Toyo Seat Philippines Corporation/Yoshihiro Takahama v. Annabelle C. Velasco, et al., G.R. No.

240774-MARCH 3, 2021

The Case:
The present petition for review on certiorari assails the November 29, 2017 Decision and the July 11,
2018 Resolution of the Court of Appeals (CA) in CA-G.R. SP No. 140391, which ordered petitioners
Toyo Seat Philippines Corporation (TSPC) and Yoshihiro Takahama to reinstate herein respondents to
their former positions and to pay them full backwages, moral damages, exemplary damages, and
attorney's fees.

The Facts:
Petitioner TSPC, formerly Automotive Interiors Corporation, is a Philippine corporation engaged in
manufacturing car seats, seat and door trims, wire harnesses, manual binders, rear frames, bus seats, and
cinema seats; while petitioner Yoshihiro Takahama was TSPC's president. In 2008 and 2009, TSPC hired
respondents as sewers. The subsequent course of events is summarized by the CA as follows:

x x x [TSPC] engaged the services of [respondents] as sewers for Project J68.C (Export Trim for 2008
Mazda 3 vehicle) which started in August 2008 and estimated to be completed in September 2012. At the
advent of 2011 model of Mazda 3 vehicle, however, [TSPC] was directed by Mazda to stop the
production of the J68C Export, rim car seats for the 2008 Mazda 3 model which resulted to the early
termination of the J68C Project. In lieu thereof [TSPC] was contracted to manufacture car seats
specifically designed for the new 2011 Mazda 3 model, referred to as the J68N Project (Export Trim for
2011 Mazda 3 vehicle). [Respondents] agreed to be employed under Project J68N by affixing their
signatures on the Letter dated May 31, 2011 issued by [TSPC]. Their employment was covered by Project
Employment Contract dated June 8, 2011 the duration of which is from June 8, 2011 until December 20,
2012.
Aside from the daily rates of [respondents], the name ofthe projects and duration of their employment for
each project, the terms and conditions in the contracts were similarly worded as follows:
"This is to confirm your employment with the Company as a project employee under the following terms
and conditions:
I. You shall be engaged for the position of Sewer solely for the manufacture of J68C Export Trim for
Mazda 3 vehicle (hereafter, the "Project"). The Project started last August 2008 and is estimated to be
finished by September 2012.
2. As such, your employment shall commence on 30 September 2009 and end on 29 September 2012, or
until the actual date of the completion of the Project, whichever comes earlier. As a project employee,
your employment is co-terminus with the duration of the Project, upon the completion of which, your
employment will automatically cease without any need for verbal or written notice.
3. The Company reserves the right to terminate your services even prior to the expiration of your
employment contract for any of the just and authorized causes for termination of employment provided
for by law, including any violation ofthe rules and regulations that the Company may promulgate from
time to time of which you have been made aware and any violation of the terms of this Contract. Should
the Company choose to terminate your project employment, you will be entitled to collect your salary
computed only up to the last day ofyour actual service.
4. You shall be reporting to the Supervisor - Export Sewing, who shall discuss with you the details of
your responsibilities as well as the performance standards required in your assignment.
5. Your compensation shall be P298.00 per day worked.
6. As a project employee, you shall not be entitled to the privileges and fringe benefits granted to our
regular employees, except those which may be provided by law or by this contract, as follows:
a. SSS/Philhealth/PAG-IBIG coverage during the term ofyour engagement;
 b. 13thmonthpayequivalentto1/12ofyouraggregate salaries in compliance with Philippine law;
c. Five-day service incentive leave with pay (after completing one year o f service)
d. Uniform; and
e. Meal allowance.
7. You agree to comply with all existing policies, rules and regulations of the Company, as well as those
which may hereafter be issued.
8. You agree to work in accordance with a work schedule determined by the Company and to render
overtime/extra work on any day in case there are urgent works to be done and/or immediate matters to be
attended to.
9. You shall be solely responsible and accountable for any loss of, or damage to, any materials, tools,
equipment, etc., issued to you in the course of your employment.
10. You shall refrain from working for another employer, directly or indirectly, part-time of fulltime.
11. You shall not engage in or have any share or ownership in a business or occupation which may render
yourself a competitor of the Company nor act or enter into any transaction which may, in any manner,
compete or help any person compete with the Company.
12. You are required to handle all official documents o f the Company with utmost care and to keep any
information relating to the processes or operations of the Company, which you may have acquired in the
course of your employment confidential at all times. You agree that any breach of confidentiality will
constitute sufficient grounds for the immediate termination of your employment.
13. In case you intend to resign from the Company prior to the expiration of your Contract, you are
required to submit a thirty (30)-day written notice prior to the effectivity of such resignation; otherwise,
failure on your part to do so will render you liable for damages. Should you accept the foregoing terms
and conditions of employment, please indicate your acceptance by signing on the space provided for this
purpose."Just a few months after the commencement of the J68N Project, however, Mazda informed
[TSPC] of its low volume of orders for the 2011 model of Mazda 3 thus, the required amount of work was
also lessened. For this reason, [respondents] were not required to report for work everyday due to lack of
orders.To accommodate the employees under the J68N Project who were not earning salaries during the
times when they were not required to report for work, [TSPC] assigned them as sewers under the Project
GS41 Export Trim/Seats for Mitsubishi Lancer. [Respondent]s' schedule of work was alternating for both
J68N and GS4l.
In December 2012, the GS41 Project ended. However, with respect to the J68N Project, [TSPC] advised
[respondents] and their co- complainants that the same will not be completed as scheduled in December
2012, thus, [TSPC] offered the latter an extension of their project employment until June 30, 2013, to
which they agreed. At this juncture, on the belief that they already attained the status of regular
employees, [respondents] and their co-complainants filed a Complaint for regularization with the NLRC
on April 18, 2013 and May 22, 2013, respectively. On June 28, 2013, [TSPC] advised [respondents] of
another extension of J68N Project for one (1) week from June 30, 2013 until July 12, 2013 because the
arrival of the materials to be used will be delayed. This time, however, [respondents] and their co-
complainants declined the offer of extension of their project employment in view of their complaint for
regularization before the NLRC. As a result, on June 28, 2013, [TSPC] issued a letter informing the
[respondent]s and their co-complainants that their project employment with the company has ceased
effective July 1, 2013.
Perplexed, [respondent]s' Complaint for regularization has ripened to a Complaint for illegal dismissal
and non-payment of 13th month pay, with prayer for reinstatement, moral, exemplary, actual, nominal
damages and attorney's fee[s].In their Position Paper, [respondents] contended that they have attained the
status of regular employees because they performed activities for almost four years as sewers for [TSPC],
which are usually necessary and desirable to [TSPC's] usual business. [Respondents] posited that [TSPC]
discriminated against them for having two sets of employees, the regular and the non-regular, who are
performing the same sets of work. According to [respondent]s, [TSPC's] practice of rehiring them
continuously under the project employment contract was tainted with bad faith a.,d nothing but a mere
circumvention of the law to prevent their regularization.
For their part, [TSPC] sought the dismissal of the complaint for regularization on the ground that [it]
validly engaged [respondents and their co-complainants] as project employees pursuant to the separate
and distinct projects entered into by the company with various clients. [TSPC] maintained that the
company merely accepted projects for the manufacture of car seats, among other things, from third parties
and only on occasions when it has work contracts of this nature that it hires workers to do the job.
Necessarily, the company's work is dependent on the availability of projects to it by third parties. Hence,
the company's project arrangement with its employees is valid.
[TSPC] likewise posited that they complied with the requisites of a valid project employment such that
[respondents] were duly informed of their status as project employees at that time of their engagement;
the project to which complainants were engaged were sufficiently identified; and the company exercised
good faith in engaging [respondents and their co-complainants] as project employees since the company's
work is dependent on specific projects referred to it by its client. Thus, the duration of employment of its
employees cannot be made permanent.
Finally, [TSPC] contended that the repeated and successive rehiring of project employees do not qualify
[respondents] as regular employees, as length of service is not the controlling determinant of the
employment tenure of a project employee, but whether the employment has been fixed for a specific
project or undertaking and its completion has been determined at the time of the engagement of the
employee. Since the Complaint is devoid of merit, complainants' claim for attorney's fees is therefore
unjustified. Of the 27 TSPC sewers who originally filed complaints before the Regional Arbitration
Branch,23 entered into settlements with TSPC, leading to the dismissal of their respective
complaints.Only the herein respondents Annabelle C. Velasco, Renato Natividad, Florante Bilasa, and
Mary Ann Benigla opted to continue with the case.
Ruling of the Labor Arbiter.
The Labor Arbiter dismissed the respondents' complaint for lack of merit; but ordered TSPC to pay the
th
respondents 13 month pay for the period ofJanuary to June 2013.While the Labor Arbiter conceded the
fact that "complainants' work at [TSPC] was necessary or desirable in its usual business or trade,"
nevertheless ruled that they were validly engaged as project employees. Relying on the admission of the
complainants and the text of their employment contracts, the Labor Arbiter found that the complainants
were employed specifically for projects J68C, J68N, and GS41. The specific periods and estimated
durations of each project were clearly specified in the contract; and while they may have worked
simultaneously on J68N and GS4 l, this was merely an accommodation extended to them by TSPC so
they can continue working despite the low volume of orders for the J68N project. Such accommodation
did not operate to vest regular status upon complainants, since it was a mere contingency measure and the
basis of complainants' employment remained rooted in the J68N project employment contract. J68C and
J68N projects were not part of the TSPC's regular and habitual activities, but were specific projects
undertaken by TSPC pursuant to directives from its Japanese sister company Nanjo Sobi Kogyo (NSK),
as N S K could not meet the demand of its client Mazda. The Labor Arbiter found no proof that
complainants had entered into the project employment contracts under force, duress, or undue pressure.
The requirement for complainants to sign the contracts before being allowed to work cannot be construed
as a form of undue pressure, but as an indication that the agreement was essentially a contract of
adhesion, i.e., complainants were free to adhere or reject the terms of the employment contract as written.
Since complainants were validly hired as project employees, the fact that they were employed for more
than one year did not have the effect of regularization, for the one-year regularization period in Article
280 (now Article 295) of the Labor Code applies only to casual employees. As regards the non-
submission of termination reports to the Department of Labor and Employment (DOLE), the Labor
Arbiter held that the same is only an indicator of project employment and not a determinative test thereof.
The termination report requirement under DOLE Department Order No. 19 applies only to businesses in
the construction industry, and TSPC is not a construction company.
The Labor Arbiter gave short shrift to complainants' argument that TSPC was engaged in illegal
subcontracting, ruling that TSPC was merely sharing in the work contracts of its sister company in Japan.
Moreover, complainants do not claim to be employees of the purported original contractors, TSPC-Japan
and NSK; or of the purported principals who farmed out the work of seat production, i.e., Mitsubishi and
th
Mazda. Finally, the Labor Arbiter held that TSPC admitted to withholding complainants' 13 month pay
because they had not finished the company's clearance process. Consequently, the Labor Arbiter ordered
 th
TSPC to pay complainants their 13 month pay, subject to complainants' submission to TSPC's clearance
procedure.Aggrieved, respondents appealed before the National Labor Relations Commission (NLRC).
.
Ruling of the NLRC

