Labor Relation Cases 1st Batch Commissioner Velasco
1. Gonzalez vs. NLRC
2. Capitol Med Center vs. Meris
3. PAL vs NLRC, 225 SCRA 301 (1993)
4. Fair Shipping Corp. vs Medel 679 SCRA 360, Aug. 29, 2012, GR 177907 5. Brewmaster Intl., Inc. vs NFL 271SCRA 275 (1997)
6. Mabeza vs NLRC, 271 SCRA 679, 1997
7. Reynaldo Moya of First Solid Rubber Industries, GR 184011, Sept. 18, 2013 8. Fuentes et al vs NLRC et al., 266 SCRA 24 (1997)
9. Capili vs NLRC 270 SCRA 488 (1997) 10. Garcia vs NLRC 234 SCRA 632 (1994) 11. Jamer vs NLRC 278 SCRA 632 (1997)
12. Gandara Mill Supply vs NLRC, 300 SCRA 702 (1998) 13. BPI vs BPI EU GR 175678, Aug. 22, 2012
14. PLDT vs NLRC 276 SCRA 1 (1997)
15. Price et al vs Innodata, GR 178505, Sept. 30, 2008
16. Penaflor vs Outdoor Clothing Mfg. Corp. GR 177114, Jan. 2, 2010 17. ONCC vs NLRC 277 SCRA 91
18. Alex Gurango vs Best Chemicals & Plastics, Inc., GR 174593, Aug. 25, 2010 19. Lilia Laboradan vs Forest Hills Academy, GR 172295, Dec. 23, 2008
G.R. No. 125735 August 26, 1999 LORLENE A. GONZALES, petitioner, vs.
NATIONAL LABOR RELATIONS COMMISSION, FIFTH DIVISION, CAGAYAN DE ORO CITY, and ATENEO DE DAVAO UNIVERSITY, respondents.
BELLOSILLO, J.:
By way of certiorari under Rule 65 of the Rules of Court petitioner seeks the nullification of the Decision of public respondent National Labor Relations Commission, Fifth Division, which reversed and set aside that of Executive Labor Arbiter Conchita J. Martinez.
LORLENE GONZALES, petitioner, has been a schoolteacher in the Elementary Department of private respondent Ateneo de Davao UNIVERSITY (hereafter ATENEO) since 1974 assigned to teach Reading, Mathematics, Language and Pilipino in the Grade VI class, while ATENEO is an educational institution, a corporation duly organized under the laws of the Philippines, with principal address at Jacinto St., Davao City.1âwphi1.nêt
Sometime in 1991 Fr. Oscar Millar, S.J., Ateneo Grade School Headmaster, sent a letter dated 11 April 1991 informing petitioner Lorlene A. Gonzales of the complaints of two (2) parents for alleged use of corporal punishment on her students. Petitioner claimed that she was not informed of the identity of the parents who allegedly complained of the corporal punishment she purportedly inflicted in school-year 1990-1991. She likewise claimed that she was not confronted about it by private respondent ATENEO in 1991 and that it was only two (2) years after the
complaints were made that she discovered, through her students and their parents, that ATENEO was soliciting complainants to lodge written complaints against her.
On 31 March 1993 she wrote a letter to Fr. Oscar Millar, S.J., demanding that she be formally informed of the complaint and be duly investigated.
On 9 June 1993 petitioner was informed of the composition of an investigative committee organized by Fr. Oscar Millar, S.J., to look into the alleged use of corporal punishment by petitioner in
disciplining her students. It can be gleaned from the records that she was duly furnished with the rules of procedure, informed of the schedule of the hearings, and given copies of the affidavits executed by the students who testified against her.
Petitioner refused to take part in the investigation unless the rules of procedure laid down by the Committee be revised, contending that the same were violative of her right to due process. Petitioner specifically objected to the provision which stated: . . . 3) Counsel for Ms. Lorlene Gonzales shall not directly participate in the investigation but will merely advise Ms. Gonzales . . . (par. 3).1
But the Committee was steadfast in its resolve to adopt the aforementioned rules. In its letter dated 9 August 1993, private respondent informed petitioner that the rules of procedure to be applied were "substantially the same rules that were used in the investigation of a former Ateneo employee and therefore we are under legal advice not to change these rules."2 Over the objection of petitioner the Committee commenced with its investigation without petitioner’s participation. Out of the twenty-two (22) invitations sent out by ATENEO to petitioner’s students and their parents to shed light on the matter of corporal punishment allegedly "administered" by her, eleven (11) appeared and testified before the committee. The eleven (11) witnesses also executed written statements denominated as "affidavits."
On 10 November 1993 private respondent served a Notice of Termination on petitioner pursuant to the findings and recommendation of the Committee. Thereafter, petitioner received a letter from the president of ATENEO demanding her voluntary resignation a week from receipt of the letter, otherwise, she would be considered resigned from the service.
On 29 November 1993 petitioner filed a complaint before the Labor Arbiter for illegal dismissal. After trial, Executive Labor Arbiter Conchita J. Martinez found her dismissal illegal for lack of factual basis and ordered ATENEO to award petitioner separation pay, back wages and 13th month pay. In her decision, the Executive Labor Arbiter opined that although petitioner was afforded procedural due process respondent institution "failed to establish substantial evidence as to the guilt of the complainant of the offense charged"3 thus —
. . . the complainant was afforded procedural due process. There is convincing and sufficient evidence . . . showing respondent complied with the notice and hearing requirement. . . . .4
After considering the evidence, arguments and counter-arguments of the parties, this office finds that the respondent failed to establish substantial evidence as to the guilt of
complainant of the offense charged. . . .5
Complainant has sufficiently established that she is a very good teacher. She is equipped with the appropriate educational qualifications, trainings, seminars and work experiences. Such fact was affirmed by her present and former students, their parents, colleagues and the former headmaster of the grade school. . . .6
As a matter of fact, six (6) out of the nine (9) students and their parents/guardians have retracted and withdrawn their statements. . . .7
Both parties appealed to the NLRC which on 25 March 1996 reversed the decision of the
Executive Labor Arbiter by declaring petitioner’s dismissal valid and legal but added that since ATENEO offered petitioner her retirement benefits it was but proper that she be extended said benefits. Petitioner now seeks the reversal of the decision; hence, this petition.
The crux of the controversy is whether the NLRC committed grave abuse of discretion in sustaining as valid and legal the dismissal of petitioner by private respondent ATENEO.
The NLRC, in our view, appears to have skirted several important issues raised by petitioner
foremost of which is the absence of due process. Upon being notified of her termination, she has the right to demand compliance with the basic requirements of due process. Compliance entails the twin requirements of procedural and substantial due process. Ample opportunity must be afforded the employee to defend herself either personally and/or with assistance of a representative; to know the nature of her offense; and, to cross examine and confront face to face the witnesses against her. Likewise, due process requires that the decision must be based on established facts and on a sound legal foundation.
It is precisely to demand compliance with these requirements that petitioner at the very onset of the investigation demanded the revision of the rules laid down by the Investigative Committee. The adamant refusal of the Committee to accede to this demand resulted in her failure to confront and cross-examine her accusers. This is not "harping at technicalities" as wrongfully pointed out by the NLRC but a serious violation of petitioner's statutory and constitutional right to due process that ultimately vitiated the investigation.
Moreover, the failure of ATENEO to refute the contention of petitioner that the joint affidavits executed by the students and parents were "pre-prepared" raises serious doubts as to the probative value of this evidence. As correctly pointed out by the Executive Labor Arbiter, "there is more reason to disregard it especially where the same was challenged and has remained
unexplained." Hearsay evidence, in the strict sense, has no probative value whether objected to or not.
