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LABOR> LABOR STANDARDS> Right to Close Business>Right to Transfer or Discharge


ASSOCIATION, respondents.
G.R. No. L-3587 December 21, 1951

FACTS: Gaw Pun So, the previous owner of a tailor shop known as the Army Shirt Factory, entered into
a transfer agreement in January 1948 with Tiong King wherein the operation of the shop will be taken
over by the latter. The said transfer was put into writing and thus Tiong King continued the business and
put up a capital of P7,000 from February with the same employees of Gaw Pun So. With such
arrangement, Gaw Pun So, in a labor dispute against him by the employees, asked court to implead
Tiong King as respondent. Tiong King then entered a separate agreement with National Tailors
Association (NTA) wherein they agreed to have all cases terminated against him and such agreement
was duly approved by the CIR. On April 27, 1948, Tiong King filed a petition in the CIR to close the
businessdue to losses resulting to veryy little of the capital originally invested remained. However,
presiding Judge Arsenio C. Roldan of the CIR issued an order enjoining Tiong King not to close his
factory and not to dismiss, suspend or lay off any laborer or employee without previous authority of said
court. A decision made on January 13, 1949 by CIR was later rendered dismissing his petition and
ordering him to pay the salary of personel from his closure last May to the date of decision. The decision
was reversed in the motion for reconsideration, allowing Tiong to close his business but was later on
reversed upon motion for reconsideration of NTA, wherein Judge Roldan reaffirmed their first decision of
prohibiting Tiong to close his business.

ISSUE #1: Whether or not Tiong is the owner or operator of Army Shirt Factory and had the right to file
the petition in the CIR to close the same?

ISSUE #2: Whether or not Tiong’s may close down his business due to justifiable reasons?


Upon this point, it is only sufficient to recall that the National Tailors Association entered into a stipulation
with Tiong King alone whereby they agreed that all cases against the former owners of the business were
terminated. That Tiong King was conceded to be the owner and operator of the army shirt factory at the
time his petition to close it was filed, is conclusively borne out by the fact that Presiding Judge Roldan in
his decision of January 13, 1949, ordered Tiong King, and not Gaw Pun So, to pay the salaries and
wages of the personnel.l It is contended, however, that "If at all the court has approved of the agreement
between the National Tailors' Association and Mr. Tiong King it was because — 'this arrangement is a
very good solution to the present conflict as it is advantageous not only to the union but also the
management, and, is in consonance with the contract entered into between the management and the new
workers." This contention is followed with the remark that the approval of said agreement did not include
a finding that Tiong King was either the owner or the lessee of the Army Shirt Factory. We are unable to
agree. In entering into the agreement with the National Tailors Association, Tiong King acted in his own
behalf, regardless of the former owners of the business. Indeed, it was covenanted that all the cases
against the latter were deemed terminated. Considerations of fair play and justice demand that Tiong
King be given the full legal effect of said agreement which before the sanction of the Court of Industrial


There being no question that Tiong King's capital invested in the Army Shirt Factory was almost
exhausted at the time of the filing of his petition to close it, said petition must necessity be granted. It is
admitted by all the Judges of the Court of Industrial Relations that an employer may close his business,
provided the same is done in good faith and is due beyond his control. To rule otherwise, would be
oppressive and inhuman.
LABOR> LABOR STANDARDS>Overseas Employement> Art.20: National Seamen Board

MAGSAYSAY LINES, INC., respondents.
G.R. Nos. L-64781-99 August 15, 1989


The cases at bar involve a group of Filipino seamen who were declared by the defunct National
Seamen Board (NSB) guilty of breaching their employment contracts with the MAGSAYSAY LINES,
INC., because they demanded, upon the intervention and assistance of a third party, the
International Transport Worker's Federation (ITF), the payment of wages over and above their
contracted rates without the approval of the NSB. The Filipino seamen were ordered to reimburse
the total amount of US$91,348.44 or its equivalent in Philippine Currency representing the said over-
payments and to be suspended from the NSB registry for a period of three years. The National
Labor Relations Commission (NLRC) affirmed the decision of the NSB.

However, said seamen failed to return the overpayments upon demand of Magsaysay
Lines,resulting to filing of the latter estafa charges against the seamen.

From the records of this case it appears that the facts established and/or admitted by
the parties are the following: that on different dates in 1977 and 1978 respondents
entered into separate contracts of employment (Exhs. "B" to "B-17", inclusive) with
complainant (private respondent) to work aboard vessels owned/operated/manned
by the latter for a period of 12 calendar months and with different rating/position,
salary, overtime pay and allowance, hereinbelow specified: ...; that aforesaid
employment contracts were verified and approved by this Board; that on different
dates in April 1978 respondents (petitioners) joined the M/V "GRACE RIVER"; that
on or about October 30, 1978 aforesaid vessel, with the respondents on board,
arrived at the port of Vancouver, Canada; that at this port respondent received
additional wages under rates prescribed by the Intemational Transport Worker's
Federation (ITF) in the total amount of US$98,261.70; that the respondents received
the amounts appearing opposite their names, to wit: ...; that aforesaid amounts were
over and above the rates of pay of respondents as appearing in their employment
contracts approved by this Board; that on November 10, 1978, aforesaid vessel, with
respondent on board, left Vancouver, Canada for Yokohama, Japan; that on
December 14, 1978, while aforesaid vessel, was at Yura, Japan, they were made to
disembark. (pp. 64-66, Rollo)

Furthermore, according to the petitioners, while the vessel was docked at Nagoya, Japan, a certain
Atty. Oscar Torres of the NSB Legal Department boarded the vessel and called a meeting of the
seamen including the petitioners, telling them that for their own good and safety they should sign an
agreement prepared by him on board the vessel and that if they do, the cases filed against them with
NSB on November 17, 1978 would be dismissed. Thus, the petitioners signed the. "Agreement"
dated December 5, 1978. (Annex C of Petition) However, when they were later furnished xerox
copies of what they had signed, they noticed that the line "which amount(s) was/were received and
held by CREWMEMBERS in trust for SHIPOWNERS" was inserted therein, thereby making it
appear that the amounts given to the petitioners representing the increase in their wages based on
ITF rates were only received by them in trust for the private respondent.
When the vessel reached Manila, the private respondent demanded from the petitioners the
"overpayments" made to them in Canada. As the petitioners refused to give back the said amounts,
charges were filed against some of them with the NSB and the Professional Regulations
Commission. Estafa charges were also filed before different branches of the then Court of First
Instance of Manila which, as earlier stated, were subsequently consolidated in the sala of the
respondent Judge Alfredo Benipayo and which eventually led to G.R. Nos. 57999 and 58143-53.

In G.R. Nos. 64781-99, the petitioners claimed before the NSB that contrary to the private
respondent's allegations, they did not commit any illegal act nor stage a strike while they were on
board the vessel; that the "Special Agreement" entered into in Vancouver to pay their salary
differentials is valid, having been executed after peaceful negotiations. Petitioners further argued
that the amounts they received were in accordance with the provision of law, citing among others,
Section 18, Rule VI, Book I of the Rules and Regulations Implementing the Labor Code which
provides that "the basic minimum salary of seamen shall not be less than the prevailing minimum
rates established by the International Labor Organization (ILO) or those prevailing in the country
whose flag the employing vessel carries, whichever is higher ..."; and that the "Agreement" executed
in Nagoya, Japan had been forced upon them and that intercalations were made to make it appear
that they were merely trustees of the amounts they received in Vancouver.

On the other hand, the private respondent alleged that the petitioners breached their employment
contracts when they, acting in concert and with the active participations of the ITF while the vessel
was in Vancouver, staged an illegal strike and by means of threats, coercion and intimidation
compelled the owners of the vessel to pay to them various sums totalling US$104,244.35; that the
respondent entered into the "Special Agreement" to pay the petitioners' wage differentials because it
was under duress as the vessel would not be allowed to leave Vancouver unless the said agreement
was signed, and to prevent the shipowner from incurring further delay in the shipment of goods; and
that in view of petitioners' breach of contract, the latter's names must be removed from the NSB's
Registry and that they should be ordered to return the amounts they received over and above their
contracted rates.

The respondent NSB ruled that the petitioners were guilty of breach of contract because despite
subsisting and valid NSB-approved employment contracts, the petitioners sought the assistance of a
third party (ITF) to demand from the private respondent wages in accordance with the ITF rates,
which rates are over and above their rates of pay as appearing in their NSB-approved contracts. As
bases for this conclusion, the NSB stated:

1) The fact that respondents sought the aid of a third party (ITF) and demanded for
wages and overtime pay based on ITF rates is shown in the entries of their
respective Pay-Off Clearance Slips which were marked as their Exhs. "1" to "18",
OCTOBER 1978". Respondent Suzara admitted that the entries in his Pay-Off
Clearance Slip (Exh. "1") are correct (TSN., p. 16, Dec. 6, 1979). Moreover, it is the

policy (reiterated very often) by the ITF that it does not interfere in the affairs of the
crewmembers and masters and/or owners of a vessel unless its assistance is sought
by the crewmembers themselves. Under this pronounced policy of the ITF, it is
reasonable to assume that the representatives of the ITF in Vancouver, Canada
assisted and intervened by reason of the assistance sought by the latter.