After an exchange of pleadings, the NLRC affirmed the Labor Arbiter's decision, viz.:
After a careful review of the records, We believe that complainants were properly classified by the Labor
Arbiter as project employees. The contracts complainants signed with respondents unequivocally
indicated that they were hired as such. In the same contracts, they were notified of the duration and scope
of the projects for which they were engaged. (Records, pp. 453-477; 598-620). Complainants' allegation
that their contracts do not show a particular project but only that of a particular brand of seatbelt or
airbag, is specious to say the least. The manufacture of a specific brand can be considered a "project"
within the standpoint of law since it is a distinct undertaking, distinguishable from other activities, and the
completion of which is determinable. Projects [sic] employments contracts, such as those executed in this
case, are valid under the law. The Supreme Court in a number of cases has sustained the legitimacy of
contracts which fix an employment for a specific project or undertaking xx x.
In Villa vs. N[L]RC, G.R. No. 117043, 14 January 1998, the Supreme Court held that:
By entering into such a contract, an employee is deemed to understand that his employment is
coterminous with the project. He may not expect to be employed continuously beyond the completion of
the project. It is of judicial notice that project employees engaged for manual services or those for special
skills like those of carpenters or masons, are, as a rule, unschooled. However, this fact alone is not a valid
reason for bestowing special treatment on them or for invalidating a contract of employment. Project
employment contracts are not lopsided agreements in favor o f only one party thereto. The employer's
interest is equally important as that of the employee[s '} for theirs is the interest that propels economic
activity. While it may be true that it is the employer who drafts project employment contracts with its
business interest as overriding consideration, such contracts do not, of necessity, prejudice the employee.
Neither is the employee left helpless by a prejudicial employment contract. After all, under the law, the
interest of the worker is paramount.It is Our considered view that complainants voluntarily and freely
signed the subject project employment contracts with respondents. No evidence of force, duress or acts
that would tend to vitiate their consent had been presented to impair the validity of the contracts. From the
circumstances borne by the record, it appears that TOYO and complainants dealt with each other on more
or less on equal terms. Neither is there any proof, except for complainants' bare allegation, to establish
that the periods imposed by respondents in the employment contracts were designed to preclude
complainants' acquisition of tenurial security. It is basic in the rule of evidence that bare allegations,
unsubstantiated by evidence, are not equivalent to proof. In short, mere allegations are not evidence
(GSIS vs. Prudential Guarantee and Insurance, Inc., G.R. No. 165585 & 176892, 20 November 2013).
There being no controverting evidence, We are more inclined to believe that the specific periods
contained in the subject contracts were mainly due to the production requirements ofTOYO's clients.
Complainants next claimed that their repeated and successive hiring conferred upon them the status of a
regular employee. This argument is without legal basis. Length of service of a project employee is not the
controlling factor in determining the nature of his employment, but whether he had been hired for a
specific project that was made known at the time of his engagement (William Uy Construction
Corporation vs. Jorge Trinidad, G.R. No. 183250, 10 March 2010). The simple fact that complainants
were repeatedly hired for a considerable length of time did not automatically dissolve their status as
project employees. Finally, complainants contended that TOYO's failure to file termination reports with
DOLE proves that they were not project employees.
We are not persuaded.
As correctly held by the Labor Arbiter, the submission of termination reports to the DOLE is only one of
the indicators of project employment under Department Order No. 19 and not necessarily a test for
determining project employment. Considering the presence of the other indicators of project employment
in the case at bar, as explained above, We find no reason to reverse the Labor Arbiter's conclusion that
complainants were indeed project employees whose employment ended on the dates specified in their.
Respondents filed a motion for reconsideration, which the NLRC denied in a Resolution dated February
25, 2015. Consequently, respondents elevated the dispute via certiorari to the CA.
Ruling of the Court of Appeals
As earlier mentioned, the CA ruled that the NLRC committed grave abuse of discretion when it affirmed
the Labor Arbiter's decision. Thus, the appellate court reversed the NLRC and ordered the reinstatement
of respondents. Like the Labor Arbiter, the CA ruled that respondents performed functions which were
necessary and essential to TSPC's business. The appellate court also agreed that respondents were validly
hired as project employees; however, it held that TSPC's subsequent extension of respondents'
employment operated to vest them with regular employment status, viz. :The circumstances leading to the
extension of [respondent]s' employment, however, reveal that the period of completion of the "project" is
uncertain. To illustrate, the production of the car seats/trims for 2008 model Mazda vehicle was cut short
not because the "project" was completed but because the consumers' demand for the said model had
economically declined. Furthermore, [TSPC] stated that due to the low volume of orders for the 2011
model of Mazda 3 car seats/trims, the work for that particular project was also lessened. Hence,
[respondent]s were directed to report for work only three days in a week. Evidently, the period appearing
in the employment contract of [respondent]s does not pertain to the commencement and completion of the
supposed project considering that its completion is dependent on the fluctuating demands of the
consumers. As aptly discussed in Herma Shipyard, Inc. v. Oliveros, "Project" in the realm of business and
industry refers to a particular job or undertaking that is within the regular or usual business of employer,
but which is distinct and separate and identifiable as such from the undertakings of the company. Such
job or undertaking begins and ends at determined or determinable times.
Given the attendant circumstances in the case at bar, however, We are of the view that the period imposed
on the succeeding contracts of employment were intended to make it appear that [respondent]s were hired
on a per-project basis to circumvent the law on regularization and to preclude the acquisition of tenurial
security by the employee. Verily, the Court cannot countenance this practice as to do so would effectively
permit [TSPC] to avoid hiring permanent or regular employees by simply hiring them on a temporary or
casual basis, thereby violating the employees' security o f tenure relative to their jobs. The Supreme Court
consistently held that if it is apparent from the circumstances of the case "that periods have been imposed
to preclude acquisition of tenurial security by the employee," such project or fixed term contracts are
disregarded for being contrary to public policy, morals, good customs or public order, as in this case.
In any event, the desirability and indispensability of the activity performed by [respondent]s to the usual
business or trade of the company was furthered bolstered by the respondents' own action when during the
gap in petitioners' days of work, [TSPC] assigned them as sewers for the manufacture of car trims/seats
for Mitsubishi Lancer denominated as Project GS41. [TSPC's] contention that it only accommodated
[respondent]s for them to earn some income during their vacant days is a tenuous scheme in an attempt to
circumvent the law. The inevitable conclusion from the foregoing disquisition is that [respondent]s are
regular employees o f [TSPC] who are entitled to security o f tenure, hence, dismissible only if a just or
authorized cause exists therefor.
In ruling that TSPC's project-based employment scheme was a circumvention of respondents' right to
security of tenure, the CA dismissed TSPC's claim that its business model does not entail continued
production of car seats which would require the continued engagement of regular employees, viz.:
x x x [TSPC] does not deny the fact that it maintains a roster of regular employees who perform the same
functions and possess the same set of skills as that of [respondent]s. This fact, to Our mind, establishes
that [TSPC's] trade of business demands continuous productions of car seats and the operation of
manufacturing car seats continue regardless of the termination of a contract with a third party. In fact, as
discussed above, Mazda did not terminate its contract with [TSPC] for the production of seats for its
vehicle, it merely continued on to another model of car seats. Expectedly, [respondents] will agree to be
employed again lest they lose their only means of livelihood.
On the probative value of TSPC's non-submission of termination reports, the CA ruled:
The case of Sandoval further militates against the claim of the respondents because in that case, the
termination of the project employees was duly reported to the then Ministry ofLabor and Employment. It
is well- settled that the failure of the employer to file termination reports was an indication that an
employee was not a project but a regular employee. Moreover, Department Order No. 19 (as well as the
old Policy Instructions No. 20) requires employers to submit a report of an employee's termination to the
nearest public employment office every time the employment is terminated due to the completion of a
project. In this case, respondents utterly failed to adduce proof of termination reports required to be
submitted to the nearest public employment office for every completion of a project to which petitioners
were assigned. Such omission cannot but further strengthen the inescapable conclusion that petitioners are
truly a regular employee.
In addition to reinstatement and backwages, the CA also ordered TSPC to pay respondents PS0,000.00 as
moral damages, another PS0,000.00 as exemplary damages, and attorney's fees equivalent to 10 percent
(10%) of the total monetary award, premised on the finding that TSPC's repeated hiring of respondents on
project employment contracts was a malafide scheme meant Aggrieved, TSPC filed a motion for
reconsideration, which the appellate court denied through the assailed resolution. Hence, this petition for
review, which raises the following errors: to prevent respondents from acquiring regular employment
status.
THE HONORABLE COURT REVERSIBLE ERROR IN RULING THAT THE RESPONDENTS
WERE REGULAR EMPLOYEES. THE RECORDS CLEARLY SHOW THAT [TSPC] VALIDLY
ENGAGED RESPONDENTS AS PROJECT EMPLOYEES, PURSUANT TO THE SEP ARA TE AND
DISTINCT PROJECTS IT ENTERED INTO WITH VARIOUS CLIENTS. CONSEQUENTLY ,
RESPONDENTS' SEP ARA TION FROM THE COMP ANY UPON THE EXPIRA TION OF THE
PROJECT FOR WHICH THEY WERE ENGAGED WAS VALID.
A. THERE ARE OVERWHELMING LEGAL AND FACTUAL BASES WHICH SHOW THAT [TSPC]
COMPLIED WITH THE REQUIREMENTS OF A VALID PROJECT EMPLOYMENT.
B. THE J68C, J68N, AND GS41 PROJECTS ARE SEPARATE AND DISTINCT PROJECTS, EACH
HAVING ITS OWN SPECIFIC DURATION, THE PERIODS OF COMPLETION OF WHICH WERE
REASONABLY CERTAIN.
C. PERFORMANCE OF ACTIVITIES WHICH ARE USUALL Y NECESSARY AND DESIRABLE
TO THE [TSPC]'S BUSINESS OPERA TIONS DOES NOT AUTOMA TICALL Y MAKE
RESPONDENTS REGULAR EMPLOYEES.
D. THERE IS NO EVIDENCE TO SHOW THAT THE PROJECT EMPLOYMENT CONTRACTS
WERE ADOPTED TO PRECLUDE RESPONDENTS' REGULARIZA TION.
E. THE ABSENCE OF REPORTORIAL REQUIREMENTS WITH THE DOLE UPON COMPLETION
OF EACH PROJECT IS COMPLETELY IRRELEVANT TO THE VALIDITY OF RESPO:t\TDENTS'
ENGAGEMENT AND THE EXPIRATION OF THEIR CONTRACTS AS PROJECT EMPLOYEES.
F. RESPONDENTS' PROJECT EMPLOYMENT CONTRACTS AND THEIR OWN SINUMPAANG
SALAYSAY WOULD SHOW THAT THEY KNOWINGLY AND VOLUNTARILY ENTERED INTO
PROJECT EMPLOYMENT.
II.
SINCE THE RESPONDENTS WERE NOT ILLEGALLY DISMISSED, THEY ARE NOT ENTITLED
TO REINSTATEMENT WITH FULL BACKW AGES, MORAL AND EXEMPLARY DAMAGES,
AND ATTORNEY'S FEES.
Ruling of the Court
I.
Owing to the unique review procedure laid down by law and jurisprudence,this Court's task in appeals
from labor cases is limited to the determination of "whether the Court of Appeals erred in determining the
presence or absence of grave abuse of discretion and deciding other Jurisdictional errors of the NLRC."
As elucidated in Montoya v. Transmed Manila Corp./Mr. Ellena, et al. :In a Rule 45 review, we consider
the correctness of the assailed CA decision, in contrast with the review for jurisdictional error that we
undertake under Rule 65. Furthermore, Rule 45 limits us to the review of questions of law raised against
the assailed CA decision. In ruling for legal correctness, we have to view the CA decision in the same
context that the petition for certiorari it ruled upon was presented to it; we have to examine the CA
decision from the prism of whether it correctly determined the presence or absence of grave abuse of
discretion in the NLRC decision before it, not on the basis of whether the NLRC decision on the merits of
the case was correct. In other words, we have to be keenly aware that the CA undertook a Rule 65 review,
not a review on appeal, of the NLRC decision challenged before it. This is the approach that should be
basic in a Rule 45 review of a CA ruling in a labor case. In question form, the question to ask is: Did the
CA correctly determine whether the NLRC. Such an approach to the review of labor cases is based partly
on the great weight and respect accorded to findings of the national labor tribunals, especially when their
findings are concurrent and supported by substantial evidence. Conversely, the Labor Arbiters and the
NLRC commit grave abuse of discretion when they decide cases on the basis of findings and conclusions
which are not supported by substantial evidence.
II.Article 295 of the Labor Code provides:
ARTICLE 295. [280] Regular and Casual Employment. - The provisions of written agreement to the
contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be
deemed to be regular where the employee has been engaged to perform activities which are usually
necessary or desirable in the usual business or trade of the employer, except where the employment has
been fixed for a specific project or undertaking the completion or termination of which has been
determined at the time of the engagement of the employee or where the work or services to be performed
is seasonal in nature and the employment is for the duration of the season.An employment shall be
deemed to be casual if it is not covered by the preceding paragraph: Provided, That any employee who
has rendered at least one year of service, whether such service is continuous or broken, shall be
considered a regular employee with respect to the activity in which he is employed and his employment
shall continue while such activity exist. (Emphases, italics, and underscoring supplied)
It is clear from the foregoing provision that there are two determinative factors for the existence of regular
employment: the nature of the work performed by the employee and the length of service rendered. If it
be found that an employee performs functions which are usually necessary or desirable in the employer's
usual business or trade, or if a casual employee has rendered at least one year of service, then the law
considers that employee as a regular employee even if the employment agreement, whether written or
oral, provides otherwise. However, this general rule does not apply if the worker was employed for a
specific project or if the work or service performed is seasonal in nature. The reason behind the different
treatment accorded to project employees was explained by this Court in De Ocampo, Jr. v. National
Labor Relations Commission:
The rationale of this rule is that if a project has already been completed, it would be unjust to require the
employer to maintain them in the payroll while they are doing absolutely nothing except waiting until
another project is begun, if at all. In effect, these stand-by workers would be enjoying the status of
privileged retainers, collecting payment for work not done, to be disbursed by the employer from profits
not earned. This is not fair by any standard and can only lead to a coddling of labor at the expense of
management. Consequently, Article 295 defines project employees as workers whose employment has
been fixed for a specific project or undertaking the completion or termination of which has been
38
determined at the time of their engagement. In ALU-TUCP v. National Labor Relations Commission,
this Court expounded on what the law means by a "project":x x x The "project" for the carrying out of
which "project employees" are hired would ordinarily have some relationship to the usual business of the
employer. Exceptionally, the "project" undertaking might not have an ordinary or normal relationship to
the usual business of the employer. In this latter case, the determination of the scope and parameters ofthe
"project" becomes fairly easy. It is unusual (but still conceivable) for a company to undertake a project
which has absolutely no relationship to the usual business of the company; thus, for instance, it would be
an unusual steel-making company which would undertake the breeding and production offish or the
cultivation of vegetables. From the viewpoint, however, of the legal characterization problem here
presented to the Court, there should be no difficulty in designating the employees who are retained or
hired for the purpose of undertaking fish culture or the production of vegetables as "project employees,"
as distinguished from ordinary or "regular employees," so long as the duration and scope of the project
were determined or specified at the time of engagement of the "project employees." For, as is evident
from the provisions of Article 280 of the Labor Code, quoted earlier, the principal test for determining
whether particular employees are properly characterized as "project employees" as distinguished from
"regular employees," is whether or not the "project employees" were assigned to carry out a "specific
project or undertaking," the duration (and scope) of which were specified at the time the employees were
engaged for that project.
In the realm of business and industry, we note that "project" could refer to one or the other of at least two
(2) distinguishable types of activities. Firstly, a project could refer to a particular job or undertaking that
is within the regular or usual business of the employer company, but which is distinct and separate, and
identifiable as such, from the other undertakings of the company. Such job or undertaking begins and
ends at determined or determinable times. The typical example of this first type of project is a particular
construction job or project of a construction company. A construction company ordinarily carries out two
or more discrete identifiable construction projects: e.g., a twenty-five- storey hotel in Makati; a residential
condominium building in Baguio City; and a domestic air terminal in Iloilo City. Employees who are
hired for the carrying out of one of these separate projects, the scope and duration of which has been
determined and made known to the employees at the time of employment, are properly treated as "project
employees," and their services may be lawfully terminated at completion of the project.The term "project"
could also refer to, secondly, a particular job or undertaking that is not within the regular business of the
corporation. Such a job or undertaking must also be identifiably separate and distinct from the ordinary or
regular business operations of the employer. The job or undertaking also begins and ends at determined or
determinable times. x x xThe ALU-TUCP ruling has since become entrenched in our jurisprudence.
Accordingly, workers may be considered project employees regardless of the nature of the work they
perform, as long as the essential elements of project employment are alleged and proven, i.e., I) that they
were hired for a specific project or undertaking; and 2) the completion or termination of the project or
undertaking for which they were hired has been determined at the time of their engagement.Project
employment is further regulated by DOLE Department Order No. 19, Series of 1993 (DO 19-1993),
Section 2.2 of which provides:
2.2. Indicators ofproject employment. - Either one or more ofthe following circumstances, among others,
may be considered as indicators that an employee is a project employee.
(a) The duration ofthe specific/identified undertaking for which the worker is engaged is reasonably
determinable.
(b) Such duration, as well as the spee1fic work/service to be performed, is defined in an employment
agreement and is made clear to the employee at the time of hiring.
(c) The work/service performed by the employee is in connection with the particular project/undertaking
for which he is engaged.
(d) The employee, while not employed and awaiting engagement, is free to offer his services to any other
employer.
(e) The termination ofhis employment in the particular project/undertaking is reported to the Department
of Labor and Employment (DOLE) Regional Office having jurisdiction over the workplace within 30
days following the date of his separation from work, using the prescribed form on employees'
terminations/dismissals/suspensions.
(f) An undertaking in the employment contract by the employer to pay completion bonus to the project
employee as practiced by most construction companies.
III.A.
In this case, all three tribunals a quo agreed that: 1) the initial engagement of respondents as TSPC project
employees was valid; and 2) respondents performed work that was necessary and essential to TSPC's
business. The CA, however, found that the requisites of a valid project employment under Article 295
were not met because the completion periods of the projects for which respondents were employed were
uncertain, viz.:
To illustrate, the production of the car seats/trims for 2008 model Mazda vehicle was cut short not
because the "project" was completed but because the consumers' demand for the said model had
economically declined. Furthermore, respondent company stated that due to the low volume of orders for
the 2011 model of Mazda 3 car seats/trims, the work for that particular project was also lessened. Hence,
petitioners were directed to report for work only three days in a week. Evidently, the period appearing in
the employment contract of petitioners does not pertain to the
commencement and completion of the supposed project considering that its CA Decision, rol/o (vol. I), p.
72. completion is dependent on the fluctuating demands of the consumers.
The records show that the J68C project was completed in June 2011, ahead of the earlier estimated date of
September 2011, because of low demand; while the J68N project was extended from December 2012 to
June 2013, because of fluctuations in demand for the Mazda 3 2011 model and the delayed arrival of the
raw materials for the car seats. The uniform employment contracts signed by respondents state:

I. You shall be engaged for the position ofSewer solely for the manufacture of J68C Export Trim for
Mazda 3 vehicle (hereafter, the "Project"). The Project started last August 2008 and is estimated to be
finished by September 2012.
2. As such, your employment shall commence on 30 September 2009 and end on 29 September 2012, or
until the actual date of the completion of the Project, whichever comes earlier. As a project
employee, your employment is co-terminus with the duration of the Project, upon the completion of
which, your employment will automatically cease without any need for verbal or written notice.
1. You shall be engaged for the position ofSewer solely for the manufacture of J68N Export Seat Trim for
Mazda 3 vehicle (hereinafter referred to as the "Project"). The Project will start on June 8, 2011 and is
estimated to be finished by December 2012.
2. As such, you[rl employment shall commence on June 8, 2011 and ends on December 2012, or until the
actual date of the completion of the project, whichever comes earlier. As a project based employee, your
employment is co-terminus with the duration of the Project, upon completion of which, your employment
will automatically cease without any need for verbal or written notice. xx x As a project employee, you
were likewise engaged to work as a Sewer for the manufacture of GS41 Export Trim for Mitsubishi
Lancer vehicle (hereafter, the "Project". The Project started last October 2011 and is estimated to be
finished bv December 2012. As such your employment, shall commence on October 14, 2011 and end on
December 2012, or until the actual date of the completion of the Project, whichever is earlier. As a project
employee, your employment is co-[terminous] with the duration of the Project, upon completion of
which, your employment will automatically cease without any need for verbal or written notice.
As earlier stated, the actual duration of the J68C and J68N projects did not perfectly correspond to the
periods set out in the employment contracts signed by respondents,but were either shortened or extended
according to the economic forces of supply and demand. This finding, taken together with Article 295's
dictate that the completion or termination of the project be determined at the time of engagement of the
employee, does seem to support the conclusion that the requisites of a valid project employment were not
met. However, there are other factual circumstances which indicate otherwise:
1) Respondents' employment contracts clearly state that their employment is coterminous with the actual
duration of the project; and as such, their engagement may be terminated at an earlier date if the project is
finished ahead of schedule. Likewise, the employment contracts clearly indicate that they are being
engaged as project employees. Furthermore, neither the NLRC nor the CA disturbed the Labor Arbiter's
finding that respondents were not in any way constrained, forced, or pressured to sign the project
employment contracts.
2) In cases of project extension, as with the J68N project, TSPC issued notices of extension to the project
employees concerned, wherein the new end dates of the project are clearly indicated. The Court is
convinced that this is an indication that the TSPC's projects have discrete and determinable start and end
dates which are nevertheless adjusted frequently due to several factors such as consumer demand for
automobiles (of which the car seats are but a component), arrival of raw materials, etc. Under Article
1193 of the Civil Code, a period is valid if it is set to end upon a day certain which must
Here, the completion of the projects was certain, even though the exact date thereof was necessarily
come, although it is not precisely known when. dependent upon several economic factors.
III.B.
Another point of divergence between the labor tribunals and the appellate court involved the respondents'
simultaneous engagement in the J68N and GS41 projects. The LA and the NLRC gave credence to
TSPC's assertion that the simultaneous engagement of respondents in two projects was merely an
accommodation it made after orders for the J68N project declined and respondents lost workdays. Rather
than let their J68N project employees stay idle, TSPC offered to place them in the GS4l project. On the
other hand, the CA considered such simultaneous engagement as further proof that respondents were
indeed regular employees who performed tasks which are necessary and essential to TSPC'S business.
Records show that TSPC entered into separate contracts with complainants who were employed in the
GS41 project. The GS41 employment contract states:
This is to confirm your employment with the Company as a project employee. As a project employee, you
were likewise engaged to work as a Sewer for the manufacture of GS41 Export Trim for Mitsubishi
Lancer vehicle (hereafter, the "Project". The Project started last October 2011 and is estimated to be
finished by December 2012. As such your employment, shall commence on October 14, 2011 and end on
December 2012, or until the actual date of the completion of the Project, whichever is earlier. As a project
employee, your employment is co-[terminous] with the duration of the Project, upon completion of
which, your employment will automatically cease without any need for verbal or written notice.
Other provisions of this contract may refer to the Project To this Court's mind, the fact that TSPC entered
into separate contracts for the GS41 project, taken together with the reference in said contracts to the
J68N project contract, constitutes substantial evidence in support ofTSPC's assertion that respondents'
engagement in the GS41 project was a mere contingency measure meant to optimize manpower
utilization and allow respondents to continue working while the J68N project remained idle due to low
order volume. If TSPC were really using project employment to prevent regularization of its workers, it
could have very easily ordered respondents to work on several projects simultaneously, immediately after
they were hired for the J68C project; or asked respondents to work on other projects without entering into
separate contracts with them for such work. However, as borne out by the record, TSPC entered into
separate and distinct contracts for each of the three projects for which respondents were engaged.
Furthermore, TSPC only resorted to simultaneous engagement when there was low volume of orders -
and hence, low work volume - for a certain project. This is in contrast to other instances where this Court
found that project employment was being used to circumvent tenurial security either because workers
were hired ostensibly as project employees but were assigned to non-project tasks and were regularly re-
hired to the same position, or were made to work on other company projects without separate contracts
and under different job descriptions.
III.C.
In addition to the allegedly indefinite employment period and simultaneous engagement of respondents in
two projects, the C A also considered TSPC's apparent employment of regular workers which perform the
same tasks as its project employees as proof that TSPC does not conduct its manufacturing business on a
project basis, which would justify the hiring of project employees. However, this is disproven by the
Labor Arbiter's unchallenged finding that TSPC's involvement in the J68C and J68N projects was
"pursuant to the agreement by and between Mazda and [TSPC's] mother company in Japan," whereby
TSPC-Japan subcontracted the work of car seat production to its subsidiaries NSK and TSPC. Moreover,
it has already been proven that respondents were hired for particular projects ofTSPC and were
discharged upon completion thereof Given these circumstances, this Court is convinced that TSPC's
business model is indeed based on discrete and separate projects which are based on work contracts from
automobile makers, bus manufacturers, and the like, which are referred to TSPC by its allied companies
in Japan. Thus, this Court is likewise convinced that TSPC's business model is based on "projects which
are distinct, separate, and identifiable from each other."Consequently, since TSPC manufactures products
on a project basis, it may hire project employees to cope with the demands of its current projects. It must
be reiterated that the essence of the distinction between project and regular employment lies not in the
nature of the activity performed, but in the engagement for a specific undertaking with a reasonably
determinable time frame which is determined at the time of hiring and communicated to the employee.
III.D.
Lastly, the CA considered TSPC's non-filing of termination reports as an indicator that respondents were
not project employees. TSPC counters that the termination report requirement is only an indicator of
project employment and not a requisite for the validity thereof It also argues that DO 19-1993, which
imposed the termination report requirement, applies only to project employment in the construction
industry.While it is true that DO 19-1993 was originally meant to apply only to project employment in the
construction industry, its rules and principle have nevertheless been applied to other industries where
project employment is practiced. The rationale for such broadened application of the Department Order
was explained in Maraguinot, Jr. v. NLRC, where this Court applied DO 19-1993 and regularized the
employment of the petitioning work pool employees who have rendered necessary and essential services
for a movie production company in more than twenty company projects for a continuous period of three
years, viz.:While Lao admittedly involved the construction industry, to which Policy Instruction No.
20/Department Order No. 19 regarding work pools specifically applies, there seems to be no impediment
to applying the underlying principles to industries other than the construction industry. Neither may it be
argued that a substantial distinction exists between the projects undertaken in the construction industry
and the motion picture industry. On the contrary, the raison d' etre of both industries concern projects with
a foreseeable suspension of work. Consequently, submission of termination reports should now be
considered an indicator of project employment not only in the construction industry but also in similarly
situated industries where works are conducted on a project basis and which hire project employees as a
matter of common practice.
However, it must be reiterated that submission of termination reports is only one of several indicators of
project employment. Section 2.2 ofDO 19- 1993 clearly states that "either one or more of the following
circumstances, among others, may be considered as indicators that an employee is a project employee."
This is clearly because the DOLE did not intend for DO 19-1993 to supplant the statutory requisites of a
valid project employment provided in the Labor Code. Thus, in determining the existence of a valid
project employment, the essential test remains that laid down by Article 295 of the Labor Code, with the
indicators in DO 19-1993 applying suppletorily. In Quebral, et al. v. Angbus Construction, Inc., et al., this
Court held: Based on [Section 2.2. of DO 19-1993], it is clear that the submission of the termination
report to the DOLE "may be considered" only as an indicator of project employment. By the provision's
tenor, the submission of this report, by and of itself, is therefore not conclusive to confirm the status of
the terminated employees as project employees, especially in this case where there is a glaring absence of
evidence to prove that petitioners were assigned to carry out a specific project or undertaking, and that
they were informed of the duration and scope of their supposed project engagement, which are, in fact,
attendant to the first two (2) indicators of project employment in the same DOLE issuance above-cited.In
this case, despite the non-submission of termination reports, there is substantial evidence on record to
prove that the requisites of a valid project employment under Article 295 were met. TSPC presented not
only the employment contracts signed by respondents but also the notices of termination or extension of
each of the three projects worked on by respondents, to prove that the nature of their employment as
project employees, as well as the date of completion or termination of the projects, were communicated to
respondents at the time of their engagement. It was likewise established that the completion or
termination dates of the projects were sufficiently determinate. Section 3.3(a) ofDO 19-1993 provides:
3.3. Project employees entitled to separation pay. -
a) Project employees whose aggregate period of continuous employment in a construction company is at
least one year shall be considered regular employees, in the absence of a "day certain" agreed upon by the
parties for the termination of their relationship. Project employees who have become regular shall be
entitled to separation pay.
A "day" as used herein, is understood to be that which must necessarily come, although it may not be
known exactly when. This means that where the final completion of a project or phase thereof is in fact
determinable and the expected completion is made known to the employee, such project employee may
not be considered regular, notwithstanding the one-year duration of employment in the project or phase
thereof or the one-year duration of two or more employments in the same project or phase of the
project.The completion of the project or any phase thereof determined on the date originally agreed upon
or the date indicated in the contract or, if the same is extended, the date of termination of project
extension.
Furthermore, as found by the Labor Arbiter, respondents failed to prove their allegation that they were
forced, pressured or coerced into signing the project employment contracts. All told, the CA committed
reversible error when it found the NLRC guilty of grave abuse of discretion in upholding the Labor
Arbiter's dismissal of respondents' complaints.
WHEREFORE, the present petition is GRANTED. The November 29, 2017 Decision and the July 11,
2018 Resolution of the Court of Appeals in CA- G.R. SPNo.140391 are hereby REVERSED and SET
ASIDE. TheDecember 29, 2014 and February 25, 2015 Resolutions of the National Labor Relations
Commission in NLRC Case Nos. RAB-IV-04-00530-13-L, RAB-IV-04-00534- 13-L, RAB-IV-04-00536-
13-L, RAB-IV-04-00538-13-L, RAB-IV-04-00540- 13-L, RAB-IV-04-00592-13-L, RAB-IV-07-00959-
13-L, RAB-IV-07-00960- 13-L, RAB-IV-07-00961-13-L, and RAB-IV-07-00962-13-L (NLRC LAC No.
10-002481-14) are hereby REINSTATED.
SO ORDERED.
 DIGEST
Case Digested by: LACIDA, ROMEL

