21. Art. 113, Art. 116, Art.

1706 (Civil Code)

MILAN V NLRC
SECOND DIVISION
[G.R. No. 202961. February 4, 2015.]
EMER MILAN, RANDY MASANGKAY, WILFREDO JAVIER, RONALDO DAVID,
BONIFACIO MATUNDAN, NORA MENDOZA, et al., petitioners, vs. NATIONAL
LABOR RELATIONS COMMISSION, SOLID MILLS, INC., and/or PHILIP ANG,
respondents.
DECISION
LEONEN, J p:
An employer is allowed to withhold terminal pay and benefits pending the employee's return of
its properties.
Petitioners are respondent Solid Mills, Inc.'s (Solid Mills) employees. 1 They are represented by
the National Federation of Labor Unions (NAFLU), their collective bargaining agent. 2
As Solid Mills' employees, petitioners and their families were allowed to occupy SMI Village, a
property owned by Solid Mills. 3 According to Solid Mills, this was "[o]ut of liberality and for the
convenience of its employees . . . [and] on the condition that the employees . . . would vacate the
premises anytime the Company deems fit." 4
In September 2003, petitioners were informed that effective October 10, 2003, Solid Mills would
cease its operations due to serious business losses. 5 NAFLU recognized Solid Mills' closure due
to serious business losses in the memorandum of agreement dated September 1, 2003. 6 The
memorandum of agreement provided for Solid Mills' grant of separation pay less
accountabilities, accrued sick leave benefits, vacation leave benefits, and 13th month pay to the
employees. 7 Pertinent portions of the agreement provide:
WHEREAS, the COMPANY has incurred substantial financial losses and is currently
experiencing further severe financial losses;
WHEREAS, in view of such irreversible financial losses, the COMPANY will cease its
operations on October 10, 2003;
WHEREAS, all employees of the COMPANY on account of irreversible financial
losses, will be dismissed from employment effective October 10, 2003;
In view thereof, the parties agree as follows:

1. That UNION acknowledges that the COMPANY is experiencing severe

financial losses and as a consequence of which, management is
constrained to cease the company's operations.
2. The UNION acknowledges that under Article 283 of the Labor
Code,separation pay is granted to employees who are dismissed due
to closures or cessation of operations NOT DUE to serious business
losses.
3. The UNION acknowledges that in view of the serious business losses the
Company has been experiencing as seen in their audited financial
statements, employees ARE NOT granted separation benefits under
the law.
4. The COMPANY, by way of goodwill and in the spirit of generosity agrees
to grant financial assistance less accountabilities to members of the
Union based on length of service to be computed as follows: (Italics in
this paragraph supplied)
Number of days 12.625 for every year of service
5. In view of the above, the members of the UNION will receive such
financial assistance on an equal monthly installments basis based on
the following schedule:
First Check due on January 5, 2004 and every 5th of the month thereafter
until December 5, 2004.
6. The COMPANY commits to pay any accrued benefits the Union members
are entitled to, specifically those arising from sick and vacation leave
benefits and 13th month pay, less accountabilities based on the
following schedule:
One Time Cash Payment to be distributed anywhere from. . . .
xxxxxxxxx
8. The foregoing agreement is entered into with full knowledge by the
parties of their rights under the law and they hereby bind themselves
not to conduct any concerted action of whatsoever kind, otherwise
the grant of financial assistance as discussed above will be withheld. 8
(Emphasis in the original) DacASC
Solid Mills filed its Department of Labor and Employment termination report on September 2,
2003. 9
Later, Solid Mills, through Alfredo Jingco, sent to petitioners individual notices to vacate SMI
Village. 10

Petitioners were no longer allowed to report for work by October 10, 2003. 11 They were
required to sign a memorandum of agreement with release and quitclaim before their vacation
and sick leave benefits, 13th month pay, and separation pay would be released. 12 Employees
who signed the memorandum of agreement were considered to have agreed to vacate SMI
Village, and to the demolition of the constructed houses inside as condition for the release of
their termination benefits and separation pay. 13 Petitioners refused to sign the documents and
demanded to be paid their benefits and separation pay. 14
Hence, petitioners filed complaints before the Labor Arbiter for alleged non-payment of
separation pay, accrued sick and vacation leaves, and 13th month pay. 15 They argued that their
accrued benefits and separation pay should not be withheld because their payment is based on
company policy and practice. 16 Moreover, the 13th month pay is based on law, specifically,
Presidential Decree No. 851. 17 Their possession of Solid Mills property is not an accountability
that is subject to clearance procedures. 18 They had already turned over to Solid Mills their
uniforms and equipment when Solid Mills ceased operations. 19
On the other hand, Solid Mills argued that petitioners' complaint was premature because they
had not vacated its property. 20
The Labor Arbiter ruled in favor of petitioners. 21 According to the Labor Arbiter, Solid Mills
illegally withheld petitioners' benefits and separation pay. 22 Petitioners' right to the payment of
their benefits and separation pay was vested by law and contract. 23 The memorandum of
agreement dated September 1, 2003 stated no condition to the effect that petitioners must
vacate Solid Mills' property before their benefits could be given to them. 24 Petitioners'
possession should not be construed as petitioners' "accountabilities" that must be cleared first
before the release of benefits. 25 Their possession "is not by virtue of any employer-employee
relationship." 26 It is a civil issue, which is outside the jurisdiction of the Labor Arbiter. 27
The dispositive portion of the Labor Arbiter's decision reads:
WHEREFORE, premises considered, judgment is entered ORDERING respondents
SOLID MILLS, INC. and/or PHILIP ANG (President), in solido to pay the remaining 21
complainants:
1) 19 of which, namely EMER MILAN, RAMON MASANGKAY, ALFREDO
JAVIER, RONALDO DAVID, BONIFACIO MATUNDAN, NORA MENDOZA,
MYRNA IGCAS, RAUL DE LAS ALAS, RENATO ESTOLANO, REX S. DIMAFELIX,
MAURA MILAN, JESSICA BAYBAYON, ALFREDO MENDOZA, ROBERTO IGCAS,
ISMAEL MATA, CARLITO DAMIAN, TEODORA MAHILOM, MARILOU LINGA,
RENATO LINGA their separation pay of 12.625 days' pay per year of service,
pro-rated 13th month pay for 2003 and accrued vacation and sick leaves,
plus 12% interest p.a. from date of filing of the lead case/judicial demand on
12/08/03 until actual payment and/or finality;
2) the remaining 2 of which, complainants CLEOPATRA ZACARIAS, as she
already received on 12/19/03 her accrued 13th month pay for 2003, accrued

VL/SL total amount of P15,435.16, likewise, complainant Jerry L. Sesma as he

already received his accrued 13th month pay for 2003, SL/VL in the total
amount of P10,974.97, shall be paid only their separation pay of 12.625
days' pay per year of service but also with 12% interest p.a. from date of
filing of the lead case/judicial demand on 12/08/03 until actual payment
and/or finality, which computation as of date, amount to as shown in the
attached computation sheet.
3) Nine (9) individual complaints viz., of Maria Agojo, Joey Suarez, Ronaldo
Vergara, Ronnie Vergara, Antonio R. Dulo, Sr., Bryan D. Durano, Silverio P.
Durano, Sr., Elizabeth Duarte and PurificacionMalabanan are DISMISSED
WITH PREJUDICE due to amicable settlement, whereas, that of [RONIE
ARANAS], [EMILITO NAVARRO], [NONILON PASCO], [GENOVEVA PASCO],
[OLIMPIO A. PASCO] are DISMISSED WITHOUT PREJUDICE, for lack of
interest and/or failure to prosecute.
The Computation and Examination unit is directed to cause the computation
of the award in Pars. 2 and 3 above. 28 (Emphasis in the original)
Solid Mills appealed to the National Labor Relations Commission. 29 It prayed for, among others,
the dismissal of the complaints against it and the reversal of the Labor Arbiter's decision. 30
The National Labor Relations Commission affirmed paragraph 3 of the Labor Arbiter's dispositive
portion, but reversed paragraphs 1 and 2. Thus:
WHEREFORE, the Decision of Labor Arbiter Renaldo O. Hernandez dated 10/17/05
is AFFIRMED in so far as par. 3 thereof is concerned but modified in that
paragraphs 1 and 2 thereof are REVERSED and SET ASIDE. Accordingly, the
following complainants, namely: Emir Milan, Ramon Masangkay, Alfredo Javier,
Ronaldo David, BonifacioMatundan, Nora Mendoza, Myrna Igcas, Raul De Las Alas,
Renato Estolano, Rex S. Dimaf[e]lix, Maura Milan, Jessica Baybayon, Alfredo
Mendoza, Roberto Igcas, Cleopatra Zacarias and Jerry L. Sesma's monetary claims
in the form of separation pay, accrued 13th month pay for 2003, accrued vacation
and sick leave pays are held in abeyance pending compliance of their
accountabilities to respondent company by turning over the subject lots they
respectively occupy at SMI Village SucatMuntinlupa City, Metro Manila to herein
respondent company. 31CAacTH
The National Labor Relations Commission noted that complainants MarilouLinga, Renato Linga,
Ismael Mata, and Carlito Damian were already paid their respective separation pays and benefits.
32 Meanwhile, Teodora Mahilom already retired long before Solid Mills' closure. 33 She was
already given her retirement benefits. 34
The National Labor Relations Commission ruled that because of petitioners' failure to vacate Solid
Mills' property, Solid Mills was justified in withholding their benefits and separation pay. 35 Solid
Mills granted the petitioners the privilege to occupy its property on account of petitioners'

employment. 36 It had the prerogative to terminate such privilege. 37 The termination of Solid
Mills and petitioners' employer-employee relationship made it incumbent upon petitioners to
turn over the property to Solid Mills. 38
Petitioners filed a motion for partial reconsideration on October 18, 2010, 39 but this was denied
in the November 30, 2010 resolution. 40
Petitioners, thus, filed a petition for certiorari41 before the Court of Appeals to assail the
National Labor Relations Commission decision of August 31, 2010 and resolution of November
30, 2010. 42
On January 31, 2012, the Court of Appeals issued a decision dismissing petitioners' petition, 43
thus:
WHEREFORE, the petition is hereby ordered DISMISSED. 44
The Court of Appeals ruled that Solid Mills' act of allowing its employees to make temporary
dwellings in its property was a liberality on its part. It may be revoked any time at its discretion.
45 As a consequence of Solid Mills' closure and the resulting termination of petitioners, the
employer-employee relationship between them ceased to exist. There was no more reason for
them to stay in Solid Mills' property. 46 Moreover, the memorandum of agreement between
Solid Mills and the union representing petitioners provided that Solid Mills' payment of
employees' benefits should be "less accountabilities." 47
On petitioners' claim that there was no evidence that Teodora Mahilom already received her
retirement pay, the Court of Appeals ruled that her complaint filed before the Labor Arbiter did
not include a claim for retirement pay. The issue was also raised for the first time on appeal,
which is not allowed. 48 In any case, she already retired before Solid Mills ceased its operations.
49
The Court of Appeals agreed with the National Labor Relations Commission's deletion of interest
since it found that Solid Mills' act of withholding payment of benefits and separation pay was
proper. Petitioners' terminal benefits and pay were withheld because of petitioners' failure to
vacate Solid Mills' property. 50
Finally, the Court of Appeals noted that Carlito Damian already received his separation pay and
benefits. 51 Hence, he should no longer be awarded these claims. 52
In the resolution promulgated on July 16, 2012, the Court of Appeals denied petitioners' motion
for reconsideration. 53
Petitioners raise in this petition the following errors:
I
WHETHER OR NOT THE HONORABLE COURT OF APPEALS COMMITTED REVERSIBLE
ERROR WHEN IT RULED THAT PAYMENT OF THE MONETARY CLAIMS OF
PETITIONERS SHOULD BE HELD IN ABEYANCE PENDING COMPLIANCE OF THEIR