In the instant case, ATENEO failed to prove by substantial evidence that petitioner had inflicted corporal punishment on her students. In Ang Tibay v. CIR, the Court set the measure of evidence to be presented in an administrative investigation when it said, "substantial evidence is more than mere scintilla. It means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." The evidence of private respondent did not measure up to this standard. It relied solely on the witnesses' affidavits with questionable veracity. Moreover, the affidavit of
recantation executed by some students and their parents all the more weakened the case of private respondent. Failure in this regard negates the very existence of the ground for dismissal.
On the other hand, petitioner adequately proved, by means of affidavits, letters of petition and manifesto made by her students and co-teachers, that she was a competent and dedicated teacher having spent seventeen (17) years of her life in the service of the very institution which is now seeking her dismissal.
In view of the foregoing, the conclusion of the NLRC is unwarranted. Employment is not merely a contractual relationship; it has assumed the nature of property right. It may spell the difference whether or not a family will have food on their table, roof over their heads and education for their children. It is for this reason that the State has taken up measures to protect employees from unjustified dismissals. It is also because of this that the right to security of tenure is not only a statutory right but, more so, a constitutional right.
WHEREFORE, the assailed Decision of public respondent National Labor Relations Commission dated 25 March 1996 is REVERSED and SET ASIDE, and the decision of Executive Labor Arbiter Conchita J. Martinez "declaring the dismissal of complainant Lorlene A. Gonzales illegal for lack of factual basis and ordering respondent Ateneo de Davao University to pay complainant separation pay, back wages and 13th month pay in the total amount of TWO HUNDRED SIXTEEN THOUSAND NINE HUNDRED THIRTY-EIGHT and 70/100 PESOS (P216,938.70) . . . [f]urther, ordering
respondent to pay 10% of the total monetary award as attorney's fees to counsel for complainant . . . [d]ismissing all other claims for lack of merit," is REINSTATED, AFFIRMED and ADOPTED herein as the decision in the instant case.1âwphi1.nêt
G.R. No. 155098 September 16, 2005
CAPITOL MEDICAL CENTER, INC. and DR. THELMA NAVARETTE-CLEMENTE, Petitioners, vs.
DR. CESAR E. MERIS, Respondent.
D E C I S I O N
CARPIO MORALES, J.:
Subject of the present appeal is the Court of Appeals Decision1 dated February 15, 2002 reversing the NLRC Resolution2 dated January 19, 1999 and Labor Arbiter Decision3 dated April 28, 1998 which both held that the closure of the Industrial Service Unit of the
Capitol Medical Center, Inc., resulting to the termination of the services of herein respondent Dr. Cesar Meris as Chief thereof, was valid.
On January 16, 1974, PETITIONER Capitol Medical Center, Inc. (Capitol) hired Dr. Cesar Meris (Dr. Meris),4 one of its stockholders,5 as in charge of its Industrial Service Unit (ISU) at a monthly salary of P10,270.00.
Until the closure of the ISU on April 30, 1992,6 Dr. MERIS b 500 employees and health workers as well as to employees and workers of companies having retainer contracts with it.7
On March 31, 1992, Dr. Meris received from Capitol’s president and chairman of the board, Dr. Thelma Navarette-Clemente (Dr. Clemente), a notice advising him of the management’s decision to close or abolish the ISU and the consequent termination of his services as Chief thereof, effective April 30, 1992.8 The notice reads as follows:
March 31, 1992
Dr. Cesar E. Meris
Chief, Industrial Service Unit
Capitol Medical Center
Dear Dr. Meris:
Greetings!
Please be formally advised that the hospital management has decided to abolish CMC’s Industrial Service Unit as of April 30, 1992 in view of the almost extinct demand for direct medical
services by the private and semi-government corporations in providing health care for their employees. Such a decision was arrived at, after considering the existing trend of industrial companies allocating their health care requirements to Health Maintenance Organizations (HMOs) or thru a tripartite arrangement with medical insurance carriers and designated hospitals.
As a consequence thereof, all positions in the unit will be decommissioned at the same time industrial services [are] deactivated. In that event, you shall be entitled to return to your private
practice as a consultant staff of the institution and will become eligible to receive your retirement benefits as a former hospital employee. Miss Jane Telan on the other hand will be transferred back to Nursing Service for reassignment at the CSR.
We wish to thank you for your long and faithful service to the institution and hope that our
partnership in health care delivery to our people will continue throughout the future. Best regards.
Very truly yours,
(SGD.) DR. THELMA NAVARETTE-CLEMENTE9 (Emphasis and underscoring supplied)
Dr. Meris, doubting the reason behind the management’s decision to close the ISU and believing that the ISU was not in fact abolished as it continued to operate and offer services to the client companies with Dr. Clemente as its head and the notice of closure was a mere ploy for his ouster in view of his refusal to retire despite Dr. Clemente’s previous prodding for him to do so,10 sought his reinstatement but it was unheeded.
Dr. Meris thus filed on September 7, 1992 a complaint against Capitol and Dr. Clemente for illegal dismissal and reinstatement with claims for backwages, moral and exemplary damages, plus attorney’s fees.11
Finding for Capitol and Dr. Clemente, the Labor Arbiter held that the abolition of the ISU was a valid and lawful exercise of management prerogatives and there was convincing evidence to show that ISU was being operated at a loss.12 The decretal text of the decision reads:
WHEREFORE, judgment is hereby rendered dismissing the complaint. Respondents are however ordered to pay complainant all sums due him under the hospital retirement plan.
SO ORDERED.13 (Emphasis supplied)
On appeal by Dr. Meris, the National Labor Relations Commission (NLRC) modified the Labor Arbiter’s decision. It held that in the exercise of Capitol’s management prerogatives, it had the right to close the ISU even if it was not suffering business losses in light of Article 283 of the Labor Code and jurisprudence.14
And the NLRC set aside the Labor Arbiter’s directive for the payment of retirement benefits to Dr. Meris because he did not retire. Instead, it ordered the payment of separation pay as provided under Article 283 as he was discharged due to closure of ISU, to be charged against the retirement fund.15
Undaunted, Dr. Meris elevated the case to the Court of Appeals via petition for review16 which, in the interest of substantial justice, was treated as one for certiorari.17
Discrediting Capitol’s assertion that the ISU was operating at a loss as the evidence showed a continuous trend of increase in its revenue for three years immediately preceding Dr. Meris’s dismissal on April 30, 1992,18 and finding that the ISU’s "Analysis of Income and Expenses" which was prepared long after Dr. Meris’s dismissal, hence, not yet available, on or before April 1992, was tainted with irregular entries, the appellate court held that Capitol’s evidence failed to meet the standard of a sufficient and adequate proof of loss necessary to justify the abolition of the ISU.19
The appellate court went on to hold that the ISU was not in fact abolished, its operation and management having merely changed hands from Dr. Meris to Dr. Clemente; and that there was a procedural lapse in terminating the services of Dr. Meris, no written notice to the Department of Labor and Employment (DOLE) of the ISU abolition having been made, thereby violating the requirement embodied in Article 283.20
The appellate court, concluding that Capitol failed to strictly comply with both procedural and substantive due process, a condition sine qua non for the validity of a case of termination,21 held that Dr. Meris was illegally dismissed. It accordingly reversed the NLRC Resolution and disposed as follows:
IN VIEW OF ALL THE FOREGOING, the assailed resolutions of the NLRC are hereby set aside, and another one entered –
1 – declaring illegal the dismissal of petitioner as Chief of the Industrial Service Unit of respondent Medical Center;
2 – ordering respondents to pay petitioner
a) backwages from the date of his separation in April 1992 until this decision has attained finality;
b) separation pay in lieu of reinstatement computed at the rate of one (1) month salary for every year of service with a fraction of at least six (6) months being considered as one year;
c) other benefits due him or their money equivalent;
d) moral damages in the sum of P50,000.00;
e) exemplary damages in the sum of P50,000.00; and
f) attorney’s fees of 10% of the total monetary award payable to petitioner.
