respondent

SECOND DIVISION

Atlantic

Marine

Ltd.,

(Atlantic

Marine). He was assigned to work on board the

vessel British Valour under contract for nine

JESUS E. VERGARA,
Petitioner,

months, with a basic monthly salary of US$

Present:
642.00.
QUISUMBING
CARPIO MORALES
TINGA,
The petitioner was a member of the Associated
VELASCO, JR., and
BRION,
Marine Officers and Seamans Union of the

versus -

Philippines
Promulgated:

HAMMONIA MARITIME SERVICES, INC.

and ATLANTIC MARINE LTD.,
Respondents.

(AMOSUP). AMOSUP

had

collective bargaining agreement (CBA) with

October 6, 2008
Atlantic Marine, represented in this case by

x -------------------------------------------------------------------------------------------x
Hammonia.
DECISION
The

BRION, J.:

petitioner

left

the Philippines on April 15, 2000 to rendezvous

with his ship and to carry out therein his work

Seaman Jesus E. Vergara (petitioner) comes to

as

us

Review

attending to a defective hydraulic valve, he felt

with the plea that we set aside

he was losing his vision. He complained to the

for being contrary to law and jurisprudence the

Ship Captain that he was seeing black dots and

Decision[2]promulgated on March 14, 2005 and

hairy figures floating in front of his right eye.

the Resolution[3] promulgated on June 7, 2005

His condition developed into a gradual visual

by the Court of Appeals (CA), both issued in

loss.

C.A.-G.R.

SP

E.

condition as internal bleeding in the eye or

Vergara

v.

Relations

glaucoma.[4] He was given eye drops to treat

through

on Certiorari

[1]

this

No.

Petition

85347

National

for

entitled Jesus
Labor

Commission, et al.

THE FACTUAL BACKGROUND

The

ships

August

medical

log

2000,

while

entered

his

by respondent Hammonia Maritime Services,

for

its

foreign

petitioner

went

on

furlough

in

Port

Galveston, Texas and consulted a physician

On April 4, 2000, petitioner was hired

(Hammonia)

pumpman. In

his condition.
The

Inc.

principal,

who diagnosed him to be suffering from vitreal

hemorrhage with small defined area of retinal
traction.

Differential

diagnosis

includes

incomplete vitreal detachment ruptured macro

to work as a pumpman because the job could

aneurism and valsulva retinopathy.[5] He was

precipitate

advised to see an ophthalmologist when he

condition.

the

resurgence

of

his

former

returned home to thePhilippines.

On March

20,

2001,

the

petitioner

He was sent home on September 5,

submitted himself to another examination, this

2000 for medical treatment. The company-

time by Dr. Efren R. Vicaldo, a physician who

designated physician, Dr. Robert D. Lim of the

was not also designated by the company. Dr.

Marine

of

Vicaldo opined that although the petitioner was

the

fit to work, he had a Grade X (20.15%)

correctness of the diagnosis at Port Galveston,

disability which he considered as permanent

Texas. Dr. Lim then referred the petitioner to

partial disability.

Medical

Services

the Metropolitan Hospital,

an

confirmed

ophthalmologist

at

the Chinese

General Hospital who subjected the petitioners

eye to focal laser treatment on November 13,
2000; vitrectomy with fluid gas exchange
on December 7, 2000; and a second session of
focal laser treatment on January 13, 2001.
On January

31,

2001,

Armed with these two separate diagnoses, the

petitioner

demanded

his

employer

payment of disability and sickness benefits,

pursuant

to

the

Employment

Philippine

Overseas

AdministrationStandard

Employment
the

from

Contract

Governing

the

Employment of all Filipino Seamen on Board

ophthalmologist pronounced the petitioner fit

Ocean-going

to resume his seafaring duties per the report of

Employment Contract), and the existing CBA in

Dr. Robert D. Lim, Medical Coordinator.[6] The

the company. The company did not heed his

petitioner then executed a certificate of fitness

demand, prompting the petitioner to file a

for work in the presence of Dr. Lim.[7] Claiming

complaint

that he continued to experience gradual visual

allowance,

loss despite the treatment, he sought a second

docketed as NLRC NCR OFW Case No. (M) 01-

opinion

050809-00.

from

another

ophthalmologist,

Dr.

Vessels

for

(POEA

disability

damages

and

benefits,

Standard

sickness

attorneys

fees,

Patrick Rey R. Echiverri, who was not a

company-designated physician. Dr. Echiverri
gave the opinion that the petitioner was not fit

On January 14, 2003, Labor Arbiter Madjayran

H. Ajan rendered a decision in the petitioners
favor.[8] The Arbiter ordered Hammonia and

Atlantic Marine to pay the petitioner, jointly

strictly

and

severally,

2,568.00

and

interpreting

the

POEA

Standard

sickness

allowance

of

US$

Employment Contract and the CBA between

disability

benefits

of

US$

the parties on the matter of who determines a

60,000.00 under the CBA, and 10% of the

seafarers disability.

monetary award in attorneys fees.

The petitioner particularly questions the CA
The

respondents

the

decision for giving credit to the certification by

National Labor Relations Commission (NLRC)

the company-designated physician, Dr. Robert

which

19,

Lim, that declared him fit to work. [14] On the

2004 reversing the Labor Arbiters ruling.[9] It

assumption that he was indeed fit to work, he

dismissed the complaint on the ground that the

submits that he should have been declared to

petitioner had been declared fit to resume sea

be under permanent total disability because

duty and was not entitled to any disability

the fit-to-work declaration was made more

benefit. By resolution, the NLRC denied the

than 120 days after he suffered his disability.

rendered

appealed

decision

to

on March

petitioners motion for reconsideration.[10]

The petitioner thereafter sought relief

The petitioner laments that the CA accorded

much

weight

to

the

company-designated

from the CA via a petition for certiorari under

physicians declaration that he was fit to work.

Rule 65 of the Rules of Court.

The CA

[15]

dismissed

Decision

interpretation

promulgated

the

petition

on March

in
14,

2005,[11] and

He considers this a strict and parochial

of

the

POEA

Standard

Employment Contract and the CBA. While

likewise denied the petitioners motion for

these

documents

provide

that

it

is

the

reconsideration.[12] Hence, the present petition.

company doctor who must certify a seafarer as

permanently unfit for further sea service, this

THE PETITION

literal

interpretation,

to

the

petitioner,

is

absurd and contrary to public policy; its effect

The petitioner contends that the CA erred in

is to deny and deprive the ailing seaman of his

denying him disability benefits contrary to

basic right to seek immediate attention from

existing jurisprudence, particularly the ruling of

any competent physician.He invokes in this

this Court in Crystal Shipping Inc., A/S Stein

regard our ruling in German Marine Agencies,

Line Bergen v. Deo P. Natividad,[13] and, in

Inc.

et

al., v. National

Labor

Relations

Commission.[16]

certification through the opinion of his private

ophthalmologist, Dr. Patrick Rey R. Echiverri
that he would not advise him to do heavy

In a different vein, the petitioner impugns the

pronouncement

of

Dr.

Robert

Lim,

the

company-designated physician, that he was fit

to

resume

sea

duties

as

of January

31,

2001 since Dr. Lim did not personally operate

on and attend to him when he was treated; he
had been under the care of an ophthalmologist
since September 6, 2000. The petitioner points
out that there is nothing in the record to
substantiate

the

correctness

of

Dr.

work; he would not also be able to perform

tasks that require very detailed binocular vision
as the right eyes visual acuity could only be
corrected to 20/30 and near vision to J3 at
best.[18] The petitioner likewise relies on the
assessment and evaluation of Dr. Efren R.
Vicaldo that he suffers from partial permanent
disability with a Grade X (20.15%) impediment
and is now unfit to work as a seaman.[19]

Lims

certification; neither did the attending eye

The

specialist

certification,

companies claim that he is no longer disabled

progress report, diagnosis or prognosis on his

after his visual acuity had been restored to

eye condition that could be the basis of Dr.

20/20;

Lims certification. The petitioner stresses that

disability more in its medical sense rather than

Dr. Lims certification was not based on his first

on its effect on the earning capacity of the

hand

seaman. Citing supporting jurisprudence, the

issued

issue

any

medical

findings
in

his

as

capacity

it
as

the

was
Medical

petitioner

it

petitioner

is

disputes

fallacious

posits

because

that

disability

resulting in the impairment of ones earning

specialist.

capacity that is compensated, not the injury

be the key consideration in determining the

true

status

of

the

health

of

the

patient/seaman. He seeks to rebut Dr. Lims

inability

views

also points out that Dr. Lim is not an eye

of his being company-designated that should

the

in

it

compensation,

attending physician and not the circumstance

is

respondent

Coordinator of the Metropolitan Hospital.[17] He

To the petitioner, it is the competence of the

it

the

to

work

itself. He maintains that even if his visual

acuity

is

now

20/20

company-designated

as

alleged

physician,

by
he

the
can

nevertheless no longer perform his customary

work as pumpman on board an ocean-going
vessel since the job involves a lot of strain that
could again cause his vitreous hemorrhage.

This limitation impairs his earning capacity so

that he should be legally deemed to have

In a memorandum[23] filed on December 20,

suffered permanent total disability from a

2007, respondents Hammonia and Atlantic

work-related

the

Marine

as

petition under the following arguments:

petitioner

injury. In

this

regard,

cites

entreat

this

Court

to

dismiss

the

well his unions CBA [20] whose paragraph 20.1.5

provides that:
20.1.5 Permanent
Medical
Unfitness - A seafarer
whose
disability
is
assessed at 50% or
more under the POEA
Employment Contract
shall, for the purpose
of this paragraph is
regarded
as
permanently unfit for
further sea service in
any
capacity
and
entitled
to
100%
compensation, i.e., US$
80,000 for officers and
US$ 60,000 for ratings.
Furthermore,
any
seafarer assessed at
less
than
50%
disability
under
the
Contract but certified
as permanently unfit
for further sea services
in any capacity by the
company doctor, shall
also be entitled to
100% compensation.

1. The

provisions

of

the

POEA

Standard

Employment Contract and the CBA between

the parties clearly provide that the assessment
of the company-designated physician should be
accorded respect.
2. There are no legal or factual bases for the
petitioners

claim

of

total

and

permanent

disability benefits as he was declared fit to

work.
3. The

petitioners

reliance

on

the Crystal

Shipping v. Natividad[24] case is misplaced.

4. The petitioner is not entitled to attorneys
fees.
The respondents anchor their case on their
compliance with the law and the existing CBA

Finally, the petitioner contends that because

as applied to the petitioners circumstances.

there is doubt as to the accuracy of the

medical opinion of the company-designated

They point out that upon the petitioners

physician, the doubt should be resolved in his

repatriation, he was immediately referred to an

favor, citing Sy v. Court of Appeals,[21] as well

ophthalmologist

as Article 4 of the Labor Code.[22]

observation

who
and

scheduled
regular

him

for

monitoring

preparatory to possible vitrectomy. He was

THE CASE FOR RESPONDENTS

prescribed medication in the meantime.

On January 13, 2001, petitioner underwent his

On November

13,

2000,

the

petitioner

underwent laser treatment of the right eye,

which

he

scheduled
deferred

tolerated

well. His

on November
because

he

22,

was

vitrectomy,
2000,

noted

was

to

have

accentuated bronchovascular marking on his

chest

x-ray,

and

mild

chronic

pulmonary

disease

as

pulmonary

function

test.

obstructive

revealed
He

by

was

his
given

medication for his condition and was advised to

stop smoking.
The

second session of laser treatment and he again

tolerated the procedure well. By January 31,
2001, his visual acuity was improved to 20/20
for

both

eyes,

with

correction.

He

was

prescribed eyeglasses and was found fit to

resume his sea duties. The petitioner executed
a certificate of fitness for work under oath,
witnessed by Dr. Robert Lim, the companydesignated physician who had declared the
petitioner fit to work based on the opinion of
the handling eye specialist.[25]

petitioner

was

cleared

for

surgery

underwent

The respondents anchor their objection

vitrectomy with fluid gas exchange and focal

to the grant of disability benefits on Dr. Lims

laser

on November

29,

treatment

on December

7,

2000. He

of

his

2000. He

affected

eye

certification.

They

tolerated

the

contention that the medical certifications and

petitioners

assessments

was

physicians - Dr. Echiverri and Dr. Vicaldo -

for

management

as

an

On December 13, 2000, the petitioners vision

was 20/40 (r) and 20/20 (l) with correction
and slight congestion observed in his right eye.
His vision improved to 20/25 (r) and 20/20 (l)
by December 20, 2000 although a substantial
lesion was observed and contained by laser
This

remained

constant

and

by January 11, 2001, no sign of vitreous

hemorrhage was noted on fundoscopy.

petitioners

private

should prevail.

outpatient on December 9, 2000.

markings.

the

the

procedure well. His condition stabilized and he

discharged

by

dispute

The respondents object particularly to

the petitioners claim that Dr. Lims assessment
is not authoritative because Dr. Lim does not
appear to be an eye specialist. [26] They point
out that the issue of Dr. Lims qualifications and
competence was never raised at any level of
the arbitration proceedings, and, therefore,
should not be entertained at this stage of
review. They submit that if the petitioner truly

believed

that

the

company-designated

physician was incompetent, he should have

raised the matter at the earliest possible
opportunity, or at the time he accepted Dr.
Lims assessment. On the contrary, they point
out that the petitioner concurred with the
assessment

of

the

company-designated

physician by executing a certificate of fitness to

work.[27]
The

respondents

likewise

question

the

petitioners reliance on Art. 20.1.5 of the CBA

for his claim that he is entitled to 100%
disability

compensation

since

his

work as a seaman although his disability was

determined to be only at Grade X (20.15%), a
partial permanent disability. They contend that
the petitioners position is contrary to what the
provision

provides

as

relevant portion states: [29]

3. Upon sign-off from vessel for
medical
treatment,
the
seafarer is entitled to sickness
allowance equivalent to his
basic wage until he is declared
fit to work or the degree of his
permanent disability has been
assessed by the companydesignated physician, but in no
case shall this period exceed
one hundred twenty (120)
days.
xxx
In case of permanent total or
partial disability of the seafarer
caused by either injury or
illness the seafarer shall be
compensated in accordance
with the schedule of benefits
enumerated in Section 30 of
his Contract.

doctors,

Echiverri and Vicaldo, declared him unfit to

cited

POEA Standard Employment Contract whose

the

CBA[28] specifically requires a company doctor

to certify a seafarer as permanently unfit for
service in any capacity.

The respondents then point out that Section 30

provides a schedule of disability for injuries,
disease or illness contracted. Any item in the
schedule classified under Grade I constitutes
total and permanent disability entitled to a
disability allowance equivalent to US$60,000
(US$50,000 x 120%). They consider reliance
on this Courts ruling in Crystal Shipping v.
Natividad;[30] Government

Service

Insurance

The respondents bewail the petitioners attempt

System v. Cadiz;[31] and Ijares v. Court of

to have this Court find him permanently

Appeals,[32] to be misplaced with respect to the

disabled because he was under the medication

advocated

and care of the company-designated physician

medical

for over four (4) months or more than 120

permanent disability.

days. They cite Section 20 B of petitioners

conversion
condition

of

the

petitioners

from temporary

to

The respondents stress that in the present

case, the petitioner had been accorded the

necessary medical treatment, including laser

We find no merit in the petition.

treatment by company-designated physicians,

that restored his visual acuity to 20/20. He was

The Governing Law and Rules.

declared fit to work upon his return to the full

possession of all his physical and mental

Entitlement

to

disability

benefits

by

faculties and after he was cleared of all

seamen on overseas work is a matter governed,

impediments. They contend as well that all

not only by medical findings but, by law and by

that the petitioner could present in support of

contract. The material statutory provisions are

his claim for total permanent disability was the

Articles 191 to 193 under Chapter VI (Disability

Grade X disability assessment issued by his

Benefits) of the Labor Code, in relation with

private physician, Dr. Vicaldo, that he is now

Rule

unfit to work as seaman. They point out that

Implementing Book IV of the Labor Code. By

Dr. Vicaldo himself is not an eye specialist.

contract, Department Order No. 4, series of

2000
Finally, the respondents insist that neither
factual nor legal basis exists for petitioners
claim of Grade I total and permanent disability

of

of

the

the

Rules

and

Department

of

Regulations

Labor

and

Employment (the POEA Standard Employment

Contract) and the parties CBA bind the seaman
and his employer to each other.

benefits. Factually, the petitioner was declared

fit

to

work

by

the

company-designated

physician. Legally, only blindness or total and

permanent loss of vision of both eyes is
considered a Grade I disability under the terms
of

the

POEA

Standard

Employment

Contract. Under its Section 30 on the portion

on Eyes, only total and permanent loss of
vision of both eyes can be considered as Grade
I

disability,

not

the

petitioners

impairment of vision in the right eye.

claimed

By way of background, the Department

of Labor and Employment (DOLE), through the
POEA,

has

the

determination

of

liability for work-related death, illness or injury

in
on

the

case

foreign

of

Filipino

ocean-going

seamen

working

vessels.[33] Every

seaman and the vessel owner (directly or

represented by a local manning agency) are
required

to

execute

the

POEA

Standard

Employment Contract as a condition sine qua

non prior

THE COURTS RULING

simplified

to

the

deployment

for

overseas

work. The POEA Standard Employment Contract

is supplemented by the CBA between the owner

Contract. On

of the vessel and the covered seamen.

employer

the

is

matter

not

of

subject

disability,
to

the

Philippine

jurisdiction in terms of being compelled to

A notable feature of the POEA Standard

contribute to the State Insurance Fund that,

Employment Contract is Section 31 its provision

under the Labor Code, Philippine employers are

on the Applicable Law. It provides:

obliged to support. (This Fund, administered by

the Employees Compensation Commission, is

Any unresolved dispute, claim

or grievance arising out of or in
connection with this Contract,
including the annexes shall be
governed by the laws of the
Republic of the Philippines,
international
conventions,
treaties and convenants where
the Philippines is a signatory.

the

source

of

work-related

compensation

payments for work-related deaths, injuries,

and illnesses.) Instead, the POEA Standard
Employment Contract provides its own system
of disability compensation that approximates

Through this provision, the DOLE skirted any

possible issue regarding the law that should
govern

the

terms

and

conditions

of

employment of Filipino seamen working in

ocean-going vessels that have no significant
Philippine

presence

and

Philippine

waters. Thus,

that

hardly

with

the

see
POEA

Standard Employment Contract, there is no

(and even exceeds) the benefits provided

under Philippine law.[34] The standard terms
agreed

upon,

intended

to

as
be

above
read

pointed

and

out,

understood

are
in

accordance with Philippine laws, particularly,

Articles 191 to 193 of the Labor Code and the
applicable implementing rules and regulations
in case of any dispute, claim or grievance.

doubt that in case of any unresolved dispute,

in

In this respect and in the context of

connection with the contract, Philippine laws

the present case, Article 192(c)(1) of the Labor

shall apply.

Code provides that:

claim

or

grievance

arising

out

of

or

In real terms, this means that the

shipowner

an

employer

operating

outside

Philippine jurisdiction does not subject itself to

Philippine laws, except to the extent that it
concedes the coverage and application of these
laws under the POEA Standard Employment

x x x The following disabilities

shall be deemed total and
permanent:
(1) Temporary total disability
lasting continuously for more
than one hundred twenty
days, except as otherwise
provided in the Rules;
xx

The rule referred to - Rule X, Section 2 of the

within three (3) days from arrival for diagnosis

Rules and Regulations implementing Book IV of

and

the Labor Code - states:

treatment but in no case to exceed 120 days,

treatment.[35] For

the

duration

of

the

Period of entitlement.
(a) The income benefit shall
be paid beginning on the first
day of such disability. If
caused by an injury or
sickness it shall not be paid
longer than 120 consecutive
days except where such injury
or
sickness
still
requires
medical attendance beyond
120 days but not to exceed
240 days from onset of
disability
in
which
case benefit for temporary
total disability shall be paid.
However, the System may
declare
the
total
and
permanent status at anytime
after 120 days of continuous
temporary total disability as
may be warranted by the
degree of actual loss or
impairment of physical or
mental
functions
as
determined by the System.
[Underscoring ours]

the seaman is on temporary total disability as

These provisions are to be read hand in

to declare within this period that a permanent

hand with the POEA Standard Employment

partial or total disability already exists. [39]The

Contract whose Section 20 (3) states:

seaman may of course also be declared fit to

he is totally unable to work. [36] He receives his

basic wage during this period[37] until he is
declared fit to work or his temporary disability is
acknowledged

by

the

company

to

be

permanent, either partially or totally, as his

condition is defined under the POEA Standard
Employment

Contract

and

by

applicable

Philippine laws.[38] If the 120 days initial period

is exceeded and no such declaration is made
because the seafarer requires further medical
attention, then the temporary total disability
period may be extended up to a maximum of
240 days, subject to the right of the employer

work at any time such declaration is justified by

Upon sign-off from the

vessel for medical treatment,
the seafarer is entitled to
sickness allowance equivalent
to his basic wage until he is
declared fit to work or the
degree of permanent disability
has been assessed by the
company-designated physician
but in no case shall this period
exceed one hundred twenty
(120) days.

his medical condition.

