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In Re: SSS Exemption. Catholic Archbishop v. SSC Poblete Construction vs.

Judith Asiain & SSC


G.R. No. L-15045. January 20, 1961 G.R. No. L-21448. August 30, 1967

Facts: In 1958, the Archbishop of Manila, filed with SSC a request that all religious and charitable Facts: Miguel Asiain was an employee of Poblete Construction from 1956 to 1959 (died in 1959)
institutions, directly, indirectly, wholly, or partially operated by the rman Catholic of Manila be with a monthly salary of P300. Upon his death his widow, Judith Asiain filed a petition before the
exempted from compulsory coverage of RA No. 1161 or the Social Security Law of 1954. SSC against the company and its manager, Domingo Poblete to recover:
(1) P3,600.00 equivalent to one year's salary of the deceased;
The request was based on the claim that the said Act is a labor law and does not cover religious and (2) P600.00 representing his unpaid salary for two months;
charitable institutions but is limited to businesses and activities organized for profit. SSC denied the (3) P288,00 "representing the cash received by respondents from their laborers as
request stating that the Social Security Law provides that the coverage shall be compulsory upon all contribution to the family of the deceased;
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. 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
Issue: Whether or not the Catholic Church is an employer liable under the Social Security Law. employees SSS Form E-1, did not pay any contribution, and persistently maintained that the
deceased was not a member of the System.
Held: Yes, the petition was denied and SSC’s resolution was affirmed.
Issue: Whether the Asiain a member of SSS? And the company is liable for the P3,600 award.
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 Held: Yes. The Supreme court affirmed SSC’s resolution.
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 There is no question that the deceased Miguel Asiain was subject to compulsory coverage in the
Government. 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
The term "employer" in the Social Security Law is sufficiently comprehensive as to include religious not depend upon the employee's willingness to give his share of the contribution. Section 24 is
and charitable institutions or entities not organized for profit within its meaning. This is evident by mandatory, to such an extent that if the employee should die or become sick or disabled without
the fact that it contains an exception in which said institutions or entities are not included. 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 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 The collection of the employee's share is a duty imposed by law, and his unwillingness to have it
limit the operation of the law to entities organized for profit or gain, it would not have defined an deducted from his salary does not excuse the employer's failure to make the report aforesaid. It is
"employer" in such a way as to include the Government and yet make an express exception precisely in this situation that the employer is liable, and there is no question as to the amount of
of it. such liability in this case.

***in addition, the Supreme Court stated that, the Social Security Law is a legitimate exercise of the **It was also argued that SSC lacks jurisdiction because Judith refers to the liability as “damages”,
police power of the State. It affords protection to labor, especially to working women and minors, hence the case must be filed with the ordinary courts but according to the Supreme court, The term
and is in full accord with the constitutional provisions on the "promotion of social justice to insure "claims" is broad enough to include a claim for "damages" under Section 24. Otherwise an employer
the well being and economic security of all the people." could nullify the jurisdiction of the Commission by the simple expedient of not making a report
as required by said Section.

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Ben Sta. Rita vs. CA and SSS SSS vs Teresita Jarque vda de Bailon
G.R. No. 119891. August 21, 1995 G.R. No. 165545, March 24, 2006

