Seafarer Dismissal Case

SECONDDIVISION
G.R.No.199931,September07,2015
INCSHIPMANAGEMENT,INC.,INTERORIENTNAVIGATIONCOMPANYLTD.ANDREYNALDO
RAMIREZ,P
etitioners,v
.R
ANULFOCAMPOREDONDO,R
espondent.
DECISION
DELCASTILLO,J
.:
This Petition for Review on Certiorari1 assails the July 29, 2011 Decision2 of the Court of Appeals (CA) in
CAGR. SP No. 112079 which annulled and set aside the July 31, 2009 Decision3 and October 23, 2009
Resolution4 of the National Labor Relations Commission (NLRC) and reinstated the April 27, 2009Decision5
of Labor Arbiter (LA) Thelma M. Concepcion in OFW (M) 081202008 (LAC No. 0600030309). Likewise
assailed is the January 2, 2012 Resolution6 of the CA which denied petitioners' Motion for
Reconsideration.7
chanroblesvirtuallawlibrary
FactualAntecedents
On July 19, 2007, INC Shipmanagement, Inc. (INC), for and in behalf of Interorient Navigation Company
Ltd. (Interorient), hired respondent Ranulfo Camporedondo (respondent) as chief cook on board thevessel
M/V Fortunia for aperiodof10monthswithamonthlysalaryofUS$578.50andallowanceofUS$80.00.8On
July25,2007,respondentboardedthevessel.9
As chief cook, respondent's tasks included food preparation andmealsoftheshipcrew,custody,inventory,

and budgeting of food supplies of the vessel.10 Allegedly, keeping in mind his duties, respondent inquired
fromthecaptainthebudgetforthevesselhealsoreportedtothelattertheinsufficiencyandpoorqualityof
some of the supplies. These inquiries enraged the captain. As a result, he reprimanded respondent on a
dailybasis.11
Furthermore, respondent stated that on September 11, 2007, the captain gave him a return ticket to the
Philippines to take a vacation. He was purportedly promised to be transferred to another vessel.12On
September 12, 2007 or about a month and a half into his contract, respondent was given a report13of
dismissal,whichherefusedtoaccept.14
On August 27, 2008, respondent filed a Complaint15 for illegal dismissal, nonpayment ofovertimepayand
attorney's fees against INC, Interorient and Reynaldo Elamirez, corporate officer of INC16(collectively
referredhereunderaspetitioners).
In his Position Paper,17 respondent alleged thathebeganworkingasseafarerinAugust2001.From2001to

2005,heworkedforotheremployersandfinishedhiscontractswiththemingoodstanding.InAugust2005,
he started working for INC and prior to his July 19, 2007 contract, he completed two contracts with INC
without issue. He stated that petitioners were claimingthathewasdismissedduetohisstiffarm.However,
he contended that he passed the medical and physical examination and despite his condition, petitioners
engaged his services. Furthermore, he asserted that he was made to sign a report that terminated his
contractwithoutgivinghimtheopportunitytoexplainordefendhimself.
For their part, petitioners stated in their Position Paper18thatrespondentjoinedthevesselonJuly25,2007

butwasrepatriatedonDecember12,2007.
Theycontendedthatthecaptaincomplainedabouthisincompetenceand/orpoorperformance.Inparticular,
due to his stiff right hand, respondent was allegedly unable to serve meals and maintain thecleanlinessof
the kitchen, store room and mess room. They averred that eventually the captain served upon him the
abovecited Report entitled as "Report of incompetentaction/insubordination/indiscipline"whichherefused
toreceive.
In addition, petitioners stated that the previous ship captain, under whom respondent was deployed,
likewise complained about his poor performance. They asserted that because they wanted to give
respondent another chance, they deployed him to M/V Fortunia. Allegedly, respondent was allowed to
reapplyforassignmentinanothervesselandhereadilyagreedtoberepatriated.
Petitioners argued that respondent admitted his faults as he did not outrightlyfileacaseheevenfollowed
up his redeployment with their fleet personnel officer. They also emphasized that the complaint against
them was barred by respondent's voluntary executionofaquitclaim19andthatrespondent'scomplaintwas
"absolutely malicious and an afterthought on his part because if he was trulyaggrievedbyhisrepatriation,
heshouldnothaveexecutedsuchquitclaim."20
RidingoftheLaborArbiter
On April 27, 2009, the LA rendered a Decision declaring that petitioners illegallydismissedrespondent,the
decretalportionofwhichreads:
WHEREFORE, foregoing premises considered, we find the complaint against respondents impressed with
merit. Accordingly the latter is held liable to pay complainant the salaries equivalent to eight months
unexpired portion of the ten[]month employment contract. Further awarded is ten percent of the total
judgment award as attorney's fees, the computation of which is shown in Annex 'A' and made an integral
parthereof.
The rest of complainant's monetary claims are dismissed for lack of merit including respondents'
counterclaimagainstthecomplainant.
SOORDERED.21
RulingoftheNationalLaborRelationsCommission
In its Decision dated July 31, 2009, the NLRC set aside the Decision of the LA and dismissed the case for
lackofmerit.
The NLRC was convincedthatrespondent'sperformanceaschiefcookwasbelowthecompany'sstandard.It

declared that the delay infilingthecaseprovedtheweaknessofrespondent'sclaim.Itlikewiseheldagainst
respondenthisexecutionofaquitclaimdischargingpetitionersfromanyliabilityinhisfavor.
TheNLRCalsodeniedrespondent'sMotionforReconsideration22inaResolutiondatedOctober23,2009.
Respondent thus filed a PetitionforCertiorari23beforetheCAascribinggraveabuseofdiscretiononthepart

oftheNLRCinfindingthathewaslegallydismissedandwasaffordeddueprocessoflaw.
RulingoftheCourtofAppeals
OnJuly29,2011,theCArenderedtheassailedDecision,thedispositiveportionofwhichreads:
FOR THESE REASONS, the petition is GRANTED. TheNLRCDecisionandResolutiondatedJuly31,2009and
October 23, 2009, respectively, are ANNULLED and SET ASIDE. The Decision of Labor Arbiter Thelma M.
ConcepciondatedApril27,2009isREINSTATED.
SOORDERED.24
The CA noted that petitioners dismissed respondent because of his alleged incompetence and/or poor
performance, as indicated in the Report of incompetent action/insubordination/indiscipline. The CA,
however, found that this Report wasneitherauthenticatednorsupportedbycredibleevidence.Italsofound
that the Report did not explain or give details as regards the circumstances surrounding the supposed
incompetenceandpoorperformanceofrespondent.
The CA further emphasized that electronicevidence,suchaselectronicmails(emails),mustfirstbeproved

and authenticated before they are receivedinevidence.Italsoheldthatevenifsuchemailswereadmitted
in evidence, they could not support respondent's dismissal as they were based upon the selfserving
statementsoftheofficersofpetitioners.
The CA likewise held that the subjectquitclaimdidnotprecludethefilingofanillegaldismissalcaseagainst

petitioners. It also held that while respondent executed a quitclaim, the same was invalid for want of fair
andcredibleconsideration.
IntheassailedResolutiondatedJanuary2,2012,theCAdeniedpetitioners'MotionforReconsideration.25
cralawred
Hence,petitionersfiledthisPetitionraisingthefollowingissues:
chanRoblesvirtualLawlibrary
Issues
1. WHETHERxxxTHERESPONDENTISESTOPPEDORBARREDBYLACHESFROMCLAIMINGTHATHE
WASILLEGALLYDISMISSEDSINCEITTOOKHIMALMOSTTWO(2)YEARSTOMAKESUCHCLAIM
AGAINSTTHEPETITIONERS.
2.
3.
4. WHETHERxxxRESPONDENT'SCLAIMEDILLEGALDISMISSALISNEGATEDBYHISACTOF
APPLYINGFORREDEPLOYMENTWITHTHEPETITIONERSANDWHICHHEEVENARBITRARILY
DECLINEDWHENHEWASSOSCHEDULEDTOJOINTHECROWLEYVESSEL.
5.
6.
7. WHETHERxxxRESPONDENT'SCLAIMEDILLEGALDISMISSALISNEGATEDBYHISVOLUNTARILY
EXECUTEDQUITCLAIMAFTERHISREPATRIATIONANDINFAVOROFTHEPETITIONERS.
8.
9.
10. WHETHERxxxPETITIONERS'ADDUCEDEVIDENCEWOULDNOTCONSTITUTEASSUBSTANTIAL
EVIDENCETOPROVETHERESPONDENT'SINCOMPETENCEANDPOORPERFORMANCEANDxxx
JUSTIFIEDHISDISMISSALFROMEMPLOYMENT.26
11.
Petitioners maintain that respondent was aware of the reason for his repatriation and accepted the cause
thereof as shown by his failure to immediately fileaclaimagainstthem.Besides,herepeatedlyfollowedup
hispossibleredeploymentwiththem.HewasinfactscheduledfordeploymentinJanuary2008,butdeclined
it.
Petitioners also contend that respondent voluntarily executed a quitclaim. This quitclaim was based on
sufficientconsiderationbecausetheypaidhimhisaccruedbenefits.
Petitioners likewise posit that respondent's incompetence and poor performance were supported by
substantial evidence that even inhisPositionPaperrespondentadmittedthathisworkperformancedidnot
sit well with the captain that if it were not for his poor work performance then the captain would haveno
reason to reprimand him everyday and that respondent could not deny that he was hampered by his stiff
right arm in performing his duties.Petitionersassertthattheyinformedrespondentofhispoorperformance
through the aforesaidReportwhichhedeclinedtoreceive.TheylikewisearguethattheentriesintheReport
werebasedonentriesinthevessel'slogbookthatdeserveconsideration.
Petitioners moreover argue that the captain of the previous vessel where respondent was deployed also
complainedabouthispoorperformance.
Respondent counters that petitioners illegally dismissed him on September 12, 2007 and he filed a
Complaint against them on August 27, 2008 and that in the intervening dates he claimed from petitioners
what wasrightfullyhisbuttonoavailandthatthefilingofthiscaseagainstpetitionersaftermorethanone
yearfromhisrepatriationdidnotprovethathisactionwasweak.
Respondent also argues that the allegation that he repeatedly followed up his possible redeployment was
petitioners' very own uncorroborated assertion and that what he actually followed up with petitioners was
his monetary claim for benefits unjustifiably withheld that evenassumingthathedidfollowuphispossible
redeployment,thatdoesnotamounttoawaiverofhisrighttocontesthisillegaltermination.
More than that, respondent avers that the sum he received pursuant to the quitclaim was much less than
what was due him that he still had at least eight months of salary and allowance due him amounting to
more than US$5,200.00 and that the settlement of only P32,693.63 was way below the amount he
deservedtoreceivefromthem.
Respondent takes issue with petitioners' claim that there was substantial evidence to support petitioners'
allegation of hisincompetenceandpoorperformancethattheabovecitedReportwasnotcredibleevidence
because thesamewasnotauthenticatedandthatforthesamereason,theunsignedemailsrelieduponby
petitionerswerenotcredibleasthesewerealsounauthenticated.
OurRuling
It is axiomatic that this Courtisnotatrieroffactsitreviewsonlyquestionsoflaw.Assuch,inpetitionsfor

review oncertiorari,onlyquestionsoflawmayberaised.Thisrule,nevertheless,admitsofexceptions,asin
this case where the factual findings of the LA and the CA, on one hand,andtheNLRC,ontheother,areat
odds. There being contradictory findingsoffacts,theCourtdeignsitrighttoevaluatethepiecesofevidence
adducedbythepartiesanddrawconclusionsfromthem.27
It is settled that theemployerhastheburdentoprovethatthedismissalofanemployeeisbasedonavalid

cause. To discharge this burden, the employer must present substantial evidence or such amount of
relevant evidence that a reasonablemindmightacceptasadequatetosupportaconclusionthatthecause
oftheemployee'sdismissalwasvalid.28Specifically,theemployermustcomplywiththefollowingrequisites:
(1) the dismissal must be for a just or authorized cause, and (2) the employee to be dismissedmusthave
beenaffordeddueprocessoflaw.29
Inthiscase,petitionersfailedtodischargethisburden.
Petitionersfailedtoprovejustorauthorizedcause.
First off,weholdthatthedueexecutionoftheReportofincompetentaction/insubordination/indisciplinewas
established considering that both parties adduced it to support their respective positions. On one hand,
petitioners relied on this Report to prove that respondent was validly dismissed. On the other hand,
respondent admitted that he was furnished a copy of this Report but he declined to receive it. Thus, as
regardstheexistenceofthesubjectReport,Wefindthatthesamewasdulyprovedhere.
However, the contents of this Report were insufficient bases to dismiss respondent. As stated therein,
respondentwasdismissedforthefollowingreasons:
DISMISSAL(BriefDetails):
HE HAS AN OBVIOUS HANDICAP WHICH IS A STIFF RIGHT ARM. THIS HANDICAP ALLOWS HIM TO COOK,
BUT [REGRETABLY] IT MAKES MR. CAMPOREDONO [sic] UNABLE TO ALSO SERVE THE MEALS AND CLEAN
THE KITCHEN, MESSROOMS, STORES RESPECTABLE [sic]. WITH ASSISTENCE[sic]OFAMESSMANHECAN
DOHISJOBRESPECTIVE[sic].30
As found by the CA, the Report provided no detailed explanation as regards respondent's supposed
incompetence and poor performance. The CA observed that the Report "did not particularly describe such
inability that would lead to the conclusion that he was incompetent."31 With this observation of the CA, we
fullyagree.
As a general concept, poor performance is tantamount toinefficiencyandincompetenceintheperformance

of official duties. An unsatisfactory rating can be a just cause for dismissal only if it amounts to gross and
habitual neglect of duties. Poor or unsatisfactory performance of an employee does not necessarily mean
thatheisguiltyofgrossandhabitualneglectofduties.32
To ascribe gross neglect, there must be lack of or failure to exercise slight care or diligence, or the total
absence of care in the performance of duties. In other words, there is gross neglect when the employee
exhibits thoughtless disregard of consequences without exerting effort to avoid them.33 On the otherhand,
habitual neglect involves repeated failure to performdutiesforacertainperiodoftime,dependinguponthe
circumstances,andnotmerefailuretoperformdutiesinasingleorisolatedinstance.34
As abovediscussed, the Report of incompetent action/insubordination/indiscipline against respondent did

not describe the specific acts that would establish his alleged poor performance, or his want of even slight
care in the performance of his officialtasksaschiefcookforacertainperiodoftimehence,evenassuming
that respondent's performance was unsatisfactory, petitioners failed to show that his poor performance
amountedtogrossandhabitualneglectofduties.
Moreover, as correctly pointed out by the CA, no credence can be given to the emails presented by
petitioners tosupportrespondent'spurportedincompetencebecausetheseemailswereunauthenticated.In
addition,theypertainedtothepreviouscontractofrespondent,whichisunrelatedtothispresentcase.
Petitionersdidnotcomplywiththetwonoticerulerequiredindismissinganemployee.
Toamounttoavaliddismissal,anerringseafarermustbehandedawrittennoticeofthechargeagainsthim
and must be given the opportunity to explain himself unless of course there is a clear and existing danger
against the safety of, the crew or the vessel in which case notice maybedispensedwith.35Needlesstosay,
thisisnotthesituationhere.
Section 17ofthePhilippineOverseasEmploymentAdministrationStandardTermsandConditionsGoverning
the Employment of Filipino Seafarers On Board OceanGoing Vessels (Disciplinary Measures) specifically
provides that before an erring seafarer can be validly dismissed, he must be given by the master of the
vessel a written notice statingthechargeorchargesagainsthimand,thedate,timeandplaceforaformal
investigation of such charge. Thereafter, an investigation or hearing, duly documented and entered in the
ship's logbook, must be conductedtogivetheseamantheopportunitytoexplainordefendhimself.Iffound
guilty, the seaman shall be given a written notice of the penalty meted out against him. with the specific
reasons for the penalty so imposed. "Dismissal for just cause may be affected by the Master without
furnishing the seafarer with a notice of dismissal if there is a clear and existing danger tothesafetyofthe
creworthevessel."36
In this case, no hearing was conducted respecting respondent's alleged incompetence and poor
performance, and granting him opportunity to present countervailing evidence to disprove the charge
against him. There was also no showing of imminent danger to the creworthevessel,sothattherequired
notice may be dispensed with. True, asstatedelsewhere,theabovementionedReportcouldsomehowpass
asanoticeofrespondent'sdismissal.Nevertheless,asearlierdiscussed,theallegationsinthisReportdonot
permit the conclusion that respondentwasguiltyofpoorperformanceandincompetencethatwouldamount
togrossandhabitualneglectofduties.
Lastly, the quitclaim that respondent executed did not bar him from filing a complaint for illegal dismissal
against petitioners. Saidquitclaimwasinvalidbecauseitdidnotfullyorcompletelygiveorgrantrespondent
what was due him as amatteroflawandjustice.Itonlycoveredrespondent'saccruedleavecreditsandhis
3day travel pay. Such payment involved only a part or portion of theamountofmoneyactuallyandjustly
duehimunderthelawitwasnotafullandcompletesatisfactionofwhatisduehimunderthelaw.37
In view thereof, we find that the CA did not err in setting aside theDecisionoftheNLRCandinreinstating
that of the LA, which found respondent to have been illegally dismissed and entitled to his salaries for the
unexpiredportionofhisemploymentcontractandtoattorney'sfeesof10%ofthetotalaward.38
WHEREFORE, the Petition is DENIED. Accordingly, the Decision dated July 29,2011andResolutiondated
January2,2012oftheCourtofAppealsinCAG.R.SPNo.112079areA
FFIRMED.
SOORDERED.
chanroblesvirtuallawlibr
SECONDDIVISION
HANSEATICSHIPPINGPHILIPPINESINC.,REEDEREIHANSPETERSON&SOEHNEGMBH&CO.HG
AND/ORROSALINDABAUMAN,P
etitioners,v
.A
RLESBALLON,R
espondent.
DECISION
MENDOZA,J
.:
This petition forreviewoncertiorariseekstoreverseandsetasidetheNovember25,2013Decision1andthe
June 2, 2014 Resolution2 of the Court of Appeals (CA) in CAG.R. SP No. 124237, affirming the January 6,
2012 Decision3 of the National Labor Relations Commission (NLRC). The NLRC decision reversed and set
aside the April 15, 2011 Decision4 of the Labor Arbiter (LA), a case where the certification of the
companydesignated physician on the claimed disability of the seafarer was issued beyond the 120day
period.
TheFacts
Petitioner Hanseatic Shipping Philippines, Inc. (Hanseatic), a domestic corporationandthemanningagency

of its foreign principal, petitioner Reederei Hans Peterson & Soehne GMBH & Co.HG.(Reederei),employed
respondent Aries Ballon (Ballon), a seafarer by profession, sometime in November 2001. In his last
employment with Hanseatic, Ballon signed a 6month contract on May 25, 2010. After undergoing the
required preemployment medical examination (PEME), he was hired by Hanseatic as an Able Bodied (AB)
Seaman,andonMay31,2010,heembarkedon"MVWesterems."
ComplainantBallon'sPosition
While on board the vessel, Ballon felt extreme pain in his right jaw which he complained to his second
officer. While the ship was docked in Manila, he was referred to the companydesignated physician of
Shiphealth, Inc. (Shiphealth).5OnJuly12,2010,hewasdiagnosedtohave"ReactiveLymphadenopath"and
wasadvisedtocomebackforacheckupaftertwo(2)weeks,whenthevesselwouldbebackinManila.6
OnJuly23,2010,whenthevesselarrivedatthePortofKaohsiunginTaiwan,Ballonrequestedforamedical
examination as the pain in his right jaw recurred and persisted. He was brought to Kaohsiung General
HospitalwherehewasdiagnosedbyDr.ChihMsiuLoutobesufferingfrom"RightTemporoMandibularJoint
Syndrome."7Hewasadvisedtotakesomemedication.Thereafter,heboardedtheshipagain.
On July 26, 2010, Ballon disembarked from the ship in Manila. According to him, on the same day, he
reported his medical condition to Hanseatic and the latterreferredhimtoitscompanydesignatedphysician
at Shiphealth. In turn, theShiphealthphysicianreferredhimtotheManilaDoctorsHospital(MDH)wherehe
wastreatedasanoutpatient.8
On August 5, 2010, Ballon went to the Philippine General Hospital (PGH) where he was diagnosed by Dr.
RobertoPangantohave"MyofascialPainDysfunctionprobablystressrelated."9
On August 11, 2010, Dr. AnnaPamellaLagrosaElbo(Dr.Elbo)andDr.MariaGraciaK.Gutay(Dr.Gutay),

the companydesignated physicians of Hanseatic, issued a letter of authorization/consultation.10 They
diagnosed Ballon to be suffering from "MyofascialPainDysfunctionStressRelated"andreferredhiscaseto

Dr.ElmerdelaCruzoftheMDH.
On August 27, 2010, Dr. Elbo and Dr. Gutay issued Medical Report No. 311 confirming the diagnosis of the
PGH. On September 15, 2010, Dr. Elbo and Dr. Gutay issued Medical Report No. 412 recommending that
Ballon undergo 10 sessions of physical therapy for his "Myofascial Pain Dysfunction." Meanwhile,aletterof
authorization,13 dated September 14, 2010, was issued by Dr. Elbo and Dr. Gutay referring Ballon to Dr.
ArnelV.MalayaoftheMDHforrehabilitationconsult.
OnSeptember29,2010,Ballonunderwentelectrodiagnosticexaminationwhichrevealedfindingscompatible
to mild, chronic, active cervical radiculopathyinvolvingtherightC56spinalroots.OnOctober16,2010,he
was diagnosed by Dr. Roland Dominic G. Jamora (Dr. Jamora), a neurologist, to be suffering from
"MyelopathyRC56."14
Dr. Elbo and Dr. Gutay issued an undated final diagnosis15 (undated final report) stating that Ballon had
"Myofascial Pain Dysfunction probable Stress related s/p 10 sessions of Physical Therapy" and "Cervical
Myelopathy, Right C5C6 secondary to Disc Bulges C3C4, C4C5 and C5C6." They considered him
maximallymedicallyimprovedandclearedtogobacktowork,butadvisedtheintakeofpainmedications.
On November 8, 2010, Ballon signed the Certificate of Fitness for Work16 which stated that he washolding
Shiphealth and Hanseatic free from all liabilities. He, however, vehemently denied that he executed the
samewillinglyandvoluntarily.17
On November 18, 2010, Ballon filed a complaint18forpermanentdisabilitycompensation,reimbursementof

medical expenses and payment of sick wages, moral and exemplary damages before the LA against
HanseaticanditsPresident,RosalindaBauman,anditsforeignprincipal,Reederei(p
etitioners).
Subsequently, Ballonconsultedanotherphysicianregardinghiscondition.OnFebruary11,2011,Dr.Manuel
Jacinto, Jr. (Dr. Jacinto) diagnosed him to be suffering from C5C6 Radiculopathy and Myofascial Pain
Dysfunction. Dr. JacintogaveadisabilityratingofGrade1,adjudgedhimtobephysicallyunfittogobackto
workanddeclaredhimtobesufferingfromtotalandpermanentdisability.19
On March 9, 2011, Dr. Elmer dela Cruz issued a medical certificate20 clearing Ballon of any disability. On
March 10, 2011, Dr. Jamora andDr.AdrianCatbaganalsoissuedseparatemedicalcertificates21statingthat
Ballonwasclearedofhisdisability.Thesethreedoctorswerepreviouslyconsultedbyhim.
Petitioners'Position
Petitioners averred that Ballon himself requested that he be signedoff from the vessel. On July 13, 2010,
while the vessel was docked in Manila, he completed his duty and was allowed to go ashore. Whilehewas
still on land, "MV Westerems" had to seek shelter due to an impending typhoon so he was instructed to
immediately returnonboard.He,however,returnedonlyonthenextday.Themasterofthevesselrequired
himtoexplainhisdelayinreturningtothevessel.
In a handwritten letter,22 dated July 16, 2010, Ballon justified his delaybystatingthathesavedthelifeof
his nephew. He then asked the master of the vessel thatheberepatriatedtoManila.OnJuly19,2010,the
master of the vessel relayed the incident and Ballon's explanation to his superior.23Thereafter, on July 26,
2010,Ballondisembarkedfromtheship.
Petitioners insisted that it was only on August 11, 2010, or more than two weeksafterhisdisembarkation,
that Ballon sought medical consultation from their companydesignated doctors because of jaw pain. After
he was subjected to a thorough examination and extensive treatment, he was declared fit to work by the
companydesignatedphysicians.
TheLARuling
On April 15, 2011, the LA dismissed the complaint and ruled that Ballon was not entitled to any disability
benefits. The LA explained that there was no evidence that he immediately reported to the
companydesignated physician after he signedoff from the vessel on July 26, 2010. It was onlyonAugust
5, 2010 when he went to see a doctor at the PGH. Also, relying on his letter, the LA opined that he
voluntarilyrequestedforhisterminationandthathewasnotmedicallyrepatriated.
Anent Ballon's medical condition, the LA stated that although a medicalcertificateofDr.Jacintostatedthat

he was physically unfit to go back to work, no laboratory report was submitted. Thus, the LA gave more
credencetothecompanydesignatedphysicians'findingsthathewasfittogobacktohisduties.24
Aggrieved,BallonelevatedthecasetotheNLRC.
TheNLRCRuling
On January 6, 2012, the NLRC reversed and set aside the April 15, 2011 decision of the LA. It concluded
that Ballon was entitled to theamountofUS$60,000.00aspermanenttotaldisabilitybenefits,US$2,772.00
assicknessallowance,andattorney'sfeesequivalentto10%ofthemonetaryawards.
The NLRC opined that "[i]n his handwritten letter dated 16 July 2010, Ballon never mentioned that he
wished to be signed off, much more preterminate his contract with the respondents. Although it may
appear from the said letter that complainant requested toberepatriatedandthatsuchrequestwasrelayed
by the vessel's Master to respondent principal, there is no evidence that such request was granted."25
Moreover, Ballon continued to perform his duties as an AB seaman in the vessel and was even medically
examinedinTaiwanonJuly23,2010.
The NLRC didnotgivecredencetotheassertionofpetitionersthatBallononlyreportedonAugust11,2010,

or more than two weeks after his disembarkation. It found thatBallonreportedtothecompanydesignated
physician on July 26, 2010, or on the day of his repatriation, otherwise, he wouldnothavebeenexamined
by the companydesignated physicians. Significantly, the NLRC also noticed that the report released by
petitioners was Medical Report No. 3, which meant that he had reported to the companydesignated
physicianatsomeotherpreviousdates.
The NLRC did not seriously consider the undated final report of the companydesignated physicians either.
The report stated that Ballon was maximally improved butdidnotmentionwhetherhiscervicalmyelopathy
in his right C5C6 had healed. According to the NLRC, his other disorder, myofascial pain dysfunction, was
stressrelated. A perusal of his July 16, 2010 letter confirmed that hesufferedstressashewasdeprivedof
his privacy on board the ship and did not have his own cabin for resting. Thus, the NLRC held that the
medical assessment of Dr. Jacinto as an independent physician, which gave Ballon a disability rating of
Grade 1, prevailed over the incomplete medical assessment of the companydesignated physicians. The
NLRCdisposedthecaseinthiswise:
cralawlawlibrary
IN VIEW WHEREOF, the complainant's appeal is GRANTED. The assailed Decision is hereby REVERSED and
SET ASIDE. Respondents Agency and Principal are ORDERED to pay, jointly and severally, thecomplainant
the amount of US$ 60,000.00 as permanentandtotaldisabilitybenefits,US$2,772.00(US$693.00x4mos)
as sickness allowance, and attorney's fees equivalent to ten percent (10%)ofthesaidmonetaryawardsall
tobepaidintheirpesoequivalentatthetimeofpayment.
SOORDERED.26
chanrobleslaw
Petitioners filed a motion for reconsideration, but it was denied by the NLRC in a resolution,27 dated March
19,2012.
Unperturbed, petitioners filed a petition for certiorari before the CA, arguing that Ballon was able to work
againasaseamanunderanothermanningagencyonDecember24,2011.
Meanwhile, on May 23, 2012, an entry of judgment was issued by the NLRC, declaring its January6,2012
decision final and executory. In light of the entry of judgment, Ballon filed a motion to issue writ of
execution.28 On September 5,2012,awritofexecution28wasissuedandpetitionersdepositedtheawardof
damagestotheNLRCCashier.
TheCARuling
On November 25, 2013, the CA issued the assailed decision affirming the January 6, 2012 NLRC decision.
The appellate court stated that as early as July9,2010,Ballonwasexperiencingpaininhisrightjaw.Upon
medical consultation with the companydesignated physician on July 12, 2010, he was advised to have a
medical checkup after two weeks at the next port in Manila. Accordingly, two weeks from July 12, 2010
would be July 26, 2010, which was the date of his repatriation. Thus, the CA did not believe petitioners'
assertionthathebelatedlyreportedtothecompanydesignatedphysicianonAugust11,2010.
The CA likewise doubted the undated final report of petitioners' companydesignated physicians. While the
report cleared Ballon to go back to work, it also showed that he was suffering from myofascial pain
dysfunction and cervical myelopathy in his right C5C6. According to the CA, even after he had signed the
questionable certificate of fitness to work, he continued to feel pain.Correspondingly,themedicalreportof
Dr.Jacinto,datedFebruary11,2011,statedthathisillnessespersisted.
The appellate court also held that Ballon's employmentbyanothermanningagencyonDecember24,2011,

did not erase the fact that he was not able to work as a seaman for more than a year. The law did not
requirethattheillnessshouldbeincurabletobeclassifiedasapermanentandtotaldisability.
The CA, thus, found that Ballon suffered from a permanent andtotaldisabilityashewasunabletoperform
his customary work for more than 120 days. He was repatriated on July 26, 2010 and he reported to the
companydesignated physician on the same day yet, it was only on March 2011, or seven months
thereafter, when the doctors declared him fit to return to work. The decretal portion of the CA decision
states:
cralawlawlibrary
WHEREFORE,premisesconsidered,thepetitionisDENIED.TheAssailedDecisionandResolutionoftheNLRC
datedJanuary6,2012andMarch19,2012,respectively,areherebyAFFIRMED.
SOORDERED.29
chanrobleslaw
Petitionersmovedforreconsideration,buttheirmotionwasdeniedbytheCAinitsassailedresolution,dated
June2,2014.
Hence,thispresentpetition.
ISSUES
I.
WHETHER THE DECLARATION OF FITNESS TO WORK BYTHECOMPANYDESIGNATEDPHYSICIAN

AND THE SUBSEQUENT HIRING OF BALLON ASASEAFARERBYANOTHERMANNINGAGENCYARE
OVERWHELMINGPROOFTHATHEISFITTOWORK.
II.
WHETHER THE COURT OF APPEALS ERRED IN RULING THAT BALLON IS ENTITLED TO THE
MAXIMUM DISABILITY COMPENSATION ON THE BASIS OF THE 120DAY PRESUMPTIVE
DISABILITYRULE.
chanrobleslaw
Petitioners argue that after the extensive treatment and close monitoring by the companydesignated
physicians, Ballon was found fit to work on November 8, 2010. Further, he was able to enter into a
sixmonth employment contract with another manning agency, Alster International ShippingServices,Inc.,
onDecember24,2011.ThesecircumstancesindicatethathewasfittoworkforhisdutiesasanABseaman.
Petitioners aver that they followed the 120day presumptive disability rule. From the time that Ballon was
referred to Dr. Gutay, one of the companydesignated physicians, until he was declared fit to work on
November8,2010,onlyaperiodof119dayshadpassed.
Moreover, petitioners submit that the 120day presumptive disability rule had been modified by Vergarav.
Hammonia Maritime Services, Inc.30 (Vergara) which extended the same up to 240 days. It was also held
therein that disabilities should not be measured in terms of days, but by gradings. In anycase,petitioners
contendthatBallonwasdeclaredfittoworkandsuchdeclarationmustbeupheld.
In his Comment,31 Ballon countered that the CA correctly awarded permanent and total disability benefits
because he was unable to perform his customary work for more than 120 days. He enumerated several
jurisprudence which held that the loss oftheseafarer'scapacitytoobtainemploymentandincomeformore
than120daysnecessitatedthegrantofpermanentandtotaldisabilitybenefits.
In their Reply,32 petitioners insisted that the 120day presumptive disability rule should not have been
applied because he was not medically repatriated. Also, upon his disembarkation and within 3days
therefrom, Ballon did not report to the companydesignated physician and so failed to comply with the
mandatoryrequirementforpostemploymentmedicalexamination.
TheCourt'sRuling
Thepetitionisbereftofmerit.
Observanceofthe
mandatorypostemployment
medicalexamination
Before a seafarer can claim permanent and total disability benefits, he must comply with certain
requirements set forth by the 2000 Philippine Overseas Employment AdministrationStandard Employment
Contract(POEASEC).Section20(B)(3)ofPOEASECprovides:
cralawlawlibrary
B.COMPENSATIONANDBENEFITSFORINJURYORILLNESS
xxxx
3. Upon signoff 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 permanentdisabilityhasbeen
assessed by the companydesignated physician but in no case shall this period exceedonehundredtwenty
(120)days.
For this purpose, the seafarer shall submit himself to a postemployment medical examination by a
companydesignated 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
forfeitureoftherighttoclaimtheabovebenefits.