Thus, upon petitioners return to the

country for medical treatment, both he and the
respondent
accordance

company
with

the

acted
terms

correctly
of

the

in

POEA

Standard Employment Contract and the CBA; he

As

these

provisions

operate,

the

reported to the company-designated doctor for

seafarer, upon sign-off from his vessel, must

treatment and the latter properly referred him

report to the company-designated physician

to

an

ophthalmologist

General Hospital. No

at

extended 240-day period that the petitioner was

medical treatment the petitioner received, to

fit to work. Viewed from this perspective, both

the

the NLRC and CA were legally correct when they

certificate of fitness for work based on the

refused to recognize any disability because the

assessment/certification

petitioner had already been declared fit to

that

the

existed

petitioner

by

on

doctor duly made a declaration well within the

the

point

dispute

the Chinese

executed

the

company-

designated physician.

resume

his

duties. In

the

absence

of

any

disability after his temporary total disability was

Problems only arose when despite the

addressed, any further discussion of permanent

certification, the petitioner sought second and

partial

and

total

third opinions from his own doctors, one of

distinctions

whom opined that he could no longer resume

surplusage that serves no useful purpose.

and

disability, their
consequences,

existence,

becomes

work as a pumpman while the other recognized

a

Grade

disability. Based

(20.15%)
on

partial

these

permanent

opinions,

the

A twist that directly led to the filing of

this

case

is

the

issue

of

whose

medical

petitioner demanded that he be paid disability

pronouncement should be followed given that

and

company

the company-designated physician had declared

refused, the demand metamorphosed into an

the petitioner fit for work with a certification of

actual case before the NLRC Arbitration Branch.

fitness duly executed by the latter, while the

sickness

benefits;

when

the

petitioners physicians gave qualified opinions on

As we outlined above, a temporary total

his medical situation.

disability only becomes permanent when so

declared by the company physician within the

The

POEA

Standard

Employment

periods he is allowed to do so, or upon the

Contract and the CBA clearly provide that when

expiration of the maximum 240-day medical

a seafarer sustains a work-related illness or

treatment period without a declaration of either

injury while on board the vessel, his fitness or

fitness to work or the existence of a permanent

unfitness for work shall be determined by the

disability. In the present case, while the initial

company-designated physician. If the physician

120-day treatment or temporary total disability

appointed by the seafarer disagrees with the

period was exceeded, the company-designated

company-designated physicians assessment, the

x x x more weight should be

given to the assessment of
degree of disability made by
the company doctors because
they were the ones who
attended and treated petitioner
Vergara for a period of almost
five (5) months from the time
of his repatriation to the
Philippines on September 5,
2000 to the time of his
declaration as fit to resume sea
duties on January 31, 2001,
and they were
privy to
petitioner Vergaras case from
the very beginning, which
enabled
the
companydesignated doctors to acquire a
detailed
knowledge
and
familiarity
with
petitioner
Vergaras
medical
condition
which thus enabled them to
reach
a
more
accurate
evaluation of the degree of any
disability
which
petitioner
Vergara might have sustained.
These are not mere company
doctors. These doctors are
independent
medical
practitioners who passed the
rigorous requirements of the
employer and are more likely
to protect the interest of the
employer against fraud.

opinion of a third doctor may be agreed jointly

between the employer and the seafarer to be
the decision final and binding on them.[40]
Thus, while petitioner had the right to
seek a second and even a third opinion, the final
determination of whose decision must prevail
must be done in accordance with an agreed
procedure.Unfortunately, the petitioner did not
avail of this procedure; hence, we have no
option

but

to

declare

that

the

designated doctors

certification

determination

must

that

company-

is

the

final

prevail. We do

so

mindful that the company had exerted real

effort to provide the petitioner with medical
assistance, such that the petitioner finally ended
with a 20/20 vision. The company-designated
physician, too, monitored the petitioners case
from the beginning and we cannot simply throw

Moreover, as between
those
who
had
actually
attended to petitioner Vergara
throughout the duration of his
illness and those who had
merely examined him later
upon his recovery for the
purpose
of
determining
disability benefits, the former
must prevail.

out his certification, as the petitioner suggested,

because he has no expertise in ophthalmology.
Under the facts

of this

case,

it was

the

company-designated doctor who referred the

petitioners case to the proper medical specialist
whose

medical

results

are

not

essentially

disputed; who monitored the petitioners case

We note, too, as the respondent company aptly

during

observed, that the petitioner never raised the

its

progress;

and

who

issued

his

certification on the basis of the medical records

issue

available and the results obtained. This led the

competence at any level of the arbitration

NLRC in its own ruling to note that:

proceedings, only at this level of review. On

the

of

the

contrary,

company-designated

the

petitioner

doctors

accepted

his

assessment of fitness and in fact issued a

and

certification

period operated, what appears clear is that

to

this

effect. Under

these

subsequent

conclusions on the petitioners fitness to work,

without any declaration that the seafarer

based on the assessment/certification by the

was

company-designated physician, to be legally

circumstances, a ruling of permanent and

and factually in order.

total disability was called for, fully in

repeatedly

invoked

our

ruling

in Crystal

to

accordance

beyond

disability

the

fit

went

total

circumstances, we find the NLRC and the CAs

As a last point, the petitioner has

disability

temporary

resume

240

days

work. Under

the

with the operation of the

period for entitlement that we described

Shipping, Inc. v. Natividad,[41] apparently for

above. Viewed

its statement that the respondent in the case

petitioner

was unable to perform his customary work for

Shipping ruling as basis for his claim for

more

permanent total disability.

than

120

days

which

constitutes

from

this

cannot

perspective,

cite

the

the Crystal

permanent total disability. This declaration of a

permanent total disability after the initial 120
days

of

temporary

total

disability

cannot,

Additionally and to reiterate what we

pointed out above regarding the governing

however, be simply lifted and applied as a

rules

that

affect

general rule for all cases in all contexts. The

seafarers in ocean-going vessels, the POEA

specific context of the application should be

Standard Employment Contract provides its

considered, as we must do in the application of

own Schedule of Disability or Impediment for

all rulings and even of the law and of the

Injuries

implementing regulations.

Occupational Diseases or Illness Contracted

Suffered

the

and

disability

Diseases

of

Filipino

Including

(Section 32); Disability Allowances (a subpart

Crystal Shipping was a case where the
seafarer

was

completely

unable

to

of Section 32); and its own guidelines on

work

Occupational Diseases (Section 32-A) which

for three years and was undisputably unfit for

cannot be disregarded in considering disability

sea duty due to respondents need for regular

compensation and benefits. All these read in

medical check-up and treatment which would

relation with applicable Philippine laws and

not be available if he were at sea. [42] While the

rules should also be taken into account in

case was not clear on how the initial 120-day

considering and citing Crystal Shipping and its

related line of cases as authorities.
In light of the above conclusions, we
see no need to discuss the petitioners other
submissions that the lack of disability has
rendered moot, particularly the existence of
doubt that the petitioner insists should be
resolved in his favor.
WHEREFORE,

premises

considered,

we DENY the petition for lack of merit.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 198501
2013

January 30,

KESTREL SHIPPING CO., INC./ CAPT.

AMADOR P. SERVILLON and ATLANTIC
MANNING LTD., Petitioners,
vs.
FRANCISCO D. MUNAR, Respondent.
DECISION
REYES, J.:
This is a petition for review on certiorari
assailing the Decision1 dated January 28, 2011
and Resolution2 dated September 6, 2011 of
the Court of Appeals (CA) in CA-G.R. SP No.
110878.

The facts leading to the filing of this petition

are undisputed.
On March 23, 2006, petitioner Kestrel
Shipping, Inc. (Kestrel), on behalf of its
principal, petitioner Atlantic Manning, Ltd., and
respondent Francisco Munar (Munar) forged a
six (6)-month employment contract
designating Munar as pump man for M/V
Southern Unity. As pump man, his duties
include: (a) operating, maintaining and
repairing power-driven pumps, valves and
related machinery; (b) transferring materials
to and from vessels and terminal storages; (c)
transferring liquids by siphoning; (d) installing
hoses and pipes between pumps and
containers that require filling or emptying; (e)
maintenance of pump rooms and similar
spaces; (f) assisting in the cleaning of tanks,
crude oil washing, gas inerting, purging of
tanks and wage sampling of cargo; (g)
checking and recording cargo temperature;
and (h) operating tank heating equipment.3
On October 12, 2006, after Munar assisted in
manually lifting the ships anchor windlass
motor that weighs about 350 kilograms, he
started to limp and experience severe pain in
his lumbar region. On October 18, 2006, Munar
was admitted at the Entabeni Hospital in
Durban, South Africa. According to his
attending physician, Dr. Soma T. Govender (Dr.
Govender), the x-ray and magnetic resonant
image (MRI) of Munars lumbar spine showed
degenerative changes, which required him to
take pain medication, use pelvic traction, and
undergo physiotherapy. In his medical
report4 dated October 19, 2006, Dr. Govender
stated that:
I arranged for him to have lumbar spine x-rays
and this showed that he had degenerative
changes especially of the lower lumbar spine in
the L3/4 and L5/S1 region with degenerative
changes noted bilaterally. I proceeded to do a
MRI of the lumbar spine to exclude an acute
prolapsed disc and this confirmed degenerative
changes of the lumbar spine extending from
the L2/3 region and L3/4 and the worst
affected levels appeared to be L4/5 and L5/S1.

xxxx
I have admitted him for a course on intensive
conservative management in hospital. He has
been commenced on pelvic traction and been
given pain medication, which includes Narcotic
analgesia, muscle relaxants, and antiinflammatories. I have also commenced him on
a course of physiotherapy and hopefully with
this conservative mode of treatment he should
show sufficient improvement to obviate any
spinal surgery.5
On October 24, 2006, Dr. Govender issued
another medical report6 where he stated that
while Munars improved condition allowed him
to travel, he would require assistance in
carrying his things and should be lying down
for the entire duration of the trip. Munar should
undergo further treatment and management in
a spine rehabilitation facility but if he would
not register a positive response thereto, he
must undergo surgery. Specifically:
Mr. Munar is currently recovered from the
acute pain syndrome that he first presented
with. Although he has not recuperated
completely he has progressed to the state
were he will be able to travel back to the
Phillipines (sic) with assistance. He will require
assistance with regard to his baggage transfers
and he should also be accommodated on the
aircraft so that he can lie down, as this would
minimize the amount of pressure on his lumbar
inter-vertebral disc and minimize the nerve
root compression. It is reasonable to assume
that the heavy lifting that forms part of his
daily work duties has contributed significantly
to the abnormalities demonstrated on his
lumbar spine MRI scans. x x x.
Mr. Munar will require further treatment and
management in the Philippines. I would
recommend a further course of conservative
treatment for a few more weeks. If this does
not settle he may then require surgical
intervention with decompression of the areas
of stenosis (narrowing) and removal of the disc
fragments that are compressing the nerve
roots and a possible fusion of his lower back.
However, this will depend on the response to

the conservative treatment and his recovery

after such surgery may take up to 3 months.7
Dr. Govender also declared Munar unfit to
perform his usual sea duties:
Whether he has further surgery or not, it will
not be possible for Mr. Munar to continue
performing the "heavy manual duties" that
hisjob requires any longer, as this could
exacerbate his lumbar spine problem. From
this perspective he is medically unfit to
continue such duties. x x x8
On October 28, 2006, Munar was repatriated.
On October 30, 2006, Munar was admitted at
the Chinese General Hospital. For two (2)
weeks, he underwent intensive physiotherapy
and was attended to by the following doctors:
Dr. Tiong Sam Lim (Dr. Lim), a spine surgeon;
Dr. Antonio Periquet (Dr. Periquet), a specialist
on physical rehabilitation medicine; and Dr.
Fidel Chua (Dr. Chua) of Trans Global Health
Systems, Inc. to whom Kestrel referred his
case for evaluation.9
On November 17, 2006, Dr. Chua issued a
medical report,10 stating that Munar did not
respond positively to the treatment and
recommending that he undergo laminectomy
and dissectomy, procedures which would entail
a recovery period from four (4) to six (6)
months:
The above patient had 2 weeks intensitive (sic)
physiotherapy but no improvement. I had
conference with Dr. Tiong Sam Lim (spinal
surgeon) and Dr. Antonio Periquet
(rehabilitation medicine) and strongly suggest
patient to undergo Laminectomy & dissectomy
which will approximately cost PHP 120,000.00
to PHP 150,000.00 barring complication.
Recuperation will take 4-6 months from date of
operation.11
On December 2, 2006, Munar had surgical
intervention.

On December 20, 2006, he was discharged

from the hospital. In his medical report12 of
even date, Dr. Chua diagnosed Munar as
suffering from herniated disc and that while
the surgery was successful, Munar should
continue physiotherapy:

On April 11 and 12, 2007, Munar was once

again examined by Dr. Periquet and Dr. Lim,
respectively. On May 3, 2007, Dr. Chua issued
a medical report16 where he enumerated the
findings of Dr. Periquet and Dr. Lim and rated
Munars impediment as Grade 8.

The above patient discharged today from

Chinese General Hospital. He underwent
Laminectomy and Dissectomy last December 2,
2006. Since he is from La Union, he may
continue his physiotherapy in his hometown.

The above patient was re-evaluated by Dr.

Antonio Periquet on April 11, 2007 with report
of pain level is 5/10

At present, the prognosis is good and

recuperation will take 4-6 months from date of
operation.13
Munar continued his physiotherapy sessions at
Lorma Medical Center at Carlatan, San
Fernando City, La Union.14
On February 27, 2007, Munar was physically
examined by Dr. Lim and Dr. Periquet. The
following observations were noted in the
medical report Dr. Chua issued:
Patient was re-evaluated by Dr. Tiong Sam Lim
with finding of right lower extremities has
improved but there is still pain on straight leg
raise of left and weak extensor hallis longes.
He was also evaluated by Dr. Antonio Periquet
with following finding

- SLR-45o bilateral, weakness left foot

muscle, decrease sensation below midthigh
- Tenderness-lumbo sacral process and
left lumbar area
- Pain on side bending and forward
flexion
He is advised to continue physiotherapy.
He was also seen by Dr. Tiong Sam Lim on
April 12, 2007 and advised to continue
physiotherapy and recommended disability
assessment.
After thorough evaluation, the report of Dr.
Antonio Periquet; Dr. Tiong Sam Lim and Dr.
Edward Lingayo, patient will take a long time
to fully recovered.
Therefore, he may be given disability.

1. there is a decrease in pain

2. tenderness lumbar paravertebral
3. weakness left lower extremity
4. decrease in sensation from T 10
down
5. SLR 30o left; full right
6. decrease ankle jerk left
7. pain on all trunk motion15

Based on Amended POEA Contract Section 32CHEST-TRUNK-SPINE # 5-disability grade 8.17

Meantime, on April 17, 2007, Munar filed a
complaint for total and permanent disability
benefits. His complaint was docketed as NLRCNCR Case No. OFW-07-04-00970-00 and
raffled to Labor Arbiter Veneranda Guerrero
(LA Guerrero). Munar claimed that the mere
fact that his medical condition, which
incapacitated him to engage in any gainful
employment, persisted for more than 120 days
automatically entitles him to total and
permanent disability benefits.

During the mandatory mediation and

conciliation conferences, petitioners invoked
Dr. Chuas assessment per his medical report
dated May 3, 2007 and offered to pay Munar
the benefit corresponding to Grade 8
disabilities or $16,795.00. Munar rejected
petitioners offer and maintained that his
disability should be rated as Grade 1. Munar
relied on the following assessment made by Dr.
Edward L. Chiu (Dr. Chiu), an orthopedic
surgeon at Lorma Medical Center, in a medical
certificate18 the latter issued on May 21, 2007:
At present, he could tolerate walking for short
distances due to his low back pain. There is
weakness of his left foot.
Due to his back injury and pain, he could not
go back to work. He could not tolerate
stren[u]ous physical activities.19
In a Decision20 dated May 30, 2008, LA
Guerrero awarded Munar with total and
permanent disability benefits in the amount of
US$60,000.00 and attorneys fees equivalent
to ten percent (10%) of the former. As
between the assessment of Dr. Chua and that
of Dr. Chiu, LA Guerrero gave more weight to
the latter:
Assessing the parties respective averments
and documents adduced in support thereof,
this Office finds that the complainant is entitled
to the maximum compensation benefit as
provided under the POEA Standard
Employment Contract in the amount of
US$60,000.00.
The medical certificate issued by Dr. Edward L.
Chiu dated May 21, 2007 categorically states
that complainant cannot go back to work due
to his back injury and that he cannot tolerate
strenuous physical activities. Given the nature
of his shipboard employment, it is logical to
conclude that the complainant cannot resume
shipboard employment. This conclusion is
borne out by the respondents own medical
certificate showing that after the complainant
underwent surgery in December, 2006 he was
expected to recuperate for a period of 4-6
months, and on May 3, 2007 the respondents

designated physician determined that the

complainant "will take a long time to fully
recovered (sic)". And, while he was assessed
with Impediment Grade 8, the assessment is
not accompanied by any justification, other
than the vague qualification on the length of
time of recovery.
Evidently, such ambiguous assessment, vis-vis that made by the complainants
independent physician who had taken over the
complainants therapy, cannot be a basis for
the grant of the assessed disability grading.
The determination of the company designated
physician cannot prevail over the specific
assessment made by the independent
physician.
Verily the illness sustained by the complainant
has rendered him unfit to continue his
employment as seafarer. Accordingly, he is
entitled to the maximum compensation benefit
of US$60,000.00.
It is well-settled that:
"disability should not be understood more on
its medical significance but on the loss of
earning capacity. Permanent total disability
means disablement of an employee to earn
wages in the same kind of work, or work of
similar nature that (he) was trained for or
accustomed to perform, or any kind of work
which a person of (his) mentality and
attainment could do. It does not mean
absolute helplessness. In disability
compensation, We likewise held, it is not the
injury which is compensated, but rather it is
the incapacity to work resulting in the
impairment of ones earning capacity."
(Philippine Transmarine, Inc., vs. NLRC 353
SCRA 47)21
On appeal by petitioners, the National Labor
Relations Commission (NLRC) affirmed LA
Guerreros Decision dated May 30, 2008. In a
Decision22 dated June 30, 2009, the NLRC ruled
that Dr. Chius categorical and definite
assessment should prevail over that of Dr.
Chua, which failed to approximate the period

needed by Munar to fully recover and lacked

clear basis.

incontinence or rendered walking impossible

even with the aid of crutches.

Given the report of the company-designated

physician who is unsure how much time
complainant needs in order to fully recover,
and the report of complainants physician who
is certain in his own findings that complainant
cannot go back to work given his present
condition, this Commission has no other
obvious choice than to place its confidence and
accordingly uphold the findings of
complainants physician.23

By way of the assailed decision, the CA found

no grave abuse of discretion on the part of the
NLRC and ruled that Munars continued inability
to perform his usual sea duties, which is
attributable to his medical condition that is
work-related, despite surgery and seven (7)
months of physical therapy, conclusively
indicate that he is totally and permanently
disabled. The CA noted that while the
company-designated doctors did not
categorically state that Munar is unfit for sea
duties, this is easily inferable from their
statement that he continues to experience
pain, weakness and tenderness and would take
a long time to recover.

The NLRC denied petitioners motion for

reconsideration in a Resolution24 dated August
28, 2009.
Petitioners filed a petition for certiorari25 with
the CA, alleging that the NLRC acted with
grave abuse of discretion in characterizing
Munars disability as total and permanent. The
NLRC should have upheld Dr. Chuas findings
over those of Dr. Chiu whose knowledge of
Munars case is questionable. Apart from the
fact that it is Dr. Chua, being the company
designated physician, who is tasked under the
Philippine Overseas Employment
Administration-Standard Employment Contract
(POEA-SEC) to determine the nature and
degree of a seafarers disability or his fitness to
perform sea duties, the reliability of his
assessment springs from his undisputed
familiarity with Munars medical condition. As
one of Munars attending physicians from the
time he was repatriated, Dr. Chua is in a
position to give a more accurate appraisal of
Munars disability. Moreover, Dr. Chuas
assessment is based on the findings of Dr. Lim
and Dr. Periquet who are both specialists in the
treatment and management of spine injuries.
Furthermore, under the POEA-SEC, herniated
disc is not one of the disabilities that are
classified as Grade 1. Munars herniated or
slipped disc only resulted to partial loss of
motion of his lower extremities, which is
classified as Grade 8 impediment under Section
32 of the POEA-SEC. Petitioners claim that for
a spine injury to be considered as Grade 1
disability, it should have brought forth

In the case at bar, despite his having

undergone surgeries, treatment and physical
therapy of more than seven months from the
injury, Munar is still found by all physicians
involved to continue to suffer from weakness,
tenderness and pain that prevent him from
doing strenuous activities. In fact, Kestrels
own designated physicians have stated this in
their last report and found that Munar was
entitled to disability benefits as he "(would)
take a long time to fully recover." Though they
did not state it, it is clear from these findings
that Munar is still unable to return to his
customary work as a seafarer in an oceangoing vessel, due to the strenuous nature of
the work demanded by it. No profit-motivated
ship owner will employ Munar because of his
condition. Munars private physicians
statement of this fact in his own report merely
confirms what is already obvious. Should he
even try, Munar is certain to get disqualified as
seafarer since such an employment will require
him to undergo rigorous physical examinations
which he is sure to fail because of the sorry
state of his physical health.
Thus, it is not even necessary to address
Kestrel et al.s arguments as to the persuasive
or binding nature of the findings of the
company-designated physicians since, as
earlier stated, they have been ruled to be not
binding nor conclusive on the courts. In fact,

the findings of Kestrels company-designated

doctors themselves do not categorically state
that Munar is fit to return to work; on the
contrary, they state that Munar still suffers
from weakness, tenderness and pain and is
entitled to disability benefits. Thus, the only
issue left for resolution is the amount of
disability payments due to Munar.26 (Citations
omitted)

any substantial challenge to the competence

and skill of the company-designated doctors,
there is no reason why their assessment
should not be given due credence.

Nonetheless, while the CA agreed with the

NLRC that Munars spine injury is a Grade 1
disability, it deemed proper to reduce the
amount of attorneys fees to two percent (2%)
of his disability benefits.

Petitioners insist on the correctness of the

grade assigned by their doctors on Munars
disability. According to petitioners, Munars
herniated disc is not a Grade 1 impediment as
it did not disable him from walking or rendered
him incontinent. Munar suffers from "moderate
rigidity or two thirds (2/3) loss of motion or
lifting power of the trunk" and under Section
32 of the POEA-SEC, this is a Grade 8 and not
a Grade 1 impediment.

We find, however, that the grant by public

respondent of 10% of $60,000 as attorneys
fees is exorbitant and without any stated basis,
since it was not proven that Kestrel[,] et al.
acted in gross and evident bad faith in denying
Munars claim of Impediment Grade 1
compensation. The records bear that Kestrel in
fact offered to pay Impediment Grade 8
compensation, or $16,795.00, to Munar in
good faith, which the latter refused. But since
the instant case is an action for recovery of
compensation by a laborer, attorneys fees are
still due based on Article 2208(8) of the Civil
Code, albeit on a reduced amount of two
percent (2%) of the main award, which We
deem to be the reasonable fee under the
circumstances.27

Munar cannot claim, petitioners further posit,

that he is totally and permanently disabled and
claim the benefits corresponding to Grade 1
disabilities simply because he has not yet fully
recovered after the lapse of 120 days from the
time he signed-off from M/V Southern Unity.
The nature of disability and the benefits
attached thereto are determined by the
manner they are graded or classified under the
POEA and not by the number of days that a
seafarer is under treatment. If a seafarer has
an injury or medical condition that is not
considered a Grade 1 impediment under the
POEA-SEC, then he cannot claim that he is
totally or permanently disabled. To allow the
contrary would render naught the schedule of
disabilities under the POEA-SEC.

In a Resolution28 dated September 6, 2011, the

CA denied petitioners motion for
reconsideration.

Our Ruling

Issue
There is no dispute that Munars spine injury is
work-related and that he is entitled to disability
benefits. The bone of contention is how to
classify such injury in order to determine the
amount of benefits due to him. There is a
conflict between the disability ratings made by
the company-designated physician and Munars
doctor-of-choice and petitioners claim that
holding the latters determination to be more
credible is contrary to the provisions of the
POEA-SEC and prevailing jurisprudence. Absent

This Court resolves to DENY the petition.