SO ORDERED.22
Hence, the present petition for review assigning to the appellate court the following errors:
I
. . . IN OVERTURNING THE FACTUAL FINDINGS AND CONCLUSIONS OF BOTH THE NATIONAL LABOR RELATIONS COMMISSION (NLRC) AND THE LABOR ARBITER.
II
. . . IN HOLDING, CONTRARY TO THE FINDINGS OF BOTH THE LABOR ARBITER AND THE NATIONAL LABOR RELATIONS COMMISSION, THAT THE INDUSTRIAL UNIT (ISU) WAS NOT
INCURRING LOSSES AND THAT IT WAS NOT IN FACT ABOLISHED.
. . . IN NOT UPHOLDING PETITIONERS’ MANAGEMENT PREROGATIVE TO ABOLISH THE INDUSTRIAL SERVICE UNIT (ISU).
IV
. . . IN REQUIRING PETITIONERS TO PAY RESPONDENT BACKWAGES AS WELL AS DAMAGES AND ATTORNEY’S FEES.23
Capitol questions the appellate court’s deciding of the petition of Dr. Meris on the merits, instead of merely determining whether the administrative bodies acted with grave abuse of discretion
amounting to lack or excess of jurisdiction.
The province of a special civil action for certiorari under Rule 65, no doubt the appropriate mode of review by the Court of Appeals of the NLRC decision,24 is limited only to correct errors of jurisdiction or grave abuse of discretion amounting to lack or excess of jurisdiction.25 In light of the merits of Dr. Meris’ claim, however, the relaxation by the appellate court of procedural technicality to give way to a substantive determination of a case, as this Court has held in several cases,26 to subserve the interest of justice, is in order.
Capitol argues that the factual findings of the NLRC, particularly when they coincide with those of the Labor Arbiter, as in the present case, should be accorded respect, even finality.27
For factual findings of the NLRC which affirm those of the Labor Arbiter to be accorded respect, if not finality, however, the same must be sufficiently supported by evidence on record.28 Where there is a showing that such findings are devoid of support, or that the judgment is based on a
misapprehension of facts,29 the lower tribunals’ factual findings will not be upheld.
As will be reflected in the following discussions, this Court finds that the Labor Arbiter and the NLRC overlooked some material facts decisive of the instant controversy.
Capitol further argues that the appellate court’s conclusion that the ISU was not incurring losses is arbitrary as it was based solely on the supposed increase in revenues of the unit from 1989-1991, without taking into account the "Analysis of Income and Expenses" of ISU from July 1, 1990 to July 1, 1991 which shows that the unit operated at a loss;30 and that the demand for the services of ISU became almost extinct in view of the affiliation of industrial establishments with HMOs such as Fortunecare, Maxicare, Health Maintenance, Inc. and Philamcare and of tripartite arrangements with medical insurance carriers and designated hospitals,31 and the trend resulted in losses in the
operation of the ISU.
Besides, Capitol stresses, the health care needs of the hospital employees had been taken over by other units without added expense to it;32 the appellate court’s decision is at best an undue
interference with, and curtailment of, the exercise by an employer of its management
prerogatives;33 at the time of the closure of the ISU, Dr. Meris was already eligible for retirement under the Capitol’s retirement plan; and the appellate court adverted to the alleged lack of notice to the DOLE regarding Dr. Meris’s dismissal but the latter never raised such issue in his appeal to the NLRC or even in his petition for review before the Court of Appeals, hence, the latter did not have authority to pass on the matter.34
Work is a necessity that has economic significance deserving legal protection. The social justice and protection to labor provisions in the Constitution dictate so.
Employers are also accorded rights and privileges to assure their self-determination and
independence and reasonable return of capital. This mass of privileges comprises the so-called MANAGEMENT PREROGATIVES. Although they may be broad and unlimited in scope, the State has the right to determine whether an employer’s privilege is exercised in a manner that complies with the legal requirements and does not offend the protected rights of labor. One of the rights accorded an employer is the right to close an establishment or undertaking.
The right to close the operation of an establishment or undertaking is explicitly recognized under the Labor Code as one of the authorized causes in terminating employment of workers, the only limitation being that the closure must not be for the purpose of circumventing the provisions on termination of employment embodied in the Labor Code.
ART. 283. Closure of establishment and reduction of personnel. – The employer may also terminate the employment of any employee due to the installation of labor saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by serving a written notice on the workers and the Ministry of Labor and Employment at least one (1) month before the intended date thereof. In case of termination due to the installation of labor saving devices or redundancy, the worker affected shall be entitled to a separation pay equivalent to at least his one (1) month pay or to at least one (1) month pay for every year of service, whichever is higher. In case retrenchment to prevent losses and in cases of closures or
cessation of
operations of establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be considered one (1) whole year. (Emphasis and underscoring supplied)
The phrase "closures or cessation of operations of establishment or undertaking" includes a partial or total closure or cessation.35
x x x Ordinarily, the closing of a warehouse facility and the termination of the services of employees there assigned is a matter that is left to the determination of the employer in the good faith exercise of its management prerogatives. The applicable law in such a case is Article 283 of the Labor Code which permits ‘closure or cessation of operation of an establishment or undertaking not due to serious business losses or financial reverses,’ which, in our reading includes both the complete cessation of operations and the cessation of only part of a company’s business. (Emphasis supplied)
And the phrase "closures or cessation x x x not due to serious business losses or financial reverses" recognizes the right of the employer to close or cease his business operations or
undertaking even if he is not suffering from serious business losses or financial reverses, as long as he pays his employees their termination pay in the amount corresponding to their length of service.36
It would indeed be stretching the intent and spirit of the law if a court were to unjustly interfere in management’s prerogative to close or cease its business operations just because said business operation or undertaking is not suffering from any loss.37 As long as the company’s exercise of the same is in good faith to advance its interest and not for the purpose of defeating or
circumventing the rights of employees under the law or a valid agreement, such exercise will be upheld.38
Clearly then, the right to close an establishment or undertaking may be justified on grounds other than business losses but it cannot be an unbridled prerogative to suit the whims of the employer. The ultimate test of the validity of closure or cessation of establishment or undertaking is that it must be bona fidein character.39 And the burden of proving such falls upon the employer.40
In the case at bar, Capitol failed to sufficiently prove its good faith in closing the ISU.
From the letter of Dr. Clemente to Dr. Meris, it is gathered that the abolition of the ISU was due to the "almost extinct demand for
direct medical service by the private and semi-government corporations in providing health care for their employees;" and that such extinct demand was brought about by "the existing trend of industrial companies allocating their health care requirements to Health Maintenance Organizations (HMOs) or thru a tripartite arrangement with medical insurance carriers and designated hospitals."