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.
xxxx
[UnderscoringSupplied]
chanrobleslaw
Notably, the postemployment medical examination has two (2) requisites: first, it is done by a
companydesignated physician, and second, within three (3) working days upon the seafarer'sreturn.33The
postemployment medical examination is obligatory in nature and may only be excused in a number of
exceptionalcircumstances.34
In Interorient Maritime Enterprises, Inc. v. Creer,35 the Court explained the raison d'etre of the mandatory
postemploymentmedicalexaminationinthiswise:
cralawlawlibrary
The rationale for the rule is that reporting the illness or injury within three days from repatriation fairly
makes it easier for a physician to determinethecauseoftheillnessorinjury.Ascertainingtherealcauseof
the illness or injury beyond the period may prove difficult. To ignore the rule might set a precedent with
negative repercussions, like opening floodgates to a limitless number of seafarers claiming disability
benefits, or causing unfairness to the employer who would have difficulty determining the cause of a
claimant's illness because of the passage of time. The employer would then have no protection against
unrelateddisabilityclaims.36
chanrobleslaw
In this case, petitioners argue that Ballon failed to conform to the mandatory postemployment medical
examination because he only reported to the companydesignated physician onAugust11,2015,oralmost
twoweeksafterhisrepatriationonJuly26,2010.
Therecords,however,beliepetitioners'claim.
As observed by the CA, Ballon felt pain in his right jaw as early as July 9, 2010 while onboardthevessel.
On July 12, 2010, when the ship was in Manila, he was medically examined by the companydesignated
physician and was diagnosed with "Reactive Lymphadenopath." He was prescribed some medications and
was advised to have a medical checkup after twoweeksatthenextportinManila.Accordingly,twoweeks
from July 12, 2010 would be July 26, 2010, which was the date of his repatriation. Meanwhile, onJuly23,
2010, while the vessel was docked in Taiwan, he was brought to KaohsiungGeneralHospitalwherehewas
diagnosedbyDr.ChihMsiuLoutobesufferingfrom"RightTemporoMandibularJointSyndrome."37
These factsindubitablydemonstratethatthepainexperiencedbyBallonwasconsistentandthatheproperly
sought medical attention while on board the ship. He was repatriated on July 26,2010andhefollowedthe
earlier adviceofthecompanydesignatedphysicianbyreportingtothemonthesameday.Moreover,theCA
correctlyruledthattheletter,datedJuly16,2010,didnotprovethathewasvoluntarilyrepatriatedbecause
petitioners neveractedonthatletter.AsmentionedbytheNLRC,thesaidletterevenexplainedthecauseof
hisstressonboardthevessel,whichwasthelackofappropriatesleepingcabins.
The letter of authorization/consultation of the companydesignated physicians, dated August 11,2010,and

the subsequent medical reports are not competent proofs that Ballon belatedly reported after his
repatriation. As correctly held by the NLRC, if he had reported late then he would havebeendisallowedby
petitioners to be entertained bytheircompanydesignatedphysicians.Likewise,MedicalReportNo.3,which
was the earliest dated medical report presented by petitioners, was obviously the third report from its
companydesignated physicians. Glaringly, petitioners could have had easily presented the firstandsecond
medical reports to refute Ballon's claim of timely medical examination, yet, they miserably failed to do so.
Hence,theevidenceofferedbyBallonremainsuncontroverted.
As Ballon was medically repatriated and was able to report to the companydesignated physicians on the
same day of his disembarkation, he is deemed to have complied with the mandatory postemployment
medicalexaminationrule.
Themedicaltreatment
exceeded120dayswithout
anyjustifiablereason
Permanent disability is the inability of a worker to perform his job for more than 120 days, regardless of
whether or not he loses the use of any part of his body. Total disability, on the other hand, means the
disablement of an employee to earn wages in the same kind of work of similar nature that he was trained
for, or accustomed to perform, or any kind of work which a person of his mentality and attainments could
do.38
The law that defines permanent and total disability of laborers isArticle192(c)(1)oftheLaborCode,which
provides:
cralawlawlibrary
ART.192.PermanentTotalDisability,xxx
(c)Thefollowingdisabilitiesshallbedeemedtotalandpermanent:
(1) Temporary total disability lasting continuously for more than one hundred twenty days, except as
otherwiseprovidedintheRules
ChanRoblesVirtualawlibrary
[EmphasisSupplied]
chanrobleslaw
Accordingly, the rule referred to Rule X, Section 2 of the Amended Rules on Employees' Compensation,
whichimplementedBookIVoftheLaborCode(I RR)states:
cralawlawlibrary
Sec. 2. Period of entitlement. (a) The income benefit shall be paid beginning on the first day of such
disability. If caused by an injury or sickness it shall not be paid longer than 120 consecutive days except
where such injury or sickness still requires medical attendance beyond 120 days but not to
exceed 240 days from onset of disability in which case benefit for temporarytotaldisabilityshallbepaid.
However, the System may declare the total and permanent status at anytime after 120daysofcontinuous
temporary total disability as may be warranted by the degree of actual loss or impairment of physical or
mentalfunctionsasdeterminedbytheSystem.
[EmphasisSupplied]
chanrobleslaw
PetitionersclaimthattheVergaracasemodifiedthe120daysguidelinebyextendingtheperiodoftreatment
of the seafarer to 240 days. Their contention, however, is inaccurate. In the recent case ofElburg
Shipmanagement Phils., Inc. v. Quiogue, Jr.39 (Elburg), the Court synthesizedtherulesonthe120dayand
240dayextendedperiodsformedicaltreatmentonpermanentandtotaldisabilityasfollows:
cralawlawlibrary
1.
Thecompanydesignatedphysicianmustissueafinalmedicalassessmentontheseafarer's
disabilitygradingwithinaperiodof120daysfromthetimetheseafarerreportedtohim
2.
3.
4.
Ifthecompanydesignatedphysicianfailstogivehisassessmentwithintheperiodof120days,
withoutanyjustifiablereason,thentheseafarer'sdisabilitybecomespermanentandtotal
5.
6.
7.
8.
9.
Ifthecompanydesignatedphysicianfailstogivehisassessmentwithintheperiodof120dayswith
asufficientjustification(e.g.seafarerrequiredfurthermedicaltreatmentorseafarerwas
uncooperative),thentheperiodofdiagnosisandtreatmentshallbeextendedto240days.The
employerhastheburdentoprovethatthecompanydesignatedphysicianhassufficientjustification
toextendtheperiodand
10. Ifthecompanydesignatedphysicianstillfailstogivehisassessmentwithintheextendedperiodof
240days,thentheseafarer'sdisabilitybecomespermanentandtotal,regardlessofany
justification.40
chanrobleslaw
Based on the foregoing, the general rule providesthatthecompanydesignatedphysicianmustissueafinal

medical assessment on the seafarer's disability grading within a period of 120 days. As an exception,
however, the period may be extended to 240 days if there is a sufficient justification such as when the
seafarerrequiredfurthermedicaltreatmentorwhentheseafarerwasuncooperative.
In the case at bench, petitioners assert that from the time that Ballon was examined by the
companydesignated physicians until hewasdeclaredfittoworkonNovember8,2010,onlyaperiodof119
dayshadlapsed.
TheCourtisnotpersuaded.
A cursory reading of the certification of fitness for work, dated November 8, 2010, reveals that it was
executed by Ballon that it does state the companydesignated physician's recommendations or disability
grading and that it basically frees Hanseatic from all its liabilities and it may be pleaded as a bar to any
action that maybetakenbyanygovernmentagency.Inotherwords,asaptlyheldbytheCA,thecertificate
offitnessforworkis,intruthandinfact,aquitclaim.
In Varorient Shipping Co., Inc. v. Flores,41

the Court ruled that the law does not consider as valid any
agreement to receive less compensation than what a worker is entitled to recover nor prevent him from
demanding benefits to which he is entitled. Quitclaims executed by the employees are, thus, commonly
frowned upon as contrary to public policy and ineffective to bar claims for the full measure oftheworker's
legal rights, considering the economic disadvantage of the employee and the inevitable pressure upon him
byfinancialnecessity.Thus,itisneverenoughtoassertthatthepartieshavevoluntarilyenteredintosucha
quitclaim. There are other requisites tobemet,suchas:(a)thattherewasnofraudordeceitonthepartof
any of the parties (b) that the consideration of the quitclaim is credible and reasonable and (c) that the
contract is not contrary to law, public order, public policy, morals or good customs,orprejudicialtoathird
personwitharightrecognizedbylaw.42
The Court is of the viewthatthecertificateoffitnessforworkinthiscasewasadefectivequitclaimbecause

it was meant to conceal its true intent, which was to release petitioners from any liability arising from
Ballon's claim. The execution cannot be tolerated as it amounts to a deceptive scheme to unconditionally
absolve employers from every liability. Likewise, no consideration was provided for the questionable
quitclaim.
Similarly, the undated medical report of the companydesignated physician cannot be considered by the
Court in determining petitioners' compliance with the 120day period precisely because it is undated. The
Court also agrees with the CAthattheundatedmedicalreportwasincompletebecauseitonlydiscussedthe
treatment of Ballon's myofascial pain dysfunction, but not his cervical myelopathy in his right C5C6.
Moreover, whiletheundatedmedicalreportstatedthathewasmaximallymedicallyimprovedandclearedto
go back to work,itstillprescribedtheintakeofpainmedications,suggestingthathewasnotyetcompletely
healed.
Consequently, on February 11, 2011, Dr. Jacinto confirmed Ballon's unceasingdisabilityanddiagnosedhim

to be continuously suffering from C5C6 radiculopathyandmyofascialpaindysfunction.Notably,amongthe
medical reports presented, it was onlyDr.Jacinto'sdiagnosiswhichgaveadefinitegradingonhisdisability.
Dr. Jacinto opined thathehadadisabilityGrade1thathewasphysicallyunfittogobacktoworkandthat
he was suffering from total and permanent disability. Thus, the CA and the NLRC cannot be faulted for
relying on the medical findings of Dr. Jacinto because it was theonlyreliableandcompletereportavailable
inthepresentcase.
The medical certificate by Dr. Elmer dela Cruz which stated that Ballon was cleared from his disability was
only issued on March 9, 2011. This was followed by the medical certificates of Dr. Jamora and Dr. Adrian
Catbagan, both issued onMarch10,2011.AllthesethreedoctorswereconsultedbyBallon.Assuitablyheld
by the CA, from the time of Ballon's medical repatriation on July 26, 2010 up to Dr. Elmer dela Cruz'
issuance of his medical report on March 9, 2011, more than seven (7) months or a total of 226 days had
passed. This is clearly beyond the authorized 120day period. For more than 120 days, Ballon was
incapacitatedtoperformhisworkasaseafarer,whichconsequentlydeprivedhimofhislivelihood.
Petitioners cannot invoke eithertheexceptional240dayperiodformedicaltreatmentbecausetheyfailedto

provide a sufficientjustificationinextendingthe120dayperiod.Infact,itwasonlyintheirmemorandum,43
filed with the CA, that petitioners raised the240dayextendedperiodforthefirsttime.Theburdenofproof
lies in the employer to establish that the companydesignated physician had a reasonable justification to
invoke the 240day period.44 Yet, not an iota of evidence was presented by petitioners to rationalize the
applicationofthesaidexceptionalperiod.
It was written in Elburg that, "[c]ertainly,thecompanydesignatedphysicianmustperformsomesignificant

act before he can invoke the exceptional 240day period under the IRR. It is only fitting that the
companydesignated physician must provide a sufficient justification to extend the original 120dayperiod.
Otherwise, under the law, the seafarer must be granted the reliefofpermanentandtotaldisabilitybenefits
duetosuchnoncompliance."
In the recent case of Carcedo v. Maine Marine Philippines, Inc.,45 the Court proclaimed that "[t]he
determination of the fitness of a seafarer for seadutyistheprovinceofthecompanydesignatedphysician,
subject to the periods prescribed by law." Should the companydesignated physician fail to give his
proper medical assessment and the seafarer'smedicalconditionremainsunresolved,thentheseafarershall
bedeemedtotallyandpermanentlydisabled.46
Here, as the companydesignated physicians failed to provide a proper medical assessment of Ballon's
disability within the authorized 120day period, then Ballon is deemed by law entitled to permanent and
totaldisabilitybenefits.
Thereemploymentof
Ballondoesnotnegatehis
permanentandtotal
disability
For their final argument, petitionerscontendthatBallonwaslateremployedbyAlsterInternationalShipping

Services,Inc.onDecember24,2011depictingthathewasindeedfittoworkandperformhisduties.
Theargumentisspecious.
Permanent total disability means an employee is disabled toearnwagesinthesameorsimilarkindofwork

thathewastrainedfororaccustomedtoperform,orinanykindofworkwhichapersonofhismentalityand
attainment can do. It does not mean a state of absolute helplessness but merely the inability to do
substantiallyallmaterialactsnecessarytotheprosecutionofagainfuloccupationwithoutseriousdiscomfort
or pain and without material injury or danger to life. In disability compensation, it is not just the injury
whichiscompensatedbuttheincapacitytowork.47AsruledinM
icronesiaResourcesv.Cantomayor.48
cralawlawlibrary
The possibility that petitioner could workasadrummeratseaagaindoesnotnegatetheclaimfor

permanenttotaldisabilitybenefits.
InthesamecaseofC
rystalShipping,Inc.,weheld:
Petitioners tried to contest the above findings [of permanent total disability] by showing that respondent
was able to work again as a chief mate in March2001.Nonetheless,thisinformationdoesnotalterthefact
that as aresultofhisillness,respondentwasunabletoworkasachiefmateforalmostthreeyears.Thelaw
does not require that the illness shouldbeincurable.Whatisimportantisthathewasunabletoperformhis

customaryworkformorethan120dayswhichconstitutespermanenttotaldisability.
[EmphasisSupplied]
chanrobleslaw
Based on the foregoing, the mere fact that adisabledseafarersubsequentlyacquiredemploymentdoesnot

ipso facto negate the grant of permanent and total disability benefits. The facts and circumstances ofeach
casemustbescrutinized.
In the case at bench, Ballon was medically repatriated on July 26, 2010. Since then, he was unable to
perform his regular employment due to his disability. He was incapacitated to accomplish his work as AB
seaman. It was only on December 24, 2011, or one year and five months later, that Ballon was able to
return to his duties as a seaman with another manning agency. As Ballon was evidently deprived of his
means of livelihood for a protracted period of time due to this disability,theCourtconcludesthatthegrant
ofpermanentandtotaldisabilitybenefitsinfavorofBallonisdefinitelywarranted.
WHEREFORE, thepetitionisDENIED.TheNovember25,2013DecisionandtheJune2,2014Resolutionof
theCourtofAppealsinCAG.R.SPNo.124237areherebyAFFIRMEDintoto.
SOORDERED.
chanro
SECONDDIVISION
BANCODEOROUNIBANK,INC.,P
etitioner,v
.G
UILLERMOC.SAGAYSAY,R
espondent.
DECISION
MENDOZA,J
.:
This is a petition for review on certiorari seeking to reverse and set aside theMarch31,2014Decision1and
the October 8, 2014Resolution2oftheCourtofAppeals(CA)inCAG.R.SPNo.126586,whichreversedand
set aside the February 29, 2012Decision3andtheJune25,2012Resolution4oftheNationalLaborRelations
Commission (NLRC) and reinstated the July 19, 2011 Decision5 of the Labor Arbiter (LA) in NLRC CaseNo.
RABII02006711.
TheFacts
On May 16, 2006, respondent Guillermo Sagaysay (Sagaysay) was hired by petitioner Banco De Oro
Unibank, Inc., (BDO) as Senior Accounting Assistant 5 in its San Jose, Nueva Ecija, branch as aresultofa
merger with United Overseas Bank (UOB), with BDO as the surviving bank. Sagaysay was previously
employed in UOB from 2004 to 2006 or for two (2) years. Prior thereto, he worked for Metropolitan Bank
andTrustCo.(M
etrobank)from1976to2004foraperiodoftwentyeight(28)years.
In a letter,6 dated January 8, 2010, BDO informed Sagaysay that, pursuant to the retirement policy of the
bank which mandated its retirement age to be sixty (60), he wouldbeformallyretiredeffectiveSeptember
1, 2010, a few daysafterhis60thbirthday.Thenormalorcompulsoryretirementageofthebankwasbased
onitsretirementplan7whichwasimplementedonJuly1,1994,Section1,ArticleVofwhichreads:
Section1.NormalRetirement
The Normal Retirement Date of each member shall be the first day of the month coincident with or next
following his sixtieth (60th) birthday. The Member's NormalRetirementBenefitshallbeasumdeterminedin
accordance with the Retirement Benefit Schedule stated in Section 4 of this Article as of his retirement
date.8
In an email,9 dated July 27, 2010, Sagaysay wrote that, although the time had come that the BDO
Retirement Program would be implemented to those reaching the age of sixty (60), he requested that his
services be extended because he had an outstanding loan and his children were still incollege.Heassured
BDOthathewashealthyandcouldstillperformhisdutiesinthebranch.BDOdeniedSagaysay'srequest.

In another email,10 datedAugust19,2010,SagaysayappealedtoBDOtoextendhisservicefor8.5months
or up to May16,2011sothathecouldrenderatleastfive(5)yearsofemploymentwhichwouldentitlehim
to 50% of his basic pay for every year of service upon his retirement. BDO denied Sagaysay's appeal and
retired him on September 1, 2010. As of his last day of work, he was earning a monthly salary of
P28,048.00.
Sagaysay then signed Release, Waiver and Quitclaim11 (quitclaim), dated October 22, 2010, for and in
consideration of P98,376.14. The quitclaim stated, among others, that in consideration of the foregoing
payment, Sagaysayreleasedanddischargedthebank,itsaffiliatesanditssubsidiariesfromanyaction,suit,
claimordemandinconnectionwithhisemployment.
On January 10, 2011, Sagaysay filed a complaint12 for illegal dismissal with prayer for reinstatement and
payment of backwages, moral damages, exemplary damages, and attorney's fee against BDO before the
Labor Arbiter (LA). He claimed that despite his appeal, BDOcompulsoryretiredhimonSeptember1,2010.
As a result, he and his family suffered damages in the amount of P2,225,403.00 which he would have
receivedifhewasmadetoretireattheageofsixtyfive(65).
For its part, BDO countered that after thebankdeniedSagaysay'srequestforextensionofservices,hewas

paid the amount of P98,376.14 representing the full and final settlement of his compensation, allowances,
benefitsandotheremoluments.BDOstressedthathewasnotdismissedbutwasretiredfromtheservice.
TheLARuling
In adecision,datedJuly19,2011,theLAruledthatSagaysaywasillegallydismissedbecausehewasforced
to avail of an optional retirementattheageofsixty(60)whichwascontrarytotheprovisionsofArticle287
oftheLaborCode.13TheLAopinedthathewasterminatedonthebasisofaprovisioninaretirementplanto
which he did not freely assent. BDO took advantage of his predicament and made him sign a quitclaim in
exchangeforasmallconsideration.ThedecretalportionoftheLAdecisionreads:
WHEREFORE, in view of the foregoing, judgmentisherebyrendereddeclaringthatcomplainantGUILLERMO
C. SAGAYSAY was illegally dismissed from work. Hence, respondent BDO UNIBANK, INC. is ordered to
REINSTATE complainant to his former position as Senior Accounting Assistant 5 without loss of seniority
rights and privileges and to pay him backwages in the sum of P280,480.00 as of July 7, 2011, plus ten
percent(10%)thereofasattorney'sfeesoratotalofP308,528.00.
The reinstatement aspect is immediately executory, even pending appeal. Respondent isherebyorderedto
showproofthatitcompliedwiththereinstatementofcomplainantwithinten(10)calendardaysfromreceipt
hereof.
Respondents[are]alsoorderedtopaycomplainantP50,000.00eachasmoralandexemplarydamages.
SOORDERED.14
Aggrieved,BDOappealedtotheNLRCarguingchieflythatSagaysayfreelyassentedtoitsretirementplan.
TheNLRCRuling
On February 29,2012,theNLRCreversedandsetasidetherulingoftheLA.TheNLRCexplainedthatBDO's
retirement plan, which mandated a normal or compulsory retirement date at the age of sixty (60), was
effective as early as June 1, 1994. The plan was renamed Banco de Oro Multiemployer Retirement Planon
July 1,2004,butthecompulsoryretirementageofsixty(60)waspreserved.WhenSagaysaywasemployed
on May 16, 2006, the retirement plan was already in full force and effect. Thus, the NLRC concluded that
whenheacceptedhisemploymentwithBDO,heassentedtotheprovisionsoftheretirementplan.
The NLRC found it difficult to believe that Sagaysay started his employment with BDOwithoutfamiliarizing
himself with the bank's retirement policy considering that he had previously retired from two (2) other
banks. Further, the NLRC stated that a more concrete proofofhisacceptanceofBDO'sretirementplanwas
his execution of a quitclaim where he declared that he had no cause of action against the bank and its
agents.ThedispositiveportionoftheNLRCdecisionstates:
WHEREFORE, the appeal is GRANTED. The Decision of Labor ArbiterMa.LourdesR.BaricauadatedJuly19,
2011isREVERSEDandSETASIDEandanewoneenteredDISMISSINGthecomplaint.
SOORDERED.15
Sagaysay filed a motion for reconsideration, but itwasdeniedbytheNLRCinitsResolution,datedJune25,
2012.
Undaunted, Sagaysay filed a petition for certiorari16 before the CA contending that it was neither stated in
his employment contract nor stipulated in the collective bargaining agreement (CBA) between BDO and its
employeesthatthecompulsoryretirementagewassixty(60)yearsold.
TheCARuling
On March 31, 2014, the CA rendered the assailed decision which reversed the NLRC ruling. The appellate
court explained that while the cases of Pantranco North Express, Inc., v. NLRC17 and Philippine Airlines v.
Airline Pilots Association of the Philippines18 affirmed that the employer may provide an earlier retirement
age, the retirement plans therein were the result of negotiations and agreement between employer and
employee. The CA continued that, in this case, the retirement plan was notaresultofamutualagreement
of employer and employee. This was affirmed by the BDO Memorandum,19dated June 1, 2009, statingthat
theretirementplanwastobeimplementedinthemergedbank.CitingCercadov.UNIPROMInc.20(Cercado),
the CA ruled that a retirement plan with no voluntary acquiescence on the part of the employee was
ineffective.
The CA stated that Sagaysay was forced to participate in the retirement plan. Equally, the quitclaim he
executed was not given credence because his subsequent filing of a complaint for illegal dismissal
manifested that he had no intention to relinquish his employment. Nonetheless, the CAdeletedtheawards
ofmoralandexemplarydamagesforlackofbasis.Theappellatecourtdisposedthecaseinthiswise:
WHEREFORE, the petitionisGRANTED.TheDecisiondatedFebruary29,2012andtheResolutiondatedJune
25, 2012 of the National Labor Relations Commission are REVERSED and SET ASIDE. The July 19, 2011
Decision of the Labor Arbiter is REINSTATED, with MODIFICATION that the awards ofmoralandexemplary
damagesareDELETEDforlackofbasis.
SOORDERED.21
BDO moved for reconsideration, but the motion was denied by the CA in the assailed resolution, dated
October8,2014.
Hence,thispetition.
Theissuespresentedcanbesummarizedasfollows:
I
WHETHER THE RETIREMENT PLAN IS VALID AND EFFECTIVE AND, CONSEQUENTLY, THE
MANDATORYRETIREMENTAGEOF60YEARSOLDISALSOBINDING.
II
WHETHER THE EXECUTION OF A RELEASE, WAIVER AND QUITCLAIM BY RESPONDENT IS

