Paulino Ungos III

Lawyer | Law Professor | Author

Tag: #GetThatBar2022

  • Unfit to Work as a Seaman

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

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

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

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

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

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

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

    Should Feliciano be granted total and permanent disability compensation?

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

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

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

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

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

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

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

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

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

    Further reading:

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

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

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

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

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

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

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

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

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

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

    Is Gregorio entitled to total and permanent disability benefits?

    The Supreme Court ruled in the affirmative.

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

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

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

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

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

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

    Further reading:

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

  • The Seafarer Received His Medical Report When the Parties Filed Their Position Papers

    On March 13, 2013, Leobert signed a 10-month contract as an Assistant Cook with Holland America Line Westours, Inc. (Holland America) through its agent, United Philippine Lines, Inc. (UPL). Leobert boarded the “MS Zuiderdam” on March 27, 2013.

    Leobert claimed that while performing his duties as an Assistant Cook, he experienced severe pain in his left shoulder, prompting him to notify his superior. He was advised to go to the infirmary, where the ship doctor prescribed pain relievers and advised him to rest for a few days. Leobert then requested an offshore consultation, but Holland America chose medical repatriation. Leobert was medically repatriated and arrived in the Philippines on April 10, 2013.

    Leobert reported to UPL for his post-disembarkation medical check-up on April 10, 2013, and was referred to Shiphealth, Inc., (Shiphealth) where he was advised to undergo physical therapy sessions. He was referred to the University Physicians Medical Center, Inc. after his condition did not improve, and he underwent medical tests. He then returned to Shiphealth and was instructed to obtain his medical records from UPL. He was told verbally that he was fit to work, but he was unable to obtain any documentation of his medical evaluation from UPL.

    From September 10, 2013 to October 8, 2013, Leobert sought medical advice from Seamen’s Hospital, where it was recommended that he undergo arthroscopic surgery. He also spoke with Dr. Cesar H. Garcia, an orthopedist who specializes in bone and joint diseases, who determined that Leobert was unfit to work as a seaman due to his shoulder injury. Leobert claimed that he was forced to seek medical help from independent doctors because Shiphealth and UPL refused to provide him with his medical records, and that he sought medical help from other doctors on his own initiative.

    On September 11, 2013, Leobert filed a complaint against Holland America and UPL, believing he was entitled to permanent total disability benefits.

    According to Holland America and UPL, Leobert was diagnosed with “Grade 10 — ankylosis of the shoulder joint not permitting arm to be raised above a level with a shoulder and/or irreducible fracture or faulty union collar bone” on June 14, 2013. However, Holland America and UPL claimed that Leobert was only entitled to US$12,090.00.

    Holland America and UPL also claimed that because Leobert failed to demonstrate that the company-designated physician’s assessment was tainted with bias, malice, or bad faith, and he failed to comply with the procedure under Section 20 (A) (3) of the POEA Standard Employment Contract for challenging the company-designated physician’s assessment, he was only entitled to the benefits resulting from the company-designated physician’s findings.

    Was Leobert entitled to permanent total disability benefits?

    The Supreme Court ruled in the affirmative.

    The Court noted that Holland America and UPL did not deny that Leobert’s injuries were work-related, but instead argued that Leobert was only entitled to disability benefits under Grade 10. Because Leobert failed to initiate the process to have the conflicting assessments of the company-designated physician and his own doctor referred to a third doctor, Holland America and UPL argued that the company-designated physician’s assessment is valid and should be relied on instead of the seafarer’s own doctor.

    While the Court recognized the conflict resolution procedure prescribed in Section 20 (A) (3) of the POEA Standard Employment Contract, it clarified that a seafarer’s failure to follow such procedure is only taken against him if it is first demonstrated that the seafarer was notified of the company-designated physician’s assessment. According to the Court, only after the seafarer has been duly and properly informed of the medical assessment can he decide whether or not he agrees with it. If he does not agree, he can begin the process of referring the assessment to his personal physician, after which the conflicting assessments are referred to a third doctor.

    The Court stressed its ruling in Gere v. Anglo-Eastern Crew Management Phils., Inc.1G.R. Nos. 226656 & 226713, April 23, 2018. in that the company-designated physician is mandated to issue a medical certificate, which should be personally received by the seafarer, or, if not practicable, sent to him/her by any other means sanctioned by present rules. Proper notice is one of the cornerstones of due process, the Court said, and the seafarer must be accorded the same especially so in cases where his/her well-being is at stake. If the seafarer is not notified of the evaluation of the company-designated physician after the lapse of the 120 or 240 day period from the date the seafarer first reported to the said physician, the Court states that by operation of law, the seafarer is deemed entitled to permanent total disability benefits.

    In the present case, the Court determined that Leobert was only shown the assessment of his impediment after Holland America and UPL had filed their position paper. Since the final and valid assessment of Leobert’s condition was not issued within the 120 or 240-day period, the Court ruled that Leobert was legally entitled to permanent total disability benefits.

    Further reading:

    • United Philippine Lines, Inc. v. Ramos, G.R. No. 225171, March 18, 2021.

  • We Laid the Employee Off to Re-assess His Qualifications

    On August 13, 2012, Jayraldin was hired by The Results Company, Inc. (TRCI), a business process outsourcing company. Jayraldin started as a sales representative and was promoted several times until he became a team leader in 2014. As a team leader, Jayraldin had the duty of supervising TRCI’s agents.

    On December 30, 2014, Jayraldin received an email from TRCI, informing him of infractions allegedly committed by Ruby, an agent under his supervision. Allegedly, based on quality call monitoring, Ruby incorrectly processed a customer’s order and failed to fully apprise the customer of TRCI products.

    TRCI’s Operations Manager decided to give Ruby a final written warning. However, Jayraldin, together with TRCI’s program managers, recommended that Ruby only be subjected to coaching.