Toyo Seat Philippines Corporation/Yoshihiro Takahama v. Annabelle C. Velasco, et al., G.R. No.
240774

FACTS:
Petitioner TSPC, formerly Automotive Interiors Corporation, is a Philippine corporation engaged
in manufacturing car seats, seat and door trims, wire harnesses, manual binders, rear frames, bus seats,
and cinema seats; while petitioner Yoshihiro Takahama was TSPC's president. In 2008 and 2009, TSPC
hired respondents as sewers.The petitioner engaged the services of the respondent as sewers for project
J68C, from August 2008 until September 2012. However, the project was terminated earlier due to the
request of TSPC's client Mazda to the stop the production of the J68C. In lieu thereof, Mazda engaged
another project, J68N, with the petitioner to manufacture car seats specifically designed for the new 2011
Mazda 3 model. The respondents agreed to be employed under the second project by affixing their
signature on the letter dated May 31, 2011 issued by TSPC. The said employment was covered by project
employment contract dated June 8, 2011, from June 8, 2011 until December 20, 2012.

Just a few months from the start of the J68N project, however Mazda informed petitioner of its
low volume of orders for the 2011 model of Mazda 3, consequently, the required amount of work was
also lessened. Unfortunately respondents were not required to report to work everyday due to lack of
orders.To accommodate the employees under the J68N project who were not earning salaries during the
times when they were not required to report for work, petitioner assigned them as sewers under the
project GS41 for Mitsubishi Lancer. Respondents' schedule of work alternating for both J68N and GS41.

In December 2012, the GS41 project ended. However, with respect to the J68N project, petitioner
advised respondents that the same will not be completed as schedule in December 2012, thus TSPC
offered the respondents an extension of their project employment until June 30, 2013, to which they
agreed.

On the belief that respondents have attained the status of regular employees, the latter filed a
complaint for regularization with the NLRC. LA ruled in favor of the petitioner, and the same decision
was affirmed by NLRC,however, reversed by CA.

ISSUE/S: Whether or not the respondents herein have attained the status of a regular employee?

COURT DECISION:
According to the High Court, the respondents have not attained the status of a regular employee.
Article 295 of the Labor Code gives a clear definition of a regular and casual employees.
ARTICLE 295. [280] Regular and Casual Employment. - The provisions of written agreement to the
contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be
deemed to be regular where the employee has been engaged to perform activities which are usually
necessary or desirable in the usual business or trade of the employer, except where the employment has
been fixed for a specific project or undertaking the completion or termination of which has been
determined at the time of the engagement of the employee or where the work or services to be performed
is seasonal in nature and the employment is for the duration of the season.
 It is clear from the foregoing provision that there are two determinative factors for the existence
of regular employment: the nature of the work performed by the employee and the length of service
rendered. If it be found that an employee performs functions which are usually necessary or desirable in
the employer's usual business or trade, or if a casual employee has rendered at least one year of service,
then the law considers that employee as a regular employee even if the employment agreement, whether
written or oral, provides otherwise. However, this general rule does not apply if the worker was employed
for a specific project or if the work or service performed is seasonal in nature.

Above provision defines project employees as workers whose employment has been fixed for a
specific project or undertaking the completion or termination of which has been determined at the time of
their engagement.

The Supreme Court citing also the ruling in the case of ALU-TUCP,"workers may be considered
project employees regardless of the nature of the work they perform, as long as the essential elements of
project employment are alleged and proven, i.e., I) that they were hired for a specific project or
undertaking; and 2) the completion or termination of the project or undertaking for which they were hired
"
has been determined at the time of their engagement.

In the given case, the contract executed by the petitioner in which respondents have freely signed
shows certainty of the terms and conditions of a project by which respondents have been hired. It is true
that there was an extension of the project but such end date of project-extension would truly come. Lastly,
in support of the High Court's reasoning relating to a project employee, cited Article 1193 of the Civil
Code, a period is valid if it is set to end upon a day certain which must necessarily come, although it is
not precisely known when. Here, the completion of the projects was certain, even though the exact date
thereof was dependent upon several economic factors. Thus, respondents are not deemed regular
employees but project employees.
DORELCO EMPLOYEES UNION-ALU-TUCP VS. DON ORESTES ROMUALDEZ ELECTRIC
COOPERATIVE(DORELCO), INC., G.R. NO. 240130-MARCH 15, 2021

RESOLUTION
M. LOPEZ, J.:
The timeliness of an appeal from the voluntary arbitrator's decision is the main issue in this Petition for
Review on Certiorari under Rule 45 of the Rules of Court assailing the Court of Appeals' (CA)
Resolutions dated March 8, 2018 and May 21, 2018 in CA-G.R. CEB-SP No. 11429.

ANTECEDENTS
In 2012, the DORELCO Employees Union-ALU TUCP (Union) and Don Orestes Romualdez Electric
Cooperative, Inc. (Company) submitted for arbitration before the National Conciliation and Mediation
Board (NCMB) the issue on whether the rank and file employees are entitled to salary adjustments under
the collective bargaining agreement. Meantime, several employees retired from the service, namely,
Gregorio Pingol, Reynaldo Canales, Vicente Bagol, Anacleto Cayubit, Menandro Roa, Benjamin
Gabrieles, Ian Jayan (Pingol, et al.), Epigenio S. Lumbre, Rosalita D. Cardafia, Policarpio A. Tupaz,
Leonilo L. Cahayag, and Gerardo M. Los Banos (Lumbre, et al.). The Company required the employees
to sign quitclaims so they can receive their retirement benefits. However, Pingol, et al. refused and opted
to wait for the resolution ofthe arbitration case. On the other hand, Lumbre, et al. executed their
quitclaims.
On September 25, 2012, the NCMB voluntary arbitrator ruled that the employees are entitled to salary
increases in 2010 and 2011, thus:
WHEREFORE, premises considered, Judgment is hereby rendered: xx x x
II. Ordering respondent DORELCO, Inc. to:
a. Pay every employee covered by the current CBA the across-the-board increase amounting to
[P]l,347.68 per month for the period January 2010 to December 2010, pursuant to Section 1, Article VII
of the parties' current CBA;
b. Grant and Pay all rank-and-file employees covered by the current CBA, the corresponding increase
amounting to [P)700.00, pursuant to Paragraph 2, Section 1, Article VII of the parties' current CBA.
Accordingly, the Company paid Pingol, et al. their retirement benefits with salary differentials.
Thereafter, the Union submitted for arbitration before the NCMB the issue on whether Lumbre, et al. can
claim the salary adjustments. On September 22, 2017, the voluntary arbitrator held that Lumbre, et al. are
not entitled to the salary increases since they had executed quitclaims upon their retirement. Dissatisfied,
the Union moved for a reconsideration. On November 9, 2017, the arbitrator denied the motion for lack of
merit. On November 27, 2017, the Union received a copy of the voluntary arbitrator's resolution. On
December 12, 2017, the Union elevated the case to the Court of Appeals (CA) through a Petition for
Review under Rule 43 docketed as CA-G.R. CEB-SP No. 11429.

On March 8, 2018, the CA dismissed the petition. The CA explained that the voluntary arbitrator's ruling
is not subject to a motion for reconsideration and becomes final and executory unless appealed within 10
calendar days from notice, thus:

The Court further notes that the present petition was filed fifteen (15) days after the petitioner's receipt of
the Voluntary Arbitrator's resolution denying the motion for reconsideration.
It is not amiss to stress, at this juncture, that decisions or awards of the Voluntary Arbitrator are final and
executory after ten (10) days from receipt of a copy thereof; and, a motion for reconsideration is not
allowed. This is clearly stated in Section 7, Rule XIX of DOLE's Department Order (DO) No. 40, series
of 2003, thus:Rule XIX, Section 7. Finality of Award/Decision. The decision, order, resolution or award
of the voluntary arbitrator or panel of voluntary arbitrators shall be final and executory after ten (10)
calendar days from receipt of the copy of the award or decision by the parties and it shall not be subject of
a motion for reconsideration.The pertinent provisions of the 2005 Procedural Guidelines likewise provide
that: Section 6. Finality of Decisions. The decision of the Voluntary Arbitrator shall be final and
executory after ten (10) calendar days from receipt of the copy of the decision by the parties. Section 7.
Motions for Reconsideration. The decision of the Voluntary Arbitrator is not subject of a Motion for
Reconsideration.Based on the foregoing, the decision of the voluntary arbitrator is not subject of a motion
for reconsideration and it becomes final and executory after ten (10) calendar days from receipt of the
copy of the decision by the parties; unless an appeal to reverse or modify the said award or decision is
filed before the Court of Appeals by way of Rule 43 of the Rules of Court within 10 calendar days, and
not 15 days as provided under Rule 43, from receipt of the award or decision. Accordingly, the Court
finds that the decision of the Volunta!"y Arbitrator subject of this appeal is already final and executory.
Hence, beyond this Court's appellate jurisdiction.
SO ORDERED. (Emphases supplied.)