ACCOUNTABILITIES TO RESPONDENT SOLID MILLS BY TURNING OVER THE SUBJECT

LOTS THEY RESPECTIVELY OCCUPY AT SMI VILLAGE, SUCAT, MUNTINLUPA CITY.
II
WHETHER OR NOT THE HONORABLE COURT OF APPEALS COMMITTED REVERSIBLE
ERROR WHEN IT UPHELD THE RULING OF THE NLRC DELETING THE INTEREST OF
12% PER ANNUM IMPOSED BY THE HONORABLE LABOR ARBITER HERNANDEZ ON
THE AMOUNT DUE FROM THE DATE OF FILING OF THE LEAD CASE/JUDICIAL
DEMAND ON DECEMBER 8, 2003 UNTIL ACTUAL PAYMENT AND/OR FINALITY.
III
WHETHER OR NOT THE HONORABLE COURT OF APPEALS COMMITTED REVERSIBLE
ERROR WHEN IT UPHELD THE RULING OF THE NLRC DENYING THE CLAIM OF
TEODORA MAHILOM FOR PAYMENT OF RETIREMENT BENEFITS DESPITE LACK OF
ANY EVIDENCE THAT SHE RECEIVED THE SAME.
IV
WHETHER OR NOT PETITIONER CARLITO DAMIAN IS ENTITLED TO HIS MONETARY
BENEFITS FROM RESPONDENT SOLID MILLS. 54
Petitioners argue that respondent Solid Mills and NAFLU's memorandum of agreement has no
provision stating that benefits shall be paid only upon return of the possession of respondent
Solid Mills' property. 55 It only provides that the benefits shall be "less accountabilities," which
should not be interpreted to include such possession. 56 The fact that majority of NAFLU's
members were not occupants of respondent Solid Mills' property is evidence that possession of
the property was not contemplated in the agreement. 57 "Accountabilities" should be
interpreted to refer only to accountabilities that were incurred by petitioners while they were
performing their duties as employees at the worksite. 58 Moreover, applicable laws, company
practice, or policies do not provide that 13th month pay, and sick and vacation leave pay
benefits, may be withheld pending satisfaction of liabilities by the employee. 59
Petitioners also point out that the National Labor Relations Commission and the Court of Appeals
have no jurisdiction to declare that petitioners' act of withholding possession of respondent Solid
Mills' property is illegal. 60 The regular courts have jurisdiction over this issue. 61 It is
independent from the issue of payment of petitioners' monetary benefits. 62
For these reasons, and because, according to petitioners, the amount of monetary award is no
longer in question, petitioners are entitled to 12% interest per annum. 63
Petitioners also argue that Teodora Mahilom and Carlito Damian are entitled to their claims. They
insist that Teodora Mahilom did not receive her retirement benefits and that Carlito Damian did
not receive his separation benefits. 64
Respondents Solid Mills and Philip Ang, in their joint comment, argue that petitioners' failure to
turn over respondent Solid Mills' property "constituted an unsatisfied accountability" for which
reason "petitioners' benefits could rightfully be withheld." 65 The term "accountability" should

be given its natural and ordinary meaning. 66 Thus, it should be interpreted as "a state of being
liable or responsible," or "obligation." 67 Petitioners' differentiation between accountabilities
incurred while performing jobs at the worksite and accountabilities incurred outside the worksite
is baseless because the agreement with NAFLU merely stated "accountabilities," without
qualification. 68DHIETc
On the removal of the award of 12% interest per annum, respondents argue that such removal
was proper since respondent Solid Mills was justified in withholding the monetary claims. 69
Respondents argue that Teodora Mahilom had no more cause of action for retirement benefits
claim. 70 She had already retired more than a decade before Solid Mills' closure. She also already
received her retirement benefits in 1991. 71 Teodora Mahilom's claim was also not included in
the complaint filed before the Labor Arbiter. It was improper to raise this claim for the first time
on appeal. In any case, Teodora Mahilom's claim was asserted long after the three-year
prescriptive period provided in Article 291 of the Labor Code. 72
Lastly, according to respondents, it would be unjust if Carlito Damian would be allowed to receive
monetary benefits again, which he, admittedly, already received from Solid Mills. 73
I
The National Labor Relations
Commission may preliminarily
determine issues related to rights
arising from an employer-employee
relationship
The National Labor Relations Commission has jurisdiction to determine, preliminarily, the parties'
rights over a property, when it is necessary to determine an issue related to rights or claims
arising from an employer-employee relationship.
Article 217 provides that the Labor Arbiter, in his or her original jurisdiction, and the National
Labor Relations Commission, in its appellate jurisdiction, may determine issues involving claims
arising from employer-employee relations. Thus:
ART. 217. JURISDICTION OF LABOR ARBITERS AND THE COMMISSION. (1) Except
as otherwise provided under this Code, the Labor Arbiters shall have original and
exclusive jurisdiction to hear and decide within thirty (30) calendar days after the
submission of the case by the parties for decision without extension, even in the
absence of stenographic notes, the following cases involving workers, whether
agricultural or non-agricultural:
1. Unfair labor practice cases;
2. Termination disputes; CaATDE
3. If accompanied with a claim for reinstatement, those cases that workers
may file involving wages, rates of pay, hours of work and other terms
and conditions of employment;

4. Claims for actual, moral, exemplary and other forms of damages arising
from the employer-employee relations;
5. Cases arising from any violation of Article 264 of this Code, including
questions involving the legality of strikes and lockouts; and
6. Except claims for Employees Compensation, Social Security, Medicare and
maternity benefits, all other claims, arising from employer-employee
relations including those of persons in domestic or household service,
involving an amount exceeding five thousand pesos (P5,000.00),
regardless of whether accompanied with a claim for reinstatement.
(2) The Commission shall have exclusive appellate jurisdiction over all cases
decided by Labor Arbiters. (Emphasis supplied)
Petitioners' claim that they have the right to the immediate release of their benefits as
employees separated from respondent Solid Mills is a question arising from the employeremployee relationship between the parties.
Claims arising from an employer-employee relationship are not limited to claims by an employee.
Employers may also have claims against the employee, which arise from the same relationship.
InBaezv.Valdevilla, 74 this court ruled that Article 217 of the Labor Code also applies to
employers' claim for damages, which arises from or is connected with the labor issue. Thus:
Whereas this Court in a number of occasions had applied the jurisdictional
provisions of Article 217 to claims for damages filed by employees, we hold that by
the designating clause "arising from the employer-employee relations" Article 217
should apply with equal force to the claim of an employer for actual damages
against its dismissed employee, where the basis for the claim arises from or is
necessarily connected with the fact of termination, and should be entered as a
counterclaim in the illegal dismissal case. 75
Baez was cited inDomondonv. National Labor Relations Commission. 76 One of the issues
inDomondonis whether the Labor Arbiter has jurisdiction to decide an issue on the transfer of
ownership of a vehicle assigned to the employee. It was argued that only regular courts have
jurisdiction to decide the issue. 77
This court ruled that since the transfer of ownership of the vehicle to the employee was
connected to his separation from the employer and arose from the employer-employee
relationship of the parties, the employer's claim fell within the Labor Arbiter's jurisdiction. 78
As a general rule, therefore, a claim only needs to be sufficiently connected to the labor issue
raised and must arise from an employer-employee relationship for the labor tribunals to have
jurisdiction.
In this case, respondent Solid Mills claims that its properties are in petitioners' possession by
virtue of their status as its employees. Respondent Solid Mills allowed petitioners to use its
property as an act of liberality. Put in other words, it would not have allowed petitioners to use

its property had they not been its employees. The return of its properties in petitioners'
possession by virtue of their status as employees is an issue that must be resolved to determine
whether benefits can be released immediately. The issue raised by the employer is, therefore,
connected to petitioners' claim for benefits and is sufficiently intertwined with the parties'
employer-employee relationship. Thus, it is properly within the labor tribunals' jurisdiction.
II
Institution of clearance procedures
has legal bases
Requiring clearance before the release of last payments to the employee is a standard procedure
among employers, whether public or private. Clearance procedures are instituted to ensure that
the properties, real or personal, belonging to the employer but are in the possession of the
separated employee, are returned to the employer before the employee's departure.
As a general rule, employers are prohibited from withholding wages from employees. The Labor
Code provides:
Art. 116. Withholding of wages and kickbacks prohibited. It shall be unlawful
for any person, directly or indirectly, to withhold any amount from the wages of a
worker or induce him to give up any part of his wages by force, stealth,
intimidation, threat or by any other means whatsoever without the worker's
consent.
The Labor Code also prohibits the elimination or diminution of benefits. Thus:
Art. 100. Prohibition against elimination or diminution of benefits. Nothing in
this Book shall be construed to eliminate or in any way diminish supplements, or
other employee benefits being enjoyed at the time of promulgation of this Code.
However, our law supports the employers' institution of clearance procedures before the release
of wages. As an exception to the general rule that wages may not be withheld and benefits may
not be diminished, the Labor Code provides:
Art. 113. Wage deduction. No employer, in his own behalf or in behalf of any
person, shall make any deduction from the wages of his employees, except:
1. In cases where the worker is insured with his consent by the employer, and the
deduction is to recompense the employer for the amount paid by him as premium
on the insurance;
2. For union dues, in cases where the right of the worker or his union to check-off
has been recognized by the employer or authorized in writing by the individual
worker concerned; and
3. In cases where the employer is authorized by law or regulations issued by the
Secretary of Labor and Employment. (Emphasis supplied)
The Civil Code provides that the employer is authorized to withhold wages for debts due:

Article 1706. Withholding of the wages, except for a debt due, shall not be made
by the employer.
"Debt" in this case refers to any obligation due from the employee to the employer. It includes
any accountability that the employee may have to the employer. There is no reason to limit its
scope to uniforms and equipment, as petitioners would argue.
More importantly, respondent Solid Mills and NAFLU, the union representing petitioners, agreed
that the release of petitioners' benefits shall be "less accountabilities."
"Accountability," in its ordinary sense, means obligation or debt. The ordinary meaning of the
term "accountability" does not limit the definition of accountability to those incurred in the
worksite. As long as the debt or obligation was incurred by virtue of the employer-employee
relationship, generally, it shall be included in the employee's accountabilities that are subject to
clearance procedures. AHDcCT
It may be true that not all employees enjoyed the privilege of staying in respondent Solid Mills'
property. However, this alone does not imply that this privilege when enjoyed was not a result of
the employer-employee relationship. Those who did avail of the privilege were employees of
respondent Solid Mills. Petitioners' possession should, therefore, be included in the term
"accountability."
Accountabilities of employees are personal. They need not be uniform among all employees in
order to be included in accountabilities incurred by virtue of an employer-employee relationship.
Petitioners do not categorically deny respondent Solid Mills' ownership of the property, and they
do not claim superior right to it. What can be gathered from the findings of the Labor Arbiter,
National Labor Relations Commission, and the Court of Appeals is that respondent Solid Mills
allowed the use of its property for the benefit of petitioners as its employees. Petitioners were
merely allowed to possess and use it out of respondent Solid Mills' liberality. The employer may,
therefore, demand the property at will. 79
The return of the property's possession became an obligation or liability on the part of the
employees when the employer-employee relationship ceased. Thus, respondent Solid Mills has
the right to withhold petitioners' wages and benefits because of this existing debt or liability.
InSolasv. Power and Telephone Supply Phils., Inc., et al., this court recognized this right of the
employer when it ruled that the employee in that case was not constructively dismissed. 80 Thus:
There was valid reason for respondents' withholding of petitioner's salary for the
month of February 2000. Petitioner does not deny that he is indebted to his
employer in the amount of around P95,000.00. Respondents explained that
petitioner's salary for the period of February 1-15, 2000 was applied as partial
payment for his debt and for withholding taxes on his income; while for the period
of February 15-28, 2000, petitioner was already on absence without leave, hence,
was not entitled to any pay. 81

The law does not sanction a situation where employees who do not even assert any claim over
the employer's property are allowed to take all the benefits out of their employment while they
simultaneously withhold possession of their employer's property for no rightful reason.
Withholding of payment by the employer does not mean that the employer may renege on its
obligation to pay employees their wages, termination payments, and due benefits. The
employees' benefits are also not being reduced. It is only subjected to the condition that the
employees return properties properly belonging to the employer. This is only consistent with the
equitable principle that "no one shall be unjustly enriched or benefited at the expense of
another." 82
For these reasons, we cannot hold that petitioners are entitled to interest of their withheld
separation benefits. These benefits were properly withheld by respondent Solid Mills because of
their refusal to return its property.
III
Mahilom and Damian are not
entitled to the benefits claimed
Teodora Mahilom is not entitled to separation benefits.
Both the National Labor Relations Commission and the Court of Appeals found that Teodora
Mahilom already retired long before respondent Solid Mills' closure. They found that she already
received her retirement benefits. We have no reason to disturb this finding. This court is not a
trier of facts. Findings of the National Labor Relations Commission, especially when affirmed by
the Court of Appeals, are binding upon this court. 83
Moreover, Teodora Mahilom's claim for retirement benefits was not included in her complaint
filed before the Labor Arbiter. Hence, it may not be raised in the appeal.
Similarly, the National Labor Relations Commission and the Court of Appeals found that Carlito
Damian already received his terminal benefits. Hence, he may no longer claim terminal benefits.
The fact that respondent Solid Mills has not yet demolished Carlito Damian's house in SMI Village
is not evidence that he did not receive his benefits. Both the National Labor Relations
Commission and the Court of Appeals found that he executed an affidavit stating that he already
received the benefits.
Absent any showing that the National Labor Relations Commission and the Court of Appeals
misconstrued these facts, we will not reverse these findings.
Our laws provide for a clear preference for labor. This is in recognition of the asymmetrical power
of those with capital when they are left to negotiate with their workers without the standards
and protection of law. In cases such as these, the collective bargaining unit of workers are able to
get more benefits and in exchange, the owners are able to continue with the program of cutting
their losses or wind down their operations due to serious business losses. The company in this
case did all that was required by law. CSIcTa

The preferential treatment given by our law to labor, however, is not a license for abuse. 84 It is
not a signal to commit acts of unfairness that will unreasonably infringe on the property rights of
the company. Both labor and employer have social utility, and the law is not so biased that it
does not find a middle ground to give each their due.
Clearly, in this case, it is for the workers to return their housing in exchange for the release of
their benefits. This is what they agreed upon. It is what is fair in the premises.
WHEREFORE, the petition is DENIED. The Court of Appeals' decision is AFFIRMED.