The records of the case, however, fail to impress that there was indeed extinct demand for the medical services rendered by the ISU. The ISU’s Annual Report for the fiscal years 1986 to 1991, submitted by Dr. Meris to Dr. Clemente, and uncontroverted by Capitol, shows the following:
Fiscal Year No. of Industrial No of No. of Capitol
Patients Companies Employees
1986-1987 466 11 1445
1987-1988 580 17 1707
1988-1989 676 14 1888
1989-1990 571 16 2731
1990-1991 759 18 232041
If there was extinct demand for the ISU medical services as what Capitol and Dr. Clemente purport to convey, why the number of client companies of the ISU increased from 11 to 18 from 1986 to 1991, as well as the number of patients from both industrial corporations and Capitol employees, they did not explain.
The "Analysis of Income and Expenses" adduced by Capitol showing that the ISU incurred losses from July 1990 to February 1992, to wit:
July 1, 1990 to July 1, 1991 to
June 30, 1991 February 29, 1992
INCOME P16, 772.00 P35, 236.00
TOTAL EXPENSES P225, 583.70 P169,244.34
was prepared by its internal auditor Vicenta Fernandez,43 a relative of Dr. Clemente, and not by an independent external auditor, hence, not beyond doubt. It is the financial statements audited by independent external auditors which constitute the normal method of proof of the profit and loss performance of a company.44
At all events, the claimed losses are contradicted by the accounting records of Capitol itself which show that ISU had increasing revenue from 1989 to 1991.
Year In-Patient Out-Patient Total Income
1989 P230,316.38 P 79,477.50 P309,793.88
1990 P278,438.10 P124,256.65 P402,694.75
1991 P305,126.35 P152,920.15 P458,046.5045
The foregoing disquisition notwithstanding, as reflected above, the existence of business losses is not required to justify the closure or cessation of establishment or undertaking as a ground to terminate employment of employees. Even if the ISU were not incurring losses, its abolition or closure could be justified on other grounds like that proffered by Capitol – extinct demand. Capitol failed, however, to present sufficient and convincing evidence to support such claim of extinct demand. In fact, the employees of Capitol submitted a petition46 dated April 21, 1992 addressed to Dr. Clemente opposing the abolition of the ISU.
The closure of ISU then surfaces to be contrary to the provisions of the Labor Code on termination of employment.
The termination of the services of Dr. Meris not having been premised on a just or authorized cause, he is entitled to either reinstatement or separation pay if reinstatement is no longer viable, and to backwages.
Reinstatement, however, is not feasible in case of a strained employer-employee relationship or when the work or position formerly held by the dismissed employee no longer exists, as in the instant case.47 Dr. Meris is thus entitled to payment of separation pay at the rate of one (1) month salary for every year of his employment, with a fraction of at least six (6) months being considered as one(1) year,48 and full backwages from the time of his dismissal from April 30, 1992 until the expiration of his term as Chief of ISU or his mandatory retirement, whichever comes first.
The award by the appellate court of moral damages,49 however, cannot be sustained, solely upon the premise that the employer fired his employee without just cause or due process. Additional facts must be pleaded and proven to warrant the grant of moral damages under the Civil Code, such as that the act of dismissal was attended by bad faith or fraud, or was oppressive to labor, or done in a manner contrary to morals, good customs, or public policy; and of course, that social humiliation, wounded feelings, grave anxiety, etc., resulted therefrom.50Such circumstances, however, do not obtain in the instant case. More specifically on bad faith, lack of it is mirrored in Dr. Clemente’s offer to Dr. Meris to be a consultant of Capitol, despite the abolition of the ISU.
There being no moral damages, the award of exemplary damages does not lie.51 The award for attorney’s fees, however, remains.52
WHEREFORE, the decision of the Court of Appeals dated February 15, 2002 is
hereby AFFIRMED withMODIFICATION. As modified, judgment is hereby rendered ordering Capitol Medical Center, Inc. to pay Dr. Cesar Meris separation pay at the rate of One (1) Month salary for every year of his employment, with a fraction of at least Six (6) Months being considered as One (1) Year, full backwages from the time of his dismissal from April 30, 1992 until the expiration of his term as Chief of the ISU or his mandatory retirement, whichever comes first; other benefits due him or their money equivalent; and attorney’s fees.
G.R. No. 85985 August 13, 1993
PHILIPPINE AIRLINES, INC. (PAL), petitioner, vs.
NATIONAL LABOR RELATIONS COMMISSION, LABOR ARBITER ISABEL P. ORTIGUERRA and PHILIPPINE AIRLINES EMPLOYEES ASSOCIATION (PALEA), respondents.
Solon Garcia for petitioner.
Adolpho M. Guerzon for respondent PALEA.
MELO, J.:
In the instant petition for certiorari, the Court is presented the issue of whether or not the formulation of a Code of Discipline among employees is a shared responsibility of the employer and the
employees.
On March 15, 1985, the Philippine Airlines, Inc. (PAL) completely revised its 1966 Code of
Discipline. The Code was circulated among the employees and was immediately implemented, and some employees were forthwith subjected to the disciplinary measures embodied therein.
Thus, on August 20, 1985, the Philippine Airlines Employees Association (PALEA) filed a complaint before the National Labor Relations Commission (NLRC) for unfair labor practice (Case No. NCR-7-2051-85) with the following remarks: "ULP with arbitrary implementation of PAL's Code of Discipline without notice and prior discussion with Union by Management" (Rollo, p. 41). In its position paper, PALEA contended that PAL, by its unilateral implementation of the Code, was guilty of unfair labor practice, specifically Paragraphs E and G of Article 249 and Article 253 of the Labor Code. PALEA alleged that copies of the Code had been circulated in limited numbers; that being penal in nature the Code must conform with the requirements of sufficient publication, and that the Code was arbitrary, oppressive, and prejudicial to the rights of the employees. It prayed that implementation of the Code be held in abeyance; that PAL should discuss the substance of the Code with PALEA; that employees dismissed under the Code be reinstated and their cases subjected to further hearing; and that PAL be declared guilty of unfair labor practice and be ordered to pay damages (pp. 7-14,
Record.)
PAL filed a motion to dismiss the complaint, asserting its prerogative as an employer to prescibe rules and regulations regarding employess' conduct in carrying out their duties and functions, and alleging that by implementing the Code, it had not violated the collective bargaining agreement (CBA) or any provision of the Labor Code. Assailing the complaint as unsupported by evidence, PAL maintained that Article 253 of the Labor Code cited by PALEA reffered to the requirements for negotiating a CBA which was inapplicable as indeed the current CBA had been negotiated.
In its reply to PAL's position paper, PALEA maintained that Article 249 (E) of the Labor Code was violated when PAL unilaterally implemented the Code, and cited provisions of Articles IV and I of Chapter II of the Code as defective for, respectively, running counter to the construction of penal laws and making punishable any offense within PAL's contemplation. These provisions are the following:
Sec. 2. Non-exclusivity. — This Code does not contain the entirety of the rules and regulations of the company. Every employee is bound to comply with all applicable rules, regulations, policies, procedures and standards, including standards of quality, productivity and behaviour, as issued and promulgated by the company through its duly authorized officials. Any violations thereof shall be punishable with a penalty to be determined by the gravity and/or frequency of the offense.
Sec. 7. Cumulative Record. — An employee's record of offenses shall be cumulative. The penalty for an offense shall be determined on the basis of his past record of offenses of any nature or the absence thereof. The more habitual an offender has been, the greater shall be the penalty for the latest offense. Thus, an employee may be dismissed if the number of his past offenses warrants such penalty in the
judgment of management even if each offense considered separately may not warrant dismissal. Habitual offenders or recidivists have no place in PAL. On the other hand, due regard shall be given to the length of time between commission of individual offenses to determine whether the employee's conduct may indicate occasional lapses (which may nevertheless require sterner disciplinary action) or a pattern of incorrigibility.