    Later, Jayraldin was handed a notice stating that he was grossly negligent in the performance of an assigned task and that he willfully disobeyed an order of a superior, when he failed to give Ruby a Notice to Explain and final warning. The same notice placed him under preventive suspension and summoned him to an administrative hearing.

    Jayraldin explained that all program managers recommended that Ruby be provided only with coaching and that he had fulfilled his duty to issue her a Notice to Explain.

    After administrative proceedings, Jayraldin was admonished with a warning that a similar violation of TRCI’s Code of Discipline might lead to his dismissal. Jayraldin was also placed on temporary lay-off. Specifically, he was subjected to re-profiling until he was ready for re-assignment to another account. During the lay-off, Jayraldin was not to receive any compensation.

    Jayraldin thus filed a complaint for constructive dismissal against TRCI.

    TRCI contended that it only exercised its management prerogative. According to TRCI, it temporarily laid Jayraldin off so that it could assess his qualifications and re-assign him to other accounts, if needed.

    Was Jayraldin constructively dismissed from employment?

    The Supreme Court found that Jayraldin was constructively dismissed from employment.

    The Court stated that constructive dismissal exists where there is cessation of work because continued employment is rendered impossible, unreasonable or unlikely, as an offer involving a demotion in rank or a diminution in pay and other benefits. Aptly called a dismissal in disguise or an act amounting to dismissal but made to appear as if it were not, constructive dismissal may, likewise, exist if an act of clear discrimination, insensibility, or disdain by an employer becomes so unbearable on the part of the employee that it could foreclose any choice by him except to forego his continued employment.1Morales v. Harbour Centre Port Terminal, Inc., G.R. No. 174208, January 25, 2012.

    With regard to transfer of an employee, the Court added that the employer is charged with the burden of proving that its conduct and action are for valid and legitimate grounds, such as genuine business necessity, and that the transfer is not unreasonable, inconvenient or prejudicial to the employee. If the employer cannot overcome this burden of proof, the employee’s transfer shall be tantamount to unlawful constructive dismissal.2Morales v. Harbour Centre Port Terminal, Inc., G.R. No. 174208, January 25, 2012.

    In the present case, while the Court noted that the infraction that led to Jayraldin’s re-profiling was his failure to inform his subordinate of the penalty given by the Operations Manager, it found nothing on record to show that Jayraldin’s infraction was detrimental to the account he handled such that TRCI had no choice but to re-profile him.

    The Court added that Jayraldin was in reality not even transferred to any account. According to the Court, Jayraldin was temporarily laid-off and treated like a new applicant where he would be assessed for other accounts to see if he was qualified. However, the Court found that in the interim, Jayraldin’s economic circumstances became murky. His compensation ceased for a period not to exceed six months as he awaited being accepted into a new account. Worse, he had no assurance whether he would be considered for another account.

    The Court was convinced that TRCI failed to prove any valid and legitimate ground to re-profile Jayraldin as its drastic action was not commensurate to his transgressions. TRCI just made it appear on paper that Jayraldin was still its employee, but in reality he no longer received benefits, was placed in such a situation without any legitimate ground, and was treated like a new applicant. For the Court, this was clearly a dismissal in disguise and tantamount to constructive dismissal.

    On TRCI’s argument that it exercised its management prerogative, the Court did not accept the same, in view of the prejudice against Jayraldin and the lack of legitimate ground to place him on temporary lay-off. According to the Court, although the exercise of management prerogative will ordinarily not be interfered with, it is not absolute and it is limited by law, collective bargaining agreement, and general principles of fair play and justice. Said the Court: “Indeed, having the right should not be confused with the manner in which that right is exercised.”

    As a result of being constructively dismissed, Jayraldin was awarded separation pay, backwages, and attorney’s fees.

    Further reading:

    • Ebus v. The Results Co., Inc., G.R. No. 244388, March 3, 2021.

  • Inconsistent Evidence and Unexplained Material Facts

    Jerome was hired by respondent ELPI in 1998 as a Professional Sales Representative. After several promotions, he was retrenched in 2003. He was rehired in 2005 and held the position of Sales and Marketing Services Manager in 2011.

    On November 4, 2011, ELPI issued a Show-Cause Letter, charging Jerome with violation of company rules and breach of trust and confidence. ELPI claims that on May 14, 2008, or more than three years back, Jerome simulated the purchase of four tires from a certain tire supplier and claimed reimbursement for the cost. He was placed under preventive suspension for 30 days. ELPI did not reveal the source of the damning information against Jerome.

    Jerome submitted his explanation and questioned ELPI’s failure to identify the source of the damaging information.

    In response, ELPI attached a copy of the official receipt, sales invoice, and car repairs request relating to the tire supplier.

    Jerome then submitted a certification dated December 7, 2011 issued by Lilia, proprietor of the tire supplier, stating that she issued the official receipt under the name of ELPI for the purchase of four tires.

    During the formal investigation, ELPI confronted Jerome with a notarized certification dated December 17, 2011 from Arnulfo, the husband of Lilia, stating that Jerome did not purchase tires from her. However, record showed that Arnulfo issued another statement dated December 20, 2011 acknowledging that he lacked knowledge of the sale and that his wife was the one who issued the official receipt.

    On December 21, 2011, Jerome was issued a Notice of Termination, prompting him to file a Complaint for illegal dismissal against ELPI.

    When ELPI filed its position paper, it presented two affidavits. First was the affidavit of Timothy dated December 18, 2011. Timothy narrated that Jerome directed him to obtain a receipt for the purchase of tires. Timothy further narrated that he obtained the receipt from the tire supplier and gave it to Jerome who, in turn, used it to obtain reimbursement. The second was the affidavit of Sojit dated December 19, 2011, who narrated that sometime in 2009, Timothy told him of Jerome’s directive to produce a receipt, of Jerome’s anger should Timothy fail to do so, and of Timothy’s fear during the conversation.