22. Are premarital relations with boyfriend and pregnancy out of wedlock considered
immorality (Art. 136)
CAPIN-CADIZ V BRENT HOSPITAL
THIRD DIVISION
[G.R. No. 187417. February 24, 2016.]
CHRISTINE JOY CAPIN-CADIZ, petitioner,vs.BRENTHOSPITAL AND COLLEGES, INC.,
respondent.
DECISION
REYES, J p:
This is a petition for review on certiorari1 under Rule 45 of the Rules of Court assailing
the Resolutions dated July 22, 2008 2 and February 24, 2009 3 of the Court of Appeals (CA) in
CA-G.R. SP No. 02373-MIN, which dismissed the petition filed by petitioner Christine Joy
Capin-Cadiz (Cadiz) on the following grounds: (1) incomplete statement of material dates; (2)
failure to attach registry receipts; and (3) failure to indicate the place of issue of counsel's
Professional Tax Receipt (PTR) and Integrated Bar of the Philippines (IBP) official receipts.
Antecedent Facts
Cadiz was the Human Resource Officer of respondent BrentHospital and Colleges, Inc.
(Brent) at the time of her indefinite suspension from employment in 2006. The cause of
suspension was Cadiz's Unprofessionalism and Unethical Behavior Resulting to Unwed
Pregnancy. It appears that Cadiz became pregnant out of wedlock, and Brent imposed the
suspension until such time that she marries her boyfriend in accordance with law.
Cadiz then filed with the Labor Arbiter (LA) a complaint for Unfair Labor Practice,
Constructive Dismissal, Non-Payment of Wages and Damages with prayer for Reinstatement.
4
Ruling of the Labor Tribunals
In its Decision 5 dated April 12, 2007, the LA found that Cadiz's indefinite suspension
amounted to a constructive dismissal; nevertheless, the LA ruled that Cadiz was not illegally
dismissed as there was just cause for her dismissal, that is, she engaged in premarital sexual
relations with her boyfriend resulting in a pregnancy out of wedlock. 6 The LA further stated
that her "immoral conduct . . . [was] magnified as serious misconduct not only by her getting
pregnant as a result thereof before and without marriage, but more than that, also by the fact
that Brent is an institution of the Episcopal Church in the Philippines operating both a hospital
and college where [Cadiz] was employed." 7 The LA also ruled that she was not entitled to

reinstatement "at least until she marries her boyfriend," to backwages and vacation/sick leave
pay. Brent, however, manifested that it was willing to pay her 13th month pay. The dispositive
portion of the decision reads: caITAC
WHEREFORE, judgment is hereby rendered, ordering [Brent] to pay [Cadiz]
13th month pay in the sum of Seven Thousand Nine Hundred Seventy & 11/100
Pesos (P7,970.11).
All other charges and claims are hereby dismissed for lack of merit.
SO ORDERED.8
Cadiz appealed to the National Labor Relations Commission (NLRC), which affirmed the
LA decision in its Resolution 9 dated December 10, 2007. Her motion for reconsideration
having been denied by the NLRC in its Resolution 10 dated February 29, 2008, Cadiz elevated
her case to the CA on petition for certiorari under Rule 65.
Ruling of the CA
The CA, however, dismissed her petition outright due to technical defects in the
petition: (1) incomplete statement of material dates; (2) failure to attach registry receipts; and
(3) failure to indicate the place of issue of counsel's PTR and IBP official receipts. 11Cadiz
sought reconsideration of the assailed CA Resolution dated July 22, 2008 but it was denied in
the assailed Resolution dated February 24, 2009. 12 The CA further ruled that "a perusal of
the petition will reveal that public respondent NLRC committed no grave abuse of discretion
amounting to lack or excess of jurisdiction . . . holding [Cadiz's] dismissal from employment
valid." 13
Hence, the present petition.
Cadiz argues that
I
THE HONORABLE [NLRC] GRAVELY ABUSED ITS DISCRETION WHEN IT HELD
THAT [CADIZ'S] IMPREGNATION OUTSIDE OF WEDLOCK IS A GROUND FOR THE
TERMINATION OF [CADIZ'S] EMPLOYMENT 14
II
THE [NLRC] COMMITTED GRAVE ABUSE OF DISCRETION WHEN IT UPHELD
THE DISMISSAL OF [CADIZ] ON THE GROUND THAT THE INDEFINITE SUSPENSION
WAS VALID AND REQUIRED [CADIZ] TO FIRST ENTER INTO MARRIAGE BEFORE
SHE CAN BE ADMITTED BACK TO HER EMPLOYMENT 15
III
RESPONDENT [NLRC] GRAVELY ABUSED ITS DISCRETION WHEN IT DENIED
[CADIZ'S] CLAIM FOR BACKWAGES, ALLOWANCES, SICK LEAVE PAY, MATERNITY
PAY AND MORAL AND EXEMPLARY DAMAGES AND ATTORNEY'S FEES 16
IV

THE [CA] MISPLACED APPLICATION OF THE MATERIAL DATA RULE

RESULTING TO GRAVE ABUSE OF DISCRETION WHEN IT DISMISSED THE APPEAL
17
Cadiz contends, among others, that getting pregnant outside of wedlock is not grossly
immoral, especially when both partners do not have any legal impediment to marry. Cadiz
surmises that the reason for her suspension was not because of her relationship with her then
boyfriend but because of the resulting pregnancy. Cadiz also lambasts Brent's condition for
her reinstatement that she gets married to her boyfriend saying that this violates the
stipulation against marriage under Article 136 of the Labor Code. Finally, Cadiz contends that
there was substantial compliance with the rules of procedure, and the CA should not have
dismissed the petition. 18
Brent, meanwhile, adopts and reiterates its position before the LA and the NLRC that
Cadiz's arguments are irrational and out of context. Brent argues, among others, that for Cadiz
to limit acts of immorality only to extra-marital affairs is to "change the norms, beliefs,
teachings and practices of BRENT as a Church institution of the . . . Episcopal Church in the
Philippines." 19
Ruling of the Court
Ordinarily, the Court will simply gloss over the arguments raised by Cadiz, given that the
main matter dealt with by the CA were the infirmities found in the petition and which caused
the dismissal of her case before it. In view, however, of the significance of the issues involved
in Cadiz's dismissal from employment, the Court will resolve the petition including the
substantial grounds raised herein.
The issue to be resolved is whether the CA committed a reversible error in ruling that:
(1) Cadiz's petition is dismissible on ground of technical deficiencies; and (2) the NLRC did not
commit grave abuse of discretion in upholding her dismissal from employment.
Rules of procedure are mere tools
designed to facilitate the attainment
of justice
In dismissing outright Cadiz's petition, the CA found the following defects: (1)
incomplete statement of material dates; (2) failure to attach registry receipts; and (3) failure
to indicate the place of issue of counsel's PTR and IBP official receipts.
Rule 46, Section 3 of the Rules of Court states the contents of a petition filed with the
CA under Rule 65, viz., "the petition shall . . . indicate the material dates showing when notice
of the judgment or final order or resolution subject thereof was received, when a motion for
new trial or reconsideration, if any, was filed and when notice of the denial thereof was
received." The rationale for this is to enable the CA to determine whether the petition was
filed within the period fixed in the rules. 20Cadiz's failure to state the date of receipt of the
copy of the NLRC decision, however, is not fatal to her case since the more important material
date which must be duly alleged in a petition is the date of receipt of the resolution of denial
of the motion for reconsideration, 21 which she has duly complied with. 22ICHDca

The CA also dismissed the petition for failure to attach the registry receipt in the
affidavit of service. 23Cadiz points out, on the other hand, that the registry receipt number
was indicated in the petition and this constitutes substantial compliance with the
requirement. What the rule requires, however, is that the registry receipt must be appended
to the paper being served. 24 Clearly, mere indication of the registry receipt numbers will not
suffice. In fact, the absence of the registry receipts amounts to lack of proof of service. 25
Nevertheless, despite this defect, the Court finds that the ends of substantial justice would be
better served by relaxing the application of technical rules of procedure. 26 With regard to
counsel's failure to indicate the place where the IBP and PTR receipts were issued, there was
substantial compliance with the requirement since it was indicated in the verification and
certification of non-forum shopping, as correctly argued by Cadiz's lawyer. 27
Time and again, the Court has emphasized that rules of procedure are designed to
secure substantial justice. These are mere tools to expedite the decision or resolution of cases
and if their strict and rigid application would frustrate rather than promote substantial justice,
then it must be avoided. 28
Immorality as a just cause for
termination of employment
Both the LA and the NLRC upheld Cadiz's dismissal as one attended with just cause. The
LA, while ruling that Cadiz's indefinite suspension was tantamount to a constructive dismissal,
nevertheless found that there was just cause for her dismissal. According to the LA, "there
was just cause therefor, consisting in her engaging in premarital sexual relations with Carl
Cadiz, allegedly her boyfriend, resulting in her becoming pregnant out of wedlock." 29 The LA
deemed said act to be immoral, which was punishable by dismissal under Brent's rules and
which likewise constituted serious misconduct under Article 282 (a) of the Labor Code. The LA
also opined that since Cadiz was Brent's Human Resource Officer in charge of implementing
its rules against immoral conduct, she should have been the "epitome of proper conduct." 30
The LA ruled:
[Cadiz's] immoral conduct by having premarital sexual relations with her
alleged boy friend, a former Brent worker and her co-employee, is magnified as
serious misconduct not only by her getting pregnant as a result thereof before
and without marriage, but more than that, also by the fact that Brent is an
institution of the Episcopal Church in the Philippines . . . committed to
"developing competent and dedicated professionals . . . and in providing
excellent medical and other health services to the community for the Glory of
God and Service to Humanity." . . . As if these were not enough, [Cadiz] was
Brent's Human Resource Officer charged with, among others, implementing the
rules of Brent against immoral conduct, including premarital sexual relations, or
fornication . . . . She should have been the epitome of proper conduct, but
miserably failed. She herself engaged in premarital sexual relations, which surely
scandalized the Brentcommunity. . . . . 31
The NLRC, for its part, sustained the LA's conclusion.

The Court, however, cannot subscribe to the labor tribunals' conclusions.

Admittedly, one of the grounds for disciplinary action under Brent's policies is
immorality, which is punishable by dismissal at first offense. 32Brent's Policy Manual provides:
CATEGORY IV
In accordance with Republic Act No. 1052, 33 the following are just cause for
terminating an employment of an employee without a definite period:
xxxxxxxxx
2. Serious misconduct or willful disobedience by the employee of the
orders of his employer or representative in connection with his work, such as, but
not limited to the following:
xxxxxxxxx
b. Commission of immoral conduct or indecency within the
company premises, such as an act of lasciviousness or any act which
is sinful and vulgar in nature.
c. Immorality, concubinage, bigamy. 34
Its Employee's Manual of Policies, meanwhile, enumerates "[a]cts of immorality such as
scandalous behaviour, acts of lasciviousness against any person (patient, visitors, co-workers)
within hospital premises" 35 as a ground for discipline and discharge. Brent also relied on
Section 94 of the Manual of Regulations for Private Schools (MRPS), which lists "disgraceful or
immoral conduct" as a cause for terminating employment. 36
Thus, the question that must be resolved is whether Cadiz's premarital relations with
her boyfriend and the resulting pregnancy out of wedlock constitute immorality. To resolve
this, the Court makes reference to the recently promulgated case of Cheryll Santos Leusv. St.
Scholastica's College Westgrove and/or Sr. Edna Quiambao, OSB. 37
Leus involved the same personal circumstances as the case at bench, albeit the
employer was a Catholic and sectarian educational institution and the petitioner, Cheryll
Santos Leus (Leus), worked as an assistant to the school's Director of the Lay Apostolate and
Community Outreach Directorate. Leus was dismissed from employment by the school for
having borne a child out of wedlock. The Court ruled in Leus that the determination of
whether a conduct is disgraceful or immoral involves a two-step process: first, a consideration
of the totality of the circumstances surrounding the conduct; and second, an assessment of
the said circumstances vis--vis the prevailing norms of conduct, i.e., what the society
generally considers moral and respectable. TCAScE
In this case, the surrounding facts leading to Cadiz's dismissal are straightforward she
was employed as a human resources officer in an educational and medical institution of the
Episcopal Church of the Philippines; she and her boyfriend at that time were both single; they
engaged in premarital sexual relations, which resulted into pregnancy. The labor tribunals
characterized these as constituting disgraceful or immoral conduct. They also sweepingly

