In Re: SSS Exemption. Catholic Archbishop v. SSC
Judith Asiain & SSC
G.R. No. L-15045. January 20, 1961
Facts: In 1958, the Archbishop of Manila, filed with SSC a request that all religious and charitable
institutions, directly, indirectly, wholly, or partially operated by the rman Catholic of Manila be
exempted from compulsory coverage of RA No. 1161 or the Social Security Law of 1954.
The request was based on the claim that the said Act is a labor law and does not cover religious and
charitable institutions but is limited to businesses and activities organized for profit. SSC denied the
request stating that the Social Security Law provides that the coverage shall be compulsory upon all
employees between ages 16 and 60 years old if they have been employed for at least 6 months
provided the employer is in operation for at least 2 years.
Issue: Whether or not the Catholic Church is an employer liable under the Social Security Law.
Held: Yes, the petition was denied and SSC’s resolution was affirmed.
The coverage of the Social Security Law is predicated on the existence of an employer-employee
relationship of more or less permanent nature and extends to employment of all kinds except those
expressly excluded. The funds contributed to the System created by the Social Security Law are not
public funds, but funds belonging to the members which are merely held in trust by the
Government.
The term "employer" in the Social Security Law is sufficiently comprehensive as to include religious
and charitable institutions or entities not organized for profit within its meaning. This is evident by
the fact that it contains an exception in which said institutions or entities are not included.
The principle of ejusdem generis doesn’t apply here. This is evident by the fact that it contains an
exception in which said institutions or entities are not included. Had the Legislature intended to
limit the operation of the law to entities organized for profit or gain, it would not have defined an
"employer" in such a way as to include the Government and yet make an express exception
of it.
***in addition, the Supreme Court stated that, the Social Security Law is a legitimate exercise of the
police power of the State. It affords protection to labor, especially to working women and minors,
and is in full accord with the constitutional provisions on the "promotion of social justice to insure
the well being and economic security of all the people."
Pau Jokes:
Poblete Construction vs.
G.R. No. L-21448. August 30, 1967
Facts: Miguel Asiain was an employee of Poblete Construction from 1956 to 1959 (died in 1959)
with a monthly salary of P300. Upon his death his widow, Judith Asiain filed a petition before the
SSC against the company and its manager, Domingo Poblete to recover:
(1) P3,600.00 equivalent to one year's salary of the deceased;
(2) P600.00 representing his unpaid salary for two months;
(3) P288,00 "representing the cash received by respondents from their laborers as
contribution to the family of the deceased;
It appears that although Miguel had been employed since 1056 and had accomplished SSS Form E-
1, but refused to have his share deducted from his salary. Hence the company did not file the
employees SSS Form E-1, did not pay any contribution, and persistently maintained that the
deceased was not a member of the System.
Issue: Whether the Asiain a member of SSS? And the company is liable for the P3,600 award.
Held: Yes. The Supreme court affirmed SSC’s resolution.
There is no question that the deceased Miguel Asiain was subject to compulsory coverage in the
Social Security System. It was the duty of the employer to "report immediately to the System" his
name, age, civil status, occupation, salary and dependents.(Sec. 24) Compliance with this duty did
not depend upon the employee's willingness to give his share of the contribution. Section 24 is
mandatory, to such an extent that if the employee should die or become sick or disabled without
the report having been made by the employer, the latter is liable for an amount equivalent to the
benefits to which the employee would have been entitled had such report been made.
The collection of the employee's share is a duty imposed by law, and his unwillingness to have it
deducted from his salary does not excuse the employer's failure to make the report aforesaid. It is
precisely in this situation that the employer is liable, and there is no question as to the amount of
such liability in this case.
**It was also argued that SSC lacks jurisdiction because Judith refers to the liability as “damages”,
hence the case must be filed with the ordinary courts but according to the Supreme court, The term
"claims" is broad enough to include a claim for "damages" under Section 24. Otherwise an employer
could nullify the jurisdiction of the Commission by the simple expedient of not making a report
as required by said Section.
Ben Sta. Rita vs. CA and SSS
G.R. No. 119891. August 21, 1995
Facts: Ben Sta. Rita was charged with violating the Social Secuirty Law for willfully and unlawfully
fail, neglect and refuse to remit to SSS contributions for SSS, Medicare and Employees
Compensation the Filipino seafarers recruited by B. Sta. Rita Co. and deployed on board foreign
vessels outside the Philippines.