Labor Arbiter Isabel P. Ortiguerra handling the case called the parties to a conference but they failed to appear at the scheduled date. Interpreting such failure as a waiver of the parties' right to present evidence, the labor arbiter considered the case submitted for decision. On November 7, 1986, a decision was rendered finding no bad faith on the part of PAL in adopting the Code and ruling that no unfair labor practice had been committed. However, the arbiter held that PAL was "not totally fault free" considering that while the issuance of rules and regulations governing the conduct of
employees is a "legitimate management prerogative" such rules and regulations must meet the test of "reasonableness, propriety and fairness." She found Section 1 of the Code aforequoted as "an all embracing and all encompassing provision that makes punishable any offense one can think of in the company"; while Section 7, likewise quoted above, is "objectionable for it violates the rule against double jeopardy thereby ushering in two or more punishment for the same misdemeanor." (pp. 38-39, Rollo.)
The labor arbiter also found that PAL "failed to prove that the new Code was amply circulated." Noting that PAL's assertion that it had furnished all its employees copies of the Code is unsupported by documentary evidence, she stated that such "failure" on the part of PAL resulted in the imposition of penalties on employees who thought all the while that the 1966 Code was still being followed. Thus, the arbiter concluded that "(t)he phrase ignorance of the law excuses no one from compliance . . . finds application only after it has been conclusively shown that the law was circulated to all the parties concerned and efforts to disseminate information regarding the new law have been exerted. (p. 39, Rollo.) She thereupon disposed:
WHEREFORE, premises considered, respondent PAL is hereby ordered as follows:
1. Furnish all employees with the new Code of Discipline;
2. Reconsider the cases of employees meted with penalties under the New Code of Discipline and remand the same for further hearing; and
3. Discuss with PALEA the objectionable provisions specifically tackled in the body of the decision.
SO ORDERED. (p. 40, Rollo.)
PAL appealed to the NLRC. On August 19, 1988, the NLRC through Commissioner Encarnacion, with Presiding Commissioner Bonto-Perez and Commissioner Maglaya concurring, found no evidence of unfair labor practice committed by PAL and affirmed the dismissal of PALEA's charge. Nonetheless, the NLRC made the following observations:
Indeed, failure of management to discuss the provisions of a contemplated code of discipline which shall govern the conduct of its employees would result in the erosion and deterioration of an otherwise harmonious and smooth relationship between them as did happen in the instant case. There is no dispute that adoption of rules of conduct or discipline is a prerogative of management and is imperative and essential if an industry, has to survive in a competitive world. But labor climate has
progressed, too. In the Philippine scene, at no time in our contemporary history is the need for a cooperative, supportive and smooth relationship between labor and management more keenly felt if we are to survive economically. Management can no longer exclude labor in the deliberation and adoption of rules and regulations that will affect them.
The complainant union in this case has the right to feel isolated in the adoption of the New Code of Discipline. The Code of Discipline involves security of tenure and loss of employment — a property right! It is time that management realizes that to attain effectiveness in its conduct rules, there should be candidness and openness by Management and participation by the union, representing its members. In fact, our Constitution has recognized the principle of "shared responsibility" between employers and workers and has likewise recognized the right of workers to
participate in "policy and decision-making process affecting their rights . . ." The latter provision was interpreted by the Constitutional Commissioners to mean participation in "management"' (Record of the Constitutional Commission, Vol. II).
In a sense, participation by the union in the adoption of the code if conduct could have accelerated and enhanced their feelings of belonging and would have resulted in cooperation rather than resistance to the Code. In fact, labor-management cooperation is now "the thing." (pp. 3-4, NLRC Decision ff. p. 149, Original Record.)
Respondent Commission thereupon disposed:
WHEREFORE, premises considered, we modify the appealed decision in the sense that the New Code of Discipline should be reviewed and discussed with complainant union, particularly the disputed provisions [.] (T)hereafter, respondent is directed to furnish each employee with a copy of the appealed Code of Discipline. The pending cases adverted to in the appealed decision if still in the arbitral level, should be reconsidered by the respondent Philippine Air Lines. Other dispositions of the Labor Arbiter are sustained.
SO ORDERED. (p. 5, NLRC Decision.)
PAL then filed the instant petition for certiorari charging public respondents with grave abuse of discretion in: (a) directing PAL "to share its management prerogative of formulating a Code of Discipline"; (b) engaging in quasi-judicial legislation in ordering PAL to share said prerogative with the union; (c) deciding beyond the issue of unfair labor practice, and (d) requiring PAL to reconsider pending cases still in the arbitral level (p. 7, Petition; p. 8,Rollo.)
As stated above, the Principal issue submitted for resolution in the instant petition is whether management may be compelled to share with the union or its employees its prerogative of formulating a code of discipline.
PAL asserts that when it revised its Code on March 15, 1985, there was no law which mandated the sharing of responsibility therefor between employer and employee.
Indeed, it was only on March 2, 1989, with the approval of Republic Act No. 6715, amending Article 211 of the Labor Code, that the law explicitly considered it a State policy "(t)o ensure the
participation of workers in decision and policy-making processes affecting the rights, duties and welfare." However, even in the absence of said clear provision of law, the exercise of management prerogatives was never considered boundless. Thus, in Cruz vs. Medina (177 SCRA 565 [1989]) it was held that management's prerogatives must be without abuse of discretion.
In San Miguel Brewery Sales Force Union (PTGWO) vs. Ople (170 SCRA 25 [1989]), we upheld the company's right to implement a new system of distributing its products, but gave the following caveat:
So long as a company's management prerogatives are exercised in good faith for the advancement of the employer's interest and not for the purpose of defeating or circumventing the rights of the employees under special laws or under valid agreements, this Court will uphold them.
(at p. 28.)
All this points to the conclusion that the exercise of managerial prerogatives is not unlimited. It is circumscribed by limitations found in law, a collective bargaining agreement, or the general principles of fair play and justice (University of Sto. Tomas vs. NLRC, 190 SCRA 758 [1990]). Moreover, as enunciated in Abbott Laboratories (Phil.), vs. NLRC (154 713 [1987]), it must be duly established that the prerogative being invoked is clearly a managerial one.
A close scrutiny of the objectionable provisions of the Code reveals that they are not purely
business-oriented nor do they concern the management aspect of the business of the company as in the San Miguel case. The provisions of the Code clearly have repercusions on the employee's right to security of tenure. The implementation of the provisions may result in the deprivation of an employee's means of livelihood which, as correctly pointed out by the NLRC, is a property right (Callanta, vs Carnation Philippines, Inc., 145 SCRA 268 [1986]). In view of these aspects of the case which border on infringement of constitutional rights, we must uphold the constitutional requirements for the protection of labor and the promotion of social justice, for these factors, according to Justice Isagani Cruz, tilt "the scales of justice when there is doubt, in favor of the worker" (Employees Association of the Philippine American Life Insurance Company vs. NLRC, 199 SCRA 628 [1991] 635).
Verily, a line must be drawn between management prerogatives regarding business operations per se and those which affect the rights of the employees. In treating the latter, management should see to it that its employees are at least properly informed of its decisions or modes action. PAL asserts that all its employees have been furnished copies of the Code. Public respondents found to the contrary, which finding, to say the least is entitled to great respect.