The Union sought reconsideration invoking the pronouncement in Teng v. Pahagac that the 10-day period
gave the aggrieved parties the opportunity to move for a reconsideration from the voluntary arbitrator's
decision consistent with the principle of exhaustion of administrative remedies. On May 21, 2018, the CA
denied the motion. The CA cited the ruling in Philippine Electric Corp. (PHILEC) v. CA that a party may
choose to reconsider or appeal the voluntary arbitrator's decision within 10 calendar days from notice.
Yet, the Union filed its appeal beyond the 10-day reglementary period. Specifically, the Union received
the denial of its motion for reconsideration on November 27, 2017 but filed a petition for review before
the CA only on December 12, 2017 or five days late, viz.:The Court is not unmindful of the case of Teng
v. Pahagac wherein the Honorable Supreme Court indeed made a pronouncement that an appeal from the
decision of the voluntary arbitrator to the CA via Rule 43 of the Rules ofCourt requires exhaustion
ofavailable remedies by filing a motion for reconsideration x x x.Meanwhile, on 10 December 2014[,] the
Honorable Supreme Court promulgated its decision in Philippine Electric Corporation v. Court
ofAppeals wherein the Honorable Supreme Court reiterated that notwithstanding the rules, a party may
choose to file a motion for reconsideration; however, the same must be filed within 10 days from receipt
of the decision. In the same case, it was likewise categorically held that an appeal before the Court of
Appeals by way of Rule 43 of the Rules of Court should be filed within 10 calendar days, and not 15 days
as provided under Rule 43, from receipt of the award or decision, or as in this case from the resolution
denying the motion for reconsideration .As borne by the records, the pet1t1oner herein received the 22
September 2017 decision of the voluntary arbitrator on 3 October 2017. Allegedly, thereafter, a timely
motion for reconsideration was fi led assailing said decision. The motion was nonetheless denied in a
resolution issued by the voluntary arbitrator on 9 November 2017. A copy of the resolution was received
by the petitioner herein on 27 November 2017. Thus, the petitioner herein had until 7 December 2017, a
Thursday, to file an appeal under Rule 43 before this Court. However, the present appeal was filed only
on 12 December 2017 - 5 days after the expiration of the reglementary period within which to file their
appeal.Hence, the present petition was filed beyond the 10-day reglementary period provided under the
law. On that ground, the Court maintains that the decision of the Voluntary Arbitrator subject of this
appeal has already become final and executory. SO ORDERED. Hence, this recourse. The Union argues
that the proper period to appeal the voluntary arbitrator's decision to the CA should be 15 days from
receipt of the denial of the motion for reconsideration. The Union also contends that Lumbre, et al. are
entitled to salary differentials and that the quitclaims cannot deprive them of benefits under the collective
bargaining agreement. In contrast, the Company maintained that an appeal is a mere privileg~ which may
be exercised only in the manner provided by law. The Company reiterated that the period to appeal the
voluntary arbitrator's decision to the CA is 10 days from notice.
RULING
The petition is meritorious.
Under Article 276 of the Labor Code, the award or decision of voluntary arbitrators shall be final and
executory after 10 calendar days from notice. On the other hand, Rule 43 of the Rules of Court provides
that an appeal from the judgment or final orders ofvoluntary arbitrators must be made within 15 days
from notice. With these, the Court has alternatively used the 10-day or 15-day reglementary periods. In
Guagua National Colleges v. CA, the Court En Banc settled the confusion and clarified that the 10-day
period in Article 276 should be understood as the time within which the adverse party may move for a
reconsideration from the decision or award of the voluntary arbitrators. Thereafter, the aggrieved party
may appeal to the CA within 15 days from notice pursuant to Rule 43 ofthe Rules ofCourt, viz.:
Given the variable rulings of the Court, what should now be the period to be followed in appealing the
decisions or awards ofthe Voluntary Arbitrators or Panel of Arbitrators?In the 2010 ruling in Teng v.
Pahagac, the Court clarified that the 10-day period set in Article 276 of the Labor Code gave the
aggrieved parties the opportunity to file their motion for reconsideration, which was more in keeping with
the principle ofexhaustion of administrative remedies, holding thusly: In the exercise of its power to
promulgate implementing rules and regulations, an implementing agency, such as the Department of
Labor, is restricted from going beyond the terms of the law it seeks to implement; it should neither
modify nor improve the law. The agency formulating the rules and guidelines cannot exceed the statutory
authority granted to it by the legislature.
By allowing a 10-day period, the obvious intent of Congress in amending Article 263 to Article 262-A is
to provide an opportunity for the party adversely affected by the VA's decision to seek recourse via a
motion for reconsideration or a petition for review under Rule 43 of the Rules of Court filed with the CA.
Indeed, a motion for reconsideration is the more appropriate remedy in line with the doctrine of
exhaustion of administrative remedies. For this reason, an appeal from administrative agencies to the CA
via Rule 43 of the Rules of Court requires exhaustion of available remedies as a condition precedent to a
petition under that Rule.
The requirement that administrative remedies be exhausted is based on the doctrine that in providing for a
remedy before an administrative agency, every oppo1iunity must be given to the agency to resolve the
matter and to exhaust all oppo1iunities for a resolution under the given remedy before bringing an action
in, or resorting to, the courts ofjustice. Where Congress has not clearly required exhaustion, sound
judicial discretion governs, guided by congressional intent.
By disallowing reconsideration of the VA's decision, Section 7, Rule XIX of DO 40-03 and Section 7 of
the 2005 Procedural Guidelines went directly against the legislative intent behind Article 262-A of the
Labor Code. These rules deny the V A the chance to correct himself and compel the courts of justice to
prematurely intervene with the action of an administrative agency entrusted with the adjudication of
controversies coming under its special knowledge, training and specific field of expertise. In this era of
clogged court dockets, the need for specialized administrative agencies with the special knowledge,
experience and capability to hear and determine promptly disputes on technical matters or intricate
questions of facts, subject to judicial review, is indispensable. In Industrial Enterprises, Inc. v. Court
ofAppeals, we ruled that relief must first be obtained in an administrative proceeding before a remedy will
be supplied by the courts even though the matter is within the proper jurisdiction of a court.
Hence, the 10-day period stated in Article 276 should be understood as the period within which the party
adversely affected by the ruling of the Voluntary Arbitrators or Panel of Arbitrators may file a motion for
reconsideration. Only after the resolution of the motion for reconsideration may the aggrieved party
appeal to the CA by filing the petition for review under Rule 43 of the Rules of Court within 15 days from
notice pursuant to Section 4 of Rule 43.
denying its motion for reconsideration on November 27, 2017. As such, the Union had 15 days or until
December 12, 2017 within which to perfect an appeal. Verily, the Union filed a petition for review well
within the prescribed period. The CA erred in dismissing the petition outright based solely on procedural
grounds. Thus, a remand of the case for a resolution on the merits is warranted.
Lastly, the Guagua National Colleges ruling on the c01Tect construction of Article 276 of the Labor
Code is applicable in the instant case although it was rendered after the assailed CA resolutions were
issued. Suffice it to say that the Court's interpretation ofa statute constitutes part ofthe law as ofthe date it
was originally passed. A judicial doctrine does not amount to the passage of a new law but merely
establishes the contemporaneous legislative intent that the statute intends to effectuate.To be sure, the
Court had expressly directed and reminded the Department of Labor and Employment and the NCMB to
revise or amend the rules of procedure in the conduct of voluntary arbitration to reflect the Guagua
National Colleges decision.
FOR THESE REASONS, the petition is GRANTED. The Court of Appeals' Resolutions dated March 8,
2018 and May 21, 2018 in CA-G.R. CEB-SP No. 11429 are REVERSED and SET ASIDE. The case is
REMANDED to the Court of Appeals for a proper resolution on the merits with dispatch.
SO ORDERED.
 DIGEST
Case Digested by: LACIDA, ROMEL

DORELCO EMPLOYEES UNION-ALU-TUCP V. DON ORESTES ROMUALDEZ ELECTRIC

COOPERATIVE(DORELCO), INC., G.R. NO. 240130-MARCH 15, 2021

FACTS:
DORELCO Employees Union and DORELCO submitted for arbitration before the NCMB the
issue on whether the rank and file employees are entitled to salary adjustments under the collective
bargaining agreement. Meantime, several employees retired from the service and the company required
them to sign quitclaims so they can receive their retirement benefits. However, Pingol, et al. refused and
opted to wait for the resolution of the arbitration case. On the other hand, Lumbre, et al. executed their
quitclaims.
On September 25, 2012, the NCMB voluntary arbitrator ruled that the employees are entitled to
salary increases in 2010 and 2011(Pingol et al.) but excluding (Lumbre, et al.) since they had executed
quitclaims upon their retirement. Dissatisfied, the Union moved for reconsideration, however the
arbitrator denied the motion for lack of merit. Consequently, the Union elevated the case to the Court of
Appeals via Petition for Review under Rule 43. CA dismissed the petition on the ground that the ruling of
the arbitrator was final and executory unless the appealed is within 10 calendar days from notice.The
party filed an appeal beyond the reglementary period. Hence, it is beyond this Court's appellate
jurisdiction.

ISSUE/S:
Whether or not the petitioner Union be denied salary adjustments under the collective bargaining
agreement on the ground of finality of the decision of the voluntary arbitrator due to lapse of
reglementary period for appeal?

COURT DECISION:
The Supreme Court found the petition meritorious.
The High Court citing the case of Guagua National Colleges v. CA, the Court En Banc settled the
confusion and clarified that the 10-day period in Article 276 should be understood as the time within
which the adverse party may move for a reconsideration from the decision or award of the voluntary
arbitrators. After the resolution made by the voluntary arbitrator of the motion for reconsideration,
thereafter, the aggrieved party may appeal to the CA within 15 days from notice pursuant to Rule 43 of
the Rules of Court. The records reveal that the Union received the voluntary arbitrator's resolution
denying its motion for reconsideration on November 27, 2017. As such the Union had 15 days or until
December 12, 2017, within which to perfect an appeal. Verily the Union filed a petition for review within
the prescribed period. The CA erred in dismissing the petition outright based solely on procedural
grounds. Thus, a remand of the case for a resolution on the merits is warranted.
JEBSENS MARITIME, INC., SEA CHEFS CRUISES LTD./EFFEL T. SANTILLAN, V.
LORDELITO B. GUTIERREZ, G.R. No. 244098-MARCH 3, 2021

DECISION
Before the Court is a Petition for Review on Certiorar (Petition) under Rule 45 of the Rules of Court
assailing the Decision dated August 29, 2018 and Resolution dated January 14, 2019 of the Court of
Appeals (CA) in CA- G.R. SP No. 149168 which reversed and set aside the Decision and Resolution of
the National Labor Relations Commission (NLRC).

FACTS
Lordelito B. Gutierrez (respondent) was hired on March 27, 2014 as Third Cook for the vessel MV Mein
SchiffI by Jebsens Maritime, Inc. for its foreign principal, Sea Chefs Cruises Ltd. (collectively,
petitioners). On June19, 2014, while on board, respondent experienced severe pain on the right
paralumbar area, accompanied by paresthesia on the lower right extremity, and difficulty in movement.
He consulted with the ship doctor and underwent magnetic resonance imaging (MRI) scan of the
lumbosacral spine while the ship was docked in Kiel, Germany, on June 27, 2014. Thereafter, respondent
was diagnosed with Disc Prolapse L4-L5 and medically repatriated on July 2, 2014.
On July 4, 2014, respondent was examined by the company-designated physician at Shiphealth, Inc. On
July 9, 2014, he was diagnosed with L4-L5 Herniated Nucleos Pulposus and was recommended to
undergo 18 sessions of physical therapy which he completed on September 9, 2014. On the same day,
respondent was given his Final Medical Report which diagnosed that his condition had become
asymptomatic and declared that he was "FIT TO WORK FOR THE CONDITION REFERRED, CASE
CLOSURE."
After receiving the fit to work diagnosis, respondent applied for re- engagement sometime in October
2014, but his application was denied by petitioners because he failed the pre-employment medical
examination (PEME). The examining physician during the PEME declared that there was a "'high
probability of recurrence' of [respondent's] previous illness." On November 7, 2014, respondent
underwent an x-ray of the lumbar spine which showed a mild dextroscoliosis of the lumbar vertebrae.
Proceedings before the Labor Arbiter (LA) andNLRC
Thus, respondent filed a complaint before the LA on November 28, 2014 for continuation of medical
treatment, underpayment of sick leave pay, payment of sickness allowance, and attorney's fees (First
Case). The First Case was raffled to LA Jenneth B. Napiza (LA Napiza). In a Decision dated June 16,
2015, LA Napiza dismissed the First Case due to the absence of contrary medical findings from
respondent's personally appointed physician to refute the fit to work diagnosis of the company-designated
physician.
On July 3, 2015, respondent filed a second complaint, this time for total permanent disability benefits,
medical expenses, moral and exemplary damages, and attorney's fees (Second Case). While the First Case
was pending, respondent had continued his medical treatment and sought the opinion of a personally
appointed physician, Dr. Renato P. Runas (Dr. Runas). On January 29, 2015, Dr. Runas issued a Medical
Evaluation Report finding that respondent was "permanently unfit for sea duty in whatever capacity with
a [recommendation for] permanent disability." The Second Case was raffled to LA Julia Cecily Coching-
Sosito (LA Sosito). During the conference on July 23, 2015, the parties agreed to refer respondent's
condition to a third doctor.
On August 5, 2015, petitioners filed a Motion to Dismiss on the ground of res judicata, arguing that the
dismissal of the First Case barred respondent from claiming total and permanent disability benefits in the
Second Case. LA Sosito denied the motion, holding that the complaint is not barred by res judicata as the
issues in the First Case and Second Case are not identical.
On January 4, 2016, LA Sosito directed the parties to submit the findings of a third doctor. Respondent
submitted the Medical Evaluation Report dated January 29, 2016 ofDr. Jason Paul P. Santiago (Dr.
Santiago) who opined that respondent was "presently impaired and might not be able to perform his duty
as a Chief cook which involves carrying heavy food pan, cooking utensils, standing for long hours.
Physical therapy might lessen the pain whoever (sic) higher chance that it will come back again. Surgery
might improved (sic) but will not guarantee a full recovery and he might not be able to go back to his
present job. Lifestyle and work modification should be highly considered to prevent further aggravation
of low back pain at (sic) prevent other serious complications."
Petitioners opposed the admission of the third doctor's opinion for being irrelevant and inaccurate as it
was issued one year and four months from the time that respondent was declared fit for work, and
petitioners did not participate in choosing him as the third doctor. LA Sosito denied petitioners'
opposition and admitted the report of Dr. Santiago.
Thereafter, both parties filed their respective position papers and replies. Notably, petitioners admitted in
their Position Paper that respondent's injury or illness was work-related. They maintained, however, that
respondent's claim was barred by res judicata and that respondent was already declared fit to work by the
company-designated physician. They also reiterated their opposition to the admission of the third doctor's
opinion.
On April 29, 2016, LA Sosito issued a Decision in favor of respondent, finding that he had suffered a
work-related illness which rendered him totally and permanently disabled and unfit for sea duty.
Petitioners were held solidarily liable to pay respondent total permanent disability benefits of
US$60,000.00 and attorney's fees ofUS$6,000.00.
Petitioners appealed LA Sosito's Decision in the Second Case to the NLRC which reversed the Decision
and dismissed the complaint on the ground of res judicata. The NLRC held that the First Case and
Second Case, although praying for different reliefs, involved the same issue as to the validity of the fit to
work certification of the company-designated physician. The NLRC held that LA Napiza had already
sustained the company-designated physician's findings in the First Case as respondent failed to present
the contrary opinion of a personally appointed physician before filing the complaint in the First Case. In
initiating the Second Case, respondent sought to re-litigate the same issue. The NLRC denied
respondent's Motion for Reconsideration (MR) in its Resolution dated November 15, 2016.