    The Office of the Labor Arbiter declared the dismissal of Jerome valid. The NLRC, however, ruled that Jerome was illegally dismissed from employment. The Court of Appeals’ ruling was that Jerome was validly dismissed.

    Was Jerome illegally dismissed from employment?

    The Supreme Court reiterated the settled rule that the employer has the right to terminate the services of an employee for a just or authorized cause.1Mayon Hotel & Restaurant v. Adana, G.R. No. 157634, [May 16, 2005], 497 PHIL 892-932 The dismissal of employees must, however, be made within the parameters of law and pursuant to the tenets of fair play. “[I]n termination disputes, the burden of proof is always on the employer to prove that the dismissal was for a just or authorized cause. Where there is no showing of a clear, valid and legal cause for termination of employment, the law considers the case a matter of illegal dismissal.”

    Here, the Court remarked that during the administrative proceedings, ELPI had in its possession the official receipt, the sales invoice, the repairs request, Lilia’s statement, and the two contradicting statements of Arnulfo, as basis for its decision that Jerome committed dishonesty.

    However, the Supreme Court ruled that Jerome was illegally dismissed from employment because of ELPI’s failure to prove by substantial evidence the presence of a just cause for terminating Jerome’s employment. Specifically, ELPI had failed to show through substantial evidence that Jerome simulated the tire purchase transaction.

    Re: the official receipt, sales invoice, repairs request and Lilia’s certification

    The Court found that the official receipt, sales invoice, repairs request and Lilia’s certification only revealed the genuine transaction conducted by Jerome.

    The Court presumed the official receipt to be regular and in accordance with the ordinary course of business.2Section 3 (p) and (q), Rule 131, of the Rules of Court.

    Although noting the doubt expressed by the Court of Appeals on Jerome’s transaction because he presented an old receipt, the Supreme Court, nonetheless, stated that an old official receipt did not lead to Jerome’s guilt, especially in the face of Lilia’s undisputed certification to having herself issued the receipt for the purchase of four tires. According to the Court, that Lilia used an old receipt did not mean that the purchase of the tires did not happen.

    With regard to the repairs request, the Court found that it was approved by ELPI through its Human Resource Department (HRD) Manager, who had the duty to first ascertain that repairs were actually conducted on the car.

    For the Court, the said pieces of evidence contained no indication that Jerome simulated the sale and that no anomaly characterized Jerome’s claim for reimbursement.

    Re: Arnulfo’s statements

    The Court added that the evidence that would have contradicted Lilia’s statement was Arnulfo’s first statement. However, given the inconsistencies in Arnulfo’s two statements, the fact that Lilia sold tires to ELPI over which Jerome claimed reimbursements remained undisputed at the time of the administrative proceedings conducted by ELPI.

    Re: the affidavits of Timothy and Sojit

    The Court considered the affidavits unreliable given the circumstances under which they were executed.

    According to the Court, since the affidavits and their contents were only made known to Jerome when ELPI submitted its Position Paper, the presentation of the same was an attempt to validate Jerome’s termination post facto. These new allegations contained in the affidavits, the Court said, were not available at the time ELPI conducted the administrative hearing. It could therefore not have been its basis for dismissing Jerome.

    The Court even stated that even if it were to consider these affidavits, it would find it unusual for ELPI to not have initiated administrative proceedings against Timothy. The Court added that ELPI had not even explained why it took Timothy more than three years to inform ELPI of such simulated sale.

    Re: additional findings

    Other matters on record led the Court to doubt the validity of Jerome’s dismissal.

    First, despite the fact that Jerome’s tire transaction was readily verifiable, ELPI did not explain why it still initiated administrative proceedings against Jerome three years after his request for reimbursement was made and approved by ELPI’s HRD Manager. The Court pointed out that Timothy and the HRD Manager were not even directed to explain their participation in the purported simulation and approval of the reimbursement, respectively.

    Second, ELPI was the one who introduced as evidence the statement of Arnulfo that Jerome did not purchase any tires from the tire supplier, only for Arnulfo to issue a statement of recantation later.

    And third, on May 9, 2018, Jerome filed with the Court a Manifestation with Motion to Admit Attached Affidavit of Recantation. Jerome informed the Court that Sojit communicated to him the severance of the latter’s connection with ELPI. Sojit likewise disclosed that he was pressured to sign his purported affidavit dated December 19, 2011, under threats of including him in the investigation and dismissal should he refuse. Hence, on April 4, 2018, Sojit executed an Affidavit of Recantation, denying the events narrated in his affidavit dated December 19, 2011.

    Conclusion:

    The Court concluded that ELPI failed to show a clear, valid and legal cause to dismiss Jerome. According to the Court, the pieces of evidence ELPI presented were riddled with inconsistencies and unexplained material facts that leave much to be desired. Jerome’s dismissal was accordingly declared illegal.

    Further reading:

    • Bautista v. Eli Lilly Philippines, Inc., G.R. No. 235865, February 3, 2021.

  • Get Out!

    Gil was hired as a booking salesman for Household Goods Patrons, Inc. (Household Goods) in July 2007. His duties and responsibilities included taking customer orders, collecting payments, and inspecting equipment.

    From May 2012 to August 2013, Gil faced several disciplinary proceedings due to unaccounted amounts, low sales outputs, unremitted collections, poor performance ratings for failing to meet sales targets, and late remittance of sales proceeds.

    Gil stated that on August 29, 2013, a Household Goods officer directed him to report to her office. Gil stated that he was told to resign because he was responsible for the company’s poor performance. Gil denied the accusation, claiming that he had previously been named Salesman of the Year. This enraged the officer of Household Goods, who ordered Gil to leave her office.

    Gil went on to say that the following day, an HR Supervisor of Household Goods asked for his resignation letter and presented him with a calculation of his final pay. Gil stated that, while he objected to the request, his efforts were futile, and he was ordered to surrender all documents and property.