Facts: Ben Sta. Rita was charged with violating the Social Secuirty Law for willfully and unlawfully Facts: In 1955 Clemente Bailon and Alice Diaz married in Barcelona, Sorsogon. 15+ years later,
fail, neglect and refuse to remit to SSS contributions for SSS, Medicare and Employees Clemente filed an action to declare the presumptive death of Alice she being an absentee. The
Compensation the Filipino seafarers recruited by B. Sta. Rita Co. and deployed on board foreign petition was granted in 1970. In 1983, Clemente married Jarque. The two live together untile
vessels outside the Philippines. Clemente’s death in 1998. Jarque then sought to claim her husband’s SSS benefits and the same
were granted her.
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. 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
Sta. Rita moved to dismiss the criminal case because it doesn’t constitute an offense thus, RTC has spending for it was actually them who shouldered the burial expenses of Clemente. They further
no jurisdiction. RTC sustained the motion and dismissed the case. Hence, the Solicitor General filed claim that Clemente contracted three marriages; one with Alice, another with Elisa and the other
a petition for certiorari in the CA who remanded the case back to RTC. 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
The petitioner alleges that the Filipino seafarers recruited by B. Sta. Rita Co. and deployed on board he was aware of the whereabouts of Alice or if not he could have easily located her in her parent’s
foreign vessels outside the Philippines are exempt from the coverage of R.A. No. 1161 under Section place. She was in Sorsogon all along in her parents’ place. She went there upon learning that
8 and the MOA between DOLE and SSS is null and void. Clemente had been having extra-marital affairs.

Issue: Whether or not the Filipino Seafarer are covered or not by the Social Security Law. 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
Held: Yes. 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
The Court finds no merit in petitioner's contention that the Social Security Law, as amended, decision of the SSS before the Social Security Comission and the SSC affirmed SSS. The CA however
absolutely exempts Filipino seafarers on board foreign vessels from the coverage of the SSS statute. ruled the contrary.
It simply defines the term "employment" and does not in any way relate to the scope of coverage
of the Social Security System. ISSUE: Whether or not the mere appearance of the absent spouse declared presumptively dead
automatically terminates the subsequent marriage.
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 Held: There is no previous marriage to restore for it is terminated upon Clemente’s death. Likewise
extension of the coverage of the Social Security System to Filipino seafarers arises by virtue of the there is no subsequent marriage to terminate for the same is terminated upon Clemente’s death.
assent given in the contract of employment signed by employer and seafarer; that same contract SSS is correct in ruling that it is futile for Alice to pursue the recording of her reappearance before
binds petitioner Sta. Rita or B. Sta. Rita Company, who is solidarily liable with the foreign the local civil registrar through an affidavit or a court action. But it is not correct for the SSS to rule
shipowners/employers. It may be noted that foreign shipowners and manning agencies had upon the declaration made by the RTC. The SSC or the SSS has no judicial power to review the
generally expressed their conformity to the inclusion of Filipino seafarers within the coverage of the decision of the RTC. SSS is indeed empowered to determine as to who should be the rightful
Social Security Act even prior to the signing of the DOLE-SSS Memorandum of Agreement. 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

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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 RULING:
Clemente can no longer be raised – the marriage herein is considered voidable and must be The Court holds that the proviso "as of the date of his retirement" in Section 12-B(d) of RA No. 8282,
attacked directly not collaterally – it is however impossible for a direct attack since there is no longer which qualifies the term "primary beneficiaries," is unconstitutional for it violates the due process
a marriage to be attacked for the same has been terminated upon Clemente’s death. and equal protection clauses of the Constitution.