Indeed, under Section 3229 of the POEA-SEC,
only those injuries or disabilities that are
classified as Grade 1 may be considered as
total and permanent. However, if those injuries
or disabilities with a disability grading from 2
to 14, hence, partial and permanent, would
incapacitate a seafarer from performing his
usual sea duties for a period of more than 120
or 240 days, depending on the need for further
medical treatment, then he is, under legal
contemplation, totally and permanently
disabled. In other words, an impediment
should be characterized as partial and

permanent not only under the Schedule of

Disabilities found in Section 32 of the POEASEC but should be so under the relevant
provisions of the Labor Code and the Amended
Rules on Employee Compensation (AREC)
implementing Title II, Book IV of the Labor
Code. That while the seafarer is partially
injured or disabled, he is not precluded from
earning doing the same work he had before his
injury or disability or that he is accustomed or
trained to do. Otherwise, if his illness or injury
prevents him from engaging in gainful
employment for more than 120 or 240 days, as
the case may be, he shall be deemed totally
and permanently disabled.
Moreover, the company-designated physician is
expected to arrive at a definite assessment of
the seafarers fitness to work or permanent
disability within the period of 120 or 240 days.
That should he fail to do so and the seafarers
medical condition remains unresolved, the
seafarer shall be deemed totally and
permanently disabled.
It is settled that the provisions of the Labor
Code and AREC on disabilities are applicable to
the case of seafarers such that the POEA-SEC
is not the sole issuance that governs their
rights in the event of work-related death,
injury or illness. As ruled in Remigio v. NLRC:30
Second. Is the Labor Codes concept of
permanent total disability applicable to the
case at bar? Petitioner claims to have suffered
from permanent total disability as defined
under Article 192(c)(1) of the Labor Code, viz:
Art. 192 (c). The following disabilities shall be
deemed total and permanent:
(1) Temporary total disability lasting
continuously for more than one hundred
twenty days, except as otherwise provided in
the Rules; x x x
Petitioner likewise cites Vicente v. ECC and
Abaya, Jr. v. ECC, both of which were decided
applying the Labor Code provisions on
disability benefits. Private respondents, on the
other hand, contend that petitioner erred in

applying the definition of "permanent total

disability" under the Labor Code and cases
decided under the ECC as the instant case
involves a contractual claim under the 1996
POEA SEC.
Again, we rule for petitioner.
The standard employment contract for
seafarers was formulated by the POEA
pursuant to its mandate under E.O. No. 247 to
"secure the best terms and conditions of
employment of Filipino contract workers and
ensure compliance therewith" and to "promote
and protect the well-being of Filipino workers
overseas." Section 29 of the 1996 POEA SEC
itself provides that "all rights and obligations of
the parties to the Contract, including the
annexes thereof, shall be governed by the laws
of the Republic of the Philippines, international
conventions, treaties and covenants where the
Philippines is a signatory." Even without this
provision, a contract of labor is so impressed
with public interest that the New Civil Code
expressly subjects it to "the special laws on
labor unions, collective bargaining, strikes and
lockouts, closed shop, wages, working
conditions, hours of labor and similar
subjects."
Thus, the Court has applied the Labor Code
concept of permanent total disability to the
case of seafarers. In Philippine Transmarine
Carriers v. NLRC, seaman Carlos Nietes was
found to be suffering from congestive heart
failure and cardiomyopathy and was declared
as unfit to work by the company-accredited
physician. The Court affirmed the award of
disability benefits to the seaman, citing ECC v.
Sanico, GSIS v. CA, and Bejerano v. ECC that
"disability should not be understood more on
its medical significance but on the loss of
earning capacity. Permanent total disability
means disablement of an employee to earn
wages in the same kind of work, or work of
similar nature that he was trained for or
accustomed to perform, or any kind of work
which a person of hismentality and attainment
could do. It does not mean absolute
helplessness." It likewise cited Bejerano v.
ECC, that in a disability compensation, it is not

the injury which is compensated, but rather it

is the incapacity to work resulting in the
impairment of ones earning
capacity.31 (Citations omitted)
In Vergara v. Hammonia Maritime Services,
Inc.,32 this Court read the POEA-SEC in
harmony with the Labor Code and the AREC in
interpreting in holding that: (a) the 120 days
provided under Section 20-B(3) of the POEASEC is the period given to the employer to
determine fitness to work and when the
seafarer is deemed to be in a state of total and
temporary disability; (b) the 120 days of total
and temporary disability may be extended up
to a maximum of 240 days should the seafarer
require further medical treatment; and (c) a
total and temporary disability becomes
permanent when so declared by the companydesignated physician within 120 or 240 days,
as the case may be, or upon the expiration of
the said periods without a declaration of either
fitness to work or permanent disability and the
seafarer is still unable to resume his regular
seafaring duties. Quoted below are the
relevant portions of this Courts Decision dated
October 6, 2008:
In real terms, this means that the
shipowneran employer operating outside
Philippine jurisdictiondoes not subject itself
to Philippine laws, except to the extent that it
concedes the coverage and application of these
laws under the POEA Standard Employment
Contract. On the matter of disability, the
employer is not subject to Philippine
jurisdiction in terms of being compelled to
contribute to the State Insurance Fund that,
under the Labor Code, Philippine employers are
obliged to support. (This Fund, administered by
the Employees Compensation Commission, is
the source of work-related compensation
payments for work-related deaths, injuries,
and illnesses.) Instead, the POEA Standard
Employment Contract provides its own system
of disability compensation that approximates
(and even exceeds) the benefits provided
under Philippine law. The standard terms
agreed upon, as above pointed out, are
intended to be read and understood in
accordance with Philippine laws, particularly,

Articles 191 to 193 of the Labor Code and the

applicable implementing rules and regulations
in case of any dispute, claim or grievance.
In this respect and in the context of the
present case, Article 192(c)(1) of the Labor
Code provides that:
xxxx
The rule referred to Rule X, Section 2 of the
Rules and Regulations implementing Book IV of
the Labor Code states:
xxxx
These provisions are to be read hand in hand
with the POEA Standard Employment Contract
whose Section 20 (3) states:
xxxx
As these provisions operate, the seafarer, upon
sign-off from his vessel, must report to the
company-designated physician within three (3)
days from arrival for diagnosis and treatment.
For the duration of the treatment but in no
case to exceed 120 days, the seaman is on
temporary total disability as he is totally
unable to work. He receives his basic wage
during this period until he is declared fit to
work or his temporary disability is
acknowledged by the company to be
permanent, either partially or totally, as his
condition is defined under the POEA Standard
Employment Contract and by applicable
Philippine laws. If the 120 days initial period is
exceeded and no such declaration is made
because the seafarer requires further medical
attention, then the temporary total disability
period may be extended up to a maximum of
240 days, subject to the right of the employer
to declare within this period that a permanent
partial or total disability already exists. The
seaman may of course also be declared fit to
work at any time such declaration is justified
by his medical condition.
xxxx

As we outlined above, a temporary total

disability only becomes permanent when so
declared by the company physician within the
periods he is allowed to do so, or upon the
expiration of the maximum 240-day medical
treatment period without a declaration of
either fitness to work or the existence of a
permanent disability. In the present case, while
the initial 120-day treatment or temporary
total disability period was exceeded, the
company-designated doctor duly made a
declaration well within the extended 240-day
period that the petitioner was fit to work.
Viewed from this perspective, both the NLRC
and CA were legally correct when they refused
to recognize any disability because the
petitioner had already been declared fit to
resume his duties. In the absence of any
disability after his temporary total disability
was addressed, any further discussion of
permanent partial and total disability, their
existence, distinctions and consequences,
becomes a surplusage that serves no useful
purpose.33(Citations omitted)
Consequently, if after the lapse of the stated
periods, the seafarer is still incapacitated to
perform his usual sea duties and the companydesignated physician had not yet declared him
fit to work or permanently disabled, whether
total or permanent, the conclusive presumption
that the latter is totally and permanently
disabled arises. On the other hand, if the
company-designated physician declares the
seaman fit to work within the said periods,
such declaration should be respected unless
the physician chosen by the seaman and the
doctor selected by both the seaman and his
employer declare otherwise. As provided under
Section 20-B(3) of the POEA-SEC, a seafarer
may consult another doctor and in case the
latters findings differ from those of the
company-designated physician, the opinion of
a third doctor chosen by both parties may be
secured and such shall be final and binding.
The same procedure should be observed in
case a seafarer, believing that he is totally and
permanently disabled, disagrees with the
declaration of the company-designated
physician that he is partially and permanently
disabled.

In Vergara, as between the determinations

made by the company-designated physician
and the doctor appointed by the seaman, the
former should prevail absent any indication
that the above procedure was complied with:
The POEA Standard Employment Contract and
the CBA clearly provide that when a seafarer
sustains a work-related illness or injury while
on board the vessel, his fitness or unfitness for
work shall be determined by the companydesignated physician. If the physician
appointed by the seafarer disagrees with the
company-designated physicians assessment,
the opinion of a third doctor may be agreed
jointly between the employer and the seafarer
to be the decision final and binding on them.
Thus, while petitioner had the right to seek a
second and even a third opinion, the final
determination of whose decision must prevail
must be done in accordance with an agreed
procedure. Unfortunately, the petitioner did not
avail of this procedure; hence, we have no
option but to declare that the companydesignated doctors certification is the final
determination that must prevail. x x
x.34 (Citation omitted)
In this case, the following are undisputed: (a)
when Munar filed a complaint for total and
permanent disability benefits on April 17,
2007, 181 days had lapsed from the time he
signed-off from M/V Southern Unity on October
18, 2006; (b) Dr. Chua issued a disability
grading on May 3, 2007 or after the lapse of
197 days; and (c) Munar secured the opinion
of Dr. Chiu on May 21, 2007; (d) no third
doctor was consulted by the parties; and (e)
Munar did not question the competence and
skill of the company-designated physicians and
their familiarity with his medical condition.
It may be argued that these provide sufficient
grounds for the dismissal of Munars complaint.
Considering that the 240-day period had not
yet lapsed when the NLRC was asked to
intervene, Munars complaint is premature and
no cause of action for total and permanent
disability benefits had set in. While beyond the
120-day period, Dr. Chuas medical report

dated May 3, 2007 was issued within the 240day period. Moreover, Munar did not contest
Dr. Chuas findings using the procedure
outlined under Section 20-B(3) of the POEASEC. For being Munars attending physicians
from the time he was repatriated and given
their specialization in spine injuries, the
findings of Dr. Periquet and Dr. Lim constitute
sufficient bases for Dr. Chuas disability
grading. As Munar did not allege, much less,
prove the contrary, there exists no reason why
Dr. Chius assessment should be preferred over
that of Dr. Chua.
It must be noted, however, that when Munar
filed his complaint, Dr. Chua had not yet
determined the nature and extent of Munars
disability. Also, Munar was still undergoing
physical therapy and his spine injury had yet
been fully addressed. Furthermore, when
Munar filed a claim for total and permanent
disability benefits, more than 120 days had
gone by and the prevailing rule then was that
enunciated by this Court in Crystal Shipping,
Inc. v. Natividad35 that total and permanent
disability refers to the seafarers incapacity to
perform his customary sea duties for more
than 120 days. Particularly:
Permanent disability is the inability of a worker
to perform his job for more than 120 days,
regardless of whether or not he loses the use
of any part of his body. As gleaned from the
records, respondent was unable to work from
August 18, 1998 to February 22, 1999, at the
least, or more than 120 days, due to his
medical treatment. This clearly shows that his
disability was permanent.
Total disability, on the other hand, means the
disablement of an employee to earn wages in
the same kind of work of similar nature that he
was trained for, or accustomed to perform, or
any kind of work which a person of his
mentality and attainments could do. It does
not mean absolute helplessness. In disability
compensation, it is not the injury which is
compensated, but rather it is the incapacity to
work resulting in the impairment of ones
earning capacity.

xxxx
Petitioners tried to contest the above findings
by showing that respondent was able to work
again as a chief mate in March 2001.
Nonetheless, this information does not alter
the fact that as a result of his illness,
respondent was unable to work as a chief mate
for almost three years. It is of no consequence
that respondent was cured after a couple of
years. The law does not require that the illness
should be incurable. What is important is that
he was unable to perform his customary work
for more than 120 days which constitutes
permanent total disability. An award of a total
and permanent disability benefit would be
germane to the purpose of the benefit, which is
to help the employee in making ends meet at
the time when he is unable to
work.36 (Citations omitted and emphasis
supplied)
Consequently, that after the expiration of the
120-day period, Dr. Chua had not yet made
any declaration as to Munars fitness to work
and Munar had not yet fully recovered and was
still incapacitated to work sufficed to entitle the
latter to total and permanent disability
benefits.
In addition, that it was by operation of law that
brought forth the conclusive presumption that
Munar is totally and permanently disabled,
there is no legal compulsion for him to observe
the procedure prescribed under Section 20B(3) of the POEA-SEC. A seafarers compliance
with such procedure presupposes that the
company-designated physician came up with
an assessment as to his fitness or unfitness to
work before the expiration of the 120-day or
240-day periods. Alternatively put, absent a
certification from the company-designated
physician, the seafarer had nothing to contest
and the law steps in to conclusively
characterize his disability as total and
permanent.
This Courts pronouncements in Vergara
presented a restraint against the indiscriminate
reliance on Crystal Shipping such that a
seafarer is immediately catapulted into filing a

complaint for total and permanent disability

benefits after the expiration of 120 days from
the time he signed-off from the vessel to which
he was assigned. Particularly, a seafarers
inability to work and the failure of the
company-designated physician to determine
fitness or unfitness to work despite the lapse of
120 days will not automatically bring about a
shift in the seafarers state from total and
temporary to total and permanent, considering
that the condition of total and temporary
disability may be extended up to a maximum
of 240 days.
Nonetheless, Vergara was promulgated on
October 6, 2008, or more than two (2) years
from the time Munar filed his complaint and
observance of the principle of prospectivity
dictates that Vergara should not operate to
strip Munar of his cause of action for total and
permanent disability that had already accrued
as a result of his continued inability to perform
his customary work and the failure of the
company-designated physician to issue a final
assessment.
WHEREFORE, premises considered, the petition
is DENIED. The Decision dated January 28,
2011 and Resolution dated September 6, 2011
of the Court of Appeals in CA-G.R. SP No.
110878 are AFFIRMED.
SO ORDERED.
BIENVENIDO L. REYES
Associate Justice

Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 191899

June 22, 2015

JULIUS R. TAGALOG, Petitioner,

vs.
CROSSWORLD MARINE SERVICES INC.,

CAPT. ELEASAR G. DIAZ AND/OR CHIOS

MARITIME LTD. ACTING IN BEHALF OF
OCEAN LIBERTY LTD, Respondents.
DECISION
PEREZ, J.:
Before this Court is a Petition for Review on
Certiorari under Rule 45 of the Rules of Court
assailing the Decision1dated 26 January 2010
and Resolution2 dated 12 April 2010 of the
Court of Appeals in CA-G.R. SP No. 110168.
The Court of Appeals dismissed the complaint
for permanent disability benefits filed by
petitioner Julius R. Tagalog.
The facts follow.
Respondents Crossworld Marine Services Inc.,
a local manning agent and its foreign principal,
Chios Maritime, Ltd., acting in behalf of Ocean
Liberty, Ltd., hired petitioner as Wiper/Oiler on
board the vessel M/V Ocean Breeze.
Petitioner's contract of employment was for a
fixed period of 12 months with a monthly basic
salary of $220.00. On 11 January 2005,
petitioner left the country to board the vessel.
Sometime in November 2005, petitioner
injured his eye when he accidentally splashed
his eyes with a cleaning solution mixed with a
strong chemical while cleaning the cooler of
the main engine of the vessel. On 2 December
2005, he was brought to a hospital in Port of
Spain, Trinidad and Tobago where he was
diagnosed to have bilateral pterygium and
declared unfit to work. On 8 and 15 December
2005, petitioner underwent operations on both
eyes at the Port of Pointe-a-Pierre. On 10
January 2006, petitioner went to see an
ophthalmologist in the Port of Sea Lots due to
pain and excessive tearing on his right eye. He
was diagnosed to have granuloma of the
conjunctive right. An excision was done on the
same day and continuing medication was
advised.
On 21 January 2006, petitioner signed off from
his vessel. Upon his arrival in Manila on 23

January 2006, he reported to Crossworld

Marine Services where he was referred to the
company-designated physician Dr. Susannah
Ong-Salvador (Dr. Ong-Salvador) for postemployment medical examination. Petitioner
was diagnosed to have aggressive fleshy
pterygium SIP Excision of Pterygium and
Granuloma, both eyes, SIP excision of
pterygium with conjunctival grafting, right eye.
On 23 February 2006, petitioner underwent a
pterygium excision with conjunctiva! graft on
his right eye at the University of Santo Tomas
(UST) hospital. He was discharged two days
later and given oral pain relievers. On 17
March 2006, petitioner was subjected to the
same procedure on his left eye. On 3 May
2006, Dr. Ong-Salvador declared petitioner fit
to work. Petitioner then executed a Certificate
of Fitness for Work attesting that he is fit to
work and that he has no claims whatsoever
against respondents in relation to his Injury.
On 7 September 2006, however, petitioner
sought a second opinion and consulted a
private physician, Dr. Cynthia Canta (Dr.
Canta). Petitioner was diagnosed with the
following condition: "SIP Pterygium Excision,
Both Eyes[.] Conjunctiva! Granuloma, Left
Eye[.] Error of refraction."3 Dr. Canta
concluded that petitioner was unfit to work.
This prompted petitioner to file a complaint
with the Arbitration branch of the National
Labor Relations Commission (NLRC) for
disability benefits, sickness allowance,
damages and attorney's fees against
respondents.

company-designated physician thereby

negating his claim that he is permanently
disabled. On 22 March 2007, the Labor Arbiter
ruled in favor of petitioner in this wise:

Petitioner claimed that he is entitled to

permanent total disability benefits amounting
to $60,000.00 because he was declared unfit
to work after his injury in the last week of
November 2005 until 20 April 2006, which is
beyond 120 days. Petitioner alleged that under
the law, a temporary total disability lasting
continuously for more than 120 days is
considered total and permanent. Petitioner also
prayed . for sickness allowance of $880.00,
medical reimbursement of P10,000.00,
damages and attorney's fees.

WHEREFORE, premises considered, the instant

Petition for Certiorari is hereby GRANTED. The
Resolution dated October 3, 2008 and the
Resolution dated June 18, 2009 of public
respondent NLRC, Second Division, are
ANNULLED and SET ASIDE. Accordingly, the
complaint for permanent disability benefits
filed by private respondent Julius R. Tagalog is
DISMISSED.5

Respondents countered that petitioner was

declared fit to resume his duties by the

WHEREFORE, premises considered, judgment

is hereby rendered ordering the respondents
Crossworld Marine Services, Inc./Capt. Eleasar
G. Diaz/Chios Maritime Ltd. Acting in behalf of
Ocean Liberty Ltd., to pay complainant Julius
R. Tagalog the aggregate amount of SIXTY-SIX
THOUSAND NINE HUNDRED SIXTY-SEVEN US
DOLLARS (US$66,967.00) or its equivalent in
Philippine Peso at the prevailing rate of
exchange at the time of actual payment
representing his disability benefits, sickness
allowance and attorney's fees.4
On appeal, the NLRC affirmed the findings of
the Labor Arbiter but deleted the award of
damages. The NLRC ruled that petitioner is
entitled to disability benefits because more
than 120 days have passed from the time he
was first declared unfit to work on 2 December
2005 until the declaration by the companydesignated physician that he was fit for sea
duties on 3 May 2006. The NLRC denied the
motion for reconsideration in its 18 June 2009
Resolution.
Aggrieved, respondents filed a petition for
certiorari before the Court of Appeals which set
aside the NLRC Resolutions dated 3 October
2008 and 18 June 2009. The fallo of the
aforesaid Decision reads:

Applying the case of Vergara v. Hammonia

Maritime Services, Inc., et al.,6 the Court of
Appeals held that a temporary total disability
becomes permanent only when so declared by
the company-designated physician within the

period he is allowed to do so, or upon the

expiration of the maximum 240-day medical
treatment period without a declaration of
either fitness to work or the existence of a
permanent disability. The appellate court found
that only 102 days have passed from the time
petitioner signed off from his vessel on 21
January 2006 up to the time the company
designated physician made a pronouncement
on 3 May 2006 that he was fit to resume sea
duties. And even if the computation made by
the NLRC were to be adopted, the appellate
court ruled that the maximum 240-day
treatment period has not yet expired when the
company-designated physician made a
pronouncement on petitioner's fitness to return
to work. On 12 April 2010, the Court of
Appeals denied petitioners' motion for
reconsideration. Hence, this petition.
Petitioner raises the following grounds for the
allowance of the petition:
1. Whether or not the Honorable Court
of Appeals erred in substituting the
findings of facts of the Labor Arbiter
and NLRC in affirming the assessment
of fit to work issued by the companydesignated physician even if petitioner
was permanently unfit for further sea
service regardless of the number of
days he was disabled.
2. Whether or not the Honorable Court
erred in dismissing the award of
attorney's fees and damages.7
Petitioner insists that it is not the duration or
period for the issuance of a medical certificate
that matters in disability proceedings but the
incapacity f the worker to earn wages in
whatever capacity regardless of the number of
days he was disabled. Petitioner avers that the
medical certificates issued by the companydesignated physician are palpably self-serving
and biased in favor of the company who sought
their services and therefore should not be
given evidentiary weight and value. Petitioner
claims that his choice physician's assessment
was in harmony with the Department of Health
(DOH) Administrative Order No. 176, series of

2000, on the ground that petitioner could no

longer qualify with the minimum in-service
eyesight standards thereof, thus, he is
permanently unfit for work at sea. Petitioner .
suggests that the entirety of his medical
records, history and improvement to treatment
should be the paramount consideration in
awarding disability benefits because the
alleged fitness to work cannot defeat the actual
medical condition of petitioner on the ground
that he failed to earn wages for the past four
years and six months already. Petitioner
reiterates his entitlement to damages and
attorney's fees.
Respondents defend the decision of the
appellate court in affirming the findings of the
company-designated physician because it is
the latter who is mandated to determine the
fitness and disability of the seafarer. In this
case, respondents allege that sufficient medical
examination and diagnosis were conducted by
the company-designated physician spanning
for almost four months. On the other hand,
petitioner was seen by his personal doctor only
once and for the sole purpose of determining
disability. Moreover, respondents assert that
petitioner also affirmed the findings of the
company designated doctor when he executed
a certificate of fitness for work. The principal
issue for our resolution is whether petitioner is
entitled to permanent disability benefits.
The mere lapse of the 120-day
period itself does not automatically
warrant the payment of permanent
total disability benefits.
Entitlement of seafarers to disability benefits is
governed not only by medical findings but also
by contract and by law. By contract,
Department Order No. 4, series of 2000, of the
Department of Labor and Employment
Philippine Overseas Employment AgencyStandard Employment Contract (POEA-SEC)
and the parties' Collective Bargaining
Agreement (CBA) bind he seafarer and the
employer. By law, the Labor Code provisions on
disability apply with equal force to seafarers.8