    Household Goods, on the other hand, asserted that Gil was not fired. According to Household Goods, its officer did speak with Gil about his poor performance and unremitted collections, which it viewed as instances of theft and thus valid grounds for his immediate termination. Household Goods claimed to have taken into account Gil’s previous good sales performance as well as the stigma of being fired from his job. As a result, it offered Gil the option of simply resigning and not filing a criminal charge against him for the unremitted amounts. Gil never returned to work after this conversation, according to Household Goods.

    Was Gil illegally dismissed from employment?

    The Supreme Court ruled in the negative. According to the Court, there was no proof that Gil was dismissed from employment.

    The Court reiterated the settled rule that in illegal dismissal cases, before the employer must bear the burden of proving that the dismissal was legal, the employee must first establish by substantial evidence the fact of his dismissal from service. If there is no dismissal, then there can be no question as to its legality or illegality.1Rodriguez v. Sintron Systems, Inc., G.R. No. 240254, July 24, 2019

    The Court also stated that since an allegation is not evidence, it is elementary that a party alleging a critical fact must support his allegation with substantial evidence. Bare allegations of dismissal, when uncorroborated by the evidence on record, cannot be given credence. Moreover, the evidence to prove the fact of dismissal must be clear, positive and convincing.

    In the present case, the Court found that other than his allegation, Gil failed to present any proof that he was dismissed from employment. He failed to present any proof of dismissal or that he was prohibited from returning to work.

    The Court also found that, on the other hand, Household Goods was able to show that Gil was not dismissed from work. According to the Court, with his poor performance, Gil was only given the option to resign instead of being dismissed.

    The Court recognized the fact that giving such an option may be done at the discretion of the employer. According to the Court, a decision to give a graceful exit to an employee rather than to file an action for redress is perfectly within the discretion of an employer. It is not uncommon that an employee is permitted to resign to save face after the exposure of his/her malfeasance.

    In the present case, the Court found that Household Goods’ act of providing Gil the option to gracefully exit considering his prior good sales performance and out of compassion did not constitute dismissal, legal or illegal. The Court added that although Gil did not resign and take the separation pay offered to him, neither did Household Goods initiate disciplinary proceedings to terminate his employment.

    Could Gil be directed to report back to work?

    The Court discussed that generally, when there is no dismissal, the employee should go back to his work and the employer must then accept him because the employment relationship between them was never actually severed.

    Here, considering that Household Goods had from the outset offered to pay separation pay to Gil, and which even Gil himself did not dispute, and that more than seven years had passed since Gil reported for work on September 1, 2013, the Court deemed it just to award separation pay (equivalent to one month salary for every year of service, computed up to the time he stopped working, or until September 1, 2013) in lieu of the directive for him to return to work and for Household Goods to accept him.

    Further reading:

    • Jarabelo v. Household Goods Patrons, Inc., G.R. No. 223163, December 2, 2020.

  • But “Backwages” Is Awarded Only to an Illegally Dismissed Employee

    An electric cooperative holding a franchise for the retail distribution of electricity for the province of Albay had a labor organization, which also served as the collective bargaining agent of the electric cooperative’s employees.

    The electric cooperative suffered from financial distress. Thus, efforts were undertaken to rehabilitate it. A strategy that the electric cooperative pushed for was that of Private Sector Participation. Under such strategy, the current employees of the electric cooperative shall be required to tender their courtesy resignation to give flexibility to the incoming private sector concessionaire, but they shall receive separation pay based on the existing collective bargaining agreement with the labor organization and shall have priority in rehiring based on the standards set by the concessionaire.

    The labor organization expressed grievance over the conditions set under the Private Sector Participation strategy, which was why it sought preventive mediation for unfair labor practices before the regional branch of the National Conciliation and Mediation Board. The electric cooperative and the labor organization, however, failed to settle their differences, and this constrained the latter to decide to strike.

    Subsequently, the Private Sector Participation strategy was eventually chosen as the appropriate rehabilitation measure and a concession was awarded to a certain company.

    Still, the labor organization went on strike. Thereafter, notices of retrenchment were served on the labor organization’s employees.

    As the labor dispute continued, the electric cooperative and the labor organization formally requested the Secretary of the Department of Labor and Employment to assume jurisdiction over the controversy.

    The Secretary of the Department of Labor and Employment assumed jurisdiction on January 10, 2014 and correspondingly issued a Return-to-Work Order of even date.

    In a Resolution dated April 29, 2016, the Secretary of the Department of Labor and Employment upheld the validity of the retrenchment of the employees of the electric cooperative and ordered it to pay the retrenched employees their separation benefits in accordance with the collective bargaining agreement. It also ordered the electric cooperative to pay them backwages and other benefits computed from January 10, 2014 until the finality of the said Resolution.

    The Court of Appeals modified the said Resolution dated April 29, 2016 and fixed the period for computation of the backwages awarded by the Secretary of the Department of Labor and Employment from the date of the Return-to-Work Order on January 10, 2014 up to the issuance of the Resolution dated April 29, 2016.

    The electric cooperative argued before the Supreme Court that the Court of Appeals erred in sustaining the award of backwages because:

    • it complied with the Assumption Order as early as January 14, 2014;
    • “backwages” is awarded only to an illegally dismissed employee; and
    • if backwages were to be awarded, the same should accrue only until February 26, 2014, the date when the returning employees last reported for work, and not until April 29, 2016, or the date of the Secretary of the Department of Labor and Employment’s Resolution.

    Was the award of backwages proper?

    If proper, was the limit to the period of computing backwages until April 29, 2016 correct?