VALID.
BDO principally argues that theretirementplanhasbeenvalidandeffectivesinceJune1,1994thathaving

been in place for such a long period, the retirement plan is deemed to have been written into Sagaysay's
employment contract, executed on May 16,2006thatheevenaskedforanextensiontobecomeeligibleto
avail of the benefits under the same retirementplanandthatthe20052010CBAstated,"[t]heBankshall
continuetograntretirementpay,"showingthattheCBAlikewiserecognizedtheexistingretirementplan.
BDO also contends that the CA erred in citing Cercado because in that case, the retirement plan was
executed only after the employment of petitioner therein. Moreover, Sagaysay, as a veteran banker, fully
knewtheeffectsoftherelease,waiverandquitclaimwhenhesignedit.
In his Comment,22 Sagaysay countered that he was retired by BDO against his will that there was no
provision in anyCBAthatemployeeswhoreachedsixty(60)yearsofagecouldbecompulsorilyretiredthat
there was no agreement either between Sagaysay and BDO that he would be retired upon reaching sixty
(60) and that the quitclaim was invalid because BDO took undue advantage of his situation and dire
financialproblemstoobtainhissignaturetherein.
In its Reply,23 BDO reiterated that the retirement plan was not forced upon Sagaysayandthatatthetime
he was employed by BDO in 2006, he had every opportunitytorefuseemploymentifhedisagreedwiththe
retirementpolicyofthebank.
chanrobleslaw
TheCourt'sRuling
TheCourtfindsthepetitionmeritorious.
The petition essentially centers on whether the June 1, 1994 retirement plan is valid and effective against
Sagaysay. To resolve this issue, a review of the relevant laws and jurisprudence regarding the compulsory
retirementageiswarranted.
Lawsandjurisprudenceonearlyageofretirement
Retirement is the result of a bilateral act of the parties, a voluntary agreement between the employer and
the employee whereby the latter, after reaching a certain age, agrees to sever hisorheremploymentwith
the former.24 Article 287oftheLaborCodeistheprimaryprovisionwhichgovernstheageofretirementand
states:
Art.287.Retirement.xxx
In the absence of a retirement planoragreementprovidingforretirementbenefitsofemployees

in the establishment, an employee upon reaching the age of sixty (60) years or more, but not beyond
sixtyfive (65) years which is hereby declared the compulsory retirement age, who has served atleastfive
(5) years in the said establishment, may retire and shallbeentitledtoretirementpayequivalenttoatleast
onehalf (1/2) month salary for every year of service, a fractionofatleastsix(6)monthsbeingconsidered
asonewholeyear.
[EmphasisSupplied]
Doubtless, under this provision, the retirement age is primarily determined by the existing agreement or
employment contract. Only in the absence of such an agreement shall the retirement age be fixed by law,
which provides for a compulsory retirement ageat65years,whiletheminimumageforoptionalretirement
issetat60years.25
cralawred
Retirement plans allowing employers to retire employees who have not yet reached the compulsory
retirement age of 65 years are not per se repugnanttotheconstitutionalguarantyofsecurityoftenure.By
its express language, the Labor Code permits employersandemployeestofixtheapplicableretirementage
at 60 years or below, provided that the employees' retirement benefits under any CBA and other
agreementsshallnotbelessthanthoseprovidedtherein.26
Jurisprudence is replete with cases discussing the employer's prerogative to lower the compulsory
retirement age subject to the consent of its employees. In Pantranco North Express, Inc. v. NLRC,27
the
Court upheld the retirement of the private respondent therein pursuant to a CBA allowing the employer to
compulsorily retire employeesuponcompleting25yearsofservicetothecompany.InterpretingArticle287,
the Court held that the Labor Code permits employers and employees to fix the applicable retirement age
lower than 60 years of age. The Court alsostressedthat"[p]rovidinginaCBAforcompulsoryretirementof
employees after twentyfive (25) years of serviceislegalandenforceablesolongasthepartiesagreetobe
governedbysuchCBA."28
In Progressive Development Corporation v. NLRC,29

the retirement plan, which allowed the employer to
retire employees who had rendered more than20yearsofservice,wasdeclaredvalidandenforceableeven
though it was notembodiedinaCBA.Inthatcase,theCourtconcludedthattheemployees,whowerehired
before the execution of the employer's retirement plan on April 1, 1980, were bound by it because the
retirementplanwasexpresslymadeknownandacceptedbythem.
In contrast, the case of Jaculbe v. Silliman University30 did not allow the application of a lower retirement
age. The petitioner in the said case was employed sometime in 1958 while the retirement plan, which
automatically retired its members upon reaching the age of 65 orafter35yearsofuninterruptedserviceto
the university, came into being in 1970. The said retirement plan wasnotappliedtothepetitionerbecause
therewasnoagreementtowhichthelatterassented.
Similarly, the case of Cercado, which was heavily relied on by the CA, involved a noncontributory
retirement plan which providedthatanyemployeewithtwenty(20)yearsofservice,regardlessofage,may
be retired at his option or at the option of the company. The said plan was adopted on April1,1980while
the petitioner therein was employed earlier on December 15, 1978. When respondentUNIPROMretiredthe
petitioner pursuant to its retirement plan, the latter objected stating that she did not consent to it. The
Court ruled in favor of the petitioner because there was no voluntary acquiescence to UNIPROM's early
retirementageoptiononherpart.Itelucidatedthat:
Acceptance by the employees of an early retirement age option must be explicit, voluntary, free, and
uncompelled. While an employer may unilaterally retire an employee earlier than the legally permissible
ages under the Labor Code, this prerogative must be exercised pursuant to a mutually instituted early
retirement plan. In other words, onlytheimplementationandexecutionoftheoptionmaybeunilateral,but
not the adoption andinstitutionoftheretirementplancontainingsuchoption.Fortheoptiontobevalid,the
retirement plan containing it must be voluntarily assented to by the employees or at least byamajorityof
themthroughabargainingrepresentative.31
On the other hand, in Obusan v. Philippine National Bank32 (Obusan), the petitionertherein,whowashired
by PNB in 1979, was deemed covered by its retirement plan adopted on December 22, 2000. It mandated
that the employee should retire when he attained the age of sixty (60), regardless of hislengthofservice,
or when he had rendered thirty (30) years of service, regardless of age, whichever of the said conditions
came first. Considering that on February21,2001,PNBhadinformedallofitsofficersandemployeesabout
the said retirement plan, the said plan was then registered with the B1R and was later recognized by the
Philnabank Employees Association in its CBA. Despite the proper dissemination of information, no one
questioned the retirement plan. Hence, the Court deemed it valid and effective as due notice of the
employer'sdecisiontoretireanemployeewasadequatelyprovided.
A scrutiny of the abovediscussed cases reveals that the retirement plan was adopted after the employees
were hired by their employer. This is in stark contrast with the case at bench wherein the adoption of the
retirement plan came before the hiring of Sagaysay. Thus, the present petition portrays a unique
predicament on whether a retirement plan adopted before the employment of an employee is deemed
bindingonthelatter.
Sagaysaywassufficientlyinformedoftheretirementplan

After a judicious study of records, the Court is convinced that Sagaysay was undeniably informed and had
consented to the retirement plan of BDO before his compulsory retirementonSeptember1,2010basedon
thefollowing:
First, the retirement plan was established as early as July 1, 1994.Thepurposeoftheplanwastocreatea

BDO employee's retirement trust fund which would provide for retirement and other benefits for all
employees of the bank. It was also intended to support the funding of the benefits indicated in the CBA.33
The retirement plan provided several retirement options such as normal retirement, early retirement, late
retirement, and disability retirement. Normal orcompulsoryretirementwasmandatedatthefirstdayofthe
month following the employee's sixtieth (60th) birthday, while early or optional retirement age was pegged
at the age of fifty (50) withatleast10yearsofcreditedservice.Italsodiscussedthedifferentbenefitsthat
anemployeecouldbeentitledtouponretirement,resignationorseparation.
It was renamed on June 1, 2004, but its provision on the normalretirementagewasretained.Twelve(12)

years after the adoption of the retirement plan, Sagaysay was employed by the bank. From its inception
until his hiring, no employee had earnestly questioned the retirement plan. By then, it wasunquestionably
anestablishedpolicywithintheBDO,appliedtoeachandeveryworkerofthebank.
Second, by accepting the employment offer of BDO, Sagaysay was deemedtohaveassentedtoallexisting

rules, regulations and policy of the bank, includingtheretirementplan.Likewise,heconsentedtotheCBA34
between BDO and the National Union of BankEmployeesBancoDeOroChapter.Section2ofArticleXVIIof
the CBA provides that "[t]he Bank shall continue to grant retirement/gratuity pay xxx." Notably, both the
retirement plan and the CBA recognize that the bank has a continued and existing practice of grantingthe
retirementpaytoitsemployees.
Third, on June 1, 2009, BDO issued a memorandum35 regarding the implementation of its retirement
program,reiteratingthatthenormalretirementdatewasthefirstdayofthemonthfollowingtheemployee's
sixtieth (60th) birthday. Similar to the case of Obusan, the memorandum was addressed toall employees
and officers. By that time, Sagaysaywasalreadyanemployeeandhedidnotdenybeinginformedofsuch
memorandum.
Forfouryears,fromthetimehewasemployeduntilhisretirement,andhavingactualknowledgeoftheBDO
retirement plan, Sagaysay had every opportunity to question the same, if indeed he knew it would not be
beneficial to him. Yet, he did not express his dissent. As observed in Obusan, "[t]his deafening silence
eloquentlyspeaksof[his]lackofdisagreementwithitsprovisions."36
Lastly, perhaps the most telling detailindicativeofSagaysay'sassenttotheretirementplanwashisemails

to the bank, dated July 27, 2010 and August 19, 2010. In these communications, albeit having been
informedofhisupcomingretirement,Sagaysayneveropposedthecompany'scompulsoryageofretirement.
In fact, he recognized that "the time has come that BDO Retirement Programwillbeimplementedtothose
reachingtheageofsixty(60)."37
Glaringly, he even requested that his services be extended, at least until May 16, 2011, so that he could
render five (5) years of service.38 Sagaysay's requestreflectsthelateretirementoptionwhereanemployee
may be allowed by the bank to continue to work on a yearly extension basis beyondhisnormalretirement
date.39 The late retirement option is embodied in the same retirement plan, ofwhich,ironically,heclaimed
to be unaware. With such inconsistent stance, the Court can only conclude that Sagaysay was indeed
notified and had accepted the provisions of the retirement plan. It was only when his request for late
retirementwasdeniedthathesuddenlybecameoblivioustothesaidplan.
ThecaseofCercadoisnotapplicable
The case of Cercadoisnotapplicableinthepresentcaseasithasadifferentfactualmilieu.First,inCercado,

the petitioner was employed on December 15, 1978, which was almosttwo(2)yearsbeforetheadoptionof
the employer's retirement plan on April 1, 1980. The Court explained that, logically, her employment
contractdidnotincludetheretirementplan,muchlesstheearlyretirementageoptioncontainedtherein.
In the case at bench, Sagaysay was employed on May 16, 2006, which was almost twelve (12) yearsafter
the adoption of retirement plan on July 1, 1994. Accordingly, fromthemomentthatSagaysayacceptedhis
employment, he was deemed to haveconsentedtoallexistingcompanyrulesandregulations,includingthe
policyontheearlyageretirement.
Second, in Cercado, the retirement plan was implemented when the petitioner therein was already
employed. The Court held that because of the automatic application of the retirement plan to the current
employees without their voluntary conformity, "[p]etitioner was forced to participate in the plan, and the
only way she could have rejected the same was to resign or lose her job." Necessarily, it undermined the
petitioner'ssecurityoftenure.
The ruling inCercadocannotbeappliedtothiscaseasSagaysaywasnotyetemployedwhentheretirement

plan was adopted. When he was offered employment by the bank in 2006, the established retirementplan
was not forced upon him. Sagaysay had the free will whether toundertaketheemploymentandacceptthe
bank's corresponding policies or look for a jobelsewhere.Corollarily,nosecurityoftenurehadyetattached
atthatspecificmoment.
In other words, the evil sought to be prevented in Cercardo doesnotexistinthepresentcaseasSagaysay

wasgiventheopportunitytoacceptorrejectthelowerretirementagepolicy.
Third,thepetitionerinCercadorefusedtheearlyretirementpackageintheamountofP171,982.90fromher
employer. From the very beginning,shewasadamantthatshedidnotconsenttotheretirementplanofher
employer.
The opposite cam be observed in the present case. It has been uncontroverted that Sagaysay earlier
acknowledged the retirement program ofBDOandevenrequestedforanextensionofservice.Moreover,he
signed a quitclaim for and in consideration of P98,376.14 which discharged the bank, its affiliates and its
subsidiariesfromanyaction,suit,claimordemandinconnectionwithhisemployment.
Generally, a quitclaim is frowned upon. As an exception, a quitclaim, with clear andunambiguouscontents

andexecutedforavalidconsiderationreceivedinfullbytheemployeewhosignedthesame,cannotbelater
invalidated because its signatory claims that hewaspressuredintosigningitonaccountofhisdirefinancial
need. When it is shown that the person executing the waiver did so voluntarily, with full understanding of
what he was doing, and the consideration for the quitclaim was credible and reasonable, the transaction
mustberecognizedasavalidandbindingundertaking.40
Here, the Courtisoftheviewthatthequitclaimwasvalidlyexecuted.Fortheconsiderationofthequitclaim,

Sagaysay received the amount of P98,376.14. As admitted by him, the amount was based on aliquidation
data sheet which showed the computation of benefits and emoluments of a rank and file employee.41
Understandably, the amount given would not reflect the retirement benefits he demanded because he did
not qualify under the retirement plan of BDO for he had not completed five (5) years of service upon his
compulsoryretirement.Thus,theconsiderationprovidedinthequitclaimwasjustifiedandreasonable.
Further, it has been duly proven that Sagaysay was a seasoned banker, spending thirtyfour (34) years of
his career in different banking establishments. He was learned in his profession and even experienced
separationfromhispreviousemployments.Consequently,itcannotbesaidthathewasnaiveindealingwith
his employer and that he failed to exercise his free and voluntary will when faced with the documents
relating to his retirement. Not an iota of evidence showed thatBDOexertedundueinfluenceagainsthimto
acquirehisconsent.Infine,absentanydoubttothecontrary,hisquitclaimmuststand.

Extensionofservice
Finally, on Sagaysay's requesttoextendhislengthofservicedespitethecompulsoryretirementageofsixty

(60) which was denied by BDO and eventually sparked the present controversy, the Court holds that BDO
had the management prerogative to deny the extension of service. It is important to state that upon the
compulsory retirement of an employee or official in the public or privateservicehisemploymentisdeemed
terminated. The matter of extension of service of such employee or official is addressed to the sound
discretionoftheemployer.Itisaprivilegeonlytheemployercangrant.42
Although theCourthas,moreoftenthannot,beeninclinedtowardstheplightoftheworkersandhasupheld
their cause in their conflicts with the employers, such inclinationhasnotblindedittotherulethatjusticeis
in every case for the deserving, to be dispensed in the light of theestablishedfactsandapplicablelawand
doctrine.43
WHEREFORE, the petition is GRANTED. The March 31, 2014 Decision andtheOctober8,2014Resolution
of the Court of Appeals in CAG.R. SP No. 126586 are REVERSED and SET ASIDE, and the February 29,
2012 Decision and the June 25, 2012 Resolution of the National Labor Relations Commission in NLRC LAC
No.0800206911areR
EINSTATED.
SOORDERED.
chan
THIRDDIVISION
G.R.No.186114,October07,2015
CHEVRON(PHILS.),INC.,P
etitioner,v
.V
ITALIANOCGALIT,SJSANDSONSCONSTRUCTION
CORPORATIONANDMR.REYNALDOSALOMON,R
espondents.
DECISION
PERALTAJ.:*
Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court seeking the
reversal and setting aside of the Decision1 and Resolution2oftheCourtofAppeals(CA),datedDecember8,
2008 and January 20, 2009, respectively,inCAG.R.SPNo.104713.TheassailedCADecisionreversedand
set aside the Decision dated January 31,2008andtheResolutiondatedMay27,2008oftheNationalLabor
Relations Commission (NLRC), Second Division in NLRC NCR (Case No.) 00030239906 (CA No.
05146807),whilethequestionedCAResolutiondeniedpetitioner'sMotionforReconsideration.
Thefactualandproceduralantecedentsofthecaseareasfollows:
On March 20, 2006, herein respondent (Galit) filed against Caltex Philippines, Inc., now Chevron (Phils.),
Inc., SJS and Sons Construction Corporation (SJS), and its president, Reynaldo Salomon (Salomon),3 a
Complaint4 for illegal dismissal, underpayment/nonpayment of 13th month pay, separation pay and
emergency cost of living allowance. The Complaint was filed with the NLRC National Capital Region, North
SectorBranchinQuezonCity.
In his Position Paper,5 Galit alleged that: he is a regular and permanent employee of Chevron since 1982,
having been assigned at the company's Pandacan depotheisan"allaroundemployee"whosejobconsists
of cleaning the premises of the depot, changing malfunctioning oil gaskets, transferring oil fromcontainers
and other tasks that management would assign to him in the performance of his duties, he was directly
under the control and supervision of Chevron supervisors on January 15, 2005, he was verbally informed
that his employment is terminated but waspromisedthathewillbereinstatedsoonforseveralmonths,he
followeduphisreinstatementbutwasnotgivenbackhisjob.
In its Position Paper,6 SJS claimed that: it is a company whichwasestablishedin1993andwasengagedin

the business of providingmanpowertoitsclientsona"perproject/contract"basisGalitwashiredbySJSin
1993 asaprojectemployeeandwasassignedtoChevron,asajanitor,basedonacontractbetweenthetwo
companies contrary to Galit's allegation, he started working for SJS only in 1993 the manpower contract
between SJS and Chevron eventually ended on November 30, 2004 which resulted in the severance of
Galit's employment SJS finally closed its business operations in December 2004 it retired from doing
businessinManilaonJanuary21,2005GalitwaspaidseparationpayofP11,000.00.
On the other hand, petitioner contended in its Position Paper with Motion to Dismiss7 that: it entered into
two (2) contracts forjanitorial services with SJS from May1,2001toApril30,2003andfromJune1,2003
to June 1, 2004 under these contracts, SJSundertookto"assignsuchnumberofitsemployees,uponprior
.agreement with [petitioner], as would be sufficient to fully and effectively render the work and services
undertaken" and to "supply the equipment, tools and materials, which shall, by all means,beeffectiveand
efficient, at its own expense,necessaryfortheperformance"ofjanitorialservicesGalit,whowasemployed
by SJS, was assigned to petitioner's Pandacan depot as a janitor his wages and all employment benefits
were paid by SJS he was subject to the supervision, discipline and controlofSJSonNovember30,2004,
the extended contract between petitioner and SJS expired subsequently, a new contract for janitorial
services was awarded by petitioner to another independent contractor petitioner was surprised that Galit
filed an action impleading it despite several conferences, thepartieswerenotabletoarriveatanamicable
settlement.
On October 31, 2006, the Labor Arbiter (LA) assigned to the case rendered a Decision,8 the dispositive
portionofwhichreadsasfollows:
cralawlawlibrary
WHEREFORE, judgment is hereby rendered DISMISSINGtheComplaintagainstrespondentChevronforlack

of jurisdiction, and against respondents SJS and Reynaldo Salomon for lack of merit. For equity and
compassionate consideration, however, respondent SJS is hereby ordered to pay the complainant a
separation pay at the rate of a halfmonth salary for every year of service that the complainant had with
respondentSJS.
SOORDERED.9
chanrobleslaw
The LA found that SJS is a legitimate contractor and that it was Galit's employer, not petitioner. The LA
dismissed Galit's complaint for illegal dismissal against petitioner for lack of jurisdiction on the groundthat
there was no employeremployee relationship between petitioner and Galit. The LA likewise dismissed the
complaint against SJS and Salomon forlackofmeritonthebasisofhisfindingthatGalit'semploymentwith
SJSsimplyexpiredasaresultofthecompletionoftheprojectforwhichhewasengaged.
Aggrieved,hereinrespondentfiledanappeal10withtheNLRC.
OnJanuary31,2008,theNLRCrendereditsDecision11anddisposedasfollows:
cralawlawlibrary
WHEREFORE,premisesconsidered,thedecisionunderreviewishereby,MODIFIED.
Respondent SJS and Sons Construction Corporation is ordered to pay the complainant, severance
compensation, at the rate of one (1) month salary for every year of service. In all other respects, the
appealeddecisionsostandsasAFFIRMED.
SOORDERED.12
chanrobleslaw
The NLRC affirmed the findings of the LA that SJS was a legitimate job contractor and that it was Galit's
employer. However,"the NLRC found that Gal it was a regular, and not a project employee, of SJS, whose
employmentwaseffectivelyterminatedwhenSJSceasedtooperate.
Herein respondent tiled a Motion for Reconsideration,13 but the NLRC denied itinitsResolution14datedMay
27,2008.
Respondentthenfiledapetitionforc
ertiorariwiththeCAassailingtheaboveNLRCDecisionandResolution.

On December 8, 2008, the CA promulgated its assailed Decision, the dispositive portion of which reads,
thus:
cralawlawlibrary
WHEREFORE, premises considered, the petition is GRANTED. The Decision dated January 31, 2008 and
the Resolution dated May 27, 2008 of the NLRC, Second Division in NLRC NCR [Cast No.]00030239906
(CA No. 05146807) are REVERSED and SET ASIDE. Judgment is rendered declaringprivaterespondent
Chevron Phils,guiltyofillegaldismissalandorderingpetitionerGalit'sreinstatementwithoutlossofseniority
rights and other privileges and payment of his full backwages, inclusive ofallowancesandtootherbenefits
or their monetary equivalents computed from the time compensation was withheld up tothetimeofactual
reinstatement. Private respondent Chevron Phils, is also hereby ordered to pay 10% of the amount due
petitionerGalitasattorney'sfees.
SOORDERED.15
chanrobleslaw
Contrary to the findings of the LA and the NLRC, the CA held that SJS was a laboronly contractor, that
petitionerisGalit'sactualemployerandthatthelatterwasunjustlydismissedfromhisemployment.
Herein petitioner filed a motion for reconsideration, but the CA denieditinitsResolutiondatedJanuary20,

2009.
Hence,thepresentpetitionforreviewonc
ertiorarib
asedonthefollowinggrounds:
cralawlawlibrary
I.
WITH ALL DUE RESPECT, THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN DECLARING THAT
THEDISMISSALOFRESPONDENTWASILLEGALCONSIDERINGTHAT:
A. THE FINDINGS OF FACT OF TFIE LABOR ARBITER A QUO AND THE NATIONAL LABOR RELATIONS
COMMISSIONAREALREADYBINDINGUPONTHEHONORABLECOURTOFAPPEALS.
B.THEREISNOEMPLOYEREMPLOYEERELATIONSHIPBETWEENTHECOMPANYANDRESPONDENTHEREIN.
C.PETITIONERSJSISA.LEGITIMATEINDEPENDENTCONTRACTOR.
II.
CONSIDERING THAT THERE IS NO EMPLOYEREMPLOYEE RELATIONSHIP BETWEEN THE COMPANY AND

RESPONDENT HEREIN, THE HONORABLE COURT OF APPEALS' AWARD OF REINSTATEMENT, BACKWAGES,
ANDATTORNEY'SFEESAGAINSTTHECOMPANYHASNOLEGALBASIS.16
chanrobleslaw
On September 19, 2012, this Court issued a Resolution directing petitioner to implead SJS as
partyrespondentonthegroundthatitisanindispensablepartywithoutwhomnofinaldeterminationcanbe
hadofthiscase.
In a Motion18 dated November 21, 2012, petitioner manifested its compliance with this Court's September
19,2012Resolution.Inaddition,itprayedthatSalomonbealsoimpleadedaspartyrespondent
Acting on petitioner's above Motion, this Court issued another Resolution19 on June 19, 2013, stating that
SJS and Salomon are impleaded as partiesrespondents and are required to comment on the petition for
reviewonc
ertiorari.
However, despite due notice sent to SJS and Salomon at their last known addresses, copies of the above
Resolution were returned unserved. Hence, on October 20, 2014, the Court, acting on Galit'spleaforearly
resolution of the case, promulgated a Resolution20 resolving to dispense with thefilingbySJSandSalomon
oftheirrespectivecomments.
17
TheCourtwill,thus,proceedtoresolvetheinstantpetition.
At theoutset,theCourtnotesthatthefirstgroundraisedbypetitionerconsistsoffactualissues.Itissettled
that this Court is not a trier of facts, and this applies with greater force in labor cases.21Corollary thereto,
this Court has held in a number of cases that factual findings of administrative or quasijudicial bodies,
which are deemed to have acquired expertise in matters within their respective jurisdictions, are generally
accorded not only respect but even finality, and bind the Court when supported by substantial evidence.22
However, it is equally settled that the.foregoing principles admit of certain exceptions, to wit: (1) the
findings are grounded entirely on speculation,surmisesorconjectures(2)theinferencemadeismanifestly
mistaken, absurd or impossible (3) there is grave abuse of discretion (4) the judgment is based on a
misapprehension of facts (5) the findings of fact are conflicting (6) in making its findings, the Court of
Appeals went beyond the issues of the case, or its findingsarecontrarytotheadmissionsofbothappellant
and appellee (7) the findings are contrary to those of the trial court (8) the findings are conclusions
without citation of specific evidence on which they are based (9) the facts set forthinthepetition,aswell
as in petitioners main and reply briefs, are not disputed by respondent (10) the findings of fact are
premised on the supposed absence of evidence and contradicted by the evidence on record and (11) the
Court of Appeals manifestly overlooked certain relevant facts not disputed bytheparties,which,ifproperly
considered, would justify a different conclusion.23 In the instant case, the Court gives due course to the
instant petition considering that the findings of fact and conclusions of law of the LA and the NLRC differ
fromthoseoftheCA.
Thus, the primordial question that confronts the Court is whether there existed an employeremployee
relationship between petitionerandGalit,andwhethertheformerisliabletothelatterfortheterminationof
his employment. Corollary to this, is the issueofwhetherornotSJSisanindependentcontractororalabor
onlycontractor.
To ascertain the existence of an employeremployee relationship, jurisprudence has invariably adhered to

the fourfold test, towit:(1)theselectionandengagementoftheemployee(2)thepaymentofwages(3)
the power of dismissal and (4) the power to control the employee's conduct, or the socalled "control
test."24Ofthesefour,thelastoneisthemostimportant.25Thesocalled"controltest"iscommonlyregarded
as the most crucial and determinative indicator of the presence or absence of an employeremployee
relationship.26 Under the control test, an employeremployee relationshipexistswherethepersonforwhom
the services are performed reserves the righttocontrolnotonlytheendachieved,butalsothemannerand
meanstobeusedinreachingthatend.27
In the instant case, the true nature of Galit's employment is evident from the Job Contract between
petitionerandSJS,pertinentportionsofwhicharereproducedhereunder:
cralawlawlibrary
xxxx
1.1TheCONTRACTOR[SJS]shallprovidethefollowingspecificservicestotheCOMPANY[petitioner]:
xxxx
1.Scoopingofslopofoilwaterseparator
2.Cleaningoftruckparkingarea/drumstorageareaandpier
xxxx
4.1 In the fulfillment of its obligations to the COMPANY, the CONTRACTOR shallselectandhireitsworkers.
The CONTRACTOR alone shall beresponsibleforthepaymentoftheirwagesandotheremploymentbenefits
and likewise for the safeguarding of their health and safety in accordance with existing laws and
regulations. Likewise, the CONTRACTOR shall be responsible for the discipline and/or dismissal of these
workers.
4.2 The CONTRACTOR shall retain the right to control the manner and the means of performing the work,
withtheCOMPANYhavingthecontrolordirectiononlyastotheresultstobeaccomplished.
xxxx
4.4 It is understood that, for the above reasons, theseworkersshallbeconsideredastheemployeesofthe

CONTRACTOR. Under no circumstances, shall these workers be deemed directly or indirectly as the
employeesoftheCOMPANY.
xxxx
5.1 The CONTRACTOR shall maintain efficient and effective discipline over any and all employees it may
utilizeinperformingitsobligationsunderthisCONTRACT,xxx
5.2 The COMPANY shall in no manner be answerable or accountable for any incident or injury which may
occur to any worker or personnel of .the CONTRACTOR during the time and consequent upon the
performance of the work andservicesunderthisAgreement,norforanyinjury,lossordamagearisingfrom
fault, negligence or carelessness of the CONTRACTOR or anyone of its workers toanypersonorpersonsor
to his or their property and the CONTRACTOR covenantsandagreestoassume,asitdoesherebyassume,
all liabilities for any such injury,lossordamageandtomaketheCOMPANYfreeandblamelesstherefrom,x
xx
5.3. The CONTRACTOR shall be responsibleforanylossordamagethatmaybeincurredupontheproducts,

properties and installations of the COMPANY during the effectivity of this Contract which are due to the
unreasonableornegligentactoftheCONTRACTOR,itsagentsoritsworkers.
xxxx
6.1 The CONTRACTOR shall at its own expensemaintainwithareputableinsurancecompany,acceptableto

the CQMPANY, a comprehensive liability insurance in the amount required bytheCOMPANYtocoverclaims
for bodily injury, death or property damage caused to any person or persons by an act or omission of the
CONTRACTORoranyofitsemployees,agentsorrepresentatives.
xxxx
xxx[T]heCONTRACTORagreesandundertakes:
xxxx
b. To submit satisfactory proof to the COMPANY that it has registered its personnel/workers assigned to
perform the work and services herein required with the Social Security System, Medicare and other
appropriateagenciesforpurposesoftheLaborCodeaswellasotherlaws,decrees,rulesandregulations.
c. To pay the wages or salaries of its personnel/workers as well as benefits, premia and protection in
accordance with the provisions of the Labor Code and other applicable laws, decrees, rulesandregulations
promulgatedbycompetentauthority,xxx
d. To assign such number ofitsemployees,uponprioragreementwiththeCOMPANY,aswouldbesufficient

tofullyandeffectivelyrendertheworkandserviceshereinundertaken,xxx
e. To supply the equipment, tools and materials, which shall, by all means, be effectiveandefficient,atits
ownexpense,necessaryfortheperformanceoftheservicesunderthisContract.28
chanrobleslaw
The foregoing provisions of the Job Contract between petitioner and SJS demonstrate that the latter
possessed the following earmarks of an employer, to wit: (1) the power of selection and engagement of
employees, under.Sections 4.1 and 6.1(d) (2) the payment of wages, under Sections 4.1 and 6.1(c) (3)
the power to discipline and dismiss, under Section 4.1 and, (4) the power to control the employee's
conduct,underSections4.1,4.2,and5.1.
As to SJS' power of selection and engagement, Galit himself admitted in his own affidavit that it was SJS
which assigned him to work at Chevron's Pandacan depot.29 As such, there is no question that it was SJS
whichselectedandengagedGalitasitsemployee.
With respect to the payment of wages, the Court finds no errorinthefindingsoftheLAthatGalitadmitted

that it was SJS which paid his wages. While Galit claims that petitioner wastheonewhichactuallypaidhis
wages and that SJS was merely used as a conduit, Galit failed to present evidence to this effect. Galit,
likewise, failed to present sufficient proof to back up his claim that it was petitioner, and not SJS, which
actually paid his SSS, Philhealth and PagIBIG premiums. On the contrary, it is .unlikely that SJS would
report Galit as its worker, pay his SSS, Philhealth and PagIBIG premiums, as well as his wages, if itwere
not true that he was indeed its employee.30 In the same manner, the Quitclaim and Release,31 which was
undisputedly signed by Galit, acknowledging receipt ofhisseparationpayfromSJS,isanindirectadmission
or recognition of the fact that the latter was indeed his employer.Again,itwouldbeunlikelyforSJStopay
Galithisseparationpayifitisnotthelatter'semployer.
Galit also did not dispute the fact that he was dismissed from employment by reason of theterminationof
the service contract between SJS and petitioner. In other words, it was not petitioner which ended his
employment. He was dismissed therefrom because petitioner no longer renewed its contract with SJS and
thatthelattersubsequentlyceasedtooperate.
Anent the power of control, the Court again finds no cogent reasontodepartfromthefindingsoftheNLRC
that in case of matters that needed to beaddressedwithrespecttoemployeeperformance,petitionerdealt
directly with SJS and not with the employee concerned. In any event, it is settled that such power merely
calls for the existence of the right to control and not necessarily the exercise thereof. Inthe'presentcase,
the Job Contract between petitioner and SJS clearly provided that SJS "shall retain the right to control the
manner and the means of performing the work, with [petitioner] having the control or direction only as to
theresultstobeaccomplished."32
In addition, it would bear to point out that contrary to the ruling of the CA, the work performed by Galit,
which is the "scooping of slop of oil water separator,"33hasnodirectrelationtopetitioner'sbusiness,which
is the importation, refining and manufacture ofpetroleumproducts.TheCourtdeferstothefindingsofboth
theLAandtheNLRCthatthejobperformedbyGalit,whichessentiallyconsistsofjanitorialservices,maybe
incidentalordesirabletopetitioner'smainactivitybutitisnotnecessaryanddirectlyrelatedtoit.
As to whether or not SJS is an independent contractor, jurisprudence has invariably ruled that an
independent contractor carries on an independent business and undertakes the contract work on his own
account, under his own responsibility, according to his own manner and method, and free fromthecontrol
and direction of his employer or principal in all matters connected withtheperformanceoftheworkexcept
as to the results thereof.34 This embodies what has long been jurisprudentially recognized as the control
test, as discussed above. In the instant case, SJS presented evidence to show that it had an independent
business by paying business taxes and fees and that it was registered as an employer with the Social
Security System. Moreover, there was noevidencetoshowthatSJSanditsemployeeswereeversubjectto
the control of petitioner. Onthecontrary,asshownabove,SJSpossessedtherighttocontrolitsemployees'
mannerandmeansofperformingtheirwork,includinghereinrespondentGalit.
As to its capital, there is no dispute that SJS generatedanincomeofP1,523,575.81fortheyear2004.35In