concluded that as Human Resource Officer, Cadiz should have been the epitome of proper
conduct and her indiscretion "surely scandalized the Brent community." 38
The foregoing circumstances, however, do not readily equate to disgraceful and
immoral conduct. Brent's Policy Manual and Employee's Manual of Policies do not define
what constitutes immorality; it simply stated immorality as a ground for disciplinary action.
Instead, Brent erroneously relied on the standard dictionary definition of fornication as a form
of illicit relation and proceeded to conclude that Cadiz's acts fell under such classification, thus
constituting immorality. 39
Jurisprudence has already set the standard of morality with which an act should be
gauged it is public and secular, not religious. 40 Whether a conduct is considered
disgraceful or immoral should be made in accordance with the prevailing norms of conduct,
which, as stated in Leus, refer to those conducts which are proscribed because they are
detrimental to conditions upon which depend the existence and progress of human society.
The fact that a particular act does not conform to the traditional moral views of a certain
sectarian institution is not sufficient reason to qualify such act as immoral unless it, likewise,
does not conform to public and secular standards. More importantly, there must be
substantial evidence to establish that premarital sexual relations and pregnancy out of
wedlock is considered disgraceful or immoral. 41
The totality of the circumstances of this case does not justify the conclusion that Cadiz
committed acts of immorality. Similar to Leus, Cadiz and her boyfriend were both single and
had no legal impediment to marry at the time she committed the alleged immoral conduct. In
fact, they eventually married on April 15, 2008. 42 Aside from these, the labor tribunals'
respective conclusion that Cadiz's "indiscretion" "scandalized the Brent community" is
speculative, at most, and there is no proof adduced by Brent to support such sweeping
conclusion. Even Brent admitted that it came to know of Cadiz's "situation" only when her
pregnancy became manifest. 43Brent also conceded that "[a]t the time [Cadiz] and Carl R.
Cadiz were just carrying on their boyfriend-girlfriend relationship, there was no knowledge or
evidence by [Brent] that they were engaged also in premarital sex." 44 This only goes to show
that Cadiz did not flaunt her premarital relations with her boyfriend and it was not carried on
under scandalous or disgraceful circumstances. As declared in Leus, "there is no law which
penalizes an unmarried mother by reason of her sexual conduct or proscribes the consensual
sexual activity between two unmarried persons; that neither does such situation
contravene[s] any fundamental state policy enshrined in the Constitution." 45 The fact that
Brent is a sectarian institution does not automatically subject Cadiz to its religious standard of
morality absent an express statement in its manual of personnel policy and regulations,
prescribing such religious standard as gauge as these regulations create the obligation on both
the employee and the employer to abide by the same. 46
Brent, likewise, cannot resort to the MRPS because the Court already stressed in Leus
that "premarital sexual relations between two consenting adults who have no impediment to
marry each other, and, consequently, conceiving a child out of wedlock, gauged from a purely

public and secular view of morality, does not amount to a disgraceful or immoral conduct
under Section 94 (e) of the 1992 MRPS." 47
Marriage as a condition for
reinstatement
The doctrine of management prerogative gives an employer the right to "regulate,
according to his own discretion and judgment, all aspects of employment, including hiring,
work assignments, working methods, the time, place and manner of work, work supervision,
transfer of employees, lay-off of workers, and discipline, dismissal, and recall of employees."
48 In this case, Brent imposed on Cadiz the condition that she subsequently contract marriage
with her then boyfriend for her to be reinstated. According to Brent, this is "in consonance
with the policy against encouraging illicit or common-law relations that would subvert the
sacrament of marriage." 49
Statutory law is replete with legislation protecting labor and promoting equal
opportunity in employment. No less than the 1987 Constitution mandates that the "State shall
afford full protection to labor, local and overseas, organized and unorganized, and promote
full employment and equality of employment opportunities for all." 50 The Labor Code of the
Philippines, meanwhile, provides:
Art. 136. Stipulation against marriage. It shall be unlawful for an employer
to require as a condition of employment or continuation of employment that a
woman employee shall not get married, or to stipulate expressly or tacitly that
upon getting married, a woman employee shall be deemed resigned or
separated, or to actually dismiss, discharge, discriminate or otherwise prejudice a
woman employee merely by reason of her marriage.
With particular regard to women, Republic Act No. 9710 or the Magna Carta of
Women51 protects women against discrimination in all matters relating to marriage and
family relations, including the right to choose freely a spouse and to enter into marriage only
with their free and full consent.52cTDaEH
Weighed against these safeguards, it becomes apparent that Brent's condition is
coercive, oppressive and discriminatory. There is no rhyme or reason for it. It forces Cadiz to
marry for economic reasons and deprives her of the freedom to choose her status, which is a
privilege that inheres in her as an intangible and inalienable right. 53 While a marriage or nomarriage qualification may be justified as a "bona fide occupational qualification," Brent must
prove two factors necessitating its imposition, viz.: (1) that the employment qualification is
reasonably related to the essential operation of the job involved; and (2) that there is a
factual basis for believing that all or substantially all persons meeting the qualification would
be unable to properly perform the duties of the job. 54Brent has not shown the presence of
neither of these factors. Perforce, the Court cannot uphold the validity of said condition.
Given the foregoing, Cadiz, therefore, is entitled to reinstatement without loss of
seniority rights, and payment of backwages computed from the time compensation was
withheld up to the date of actual reinstatement. Where reinstatement is no longer viable as

an option, separation pay should be awarded as an alternative and as a form of financial

assistance. 55 In the computation of separation pay, the Court stresses that it should not go
beyond the date an employee was deemed to have been actually separated from
employment, or beyond the date when reinstatement was rendered impossible.56 In this
case, the records do not show whether Cadiz already severed her employment with Brent or
whether she is gainfully employed elsewhere; thus, the computation of separation pay shall
be pegged based on the findings that she was employed on August 16, 2002, on her own
admission in her complaint that she was dismissed on November 17, 2006, and that she was
earning a salary of P9,108.70 per month, 57 which shall then be computed at a rate of one (1)
month
salary
for
every
year
of
service,
58
as
follows:
Monthly salary
multiplied by number of years
in service (Aug 02 to Nov 06)

P9,108.70
x
4

P36,434.80
=========

The Court also finds that Cadiz is only entitled to limited backwages. Generally, the
computation of backwages is reckoned from the date of illegal dismissal until actual
reinstatement. 59 In case separation pay is ordered in lieu of reinstatement or reinstatement
is waived by the employee, backwages is computed from the time of dismissal until the
finality of the decision ordering separation pay. 60 Jurisprudence further clarified that the
period for computing the backwages during the period of appeal should end on the date that
a higher court reversed the labor arbitration ruling of illegal dismissal. 61 If applied in Cadiz's
case, then the computation of backwages should be from November 17, 2006, which was the
time of her illegal dismissal, until the date of promulgation of this decision. Nevertheless, the
Court has also recognized that the constitutional policy of providing full protection to labor is
not intended to oppress or destroy management. 62 The Court notes that at the time of
Cadiz's indefinite suspension from employment, Leus was yet to be decided by the Court.
Moreover, Brent was acting in good faith and on its honest belief that Cadiz's pregnancy out
of wedlock constituted immorality. Thus, fairness and equity dictate that the award of
backwages shall only be equivalent to one (1) year or P109,304.40, computed as follows:
Monthly salary
multiplied by one year
or 12 months

P9,108.70
x
12

P109,304.40
==========

Finally, with regard to Cadiz's prayer for moral and exemplary damages, the Court finds
the same without merit. A finding of illegal dismissal, by itself, does not establish bad faith to
entitle an employee to moral damages. 63 Absent clear and convincing evidence showing that
Cadiz's dismissal from Brent's employ had been carried out in an arbitrary, capricious and
malicious manner, moral and exemplary damages cannot be awarded. The Court nevertheless
grants the award of attorney's fees in the amount of ten percent (10%) of the total monetary
award, Cadiz having been forced to litigate in order to seek redress of her grievances. 64
WHEREFORE, the petition is GRANTED. The Resolutions dated July 22, 2008 and
February 24, 2009 of the Court of Appeals in CA-G.R. SP No. 02373-MIN are REVERSED andSET
ASIDE, and a NEW ONE ENTERED finding petitioner Christine Joy Capin-Cadiz to have been
dismissed without just cause.
Respondent BrentHospital and Colleges, Inc. is hereby ORDERED TO PAY petitioner
Christine Joy Capin-Cadiz:
(1) One Hundred Nine Thousand Three Hundred Four Pesos and 40/100 (P109,304.40)
as backwages;
(2) Thirty-Six Thousand Four Hundred Thirty-Four Pesos and 80/100 (P36,434.80) as
separation pay; and
(3) Attorney's fees equivalent to ten percent (10%) of the total award.
The monetary awards granted shall earn legal interest at the rate of six percent (6%) per
annum from the date of the finality of this Decision until fully paid.
SO ORDERED.

23. RA 6727 (NWPC and RTWPB); Arts. 121-122, Authority to provide additional exemptions
THE NATIONAL WAGES PRODUCTIVITY BOARD V THE ALLIANCE OF PROGRESSIVE LABOR
FIRST DIVISION
[G.R. No. 150326. March 12, 2014.]
THE NATIONAL WAGES AND PRODUCTIVITY COMMISSION (NWPC) and THE
REGIONAL TRIPARTITE WAGES AND PRODUCTIVITY BOARD (RTWPB)-NCR,
petitioners, vs. THE ALLIANCE OF PROGRESSIVE LABOR (APL) and THE TUNAY NA
NAGKAKAISANG MANGGAGAWA SA ROYAL (TNMR-APL), respondents.
DECISION
BERSAMIN, J p:
This case concerns the authority of the National Wages and Productivity Commission (NWPC) and
the Regional Tripartite Wages and Productivity Board (RTWPB) created under Republic Act No.
6727, 1 otherwise known as the Wage Rationalization Act, to issue wage orders, and to receive,
process and act on applications for exemption from the prescribed wage rates.
The Case
Petitioners NWPC and RTWPB of the National Capital Region (NCR) appeal the decision
promulgated on June 15, 2001, 2 whereby the Court of Appeals (CA) reversed the decisions
rendered by the NWPC on February 28, 2000 3 and July 17, 2000, 4 and declared as null and void
Section 2 (A) and Section 9 (2) of Wage Order No. NCR-07.
Antecedents
On June 9, 1989, Republic Act No. 6727 was enacted into law. In order to rationalize wages
throughout the Philippines, Republic Act No. 6727 created the NWPC and the RTWPBs of the
different regions. HCaDIS
Article 121 of the Labor Code, as amended by Section 3 of Republic Act No. 6727, empowered
the NWPC to formulate policies and guidelines on wages, incomes and productivity improvement
at the enterprise, industry and national levels; to prescribe rules and guidelines for the
determination of appropriate minimum wage and productivity measures at the regional,
provincial or industry levels; and to review regional wage levels set by the RTWPBs to determine
whether the levels were in accordance with the prescribed guidelines and national development
plans, among others. On the other hand, Article 122 (b) of the Labor Code, also amended by
Section 3 of Republic Act No. 6727, tasked the RTWPBs to determine and fix minimum wage rates
applicable in their region, provinces or industries therein; and to issue the corresponding wage
orders, subject to the guidelines issued by the NWPC. The RTWPBs were also mandated to

receive, process and act on applications for exemption from the prescribed wage rates as may be
provided by law or any wage order. 5
Consequently, the RTWPB-NCR issued Wage Order No. NCR-07 on October 14, 1999 imposing an
increase of P25.50/day on the wages of all private sector workers and employees in the NCR and
pegging the minimum wage rate in the NCR at P223.50/day. 6 However, Section 2 and Section 9
of Wage Order No. NCR-07 exempted certain sectors and industries from its coverage, to wit:
Section 2. The adjustment in this Order does not cover the following:
A. [W]orkers in the following sectors which were granted corresponding wage
increases on January 1, 1999 as prescribed by Wage Order No. NCR-06:
a.1. Agriculture workers
- Plantation
- Non-plantation
a.2.
Cottage/handicraft industry
a.3. Private hospitals with bed capacity
of 100 or less
a.4. Retail/Service establishments
- Employing 11-15 workers
- Employing not more than 10 workers

P12.00
P18.50
P16.00
P12.00
P12.00
P19.00

B. Workers in small establishments employing less than ten (10) workers. HSEIAT
xxxxxxxxx
Section 9. Upon application with and as determined by the Board, based on
documentation and other requirements in accordance with applicable rules and
regulations issued by the Commission, the following may be exempt from the
applicability of this Order:
1. Distressed establishments as defined in the NPWC Guidelines No. 01, series of
1996;
2. Exporters including indirect exporters with at least 50% export sales and with
forward contracts with their foreign buyers/principals entered into on or twelve
(12) months before the date of publication of this Order may be exempt during the
lifetime of said contract but not to exceed twelve (12) months from the effectivity
of this Order.
Feeling aggrieved by their non-coverage by the wage adjustment, the Alliance of Progressive
Labor (APL) and the TunaynaNagkakaisangManggagawasa Royal (TNMR) filed an appeal with the
NWPC assailing Section 2 (A) and Section 9 (2) of Wage Order No. NCR-07. They contended that
neither the NWPC nor the RTWPB-NCR had the authority to expand the non-coverage and
exemptible categories under the wage order; hence, the assailed sections of the wage order
should be voided. The appeal was docketed as NWPC Case No. W.O.- 99-001.