2) The fact that the ITF assisted and intervened for and in behalf of the respondents
in the latter's demand for higher wages could be gleaned from the answer of the
respondents when they admitted that the ITF acted in their behalf in the negotiations
for increase of wages. Moreover, respondent Cesar Dimaandal admitted that the ITF
differential pay was computed by the ITF representative (TSN, p. 7, Dec. 12, 1979)

3) The fact that complainant and the owner/operator of the vessel were compelled to
sign the Special Agreement (Exh. "20") and to pay ITF differentials to respondents in
order not to delay the departure of the vessel and to prevent further losses is shown
in the "Agreement" (Exhs. "R-21") ... (pp. 69-70, Rollo)

The NSB further said:

While the Board recognizes the rights of the respondents to demand for higher
wages, provided the means are peaceful and legal, it could not, however, sanction
the same if the means employed are violent and illegal. In the case at bar, the means
employed are violent and illegal for in demanding higher wages the respondents
sought the aid of a third party and in turn the latter intervened in their behalf and
prohibited the vessel from sailing unless the owner and/or operator of the vessel
acceded to respondents' demand for higher wages. To avoid suffering further
incalculable losses, the owner and/or operator of the vessel had no altemative but to
pay respondents' wages in accordance with the ITF scale. The Board condemns the
act of a party who enters into a contract and with the use of force/or intimidation
causes the other party to modify said contract. If the respondents believe that they
have a valid ground to demand from the complainant a revision of the terms of their
contracts, the same should have been done in accordance with law and not thru
illegal means. (at p. 72, Rollo).

Although the respondent NSB found that the petitioners were entitled to the payment of earned
wages and overtime pay/allowance from November 1, 1978 to December 14, 1978, it nevertheless
ruled that the computation should be based on the rates of pay as appearing in the petitioners' NSB-
approved contracts. It ordered that the amounts to which the petitioners are entitled under the said
computation should be deducted from the amounts that the petitioners must return to the private

On appeal, the NLRC affirmed the NSB's findings. Hence, the petition in G.R. Nos. 64781-99.

Meanwhile, the petitioners in G.R. Nos. 57999 and 58143-53 moved to quash the criminal cases of
estafa filed against them on the ground that the alleged crimes were committed, if at all, in
Vancouver, Canada and, therefore, Philippine courts have no jurisdiction. The respondent judge
denied the motion. Hence, the second petition.

The principal issue in these consolidated petitions is whether or not the petitioners are entitled to the
amounts they received from the private respondent representing additional wages as determined in
the special agreement. If they are, then the decision of the NLRC and NSB must be reversed.
Similarly, the criminal cases of estafa must be dismissed because it follows as a consequence that
the amounts received by the petitioners belong to them and not to the private respondent.

In arriving at the questioned decision, the NSB ruled that the petitioners are not entitled to the wage
differentials as determined by the ITF because the means employed by them in obtaining the same
were violent and illegal and because in demanding higher wages the petitioners sought the aid of a
third party, which, in turn, intervened in their behalf and prohibited the vessel from sailing unless the
owner and/or operator of the vessel acceded to respondents' demand for higher wages. And as
proof of this conclusion, the NSB cited the following: (a) the entries in the petitioners Pay-Off
Clearance Slip which contained the phrase "DEMANDED ITF WAGES ..."; (b) the alleged policy of
the ITF in not interfering with crewmembers of a vessel unless its intervention is sought by the
crewmembers themselves; (c), the petitioners' admission that ITF acted in their behalf; and (d) the
fact that the private respondent was compelled to sign the special agreement at Vancouver, Canada.

There is nothing in the public and private respondents' pleadings, to support the allegations that the
petitioners used force and violence to secure the special agreement signed in Vancouver. British
Columbia. There was no need for any form of intimidation coming from the Filipino seamen because
the Canadian Brotherhood of Railways and Transport Workers (CBRT), a strong Canadian labor
union, backed by an international labor federation was actually doing all the influencing not only on
the ship-owners and employers but also against third world seamen themselves who, by receiving
lower wages and cheaper accommodations, were threatening the employment and livelihood of
seamen from developed nations.

The bases used by the respondent NSB to support its decision do not prove that the petitioners
initiated a conspiracy with the ITF or deliberately sought its assistance in order to receive higher
wages. They only prove that when ITF acted in petitioners' behalf for an increase in wages, the latter
manifested their support. This would be a logical and natural reaction for any worker in whose
benefit the ITF or any other labor group had intervened. The petitioners admit that while they
expressed their conformity to and their sentiments for higher wages by means of placards, they,
nevertheless, continued working and going about their usual chores. In other words, all they did was
to exercise their freedom of speech in a most peaceful way. The ITF people, in turn, did not employ
any violent means to force the private respondent to accede to their demands. Instead, they simply
applied effective pressure when they intimated the possibility of interdiction should the shipowner fail
to heed the call for an upward adjustment of the rates of the Filipino seamen. Interdiction is nothing
more than a refusal of ITF members to render service for the ship, such as to load or unload its
cargo, to provision it or to perform such other chores ordinarily incident to the docking of the ship at
a certain port. It was the fear of ITF interdiction, not any action taken by the seamen on board the
vessel which led the shipowners to yield.

The NSB's contusion that it is ITF's policy not to intervene with the plight of crewmembers of a
vessel unless its intervention was sought is without basis. This Court is cognizant of the fact that
during the period covered by the labor controversies in Wallem Philippines Shipping, Inc. v. Minister
of Labor (102 SCRA 835 [1981]; Vir-Jen Shipping and Marine Services, Inc. v. NLRC (supra) and
these consolidated petitions, the ITF was militant worldwide especially in Canada, Australia,
Scandinavia, and various European countries, interdicting foreign vessels and demanding wage
increases for third world seamen. There was no need for Filipino or other seamen to seek ITF
intervention. The ITF was waiting on its own volition in all Canadian ports, not particularly for the
petitioners' vessel but for all ships similarly situated. As earlier stated, the ITF was not really acting
for the petitioners out of pure altruism. The ITF was merely protecting the interests of its own
members. The petitioners happened to be pawns in a higher and broader struggle between the ITF
on one hand and shipowners and third world seamen, on the other. To subject our seamen to
criminal prosecution and punishment for having been caught in such a struggle is out of the

As stated in Vir-Jen Shipping (supra):

The seamen had done no act which under Philippine law or any other civilized law
would be termed illegal, oppressive, or malicious. Whatever pressure existed, it was
mild compared to accepted and valid modes of labor activity. (at page 591)

Given these factual situations, therefore, we cannot affirm the NSB and NLRC's finding that there
was violence, physical or otherwise employed by the petitioners in demanding for additional wages.
The fact that the petitioners placed placards on the gangway of their ship to show support for ITF's
demands for wage differentials for their own benefit and the resulting ITF's threatened interdiction do
not constitute violence. The petitioners were exercising their freedom of speech and expressing
sentiments in their hearts when they placed the placard We Want ITF Rates." Under the facts and
circumstances of these petitions, we see no reason to deprive the seamen of their right to freedom
of expression guaranteed by the Philippine Constitution and the fundamental law of Canada where
they happened to exercise it.

As we have ruled in Wallem Phil. Shipping Inc. v. Minister of Labor, et al. supra:

Petitioner claims that the dismissal of private respondents was justified because the
latter threatened the ship authorities in acceding to their demands, and this
constitutes serious misconduct as contemplated by the Labor Code. This contention
is now well-taken. The records fail to establish clearly the commission of any threat.
But even if there had been such a threat, respondents' behavior should not be
censured because it is but natural for them to employ some means of pressing their
demands for petitioner, who refused to abide with the terms of the Special
Agreement, to honor and respect the same. They were only acting in the exercise of
their rights, and to deprive them of their freedom of expression is contrary to law and
public policy. ... (at page 843)

We likewise, find the public respondents' conclusions that the acts of the petitioners in demanding
and receiving wages over and above the rates appearing in their NSB-approved contracts is in effect
an alteration of their valid and subsisting contracts because the same were not obtained through.
mutual consent and without the prior approval of the NSB to be without basis, not only because the
private respondent's consent to pay additional wages was not vitiated by any violence or intimidation
on the part of the petitioners but because the said NSB-approved form contracts are not unalterable
contracts that can have no room for improvement during their effectivity or which ban any
amendments during their term.