Neri v. National Labor Relations Commission,36 this Court held that a business venture which had a
capitalization of P1,000,000.00 was considered as highly capitalized and cannot be deemed engaged in
laboronlycontracting.Inthepresentcase,whileSJS'incomeofmorethanP1,500,000.00wasnotshownto
be equivalent to its authorized capital stock, such income is an indication of howmuchcapitalwasputinto
its business to generate such amount of revenue. Thus, the Court finds no sufficient reason to disturb the
findingsoftheLAandtheNLRCthatSJShadsubstantialcapital.
WHEREFORE, the instant petition is GRANTED. The assailed Decision and Resolution of the Court of
Appeals, datedDecember8,2008andJanuary20,2009,respectively,areREVERSEDandSETASIDE.The
Decision of the National Labor Relations Commission, dated January 31, 2008 in NLRC NCR' [Case No.]
00030239906(CANo.05146807)isR
EINSTATED.
SOORDERED.
chanroblesvi
FIRSTDIVISION
G.R.No.212861,October14,2015
MELVINP.MALLO,P
etitioner,v
.S
OUTHEASTASIANCOLLEGE,INC.ANDEDITA
ENATSU,*Respondents.
DECISION
PERLASBERNABE,J
.:
Assailed in this petition for review on certiorari1 are the Decision2 dated February 25, 2014 and the
Resolution3 dated June 6, 2014 of the Court of Appeals (CA) inCAG.R.SPNo.129669,whichmodifiedthe
Resolutions dated December 28, 20124 and February 6, 20135 of the National Labor Relations Commission
(NLRC) in NLRC NCR Case No. 071068611 and, accordingly, declared petitioner Melvin P.Mallo(Mallo)to
haveabandonedhisjob,hence,notentitledtobackwages,separationpay,andattorney'sfees.
TheFacts
The instantcasearosefromacomplaint6for,interalia,unfairlaborpractice,illegaldismissal,underpayment
of salary/wages, damages, and attorney's fees filed by Mallo against respondents Southeast Asian College,
Inc. (SACI) and its Executive President/Chief Executive Officer, Edita F. Enatsu (Enatsu collectively,
respondents) before the NLRC.7 Mallo alleged that SACI first hired him as a Probationary FullTime Faculty
Member of its College of Nursing and Midwifery with the rank of Assistant Professor C for the Second
Semester of School Year(SY)200720088and,thereafter,hisemploymentwasrenewed9forthesucceeding
semesters until the Summer Semester of SY 20102011.10 On June 3 and 8,2011,Malloinquiredabouthis
teaching load for the First Semester of SY 20112012, but SACI only responded thatteachingassignments
for the semester were yettobegiventofacultymembers.11Thereafter,onJune15,2011,helearnedfroma
coprofessor that faculty meetings were conducted on June 9 and 10, 2011 whereby teaching loads were
distributed to the professors.12 Upon learning of this development,MallowentagaintoSACItoconfrontthe
Dean of the College of Nursing, Dr. Clarita D. Curato (Dr. Curato). Claiming that he was already a
permanent employee of SACI, having been a professor of SACI for almost four (4) years since his first
teaching assignment in November 2007, Mallo demanded that he begivenhiscorrespondingteachingload.
However, Dr. Curato simply retorted that the schoolwasundernoobligationtogivehimanyteachingloads
for the semesterbecausehewasmerelyacontractualemployee.13Assuch,Mallowasconstrainedtofilethe
instantcomplaintagainstrespondents.
In their defense, respondents denied dismissing Mallo, maintaining that as early as April 2011 and as
evidenced by Dr. Curato's letter14 to the Medical Center Chief II of the National Center for Mental Health
(NCMH), SACI already gave Mallo his teaching load for the First Semester of SY 20112012 as Clinical
Instructor for the College of Nursing's Preceptorship Program, an onthejobmentoringandongoingclinical
experience of students under the Nursing Related Learning Experience (NLRE) curriculum, to be conducted
at NCMH.15 Unfortunately, Mallo twice failed the qualifying test required for the job. This notwithstanding,
SACI endeavored to give Mallo a teaching load by appointing him as a Clinical Instructor for Preceptorship
Program to be conducted at the United Doctors Medical Center (UDMC) instead, beginning June 23, 2011,
which heaccepted.16However,adaybeforehewassettostartasaClinicalInstructoratUDMC,Malloasked
for a change in schedule, which was denied as it would entailareshuffleoftheentireNLREscheduleofthe
school.17 On June 23to25,2011,MallodidnotattendhisclassesatUDMC.ThispromptedaSACIofficialto
contact Mallo if he would report for work the following day, to which the latter allegedly replied in the
negative as his schedule with SACI conflicted with his newemployment.Thereafter,SACIneverheardfrom
Malloagainuntilhefiledtheinstantcase.18
TheLaborArbiter'sRuling
In a Decision19 dated July 30, 2012, the LA found Mallo to have been illegally dismissed and, accordingly,
ordered SACI to payhimbackwages,separationpayinlieuofreinstatement,serviceincentiveleavepay,13
monthpay,andattorney'sfees.20
It held that, contrary to respondents' assertion, Mallo's employment was originally probationary in nature,
which eventually lapsed into a permanent one after having completed three (3) consecutive years of
satisfactory service and having possessed the required masteral degrees pursuant to the Manual of
Regulations for Private Schools (Manual).21 Inthisregard,theLAfoundnoevidencetosupportrespondents'
claim that Mallo refused his appointment as Clinical InstructoratUDMCorthathefailedthequalifyingtests
at NCMH.22 In this light, the LA concluded that respondents' failure to give Mallo any teaching load for the
FirstSemesterofSY20112012istantamounttothelatter'sillegaldismissal.Ontheotherhand,theLAsaw
no basis to support Mallo's monetary claims except for hisserviceincentiveleavepay,whichhewaslegally
entitled to, having completed more than one (1)yearofservice,his13thmonthpay,andattorney'sfeesfor
havingbeencompelledtolitigate.23
Aggrieved, respondents appealed to the NLRC, docketed as NLRC NCR Case No. 071068611/NLRC LAC
No.1100316412.
24
TheNLRCRuling
In a Resolution25 dated December 28, 2012, the NLRC affirmed the LA ruling. It did not give credence to
respondents' claim that Mallo did not teach in the First Semester of SY 20082009 and, thus, did not
complete the required six(6)regularsemestersofsatisfactoryserviceforhimtoattainthestatusofbeinga
regular employee. In this regard, the NLRC noted the SocialSecuritySystem(SSS)InquiryReportshowing
that SACI contributed SSS premiums for Mallo beginning January to December of 2008, hence, could not
have beenemployedonlyonthe2ndSemesterofSY20082009.26Itlikewiserejectedrespondents'assertion
that Mallo's performance had not been satisfactory, considering that he was repeatedly hired for seven(7)
straight regular semesters and despite having failed NCMH's qualifying tests, he was nonetheless given
another assignment at UDMC.27 In the same vein, it found no abandonment on the part of Mallo, holding
that no evidence was presented to show that the latter had clearly intended to sever his employment with
respondents and, considering further that he had instituted the instant complaint.28 The NLRC, however,
reduced theawardforthe13thmonthpaytoP39,863.94basedontheevidencethatSACIalreadypaidMallo
atotalofP75,356.03as13thmonthpay.29
Respondents moved for reconsideration,30 but the same was denied in a Resolution31 dated February 6,
2013.Dissatisfied,theyelevatedthemattertotheCAviaapetitionforc
ertiorari.32
TheCARuling
In a Decision33 dated February 25, 2014, the CA modified the NLRC ruling and, thereby, declared Mallo to
have abandoned his job and, thus, not entitled to backwages, separation pay in lieu of reinstatement, and
attorney's fees.34 ItheldthatwhileMallohadindeedattainedthestatusofaregularemployee,therewasno
illegal dismissal to speak of as the evidence on record failed to show any overt or positive act on
respondents' part to terminate hisemployment.35Inthisrelation,theCApointedoutthatSACIgaveMalloa
teaching load for the First Semester of SY 20112012 as a Clinical Instructor, which he even accepted. It
was only when Mallo's request for a change in schedule at UDMC was denied that he failed to attend his
classes and refused to accept his new work assignmentinviewoftheconflictinhisnewemployment.36The
CA ruled that the totality of Mallo's acts, i.e., not attending his classes, his refusal to work, and obtaining
new employment, clearly constituted abandonment on his part, resulting in the deletion of the awards of
backwages, separation pay, and attorney's fees in his favor.37 The CA, however, retained the awards of
serviceincentiveleavepayand13thmonthpayasrenderedbytheNLRC.
Dissatisfied, Mallo filed a motion for reconsideration38 on March 17, 2014, which was, however, deniedina
Resolution39datedJune6,2014hence,thispetition.
TheIssueBeforetheCourt
The essential issue for the Court's resolution is whether or not the CA correctly ruled there was no illegal
dismissalandthatMalloabandonedhisjob.
TheCourt'sRuling
Thepetitionispartlymeritorious.
At the outset, the Court notes that the LA, the NLRC, and the CA were one in declaring that Mallo's
employment with SACI had already attained the status of a regular employee. However, a scrutiny of the
records reveals that their factual findings differ as to whether or not Mallo was illegally dismissed or had
abandoned his job. In this regard, it bears stressing that in petitions for review oncertiorariunderRule45
of the Rules of Court, the scope of theCourt'sjudicialreviewisgenerallyconfinedtoerrorsoflawanddoes
not extend to a reevaluation of the sufficiency of the evidence upon which the lower courts and/or
quasijudicial agencies had based their determination.40 Indeed, it is axiomatic that the factual findings of
the LA and the NLRC, especially when affirmed by the CA, are accorded not only great respect, but also
finality, and are deemed binding upon the Court so long as they are supported by substantial evidence.41
However, in instances where there is a divergence in the findings of facts of the NLRC and that of the CA,
there is a need for the Court to reviewtherecordstodeterminewhichofthemshouldbepreferredasmore
conformabletoevidentiaryfacts,42asinthiscase.
Here,Malloinsiststhatrespondentsillegallydismissedhimbecausethelatterfailedtogivehimanyteaching
load for the First Semester of SY 20112012. On the other hand, respondents vehemently deny Mallo's
claims, maintaining that they promptly gave him his teaching assignment and that the latter even initially
accepted the same, but such assignment was eventually turned down due to a conflict inschedulewithhis
newemploymentinanotherschool.
In termination cases, the onus of proving that an employee was not dismissed or, if dismissed, his
dismissal was not illegal fullyrestsontheemployerthefailuretodischargesuchonuswouldmeanthatthe
dismissalwasnotjustifiedand,therefore,illegal.43
The records readily show thatasearlyasApril2011,respondentsalreadyassignedMalloateachingloadfor

theFirstSemesterofSY20112012asaClinicalInstructorforSACIstudentstobeassignedatNCMH,which
the latter accepted. Unfortunately, Mallo failed the qualifying tests at NCMH twice, thus, virtually
disqualifying him from performing his work as SACFs Clinical Instructor thereat. Despite these
developments, respondents were able to remedy the situation, albeit belatedly, by assigning Mallo as a
ClinicalInstructoratUDMCinstead,asshownintheTentativeFacultyLoadingdatedJune24,2011.44Inview
oftheforegoing,theCourtisinclinedtoholdthatrespondentsneverdismissedMallofromhisjob.
While the Court concurs with the CAthatMallowasnotillegallydismissed,theCourtdoesnotagreethathe

had abandoned his work. The concept of abandonment in labor law had been thoroughly discussed inTan
BrothersCorporationofBasilanCityv.Escudero:45
As defined under established jurisprudence, abandonment is the deliberate and unjustified refusal of an
employee to resume his employment. It constitutes neglect of duty and is a just cause for termination of
employment under paragraph (b) of Article 282 [now Article 29646] of the Labor Code. To constitute
abandonment, however, there must be a clear and deliberate intent to discontinue one's
employment without any intention of returning. In this regard, two elements must concur: (1)
failure to report for work or absence withoutvalidorjustifiablereasonand(2)aclearintention
tosevertheemployeremployeerelationship,withthesecondelementasthemoredeterminative
factor and being manifested by some overt acts. Otherwise stated, absence must be accompanied by
overt acts unerringly pointing to the fact that the employee simply does not want to work anymore.Ithas
been ruled that the employer has the burden of proof to show a deliberate and unjustified refusal of the
employee to resume his employment without any intention of returning.47 (Emphasis and underscoring
supplied)
In this case, records are bereft of any indication thatMallo'sabsencefromworkwasdeliberate,unjustified,

and with a clear intent to sever his employment relationship with SACI. While respondents claim to have
assigned Mallo as Clinical Instructor at UDMC after failing the qualifying tests at NCMH, which assignment
the latter initially accepted, but eventually declined, there is no proof that Mallo was informed of such
assignment. Itbearsstressingthatapartyallegingacriticalfactmustsupporthisallegationwithsubstantial
evidence for any decision based on unsubstantiated allegation cannot stand as it will offend due
process.48
More importantly, Mallo's filing of a complaint for illegal dismissal, coupled with his prior acts of actively
inquiring about his teaching load, negate any intention on his part to sever his employment.49 Indeed, itis
simply absurd for Mallo to provide continuous service to SACI for more than three (3) years in order to
attain a regular status, only to leave his job without any justifiable reason and, thereafter,fileacaseinan
attempt to recover the same. To reiterate, abandonment of position is a matter of intention andcannotbe
lightlyinferred,muchlesslegallypresumed,fromcertainequivocalacts.50
In sum, since Mallo's was not dismissed and that he never abandoned his job, it is only proper for him to
report back to work and forrespondentstoreinstatehimtohisformerpositionorasubstantiallyequivalent
one in its stead. In this regard, jurisprudence provides that in instances where there was neitherdismissal
by the employer nor abandonment by the employee, the proper remedy is toreinstatetheemployeetohis
formerpositionbutwithouttheawardofbackwages.51
WHEREFORE, thepetitionisPARTLYGRANTED.TheDecisiondatedFebruary25,2014andtheResolution
dated June 6, 2014 of the Court of Appeals (CA) in CAG.R. SP No. 129669 are herebyMODIFIED finding
petitioner Melvin P. Mallo (Mallo) not tohaveabandonedhisjob.RespondentsSoutheastAsianCollege,Inc.
andEditaF.EnatsuareorderedtoREINSTATEMallotohisformerpositionorasubstantiallyequivalentone
initsstead,butwithoutbackwages.
TherestoftheCADecisionS
TANDS.
SOORDERED.
cralaw
THIRDDIVISION
G.R.No.196597,October21,2015
MODESTOW.RIVERA,P
etitioner,v
.A
LLIEDBANKINGCORPORATION,CORAD.CORPUSAND
ANTONIOH.SANTOS,R
espondents.
DECISION
VILLARAMA,JR.,J
.:
Assailed in this petition for review on certiorari under Rule 45 are the Decision1 dated December 28, 2010
and Resolution2 datedApril6,2011oftheCourtofAppeals(CA)inCAG.R.SPNo.115008.TheCAaffirmed
the Decision3 dated October 23, 2009 as modified by Resolution4datedApril20,2010oftheNationalLabor
Relations Commission (NLRC),SeventhDivision,whichreversedtheLaborArbiter'sDecision5datedJune30,
2008declaringpetitioner'sdismissalasillegal.
chanrobleslaw
FactualAntecedents
Petitioner Modesto W. Rivera started working for respondent Allied Banking Corporation ("Bank") on March
1, 1995 as a junior officer (Accountant). He rose to the position of Branch Head (with rank of Assistant
Manager)assignedattheBank'sbranchinLaTrinidad,BenguetinJune2006.
On July 23, 2007, petitioner received an InterOffice Communication6 (IOC) from respondent Antonio H.
Santos, the Bank's VicePresident, directing him to explain in writing within 48 hours why no disciplinary
action should be taken against him for misconduct, dishonesty, fraud or willful breach of the trust reposed
on him by the Bank. A bank client, Ms. Nene Sta. Cruz,7 had sought an audience with the Bank's Legal
Department complaining that she hadentrustedbigsumsofmoneytopetitionerforrediscountingofforeign
currency checks which were then deposited into her savings accounts, with the supposed payees as
codepositors. Most of these checks were returned and her total uncollected deposits amounted to
US$71,146.00.
In his letterreply8 dated July 31, 2007, petitioner denied having enticed Ms. Sta. Cruz who was already
engaged in rediscounting transactions long before she opened an account at his branch. He explained that
the arrangement with Ms. Sta. Cruz regarding the opening of joint accounts for her foreign currencycheck
deposits was merely an accommodation service to a bank client, which was done in good faith and in
accordancewiththeBank'spolicies.
On August 2, 2007, petitioner received another IOC9 from the Retail Banking Group (RBG) which was
already investigating the allegations of Ms. Sta. Cruz. This time, it was aboutalettercomplaintsenttothe
Bank's Legal Department by the law office of Magno & Associates in behalfoftheirclient,MilagrosOcampo
Vda. de Palalay. The letter stated that Globe Life and Accident Insurance Co. of OklahomaCity,U.S.A.had
issued checks representing life insurance benefits to the heirs of Hector Palalay. It turned out that one of
these checks in the amount of US$4,307.42 payable to Alexa Palalay was deposited by a certain "Nena
Soriano Sta. Cruz" with the Bank on July 31, 2007. The Bank's crediting of this check was fraudulent
because Alexa Palalay could not have signed the check as she was then barely two years old. Again,
petitionerwasdirectedtosubmithiswrittenexplanationastowhyheshouldnotbesubjectedtodisciplinary
action for his violation oftheBank'spolicyagainstacceptingfordepositorencashmentsecondendorsedUS
Dollardenominatedcurrencychecks.
In his letterreply,10 petitioner admitted that the negotiated check of Alexa Palalay was among those
secondendorsed checks from Ms. Sta. Cruz who was engaged in the rediscounting business. He explained
that before accepting such checks from Ms. Sta. Cruz, he made a backgroundcheckonherbusinessesand
based on data gathered he allowed her toopenaccountsinhisbranchformarketingconsiderations.Having
already informed Ms. Sta. Cruz regarding the returned check, petitioner said the branch is awaiting her
actiononthematter.
After the conclusion of the investigation, petitioner was immediately terminated under IOC11 datedOctober
3, 2007 from the Bank's Senior VicePresident, respondent Cora D. Corpus. The said memo stated in
part:
This is in relation to your acceptance of second endorsed/illegitimateforeigncurrency(FxCy)checksduring
yourtenureasBranchHeadofABC[,]LaTrinidad.
Inthepreliminaryexaminationconducted,itwasdeterminedthat
1. From15November2006to17June2007[,]youaccepted/approvedforoutrightcreditNinetyThree
(93)secondendorsed/illegitimateforeigncurrencychecksaggregatingTwoHundredFiftytwo
ThousandOneHundredNinetyUSDollarsand79/100(US$252,190.79).
2.
3.
4. Eightysix(86)ofsaidchecksaggregatingTwoHundredTwentySixThousandSevenHundredFifty
USDollarsand25/100(US$226,750.25)werecreditedoutrighttonine(9)FxCysaving[s]accounts
whileseven(7)aggregatingTwentyfiveThousandFourHundredFortyUSDollarsand54/100
(US$25,440.54)wereacceptedforcollectionandsubsequentlycrediteduponexpiryoftheholding
period.
5.
6.
7. Asof01October2007,thirtyfour(34)ofsaidchecksaggregatingOneHundredFiftyEight
ThousandFiveHundredThirtyThreeUSDollarsand70/100(US$158,533.70)werereturnedbythe
respectiveforeigndraweebanks/financialservicesforreasonssuchasforged/unauthorized
endorsements.
8.
9.
10. Theproceedsoffiftynine(59)FxCychecksaggregatingNinetyThreeThousandSixHundredFifty
SevenUSDollarsand09/100(US$93,657.09)previouslycreditedtonine(9)FxCySavingAccounts
wereallowedtobewithdrawnbyMs.NenaSta.Cruzorrepresentativesincludingy
ou.
11.
12.
13. Thesetransactions,asof01October2007,exposedtheBanktolossesintheamountofNinetySix
ThousandNineHundredThirtyFourUSDollarsand85/100(US$96,934.85).12
14.
The IOC declared that petitioner's acts constitute noncompliance with the Bank's policies and rules, which
likewise breached the trust and confidence reposed on himbytheBank.Petitionerwasalsoinformedofthe
forfeitureofallbenefitsthatmaybeduehimonaccountofhisterminationforjustcause.
On December 13, 2007, petitioner filed a Complaint13 for illegaldismissalwithprayerforreinstatementand

payment of backwages, his share in ProfitSharing,damagesandattorney'sfees.Inaddition,hesoughtthe
return of his personal contributions to the Employment Investment Savings Plan amounting to at least
P335,200.00 and to the Mutual Savings Plan in the sumofP42,000.00,aswellaspaymentofhiscombined
accumulatedvacationandsickleaves(175days),totalingaboutP425,000.00.
Petitioner claimed his termination was illegal because he was never informed of its true reasons despite
making repeated requests to befurnishedacopyoftheBank'sauditfindings.Hesurmisedthatrespondents
already decided to dismiss him as of June 26, 2007 when the Bank's management met with Ms. Sta. Cruz
and, relying completely on her complaint, considered him guilty of committing irregularities in his branch.
Even assuming he was indeed guilty, petitioner believes the penalty ofwarningforthefirstoffenseandnot
dismissal should have been imposed, as provided in the Bank'sEmployeeDisciplinePoliciesandProcedures
(EDPP).14
Respondents countered that petitioner's acceptance of secondendorsedforeigncurrencycheckswasnotan

isolated transaction but repeated infractions throughout his tenure as Branch Head. They claimed that the
most damning evidence against petitionerwashisownadmissionthathereceivedcommissionsinexchange
foracceptanceofthesecondendorsedforeigncurrencychecksfromMs.Sta.Cruz.15
In his comment/reply, petitioner denied having made such admissionduringtheinvestigationconductedby

the Bank. He suggested that the Bank instead should file appropriate actions against Ms. Sta. Cruz who is
tryingtomisleadtheBankforthelossessheincurredfromherillegalrediscountingbusiness.16
In his Decision dated June 30, 2008, Labor Arbiter Monroe C. Tabingan ruled in favor of petitioner and
awardedhimthefollowingreliefs:
WHEREFORE, all premises duly considered, finding the complainant to have been illegally dismissed, the
respondents,jointlyandseverally,areherebyorderedtopaytothecomplainantthefollowing:
1.
His separation pay in a sum equivalent to onemonth pay for every year of service, currently
computedatP
hP686,042.50withlegalinterestthereonuntilfullypaid
P50,000.00 x 13
years
Add:
Interest
P656,500x
P656,500.00
6%x9/12
2.
His backwages from the time of his dismissal to the finality ofthisdecision,currentlycomputedat
PhP514,531.85withlegalinterestthereonuntilfullypaid
P50,000.00
months
13thth
MP:
454,500.00/12
Add:
Interest
P492,375.00
x6%x9/12
13.
HiscontributionstotheEmploymentInvestmentSavingsPlanintheamountofPhP335,000.00with
legal interestthereonuntilfullypaidnowcomputedatP335,000.00x12%x9/12)P30,150.00ora
totalof....................................P365,150.00
4.
His personal contributions in the Mutual Savings Plan, in the amount of PhP42,000.00 with the
corresponding earned interest until fully paid (P42,000.00 x 12% x 9/12) = 3,780.00 or a total
of.........................................................P
45,780,000
5.
The cash value of his accumulated vacation and sick leave benefits must also be given, in the
amountof..................................................................PhP425,000.00
6.
Anexemplarydamageof..............................P
hP200,000.00
7.
Moraldamagesintheamountof..................P
hP200,000.00
8.
Attorney's fee equivalent to not more than ten (10%) per centum of the total monetary awards
(P2,036,504.35x10%)amountingto.....................................................P
203,650.45.
29,542.50
....
P454,500.00
37,875.00
P686,042.50
22,156.85
....
P514,531.85
Allotherclaimsaredismissedforlackofmerit.
SOORDERED.17
RespondentsappealedtotheNLRC,whichreversedtheLaborArbiter'sruling,asfollows:
WHEREFORE, premises considered, the appealed Decision is hereby REVERSED andSET ASIDE but
orderingrespondentAlliedBankingCorporationtopaythecomplainantthefollowingamounts:
1. P425,000.00representingaccumulatedvacationandsickleavecredits
2.
3.
4. P365,150.00representingrefundofcontributionstotheEmploymentInvestmentSavingsPlanwith
legalinterestand
5.
6.
7. P45,780.00representingrefundofcontributionstotheManual[s
ic]savingsPlanplusearned
interest.
8.
SOORDERED.18
Petitioner moved to reconsider the above decision while respondents filed a motion for partial
reconsideration.
TheNLRCissuedaResolutionmodifyingitsDecision,asfollows:
WHEREFORE, premises considered, the assailed Decision rendered by this Commission dated October 23,
2009 is hereby MODIFIED deleting the award of Php425,000.00 representing complainant's accumulated
vacationandsickleavecredits.
TherestoftheawardstaysA
FFIRMED.
SOORDERED.19
Petitioner filed a petitionforcertiorariintheCAalleginggraveabuseofdiscretiononthepartoftheNLRCin

completelyoverlookingwhatheassertedasobviousillegaldismissal.
By Decision dated December 28, 2010, the CA sustained the ruling of the NLRC. The CA held that the
requirement thattherebesomebasisorreasonablegroundtobelievethatpetitionerwasresponsibleforthe
breach of the Bank's standard operating procedure was satisfied in this case. Petitioner's motion for
reconsiderationwaslikewisedeniedbytheCA.
Hence, this petition reiterating the lack of a valid ground for petitioner's termination because respondents
failed to fully apprise him of the complaint against him and the findings in the audit report which was
disclosedtohimonlyduringtheinvestigation.
cralawlawlibrary
chanrobleslaw
Issue
Thesoleissuetoberesolvediswhethertherespondentsvalidlydismissedpetitioner.
chanrobleslaw
Ruling
Thepetitionhasnomerit.
Article282oftheL
aborCode,asamended,provides:
ART. 282. Termination by employer. An employer may terminate an employment for any of the
followingcauses:
(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or
representativeinconnectionwithhiswork
cralawlawlibrary
(b)Grossandhabitualneglectbytheemployeeofhisduties
cralawlawlibrary
(c) Fraud or willful breach by the employee of the trust reposed in him by his employer or dulyauthorized
representative
cralawlawlibrary
(d) Commission of a crime oroffensebytheemployeeagainstthepersonofhisemployeroranyimmediate

memberofhisfamilyorhisdulyauthorizedrepresentativeand
(e)Othercausesanalogoustotheforegoing.
Under Article 282(c) of the Labor Code, as amended, an employer may dismisstheemployeeeitherfor(1)
fraud or (2) willful breach by the employee of the trust reposed in him byhisemployerordulyauthorized
representative.
Law and jurisprudence have long recognized the right of employers to dismiss employeesbyreasonofloss
of trust and confidence.20 More so, in the case of supervisors or personnel occupying positions of
responsibility, loss of trust justifies termination. Loss of confidenceasajustcausefordismissalispremised
onthefactthatanemployeeconcernedholdsapositionoftrustandconfidence.21
While it is true that loss of trust and confidence is one of the just causesfortermination,suchlossoftrust
and confidence must, however, have some basis. Proof beyond reasonable doubt is not required. It is
sufficient that there must only be some basis for such loss ofconfidenceorthatthereisreasonableground
to believe, if not to entertain, the moral conviction that the concerned employee is responsible for the
misconduct and that the nature of his participation therein rendered him absolutely unworthy of trust and
confidence demanded by his position.22 Loss of trust and confidence,tobeavalidcausefordismissal,must
bebasedonawillfulbreachoftrustandfoundedonclearlyestablishedfacts.23
There is no question that petitioner's position as Branch Head requires a high degree of trust and
confidence. Given the sensitive functions of his office, he is thus expected to strictly observe and comply
withtheBank'sstandardoperatingprocedures.
Contrary to petitioner's asseveration, respondents did not just rely on the allegations of Ms. Sta. Cruz,
whose complaint merely triggered the full investigation conducted by the Bank on the return of several
foreign currency checks. Subsequently, the audit on petitioner's branch revealed that several US Dollar
denominated currency checks were returned due to forged or unauthorized endorsements. The practice of
accepting for deposit secondendorsed US Dollar denominated checks isstrictlyprohibitedundertheBank's
establishedpolicies,andmaybeallowedonlyincertainexceptionalcases.
The Bank's Operations Memorandum (OM) No.81071datedAugust31,1981prescribedtheproceduresfor

foreigncheckspurchasedoutright,towit:
1. Thechecksmaybepurchasedoutrightonlyfromclientswithestablishedcreditfacilityforthe
purpose.
2.
3.
4. Theauthenticityofthecheckpurchasedshallalwaysbeestablishedandifpossibleissuanceofthe
sameshallbeconfirmedfromthedrawer.24
5.
Furthermore, the Bank's OM No. 03367 dated October 8, 2003 provided explicit guidelines regarding
secondendorsedUSDollarcurrencydenominatedchecks,asfollows:
As a matter of policy, acceptance of secondendorsed US Dollar currency denominated checks either for
deposit to a foreign currency deposit account, payment of US Dollar denominated loans or credit cards, or
presented for encashment overthecounter is NOT ALLOWED, moresomultipleendorsedchecks.However,
due to marketing and customer relation conditions, secondendorsed US Dollar checks may be
accepted at the discretion of the Branch Head (BH)/OfficerinCharge (OIC) who shall
bepersonally accountable/responsible therefore. In this connection, the following shall be
observed:
1. SecondendorsedUSDollarchecksshallbeacceptedONLYfromselectedvalued/TripleA
Depositor/Clientwellknowntothebankandwhosefinancial/creditstandingwarrant/ensure
reimbursementincaseofclaimfromlegitimatePayee.
2.
xxxx
US Bank[s] are now very strict in accepting secondendorsed US Dollar checks either for deposit or thru
clearing because of the AntiMoney Laundering Law. In view of this, all concerned shall ensure that the
abovementioned guidelines/procedures are strictly enforced to avoid/prevent losses to the Bank. Losses
incurred due to noncompliance shall be charged to the erring Officer/Personnel.25 (Emphasis
supplied)
The Bank's investigation on the transactions involving foreign currency checks during petitioner'stenureas
Branch Head disclosed that petitioner deliberately disregarded the foregoing rules when he accepted for
deposit severalUSDollardenominatedchecksfromMs.Sta.Cruz.Basedontheinformationgatheredbythe
Bank'sinvestigatingcommittee,thefollowingfactsareestablished:
1.C
heckpayabletoMr.Fisher
Imelda Sta. Cruz, daughter ofNenaSta.Cruz,openedajointsavingsaccounttogetherwithacertain