PAL posits the view that by signing the 1989-1991 collective bargaining agreement, on June 27, 1990, PALEA in effect, recognized PAL's "exclusive right to make and enforce company rules and regulations to carry out the functions of management without having to discuss the same with
PALEA and much less, obtain the latter'sconformity thereto" (pp. 11-12, Petitioner's Memorandum; pp 180-181, Rollo.) Petitioner's view is based on the following provision of the agreement:
The Association recognizes the right of the Company to determine matters of management it policy and Company operations and to direct its manpower.
Management of the Company includes the right to organize, plan, direct and control operations, to hire, assign employees to work, transfer employees from one
department, to another, to promote, demote, discipline, suspend or discharge employees for just cause; to lay-off employees for valid and legal causes, to introduce new or improved methods or facilities or to change existing methods or facilities and the right to make and enforce Company rules and regulations to carry out the functions of management.
The exercise by management of its prerogative shall be done in a just reasonable, humane and/or lawful manner.
Such provision in the collective bargaining agreement may not be interpreted as cession of employees' rights to participate in the deliberation of matters which may affect their rights and the formulation of policies relative thereto. And one such mater is the formulation of a code of discipline.
Indeed, industrial peace cannot be achieved if the employees are denied their just participation in the discussion of matters affecting their rights. Thus, even before Article 211 of the labor Code (P.D. 442) was amended by Republic Act No. 6715, it was already declared a policy of the State, "(d) To promote the enlightenment of workers concerning their rights and obligations . . . as employees." This was, of course, amplified by Republic Act No 6715 when it decreed the "participation of workers in decision and policy making processes affecting their rights, duties and welfare." PAL's position that it cannot be saddled with the "obligation" of sharing management prerogatives as during the formulation of the Code, Republic Act No. 6715 had not yet been enacted (Petitioner's
Memorandum, p. 44; Rollo, p. 212), cannot thus be sustained. While such "obligation" was not yet founded in law when the Code was formulated, the attainment of a harmonious labor-management relationship and the then already existing state policy of enlightening workers concerning their rights as employees demand no less than the observance of transparency in managerial moves affecting employees' rights.
Petitioner's assertion that it needed the implementation of a new Code of Discipline considering the nature of its business cannot be overemphasized. In fact, its being a local monopoly in the business demands the most stringent of measures to attain safe travel for its patrons. Nonetheless, whatever disciplinary measures are adopted cannot be properly implemented in the absence of full
cooperation of the employees. Such cooperation cannot be attained if the employees are restive on account, of their being left out in the determination of cardinal and fundamental matters affecting their employment.
WHEREFORE, the petition is DISMISSED and the questioned decision AFFIRMED. No special pronouncement is made as to costs.
G.R. No. 177907 August 29, 2012
FAIR SHIPPING CORP., and/or KOHYU MARINE CO., LTD., Petitioners, vs.
JOSELITO T. MEDEL, Respondent.
D E C I S I O N
LEONARDO-DE CASTRO, J.:
In this Petition for Review on Certiorari1 under Rule 45, the Court is asked to reverse and set aside the Decision2and Resolution3 of the Court of Appeals in CA-G.R. SP No. 75893 dated November 20, 2006 and May 15, 2007, respectively. In the assailed Decision, the Court of Appeals held that the Second Division of the National Labor Relations Commission (NLRC) committed grave abuse of discretion amounting to lack or excess of jurisdiction in issuing the Decision4 dated July 31, 2002 in NLRC OFW (M) 99-09-01462 (CA No. 029790-01). In the assailed resolution, the Court of Appeals denied for lack of merit the Motion for Reconsideration5 of herein petitioners Fair Shipping
Corporation and Kohyu Marine Co., Ltd. and the Partial Motion for Reconsideration filed by herein respondent Joselito T. Medel.
From the records of the case, we culled the following material facts:
On November 23, 1998, Medel was hired by Fair Shipping Corporation, for and in behalf of its foreign principal Kohyu Marine Co., Ltd. Under the Contract of Employment6 signed by Medel, the latter was employed as an Able Seaman of the vessel M/V Optima for a period of 12 months with a basic monthly salary of US$335.00, plus fixed overtime pay of US$136.00 and vacation leave with pay of two and a half (2.5) days per month. The contract expressly stated that the terms and conditions of the revised Employment Contract governing the employment of all seafarers, as approved per Department Order No. 33 and Memorandum Circular No. 55, both series of 1996 the 1996 POEA SEC,7 were to be strictly and faithfully observed by the parties.
Medel boarded the M/V Optima on November 27, 1998 and commenced the performance of his duties therein.8On March 1, 1999, while the M/V Optima was docked at the Port of Vungtao in Ho Chi Minh City, Vietnam, Medel figured in an unfortunate accident. During the conduct of emergency drills aboard the vessel, one of Medel’s co-workers lost control of the manual handle of a lifeboat, causing the same to turn uncontrollably; and it struck Medel in the forehead. Medel was given first aid treatment and immediately brought to the Choray Hospital in Ho Chi Minh City on said date.9
After undergoing surgical procedure to treat his fractured skull, Medel was discharged from the hospital on March 13, 1999. Medel’s Discharge Summary disclosed that he underwent the following treatment:
1/ Surgical procedure: An open wound, 5 cm long, in the left frontal region. Extend [of] the wound up to 10 cm. The underlying frontal bone is found completely shattered. The frontal sinus is broken. The fracture in the frontal bone extends beyond the midline to the right parietal bone. The fractured skull is depressed 1 cm. Frontal sinus is cleansed, its mucosa is cauterized. A Gelfoam is packed into the frontal sinus. The broken fragments of the frontal bone are removed. The remaining depressed frontal bone is elevated to normal position. The fractured fronto-parietal bone is gouged out. A rubber tube drain is placed into the wound. Skin is closed in 2 layers.
Post-op is uneventful. Left palpebral ptosis and dimmed vision are recorded. Eye examination shows scattered retinal hemorrhages. Surgical incision heals well. Left palpebral ptosis recovers nearly completely. Retinal hemorrhage is markedly reduced, however, left vision is not yet fully recovered.10
Medel’s attending physician then recommended his "[r]epatriation for further treatment (at the patient’s request)" and that he should "see a neurosurgeon and an ophthalmologist in the Philippines."11
Medel was repatriated to the Philippines on March 13, 1999 and was admitted to the Metropolitan Hospital on the said date. In a letter dated March 16, 1999, Dr. Robert D. Lim, the
company-designated physician and Medical Coordinator of the Metropolitan Hospital, informed petitioners that Medel was seen by a neurologist, an ENT specialist, and an ophthalmologist.12 Medel subsequently underwent a cranial CT scan and an ultrasound on his left eye, which was also injured during the accident.13 On April 22, 1999, a posterior vitrectomy was performed on Medel’s left eye;14 and on July 14 and July 19, 1999, Medel’s left eye was likewise subjected to two sessions of argon laser retinopexy.15 Dr. Lim then reported to petitioners that Medel’s condition was re-evaluated on July 22, 1999 and, after consulting with the neurosurgeon at the Metropolitan Hospital, Medel was advised to undergo cranioplasty to treat the bony defect in his skull.16 On October 20, 1999, Medel was
admitted to the hospital and underwent the said surgical procedure.17 On October 25, 1999, Dr. Daniel L. Ong, a neurologist at the Metropolitan Hospital, sent a report to Dr. Lim stating thus:
DEAR DR. LIM,
RE: DELAY OF CRANIOPLASTY OF LEFT FRONTAL SINUS OPEN DEPRESSED FRACTURE; S/P POST-CRANIOTOMY (MR. JOSELITO MEDEL)
THE REASON FOR THE DELAY IS DUE TO THE POOR SKIN CONDITION AND THE POTENTIAL INFARCTION IN THIS PARTICULAR AREA IF DONE TOO QUICKLY. THIS IS ALSO THE
REASON FOR PROLONGED AN[T]IBIOTIC COVERAGE AS PART OF THE INITIAL
PREPARATORY TREATMENT, USUALLY SIX MONTHS WAIT BEFORE A CRANIOPLASTY IN THIS CASE.