Ruling of the NWPC

In its decision dated February 28, 2000, 7 the NWPC upheld the validity of Section 2 (A) and
Section 9 (2) of Wage Order No. NCR-07. It observed that the RTWPB's power to determine
exemptible categories was adjunct to its wage fixing function conferred by Article 122 (e) of the
Labor Code, as amended by Republic Act No. 6727; that such authority of the RTWPB was also
recognized in NWPC Guidelines No. 01, Series of 1996; that APL and TNMR did not adduce
evidence to show any arbitrariness on the part of the RTWPB-NCR when it included in Wage
Order No. NCR-07 the disputed exclusionary provisions; and that the RTWPB-NCR was able to
submit strong and justifiable reasons for the inclusion of the exemptible categories in Wage
Order No. NCR-07.
With regard to the excluded sectors provided for in Section 2 (A) of Wage Order No. NCR-07, the
NWPC took cognizance of the precarious situation in the Philippines in 1997 because of the Asian
economic turmoil that had prompted the RTWPB-NCR to issue Wage Order No. NCR-06 to
prescribe a staggered amount of wage increases for the agricultural workers, cottage/handicraft
industry, private hospitals with bed capacity of 100 or less, and retail/service establishments
employing 15 or less workers. It noted that the effects of that economic turmoil were still felt in
the NCR when Wage Order No. NCR-07 was issued considering that the unemployment rate was
15.4% in July 1999; that the RTWPB-NCR thought it wise to defer the implementation of the new
wage increase until a future date; and that the non-inclusion of some sectors from the coverage
of the Wage Order No. NCR-07 was only temporary in character. IScaAE
As regards the exemption granted to the exporting firms, the NWPC considered the nature of the
business wherein the exporters would normally enter into forwarding contracts with their
principals. It held that the recent adjustment imposed by Wage Order No. NCR-07 could not have
been anticipated by the parties at the time they agreed on the price of their forward contract;
that the implementation of the wage adjustment would surely result, therefore, into either
financial loss or at the very least a marked reduction of profits on the part of the exporters; and
that the exemption given to exporting firms was not automatic because the RTWPB-NCR had the
discretion to ascertain if the exporter had complied with the requirements, and the exemption
given was only for a period of one year. 8
Accordingly, the NWPC denied the appeal of APL and TNMR for its lack of merit. It also denied
TNMR's motion for reconsideration through its resolution of July 17, 2000. 9
Ruling of the CA
The APL and TNMR assailed the decisions of the NWPC on certiorari in the CA (C.A.-G.R. SP No.
60833), attributing grave abuse of discretion to the NWPC in upholding Section 2 (A) and Section
9 (2) of Wage Order No. NCR-07, and contending that the power of the RTWPB-NCR to determine
exemptible categories was not an adjunct to its wage fixing function.
On June 15, 2001, the CA granted the petition for certiorari, 10 holding that the powers and
functions of the NWPC and RTWPB-NCR as set forth in Republic Act No. 6727 did not include the
power to grant additional exemptions from the adjusted minimum wage; that an administrative
rule or regulation must be in harmony with the enabling law; and that the statutory grant of

power could not be extended by implication beyond what was necessary for their just and
reasonable execution. It disposed as follows: AacDHE
WHEREFORE, the petition is GRANTED and the Decisions of the respondent
Commission dated February 28, 2000 and July 17, 2000 are hereby SET ASIDE.
Sections 2A and 9(2) of the Wage Order No. NCR-07 are hereby declared NULL and
VOID.
SO ORDERED. 11cCSTHA
The NWPC and RTWPB-NCR moved to reconsider the decision, but the CA denied their motion in
the resolution promulgated on September 11, 2001, 12 ruling that notwithstanding the
pronouncement inNasipit Lumber Company, Inc. v. National Wages and Productivity
Commission13 to the effect that the NWPC had the power not only to prescribe guidelines to
govern wage orders but also to issue exemptions therefrom, Section 2 (A) and Section 9 (2) of
Wage Order No. NCR-07 were invalid due to lack of approval by the NWPC.
Hence, this appeal by petition for review on certiorari by the NWPC and RTWPB-NCR.
Issues
The NWPC and RTWPB-NCR submit for resolution that: TcIaHC
I
SECTION 3 OF REPUBLIC ACT NO. 6727 MAY BE CONSTRUED TO AUTHORIZE THE
NWPC AND RTWPB TO PROVIDE FOR ADDITIONAL EXEMPTIONS IN THE
MINIMUM WAGE ADJUSTMENTS SUCH AS IN WAGE ORDER NO. NCR-07.
II
THE APPROVAL GIVEN BY THE NWPC WHICH WAS CONTAINED IN ITS DECISIONS
DATED FEBRUARY 28, 2000 AND JULY 17, 2000 COMPLIES WITH THE
REQUIREMENT OF REVIEW/APPROVAL REQUIRED UNDER SECTION 2 OF THE
REVISED GUIDELINES ON EXEMPTIONS FROM WAGE ORDER. 14 AHDTIE
Restated, the issues are: (a) whether or not the RTWPB-NCR had the authority to provide
additional exemptions from the minimum wage adjustments embodied in Wage Order No. NCR07; and (b) whether or not Wage Order No. NCR-07 complied with the requirements set by
NWPC Guidelines No. 01, Series of 1996.
Ruling
The petition for review on certiorari is meritorious.
Indisputably, the NWPC had the authority to prescribe the rules and guidelines for the
determination of the minimum wage and productivity measures, and the RTWPB-NCR had the
power to issue wage orders.
Pursuant to its statutorily defined functions, the NWPC promulgated NWPC Guidelines No. 00195 (Revised Rules of Procedure on Minimum Wage Fixing) to govern the proceedings in the NWPC

and the RTWPBs in the fixing of minimum wage rates by region, province and industry. Section 1
of Rule VIII of NWPC Guidelines No. 001-95 recognized the power of the RTWPBs to issue
exemptions from the application of the wage orders subject to the guidelines issued by the
NWPC, viz.: ESTAIH
SECTION 1. APPLICATION FOR EXEMPTION.
Whenever a wage order provides for exemption, applications for exemption shall
be filed with the appropriate Board which shall process these applications, subject
to the guidelines issued by the Commission.
The NWPC also issued NWPC Guidelines No. 01, Series of 1996, to fix the rules on the exemption
from compliance with the wage increases prescribed by the RTWPBs. Section 2 of the Guidelines
No. 01 reads:
SECTION 2. CATEGORIES OF EXEMPTIBLE ESTABLISHMENTS.
Exemption of establishments from compliance with the wage increases and cost of
living allowances prescribed by the Boards may be granted in order to (1) assist
establishments experiencing temporary difficulties due to losses maintain the
financial viability of their businesses and continued employment of their workers;
(2) encourage the establishment of new businesses and the creation of more jobs,
particularly in areas outside the National Capital Region and Export Processing
Zones, in line with the policy on industry dispersal; and (3) ease the burden of
micro establishments, particularly in the retail and service sector, that have a
limited capacity to pay.
Pursuant to the above, the following categories of establishments may be
exempted upon application with and as determined by the Board, in accordance
with applicable criteria on exemption as provided in this Guidelines; provided
further that such categories are expressly specified in the Order.
1. Distressed establishments
2. New business enterprises (NBEs)
3. Retail/Service establishments employing not more than ten (10) workers SDITAC
4. Establishments adversely affected by natural calamities
Exemptible categories outside of the abovementioned list may be allowed only if
they are in accord with the rationale for exemption reflected in the first
paragraph of this section. The concerned Regional Board shall submit strong and
justifiable reason/s for the inclusion of such categories which shall be subject to
review/approval by the Commission.
Under the guidelines, the RTWPBs could issue exemptions from the application of the wage
orders as long as the exemptions complied with the rules of the NWPC. In its rules, the NWPC
enumerated four exemptible establishments, but the list was not exclusive. The RTWPBs had the

authority to include in the wage orders establishments that belonged to, or to exclude from the
four enumerated exemptible categories. If the exempted category was one of the listed ones, the
RTWPB issuing the wage order must see to it that the requisites stated in Section 3 and Section 4
of the NWPC Guidelines No. 01, Series of 1996 were complied with before granting fully or
partially the application of an establishment seeking to avail of the exemption, to wit: TCaEIc
SECTION 3. CRITERIA FOR EXEMPTION.
The following criteria shall be used to determine whether the applicantestablishment is qualified for exemption:
A. Distressed Establishments
1. For Stock Corporations/Cooperatives
a. When deficit as of the last full accounting period or interim period, if any,
immediately preceding the effectivity of the Order amounts to 20% or more
of the paid-up capital for the same period; or
b. When an establishment registers capital deficiency i.e., negative stockholders'
equity as of the last full accounting period or interim period, if any,
immediately preceding the effectivity of the Order.
2. For Single Proprietorships/Partnerships
a. Single proprietorships/partnerships operating for at least two (2) years may be
granted exemption:
a.1. When the net accumulated losses for the last two (2) full accounting
periods and interim period, if any, preceding the effectivity of the
Order amounts to 20% or more of the total invested capital at the
beginning of the period under review; or HCSDca
a.2. When an establishment registers capital deficiency i.e., negative net
worth as of the last full accounting period or interim period, if any,
immediately preceding the effectivity of the Order.
b. Single proprietorships/partnerships operating for less than two (2) years may be
granted exemption when the net accumulated losses for the period
immediately preceding the effectivity of the Order amounts to 20% or more
of the total invested capital at the beginning of the period under review.
3. For Non-stock Non-profit Organizations
a. Non-stock Non-profit organizations operating for at least two (2) years may be
granted exemption:
a.1. When the net accumulated losses for the last two (2) full accounting
periods and interim period, if any, immediately preceding the
effectivity of the Order amounts to 20% or more of the fund

balance/members' contribution at the beginning of the period under

review; or
a.2. When an establishment registers capital deficiency i.e., negative fund
balance/members' contribution as of the last full accounting period or
interim period, if any, immediately preceding the effectivity of the
Order.
b. Non-stock non-profit organizations operating for less than two (2) years may be
granted exemption when the net accumulated losses for the period
immediately preceding the effectivity of the Order amounts to 20% or more
of the fund balance/members' contribution at the beginning of the period
under review.
4. For Banks and Quasi-banks cDTSHE
a. Under receivership/liquidation
Exemption may be granted to a bank or quasi-bank under receivership or
liquidation when there is a certification from the BangkoSentral ng Pilipinas
that it is under receivership or liquidation as provided in Section 30 of RA
7653, otherwise known as the New Central Bank Act.
b. Under controllership/conservatorship
A bank or quasi-bank under controllership/conservatorship may apply for
exemption as a distressed establishment under Section 3 A of this Guideline.
EcHAaS
B. New Business Enterprises
Exemption may be granted to New Business Enterprises established outside the
National Capital Region (NCR) and Export Processing Zones within two (2) years
from effectivity of the Order, classified under any of the following:
1. Agricultural establishments whether plantation or non-plantation.
2. Establishments with total assets after financing of five million pesos
(P5,000,000.00) and below.
C. Retail/Service Establishments Regularly Employing Not More Than Ten (10)
Workers
Exemption may be granted to a retail/service establishment when:
1. It is engaged in the retail sale of goods and/or services to end users for
personal or household use; and
2. It is regularly employing not more than ten (10) workers regardless of
status, except the owner/s, for at least six (6) months in any calendar
year.

D. Establishments Adversely Affected by Natural Calamities

1. The establishment must be located in an area declared by a competent
authority as under a state of calamity.
2. The natural calamities, such as earthquakes, lahar flow, typhoons, volcanic
eruptions, fire, floods and similar occurrences, must have occurred
within 6 months prior to the effectivity of the Wage Order. DaECST
3. Losses suffered by the establishment as a result of the calamity that
exceed the insurance coverage should amount to 20% or more of the
stockholders' equity as of the last full accounting period in the case of
corporations and cooperatives, total invested capital in the case of
partnerships and single proprietorships and fund balance/members'
contribution in the case of non-stock non-profit organizations.
Only losses or damage to properties directly resulting from the calamity and
not incurred as a result of normal business operations shall be
considered.
4. Where necessary, the Board or its duly-authorized representative shall
conduct an ocular inspection of the establishment or engage the
services of experts to validate the extent of damages suffered.
TaCDAH
SECTION 4. DOCUMENTS REQUIRED.
The following supporting documents shall be submitted together with the
application:
For All Categories of Exemption
Proof of notice of filing of the application to the President of the union/contracting
party if one is organized in the establishment, or if there is no union, a copy of a
circular giving general notice of the filing of the application to all the workers in the
establishment. The proof of notice, which may be translated in the vernacular,
shall state that the workers' representative was furnished a copy of the application
with all the supporting documents. The notice shall be posted in a conspicuous
place in the establishment.
A. For Distressed Establishments
1. For corporations, cooperatives, single proprietorships, partnerships, non-stock
non-profit organizations.
a. Audited financial statements (together with the Auditor's opinion and the
notes thereto) for the last two (2) full accounting periods preceding
the effectivity of the Order filed with and stamped "received" by the
appropriate government agency.

b. Audited interim quarterly financial statements (together with the

Auditor's opinion and the notes thereto) for the period immediately
preceding the effectivity of the Order.
2. For Banks and Quasi-banks EAcIST
a. Certification from BangkoSentral ng Pilipinas that it is under
receivership/liquidation.
B. For New Business Enterprises
1. Affidavit from employer regarding the following:
a. Principal economic activity
b. Date of registration with appropriate government agency
c. Amount of total assets
2. Certificate of registration from the appropriate government agency.
C. For Retail/Service Establishments Employing not more than Ten (10)
Workers:
1. Affidavit from employer stating the following:
a. It is a retail/service establishment.
b. It is regularly employing not more than ten (10) workers for at least six
months in any calendar year.
2. Business Permit for the current year from the appropriate government agency.
cIETHa
D. For Establishments Adversely Affected by Natural Calamities
1. Affidavit from the General Manager or Chief Executive Officer of the
establishment regarding the following:
a. Date and type of calamity
b. Amount of losses/damages suffered as a direct result of the calamity
c. List of properties damaged/lost together with estimated valuation
d. For properties that are not insured, a statement that the same are not
covered by insurance.
2. Copies of insurance policy contracts covering the properties damaged, if any.
3. Adjuster's report for insured properties.
4. Audited financial statements for the last full accounting period preceding the
effectivity of the Order stamped received by the appropriate government
agency.