A Memorandum of Agreement was entered into by the DOLE and the SSS in effect amending the
aforequoted provision of R.A. No. 1161 by expanding its coverage.
Sta. Rita moved to dismiss the criminal case because it doesn’t constitute an offense thus, RTC has
no jurisdiction. RTC sustained the motion and dismissed the case. Hence, the Solicitor General filed
a petition for certiorari in the CA who remanded the case back to RTC.
The petitioner alleges that the Filipino seafarers recruited by B. Sta. Rita Co. and deployed on board
foreign vessels outside the Philippines are exempt from the coverage of R.A. No. 1161 under Section
8 and the MOA between DOLE and SSS is null and void.
Issue: Whether or not the Filipino Seafarer are covered or not by the Social Security Law.
Held: Yes.
The Court finds no merit in petitioner's contention that the Social Security Law, as amended,
absolutely exempts Filipino seafarers on board foreign vessels from the coverage of the SSS statute.
It simply defines the term "employment" and does not in any way relate to the scope of coverage
of the Social Security System.
Therefore the agreement between SSS and DOLE is not null and void it only define the coverage of
the Social Security Law on seafarers and does not in any way amend the law. In other words, the
extension of the coverage of the Social Security System to Filipino seafarers arises by virtue of the
assent given in the contract of employment signed by employer and seafarer; that same contract
binds petitioner Sta. Rita or B. Sta. Rita Company, who is solidarily liable with the foreign
shipowners/employers. It may be noted that foreign shipowners and manning agencies had
generally expressed their conformity to the inclusion of Filipino seafarers within the coverage of the
Social Security Act even prior to the signing of the DOLE-SSS Memorandum of Agreement.
Pau Jokes:
SSS vs Teresita Jarque vda de Bailon
G.R. No. 165545, March 24, 2006
Facts: In 1955 Clemente Bailon and Alice Diaz married in Barcelona, Sorsogon. 15+ years later,
Clemente filed an action to declare the presumptive death of Alice she being an absentee. The
petition was granted in 1970. In 1983, Clemente married Jarque. The two live together untile
Clemente’s death in 1998. Jarque then sought to claim her husband’s SSS benefits and the same
were granted her.
On the other hand, a certain Cecilia Baion-Yap who claimed that she is the daughter of Bailon to a
certain Elisa Jayona petitioned before the SSS that they be given the reimbursement for the funeral
spending for it was actually them who shouldered the burial expenses of Clemente. They further
claim that Clemente contracted three marriages; one with Alice, another with Elisa and the other
with Jarque. Cecilia also averred that Alice is alive and kicking and Alice subsequently emerged;
Cecilia claimed that Clemente obtained the declaration of Alice’s presumptive death in bad faith for
he was aware of the whereabouts of Alice or if not he could have easily located her in her parent’s
place. She was in Sorsogon all along in her parents’ place. She went there upon learning that
Clemente had been having extra-marital affairs.
SSS then ruled that Jarque should reimburse what had been granted her and to return the same to
Cecilia since she shouldered the burial expenses and that the benefits should go to Alice because
her reappearance had terminated Clemente’s marriage with Harque. Further, SSS ruled that the
RTC’s decision in declaring Alice to be presumptively death is erroneous. Teresita appealed the
decision of the SSS before the Social Security Comission and the SSC affirmed SSS. The CA however
ruled the contrary.
ISSUE: Whether or not the mere appearance of the absent spouse declared presumptively dead
automatically terminates the subsequent marriage.
Held: There is no previous marriage to restore for it is terminated upon Clemente’s death. Likewise
there is no subsequent marriage to terminate for the same is terminated upon Clemente’s death.