I THINK PATIENT CAN RESUME SEA DUTIES WITHOUT ANY DISABILITY.
THANK YOU.
(SIGNED) DANIEL ONG, M.D.18 Months after, in a letter dated February 15, 2000, Dr. Lim informed petitioners of Medel’s condition, the relevant portion of which states:
RE : MR. JOSELITO MEDEL MV OPTIMA
FAIR SHIP. CORP.
: PATIENT WAS SEEN AND RE-EVALUATED FEBRUARY 11, 2000.
HIS WOUND IS HEALED. HIS PERIMETRY RESULT WAS GIVEN TO OUR NEUROLOGIST AND HE OPINES THAT PATIENT IS NOW FIT TO WORK.
: HE WAS PRONOUNCED FIT TO RESUME SEA DUTIES AS OF FEBRUARY 11, 2000.
: HOWEVER, THE PATIENT REFUSED TO SIGN HIS CERTIFICATE OF FITNESS TO WORK.
: FOR YOUR PERUSAL.19
In the interregnum, before Medel actually underwent the procedure of cranioplasty, he claimed from petitioners the payment of permanent total disability benefits. Petitioners, however, refused to grant the same.20Consequently, on September 7, 1999, Medel filed before the Arbitration Branch of the NLRC a complaint21against petitioners for disability benefits in the amount of US$60,000.00, medical expenses, loss of earning capacity, damages and attorney’s fees. The case was docketed as NLRC OFW (M) No. 99-09-01462. Medel claimed entitlement to permanent total disability benefits as more than 120 days had passed since he was repatriated for medical treatment but he was yet to be declared fit to work or the degree of his disability determined by the company-designated physician.
On July 30, 2001, the Labor Arbiter issued a Decision22 in favor of Medel, holding that:
Upon the records, this Office is more than convinced that Medel is entitled to a [sic] disability
benefits which is equivalent to 120% of US$50,000.00 or US$60,000.00 or its peso equivalent at the exchange rate prevailing at the time of its payment.
As held by petitioners to be an undisputed fact, Medel suffered injury that was sustained by him during the effectivity of his shipboard employment contract and while engaged in the performance of his contracted duties.
Upon Medel’s arrival, petitioners referred him to the company designated physician at Metropolitan Hospital on March 13, 1999, with impression, "Head Injury with Open Fracture of the Left Frontal Bone: S/P Open Reduction & Internal Fixation of Frontal Bone and Sinus; Cerebral Concussion; Vitreous Hemorrhage, left eye secondary to trauma." Suggested procedure was Ultrasound of the left eye. Subsequently, Medel was referred to a neuro-surgeon. His cranial CT scan showed "Minimal Pneumocephalus; Inferior Frontal Region;
Comminuted Fracture, Frontal Bone; Post craniotomy Defect, Left Frontal Bone; changed within the Sphenoid which may relate to previous hemorrhage and Negative for Mass effect nor Intracranial Intracerebral Hemorrhage." His ultrasound of the left eye confirmed the presence of Vitreous Hemorrhage. Suggestion was Vitrectomy, Left eye. On June 28, 1999, Medel was re-evaluated, however, the ophthalmologist suggested Argon Laser Retinopexy since he was noted to have Wrinkled Macula and Areas of weakness in the Retina secondary to Trauma. He was then seen July 14, 1999 when he underwent first session of Argon Laser Retinopexy and for re-evaluation on July 19, 1999 for second session. On July 23, 1999, he was seen by the neurosurgeon who advised him to undergo the procedure of cranioplasty to cover the bony defect of the skull to be done in October 1999.
With the foregoing, we are persuaded by Medel’s arguments that the claim for disability benefits is not solely premised on the extent of his injury but also on the consequences of the same to his profession as a seafarer which was his only means of livelihood. We could imagine the nature of these undertakings of seafarers where manual and strenuous activities are part of the days work. Moreso, with the position of Medel being an ordinary seaman which primarily comprises the vessel manpower and labor. Thus, to us, we are convinced that Medel is entitled to the benefits under
Section 20 B of the POEA Memorandum Circular No. 55 and Section 30 A thereof which was deemed incorporated to his POEA approved employment contract.
Further, the claim for attorney’s fees is justified considering the above discussed circumstances which in effect has constrained Medel to hire the services of a legal counsel to protect his interest.23
The Labor Arbiter decreed as follows:
WHEREFORE, in view of the foregoing, judgment is hereby rendered finding petitioners jointly and severally liable to:
1) To pay Medel the amount of US$60,000.00 or its peso equivalent at the prevailing exchange rate at the time of payment, representing permanent and total disability; and
2) To pay Medel the equivalent amount of ten (10%) percent of the total judgment award, as and for attorney’s fees;
All other claims are hereby dismissed for lack of merit.24
Petitioners filed a Memorandum of Appeal25 before the NLRC, which was docketed as NLRC CA No. 029790-01. In their appeal, petitioners alleged that the disability compensation granted to Medel was improper because the same was not based on a disability assessment issued by the company-designated physician. As Medel was not disabled, they argued that he was not entitled to any compensation, including attorney’s fees.
In its Decision dated July 31, 2002, the Second Division of the NLRC found merit in the petitioners’ appeal and disposed of the same thus:
WHEREFORE, the appealed decision is SET ASIDE and a new one entered by ordering Medel’s claim DISMISSED for lack of merit.26
The NLRC ruled that under Section 20(B)(2) of the 1996 POEA SEC, the disability of a seafarer should be assessed by the company-designated physician. The employer shall be liable for the seafarer’s medical treatment until the latter is declared fit to work or his disability is assessed.
Should the seafarer recover, the NLRC posited that the contractual obligation of the employer should cease. However, if the seafarer is found to be incapacitated, the employer’s contractual obligation shall terminate only after the latter pays the seafarer’s disability benefits. Furthermore, the NLRC stated that the 120 days referred to in Section 20(B)(3) of the POEA SEC27 pertained to "the maximum number of days to which a seafarer who signed-off from the vessel for medical treatment is entitled to sickness wages."28 The NLRC ruled that there was no evidence to prove that Medel was disabled, other than his contention that his treatment had gone beyond 120 days. Medel was even declared fit to resume sea duty. Thus, the NLRC held that Medel had no basis for his claim of disability benefits.
Medel filed a Motion for Reconsideration29 of the above NLRC Decision but the same was denied in the NLRC Resolution30 dated November 21, 2002.
Medel, thus, filed a Petition for Certiorari31 before the Court of Appeals, which sought the reversal of the NLRC rulings for having been allegedly issued with grave abuse of discretion amounting to lack or excess of jurisdiction. Medel’s petition was docketed as CA-G.R. SP No. 75893.