DYCAICO v. SSS & SSC As illustrated by the petitioner's case, the proviso "as of the date of his retirement" in Section 12-
G.R. No. 161357, Nov. 30, 2005 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:
FACTS: (1) Those dependent spouses whose respective marriages to SSS members
 Bonifacio Dycaico became a member of the SSS on Jan 24, 1980. In his self-employed data were contracted prior to the latter's retirement; and
record, he named Elena Dycaico and their 8 children as his beneficiaries. At that time, (2) Those dependent spouses whose respective marriages to SSS members were contracted after
Bonifacio and Elena lived together as husband and wife without the benefit of marriage. the latter's retirement.
 In June 1989, Bonifacio was considered retired and began receiving his pension from SSS Underlying these two classifications of dependent spouses is that their respective marriages are
until he passed away on June 19, 1997. A few months prior to his death, Bonifacio married valid. In other words, both groups are legitimate or legal spouses. The distinction between them
Elena. lies solely on the date the marriage was contracted. The petitioner belongs to the second group of
 Shortly after Bonifacio's death, Elena filed with SSS an application for survivor's pension. dependent spouses, i.e., her marriage to Bonifacio was contracted after his retirement. As such,
Her application was denied on the ground that under Section 12-B(d) of RA No. 8282 or she and those similarly situated do not qualify as "primary beneficiaries" under Section 12-B(d)
the Social Security Law she could not be considered a primary beneficiary of Bonifacio as of Rep. Act No. 8282 and, therefore, are not entitled to survivor's pension under the same
of the date of his retirement. (They were married after his retirement date) provision by reason of the subject proviso.
 On July 9, 2001, Elena filed with the SSC a petition alleging that Bonifacio designated her In any case, the issue that now confronts the Court involves a dependent spouse who claims to have
and their children as primary beneficiaries in his SSS Form RS-1 and that it was not been unjustly deprived of her survivor's pension under Section 12-B(d) of Rep. Act No. 8282. Hence,
indicated therein that only legitimate family members could be made beneficiaries. the subsequent discussion will focus on the resultant classification of the dependent spouses as
Section 12-B(d) of RA No. 8282 does not, likewise, require that the primary beneficiaries primary beneficiaries under the said provision.
be legitimate relatives of the member to be entitled to the survivor's pension. In the petitioner's case, for example, she asserted that when she and Bonifacio got married in 1997,
 On February 6, 2002, the SSC affirmed the denial of the Elena's claim. it was merely to legalize their relationship and not to commit fraud. This claim is quite believable.
 Aggrieved, the petitioner filed with the CA a petition for review of the SSC's February 6, After all, they had been living together since 1980 and, in fact, during that time their eldest child
2002 Resolution. was already twenty-four (24) years old. However, the petitioner was not given any opportunity to
 The Appellate Court dismissed the petition, the CA declared that since the petitioner was prove her claim that she was Bonifacio's bonafide legal spouse as she was automatically disquali3ed
merely the common-law wife of Bonifacio at the time of his retirement in 1989, his from being considered as his primary beneficiary. In effect, the petitioner was deprived of the
designation of Elena as one of his beneficiaries in the SSS Form RS-1 in 1980 is void. survivor's benefits, a property interest, accruing from the death of Bonifacio without any
Hence, this petition. opportunity to be heard.

ISSUE: Standards of due process require that the petitioner be allowed to present evidence to prove that
whether or not the proviso "as of the date of his retirement" in Section 12-B(d) of Rep. Act No. 8282 her marriage to Bonifacio was contracted in good faith and as his bonafide spouse she is entitled to
violates the equal protection and due process clauses of the Constitution and; the survivor's pension accruing upon his death. Hence, the proviso "as of the date of his retirement"
Whether or not Petitioner could be considered as Bonifacio's primary beneficiary 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.

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 Thus, Asiapro should register itself with SSS as an employer and make the corresponding
Finally, the Court concedes that the petitioner did not raise the issue of the validity of the proviso report and remittance of premium contributions in accordance with Social Security Law of
"as of the date of his retirement" in Section 12-B(d) of Rep. Act No. 8282. The rule is that the Court 1997.
does not decide questions of a constitutional nature unless absolutely necessary to a decision of  On 9 October 2002, Asiapro replied to SSS asserting that it is not an employer because its
the case. 29 However, the question of the constitutionality of the proviso is absolutely necessary owners-members are the cooperative itself; hence, it cannot be its own employer.
for the proper resolution of the present case. Accordingly, the Court required the parties to present  Again, on 21 October 2002, SSS sent a letter to Asiapro ordering the latter to register as an
their arguments on this issue and proceeded to pass upon the same in the exercise of its equity employer and report its owners-members as employees for compulsory coverage with SSS.
jurisdiction and in order to render substantial justice to the petitioner who, presumably in her Asiapro continuously ignored the demand of SSS.
advanced age by now, deserves to receive forthwith the survivor's pension accruing upon the death  Accordingly, SSS, on 12 June 2003, filed a petition before SSC against Asiapro and Stanfilco
of her husband. 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
WHEREFORE, the petition is GRANTED. an Answer with Motion to Dismiss alleging that no employer-employee relationship exists
The proviso "as of the date of his retirement" in Section 12-B(d) of Rep. Act No. 8282 is declared thus SSC has no jurisdiction over Asiapro; Stanfilco, on the other hand, filed an Answer with
VOID for being contrary to the due process and equal protection clauses of the Constitution. The Cross-Claim against Asiapro.
Social Security System cannot deny the claim of petitioner Elena P. Dycaico for survivor's pension  On 17 Feb 2004, SSC issued an order denying the motion to dismiss filed by Asiapro.
on the basis of this invalid proviso. 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.
REPUBLIC (SSS/SSC) V. ASIAPRO COOPERATIVE  On 5 Jan 2006, CA rendered a decision granting the petition of Asiapro.
G.R. No. 172101, Nov. 23, 2007  Aggrieved by the decision, SSS moved for a reconsideration but it was denied by the CA.