    The Court set forth relevant principles as follows:

    The effects of an assumption order issued by the Secretary of the Department of Labor and Employment under Article 2781Formerly Article 263. The provision states: Art. 278. Strikes, picketing, and lockouts. — x x x (g) When, in his opinion, there exists a labor dispute causing or likely to cause a strike or lockout in an industry indispensable to the national interest, the Secretary of Labor and Employment may assume jurisdiction over the dispute and decide it or certify the same to the Commission for compulsory arbitration. Such assumption or certification shall have the effect of automatically enjoining the intended or impending strike or lockout as specified in the assumption or certification order. If one has already taken place at the time of assumption or certification, all striking or locked out employees shall immediately return to work and the employer shall immediately resume operations and readmit all workers under the same terms and conditions prevailing before the strike or lockout. The Secretary of Labor and Employment or the Commission may seek the assistance of law enforcement agencies to ensure compliance with this provision as well as with such orders as he may issue to enforce the same. x x x (Emphasis supplied.) (g) of the Labor Code of the Philippines are two-fold:

    • it enjoins an impending strike on the part of the employees, and
    • it orders the employer to maintain the status quo.2Digital Telecommunications Philippines, Inc. v. Digitel Employees Union, G.R. Nos. 184903-04, October 10, 2012.

    In cases where a strike has already taken place, the assumption order shall have the effect of:

    • directing all striking workers to immediately return to work; and
    • mandating the employer to immediately resume operations and readmit all workers under the same terms and conditions prevailing before the strike.

    The status quo to be maintained under law refers to that which was prevailing the day before the strike. Furthermore, this obligation on the part of the employer generally requires actual reinstatement.

    Jurisprudence3San Fernando Coca-Cola Rank-and-File Union v. Coca-Cola Bottlers Philippines, Inc., G.R. No. 200499, October 4, 2017. teaches that the purpose of maintaining the status quo is to avoid any disruption to the economy while the labor dispute is being resolved in the proper forum. The objective is to minimize, if not totally avert, any damage that such labor dispute might cause upon the national interest by occasion of any work stoppage or slow-down. The directive to maintain the status quo extends only until the labor dispute has been resolved.

    1)

    In the present case, the Supreme Court ruled that the award of backwages was proper.

    The Court found that the Secretary of the Department of Labor and Employment assumed jurisdiction over the labor dispute between the parties on January 10, 2014 and issued a return-to-work order on even date under Article 278 (g) of the Labor Code of the Philippines.

    Although the electric cooperative claimed that it admitted the striking employees to its premises on January 14, 2014, the Court found that no actual work was given to the said employees. Instead, the Court discovered that the electric cooperative confined these employees in a room for over three weeks.

    Furthermore, although the electric cooperative claimed that it tendered the salaries of the employees who actually reported back for work, it also admitted that the employees refused to receive the amounts it supposedly tendered because of disagreement on the figures. The Court took this to mean that the affected employees were still not paid their wages and benefits for the period they were supposed to be reinstated.

    The Court thus affirmed the Secretary of the Department of Labor and Employment’s award of backwages.

    However, the Court clarified that backwages were not imposed as a penalty for non-compliance with the Assumption Order, but as satisfaction of the electric cooperative’s obligation towards the employees as contemplated under the Assumption Order. In other words, said backwages corresponded to the amount ought to have been received by the affected employees if only they had been reinstated following the Assumption Order.

    The Court further stated that an award of backwages outside illegal dismissal cases is not prohibited. According to the Court, even in the absence of illegal dismissal in this case, the Secretary of the Department of Labor and Employment had the authority to award and was not mistaken in awarding backwages.

    2)

    In this regard, the limitation of the computation of backwages until April 29, 2016 by the Court of Appeals was affirmed. The Supreme Court ruled that the status quo mandated by the Assumption Order extended from the date of its issuance until the Secretary of the Department of Labor and Employment’s resolution of the dispute between the parties on the said date of April 29, 2016.

    Further reading:

    • Albay Electric Cooperative, Inc. v. ALECO Labor Employees Organization, G.R. No. 241437, September 14, 2020.

  • Admitted the Due Issuance of the Certification

    The accused here were charged with one (1) count of violation of the Migrant Workers and Overseas Filipinos Act of 1995, alongside ten (10) counts of estafa. With regard to the charge relating to the Migrant Workers and Overseas Filipinos Act of 1995, they were specifically accused of illegal recruitment in large scale when they conspired to

    • represent themselves to have the capacity to contract, enlist and transport workers for employment as factory workers in Korea and Italy;
    • recruit and promise employment/job placement abroad to the complainants in the case; and
    • accordingly collect and receive money from them without first securing the required license and authority from relevant government authorities.

    One of the accused (named Sagisag) countered that he was merely an administrative assistant of the agency, which, in turn, was owned by his co-accused. Sagisag alleged that he met the complainants when they purchased plane tickets for Korea, and he claimed that it was his co-accused who received the payments for the tickets, and that he was merely instructed to issue provisional receipts for the payments. Sagisag further denied conspiring with his co-accused to misrepresent and promise work in South Korea in exchange for money. He said that whenever he accepted money from the complainants, he merely did so in behalf of his co-accused De Guzman, and that in cases when he accepted money on his own behalf, he did so on the understanding that the money was for the payment of the tuition fee for the Korean language classes he conducted.

    After trial, the Regional Trial Court found the accused guilty beyond reasonable doubt of the crime of illegal recruitment in large scale, in addition to the finding of guilt beyond reasonable doubt to three (3) counts of estafa. The trial court ruled that the prosecution sufficiently established that the two elements of illegal recruitment concurred, namely:

    • that Sagisag did not have the required license or authority to engage in the recruitment and placement of workers, and
    • that Sagisag nevertheless undertook a recruitment and placement activity as defined under Article 13 (b) of the Labor Code of the Philippines, or otherwise any prohibited practice under Article 34 of the same Code.

    Specifically, it found that the first element was established by no less than the POEA Certification dated October 7, 2008 that Sagisag and his co-accused were not licensed or otherwise authorized to recruit workers for overseas employment.