Article 192(c)(1), Chapter VI, Title II, Book IV

of the Labor Code, as amended, states that a
disability which lasts continuously for more
than 120-days is deemed total and permanent.
Section 2(b), Rule VII of the Implementing
Rules of Title II, Book IV of the Labor Code, as
amended, reads:
SECTION 2. Disability. x x x
(b) A disability is total and permanent if as a
result of the injury or sickness the employee is
unable to perform any gainful occupation for a
continuous period exceeding 120 days, except
as otherwise provided for in Rule X of these
Rules.
The provision adverted to is Section 2, Rule X
of the Implementing Rules of Title II, Book IV
of the Labor Code, as amended, which states:
SECTION 2. Period of entitlement. (a) The
income benefit shall be paid beginning on the
first day of such disability. If caused by an
injury or sickness it shall not be paid longer
than 120 consecutive days except where such
injury or sickness still requires medical
attendance beyond 120 days but not to exceed
240 days from onset of disability in which case
benefit for temporary total disability shall be
paid. However, the System may declare the
total and permanent status at any time after
120 days of continuous temporary total
disability as may be warranted by the degree
of actual loss or impairment of physical or
mental functions as determined by the System.
By contract, Department Order No. 4, series of
2000 of the Department of Labor and
Employment (the POEA Standard Employment
Contract) and the parties' CBA bind the
seaman and his employer to each other. The
terms under the POEA-SEC are to be read in
accordance with what the Philippine law
provides.9
Section 20(B)(3) of the PO EA-SEC states that:
3. Upon sign-off from the vessel for medical
treatment, the seafarer is entitled to sickness

allowance equivalent to his basic wage until he

is declared fit to work or the degree of
permanent disability has been assessed by the
company-designated physician but in no case
shall this period exceed one hundred twenty
(120) days. x x x
The Vergara10 ruling, heretofore mentioned,
gives us a clear picture of how the provisions
of the law, the rules and the POEA-SEC
operate, thus:
[T]he seafarer, upon sign-off from his vessel,
must report to the company-designated
physician within three (3) days from arrival for
diagnosis and treatment. For the duration of
the treatment but in no case to exceed 120
days, the seaman is on temporary total
disability as he is totally unable to work. He
receives his basic wage during this period until
he is declared fit to work or his temporary
disability is acknowledged by the company to
be permanent, either partially or totally, as his
condition is defined under the POEA Standard
Employment Contract and by applicable
Philippine laws. If the 120 days initial period is
exceeded and no such declaration is made
because the seafarer requires further medical
attention, then the temporary total disability
period may be extended up to a maximum of
240 days, subject to the right of the employer
to declare within this period that a partial or
total disability already exists. The seaman may
of course also be declared fit to work at any
time such declaration is justified by his medical
condition.11
As the rule now stands, the mere lapse of the
120-day period itself does not automatically
warrant the payment of permanent total
disability benefits.12 We affirm the Court of
Appeals' holding that petitioner is not entitled
to permanent total disability benefits. As
correctly observed by the Court of Appeals:
Applying this in the case at bench, the NLRC's
finding that private respondent was entitled to
permanent total disability benefits because he
was unable to perform his work for more than
120 days in untenable. It appears that only
102 days have passed from the time private

respondent signed-off from his vessel on

January 21, 2006 up to the time the companydesignated physician made a pronouncement
on May 3, 2006 that he was fit to resume sea
duties. Verily, the initial 120-day medical
treatment period has not yet lapsed. Even if
we were to adopt the computation made by
the NLRC that private respondent's injury was
a continuing disability from December 2, 2005,
when he was first declared unfit to work' at the
Port of Spain until May 3, 2006, still the
maximum 240-day treatment period has not
yet expired when the company- designated
physician made a pronouncement on private
respondent's fitness to return to work.13
Petitioner's invocation of the ruling in the case
of Crystal Shipping, Inc. v. Natividad14 was
likewise found by the Court of Appeals to be
inapplicable, to wit:
Moreover, the ruling in Crystal Shipping, Inc. v.
Natividad case in that the seafarer therein
"was unable to perform his customary work for
more than 120 days which constitutes
permanent total disability" cannot be applied
as a general rule in the instant case because it
involved a different set of facts. In Crystal
Shipping case, the seafarer was completely
unable to work for three years and was
undisputably unfit for sea duty due to his need
for regular medical check-up and treatment
which would not be available if he were at sea.
It was also clear in that case that the
seafarer's disability went beyond 240 days
without any declaration that the seafarer was
fit to resume work. Under such circumstances,
a ruling of permanent and total disability was
called for in accordance with the operation of
the period for entitlement that we described
above. However, in the case at bench, private
respondent's medical treatment period lasted
only for 102 days before the companydesignated physician made a pronouncement
that he was already fit to resume sea duties.15
As a matter of fact, in Kestrel Shipping,16 the
Court made the following pronouncement
regarding the indiscriminate invocation of
Crystal Shipping in permanent disability claims,
thus: This Court's pronouncements in Vergara

presented a restraint against the indiscriminate

reliance on Crystal Shipping such that a
seafarer is immediately catapulted into filing a
complaint for total and permanent disability
benefits after the expiration of 120 days from
the time he signed off from the vessel to which
he was assigned. Particularly, a seafarer's
inability to work and the failure of the
company-designated physician to determine
fitness or unfitness to work despite the lapse of
120 days will not automatically bring about a
shift in the seafarer's state from total and
temporary to total and permanent, considering
that the condition of total and temporary
disability may be extended up to a maximum
of 240 days.
We likewise uphold the Court of Appeals'
reliance on the medical findings of the
company-designated physician.
In a maritime disability claim, the issue that
often arises is the conflicting findings between
the company-designated physician and the
seafarer's chosen physician.
Section 20(B)(3) of the POEA-SEC provides
that if a doctor appointed by the seafarer
disagrees with the assessment of the company
designated doctor, a third doctor may be
agreed jointly between the employer and the
seafarer, and the third doctor's decision shall
be final and binding on both parties.
We had in several cases upheld the findings of
the company designated physician due to the
non-referral by the seafarer to a third
doctor.1wphi1 In Philippine Hammonia Ship
Agency v. Dumadag,17 we considered the filing
of the complaint by the seafarer as a breach of
his contractual obligation to have the
conflicting assessments of his disability
referred to a third doctor for a binding opinion.
The case of Formerly INC Shipmanagement v.
Rosales18was categorical in stating that nonreferral to a third physician, whose decision
shall be considered as final and binding,
constitutes a breach of the PO EA-SEC.
The more practical consideration in favoring
the medical findings of the company-

designated physician was explained in

Dalusong v. Eagle Clare, Shipping,19 thus:
As the Court aptly stated in Philman Marine
Agency, Inc. (now DOHLE-P HILMAN Manning
Agency, Inc.) v. Cabanban, "the doctor who
have had a personal knowledge of the actual
medical condition, having closely, meticulously
and regularly monitored and actually treated
the seafarer's illness, is more qualified to
assess the seafarer's disability." Based on the
Disability Report of petitioner's doctor, it
appears that he only conducted a physical
examination on petitioner before issuing his
final diagnosis and disability rating on
petitioner's condition. Clearly, the findings of
the company-designated doctor, who, with his
team of specialists which included an
orthopedic surgeon and a physical therapist,
periodically treated petitioner for months and
monitored his condition, deserve greater
evidentiary weight than the single medical
report of petitioner's doctor, who appeared to
have examined petitioner only once.
Following jurisprudence, the Court of Appeals
correctly upheld the fit-to-work order issued by
the company-designated
physician.1wphi1 After the certification on the
fitness for sea duties was issued by the
company-designated physician, petitioner
sought a second opinion from a private doctor.
When the private doctor opined that petitioner
was unfit to work, petitioner wasted no time in
filing the instant complaint. Verily, he did not
bother to seek the opinion of a third person as
mandated by the POEA-SEC. Furthermore, the
private doctor had only examined petitioner
once while the company-designated physician
had monitored petitioner's medical condition
for several months. As aptly observed by the
Court of Appeals:
It also bears to note that petitioners extended
medical assistance to private respondent from
the time he arrived in the Philippines up to the
time he was declared fit to resume his sea
duties. The records show that petitioners
referred him to the company-designated
physician, Dr. Susannah Ong-Salvador of SHIP
where he was diagnosed by the clinic's

ophthalmologists. On February 23, 2006,

private respondent underwent an operation on
his right eye at UST Hospital and was later
admitted therein for further management
under the care of SHIP's specialists. On March
17, 2006, private respondent again underwent
a second operation on his left eye at UST
Hospital and was admitted therein for three
days. Private respondent's progress was also
continuously evaluated and monitored by
SHIP's ophthalmologists as shown by the
Medical Progress Reports they issued.
In all, the company-designated physician
acquired a more detailed knowledge and
familiarity of private respondent's injury and
could very well accurately evaluate the latter's
degree of disability. The evaluations made by
the company-designated physician were never
disputed. Even their competence has not been
challenged. Besides, as between the companydesignated doctor who has all the medical
records of private respondent during the
duration of his treatment and as against the
latter's private doctor who examined for a day
as an outpatient, the former's finding must
prevail.20
Very akin to the case at bar is the case of OSG
Shipmanagement v. Pellazar21 where we ruled
that the company designated physician's
findings, although not binding on the Court,
generally prevails over other medical findings.
We quote:
By recognizing that a disagreement between
the company-designated physicians and the
physician chosen by the seafarer may exist,
the PO EA-SEC itself impliedly recognizes the
seafarer's right to request a second medical
opinion from a physician of his own choice.
That the seafarer should not be prevented
from seeking an independent medical opinion
proceeds from the theory that a companydesignated physician, naturally, may downplay
the compensation due to the seafarer because
that is what the employer, after all, expects of
him. Accordingly, the Court observed that labor
tribunals and the courts are not bound by the
medical findings of the company-designated
physician and that the inherent merits of its

medical findings will be weighed and duly

considered.

misplaced reliance on the 120-day period, as

earlier discussed.

However, even on this context, the NLRC's

ruling awarding Pellazar disability benefits
based on the Grade 10 rating of Drs. De
Guzman and Banaga can fully withstand a Rule
65 challenge since the Grade 10 rating had
ample basis in the extensive evaluation and
treatment of Pellazar by these two company
doctors, including an orthopedic specialist and
a physiatrist.

Based on the foregoing, we deny the petition.

In stark contrast, Dr. Sabado, Pellazar's chosen

physician, examined him only once and could
have treated him for a few hours only,
considering as the petitioners point out, that
Pellazar came all the way from Antipolo, where
he resides, to Dagupan City, where Dr. Sabado
is practicing his profession. It is as if, the
petitioners aver, Pellazar sought out Dr. Sabado
in Dagupan City for a favorable certification.

JOSE PORTUGAL PEREZ

Associate Justice

While Dr. Sabado' s diagnosis was consistent

with that of the company-designated
physicians (which centered on the injury in
Pellazar's 5th right finger and the resulting loss
of grasping power of said fifth finger), Dr.
Sabado certified Pellazar to be permanently
unfit for sea service. Notwithstanding Dr.
Sabado's unfit-to-work certification (which the
LA relied upon in ruling in Pellazar's favor), the
NLRC gave more credence to the Grade 10
disability rating of Pellazar than the
assessment of Dr. Sabado.
The NLRC's mere disagreement with the LA,
however, does not give rise to grave abuse of
discretion, unless the NLRC's contrary
conclusion had no basis in fact and law. In the
present case, the NLRC ruling was actually
based on the extensive evaluation and
treatment of Pellazar's medical condition by the
company doctors. Under a Rule 65 petition, the
CA does not determine which of the conflicting
findings or assessment should be preferred;
but rather, whether in deciding to uphold one
over the other, the NLRC exceeded the bounds
of its jurisdiction or committed grave abuse of
discretion. The CA's finding in this regard finds
no support in its decision because of its

WHEREFORE, the petition is DENIED. The

Decision and Resolution dated 26 January 2010
and 12 April 2010, respectively of the Court of
Appeals in CA-G.R. SP No. 110168 are
AFFIRMED.
SO ORDERED.

G.R. No. 206522

DOEHLE-PHILMAN1 MANNING AGENCY
INC., DOHLE (IOM) LIMITED AND CAPT.
MANOLO T. GACUTAN,,Petitioners
vs.
HENRY C. HARO, Respondent.
DECISION
DEL CASTILLO, J.:
"[T]he constitutional policy to provide full
protection to labor is not meant to be a sword
to oppress employers. The commitment of this
Court to the cause of labor does not prevent us
from sustaining the employer when it is in the
right. We should always be mindful that justice
is in every case for the deserving, to be
dispensed with in the light of established facts,
the applicable law, and existing
Jurisprudence."2
This Petition for Review on Certiorari assails
the July 20, 2012 Decision3 of the Court of
Appeals (CA) in CA-GR. SP No. 117988. The CA
reversed and set aside the September 28,
20104 and November.30, 20105 Resolutions of
the Nation Labor Relations Commission (NLRC)
in NLRC LAC (OFW) No. 04-000295-10 which
affirmed the February 26, 2010 Decision6 of
the Labor Arbiter (LA) dismissing the

Complaint in NLRC OFW Case No. 06-0903109. Accordingly, the CA ordered DoehlePhilman Manning Agency, Inc. (DoehlePhilman), Dohle (IOM) Limited (Dohle Ltd.)
and Capt. Manolo T. Gacutan (petitioners) to
jointly and severally pay respondent Henry C.
Haro permanent and total disability benefits
amounting to US$60,000.00 and attorneys
fees of 10% of the total monetary award. Also
assailed is the March 27, 2013 CA
Resolution7 denying petitioners Motion for
Reconsideration.
Factual Antecedents
On May 30, 2008, Doehle-Philman, in behalf of
its foreign principal, Dohle Ltd., hired
respondent as oiler aboard the vessel MV CMA
CGM Providencia8 for a period of nine months
with basic monthly salary of US$547.00 and
other benefits.9 Before deployment, respondent
underwent pre-employment medical
examination (PEME) and was declared fit for
sea duty.10

against petitioners.15 Respondent claimed that

since he was declared fit to work before his
deployment, this proved that he sustained his
illness while in the performance of his duties
aboard the vessel; that he was unable to work
for more than 120 days; and that he lost his
earning capacity to engage in a work he was
skilled to do. Thus, he insisted he is entitled to
permanent and total disability benefits.16
For their part, petitioners alleged that
respondent boarded the vessel on June 2,
2008; that on or about November 21, 2008,
respondent was confined at a hospital in
Rotterdam; and that upon repatriation, he was
referred to Dr. Leticia Abesamis (Dr.
Abesamis), the company-designated doctor, for
treatment.17

Respondent stated that on June 1, 2008, he

boarded the vessel and assumed his duties as
oiler; however, in November 2008, he
experienced heartache and loss of energy after
hammering and lifting a 120-kilogram
machine; thereafter, he was confined at a
hospital in Rotterdam where he was informed
of having a hole in his heart that needed
medical attention.11

Petitioners denied that respondent has a hole

in his heart. Instead, they pointed out that on
December 27, 2008, Dr. Abesamis diagnosed
him of "aortic regurgitation, moderate" but
declared that his condition is not workrelated.18 They averred that despite such
declaration, they still continued with
respondents treatment.19 However, on January
19, 2009, Dr. Abesamis declared that
respondent had not reported for follow up
despite repeated calls.20 On April 8, 2009, the
company-designated doctor reported that
respondent refused surgery.21 And on April 15,
2009, she reiterated that respondents
condition is not work-related.22

After his repatriation on December 6, 2008,

respondent reported to Doehle-Philman which
in turn referred him to Clinico-Med.
Respondent claimed that he was confined for
two days in UST12 Hospital and that a heart
operation was recommended to him. He
nevertheless admitted that he has not yet
undergone any surgery.13 On April 24, 2009,
respondents personal doctor, Dr. Luminardo M.
Ramos (Dr. Ramos), declared him not fit to
work.14

Petitioners insisted that the determination of

the fitness or unfitness of a medically
repatriated seafarer rests with the companydesignated physician; and since Dr. Abesamis
declared that respondents illness is not workrelated, such determination must
prevail.23 They also stressed that the companydesignated doctor continuously treated
respondent from his repatriation in December
2008, until April 2009, hence, her finding that
his illness is not work-related must be

Consequently, on June 19, 2009, respondent

filed a Complaint for disability benefits,
reimbursement of medical expenses, moral and
exemplary damages, and attorneys fees

respected.24
Finally, petitioners argued that since
respondents illness is not an occupational

disease, then he must prove that his work

caused his illness; because of his failure to do
so, then he is not entitled to disability
benefits.25

Respondent filed a Petition for Certiorari with

the CA arguing that the NLRC committed grave
abuse of discretion in finding him not entitled
to disability benefits, moral and exemplary
damages, and attorneys fees.

Ruling of the Labor Arbiter

On February 26, 2010, the LA dismissed26 the
case for lack of merit. The LA noted that Dr.
Abesamis declared that respondents illness is
not work-related; therefore, it is incumbent
upon respondent to prove otherwise. He
further held that even respondents personal
doctor, Dr. Ramos, did not state that his illness
is work-related as he only declared that
respondent is not fit for work.
Ruling of the National Labor Relations
Commission
Respondent interposed an appeal. He
maintained that he is entitled to permanent
and total disability benefits because he
underwent the PEME and was declared fit to
work; and his illness transpired while he was in
the performance of his duties and during the
effectivity of his employment contract.
On September 28, 2010, the NLRC
dismissed27 the appeal. It found no sufficient
evidence that respondents illness is workconnected. It decreed that instead of
establishing that the alleged hole in his heart
was work-related,
respondent focused more on his inability to
work for more than 120 days. It also explained
that respondents reliance on his PEME is
misplaced as the same is neither rigid nor
exploratory. It likewise reiterated the finding of
the LA that even respondents personal doctor
did not pronounce his condition as workconnected, and only declared him unfit to
resume sea duty.
On November 30, 2010, the NLRC
denied28 respondents Motion for
Reconsideration.
Ruling of the Court of Appeals

On July 20, 2012, the CA granted29 the Petition

and concomitantly reversed and set aside the
September 28, 2010 and November 30, 2010
NLRC Resolutions. The decretal portion of the
CA Decision reads:
WHEREFORE, the foregoing considered, the
present petition is hereby GRANTED and the
assailed Resolutions [dated] 28 September
2010 and 30 November 2010 [are] REVERSED
and SET ASIDE. Accordingly, private
respondents are hereby held jointly and
severally liable to pay petitioner permanent
and total disability benefits in the sum of
US$60,000.00 and attorneys fees of ten
percent (10%) of the total monetary award,
both at its peso equivalent at the time of actual
payment.
SO ORDERED.30
According to the CA, the NLRC committed
grave abuse of discretion in affirming the LA
Decision dismissing the Complaint. The CA
gave credence to respondents arguments that
he acquired his illness during his employment
contract with petitioners; and that his illness
has rendered him totally and permanently
disabled as he had not been able to perform
his customary work for more than 120 days.
On March 27, 2013, the CA
denied31 petitioners Motion for
Reconsideration.
Thus, petitioners filed this Petition stating that:
THE HONORABLE COURT OF APPEALS
COMMITTED SERIOUS, REVERSIBLE AND
GROSS ERROR IN LAW BASED ON THE
FOLLOWING GROUNDS:
A. In failing to uphold the legal and
jurisprudential principle that a writ

of certiorari may be issued only for the

correction of errors of jurisdiction or
grave abuse of discretion amounting to
lack or excess of jurisdiction which is
absolutely lacking in this case.
B. In utilizing [r]espondents alleged
inability to work for a period exceeding
120 days as sole basis for entitlement
to permanent total disability benefits in
absolute disregard of the provisions of
the POEA Standard Employment
Contract making work-relation as a
condition sine qua non for
compensability of an illness or injury.
C. In awarding ten percent (10%)
attorneys fees in favor of [r]espondent
solely on the ground that he was
constrained to engage the services of
counsel contrary to the wellentrenched principle that attorneys
fees shall only be awarded upon a
showing that the petitioner acted in
gross and evident bad faith.32
Petitioners Arguments
Petitioners posit that no abuse of discretion
may be imputed against the NLRC because its
findings and conclusions were based on the
facts and evidence on record. Thus, they claim
that the CA erred in setting aside the NLRC
Resolutions and in not upholding that a writ
of certiorari may be issued only for the
correction of errors of jurisdiction or grave
abuse of discretion amounting to lack or excess
of jurisdiction.33

Additionally, petitioners insisted that the CA

erred in granting permanent and total disability
benefits in favor of respondent on the sole
basis that he was unable to work for a period
exceeding 120 days.34 They argue that since
respondents illness is not an occupational
disease then there must be causal connection
between his work and his illness. They contend
that the burden to prove such connection is
upon respondent. They added that there is no
proof that the nature of respondents job
increased the risk of his illness.35
Lastly, petitioners reiterate that the companydesignated doctor continuously treated
respondent for a period of about four months;
that nothing in the records disproves the
finding of company-designated physician that
respondents condition is not job-related; that
since respondents illness is not work-related
then, the company-designated doctor is not
obliged to make a declaration on his fitness or
unfitness to work; and, that respondents
personal doctor merely concluded that
respondent is "not fit" but he did not also make
any declaration on whether respondents
condition is work-related or not.36
Respondents Arguments
Respondent contends that the CA properly
ruled that he is entitled to permanent and total
disability benefits.37 He insists that since his
illness is not listed as an occupational disease,
he is "relieved of the burden to show the
causation [of] his rights over the disability
benefits"38 as his illness is disputably presumed
work-related. 39 He maintains that he sustained
his illness while employed as oiler and his
condition resulted to the loss of his earning
capacity.40
Issue
Is the CA correct in setting aside the NLRC
Resolutions denying respondents claim for
permanent and total disability benefits?
Our Ruling

The Court finds merit in the Petition.

This Court does not review factual issues as
only questions of law can be raised in a Rule
45 Petition. However, such rule admits of
exceptions including a situation where the
factual findings of the tribunals or courts below
are conflicting. Here, there being contrary
findings of fact by the LA and NLRC, on one
hand, and the CA, on the other, we deem it
necessary to make our own determination and
evaluation of the evidence on record.41
Essentially, petitioners claim that respondent is
not entitled to permanent and total disability
benefits on the sole basis that he was unable
to work for more than 120 days.

In this case, considering that respondent did

not suffer from any occupational disease listed
under Section 32-A of the POEA-SEC, then to
be entitled to disability benefits, the
respondent has the burden to prove that his
illness is work-related. Unfortunately, he failed
to discharge such burden.
Records reveal that respondent was diagnosed
of aortic regurgitation, a heart "condition
whereby the aortic valve permits blood ejected
from the left ventricle to leak back into the left
ventricle."46 Although this condition manifested
while respondent was aboard the vessel, such
circumstance is not sufficient to entitle him to
disability benefits as it is of equal importance
to also show that respondents illness is workrelated.

The Court agrees.