FACTS: Hence, this petition.


 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 ISSUE:
livelihood services for its owners-members. In the discharge of its objectives, Asiapro Whether or not there is an employer-employee relationship between Asiapro and its owners-
entered into several Service Contracts with Stanfilco (a division of DOLE Phil.,Inc.). members
 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. RULING:
 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 In determining the existence of an employer-employee relationship, the following elements are
their contributions as such. considered: (1) the selection and engagement of the workers; (2) the payment of wages by
 Also, the SSS contributions of the said owners-members were equal to the share of both whatever means; (3) the power of dismissal; and (4) the power to control the worker's conduct,
the employer and the employee. with the latter assuming primacy in the overall consideration. The most important element is the
 On 26 September 2002, SSS sent a letter to Asiapro informing the latter that based on the employer's control of the employee's conduct, not only as to the result of the work to be done, but
Service Contract it executed with Stanfilco, Asiapro is actually a manpower contractor also as to the means and methods to accomplish. The power of control refers to the existence of
supplying employees to Stanfilco and for that reason, it is an employer of its owners- the power and not necessarily to the actual exercise thereof. It is not essential for the employer to
members working with Stanfilco.

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actually supervise the performance of duties of the employee; it is enough that the employer has defined and prescribed by law and not by what the parties say it should be. It is settled that the
the right to wield that power. All the aforesaid elements are present in this case. contracting parties may establish such stipulations, clauses, terms and conditions as they want, and
First. It is expressly provided in the Service Contracts that it is the respondent cooperative which their agreement would have the force of law between them. However, the agreed terms and
has the exclusive discretion in the selection and engagement of the owners-members as well as its conditions must not be contrary to law, morals, customs, public policy or public order. The Service
team leaders who will be assigned at Stanfilco. Contract provision in question must be struck down for being contrary to law and public policy since
Second. Wages are defined as "remuneration or earnings, however designated, capable of being it is apparently being used by the respondent cooperative merely to circumvent the compulsory
expressed in terms of money, whether fixed or ascertained, on a time, task, piece or commission coverage of its employees, who are also its owners-members, by the Social Security Law.
basis, or other method of calculating the same, which is payable by an employer to an employee In sum, having declared that there is an employer-employee relationship between the respondent
under a written or unwritten contract of employment for work done or to be done, or for service cooperative and its owners-member, we conclude that the petitioner SSC has jurisdiction over the
rendered or to be rendered." petition-complaint filed before it by the petitioner SSS. This being our conclusion, it is no longer
In this case, the weekly stipends or the so-called shares in the service surplus given by the necessary to discuss the issue of whether the respondent cooperative was estopped from assailing
respondent cooperative to its owners-members were in reality wages, as the same were equivalent the jurisdiction of the petitioner SSC when it filed its Answer with Motion to Dismiss.
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 EDUARDO BUGHAW, JR. vs. TREASURE ISLAND INDUSTRIAL CORPORATION
surplus are indeed wages, because these are given to the owners-members as compensation in G.R. No. 173151, march 28, 2008
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
Facts: Sometime in March 1986, petitioner was employed as production worker by respondent.