"Mr. Fisher" as codepositor. A check in the amount of US$9,012.53payabletoMichaelFisherwhich
was deposited under the account name "Imelda D. Sta. Cruz &/or Michael Fisher" with S/A No.
1122001476 on February 28, 2007, was already cleared 45 days after. However, the check was
tagged on hold because a male person called the branch office andtoldpetitionerheisthereal"Mr.
Fisher" and requested to freeze the check deposited to the aforesaid account since it was the
insuranceclaimofhisdeceasedfather.
Regarding this incident, petitioner relayed to theRBGonMarch20,2007thathehadadvisedImelda

Sta. Cruz to check or confirm who was reallywithherwhensheopenedS/ANo.1122001476.This
real "Mr. Fisher" supposedly visited the main office of the Bank and presented his identification
credentials.
Nena Sta. Cruz told the Bank's Legal Department that it waspetitionerhimself,aswithothersimilar
instances, who introduced to her "Mr. Fisher" and enticed hertorediscountthecheckandthenopen
a joint account under her daughter's name (Imelda) and "Mr. Fisher." Petitioner sent a letter dated
June 12, 2007 to Imelda informing her that the check of"Mr.Fisher"wasclearedbutwastaggedon
hold upon request of another male person claiming to bethereal"Mr.Fisher."Thelastparagraphof
saidletterstates:
The amount of US$ 9,012.53 in youraccountisstillintactandonlytoreleasesuchamountifhiscredentials
and identification cards are completed and submitted by this person claiming as the real Mr. Fisher. As of
today, Mr. Fisher have notshownupnorsubmittedhiscompletecredentialsforhisclaim.AsIaminformed,
Mr.Fisherhadfiledastoppaymentofhisallegedlostcheck.
Nena Sta. Cruz went to the Head Office (HO) primarily to confirm if the realMr.Fisherindeedcame
totheHO.26
2.C
heckpayabletoMs.RizaSilva
A check in the amount of US$ 404.90 payable to "Ms. Riza Silva" was deposited in Nena Sta. Cruz'
account SAFX 1122001352 on February 19, 2007. The real owner, Ms. Riza Silva went to the HO
bringing with her a copy of the letter she sent to petitioner on May 16, 2007 stating that another
person forged the said check payable to her. She also presented sufficient documents to prove her
ownershipofthecheck.
Nena Sta. Cruz discussed this case of Ms. Riza Silva with theLegalDepartment,claimingthatitwas
alsopetitionerwhointroducedtoheranotherwomanas"Ms.RizaSilva."
Petitioner was instructed to debit the amount of the check to the client's account on May 18, 2007
and temporarily lodged to Accounts payable. In his incident report dated May 21, 2007, he told the
RBG it was Ms. Riza Silva who personally came to the branch regarding the forged check and he
accordinglyadvisedherhowtoreclaimhercheck.27
3.C
heckdepositedunderthepassbookofDepositorsSalomeObana&/orRafaelUngson
Nena Sta. Cruz accepted as collateral a passbook under the name "Salome Obana &/or Rafael
Ungson" in which was deposited the check for US$ 50,307.60 she had rediscounted. For several
times, she had tried to withdraw from the said account but the check was returned as it was
dishonoredforreasonof"forgedorunauthorizedendorsement."
Petitioner denied the accusation of Ms. Sta. Cruz that he was in complicity with Obana and Ungson
after she discovered that there were withdrawals made from their account, explaining to her it was
notpossibleforhimtomakethosewithdrawals.28
In March 2008, NenaSta.CruzinstitutedacriminalcomplaintforEstafaagainstpetitioner,Obana,et

al. (I.S. No. 088012008). On March 26, 2008, Criminal Case No. 08CR7252 was filed by the
Provincial Prosecutor in the Regional Trial Court of La Trinidad, Benguet, Branch 62 (People of the
Philippines vs. Modesto Rivera, Salome Obana, Janet Cenizal a.k.a. Janet De Jesus/Corazon
David/Liberty Scott/Editha Rivera). The checksofFisherandSilvawereamongthe27checkssubject
of the criminal case. Before the Office of the Provincial Prosecutor, Sta. Cruz detailed the check
rediscounting transactions whereby petitioner offered her US Dollar denominated checks which she
paid after the supposed payees were introduced to her and they deposited the check to a joint
account they made her open at petitioner's branch and because of the latter's position she became
confident that she couldindeedwithdrawtheamountsofthecheck.Becauseoftheincidentinvolving
Mr.FisherwhenshediscoveredwithdrawalsweremadebyObanafromtheirjointaccountdespitethe
passbook and presigned withdrawal slips that were in her possession, she was alarmed and
complained directly to the Bank's Legal Department. Warrants of arresthavealreadybeenissuedby
theRTCofLaTrinidad,Benguetagainstpetitioner,ObanaandJanetCeniza.29
4.C
heckPayabletoAlexaPalalay
On January 16, 2007, Globe Life & Accident Insurance Co. of Oklahoma, City, U.S.A. released
insurance benefits to the children of Hector C. Palalay who died in Laoag City, Ilocos Norte on
December 2, 2005. One of the checks representing the proceeds ofinsurancebenefitswasissuedto
Alexa Palalay in the amount ofUS$4,307.42.OnJuly16,2007,thelawyersofMilagrosOcampoVda.
de Palalay, wrote the Bank's LegalDepartmentstatingthatthepaymentofthischeckwasfraudulent
becausethepayeecouldnothavesignedorendorseditasshewasjustatwoyearoldchild.
The Bank's Legal Department discovered that said check was deposited by Nena Sta. Cruz whose
accountleftabalanceofonlyUS$203.04onJuly31,2007.Petitioner'sbranchcreditedtheamountto
heraccountonFebruary13,2007.
Petitioner said he already advised Sta. Cruz to reimburse the bank on the returned check and the
branchisawaitingheractiononthematter.30
We find substantial evidence of petitioner's misconduct that justified respondents' loss of confidence in
petitioner whose repeated violations of OM 03367 resulted in huge losses to the Bank. Petitioner knew of
the risky and questionable rediscounting business of Ms. Sta. Cruz and yet allowed her to deposit
secondendorsed US Dollar denominated checks in substantial amounts even if these were sourced only
from her various "contacts" or agents. Moreover, the criminal case filed by Ms. Sta.Cruzagainstpetitioner
and twootherindividualsfurtherlendscredencetoherclaimthatpetitionerhimselfhadactivelyparticipated
in the rediscounting scheme, which defrauded her of no less than P4 million, by introducing to her the
alleged payees andmakingheropenajointaccountwiththesepayeesupontheassuranceofpetitionerthat
she can withdraw the proceeds of the check upon its clearing. Respondents were also acting wellwithinits
rights whentheyrejectedpetitioner'srequesttobeexemptedfrompersonalliabilityconsideringthatdespite
several returned checks, he continued to receive for deposit similar checks from Ms. Sta. Cruz.Indeed,his
written replies to respondents' memoranda are replete with admission of lapses in judgment, accompanied
byremorseandsimultaneouspleaforconsideration,viz:
LetterdatedJuly31,2007(Re:ComplaintsofMs.Sta.Cruz)
The predicament of Mrs.Sta.Cruzshouldnotbethrowntomeasth[ese]deals[were]herowndecisionand

fully trusted her contacts/agents. This is her fault considering the nature of the business which involves
great risk. She should have exercise [d] extra caution in dealing this kind of business and should had not
think only of earning a big profit the easy and fastest way. InfactIhavewarnedhertheriskinvolve[d]on
these2nd
endorsedcheckstransactedbutstillproceededwiththesedeals.
xxx As I realize it now, I think I am just a victim of circumstances and presumablywasusedandthebank

thruSta.Cruzbysomesyndicate.31
LetterdatedAugust2,2007(NegotiatedCheckofA.Palalay)
before these 2nd endorsed check transactions were accepted from Ms. Sta. Cruz, a background checking
was made as to her business engagement and financial standing. In my checking, it was established that
she was engage[d] in money lending, rediscounting of checks and previously operator of small businesses
like videoke rental, eatery, lechon manok outlet and bicycle rental in Baguio City. Her financial standing
were likewise check[ed] and I have confirmed some of her deposits with Accord Bank, BaguioBranch,PNB
and other banks. Based onthesedatagatheredandgiventhediscretionandmyjudgment,shewasallowed
thistypeofdepositandaccountwasopenedformarketingconsiderations.
client initially opened a dollar savings account then a time deposit of $14,000.00 and later a Triple A
account. Check deposits for the first 3to4monthsfromdateaccountopenedwasgoodwithnoreturnsand
savingsdepositbalancehaveaccumulatedoverUS$80K.
Mrs. Sta. Cruz was warned and reminded that these checks she rediscounts must be known to her and
assured us of it. She give the assurance that all her agents and contacts who transact these checks are
known to her and these are legitimately transacted. I also informed her that forgedendorsedchecksisnot
coveredbyclearingperiod.
xxxx
It is with deep regret thatthissituationoccursnowwhileIhavenorecoursebuttofaceitasaconsequence

of my judgment.Ihavetofightthisoutwithclientandjusthopemanagementbeconsiderateandassistme
in dealing this situation. Also, I trust management will give its support and exhaust all the possibilities in
handling whatever be the development on this account. This accountwasopenedinlinewithmymarketing
workandasIhadjudgedit,thiswasexpectedasagoodaccountthen.32
LetterdatedSeptember5,2007(Re:endEndorsedCheckMs.Palalay)
Ipraythatyourgoodofficebemorekindtoassistandhelpthebranchonthissituationassuchactionswere
in relation with the performance of our work. Also, I believe that this is not a personal but a bank claim
againstMs.Sta.Cruzasthisisabanktransactionwhichwasadeposittoheraccount.33
Petitioner contends that respondents failed to observe due process as they only gave him the termination
notice which included numerous alleged infractions without giving him reasonable opportunity to be heard
and present his case. However, recordsshowedthathesubmittedaletterdatedSeptember25,2007tothe
Chairman of the Investigating Committee where he gave his comments to the committee's findings as
relayedtohimduringthehearingconductedonSeptember13,2007.Thecontentsofthisletterconfirmthat
petitioner was fully apprised of the charges against him as in fact he reiterated his previouswrittenreplies
totheRBGoneachincidentoffraudulentlyendorsedcheck.
As branch manager,petitionerclearlyoccupiesapositionoftrust.Hisrighttostayintheservicedependson
the employer's trust and confidence in him and on his managerial services. Having breached that trust in
deliberately disregarding the Bank's strict policy on accepting US Dollar denominated currency checks
resulting in substantial loss to the Bank when the said checks were returned for reason of forged or
unauthorizedendorsement,respondentsarejustifiedinimposingthesupremepenaltyofdismissal.
We find no merit in petitioner's contention that he had sufficiently explained the accommodation service
extended to Ms. Sta. Cruz and therefore he should not be held accountable for the returned fraudulent
checks.
ThediscretionconferreduponhimunderOM03367requiresutmostprudenceonhispartanddemandsthat
he exercises judgment for the protection of the Bank's interest above all other considerations. Despite
awareness of the risks of the rediscounting business of Ms. Sta. Cruz, he accepted from her several
questionable checks and even aided the scheme by making her open joint accounts with the socalled
payees who, as alleged byMs.Sta.Cruz,wereintroducedtoherbypetitionerhimself.Hisseemingpersonal
interestinthiskindofdepositsbecamemanifestwhenhecontinuedtoreceivesuchsecondendorsedchecks
despite the returnofseveralchecksduetoforgedorunauthorizedendorsementstherebyexposingtheBank
to even greater financial damage. His repeated violation of the bank policy was indeed deliberate and
constitutes gross misconduct. An employer cannot be compelled to retain anemployeewhoisguiltyofacts
inimical to the interests of the employer.34 A company has the right to dismiss itsemployeesasameasure
of protection, moresointhecaseofsupervisorsorpersonneloccupyingpositionsofresponsibility.35Indeed,
it would be oppressiveandunjusttoordertherespondentstotakepetitionerback,forthelaw,inprotecting
therightsoftheemployee,authorizesneitheroppressionnorselfdestructionoftheemployer.36
The forfeiture of petitioner's vacation and sick leavesislikewiseproper.ThisisbasedonSectionB(03)and

(04)oftheEDPP,whichstate:
(3)
Dismissal Dismissal is a permanent separation for causeofanyemployeeforthe

commission of an offense necessitating such separation. An employee who is
terminated for cause forfeits all benefits he may have been entitled to arising from
hisemploymentwiththeBankortoseparationpay.
(4)
Forfeiture Forfeiture is a divesture of salaries, bonuses and other pecuniary

benefits including leaves, retirement or service credits and their equivalent
monetary values which an employee may receive or be entitled to and may be
imposed upon an employee who has committed an offense, in addition to other
penaltiesthatmaybeimposed.37
Having been dismissed forcause,thepenaltyofdismissalimposedonpetitionercarriedwithittheforfeiture

of his leave credits and their monetary equivalent. Moreover, pursuant to OM 03367, the losses resulting
from the returned fraudulent checks became the personal liability ofpetitionerwhoallowedthedepositand
crediting of secondendorsed US Dollar denominated currency checks in Ms. Sta. Cruz's savings/joint
accounts.
In closing, we stress the need to assert public interest in preventing bank fraud and not sanctioning bank
employees like petitioner who have no qualms abetting the now rampant practice of rediscounting of US
Dollar currency checks, which often turn out to be stolen or falsified instruments. In Cadiz v. Court of
Appeals,38
wesaid:
Moreover, it would simply be temerarious for the Court to sanction the reinstatement of bank employees
who have clearly engaged in anomalous banking practices. The particular fiduciary responsibilities reposed
on banks and its employees cannot be emphasized enough. The fiduciary nature of bankingisenshrinedin
Republic Act No. 8791 or the General Banking Law of 2000. Section 2 of the law specifically says that the
State recognizesthe"fiduciarynatureofbankingthatrequireshighstandardsofintegrityandperformance."
The bank must not only exercise "high standards of integrity andperformance,"itmustalsoensurethatits
employees do likewise because this is the only way to ensure that the bank will comply with its fiduciary
duty.39
WHEREFORE, the petition is DENIED for lack of merit. The Decision dated December 28, 2010 and
ResolutiondatedApril6,2011oftheCourtofAppealsinCAG.R.SPNo.115008areherebyAFFIRMED.
Withtreblecostsagainstthepetitioner.
SOORDERED.
THIRDDIVISION
G.R.No.174115,November09,2015
PUNONGBAYANANDARAULLO(P&A),BENJAMINR.PUNONGBAYAN.,JOSEG.ARAULLO,
GREGORIOS.NAVARRO,ALFREDOV.DAMIANANDJESSIEC.CARPIO,P
etitioners,v
.R
OBERTO
PONCELEPON,R
espondent.
DECISION
JARDELEZA,J
.:
This is a petition for review on certiorari1 of the Decision2 of theCourtofAppealsdatedFebruary15,2006,
and Resolution3 datedAugust3,2006reversingtheDecisionoftheNLRCandtheLaborArbiter,holdingthat
petitionersvalidlydismissedrespondentRobertoPonceLeponduetolossoftrustandconfidence.
TheFacts
Petitioner Punongbayan and Araullo (P&A) is a professional partnership engaged in public accounting
practice. It is duly registered and organized under existing Philippine laws. Benjamin R. Punongbayan
(Punongbayan), Jose G. Araullo, Gregorio S. Navarro,AlfredoV.Damian(Damian)andJessieS.Carpio,are
partnersofP&A(otherpetitioners).4
On July 5, 1988, P&A hired Roberto Ponce Lepon (respondent) as StaffAuditor1.Afteryearsofservice,he

became the ManagerinCharge of the CebuoperationsandtheDirectoroftheVisayasMindanaooperations
of P&A.5 Sometime in April 2002, accounting firm Sycip Gorres Velayo and Company (SGV) commenced
negotiations with P&A for a possible merger of their Philippine operations. During negotiations, some of
P&A'semployees,includingrespondent,expressedfearsontheirfateincaseofamerger.6
On April 24, 2002, P&A sent a Memorandum7 to its clientsinformingthemaboutitsagreementwithSGVto

combine their practices, and to later become a member of the Ernst & Young Organization. Subject to
appropriate due diligence and final partner's approval, the combined practice was expected to be effective
on July 1, 2002.8 On April 26, 2002, through an emailletter to Punongbayan, respondent pleaded against
the merger. He argued mainly that: (1) the combination would defeat the spirit of competition and will
create a monopoly of sorts (2) the arrangement would be very onerous on the part of P&A(3)Ernstand
Young was attacking P&A despite 14 years of collaboration and even threatened towithdrawitstechnology
from P&A and (4) the cultures of P&A and SGV would not match because P&A's culture was founded on
excellencewhilethatofSGVwasfoundedonhubris.9
Subsequently, P&A learned that respondent (1) met with P&A's clients and invited them to engage the
services of Laya MananghayaKPMG (LMKPMG), a competing accounting firm, and (2) attempted to pirate
the entire staff of P&A's Cebu City Office and Davao City Office. Thus, on May 30,2002,petitionerDamian
sent respondent a letter asking him to explain the alleged disloyal and inimical acts he committed against
P&A.10
Theletterreads:
May30,2002

Mr.RobertP.Lepon
Punongbayan&Araullo
CebuCity
DearBob,
As Greg Navarro communicated to you over the telephone yesterday, it has come to our attentionthat
you have discussed possible employment with the managing partner of one of our competitors
and that youhaveagreedonpracticallyallthetermsofemploymentexceptthedateyouwilljoin
them. It has also come to our attention that you have been enjoining a number of ourclientsin
Cebu and Davao to consider transferring the audit to the firm you intend to join, and that you
have also talked to our staff in Cebu and Davao, inviting them to join you when you make the
move to the other firm. Please give us an explanation not later than June 7, 2002 of suchactuationson
your part, which have caused us to doubt seriously whether or not you are still working in the interest of
Punongbayan & Araullo, and which could be valid grounds for the terminationofyouremploymentwiththe
Firm.
While we are waiting for your explanation, werequireyoutogoonleaveofabsencewithpayeffectiveJune

1, 2002 until June 15, 2002. We would like you to turn over your Firmissuedlaptopcomputer,clientwork
files, and other such materials that may be required for the continued operation of the Cebu and Davao
Offices to the person we will designate to take over your functions during the period of your leave of
absence.(E
mphasissupplied.)
Verytrulyyours,
(Sgd.)
ALFREDOV.DAMIAN
Partner
HR&Communication11
cralawlawlibrary
In his reply12 dated June 6, 2002, respondent reiterated his worries about the merger, and denied the
allegations against him. On June 17, 2002,afterconsideringrespondent'sexplanation,Damianservedupon
respondent a termination notice13 informing him that his employment isterminatedeffectiveJune16,2002
duetolossoftrustandconfidence.
On June 14, 2002, respondent filed a complaintforillegalsuspensionandillegaldismissal,andforpayment

of 13th month pay, service incentiveleave,allowances,separationpay,retirementbenefits,moraldamages,
and exemplary damages against P&A and its partners with the Regional Arbitration Branch No. VII of the
National Labor Relations Commission (NLRC) in Cebu City. The parties failed to amicably settle thecaseso
theywererequiredtosubmitpositionpapers.14
On August 13, 2013, the Labor Arbiter dismissed the complaint for lack of merit.15 The Labor Arbiter held
that "the [petitioners] were able to satisfactorily discharge theirobligationofestablishingthebasisfortheir
loss of trust and confidence in [respondent] through the affidavits of their witnesses and other pieces of
evidence."16 It also ruled that respondent was not denied due process. Respondent was able to submit his
writtenexplanationtothechargesagainsthim,andhedidnotrequestforanadversarialhearing.Petitioners
could not be faulted for requiring respondent to go on leave with pay to prevent him from continuing with
hisclientsortiesandattemptstopiratehiscolleaguesandsubordinatesonfirmtimeandresources.17
The NLRC affirmed the Labor Arbiter's Decision.18 Respondentfiledamotionforreconsideration19whichwas

denied.20 Thus, respondent filed a petition for certiorari21 before the Court of Appeals. He faulted the NLRC
foraffirmingtheLaborArbiter'sfindingthathisdismissalfromemploymentwasvalid.
The Court of Appeals found the petition meritorious. It reviewed the factual findings of the NLRC, and it
ruledthatpetitionersillegallysuspendedanddismissedrespondentfromemployment.22
The Court of Appeals did not give credence to the affidavits executed by P&A's employees relating to the
inimicalactscommittedbyrespondent.
It noted the "soaring possibility that the affidavits of these persons are highly tainted with bias cannot be
discarded,theybeingemployeesofP&A."23
It further ruled that respondent was denied due process. "With the [respondent's] denial of the charges
against him, a hearing orinvestigationshouldhavebeenconductedbyP&Ainsteadofjusthastilyfurnishing
the[respondent]thenoticeofterminationofhisemployment."24
The Court of Appeals set aside the NLRC Decision and directed petitioners to pay jointly and severally
respondent full backwages from June 16, 2002 up to the finality ofthejudgment,separationpay(inlieuof
reinstatement), and attorney's fees equivalent to 10% of respondent's separation pay and backwages.The
dispositiveportionofthedecisionread:
WHEREFORE, in view of the foregoing premises, judgment is hereby rendered by usGRANTING the
petition filed in this case and SETTING ASIDE the [D]ecision and [R]esolution promulgated by the public
respondent NLRC, Fourth Division in Cebu CityinNLRCCaseNo.V0000902004datedMarch31,2005and
July 5, 2005, respectively. Private respondents are hereby DIRECTED to pay jointly and severally the
petitioner his full backwages from June 16, 2002 up to the finality of this judgment, separation pay in the
sum of P1,142,400.00 for his 14 years of service with P&A computed atonemonthsalaryforeveryyearof
service,andattorney'sfeesequivalentto10%ofthepetitioner'sseparationpayandbackwages.25
cralawlawlibrary
P&Afiledamotionforreconsideration whichwasdenied. Thus,thispetition.
ThePetition
P&AmaintainedthattheCourtofAppealscommittedgraveerrorinrenderingtheDecisiononfourgrounds.
First, the Court of Appeals erred when it reversed the factual findings of both the NLRC and the Labor
Arbiter. It erred when it reevaluated the evidentiary weight accorded to the affidavits of petitioners'
witnessesthoughsupportedbysubstantialevidenceonrecord.28
26
27
Second, theCourtofAppealserroneouslyruledthattheaffidavitsofthecoemployeesofrespondentarenot
sufficient basis for petitioners' loss oftrustandconfidenceinhim.Therewasnoallegation,muchlessproof,
that respondent's colleagues and subordinates were motivated by any ill motive in giving false statements
against him. There was also no showing that the witnesses were forced, intimidated, or coerced into
executingtheiraffidavits.29
Third, the Court of Appeals erred in ruling that the absence of an administrative investigationconstitutesa
violationofrespondent'srighttodueprocess.30
Fourth, the Court of Appeals erred in holding the partners jointly and severally liable to pay the judgment
award despite the absence of any showing that they acted in bad faith in terminating respondent's
employment.31
Issues
Basedonpetitioners'allegationsoferrors,theissuesforresolutionbeforethisCourtare:
1.
2.
WhetherthefactualfindingsofboththeNLRCandtheLaborArbiterweresupportedbysubstantial
evidence
3.
4.
5.
6.
Whetherrespondentwasdeprivedofhisrighttodueprocessand
WhetherthepetitionersarejointlyandseverallyliablewithP&Atopaythejudgmentaward.
cralawlawlibrary
Court'sRuling
The parameters of a Rule 45 appeal from the Court of Appeal's Rule 65 decision on a labor case, are as
follows:
In a Rule 45 review, we consider the correctness oftheassailedCAdecision,incontrastwiththereviewfor

jurisdictional error that we undertake under Rule 65. Furthermore, Rule 45 limits us to the review of
questions of law raised against the assailed CAdecision.Inrulingforlegalcorrectness,wehavetoviewthe
CAdecisioninthesamecontextthatthepetitionforcertiorariitruleduponwaspresentedtoitwehaveto
examine the CA decision from the prism of whether it correctly determined the presence or
absence of grave abuse of discretion in the NLRC decision before it, not on thebasisofwhether
the NLRC decision on the merits of the casewascorrect.Inotherwords,wehavetobekeenlyaware
thattheCAundertookaRule65review,notareviewonappeal,oftheNLRCdecisionchallengedbeforeit.
cralawlawlibrary
Accordingly, we do not reexamine conflicting evidence, reevaluate the credibility of witnesses, or

substitute the findings of fact of the NLRC, an administrativebodythathasexpertiseinitsspecializedfield.
Nor dowesubstituteour"ownjudgmentforthatofthetribunalindeterminingwheretheweightofevidence
lies or what evidence is credible." The factual findings of the NLRC, when affirmedbytheCA,aregenerally
conclusiveonthisCourt.
Nevertheless, there are exceptional cases where we, in the exercise of our discretionary
appellate jurisdiction, may be urged to look into factual issues raised in a Rule 45 petition. For
instance, when the petitioner persuasivelyalleges that there is insufficient or insubstantial
evidence on record to support the factual findings of the tribunal or court a quo, as Section 5,
Rule 133 of the RulesofCourtstatesinexpresstermsthatincasesfiledbeforeadministrativeor
quasijudicial bodies, a fact may be deemed established only if supported by substantial
evidence.32(CitationsomitteditalicsandE
mphasissupplied)
cralawlawlibrary
Here, we find it necessary to examinetherecordtodeterminewhetherthefindingsoftheLaborArbiterand

theNLRCaresupportedbysubstantialevidence.
ThefactualfindingsoftheNLRC
andtheLaborArbiterweresupported
bysubstantialevidence.
The Court of Appeals ruled that P&A failed to prove by substantial evidence its allegations that respondent
committed acts of disloyalty, or acts inimical to the interest of P&A. The affidavits executed by the
employees of P&A, over whom it has undeniablemoralascendancy,donotdeservecredenceandarehighly
suspect.33
Wedisagree.
Affidavits may be sufficient to establish substantial evidence. Substantial evidence means "that amount of
relevant evidence which a reasonable mind might accept as adequate to justify a conclusion."34 InCapitol
Medical Center, Inc. v. National Labor Relations Commission,35 this Court gave credence totheaffidavitsof
the 17 employees of Capitol Medical Center, its security guards, and the union members, totheeffectthat
nostrikevotetookplace,inthatcase,whiletheLaborArbiterupheldtheaffidavitsoftheemployees,guards
and union members of Capitol Medical Center, the NLRC and the Court of Appeals ruled that the affidavits
had no probative value because they were executed out of fear. The Court of Appeals also noted that the
affidavitswereuniformandp
roforma.InreversingtheCourtofAppeals,thisCourtruled:
The allegations in the foregoing affidavits [of the overseer of the parking lot and the two security guards]
belie the claim of the respondents and the finding of the NLRC that a secret balloting took place on
November 10, 1997 in front of the hospital at the corner of Scout Magbanua Street and Panay Avenue,
Quezon City, x x x Indeed, 17 of those who purportedly voted in a secret voting executed their separate
affidavits that no secretballotingtookplaceonNovember10,1997andthateveniftheywerenotmembers
of the respondent Union, were asked to vote and sign attendance papers. The respondents failed to
adducesubstantialevidencethatthesaidaffiantswerecoercedintoexecutingthesaidaffidavits.
The bare fact that some portions of the said affidavits are similarly worded does not constitute
substantial evidence that the petitionerforced,intimidatedorcoercedtheaffiantstoexecutethe
same.36
(Emphasissupplied).
cralawlawlibrary
This principle was reiterated in INC Shipmanagement, Inc., et al. v. Moradas.37

