Case 1

BENJAMIN L. SAROCAM v.
INTERORIENT MARITIME ENT., INC., and DEMACO UNITED LTD.
G.R. No. 167813, 27 June 2006, FIRST DIVISION (Callejo, Sr., J.)
DOCTRINE OF THE CASE
In order to claim disability benefits under the POEA Standard Employment Contract, it
is the company-designated physician who must proclaim that the petitioner suffered a permanent
disability, whether total or partial, due to either injury or illness, during the term of the latter's
employment. Thus, not all waivers and quitclaims are invalid as against public policy, the Court
has, likewise, recognized legitimate waivers that represent a voluntary and reasonable settlement
of a worker's claim which should be respected as the law between the parties. Where the person
making the waiver has done so voluntarily with a full understanding. Therefore, the
consideration for the quitclaim is credible and reasonable, the transaction must be recognized as
being a valid and binding undertaking.
FACTS
On June 27, 2000, petitioner Benjamin Sarocam was hired by Interorient Maritime and
Demaco United Ltd., for 12-month contract as bosun on board M/V Despina. While navigating
to China, Sarocam suffered from a lumbar sprain when he accidentally fell from a ladder.
On November 15, 2000, he was examined and was found that he has a neuromyositis and
diabetes. The examining physician prescribed medicine and recommended signing off and
hospitalization. He was repatriated on November 30, 2000.On December 5, 2000, petitioner
was referred to the company-designated physician which is Dr. Teodoro F. Pidlaoan.
Sarocam was given medicine for his back pain and diabetes and was advised to return for a
follow-up checkup. On Dec 13, he returned to the clinic with normal results, petitioner was then
declared fit for duty. On March 20, 2001, petitioner executed a release and quitclaim in favor of
his employer where he acknowledged receipt of $405 as sick wages. However, on November 27,
2001, petitioner filed a complaint with NLRC for disability benefit, illness allowance,
reimbursement of medical expenses, damages and attorney fees. To support his claim, he
presented medical certificates issued by his 3 personal doctors, recommending Grade
VIII disability under POEA schedule of disability grading. Labor Arbiter dismissed the
complaint citing that he was not entitled to disability benefits because he was declared fit for
duty and had previously executed a release and quitclaim in favor of his employers and had
already received his sickness allowance. NLRC affirmed the same. Sarocam‘s argument is the
quitclaim he executed is invalid, as the amount he received was much lower than what he
should have received under the POEA standard employment contract. Quitclaims are
frowned upon by the courts as they are contrary to public policy.
ISSUES:
The respondents' company designated doctor be considered competent and reliable enough to
declare petitioner as fit to work contrary to the declarations of three (3) independent physicians
similarly finding him otherwise?
Does the execution by petitioner of a release and quitclaim stop him from claiming disability
benefits under the POEA Standard Employment Contract?
RULING OF THE COURT:
Yes. The company designate physician has to be considered competent and reliable
enough to declare petitioner as fit to work. Since the company designated physician Dr. Pidlaoan
examined and treated petitioner from the time he was repatriated up to his recovery. He has a
familiarity, of the petitioner's medical condition. No doubt Dr. Pidlaoan has arrive at a much
more accurate appraisal of petitioner's condition, as compared to three physicians not privy to
petitioner's case from the very beginning. Indeed, the assessment of the three independent
doctors of petitioner could not have been that reliable considering that they based their
conclusions on the prior findings of Dr. Pidlaoan. Additionally, and most importantly, the
petitioner did not question the competency of Dr. Pidlaoan and his assessment when the latter
declared him as fit for duty or fit to work. Instead of questioning the assessment of the company-
designated doctor, the petitioner executed and release a quitclaim in favor of the respondents. In
executing the said document, petitioner impliedly admitted the correctness of the assessment of
the company-designated physician, and acknowledged that he could no longer claim the
disability benefits.
Yes. The petitioner execution and release of quitclaim stops him from claiming his
disability benefits. The court held that they recognize legitimate waivers that represent a
voluntary and reasonable settlement of a worker's claim which should be respected as the law
between the parties making it valid and binding. That the petitioner voluntarily entered to it and
represents a reasonable settlement, it is binding on the parties and may not later be disowned
simply because of a change of mind, where it was made with full understanding on the part of
the petitioner  and the consideration for the quitclaim is credible and reasonable, the transaction
must be recognized as a valid and binding undertaking.