For one thing, the employer can always improve the working conditions without violating any law or

We stated in the Vir-Jen case (supra) that:

The form contracts approved by the National Seamen Board are designed to protect
Filipino seamen not foreign shipowners who can take care of themselves. The
standard forms embody the basic minimums which must be incorporated as parts of
the employment contract. (Section 15, Rule V, Rules and Regulations Implementing
the Labor Code). They are not collective bargaining agreements or immutable

contracts which the parties cannot improve upon or modify in the course of the
agreed period of time. To state, therefore, that the affected seamen cannot petition
their employer for higher salaries during the 12 months duration of the contract runs
counter to estabhshed principles of labor legislation. The National Labor Relations
Commission, as the appellate tribunal from the decisions of the National Seamen
Board, correctly ruled that the seamen did not violate their contracts to warrant their
dismissal. (at page 589)

It is impractical for the NSB to require the petitioners, caught in the middle of a labor struggle
between the ITF and owners of ocean going vessels halfway around the world in Vancouver, British
Columbia to first secure the approval of the NSB in Manila before signing an agreement which the
employer was willing to sign. It is also totally unrealistic to expect the petitioners while in Canada to
exhibit the will and strength to oppose the ITF's demand for an increase in their wages, assuming
they were so minded.

An examination of Annex C of the petition, the agreement signed in Japan by the crewmembers of
the M/V Grace River and a certain M. Tabei, representative of the Japanese shipowner lends
credence to the petitioners' claim that the clause "which amount(s) was received and held by
CREWMEMBERS in trust for SHIPOWNER" was an intercalation added after the execution of the
agreement. The clause appears too closely typed below the names of the 19 crewmen and their
wages with no similar intervening space as that which appears between all the paragraphs and the
triple space which appears between the list of crewmembers and their wages on one hand and the
paragraph above which introduces the list, on the other. The verb "were" was also inserted above
the verb "was" to make the clause grammatically correct but the insertion of "were" is already on the
same line as "Antonio Miranda and 5,221.06" where it clearly does not belong. There is no other
space where the word "were" could be intercalated. (See Rollo, page 80).

At any rate, the proposition that the petitioners should have pretended to accept the increased
wages while in Vancouver but returned them to the shipowner when they reached its country, Japan,
has already been answered earlier by the Court:

Filipino seamen are admittedly as competent and reliable as seamen from any other
country in the world. Otherwise, there would not be so many of them in the vessels
sailing in every ocean and sea on this globe. It is competence and reliability, not
cheap labor that makes our seamen so greatly in demand. Filipino seamen have
never demanded the same high salaries as seamen from the United States, the
United Kingdom, Japan and other developed nations. But certainly they are entitled
to government protection when they ask for fair and decent treatment by their
employer and when they exercise the right to petition for improved terms of
employment, especially when they feel that these are sub-standard or are capable of
improvement according to internationally accepted rules. In the domestic scene,
there are marginal employers who prepare two sets of payrolls for their employees —
one in keeping with minimum wages and the other recording the sub-standard wages
that the employees really receive. The reliable employers, however, not only meet
the minimums required by fair labor standards legislation but even go away above
the minimums while earning reasonable profits and prospering. The same is true of
international employment. There is no reason why this court and the Ministry of
Labor and Employment or its agencies and commissions should come out with
pronouncements based on the standards and practices of unscrupulous or inefficient
shipowners, who claim they cannot survive without resorting to tricky and deceptive
schemes, instead of Government maintaining labor law and jurisprudence according
to the practices of honorable, competent, and law-abiding employers, domestic or
foreign. (Vir-Jen Shipping, supra, pp. 587-588)

It is noteworthy to emphasize that while the Intemational Labor Organization (ILO) set the minimum
basic wage of able seamen at US$187.00 as early as October 1976, it was only in 1979 that the
respondent NSB issued Memo Circular No. 45, enjoining all shipping companies to adopt the said
minimum basic wage. It was correct for the respondent NSB to state in its decision that when the
petitioners entered into separate contracts between 1977-1978, the monthly minimum basic wage
for able seamen ordered by NSB was still fixed at US$130.00. However, it is not the fault of the
petitioners that the NSB not only violated the Labor Code which created it and the Rules and
Regulations Implementing the Labor Code but also seeks to punish the seamen for a shortcoming of
NSB itself.
Article 21(c) of the Labor Code, when it created the NSB, mandated the Board to "(O)btain the best
possible terms and conditions of employment for seamen."

Section 15, Rule V of Book I of the Rules and Regulations Implementing the Labor Code provides:

Sec. 15. Model contract of employment. — The NSB shall devise a model contract of
employment which shall embody all the requirements of pertinent labor and social
legislations and the prevailing standards set by applicable International Labor
Organization Conventions. The model contract shall set the minimum standards of
the terms and conditions to govern the employment of Filipinos on board vessels
engaged in overseas trade. All employers of Filipinos shall adopt the model contract
in connection with the hiring and engagement of the services of Filipino seafarers,
and in no case shall a shipboard employment contract be allowed where the same
provides for benefits less than those enumerated in the model employment contract,
or in any way conflicts with any other provisions embodied in the model contract.

Section 18 of Rule VI of the same Rules and Regulations provides:

Sec. 18. Basic minimum salary of able-seamen. — The basic minimum salary of
seamen shall be not less than the prevailing minimxun rates established by the
International Labor Organization or those prevailing in the country whose flag the
employing vessel carries, whichever is higher. However, this provision shall not apply
if any shipping company pays its crew members salaries above the minimum herein

Section 8, Rule X, Book I of the Omnibus Rules provides:

Section 8. Use of standard format of service agreement. — The Board shall adopt a
standard format of service agreement in accordance with pertinent labor and social
legislation and prevailing standards set by applicable International Labor
Organization Conventions. The standard format shall set the minimum standard of
the terms and conditions to govern the employment of Filipino seafarers but in no
case shall a shipboard employment contract (sic), or in any way conflict with any
other provision embodied in the standard format.

It took three years for the NSB to implement requirements which, under the law, they were obliged to
follow and execute immediately. During those three years, the incident in Vancouver happened. The
terms and conditions agreed upon in Vancouver were well within ILO rates even if they were above
NSB standards at the time.

The sanctions applied by NSB and affirmed by NLRC are moreover not in keeping with the basic
premise that this Court stressed in the Vir-Jen Shipping case (supra) that the Ministry now the
Department of Labor and Employment and all its agencies exist primarily for the workingman's
interest and the nation's as a whole.

Implicit in these petitions and the only reason for the NSB to take the side of foreign shipowners
against Filipino seamen is the "killing the goose which lays the golden eggs" argument. We reiterate
the ruling of the Court in Vir-Jen Shipping (supra)

There are various arguments raised by the petitioners but the common thread
running through all of them is the contention, if not the dismal prophecy, that if the
respondent seamen are sustained by this Court, we would in effect "kill the hen that
lays the golden egg." In other words, Filipino seamen, admittedly among the best in
the world, should remain satisfied with relatively lower if not the lowest, international
rates of compensation, should not agitate for higher wages while their contracts of
employment are subsisting, should accept as sacred, iron clad, and immutable the
side contracts which require: them to falsely pretend to be members of international
labor federations, pretend to receive higher salaries at certain foreign ports only to
return the increased pay once the ship leaves that port, should stifle not only their
right to ask for improved terms of employment but their freedom of speech and
expression, and should suffer instant termination of employment at the slightest sign
of dissatisfaction with no protection from their Government and their courts.
Otherwise, the petitioners contend that Filipinos would no longer be accepted as
seamen, those employed would lose their jobs, and the still unemployed would be
left hopeless.

This is not the first time and it will not be the last where the threat of unemployment and loss of jobs
would be used to argue against the interests of labor; where efforts by workingmen to better their
terms of employment would be characterized as prejudicing the interests of labor as a whole.

xxx xxx xxx

Unionism, employers' liability acts, minimum wages, workmen's compensation, social

security and collective bargaining to name a few were all initially opposed by
employers and even well meaning leaders of government and society as "killing the
hen or goose which lays the golden eggs." The claims of workingmen were described
as outrageously injurious not only to the employer but more so to the employees
themselves before these claims or demands were established by law and
jurisprudence as "rights" and before these were proved beneficial to management,
labor, and the national as a whole beyond reasonable doubt.

The case before us does not represent any major advance in the rights of labor and
the workingmen. The private respondents merely sought rights already established.
No matter how much the petitioner-employer tries to present itself as speaking for the
entire industry, there is no evidence that it is typical of employers hiring Filipino
seamen or that it can speak for them.

The contention that manning industries in the Philippines would not survive if the
instant case is not decided in favor of the petitioner is not supported by evidence.
The Wallem case was decided on February 20, 1981. There have been no severe
repercussions, no drying up of employment opportunities for seamen, and none of
the dire consequences repeatedly emphasized by the petitioner. Why should Vir-Jen
be an exception?