its team leaders who were rendering services at Stanfilco.
Respondent was receiving information that many of its employees were using prohibited drugs
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 during working hours and within the company premises.
control over the manner and means of performing the services under the Service Contracts with On 5 June 2001, one of its employees, Erlito Loberanes (Loberanes) was caught in Bagrante delicto
Stanfilco as well as the means and methods of work. Also, the respondent cooperative is solely and
by the police officers while in possession of shabu. Loberanes was arrested and sent to jail. He
entirely responsible for its owners-members, team leaders and other representatives at Stanfilco.
implicated petitioner in the crime by claiming that part of the money used for buying the illegal
33 All these clearly prove that, indeed, there is an employer-employee relationship between the
respondent cooperative and its owners-members. drugs was given by the latter, and the illegal drugs purchased were for their consumption for the
rest of the month.
It is true that the Service Contracts executed between the Asiapro and Stanfilco expressly provide
On 29 June 2001, served a Memo for Explanation to petitioner requiring him to explain within 120
that there shall be no employer-employee relationship between the respondent cooperative and
hours why no disciplinary action should be imposed against him for his alleged involvement in illegal
its owners-members. This Court, however, cannot give the said provision force and effect.
drug activities. For the meantime, petitioner was placed under preventive suspension for the period
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 of 30 days effective upon receipt of the Notice.
the existence of an employment relationship have been complied with. The respondent cooperative Notwithstanding said Memo, petitioner failed to appear. On 19 July 2001, respondent sent a second
must not be allowed to deny its employment relationship with its owners-members by invoking the
letter to petitioner directing him to attend another administrative hearing scheduled on 23 July
questionable Service Contracts provision, when in actuality, it does exist. The existence of an
2001 but petitioner once again failed to show up.
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

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Consequently, respondent, in a third letter 8 dated 21 August 2001 addressed to petitioner, (b) Gross and habitual neglect by the employee of his duties;
terminated the latter's employment retroactive to 11 June 2001 for using illegal drugs within
(c) Fraud or willful breach by the employee of the trust reposed in him by his employer or his duly
company premises during working hours, and for refusal to attend the administrative hearing and
authorized representative;
submit written explanation on the charges hurled against him.
(d) Commission of a crime or offense by the employee against the person of his employer or any
On 20 July 2001, petitioner filed a complaint for illegal dismissal against respondent and its
immediate member of his family or his duly authorized representative; and
President, Emmanuel Ong, before the Labor Arbiter.
(e) Other causes analogous to the foregoing.
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. 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,
Court of Appeals reversed the Decisions of the Labor Arbiter and NLRC on the grounds of patent
respondent failed to present clear and unmistakable proof that petitioner was duly served a copy
misappreciation of evidence and misapplication of law. The appellate court found that petitioner
of the notice of termination but he refused receipt.
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 Where the dismissal is for just cause, as in the instant case, the lack of statutory due process should
6le an illegal dismissal case against respondent before the Labor Arbiter. 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.

Issue: WHETHER OR NOT PETITIONER WAS ILLEGALLY DISMISSED FROM EMPLOYMENT.