SSS is correct in ruling that it is futile for Alice to pursue the recording of her reappearance before
the local civil registrar through an affidavit or a court action. But it is not correct for the SSS to rule
upon the declaration made by the RTC. The SSC or the SSS has no judicial power to review the
decision of the RTC. SSS is indeed empowered to determine as to who should be the rightful
beneficiary of the benefits obtained by a deceased member in case of disputes but such power does
not include the appellate power to review a court decision or declaration. In the case at bar, the
RTC ruling is binding and Jarque’s marriage to Clemente is still valid because no affidavit was filed
by Alice to make known her reappearance legally. Alice reappeared only after Clemente’s death and
in this case she can no longer file such an affidavit; in this case the bad faith [or good faith] of
Clemente can no longer be raised – the marriage herein is considered voidable and must be
attacked directly not collaterally – it is however impossible for a direct attack since there is no longer
a marriage to be attacked for the same has been terminated upon Clemente’s death.
DYCAICO v. SSS & SSC
G.R. No. 161357, Nov. 30, 2005
FACTS:
 Bonifacio Dycaico became a member of the SSS on Jan 24, 1980. In his self-employed data
record, he named Elena Dycaico and their 8 children as his beneficiaries. At that time,
Bonifacio and Elena lived together as husband and wife without the benefit of marriage.
 In June 1989, Bonifacio was considered retired and began receiving his pension from SSS
until he passed away on June 19, 1997. A few months prior to his death, Bonifacio married
Elena.
 Shortly after Bonifacio's death, Elena filed with SSS an application for survivor's pension.
Her application was denied on the ground that under Section 12-B(d) of RA No. 8282 or
the Social Security Law she could not be considered a primary beneficiary of Bonifacio as
of the date of his retirement. (They were married after his retirement date)
 On July 9, 2001, Elena filed with the SSC a petition alleging that Bonifacio designated her
and their children as primary beneficiaries in his SSS Form RS-1 and that it was not
indicated therein that only legitimate family members could be made beneficiaries.
Section 12-B(d) of RA No. 8282 does not, likewise, require that the primary beneficiaries
be legitimate relatives of the member to be entitled to the survivor's pension.
 On February 6, 2002, the SSC affirmed the denial of the Elena's claim.
 Aggrieved, the petitioner filed with the CA a petition for review of the SSC's February 6,
2002 Resolution.
 The Appellate Court dismissed the petition, the CA declared that since the petitioner was
merely the common-law wife of Bonifacio at the time of his retirement in 1989, his
designation of Elena as one of his beneficiaries in the SSS Form RS-1 in 1980 is void.
Hence, this petition.
ISSUE:
whether or not the proviso "as of the date of his retirement" in Section 12-B(d) of Rep. Act No. 8282
violates the equal protection and due process clauses of the Constitution and;
Whether or not Petitioner could be considered as Bonifacio's primary beneficiary
Pau Jokes:
RULING:
The Court holds that the proviso "as of the date of his retirement" in Section 12-B(d) of RA No. 8282,
which qualifies the term "primary beneficiaries," is unconstitutional for it violates the due process
and equal protection clauses of the Constitution.
As illustrated by the petitioner's case, the proviso "as of the date of his retirement" in Section 12-
B(d) of Rep. Act No. 8282 which qualifies the term "primary beneficiaries" results in the classi3cation
of dependent spouses as primary beneficiaries into two groups:
(1) Those dependent spouses whose respective marriages to SSS members
were contracted prior to the latter's retirement; and
(2) Those dependent spouses whose respective marriages to SSS members were contracted after
the latter's retirement.
Underlying these two classifications of dependent spouses is that their respective marriages are
valid. In other words, both groups are legitimate or legal spouses. The distinction between them
lies solely on the date the marriage was contracted. The petitioner belongs to the second group of
dependent spouses, i.e., her marriage to Bonifacio was contracted after his retirement. As such,
she and those similarly situated do not qualify as "primary beneficiaries" under Section 12-B(d)
of Rep. Act No. 8282 and, therefore, are not entitled to survivor's pension under the same
provision by reason of the subject proviso.
In any case, the issue that now confronts the Court involves a dependent spouse who claims to have
been unjustly deprived of her survivor's pension under Section 12-B(d) of Rep. Act No. 8282. Hence,
the subsequent discussion will focus on the resultant classification of the dependent spouses as
primary beneficiaries under the said provision.
In the petitioner's case, for example, she asserted that when she and Bonifacio got married in 1997,
it was merely to legalize their relationship and not to commit fraud. This claim is quite believable.