    This finding was affirmed by the Court of Appeals. Sagisag went to the Supreme Court.

    The issue that reached the Court was whether the lower courts erred in convicting Sagisag.

    The Court began by stating that an illegal recruiter may be held liable for the crimes of illegal recruitment committed in large scale and estafa without risk of being put in double jeopardy, for as long as the accused has been so charged under separate Informations. Here, record showed that Sagisag was separately charged for illegal recruitment in large scale and estafa. For the Court, Sagisag was properly prosecuted simultaneously for both crimes.

    With regard to illegal recruitment, the Court stated that it is committed by a person who: undertakes any recruitment activity defined under Article 13 (b) or any prohibited practice enumerated under Articles 34 and 38 of the Labor Code of the Philippines; and does not have a license or authority to lawfully engage in the recruitment and placement of workers. It is committed in large scale when it is committed against three or more persons individually or as a group.

    Together with the Migrant Workers and Overseas Filipinos Act of 1995, the law governing illegal recruitment is the Labor Code of the Philippines which, under Article 13 (b) thereof defines recruitment and placement as “any act of canvassing, enlisting, contracting, transporting, utilizing, hiring or procuring workers, and includes referrals, contract services, promising or advertising for employment, locally or abroad, whether for profit or not x x x.” The same Code also defines and punishes illegal recruitment, under Articles 38 and 39.

    According to the Court, to prove illegal recruitment, two elements must be shown, namely:

    • the person charged with the crime must have undertaken recruitment activities, or any of the activities enumerated in Article 34 of the Labor Code of the Philippines, as amended; and
    • said person does not have a license or authority to do so.

    In this regard, the Court said that it is not the issuance or signing of receipts for the placement fees that makes a case for illegal recruitment, but rather the undertaking of recruitment activities without the necessary license or authority.

    The Court then added that to establish that the offense of illegal recruitment was conducted in a large scale, it must be proven that the accused:

    • engaged in acts of recruitment and placement of workers defined under Article 13 (b) or in any prohibited activities under Article 34 of the Labor Code of the Philippines;
    • has not complied with the guidelines issued by the Secretary of Labor and Employment, particularly with respect to the securing of a license or an authority to recruit and deploy workers, either locally or overseas; and
    • commits the unlawful acts against three or more persons, individually or as a group.

    The Court mentioned that all three elements have been established beyond reasonable doubt.

    In the present case, the Court found that the accused engaged in recruitment and placement activities without the requisite authority, and were therefore properly charged with illegal recruitment.

    The Court considered the attack of Sagisag on the admissibility of the POEA Certification which stated that he had no authority or license to recruit for overseas employment, since said document was not authenticated in court by the signatory thereto. However, such attack was not found to be meritorious, for record showed that the parties, which included Sagisag, had stipulated on the veracity and probative import of the POEA Certification. The Court stated that accused Sagisag may not now turn back on the stipulations and then question the admissibility of a crucial document, the due issuance of which he stipulated and agreed on.

    The Court also found without merit Sagisag’s reliance on the Equipoise Rule, which provides that where the evidence in a criminal case is evenly balanced, the constitutional presumption of innocence tilts the scales in favor of the accused. The Court pointed out that the rule was inapplicable to the case of Sagisag because, contrary to his submission, the evidence submitted and evaluated by both lower courts mounted high against his denial and ineffective and uncorroborated feigning of innocence. The total evidence presented by both parties, said the Court, was asymmetrical, with the prosecution’s submissions indubitably demonstrating Sagisag’s guilt.

    The Court accordingly affirmed the conviction of Sagisag.

    Further reading:

    • People v. Bautista, G.R. No. 218582, September 3, 2020.

  • Appeal Bonds and Insolvency Proceedings

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

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

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

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

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

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

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

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

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

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

    The Court started by discussing Article 2231Art. 223. Appeal. — Decisions, awards, or orders 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. x x x 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. of the Labor Code of the Philippines which requires the posting of a cash or surety bond when the judgment appealed from involves a monetary award. The Court reiterated prevailing jurisprudence2Viron Garments Manufacturing, Co., Inc. v. National Labor Relations Commission, G.R. No. 97357, March 18, 1992. in that the posting of the bond is an indispensable requisite for the perfection of an appeal by the employer. The mandatory nature of the bond is clearly limned in the provision that an appeal by the employer may be perfected only upon the posting of a cash or surety bond. The Court stressed that the word ‘only’ makes it perfectly clear, that the lawmakers intended the posting of a cash or surety bond by the employer to be the exclusive means by which an employer’s appeal may be perfected.

    However, the Court also mentioned the following exceptional circumstances under jurisprudence:3Lepanto Consolidated Mining Corp. v. Icao, G.R. No. 196047, January 15, 2014.

    • The Court excused the failure of an appellant to post a bond in view of its counsel’s reliance on the notice of the decision in the case which stated the requirements of an appeal without any mention of the bond requirement. The Court found that the said counsel, as well as the opposing party, apparently had no knowledge of the amendments caused by Republic Act No. 6715 on the bond requirement, including the issuance of the NLRC Interim Rules requiring the posting of a bond on appeal.4Your Bus Lines v. NLRC, G.R. No. 93381, September 28, 1990.
    • An appellant was likewise excused from the requirement, when its failure to post a bond was partly caused by the Office of the Labor Arbiter’s failure to state the exact amount of monetary award due, which would have been the basis of the amount of the bond to be posted.5Blancaflor v. National Labor Relations Commission, G.R. No. 101013, February 2, 1993.
    • An appeal was given due course despite the failure of the appellant to post a bond, on account of its insolvency and poverty.6Cabalan Pastulan Negrito Labor Association v. National Labor Relations Commission, G.R. No. 106108, February 23, 1995.
    • Finally, the appellant was allowed to post a property bond in lieu of a cash or surety bond. The Court found that the assailed judgment involved more than P17 million and its execution could adversely affect the economic survival of the appellant, which was a medical center.7 UERM-Memorial Medical Center v. National Labor Relations Commission, G.R. No. 110419, [March 3, 1997.