The Board may require the submission of other pertinent documents to support
the application for exemption. DHITSc
On the other hand, if the exemption was outside of the four exemptible categories, like here, the
exemptible category should be: (1) in accord with the rationale for exemption; (2)
reviewed/approved by the NWPC; and (3) upon review, the RTWPB issuing the wage order must
submit a strong and justifiable reason or reasons for the inclusion of such category. It is the
compliance with the second requisite that is at issue here.
The CA reversed the decisions of the NWPC dated February 28, 2000 and July 17, 2000 mainly on
the ground that Wage Order No. NCR-07, specifically its Section 2 (A) and Section 9 (2), had not
been reviewed or approved by the NWPC. However, the NWPC stated that it had reviewed and
approved the challenged sections when it upheld the validity of Wage Order No. NCR-07 in its
decisions of February 28, 2000 and July 17, 2000.
We rule in favor of petitioners.
The wage orders issued by the RTWPBs could be reviewed by the NWPC motuproprio or upon
appeal. 15 Any party aggrieved by the wage order issued by the RTWPBs could appeal. Here, APL
and TNMR appealed on October 26, 1999, submitting to the NWPC precisely the issue of the
validity of the Section 2 (A) and Section 9 (2) of Wage Order No. NCR-07. The NWPC, in arriving at
its decision, weighed the arguments of the parties and ruled that the RTWPB-NCR had substantial
and justifiable reasons in exempting the sectors and establishments enumerated in Section 2 (A)
and Section 9 (2) based on the public hearings and consultations, meetings, social-economic data
and informations gathered prior to the issuance of Wage Order No. NCR-07. The very fact that
the validity of the assailed sections of Wage Order No. NCR-07 had been already passed upon
and upheld by the NWPC meant that the NWPC had already given the wage order its necessary
legal imprimatur. Accordingly, the requisite approval or review was complied with. SHcDAI
In creating the RTWPBs, Congress intended to rationalize wages, firstly, by establishing full time
boards to police wages round-the-clock, and secondly, by giving the boards enough powers to
achieve this objective. In Employers Confederation of the Phils. v. National Wages and
Productivity Commission, 16 this Court all too clearly pronounced that Congress meant the
RTWPBs to be creative in resolving the annual question of wages without Labor and Management
knocking on the doors of Congress at every turn. The RTWPBs are the thinking group of men and
women guided by statutory standards and bound by the rules and guidelines prescribed by the
NWPC. In the nature of their functions, the RTWPBs investigate and study all the pertinent facts
to ascertain the conditions in their respective regions. Hence, they are logically vested with the
competence to determine the applicable minimum wages to be imposed as well as the industries
and sectors to exempt from the coverage of their wage orders.
Lastly, Wage Order No. NCR-07 is presumed to be regularly issued in the absence of any strong
showing of grave abuse of discretion on the part of RTWPB-NCR. The presumption of validity is
made stronger by the fact that its validity was upheld by the NWPC upon review.

WHEREFORE, we GRANT the petition for review on certiorari; SET ASIDE the decision
promulgated on June 15, 2001 and resolution promulgated on September 11, 2001 by the Court
of Appeals; REINSTATE the decisions rendered on February 28, 2000 and July 17, 2000 by the
National Wages and Productivity Commission; and DIRECT the respondents to pay the costs of
suit.
SO ORDERED. TIAEac

24. Art. 167(j), Beneficiaries

BARTOLOME V SSS AND SCANMAR
THIRD DIVISION
[G.R. No. 192531. November 12, 2014.]
BERNARDINA P. BARTOLOME, petitioner, vs. SOCIALSECURITYSYSTEM and
SCANMAR MARITIME SERVICES, INC., respondents.
DECISION
VELASCO, JR., J p:
Nature of the Case
This Appeal, filed under Rule 43 of the Rules of Court, seeks to annul the March 17, 2010 Decision
1 of the Employees' Compensation Commission (ECC) in ECC Case No. SL-18483-0218-10,
entitledBernardina P. Bartolomev.SocialSecuritySystem (SSS) [Scanmar Maritime Services, Inc.],
declaring that petitioner is not a beneficiary of the deceased employee under Presidential Decree
No. (PD) 442, otherwise known as theLabor Code of the Philippines, as amended by PD 626. 2
The Facts
John Colcol (John), born on June 9, 1983, was employed as electrician by Scanmar Maritime
Services, Inc., on board the vessel Maersk Danville, since February 2008. As such, he was enrolled
under the government's Employees' Compensation Program (ECP). 3 Unfortunately, on June 2,
2008, an accident occurred on board the vessel whereby steel plates fell on John, which led to his
untimely death the following day. 4
John was, at the time of his death, childless and unmarried. Thus, petitioner Bernardina P.
Bartolome, John's biological mother and, allegedly, sole remaining beneficiary, filed a claim for
death benefits under PD 626 with the SocialSecuritySystem (SSS) at San Fernando City, La Union.
However, the SSS La Union office, in a letter dated June 10, 2009 5 addressed to petitioner,
denied the claim, stating:
We regret to inform you that we cannot give due course to your claim because you
are no longer considered as the parent of JOHN COLCOL as he was legally adopted
by CORNELIO COLCOL based on documents you submitted to us. DSAEIT
The denial was appealed to the Employees' Compensation Commission (ECC), which affirmed the
ruling of the SSS La Union Branch through the assailed Decision, the dispositive portion of which
reads:

WHEREFORE, the appealed decision is AFFIRMED and the claim is hereby dismissed
for lack of merit.
SO ORDERED. 6
In denying the claim, both the SSS La Union branch and the ECC ruled against petitioner's
entitlement to the death benefits sought after under PD 626 on the ground she can no longer be
considered John's primary beneficiary. As culled from the records, John and his sister Elizabeth
were adopted by their great grandfather, petitioner's grandfather, Cornelio Colcol (Cornelio), by
virtue of the Decision 7 in Spec. Proc. No. 8220-XII of the Regional Trial Court in Laoag City dated
February 4, 1985, which decree of adoption attained finality. 8 Consequently, as argued by the
agencies, it is Cornelio who qualifies as John's primary beneficiary, not petitioner.
Neither, the ECC reasoned, would petitioner qualify as John's secondary beneficiary even if it
were proven that Cornelio has already passed away. As the ECC ratiocinated:
Under Article 167 (j) of P.D. 626, as amended, provides (sic) that beneficiaries are
the "dependent spouse until he remarries and dependent children, who are the
primary beneficiaries. In their absence, the dependent parents and subject to the
restrictions imposed on dependent children, the illegitimate children and
legitimate descendants who are the secondary beneficiaries; Provided; that the
dependent acknowledged natural child shall be considered as a primary beneficiary
when there are no other dependent children who are qualified and eligible for
monthly income benefit."
The dependent parent referred to by the above provision relates to the legitimate
parent of the covered member, as provided for by Rule XV, Section 1(c)(1) of the
Amended Rules on Employees' Compensation. This Commission believes that the
appellant is not considered a legitimate parent of the deceased, having given up
the latter for adoption to Mr. Cornelio C. Colcol. Thus, in effect, the adoption
divested her of the status as the legitimate parent of the deceased.
xxxxxxxxx
In effect, the rights which previously belong [sic] to the biological parent of the
adopted child shall now be upon the adopting parent. Hence, in this case, the legal
parent referred to by P.D. 626, as amended, as the beneficiary, who has the right
to file the claim, is the adoptive father of the deceased and not herein appellant. 9
(Emphasis supplied) ESCcaT
Aggrieved, petitioner filed a Motion for Reconsideration, which was likewise denied by the ECC.
10 Hence, the instant petition.
The Issues
Petitioner raises the following issues in the petition:
ASSIGNMENT OF ERRORS

I. The Honorable ECC's Decision is contrary to evidence on record.

II. The Honorable ECC committed grave abuse in denying the just, due and lawful
claims of the petitioner as a lawful beneficiary of her deceased biological
son.
III. The Honorable ECC committed grave abuse of discretion in not giving due
course/denying petitioner's otherwise meritorious motion for
reconsideration. 11
In resolving the case, the pivotal issue is this: Are the biological parents of the covered, but
legally adopted, employee considered secondary beneficiaries and, thus, entitled, in appropriate
cases, to receive the benefits under the ECP?
The Court's Ruling
The petition is meritorious.
The ECC's factual findings
are not consistent with the
evidence on record
To recall, one of the primary reasons why the ECC denied petitioner's claim for death benefits is
that even though she is John's biological mother, it was allegedly not proven that his adoptive
parent, Cornelio, was no longer alive. As intimated by the ECC:
Moreover, there had been no allegation in the records as to whether the legally
adoptive parent, Mr. Colcol, is dead, which would immediately qualify the
appellant [petitioner] for SocialSecurity benefits. Hence, absent such proof of
death of the adoptive father, this Commission will presume him to be alive and
well, and as such, is the one entitled to claim the benefit being the primary
beneficiary of the deaceased. Thus, assuming that appellant is indeed a qualified
beneficiary under the SocialSecurity law, in view of her status as other beneficiary,
she cannot claim the benefit legally provided by law to the primary beneficiary, in
this case the adoptive father since he is still alive. cAaDHT
We disagree with the factual finding of the ECC on this point.
Generally, findings of fact by administrative agencies are generally accorded great respect, if not
finality, by the courts by reason of the special knowledge and expertise of said administrative
agencies over matters falling under their jurisdiction. 12 However, in the extant case, the ECC had
overlooked a crucial piece of evidence offered by the petitioner Cornelio's death certificate. 13
Based on Cornelio's death certificate, it appears that John's adoptive father died on October 26,
1987, 14 or only less than three (3) years since the decree of adoption on February 4, 1985,
which attained finality. 15 As such, it was error for the ECC to have ruled that it was not duly
proven that the adoptive parent, Cornelio, has already passed away.
The rule limiting death
benefits claims to the

legitimate parents is contrary

to law
This brings us to the question of whether or not petitioner is entitled to the death benefits claim
in view of John's work-related demise. The pertinent provision, in this regard, is Article 167 (j) of
the Labor Code,as amended, which reads:
ART. 167. Definition of terms. As used in this Title unless the context indicates
otherwise:
xxxxxxxxx
(j) 'Beneficiaries' means the dependent spouse until he remarries and dependent
children, who are the primary beneficiaries. In their absence, the dependent
parents and subject to the restrictions imposed on dependent children, the
illegitimate children and legitimate descendants who are the secondary
beneficiaries; Provided, that the dependent acknowledged natural child shall be
considered as a primary beneficiary when there are no other dependent children
who are qualified and eligible for monthly income benefit. (Emphasis supplied)
Concurrently, pursuant to the succeeding Article 177 (c) supervising the ECC "[T]o approve rules
and regulations governing the processing of claims and the settlement of disputes arising
therefrom as prescribed by the System," the ECC has issued the Amended Rules on Employees'
Compensation, interpreting the above-cited provision as follows:
RULE XV BENEFICIARIES
SECTION 1. Definition. (a) Beneficiaries shall be either primary or secondary, and
determined at the time of employee's death. caSEAH
(b) The following beneficiaries shall be considered primary:
(1) The legitimate spouse living with the employee at the time of the
employee's death until he remarries; and
(2) Legitimate, legitimated, legally adopted or acknowledged natural
children, who are unmarried, not gainfully employed, not over 21 years of
age, or over 21 years of age provided that he is incapacitated and incapable
of self-support due to physical or mental defect which is congenital or
acquired during minority; Provided, further, that a dependent acknowledged
natural child shall be considered as a primary beneficiary only when there
are no other dependent children who are qualified and eligible for monthly
income benefit; provided finally, that if there are two or more acknowledged
natural children, they shall be counted from the youngest and without
substitution, but not exceeding five.
(c) The following beneficiaries shall be considered secondary:

(1) The legitimate parents wholly dependent upon the employee for regular
support; DCcAIS
(2) The legitimate descendants and illegitimate children who are unmarried,
not gainfully employed, and not over 21 years of age, or over 21 years of age
provided that he is incapacitated and incapable of self-support due to
physical or mental defect which is congenital or acquired during minority.
(Emphasis supplied)
Guilty of reiteration, the ECC denied petitioner's claim on the ground that she is no longer the
deceased's legitimate parent, as required by the implementing rules. As held by the ECC, the
adoption decree severed the relation between John and petitioner, effectively divesting her of
the status of a legitimate parent, and, consequently, that of being a secondary beneficiary.
We disagree. cITCAa
a. Rule XV, Sec. 1 (c) (1) of the
Amended Rules on Employees'
Compensation deviates from the
clear language of Art. 167 (j) of
the Labor Code, as amended
Examining the Amended Rules on Employees' Compensation in light of the Labor Code,as
amended, it is at once apparent that the ECC indulged in an unauthorized administrative
legislation. In net effect, the ECC read into Art. 167 of the Code an interpretation not
contemplated by the provision. Pertinent in elucidating on this point is Article 7 of the Civil Code
of the Philippines, which reads:
Article 7. Laws are repealed only by subsequent ones, and their violation or nonobservance shall not be excused by disuse, or custom or practice to the contrary.
When the courts declared a law to be inconsistent with the Constitution, the
former shall be void and the latter shall govern.
Administrative or executive acts, orders and regulations shall be valid only when
they are not contrary to the laws or the Constitution. (Emphasis supplied) ISaTCD
As applied, this Court held inCommissioner of Internal Revenue v. Fortune Tobacco Corporation16
that:
As we have previously declared, rule-making power must be confined to details for
regulating the mode or proceedings in order to carry into effect the law as it has
been enacted, and it cannot be extended to amend or expand the statutory
requirements or to embrace matters not covered by the statute. Administrative
regulations must always be in harmony with the provisions of the law because
any resulting discrepancy between the two will always be resolved in favor of the
basic law. (Emphasis supplied)