The Standard Terms and Conditions Governing
the Employment of Filipino Seafarers On-Board
Ocean-Going Vessels (POEA-SEC), particularly
Section 20(B) thereof, provides that the
employer is liable for disability benefits when
the seafarer suffers from a work-related injury
or illness during the term of his contract. To
emphasize, to be compensable, the injury or
illness 1) must be work-related and 2) must
have arisen during the term of the employment
contract.42
In Jebsen Maritime, Inc. v. Ravena,43 the Court
held that those diseases not listed as
occupational diseases may be compensated if
it is shown that they have been caused or
aggravated by the seafarers working
conditions. The Court stressed that while the
POEA-SEC provides for a disputable
presumption of work-relatedness as regards
those not listed as occupational diseases, this
presumption does not necessarily result in an
automatic grant of disability compensation.
The claimant still has the burden to present
substantial evidence or "such relevant evidence
as a reasonable mind might accept as
adequate to support a conclusion"44 that his
work conditions caused or at least increased
the risk of contracting the illness.45

In Ayungo v. Beamko Shipmanagement

Corporation,47 the Court held that for a
disability to be compensable, the seafarer must
prove a reasonable link between his work and
his illness in order for a rational mind to
determine that such work contributed to, or at
least aggravated, his illness. It is not enough
that the seafarers injury or illness rendered
him disabled; it is equally necessary that he
establishes a causal connection between his
injury or illness, and the work for which he is
engaged.48
Here, respondent argues that he was unable to
work as a seaman for more than 120 days, and
that he contracted his illness while under the
employ of petitioners. However, he did not at
all describe his work as an oiler, and neither
did he specify the connection of his work and
his illness.
In Panganiban v. Tara Trading
Shipmanagement, Inc.,49 the Court denied the
claim for disability benefits of a seafarer, who
was an oiler like herein respondent. The Court
held that petitioner therein failed to elaborate
on the nature of his work or to even specify his
tasks as oiler which rendered it difficult to
determine a link between his position and his
illness.

The Court is confronted with a similar situation

in this case. Respondent simply relied on the
presumption that his illness is work-related. He
did not adduce substantial evidence that his
work conditions caused, or at the least
increased the risk of contracting his illness.
Like in Panganiban, herein respondent did not
elaborate on the nature of his work and its
connection to his illness. Certainly, he is not
entitled to any disability compensation.
In an attempt to establish work-relatedness,
respondent stated in his Memorandum before
the Court that his illness is compensable due to
stress.50 Aside from being belatedly argued,
such claim is unmeritorious as it still failed to
prove the required linkage between
respondents work and his illness to entitle him
to disability benefits.
In this regard, we quote with approval the
pronouncement of the NLRC as follows:
x x x [Respondent] admitted that he was told
by the attending physician that his heart has a
hole somewhere in the left ventricle x x x.
Instead of showing how a hole in the heart
may be work[-]related, [respondent] argued
on his being unable to perform his customary
work for more than 120 days x x x. He
stressed in his Appeal that probability is the
ultimate test of proof in compensation
proceedings, but he did not cite any probable
circumstance which could have made [a] hole
in the heart [w]ork[-]related.
xxxx
x x x [T]o be entitled to compensation and
benefits, the seafarer must prove by
substantial evidence that he contracted the
illness during the term of his contract and
[that] such infirmity was work-related or at the
very least aggravated by the conditions of the
work for which he was engaged. Failing on this
aspect, the assertion of [respondent] that his
illness was work-connected is nothing but an
empty imputation of fact without any probative
weight.51

Moreover, the company-designated doctor

determined that respondents condition is not
work-related.
Section 20(B)(3) of the POEA-SEC provides
that the company-designated doctor is tasked
to determine the fitness or the degree of
disability of a medically repatriated
seafarer.52 In addition, the company-designated
doctor was shown to have closely examined
and treated respondent from his repatriation
up to four months thereafter. Thus, the LA and
the NLRC's reliance on the declaration of the
company-designated doctor that respondent's
condition is not work-related is justified. 53
The Court also notes that even respondent's
physician of choice made no pronouncement
whether his condition is work-related or
not.1wphi1 In his one-page medical report,
Dr. Ramos only stated that respondent is not fit
for work. He neither stated that respondent's
condition is not work-related nor did he
expound on his conclusion that respondent is
not fit for work.
Lastly, the Court holds that the fact that
respondent passed the PEME is of no moment
in determining whether he acquired his illness
during his employment. The PEME is not
exploratory in nature. It is not intended to be a
thorough examination of a person's medical
condition, .and is not a conclusive evidence
that one is free from any ailment before
deployment.54 Hence, it does not follow that
because respondent was declared fit to work
prior to his deployment, then he necessarily
sustained his illness while aboard the vessel.
Given all these, the Court finds that the CA
erred in setting a8ide the NLRC Resolutions,
which affirmed the dismissal of the Complaint.
The findings and conclusions arrived at by the
NLRC were not tainted with grave abuse of
discretion as respondent's claim for disability
benefits is unsupported by substantial
evidence. Indeed, when the evidence adduced
negates compensability, the claim must
necessan1y fail. 55

WHEREFORE, the Petition is GRANTED. The

July 20, 2012 Decision and March 27, 2013
Resolution of the Court of Appeals in CA-G.R
SP No. 117988 are REVERSED and SET
ASIDE. Accordingly, the Complaint
is DISMISSEDfor lack of merit.
SO ORDERED.
MARIANO C. DEL CASTILLO
Associate Justice

G.R. No. 198587, January 14, 2015

SAUDI ARABIAN AIRLINES (SAUDIA) AND
BRENDA J. BETIA, Petitioners, v. MA.
JOPETTE M. REBESENCIO, MONTASSAH B.
SACAR-ADIONG, ROUEN RUTH A.
CRISTOBAL AND LORAINE S. SCHNEIDERCRUZ, Respondents.
DECISION
LEONEN, J.:
All Filipinos are entitled to the protection of the
rights guaranteed in the Constitution.
This is a Petition for Review on Certiorari with
application for the issuance of a temporary
restraining order and/or writ of preliminary
injunction under Rule 45 of the 1997 Rules of
Civil Procedure praying that judgment be
rendered reversing and setting aside the June
16, 2011 Decision1 and September 13, 2011
Resolution2 of the Court of Appeals in CA-G.R.
SP. No. 113006.
Petitioner Saudi Arabian Airlines (Saudia) is a
foreign corporation established and existing
under the laws of Jeddah, Kingdom of Saudi
Arabia. It has a Philippine office located at 4/F,
Metro House Building, Sen. Gil J. Puyat
Avenue, Makati City.3 In its Petition filed with
this court, Saudia identified itself as
follows:chanroblesvirtuallawlibrary
1. Petitioner SAUDIA is a foreign corporation
established and existing under the Royal
Decree No. M/24 of 18.07.1385H
(10.02.1962G) in Jeddah, Kingdom of Saudi
Arabia ("KSA"). Its Philippine Office is located

at 4/F Metro House Building, Sen, Gil J. Puyat

Avenue, Makati City (Philippine Office). It may
be served with orders of this Honorable Court
through undersigned counsel at 4 th and
6th Floors, Citibank Center Bldg., 8741 Paseo
de Roxas, Makati City.4 (Emphasis supplied)
Respondents (complainants before the Labor
Arbiter) were recruited and hired by Saudia as
Temporary Flight Attendants with the
accreditation and approval of the Philippine
Overseas Employment Administration.5 After
undergoing seminars required by the Philippine
Overseas Employment Administration for
deployment overseas, as well as training
modules offered by Saudia (e.g., initial flight
attendant/training course and transition
training), and after working as Temporary
Flight Attendants, respondents became
Permanent Flight Attendants. They then
entered into Cabin Attendant contracts with
Saudia: Ma. Jopette M. Rebesencio (Ma.
Jopette) on May 16, 1990;6Montassah B.
Sacar-Adiong (Montassah) and Rouen Ruth A.
Cristobal (Rouen Ruth) on May 22, 1993;7and
Loraine Schneider-Cruz (Loraine) on August
27, 1995.8
Respondents continued their employment with
Saudia until they were separated from service
on various dates in 2006.9
Respondents contended that the termination of
their employment was illegal. They alleged that
the termination was made solely because they
were pregnant.10
As respondents alleged, they had informed
Saudia of their respective pregnancies and had
gone through the necessary procedures to
process their maternity leaves. Initially, Saudia
had given its approval but later on informed
respondents that its management in Jeddah,
Saudi Arabia had disapproved their maternity
leaves. In addition, it required respondents to
file their resignation letters.11
Respondents were told that if they did not
resign, Saudia would terminate them all the
same. The threat of termination entailed the
loss of benefits, such as separation pay and
ticket discount entitlements.12
Specifically, Ma. Jopette received a call on
October 16, 2006 from Saudia's Base Manager,
Abdulmalik Saddik (Abdulmalik).13 Montassah
was informed personally by Abdulmalik and a
certain Faisal Hussein on October 20, 2006
after being required to report to the office one

(1) month into her maternity leave.14 Rouen

Ruth was also personally informed by
Abdulmalik on October 17, 2006 after being
required to report to the office by her Group
Supervisor.15 Loraine received a call on October
12, 2006 from her Group Supervisor, Dakila
Salvador.16
Saudia anchored its disapproval of
respondents' maternity leaves and demand for
their resignation on its "Unified Employment
Contract for Female Cabin Attendants" (Unified
Contract).17 Under the Unified Contract, the
employment of a Flight Attendant who
becomes pregnant is rendered void. It
provides:chanroblesvirtuallawlibrary
(H) Due to the essential nature of the Air
Hostess functions to be physically fit on board
to provide various services required in normal
or emergency cases on both
domestic/international flights beside her role in
maintaining continuous safety and security of
passengers, and since she will not be able to
maintain the required medical fitness while at
work in case of pregnancy, accordingly, if the
Air Hostess becomes pregnant at any time
during the term of this contract, this shall
render her employment contract as void
and she will be terminated due to lack of
medical fitness.18 (Emphasis supplied)
In their Comment on the present
Petition,19 respondents emphasized that the
Unified Contract took effect on September 23,
2006 (the first day of Ramadan),20 well after
they had filed and had their maternity leaves
approved. Ma. Jopette filed her maternity leave
application on September 5, 2006.21Montassah
filed her maternity leave application on August
29, 2006, and its approval was already
indicated in Saudia's computer system by
August 30, 2006.22 Rouen Ruth filed her
maternity leave application on September 13,
2006,23 and Loraine filed her maternity leave
application on August 22, 2006.24
Rather than comply and tender resignation
letters, respondents filed separate appeal
letters that were all rejected.25
Despite these initial rejections, respondents
each received calls on the morning of
November 6, 2006 from Saudia's office
secretary informing them that their maternity
leaves had been approved. Saudia, however,
was quick to renege on its approval. On the
evening of November 6, 2006, respondents
again received calls informing them that it had
received notification from Jeddah, Saudi Arabia
that their maternity leaves had been

disapproved.26
Faced with the dilemma of resigning or totally
losing their benefits, respondents executed
handwritten resignation letters. In Montassah's
and Rouen Ruth's cases, their resignations
were executed on Saudia's blank letterheads
that Saudia had provided. These letterheads
already had the word "RESIGNATION" typed on
the subject portions of their headings when
these were handed to respondents.27
On November 8, 2007, respondents filed a
Complaint against Saudia and its officers for
illegal dismissal and for underpayment of
salary, overtime pay, premium pay for holiday,
rest day, premium, service incentive leave pay,
13th month pay, separation pay, night shift
differentials, medical expense reimbursements,
retirement benefits, illegal deduction, lay-over
expense and allowances, moral and exemplary
damages, and attorney's fees.28 The case was
initially assigned to Labor Arbiter Hermino V.
Suelo and docketed as NLRC NCR Case No. 0011-12342-07.
Saudia assailed the jurisdiction of the Labor
Arbiter.29 It claimed that all the determining
points of contact referred to foreign law and
insisted that the Complaint ought to be
dismissed on the ground offorum non
conveniens.30 It added that respondents had no
cause of action as they resigned voluntarily.31
On December 12, 2008, Executive Labor
Arbiter Fatima Jambaro-Franco rendered the
Decision32dismissing respondents' Complaint.
The dispositive portion of this Decision
reads:chanroblesvirtuallawlibrary
WHEREFORE, premises' considered, judgment
is hereby rendered DISMISSING the instant
complaint for lack of
jurisdiction/merit.33cralawlawlibrary
On respondents' appeal, the National Labor
Relations Commission's Sixth Division reversed
the ruling of Executive Labor Arbiter JambaroFranco. It explained that "[considering that
complainants-appellants are OFWs, the Labor
Arbiters and the NLRC has [sic] jurisdiction to
hear and decide their complaint for illegal
termination."34 On the matter of forum non
conveniens, it noted that there were no special
circumstances that warranted its abstention
from exercising jurisdiction.35 On the issue of
whether respondents were validly dismissed, it
held that there was nothing on record to
support Saudia's claim that respondents
resigned voluntarily.

The dispositive portion of the November 19,

2009 National Labor Relations Commission
Decision36reads:chanroblesvirtuallawlibrary
WHEREFORE, premises considered, judgment
is hereby rendered finding the appeal
impressed with merit. The respondentsappellees are hereby directed to pay
complainants-appellants the aggregate amount
of SR614,001.24 corresponding to their
backwages and separation pay plus ten (10%)
percent thereof as attorney's fees. The decision
of the Labor Arbiter dated December 12, 2008
is hereby VACATED and SET ASIDE. Attached is
the computation prepared by this Commission
and made an integral part of this
Decision.37cralawlawlibrary
In the Resolution dated February 11,
2010,38 the National Labor Relations
Commission denied petitioners' Motion for
Reconsideration.
In the June 16, 2011 Decision,39 the Court of
Appeals denied petitioners' Rule 65 Petition
and modified the Decision of the National Labor
Relations Commission with respect to the
award of separation pay and backwages.
The dispositive portion of the Court of Appeals
Decision reads:chanroblesvirtuallawlibrary
WHEREFORE, the instant petition is
hereby DENIED. The Decision dated
November 19, 2009 issued by public
respondent, Sixth Division of the National
Labor Relations Commission - National Capital
Region is MODIFIED only insofar as the
computation of the award of separation pay
and backwages. For greater clarity, petitioners
are ordered to pay private respondents
separation pay which shall be computed from
private respondents' first day of employment
up to the finality of this decision, at the rate of
one month per year of service and backwages
which shall be computed from the date the
private respondents were illegally terminated
until finality of this decision. Consequently, the
ten percent (10%) attorney's fees shall be
based on the total amount of the award. The
assailed Decision is affirmed in all other
respects.
The labor arbiter is hereby DIRECTED to make
a recomputation based on the
foregoing.40cralawlawlibrary
In the Resolution dated September 13,
2011,41 the Court of Appeals denied petitioners'
Motion for Reconsideration.
Hence, this Appeal was filed.

The issues for resolution are the following:

First, whether the Labor Arbiter and the
National Labor Relations Commission may
exercise jurisdiction over Saudi Arabian Airlines
and apply Philippine law in adjudicating the
present dispute;
Second, whether respondents' voluntarily
resigned or were illegally terminated; and
Lastly, whether Brenda J. Betia may be held
personally liable along with Saudi Arabian
Airlines.chanRoblesvirtualLawlibrary
I
Summons were validly served on Saudia and
jurisdiction over it validly acquired.
There is no doubt that the pleadings and
summons were served on Saudia through its
counsel.42Saudia, however, claims that the
Labor Arbiter and the National Labor Relations
Commission had no jurisdiction over it because
summons were never served on it but on
"Saudia Manila."43 Referring to itself as "Saudia
Jeddah," it claims that "Saudia Jeddah" and
not "Saudia Manila" was the employer of
respondents because:
First, "Saudia Manila" was never a party to the
Cabin Attendant contracts entered into by
respondents;
Second, it was "Saudia Jeddah" that provided
the funds to pay for respondents' salaries and
benefits; and
Lastly, it was with "Saudia Jeddah" that
respondents filed their resignations.44
Saudia posits that respondents' Complaint was
brought against the wrong party because
"Saudia Manila," upon which summons was
served, was never the employer of
respondents.45
Saudia is vainly splitting hairs in its effort to
absolve itself of liability. Other than its bare
allegation, there is no basis for concluding that
"Saudia Jeddah" is distinct from "Saudia
Manila."
What is clear is Saudia's statement in its own
Petition that what it has is a "Philippine Office .
. . located at 4/F Metro House Building, Sen.
Gil J. Puyat Avenue, Makati City."46 Even in the
position paper that Saudia submitted to the

Labor Arbiter,47 what Saudia now refers to as

"Saudia Jeddah" was then only referred to as
"Saudia Head Office at Jeddah, KSA,"48 while
what Saudia now refers to as "Saudia Manila"
was then only referred to as "Saudia's office in
Manila."49
By its own admission, Saudia, while a foreign
corporation, has a Philippine office.
Section 3(d) of Republic Act No.. 7042,
otherwise known as the Foreign Investments
Act of 1991, provides the
following:chanroblesvirtuallawlibrary
The phrase "doing business" shall
include . . . opening offices, whether
called "liaison" offices or branches; . . .
and any other act or acts that imply a
continuity of commercial dealings or
arrangements and contemplate to that extent
the performance of acts or works, or the
exercise of some of the functions normally
incident to, and in progressive prosecution of
commercial gain or of the purpose and object
of the business organization. (Emphasis
supplied)
A plain application of Section 3(d) of the
Foreign Investments Act leads to no other
conclusion than that Saudia is a foreign
corporation doing business in the Philippines.
As such, Saudia may be sued in the Philippines
and is subject to the jurisdiction of Philippine
tribunals.
Moreover, since there is no real distinction
between "Saudia Jeddah" and "Saudia Manila"
the latter being nothing more than Saudia's
local office service of summons to Saudia's
office in Manila sufficed to vest jurisdiction over
Saudia's person in Philippine
tribunals.chanRoblesvirtualLawlibrary
II
Saudia asserts that Philippine courts and/or
tribunals are not in a position to make an
intelligent decision as to the law and the facts.
This is because respondents' Cabin Attendant
contracts require the application of the laws of
Saudi Arabia, rather than those of the
Philippines.50 It claims that the difficulty of
ascertaining foreign law calls into operation the
principle of forum non conveniens, thereby
rendering improper the exercise of jurisdiction
by Philippine tribunals.51
A choice of law governing the validity of
contracts or the interpretation of its provisions
dees not necessarily imply forum non

conveniens. Choice of law and forum non

conveniens are entirely different matters.
Choice of law provisions are an offshoot of the
fundamental principle of autonomy of
contracts. Article 1306 of the Civil Code firmly
ensconces this:chanroblesvirtuallawlibrary
Article 1306. The contracting parties may
establish such stipulations, clauses, terms and
conditions as they may deem convenient,
provided they are not contrary to law, morals,
good customs, public order, or public policy.
In contrast, forum non conveniens is a device
akin to the rule against forum shopping. It is
designed to frustrate illicit means for securing
advantages and vexing litigants that would
otherwise be possible if the venue of litigation
(or dispute resolution) were left entirely to the
whim of either party.
Contractual choice of law provisions factor into
transnational litigation and dispute resolution
in one of or in a combination of four ways: (1)
procedures for settling disputes, e.g.,
arbitration; (2) forum, i.e., venue; (3)
governing law; and (4) basis for
interpretation. Forum non conveniens relates
to, but is not subsumed by, the second of
these.
Likewise, contractual choice of law is not
determinative of jurisdiction. Stipulating on the
laws of a given jurisdiction as the governing
law of a contract does not preclude the
exercise of jurisdiction by tribunals elsewhere.
The reverse is equally true: The assumption of
jurisdiction by tribunals does notipso
facto mean that it cannot apply and rule on the
basis of the parties' stipulation. In Hasegawa
v. Kitamura:52ChanRoblesVirtualawlibrary
Analytically, jurisdiction and choice of law are
two distinct concepts. Jurisdiction considers
whether it is fair to cause a defendant to travel
to this state; choice of law asks the further
question whether the application of a
substantive law V'hich will determine the
merits of the case is fair to both parties. The
power to exercise jurisdiction does not
automatically give a state constitutional
authority to apply forum law. While jurisdiction
and the choice of the lex fori will often,
coincide, the "minimum contacts" for one do
not always provide the necessary "significant
contacts" for the other. The question of
whether the law of a state can be applied to a
transaction is different from the question of
whether the courts of that state have
jurisdiction to enter a
judgment.53cralawlawlibrary

As various dealings, commercial or otherwise,

are facilitated by the progressive ease of
communication and travel, persons from
various jurisdictions find themselves
transacting with each other. Contracts involving
foreign elements are, however, nothing new.
Conflict of laws situations precipitated by
disputes and litigation anchored on these
contracts are not totally novel.
Transnational transactions entail differing laws
on the requirements Q for the validity of the
formalities and substantive provisions of
contracts and their interpretation. These
transactions inevitably lend themselves to the
possibility of various fora for litigation and
dispute resolution. As observed by an eminent
expert on transnational
law:chanroblesvirtuallawlibrary
The more jurisdictions having an interest in, or
merely even a point of contact with, a
transaction or relationship, the greater the
number of potential fora for the resolution of
disputes arising out of or related to that
transaction or relationship. In a world of
increased mobility, where business and
personal transactions transcend national
boundaries, the jurisdiction of a number of
different fora may easily be invoked in a single
or a set of related disputes.54cralawlawlibrary
Philippine law is definite as to what governs
the formal or extrinsic validity of contracts. The
first paragraph of Article 17 of the Civil Code
provides that "[t]he forms and solemnities of
contracts . . . shall be governed by the laws of
the country in which they are
executed"55 (i.e., lex loci celebrationis).
In contrast, there is no statutorily established
mode of settling conflict of laws situations on
matters pertaining to substantive content of
contracts. It has been noted that three (3)
modes have emerged: (1) lex loci
contractus or the law of the place of the
making; (2) lex loci solutionis or the law of the
place of performance; and (3) lex loci
intentionis or the law intended by the parties.56
Given Saudia's assertions, of particular
relevance to resolving the present dispute
is lex loci intentionis.
An author observed that Spanish jurists and
commentators "favor lex loci
intentionis."57 These jurists and commentators
proceed from the Civil Code of Spain, which,
like our Civil Code, is silent on what governs
the intrinsic validity of contracts, and the same
civil law traditions from which we draw ours.