In that case, this Court
upheld the affidavits and statements executed by the vessel's officers and crew members to support the
claimthattheinjuriesofrespondentemployeewereselfinflicted:
While respondent contended that the affidavits and statements of the vessel's officers and his fellow crew
members should not be given probative value as they were biased, sellserving, and mere hearsay, he
nonetheless failed to present any evidence to substantiate hisowntheory.Besides,ascorrectlypointedout
by the NLRC, the corroborating affidavits and statements of the vessel's officers antl crew
members must be taken as a whole and cannot just be perfunctorily dismissed as selfserving
absent any showing that they were lying when they made the statements therein.38 (Citations
omittedE
mphasissupplied.)
cralawlawlibrary
Here, respondent did not adduce evidence to show that the affiants, including Ramilito L. Nanola(Nanola),
Wendell D. Ganhinhin (Ganhinhin), Sophia M. Verdida (Verdida), and Cielo C. Diano (Diano), all of whom
wereemployedbyP&A,werecoercedtoexecuteanaffidavitprejudicialtorespondent.
In fact, respondent never questioned the evidentiary value of the affidavits at any stage of the
proceedings.39 As correctly observed by petitioners, there was no single evidence submitted showing that
theyhaveexertedunduepressureontheaffiants.40
As correctly held by both the Labor Arbiter andtheNLRC,theseaffidavitsconstitutesubstantialevidenceto

prove that respondent committed acts breaching the trust and confidence reposed on him by P&A. The
colleagues and subordinates of respondent executed the affidavits based on their personal knowledge, and
without any proof of coercion. Their statements, as discussed below, corroborate each other and leave no
roomfordoubtastotheactscommittedbyrespondent.
Respondentwasvalidlydismissed
onthegroundoflossoftrustandconfidence.
Theaffidavitsofhiscoemployeesare
sufficientbasisforP&A'slossoftrust
andconfidence.
Article 297(c)41 of theLaborCode,42asamended,providesthatanemployermayterminateanemployeefor

willfulbreachbytheemployeeoftrustreposedinhimbyhisemployerordulyauthorizedrepresentative.
While the right of an employer to freely select or discharge his employees is subject to regulation by the
State in the exercise of its paramount police power, there is also an equally established principle that an
employer cannot be compelled to continue in employment an employee guilty of actsinimicalto
theinterestoftheemployerandjustifyinglossofconfidenceinhim.43
In Bristol Myers Squibb (Phils.), Inc. v. Baban,44 this Court explained that the following requisites must be
satisfiedtojustifyavaliddismissalbasedonlossoftrustandconfidence,towit:
(1)Theemployeeconcernedmustbeoneholdingapositionoftrustandconfidence45and
(2)Theremustbeanactthatwouldjustifythelossoftrustandconfidence.46
cralawlawlibrary
Thesetworequisitesarepresentinthiscase.
As to the first requisite, employees holding positions oftrustandconfidencemaybeclassifiedintotwo.The

first class consists of the managerial employees who are vested with the powers and prerogatives to lay
down management policies and to hire, transfer, suspend, lay off, recall, discharge, assign or discipline
employees or effectively recommend such managerial actions. The second class consists of cashiers,
auditors, property custodians, etc., who in the normal and routine exercise of their functions, regularly
handlesignificantamountsofmoneyorproperty.47
The Labor Arbiter and the NLRC correctly ruled that respondent was a managerialemployee.Atthetime
of his termination on June16,2002,respondentwastheManagerinChargeoftheCebuoperationsandthe
Director of the VisayasMindanao operations of P&A.48 The Labor Arbiter noted that respondent failed to
dispute that his position, as the highest ranking officer of P&A's VisayasMindanao operations, demanded
utmost trust and confidence.49 The NLRC ruled that as Director of the VisayasMindanao operations,
respondent was bound by more exacting workethicsandwasexpectedtoupholdthedignityandinterestof
P&Aevenifhisopinionrancountertothatofhisemployer.50
The second requisite is also present. P&A's loss of trust andconfidenceisbasedonawillfulbreachoftrust,

and is foundedonclearlyestablishedfacts.InMendozav.HMSCreditCorporation,51thisCourtdistinguished
the degree of proof required in proving loss of trust andconfidenceinamanagerialemployeeononehand,
andarankandfileemployeeontheother:
The degree of proof required in labor cases is not as stringent asinothertypesofeases.Itmustbenoted,

however, that recent decisionsofthisCourthavedistinguishedthetreatmentofmanagerialemployeesfrom
that of rankandfile personnel, insofar as the application of the doctrine of loss of trust and confidence is
concerned. Thus, with respect to rankandfile personnel, loss of trust and confidence as ground for valid
dismissal requires proof of involvement in the alleged events in question, and that mere uncorroborated
assertions and accusations by the employer will not be sufficient. But as regards a managerial
employee, the mere existence of a basis forbelievingthatsuchemployeehasbreachedthetrust
of his employer would suffice for his dismissal. Hence, in the case of managerial employees,
proof beyond reasonable doubt is not required, it being sufficient that there is some basis for
such loss of confidence, such as when the employer has reasonable ground to believe that the
employee concerned is responsible for the purported misconduct, and the nature of his
participation therein renders him unworthy of the trust and confidence demanded by his
position.52
(CitationsomittedE
mphasissupplied)
cralawlawlibrary
Respondent breached the trust reposed in him by committing the followingacts:(1)negotiatingtotransfer

to a competing firm while still employed with P&A (2) enjoining a number ofP&A'sclientstotransfertheir
audit business to a competing firm (3) inviting P&A's staff to join him in his transfer to a competingfirm
and(4)enjoiningP&A'sstafftoengageinasympathystrikeduringhispreventivesuspension.
The affidavits of Nanola,53 Ganhinhin,54 Verdida,55 and Diane56 show respondent's commission of these acts
whichareallinbreachofthetrustandconfidencereposedinhimbyP&A.
On the first act, Nanola narrated how respondent told him about his Memorandum of Understanding with
LMKPMGandhisimpendingtransfertothecompetitorfirm:
7. x x x Upon his arrivalinDavao,priortoourmeetingwithclients,hemetallofus(Davaooffice

staff members) and told us again abouttheLMKPMGofferandhisfutureplans.Heeventoldme
that he already signed a Memorandum of Understanding with LMKPMG and thathewillstarton
June 15, 2002. He also told us that the purpose of the meeting with clients is to inform them about the
merger/combination and where he will begoing.Amongtheclients,whichwevisitedareBurmeister&Wain
Scandinavian Contractors (BWSC) Mindanao,Inc.,AsiaIndustries,Inc.,NaderandEbrahimPhilippines,AME
Travel/Construction, Techno Trade Davao, Farm Coop and MicroEnterprise Bank, which are all based in
Davao City. During the saidvisits,Mr.LepontoldtheclientsinmypresencethatheisleavingP&A
due to the impending merger of SGV and P&A and that he willnotjointhemerger/combination
but instead he will be joiningLMKPMG.Healsomentionedhisplansanddreamsforthecountry.There
were several instances also he mentioned our competitor, LMKPMG, which he is intending to join, x x
x57
cralawlawlibrary
InE
lizaldeInternational(Philippines)Inc.v.CourtofAppeals58weruled:
One who asserts an interest, or performs acts adverse or disloyal lo one's employer commits a breach of
an implied condition of the contract of employment which may warrant discharge, as, for example,
where onesecretlyengagesinabusinesswhichrendershimacompetitorandrivalofhisempioyer[.]"Aside
from any duties expressly imposed uponorundertakenbytheemployeeinthecontractofemployment,the
law implies various obligations and undertakings byanemployeeinenteringintoacontractofemployment,
x x x An employer has the right to expect loyalty from hisemployeesaslongastheemployment
relationship continues[.]" "Implicit in the contract of employment is the undertaking that the
employee shall be faithful to the interest of the employer during the term of the employment.
When an employee deliberately acquires an interest adverse to his employer, he is disloyal, and his
dischargeisjustified,xxx"59(CitationsomittedE
mphasissupplied.)
cralawlawlibrary
Respondent also showed Ganhinhin a copy of a letter purportedly written by LMKPMG which promised
respondentabonusincaseheachievescertainrevenuetargets.60
On the second act, Naola narrated how respondent attempted to persuade P&A's clients to transfer to
LMKPMG:
7. InMay2002,Mr.LeponcalledupfromCebuandrequestedmysecretarytosetmeetingswithourclients.
Since the Davao staff members are more inclined to join SGV, we are hesitant to setupmeetingswithour
clients as we wanted to bring all our clients upon our transfer. I told my secretary to ask him about the
purpose of the meetings. She told me later that Mr. Lepon asked her who asked such question. To avoid
unnecessary argument, we continue settingupthemeetings,xxxHealsoinformedsomeoftheclients
we met that they would be getting the short end of the bargain if they chose (sic) to stay with
P&A sincethequalityofitsserviceisexpectedtodeteriorateasaresultofthemerger.Moreover,
he also toldsomeofthemthatthebadreputationofSGVwilltaintthereputationofP&Aandthis
badreputationwillresultinthedeliveryofpoorservicetotheclients.
8. On May 28, 2002, during lunch time, we againinformedhimaboutourfinalstandasregardswhatisthe

best option for us to take, which istojoinSGV.Fromthatmoment,themoodofMr.Leponchanged.When
we resumed our meeting that afternoon with one of our clients, the way he conducted the
meeting was totally different from our previous meetings. This time, he talked a lot about
LMKPMG. Obviously, trying to convince the client to move to LMKPMG. He even gave his P&A
calling card and scribbled his cell number so that he can easily be contacted.61
(Emphasis
supplied.)
cralawlawlibrary
Verdida and Diano's joint affidavit also proved respondent's intention to lead P&A's clients away from
P&A:
6. x x x Mr. Lepon even instructed us to summarize the audit lees of our clients that he can probably
convince totransfertoLMICPMG.Healsoinstructedustoprepareasummaryofourcompensationpackage
thathewouldpresenttoLMKPMG.xxx62
cralawlawlibrary
Respondent cannot invoketheMemorandum63datedApril24,2002.TheMemorandumwasissuedbyP&Ato

its clients for the only purpose of informing them about the proposed merger with SGV and of the
advantages of a merger. Instead, respondent went to CebuandDavaotellingP&A'sclientsthattheywillbe
getting the short end of the bargain if they choose to stay with P&A since the quality of P&A's service will
deteriorate as a result of the merger. He explained to them why he was not joining the merger, where he
wouldprobablygo,andtoldthemthatP&A'sserviceisexpectedtodeteriorate.
AsheldbytheNLRC,whilerespondentmayhavethelibertytoexpresshisviewsoftheproposedmerger,he
was not justified when he made his own conviction go overboard, by telling clients of P&A that the latter's
reputation as provider of quality service is expected to deteriorate clue to the merger and further induced
them to patronize the rival firm he intended to join.64 Respondent, as the Director of P&A's
VisayasMindanao operations, owed duties of loyalty to P&A, his employer, toinformitsclientsaboutP&A's
businessdecisiontomerge,foraslongashewasstillemployedbyP&A.
As to the third act, Naola narrated how respondent persuaded his colleagues andsubordinatestotransfer
atLMKPMG:
6. Sometime inApril2002,togetherwithotherManagersandDirectors,weattendedameetingwiththekey
partners of SGV and P&A. The following morning, I told Mr. Lepon that my Davao staff members aremore
inclined to join with SGV. Hence, Mr. Lepon told me that he will no longer include Davao office for any
options. However,accordingtoMr.LepontheLayaMananghayaKPMG(LMKPMG)offercome(sic)
up and he told me to consider said option and disseminate the information to my staff. He even
called up my secretary and my senior staff members about the LMKPMG offer andpersuadedthemtojoin
LMKPMG. According to him, LMKPMG is offering three months bonus for the Director and Managers, two
months bonus for senior staff and a month bonus for junior staff. He also mentioned that ifwecouldmeet
the [P]6,000,000 gross revenue and the [P]1,500,000 net income (not told to my staff), he will receive a
[P]500,000 bonus, which he intendtomakeavailableforallofus.Mr.Leponisverypersistentinconvincing
ustoconsidertheLMKPMGoption.65
cralawlawlibrary
Ganhinhin's narration also proved that respondent explained to his colleagues and subordinates the
compensationpackageandbenefitsofferedbyLMKPMG:
6. Sometime in May 2002, according to Mr. Lepon, Laya MananghayaKPMG (LMKPMG) offered three
months bonus for the Director and Managers, two months bonus for senior staff and a month bonus for
junior staff. He showed to me a 2page letter in plain bond paper which he claimed came from LMKPMG.
Under the said letter,ifhecouldmeetcertainrevenuetargets,hewillreceivea[P]500,000bonus,whichhe
intendstomakeavailabletoallofus.66
cralawlawlibrary
Verdida and Diano's jointaffidavitfurtherprovedrespondent'sintentiontoleadP&A'sstafftotransfertothe

competingfirm:
6. 'there is no truth whatsoever to the claim of Ms. Louilyn N. Amboang, a former contractualemployeeof
[P&A], that Mr. Lepon never campaigned among the employees to abandon [P&A]. All the employees of
P&A's Cebu City Office knew for afactthatMr.Leponhadaggressivelyinvitedthestaffof[P&A]'sCebuCity
Office to join him when he joins LMKPMG. He kept on harping on his claim that we have no future
with [P&A]andthatamuchbettercompensationpackageawaitsusshouldwedecidetojoinhim
in LMKPMG. x x x He also instructedustoprepareasummaryofourcompensationpackagethat
he would present to LMKPMG. When Mr. Lepon went on leave with pay,heinstructedustogivetohim
all documents, including the draft of his employment contract with LMKPMG, and to delete all the files in
ourcomputerspertainingtoLMKPMG.67(E
mphasissupplied.)
cralawlawlibrary
InM
olinav.PacificPlans,Inc., thisCourtruled:
68
xxx Moreover, an employer has a protectable interest in the customer relationships of its formeremployee
established and/or nurtured while employed by the employer, and is entitled to protect itself from the risk
that a former employee might appropriate customers by taking unfair advantage of thecontractdeveloped
while working for the employer. While acting as an agent of his employer, an employee owes the
duty of fidelity and loyalty. Being a fiduciary, he cannot act inconsistently with his agency or
trust. He cannot solicit his employer's customers or coemployees for himself or for a business
competitorofhisemployer,xxx69
(CitationsomittedEmphasissupplied.)
cralawlawlibrary
As tothefourthact,GanhinhinnarratedthatrespondentenjoinedthestaffofP&A'sCebuOfficetoconducta
sympathystrikeduringrespondent'spreventivesuspension:
7. WhenMr.LeponwasrequiredtotakealeaveofabsencewithpaybyP&A,lieaskedthestaffof
P&A CebuOfficetojoinhiminLMKPMGandenjoinedustosympathizewithhimbynotreporting
to worksoastoparalyzetheoperationsoftheP&ACebuOffice.Itoldhimtoconsulthislaborlawyer
before doing that because I believe it is not appropriate to abandon our job since the issue of leave of
absencedoesnotconcernus.70
(E
mphasissupplied.)
cralawlawlibrary
Verdida and Diano also narrated in their joint affidavit that respondent invited them to engage in a
sympathystriketoparalyzetheoperationsofP&A'sCebuCityOffice:
5. On May 29, 2002, when Mr. Lepon was informed over the telephone that lie would be requiredtogoon
leave of absence withpayeffectiveJune1,2002,heaskedthestaffof[P&A]'sCebuCityOfficetojoin
him in LMKPMC and enjoined us to sympathize with him by not reporting to work so as to
paralyze the operationsofP&A'sCebuCityOffice,Hesuggestedthatwewouldfinishourpendingwork
in LMKPMG. Mr. Lepon even gotdisappointedatusafterthestaffof[P&A]'sCebuCityrefusedtoconducta
sympathystrikeforhisleaveofabsencewithpay.71
cralawlawlibrary
In Perez v. Medical City General Hospital, we ruled that "[a]n employer cannot be expected to retain an
employee whose lack of morals, respect and loyalty to his employer or regard for his employer's rulesand
appreciationofthedignityandresponsibilityofhisofficehassoplainlyandcompletelybeenbared."
We cannot sanctionrespondent'sactofinvitingP&A'sstafftoconductasympathystrike.Thisisinconsistent
with respondent's duty of fidelity and loyalty to P&A. In doing so, respondent urged his colleagues and
subordinates to disregard their responsibilities as employees of P&A and sought to disrupt the latter's
operations. Thus, P&A merely acted within its right as employer when it dismissedrespondent.Theactshe
committedaresufficientbasisforthelossoftrustandconfidenceofP&A.
Respondentwasnotdeprivedofdueprocess
The Court of Appeals ruled that respondent was denied of due process because P&A failed to conduct a
hearingorinvestigationpriortothenoticeoftermination.
Wedisagree.
Article 292(b),73 of the Labor Code, as amended, in relation to the then applicable Section 2(d),74 RuleIof
the Implementing Rules of Book VI of the Labor Code, as amended by Department Order No. 10, seriesof
1997, requires theemployertogivetheemployeetwowrittennoticespriortohisterminationforjustcause.
The first noticemustcontainastatementofthecausesfortermination,andshallaffordtheemployeeample
opportunity to be heard and to defend himself with the assistance of a representative if he sodesires.The
second notice, which is the notice of termination, must indicate that upon due consideration of all the
circumstances,groundshavebeenestablishedtojustifytheemployee'stermination.
P&A complied with the twonotice rule under Article 292 of the Labor Code, as amended. P&A served
respondent with the first notice dated May 30, 2002 which properly apprised him of the incidents that
contributed to P&A's loss of trust and confidence. Respondent sent his reply dated June 6, 2002 where he
justified his actions, and presented hisdefensesagainsttheaccusationsagainsthim.Afterevaluationofthe
matters raised in respondent's reply, P&A sent a notice of termination dated June 13, 2002 informing him
that the totality of his reactions and actuations inrelationtotheproposedcombinationofP&AandSGVhas
put his loyalty to serious doubt, and has led toacompletelossofthepartners'trustandconfidenceinhim.
ThisisthesecondnoticerequiredunderArticle292.
Respondent cannot argue that a hearing, investigation or any semblance thereof should have been
conducted before he was terminated. In Perez v. PhilippineTelegraphandTelephoneCompany,75
thisCourt
explained the meaning of "ample opportunity to be heard" under Article 292 of the Labor Code, as
amended:
72
A hearing means that a party should be given a chance to adduce his evidence to support his side of the
case and that the evidence should be taken into account in the adjudication of the controversy. To be
heard"does not mean verbal argumentationaloneinasmuchasonemaybeheardjustaseffectivelythrough
written explanations, submissions orpleadings.Therefore,whilethephrase"ampleopportunitytobeheard"
may in fact include an actual hearing, it is not limited to a formal hearing only. In other words, the
existence of an actual, formal "trialtype" hearing, although preferred, is not absolutely
necessarytosatisfytheemployee'srighttobeheard.76
xxx
(a) "ample opportunity to be heard" meansanymeaningfulopportunity(verbalorwritten)given

to the employee to answer the charges against him and submit evidence in support of his
defense,whetherinahearing,conferenceorsomeotherfair,justandreasonableway.
(b) a formal hearing or conference becomes mandatory only when requested by theemployeeinwritingor
substantial evidentiary disputes exist or a company rule or practice requires it, or when similar
circumstancesjustifyit.
(c) the "ample opportunity to be heard" standard in the Labor Code prevails over the "hearing or
conference"requirementintheimplementingrulesandregulations.77(CitationsomittedE
mphasissupplied).
cralawlawlibrary
Despite the lack offormalhearingorinvestigation,respondentwasgivenampleopportunitytobeheard.He

was given the opportunity to refute the charges against him. In fact, his reply dated June 6, 2002
thoroughly discussed his justifications and defenses to the accusations imputed on him.78 He cannot argue
that the absence of a formal hearing or investigation, despite his denial to the accusations, constituted a
defectonhisdismissalfromemployment.79
In view of the foregoing, respondent's dismissal from employment is valid. Thus, respondent's monetary
claimsagainstP&Aandpetitionershavenolegalandfactualbasis.
WHEREFORE, premises considered, the petition is hereby GRANTED and the decision of the Court of
Appeals dated February 15, 2006 is hereby REVERSED. We AFFIRM the Decision dated March 31, 2005
and the Resolution dated July 25, 2005 of the National Labor Relations Commission which affirmed the
August13,2003DecisionoftheLaborArbiter.
SOORDERED.
chanroblesvirtua
SECONDDIVISION
NEWFILIPINOMARITIMEAGENCIES,INC.,TAIYONIPPONKISENCO.,LTD.,ANDANGELINAT,
RIVERA,P
etitioners,v
.V
INCENTH.DATAYANHEIROFSIMONVINCENTH.DATAYAN
III,1
Respondent.
DECISION
DELCASTILLO,J
.:
As a rule, the death of a seafarer during the term of his employment makes his employer liable for death
benefits. The employer, may, however, be exempt from liability if it can successfully establish that the
seafarer'sdeathwasduetoacauseattributabletohisownwillfulact.2
This PetitionforReviewonCertiorariassailstitleFebruary22,2012Decision3oftheCourtofAppeals(CA)in
CAG.R. SP No.119775.TheCAgrantedthePetitionforCertiorarifiledtherewithandreversedandsetaside
the October 28, 2010 Decision4 and March 15,2011Resolution5oftheNationalLaborRelationsCommission
(NLRC) in NLRCLACNo.0700053610,which,inturn,affirmedtheMay31,2010Decision6ofLaborArbiter
ArdenS.Anni(LA)dismissingthecomplaintinNLRCNCROFWCaseNo.(M)050705209.
Likewise challenged is the July 24, 2012 CA Resolution7 denying the motion for reconsideration for lack of
merit.
FactualAntecedents
On August 8, 2007, New Filipino Maritime Agencies, Inc. (NFMA), for and on behalf of St. Paul Maritime
Corp. (SPMC), employed Simon Vincent Datayan II (Simon) as deck cadet on board the vessel Corona
Infinity. His employment was for nine months with basic monthly salary of US$23 5.00.8 Prior to his
deployment, Simon underwent preemployment medical examination (PEME) and was declared fit for sea
duties.OnAugust17,2007,heboardedthevesselandassumedhisdutiesasdeckcadet.9
On December 30,2007, at 12:40 a.m.,theMasterauthorizedtheconductofanemergencyfiredrillinwhich

the crew participated. At about 1:25 a.m., he declared that Simon jumped overboard. A futile
searchandrescue operation ensued. After a few weeks, Simon was declared missing and was presumed
dead.10
Simon's father, Vincent H. Datayan (respondent), alleged that he went toNFMAtoclaimdeathbenefitsbut

his claim was unheeded.11 On May 11, 2009, he filed a complaint12 for death benefits and attorney's fees
againstNFMA,TaiyoNipponKisenCo.,Ltd.,13andAngelinaT.Rivera(petitioners).
Respondent averred that because Simon died during the term of his employment, the provisions of the
collective bargaining agreement (CBA) among All Japan Seamen's Union, Associated Marine Officers' and
Seamen's Union of the Philippines (AMOSUP), and the International Mariners Management Association of
Japan, must be applied in the grant of death benefits and burial assistance in his favor, being the heir of
Simon.14
Respondent also stated that thefiredrillwasconductedat12:40a.m.wheretherewasheavyconcentration

of fishing boats in the area and during which the water temperature was expected to cause hypothermia.
He asserted that petitioners were presumed to be at faultorhadactednegligently,unlesstheycouldprove
that Simon's death was due to causes not legally compensable.15 He declared that there was no evidence
that Simon committed suicide and maintained that his death was a result of negligence and reckless
instructionoftheMaster.16
On the other hand, petitioners alleged that on December 29/2007, the crew,exceptthoseonduty,werein
the mess hall for a birthday celebration. They stated that SimonwasinvitedbytheMastertojointheparty
but he refused.17 At about 12:40 a.m. of December 30, 2007, the Master ordered the conductofafireand
emergency drill. After the drill, a crew meeting was held where the Master reprimandedSimonforhispoor
performance. They stated that Simonleftevenbeforethemeetingwasconcluded.Thus,theMasterordered
the crew to search for him. At about 1:25 a.m. to 1:30 a.m. of December 30, 2007, Raymond Ocleasa
(Ocleasa)sawSimonjumpoverboard.18
Additionally, petitioners declared that they exerted efforts to search, locate and rescue Simon.19 They
alleged that the vessel retraced itscoursetowherehefell.TheMasteralsoinformedtheJapanCoastGuard
about the incident. In response, the Yokohama Coastguard Patrol conductedasearchandrescueoperation
tonoavail.20
Petitionersalsoaverredthatduringasearchmadeonthevessel,anotefromSimonwasfound.21
Petitioners argued that respondent had nocauseofactionagainstthembecauseSimon'sdeathwasaresult

of his (Simon's) deliberate act. They insisted that based on the Philippine Overseas Employment
Administration (POEA)StandardEmploymentContract(SEC)andCBA,acomplainantisnotentitledtodeath
benefits when the cause of the seaman's death was the latter's willful act.22 Petitioners added that the
Master's Report, Statement of Facts, Marine Note of Protest and Investigation Report conclusively proved
that Simon committed suicide. They stated that this conclusion was bolstered by the suicide notefoundon
thevessel,signedbySimonhimself.23
RulingoftheLaborArbiter
On May 31, 2010,theLAdismissedthecomplaint.24TheLAheldthatSimon'ssuicidewasestablishedbythe

evidence on record. Specifically, the Master's Report, as corroborated by Simon'ssuicidenote,showedthat
he voluntarily jumped overboard. The LA stated that ''the signature of the deceased seafarer in said note
andinhisPOEAContractwouldshowsimilarity,ifnotidentity.Tosaythatitwasfabricatedorconcoctedwill
notlessenthecredibilityofthesuicidenote,absentanyconcreteevidencetothecontrary."25
cralawred
RulingoftheNationalLaborRelationsCommission
On appeal, the NLRC affirmed the LA Decision.26 Like theLA,theNLRCgaveprobativeweighttothesuicide

note, the Master's Report, along with other pieces of documentary evidence adduced, to establish that
Simon committed suicide. It held that considering that the death of the seafarer was due to his willfulact,
thenhisheirisnotentitledtohisdeathbenefits.
OnMarch15,2011,theNLRCdeniedrespondent'smotionforreconsideration.27
RulingoftheCourtofAppeals
Respondent then filed a Petition for Certiorari with the CA maintaining that there was no evidence that
Simoncommittedsuicidehencehisdeathiscompensable.
On February 22, 2012, the CA rendered the assailed Decision,28 findingforrespondent,thedecretalportion

ofwhichreads:
WHEREFORE, the petition for certiorari is GRANTED. The assailed October 28, 2010 Decision and March
15,2011 Resolution of public respondent are REVERSED and SET ASIDE. A new judgment is rendered
ordering private respondents New Filipino Maritime Agencies, Inc. and/or Taiyo Nippon Kisen Co., Ltd. and
Angelina T. Rivera to pay petitioner Vincent H. Datayan as heir of Simon Vincent H. Datayan II, the
following:
1. US$50,000.00oritsPhilippinecurrencyequivalentasdeathbenefitsinaccordancewiththe2000
POEAAmendedStandardTermsandConditionsGoverningtheEmploymentofFilipinoSeafarerson
BoardOcean[]GoingVessels
2.
3.
4. US$1,000.00oris[sic]Philippinecurrencyequivalentasburialassistance
5.
6.
7. P50,000.00asmoraldamagesandP25,000.00asexemplarydamages
8.
9.
10. Attorney'sfeesequivalentto10%ofthetotalmonetaryawardsand
11.
12.
13. Legalinterestontheforegoingamountsfromthedateoffilingofthecomplaintuntilfullypaid.
SOORDERED.29
cralawlawlibrary
TheCAexplainedthatitwasbeyondquestionthatSimondiedaboardthevesselandduringtheeffectivityof
his contract, thus, respondent is entitled to receive death benefits arising therefrom. It found that
petitioners' evidence failed to prove that Simon committed suicideandruledthattheMasterwhoexecuted
and signed the Master's Report, Marine Note of Protest and Statement of Facts failed to give positive
testimony ascertaining Simon's actual suicide. It further pointedoutthatthecrewmemberswhosignedthe
Investigation. Report had no personal knowledge of Simon's suicide. It added that Ocleasa, the alleged
witnessoftheincident,didnotsignthereportorissueaswornstatementonthematter.
In addition, the CA stated that Simon underwent PEME and was not declared emotionally unfit. As such, it
gavenoprobativeweighttotheallegedsuicidenoteofSimon.
Finally, the CA reasoned that in computing the death benefits in favor of respondent, the applicable
provisions are those under the POEASECnottheCBAwhichcoversdisabilitybenefitsonlymoreover,there
wasnoevidencethatSimonwasanAMOSUPmember.
On July 24,2012, the CA denied petitioners'motionforreconsideration.30Hence,petitionersfiledtheinstant

Petitionarguingthat:
1.
2.
3.
4.
5.
6.
7.
8.
cralawlawlibrary
xxxtheCourtofAppealscommittedserious,reversibleerroroflawinawardingdeathbenefitsin
favorofrespondentMr.VincentH.DatayanIIdespitetherulingofthisHonorableCourtinthecase
ofReyesvs.Maxim'sTeaHouse,thatfindingsoffactofquasijudicialbodiesliketheNLRC,
particularlywhentheycoincidewiththoseoftheLaborArbiterandifsupportedbysubstantial
evidence,areaccordedrespectandevenfinalitybyappellatecourts.
xxxtheCourtofAppealscommittedserious,reversibleerroroflawinholdingthatthedeathofthe
deceasedseafarerwascompensableasthedefenseofsuicidewasnotestablishedwithsubstantial
evidencedespitethesuicidenotemadebythedeceasedseafarerwhoseauthenticitywasaffirmed
bytheLaborArbiterandtheFirstDivisionoftheNLRC.32
xxxtheCourtofAppealscommittedserious,reversibleerroroflawinawardingdamages,
attorney'sfeesandlegalinterestinfavorofrespondent.Theawardofdamagesandattorney'sfees
hasnobasisasthedenialofrespondent'sclaimfordeathbenefitswasdoneingoodfaith.Further,
theawardoflegalinterestshasnobasisinfactandinlaw.33
Petitioners submit that the documentary evidence established that Simon killed himself, which makes
respondent not entitled to death benefits. They contend the LA and the NLRC found said documents to be
authenticandaresufficientproofthatthecauseofSimon'sdeathwashiswillfulactofcommittingsuicide.
Petitioners posit that the CAerredinholdingthatthebestevidencetoproveSimon'sallegedsuicidewashis

body, which was never found. They added that it would be unjust to hold that the fact of death was
established but its cause was not shown from the evidence on record. They further aver that to followthis
line of reasoning the fact ofdeathmustbeestablishedbyclearandconvincingevidence.Assuch,according
to petitioners, respondent's cause of action would have accrued only after four years from the time Simon
waspresumeddeadonDecember30,2007.
Likewise, petitioners state that the Marine Note of Protest, Master's Report, Statement of Facts and
Investigation Report were not hearsay evidence becausetheywereofficialdocumentsissuedbytheMaster.
Also, they point out that these documents were notarized and were authenticated byanaffidavitsignedby
theMaster.
Petitioners also explain that the absence of signature of OcleasawasaddressedintheInvestigationReport.