Guided by this doctrine, We find that Rule XV of the Amended Rules on Employees'
Compensation is patently a wayward restriction of and a substantial deviation from Article 167 (j)
of the Labor Code when it interpreted the phrase "dependent parents" to refer to "legitimate
parents."
It bears stressing that a similar issue in statutory construction was resolved by this Court inDiazv.
Intermediate Appellate Court17 in this wise:
It is Our shared view that the word "relatives" should be construed in its general
acceptation. Amicus curiae Prof. Ruben Balane has this to say:
The term relatives, although used many times in the Code, is not defined by
it. In accordance therefore with the canons of statutory interpretation, it
should be understood to have a general and inclusive scope, inasmuch as the
term is a general one. Generaliaverbasuntgeneraliterintelligenda. That the
law does not make a distinction prevents us from making one:Ubilex non
distinguit, necnosdistingueradebemus. . . .
According to Prof. Balane, to interpret the term relatives in Article 992 in a more
restrictive sense than it is used and intended is not warranted by any rule of
interpretation. Besides, he further states that when the law intends to use the
term in a more restrictive sense, it qualifies the term with the word collateral, as in
Articles 1003 and 1009 of the New Civil Code.
Thus, the word "relatives" is a general term and when used in a statute it
embraces not only collateral relatives but also all the kindred of the person
spoken of, unless the context indicates that it was used in a more restrictive or
limited sense which as already discussed earlier, is not so in the case at bar.
(Emphasis supplied) acCTSE
In the same vein, the term "parents" in the phrase "dependent parents" in the afore-quoted
Article 167 (j) of the Labor Code is used and ought to be taken in its general sense and cannot be
unduly limited to "legitimate parents" as what the ECC did. The phrase "dependent parents"
should, therefore, include all parents, whether legitimate or illegitimate and whether by nature
or by adoption. When the law does not distinguish, one should not distinguish. Plainly,
"dependent parents" are parents, whether legitimate or illegitimate, biological or by adoption,
who are in need of support or assistance.
Moreover, the same Article 167 (j), as couched, clearly shows that Congress did not intend to
limit the phrase "dependent parents" to solely legitimate parents. At the risk of being repetitive,
Article 167 provides that "in their absence, the dependent parents and subject to the restrictions
imposed on dependent children, the illegitimate children and legitimate descendants who are
secondary beneficiaries." Had the lawmakers contemplated "dependent parents" to mean
legitimate parents, then it would have simply said descendants and not "legitimate descendants."
The manner by which the provision in question was crafted undeniably show that the phrase

"dependent parents" was intended to cover all parents legitimate, illegitimate or parents by
nature or adoption.
b. Rule XV, Section 1 (c) (1) of the
Amended Rules on Employees'
Compensation is in contravention
of the equal protection clause
To insist that the ECC validly interpreted the Labor Code provision is an affront to the
Constitutional guarantee of equal protection under the laws for the rule, as worded, prevents
the parents of an illegitimate child from claiming benefits under Art. 167 (j) of the Labor
Code,as amended by PD 626. To Our mind, such postulation cannot be countenanced.
As jurisprudence elucidates, equal protection simply requires that all persons or things similarly
situated should be treated alike, both as to rights conferred and responsibilities imposed. It
requires public bodies and institutions to treat similarly situated individuals in a similar manner.
18 In other words, the concept of equal justice under the law requires the state to govern
impartially, and it may not draw distinctions between individuals solely on differences that are
irrelevant to a legitimate governmental objective. 19HcTSDa
The concept of equal protection, however, does not require the universal application of the laws
to all persons or things without distinction. What it simply requires is equality among equals as
determined according to a valid classification. Indeed, the equal protection clause permits
classification. Such classification, however, to be valid must pass the test of reasonableness. The
test has four requisites: (1) The classification rests on substantial distinctions; (2) It is germane to
the purpose of the law; (3) It is not limited to existing conditions only; and (4) It applies equally to
all members of the same class. "Superficial differences do not make for a valid classification." 20
In the instant case, there is no compelling reasonable basis to discriminate against illegitimate
parents. Simply put, the above-cited rule promulgated by the ECC that limits the claim of benefits
to the legitimate parents miserably failed the test of reasonableness since the classification is not
germane to the law being implemented. We see no pressing government concern or interest that
requires protection so as to warrant balancing the rights of unmarried parents on one hand and
the rationale behind the law on the other. On the contrary, the SSS can better fulfill its mandate,
and the policy of PD 626 that employees and their dependents may promptly secure adequate
benefits in the event of work-connected disability or death will be better served if Article 167
(j) of the Labor Code is not so narrowly interpreted. cDEHIC
There being no justification for limiting secondary parent beneficiaries to the legitimate ones,
there can be no other course of action to take other than to strike down as unconstitutional the
phrase "illegitimate" as appearing in Rule XV, Section 1 (c) (1) of the Amended Rules on
Employees' Compensation.
Petitioner qualifies as John's
dependent parent

In attempting to cure the glaring constitutional violation of the adverted rule, the ECC extended
illegitimate parents an opportunity to file claims for and receive death benefits by equating
dependency and legitimacy to the exercise of parental authority. Thus, as insinuated by the ECC
in its assailed Decision, had petitioner not given up John for adoption, she could have still claimed
death benefits under the law.
To begin with, nowhere in the law nor in the rules does it say that "legitimate parents" pertain to
those who exercise parental authority over the employee enrolled under the ECP. It was only in
the assailed Decision wherein such qualification was made. In addition, assuming arguendo that
the ECC did not overstep its boundaries in limiting the adverted Labor Code provision to the
deceased's legitimate parents, and that the commission properly equated legitimacy to parental
authority, petitioner can still qualify as John's secondary beneficiary.
True, when Cornelio, in 1985, adopted John, then about two (2) years old, petitioner's parental
authority over John was severed. However, lest it be overlooked, one key detail the ECC missed,
aside from Cornelio's death, was that when the adoptive parent died less than three (3) years
after the adoption decree, John was still a minor, at about four (4) years of age.
John's minority at the time of his adopter's death is a significant factor in the case at bar. Under
such circumstance, parental authority should be deemed to have reverted in favor of the
biological parents. Otherwise, taking into account Our consistent ruling that adoption is a
personal relationship and that there are no collateral relatives by virtue of adoption, 21 who was
then left to care for the minor adopted child if the adopter passed away?
To be sure, reversion of parental authority and legal custody in favor of the biological parents is
not a novel concept. Section 20 of Republic Act No. 855222 (RA 8552), otherwise known as the
Domestic Adoption Act, provides:
Section 20. Effects of Rescission. If the petition [for rescission of adoption] is
granted, the parental authority of the adoptee's biological parent(s), if known, or
the legal custody of the Department shall be restored if the adoptee is still a
minor or incapacitated. The reciprocal rights and obligations of the adopter(s) and
the adoptee to each other shall be extinguished. (emphasis added)
The provision adverted to is applicable herein by analogy insofar as the restoration of custody is
concerned. The manner herein of terminating the adopter's parental authority, unlike the
grounds for rescission, 23 justifies the retention of vested rights and obligations between the
adopter and the adoptee, while the consequent restoration of parental authority in favor of the
biological parents, simultaneously, ensures that the adoptee, who is still a minor, is not left to
fend for himself at such a tender age.
To emphasize, We can only apply the rule by analogy, especially since RA 8552 was enacted after
Cornelio's death. Truth be told, there is a lacuna in the law as to which provision shall govern
contingencies in all fours with the factual milieu of the instant petition. Nevertheless, We are
guided by the catena of cases and the state policies behind RA 8552 24 wherein the paramount
consideration is the best interest of the child, which We invoke to justify this disposition. It is,

after all, for the best interest of the child that someone will remain charged for his welfare and
upbringing should his or her adopter fail or is rendered incapacitated to perform his duties as a
parent at a time the adoptee is still in his formative years, and, to Our mind, in the absence or, as
in this case, death of the adopter, no one else could reasonably be expected to perform the role
of a parent other than the adoptee's biological one.
Moreover, this ruling finds support on the fact that even though parental authority is severed by
virtue of adoption, the ties between the adoptee and the biological parents are not entirely
eliminated. To demonstrate, the biological parents, in some instances, are able to inherit from
the adopted, as can be gleaned from Art. 190 of the Family Code:
Art. 190. Legal or intestate succession to the estate of the adopted shall be
governed by the following rules:
xxxxxxxxx
(2) When the parents, legitimate or illegitimate, or the legitimate ascendants of the
adopted concur with the adopter, they shall divide the entire estate, one-half to be
inherited by the parents or ascendants and the other half, by the adopters;
xxxxxxxxx
(6) When only collateral blood relatives of the adopted survive, then the ordinary
rules of legal or intestate succession shall apply. caHASI
Similarly, at the time of Cornelio Colcol's death, which was prior to the effectivity of the Family
Code, the governing provision is Art. 984 of the New Civil Code, which provides:
Art. 984. In case of the death of an adopted child, leaving no children or
descendants, his parents and relatives by consanguinity and not by adoption, shall
be his legal heirs.
From the foregoing, it is apparent that the biological parents retain their rights of succession to
the estate of their child who was the subject of adoption. While the benefits arising from the
death of an SSS covered employee do not form part of the estate of the adopted child, the
pertinent provision on legal or intestate succession at least reveals the policy on the rights of the
biological parents and those by adoption vis--vis the right to receive benefits from the adopted.
In the same way that certain rights still attach by virtue of the blood relation, so too should
certain obligations, which, We rule, include the exercise of parental authority, in the event of the
untimely passing of their minor offspring's adoptive parent. We cannot leave undetermined the
fate of a minor child whose second chance at a better life under the care of the adoptive parents
was snatched from him by death's cruel grasp. Otherwise, the adopted child's quality of life might
have been better off not being adopted at all if he would only find himself orphaned in the end.
Thus, We hold that Cornelio's death at the time of John's minority resulted in the restoration of
petitioner's parental authority over the adopted child. HcISTE
On top of this restoration of parental authority, the fact of petitioner's dependence on John can
be established from the documentary evidence submitted to the ECC. As it appears in the

records, petitioner, prior to John's adoption, was a housekeeper. Her late husband died in 1984,
leaving her to care for their seven (7) children. But since she was unable to "give a bright future
to her growing children" as a housekeeper, she consented to Cornelio's adoption of John and
Elizabeth in 1985.
Following Cornelio's death in 1987, so records reveal, both petitioner and John repeatedly
reported "Brgy. Capurictan, Solsona, Ilocos Norte" as their residence. In fact, this very address
was used in John's Death Certificate 25 executed in Brazil, and in the Report of Personal Injury or
Loss of Life accomplished by the master of the vessel boarded by John. 26 Likewise, this is John's
known address as per the ECC's assailed Decision. 27 Similarly, this same address was used by
petitioner in filing her claim before the SSS La Union branch and, thereafter, in her appeal with
the ECC. Hence, it can be assumed that aside from having been restored parental authority over
John, petitioner indeed actually execised the same, and that they lived together under one roof.
Moreover, John, in his SSS application, 28 named petitioner as one of his beneficiaries for his
benefits under RA 8282, otherwise known as the "SocialSecurity Law." While RA 8282 does not
cover compensation for work-related deaths or injury and expressly allows the designation of
beneficiaries who are not related by blood to the member unlike in PD 626, John's deliberate act
of indicating petitioner as his beneficiary at least evinces that he, in a way, considered petitioner
as his dependent. Consequently, the confluence of circumstances from Cornelio's death during
John's minority, the restoration of petitioner's parental authority, the documents showing
singularity of address, and John's clear intention to designate petitioner as a beneficiary
effectively made petitioner, to Our mind, entitled to death benefit claims as a secondary
beneficiary under PD 626 as a dependent parent.
All told, the Decision of the ECC dated March 17, 2010 is bereft of legal basis. Cornelio's adoption
of John, without more, does not deprive petitioner of the right to receive the benefits stemming
from John's death as a dependent parent given Cornelio's untimely demise during John's
minority. Since the parent by adoption already died, then the death benefits under the
Employees' Compensation Program shall accrue solely to herein petitioner, John's sole remaining
beneficiary. ESTDIA
WHEREFORE, the petition is hereby GRANTED. The March 17, 2010 Decision of the Employees'
Compensation Commission, in ECC Case No. SL-18483-0218-10, is REVERSED and SET ASIDE. The
ECC is hereby directed to release the benefits due to a secondary beneficiary of the deceased
covered employee John Colcol to petitioner Bernardina P. Bartolome.
No costs.
SO ORDERED.