JEFFREY NACAGUE vs. SULPICIO LINES, INC.,
G.R. No. 172589, August 8, 2010

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 Facts: On 15 June 1995, respondent Sulpicio Lines, Inc. (Sulpicio Lines) hired Nacague as "hepe de
authorized cause, the rudimentary requirements of due process — notice and hearing — must, viaje" or the representative of Sulpicio Lines
likewise, be observed before an employee may be dismissed.
Sulpicio Lines received an anonymous letter reporting the use of illegal drugs on board the ship. On
Hence, the two (2) facets of a valid termination of employment are: (a) the legality of the act of 14 February 2003, a housekeeper on the ship, submitted a report regarding the drug paraphernalia
dismissal, i.e., the dismissal must be under any of the just causes provided under Article 282 of the found inside the Mopalla Suite Room and the threat on his life made by Nacague and Chief Mate
Labor Code; and (b) the legality of the manner of dismissal, which means that there must be Reynaldo Doroon after he found the drug paraphernalia. 8 On 15 February 2003, Sulpicio Lines sent
observance of the requirements of due process, otherwise known as the two-notice rule. Article a notice of investigation to Nacague informing him of the charges against him for use of illegal drugs
282 of the Labor Code enumerates the just causes for terminating the services of an employee: ART. and threatening a co-employee.
282. Termination by employer. — An employer may terminate an employment for any of the
Some crew members of the ship, together with Nacague, were subjected to a random drug test.
following causes:
They were taken to S.M. Lazo Medical Clinic (S.M. Lazo Clinic) and were required to submit urine
(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer samples. The result of the random drug test revealed that Nacague was positive for
or representative in connection with his work; methamphetamine hydrochloride or shabu.

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On 20 February 2003, Sulpicio Lines subjected Nacague to a formal investigation. Nacague denied laboratories or by any of the drug testing laboratories accredited and monitored by the DOH to
using illegal drugs. 11 On 23 February 2003, Nacague went to Chong Hua Hospital in Cebu City to safeguard the quality of test results. The DOH shall take steps in setting the price of the drug test
undergo a voluntary drug test. The drug test with Chong Hua Hospital yielded a negative result. 12 with DOH accredited drug testing centers to further reduce the cost of such drug test. The drug
Nacague submitted this test result to Sulpicio Lines. However, on 7 March 2003, Sulpicio Lines sent testing shall employ, among others, two (2) testing methods, the screening test which will
a memorandum to Nacague terminating him from the service. 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
Nacague Filed a complaint for illegal suspension, illegal dismissal and for reinstatement with
provides: Drug Testing Program for Officers and Employees iii. Drug testing shall conform with the
backwages. On 12 November 2003, Labor Arbiter Ernesto F. Carreon rendered a decision in favor of
procedures as prescribed by the Department of Health (DOH). Only drug testing centers accredited
Nacague and declared that Sulpicio Lines illegally dismissed Nacague.
by the DOH shall be utilized. A list of accredited centers may be accessed through the OSHC. iv. Drug
The Labor Arbiter agreed with Nacague that the drug test result from S.M. Lazo Clinic was testing shall consist of both the screening test and the confirmatory test; the latter to be carried
questionable because the clinic is not accredited by the Dangerous Drug Board and not under its out should the screening test turn positive. The employee concerned must be informed of the test
supervision. The Labor Arbiter gave more weight to the drug test performed by Chong Hua Hospital results whether positive or negative.
because it was accredited by the Dangerous Drug Board.
The law is clear that drug tests shall be performed only by authorized drug testing centers. In this
Sulpicio Lines appealed to the NLRC. In its 21 March 2005 Decision, the NLRC reversed the Labor case, Sulpicio Lines failed to prove that S.M. Lazo Clinic is an accredited drug testing center
Arbiter's decision and dismissed Nacague's complaint for lack of merit. According to the NLRC, since
only a screening test was conducted to determine if Nacague was guilty of using illegal drugs.
Nacague, who was performing a task involving trust and confidence, was found positive for using
Sulpicio Lines did not confirm the positive result of the screening test with a confirmatory test.
illegal drugs, he was guilty of serious misconduct and loss of trust and confidence.
The court agrees with the Labor Arbiter that Nacague's reinstatement is no longer feasible due to
Nacague =led a petition for certiorari with the Court of Appeals. According to the Court of Appeals,
strained relations between Nacague and Sulpicio Lines and that Nacague should instead be granted
Sulpicio Lines complied with both the procedural and substantive requirements of the law when it
separation pay.
terminated the employment of Nacague.

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

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