After all, they had been living together since 1980 and, in fact, during that time their eldest child
was already twenty-four (24) years old. However, the petitioner was not given any opportunity to
prove her claim that she was Bonifacio's bonafide legal spouse as she was automatically disquali3ed
from being considered as his primary beneficiary. In effect, the petitioner was deprived of the
survivor's benefits, a property interest, accruing from the death of Bonifacio without any
opportunity to be heard.
Standards of due process require that the petitioner be allowed to present evidence to prove that
her marriage to Bonifacio was contracted in good faith and as his bonafide spouse she is entitled to
the survivor's pension accruing upon his death. Hence, the proviso "as of the date of his retirement"
in Section 12-B(d) which deprives the petitioner and those similarly situated dependent spouses of
retired SSS members this opportunity to be heard must be struck down.

Finally, the Court concedes that the petitioner did not raise the issue of the validity of the proviso
"as of the date of his retirement" in Section 12-B(d) of Rep. Act No. 8282. The rule is that the Court
does not decide questions of a constitutional nature unless absolutely necessary to a decision of
the case. 29 However, the question of the constitutionality of the proviso is absolutely necessary
for the proper resolution of the present case. Accordingly, the Court required the parties to present
their arguments on this issue and proceeded to pass upon the same in the exercise of its equity
jurisdiction and in order to render substantial justice to the petitioner who, presumably in her
advanced age by now, deserves to receive forthwith the survivor's pension accruing upon the death
of her husband.
WHEREFORE, the petition is GRANTED.
The proviso "as of the date of his retirement" in Section 12-B(d) of Rep. Act No. 8282 is declared
VOID for being contrary to the due process and equal protection clauses of the Constitution. The
Social Security System cannot deny the claim of petitioner Elena P. Dycaico for survivor's pension
on the basis of this invalid proviso.
REPUBLIC (SSS/SSC) V. ASIAPRO COOPERATIVE
G.R. No. 172101, Nov. 23, 2007
FACTS:
 Respondent Asiapro, as a cooperative, is composed of owners-members. Under its by-
laws, owners-members are either regular member or associate member.
 Its primary objectives are to provide savings and credit facilities and to develop other
livelihood services for its owners-members. In the discharge of its objectives, Asiapro
entered into several Service Contracts with Stanfilco (a division of DOLE Phil.,Inc.).
 The owners-members do not receive compensation instead they receive a share in the
service surplus, such as the income derived from the said Service Contracts with Stanfilco.
 In order to enjoy the benefits under the Social Security Law of 1997, the owners-members
requested the services of Stanfilco to register them with SSS as self-employed and to remit
their contributions as such.
 Also, the SSS contributions of the said owners-members were equal to the share of both
the employer and the employee.
 On 26 September 2002, SSS sent a letter to Asiapro informing the latter that based on the
Service Contract it executed with Stanfilco, Asiapro is actually a manpower contractor
supplying employees to Stanfilco and for that reason, it is an employer of its owners-
members working with Stanfilco.
Pau Jokes:
 Thus, Asiapro should register itself with SSS as an employer and make the corresponding
report and remittance of premium contributions in accordance with Social Security Law of
1997.
 On 9 October 2002, Asiapro replied to SSS asserting that it is not an employer because its
owners-members are the cooperative itself; hence, it cannot be its own employer.
 Again, on 21 October 2002, SSS sent a letter to Asiapro ordering the latter to register as an
employer and report its owners-members as employees for compulsory coverage with SSS.
Asiapro continuously ignored the demand of SSS.
 Accordingly, SSS, on 12 June 2003, filed a petition before SSC against Asiapro and Stanfilco
praying that Asiapro or Stanfilco be directed to register as an employer and to report
Asiapro's owners-members as covered employees and to remit contributions; Asiapro filed
an Answer with Motion to Dismiss alleging that no employer-employee relationship exists
thus SSC has no jurisdiction over Asiapro; Stanfilco, on the other hand, filed an Answer with
Cross-Claim against Asiapro.
 On 17 Feb 2004, SSC issued an order denying the motion to dismiss filed by Asiapro.
Asiapro moved for the reconsideration but was denied.
 Asiapro filed a Motion for Extension of Time to File a Petition for Review before the Court
of Appeals. Then, Asiapro filed a Peitition for Certiorari before the CA.
 On 5 Jan 2006, CA rendered a decision granting the petition of Asiapro.