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

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

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

    The Court noted that under Article 2178Art. 217. Jurisdiction of the Labor Arbiters and the Commission. — (a) Except as otherwise provided under this Code, the Labor Arbiters shall have original and exclusive jurisdiction to hear and decide, within thirty (30) calendar days after the submission of the case by the parties for decision without extension, even in the absence of stenographic notes, the following cases involving all workers, whether agricultural or non-agricultural: xxx xxx xxx (6) Except claims for Employees Compensation, Social Security, Medicare and maternity benefits, all other claims arising from employer-employee relations, including those of persons in domestic or household service, involving an amount exceeding five thousand pesos (P5,000.00) regardless of whether accompanied with a claim for reinstatement. (Emphasis supplied and underscoring supplied) of the Labor Code of the Philippines, money claims arising from an employer-employee relationship may only be filed and ruled upon by the Office of the Labor Arbiter. However, the Court also noted that when an employer is undergoing insolvency proceedings, Article 217 of the Labor Code of the Philippines has to be read together with Section 609SECTION 60. No creditor, proving his debt or claim, shall be allowed to maintain any suit therefor against the debtor, but shall be deemed to have waived all right of action and suit against him, and all proceedings already commenced, or any unsatisfied judgment already obtained thereon, shall be deemed to be discharged and surrendered thereby; and after the debtor’s discharge, upon proper application and proof to the court having jurisdiction, all such proceedings shall be dismissed, and such unsatisfied judgments satisfied of record: Provided, That no valid lien existing in good faith thereunder shall be thereby affected. A creditor proving his debt or claim shall not be held to have waived his right of action or suit against the debtor when a discharge has have been refused or the proceedings have been determined without a discharge. No creditor whose debt is provable under this Act shall be allowed, after the commencement of proceedings in insolvency, to prosecute to final judgment any action therefor against the debtor until the question of the debtor’s discharge shall have been determined, and any such suit or proceeding shall, upon the application of the debtor or of any creditor, or the assignee, be stayed to await the determination of the court on the question of discharge: Provided, That if the amount due the creditor is in dispute, the suit, by leave of the court in insolvency, may proceed to judgment for the purpose of ascertaining the amount due, which amount, when adjudged, may be allowed in the insolvency proceedings, but execution shall be stayed as aforesaid. of the Insolvency Law,10Act No. 1956, May 20, 1909. The Financial Rehabilitation and Insolvency Act (FRIA) of 2010, or Republic Act No. 10142, was signed into law on July 18, 2010. or the law in effect when the National Labor Relations Commission dismissed the appeal on November 28, 2008, which states that a creditor may be allowed to proceed with the suit to ascertain the amount due to it but the execution of which shall be stayed.

    The Court discussed that during the pendency of the insolvency proceedings, employees are afforded a measure of protection by having their claim considered as a contingent claim before the insolvent court following Section 5511 SECTION 55. In all cases of contingent debts and contingent liabilities, contracted by the debtor, and not herein otherwise provided for, the creditor may make claim therefor and have his claim allowed, with the right to share in the dividends, if the contingency shall happen before the order of the final dividend; or he may, at any time, apply to the court to have the present value of the debt or liability ascertained and liquidated, which shall be done in such manner as the court shall order, and it shall be allowed for the amount so ascertained. of the Insolvency Act. The Court stated that like any other contingent claim, employees may prosecute their case before the labor tribunals, and exhaust other remedies, until he or she obtains a final and executory judgment. Assuming the employees obtain a favorable money judgment, the execution will be stayed following Section 60 of the Insolvency Act because the insolvency proceedings is where all creditors of the employer may establish their claims.

    The Court added that assuming the insolvent corporation undergoes liquidation, the measure of protection given to employees is stated in Article 11012Art. 110. Worker Preference in Case of Bankruptcy. — In the event of bankruptcy or liquidation of an employer’s business, his workers shall enjoy first preference as regards their wages and other monetary claims, any provisions of law to the contrary notwithstanding. Such unpaid wages and monetary claims shall be paid in full before claims of the government and other creditors may be paid. of the Labor Code of the Philippines, which prescribes not only the preference for unpaid wages and monetary claims even before the payment of claims of the government and other creditors, but also the only proper venue for the enforcement of such preferential right.13In Development Bank of the Phils. v. Secretary of Labor, G.R. No. 79351, November 28, 1989, the Court ruled: In this jurisdiction, bankruptcy, insolvency and general judicial liquidation proceedings provide the only proper venue for the enforcement of a creditor’s preferential right such as that established in Article 110 of the Labor Code, for these are in rem proceedings binding against the whole world where all persons having any interest in the assets of the debtor are given the opportunity to establish their respective credits. In other words, what Article 110 means in the context of an insolvent employer is “that during bankruptcy, insolvency or liquidation proceedings involving the existing properties of the employer, the employees have the advantage of having their unpaid wages satisfied ahead of certain claims which may be proved therein.”

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

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

    Further reading:

    • Karj Global Marketing Network, Inc. v. Mara, G.R. No. 190654, July 28, 2020.

  • General Return-to-Work Orders

    The employee alleged that sometime in May 2006, he was hired as a security guard by SF Security Services, Inc. He narrated that on December 25, 2013, he was suddenly relieved from his post upon request of SF Security Services, Inc.’s client. The next day, he received an order suspending him for 10 days. After the lapse of his 10-day suspension, or on January 7, 2014, he reported for work. However, SF Security Services, Inc. informed him that he was placed on floating status and he was just advised to wait for a call.