The CA Decision
Respondent elevated the case via Petition for Certiorari under Rule 65 before the CA, which ruled in his
favor. In its Decision dated August 29, 2018, the CA overturned the findings of the NLRC, holding that
the Second Case was not barred by the First Case as they had different causes of action, issues, and reliefs
sought. The First Case was an action for payment of sickness allowance and continuation of medical
treatment while the Second Case was an action for total and permanent disability benefits. The CA further
ruled that the cause of action in the Second Case was not yet in existence at the time of filing ofthe
complaint in the First Case. The CA reinstated LA Sosito's award o f total and permanent disability
benefits and attorney's fees. Petitioners filed an MR which was denied by the CA in its Resolution dated
January 14, 2019.
The Petition
Aggrieved, petitioners filed the instant Petition before the Court assailing the CA Decision and
Resolution. Petitioners argue that all the elements of res judicata are present in the case. There is identity
of parties, subject matter, issues, and causes of action. Respondent's claim for sickness allowance in the
First Case and total permanent disability benefits in the Second Case arose from the same illness.
Even assuming that res judicata does not apply, petitioners argue that respondent is not entitled to total
and permanent disability benefits because the illness for which he was repatriated was already resolved
and the company-designated physician had already declared him fit to work.
Petitioners also assail the findings of the third doctor. They maintain that while the parties had agreed to
the appointment of a third doctor, it was respondent alone who secured the medical assessment of Dr.
Santiago and petitioners had not agreed thereto. Thus, the findings of Dr. Santiago cannot be considered
as a valid and binding third doctor opinion.
Respondent filed his Comment asserting that the elements of res judicata are not existent in the instant
case as the First Case and Second Case involved different causes of action. Respondent also maintains
that he is entitled to total and permanent disability benefits as his personally appointed physician and the
third doctor had declared him unfit to work as a seafarer.
Respondent also avers that the award of attorney's fees was correct.
Issue
Whether the CA committed reversible error in reversing the NLRC Decision and Resolution.
The Court's Ruling
The Petition lacks merit.
Res judicata is not applicable
The literal interpretation of res judicata is "a matter adjudged; a thing judicially acted upon or decided; a
thing or matter settled by judgment." It is anchored on the principle that parties should not be allowed to
re-litigate the same issue in multiple suits. Once a right or fact has been tried and established or an
opportunity for trial has been provided to the parties, the final judgment of the court shall be conclusive as
between the parties and their privies. There are two concepts of res judicata, (1) bar by prior judgment,
and (2) conclusiveness of judgment Res judicata as a bar by prior judgment applies when the following
requisites are present:
1. The prior decision must be a final judgment or order; 2. The court rendering the same must have
jurisdiction over the subject matter and over parties;
3. There must be identity of parties, subject matter, and causes of action between the two cases; and
4. It must be a judgment or order on the merits.
The CA correctly ruled that the Second Case is not barred by res judicata as the third element is lacking;
the two cases are based on different causes of action. The present case is a claim for total and permanent
disability benefits while the First Case was a claim for continuation of medical treatment, payment of
sickness allowance, and underpayment of sick leave pay.
A cause of action is defined as an act or omission by which one party violates the right of another. The
elements that constitute a cause of action are: (1) the legal right of the plaintiff; (2) correlative obligation
of the defendant to respect that legal right; and (3) an act or omission of the defendant that violates such
right.
The employer has an obligation to provide medical treatment and sickness allowance under Section 20(A)
(2) and (3) of the Philippine Overseas Employment Administration-Standard Employment Contract
(POEA-SEC). After the medical treatment, if the seafarer is found to be suffering from permanent total or
partial disability due to the work-related injury or illness, the employer has an obligation to pay the
seafarer disability benefits under Section 20(A)(6) of the POEA-SEC in accordance with the schedule of
disability ratings under Section32. In some cases,these benefits may be claimed together since they
usually arise from the same injury or illness. In the instant case, respondent had a right to claim the two
causes of action separately, even if they arose from the same illness.
It is important to note the particular sequence of events which led respondent to file two subsequent
complaints before the LA. Respondent was medically repatriated on July 2, 2014 and immediately
underwent medical treatment. The company-designated physician declared respondent fit to work on
September 9, 2014. However, when respondent applied for re-engagement sometime in October 2014, his
application was denied because he failed the PEME. At this point, respondent had received conflicting
medical evaluations within the span of about one month; he was declared fit to work by the company-
designated physician on September 9, 2014, but failed the PEME for re-deployment in October 2014.
Thus, respondent requested for the continuation of his medical treatment. When petitioners denied his
request, respondent was constrained to file the First Case for the continuation of his medical treatment,
sickness allowance, and underpayment of sick leave pay. LA Napiza dismissed the First Case due to the
absence of contrary medical findings from a personally appointed physician. No further appeal was taken
therefrom and the dismissal of the First Case has since become final.
Pending resolution of the First Case, respondent had continued with his medical treatment at his own
expense and was eventually diagnosed to be permanently unfit for sea duty by his personally appointed
physician on January 29, 2015~this gave rise to a separate cause of action for total and permanent
disability benefits.
A fundamental test to determine whether two suits relate to the same cause of action is whether the cause
of action in the second case was already existing at the time of filing of the prior complaint. At the time
respondent filed the First Case, the cause of action for permanent and total disability benefits did not yet
exist as the true nature and extent of respondent's condition and whether this was work-related was not yet
known. This is precisely why respondent initially requested for the continuation of his medical treatment
instead of immediately claiming disability compensation. Thus, res judicata as a bar by prior judgment
does not apply as the two cases are premised on different causes of action.
Res judicata under the second concept of conclusiveness of judgment likewise does not apply. The
principle of conclusiveness of judgment dictates that when a competent court has issued a final decision
on a particular fact or question which has been squarely put in issue, deliberated, and passed upon, the
parties cannot raise the same issues or points in a later case even if based on a different cause of action.
Stated conversely, if the prior and the latter cases have the same parties but different causes of action, the
first judgment is conclusive only as to those matters actually and directly controverted and determined
and not as to matters merely related thereto.
Conclusiveness of judgment does not bar the Second Case because the issue of whether respondent is
entitled to total and permanent disability benefits was not raised and passed upon in the First Case. LA
Napiza's Decision in the First Case is conclusive only as to the issue of respondent's non-entitlement to
the continuation of medical treatment, sickness allowance, and underpayment of sick leave pay.
Moreover, L A Napiza did not categorically rule on respondent's health condition but dismissed the
complaint on the ground that respondent did not present contrary medical findings from a personally
appointed physician.
Thus, the CA correctly ruled that res judicata does not apply. The dismissal of the First Case for
continuation of medical treatment, sickness allowance, and underpayment of sick leave pay does not bar
respondent's current claim for total and permanent disability benefits.
Respondent is entitled to total and permanent disability benefits
The Court also affirms the CA's ruling that respondent is entitled to total and permanent disability
benefits as he suffered a work-related illness rendering him totally and permanently disabled and unfit to
work as a seafarer/third cook.
Petitioners do not dispute that respondent's illness is work-related but they maintain that respondent is not
entitled to total and permanent disability benefits because he was already declared fit to work by the
company- designated physician. However, under the POEA-SEC, the seafarer is not absolutely bound by
the opinion of the company-designated physician. He has a right to seek a second medical opinion which
respondent obtained in this case.
The company-designated physician issued a Final Medical Report which states:
Final Diagnosis:
• L4-L5 Herniated Nucleus Pulposus, right, asymptomatic
• sip 3 sets of physical therapy (6 sessions each set)
Recommendations:
• FIT TO WORK FOR THE CONDITION REFERRED, CASE
48
CLOSURE.

Dr. Runas, respondent's personally appointed physician, declared, to the contrary, that respondent was
permanently unfit for sea duty in his Medical Evaluation Report, which declares:
At present, [respondent] is complaining of persistent low back discomfort. He is experiencing morning
stiffness and pain [in] the lower back upon waking up. There is mild to moderate radicular symptom
characterized as numbness of the right lower extremity and shooting pain particularly at night time and
during prolonged standing. The low back discomfort worsens during prolonged- standing and walking.
Physical examination showed the patient is ambulatory with slight limp on the right[.] Trunk
motion is limited. Straight Leg Raising test is positive on the right side. Hypoesthesia is noted on the
right lower extremity. MRI of the lumbosacral spine showed: multiple disc protrusions, right
paracentral and lateral foraminal indenting the right nerve root at LS- Sl; small broad-based
ventral and bilateral at L3-4 and L4-5 with disc desiccation and slight spinal canal stenosis.
Seaman Gutierrez is presently impaired due to chronic low back pain with right lower extremity
rd
sciatica. As a 3 Cook, his job is very strenuous and demanding. He works strenuously and
vigorously. He carries and lifts heavy pans and other cooking utensils. He also lifts and carries
heavy provisions and other objects. He works in awkward position for long periods. Surgery may
not fully address the chronic low back pain due to the presence of the other conditions as stated
above. Physical therapy may improve the condition but will recur when subjected to undue stress at
the back again. With his present impediment, he can no longer accomplish his tasks without
experiencing severe low back pain. Lifestyle and work modification should be highly considered to
prevent aggravation and more serious complications of the back problem secondary to disk
herniation. He is no longer be (sic) allowed to return to his previous job. He is permanently unfit
for sea duty in whatever capacity with a permanent disability.
Section 20(A)(3) of the POEA-SEC mandates that when there are conflicting findings by the company-
designated physician and the seafarer's personally appointed physician, the parties may refer to a third
doctor mutually agreed upon, whose decision shall be final and binding on both parties.
In view ofthis, the NLRC promulgated NLRC En Banc Resolution No. 08-14, which directs all Labor
Arbiters, during mandatory conference, to give the parties a period of fifteen (15) days within which to
secure the services of a third doctor and an additional period of thirty (30) days for the third doctor to
submit his/her reassessment.
In the instant case, both parties agreed to refer respondent's condition to a third doctor during the
conference before LA Sosito on July 23, 2015. The third doctor, Dr. Santiago issued a Medical
Evaluation Report on January 29, 2016, with the following findings:
Presently patient Gutierrez is still complaining of persistent low back pain (PS 5-6/10) with weakness
of4/5 was also noted on right L5 and S1 myotome upon assessing the muscle strength with associated
Radiculopathy shooting pain to over the right leg and decrease sensory over the right [L4-L5] and SI
dermatome aggravated by prolonged sitting, standing and walking. Repeat plain MRI Lurnbosacral spine
was done last January 19, 2016 showed L3-L4, L4-L5 and LS-SI disc [desiccation]. L3- L4 Central
posterior disc protrusion and annular fissure indenting the ventral thecal sac. L4-L5 Central and right
paracentral disc protrusion indenting the ventral thecal sac and abutting the right LS traversing nerve root.
LS-SI right paracentral disc protrusion abutting the right S1 traversing nerve root Present. The above MRl
finding coincides with the present PE where in patient is ambulatory with slight limp on the right, limited
trunk motion. Straight leg raising test is positive on the right side with decrease sensory over the right
[L4-L5] and SI dermatome.
Persistent and progressing low back pain experienced by patient Gutierrez with associated radiation to
right lower extremities, which allegedly noted after the lifting incident while onboard. With the present
physical examination, of limited trunk flexion, with slight tenderness at the paralurnbar muscles. Positive
straight leg raising at 40 degrees was also noted on right lower extremity. On neurologic examination,
decrease sensory about 50% was noted on right [L4-L5] and SI dermatomes. Weakness of4/5 was also
noted on right L5 and S1 myotome upon assessing the muscle strength. Which also correlated with the
present MRI findings of chronic postero-central and right paracentral disc protrusion at L4-L5 level with
indentation of the thecal sac and right LS nerve root. Seaman Gutierrez is presently impaired and
might not be able to perform his duty as a Chief cook which involves carrying heavy food pan,
cooking utensils, standing for long hours. Physical Therapy might lessen the pain whoever (sic)
higher chance that it will come back again. Surgery might improved (sic) but will not guarantee a
full recovery and he might not be able to go back to his present job. Lifestyle and work
modification should be highly considered to prevent further aggravation of low back pain at (sic)
prevent other serious complications.
Thus, the third doctor's findings were consistent with the findings of respondent's personally appointed
physician, that respondent's illness in the lumbar spine or lower back, rendered him unfit for sea duty and
for his specific duties as Third Cook. Both Dr. Runas and Dr. Santiago opined that physical therapy and
surgery may improve respondent's condition but do not guarantee full recovery. Notably, the findings
ofDr. Runas and Dr. Santiago are also consistent with the PEME results which found that there was a
high probability of recurrence of respondent's illness. Petitioners also do not deny that respondent was not
re-hired after he failed the PEME. Dr. Santiago's and Dr. Runas' medical findings, taken with the fact that
petitioners themselves did not hire and re-deploy respondent for his having failed the PEME, points to no
other conclusion than that respondent is suffering from a work-related illness that rendered him unfit for
sea duty and for which he is entitled to total and permanent disability benefits.
Petitioners attempt to discredit Dr. Santiago's valid and binding report by asserting that they did not
consent, participate, or accept the medical assessment and it was respondent alone who obtained the
same. As correctly held by the CA, petitioners' claim has no merit. Both parties had agreed to refer to a
third doctor during the conference on July 23, 2015. Petitioners' refusal or failure to actively participate in
the process of choosing the third doctor was a waiver of their right to do so, and cannot be used to
challenge the third doctor's final and binding opinion.
Under the Schedule of Disability Allowances in Section 32(A) of the POEA-SEC, an illness classified as
total and permanent disability shall be compensated with permanent disability benefits of US$60,000.00.
The Court also affirms the CA's award of attorney's fees and imposition of interest. Following Article
2208 of the Civil Code, attorney's fees equivalent to ten percent (10%) of the total monetary award may
be granted in actions for recovery of wages of laborers and actions for indemnity under the employer's
liability laws.
Consistent with the Court's pronouncement in Nacar v. Gallery Frames, interest at the rate of six percent
(6%) per annum is imposed on the total monetary award reckoned from the finality of judgment until full
satisfaction. The liability of petitioners shall be solidary, as provided under Section 10 ofRepublic Act
No. 8042 or the Migrant Workers and Overseas Filipinos Act of 1995, as amended, which mandates that
the principal/employer, recruitment/placement agency, and its corporate officers and directors in case of
corporations, shall be solidarily liable for money claims arising out of employer-employee relationship
with overseas Filipino workers.
WHEREFORE, premises considered, the Petition is DENIED. The Court of Appeals' Decision dated
August 29, 2018 and Resolution dated January 14, 2019 in CA-G.R. SP No. 149168 are AFFIRMED
with MODIFICATION. The total monetary awards shall earn interest of six percent (6%) per annum
from the date of finality of this Decision until full payment.
 DIGEST
Case Digested by: LACIDA, ROMEL