 Aggrieved by the decision, SSS moved for a reconsideration but it was denied by the CA.
Hence, this petition.
ISSUE:
Whether or not there is an employer-employee relationship between Asiapro and its owners-
members
RULING:
In determining the existence of an employer-employee relationship, the following elements are
considered: (1) the selection and engagement of the workers; (2) the payment of wages by
whatever means; (3) the power of dismissal; and (4) the power to control the worker's conduct,
with the latter assuming primacy in the overall consideration. The most important element is the
employer's control of the employee's conduct, not only as to the result of the work to be done, but
also as to the means and methods to accomplish. The power of control refers to the existence of
the power and not necessarily to the actual exercise thereof. It is not essential for the employer to
actually supervise the performance of duties of the employee; it is enough that the employer has
the right to wield that power. All the aforesaid elements are present in this case.
First. It is expressly provided in the Service Contracts that it is the respondent cooperative which
has the exclusive discretion in the selection and engagement of the owners-members as well as its
team leaders who will be assigned at Stanfilco.
Second. Wages are defined as "remuneration or earnings, however designated, capable of being
expressed in terms of money, whether fixed or ascertained, on a time, task, piece or commission
basis, or other method of calculating the same, which is payable by an employer to an employee
under a written or unwritten contract of employment for work done or to be done, or for service
rendered or to be rendered."
In this case, the weekly stipends or the so-called shares in the service surplus given by the
respondent cooperative to its owners-members were in reality wages, as the same were equivalent
to an amount not lower than that prescribed by existing labor laws, rules and regulations, including
the wage order applicable to the area and industry; or the same shall not be lower than the
prevailing rates of wages. It cannot be doubted then that those stipends or shares in the service
surplus are indeed wages, because these are given to the owners-members as compensation in
rendering services to Stanfilco.
Third. It is also stated in the above-mentioned Service Contracts that it is the respondent
cooperative which has the power to investigate, discipline and remove the owners-members and
its team leaders who were rendering services at Stanfilco.
Fourth. As earlier opined, of the four elements of the employer-employee relationship, the "control
test" is the most important. In the case at bar, it is the respondent cooperative which has the sole
control over the manner and means of performing the services under the Service Contracts with
Stanfilco as well as the means and methods of work. Also, the respondent cooperative is solely and
entirely responsible for its owners-members, team leaders and other representatives at Stanfilco.
33 All these clearly prove that, indeed, there is an employer-employee relationship between the
respondent cooperative and its owners-members.
It is true that the Service Contracts executed between the Asiapro and Stanfilco expressly provide
that there shall be no employer-employee relationship between the respondent cooperative and
its owners-members. This Court, however, cannot give the said provision force and effect.
As previously pointed out by this Court, an employee-employer relationship actually exists between
the respondent cooperative and its owners-members. The four elements in the four-fold test for
the existence of an employment relationship have been complied with. The respondent cooperative
must not be allowed to deny its employment relationship with its owners-members by invoking the
questionable Service Contracts provision, when in actuality, it does exist. The existence of an
employer-employee relationship cannot be negated by expressly repudiating it in a contract, when
the terms and surrounding circumstances show otherwise. The employment status of a person is
Pau Jokes:
defined and prescribed by law and not by what the parties say it should be. It is settled that the
contracting parties may establish such stipulations, clauses, terms and conditions as they want, and
their agreement would have the force of law between them. However, the agreed terms and
conditions must not be contrary to law, morals, customs, public policy or public order. The Service
Contract provision in question must be struck down for being contrary to law and public policy since
it is apparently being used by the respondent cooperative merely to circumvent the compulsory
coverage of its employees, who are also its owners-members, by the Social Security Law.
In sum, having declared that there is an employer-employee relationship between the respondent
cooperative and its owners-member, we conclude that the petitioner SSC has jurisdiction over the
petition-complaint filed before it by the petitioner SSS. This being our conclusion, it is no longer
necessary to discuss the issue of whether the respondent cooperative was estopped from assailing
the jurisdiction of the petitioner SSC when it filed its Answer with Motion to Dismiss.
EDUARDO BUGHAW, JR. vs. TREASURE ISLAND INDUSTRIAL CORPORATION
G.R. No. 173151, march 28, 2008
Facts: Sometime in March 1986, petitioner was employed as production worker by respondent.