    The employee further narrated that on May 16, 2014, he received a letter from SF Security Services, Inc. directing him to report to its office within 48 hours from receipt thereof. The employee claimed that he went to SF Security Services, Inc. ‘s office on May 19, 2014, but he was not allowed to enter and was made to wait outside the office. Before leaving the premises, he handed a letter to SF Security Services, Inc. to inform his readiness to report for duty on the same day. SF Security Services, Inc. wrote a second letter dated May 28, 2014, allegedly to make it appear that he failed to report to work despite its return to work order. In a letter dated July 11, 2014, the employee inquired the status of his employment. However, SF Security Services, Inc. refused to provide him with work.

    On July 28, 2014, the employee filed a complaint for constructive dismissal against SF Security Services, Inc.

    SF Security Services, Inc. admitted the suspension of the employee for a period of 10 days, starting December 26, 2013. However, it asserted that on May 14, 2014, it sent the employee a letter directing him to report for posting, but the latter did not comply with the directive. On May 28, 2014, SF Security Services, Inc. sent him another letter reiterating the instruction to report for posting. However, it still received no word from the employee. According to SF Security Services, Inc., it was surprised to learn of the employee’s complaint for illegal dismissal.

    Was the employee validly placed on floating status?

    The Supreme Court stated that in security services, the “floating status” or temporary “off-detail” of an employee may take place when there are no available posts to which the employee may be assigned — which may be due to the non-renewal of contracts with existing clients of the agency, or from a client’s request for replacement of guards assigned to it.1Salvaloza v. National Labor Relations Commission, G.R. No. 182086, November 24, 2010, 650 PHIL 543-561. It added that while there is no specific provision in the Labor Code of the Philippines governing the “floating status” or temporary “off-detail” of employees, Article 3012Formerly Article 286. Article 301 reads: ART. 301. When Employment not Deemed Terminated. — The bona fide suspension of the operation of a business or undertaking for a period not exceeding six (6) months, or the fulfillment by the employee of a military or civic duty shall not terminate employment. In all such cases, the employer shall reinstate the employee to his former position without loss of seniority rights if he indicates his desire to resume his work not later than one (1) month from the resumption of operations of his employer or from his relief from the military or civic duty. of the said law, by analogy, considers this situation as a form of temporary retrenchment or lay-off.3on ||| Superior Maintenance Services, Inc. v. Bermeo, G.R. No. 203185, December 5, 2018.

    The Court further stated that conformably with the above provision, the placement of an employee on “floating status” must not exceed six months. Otherwise, the employee may be considered constructively dismissed.4Ibon v. Genghis Khan Security Services, G.R. No. 221085, June 19, 2017, 811 PHIL 250-260. Furthermore, the burden of proving that there are no posts available to which the security guard can be assigned rests on the employer.5Nationwide Security and Allied Services, Inc. v. Valderama, G.R. No. 186614, February 23, 2011, 659 PHIL 362-374. However, the mere lapse of six months in “floating status” should not automatically result to constructive dismissal. The peculiar circumstances of the employee’s failure to assume another post must still be inquired upon.6Exocet Security and Allied Services Corp. v. Serrano, G.R. No. 198538, September 29, 2014, 744 PHIL 403-422.

    In the present case, the Supreme Court found that the employee was placed on floating status beginning on the lapse of his 10-day suspension on January 7, 2014 and that he had been on floating status for six months and 21 days from the time he filed the complaint for constructive dismissal on July 28, 2014.

    The Court also found that although SF Security Services, Inc. sent the employee letters dated May 14, 2014 and May 28, 2014, the same were in the nature of general return to work orders. According to the Court, jurisprudence requires not only that the employee be recalled to the agency’s office, but that the employee be deployed to a specific client before the lapse of six months.7Ibon v. Genghis Khan Security Services, G.R. No. 221085, June 19, 2017, 811 PHIL 250-260.

    The Court stated that considering that the employee was placed on floating status for more than six months without being deployed to a specific assignment he was deemed to have been constructively dismissed from employment. The employee was granted the reliefs of separation pay 8considering that he no longer asked to be reinstated and backwages.

    Could the employee be said to have abandoned his employment?

    The Court ruled that with the finding of constructive dismissal it followed that the employee could not have abandoned his employment. The Court stressed that abandonment is incompatible with constructive dismissal.

    The Court reiterated the principle that abandonment, as a just cause for termination, requires “a deliberate and unjustified refusal of an employee to resume his work, coupled with a clear absence of any intention of returning to his or her work.”9Veterans Security Agency Inc. v. Gonzalvo Jr., G.R. No. 159293, December 16, 2005, 514 PHIL 488-505 The following elements must therefore concur: (1) the failure to report for work or absence without valid or justifiable reason, and (2) a clear intention to sever the employer-employee relationship, with the second element as the more determinative factor and being manifested by some overt acts.10Icawat v. National Labor Relations Commission, G.R. No. 133573, June 20, 2000, 389 PHIL 441-447

    In the present case, the Court found no proof that the employee intended to sever his employment. On the contrary, the Court found strong indications of the employee’s desire to resume work. According to the Court, after the employee served his 10-day suspension, he reported for work but was instead told that he was being placed on floating status and instructed to wait for a call. The employee also sent SF Security Services, Inc. a letter dated May 19, 2014 to inform the latter that he was ready to report for duty, and a letter dated July 11, 2014 to inquire on the status of his employment. He also filed the complaint for constructive dismissal shortly after the lapse of his six-month floating status. For the Court, his immediate filing of the complaint sufficiently established his desire to return to work and negated any suggestion of abandonment. In addition, considering that the employee been in the service of SF Security Services, Inc. since 2006, or for eight years already before his dismissal in 2014, the employee could not have had such intention to abandon his work. The Court concluded that the totality of these circumstances negated the existence of a clear intention to sever the employment relation.

    Further reading:

    • Seventh Fleet Security Services, Inc. v. Loque, G.R. No. 230005, January 22, 2020.