The wages of seamen engaged in international shipping are shouldered by the

foreign principal. The local manning office is an agent whose primary function is
recruitment and who usually gets a lump sum from the shipowner to defray the
salaries of the crew. The hiring of seamen and the determination of their
compensation is subject to the interplay of various market factors and one key factor
is how much in terms of profits the local manning office and the foreign shipowner
may realize after the costs of the voyage are met. And costs include salaries of
officers and crew members. (at pp. 585-586)
The Wallem Shipping case, was decided in 1981. Vir-Jen Shipping was decided in 1983. It is now
1989. There has'been no drying up of employment opportunities for Filipino seamen. Not only have
their wages improved thus leading ITF to be placid and quiet all these years insofar as Filipinos are
concerned but the hiring of Philippine seamen is at its highest level ever.

Reporting its activities for the year 1988, the Philippine Overseas Employment Administration
(POEA) stated that there will be an increase in demand for seamen based overseas in 1989
boosting the number to as high as 105,000. This will represent a 9.5 percent increase from the 1988
aggregate. (Business World, News Briefs, January 11, 1989 at page 2) According to the POEA,
seabased workers numbering 95,913 in 1988 exceeded by a wide margin of 28.15 percent the year
end total in 1987. The report shows that sea-based workers posted bigger monthly increments
compared to those of landbased workers. (The Business Star, Indicators, January 11, 1988 at page

Augmenting this optimistic report of POEA Administrator Tomas Achacoso is the statement of
Secretary of Labor Franklin M. Drilon that the Philippines has a big jump over other crewing nations
because of the Filipinos' abilities compared with any European or westem crewing country. Drilon
added that cruise shipping is also a growing market for Filipino seafarers because of their flexibility
in handling odd jobs and their expertise in handling almost all types of ships, including luxury liners.
(Manila Bulletin, More Filipino Seamen Expected Development, December 27, 1988 at page
29). Parenthetically, the minimum monthly salary of able bodied seamen set by the ILO and

adhered to by the Philippines is now $276.00 (id.) more than double the $130.00 sought to be
enforced by the public respondents in these petitions.

The experience from 1981 to the present vindicates the finding in Vir-Jen Shipping that a decision in
favor of the seamen would not necessarily mean severe repercussions, drying up of employment
opportunities for seamen, and other dire consequences predicted by manning agencies and
recruiters in the Philippines.

From the foregoing, we find that the NSB and NLRC committed grave abuse of discretion in finding
the petitioners guilty of using intimidation and illegal means in breaching their contracts of
employment and punishing them for these alleged offenses. Consequently, the criminal prosecutions
for estafa in G.R. Nos. 57999 and 58143-53 should be dismissed.

WHEREFORE, the petitions are hereby GRANTED. The decisions of the National Seamen Board
and National Labor Relations Commission in G. R. Nos. 64781-99 are REVERSED and SET ASIDE
and a new one is entered holding the petitioners not guilty of the offenses for which they were
charged. The petitioners' suspension from the National Seamen Board's Registry for three (3) years
is LIFTED. The private respondent is ordered to pay the petitioners their earned but unpaid wages
and overtime pay/allowance from November 1, 1978 to December 14, 1978 according to the rates in
the Special Agreement that the parties entered into in Vancouver, Canada.

The criminal cases for estafa, subject matter of G. R. Nos. 57999 and 58143-53, are ordered

LABOR> LABOR STANDARDS>Conditions of Employment>Employee-Employer Relationship


COMMISSION, respondents.
G.R. No. 100665 February 13, 1995


Workers of Zanotee Shoes filed a case of illegal dismissal with the Labor Arbiter against Leonardo
Lorenzo, owner of the same. The workers worked for a minimum of twelve hours daily, including Sundays
and holidays when needed and were paid on piece-work basis. They later on asked Lorenzo to be made
members of SSS which “angered” the latter and that when they further demanded an increase in their pay
rates, they were prevented from entering the work premises. AS for Lorenzo’s defense, he contends that
the business operations were only seasonal, normally twice a year, one in June (coinciding with the
opening of school classes) and another in December (during the Christmas holidays), when heavy job
orders would come in. Thus, the workers were engaged on purely contractual basis and paid the rates
conformably with their respective agreements.

LA ruled in favor of workers finding the existence of emplyee-employer relationship and that the workers
are regular employees of Lorenzo and ordered payment of separation pay. On appeal, NLRC affirmed
LA’s decision. Thus, a petition for certiorari was filed by lorenzo assailing the decision of NLRC.

ISSUE#1: Whether or not there exists an emplyee-employer relationship between the workers and

ISSUE#2: Whether or not the award of separation pay to the workers are proper?

HELD #1: Yes.

The work of private respondents is clearly related to, and in the pursuit of, the principal business activity
of petitioners. The indicia used for determining the existence of an employer-employee relationship, all
extant in the case at bench, include (a) the selection and engagement of the employee; (b) the payment
of wages; (c) the power of dismissal; and (d) the employer's power to control the employee with respect to
the result of the work to be done and to the means and methods by which the work to be done and to the
means and methods by which the work is to be accomplished. The requirement, so herein posed as an
issue, refers to the existence of the right to control and not necessarily to the actual exercise of the right.
In Dy Keh Beng v.International Labor and Marine Union of the Philippines, et al., the Court has held:

It should be borne in mind that the control test calls merely for the existence of the right to
control the manner of doing the work, not the actual exercise of the right. Considering the
finding by the Hearing Examiner that the establishment of Dy Keh Beng is "engaged in the
manufacture of basket known as kaing," it is natural to expect that those working under Dy
would have to observe, among others, Dy's requirements of size and quality of the kaing.
Some control would necessarily be exercised by Dy's specifications. Parenthetically, since
the work on the baskets is done at Dy's establishments, it can be inferred that the proprietor
Dy could easily exercise control on the men he employed.


The fact of the matter is that Lorenzo have repeatedly indicated their willingness to accept private
respondents (workers) but the latter have steadfastly refused the offer. For being without any clear legal
basis, the award of separation pay must thus be set aside. There is nothing, however, that prevents
petitioners from voluntarily giving private respondents some amounts on ex gratia basis.
LABOR> LABOR STANDARDS> Management Prerogative>Hours Worked

G.R. No. 119205 April 15, 1998

Sime Darby Pilipinas is engaged in the manufacture of automotive tires, tubes and other rubber products.
Sime Darby Salaried Employees Association (ALU-TUCP) is an association of monthly salaried
employees of Sam Darby in its Marikina factory. Prior to the present controversy, all company factory
workers in Marikina including members of private respondent union worked from 7:45 a.m. to 3:45 p.m.
with a 30-minute paid "on call" lunch break. On 14 August 1992 petitioner issued a memorandum to all
factory-based employees advising all its monthly salaried employees in its Marikina Tire Plant a change in
work schedule effective 14 September 1992. ALU-TUCP filed on behalf of its members a complaint with
the Labor Arbiter for unfair labor practice. The LA dismissed the complaint on the ground that the change
in the work schedule and the elimination of the 30-minute paid lunch break of the factory workers
constituted a valid exercise of management prerogative and that the new work schedule, break time and
one-hour lunch break did not have the effect of diminishing the benefits granted to factory workers as the
working time did not exceed eight (8) hours. NLRC sustained the Labor Arbiter on appeal. On motion for
reconsideration, NLRC reversed the decision based on Sime Darby case of 1990 and held that the new
work schedule deprived the employees of the benefits of a time-honored company practice of providing
its employees a 30-minute paid lunch break resulting in an unjust diminution of company privileges
prohibited by Art. 100 of the Labor Code, as amended. A petition for certiorair was filed by Sam Darby
alleging that public respondent committed grave abuse of discretion amounting to lack or excess of

ISSUE: Whether or not the the act of management in revising the work schedule of its employees and
discarding their paid lunch break constitutive of unfair labor practice?


The right to fix the work schedules of the employees rests principally on their employer. In the instant
case petitioner, as the employer, cites as reason for the adjustment the efficient conduct of its business
operations and its improved production.6 It rationalizes that while the old work schedule included a 30-
minute paid lunch break, the employees could be called upon to do jobs during that period as they were
"on call." Even if denominated as lunch break, this period could very well be considered as working time
because the factory employees were required to work if necessary and were paid accordingly for working.
With the new work schedule, the employees are now given a one-hour lunch break without any
interruption from their employer. For a full one-hour undisturbed lunch break, the employees can freely
and effectively use this hour not only for eating but also for their rest and comfort which are conducive to
more efficiency and better performance in their work. Since the employees are no longer required to work
during this one-hour lunch break, there is no more need for them to be compensated for this period. We
agree with the Labor Arbiter that the new work schedule fully complies with the daily work period of eight
(8) hours without violating the Labor Code.7 Besides, the new schedule applies to all employees in the
factory similarly situated whether they are union members or not.