The report indicated that Ocleasa had already disembarked when the investigation was conducted he,
nonetheless,reportedtothelocalagentsandnarratedwhathewitnessedonthevessel.
Petitioners emphasize the finding of the LA that the signatures in the alleged suicide note and in thePOEA
contractwerethesame,ifnotidentical.
Lastly, petitioners allege that damages were improperly awarded in favor of respondent considering that
necessary procedures were undertaken tolocateSimon.Theyalsostatethatinvestigationwasconductedto
gatherinformationfromthecrewregardingthecircumstancessurroundinghisdeath.
For his part, respondent reiterates that there was no evidence that Simon committed suicide and that his
death was a result of the Master's negligence. He insists that the alleged suicide note could not havebeen
written bySimonconsideringtheproximityofevents,thatis,at12:40a.m.,thefiredrillwasconductedand
at 1:25 a.m., Simon was said to have jumped overboard.Heassertsthatheisentitledtocompensationfor
the death of his son because he had established that he died during the term of his employment contract
withpetitioners.
Issue
IstheCAcorrectinfindingthattheNLRCcommittedgraveabuseofdiscretionindenyingrespondent'sclaim
fordeathbenefits?
OurRuling
In labor cases, the reviewoftheCourtunderRule45oftheRulesofCourtinvolvesthedeterminationofthe

legal correctness of the CA Decision. This means that the Court must ascertain whether the CA properly
determined the presence or absence of grave abuse of discretion in the NLRC Decision. Simply put, "in
testing for legal correctness, the Court views the CA Decision in the same context that the petition for
certiorari it ruled upon was presented to it."34 It entailsalimitedreviewoftheactsoftheNLRC,ofwhether
it committed errors of jurisdiction. It does not cover the issue of whether theNLRCcommittedanyerrorof
judgment, unless there is a showing that its findings and conclusion were arbitrarily arrived at or werenot
basedonsubstantialevidence.35
In this case, both the LA and the NLRC ruled that respondent's claim for death benefits was withoutbasis.
They agreed that Simon committed suicide, as principally established by the Master's Report and Simon's
suicide note. The CA ruled otherwise. It gave no weight to the suicide note because Simon underwent the
PEME and was declared fit to work. The CA also refused to accord probative value to the Master's Report,
amongothers,becausetheMastergavenopositivetestimonyonSimon'sactualsuicide.
To determine whether the CA correctly found that the NLRC gravely abused its discretion in finding that
there is substantial evidence or such relevant evidence a reasonable mind might accept as adequate to
support a conclusion36 thatSimoncommittedsuicide,itbecomesimperativetoresolvewhethertheparties
discharged their respective burdens of proof and the corresponding shift in the burden of evidence in this
case.37
As claimant for death benefits, respondent has the burden to prove by substantial evidence that his son's
death is workrelated and that it transpired during the term of his employment contract. In this respect,
respondenthasdischargedhisburden.ItisbeyondquestionthatSimondiedduringthetermofhiscontract.
The next question is whether Simon's death was due to his deliberate act. If such is the case, then
respondent is not entitled to death benefits. That Simon's death was aresultofhiswillfulactisamatterof
defense.38Thus,petitionershavetheburdentoprovethiscircumstancebysubstantialevidence.
The Court finds that petitioners discharged their burden to prove that Simon committed suicide. The
Master's Report39 clearly described the situation on thevesselpriorto,duringandafterthetimethatSimon
wentoverboard,towit:
x x x WE CONDUCTED EMERGENCY FIRE DRILL AT NIGHT TIME 0040LT30thDECEMBER2007/1540TC29th

DECEMBER 2007. AFTER THE DRILL ATABOUT0055LTWECONDUCTEDMEETINGATCREWMESSHALLFOR
MASTER'S EVALUATION AND AT THE SAME TIME SAFETY MEETING DURING EVALUATION, I STRONGLY
MENTIONED ABOUT HIS (SIMON'S) BEHAVIOUR ON BOARD THESHIPTOMOTIVATEHIMANDTOIMPROVE
HIS PERFORMANCE SINCE HE IS A DECK CADET ANDABOUTTOBEPROMOTEDASORDINARYSEAMANxx
x
x x x AFTER THE MEETING [I] OBSERVED THAT HEWASNOTAROUNDINTHEMESSHALL.KNOWINGTHAT

HE WAS SLIGHTEDIORDERTOLOOKFORHIMINWHICHTHECREWCOMPLIED.ONEOFTHECREWWIPER
RAYMOND C. OCLEASA xxx SAW DECK CADET SIMON VINCENT H. DATAYAN II WAS STANDING [SIC] ON
THE FAIRLEAD PORT QUARTER AND AT THAT POINT HE (WIPER) SAW TORCH LIGHT PASS HIS (DECK
CADET) FACE AND CAUGHT HIS (DECK CADET) ATTENTION THEN WHEN HE ATTEMPTED TO JUMP, HE
(WIPER) CALLED HIS NAME BUT HE (DECK CADET) JUMPED OVERBOARD. THEN WIPER WENT TO SHIP'S
OFFICE AND DIAL 0 FOR PUBLIC ADDRESS AND SHOUT MANOVERBOARD PORTSIDE. BUT THAT
ANNOUNCEMENT WAS NOT CLEAR ENOUGH. SO WHEN I REACH THE BRIDGE I ASKED SECOND OFFICER
WHICH SIDE HE FELL OVERBOARD BUT SECOND OFFICER ALSO NOTSURE[SIC]WHICHSIDEHEFELL.IN
ORDER TO RETURN I ORDERED HARD STARBOARD TO MANEUVER WILLIAMSON TURN AND RETURN TO
RECIPROCAL COURSE AND DROP LIFEBOUY WITH BOUYANT SMOKE SIGNAL AND SELF IGNITING LIGHT.
TURNONALLDECKLIGHTSANDPOSTEDLOOKOUTSxxx40
cralawlawlibrary
At the same time, the Statement of Facts submitted bypetitionersindicatedthatafterthevesselretraced

its course to where Simon fell, the incident was reported to the Japan CoastGuardandtopetitioners'local
agents in the Philippines. The Yokohama Coastguard Patrol also conducted searchandrescue but to no
avail.
Moreover, in their Investigation Report,42 the crewdescribedSimonasa"verysilentperson,brightstudent,

[f]ast learner but very sensitive person and will not talk unless you x x x question him. No problems with
anybodysinceheembarkedthevessel[sic]."
The Master Report and Statement of Facts were executed by the Ship Master Arthur Evangelista, who also
subscribedandsworetohisstatementsbeforeaNotaryPublic.43
41
In Unicol Management Services, Inc. v. Malipot,44 the Court considered the Master's Report and the
Investigation Report, among others, in ruling that the seaman's beneficiaries were not entitled to death
benefits. It noted that these documents completely detailed the events that transpired prior to and the
circumstancesleadingtothediscoveryofhisdeathbysuicide.
Similarly, in the instant case, the Master's Report as well as the Statement of Facts described the events
that occurred prior to, during and after the incident when Simon went overboard. In particular, Simon
declinedtheMaster'sinvitationforhimtojointhepartythereafter,theMasterreprimandedhimbecausehe
performed poorly in the drill Simon left the meeting and was later seen to jump overboard by Ocleasa.
Added to this narration is the statement of the crew in the Investigation Report that Simon was a "very
sensitive"person.
Also, the Investigation Report addressed the question on why Ocleasa did not sign said report. As stated
therein, he already disembarked from the vessel whenthereportwasexecutedandwasinvestigatedatthe
(local)office,wherehestatedthathesawSimonjumpoverboard.45
More importantly, the fact that Simon committed suicide is bolstered by the suicide note thatheexecuted.
Hisnote46reads:
0100LT
Dec.30,2007
Dearlovedones&shipmates,
I cannot take it anymore. Sorry for letting you pay for my shortcomings. I ask you toletmeendmylife.I
cannot beartheshameoflettingyouallendureallwhatisdueme.ButIhappilyendmylifebecauseIknow
it is the only [way] I can repay you [sic]. You suffered for not letting myself obey my Master for a drink
[sic],ofwhich,hecommencedadrillw/outanyones[sic]idea[.]
Sayonara&Godbless.
w/youalways.
Simon
cralawlawlibrary
The suicide note is informative as to why Simon committed suicide. He declined tojointhepartyheldprior
to the drill and was reprimanded for his poor performance in said drill. It can, thus, be inferred from the
notethatheblamedhimselfforthedifficultiesheassumedtohavecausedhiscolleagues.
As such, to refute petitioners' position that Simon committed suicide, the burden of evidence shifts to
respondent. Nonetheless, respondent failed to discharge his burden. Respondent relies on the alleged
negligence of the Master in ordering the conductofthedrillandarguesthatSimoncouldnothavewrittena
suicide note because of the proximity of the time when the drill was conducted and the time when Simon
jumped overboard. Respondent presented no proof that said suicidenotewasfabricated,asnospecimenof
Simon'shandwritingwassubmittedtoprovethatitwasnotwrittenbyhim.
On the contrary, the Court shares the observation of the LA thatthesignature47inthesuicidenoteandthe

signature48ofSimoninhisemploymentcontractappeartobethesame.
Hence,bysubstantialevidence,thereareadequatereasonsandproofthatSimoncommittedsuicide.
Under Section 20(D) of the POEA SEC,49 no compensation or benefits shall arise in case of death of a
seafarer resulting from his willfulact,providedthattheemployercouldprovethatsuchdeathisattributable
totheseafarer.
Although Simon died during the term of his contract with petitioners, still, respondent is not entitled to
receive benefits arising from his death. As clearly established, Simon died by his willful act of committing
suicideanddeathunderthatcircumstanceisnotcompensableunderthePOEASEC.
In consideration of the foregoing, theCourtfindsthattheCAerredinsettingasidetheNLRCDecisionwhich

affirmedtheLADecisiondismissingthecomplaintforlackofmerit.
WHEREFORE, the Petition is GRANTED. The February 22, 2012 Decision and July 24, 2012 Resolution of
the Court of Appeals in CAG.R. SP No. 119775 are REVERSED and SET ASIDE. The October 28, 2010
Decision of the National Labor Relations Commission in NLRC LAC No. 0700053610 isREINSTATED and
AFFIRMED.Accordingly,thecomplaintinNLRCNCROFWCaseNo.(M)050705209isD
ISMISSED.
SOORDERED.
SECONDDIVISION
REYNALDOINUTAN,HELENCARTE,NOELAYSON,IVYCABARLE,NOELJAMILI,MARITESHULAR,
ROLITOAZUCENA,RAYMUNDOTUNOG,ROGERBERNAL,AGUSTEVESTRE,MARILOUSAGUN,AND
ENRIQUELEDESMA,JR.,P
etitioners,v
.N
APARCONTRACTING&ALLIEDSERVICES,NORMAN
LACSAMANA,***JONASINTERNATIONAL,INC.,ANDPHILIPYOUNG,R
espondent.
DECISION
DELCASTILLO,J
.:
A judicially approved compromise agreement hastheeffectandauthorityofresjudicata.2Itisfinal,binding
on the parties, and enforceable through a writ of execution. Article 2041 oftheCivilCode,however,allows
the aggrieved party to rescind the compromise agreement and insist upon hisoriginaldemanduponfailure
andrefusaloftheotherpartytoabidebythecompromiseagreement.
This Petition for Review on Certiorari2 assails the August 27, 2010 Decision3 oftheCourtofAppeals(CA)in
CAG.R. SP No. 106724, which dismissed thePetitionforCertiorarifiledbyReynaldoInutan(Inutan),Helen
Carte (Carte), Noel Ayson (Ayson), IvyCabarle(Cabarle),NoelJamili(Jamili),MaritessHular(Hular),Rolito
Azucena (Azucena), Raymundo Tunog (Tunog), Jenelyn Sancho, Wilmar Bolonias, Roger Bernal (Bernal),
Agustin Estre (Estre), Marilou Sagun (Sagun), and Enrique Ledesma, Jr. (Ledesma), against respondents
Napar Contracting & Allied Services (Napar), Norman Lacsamana (Lacsamana), Jonas International, Inc.
(Jonas), and Philip Young (Young), and affirmed the June 26, 2008 Decision4 and October 14, 2008
Resolution5 of the National Labor Relations Commission (NLRC) in NLRC CA No. 04147404 dismissing the
consolidated complaints against respondents for illegal dismissal with money claims on the ground of res
judicata. Likewise assailed is the CA's February 10, 2011 Resolution6 which denied the Motion for
Reconsideration.
FactualAntecedents
Petitioners Inutan, Carte,Ayson,Cabarle,Jamili,Hular,Azucena,Tunog,Bernal,Estre,Sagun,andLedesma

were employeesofrespondentNapar,arecruitmentagencyownedandmanagedbyrespondentLacsamana.
Napar assigned petitioners at respondent Jonas, a corporation engaged in the manufacture of various food
products with respondent Young as its President, to work as factory workers, machine operator, quality
controlinspector,selector,mixer,andwarehouseman.
Sometime in September of 2002, petitioners and other coworkers (complainants) filed before the
Arbitration Branch of the NLRC three separate complaints for wage differentials, 13th month pay, overtime
pay, holiday pay, premium pay for holidayandrestday,serviceincentiveleavepay,andunpaidemergency
cost of living allowance (ECOLA) against respondents, docketed as NLRC NCR Case Nos. 09766982002,
09081522002, and 09080462002, which complaints were consolidated before Labor Arbiter Jaime M.
Reyno(LAReyno).
On January 13, 2003, complainants and respondents entered into a Joint Compromise Agreement7which
reads:
JOINTCOMPROMISEAGREEMENT
COMPLAINANTS and the RESPONDENTS, through their' respectivecounsel,respectfullysubmitthefollowing

CompromiseAgreement.
WHEREAS,theparties(exceptSusanaLarga)decidingtofinallywrite"finis"totheinstantcase,haveagreed
tosettletheinstantcaseandtoenterintoaCompromiseAgreement.
NOW THEREFORE, for and in consideration of the terms and conditions herein below stipulated,theparties
doherebyagree:
1. ThatthecomplainantsshouldbeconsideredregularemployeesofNaparContractingandAllied
Servicesreckonedfromtheirdateofhireandareentitledtoallthebenefitsunderthelawdueto
regularemployees
2.
3.
4. ThatthecomplainantsshallbereassignedbyNaparContractingandAlliedServicesandshall
ensurethattheywillbegivenworkwithinfortyfivedays(45)oruntilFebruary26,2002
5.
6.
7. ThatincaseNaparContractingandAlliedServicesfailedtoreassignorprovidethemwork,
complainantsshallbereinstatedintheirpayrollorbegiventheirsalaryequivalenttotheexisting
minimumwagexxx
8.
9.
10. ThatthecomplainantsshalleachreceivetheamountofSEVENTHOUSANDPESOSaspaymentfor
theirmonetaryclaimsandwhichamountshallbeconsideredinanyfuturelitigation
11.
12.
13. Thatuponsigningofthisagreementandcompliancewiththestipulationshereinprovided,thecases
shallbedeemedandconsideredfullyandcompletelysatisfiedandthecomplainantsherebyrelease,
remissandforeverdischargethehereinrespondents,fromanyandallclaimsarisingfromthe
abovecases
14.
15.
16. ThepartieshereinrespectfullyprayuntothisHonorableCommissiontoapprovethisCompromise
AgreementandthereafteranOrderbeissueddeclaringthejudgmentintheaboveentitledcases
fullyandcompletelysatisfied.
17.
INWITNESSWHEREFORE,thepartieshavehereuntosettheirhandsthis13thdayofJanuary2003.8
cralawlawlibrary
In an Order dated January 16, 2003, LA Reyno approved the Joint Compromise Agreement, enjoined the
partiestofullycomplywithitstermsanddismissedthecasewithoutprejudice.
In accordance with the Joint Compromise Agreement, complainants, on several instances, reported to
Napar. They were paid P7,000.00 each as part of theagreementbutwererequiredbyNapar(1)tosubmit
their respective biodata/resume and several documents suchasPoliceClearance,NBIClearance,Barangay
Clearance, Mayor's Permit, Health Certificate, drug test results, community tax certificate, eye test results
and medical/physical examination results (2) to attend orientation seminars (3) to undergo series of
interviews and (4) to take and pass qualifying examinations, before they could be posted to their new
assignments. Theserequirements,accordingtoNapar,areneededtoproperlyassesscomplainants'skillsfor
newplacementwiththeagency'sotherclients.
Complainantsfailedtofullycomply,hencetheywerenotgivennewassignments.
ProceedingsbeforetheLaborArbiter
Sensing Napar's insincerity in discharging its obligation inreassigningthem,complainantsfiledanewbefore

the Arbitration Branch of the NLRC four separate Complaints10 for illegal dismissal, nonpayment of 13th
month pay, wage differentials, overtime pay, service incentive leave pay, holiday pay, premium pay for
holiday and rest day, and moral and exemplary damagesagainstrespondents,docketedasNLRCNCRCase
Nos. 0005055572003, 0005061872003, 0005066052003,11 and 0007077922003. These
complaintswereconsolidated.
IntheirPositionPaper,12complainantsaverredthatNapar'sfailuretoreinstateorprovidethemworkwithout
any condition, in consonance with the terms of the Joint Compromise Agreement, constitutes illegal
constructivedismissal.Theyprayedforbackwagesplusseparationpayinlieuofreinstatement.
Respondents, in their Position Paper,13 claimed that they have fulfilled theirobligationundertheagreement
when Napar required complainants to report for work, to submit documentary requirements, to undergo
seminars and training, and to pass qualifying exams. Theycontendedthatcomplainantsweretheoneswho
violated the agreement when they refused to comply with the foregoing requirements in order to assess
their working capabilities and skills for their next posting. As such, they were deemedtohavewaivedtheir
right to bereassigned.Theyarguedthatcomplainantsshouldnothavefilednewcomplaintsbutshouldhave
instead moved for the execution of the Joint Compromise Agreement. They then argued that the Labor
Arbiter who approved the said JointCompromiseAgreementorLAReynohasexclusivejurisdictiontoacton
thecomplaints.
In a Decision14 dated July 29, 2004, LaborArbiterPabloC.Espiritu,Jr.(LAEspiritu)heldthattheconditions

oftheJointCompromiseAgreementparticularlyregardingreinstatement/reassignmentofcomplainantswere
violated thereby justifying rescission of the Joint Compromise Agreement. LA Espiritu noted that
complainants were correct in refiling the complaints as thiswasanavailableremedyundertheNLRCRules
of Procedurewhentheirpreviouscomplaintsweredismissedwithoutprejudice.Hestruckdownrespondents'
9
contention that a motion for execution of the compromise agreement was the properremedy,ratiocinating
that the dismissal of the cases was approved without prejudice and therefore cannot be the subject of an
execution.
LA Espiritu then ruled that complainants were constructively dismissed as they were placed on temporary
offdetail without any work for more than six months despite being regular employees of Napar. Doubting
respondents' intention ofreinstatingcomplainants,LAEspirituobservedthatthesubmissionofrequirements
and compliance with the procedures for rehiring should not be imposed on complainants who are not
newlyhired employees. Thus, Napar and Lacsamana were held jointly and severally liable to pay
complainantstheirseparationpayinlieuofreinstatementduetothealreadystrainedrelationsoftheparties.
Respondents Jonas/Young, as indirect employers ofcomplainants,wereheldjointlyandseverallyliablewith

Napar/Lacsamana for wage differentials, 13 month pay differentials, service incentive leave pay, unpaid
ECOLA, and holiday pay to some complainants, less the P7,000.00 already received fromrespondents.The
claims for premium payforholiday,restday,overtimepay,andmoralandexemplarydamagesweredenied
forlackofmerit.
ProceedingsbeforetheNationalLaborRelationsCommission
AllpartiesappealedtotheNLRC.
Complainants filed a partial appeal, arguing that LA Espiritu erred in not awarding backwages as well as
wageand13thmonthpaydifferentialstonineofthem.
Respondents, for their part, argued that LA Espiritu erred in failing to recognize thefinalandbindingeffect
of the Joint Compromise Agreement, contending that complainants are barred from rescinding the
agreement for having received P7,000.00 each as partial compliance and refusing to comply with the
requirements fortheirreassignment.RespondentsNaparandLacsamana,intheirMemorandumonAppeal,15
vehemently denied having illegally dismissed complainants and averred that they have the prerogative to
impose certain requirements in order to determine their working skills visavis their new postings. And
since they refused to comply, they have waived their right to be reassigned. Respondents Jonas/Young,
meanwhile, in its Notice of Appeal Memorandum of Appeal,16 asserted that they cannot be held solidarity
liable with respondents Napar and Lacsamana since only Napar is obligatedtoreassigncomplainantsunder
theJointCompromiseAgreement.
In a Decision17datedJune26,2008,theNLRCgrantedrespondents'appeal.Itruledthattheapprovalofthe
Joint Compromise Agreement by LA Reyno operates as res judicata between the parties and renders it
unappealable and immediately executory. It held that complainants had no cause of action when they
refiled their complaints for being barred by res judicata. The NLRC, in disposing of the case, ordered the
issuanceofawritofexecutiontoenforcetheJointCompromiseAgreement,thus:
WHEREFORE, premises considered, theappealofrespondentsisGRANTED,whilethatofthecomplainantsis

DISMISSED for lack of merit. The Decision of Labor Arbiter Pablo C. Espiritu, Jr. dated July 29, 2004 is
REVERSED and SET ASIDE, and a new one is rendered DISMISSING the aboveentitled complaints for
having been barred by res judicata. The OrderofLaborArbiterJaimeReynodatedJanuary16,2003finding
the Compromise Agreement entered into bythepartiesonJanuary13,2003tobeinorderandnotcontrary
to law and approving the same, stands valid, effective and should be enforced. Let therecordsofthiscase
be forwarded to the Labor Arbiter for the issuance of a writ of execution to enforce the said Compromise
Agreement.
SOORDERED.18
cralawlawlibrary
Complainants filed a Motion for Reconsideration,19 averring that the NLRC gravely erred in ordering the
issuance of a writ of execution despite the absence of a final judgment or a judgment on the merits. They
standontheirrighttorescindtheJointCompromiseAgreementandtoinsistontheiroriginaldemandswhen
respondents violated the compromise agreement and on their right to refile their cases as sanctioned by
therulesincasesofprovisionaldismissalofcases,
Napar and Lacsamana, on the other hand, filed a Motion for Partial Reconsideration20 praying for the
modification of the NLRC Decisioninthatcomplainantsbedeclaredtohavewaivedtheirrighttotheirclaims
undertheJointCompromiseAgreementforlikewiseviolatingtheagreement.
BothmotionsweredeniedintheNLRCResolution21datedOctober14,2008.
ProceedingsbeforetheCourtofAppeals
In their Petition for Certiorari22 filed before the CA, complainants insisted on their right to rescind theJoint
Compromise Agreement under Article 204123 of the Civil Code and on their right to refile their complaints
underSection16,RuleVoftheNLRCRulesofProcedure.24
Napar and Lacsamana filed a Comment25 on the Petition. Jonas and Young, however, failed to file a
comment. As the CA did not acquire jurisdiction over Jonas and Young and on the basis of complainants'
manifestation that Jonas and Young had already ceased operation, Jonas andYoungweredroppedasparty
respondentsbytheCAinitsResolution26ofDecember16,2009.
On August 27, 2010, the CA rendered a Decision27 affirming the NLRC. The CA considered the January 16,
2003 Order of LA Reyno, which approved the Joint Compromise Agreement, as a judgment on the merits,
and held that the second set of complaints was barred by res judicata. According to the C A, the
complainants, in refiling their complaints due to respondents' unwarranted refusal to provide them work,
were essentially seeking to enforce the compromise agreement and were not insisting on their original
demands that do not even include a claim for illegal dismissal.Thus,theCAruledthatcomplainantsshould
have moved for the execution of the Joint Compromise Agreement instead of filing a separate and
independentactionforillegaldismissal.TheCAdismissedthePetition,v
iz.:
WHEREFORE, premises considered, the instant petition for certiorari is DISMISSED for lack of merit.
Accordingly, the June 26, 2008 Decision and October 14, 2008 Resolution of public respondent National
LaborRelationsCommissionareAFFIRMED.
SOORDERED.28
cralawlawlibrary
Complainants filed a Motion for Reconsideration29 but it was likewise denied by the CA in its Resolution30
datedFebruary10,2011.
Twelveofthecomplainants,hereinpetitioners,institutedthepresentPetitionforReviewonC
ertiorari.
Issues
Petitionerspresentedthefollowingissues:
WHETHER THE COURT OF APPEALS GRAVELY ERRED IN RULING THAT PETITIONERS' COMPLAINT IS
ALREADYBARREDBYR
ESJUDICATA.
II
WHETHER THE COURT OFAPPEALSGRAVELYERREDINRULINGTHAT,INFILINGTHESECONDCOMPLAINT,

THE PETITIONERSAREENFORCINGTHEJOINTCOMPROMISEAGREEMENTANDNOTRESCINDINGIT.THUS,
THE PETITIONERS SHOULD HAVE MOVED FOR THE ISSUANCE OF A WRIT OF EXECUTION BEFORE THE
LABORARBITERINSTEADOFFILINGASECONDCOMPLAINT.
III
WHETHER THE PETITIONERS ARE ENTITLED TO SEPARATION PAY IN LIEU OF REINSTATEMENT AND FULL
BACKWAGES.31
cralawlawlibrary
Petitioners argue that the CA, in ordering the execution of the Joint Compromise Agreement, has deprived
them of their right of rescission under Article 2041 of the Civil Code. They posit that due to the blatant
violation by the respondents of the provisions of the Joint Compromise Agreement, theyonlyexercisedthe
option accorded to them by law ofrescindingtheagreementandofinsistingupontheiroriginaldemandsby
filing anew their Complaints. The inclusion of illegal dismissal in their causes of action is, for petitioners, a
necessary consequence of their subsequent dismissal andtheblatantomissionofrespondents'commitment
to reinstate them. Petitioners thus pray for the payment of separation pay in lieu of reinstatement andfull
backwagesasaconsequenceoftheirillegaldismissal.
Napar and Lacsamana on the other hand, aver that petitioners' sole remedy wastomovefortheexecution
of the Joint Compromise Agreement. They aver thatpetitionerscannotbeallowedtorescindtheagreement
after having violated the same and having already enjoyed its benefits. After all, the Joint Compromise
Agreementisfinal,bindingandconstitutesasresjudicatabetweenthem.
OurRuling
The Petition hasmerit.Petitioners'righttorescindtheJointCompromiseAgreementandrighttorefiletheir

complaintsmustprevail.
Petitionersvalidlyexercisedthe
optionofrescindingtheJoint
CompromiseAgreementunder
Article2041oftheCivilCode
Article 2028 of the Civil Code defines a compromise agreement as a contract whereby the parties make
reciprocal concessions in order to avoid litigation or put an end to one already commenced. If judicially
approved, it becomes more than a binding contractitisadeterminationofacontroversyandhastheforce
and effect of a judgment.32 Article 227 of the Labor Code provides that any compromise settlement
voluntarily agreed upon by the parties with the assistance of the Bureau of Labor Relations or theregional
office of the Department of Labor and Employment shall befinalandbindingupontheparties.Compromise
agreements between employers and workers have often been upheld as valid and accepted as a desirable
meansofsettlingdisputes.33
Thus, a compromise agreement, once approved, has the effect of res judicata between the parties and
should not be disturbed except for vices of consent, forgery, fraud, misrepresentation, and coercion.34 A
judgment upon compromise is therefore not appealable, immediately executory, and can be enforced by a
writ of execution.35 However, this broad precept enunciated under Article 203736 of theCivilCodehasbeen
qualified by Article 2041 of the same Code which recognizes the right of an aggrieved party to either (1)
enforce the compromise by a writ of execution, or (2) regard it as rescinded and insist upon his original
demand, upon the other party's failure or refusal to abide by the compromise. In aplethoraofcases,37the
Court has recognized the option of rescinding a compromise agreement due to noncompliance with its
terms.WeexplainedinC
havezv.CourtofAppeals:38
A compromise has upon the parties the effect and authority of res judicatabut there shall benoexecution
exceptincompliancewithajudicialcompromise.
cralawlawlibrary
Thus, we have held that a compromise agreement which is not contrary to law, public order, publicpolicy,
morals or good customs is a valid contract which is the law between the parties themselves. It has upon
them the effect and authority of res judicata even if not judiciallyapproved,andcannotbelightlysetaside
ordisturbedexceptforvicesofconsentandforgery.
However, in Heirs of Zari, et al v. Santos, we clarified that the broad precept enunciated in Art, 2037 is
qualifiedbyArt.2041ofthesameCode,whichprovides:
If one of the parties fails or refuses to abide by the compromise, the other party may either enforce the
compromiseorregarditasrescindedandinsistuponhisoriginaldemand.
Weexplained,v
iz.:
[B]efore the onset of the new Civil Code, there was no right to rescind compromise agreements. Where a
party violated the terms of a compromise agreement, the only recourse open to the other party was to
enforcethetermsthereof.
When the new Civil Code came into being, its Article 2041 xxx created for the first time the right of
rescission. That provision gives to theaggrievedpartytherightto"eitherenforcethecompromiseorregard
it as rescinded and insist upon his originaldemand."Article2041shouldobviouslybedeemedtoqualifythe
broad precept enunciated in Article2037that"[a]compromisehasuponthepartiestheeffectandauthority
ofresjudicata.
In exercising the second option under Art. 2041, the aggrieved party may, if he chooses, bring the suit
contemplated or involved in his original demand, as if there had never been any compromise agreement,
without bringing an action for rescission. This is because he may regard the compromise as already
rescindedbythebreachthereofoftheotherparty.
cralawlawlibrary
To reiterate, Article 2041 confers upon the party concerned the authority, not only to regard the
compromise agreement as rescinded but also, to insist upon his original demand. We find that petitioners
validlyexercisedthisoptionastherewasbreachandnoncomplianceoftheJointCompromiseAgreementby
respondents.
It is undisputed that Napar failed to reassign and provide work to petitioners. Napar, however, puts the
blame on petitioners fortheirallegeddeliberaterefusaltocomplywiththerequirementsforreassignmentto
other clients. Napar claims that the imposition of these socalled "reassessment procedures" will efficiently
guide them on where to assign petitioners it likewise posits that it is a valid exercise of its management
prerogativetoassignworkerstotheirprincipalemployer.
At the outset, it must be emphasized that there was no indication that petitioners deliberately refused to
comply with the procedures prior to their purported reassignment. Petitioners alleged thattheyreportedto
Napar several times waitingfortlieirassignmentandthatNaparwasgivingthemarunaroundevenasthey
tried to comply with the requirements. These matters were not disputed by respondents. Thus, we cannot
agree with respondents were the ones who violated the compromise agreement. Moreover, we are not
persuaded by Napar's assertion that petitioners' reassignment cannot be effected without compliance with
the requirements set by it. Petitioners are regular employees ofNaparthus,theirreassignmentshouldnot
involve any reduction in rank, status or salary.39 As aptly noted by LA Espiritu, petitioners are not
newlyhired employees. Considering furtherthattheyareordinaryfactoryworkers,theydonotneedspecial
training or any skills assessment procedures for proper placement. While we consider Napar's decision to
require petitioners to submitdocumentsandemploymentclearances,toattendseminarsandinterviewsand
take examinations, which according to Napar isimperativeinorderforittoeffectivelycarryoutitsbusiness
objective, as falling within the ambit of management prerogative, this undertaking should not, however,
deny petitioners their constitutional right of tenure. Besides, there is no evidence nor any allegation
proffered that Napar has no availableclientswherepetitionerscanbeassignedtoworkinthesameposition
they previously occupied. Plainly, Napar's scheme of requiring petitioners to comply with reassessment
proceduresonlyseekstopreventpetitioners'immediatereassignment.
"We have held that management is free to regulate, according to its own discretion and judgment, all
aspects of employment, including hiring, work assignments, working methods, time, place and manner of
work, processes to be followed, supervision of workers, working regulations, transfer of employees, work
supervision, lay off of workers and discipline, dismissal and recall of workers. The exerciseofmanagement
prerogative, however, is not absolute asitmustbeexercisedingoodfaithandwithdueregardtotherights
oflabor."40Such"cannotbeusedasasubterfugebytheemployertoridhimselfofanundesirableworker."41
Respondents' noncompliance with the strict terms of the Joint Compromise Agreement of reassigning
petitioners and ensuring that they will be given work withintherequiredtimeconstitutesrepudiationofthe
agreement. As such, the agreement is considered rescinded in accordance with Article 2041 of the Civil
Code. Petitioners properly chose to rescind the compromise agreement and exercised the option of filing
anew their complaints,pursuanttoArt.2041.ItwaserroronthepartoftheCAtodenypetitionerstheright
ofrescission.
Still, respondents insist that petitioners cannot seekrescissionfortheyhavealreadyenjoyedthebenefitsof

the Joint Compromise Agreement. According to respondents, petitioners' acceptance of the amount of
P7,000.00eachbarsthemfromrepudiatingandrescindingtheagreement.
The contention lacks meritforthefollowingreasons.First,petitionersneveracceptedthemeageramountof