ARCO METAL PRODUCTS, CO., INC., and MRS. SALVADOR UY, v. SAMAHAN NG
MGA MANGGAGAWA SA ARCO METAL-NAFLU (SAMARM-NAFLU)
G.R. No. 170734, 14 May 2008, SECOND DIVISION (TINGA, J.)
DOCTRINE OF THE CASE
Any benefit and supplement being enjoyed by employees cannot be reduced, diminished,
discontinued or eliminated by the employer. The principle of non-diminution of benefits is
founded on the Constitutional mandate to protect the rights of workers and promote their
welfare, and to afford labor full protection. The said mandate in turn is the basis of Article 4 of
the Labor Code which states that "all doubts in the implementation and interpretation of this
Code, including its implementing rules and regulations shall be rendered in favor of labor."
In the years 1992, 1993, 1994, 1999, 2002 and 2003, petitioner had adopted a policy of
freely, voluntarily and consistently granting full benefits to its employees regardless of the length
of service rendered. True, there were only a total of seven employees who benefited from such a
practice, but it was an established practice nonetheless. Jurisprudence has not laid down any rule
specifying a minimum number of years within which a company practice must be exercised in
order to constitute voluntary company practice
FACTS
Sometime in December 2003, petitioner paid the 13th month pay, bonus, and leave
encashment of three union members in amounts proportional to the service they actually
rendered in a year, which is less than a full twelve (12) months.
Respondent protested the prorated scheme, claiming that on several occasions’ petitioner
did not prorate the payment of the same benefits to seven (7) employees who had not served for
the full 12 months. The payments were made in 1992, 1993, 1994, 1996, 1999, 2003, and 2004.
According to respondent, the prorated payment violates the rule against diminution of benefits
under Article 100 of the Labor Code. Thus, they filed a complaint before the National
Conciliation and Mediation Board (NCMB). The parties submitted the case for voluntary
arbitration.
The voluntary arbitrator, Apron M. Mangabat, ruled in favor of petitioner and found that
the giving of the contested benefits in full, irrespective of the actual service rendered within one
year has not ripened into a practice. On appeal, the CA ruled in favor of the respondent.
Petitioner submits that the Court of Appeals erred when it ruled that the grant of 13th
month pay, bonus, and leave encashment in full regardless of actual service rendered constitutes
voluntary employer practice and, consequently, the prorated payment of the said benefits does
not constitute diminution of benefits under Article 100 of the Labor Code.
ISSUES
Whether there was a violation of Article 100 of the Labor Code. (YES)
RULING
The employer cannot reduce, diminish, discontinue, or remove any benefit or supplement
provided to employees.  The principle of non-diminution of benefits is based on the
Constitutional mandate that protect the rights of workers and promote their welfare, and to afford
labor full protection. Which states in Article 4 of the Labor Code, that "all doubts in the
implementation and interpretation of this Code, including its implementing rules and regulations,
shall be rendered in favor of labor."
There are numerous cases in the law that acknowledge an employee's right to benefits
that were freely provided by the employer and became into company practice. Thus, in Davao
Fruits Corporation v. Associated Labor Unions, et al., where an employer freely and
continuously included in the computation of the 13th month pay those items that were expressly
excluded by the law, they held that the act, since it was beneficial to the employees even though
it is not conforming to the law, and had ripened into a practice that could not be withdrawn,
reduced, diminished, discontinued, or eliminated. They held in Sevilla Trading Corporate v.
Semana that the employer's voluntary act of including non-basic benefits in the computation of
the 13th month salary had developed into a company practice that could not be peremptorily
abolish.
Meanwhile, in Davao Integrated Port Stevedoring Services v. Abarquez, the Court
ordered the payment of the cash equivalent of unutilized sick leave benefits to its intermittent
workers after finding that they had been receiving these benefits for almost four years before the
grant was terminated due to a different interpretation of the CBA provisions. They held that the
employer could not unilaterally revoke the existing privilege of commutation or conversion to
cash granted to said employees, and they also noted that the employer had granted and paid the
cash equivalent of the unutilized portion of the sick leave benefits to some intermittent
employees.
Petitioner had implemented a policy of freely, voluntarily, and regularly granting full
benefits to its workers regardless of the duration of service performed in the years 1992, 1993,
1994, 1999, 2002, and 2003. True, there were only seven employees who benefitted from this
practice, but it was a well-established one nonetheless. There is no regulation in the law that
specifies a minimum number of years that a company practice must be practiced in order to be
considered voluntary company practice. As a result, it could be six (6) years, three (3) years, or
even two (2) years.