On November 20, 2006, the Court of Appeals rendered the assailed decision, the dispositive portion of which provides:
WHEREFORE, in view of the foregoing, the NLRC Decision dated July 31, 2002 is
herebyREVERSED and SET ASIDE. The decision of the Labor Arbiter dated July 30, 2001 is herebyREINSTATED with respect only to the award of disability benefits. The award of attorney’s fees in the Labor Arbiter’s decision is deleted.32
Citing the Court’s ruling in Crystal Shipping, Inc. v. Natividad,33 the Court of Appeals stated that an award of permanent total disability benefits is proper when an employee is unable to perform his customary work for more than 120 days. Since Medel’s accident rendered him incapable of
performing his usual or customary work for more than 120 days, the Court of Appeals concluded that he was entitled to permanent total disability benefits. The Court of Appeals also refused to accept the veracity of the medical certificate attesting to Medel’s fitness to resume sea duties as the same was issued by Dr. Lim, a physician who the appellate court deemed as not privy to Medel’s
condition. The Court of Appeals did not, however, heed Medel’s claims for moral and exemplary damages since petitioners neither abandoned him during his period of disability, nor were they negligent in providing for his medical treatment. Lastly, the Court of Appeals deleted the award of attorney’s fees.
Medel filed a Partial Motion for Reconsideration34 of the above decision as regards the award of attorney’s fees. On the other hand, petitioners filed their Motion for Reconsideration,35 arguing that the provisions alone of the POEA SEC should apply in determining what constitutes permanent total disability, to the exclusion of the Labor Code provisions on disability compensation. In the assailed Resolution dated May 15, 2007, the Court of Appeals denied for lack of merit the respective motions of the parties.
Hence, petitioners instituted this petition, citing the following issues:
I.
WHETHER OR NOT THE DISABILITY BENEFITS PROVIDED UNDER THE POEA CONTRACT ARE SEPARATE AND DISTINCT FROM THOSE PROVIDED UNDER THE LABOR CODE.
II.
WHETHER OR NOT UNDER THE POEA CONTRACT THE INABILITY TO WORK FOR MORE THAN ONE HUNDRED TWENTY (120) DAYS IS TOTAL AND PERMANENT DISABILITY.
III.
WHETHER OR NOT, IN DISABILITY COMPENSATION CLAIMS, THE CONDITIONS PRECEDENT REQUIRED UNDER THE POEA CONTRACT SHOULD BE LIGHTLY DISREGARDED ON MERE APPEAL TO THE LIBERALITY OF LAWS TOWARDS FILIPINO SEAFARERS.36
Petitioners argue that Medel’s claims for disability benefits should be resolved by applying
exclusively the provisions of the POEA SEC and the relevant jurisprudence interpreting the same, without resorting to the provisions of the Labor Code on disability benefits. Moreover, petitioners aver that the 1996 POEA SEC does not state that the mere lapse of 120 days automatically makes a seafarer permanently and totally disabled. In spite of the lapse of 120 days, petitioners posit that the entitlement to disability benefits would only come as a matter of course after the degree of the
seafarer’s disability had been established, which assessment shall be made after the seafarer no longer responds to any medication or treatment. Thus, a seafarer is entitled to receive permanent total disability benefits only if the seafarer was declared by the company-designated physician to be suffering from a Grade 1 impediment.
In the present case, petitioners insist that there was no disability assessment from the company-designated physician. On the contrary, Medel was even assessed to be physically fit to resume work. Petitioners then faulted the Court of Appeals for rejecting the certification of Dr. Ong that Medel was fit to resume sea duties. Petitioners insist that said doctor had personal knowledge of Medel’s condition, as he was a member of a team of physicians tasked to treat Medel. Petitioners maintain that Medel did not present evidence to prove his incapacity, which would entitle him to the disability benefits that he sought.
After thoroughly reviewing the records of this case, the Court concludes and so declares that the instant petition lacks merit.
The Applicable Law and Jurisprudence
in the Award of Disability Benefits of Seafarers
The application of the provisions of the Labor Code to the contracts of seafarers had long been settled by this Court. In Remigio v. National Labor Relations Commission,37 we emphatically declared that:
The standard employment contract for seafarers was formulated by the POEA pursuant to its mandate under E.O. No. 247 to "secure the best terms and conditions of employment of Filipino contract workers and ensure compliance therewith" and to "promote and protect the well-being of Filipino workers overseas." Section 29 of the 1996 POEA SEC itself provides that "all rights and obligations of the parties to the Contract, including the annexes thereof, shall be governed by the laws of the Republic of the Philippines, international conventions, treaties and covenants where the Philippines is a signatory." Even without this provision, a contract of labor is so impressed with public interest that the New Civil Code expressly subjects it to "the special laws on labor unions, collective bargaining, strikes and lockouts, closed shop, wages, working conditions, hours of labor and similar subjects."
Thus, the Court has applied the Labor Code concept of permanent total disability to the case of seafarers. x x x.38
The Labor Code defines permanent total disability under Article 192(c)(1), which states:
ART. 192. PERMANENT TOTAL DISABILITY. – x x x
x x x x
(c) The following disabilities shall be deemed total and permanent:
(1) Temporary total disability lasting continuously for more than one hundred twenty days, except as otherwise provided in the Rules. (Emphasis ours.)
This concept of permanent total disability is further explained in Section 2(b), Rule VII of the Implementing Rules of Book IV of the Labor Code (Amended Rules on Employees Compensation) as follows:
SEC. 2. Disability. – x x x
(b) A disability is total and permanent if as a result of the injury or sickness the employee is unable to perform any gainful occupation for a continuous period exceeding 120 days, except as otherwise provided for in Rule X of these Rules. (Emphasis ours.)
The exception in Rule X of the Implementing Rules of Book IV (Amended Rules on Employees Compensation) as mentioned above, on the other hand, pertains to an employee’s entitlement to temporary total disability benefits under Section 2 of the aforesaid Rule X, to wit:
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 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 temporary total disability shall be paid. However, the System may declare the total and permanent status at any time after 120 days of continuous temporary total disability as may be warranted by the degree of actual loss or impairment of physical or mental functions as determined by the System. (Emphasis ours.)
In Vergara v. Hammonia Maritime Services, Inc.,39 the Court discussed how the above-mentioned provisions of the Labor Code and its implementing rules should be read in conjunction with the first paragraph of Section 20(B)(3) of the 2000 POEA SEC, which states:
3. Upon sign-off from the vessel for medical treatment, the seafarer is entitled to sickness allowance equivalent to his basic wage until he is declared fit to work or the degree of permanent disability has been assessed by the company-designated physician but in no case shall this period exceed one hundred twenty (120) days.
Correlating the aforementioned provision of the POEA SEC with the pertinent labor laws and rules, Vergara teaches that:
As these provisions operate, the seafarer, upon sign-off from his vessel, must report to the
company-designated physician within three (3) days from arrival for diagnosis and treatment. For the duration of the treatment but in no case to exceed 120 days, the seaman is on temporary total disability as he is totally unable to work. He receives his basic wage during this period until he is declared fit to work or his temporary disability is acknowledged by the company to be permanent, either partially or totally, as his condition is defined under the POEA Standard Employment Contract and by applicable Philippine laws. If the 120 days initial period is exceeded and no such declaration is made because the seafarer requires further medical attention, then the temporary total disability period may be extended up to a maximum of 240 days, subject to the right of the employer to declare within this period that a permanent partial or total disability already exists. The seaman may of course also be declared fit to work at any time such declaration is justified by his medical
condition.
x x x x
As we outlined above, a temporary total disability only becomes permanent when so declared by the company physician within the periods he is allowed to do so, or upon the expiration of the maximum 240-day medical treatment period without a declaration of either fitness to work or the existence of a permanent disability. x x x.40 (Emphases ours.)
Incidentally, although the contract involved in Vergara was the 2000 POEA SEC, the Court applied the ruling therein to the case of Magsaysay Maritime Corporation v. Lobusta,41 which involved the