P7,000.00 as full satisfaction of their claims as they also expected to be reassigned and reinstated in their
jobs. In other words, their acceptance of the amount of P7,000.00 each should not be interpreted as full
satisfaction of all their claims, which included reinstatement in their jobs. The amount of P7,000.00 is
measly compared to the amount of monetary award granted by LA Espiritu and therefore makes the
agreement unconscionable and against public policy,42 At this point, it is worth noting that even quitclaims
are ineffective in barring recoveryforthefullmeasureoftheworker'srightsandthatacceptanceofbenefits
therefrom does not amount to estoppel.43 Lastly, it must be emphasized that the Joint Compromise
Agreement expressly provided that each of the complainants shall receive P7,000.00 as payment for their
monetary claims and "which amount shall be considered in any future litigation."44By virtue of this
stipulation, the parties in entering into the agreement did notruleoutthepossibilityofanyfutureclaimsin
the event of noncompliance. AscorrectlyruledbyLAEspiritu,thisprovisoshowedthatpetitionerswerenot
barredfromraisingtheirmoneyclaimsinthefuture.
Section16ofRuleVoftheNLRCRules
ofProcedureallowspetitionerstorefiletheir
complaintswhichwerepreviouslydismissed
withoutprejudice
The Court also takes into account the circumstance that petitioners' previous complaints were dismissed
without prejudice. "A dismissal without prejudice does not operate as a judgment on the merits."45 As
contrasted from a dismissal with prejudice which disallows and bars the filing of. a complaint, a dismissal
without prejudice "does not bar another action involving the same parties, onthesamesubjectmatterand
theory."46 The NLRC Rules of Procedure, specifically Section 16 of Rule V thereof, provides the remedy of
filing forarevivalorreopeningofacasewhichwasdismissedwithoutprejudicewithin10daysfromreceipt
of notice of the order of dismissal and of refiling the case after the lapse of the 10dayperiod.Petitioners
arethusnotbarredfromrefilingtheirComplaints.
In choosing to rescind the Joint Compromise Agreement and refile their complaints, petitioners can
rightfully include their claim of illegal dismissal. The CA tookofffromthewrongpremisethatpetitioners,in
refiling their case, cannot be said to have opted torescindthecompromiseagreementsincetheywerenot
insisting on their original claim. It must be noted that when petitioners initially filed their first set of
complaints for wage differentials, 13th month pay, overtime pay, holiday pay, premium pay forholidayand
rest day, service incentive leave pay, and unpaid ECOLA (that does not include the claim of illegal
dismissal), subsequent events transpired which brought about their unceremonious suspension and
dismissal from work. This then led to the parties entering into the Joint Compromise Agreement whereby
respondents undertook to reinstate petitioners and pay them the sum ofP7,000.00inpartialsatisfactionof
their claims. The compromiseagreementevincesandshowsthatpetitioners'reinstatementwaspartoftheir
original demands. Besides, respondents acknowledged that the first and second sets of Complaints filedby
petitioners are similar in nature. Respondents even admitted that the issues raised in the first set of
Complaints were similar to the issues raised by petitioners when they filed anew their Complaints.
Nevertheless, the filing of a separate action for illegal dismissalshallonlygoagainsttheruleonmultiplicity
of suits. It is settled that a plaintiff may join several distinct demands, controversies or rights of action in
one declaration, complaint or petition.47 This is to avert duplicity and multiplicity of suitsthatwouldfarther
delaythedispositionofthecase.
In view of the foregoing, we find that both the NLRC and CA gravely erred in dismissing petitioners'
Complaints on the ground of res judicata. LA Espiritu correctly assumed jurisdiction and properly took
cognizanceofpetitioners'consolidatedcomplaintsforillegaldismissalandothermonetaryclaims.
Petitionersareentitledtoseparationpay
andfullbackwagesaswellastotheother
monetaryawardsgrantedbythe
LaborArbiter
We, likewise, subscribe to LA Espiritu's ruling that petitioners, as regular employees, are deemed to have
been constructively and illegally dismissed by respondents. Being on floating status and offdetailed for
more than six months, not having been reinstated and reassigned by respondents, petitioners are
considered to have been constructively dismissed.48 Settled is the rule that an employee who is unjustly
dismissed from work shall be entitled to reinstatement, or separation pay if reinstatement is no longer
viable,andtohisfullbackwages.49
LA Espiritu awarded petitioners separation pay in lieu of reinstatement. The Court agreesthattheawardof
separation pay is warranted due to the already strained relations between the parties.50 However, aside
from separation pay,petitioners,forhavingbeenillegallydismissed,shouldalsobeawardedfullbackwages,
inclusive of allowances and their other benefits or their monetary equivalent computed from November 9,
2002 (the date of their last workassignmentorfromthetimecompensationwaswithheldfromthem)upto
thedateoffinalityofthisDecision.
While petitioners failed to raise thematterofentitlementtobackwagesbeforetheCA,thisdoesnotprevent

the Court from considering their entitlement to the same. The Court has discretionary authority to take up
newissuesonappealifitfindsthattheirconsiderationisnecessaryinarrivingatajustdecision.
Anent the other monetaryclaimsinpetitioners'complaints,theawardsgrantedtothembyLAEspiritustand

undisturbed for petitioners'failuretoquestionthesameonappealbeforetheCAandevenbeforethisCourt.
Hence, we sustain theawardofwagedifferentials,13thmonthpaydifferentials,serviceincentiveleavepay,
unpaidECOLA,andholidaypaylesstheP7000.00alreadyreceivedbythem.
WHEREFORE,thePetitionisGRANTED.TheAugust27,2010DecisionandFebruary10,2011Resolutionof
the Court ofAppealsinCAG.R.SPNo.106724areREVERSEDandSETASIDE.TheJuly29,2004Decision
of the Labor Arbiter Pablo C. Espiritu, Jr. in NLRC NCR Case Nos. 0005055572003, 0005061872003,
0005066052003 and 0007077922003 is REINSTATED. In addition, respondents Napar Contracting &
Allied Services and Norman Lacsamana are held jointly and severally liable to pay petitioners Reynaldo
Inutan, Helen Carte,NoelAyson,IvyCabarle,NoelJamili,MaritessHular,RolitoAzucena,RaymundoTunog,
Roger Bernal, Agustin Estre, Marilou Sagun, and Enrique Ledesma, Jr. full backwages, inclusive of
allowances and their other benefits or their monetary equivalent computed from November 9, 2002 up to
thedateoffinalityofthisDecision.
SOORDERED.
chanrobles
FIRSTDIVISION
G.R.No.213814,December02,2015
RAFAELB.QUILLOPA,P
etitioner,v
.Q
UALITYGUARDSSERVICESANDINVESTIGATIONAGENCY
ANDISMAELBASABICA,JR.,R
espondents.
DECISION
PERLASBERNABE,J
.:
Assailed in this petition for review on certiorari1 are the Decision2 dated February 19, 2014 and the
Resolution3 dated July 25, 2014 oftheCourtofAppeals(CA)inCAG.R.SPNo.127275,whichreversedand
set aside the Decision4datedMay31,2012andtheResolution5datedAugust14,2012oftheNationalLabor
Relations Commission (NLRC) in NLRC LAC No. 0200076012 / NLRC RABCAR Case No. 09034611, and
accordingly, dismissed the complaint for illegal dismissal filed by petitioner Rafael B. Quillopa (petitioner)
against respondents Quality Guards Services and Investigation Agency (QGSIA) and Ismael Basabica, Jr.
(Ismaelcollectively,respondents).
TheFacts
On March 14, 2003, QGSIA hired petitioner as a security guard andgavehimvariousassignments,thelast

of which was at the West Burnham Place Condominium in BaguioCity.OnSeptember28,2010,thedeputy
manager of QGSIA, Rhegan Basabica, visited petitioner at his post and told the latter that he would be
placed on a floating status, but was assured that he would be given a new assignment. At the same time,
petitioner was ordered to report to the QGSIA Office the next day for further instructions. Despite such
assurance and his repeated trips for follow up to the QGSIA Office, petitioner was not given any new
assignmentastherewasallegedlynovacancyyet.6Hence,heremainedonfloatingstatus.
On November 11, 2010, petitioner filed a complaint7 for money claims such as wages, overtime pay,
premium pay for holidaysandrestdays,nightshiftdifferentials,13thmonthpay,andserviceincentiveleave
pay against respondents before the NLRC, docketed as NLRC RABCAR Case No. 11054210 (First
Complaint).8 However, the parties were able to amicably settle the controversy, as evidenced by a
Waiver/Quitclaim and Release9 dated February 3, 2011, which provides, among others, that petitioner is
withdrawing his complaint against respondents andthathereceivedatotalofP10,000.00fromrespondents
"for and [in] consideration of the settlement of all [petitioner's] claims which might have arisen as
consequence of [petitioner's] employment."10 On even date, the Labor Arbiter (LA) issued an Order11
approving and granting the amicable settlement and ordering the dismissal of the First Complaint with
prejudice.12
However, on September 14, 2011, petitioner filed another complaint,13 this time, for illegal dismissal with
prayer for payment of full backwages, separation pay, and attorney's fees, against respondents before the
NLRC, docketed as NLRC RABCAR Case No. 09034611 (Second Complaint).14 In his Position Paper,15
petitioner alleged that after the settlement of the First Complaint, he waited for a new posting or
assignment, but to no avail. In this relation, petitioner contended that respondents' continued failure to
reinstate him to his previous assignment or to give him a new one shouldbeconstruedasaterminationof
hisemployment,consideringthathehadbeenonfloatingstatusforalmostone(1)year.16
In their defense,17 respondents essentially countered that the Waiver/Quitclaim and Release already
terminated the employeremployee relationship between them and petitioner, and thus, the latter had no
moregroundtofiletheSecondComplaint.18
TheLARuling
In a Decision19 dated January 30, 2012, the LA ruled in petitioner's favor, and accordingly, ordered
respondents to pay the aggregate sum of P205,436.00 broken down as follows: (a) P63,648.00 as
separationpay(b)P123,112.00asbackwagesand(c)P18,676.00asattorney'sfees.20
The LA found that the settlement of the First Complaint through the execution of a Waiver/Quitclaim and
Release dated February3,2011cannotbarpetitionerfromfilingtheSecondComplaintagainstrespondents,
since such settlement referred only to petitioner's money claims reflected in the First Complaint, and does
not cover the complaint forillegaldismissalwhichisthecruxoftheSecondComplaint.21Inthisrelation,the
LA added that the issues in theSecondComplaintcannotbesubsumedundertheFirstComplaintgiventhat
the facts which gave risetotheformeronlyoccurredafterthesettlementofthelatter.Further,theLAruled

that while security guards, such as petitioner, may be placed in an "offdetail" or "floating status," such
status should not exceed aperiodofsix(6)monthsotherwise,heisdeemedtobeconstructivelydismissed
withoutjustcauseandwithoutdueprocess.22
Dissatisfied,respondentsappealed23totheNLRC,docketedasNLRCLACNo.0200076012.
TheNLRCRuling
In a Decision24 dated May 31, 2012, the NLRC affirmedtheLAruling.Itheldthatsinceillegaldismissalwas

not included as a cause of action in the First Complaint, the executionoftheWaiver/QuitclaimandRelease
did not preclude petitioner from filing the Second Complaint for illegal dismissal.25 It further held that
petitioner was indeed constructively dismissed from service given that he was placed on floating status
beyondtheallowableperiodunderthelaw.26
Respondents moved for reconsideration27 which was, however, denied in a Resolution28 dated August 14,
2012.Undaunted,theyfiledapetitionforc
ertiorari29beforetheCA.
TheCARuling
In a Decision30 dated February 19, 2014, the CA reversed and set aside the NLRC ruling, and accordingly,
dismissed the Second Complaint.31 Contrary to the findings of the LA and the NLRC, the CA held that the
Waiver/Quitclaim and Release operated to sever the employeremployee relationship between respondents
and petitioner. As such, petitioner had no more cause of action against respondents when he filed the
SecondComplaintmorethanseven(7)monthslater,oronSeptember14,2011.32
Aggrieved, petitioner moved for reconsideration,33 but was denied in a Resolution34 dated July 25, 2014
hence,thispetition.
TheIssueBeforetheCourt
The issue for the Court's resolution is whether or not the CA correctly ruled that the Waiver/Quitclaim and
ReleaseprecludedpetitionerfromfilingtheSecondComplaintforillegaldismissalagainstrespondents.
TheCourt'sRuling
Thepetitionismeritorious.
"To justify the grant of the extraordinary remedy of certiorari, petitioners must satisfactorily show thatthe
court or quasijudicial authority gravely abused the discretion conferred upon it. Grave abuse of discretion
connotes judgmentexercisedinacapriciousandwhimsicalmannerthatistantamounttolackofjurisdiction.
Tobeconsidered'grave,'discretionmustbeexercisedinadespoticmannerbyreasonofpassionorpersonal
hostility, and must be so patent andgrossastoamounttoanevasionofpositivedutyoravirtualrefusalto
performthedutyenjoinedbyortoactatallincontemplationoflaw."35
"In labor disputes, grave abuse of discretion may be ascribed to the NLRC when,interalia,itsfindingsand
the conclusions reached thereby are not supported by substantial evidence. Thisrequirementofsubstantial
evidence is clearly expressed in Section 5, Rule 133 of the Rules of Court which provides that '[i]n cases
filed before administrative or quasijudicial bodies, a fact may be deemed established if it is supported by
substantial evidence, or that amount of relevant evidence which a reasonable mind might accept as
adequatetojustifyaconclusion.'"36
Guided by the foregoing considerations, the Court finds that the CA erred in ascribing grave abuse of
discretion onthepartoftheNLRCwhenitruledthatpetitionerwasconstructivelydismissedbyrespondents,
considering that the same is supported by substantial evidence and in accord with prevailing law and
jurisprudence,aswillbeexplainedhereunder.
A judicious review of the records reveals the following timeline: (a) onSeptember28,2010,petitionerwas
placed on floating status by respondents (b) onNovember11,2010,petitionerfiledtheFirstComplaintfor
money claims such as wages, overtime pay, premium pay for holidays and rest days, night shift
differentials, 13th monthpay,andserviceincentiveleavepay,againstrespondents(c)onFebruary3,2011,
petitioner executed a Waiver/Quitclaim and Release in settlement of the First Complaint and (d) on
September 14, 2011, or more than 11 months from the time petitioner was placed on floating status, he
filed the Second Complaint, this time for illegal dismissal, against respondents. Pertinent portions of the
Waiver/QuitclaimandReleaseread:
a)Iwithdrawmycomplaintagainstabovenamedrespondent/s
b) I received the amount of cash P5,000.00 and Industry Bank Check No. 1074928 dtd. 2/15/ (sic)
P5,000.00 in the total amount of Ten Thousand Pesos (P10,000.00) for and [in] consideration of the
settlementofallmyclaims,whichmighthavearisenasconsequenceofmyemployment
c)1amawareoftheeffectsandconsequencesofthisinstrument
d) I was not forced, threatened, intimidated, coerced nor was I subjected to undueinfluenceorviolenceto
agreetoanamicablesettlementofthiscase
e)Iamfreelyandvoluntarilysigningthisdocument.37
It cannot be pretended that the foregoing Waiver/Quitclaim and Release only pertained to the First
Complaint, which hadforitscausesofactionthefollowing:(a)underpaymentofwages(b)nonpaymentof
overtime pay, holidaypay,restdaypay,nightshiftdifferentials,13thmonthpay,andserviceincentiveleave
pay and (c) refundofcashbond.38Hence,theresjudicataeffect39ofthissettlementagreementshouldonly
pertam to the aforementioned causes of action and not to anyotherunrelatedcause/sofactionaccruingin
petitioner's favor after theexecutionofsuchsettlement,i.e.,illegaldismissal.Further,theWaiver/Quitclaim
and Release cannot be construed to sever the employeremployee relationship between respondents and
petitioner, as the CA would put it, simply because there is nothing therein that would operate as such.
Perforce, the CA erred in dismissing the Second Complaint on the ground that there is no more
employeremployeerelationshipbetweenrespondentsandpetitioneruponthefilingofthesame.
Ontheissueofconstructivedismissal,theLAandtheNLRCcorrectlyruledinfavorofthepetitioner.
Case law provides thattheconceptoftemporary"offdetail"or"floatingstatus"ofsecurityguardsemployed

by private security agencies a form of a temporary retrenchment or layoff relatestotheperiodoftime
when securityguardsareinbetweenassignmentsorwhentheyaremadetowaitafterbeingrelievedfroma
previous post until they are transferred to a new one. This takes place when the security agency's clients
decide not to renew their contracts with theagency,resultinginasituationwheretheavailablepostsunder
its existing contracts are less than the number of guards in its roster. It also happens in instances where
contracts for security services stipulate that the client may request the agency for the replacement of the
guards assigned to it, even for want of cause, such that the replaced security guard may be placed on
temporary "offdetail" if there are no available posts under the agency's existing contracts. As the
circumstance is generally outside the control of the security agency or employer, the Court has ruled that
when a security guard is placed on a "floating status," he or she does not receive any salary or financial
benefitprovidedbylaw.40
To clarify, placing a security guard in temporary "offdetail" or "floating status" is part of management
prerogative of the employersecurity agency and does not, per se, constitute a severance of the
employeremployee relationship. However, being an exercise of management prerogative, it must be
exercised in good faith that is, one which is intended for the advancement of theemployer'sinterestand
not for the purpose of defeating or circumventing the rights of the employees under special laws or under
valid agreements.41 Moreover, due to the grim economic consequences to the security guard in which he
does notreceiveanysalarywhileintemporary"offdetail"or"floatingstatus,"theemployersecurityagency
should bear the burden of proving that there are no postsavailabletowhichthesecurityguardtemporarily
out of work can be assigned.42 Furthermore, the security guard must notremaininsuchstatusforaperiod
of more than six (6) months otherwise,heisdeemedterminated.TheCourt'srulinginNationwideSecurity
andAlliedServices,Inc.v.Valderama43isinstructiveonthismatter,towit:
In cases involving security guards, a relief and transfer order in itself does not sever employment
relationship between a security guard and his agency. An employee has the right tosecurityoftenure,but
this does not give him a vested right to his position as would deprive the company of its prerogative to
change his assignment or transfer him where his service, as security guard, will be most beneficial to the
client. Temporary offdetail or the period of time security guards are made to wait untiltheyare
transferred orassignedtoanewpostorclientdoesnotconstituteconstructivedismissal,solong
assuchstatusdoesnotcontinuebeyondsixmonths.
The onus of proving that there is no post available to which the security guard can be assigned
restsontheemployerxxx.44(Emphasesandunderscoringsupplied)
In the case at bar, it is undisputed that from September 28, 2010 until he filed the Second Complaint on
September14,2011,oratotalofmorethan11months,petitionerwasplacedonatemporary"offdetail"or
"floating status" without any salary or benefits whatsoever. In fact, despite repeated followups at the
QGSIA Office, he failed to get a new post or assignment from respondents purportedly forlackofvacancy.
However, records are bereft of any indication or proof that there was indeed no posts available to which
petitioner may be assigned. Therefore, in view of their unjustified failure to place petitioner back in active
duty within the allowable six (6)month period and to discharge the burden placed upon it by prevailing
jurisprudence,theCourtisconstrainedtoholdrespondentsliableforpetitioner'sconstructivedismissal.
WHEREFORE, the petition is GRANTED. The Decision dated February 19, 2014 and the Resolution dated
July 25, 2014 of the Court of Appeals in CAG.R. SP No. 127275 are hereby REVERSED and SET ASIDE.
Accordingly, the Decision dated May 31, 2012 and the Resolution dated August 14, 2012 of the National
Labor Relations Commission in NLRC LAC No. 0200076012/ NLRC RABCAR Case No. 09034611 are
REINSTATED.
SOORDERED.
chan

Seafarer Dismissal Case

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Seafarer Dismissal Case

Uploaded by

Copyright:

Available Formats

SECONDDIVISION

As chief cook, respondent's tasks included food preparation andmealsoftheshipcrew,custody,inventory,

In his Position Paper,17 respondent alleged thathebeganworkingasseafarerinAugust2001.From2001to

For their part, petitioners stated in their Position Paper18thatrespondentjoinedthevesselonJuly25,2007

The NLRC was convincedthatrespondent'sperformanceaschiefcookwasbelowthecompany'sstandard.It

Respondent thus filed a PetitionforCertiorari23beforetheCAascribinggraveabuseofdiscretiononthepart

The CA further emphasized that electronicevidence,suchaselectronicmails(emails),mustfirstbeproved

The CA likewise held that the subjectquitclaimdidnotprecludethefilingofanillegaldismissalcaseagainst

It is axiomatic that this Courtisnotatrieroffactsitreviewsonlyquestionsoflaw.Assuch,inpetitionsfor

It is settled that theemployerhastheburdentoprovethatthedismissalofanemployeeisbasedonavalid

As a general concept, poor performance is tantamount toinefficiencyandincompetenceintheperformance

As abovediscussed, the Report of incompetent action/insubordination/indiscipline against respondent did

Petitioner Hanseatic Shipping Philippines, Inc. (Hanseatic), a domestic corporationandthemanningagency

On August 11, 2010, Dr. AnnaPamellaLagrosaElbo(Dr.Elbo)andDr.MariaGraciaK.Gutay(Dr.Gutay),

diagnosed Ballon to be suffering from "MyofascialPainDysfunctionStressRelated"andreferredhiscaseto

On November 18, 2010, Ballon filed a complaint18forpermanentdisabilitycompensation,reimbursementof

Anent Ballon's medical condition, the LA stated that although a medicalcertificateofDr.Jacintostatedthat

The NLRC didnotgivecredencetotheassertionofpetitionersthatBallononlyreportedonAugust11,2010,

The appellate court also held that Ballon's employmentbyanothermanningagencyonDecember24,2011,

WHETHER THE DECLARATION OF FITNESS TO WORK BYTHECOMPANYDESIGNATEDPHYSICIAN

The letter of authorization/consultation of the companydesignated physicians, dated August 11,2010,and

Based on the foregoing, the general rule providesthatthecompanydesignatedphysicianmustissueafinal

In Varorient Shipping Co., Inc. v. Flores,41

The Court is of the viewthatthecertificateoffitnessforworkinthiscasewasadefectivequitclaimbecause

Consequently, on February 11, 2011, Dr. Jacinto confirmed Ballon's unceasingdisabilityanddiagnosedhim

Petitioners cannot invoke eithertheexceptional240dayperiodformedicaltreatmentbecausetheyfailedto

It was written in Elburg that, "[c]ertainly,thecompanydesignatedphysicianmustperformsomesignificant

For their final argument, petitionerscontendthatBallonwaslateremployedbyAlsterInternationalShipping

Permanent total disability means an employee is disabled toearnwagesinthesameorsimilarkindofwork

The possibility that petitioner could workasadrummeratseaagaindoesnotnegatetheclaimfor

does not require that the illness shouldbeincurable.Whatisimportantisthathewasunabletoperformhis

Based on the foregoing, the mere fact that adisabledseafarersubsequentlyacquiredemploymentdoesnot

For its part, BDO countered that after thebankdeniedSagaysay'srequestforextensionofservices,hewas

WHETHER THE EXECUTION OF A RELEASE, WAIVER AND QUITCLAIM BY RESPONDENT IS

BDO principally argues that theretirementplanhasbeenvalidandeffectivesinceJune1,1994thathaving

In the absence of a retirement planoragreementprovidingforretirementbenefitsofemployees

In Progressive Development Corporation v. NLRC,29

First, the retirement plan was established as early as July 1, 1994.Thepurposeoftheplanwastocreatea

It was renamed on June 1, 2004, but its provision on the normalretirementagewasretained.Twelve(12)

Second, by accepting the employment offer of BDO, Sagaysay was deemedtohaveassentedtoallexisting

Lastly, perhaps the most telling detailindicativeofSagaysay'sassenttotheretirementplanwashisemails

The case of Cercadoisnotapplicableinthepresentcaseasithasadifferentfactualmilieu.First,inCercado,

The ruling inCercadocannotbeappliedtothiscaseasSagaysaywasnotyetemployedwhentheretirement

In other words, the evil sought to be prevented in Cercardo doesnotexistinthepresentcaseasSagaysay

Generally, a quitclaim is frowned upon. As an exception, a quitclaim, with clear andunambiguouscontents

Here, the Courtisoftheviewthatthequitclaimwasvalidlyexecuted.Fortheconsiderationofthequitclaim,

Finally, on Sagaysay's requesttoextendhislengthofservicedespitethecompulsoryretirementageofsixty

In its Position Paper,6 SJS claimed that: it is a company whichwasestablishedin1993andwasengagedin

WHEREFORE, judgment is hereby rendered DISMISSINGtheComplaintagainstrespondentChevronforlack

Herein petitioner filed a motion for reconsideration, but the CA denieditinitsResolutiondatedJanuary20,

CONSIDERING THAT THERE IS NO EMPLOYEREMPLOYEE RELATIONSHIP BETWEEN THE COMPANY AND

To ascertain the existence of an employeremployee relationship, jurisprudence has invariably adhered to

4.4 It is understood that, for the above reasons, theseworkersshallbeconsideredastheemployeesofthe

5.3. The CONTRACTOR shall be responsibleforanylossordamagethatmaybeincurredupontheproducts,

6.1 The CONTRACTOR shall at its own expensemaintainwithareputableinsurancecompany,acceptableto

d. To assign such number ofitsemployees,uponprioragreementwiththeCOMPANY,aswouldbesufficient

With respect to the payment of wages, the Court finds no errorinthefindingsoftheLAthatGalitadmitted

As to its capital, there is no dispute that SJS generatedanincomeofP1,523,575.81fortheyear2004.35In

The records readily show thatasearlyasApril2011,respondentsalreadyassignedMalloateachingloadfor

While the Court concurs with the CAthatMallowasnotillegallydismissed,theCourtdoesnotagreethathe

In this case, records are bereft of any indication thatMallo'sabsencefromworkwasdeliberate,unjustified,

On December 13, 2007, petitioner filed a Complaint13 for illegaldismissalwithprayerforreinstatementand

Respondents countered that petitioner's acceptance of secondendorsedforeigncurrencycheckswasnotan