In this jurisdiction, this court, in Philippine

Export and Foreign Loan Guarantee v. V.P.
Eusebio Construction, Inc.,58 manifested
preference for allowing the parties to select the
law applicable to their
contract":chanroblesvirtuallawlibrary
No conflicts rule on essential validity of
contracts is expressly provided for in our laws.
The rule followed by most legal systems,
however, is that the intrinsic validity of a
contract must be governed by the lex
contractus or "proper law of the contract." This
is the law voluntarily agreed upon by the
parties (the lex loci voluntatis) or the law
intended by them either expressly or implicitly
(the lex loci intentionis). The law selected may
be implied from such factors as substantial
connection with the transaction, or the
nationality or domicile of the parties. Philippine
courts would do well to adopt the first and
most basic rule in most legal systems,
namely, to allow the parties to select the law
applicable to their contract, subject to the
limitation that it is not against the law, morals,
or public policy of the forum and that the
chosen law must bear a substantive
relationship to the transaction.59 (Emphasis in
the original)
Saudia asserts that stipulations set in the
Cabin Attendant contracts require the
application of the laws of Saudi Arabia. It
insists that the need to comply with these
stipulations calls into operation the doctrine
of forum non conveniens and, in turn, makes it
necessary for Philippine tribunals to refrain
from exercising jurisdiction.
As mentioned, contractual choice of laws
factors into transnational litigation in any or a
combination of four (4) ways. Moreover, forum
non conveniens relates to one of these:
choosing between multiple possible fora.
Nevertheless, the possibility of parallel
litigation in multiple fora along with the host
of difficulties it poses is not unique to
transnational litigation. It is a difficulty that
similarly arises in disputes well within the
bounds of a singe jurisdiction.
When parallel litigation arises strictly within the
context of a single jurisdiction, such rules as
those on forum shopping, litis pendentia,
and res judicata come into operation. Thus, in
the Philippines, the 1997 Rules on Civil
Procedure provide for willful and deliberate
forum shopping as a ground not only for
summary dismissal with prejudice but also for

citing parties and counsels in direct contempt,

as well as for the imposition of administrative
sanctions.60 Likewise, the same rules expressly
provide that a party may seek the dismissal of
a Complaint or another pleading asserting a
claim on the ground "[t]hat there is another
action pending between the same parties for
the same cause," i.e., litis pendentia, or "[t]hat
the cause of action is barred by a prior
judgment,"61 i.e., res judicata.
Forum non conveniens, like the rules of forum
shopping, litis pendentia, and res judicata, is a
means of addressing the problem of parallel
litigation. While the rules of forum
shopping, litis pendentia, andres judicata are
designed to address the problem of parallel
litigation within a single jurisdiction, forum non
conveniens is a means devised to address
parallel litigation arising in multiple
jurisdictions.
Forum non conveniens literally translates to
"the forum is inconvenient."62 It is a concept in
private international law and was devised to
combat the "less than honorable" reasons and
excuses that litigants use to secure procedural
advantages, annoy and harass defendants,
avoid overcrowded dockets, and select a
"friendlier" venue.63 Thus, the doctrine
of forum non conveniens addresses the same
rationale that the rule against forum shopping
does, albeit on a multijurisdictional scale.
Forum non conveniens, like res judicata,64 is a
concept originating in common law.65 However,
unlike the rule on res judicata, as well as those
on litis pendentia and forum shopping, forum
non conveniensfinds no textual anchor,
whether in statute or in procedural rules, in our
civil law system. Nevertheless, jurisprudence
has applied forum non conveniens as basis for
a court to decline its exercise of jurisdiction. 66
Forum non conveniens is soundly applied not
only to address parallel litigation and
undermine a litigant's capacity to vex and
secure undue advantages by engaging in forum
shopping on an international scale. It is also
grounded on principles of comity and judicial
efficiency.
Consistent with the principle of comity, a
tribunal's desistance in exercising jurisdiction
on account offorum non conveniens is a
deferential gesture to the tribunals of another
sovereign. It is a measure that prevents the
former's having to interfere in affairs which are
better and more competently addressed by the

latter. Further, forum non conveniens entails a

recognition not only that tribunals elsewhere
are better suited to rule on and resolve a
controversy, but also, that these tribunals
arebetter positioned to enforce judgments and,
ultimately, to dispense justice. Forum non
conveniensprevents the embarrassment of an
awkward situation where a tribunal is rendered
incompetent in the face of the greater
capability both analytical and practical of
a tribunal in another jurisdiction.
The wisdom of avoiding conflicting and
unenforceable judgments is as much a matter
of efficiency and economy as it is a matter of
international courtesy. A court would
effectively be neutering itself if it insists on
adjudicating a controversy when it knows full
well that it is in no position to enforce its
judgment. Doing so is not only an exercise in
futility; it is an act of frivolity. It clogs the
dockets of a.tribunal and leaves it to waste its
efforts on affairs, which, given transnational
exigencies, will be reduced to mere academic,
if not trivial, exercises.
Accordingly, under the doctrine of forum non
conveniens, "a court, in conflicts of law
cases, mayrefuse impositions on its jurisdiction
where it is not the most 'convenient' or
available forum and the parties are not
precluded from seeking remedies
elsewhere."67 In Puyat v. Zabarte,68 this court
recognized the following situations as among
those that may warrant a court's desistance
from exercising
jurisdiction:chanroblesvirtuallawlibrary
1) The belief that the matter can be better tried
and decided elsewhere, either because the
main aspects of the case transpired in a
foreign jurisdiction or the material witnesses
have their residence there;
2) The belief that the non-resident plaintiff
sought the forum[,] a practice known
asforum shopping[,] merely to secure
procedural advantages or to convey or
harass the defendant;
3) The unwillingness to extend local judicial
facilities to non residents or aliens when the
docket may already be overcrowded;
4) The inadequacy of the local judicial
machinery for effectuating the right sought
to be maintained; and
5) The difficulty of ascertaining foreign law.69

In Bank of America, NT&SA, Bank of America

International, Ltd. v. Court of Appeals,70 this
court underscored that a Philippine court may
properly assume jurisdiction over a case if it
chooses to do so to the extent: "(1) that the
Philippine Court is one to which the parties
may conveniently resort to; (2) that the
Philippine Court is in a position to make an
intelligent decision as to the law and the facts;
and (3) that the Philippine Court has or is likely
to have power to enforce its decision."71
The use of the word "may" (i.e., "may refuse
impositions on its jurisdiction"72) in the
decisions shows that the matter of jurisdiction
rests on the sound discretion of a court.
Neither the mere invocation offorum non
conveniens nor the averment of foreign
elements operates to automatically divest a
court of jurisdiction. Rather, a court should
renounce jurisdiction only "after 'vital facts are
established, to determine whether special
circumstances' require the court's
desistance."73 As the propriety of
applying forum non conveniens is contingent
on a factual determination, it is, therefore, a
matter of defense.74
The second sentence of Rule 9, Section 1 of
the 1997 Rules of Civil Procedure is exclusive
in its recital of the grounds for dismissal that
are exempt from the omnibus motion rule: (1)
lack of jurisdiction over the subject matter;
(2) litis pendentia; (3) res judicata; and (4)
prescription. Moreover, dismissal on account
offorum non conveniens is a fundamentally
discretionary matter. It is, therefore, not a
matter for a defendant to foist upon the court
at his or her own convenience; rather, it must
be pleaded at the earliest possible opportunity.
On the matter of pleading forum non
conveniens, we state the rule, thus: Forum
non conveniens must not only be clearly
pleaded as a ground for dismissal; it must be
pleaded as such at the earliest possible
opportunity. Otherwise, it shall be deemed
waived.
This court notes that in Hasegawa,76 this court
stated that forum non conveniens is not a
ground for a motion to dismiss. The factual
ambience of this case however does not
squarely raise the viability of this doctrine.
Until the opportunity comes to review the use
of motions to dismiss for parallel
litigation,Hasegawa remains existing doctrine.
Consistent with forum non conveniens as

fundamentally a factual matter, it is imperative

that it proceed from & factually established
basis. It would be improper to dismiss an
action pursuant toforum non conveniens based
merely on a perceived, likely, or hypothetical
multiplicity of fora. Thus, a defendant must
also plead and show that a prior suit has, in
fact, been brought in another jurisdiction.
The existence of a prior suit makes real the
vexation engendered by duplicitous litigation,
the embarrassment of intruding into the affairs
of another sovereign, and the squandering of
judicial efforts in resolving a dispute already
lodged and better resolved elsewhere. As has
been noted:chanroblesvirtuallawlibrary
A case will not be stayed o dismissed on
[forum] non conveniens grounds unless the
plaintiff is shown to have an available
alternative forum elsewhere. On this, the
moving party bears the burden of proof.
A number of factors affect the assessment of
an alternative forum's adequacy. The statute of
limitations abroad may have run, of the foreign
court may lack either subject matter or
personal jurisdiction over the defendant. . . .
Occasionally, doubts will be raised as to the
integrity or impartiality of the foreign court
(based, for example, on suspicions of
corruption or bias in favor of local nationals),
as to the fairness of its judicial procedures, or
as to is operational efficiency (due, for
example, to lack of resources, congestion and
delay, or interfering circumstances such as a
civil unrest). In one noted case, [it was found]
that delays of 'up to a quarter of a century'
rendered the foreign forum... inadequate for
these purposes.77cralawlawlibrary
We deem it more appropriate and in the
greater interest of prudence that a defendant
not only allege supposed dangerous tendencies
in litigating in this jurisdiction; the defendant
must also show that such danger is real and
present in that litigation or dispute resolution
has commenced in another
jurisdiction and that a foreign tribunal has
chosen to exercise jurisdiction.
III
Forum non conveniens finds no application and
does not operate to divest Philippine tribunals
of jurisdiction and to require the application of
foreign law.
Saudia invokes forum non conveniens to
supposedly effectuate the stipulations of the
Cabin Attendant contracts that require the

application of the laws of Saudi Arabia.

Forum non conveniens relates to forum, not to
the choice of governing law. Thai forum non
conveniensmay ultimately result in the
application of foreign law is merely an incident
of its application. In this strict sense, forum
non conveniens is not applicable. It is not the
primarily pivotal consideration in this case.
In any case, even a further consideration of
the applicability of forum non conveniens on
the incidental matter of the law governing
respondents' relation with Saudia leads to the
conclusion that it is improper for Philippine
tribunals to divest themselves of jurisdiction.
Any evaluation of the propriety of contracting
parties' choice of a forum and'its incidents
must grapple with two (2) considerations: first,
the availability and adequacy of recourse to a
foreign tribunal; and second, the question of
where, as between the forum court and a
foreign court, the balance of interests inhering
in a dispute weighs more heavily.
The first is a pragmatic matter. It relates to the
viability of ceding jurisdiction to a foreign
tribunal and can be resolved by juxtaposing
the competencies and practical circumstances
of the tribunals in alternative fora. Exigencies,
like the statute of limitations, capacity to
enforce orders and judgments, access to
records, requirements for the acquisition of
jurisdiction, and even questions relating to the
integrity of foreign courts, may render
undesirable or even totally unfeasible recourse
to a foreign court. As mentioned, we consider
it in the greater interest of prudence that a
defendant show, in pleading forum non
conveniens, that litigation has commenced in
another jurisdiction and that a foieign tribunal
has, in fact, chosen to exercise jurisdiction.
Two (2) factors weigh into a court's appraisal
of the balance of interests inhering in a
dispute: first, the vinculum which the parties
and their relation have to a given jurisdiction;
and second, the public interest that must
animate a tribunal, in its capacity as an agent
of the sovereign, in choosing to assume or
decline jurisdiction. The first is more concerned
with the parties, their personal circumstances,
and private interests; the second concerns
itself with the state and the greater social
order.
In considering the vinculum, a court must look
into the preponderance of linkages which the

parties and their transaction may have to

either jurisdiction. In this respect, factors, such
as the parties' respective nationalities and
places of negotiation, execution, performance,
engagement or deployment, come into play.
In considering public interest, a court proceeds
with a consciousness that it is an organ of the
state. It must, thus, determine if the interests
of the sovereign (which acts through it) are
outweighed by those of the alternative
jurisdiction. In this respect, the court delves
into a consideration of public policy. Should it
find that public interest weighs more heavily in
favor of its assumption of jurisdiction, it should
proceed in adjudicating the dispute, any doubt
or .contrary view arising from the
preponderance of linkages notwithstanding.
Our law on contracts recognizes the validity of
contractual choice of law provisions. Where
such provisions exist, Philippine tribunals,
acting as the forum court, generally defer to
the parties' articulated choice.
This is consistent with the fundamental
principle of autonomy of contracts. Article 1306
of the Civ:l Code expressly provides that "[t]he
contracting parties may establish 'such
stipulations, clauses, terms and conditions as
they may deem convenient."78 Nevertheless,
while a Philippine tribunal (acting as the forum
court) is called upon to respect the parties'
choice of governing law, such respect must not
be so permissive as to lose sight of
considerations of law, morals, good customs,
public order, or public policy that underlie the
contract central to the controversy.
Specifically with respect to public policy,
in Pakistan International Airlines Corporation v.
Ople,79 this court explained
that:chanroblesvirtuallawlibrary
counter-balancing the principle of autonomy of
contracting parties is the equally general rule
that provisions of applicable law,
especially provisions relating to matters
affected with public policy, are deemed written
inta the contract. Put a little differently, the
governing principle is that parties may not
contract away applicable provisions of law
especially peremptory provisions dealing with
matters heavily impressed with public
interest.80 (Emphasis supplied)
Article II, Section 14 of the 1987 Constitution
provides that "[t]he State ... shall ensure the
fundamental equality before the law of women
and men." Contrasted with Article II, Section 1
of the 1987 Constitution's statement that "[n]o

person shall ... be denied the equal protection

of the laws," Article II, Section 14 exhorts the
State to "ensure." This does not only mean
that the Philippines shall not countenance nor
lend legal recognition and approbation to
measures that discriminate on the basis of
one's being male or female. It imposes an
obligation to actively engage in securing the
fundamental equality of men and women.
The Convention on the Elimination of all Forms
of Discrimination against Women (CEDAW),
signed and ratified by the Philippines on July
15, 1980, and on August 5, 1981,
respectively,81 is part of the law of the land. In
view of the widespread signing and ratification
of, as well as adherence (in practice) to it by
states, it may even be said that many
provisions of the CEDAW may have become
customary international law. The CEDAW gives
effect to the Constitution's policy statement in
Article II, Section 14. Article I of the CEDAW
defines "discrimination against women"
as:chanroblesvirtuallawlibrary
any distinction, exclusion or restriction made
on the basis of sex which has the effect or
purpose of impairing or nullifying the
recognition, enjoyment or exercise by women,
irrespective of their marital status, on a basis
of equality of men and women, of human
rights and fundamental freedoms in the
political, economic, social, cultural, civil or any
other field.82cralawlawlibrary
The constitutional exhortation to ensure
fundamental equality, as illumined by its
enabling law, the CEDAW, must inform and
animate all the actions of all personalities
acting on behalf of the State. It is, therefore,
the bounden duty of this court, in rendering
judgment on the disputes brought before it, to
ensure that no discrimination is heaped upon
women on the mere basis of their being
women. This is a point so basic and central
that all our discussions and pronouncements
regardless of whatever averments there may
be of foreign law must proceed from this
premise.
So informed and animated, we emphasize the
glaringly discriminatory nature of Saudia's
policy. As argued by respondents, Saudia's
policy entails the termination of employment of
flight attendants who become pregnant. At the
risk of stating the obvious, pregnancy is an
occurrence that pertains specifically to women.
Saudia's policy excludes from and restricts
employment on the basis of no other
consideration but sex.

We do not lose sight of the reality that

pregnancy does present physical limitations
that may render difficult the performance of
functions associated with being a flight
attendant. Nevertheless, it would be the height
of iniquity to view pregnancy as a disability so
permanent and immutable that, it must entail
the termination of one's employment. It is
clear to us that any individual, regardless of
gender, may be subject to exigencies that limit
the performance of functions. However, we fail
to appreciate how pregnancy could be such an
impairing occurrence that it leaves no other
recourse but the complete termination of the
means through which a woman earns a living.
Apart from the constitutional policy on the
fundamental equality before the law of men
and women, it is settled that contracts relating
to labor and employment are impressed with
public interest. Article 1700 of the Civil Code
provides that "[t]he relation between capital
and labor are not merely contractual. They are
so impressed with public interest that labor
contracts must yield to the common good."
Consistent with this, this court's
pronouncements in Pakistan International
Airlines Corporation83 are clear and
unmistakable:chanroblesvirtuallawlibrary
Petitioner PIA cannot take refuge in paragraph
10 of its employment agreement which
specifies, firstly, the law of Pakistan as the
applicable law of the agreement, and,
secondly, lays the venue for settlement of any
dispute arising out of or in connection with the
agreement "only [in] courts of Karachi,
Pakistan". The first clause of paragraph 10
cannot be invoked to prevent the application of
Philippine labor laws and'regulations to the
subject matter of this case, i.e., the employeremployee relationship between petitioner PIA
and private respondents. We have already
pointed out that the relationship is much
affected with public interest and that the
otherwise applicable Philippine laws and
regulations cannot be rendered illusory by the
parties agreeing upon some other law to
govern their relationship. . . . Under these
circumstances, paragraph 10 of the
employment agreement cannot be given effect
so as to oust Philippine agencies and courts of
the jurisdiction vested upon them by Philippine
law.84 (Emphasis supplied)
As the present dispute relates to (what the
respondents allege to be) the illegal
termination of respondents' employment, this
case is immutably a matter of public interest
and public policy. Consistent with clear

pronouncements in law and jurisprudence,

Philippine laws properly find application in and
govern this case. 'Moreover, as this premise for
Saudia's insistence on the application forum
non conveniens has been shattered, it follows
that Philippine tribunals may properly assume
jurisdiction over the present controversy.
Philippine jurisprudence provides ample
illustrations of when a court's renunciation of
jurisdiction on account of forum non
conveniens is proper or improper.'
In Philsec Investment Corporation v. Court of
Appeals,85 this court noted that the trial court
failed to consider that one of the plaintiffs was
a domestic corporation, that one of the
defendants was a Filipino, and that it was the
extinguishment of the latter's debt that was
the object of the transaction subject of the
litigation. Thus, this court held, among others,
that the trial court's refusal to assume
jurisdiction was not justified by forum non
conveniens and remanded the case to the trial
court.
In Raytheon International, Inc. v. Rouzie,
Jr.,86 this court sustained the trial court's
assumption of jurisdiction considering that the
trial court could properly enforce judgment on
the petitioner which was a foreign corporation
licensed to do business in the Philippines.
In Pioneer International, Ltd. v. Guadiz,
Jr.,87 this court found no reason to disturb the
trial court's assumption of jurisdiction over a
case in which, as noted by the trial court, "it is
more convenient to hear and decide the case in
the Philippines because Todaro [the plaintiff]
resides in the Philippines and the contract
allegedly breached involve[d] employment in
the Philippines."88
In Pacific Consultants International Asia, Inc.
v. Schonfeld,89 this court held that the fact that
the complainant in an illegal dismissal case
was a Canadian citizen and a repatriate did not
warrant the application of forum non
conveniens considering that: (1) the Labor
Code does not include forum non
conveniens as a ground for the dismissal of a
complaint for illegal dismissal; (2) the
propriety of dismissing a case based on forum
non conveniens requires a factual
determination; and (3) the requisites for
assumption of jurisdiction as laid out in Bank
of America, NT&SA90 were all satisfied.
In contrast, this court ruled in The Manila Hotel
Corp. v. National Labor Relations

Commission91 that the National Labor Relations

Q Commission was a seriously inconvenient
forum. In that case, private respondent
Marcelo G. Santos was working in the
Sultanate of Oman when he received a letter
from Palace Hotel recruiting him for
employment in Beijing, China. Santos accepted
the offer. Subsequently, however, he was
released from employment supposedly due to
business reverses arising from political
upheavals in China (i.e., the Tiananmen Square
incidents of 1989). Santos later filed a
Complaint for illegal dismissal impleading
Palace Hotel's General Manager, Mr. Gerhard
Schmidt, the Manila Hotel International
Company Ltd. (which was, responsible for
training Palace Hotel's personnel and staff),
and the Manila Hotel Corporation (which owned
50% of Manila Hotel International Company
Ltd.'s capital stock).
In ruling against the National Labor Relations
Commission's exercise of jurisdiction, this court
noted that the main aspects of the case
transpired in two (2) foreign jurisdictions,
Oman and China, and that the case involved
purely foreign elements. Specifically, Santos
was directly hired by a foreign employer
through correspondence sent to Oman. Also,
the proper defendants were neither Philippine
nationals nor engaged in business in the
Philippines, while the main witnesses were not
residents of the Philippines. Likewise, this court
noted that the National Labor Relations
Commission was in no position to conduct the
following: first, determine the law governing
the employment contract, as it was entered
into in foreign soil; second, determine the
facts, as Santos' employment was terminated
in Beijing; and third, enforce its judgment,
since Santos' employer, Palace Hotel, was
incorporated under the laws of China and was
not even served with summons.
Contrary to Manila Hotel, the case now before
us does not entail a preponderance of linkages
that favor a foreign jurisdiction.
Here, the circumstances of the parties and
their relation do not approximate the
circumstances enumerated in Puyat,92 which
this court recognized as possibly justifying the
desistance of Philippine tribunals from
exercising jurisdiction.
First, there is no basis for concluding that the
case can be more conveniently tried elsewhere.
As established earlier, Saudia is doing business
in the Philippines. For their part, all four (4)

respondents are Filipino citizens maintaining

residence in the Philippines and, apart from
their previous employment with Saudia, have
no other connection to the Kingdom of Saudi
Arabia. It would even be to respondents'
inconvenience if this case were to be tried
elsewhere.
Second, the records are bereft of any
indication that respondents filed their
Complaint in an effort to engage in forum
shopping or to vex and inconvenience Saudia.
Third, there is no indication of "unwillingness
to extend local judicial facilities to nonresidents or aliens."93 That Saudia has
managed to bring the present controversy all
the way to this court proves this.
Fourth, it cannot be said that the local judicial
machinery is inadequate for effectuating the
right sought to be maintained. Summons was
properly served on Saudia and jurisdiction over
its person was validly acquired.
Lastly, there is not even room for considering
foreign law. Philippine law properly governs the
present dispute.
As the question of applicable law has been
settled, the supposed difficulty of ascertaining
foreign law (which requires the application
of forum non conveniens) provides no
insurmountable inconvenience or special
circumstance that will justify depriving
Philippine tribunals of jurisdiction.
Even if we were to assume, for the sake of
discussion, that it is the laws of Saudi Arabia
which should apply, it does not follow that
Philippine tribunals should refrain from
exercising jurisdiction. To. recall our
pronouncements in Puyat,94 as well as in Bank
of America, NT&SA,95 it is not so much
the mere applicability of foreign law which calls
into operation forum non conveniens. Rather,
what justifies a court's desistance from
exercising jurisdiction is "[t]he difficulty of
ascertaining foreign law"96 or the inability of a
"Philippine Court to make an intelligent
decision as to the law[.]"97
Consistent with lex loci intentionis, to the
extent that it is proper and practicable (i.e., "to
make an intelligent decision"98), Philippine
tribunals may apply the foreign law selected by
the parties. In fact, (albeit without meaning to
make a pronouncement on the accuracy and
reliability of respondents' citation) in this case,

respondents themselves have made averments

as to the laws of Saudi Arabia. In their
Comment, respondents
write:chanroblesvirtuallawlibrary
Under the Labor Laws of Saudi Arabia and the
Philippines[,] it is illegal and unlawful to
terminate the employment of any woman by
virtue of pregnancy. The law in Saudi Arabia is
even more harsh and strict [sic] in that no
employer can terminate the employment of a
female worker or give her a warning of the
same while on Maternity Leave, the specific
provision of Saudi Labor Laws on the matter is
hereto quoted as
follows:chanroblesvirtuallawlibrary
"An employer may not terminate the
employment of a female worker or give her a
warning of the same while on maternity leave."
(Article 155, Labor Law of the Kingdom of
Saudi Arabia, Royal Decree No.
M/51.)99cralawlawlibrary
All told, the considerations for assumption of
jurisdiction by Philippine tribunals as outlined
in Bank of America, NT&SA100 have been
satisfied. First, all the parties are based in the
Philippines and all the material incidents
transpired in this jurisdiction. Thus, the parties
may conveniently seek relief from Philippine
tribunals. Second, Philippine tribunals are in a
position to make an intelligent decision as to
the law and the facts. Third, Philippine
tribunals are in a position to enforce their
decisions. There is no compelling basis for
ceding jurisdiction to a foreign tribunal. Quite
the contrary, the immense public policy
considerations attendant to this case behoove
Philippine tribunals to not shy away from their
duty to rule on the
case.chanRoblesvirtualLawlibrary
IV
Respondents were illegally terminated.
In Bilbao v. Saudi Arabian Airlines,101 this court
defined voluntary resignation as "the voluntary
act of an employee who is in a situation where
one believes that personal reasons cannot be
sacrificed in favor of the exigency of the
service, and one has no other choice but to
dissociate oneself from employment. It is a
formal pronouncement or relinquishment of an
office, with the intention of relinquishing the
office accompanied by the act of
relinquishment."102 Thus, essential to the act of
resignation is voluntariness. It must be the
result of an employee's exercise of his or her
own will.