Management is free to regulate, according to its own discretion and judgment, all aspects of employment,
including hiring, work assignments, working methods, time, place and manner of work, processes to be
followed, supervision of workers, working regulations, transfer of employees, work supervision, lay off of
workers and discipline, dismissal and recall of workers. Further, management retains the prerogative,
whenever exigencies of the service so require, to change the working hours of its employees. So long as
such prerogative is exercised in good faith for the advancement of the employer's interest and not for the
purpose of defeating or circumventing the rights of the employees under special laws or under valid
agreements, this Court will uphold such exercise.
LABOR> LABOR STANDARDS> Non-Diminution of Benefits>Exceptions

G.R. No. 155059. April 29, 2005

FACTS: American Wire and Cable Co., Inc., is a corporation engaged in the manufacture of wires and
cables. There are two unions in this company, the American Wire and Cable Monthly-Rated Employees
Union (Monthly-Rated Union) and the American Wire and Cable Daily-Rated Employees Union (Daily-
Rated Union). On 16 February 2001, an original action was filed before the NCMB of the DOLE by the
two unions for voluntary arbitration due to the sudden and unilateral withdrewal and denial certain
benefits and entitlements such as Service Award; 35% premium pay of an employee’s basic pay for the
work rendered during Holy Monday, Holy Tuesday, Holy Wednesday, December 23, 26, 27, 28 and 29;
Christmas Party; and Promotional Increase which they have long enjoyed. The Voluntary Arbitrator Angel
A. Ancheta ruled that the Company is not guilty of violating Article 100 of the Labor Code. Motion for
reconsideration was also denied by the Arbiter. A special review for certioari and consequently the motion
for reconsideration, was filed in the Court of Appeals but the same was denied. Hence, this instant special
civil action for certiorari citing grave abuse of discretion amounting to lack of jurisdiction.

ISSUE: Whether or not the company is guilty of violating Article 100 of the Labor Code due to withdrawal
of benefits/entitlements given to the members of petitioner union?.


To solve the issue, it is critical that a determination must be first made on whether the
benefits/entitlements are in the nature of a bonus or not, and assuming they are so, whether they are
demandable and enforceable obligations. A bonus is an amount granted and paid to an employee for his
industry and loyalty which contributed to the success of the employer’s business and made possible the
realization of profits. It is an act of generosity granted by an enlightened employer to spur the employee to
greater efforts for the success of the business and realization of bigger profits. The granting of a bonus is
a management prerogative, something given in addition to what is ordinarily received by or strictly due the
recipient. Thus, a bonus is not a demandable and enforceable obligation, except when it is made part of
the wage, salary or compensation of the employee.

In the present case, it is obvious that the benefits/entitlements subjects of the instant case are all bonuses
which were given by the private respondent out of its generosity and munificence. The additional 35%
premium pay for work done during selected days of the Holy Week and Christmas season, the holding of
Christmas parties with raffle, and the cash incentives given together with the service awards are all in
excess of what the law requires each employer to give its employees. Since they are above what is
strictly due to the members of petitioner-union, the granting of the same was a management prerogative,
which, whenever management sees necessary, may be withdrawn, unless they have been made a part of
the wage or salary or compensation of the employees.For a bonus to be enforceable, it must have been
promised by the employer and expressly agreed upon by the parties, or it must have had a fixed amount
and had been a long and regular practice on the part of the employer.However, he benefits/entitlements
in question were never subjects of any express agreement between the parties. They were never
incorporated in the Collective Bargaining Agreement (CBA). To hold that an employer should be forced to
distribute bonuses which it granted out of kindness is to penalize him for his past generosity.

Hence, it was found that the the additional 35% premium pay for work rendered during selected days of
the Holy Week and Christmas season, the holding of Christmas parties with its incidental benefits, and
the grant of cash incentive together with the service award are all bonuses which are neither demandable
nor enforceable obligations of the private respondent.
LABOR> LABOR STANDARDS> Administration and Enforcement


G.R. No. 82849 August 2, 1989

FACTS: COACO and the union of its rank and file employees, COAVEA entered into a CBA covering the
years 1986 to 1988 providing for salary increases. Said CBA contained the following provision.




On December 14, 1987, RA 6640 was passed increasing the minimum wage. The Secretary of Labor
issued the pertinent rules implementing the provisions of Republic Act No. 6640. Section 8 thereof
prohibits the employer from crediting anniversary wage increases negotiated under a collective
bargaining agreement against such wage increases mandated by RA 6640. An inspection was done by
DOLE and resulted to the finding that COACO violated RA 6640 for failing to provide the minimum wage
increase provided under the law. The Regional Director issued and Order directing constitutes full
compliance with RA 6640. However, the protest was not entertained. Thus, a petition was filed by
COACO assailing the validity of Section 8 on the ground that it unduly expands the provisions of the said

ISSUE: Whether or not an Implementing Order of the Secretary of Labor and Employment (DOLE) can
provide for a prohibition not contemplated by the law it seeks to implement?


As to the issue of the validity of Section 8 of the rules implementing Republic Act No. 6640, which
prohibits the employer from crediting the anniversary wage increases provided in collective bargaining
agreements, it is a fundamental rule that implementing rules cannot add or detract from the provisions of
law it is designed to implement. The provisions of Republic Act No. 6640, do not prohibit the crediting of
CBA anniversary wage increases for purposes of compliance with Republic Act No. 6640. The
implementing rules cannot provide for such a prohibition not contemplated by the law. Administrative
regulations adopted under legislative authority by a particular department must be in harmony with the
provisions of the law, and should be for the sole purpose of carrying into effect its general provisions. The
law itself cannot be expanded by such regulations. An administrative agency cannot amend an act of
Congress. Thus COACO's contention that the salary increases granted by it pursuant to the existing CBA
including anniversary wage increases should be considered in determining compliance with the wage
increase mandated by Republic Act No. 6640, is correct.
G.R. No. 230481



G.R. No. 230500





These are consolidated Petitions for Review on Certiorari under Rule 45 of the Rules of Court, which
seek to reverse and set aside the Decision1 dated November 8, 2016 of the Court of Appeals (CA)
and its Resolution2 dated March 8, 2017 in CA-G.R. SP No. 142979. There, Hoegh Fleet Services
Phils., Inc. and/or Hoegh Fleet Services AS (hereinafter referred to as Hoegh Fleet) was ordered to
pay Turallo US$90,000.00, US$3,084.54 and US$1,000.00 as disability compensation, sickness
allowance and attorney's fees, respectively.3

The facts, as found by the CA, are as follows:

On 9 November 2012, petitioners hired Turallo as a Messman on board vessel "Hoegh Tokyo" for
nine (9) months. The employment contract was signed on 27 December 2012, which was also
covered by a Collective Bargaining Agreement between the Associated Marine Officers' and
Seaman's Union of the Philippines and Hoegh Fleet Services AS, represented by Hoegh Fleet
Services Phils., Inc.

Turallo was found "fit for sea duty" in the Pre-Employment Medical Examination (PEME).

On 2 January 2013, Turallo boarded the vessel.

Sometime in September 2013 while on board the vessel, Turallo felt pain on the upper back of his
body and chest pain, which was reported to his superiors on 23 September 2013, as evidenced by
the "Incident/ Accidents Personnel" signed by Turallo' s department head and the master of the
vessel. On 24 September 2013, Turallo was referred to a doctor by the ship's captain. Said referral
also mentioned that Turallo was discharged from the ship on 23 September 2013.

Upon arrival in Manila, Turallo was referred to the company-designated physician, who in turn
referred him to an orthopedic surgeon and cardiologist. He underwent medical and laboratory tests
and was advised to return on 27 September 2013 for re-evaluation.

On 27 September 2013, Turallo underwent MRI of the cervical spine and left shoulder and EMG-
NCV on 30 September 2013.
On 4 October 2013, after the said tests, the company-designated physician diagnosed Turallo with
"Acromioclavicular Joint Arthritis; Bicep Tear and Cuff Tear, Left Shoulder; Cervical Spondylosis
Secondary to C4-C5, C5-C6; Disc Protrusion; Rule Out Ischemic Heart Disease" and recommended
that he undergo the following procedures: "Dobutamine Stress Echocardiogram Arthroscopic
Surgery, Acromioclavicular Joint Debridgment, Subacrominal Decompression Cuff Repair using
Double Row 3-4 anchors, Biceps Tenodesis using 1-2 anchors".

In a "private and confidential" correspondence dated 23 December 2013 to Capt. Desabille, head of
the crew operations, the company-designated physician reported that Turallo had undergone a C4-
C5, C5-C6 Discectomy Fusion with PEEK Prevail on 19 December 2013, and that the specialist
opined that the estimated length of treatment after surgery is three (3) months of rehabilitation for
strengthening and mobilization exercise. The letter further stated that based on Turallo' s condition at
that time, if the latter is entitled to disability, the closest interim assessments are Grade 8 (shoulder)-
ankylosis of one shoulder and Grade 10 (neck)"moderate stiffness or 2/3 loss of motion in neck.