25. Art. 192, Disability

SEALINES MARINE SERVICES V DELA TORRE
THIRD DIVISION
[G.R. No. 214132. February 18, 2015.]
SEALANES MARINE SERVICES, INC./ARKLOW SHIPPING NETHERLAND and/or
CHRISTOPHER DUMATOL, petitioners, vs. ARNEL G. DELA TORRE, respondent.
RESOLUTION
REYES, J p:
This is a Petition for Review on Certiorari1 from the Decision 2 dated April 24, 2014 of the Court
of Appeals (CA) in CA-G.R. SP No. 130641, which affirmed the Decision dated February 28, 2013
and Resolution dated April 24, 2013 of the National Labor Relations Commission (NLRC), in NLRC
LAC-09-000747-12-OFW, entitled, "Arnel G. Dela Torre v.Sealanes Marine Services, Inc./Arklow
Shipping Netherland and Christopher Dumatol," which upheld the disability award by the Labor
Arbiter (LA) of US$80,000.00 in favor of Arnel G. Dela Torre (respondent), pursuant to the parties'
Collective Bargaining Agreement (CBA).
Factual Antecedents
The respondent was hired by Sealanes Marine Services, Inc. (Sealanes), a local manning agency,
through its President, Christopher Dumatol (Dumatol), in behalf of its foreign principal, Arklow
Shipping Netherland (petitioners), as an able seaman on board M/V Arklow Venture for a period
of nine months at a basic monthly salary of US$545.00. An overriding CBA between the
respondent's union, Associated Marine Officers' and Seamen's Union of the Philippines, and the
Netherlands Maritime Employers Association, called "CBA for Filipino Ratings on Board
Netherlands Flag Vessels" (Dutch CBA), also covered his contract. 3
The respondent embarked on January 21, 2010. On August 1, 2010, during the crew's rescue boat
drill at the port of Leith, Scotland, he figured in an accident and injured his lower back. An X-ray
of his lumbosacral spine was taken at a hospital at the port, but while according to his attending
physician he sustained no major injury, the pain in his back persisted and he was repatriated. On
August 4, 2010, the respondent was referred by Sealanes to the Marine Medical Services of the
Metropolitan Medical Center. On August 5, 2010, an X-ray of his lumbosacral spine showed, per
the medical report, that he sustained "lumbar spine degenerative changes with associated L1
compression fracture." The next day, a Magnetic Resonance Imaging scan of his lumbar spine
revealed an "acute compression fracture body of L1; right paracentral disc protrusion at L5-S1
causing minimal canal compromise; L4-L5 and L5-S1 disc dehydration." Again on December 16,

2010, an X-ray showed "compression deformity of L1 vertebra; L2-L1 disc space is now defined
but slightly narrowed". On January 27, 2011, his fourth X-ray still showed a "compression
fracture, L1 with narrowed L2-L1 disc space; no significant neural foraminal compromise." 4
The respondent underwent several physical therapy sessions, and finally on March 10, 2011 the
company-designated physician assessed him with a Grade 11 disability for slight rigidity or onethird loss of motion or lifting power of trunk. Nonetheless, he was informed of the assessment
only in May 2011, or more than 240 days since the accident. 5ACEIac
Rulings of the LA and the NLRC
On May 20, 2011, the respondent filed a complaint for disability benefits, medical
reimbursement, underpaid sick leave, damages and attorney's fees. On July 30, 2012, the LA
rendered judgment awarding him US$80,000.00 in disability benefits as provided in the Dutch
CBA, plus 10% as attorney's fees. In particular, the LA held that such an award cannot be made to
depend on the company-designated physician's disability assessment which was issued more
than 120 days after the accident, especially if despite treatment for more than 240 days the
respondent was still unable to return to his accustomed work. 6
On August 31, 2012, the petitioners appealed to the NLRC contending that the disability benefits
due to the respondent should be based on his Grade 11 disability assessment issued by the
company-designated physician. On September 21, 2012, the respondent also filed his appeal
assailing the denial of his medical and transportation expenses. 7
In its Decision dated February 28, 2013, the NLRC affirmed the award of total disability benefits
to the respondent noting that he continued with his rehabilitation even after the company's
Grade 11 disability rating issued on March 10, 2011, indicating that its disability rating was
intended merely to comply with the 240-day limit for the company-designated physician to either
declare him fit to work or to assess the degree of his permanent disability. The petitioners'
motion for reconsideration was denied on April 24, 2013.
On petition for certiorari to the CA, the petitioners raised the following grounds:
I. PUBLIC RESPONDENT NLRC COMMITTED GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OR EXCESS OF JURISDICTION WHEN IT AWARDED
MAXIMUM DISABILITY COMPENSATION AND ATTORNEY'S FEES TO [THE
RESPONDENT] DESPITE THE FOLLOWING:
a. Private respondent was assessed with Disability Grade 11 only by the
company-designated physician within his 240-day period of treatment;
b. Under the POEA-contract and the Dutch CBA, disability benefits of
seafarer shall be based on the medical assessment of the companydesignated physician.
c. Under the POEA-contract, benefits are awarded based solely on gradings
and not by the number of days of treatment.

II. PUBLIC RESPONDENT NLRC COMMITTED GRAVE ABUSE OF DISCRETION

AMOUNTING TO LACK OR EXCESS OF JURISDICTION WHEN IT AWARDED
ATTORNEY'S FEES TO PRIVATE RESPONDENT. 8
Ruling of the CA
The petitioners maintained that the respondent is not entitled to maximum disability benefits
under the Philippine Overseas Employment Administration Standard Employment Contract
(POEA SEC), the Dutch CBA and this Court's decisions, in view of his Grade 11 disability rating as
assessed by the company-designated physician. But the respondent pointed out that, at the time
the said rating was issued, he was not completely healed but had to continue with his physical
therapy sessions even beyond the maximum 240-day period allowed under the Amended Rules
on Employee Compensation (AREC), 9 implying that the company's disability rating on March 10,
2011 was temporary; that since his treatment exceeded the 240 days permitted, his disability is
now total and permanent.
In its Decision 10 dated April 24, 2014, the CA ruled that the seafarer's right to disability benefits
is determined not solely by the company's assessment of his impediment but also by law,
contract and medical findings. Citing Articles 191 to 193 of the Labor Code,Section 2, Rule X of
the AREC, the POEA SEC, the parties' CBA, and the employment contract between the parties, the
appellate concurred that the respondent was entitled to total permanent disability benefits. 11
Petition for Review in the Supreme Court
In this petition, the petitioners insist that the CA erred in disregarding the petitioners' partial
permanent disability rating of Grade 11 under the POEA SEC schedule of disability benefits, even
as they pointed out that the respondent failed to refer his assessment to a neutral third doctor as
provided in Paragraph 3, Section 20 (B) of the POEA SEC.
Ruling of the Court
The Court denies the petition.
It is expressly provided in Article 192 (c) (1) of the Labor Code that a "temporary total disability
lasting continuously for more than [120] days, except as otherwise provided in the Rules," shall
be deemed total and permanent. Section 2 (b), Rule VII of the AREC, likewise provides that "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 under Rule X of these Rules."
As to sickness allowance, Section 2 (a), Rule X of the AREC, referred to in Article 192 (c) (1) of the
Labor Code,reads:
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 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. DIESaC
For its part, the POEA SEC for seafarers provides in Paragraph 3 of Section 20 (B) thereof that:
3. Upon sign-off from the vessel for medical treatment, the seafarer is entitled to
sickness allowance equivalent to his basic wage until he is declared fit to
work or the degree of permanent disability has been assessed by the
company-designated physician but in no case shall this period exceed one
hundred twenty (120) days.
For this purpose, the seafarer shall submit himself to a post-employment medical
examination by a company-designated physician within three working days
upon his return except when he is physically incapacitated to do so, in which
case, a written notice to the agency within the same period is deemed as
compliance. Failure of the seafarer to comply with the mandatory reporting
requirement shall result in his forfeiture of the right to claim the above
benefits.
If a doctor appointed by the seafarer disagrees with the assessment, a third doctor
may be agreed jointly between the employer and the seafarer. The third
doctor's decision shall be final and binding on both parties.
True, under Section 20 (B) (3) of the POEA SEC, it is the company-designated physician who
should determine the disability grading or fitness to work of the seafarer. Also, under Article
21.4.1 of the Dutch CBA governing the parties, it is the doctor appointed by the company's
medical advisor who shall determine the degree of disability suffered by a seafarer:
21.4.1 DISABILITY COMPENSATION the degree of disability which the
COMPANY subject to this Agreement is liable to pay shall be determined by a
doctor appointed by the COMPANY'S MEDICAL ADVISOR.
Under Section 32 12 of the POEA SEC, only those injuries or disabilities classified as Grade 1 are
considered total and permanent. In Kestrel Shipping Co., Inc. v.Munar, 13 the Court read the
POEA SEC in harmony with the Labor Code and the AREC, and explained that: (a) the 120 days
provided under Section 20 (B) (3) of the POEA SEC is the period given to the employer to
determine fitness to work and when the seafarer is deemed to be in a state of total and
temporary disability; (b) the 120 days of total and temporary disability may be extended up to a
maximum of 240 days should the seafarer require further medical treatment; and (c) a total and
temporary disability becomes permanent when so declared by the company-designated
physician within 120 or 240 days, as the case may be, or upon the expiration of the said periods
without a declaration of either fitness to work or permanent disability and the seafarer is still
unable to resume his regular seafaring duties. 14
The respondent was repatriated on August 4, 2010 and immediately underwent treatment and
rehabilitation at the company-designated facility, Marine Medical Services of the Metropolitan

Medical Center. It lasted until July 20, 2011, exceeding the 240 days allowed to declare him
either fit to work or permanently disabled. Although he was given a Grade 11 disability rating on
March 10, 2011, the assessment may be deemed tentative because he continued his physical
therapy sessions beyond 240 days. Yet, despite his long treatment and rehabilitation, he was
eventually unable to go back to work as a seafarer, which fact entitled him under the Dutch CBA
to maximum disability benefits.
It was held in Kestrel that the POEA SEC provides merely for the basic or minimal acceptable
terms of a seafarer's employment contract, thus, in the assessment of whether his injury is
partial and permanent, the same must be so characterized not only under the Schedule of
Disabilities in Section 32 of the POEA SEC, but also under the relevant provisions of the Labor
Code and the AREC implementing Title II, Book IV of the Labor Code.According to Kestrel, while
the seafarer is partially injured or disabled, he must not be precluded from earning doing the
same work he had before his injury or disability or that he is accustomed or trained to do.
Otherwise, if his illness or injury prevents him from engaging in gainful employment for more
than 120 or 240 days, as may be the case, then he shall be deemed totally and permanently
disabled.
In Crystal Shipping, Inc. v. Natividad, 15 the Court ruled that it is of no consequence that the
seafarer recovered from his illness or injury, for what is important is that he was unable to
perform his customary work for more than 120 days, and this constitutes total permanent
disability:
Petitioners tried to contest the above findings by showing that respondent was
able to work again as a chief mate in March 2001. Nonetheless, this information
does not alter the fact that as a result of his illness, respondent was unable to work
as a chief mate for almost three years. It is of no consequence that respondent was
cured after a couple of years. The law does not require that the illness should be
incurable. What is important is that he was unable to perform his customary work
for more than 120 days which constitutes permanent total disability. An award of a
total and permanent disability benefit would be germane to the purpose of the
benefit, which is to help the employee in making ends meet at the time when he is
unable to work. 16 (Citations omitted and italics supplied)
Thus, that the respondent required therapy beyond 240 days and remained unable to perform
his customary work during this time rendered unnecessary any further need by him to secure his
own doctor's opinion or that of a neutral third doctor to determine the extent of his permanent
disability.
Concerning the joint and solidary liability of the manning agency, Sealanes, its foreign principal,
Arklow Shipping Netherland, and Sealanes' President Dumatol, Section 10 of Republic Act (R.A.)
No. 8042, otherwise known as the "Migrant Workers and Overseas Filipinos Act of 1995", as
amended by Section 7 of R.A. No. 10022, reads:
SEC. 10. Money Claims. Notwithstanding any provision of law to the contrary,
the Labor Arbiters of the National Labor Relations Commission (NLRC) shall have

the original and exclusive jurisdiction to hear and decide, within ninety (90)
calendar days after the filing of the complaint, the claims arising out of an
employer-employee relationship or by virtue of any law or contract involving
Filipino workers for overseas deployment including claims for actual, moral,
exemplary and other forms of damage. Consistent with this mandate, the NLRC
shall endeavor to update and keep abreast with the developments in the global
services industry.
The liability of the principal/employer and the recruitment/placement agency for
any and all claims under this section shall be joint and several. This provision shall
be incorporated in the contract for overseas employment and shall be a condition
precedent for its approval. The performance bond to [be] filed by the
recruitment/placement agency, as provided by law, shall be answerable for all
money claims or damages that may be awarded to the workers. If the
recruitment/placement agency is a juridical being, the corporate officers and
directors and partners as the case may be, shall themselves be jointly and
solidarily liable with the corporation or partnership for the aforesaid claims and
damages.
Such liabilities shall continue during the entire period or duration of the
employment contract and shall not be affected by any substitution, amendment
or modification made locally or in a foreign country of the said contract.
xxxxxxxxx (Italics ours)
Thus, every applicant for license to operate a seafarers' manning agency shall, in the case of a
corporation or partnership, submit a written application together with, among others, a verified
undertaking by officers, directors and partners that they will be jointly and severally liable with
the company over claims arising from employer-employee relationship. 17 Laws are deemed
incorporated in employment contracts and the contracting parties need not repeat them. They
do not even have to be referred to. Every contract, thus, contains not only what has been
explicitly stipulated, but also the statutory provisions that have any bearing on the matter.
18aHSCcE
WHEREFORE, the petition is DENIED.
SO ORDERED.