JEBSENS MARITIME, INC., SEA CHEFS CRUISES LTD./EFFEL T. SANTILLAN, V.

LORDELITO B. GUTIERREZ, G.R. No. 244098

FACTS:
Respondent, Lordelito B. Gutierrez was hired on March 27, 2014 as third cook for the vessel MV
Mein Schiff I by Jebsens Maritime, Inc. for its foreign principal, Sea Chefs Cruises Ltd(collectively,
petitioners). While on board, respondent experience severe pain on the right paralubar area, accompanied
by paresthesia on the lower right extremity and difficulty in movement. He consulted with the ship doctor
and underwent magnetic resonance imaging scan of the lumbosacral spine and was diagnosed with Disc
Prolapse L4-L5 and medically repatriated on July 2, 2014.
On July 2, 2014, he was examined by the company designated physician at Shiphealth, Inc. On
July 9, 2014, he was diagnosed with L4-L5 Herniated Nucleos Pulposus and was recommended to
undergo 18 sessions of physical therapy which he completed on September 9, 2014. Final Medical Report
shows that his condition had become asymptomatic and declared that he was "Fit to work for the
condition referred case closure."
Despite presentation of fit to work diagnosis, respondent application for re-engagement was
denied by petitioners because he failed the pre-employment medical examination. The examining
physician during the pre-employment medical examination declared that there was a high probability of
recurrence of respondent's previous illness.
On November 28, 2014, respondent filed a complaint before the Labor Arbiter but dismissed due
to the absence of contrary medical findings from respondent's personally appointed physician to refute the
fit to work diagnosis of the company designated physician. On July 3, 2015, respondent filed a second
complaint for total permanent disability benefits, medical expenses, moral and exemplary damages and
attorney's fees. He sought the opinion of a personally appointed physician, Dr. Renato Runas in which the
latter issued a Medical Evaluation Report finding that respondent was permanently unfit for sea duty in
whatever capacity with a recommendation for permanent disability. The same findings was considered by
the LA in his decision favoring the respondent side. Petitioners appealed LA's decision in the second case
to the NLRC by which the latter reversed the decision. On the contrary dismissed the complaint of the
respondent on the ground of res judicata reasoning that the first case and the second case, although
praying for different reliefs involved the same issue as to the validity of the fit to work certification of the
company designated physician. CA reversed the findings of NLRC.

ISSUE/S:
Whether the CA committed reversible error in reversing the NLRC Decision and Resolution.

COURT DECISION:

The Petition lacks merit.

ON THE ISSUE ON RES JUDICATA

The literal interpretation of res judicata is "a matter adjudged; a thing judicially acted upon or
decided; a thing or matter settled by judgment."It is anchored on the principle that parties should not be
allowed to re-litigate the same issue in multiple suits. Once a right or fact has been tried and established
or an opportunity for trial has been provided to the parties, the final judgment of the court shall be
conclusive as between the parties and their privies.
 There are two concepts of res judicata, (1) bar by prior judgment, and (2) conclusiveness of
judgment. Res judicata as a bar by prior judgment applies when the following requisites are present:

1. The prior decision must be a final judgment or order;

2. The court rendering the same must have jurisdiction over the subject matter and over parties;
3. There must be identity of parties, subject matter, and causes of action between the two cases;
and
4. t must be a judgment or order on the merits.
The CA correctly ruled that the Second Case is not barred by res judicata as the third element is
lacking; the two cases are based on different causes of action. The present case is a claim for total and
permanent disability benefits while the First Case was a claim for continuation of medical treatment,
payment of sickness allowance, and underpayment of sick leave pay.

ON THE ISSUE OF RESPONDENT'S ENTITLEMENT TO TOTAL AND PERMANENT

DISABILITY BENEFITS
The Court also affirms the CA's ruling that respondent is entitled to total and permanent disability
benefits as he suffered a work-related illness rendering him totally and permanently disabled and unfit to
work as a seafarer/third cook.Under the Schedule of Disability Allowances in Section 32(A) of the
POEA-SEC, an illness classified as total and permanent disability shall be compensated with permanent
disability benefits of US$60,000.00. The Court also affirms the CA's award of attorney's fees and
imposition of interest. Following Article 2208 of the Civil Code, attorney's fees equivalent to ten percent
(10%) of the total monetary award may be granted in actions for recovery of wages of laborers and
actions for indemnity under the employer's liability laws.
Consistent with the Court's pronouncement in Nacar v. Gallery Frames, interest at the rate of six
percent (6%) per annum is imposed on the total monetary award reckoned from the finality of judgment
until full satisfaction. The liability of petitioners shall be solidary, as provided under Section 10 of
Republic Act No. 8042 or the Migrant Workers and Overseas Filipinos Act of 1995, as amended, which
mandates that the principal/employer, recruitment/placement agency, and its corporate officers and
directors in case of corporations, shall be solidarily liable for money claims arising out of employer-
employee relationship with overseas Filipino workers.
JAYRALDIN F. EBUS V. THE RESULT COMPANY, INC., ET AL.,G.R. NO. 244388 -MARCH 3,
2021

DECISION
CAGUIOA, J.:
This is a petition for review on certiorari (Petition) under Rule 45 of the Rules of Court assailing the
Decision dated June 13, 2018 and Resolution dated January 29, 2019 of the Court of Appeals (CA) in
CA- G.R. SP No. 148300, which affirmed the National Labor Relations Commission's (NLRC) dismissal
of petitioner Jayraldin Ebus's (Ebus) complaint for constructive dismissal.
Facts
Ebus has been an employee of respondent The Results Company, Inc. (TRCI), a business process
outsourcing company, since August 13, 2012. He was hired as a sales representative and was promoted
several times until he became a Team Leader in 2014. As a Team Leader, Ebus had the duty of
supervising agents assigned to a program handling TRCI's US-based telecommunication service
provider.During Ebus's employment, he was recognized for his accomplishments and was given various
awards and travel incentives.On December 30, 2014, Ebus received an email from John Christopher P.
David (David), a consultant of TRCI, informing him of two company infractions allegedly committed by
one of Ebus's agents - Ruby De Leon (De Leon). Allegedly, based on a quality call monitoring, De Leon
incorrectly processed a customer's order and failed to fully apprise the customer of the products that TRCI
offers. David recommended that coaching be provided to De Leon. Several program managers, one of
whom was Operations Manager Summer Dombrowski (Dombrowski), were furnished a copy of the
email. On the same day, Dombrowski replied to the group email that a final written warning must be
given to De Leon, stating that De Leon's employment should be terminated if it would be later found out
that the same process has become a trend in past transactions. However, the other program managers
disagreed with Dombrowski and recommended only coaching as there seemed to have been no fraud
committed. One program manager - Maria Aguilar (Aguilar) - likewise recommended coaching, after
having listened to the calls, but advised that De Leon would not be receiving her commission pursuant to
TRCI's Zero Tolerance Policy (ZTP) which authorizes the imposition of automatic penalty. Ebus
answered the email of Aguilar and clarified that De Leon did not have
On January 1, 2015, Ebus issued a Notice to Explain to De Leon, pursuant to Dombrowski's instructions,
but without mentioning any sanctions as Ebus was still awaiting the recommendation of Aguilar who was
his immediate supervisor. He gave Aguilar a copy of the Notice to Explain and De Leon's explanation and
informed Aguilar that he had yet to convey the sanction to De Leon as he was not yet sure of the
corrective measure to impose.
Later, Ebus was also handed a Notice to Explain with Preventive Suspension, stating that he committed
the following acts inimical to TRCI:
(1) failure to act on an infraction by a supervisor; (2) gross negligence in the performance of an assigned
task; (3) willful disobedience of the orders of a superior; and (4) serious misconduct. The same notice
placed him under preventive suspension for 30 days and summoned him to an administrative hearing.
Ebus submitted his explanation, stating that all the support staff concurred that coaching was the sanction
to be imposed on De Leon and that he was not grossly negligent as he fulfilled his duty to issue the Notice
to Explain to De Leon.Administrative proceedings ensued on January 13, 2015. Subsequently, on
February 9, 2015, TRCI issued a Notice of Decision, wherein Ebus was admonished with a warning that
another similar violation of TRCI's Code of Discipline might lead to his dismissal. He was found to have
committed insubordination for failing to issue a Notice to Explain to De Leon and to inform her that it
should be deemed a final warning for the infractions she committed. The notice likewise informed Ebus
that he would be re-profiled to another account. Hence, along with the Notice of Decision, the HR
Department issued a Redeployment Notice, placing Ebus on temporary lay-off (TLO) until he was re-
assigned to another account after being processed and after having qualified therefor. During the lay-off,
which should not exceed six months, Ebus would not receive any compensation. Ebus thus filed a
Complaint for constructive dismissal and other monetary claims and damages on March 20, 2015 before
the Labor Arbiter (LA).
LA Decision
In a Decision dated February 1, 2016, the LA found Ebus to have been constructively dismissed and
ordered payment of full separation pay and backwages. According to the LA, respondents failed to
establish any factual and legal basis for placing Ebus under preventive suspension and to issue the final
written warning. Moreover, the transfer of Ebus to another program for re-profiling, characterized by
uncertainty and indefiniteness, constitutes constructive dismissal. The dispositive portion of the Decision
states:
WHEREFORE, premises considered, judgment is hereby rendered declaring herein Complainant to have
been constructively dismissed and, correspondingly, holding all herein Respondents jointly and severally
liable to pay said Complainant his full separation pay and backwages counted from the time of his relief
until finality of this Decision, plus moral and exemplary damages of PS0,000 each and attorney's fees
equal to 10% o f the total judgment awards, as contained in the Computation and Examination Unit's
schedule of computation herein adopted and attached as Annex "A".
All other claims are dismissed for lack ofmerit.
SO ORDERED.
Only respondents appealed to the NLRC.
NLRC Decision
In a Decision dated July 29, 2016, the NLRC reversed and set aside the LA's Decision, ruling that the
actions taken by TRCI were valid management prerogatives, as follows: (1) placing Ebus under
preventive suspension to protect TRCI from further losses; (2) issuing several memoranda as disciplinary
actions for Ebus's various violations of company rules and regulations; and (3) placing Ebus on a TLO
status for a period not exceeding six months. The dispositive portion ofthe NLRC Decision states:

WHEREFORE, premises considered, the Appeal dated 29 February 2016 is GRANTED. The assailed
Decision dated 1 February 2016 is REVERSED AND SET ASIDE.
Complainant-appellee Jayraldin F. Ebus was not constructively dismissed, but validly placed under
preventive suspension.
SO ORDERED.
Ebus filed a motion for reconsideration, which was denied in the NLRC's Resolution dated September 9,
2016. Hence, Ebus filed a petition for certiorari with the CA.
CA Decision
In the assailed Decision, the CA denied Ebus's petition and affirmed
the ruling of the NLRC. According to the CA, Ebus failed to demonstrate

how he was demoted in rank or salaries by his transfer to a new account which may lead to the conclusion
that he was constructively dismissed. The CA believed TRCI's argument that Ebus cannot claim to have
been constructively dismissed since he would retain the same position, salary and benefits, and would not
lose any seniority rights as a result of his transfer. According to the CA, it was not shown that respondents
perpetrated acts of clear discrimination, insensibility or disdain that have become so unbearable that Ebus
was compelled to sever his ties with the company. As to his preventive suspension, the same was legal for
it did not exceed 30 days pending investigation and that it was to protect the business of TRCI since Ebus
held a position engaged in providing guidance, supervision, and leadership, and has strong influence on
his subordinates whose performance will impact on TRCI's revenues.
The dispositive portion ofthe CA Decision states:
WHEREFORE, the petition is DENIED for lack of merit. The Decision dated July 29, 2016 and the
Resolution dated September 9, 2016 of the NLRC (Fourth Division) in NLRC LAC 03-000946-16/NLRC
NCR Case No. 03-03497-15 are hereby AFFIRMED.
SO
ORDERED.