Respondent was receiving information that many of its employees were using prohibited drugs
during working hours and within the company premises.
On 5 June 2001, one of its employees, Erlito Loberanes (Loberanes) was caught in Bagrante delicto
by the police officers while in possession of shabu. Loberanes was arrested and sent to jail. He
implicated petitioner in the crime by claiming that part of the money used for buying the illegal
drugs was given by the latter, and the illegal drugs purchased were for their consumption for the
rest of the month.
On 29 June 2001, served a Memo for Explanation to petitioner requiring him to explain within 120
hours why no disciplinary action should be imposed against him for his alleged involvement in illegal
drug activities. For the meantime, petitioner was placed under preventive suspension for the period
of 30 days effective upon receipt of the Notice.
Notwithstanding said Memo, petitioner failed to appear. On 19 July 2001, respondent sent a second
letter to petitioner directing him to attend another administrative hearing scheduled on 23 July
2001 but petitioner once again failed to show up.
Consequently, respondent, in a third letter 8 dated 21 August 2001 addressed to petitioner,
terminated the latter's employment retroactive to 11 June 2001 for using illegal drugs within
company premises during working hours, and for refusal to attend the administrative hearing and
submit written explanation on the charges hurled against him.
On 20 July 2001, petitioner filed a complaint for illegal dismissal against respondent and its
President, Emmanuel Ong, before the Labor Arbiter.
The Labor Arbiter and the NLRC both ruled that petitioner was illegally dismissed from employment
and ordered the payment of his unpaid wages, backwages, and separation pay.
Court of Appeals reversed the Decisions of the Labor Arbiter and NLRC on the grounds of patent
misappreciation of evidence and misapplication of law. The appellate court found that petitioner
was afforded the opportunity to explain and defend himself from the accusations against him when
respondents gave him notices of hearing, but petitioner repeatedly ignored them, opting instead to
6le an illegal dismissal case against respondent before the Labor Arbiter.
Issue: WHETHER OR NOT PETITIONER WAS ILLEGALLY DISMISSED FROM EMPLOYMENT.
Held: No. Under the Labor Code, the requirements for the lawful dismissal of an employee are two-
fold, the substantive and the procedural aspects. Not only must the dismissal be for a just or
authorized cause, the rudimentary requirements of due process — notice and hearing — must,
likewise, be observed before an employee may be dismissed.
Hence, the two (2) facets of a valid termination of employment are: (a) the legality of the act of
dismissal, i.e., the dismissal must be under any of the just causes provided under Article 282 of the
Labor Code; and (b) the legality of the manner of dismissal, which means that there must be
observance of the requirements of due process, otherwise known as the two-notice rule. Article
282 of the Labor Code enumerates the just causes for terminating the services of an employee: ART.
282. Termination by employer. — An employer may terminate an employment for any of the
following causes:
(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer
or representative in connection with his work;
Pau Jokes:
(b) Gross and habitual neglect by the employee of his duties;
(c) Fraud or willful breach by the employee of the trust reposed in him by his employer or his duly
authorized representative;
(d) Commission of a crime or offense by the employee against the person of his employer or any
immediate member of his family or his duly authorized representative; and
(e) Other causes analogous to the foregoing.
The charge of drug abuse inside the company's premises and during working hours against
petitioner constitutes serious misconduct, which is one of the just causes for termination. However,
respondent failed to present clear and unmistakable proof that petitioner was duly served a copy
of the notice of termination but he refused receipt.
Where the dismissal is for just cause, as in the instant case, the lack of statutory due process should
not nullify the dismissal or render it illegal or ineffectual. However, the employer should indemnify
the employee for the violation of his right to procedural due process.
JEFFREY NACAGUE vs. SULPICIO LINES, INC.,
G.R. No. 172589, August 8, 2010
Facts: On 15 June 1995, respondent Sulpicio Lines, Inc. (Sulpicio Lines) hired Nacague as "hepe de
viaje" or the representative of Sulpicio Lines
Sulpicio Lines received an anonymous letter reporting the use of illegal drugs on board the ship. On
14 February 2003, a housekeeper on the ship, submitted a report regarding the drug paraphernalia
found inside the Mopalla Suite Room and the threat on his life made by Nacague and Chief Mate
Reynaldo Doroon after he found the drug paraphernalia. 8 On 15 February 2003, Sulpicio Lines sent
a notice of investigation to Nacague informing him of the charges against him for use of illegal drugs
and threatening a co-employee.