In another correspondence of same date addressed to Capt. Desabille, the company-designated

physician noted Turallo's condition and stated the treatment and processes that the latter has
undergone and further noted that Turallo was in stable condition, he was advised to continue
physical therapy on out-patient basis and was prescribed seven (7) different take home medications.

On 10 January 2014, the company-designated physician certified that Turallo was undergoing
medical/surgical treatment from 25 September 2013 up to the said date.

Despite Turallo' s continuous rehabilitation treatment, pain in his left shoulder persisted, hence, he
followed up his pending surgery therefor several times to no avail. This prompted Turallo to seek a
second opinion.

On 13 May 2014, Turallo consulted with Dr. Manuel Fidel Magtira, a government physician of the
Vizcarra Diagnostic Center who, after x-ray of his left wrist and shoulder joints, found him to be
"partially and permanently disabled with separate impediments for the different affected parts of (his)
body of Grade 8, Grade 10 and Grade 11, based on the POEA contract" but declared him as
"permanently unfit in any capacity for further sea duties".

On 23 May and 2 June 2014, grievance proceedings were held between the parties at the AMOSUP,
where the petitioners offered the amount of Thirty Thousand Two Hundred Thirty One US Dollars
(US$30,231. 00) corresponding to .a Grade 8 disability compensation based on the maximum
amount of Ninety Thousand US Dollars (US$90,000.00). Turallo, however proposed the settlement
.amount of Sixty Thousand US Dollars (US$60,000.00). The parties failed to reach an agreement.

Turallo then filed a Notice to Arbitrate with the National Conciliation and Mediation Board. At this
point, petitioners increased their offer from Thirty Thousand Two Hundred Thirty One US Dollars
(US$30,231.00) to Fifty Thousand US Dollars (US$50,000.00) plus allowances for further medical
treatments and expenses. Turallo, however still refused to accept such amount.

Despite efforts to arrive at an agreement, the parties failed to settle their differences, hence, they
were directed to submit their pleadings and evidence for the resolution of the issues before the panel
of arbitrators.

On 27 May 2015, the Panel rendered its assailed Decision, disposing, thus:

"WHEREFORE, judgment is hereby rendered ordering [petitioners], jointly and severally, to pay
complainant the following amounts:
1. Disability compensation in the amount of US$90,000.00, to be paid in the equivalent peso amount
at the rate prevailing at the time of payment.

2. Sickness Allowance in the amount of US$3,084.54 to be paid in its peso equivalent as in number
l; and

3. Attorney's fees equivalent to ten percent (10%) of the total monetary award.

Finally, legal interests shall be imposed on the monetary awards herein granted at the rate of 6% per
annum from finality of this judgment until fully paid.


In its 16 September 2015 Resolution, the Panel denied petitioners' motion for reconsideration, thus:

"WHEREFORE, the Decision and Award dated 27 May 2015 stays.


The Ruling of the CA

In assailing the Panel of Arbitrator's decision, Hoegh Fleet argued that the Panel erred in ruling that
Turallo is entitled to total and permanent disability benefits, finding that he was not issued a final
disability grade. It averred that the final assessment of Grade 8 disability was given by the company-
designated physician but was not attached to their Position Paper before the Panel, hence, it was
not considered. It also questioned the award of attorney's fees for being unwarranted as there was
no showing of an unjustified act or evident bad faith on its part for denying Turallo's claim.

The CA found no cogent reason to reverse the findings of the Panel. It explained that the
employment of seafarers and its incidents, including claims for death benefits, are governed by the
contracts they sign every time they are hired or rehired. Also, while the seafarers and their
employees are governed by their mutual agreements, the Philippine Overseas Employment Agency
(POEA) rules and regulatioi1s require the POEA-Standard Employment Contract (SEC), which
contains the standard terms and conditions of the seafarer's employment in ocean-going vessels, be
integrated in every seafarer's contract. Entitlement, thus, to disability benefits by seamen is a matter
governed not only by medical findings but by law and contract.

In saying that the Panel correctly considered Turallo as totally and permanently disabled, it referred
to Section 32 of the POEA-SEC which states that a seafarer shall be deemed totally and
permanently disabled if the company-designated physician fails to arrive at a definite assessment of
the seafarer's fitness to work or permanent disability within the period of 120 to 240 days. The CA
was not persuaded with Hoegh Fleet's allegation that its company-designated physician actually
issued a final assessment, invoking the document signed by its orthopedic and spinal surgery
specialist dated 29 January 2014 as Turallo is still undergoing surgery during this period.

Even assuming that the company-designated physician's disability rating was actually given and
considered definitive, the CA ruled that Turallo would still have a cause of action for total and
permanent disability compensation as he remained incapacitated to perform his usual sea duties
after the lapse of 120 or 240 days, such being the period for the company-designated physician to
issue a declaration of his fitness to engage in sea duty.
Finally, with regard to the award of attorney's fees, while the CA did not dispute Turallo' s entitlement
to the same, it ruled that reducing the amount from ten percent (10%) of the total monetary award to
just One Thousand US Dollars (US$1,000.00) would be reasonable. The dispositive portion of the
assailed Decision reads:

WHEREFORE, premises considered, the assailed Decision dated 27 May 2015 and Resolution
dated 16 September 2015 of the Panel of Voluntary Arbitrators composed of AVA Orlalyn Suarez-
Fetesio, AVA Generoso Mamaril and AVA Jaime Montealegre in Case No. AC-949- RCMB-NCR-
MVA-075-06-08-2014 are hereby AFFIRMED with MODIFICATION only as to the award of
attorney's fees, herein reduced to One Thousand Dollars (US$1,000.00).


The Motion for Reconsideration was denied in a Resolution6 dated March 8, 2017. From the CA
ruling, Hoegh Fleet and Turallo filed separate petitions for review on certiorari, which were
consolidated by the Court through its April 24, 2016 Resolution.7

The Issue

In G.R. No. 230481, Hoegh Fleet questioned Turallo's claim for total and permanent disability
benefits. It raised that its company-designated physician issued a final disability assessment of
Grade 8 well within the 240-day period. Thus, Turallo's compensation should only be confined to the
amount corresponding to the Grade 8 assessment, a partial disability.8

Meanwhile in G.R. No. 230500, Turallo questioned the award of US$1,000.00 attorney's fees for
being wanting in any factual and legal justification. He furthered that the judgment of the Panel of
Voluntary Arbitrators awarding him 10% of the total monetary award should be reinstated as it is in
accord with prevailing jurisprudence.9

The Ruling of the Court

The petitions are unmeritorious.

The POEA-SEC governs. Under
Section 32 thereof, Turallo is entitled
to a total and permanent disability

In Kestrel Shipping Co., Inc. v. Munar,10 the Court reads Section 32 of PQEA-SEC in harmony with
the Labor Code and explained, viz:

Indeed, under Section 32 of the POEA-SEC, only those injuries or disabilities that are classified as
Grade 1 may be considered as total and permanent. However, if those injuries or disabilities with a
disability grading from 2 to 14, hence, partial and permanent, would incapacitate a seafarer from
performing his usual sea duties for a period of more than 120 or 240 days, depending on the need
for further medical treatment, then he is, under legal contemplation, totally and permanently
disabled. In other words, an impediment should be characterized as partial and permanent not only
under the Schedule of Disabilities found in Section 32 of the POEA-SEC but should be so under the
relevant provisions of the Labor Code and the Amended Rules on Employee Compensation (AREC)
implementing Title II, Book IV of the Labor Code. That while the seafarer is partially injured or
disabled, he is not 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 the case may be, he shall be
deemed totally and permanently disabled.

Moreover, the company-designated physician is expected to arrive at a definite assessment of the

seafarer's fitness to work or permanent disability within the period of 120 or 240 days. That should
he fail to do so and the seafarer's medical condition remains unresolved, the seafarer shall be
deemed totally and permanently disabled.11 (emphasis ours)

It cannot be any clearer that the company-designated physician's failure to arrive at a definite
assessment of the seafarer's fitness to work or permanent disability within the prescribed periods
would hold the seafarer's disability total and permanent.