In the same case of Bilbao, this court advanced

a means for determining whether an employee
resigned voluntarily:chanroblesvirtuallawlibrary
As the intent to relinquish must concur with
the overt act of relinquishment, the acts of the
employee before and after the alleged
resignation must be considered in determining
whether he or she, in fact, intended, to sever
his or her employment.103(Emphasis supplied)
On the other hand, constructive dismissal has
been defined as "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."104
In Penaflor v. Outdoor Clothing Manufacturing
Corporation,105 constructive dismissal has been
described as tantamount to "involuntarily [sic]
resignation due to the harsh, hostile, and
unfavorable conditions set by the
employer."106 In the same case, it was noted
that "[t]he gauge for constructive dismissal is
whether a reasonable person in the employee's
position would feel compelled to give up his
employment under the prevailing
circumstances."107
Applying the cited standards on resignation
and constructive dismissal, it is clear that
respondents were constructively dismissed.
Hence, their termination was illegal.
The termination of respondents' employment
happened when they were pregnant and
expecting to incur costs on account of child
delivery and infant rearing. As noted by the
Court of Appeals, pregnancy is a time when
they need employment to sustain their
families.108 Indeed, it goes against normal and
reasonable human behavior to abandon one's
livelihood in a time of great financial need.
It is clear that respondents intended to remain
employed with Saudia. All they did was avail of
their maternity leaves. Evidently, the very
nature of a maternity leave means that a
pregnant employee will not report for
work only temporarily and that she will resume
the performance of her duties as soon as the
leave allowance expires.
It is also clear that respondents exerted all
efforts to' remain employed with Saudia. Each
of them repeatedly filed appeal letters (as
much as five [5] letters in the case of
Rebesencio109) asking Saudia to reconsider the
ultimatum that they resign or be terminated
along with the forfeiture of their benefits.

Some of them even went to Saudia's office to

personally seek reconsideration.110
Respondents also adduced a copy of the
"Unified Employment Contract for Female
Cabin Attendants."111 This contract deemed
void the employment of a flight attendant who
becomes pregnant and threatened termination
due to lack of medical fitness.112 The threat of
termination (and the forfeiture of benefits that
it entailed) is enough to compel a reasonable
person in respondents' position to give up his
or her employment.
Saudia draws attention to how respondents'
resignation letters were supposedly made in
their own handwriting. This minutia fails to
surmount all the other indications negating any
voluntariness on respondents' part. If at all,
these same resignation letters are proof of how
any supposed resignation did not arise from
respondents' own initiative. As earlier pointed
out, respondents' resignations were executed
on Saudia's blank letterheads that Saudia had
provided. These letterheads already had the
word "RESIGNATION" typed on the subject
portion of their respective headings when
these were handed to
respondents.113ChanRoblesVirtualawlibrary
"In termination cases, the burden of proving
just or valid cause for dismissing an employee
rests on the employer."114 In this case, Saudia
makes much of how respondents supposedly
completed their exit interviews, executed
quitclaims, received their separation pay, and
took more than a year to file their
Complaint.115 If at all, however, these
circumstances prove only the fact of their
occurrence, nothing more. The voluntariness of
respondents' departure from Saudia is non
sequitur.
Mere compliance with standard procedures or
processes, such as the completion of their exit
interviews, neither negates compulsion nor
indicates voluntariness.
As with respondent's resignation letters, their
exit interview forms even support their claim of
illegal dismissal and militates against Saudia's
arguments. These exit interview forms, as
reproduced by Saudia in its own Petition,
confirms the unfavorable conditions as regards
respondents' maternity leaves. Ma. Jopette's
and Loraine's exit interview forms are
particularly telling:chanroblesvirtuallawlibrary
a. From Ma. Jopette's exit interview form:

3. In what respects has the job met or failed

to meet your expectations?

and callous schemes, respondents are likewise

entitled to exemplary damages.

THE SUDDEN TWIST OF DECISION

REGARDING THE MATERNITY LEAVE.116

In a long line of cases, this court awarded

exemplary damages to illegally dismissed
employees whose "dismissal[s were] effected
in a wanton, oppressive or malevolent
manner."122 This court has awarded exemplary
damages to employees who were terminated
on such frivolous, arbitrary, and unjust grounds
as membership in or involvement with labor
unions,123 injuries sustained in the course of
employment,124 development of a medical
condition due to the employer's own violation
of the employment contract,125 and lodging of a
Complaint against the employer.126 Exemplary
damages were also awarded to employees who
were deemed illegally dismissed by an
employer in an attempt to evade compliance
with statutorily established employee
benefits.127 Likewise, employees dismissed for
supposedly just causes, but in violation of due
process requirements, were awarded
exemplary damages.128

b. From Loraine's exit interview form:

1. What are your main reasons for leaving
Saudia? What company are you joining?
xxx xxx xxx
Others
CHANGING POLICIES REGARDING MATERNITY
LEAVE (PREGNANCY)117
As to respondents' quitclaims, in Phil. Employ
Services and Resources, Inc. v. Paramio,118 this
court noted that "[i]f (a) there is clear proof
that the waiver was wangled from an
unsuspecting or gullible person; or (b) the
terms of the settlement are unconscionable,
and on their face invalid, such quitclaims must
be struck down as invalid or
illegal."119 Respondents executed their
quitclaims after having been unfairly given an
ultimatum to resign or be terminated (and
forfeit their
benefits).chanRoblesvirtualLawlibrary
V
Having been illegally and unjustly dismissed,
respondents are entitled to full backwages and
benefits from the time of their termination until
the finality of this Decision. They are likewise
entitled to separation pay in the amount of one
(1) month's salary for every year of service
until the fmality of this Decision, with a fraction
of a year of at least six (6) months being
counted as one (1) whole year.
Moreover, "[m]oral damages are awarded in
termination cases where the employee's
dismissal was attended by bad faith, malice or
fraud, or where it constitutes an act oppressive
to labor, or where it was done in a manner
contrary to morals, good customs or public
policy."120 In this case, Saudia terminated
respondents' employment in a manner that is
patently discriminatory and running afoul of
the public interest that underlies employeremployee relationships. As such, respondents
are entitled to moral damages.
To provide an "example or correction for the
public good"121 as against such discriminatory

These examples pale in comparison to the

present controversy. Stripped of all
unnecessary complexities, respondents were
dismissed for no other reason than simply that
they were pregnant. This is as wanton,
oppressive, and tainted with bad faith as any
reason for termination of employment can be.
This is no ordinary case of illegal dismissal.
This is a case of manifest gender
discrimination. It is an affront not only to our
statutes and policies on employees' security of
tenure, but more so, to the Constitution's
dictum of fundamental equality between men
and women.129
The award of exemplary damages is, therefore,
warranted, not only to remind employers of the
need to adhere to the requirements of
procedural and substantive due process in
termination of employment, but more
importantly, to demonstrate that gender
discrimination should in no case be
countenanced.
Having been compelled to litigate to seek
reliefs for their illegal and unjust dismissal,
respondents are likewise entitled to attorney's
fees in the amount of 10% of the total
monetary award.130
VI
Petitioner Brenda J. Betia may not be held
liable.

A corporation has a personality separate and

distinct from those of the persons composing
it. Thus, as a rule, corporate directors and
officers are not liable for the illegal termination
of a corporation's employees. It is only when
they acted in bad faith or with malice that they
become solidarity liable with the corporation.131
In Ever Electrical Manufacturing, Inc. (EEMI) v.
Samahang Manggagawa ng Ever
Electrical,132 this court clarified that "[b]ad faith
does not connote bad judgment or negligence;
it imports a dishonest purpose or some moral
obliquity and conscious doing of wrong; it
means breach of a known duty through some
motive or interest or ill will; it partakes of the
nature of fraud."133
Respondents have not produced proof to show
that Brenda J. Betia acted in bad faith or with
malice as regards their termination. Thus, she
may not be held solidarity liable with
Saudia.cralawred
WHEREFORE, with
the MODIFICATIONS that first, petitioner
Brenda J. Betia is not solidarity liable with
petitioner Saudi Arabian Airlines, and second,
that petitioner Saudi Arabian Airlines is liable
for moral and exemplary damages. The June
16, 2011 Decision and the September 13,
2011 Resolution of the Court of Appeals in CAG.R. SP. No. 113006 are hereby AFFIRMED in
all other respects. Accordingly, petitioner Saudi
Arabian Airlines is ordered to pay respondents:
(1 Full backwages and all other benefits
) computed from the respective dates in
which each of the respondents were illegally
terminated until the finality of this Decision;
(2 Separation pay computed from the
) respective dates in which each of the
respondents 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 (1)
whole year;
(3 Moral damages in the amount of
) P100,000.00 per respondent;
(4 Exemplary damages in the amount of
) P200,000.00 per respondent; and
(5 Attorney's fees equivalent to 10% of the
) total award.

Interest of 6% per annum shall likewise be

imposed on the total judgment award from the
finality of this Decision until full satisfaction
thereof.
This case is REMANDED to the Labor Arbiter
to make a detailed computation of the amounts
due to respondents which petitioner Saudi
Arabian Airlines should pay without delay.
SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 197309
2012

October 10,

ACE NAVIGATION CO., INC., VELA

INTERNATIONAL MARINE LTD., and/or
RODOLFO PAMINTUAN,Petitioners,
vs.
TEODORICO FERNANDEZ, assisted by
GLENITA FERNANDEZ, Respondent.
DECISION
BRION, J.:
For resolution is the petition for review
on certiorari1 which seeks to nullify the
decision2 dated September 22, 2010 and the
resolution3 dated May 26,2011 ofthe Court of
Appeals (CA) in CA-G.R. SP No. 112081.
The Antecedents
On October 9, 2008, seaman Teodorico
Fernandez (Fernandez), assisted by his wife,
Glenita Fernandez, filed with the National
Labor Relations Commission (NLRC) a
complaint for disability benefits, with prayer for
moral and exemplary damages, plus attorneys
fees, against Ace Navigation Co., Inc., Vela
International Marine Ltd., and/or Rodolfo
Pamintuan (petitioners).
The petitioners moved to dismiss the
complaint,4 contending that the labor arbiter
had no jurisdiction over the dispute. They
argued that exclusive original jurisdiction is

with the voluntary arbitrator or panel of

voluntary arbitrators, pursuant to Section 29 of
the POEA Standard Employment Contract
(POEA-SEC), since the parties are covered by
the AMOSUP-TCC or AMOSUP-VELA (as later
cited by the petitioners) collective bargaining
agreement (CBA). Under Section 14 of the
CBA, a dispute between a seafarer and the
company shall be settled through the grievance
machinery and mandatory voluntary
arbitration.
Fernandez opposed the motion.5 He argued
that inasmuch as his complaint involves a
money claim, original and exclusive jurisdiction
over the case is vested with the labor arbiter.
The Compulsory Arbitration Rulings
On December 9, 2008, Labor Arbiter Romelita
N. Rioflorido denied the motion to dismiss,
holding that under Section 10 of Republic Act
(R.A.) No. 8042, the Migrant Workers and
Overseas Filipinos Act of 1995, the labor
arbiter has original and exclusive jurisdiction
over money claims arising out of an employeremployee relationship or by virtue of any law
or contract, notwithstanding any provision of
law to the contrary.6
The petitioners appealed to the NLRC, but the
labor agency denied the appeal. It agreed with
the labor arbiter that the case involves a
money claim and is within the jurisdiction of
the labor arbiter, in accordance with Section 10
of R.A. No. 8042. Additionally, it declared that
the denial of the motion to dismiss is an
interlocutory order which is not appealable.
Accordingly, it remanded the case to the labor
arbiter for further proceedings. The petitioners
moved for reconsideration, but the NLRC
denied the motion, prompting the petitioners
to elevate the case to the CA through a
petition for certiorari under Rule 65 of the
Rules of Court.
The CA Decision
Through its decision of September 22,
2010,7 the CA denied the petition on
procedural and substantive grounds.
Procedurally, it found the petitioners to have
availed of the wrong remedy when they
challenged the labor arbiters denial of their
motion to dismiss by way of an appeal to the
NLRC. It stressed that pursuant to the NLRC

rules,8an order denying a motion to dismiss is

interlocutory and is not subject to appeal.
On the merits of the case, the CA believed that
the petition cannot also prosper. It rejected the
petitioners submission that the grievance and
voluntary arbitration procedure of the parties
CBA has jurisdiction over the case, to the
exclusion of the labor arbiter and the NLRC. As
the labor arbiter and the NLRC did, it opined
that under Section 10 of R.A. No. 8042, the
labor arbiter has the original and exclusive
jurisdiction to hear Fernandezs money claims.
Further, the CA clarified that while the
law9 allows parties to submit to voluntary
arbitration other labor disputes, including
matters falling within the original and exclusive
jurisdiction of the labor arbiters under Article
217 of the Labor Code as this Court recognized
in Vivero v. Court of Appeals,10 the parties
submission agreement must be expressed in
unequivocal language. It found no such
unequivocal language in the AMOSUP/TCC CBA
that the parties agreed to submit money claims
or, more specifically, claims for disability
benefits to voluntary arbitration.
The CA also took note of the POEA-SEC11 which
provides in its Section 29 that in cases of
claims and disputes arising from a Filipino
seafarers employment, the parties covered by
a CBA shall submit the claim or dispute to the
original and exclusive jurisdiction of the
voluntary arbitrator or panel of voluntary
arbitrators. The CA explained that the relevant
POEA-SEC provisions should likewise be
qualified by the ruling in the Vivero case, the
Labor Code, and other applicable laws and
jurisprudence.
In sum, the CA stressed that the jurisdiction of
voluntary arbitrators is limited to the seafarers
claims which do not fall within the labor
arbiters original and exclusive jurisdiction or
even in cases where the labor arbiter has
jurisdiction, the parties have agreed in
unmistakable terms (through their CBA) to
submit the case to voluntary arbitration.
The petitioners moved for reconsideration of
the CA decision, but the appellate court denied
the motion, reiterating its earlier
pronouncement that on the ground alone of
the petitioners wrong choice of remedy, the
petition must fail.

The Petition
The petitioners are now before this Court
praying for a reversal of the CA judgment on
the following grounds:
1. The CA committed a reversible error in
disregarding the Omnibus Implementing Rules
and Regulations (IRR) of the Migrant Workers
and Overseas Filipinos Act of 1995,12 as
amended by R.A. No. 10022,13 mandating that
"For OFWs with collective bargaining
agreements, the caseshall be submitted for
voluntary arbitration in accordance with
Articles 261 and 262 of the Labor Code."14
The petitioners bewail the CAs rejection of the
above argument for the reason that the
remedy they pursued was inconsistent with the
2005 Revised Rules of Procedure of the NLRC.
Citing Municipality of Sta. Fe v. Municipality of
Aritao,15 they argue that the "dismissal of a
case for lack of jurisdiction may be raised at
any stage of the proceedings."
In any event, they posit that the IRR of R.A.
No. 10022 is in the nature of an adjective or
procedural law which must be given retroactive
effect and which should have been applied by
the CA in resolving the present case.
2. The CA committed a reversible error in
ruling that the AMOSUP-VELA CBA does not
contain unequivocal wordings for the
mandatory referral of Fernandezs claim to
voluntary arbitration.
The petitioners assail the CAs failure to explain
the basis "for ruling that no explicit or
unequivocal wordings appeared on said CBA
for the mandatory referral of the disability
claim to arbitration."16They surmise that the CA
construed the phrase "either party may refer
the case to a MANDATORY ARBITRATION
COMMITTEE" under Section 14.7(a) of the CBA
as merely permissive and not mandatory
because of the use of the word "may." They
contend that notwithstanding the use of the
word "may," the parties unequivocally and
unmistakably agreed to refer the present
disability claim to mandatory arbitration.
3. The CA committed a reversible error in
disregarding the NLRC memorandum
prescribing the appropriate action for
complaints and/or proceedings which were
initially processed in the grievance machinery

of existing CBAs. In their motion for

reconsideration with the CA, the petitioners
manifested that the appellate courts assailed
decision had been modified by the following
directive of the NLRC:
As one of the measures being adopted by our
agency in response to the Platform and Policy
Pronouncements on Labor Employment, you
are hereby directed to immediately dismiss the
complaint and/or terminate proceedings which
were initially processed in the grievance
machinery as provided in the existing
Collective Bargaining Agreements (CBAs)
between parties, through the issuance of an
Order of Dismissal and referral of the disputes
to the National Conciliation Mediation Board
(NCMB) for voluntary arbitration.
FOR STRICT COMPLIANCE.17
4. On July 31, 2012,18 the petitioners
manifested before the Court that on June 13,
2012, the Courts Second Division issued a
ruling in G.R. No. 172642, entitled Estate of
Nelson R. Dulay, represented by his wife
Merridy Jane P. Dulay v. Aboitiz Jebsen
Maritime, Inc., and General Charterers,
Inc.,upholding the jurisdiction of the voluntary
arbitrator or panel of voluntary arbitrators over
a seafarers money claim. They implore the
Court that since the factual backdrop and the
issues involved in the case are similar to the
present dispute, the Dulay ruling should be
applied to this case and which should
accordingly be referred to the National
Conciliation and Mediation Board for voluntary
arbitration.
The Case for Fernandez
In compliance with the Courts
directive,19 Fernandez filed on October 7, 2011
his Comment20 (on the Petition) with the plea
that the petition be dismissed for lack of merit.
Fernandez presents the following arguments:
1. The IRR of the Migrant Workers and
Overseas Filipinos Act of 1995 (R.A.
No. 8042), as amended by R.A. No.
10022,21 did not divest the labor
arbiters of their original and exclusive
jurisdiction over money claims arising
from employment, for nowhere in said
IRR is there such a divestment.

2. The voluntary arbitrators do not

have jurisdiction over the present
controversy as can be deduced from
Articles 261 and 262 of the Labor
Code. Fernandez explains that his
complaint does not involve any
"unresolved grievances arising from
the interpretation or implementation of
the Collective Bargaining Agreement
[nor] from the interpretation or
enforcement of company personnel
policies[.]"22 As he never referred his
claim to the grievance machinery,
there is no "unresolved grievance" to
speak of. His complaint involves a
claim for compensation and damages
which is outside the voluntary
arbitrators jurisdiction under Article
261. Further, only disputes involving
the union and the company shall be
referred to the grievance machinery
and to voluntary arbitration, as the
Court held in Sanyo Philippines
Workers Union-PSSLU v.
Caizares23 and Silva v. CA.24
3. The CA correctly ruled that no
unequivocal wordings appear in the
CBA for the mandatory referral of
Fernandezs disability claim to a
voluntary arbitrator.
The Courts Ruling
We first rule on the procedural question arising
from the labor arbiters denial of the
petitioners motion to dismiss the complaint.
On this point, Section 6, Rule V of The 2005
Revised Rules of Procedure of the NLRC
provides:
On or before the date set for the mandatory
conciliation and mediation conference, the
respondent may file a motion to dismiss. Any
motion to dismiss on the ground of lack of
jurisdiction, improper venue, or that the cause
of action is barred by prior judgment,
prescription, or forum shopping, shall be
immediately resolved by the Labor Arbiter
through a written order. An order denying the
motion to dismiss, or suspending its resolution
until the final determination of the case, is not
appealable. [underscoring ours]
Corollarily, Section 10, Rule VI of the same
Rules states:

Frivolous or Dilatory Appeals. No appeal from

an interlocutory order shall be entertained. To
discourage frivolous or dilatory appeals,
including those taken from interlocutory
orders, the Commission may censure or cite in
contempt the erring parties and their counsels,
or subject them to reasonable fine or penalty.
In Indiana Aerospace University v. Comm. on
Higher Educ.,25 the Court declared that "[a]n
order denying a motion to dismiss is
interlocutory"; the proper remedy in this
situation is to appeal after a decision has been
rendered. Clearly, the denial of the petitioners
motion to dismiss in the present case was an
interlocutory order and, therefore, not subject
to appeal as the CA aptly noted.
The petitions procedural lapse
notwithstanding, the CA proceeded to review
the merits of the case and adjudged the
petition unmeritorious. We find the CAs action
in order. The Labor Code itself declares that "it
is the spirit and intention of this Code that the
Commission and its members and the Labor
Arbiters shall use every and all reasonable
means to ascertain the facts in each case
speedily and objectively and without regard to
technicalities of law or procedure, all in the
interest of due process."26
We now address the focal question of who has
the original and exclusive jurisdiction over
Fernandezs disability claim the labor arbiter
under Section 10 of R.A. No. 8042, as
amended, or the voluntary arbitration
mechanism as prescribed in the parties CBA
and the POEA-SEC?
The answer lies in the States labor relations
policy laid down in the Constitution and fleshed
out in the enabling statute, the Labor Code.
Section 3, Article XIII (on Social Justice and
Human Rights) of the Constitution declares:
xxxx
The State shall promote the principle of shared
responsibility between workers and employers
and the preferential use of voluntary modes in
settling disputes, including conciliation, and
shall enforce their mutual compliance therewith
to foster industrial peace.
Article 260 of the Labor Code (Grievance
machinery and voluntary arbitration) states:

The parties to a Collective Bargaining

Agreement shall include therein provisions that
will ensure the mutual observance of its terms
and conditions. They shall establish a
machinery for the adjustment and resolution of
grievances arising from the interpretation or
implementation of their Collective Bargaining
Agreement and those arising from the
interpretation or enforcement of company
personnel policies.
Article 261 of the Labor Code (Jurisdiction of
Voluntary Arbitrators or panel of Voluntary
Arbitrators), on the other hand, reads in part:
The Voluntary Arbitrator or panel of Voluntary
Arbitrators shall have original and exclusive
jurisdiction to hear and decide all unresolved
grievances arising from the interpretation or
implementation of the Collective Bargaining
Agreement and those arising from the
interpretation or enforcement of company
personnel policies[.]
Article 262 of the Labor Code (Jurisdiction over
other labor disputes) declares:
The Voluntary Arbitrator or panel of Voluntary
Arbitrators, upon agreement of the parties,
shall also hear and decide all other labor
disputes including unfair labor practices and
bargaining deadlocks.
Further, the POEA-SEC, which governs the
employment of Filipino seafarers, provides in
its Section 29 on Dispute Settlement
Procedures:
In cases of claims and disputes arising
from this employment, the parties
covered by a collective bargaining
agreement shall submit the claim or
dispute to the original and exclusive
jurisdiction of the voluntary arbitrator or
panel of voluntary arbitrators. If the parties
are not covered by a collective bargaining
agreement, the parties may at their option
submit the claim or dispute to either the
original and exclusive jurisdiction of the
National Labor Relations Commission (NLRC),
pursuant to Republic Act (RA) 8042 otherwise
known as the Migrant Workers and Overseas
Filipinos Act of 1995 or to the original and
exclusive jurisdiction of the voluntary arbitrator
or panel of voluntary arbitrators. If there is no
provision as to the voluntary arbitrators to be
appointed by the parties, the same shall be

appointed from the accredited voluntary

arbitrators of the National Conciliation and
Mediation Board of the Department of Labor
and Employment. [emphasis ours]
We find merit in the petition.
Under the above-quoted constitutional and
legal provisions, the voluntary arbitrator or
panel of voluntary arbitrators has original and
exclusive jurisdiction over Fernandezs
disability claim. There is no dispute that the
claim arose out of Fernandezs employment
with the petitioners and that their relationship
is covered by a CBA the AMOSUP/TCC or the
AMOSUP-VELA CBA. The CBA provides for a
grievance procedure for the resolution of
grievances or disputes which occur during the
employment relationship and, like the
grievance machinery created under Article 261
of the Labor Code, it is a two-tiered
mechanism, with voluntary arbitration as the
last step.1wphi1
Contrary to the CAs reading of the CBAs
Article 14, there is unequivocal or
unmistakable language in the agreement which
mandatorily requires the parties to submit to
the grievance procedure any dispute or cause
of action they may have against each other.
The relevant provisions of the CBA state:
14.6 Any Dispute, grievance, or
misunderstanding concerning any ruling,
practice, wages or working conditions in
the COMPANY or any breach of the
Contract of Employment, or any dispute
arising from the meaning or application of
the provisions of this Agreement or a
claim of violation thereof or any complaint
or cause of action that any such Seaman
may have against the COMPANY, as well
as complaints which the COMPANY may
have against such Seaman shall be
brought to the attention of the
GRIEVANCE RESOLUTION COMMITTEE
before either party takes any action, legal
or otherwise. Bringing such a dispute to
the Grievance Resolution Committee shall
be unwaivable prerequisite or condition
precedent for bringing any action, legal or
otherwise, in any forum and the failure to
so refer the dispute shall bar any and all
legal or other actions.
14.7a) If by reason of the nature of the
Dispute, the parties are unable to

amicably settle the dispute, either party

may refer the case to a MANDATORY
ARBITRATION COMMITTEE. The
MANDATORY ARBITRATION COMMITTEE shall
consist of one representative to be designated
by the UNION, and one representative to be
designated by the COMPANY and a third
member who shall act as Chairman and shall
be nominated by mutual choice of the parties.
xxx

the Mandatory Arbitration Committee

shall be unwaivable prerequisite or
condition precedent for bringing any
action, claim, or cause of action, legal or
otherwise, before any court, tribunal, or
panel in any jurisdiction"29 and that the
failure by a party or seaman to so refer
the dispute to the prescribed dispute
resolution mechanism shall bar any legal
or other action.

h) Referral of all unresolved disputes from

the Grievance Resolution Committee to
the Mandatory Arbitration Committee
shall be unwaivable prerequisite or
condition precedent for bringing any
action, claim, or cause of action, legal or
otherwise, before any court, tribunal, or
panel in any jurisdiction. The failure by a
party or seaman to so refer and avail
oneself to the dispute resolution
mechanism contained in this action shall
bar any legal or other action. All parties
expressly agree that the orderly
resolution of all claims in the prescribed
manner served the interests of reaching
settlements or claims in an orderly and
uniform manner, as well as preserving
peaceful and harmonious labor relations
between seaman, the Union, and the
Company.27 (emphases ours)

Read in its entirety, the CBAs Article 14

(Grievance Procedure) unmistakably reflects
the parties agreement to submit any
unresolved dispute at the grievance resolution
stage to mandatory voluntary arbitration under
Article 14.7(h) of the CBA. And, it should be
added that, in compliance with Section 29 of
the POEA-SEC which requires that in cases of
claims and disputes arising from a seafarers
employment, the parties covered by a CBA
shall submit the claim or dispute to the original
and exclusive jurisdiction of the voluntary
arbitrator or panel of voluntary arbitrators.

What might have caused the CA to miss the

clear intent of the parties in prescribing a
grievance procedure in their CBA is, as the
petitioners have intimated, the use of the
auxiliary verb "may" in Article 14.7(a) of the
CBA which, to reiterate, provides that "if by
reason of the nature of the Dispute, the
parties are unable to amicably settle the
dispute, either party may refer the case to
a MANDATORY ARBITRATION
COMMITTEE."28
While the CA did not qualify its reading of the
subject provision of the CBA, it is reasonable to
conclude that it viewed as optional the referral
of a dispute to the mandatory arbitration
committee when the parties are unable to
amicably settle the dispute.
We find this a strained interpretation of the
CBA provision. The CA read the provision
separately, or in isolation of the other sections
of Article 14, especially 14.7(h), which, in
clear, explicit language, states that the
"referral of all unresolved disputes from
the Grievance Resolution Committee to

Since the parties used unequivocal language in

their CBA for the submission of their disputes
to voluntary arbitration (a condition laid down
in Vivero for the recognition of the submission
to voluntary arbitration of matters within the
original and exclusive jurisdiction of labor
arbiters), we find that the CA committed a
reversible error in its ruling; it disregarded the
clear mandate of the CBA between the parties
and the POEA-SEC for submission of the
present dispute to voluntary arbitration.
Consistent with this finding, Fernandezs
contention that his complaint for disability
benefits is a money claim that falls within the
original and exclusive jurisdiction of the labor
arbiter under Section 10 of R.A. No. 8042 is
untenable. We likewise reject his argument
that he never referred his claim to the
grievance machinery (so that no unresolved
grievance exists as required under Article 261
of the Labor Code), and that the parties to the
case are not the union and the
employer.30 Needless to state, no such
distinction exists in the parties CBA and the
POEA-SEC.
It bears stressing at this point that we are
upholding the jurisdiction of the voluntary
arbitrator or panel of voluntary arbitrators over
the present dispute, not only because of the
clear language of the parties CBA on the
matter; more importantly, we so uphold the

voluntary arbitrators jurisdiction, in

recognition of the States express preference
for voluntary modes of dispute settlement,
such as conciliation and voluntary arbitration
as expressed in the Constitution, the law and
the rules.

Petitioner,

Pres

- versus

PER

In this light, we see no need to further

consider the petitioners submission regarding
the IRR of the Migrant Workers and Overseas
Filipinos Act of 1995, as amended by R.A. No.
10022, except to note that the IRR lends
further support to our ruling.
In closing, we quote with approval a most
recent Court pronouncement on the same
issue, thus

ABA

VILL

MEN
ABOITIZ JEBSEN MARITIME, INC. and GENERAL
CHARTERERS, INC.,
Respondents.

It is settled that when the parties have

validly agreed on a procedure for
resolving grievances and to submit a
dispute to voluntary arbitration then that
procedure should be strictly
observed.31 (emphasis ours)
WHEREFORE, premises considered, the
petition is GRANTED. The assailed decision
and resolution of the Court of Appeals are SET
ASIDE. Teodorico Fernandez's disability claim
is REFERRED to the Grievance Resolution
Committee of the parties' collective bargaining
agreement and/or the Mandatory Arbitration
Committee, if warranted.

Pro

June 1
x----------------------------------------------------------------------------------------x

DECISION

SO ORDERED.
ARTURO D. BRION
Associate Justice
PERALTA, J.:
Republic of the Philippines
Supreme Court
Manila

Before the Court is a petition for review

on certiorari under Rule 45 of the Rules of
Court seeking to reverse and set aside the

THIRD DIVISION

Decision[1] and

Resolution[2] dated

July

11,

2005 and April 18, 2006 of the Court of

Appeals (CA) in CA-G.R. SP No. 76489.

ESTATE OF NELSON R. DULAY, represented by

his wife MERRIDY JANE P. DULAY,

PER

The factual and procedural antecedents of the

case, as summarized by the CA, are as follows:
Nelson R. Dulay (Nelson, for
brevity) was employed by
[herein respondent] General
Charterers Inc. (GCI), a
subsidiary of co-petitioner
[herein
co-respondent]
Aboitiz Jebsen Maritime Inc.
since
1986.
He
initially
worked
as
an
ordinary
seaman and later as bosun
on a contractual basis. From
September 3, 1999 up to
July 19, 2000, Nelson was
detailed in petitioners vessel,
the MV Kickapoo Belle.
On August 13, 2000, or 25
days after the completion of
his employment contract,
Nelson died due to acute
renal failure secondary to
septicemia. At the time of his
death, Nelson was a bona
fide
member
of
the
Associated Marine Officers
and Seamans Union of the
Philippines (AMOSUP), GCIs
collective bargaining agent.
Nelsons widow, Merridy Jane,
thereafter claimed for death
benefits
through
the
grievance procedure of the
Collective
Bargaining
Agreement (CBA) between
AMOSUP and GCI. However,
on January 29, 2001, the
grievance
procedure
was
declared
deadlocked
as
petitioners refused to grant
the benefits sought by the
widow.
On March 5, 2001, Merridy
Jane filed a complaint with
the
NLRC
Sub-Regional
Arbitration Board in General

Santos City against GCI for

death and medical benefits
and damages.
On March 8, 2001, Joven
Mar,
Nelsons
brother,
received P20,000.00
from
[respondents] pursuant to
article 20(A)2 of the CBA and
signed
a
Certification
acknowledging receipt of the
amount
and
releasing
AMOSUP
from
further
liability.
Merridy
Jane
contended
that
she
is
entitled to the aggregate
sum of Ninety Thousand
Dollars
($90,000.00)
pursuant to [A]rticle 20 (A)1
of the CBA x x x
xxxx
Merridy Jane averred that the
P20,000.00 already received
by Joven Mar should be
considered advance payment
of
the
total
claim
of
US$90,000.[00].
[Herein respondents], on the
other hand, asserted that the
NLRC had no jurisdiction over
the action on account of the
absence
of
employeremployee
relationship
between GCI and Nelson at
the time of the latters death.
Nelson also had no claims
against petitioners for sick
leave
allowance/medical
benefit by reason of the
completion of his contract
with
GCI.
They
further
alleged
that
private
respondent is not entitled to
death
benefits
because
petitioners are only liable for
such in case of death of the

seafarer during the term of

his contract pursuant to the
POEA contract and the cause
of his death is not workrelated. Petitioners admitted
liability only with respect to
article 20(A)2 [of the CBA]. x
xx
xxxx

Herein respondents then filed a special

civil

action

for certiorari with

the

CA

contending that the NLRC committed grave

abuse of discretion in affirming the jurisdiction
of the NLRC over the case; in ruling that a
different provision of the CBA covers the death
claim; in reversing the findings of the Labor
Arbiter that the cause of death is not work-

However,
as
petitioners
stressed, the same was
already discharged.
The Labor Arbiter ruled in
favor of private respondent.
It took cognizance of the
case by virtue of Article 217
(a), paragraph 6 of the Labor
Code and the existence of a
reasonable causal connection
between
the
employeremployee relationship and
the
claim
asserted.
It
ordered the petitioner to
pay P4,621,300.00,
the
equivalent of US$90,000.00
less P20,000.00, at the time
of judgment x x x
xxxx
The Labor Arbiter also ruled
that the proximate cause of
Nelsons death was not workrelated.
On
appeal,
[the
NLRC]
affirmed the Labor Arbiters
decision as to the grant of
death benefits under the CBA
but reversed the latters
ruling as to the proximate
cause of Nelsons death.[3]

related; and, in setting aside the release and

quitclaim executed by the attorney-in-fact and
not

considering

the

P20,000.00

already

received by Merridy Jane through her attorneyin-fact.

On July 11, 2005, the CA promulgated

its assailed Decision, the dispositive portion of
which reads as follows:

WHEREFORE, in view of
the foregoing, the petition is
hereby GRANTED and the case
is REFERRED to the National
Conciliation
and
Mediation
Board for the designation of
the Voluntary Arbitrator or the
constitution of a panel of
Voluntary Arbitrators for the
appropriate resolution of the
issue on the matter of the
applicable CBA provision.
SO ORDERED.[4]

The CA ruled that while the suit filed by

Merridy Jane is a money claim, the same
basically

involves

the

interpretation

and

application of the provisions in the subject

CBA. As such, jurisdiction belongs to the

voluntary arbitrator and not the labor arbiter.

Petitioner

filed

Motion

for

Reconsideration but the CA denied it in its

Resolution of April 18, 2006.

Hence, the instant petition raising the

the original and exclusive

jurisdiction to hear and decide,
within ninety (90) calendar
days
after
filing
of
the
complaint, the claims arising
out of an employer-employee
relationship or by virtue of any
law
or
contract
involving
Filipino workers for overseas
deployment including claims for
actual, moral, exemplary and
other forms of damages.

sole issue of whether or not the CA committed

error in ruling that the Labor Arbiter has no
Article 217(c) of the Labor Code, on the other

jurisdiction over the case.

hand, states that:

Petitioner contends that Section 10 of

xxxx

Republic Act (R.A.) 8042, otherwise known as

the Migrant Workers and Overseas Filipinos Act
of 1995, vests jurisdiction on the appropriate
branches of the NLRC to entertain disputes
regarding the interpretation of a collective
bargaining agreement involving migrant or
overseas Filipino workers. Petitioner argues
that the abovementioned Section amended
Article 217 (c) of the Labor Code which, in
turn,

confers

jurisdiction

upon

voluntary

(c) Cases arising from

the
interpretation
or
implementation of collective
bargaining
agreements
and
those
arising
from
the
interpretation or enforcement
of company personnel policies
shall be disposed by the Labor
Arbiter by referring the same to
the grievance machinery and
voluntary arbitration as may be
provided in said agreements.

or

On their part, respondents insist that in the

bargaining

present case, Article 217, paragraph (c) as well

agreements and interpretation or enforcement

as Article 261 of the Labor Code remain to be

of company personnel policies.

the governing provisions of law with respect to

arbitrators
implementation

over
of

interpretation
collective

unresolved
The pertinent provisions of Section 10
of R.A. 8042 provide as follows:

grievances

arising

from

the

interpretation and implementation of collective

bargaining agreements. Under these provisions
of law, jurisdiction remains with voluntary

SEC.
10. Money
Claims. - Notwithstanding any
provision of law to the contrary,
the Labor Arbiters of the
National
Labor
Relations
Commission (NLRC) shall have

arbitrators.

Article 261 of the Labor Code reads, thus:

Collective
Agreement.
ARTICLE 261. Jurisdiction of
Voluntary Arbitrators or panel
of Voluntary Arbitrators. The
Voluntary Arbitrator or panel of
Voluntary Arbitrators shall have
original
and
exclusive
jurisdiction to hear and decide
all
unresolved
grievances
arising from the interpretation
or
implementation
of
the
Collective
Bargaining
Agreement and those arising
from the interpretation or
enforcement
of
company
personnel policies referred to in
the
immediately
preceding
article. Accordingly, violations
of a Collective Bargaining
Agreement, except those which
are gross in character, shall no
longer be treated as unfair
labor practice and shall be
resolved as grievances under
the
Collective
Bargaining
Agreement. For purposes of
this article, gross violations of
Collective
Bargaining
Agreement shall mean flagrant
and/or malicious refusal to
comply with the economic
provisions of such agreement.
The Commission, its Regional
Offices
and
the
Regional
Directors of the Department of
Labor and Employment shall
not
entertain
disputes,
grievances or matters under the
exclusive
and
original
jurisdiction of the Voluntary
Arbitrator or panel of Voluntary
Arbitrators
and
shall
immediately dispose and refer
the same to the Grievance
Machinery
or
Voluntary
Arbitration provided in the

Bargaining

The petition is without merit.

It is true that R.A. 8042 is a special law

governing overseas Filipino workers. However,
a careful reading of this special law would
readily show that there is no specific provision
thereunder which provides for jurisdiction over
disputes or unresolved grievances regarding
the

interpretation

or

implementation

of

CBA. Section 10 of R.A. 8042, which is cited by

petitioner, simply speaks, in general, of claims
arising

out

of

an

employer-employee

relationship or by virtue of any law or contract

involving

Filipino

workers

for

overseas

deployment including claims for actual, moral,

exemplary and other forms of damages. On
the other hand, Articles 217(c) and 261 of the
Labor Code are very specific in stating that
voluntary arbitrators have jurisdiction over
cases

arising

implementation

from
of

the

interpretation

collective

or

bargaining

agreements. Stated differently, the instant

case involves a situation where the special
statute (R.A. 8042) refers to a subject in
general, which the general statute (Labor
Code) treats in particular.[5] In the present
case, the basic issue raised by Merridy Jane in
her complaint filed with the NLRC is: which
provision of the subject CBA applies insofar as
death benefits due to the heirs of Nelson are
concerned. The Court agrees with the CA in
holding that this issue clearly involves the

interpretation or implementation of the said

when the parties have validly agreed on a

CBA. Thus, the specific or special provisions of

procedure for resolving grievances and to

the Labor Code govern.

submit a dispute to voluntary arbitration then

that procedure should be strictly observed.[7]

In any case, the Court agrees with petitioner's

contention that the CBA is the law or contract

It may not be amiss to point out that the

between the parties. Article 13.1 of the CBA

abovequoted provisions of the CBA are in

entered into by and between respondent GCI

consonance with Rule VII, Section 7 of the

and AMOSUP, the union to which petitioner

present

belongs, provides as follows:

Implementing

Omnibus

Rules

the

and

Migrant

Regulations

Workers

and

Overseas Filipinos Act of 1995, as amended by

The Company and the Union
agree that in case of dispute
or
conflict
in
the
interpretation or application
of any of the provisions of
this
Agreement,
or
enforcement of Company
policies, the same shall be
settled through negotiation,
conciliation
or
voluntary
arbitration. The Company and
the Union further agree that
they
will
use
their
best
endeavor to ensure that any
dispute will be discussed,
resolved and settled amicably
by the parties hereof within
ninety (90) days from the date
of filing of the dispute or
conflict and in case of failure to
settle thereof any of the parties
retain their freedom to take
appropriate action.[6](Emphasis
supplied)

Republic Act No. 10022, which states that [f]or

OFWs with collective bargaining agreements,
the case shall be submitted for voluntary
arbitration in accordance with Articles 261 and
262 of the Labor Code. The Court notes that
the said Omnibus Rules and Regulations were
promulgated by the Department of Labor and
Employment (DOLE) and the Department of
Foreign

Affairs

in the first place, really intended to bring to

conciliation or voluntary arbitration any dispute
or conflict in the interpretation or application of
the provisions of their CBA. It is settled that

and

that

these

departments were mandated to consult with

the

Senate

Committee

on

Labor

and

Employment and the House of Representatives

Committee on Overseas Workers Affairs.

In the same
prevailing

manner, Section 29

Standard

Governing

the

Terms

and

Employment

of the

Conditions
of

Filipino

Seafarers on Board Ocean Going Vessels,

promulgated

From the foregoing, it is clear that the parties,

(DFA)

by

the

Philippine

Overseas

Employment Administration (POEA), provides

as follows:
Section 29. Dispute Settlement
Procedures. In
cases
of
claims and disputes arising
from this employment, the

parties
covered
by
a
collective
bargaining
agreement shall submit the
claim or dispute to the
original
and
exclusive
jurisdiction of the voluntary
arbitrator
or
panel
of
arbitrators. If the parties are
not covered by a collective
bargaining
agreement,
the
parties may at their option
submit the claim or dispute to
either
the
original
and
exclusive jurisdiction of the
National
Labor
Relations
Commission (NLRC), pursuant
to Republic Act (RA) 8042,
otherwise known as the Migrant
Workers and Overseas Filipinos
Act of 1995 or to the original
and exclusive jurisdiction of the
voluntary arbitrator or panel of
arbitrators. If there is no
provision as to the voluntary
arbitrators to be appointed by
the parties, the same shall be
appointed from the accredited
voluntary arbitrators of the
National
Conciliation
and
Mediation
Board
of
the
Department of Labor and
Employment.

It

is

clear

from

the

above

that

the

interpretation of the DOLE, in consultation with

their counterparts in the respective committees
of

the

Senate

and

the

House

of

Representatives, as well as the DFA and the

POEA is that with respect to disputes involving
claims of Filipino seafarers wherein the parties
are

covered

by

collective

bargaining

agreement, the dispute or claim should be

submitted to the jurisdiction of a voluntary
arbitrator or panel of arbitrators. It is only in
the

absence

of

collective

bargaining

agreement that parties may opt to submit the

dispute to either the NLRC or to voluntary
arbitration. It is elementary that rules and
regulations issued by administrative bodies to
interpret the law which they are entrusted to
enforce, have the force of law, and are entitled
to great respect.[8] Such rules and regulations
partake of the nature of a statute and are just
as binding as if they have been written in the
statute itself.[9] In the instant case, the Court
finds no cogent reason to depart from this rule.

The
Philippine
Overseas
Employment
Administration
(POEA) shall exercise original
and exclusive jurisdiction to
hear and decide disciplinary
action on cases, which are
administrative
in
character,
involving or arising out of
violations of recruitment laws,
rules and regulations involving
employers,
principals,
contracting
partners
and
Filipino seafarers. (Emphasis
supplied)

The above interpretation of the DOLE, DFA and

POEA is also in consonance with the policy of
the state to promote voluntary arbitration as a
mode of settling labor disputes.[10]

No

less

than

the

Philippine

Constitution

provides, under the third paragraph, Section 3,

Article XIII, thereof that [t]he State shall
promote the principle of shared responsibility
between

workers

and

employers

and

the

preferential use of voluntary modes in settling

disputes,

including

conciliation,

and

shall

On the basis of the foregoing, the Court finds

enforce their mutual compliance therewith to

no error in the ruling of the CA that the

foster industrial peace.

voluntary arbitrator has jurisdiction over the

instant case.

Consistent with this constitutional provision,

Article 211 of the Labor Code provides the

WHEREFORE, the petition is DENIED.

declared policy of the State [t]o promote and

The Decision and Resolution of the Court of

emphasize

collective

Appeals in CA-G.R. SP No. 76489 dated July

including

11, 2005 and April 18, 2006, respectively,

the

primacy

bargaining

and

voluntary

arbitration,

of

free

negotiations,

mediation

and

areAFFIRMED.

conciliation, as modes of settling labor or

industrial disputes.

SO ORDERED.