Ebus moved for reconsideration but this was denied.

Hence, this Petition.
In due course, TRCI filed its Comment and in turn, Ebus filed his Reply.

31 32 33 34 35 36 37
Issue
The only issue raised in the Petition is as follows:
THE [CA] COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR x x x
EXCESS OF ITS JURISDICTION IN CONCLUDING THA T [EBUS] W AS NOT
CONSTRUCTIVELY DISMISSED.
The Court's Ruling
RCIfailed to prove the propriety of putting Ebus on TLO.
The Court's examination of a CA decision in a labor case elevated via a petition for review on certiorari
under Rule 45 of the Rules of Court is limited to whether the CA correctly determined the existence of
grave abuse of discretion on the part of the NLRC.
As defined, grave abuse of discretion may arise when the NLRC violates or contravenes the Constitution,
the law or existing jurisprudence. It is "such capricious and whimsical exercise of judgment as is
equivalent to lack of jurisdiction. The abuse of discretion must be grave as where the power is exercised
in an arbitrary or despotic manner by reason of passion or personal hostility and must be so patent and
gross as to amount to an evasion of positive duty or to a virtual refusal to perform the duty enjoined by or
to act at all in contemplation of law. It is with this lens that the Court examines this case.To recall, TRCI,
as a result of Ebus's transgressions, found it proper to penalize him with an admonition with a warning
and re-profiling. It is the latter that gave rise to the issuance of the Redeployment Notice, which states:
REDEPLOYMENT NOTICE
Be this as it may, and pursuant to the Company's philosophy to retrain its employees, you are to be placed
on Temporary Lay Off (TLO) until such time as you are reassigned to an account after being processed
and qualified. Such TLO shall in no case be more than 6 months. Your TLO shall take effect x x x on
Feb. 9, wherein which re-profiling opportunities will commence. In case you fail to qualify for an account
within the period, we shall assess the most suitable opportunities available to you.
You are expected to exercise full cooperation, honesty and good faith to be re-profiled and transferred to
other programs/department which shall be subject to applicable recruitment process and policies. Should
you refuse to participate, fail to satisfy or comply with the requirements of the Recruitment Team, the
same shall be deemed as an opportunity for you to be re-profiled.
You shall not be compensated while on TLO. You may, however, opt to file as Vacation Leave a certain
number of days depending on your available vacation leave credits.
You are likewise advised that once re-profiled, the applicable training standards shall also apply to you.
(Italics omitted)
Ebus argues that he was constructively dismissed when he was issued his Redeployment Notice as it
constituted a demotion, his employment status was placed in a vague and indefinite status, and the
transfer was invalid.
On the other hand, TRCI argues that it was a valid exercise of management prerogative when it
transferred, redeployed, and placed Ebus on TL0. TRCI argues that it was only validly regulating the
employment of Ebus and putting him on TLO was an opportunity for TRCI to assess Ebus's qualifications
and re-assign him to other accounts, if needed.The Court agrees with Ebus. The CA erred in ruling that
the NLRC did not commit grave abuse of discretion when the NLRC's ruling contradicts settled
jurisprudence on determining whether a transfer results in constructive dismissal.The Court discussed in
Morales v. Harbour Centre Port Terminal, Inc. (Morales), that in cases of transfer of an employee, the
employer has the burden to prove that its conduct is valid and legitimate and that it would not be
prejudicial to the employee; otherwise, it will be deemed as constructive dismissal, thus:Constructive
dismissal exists where there is cessation of work because "continued employment is rendered impossible,
unreasonable or unlikely, as an offer involving a demotion in rank or a diminution in pay" and other
benefits. Aptly called a dismissal in disguise or an act amounting to dismissal but made to appear as if it
were not, constructive dismissal may, likewise, exist if an act of clear discrimination, insensibility, or
disdain by an employer becomes so unbearable on the part of the employee that it could foreclose any
choice by him except to forego his continued employment. In cases of a transfer of an employee, the rule
is settled that the employer is charged with the burden of proving that its conduct and action are for valid
and legitimate grounds such as genuine business necessity and that the transfer is not unreasonable,
inconvenient or prejudicial to the employee. If the employer cannot overcome this burden of proof, the
employee's transfer shall be tantamount to unlawful constructive dismissal.
Here, Ebus's infraction that led to his re-profiling was his failure to inform his subordinate of the penalty
imposable on her because of her error during a call. But there is nothing on record to show that Ebus's
infraction was detrimental to the account he was handling such that TRCI had no choice but to re-profile
him.In fact, Ebus was in reality not even transferred to any account. Using TRCI's term, he was
temporarily laid-off, and was treated like a new applicant where he would be assessed for other accounts
to see if he was qualified. In the interim, Ebus's economic circumstances were murky. His salaries and
benefits, save for accrued vacation leave, were all stopped for a period not to exceed six months as he
awaited being accepted into a new account. Worse, he had no assurance whether he would be considered
for another account. Measured against the standard for a valid transfer as stated in Morales, the Court is
convinced that TRCI failed to prove any valid and legitimate ground to re-profile Ebus as its drastic
action was not commensurate to Ebus's transgressions. This action prejudiced Ebus as his salaries and
benefits were stopped and he was treated like a new applicant. TRCI just made it appear on paper that
Ebus was still its employee but in reality he received none of the benefits of one and was placed in such a
situation without any legitimate ground. This is clearly a dismissal in disguise and is tantamount to
constructive dismissal. TRCI cannot hide behind the argument that its conduct was an exercise of
management prerogative as its actions prejudiced Ebus and it failed to provide a legitimate ground to put
him on TLO. Although the exercise of management prerogative will ordinarily not be interfered with,51 it
is not absolute and it is limited by law, collective bargaining agreement, and general principles of fair
play and justice. "Indeed, having the right should not be confused with the manner in which that right is
exercised. As a result of being constructively dismissed, Ebus should be entitled to reinstatement and
backwages. Article 294 of the Labor Code states that an employee who is unjustly dismissed is entitled to
reinstatement and to full backwages computed from the time his compensation is withheld until the time
of his actual reinstatement. In instances where reinstatement is not viable, separation pay may be awarded
in lieu of reinstatement.
However, reinstatement is no longer available to Ebus as the LA ruled that he is entitled to separation pay
in lieu of reinstatement, and he did not question the LA Decision. This is therefore binding on Ebus as
"[i]t is settled in our jurisprudence that a party who has not appealed cannot obtain from the appellate
court any affirmative relief other than the ones granted in the appealed decision. As to Ebus's backwages,
he shall be entitled to full backwages computed from February 9, 2015, the date he was placed on TLO.
Both separation pay and full backwages shall be computed until the finality of this Decision. Ebus is
likewise entitled to attorney's fees often percent (10%) of the monetary awards as he was indeed
compelled to litigate in order to seek redress for his constructive dismissal.
Finally, consistent with the Court's pronouncement in Nacar v. Gallery Frames, interest at the rate of six
percent (6%) per annum is hereby imposed on the total monetary awards counted from the finality of this
Decision until full payment.
WHEREFORE, premises considered, the Petition is GRANTED. The Decision dated June 13, 2018 and
Resolution dated January 29, 2019 of the Court ofAppeals in CA-G.R. SP No. 148300 are REVERSED
and SET ASIDE. Respondent The Results Company, Inc. is DIRECTED to pay petitioner Jayraldin F.
Ebus the following:
 1. Full backwages computed from February 9, 2015 until the finality ofthis
Decision;
2. Separation pay computed from the date petitioner commenced employment until
the finality of this Decision at the rate of one (1) month's salary for every year of service, with a
fraction of a year of at least six (6) months being counted as one (I) whole year; and
3. Attorney'sfeesequivalenttotenpercent(10%)ofthetotalaward.
The total monetary awards shall be subject to interest at the rate of six percent (6%) per annum from the
finality of this Decision until full payment.
Let the records of the case be remanded to the Labor Arbiter for proper computation of the award in
accordance with this Decision.

SO ORDERED.
 DIGEST
Case Digested by: LACIDA, ROMEL

JAYRALDIN F. EBUS V. THE RESULT COMPANY, INC., ET AL. (G.R. NO. 244388)

FACTS:
Ebus has been hired as a sales representative by The Results Company, Inc., a business
outsourcing company since August 13, 2012. She was promoted several times until she became a Team
Leader in 2014. She had the duty of supervising agents to a program handling TRCI's US- based
telecommunication service provider. During her employment she was recognized for his
accomplishments and was given various awards and travel incentives.

On December 20, 2014, Ebus received an email from Christopher David, a consultant of TRCI
informing of insfractions committed by one of his agents, Ruby De Leon for failure to apprise the
customers of the products that the company offers. David recommended that a coaching be given to
Ruby. However, on the same day, Operations Manager Summer Dhombrowski recommended for a final
written warning for Ruby and stating that the latter's employment be terminated if it would be later found
out that the same process has become a trend in past transactions, while other managers recommended
coaching. One of those who recommended coaching said that Ruby would not be receiving her
commission pursuant to company's zero tolerance policy which authorizes the imposition of automatic
penalty. Ebus answered that Ruby did not have any intention to defraud and that her infraction is not
covered by the ZPT.

On January 1, 2015, Ebus issued a Notice to Explain to Ruby without mentioning any sanctions
as she was still awaiting the recommendation of Aguilar who was his immediate supervisor, and she was
not yet sure of the corrective measure to impose.

Later, Ebus have received Notice to Explain with preventive suspension stating that she
committed acts (1) failure to act on an infraction by a supervisor; (2) gross negligence in the performance
of an assigned task; (3) willful disobedience of the orders of a superior; and (4) serious misconduct,
inimical to the company. Based on the administrative decision, she was given an stern warning that
similar violation might lead to dismissal. The same notice likewise informed that she would be re-profiled
to another account. Hence, along with the Notice of Decision, the HR Department issued a Redeployment
Notice, placing him on temporary lay-off. During that period which should not exceed six months, she
would not receive any compensation. Thus, a complaint for constructive dismissal and other monetary
claims and damages was filed before the Labor Arbiter.

Labor Arbiter found Ebus to have been constructively dismissed. The transfer to another
program for re-profiling, characterized by uncertainty and indefiniteness constitutes constructive
dismissal. In addition holding all the respondents jointly and severally liable to pay said complainant for
full separation pay and back wages. However, NLRC reversed and set aside the LA's decision also denied
the motion for reconsideration of Ebus. CA affirmed the decision of the NLRC.

ISSUE/S: Whether or not the CA committed grave abuse of discretion amounting to lack or excess of its
jurisdiction in concluding that Ebus was not constructively dismissed.
COURT DECISION:

The Supreme Court granted the petition. Accordingly, Ebus was right in saying that she was
constructively dismissed when she was issued his Redeployment Notice as it constituted a demotion, his
employment status was placed in a vague and indefinite status, and the transfer was invalid. In addition,
CA erred in ruling that the NLRC did not commit grave abuse of discretion when the latter's ruling
contradicts settled jurisprudence on determining whether a transfer results in constructive dismissal.
Citing the case of "Morales v. Harbour Centre Port Terminal, Inc., that in cases of transfer of an
employee, the employer has the burden to prove that its conduct is valid and legitimate and that it would
not be prejudicial to the employee; otherwise, it will be deemed as constructive dismissal."