The Court does not wish to disturb the factual findings of the Panel and the CA that indeed the
company-designated physician failed to issue a final assessment of Turallo's disability grading as
this Court is not a trier of facts.12 Hence, under the contemplation of the law abovementioned, Turallo
is considered as totally and permanently disabled. The Panel, as affirmed by the CA, is correct in
concluding that the Grade 8 disability grading given, as reflected in the 23 December 2013
correspondence, cannot be considered as a final assessment as the said letter expressly states that
it was merely an "interim" assessment. In Fil-Star Maritime Corporation v. Rosete13 and Tamin v.
Magsaysay Maritime Corporation,14 We concluded that the company-designated doctor's certification
issued within the prescribed periods must be a final and definite assessment of the seafarer's fitness
to work or disability, not merely interim, as in this case. Thus, the award of US$90,000, as the
maximum disability compensation stipulated in their Collective Bargaining Agreement (CBA)15 is

Article 111 of tile Labor Code

fixes the limit on the amount
of attorney's fees a party may

The Court agrees with the CA that attorney's fees should be reduced, not to US$1,000.00, however,
but to five percent (5%) of the total monetary award. Article 111 of the Labor Code indeed provides
1âwphi 1

that the culpable party may be assessed attorney's fees equivalent to 10 percent of the amount of
wages recovered. It also provides that it shall be unlawful for any person to demand or accept, in
any judicial or administrative proceedings for the recovery of wages, attorney's fees which exceed 10
percent of the amount of wages recovered. Section 8, Rule VIII, Book III of the Implementing Rules
of the Labor Code sustains the same and states that attorney's fees shall not exceed 10 percent of
the amount awarded.16 A closer reading of these provisions, however, would lead us to the
conclusion that the 10 percent only serves as the maximum of the award that may be
granted.17 Relevantly, We have ruled in the case of Taganas v. National Labor Relations
Commission18 that Article 111 does not even prevent the NLRC from fixing an amount lower than the
ten percent ceiling prescribed by the article when the circumstances warrant it. With that, the Court
is not tied to award 10 percent attorney's fees to the winning party, as what Turallo wishes to imply.

Despite this, We deem it more reasonable to grant five percent (5%) of the total monetary award as
attorney's fees to Turallo, instead of the US$1,000.00 awarded by the CA.

In PCL Shipping Philippines, Inc. v. National Labor Relations Commission,19 the Court discussed that
there are two commonly accepted concepts of attorney's fees, the so-called ordinary and
extraordinary. In its ordinary concept, an attorney's fee is the reasonable compensation paid to a
lawyer by his client for the legal services he has rendered to the latter. The basis of this
compensation is the fact of his employment by and his agreement with the client. In its extraordinary
concept, attorney's fees are deemed indemnity for damages ordered by the court to be paid by the
losing party in a litigation. The instances where these may be awarded are those enumerated in
Article 2208 of the Civil Code, specifically par. 7 thereof which pertains to actions for recovery of
wages, and is payable not to the lawyer but to the client, unless they have agreed that the award
shall pertain to the lawyer as additional compensation or as part thereof. The extraordinary concept
of attorney's fees is the one contemplated in Article 111 of the Labor Code. This is awarded by the
court to the successful party to be paid by the losing party as indemnity for damages sustained by
the former in prosecuting, through counsel, his cause in court.20

Clearly, Turallo incurred legal expenses after he was forced to file an action to recover his disability
benefits. Considering that he was constrained to litigate with counsel in all the stages of this
proceeding, and keeping in mind the liberal and compassionate spirit of the Labor Code, where the
employees' welfare is the paramount consideration,21 this Court considers five percent (5%) of the
total monetary award as more appropriate and commensurate under the circumstances of this

WHEREFORE, the instant petitions are hereby DENIED. The November 8, 2016 Decision and
March 8, 2017 Resolution issued by the Court of Appeals are hereby AFFIRMED WITH
MODIFICATION that the attorney's fees to be awarded to Turallo is increased to five (5) percent of
the total monetary award to him.



Associate Justice

G.R. No. 189942

ADTEL, INC. and/or REYNALDO T. CASAS, Petitioners,

MARIJOY A. VALDEZ,, Respondent



The Case

Before the Court is a petition for review on certiorari1 assailing the 28 May 2009 Resolution2 and the
8 October 2009 Resolution3 of the Court of Appeals (CA) in CA-G.R. SP No. 108169.

The Facts

Adtel, Inc. (Adtel) is a domestic corporation engaged in the distribution of telephone units, gadgets,
equipment, and allied products. On 9 September 1996, Adtel hired Marijoy A. Valdez (respondent) to
work as an accountant for the company. Adtel promoted respondent as the company's purchasing
and logistics supervisor.4 Adtel then entered into a dealership agreement with respondent's husband,
Angel Valdez (Mr. Valdez), to distribute Adtel's wideband VHF-UHF television antem1as. The
dealership agreement was for twelve (12) months and the agreement was extended for another
three (3) months.5 On 3 February 2006, Mr. Valdez filed a civil case against Adtel for specific
performance and damages for the execution of the terms of the dealership agreement.6 On 10 May
2006, Mr. Valdez also instituted a criminal complaint for libel against Adtel's chairman, president,
and officers.7

On 22 May 2006, Adtel issued a memorandum8 directing respondent to show cause in writing why
she should not be terminated for conflict of interest and/or serious breach of trust and
confidence.9 The memorandum stated that the filing of cases by respondent's husband created a
conflict of interest since respondent had access to vital information that can be used against
Adtel.10 Respondent was placed under preventive suspension by Adtel. On 23 May 2006, respondent
denied the charges of Adtel. Respondent contended that the cases had nothing to do with her being
an employee of Adtel and had not affected her performance in the company.11

On 29 May 2006, Adtel terminated respondent from the company. Respondent filed a complaint for
illegal dismissal with the Labor Arbiter. In her Position Paper,12 respondent alleged that she did not
violate any company rule or policy; neither was she guilty of fraud, nor willful breach of trust.
Respondent contended that she was illegally dismissed without just cause and was entitled to
separation pay, backwages, and damages.

The Decision of the Labor Arbiter

In a Decision13 dated 24 May 2007, the Labor Arbiter dismissed respondent's complaint for illegal
dismissal. The Labor Arbiter found that there existed a conflict of interest between respondent and
Adtel. The Labor Arbiter ruled that respondent was not an ordinary rank-and-file employee but a
managerial employee with a fiduciary duty to protect the interest of Adtel. The Labor Arbiter held that
the civil and criminal cases initiated by respondent's husband indubitably created a conflict of
interest that was a just cause for her dismissal by Adtel.

The dispositive portion of the Labor Arbiter's decision reads:

WHEREFORE, premises considered, judgment is hereby rendered DISMISSING the instant

complaint for utter lack of merit.


The Decision of the National Labor Relations Commission

In a Decision15 dated 21 May 2008, the National Labor Relations Commission (NLRC) reversed the
decision of the Labor Arbiter. The NLRC ruled that Adtel illegally dismissed respondent. The NLRC
held that Adtel failed to substantially prove the existence of an act or omission personally attributable
to the respondent to serve as a just cause to terminate her employment.

The dispositive portion of the NLRC's decision states:

WHEREFORE, the appeal is GRANTED and the assailed Decision is hereby REVERSED and SET
ASIDE. A new one is hereby rendered ordering the respondent company to pay to the complainant
the following amounts:

1. ₱283,000.00 - representing her separation pay for her almost ten years of service to the company;

2. ₱684,600.58 - representing her backwages from May 29, 2006 up to the date of this Decision;

Plus ten percent (10%) of the total monetary awards, as and for attorney's fees.
Other claims and charges are dismissed for lack of merit.


Adtel filed a Motion for Reconsideration which was denied by the NLRC on 24 December 2008.
Adtel received the NLRC Resolution on 5 February 2009. On 7 April 2009, the last day for filing its
petition for certiorari with the CA, Adtel filed a motion for extension of time with the CA. On 22 April
2009, fifteen (15) days after the last day for filing or the 751 h day, Adtel filed its petition
for certiorari with the CA.17

The Decision of the CA

On 28 May 2009, the CA denied the motion for extension and dismissed Adtel's petition
for certiorari for being filed beyond the reglementary period. The CA ruled that Adtel had until 7 April
2009 to file its petition for certiorari. Instead of filing the petition for certiorari, Adtel filed a motion for
extension of time on 7 April 2009 and subsequently filed its petition for certiorari on 22 April 2009,
the last day of the extended period prayed for by Adtel. The CA held that the reglementary period to
file a petition for certiorari can no longer be extended pursuant to A.M. No. 07- 7-12-SC which
amended Section 4, Rule 65 of the Rules of Court.18

The dispositive portion of the CA's Resolution states:

WHEREFORE, the Motion is DENIED. Instead, the petition is DISMISSED for being filed beyond the
reglementary period.


Adtel filed a motion for reconsideration which was denied on 8 October 2009.20

The Issues

Adtel presented the following issues in this petition:

A. The Court of Appeals committed a reversible error in denying the petitioners' motion for
reconsideration and in dismissing the petition for certiorari on the sole basis of technicality.

B. Technicalities should give way to a judgment on the merits considering that the Labor Arbiter
justly and correctly ruled that the complaint for illegal dismissal against petitioner was baseless and
unmeritorious only to be later reversed by the NLRC upon respondent's appeal.21

The Decision of this Court

We deny the petition.

A.M. No. 07-7-12-SC which amended Section 4, Rule 65 of the Rules of Court states:

Sec. 4. When and where to file the petition. - The petition shall be filed not later than sixty (60) days
from notice of the judgment, order or resolution. In case a motion for reconsideration or new trial is
timely filed, whether such motion is required or not, the petition shall be filed not later than sixty (60)
days counted from the notice of the denial of the motion.
If the petition relates to an act or an omission of a municipal trial court or of a corporation, a board,
an officer or a person, it shall be filed with the Regional Trial Court exercising jurisdiction over the
territorial area as defined by the Supreme Court. It may also be filed with the Court of Appeals or
with the Sandiganbayan, whether or not the same is in aid of the court's appellate jurisdiction. If the
petition involves an act or an omission of a quasi-judicial agency, unless otherwise provided by law
or these rules, the petition shall be filed with and be cognizable only by the Court of Appeals.

In election cases involving an act or an omission of a municipal or a regional trial court, the petition
shall be filed exclusively with the Commission on Elections, in aid of its appellate jurisdiction.

A.M. No. 07-7-12-SC states that in cases where a motion for reconsideration was timely filed, the
filing of a petition for certiorari questioning the resolution denying the motion for
reconsideration must be made not later than sixty (60) days from the notice of the denial of the
motion. In Laguna Metts Corporation v. Court of Appeals,22 this Court held that following A.M. No.
07-7-12-SC, petitions for certiorari must be filed strictly within 60 days from the notice of judgment or
from the order denying a motion for reconsideration. In Laguna Metts Corporation, this Court stated
the rationale for the strict observance of the 60-day period to file a petition for certiorari, to wit:

The 60-day period is deemed reasonable and sufficient time for a party to mull over and to prepare a
petition asserting grave abuse of discretion by a lower court. The period was specifically set to avoid
any unreasonable delay that would violate the constitutional rights of the parties to a speedy
disposition of their case.23

In Laguna Metts Corporation, this Court ruled that the 60-day period was non-extendible and the CA
no longer had the authority to grant the motion for extension in view of A.M. No. 07-7-12-SC which
amended Section 4 of Rule 65.

However, in Domdom v. Third and Fifth Divisions of the Sandiganbayan,24 this Court held that the
strict observance of the 60-day period to file a petition for certiorari is not absolute. This Court ruled
that absent any express prohibition under Rule 65, a motion for extension is still permitted, subject to
the Court's sound discretion. Similarly, in Labao v. Flores,25 this Court recognized that the extension
of the 60-day period may be granted by the Court in the presence of special or compelling
circumstances provided that there should be an effort on the part of the party invoking liberality to
advance a reasonable or meritorious explanation for his or her failure to comply with the rules.
Likewise, in Mid-Islands Power Generation v. Court of Appeals,26 this Court held that a motion for
extension was allowed in petitions for certiorari under Rule 65 subject to the Court's sound
discretion and only under exceptional or meritorious cases.

The exception to the 60-day rule to file a petition for certiorari under Rule 65 was also applied by this
Court in a more recent case in Republic of the Philippines v. St. Vincent de Paul Colleges, Inc. ,27 to
wit: "[ u ]nder exceptional circumstances, however, and subject to the sound discretion of the Court,
[the] said period may be extended pursuant to [the] Domdom, Labao and Mid-Islands
Power cases."28

Therefore, the rule is that in filing petitions for certiorari under Rule 65, a motion for
extension is a prohibited pleading. However in exceptional or meritorious cases, the Court
may grant an extension anchored on special or compelling reasons.

Adtel's motion for extension filed with the CA on 7 April 2009 reads:


1. Petitioner's Petition for Certiorari was due for filing yesterday, 06 April 2009 or sixty (60) days from
05 February 2009, the date of receipt of the Resolution dated 24 December 2008 issued by the
National Labor Relations Commission (NLRC). Considering that yesterday was a holiday, the
petition in effect is due today, 07 April 2009.

2. While a draft of the pleading had already been prepared, final revisions have yet to be
completed. However, due to the undersigned counsel's heavy volume of work, petitioner is

constrained to request for an additional period of fifteen (15) days from today or up to 22
April 2009 within which to file the Petition for Certiorari.

3. This motion is not intended to delay the proceedings but is prompted solely by the above-stated


WHEREFORE, petitioner respectfully prays for an extension of fifteen (15) days from 07 April 2009
or up to 22 April 2009 within which to file its Petition for Certiorari.

Petitioner prays for such other relief which may be deemed just and equitable under the
circumstances.29(Boldfacing and underscoring supplied)

In Yutingco v. Court of Appeals, 30 this Court held that the circumstance of heavy workload
alone, absent a compelling or special reason, is not a sufficient justification to allow an extension of
the 60-day period to file a petition for certiorari, to wit:

Heavy workload, which is relative and often self serving, ought to be coupled with more compelling
reasons such as illness of counsel or other emergencies that could be substantiated by affidavits of
merit. Standing alone, heavy workload is not sufficient reason to deviate from the 60-day rule. Thus,
we are constrained to state that the Court of Appeals did not err in dismissing the petition for having
been filed late.31

In Thenamaris Philippines, Inc. v. Court of Appeals,32 this Court held that the heavy workload of
counsel is hardly a compelling or meritorious reason for availing a motion for extension of time to file
a petition for certiorari. Similarly, in Mid-Islands Power, this Court ruled that the heavy workload and
the resignation of the lawyer handling the case are insufficient reasons to justify the relaxation of the
procedural rules under Rule 65. In both Thenamaris and Mid-Islands Power, this Court denied the
motions for extension of time to file a petition for certiorari and held that the heavy workload of
counsel was not a

As previously stated in Labao, 33 there should be an effort on the part of the party invoking liberality to
advance a reasonable or meritorious explanation for his or her failure to comply with Rule 65.
Accordingly, in the absence of a more compelling reason cited in the motion for extension of time
other than the "undersigned counsel's heavy volume of work," the CA did not commit a reversible
error in dismissing the petition for certiorari.

WHEREFORE, we DENY the petition. We AFFIRM the Resolutions of the Court of Appeals dated
28 May 2009 and 8 October 2009 in CA-G.R. SP No. 108169.
LABOR> LABOR STANDARDS> Permanent Total Disability> Benefits


G.R. No. 85024 January 23, 1991

FACTS: Domingo Vicente was formerly employed as a nursing attendant at the Veterans Memorial
Medical Center. He applied for optional retirement at the age of forty-five after having rendered more than
twenty-five years of government service giving as reason his inability to continue working as a result of
his physical disability. He also filed with the GSIS an application for "income benefits claim for payment".
Both applications were accompanied by a "Physician's Certification" issued by Dr. Avelino A. Lopez, M.D.
who had diagnosed the petitioner as suffering from: Osteoarthritis, multiple;
Hypertensive Cardiovascular Disease; Cardiomegaly; and Left Ventricular Hypertrophy; and classified
him as being under "permanent total disability."

Vicente’s application for income benefits claim payment was granted but only for permanent partial
disability compensation or for a period of nineteen months. Upon reconsideration, GSIS further awarded
him the equivalent of additional 4 months benefits. Vicente insisted, however, that he should be
compensated for "permanent total disability." The said petition was denied. Vicente elevated the case to
Employees Compensation Commission (ECC) which affirmed the ruling of the GSIS. Hence this petition
for certiorari.

ISSUE: Whether or not Vicente is entitled for benefits for persons with permanent total disability?


Employee's disability under the Labor Code is classified into three distinct categories: (a) temporary total
disability;(b) permanent total disability; and (c) permanent partial disability.

It was held from the Court's pronouncements that while "permanent total disability" invariably results in an
employee's loss of work or inability to perform his usual work, "permanent partial disability," on the other
hand, occurs when an employee loses the use of any particular anatomical part of his body which
disables him to continue with his former work. Stated otherwise, the test of whether or not an employee
suffers from "permanent total disability" is a showing of the capacity of the employee to continue
performing his work notwithstanding the disability he incurred. Thus, if by reason of the injury or sickness
he sustained, the employee is unable to perform his customary job for more than 120 days and he does
not come within the coverage of Rule X of the Amended Rules on Employees Compensability (which, in a
more detailed manner, describes what constitutes temporary total disability), then the said employee
undoubtedly suffers from "permanent total disability" regardless of whether or not he loses the use of any
part of his body.

In the case at bar, the petitioner's permanent total disability is established beyond doubt by several
factors and circumstances.1âwphi1 Noteworthy is the fact that from all available indications, it appears
that the petitioner's application for optional retirement on the basis of his ailments had been approved.
The decision of the respondent Commission even admits that the petitioner "retired from government
service at the age of 45." Considering that the petitioner was only 45 years old when he retired and still
entitled, under good behavior, to 20 more years in service, the approval of his optional retirement
application proves that he was no longer fit to continue in his employment. For optional retirement is
allowed only upon proof that the employee-applicant is already physically incapacitated to render sound
and efficient service. Further, the appropriate physicians of the petitioner's employer, the Veterans
Memorial Medical Center, categorically certified that the petitioner was classified under permanent total
disability. The fact that the petitioner was granted benefits amounting to the equivalent of twenty-three
months shows that the petitioner was unable to perform any gainful occupation for a continuous period
exceeding 120 days.