Some crew members of the ship, together with Nacague, were subjected to a random drug test.
They were taken to S.M. Lazo Medical Clinic (S.M. Lazo Clinic) and were required to submit urine
samples. The result of the random drug test revealed that Nacague was positive for
methamphetamine hydrochloride or shabu.
On 20 February 2003, Sulpicio Lines subjected Nacague to a formal investigation. Nacague denied
using illegal drugs. 11 On 23 February 2003, Nacague went to Chong Hua Hospital in Cebu City to
undergo a voluntary drug test. The drug test with Chong Hua Hospital yielded a negative result. 12
Nacague submitted this test result to Sulpicio Lines. However, on 7 March 2003, Sulpicio Lines sent
a memorandum to Nacague terminating him from the service.
Nacague Filed a complaint for illegal suspension, illegal dismissal and for reinstatement with
backwages. On 12 November 2003, Labor Arbiter Ernesto F. Carreon rendered a decision in favor of
Nacague and declared that Sulpicio Lines illegally dismissed Nacague.
The Labor Arbiter agreed with Nacague that the drug test result from S.M. Lazo Clinic was
questionable because the clinic is not accredited by the Dangerous Drug Board and not under its
supervision. The Labor Arbiter gave more weight to the drug test performed by Chong Hua Hospital
because it was accredited by the Dangerous Drug Board.
Sulpicio Lines appealed to the NLRC. In its 21 March 2005 Decision, the NLRC reversed the Labor
Arbiter's decision and dismissed Nacague's complaint for lack of merit. According to the NLRC, since
Nacague, who was performing a task involving trust and confidence, was found positive for using
illegal drugs, he was guilty of serious misconduct and loss of trust and confidence.
Nacague =led a petition for certiorari with the Court of Appeals. According to the Court of Appeals,
Sulpicio Lines complied with both the procedural and substantive requirements of the law when it
terminated the employment of Nacague.
laboratories or by any of the drug testing laboratories accredited and monitored by the DOH to
safeguard the quality of test results. The DOH shall take steps in setting the price of the drug test
with DOH accredited drug testing centers to further reduce the cost of such drug test. The drug
testing shall employ, among others, two (2) testing methods, the screening test which will
determine the positive result as well as the type of drug used and the confirmatory test which will
confirm a positive screening test. . . . (Emphasis supplied). Department Order No. 53-03 further
provides: Drug Testing Program for Officers and Employees iii. Drug testing shall conform with the
procedures as prescribed by the Department of Health (DOH). Only drug testing centers accredited
by the DOH shall be utilized. A list of accredited centers may be accessed through the OSHC. iv. Drug
testing shall consist of both the screening test and the confirmatory test; the latter to be carried
out should the screening test turn positive. The employee concerned must be informed of the test
results whether positive or negative.
The law is clear that drug tests shall be performed only by authorized drug testing centers. In this
case, Sulpicio Lines failed to prove that S.M. Lazo Clinic is an accredited drug testing center
only a screening test was conducted to determine if Nacague was guilty of using illegal drugs.
Sulpicio Lines did not confirm the positive result of the screening test with a confirmatory test.
The court agrees with the Labor Arbiter that Nacague's reinstatement is no longer feasible due to
strained relations between Nacague and Sulpicio Lines and that Nacague should instead be granted
separation pay.

Issue: Whether or not the Court of Appeals erred in ruling that his termination from employment
was valid.

Held: Yes. The court finds that Sulpicio Lines failed to clearly show that Nacague was guilty of using
illegal drugs. We agree with the Labor Arbiter that the lack of accreditation of S.M. Lazo Clinic made
its drug test results doubtful. Section 36 of R.A. No. 9165 provides that drug tests shall be performed
only by authorized drug testing centers. Moreover, Section 36 also prescribes that drug testing shall
consist of both the screening test and the confirmatory test. Section 36 of R.A. No. 9165 reads: SEC.
36. Authorized Drug Testing. — Authorized drug testing shall be done by any government forensic

Pau Jokes: