Seafarers

1. Jebsens’ Maritime Inc., et al. vs. Florvin G. Rapiz (G.R. No. 218871, 11 January 2017

2. Javier v. Philippine Transmarine Carriers, Inc.. (G.R. No. 2014101 July 2, 2014)

3. Reynaldo Y. Sunit vs. OSM Maritime Services, et al. (G.R. No. 223035, 27 February 2017

4. G.R. No. 159887 April 12, 2006, BERNARDO REMIGIO, Petitioner,

vs. NATIONAL LABOR RELATIONS COMMISSION, C.F. SHARP CREW MGT., INC. & NEW COMMODORE
CRUISE LINE, INC.,

Requirement of employer-employee relationship

5. G.R. No. 193493 June 13, 2013,

JAIME N. GAPAYAO, Petitioner, vs. ROSARIO FULO, SOCIAL SECURITY SYSTEM and SOCIAL SECURITY COMMISSION

Dependent spouse

6. G.R. No. 170195 March 28, 2011, SOCIAL SECURITY COMMISSION and SOCIAL SECURITY
SYSTEM, Petitioner, vs. TERESA G. FAVILA

7. G.R. No. 209741, April 15, 2015, SOCIAL SECURITY COMMISSION, Petitioner, v. EDNA A.
AZOTE, Respondent.

8. Signey vs SSS G.R. No. 173582, 1-28-08

9. SSS vs Jarque Vda. De Bailon G.R. No. 165545, 3-24-06

10. SSS vs Azote, GR 209741 April 15, 2015

Liability of employer

11. G.R. No. 191237 September 24, 2014

ROBERT KUA, CAROLINE N. KUA, and MA. TERESITA N. KUA, Petitioners,

vs. GREGORIO SACUPAYO and MAXIMINIANO PANERIO, Respondents.

12. Garcia vs SSC, G.R. No. 170735, 12-17-07

13. G.R. No. 101630 August 24, 1992 VICTOR DE JESUS, petitioner, vs.COURT OF APPEALS, JUDGE EDDIE R.
ROJAS, MTCC, Br. II, General Santos City, CITY PROSECUTOR FRANKLIN GACAL and SALUSTIANO
SONIDO, respondents.
 January 11, 2017 G.R. No. 218871
JEBSENS* MARITIME, INC., SEA CHEFS LTD.,** and ENRIQUE M. ABOITIZ, Petitioners, vs.
FLORVIN G. RAPIZ, Respondent.

Assailed in this petition for review on certiorari1are the Decision2 dated January 20, 2015 and the Resolution3 dated June
5, 2015 of the Court of Appeals (CA) in CA-G.R. SP No. 130442, which affirmed the Decision4 dated January 25, 2013
and the Resolution5 dated May 22, 2013 of the Office of the Panel of Voluntary Arbitrators (VA) of the National
Conciliation and Mediation Board (NCMB) in AC-305-NCMB-NCR-78-01-08-12 and, accordingly, ordered petitioners
Jebsens Maritime, Inc., Sea Chefs Ltd. (Sea Chefs), and Mr. Enrique Aboitiz (Aboitiz; collectively, petitioners) to jointly
and severally pay respondent Florvin G. Rapiz (respondent) permanent and total disability benefits in the amount of
US$60,000.00 plus attorney's fees in the amount of US$6,000.00 or their peso equivalent at the time of payment.

The Facts

On March 16, 2011, Jebsens, on behalf of its foreign principal, Sea Chefs, engaged the services of respondent to work on
board the M/V Mercury as a buffet cook for a period of nine (9) months with a basic monthly salary of US$501.00. 6 On
March 30, 2011, respondent boarded the said vessel. Sometime in September 2011, respondent experienced excruciating
pain and swelling on his right wrist/forearm while lifting a heavy load of meat. A consultation with the ship doctor
revealed that respondent was suffering from severe "Tendovaginitis DeQuevain"7which caused his medical repatriation
since it was not possible for him to work without using his right forearm. 8

On October 14, 2011,9 respondent was repatriated to the Philippines and underwent consultation, medication, and therapy
with the company-designated physician. After a lengthy treatment, the company-designated physician issued a 7th and
Final Summary Medical Report10 and a Disability Grading 11 both dated January 24, 2012, diagnosing respondent
with "FlexorCarpi Radialis Tendinitis, Right; Sprain, Right thumb; Extensor CarpiUlnaris Tendinitis, Right," and
classifying his condition as a "Grade 11" disability pursuant to the disability grading provided for in the 2010 Philippine
Overseas Employment Association-Standard Employment Contract (POEA-SEC). Dissatisfied, respondent consulted an
independent physician, who classified his condition as a Grade 10 disability. 12Thereafter, respondent requested
petitioners to pay him total and permanent disability benefits, which the latter did not heed, thus, constraining the former
to file a Notice to Arbitrate before the NCMB.1âwphi1 As the parties failed to amicably settle the case, the parties
submitted the same to the VA for adjudication. 13

Respondent argued, inter alia, that while both the company-designated and independent physicians gave him disability
ratings of Grade 11 and 10, respectively, he is nevertheless entitled to permanent and total disability benefits as he was
unable to work as a cook for a period of 120 days from his medical repatriation. 14 On the other hand, petitioners
maintained that respondent is only entitled to Grade 11 disability benefits pursuant to the classification made by the
company-designated physician. 15

The VA Ruling

In a Decision16 dated January 25, 2013, the VA ruled in respondent's favor and, accordingly, ordered petitioners to pay
him permanent and total disability benefits in the amount of US$60,000.00 plus attorney's fees in the amount
ofUS$6,000.00 or their peso equivalent at the time of payment. 17

The VA found that respondent is entitled to permanent and total disability benefits, considering that: (a) he suffered his
disability on his right hand while working at petitioners' vessel; (b) he can no longer pursue his

work on board the vessel as a cook due to the recurrent nature of his disability; and (c) such disability persisted beyond
120 days after his medical repatriation.18 The VA also found respondent to be entitled to attorney's fees as he was forced
to litigate to protect his rights and interest. 19

Petitioners filed a motion for reconsideration,20 but the same was denied in a Resolution 21 dated May 22, 2013.
Aggrieved, they appealed to the CA via a petition for review. 22

The CA Ruling

In a Decision23 dated January 20, 2015, the CA affirmed the VA ruling. Similar to the VA's findings, the CA held
that: (a) respondent's disability should be considered permanent and total because he was unable to continue his work as a
seaman for more than 120 days from his medical repatriation on October 11, 2011; and (b) he is entitled to attorney's fees
as he was forced to litigate and incur expenses to protect his rights and interests.24

Petitioners moved for reconsideration, 25 which was, however, denied in a Resolution26 dated June 5, 2015; hence, this
petition.

The Issue Before the Court

The essential issue for the Court's resolution is whether or not the CA correctly held that respondent is entitled to
permanent and total disability benefits.
The Court's Ruling

The petition is meritorious.

In this case, the VA and the CA' s award of permanent and total disability benefits in respondent's favor was heavily
anchored on his failure to obtain any gainful employment for more than 120 days after his medical repatriation. However,
in Ace Navigation Company v. Garcia,27the Court explained that the company-designated physician is given an additional
120 days, or a total of 240 days from repatriation, to give the seafarer further treatment and, thereafter, make a declaration
as to the nature of the latter's disability, viz. :

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 temporarytotal 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 [(SEC)] 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. 28 (Emphases and underscoring in the original)

In Elburg Shipmanagement Phils., Inc. v. Quiogue, Jr.,29the Court further clarified that for the company-designated
physician to avail of the extended 240-day period, he must first perform some significant act to justify an
extension (e.g., that the illness still requires medical attendance beyond the initial 120 days but not to exceed 240 days);
otherwise, the seafarer's disability shall be conclusively presumed to be permanent and total.30 Accordingly, the Court laid
down the following guidelines that shall govern seafarers' claims for permanent and total disability benefits:

1. The company-designated physician must issue a final medical assessment on the seafarer's disability grading within a
period of 120 days from the time the seafarer reported to him;

2. If the company-designated physician fails to give his assessment within the period of 120 days, without any justifiable
reason, then the seafarer's disability becomes permanent and total;

3. If the company-designated physician fails to give his assessment within the period of 120 days with a sufficient
justification (e.g. seafarer required further medical treatment or seafarer was uncooperative), then the period of diagnosis
and treatment shall be extended to 240 days. The employer has the burden to prove that the company-designated
physician has sufficient justification to extend the period; and

4. If the company-designated physician still fails to give his assessment within the extended period of 240 days, then the
seafarer's disability becomes permanent and total, regardless of any justification. 31

Here, records reveal that on October 14, 2011, respondent was medically repatriated for what was initially diagnosed by
the ship doctor as "Tendovaginitis DeQuevain." As early as January 24, 2012, or just 102days from repatriation, the
company-designated physician had already given his final assessment on respondent when he diagnosed the latter
with "Flexor Carpi Radialis Tendinitis, Right; Sprain, Right thumb; ExtensorCarpi Ulnaris Tendinitis, Right" and gave a
final disability rating of "Grade 11" pursuant to the disability grading provided in the 2010 POEA-SEC.32 In view of the
final disability rating made by the company-designated physician classifying respondent's disability as merely permanent
and partial33- which was not refuted by the independent physician except thatrespondent's condition was classified as a
Grade 10 disability - it is plainerror to award permanent and total disability benefits to respondent.

Moreover, it bears noting that as per respondent's contract34 with Jebsens, his employment is covered by the 2010 POEA-
SEC. It is well-settled that the POEA-SEC is the law between the parties and, as such, its provisions bind both
ofthem.35 Under Section 20 (A) (6) of the 2010 POEA-SEC, the determination of the proper disability benefits to be given
to a seafarer shall depend on the grading system provided by Section 32 of the said contract, regardless of the actual
number of days that the seafarer underwent treatment:

SECTION 20. COMPENSATION AND BENEFITS

A. COMPENSATION AND BENEFITS FOR INJURY OR ILLNESS

The liabilities of the employer when the seafarer suffers work-related injury or illness during the term of his contract are
as follows:

xxxx

6. 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 32 of this Contract. Computation of his
benefits arising from an illness or disease shall be governed by the rates and the rules of compensation applicable at the
time the illness or disease was contracted.

The disability shall be based solely on the disability gradings provided under Section 32 of this Contract, and shall
not be measured or determined by the number of days a seafarer is under treatment or the number of days in
which sickness allowance is paid. (Emphasis and underscoring supplied)

In this case, respondent's disability was already determined as only permanent and partial, in view of its classification as
Grade 11 by the company-designated physician and Grade 10 by the independent physician. As such, the award of
US$60,000.00 representing Grade 1 (i.e., permanent and total disability) benefits in favor of respondent clearly has no
basis and, consequently, must be struck down.

Be that as it may, it remains undisputed that respondent suffered an injury while on board the M/V Mercury, a work-
related disability that is clearly compensable as it is a permanent and partial disability, as classified by both the company-
designated and independent physicians. As already adverted to, there is a slight discrepancy with the classifications of the
aforesaid physicians, as the former rated respondent's disability as Grade 11, while the latter's rating was Grade 10. In this
regard, the Court rules that the findings of the company-designated physician should prevail, considering that he
examined, diagnosed, and treated respondent from his repatriation on October 14, 2011 until he was assessed with a
Grade 11 disability rating on January 24, 2012; whereas the independent physician only examined him sparingly on
March 13, 2012. In Formerly INC ShipmanagementIncorporated (now INC Navigation Co. Philippines, Inc.) v.
Rosales,36the Court held that under these circumstances, the assessment of the companydesignated physician is more
credible for having been arrived at after months of medical attendance and diagnosis, compared with the assessment of a
private physician done in one day on the basis of an examination or existing medical records. 37 In view of the foregoing,
respondent is therefore entitled to permanent and partial disability benefits corresponding to a Grade 11 rating in the
amount of US$7,465.00 or its peso equivalent at the time of payment, 38 which shall then earn legal interest at the rate of
six percent (6%) per annum from the finality of this Decision until fully paid. 39

Finally, the Court finds that the award of attorney's fees lacks legal basis and, perforce, should be deleted. 40

WHEREFORE, the petition is GRANTED. The Decision dated January 20, 2015 and the Resolution dated June 5, 2015
of the Court of Appeals in CA-G.R. SP No. 130442 are hereby MODIFIED, ordering petitioners Jebsens Maritime, Inc.,
Sea Chefs Ltd., and Enrique M. Aboitiz to jointly and severally pay respondent Florvin G. Rapiz permanent and partial
disability benefits corresponding to a Grade 11 disability under the 2010 POEA-SEC in the amount of US$7,465.00 or its
peso equivalent at the time of payment, with legal interest at the rate of six percent (6%) per annum from the finality of
this Decision until fully paid.

SO ORDERED.
 G.R. No. 204101 July 2, 2014
THE LATE ALBERTO B. JAVIER, as substituted by his surviving wife, MA. THERESA M. JAVIER, and children,
KLADINE M. JAVIER, CHRISTIE M. JAVIER, JALYN M. JAVIER, CANDY GRACE M. JAVIER and GLIZELDA
M. JAVIER, Petitioners, vs.
PHILIPPINE TRANSMARINE CARRIERS, INC. and/or NORTHERN MARINE MANAGEMENT,
LTD.,Respondents.

In this petition for review on certiorari,1 we resolve the challenge to the May 31, 2012 decision2 and the October 23, 2012
resolution3 of the Court of Appeals (CA) in CA-G.R. SP No. 96533. This CA decision affirmed the March 10, 2006
resolution4 of the National Labor Relations Commission (NLRC) in NLRC NCR Case No. (M) 04-07-01946-00 (NLRC
NCR CA No. 045549-05) which, in tum, affirmed with modification the May 31, 2005 decision5 of the labor arbiter (LA).
The LA granted the complaint filed by Alberto Javier for disability benefits, illness allowance, reimbursement of medical
expenses, damages and attorney's fees.

The Factual Antecedents

On March 3, 2003, Philippine Transmarine Carriers, Inc. (PTCI), for its principal Northern Marine Management, Ltd.
(collectively, the respondents), hired Alberto as "pumpman," on board the vessel "MT Neptune Glory." This was
Alberto’s 20th contract with the respondents.6 Pursuant to the agreement, Alberto received a basic monthly salary of
US$656.00 for a contract period of nine months. Prior to his hiring on March 3, 2003, Alberto underwent the required
Pre-employment Medical Examination (PEME) and was declared "fit for work" by PTCI’s designated physician. 7

On November 10, 2003, Alberto suddenly felt severe headache accompanied by dizziness, vomiting and physical
weakness while he was on board "MT Neptune Glory."8

On November 15, 2003, Alberto was confined at the University of Texas Medical Branch Hospital in Galveston, Texas.
He underwent a series of medical examination and was diagnosed to be suffering from hypertension. 9 On the doctors’
advice, Alberto was repatriated to the Philippines on November 23, 2003 for further medical treatment.

Upon arrival in Manila, Alberto was referred to Dr. Justo Cammayo at the Manila Doctors Hospital. Alberto underwent a
series of medical treatment and examination that included an electrocardiogram, a computed tomography scan of the
head, a 2-D Echocardiogram, a Chest X-ray, a Cervical Spine Aplo Series, and a Coronary Angiogram.10 On March 30,
2004, Alberto underwent coronary artery bypass surgery due to a "three vessel Coronary Artery Disease." 11 On April 14,
2004, Alberto was discharged from the Manila Doctors Hospital. The doctors, however, failed to either declare him as "fit
to return to work" or to assess his disability grading. Thus, Alberto sought the opinion of Dr. Efren Vicaldo, a private
doctor-cardiologist, who diagnosed Alberto’s disability as "Hypertensive cardiovascular disease; Coronary artery disease;
2 vessel involvement; S/P Coronary artery bypass graft surgery; S/P Cerebrovascular accident." Dr. Vicaldo assessed
Alberto’s disability as "impediment grade 1" and declared the latter as "unfit to resume work as seaman in any
capacity[,]" and"not expected to land a gainful employment given his medical background." 12

The LA’s Ruling

In view of Dr. Vicaldo’s assessment, Alberto claimed from the respondents’ disability benefits and sickness allowance
pursuant to the Philippine Overseas Employment Administration Standard Employment Contract (POEA-SEC). The
respondents denied Alberto’s claim. Hence, Alberto filed before the LA a complaint for disability benefits, illness
allowance, reimbursement of medicalexpenses, damages and attorney’s fees.

In a decision dated May 31, 2005,13 the LA granted Alberto’s claims. The LA ordered the respondents to pay Alberto the
total amount of US$68,886.40 or its Philippine Peso equivalent at the prevailing rate of exchange; it consisted of
disability benefits (in the amount of US$60,000.00), sickness allowance (in the amount of US$2,624.00 or Alberto’s basic
monthly wage of US$656.00 for four months), and attorney’s fees equivalent to 10% of the monetary award.

According to the LA, Alberto contracted his illness during the term of his contract with the respondents and because of
his constant exposure to extraneous work. Hence, he is entitled to disability benefits. Also, the LA noted that the
respondents’ designated physician failed to assess Alberto’s impediment grading within the POEA-SEC mandated 120-
day period. Thus, the LA declared Alberto as likewise entitled to sickness allowance equivalent to 120 days, absent proof
that the respondents had already paid Alberto this benefit. The LA, however, denied Alberto’s claims for reimbursement
of medical expenses and damages for lack of substantial basis.

The NLRC’s Ruling

In its March 10, 2006 resolution,14 the NLRC affirmed the LA’s decision with modification.

The NLRC held that the nature of Alberto’s job and his duties as "pumpman" on board the vessel "MT Neptune Glory"
proximately caused or, at the least, contributed to the development of his hypertension. In addition, the NLRC pointed out
that Alberto was already serving his 20th consecutive contract with the respondents at the time he fell ill. At the start of
each contract, he underwent the required PEME for which he had been declared "fit for sea service" by the company-
designated physician. Under these circumstances, Alberto’s illness could not have been concealed and pre-existing as to
preclude him from claiming disability benefits.
The NLRC, however, found that Alberto made an April 12, 2004 Certification 15 acknowledging receipt in full of his
sickness allowance equivalent to 120 days (in the amountof ₱144,318.03) and payment in full of his medical treatment (in
the amount of ₱1,928,841.27). Since these expenses, in the total amount of ₱2,073,159.30, have already been paid, the
NLRC ordered its deduction from the peso equivalent of the total monetary award of US$68,886.40.

Meanwhile, Alberto died on November 1, 2005.16 He was substituted by his heirs, petitioners Ma. Theresa, Kladine,
Christie, Jalyn, Candy Grace and Glizelda, all surnamed Javier.

On April 17, 2006, the petitioners sought reconsideration17 of the NLRC’s resolution that ordered the deduction of
Alberto’s sickness allowance and medical expenses from the total monetary award, but the NLRC denied the petitioners’
motion.18 The petitioners sought recourse with the CA via a petition for certiorari.19

The CA’s Ruling

In its May 31, 2012 decision,20 the CA affirmed the NLRC’s resolution. The CA brushed aside the petitioners’ claim for
reimbursement of medical expenses incurred by Alberto because the petitioners failed to appeal the portion of the LA’s
decision that denied Alberto’s claim on these. It also denied Alberto’s claim for sickness allowance because of Alberto’s
April 12, 2004 certification.21

The CA rejected the petitioners’ claim for death benefits. The CA pointed out that death benefits are granted to the heirs
of the seafarer only when the seafarer dies during the term of the contract and for causes that are work-related. In this
case, Alberto died after his employment contract with the respondents had already been terminated.

The Petition

The petitioners argue that, as Alberto’s heirs, they are entitled to reimbursement of the expenses that Alberto incurred for
his medical treatment. They argue that contrary to the NLRC’s and the CA’s rulings, medical expenses and sickness
allowance are separate and distinct from one another and from disability benefits. Under Section 20-B (2), paragraph 2 of
the POEA-SEC, employers must provide the seafarer, at their cost, with the needed medical attention for the work-related
injury or illness until the seafarer is declared fit or the degree of disability is established by the company-designated
physician.This is in addition to the sickness allowance, based on the seafarer’s basic wage, that Section 20-B (3) of the
POEA-SEC equally requires the employers to provide. Following these provisions, the amount of ₱1,928,841.27 that they
spent for Alberto’s medical treatment should, therefore, not be deducted from the disability benefits to which Alberto was
equally entitled. The petitioners, thus, argue that the CA misconstrued these POEA-SEC provisions(on medical expenses,
sickness allowance and disability benefits) when it affirmed the NLRC’s decision which ordered the deduction of
Alberto’s medical expenses from the total monetary award.

Lastly, the petitioners argue that the respondents failed to prove that they (the respondents) paid Alberto the amount of
₱144,318.03 representing his sickness allowance. They point out that: (1) the respondents belatedly presented the April
12, 2004 certification, the execution of which is even highly questionable; and (2) the respondents failed to prove via
vouchers and/or receipts their payment of the sickness allowance.

The Case for the Respondents

The respondents maintain22 that the CA did not err in affirming the NLRC’s resolution because the NLRC committed no
grave abuse of discretion. Relying on the CA’s ruling, they point out that: (1) the portion of the LA’s decision that denied
Alberto’s claim for reimbursement of medical expenses had already become final and executory, and therefore
unassailable, as Alberto no longer appealed from this decision; and (2) they had already paid the full amount of Alberto’s
sickness allowance.

The Court’s Ruling

We find merit in the petition.

Preliminary considerations:

jurisdictional limitations of the Court’s Rule 45 review of the CA’s Rule 65 decision in labor cases

In a Rule 45 petition for review on certiorari, what we review are the legal errors that the CA may havecommitted in the
assailed decision, in contrast with the review for jurisdictional errors that we undertake in an original certiorari action. In
reviewing the legal correctness of the CA decision in a labor case taken under Rule 65 of the Rules of Court, we examine
the CA decision in the context that it determined the presence or the absence of grave abuse of discretion in the NLRC
decision before it and not on the basis of whether the NLRC decision, on the merits of the case, was correct.

Otherwise stated, we proceed from the premise that the CA undertook a Rule 65 review, not a review on appeal, of the
NLRC decision challenged before it. Within this narrow scope ofour Rule 45 review, the question that we ask is: Did the
CA correctly determine whether the NLRC committed grave abuse of discretion in ruling on the case?23
In addition, the Court’s jurisdiction in a Rule 45 petition for review on certiorari is limited to resolving only questions of
law.

The present petition essentially raises the question – whether Alberto’s medical expenses and sickness allowance should
be deducted from his disability benefits. This is a question of law that falls well within the Court’s power in a Rule 45
petition. Underlying this question of deductibility is another legal question of whether these benefits – medical expenses,
sickness allowance and disability benefits – are separate and distinct from one another.

A complete determination of thispetition’s legal issues, however, requires resolution of the intimately related but largely
factual issue of whether the respondents had already paid Alberto his medical expenses and sickness allowance. Since this
is a question of fact, it is generally not within the scope of our Rule 45 jurisdiction except to the extent necessary to
determine whether the CA correctly affirmed, for lack of grave abuse of discretion, the NLRC decision that ordered the
deduction from the LA’s total monetary award the sickness allowance and the expenses the respondents incurred for
Alberto’s medical treatment.

In the present case, we see no reason to disturb the NLRC and CA’s uniform factual finding on the issue ofpayment of
sickness allowance and medical expenses. This factual conclusion, however, totally does not support the NLRC’s legal
conclusion, ordering the deduction of the medical expenses from the total monetary award. As our subsequent discussion
will show, the NLRC’s action is nothing short of grave abuse of discretion.

The seafarer is entitled to medical treatment at cost to the employer apart from disability benefits and sickness allowance

The employment of seafarers and its incidents are governed by the contracts they sign every time they are hired or
rehired. These contracts have the force of law between the parties as long as their stipulations are not contrary to law,
morals, public order or public policy.24 Every seaman and the vessel owner (directly or represented by a local manning
agency) are required to execute the POEA-SEC as a condition sine qua nonto the seafarer’s deployment for overseas
work.25 While the seafarers and their employers are governed by their mutualagreements, the POEA rules and regulations
require that the POEA-SEC,which contains the standard terms and conditions of the seafarers’ employment in foreign
ocean-going vessels, be integrated in every seafarer’s contract.26

In the present case, Section 20-B of the 2000 POEA-SEC27 (the governing POEA-SEC at the time the respondents
employed Alberto in 2003) is the applicable provision. Under this section, the employers assume several kinds of
liabilities to the seafarer for any work-related illness or injury that the seafarer may have suffered during the term of the
contract. It reads in full:

SECTION 20. COMPENSATION AND BENEFITS

xxxx

B. COMPENSATION AND BENEFITS FOR INJURY OR ILLNESS

The liabilitiesof the employer when the seafarer suffers work-related injury or illness during the term of his contract areas
follows:

1. The employer shall continue to pay the seafarer his wages during the time he is on board the vessel;

2. If the injury or illness requires medical and/or dental treatment in a foreign port, the employer shall be liable
for the full cost of such medical, serious dental, surgical and hospital treatment as well as board and lodging until
the seafarer is declared fit to work or to be repatriated. However, if after repatriation, the seafarer still requires
medical attention arising from said injury orillness, he shall be so provided at cost to the employer until such time
heis declared fit or the degree of his disability has been established by the company-designated physician.

3. Upon sign-off from the vessel for medical treatment, the seafarer is entitled to sickness allowance equivalent to
his basic wage untilhe 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.

For this purpose, the seafarer shall submit himself to a post-employment medical examination by a company-
designated physician within three working days upon his return except when he is physically incapacitated to do
so, in which case, a written notice to the agency within the same period is deemed as compliance. Failure of the
seafarer to comply with the mandatory reporting requirement shall result in his forfeiture of the right to claim the
above benefits.

If a doctor appointed by the seafarer disagrees with the assessment, a third doctor may be agreed jointly
betweenthe employer and the seafarer. The third doctor's decision shall be final and binding on both parties.

4. Those illnesses not listed in Section 32 of this Contract are disputably presumed as work related.

5. Upon sign-off of the seafarerfrom the vessel for medical treatment, the employer shall bear the full cost of
repatriation in the event the seafarer is declared (1) fit for repatriation; or (2) fit to work but the employer is
 unable to find employment for the seafarer on board his former vessel or another vessel of the employer despite
earnest efforts.

6. In case of permanent total or partial disability of the seafarer caused by either injury or illness the seafarer shall
be compensatedin accordance with the schedule of benefitsenumerated in Section 32 of his Contract.
Computation of his benefits arising from an illness or disease shall be governed by the rates and the rules of
compensation applicable at the time the illness or disease was contracted. [emphases and underscore ours]

In reading these provisions, the Court observes the evident intent of the POEA-SEC to treat these liabilities of the
employer separately and distinctly from one another by treating the different items of liability under separate paragraphs.
These individual paragraphs, in turn, show the bases of each liability that are unique from the others. This formulation is
in keeping with the POEA’s mandate under Executive Order 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."

Accordingly, Section 20-B (2), paragraph 2, of the POEA-SEC imposes on the employer the liability to provide, at its
cost, for the medical treatment of the repatriated seafarer for the illness or injury that he suffered on boardthe vessel until
the seafarer is declared fit to work or the degree of his disability is finally determined by the company-designated
physician. This liability for medicalexpenses is conditioned upon the seafarer’s compliance with his own obligation to
report to the companydesignated physician within three (3) daysfrom his arrival in the country for diagnosis and
treatment.28 The medical treatment is aimed at the speedy recovery of the seafarer and the restoration of his previous
healthy working condition.

Since the seafarer is repatriated to the country to undergo treatment, his inability to perform his sea duties would normally
result in depriving him of compensation income. To address this contingency, Section 20-B (3), paragraph 1, of the
POEA-SEC imposes on the employer the obligation to provide the seafarer with sickness allowance that is equivalent to
his basic wageuntil the seafarer is declared fit towork or the degree of his permanent disability is determined by the
company-designated physician. The period for the declaration should be made within the period of 120 days or 240 days,
as the case may be.

Once a finding of permanent (total or partial) disability is made either within the 120-day period or the 240-day
period,29 Section 20-B (6)of the POEA-SEC requires the employer to pay the seafarer disability benefits for his
permanent total or partial disabilitycaused by the work-related illness or injury. In practical terms, a finding of permanent
disability means a permanent reduction of the earning power ofa seafarer to perform future sea or on board
duties;30 permanent disability benefitslook to the future as a means to alleviate the seafarer’s financial condition based on
the level of injury or illness he incurred or contracted.

The separate treatment of, and the distinct considerations in, these three kinds of liabilities under the POEA-SEC can only
mean that the POEA-SEC intended to make the employer liable for each of these three kinds of liabilities. In other words,
employers must: (1) pay the seafarer sickness allowance equivalent to his basic wage in addition to the medical treatment
that they must provide the seafarer with at their cost; and(2) compensate the seafarer for his permanent total or partial
disability as finally determined by the company-designated physician.31 Significantly, too, while Section 20 of the POEA-
SEC did not expressly state that the employer’s liabilities are cumulative in nature – so as to hold the employer liable for
the sickness allowance, medical expenses and disability benefits – it does not also state that the compensation and
benefits are alternative or that the grant of one bars the grant of the others.

Under this setup, the Court must beguided by the principle that as a labor contract, the POEA-SEC is imbued with public
interest. Accordingly, its provisions must be construed fairly, reasonably and liberally in favor of the seafarer in the
pursuit of his employment on board ocean-going vessels. After all, the constitutional policy, which we here uphold and
emphasize in construing as we do these POEA-SEC provisions, accords and guarantees full protection to labor, both local
and overseas.32

Notably, POEA Memorandum Circular No. 10, Series of 2010 (or the Amended Standard Terms and Conditions
Governing the Overseas Employment of Filipino Seafarers On-Board Ocean-Going Ships)33 makes more explicit the
POEA-SEC’s intent we earlier discussed. As matters stand, the pertinent POEA-SEC provisions now expressly and
clearly state that, in addition to the obligation of the employers to provide the seafarer with the needed medical attention
at their cost, they shall likewise provide the latter sickness allowance equivalent to his basic wage. 34 It also expressly
states that the disability benefits to which the seafarer may be entitled shall be based solely on the listed disabilitygradings
without regard to the duration of the seafarer’s medical treatment or the period with which he was given sickness
allowance.35 Without doubt, medical expenses, sickness allowance and disability benefits are separate and distinctfrom
one another. Employers are liable to provide these compensation and benefits, subject to the satisfaction of the requisite
degree of proof.

Since the sickness allowance was already paid, it should be deleted from the monetary award

In the May 31, 2005 decision, the LA awarded Alberto the total monetary award of US$68,886.40, consisting of
US$60,000.00 as permanent and total disability benefits, US$2,624.00 as sickness allowance for 120 days and
US$6,262.40 as attorney’s fees. The LA denied Alberto’s prayer for reimbursement of medical expensesand for damages.
On the other hand, the NLRC affirmedthis LA’s ruling, but ordered the deduction, from the total monetary award, of the
medical expenses and sickness allowance. In ordering the deduction, the NLRC pointed to the certification dated April
12, 2004 that Alberto executed, and which he did not dispute, acknowledging receipt in full of his sickness allowance and
of the respondents’ full payment of his medical expenses.

The CA upheld the NLRC’s findings on the respondents’ full payment of these benefits; it also upheld the deduction of
these benefits from the peso equivalent of the total monetary award.

The Court finds no compelling reason to overturn the NLRC and the CA’s factual finding that the respondents have fully
paid Alberto’s sickness allowance. In this regard, we agree with the CA that the NLRC committed no grave abuse of
discretion in ordering the deletion of the sickness allowance benefit in the amount of ₱144,318.03 from the peso
equivalent of the amount awarded to Alberto. The LA’s grant of sickness allowance despite its full payment is clearly
contrary to the provisions of the POEASEC; its ruling inequitably resulted ina double payment to Alberto at the
respondents’ expense.

Alberto’s medical expenses that were paid by the respondents should not be deducted from the total monetary award

Similarly, we are bound by the NLRC and the CA’s factual finding that the respondents fully paid Alberto’s medical
expenses.1âwphi1 However, unlike the deletion of sickness allowance benefits, we find that the CA legally erred in not
finding that the NLRC committed grave abuse of discretion in ordering the deduction of the medical expenses paid by the
respondents from the total monetary award. The NLRC’s action is whimsical and arbitrary for clear lack of factual, legal
and jurisprudential basis.36

As earlier stated, the LA denied for lack of basis Alberto’s prayer for reimbursement of medical expenses. The total
monetary award of US$68,886.40 consisted only of the disability benefits, sickness allowance and attorney’s fees. In
view of the NLRC’s ruling that ordered the deletion of the sickness allowance from the total monetary award, Alberto
was effectively left with only the disability benefits and the 10% attorney’s fees as his monetary award.

In this regard, the NLRC had no reason, both in fact and in law, to order the deduction from the total monetary award
(US$68,886.40) the amount of ₱1,928,841.27 incurred (and which the respondents had already paid in full) for Alberto’s
medical treatment.

As a matter of fact, the LA did not award Alberto any amount as reimbursement for his medical expenses which the
NLRC could arguably consider as double reimbursement or payment resulting in "unjust enrichment" on Alberto’s part.
As a matter of law, the benefit of medical treatment at the employer’s expense is, as earlier discussed, separate and
distinct from the disability benefits and sickness allowance to which the seafarer is additionally entitled.

Accordingly, any amount that the respondents may have expended for Alberto’s medical treatment should not be
deducted from the monetary award that consisted only of the disabilitybenefits and attorney’s fees. By ordering the
deduction from the total monetary award the amount of ₱1,928,841.27 as Alberto’s medical expenses, the NLRC treated
the employer’s liability to pay medical expenses as part ofthe permanent disability benefits to which Alberto is entitled.
The NLRC reached its conclusion even if the POEA-SEC treats these two kinds of liabilities distinctly and even if the
bases for their payment are different. This clearly smacks of grave abuse of discretion amounting to lack and excess of
jurisdiction. Grave abuse of discretion was patent when the NLRC acted contrary to the facts - that the LA did not award
Alberto medical expenses -and the provisions of the law – in this case, the PO EA-SEC.

Accordingly, the CA legally erred in affirming the NLRC resolution.

WHEREFORE, in light of these considerations, we hereby GRANT in PART the petition. We AFFIRM the decision
dated May 31, 2012 and the resolution dated October 23, 2012 of the Court of Appeals in CA-G.R. SP No. 96533 in so
far as they affirmed: (1) the award of permanent total disability benefits and 10% attorney's fees in favor of Alberto B.
Javier; and (2) the deduction of the sickness allowance in the amount of US$2,624.00 from the total monetary award
ofUS$68,886.40. We REVERSE and SET ASIDE the portion of the resolution dated March 10, 2006 of the National
Labor Relations Commission that ordered the deduction from the total monetary award of US$68,886.40 the amount
oLPl,928,841.27 as medical expenses. SO ORDERED.
 February 27, 2017 G.R. No. 223035
REYNALDO Y. SUNIT, Petitioner vs.
OSM MARITIME SERVICES, INC., DOF OSM MARITIME SERVICES A/S, and CAPT. ADONIS B. DONATO, Respondents

Nature of the Case

Before this Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court assailing the June 10, 2015
Decision1 and February 10, 2016 Resolution2 of the Court of Appeals (CA) in CA-G.R. SP No. 138268, which reversed
and set aside the August 29, 2014 Decision of the National Labor Relations Commission (NLRC).

Factual Antecedents

On June 18, 2012, respondent OSM Maritime Services, Inc. (OSM Maritime), the local agent of respondent DOF OSM
Maritime Services A/S, hired petitioner Reynaldo Sunit (Sunit) to work onboard the vessel Skandi Texel as Able Body
Seaman for three (3) months with a monthly salary of $689. Deemed incorporated in the employment contract is the 2010
Philippine Overseas Employment Agency Standard Employment Contract (POEA-SEC) and the NIS AMOSUP CBA.

During his employment, petitioner fell from the vessel's tank approximately 4.5 meters high and suffered a broken right
femur. He was immediately brought to a hospital in the Netherlands for treatment and was eventually repatriated due to
medical reason. Upon his arrival in Manila on October 6, 2012, he immediately underwent a post-employment medical
examination and treatment for his injury at the Metropolitan Medical Center, wherein the company-designated physician
diagnosed him to be suffering from a "Fractured, Right Femur; S/PIntramedullary Nailing, Right Femur."

On January 13, 2013, after 92 days of treatment, the company-designated doctor issued a Medical Report3 giving
petitioner an interim disability Grade of 10.4 Said medical report reads:

MEDICAL REPORT:

Patient's range of motion of the right hip has improved although patient still ambulates with a pair of axillary crutches.

Pain is at 1-2110 at the right hip.

Based on his present condition, his closest interim assessment is Grade 10 - irregular union of fracture in a thigh.

Dissatisfied with the company doctor's January 13, 2013 medical report, petitioner sought the opinion of another doctor,
Dr. Venancio P. Garduce (Dr. Garduce ),5 who recommended a disability grade of three (3) in his Medical Report dated
February 6, 2013.

After further medical treatment, petitioner was assessed with a final disability grade of 10 by the company physician of
respondent OSM Maritime, Dr. William Chuasuan, Jr. (Dr. Chuasuan), on February 15, 2013.6

Respondents offered petitioner disability benefit of $30,225 in accordance with the disability Grade 10 that the company-
designated doctor issued. Petitioner, however, refused the offer and filed a claim for a disability benefit of
USD$150,000.00 based on the POEA-SEC and NIS AMOSUP CBA.7

During the pendency of the case with the Labor Arbiter (LA), the parties agreed to consult Dr. Lyndon L. Bathan (Dr.
Bathan) for a third opinion. Dr. Bathan issued a Medical Certificate recommending a Grade 9 disability pursuant to the
Schedule of Disabilities and Impediments under the POEA-SEC. In addition, Dr. Bathan stated therein that petitioner is
"not yet fit to work." Dr. Bathan's certificate states:

This is to certify that SUNIT, REYNALDO consulted the undersigned on 17 Feb. 2014 at Faculty Medical Arts Building,
PGH Compound, Taft Ave., Manila.

He was diagnosed to have:

FEMORAL FRACTURE S/PINTRAMEDULLARY NAILING (2012); S/PBONE GRAFTING

Patient is Gr. 9 according to POEA Schedule of disability. Patient is not yet fit to work and should undergo
rehabilitation. 8

Ruling of the LA

Pursuant to the Grade 9 disability issued by Dr. Bathan, the LA awarded petitioner disability benefit in the amount of
$13,060.1âwphi1 The dispositive portion of its Decision9 dated April 28, 2014 reads:

WHEREFORE, respondents OSM Maritime Services, Inc., DOF OSM Maritime Services A/S, [are] hereby ordered to pay in
solidum complaint's disability benefit in the amount of US$13,060.00 or its Philippine Peso equivalent at the time of payment.
SO ORDERED.
Aggrieved, petitioner appealed to the NLRC.

Ruling of the NLRC

On August 29, 2014, the NLRC rendered a Decision modifying the LA's findings and awarded petitioner permanent and
total disability benefit in the amount of $150,000. The NLRC reasoned that petitioner is considered as totally and
permanently disabled since Dr. Bathan, the third doctor, issued the Grade 9 disability recommendation after the lapse of
the 240-day period required for the determination of a seafarer's fitness to work or degree of disability under the POEA-
SEC. The NLRC disposed of the case in this wise:

WHEREFORE, premises considered, the complainant's appeal is hereby GRANTED.

Accordingly, the Decision dated 28 April 2014 of Labor Arbiter Michelle P. Pagtalunan is hereby REVERSED and SET
ASIDE ordering respondents, jointly and severally, to pay complainant Reynaldo Y Sunit, the amount of ONE
HUNDRED FIFTY THOUSAND US DOLLARS ($150,000.00) representing permanent total disability benefits plus ten
percent (10%) thereof as attorney's fees.

All other claims are DISMISSED for lack of merit. SO ORDERED.

Respondents moved for reconsideration of the decision, but the NLRC denied the same in its Resolution dated October
22, 2014.

Respondents questioned the NLRC's decision in a petition for certiorari before the CA.

Ruling of the CA

The CA granted the respondents' petition and reinstated the LA's ruling in its Decision dated June 10, 2015, the
dispositive portion of which reads:

WHEREFORE, the instant Petition for Certiorari is GRANTED. The August 29, 2014 Decision and the October 22,
2014 Resolution of public respondent National Labor Relations Commission are REVERSED and SET ASIDE. The April
28, 2014 Decision of the Labor Arbiter is REINSTATED. SO ORDERED.

In reversing the NLRC, the appellate court held that the 240-day period for assessing the degree of disability only applies
to the company-designated doctor, and not to the third doctor. It is only upon the company-designated doctor's failure to
render a final assessment of petitioner's condition within 240 days from repatriation that he will be considered
permanently and totally disabled and, hence, entitled to maximum disability benefit. In petitioner's case, the company-
designated doctor was able to make a determination of his disability within the 240-day period; hence, he is not
considered as totally and permanently disabled despite the opinion of the third doctor having been rendered after the lapse
of 240 days from repatriation.

The CA further added that the extent of disability, whether total or partial, is determined, not by the number of days that
petitioner could not work, but by the disability grading the doctor recognizes based on his resulting incapacity to work
and earn his wages. Thus, the mere fact that petitioner was incapacitated to work for a period exceeding 120 days does
not automatically entitle him to total and permanent disability benefits. Concomitantly, the CA stressed that the
recommendation of Dr. Bathan of Grade 9 disability and his determination that the latter's disability is partial and not total
are binding on the parties.

Petitioner moved for the reconsideration of the adverted decision, but the CA denied the same in its Resolution dated
February 10, 2016.

Hence, this petition.

Issues

Petitioner anchors his plea for the reversal of the assailed Decision on the following issues:

I. WHETHER OR NOT THE CA COMMITTED SERIOUS ERROR OF LAW IN AWARDING A PARTIAL DISABILITY
OF GRADE 9 TO PETITIONER; AND

II. WHETHER OR NOT THE CA ERRED IN DISMISSING PETITIONERS' CLAIMS FOR DAMAGES AND
ATTORNEY'S FEES DESPITE RESPONDENTS' COMMISSION OF BAD FAITH IN THE PERFORMANCE OF THEIR
OBLIGATIONS.

The primordial question to be resolved is whether petitioner is entitled to permanent and total disability benefits.

The parties do not dispute that petitioner's injury was work-related and that he is entitled to disability compensation. The
disagreement, however, lies on the degree of disability and amount of benefits that petitioner is entitled.
Petitioner bases his entitlement to total and permanent disability benefits on the failure of the company-designated doctor
to arrive at a definitive assessment of his disability. Petitioner particularly assails Dr. Chuasuan' s assessment of Grade 10
disability since he still required further medical rehabilitation, as affirmed by Dr. Bathan, the third doctor.

In addition, petitioner points at the inconsistency between the Grade 9 disability issued by Dr. Bathan in his certification
and the latter's remark therein that petitioner was still "not fit to work and should undergo further rehabilitation." As noted
by the NLRC, petitioner's condition prevented him from acquiring gainful employment for 499 days reckoned from the
time he arrived on October 6, 2012 until Dr. Bathan examined him on February 17, 2014 . 10 Petitioner alleges that he
could no longer resume sea service without risk to himself and to others due to the limited physical exertion brought
about by his injury, and is permanently unfit for further sea duty.

In their Comment, respondents argue that the 240-day rule does not apply to the case since the company-designated
doctor timely assessed petitioner; that the 240-day period only applies to the assessment of the company-designated
doctor, and not to the third doctor's opinion. Even assuming that the 240 days limitation applies to the third doctor, the
parties validly extended the period for assessment since it was at petitioner's instance that a third doctor was appointed.
By seeking this relief, respondents insist that petitioner agreed to whatever disability grading the third doctor will issue.

In addition, respondents maintain that petitioner's disability should be based on the Schedule of Disability under Section
32 of the 2010 POEA-SEC and should not be based on the number of days of treatment or the number of days in which
sickness allowance is paid, citing Section 20 (A)(6) of the 2010 POEA-SEC. It is respondents' position that the
amendments therein require the injury or illness to be compensated based solely on the Schedule of Disability Gradings in
Section 32 of the Contract, and that the duration of treatment or payment of sickness allowance should be discounted
when determining the applicable disability grading.

Moreover, respondents refuse to acknowledge that they are liable for 100% disability compensation under the CBA,
arguing that the CBA does not contain a permanent unfitness clause, but merely mandates that the disability shall be
based solely on the disability grading provided under Section 32 of the PO EA-SEC, echoing Section 20(A)(6).

The Court's Ruling

The Court resolves to grant the petition.

Permanent disability is defined as the inability of a worker to perform his job for more than 120 days (or 240 days, as the
case may be), regardless of whether or not he loses the use of any part of his body. Total disability, meanwhile, 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.11

Under Article 192(c)(1) of the Labor Code, disability that is both permanent and total disability is defined as
"temporary total disability lasting continuously for more than one hundred twenty days, except as otherwise provided in
the Rules."12 Similarly, Rule VII, Section 2(b) of the Amended Rules on Employees' Compensation (AREC) provides:

(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 adverted Rule X of the AREC, which implements Book IV of the Labor Code, states in part:

Sec. 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 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.

Section 20 (A)(3) of the POEA-SEC, meanwhile, provides that:

SECTION 20. COMPENSATION AND BENEFITS

COMPENSATION AND BENEFITS FOR INJURY OR ILLNESS

The liabilities of the employer when the seafarer suffers work-related injury or illness during the term of his contract are
as follows:

3. In addition to the above obligation of the employer to provide medical attention, the seafarer shall also receive sickness
allowance from his employer in an amount equivalent to his basic wage computed from the time he signed off until he is
declared fit to work or the degree of disability has been assessed by the company-designated physician. x xx

The case of Vergara v. Hammonia Maritime Services, Inc.13 harmonized the provisions of the Labor Code and the AREC
with Section 20 (B)(3)14 of the POEA-SEC (now Section 20 [A][3] of the 2010 POEA-SEC). Synthesizing the
abovementioned provisions, Vergara clarifies that the 120- day period given to the employer to assess the disability of the
seafarer may be extended to a maximum of 240 days:

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.

Tile 1201240-day period in Article 192 (c)(1) and Rule X, Section 2 of the AREC only applies to tile company-
designated doctor

From the above-cited laws, it is the company-designated doctor who is given the responsibility to make a conclusive
assessment on the degree of the seafarer's disability and his capacity to resume work within 120/240 days. The parties,
however, are free to disregard the findings of the company doctor, as well as the chosen doctor of the seafarer, in case
they cannot agree on the disability gradings issued and jointly seek the opinion of a third-party doctor pursuant to Section
20 (A)(3) of the 2010 POEA-SEC:

SECTION 20. COMPENSATION AND BENEFITS

COMPENSATION AND BENEFITS FOR INJURY OR ILLNESS

The liabilities of the employer when the seafarer suffers work-related injury or illness during the term of his contract are
as follows:

3. x x x

If a doctor appointed by the seafarer disagrees with the assessment, a third doctor may be agreed jointly between
the Employer and the seafarer. The third doctor's decision shall be final and binding on both parties.

The above-quoted provision clearly does not state a specific period within which the third doctor must render his or her
disability assessment. This is only reasonable since the parties may opt to resort to a third opinion even during the
conciliation and mediation stage to abbreviate the proceedings, which usually transpire way beyond the 120/240 day
period for medical treatment. The CA, thus, correctly held that the 240-day period for assessing the degree of disability
only applies to the company-designated doctor, and not the third doctor.

The third doctor's assessment of the extent of disability must be definite and conclusive in order to be binding between
the parties

Indeed, the employer and the seafarer are bound by the disability assessment of the third-party physician in the event that
they choose to appoint one. Nonetheless, similar to what is required of the company-designated doctor, the appointed
third-party physician must likewise arrive at a definite and conclusive assessment of the seafarer's disability or
fitness to return to work before his or her opinion can be valid and binding between the parties.

We point to our discussion in Kestrel Shipping Co., Inc. v. Munar,15 underscoring that the assessment of the company-
designated physician of the seafarer's fitness to work or permanent disability within the period of 120 or 240 days must
be definite, viz:

Moreover, the company-designated physician is expected to arrive at a definite assessment of the seafarer's fitness
to work or permanent disability within the period of 120 or 240 days. That should he fail to do so and the seafarer's
medical condition remains unresolved, the seafarer shall be deemed totally and permanently disabled. (emphasis supplied)

Jurisprudence is replete with cases bearing similar pronouncements of this Court. In Fil-Star Maritime Corporation v.
Rosete,16 We concluded that the company-designated doctor's certification issued within the prescribed periods must be a
definite assessment of the seafarer's fitness to work or disability:

For the courts and labor tribunals, determining whether a seafarer's fitness to work despite suffering an alleged partial injury
generally requires resort to the assessment and certification issued within the 120/240-day period by the company-designated
physician. Through such certification, a seafarer's fitness to resume work or the degree of disability can be known, unless
challenged by the seafarer through a second opinion secured by virtue of his right under the POEA-SEC. Such certification, as
held by this Court in numerous cases, must be a definite assessment of the seafarer's fitness to work or permanent
disability. As stated in Oriental Shipmanagement Co., Inc. v. Bastol, the company-designated doctor must declare the seaman
fit to work or assess the degree of his permanent disability. Without which, the characterization of a seafarer's condition as
permanent and total will ensue because the ability to return to one's accustomed work before the applicable periods elapse
cannot be shown.
In Carcedo v. Maine Marine Phils., Inc.,17 We ruled that the company-designated physician's disability assessment was
not definitive since the seafarer continued to require medical treatments thereafter. Thus, because the doctor failed to
issue a final assessment, the disability of the seafarer therein was declared to be permanent and total.

In Fil-Pride Shipping Company, Inc. v. Balasta,18 We declared that the company-designated physician must arrive at a
definite assessment of the seafarer's fitness to work or permanent disability within the period of 120 or 240 days pursuant
to Article 192 (c)(1) of the Labor Code and Rule X, Section 2 of the AREC. If he fails to do so and the seafarer's medical
condition remains unresolved, the latter shall be deemed totally and permanently disabled. Thus, We considered the
failure of the company doctor to arrive at a definite assessment of the seafarer's fitness to work or permanent disability
within the said period in holding that the seafarer was totally and permanently disabled.

A final and definite disability assessment is necessary in order to truly reflect the true extent of the sickness or injuries
of the seafarer and his or her capacity to resume work as such. Otherwise, the corresponding disability benefits awarded
might not be commensurate with the prolonged effects of the injuries suffered.

Due to the abovestated reasons, We see it fit to apply the same prerequisite to the appointed third doctor before the latter's
disability assessment will be binding on the parties.

In the case at bench, despite the disability grading that Dr. Bathan issued, petitioner's medical condition remained
unresolved. For emphasis, Dr. Bathan' s certification is reproduced hereunder:

This is to certify that SUNIT, REYNALDO consulted the undersigned on 17 Feb. 2014 at Faculty Medical Arts Building,
PGH Compound, Taft Ave., Manila.

x x xx

Patient is Gr. 9 according to POEA Schedule of disability. Patient is not yet fit to work and should undergo
rehabilitation.19 (emphasis supplied)

The language of Dr. Bathan' s assessment brooks no argument that no final and definitive assessment was made
concerning petitioner's disability. If it were otherwise, Dr. Bathan would not have recommended that he undergo further
rehabilitation. Dr. Bathan' s assessment of petitioner's degree of disability, therefore, is still inconclusive and indefinite.

Petitioner's disability is permanent and total despite the Grade 9 partial disability that Dr. Bathan issued since his
incapacity to work lasted for more than 240 days from his repatriation

Petitioner was repatriated on October 6, 2012. After undergoing medical treatment, the company-designated doctor issued
petitioner an interim Grade 10 disability on January 13, 2013. Petitioner was then issued with a final Grade 10 disability
by the company-designated doctor on February 15, 2013.

Prior to the February 15, 2013 assessment, petitioner consulted the opinion of a second doctor, Dr. Garduce, who
recommended a Grade 3 disability.

Both parties then consulted a third doctor to assess petitioner's degree of disability, who assessed petitioner with a Grade
9 partial disability on February 17, 2014, 499 days from his repatriation. In addition to the partial disability grading, Dr.
Bathan likewise assessed petitioner as unfit to work and recommended him to undergo further rehabilitation.

While We have ruled that Dr. Bathan is not bound to render his assessment within the 120/240 day period, and that the
said period is inconsequential and has no application on the third doctor, petitioner's disability and incapacity to resume
working clearly continued for more than 240 days. Applying Article 192 (c)(1) of the Labor Code, petitioner's disability
should be considered permanent and total despite the Grade 9 disability grading.

This conclusion is in accordance with Kestrel,20 wherein this Court underscored that if partial and permanent injuries or
disabilities 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:

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

In determining whether a disability is total or partial, what is crucial is whether the employee who suffered from disability
could still perform his work notwithstanding the disability he met. A permanent partial disability presupposes a seafarer's
fitness to resume sea duties before the end of the 120/240-day medical treatment period despite the injuries sustained, and
works on the premise that such partial injuries did not disable a seafarer to earn wages in the same kind of work or similar
nature for which he was trained.21

To reiterate, the company doctor or the appointed third-party physician must arrive at a definite and conclusive
assessment of the seafarer's disability or fitness to return to work before his or her opinion can be valid and binding
between the parties. Dr. Bathan, whose opinion should have bound the parties despite the lapse of the 120/240 day period,
did not make such definite and conclusive assessment.

It was likewise proved that petitioner's disability persisted beyond the 240-day period and he was even declared unfit to
work by the third doctor himself. As noted by the NLRC, petitioner failed to have gainful employment for 499 days
reckoned from the time he arrived on October 6, 2012 until Dr. Bathan conducted his assessment 22 due to his injuries.
Moreover, Dr. Bathan's inconclusive assessment and petitioner's prolonged disability only served to underscore that the
company-designated doctor himself failed to render a definitive assessment of petitioner's disability.

As petitioner was actually unable to work even after the expiration of the 240-day period and there was no final and
conclusive disability assessment made by the third doctor on his medical condition, it would be inconsistent to declare
him as merely permanently and partially disabled. It should be stressed that a total disability does not require that the
employee be completely disabled, or totally paralyzed.23 In disability compensation, it is not the injury which is
compensated, but rather it is the incapacity to work resulting in the impairment of one's earning capacity.24

In view of the foregoing circumstances, petitioner is considered permanently and totally disabled, and should be awarded
the corresponding disability benefits.

At this juncture, it bears to recapitulate the procedural requisites under the rules and established jurispn1dence where the
parties opt to resort to the opinion of a third doctor:

First, according to the POEA-SEC25 and as established by Vergara,26 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 company-designated physician.

Second, if the seafarer disagrees with the findings of the company doctor, then he has the right to engage the services of a
doctor of his choice. If the second doctor appointed by the seafarer disagrees with the findings of the company doctor, and
the company likewise disagrees with the findings of the second doctor, then a third doctor may be agreed jointly between
the employer and the seafarer, whose decision shall be final and binding on both of them.

It must be emphasized that the language of the POEA-SEC is clear in that both the seafarer and the employermust
mutually agree to seek the opinion of a third doctor. In the event of disagreement on the services of the third doctor, the
seafarer has the right to institute a complaint with the LA or NLRC.

Third, despite the binding effect of the third doctor's assessment, a dissatisfied party may institute a complaint with the
LA to contest the same on the ground of evident partiality, corruption of the third doctor, fraud, other undue
means, 27 lack of basis to support the assessment, or being contrary to law or settled jurisprudence.

Petitioner is entitled to attorney's fees

Considering that petitioner was forced to litigate and incur expenses to protect his right and interest, petitioner is entitled
to a reasonable amount of attorney's fees, pursuant to Article 2208(8).28 The Court notes, however, that respondents have
not shown to act in gross and evident bad faith in refusing to satisfy petitioner's demands, and even offered to pay him
disability benefits, although in a reduced amount. Thus, the Court finds the award of attorney's fees in the amount of
$1,000 as reasonable.29

WHEREFORE, premises considered, the petition is GRANTED. The June 10, 2015 Decision and February 10, 2016
Resolution of the Court of Appeals in CA-G.R. SP No. 138268 are REVERSED and SET ASIDE. Respondents are
ordered to jointly and severally pay petitioner Reynaldo Y. Sunit the amount of $150,000 or its equivalent amount in
Philippine currency at the time of payment, representing total and permanent disability benefits, plus $1,000, or its
equivalent in Philippine currency, as attorney's fees.

SO ORDERED.
 G.R. No. 159887 April 12, 2006
BERNARDO REMIGIO, Petitioner, vs.
NATIONAL LABOR RELATIONS COMMISSION, C.F. SHARP CREW MGT., INC. & NEW COMMODORE
CRUISE LINE, INC.,1 Respondents.

Before us is a petition for review on certiorari seeking the reversal of the decision2 and resolution3 of the Court of Appeals
(CA) in CA-G.R. No. 67782 which affirmed the March 22, 2001 Resolution4 of the National Labor Relations
Commission (NLRC), awarding sickness allowance of US$3,400.00 to petitioner but denying his claim for disability
benefits.

The facts are undisputed.

On November 27, 1997, petitioner Bernardo Remigio entered into a Contract of Employment5 with respondent C.F. Sharp
Crew Management, Inc. (respondent agency), for and in behalf of its foreign principal, co-respondent New Commodore
Cruise Line, Ltd. (respondent principal). The contract provided that the terms and conditions of the standard employment
contract governing the employment of all seafarers, approved per Department of Labor and Employment's Department
Order No. 33 and the Philippine Overseas Employment Administration's Memorandum Circular No. 55, both Series of
1996 (1996 POEA SEC), were to be strictly and faithfully observed.6 Under the contract, petitioner was to work as
Musician II on board SS "Enchanted Isle," a vessel owned and operated by respondent principal, for ten (10) months, at a
basic monthly salary of US$857.00, overtime rate of US$257.00 per month and vacation leave with pay of three (3) days
per month.

After petitioner passed the pre-employment medical examination, he joined the vessel and started performing his job as a
drummer in December 1997. On March 16, 1998, while the vessel was docked at the port of Cancun, Mexico, petitioner
went ashore to attend to some personal matters. While walking, petitioner suddenly felt severe chest pain and shortness of
breath. He returned to the vessel and experienced another such episode on the same evening. When his chest pain
recurred the following day, he went to the vessel's infirmary where he again suffered from chest pain. Petitioner was
brought and confined for seven (7) days at the Grand Cayman Island Hospital. His pain worsened upon physical exertion
but improved with rest. Thus, he was instructed to refrain from performing any kind of physical activity and to have a
complete bed rest. He rejoined the vessel on March 24, 1998.

Upon the vessel's arrival at the port of New Orleans, Louisiana, U.S.A., petitioner was brought to the West Jefferson
Medical Center for a more thorough check-up and evaluation. Dr. S. Kedia's "impression" was that petitioner's chest pains
were "probable secondary to severe coronary artery disease."7 Dr. Armengol Porta conducted a physical examination on
petitioner, including a coronary angiogram,8 and found that he had several blockages in his coronary arteries. A triple
coronary artery bypass was performed on petitioner on April 2, 1998 by a Dr. Everson.

On April 8, 1998, petitioner was transferred to the Marine Medical Unit for observation. After twelve (12) days of
confinement, petitioner's cardiologist found him "not fit for sea duty" and recommended for him to be "[r]epatriated to
home port for follow up with a cardiologist."9 He was repatriated to Manila on April 23, 1998.

In a letter dated April 27, 1998, Henry P. Desiderio, the manager of the Crewing Administration and Business
Development Department of respondent agency, referred petitioner to the American Outpatient Clinic for medical check-up.10

On May 13, 1998, petitioner, through counsel, sent a formal communication11 to respondent agency demanding payment
of unpaid wages, sickness allowance and permanent total disability benefits. The demand, however, was refused.

In a letter dated June 25, 1998 addressed to the manager of respondent agency, Jose Enrique P. Desiderio, the company-
designated physician, Dr. Leticia C. Abesamis, of the American Outpatient Clinic wrote, viz:

Mr. B. Remigio who had Coronary Bypass (6x) abroad last April 2, 1998 has completed his cardiac rehabilitation here at
the Phil. Heart Center. Stress done on June 23, 1998 shows functional capacity at 8 METS.

Lately he has been complaining of epigastric discomfort probably from Ecotrin. He has been on ulcer regimen.

He may go back to sea duty as piano player or guitar player after 8-10 more months.

He was unfit from April 27, 1998 to June 25, 1998.12 (emphases supplied)

On November 12, 1998, petitioner filed the instant complaint13 for (a) recovery of permanent total disability benefits
amounting to US$60,000.00; (b) actual and compensatory damages for loss of earning capacity in the amount of
US$154,260.00; and (c) moral and exemplary damages and attorney's fees.14 Private respondents made an offer to settle
the case at US$30,000.00 as evidenced by fax letters, to which petitioner made a counter-proposal of US$40,000.00.15 No
agreement was reached as the parties proceeded to submit their respective position papers and supporting evidence.

In support of his claims, petitioner submitted copies of: a) his Contract of Employment with private respondents; b)
communication of respondent principal to respondent agency informing the latter about petitioner's "heart attack,"
repatriation and replacement; c) History and Physical Report of petitioner and Procedure Report of his cardiac
catheterization; d) receipts from a drugstore and the Philippine Heart Center; e) 2D Echocardiogram-Color Doppler
Report; f) filled up form of the Exercise Testing and Cardiac Rehabilitation Laboratory of the Philippine Heart Center
showing the results of the tests done on petitioner; and g) the Discharge Summary of the Marine Medical Unit. 16 On the
other hand, private respondents submitted copies of: a) the Contract of Employment; b) referral letter dated April 27,
1998 of respondent agency to the American Outpatient Clinic; c) demand letter dated May 13, 1998 of petitioner's
counsel; and d) medical report of Dr. Leticia C. Abesamis of the American Outpatient Clinic addressed to the manager of
respondent agency.17

On September 15, 1999, Labor Arbiter Manuel R. Caday rendered his decision,18 the dispositive portion of which states:

WHEREFORE, premises considered, judgment is hereby rendered ordering the respondents jointly and severally to pay
complainant, his sickness allowance in the amount of US$3,400.00.

All other claims are hereby dismissed for lack of merit. SO ORDERED.19

In ruling that petitioner is not entitled to disability benefits, Labor Arbiter Caday noted that the Schedule of Disability or
Impediment for Injuries Suffered and Diseases or Illness Contracted under Section 30 of the 1996 POEA SEC does not
provide for the payment of compensation benefits in cases of cardiac catheterization or heart bypass. Even assuming that
it was included, he held that no medical report was presented to show that petitioner's disability was total and permanent
as to be classified under Grade 1 of the said schedule of disability. Nonetheless, petitioner's claim for sickness allowance
was granted as there was no showing that private respondents paid petitioner's basic wages after his repatriation, as
provided under Section 20, B(3) of the 1996 POEA SEC. Petitioner was awarded US$3,400.00 as sickness allowance,
computed on the basis of his monthly wage of US$850.00 multiplied by four (4) months.

On appeal by petitioner, the NLRC affirmed the decision of the Labor Arbiter in toto. 20 Petitioner filed a motion for
reconsideration of the NLRC's resolution, to no avail. Accordingly, he filed a petition for certiorari with prayer for the
issuance of a writ of preliminary injunction and/or temporary restraining order with the CA. 21 On March 31, 2003, the CA
dismissed the petition.22

The CA likewise did not find substantial evidence to prove that the heart ailment incurred by petitioner during the term of
his employment resulted to his disability, i.e., rendered him incapable of further seeking employment as a musician or to
follow a substantially gainful occupation. It noted that petitioner's medical records abroad never mentioned that his heart
ailment resulted to a disability. Petitioner's reliance on Dr. Abesamis's letter dated June 25, 1998 that he (petitioner) was
"unfit from April 27, 1998 to June 25, 1998" was found as insufficient to prove that petitioner's earning capacity was
either lost or diminished. The statement that petitioner "may go back to sea duty as piano player or guitar player after 8-
10 more months" was likewise found as insufficient to prove that petitioner was actually "sidelined" or that it was
impossible for him to work and earn as a musician during the 8-10 months that he was not on board the vessel. Finally, it
considered that heart ailment is not included among the compensable sicknesses and injuries under the 1996 POEA SEC.

Petitioner's motion for reconsideration with the CA was denied.23 Hence, this petition in which petitioner prays that he be
awarded US$60,000.00 as permanent total disability benefits, US$3,428.00 as sickness allowance, attorney's fees and
costs of suit. He assigns as lone error, the following:

THE DECISION OF THE HONORABLE COURT OF APPEALS DISMISSING PETITIONER'S PETITION FOR
CERTIORARI AND AFFIRMING IN TOTO THE HONORABLE PUBLIC RESPONDENT AND DENYING
PETITIONER'S MOTION FOR RECONSIDERATION IS CONTRARY TO LAW.24

The main issue is whether petitioner is entitled to permanent total disability benefits.

At the outset, private respondents' contention that the instant petition must be dismissed outright for being grounded on a
question of fact must be rejected. The issue of whether petitioner is entitled to permanent total disability benefits is a
question of law as it calls for the correct application of the law and jurisprudence on disability benefits to the established
facts on record.25 It raises the following sub-issues, to wit:

1. Whether heart ailment suffered during the term of the contract is compensable under the 1996 POEA SEC even
if there is no proof of work-connection; and

2. Whether the concept of permanent total disability under the Labor Code applies to the case of a seafarer's claim
for disability benefits under the 1996 POEA SEC.

First. In ruling that petitioner is not entitled to permanent total disability benefits, the Labor Arbiter and the CA considered that
"cardiac catheterization," "heart bypass," or "heart ailment" is not found in the Schedule of Disability or Impediment for
Injuries Suffered and Diseases or Illness Contracted under Section 30 of the 1996 POEA SEC. Petitioner contends that the
schedule of disability under Section 30 of the 1996 POEA SEC is not exclusive. Heart ailment, though not listed in the
schedule, is compensable. Private respondents, on the other hand, concede that while petitioner's illness is not listed under the
1996 POEA SEC, "this does not mean that the same is not compensable."26 However, since "heart ailment" is not listed under
Section 30 of the 1996 POEA SEC, it is not an "occupational disease." It was therefore incumbent upon petitioner to prove by
substantial evidence that his illness was work-related. Having failed to do so, he is not entitled to disability benefits.

We find merit in petitioner's argument.

Petitioner bases his claim for disability benefits under Section 20 in relation to Sections 30 and 30-A of the 1996 POEA
SEC, viz:

Sec. 20. Compensation and Benefits

xxx

B. Compensation and Benefits for Injury or Illness

The liabilities of the employer when the seafarer suffers injury or illness during the term of his contract are as follows:

xxx

5. In case of permanent total or partial disability of the seafarer during the term of employment caused by either injury or
illness[,] the seafarer shall be compensated in accordance with the schedule of benefits enumerated in Section 30 of [t]his
Contract. Computation of his benefits arising from an illness or disease shall be governed by the rates and the rules of
compensation applicable at the time the illness or disease was contracted.

Sec. 30. SCHEDULE OF DISABILITY OR IMPEDIMENT FOR INJURIES SUFFERED AND DISEASES OR
ILLNESS CONTRACTED

xxx

CHEST-TRUNK-SPINE

1. Fracture of four (4) or more ribs resulting to severe limitation of chest expansion - Gr. 6
2. Fracture of four (4) or more ribs with intercostal neuralgia resulting in moderate limitation of chest expansion - Gr. 9
3. Slight limitation of chest expansion due to simple rib functional without myositis or intercostal neuralgia - Gr. 12
4. Fracture of the dorsal or lumber spines resulting to severe or total rigidity of the trunk or total loss of lifting power of
heavy objects - Gr. 6
5. Moderate rigidity or two thirds (2/3) loss of motion or lifting power of the trunk - Gr. 8
6. Slight rigidity or one third (1/3) loss of motion or lifting power of the trunk - Gr. 11
7. Injury to the spinal cord as to make walking impossible without the aid of a pair of crutches - Gr. 4
8. Injury to the spinal cord as to make walking impossible even with the aid of a pair of crutches - Gr. 1
9. Injury to the spinal cord resulting to incontinence of urine and feces - Gr. 1
xxx

NOTE: Any item in the schedule classified under Grade 1 shall be considered or shall constitute total and
permanent disability.

Sec. 30-A. SCHEDULE OF DISABILITY ALLOWANCES

Impediment Grade Impediment

1 Maximum Rate x 120.00%

2 Maximum Rate x 88.81%

3 Xxx Xxx

4 Xxx xxx

To be paid in Philippine Currency equivalent at the exchange rate prevailing during the time of payment.

"Disability" is generally defined as "loss or impairment of a physical or mental function resulting from injury or
sickness."27 Clearly, "disability" is not synonymous with "sickness" or "illness," the former being a potential effect of the
latter. The schedule in Sec. 30 of the POEA SEC is a Schedule of Disability or Impediment for Injuries Suffered and
Diseases or Illness Contracted. It is not a list of compensable sicknesses. Unlike the 2000 POEA SEC, 28nowhere in the
1996 POEA SEC is there a list of "Occupational Diseases."

The unqualified phrase "during the term" in Section 20(B) of the 1996 POEA SEC covers all injury or illness occurring in
the lifetime of the contract. The injury or illness need not be shown to be work-related. In Sealanes Marine Services, Inc.
v. NLRC, 29 we categorically held:

The argument of petitioners that since cancer of the pancreas is not an occupational disease it was incumbent upon Capt.
Arante to prove that his working conditions increased the risk of contracting the same, is not meritorious. It must be noted
that his claims arose from the stipulations of the standard format contract entered into between him and SEACORP
which, per Circular No. 2, Series of 198430 of respondent POEA was required to be adopted and used by all parties to the
employment of any Filipino seamen (sic) on board any ocean-going vessel. His claims are not rooted from the provisions
of the New Labor Code as amended. Significantly, under the contract, compensability of the death or illness of seam[e]n
need not be dependent upon whether it is work connected or not. Therefore, proof that the working conditions increased
the risk of contracting a disease or illness, is not required to entitle a seaman who dies during the term thereof by reason
of such disease or illness, of the benefits stipulated thereunder which are, under Section C(2) of the same Circular No. 2,
separate and distinct from, and in addition to whatever benefits which the seaman is entitled to under Philippine laws.
(emphasis supplied)

This principle was reiterated in the recent case of Seagull Shipmanagement and Transport, Inc. v. NLRC.31

While indeed, the Labor Code's provisions on disability benefits under the Employees' Compensation Commission (ECC)
require the element of work-relation for an illness to be compensable, the 1996 POEA SEC giving a more liberal
provision in favor of the seafarer must apply. As a rule, stipulations in an employment contract not contrary to statutes,
public policy, public order or morals have the force of law between the contracting parties. 32 In controversies between a
laborer and his master, doubts reasonably arising from the evidence, or in the interpretation of agreements and writing
should be resolved in the former’s favor.33 The policy is to extend the doctrine to a greater number of employees who can
avail of the benefits under the law, in consonance with the avowed policy of the State to give maximum aid and
protection of labor.34

Second. Is the Labor Code's 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. ECC35 and Abaya, Jr. v. ECC,36 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."37 Section 29 of the 1996 POEA SEC itself
provides that "[a]ll 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."38 lawphil.net

Thus, the Court has applied the Labor Code concept of permanent total disability to the case of seafarers. In Philippine
Transmarine Carriers v. NLRC,39 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,40 GSIS v. CA,41 and Bejerano v. ECC42 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." It likewise cited Bejerano v. ECC,43that 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 one's earning capacity.

The same principles were cited in the more recent case of Crystal Shipping, Inc. v. Natividad.44 In addition, the Court
cited GSIS v. Cadiz45 and Ijares v. CA46 that "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."

Finally. Applying the Labor Code concept of permanent total disability to the facts on record, is petitioner entitled to
permanent total disability benefit?

Petitioner contends that the certification of the company-designated physician that he may go back to sea duty as a piano
or guitar player after 8-10 months even if his job was a drummer proves that he suffered from permanent total disability
and thus entitled to permanent total disability benefits of US$60,000.00 under the 1996 POEA SEC. Private respondents,
on the other hand, contend that: 1) petitioner did not present any proof that he suffered from permanent total disability,
i.e., that his earning power is now reduced and that he is incapable of performing remunerative employment; 2) petitioner
did not present any medical certificate showing that he suffered any disability; 3) on the contrary, the company-
designated physician attested that petitioner could return to further sea duty; 4) even if he could not go back to sea duty,
this does not mean that his earning capacity is impaired since as a musician, he may still perform on land; and 5) having
admitted that he was a heavy smoker, petitioner is disqualified under Section 20(d) of the 1996 POEA SEC from
recovering compensation for any incapacity or disability he suffered.

There are three kinds of disability benefits under the Labor Code, as amended by P.D. No. 626: (1) temporary total
disability, (2) permanent total disability, and (3) permanent partial disability. Section 2, Rule VII of the Implementing
Rules of Book V of the Labor Code differentiates the disabilities as follows:

Sec. 2. Disability.-- (a) A total disability is temporary if as a result of the injury or sickness the employee is unable to
perform any gainful occupation for a continuous period not exceeding 120 days, except as otherwise provided for in Rule
X of these Rules.

(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
X47 of these Rules.

(c) A disability is partial and permanent if as a result of the injury or sickness the employee suffers a permanent
partial loss of the use of any part of his body. (emphasis supplied)

In Vicente v. ECC:48

x x x the test of whether or not an employee suffers from ‘permanent total disability’ is a showing of the capacity of the
employee to continue performing his work notwithstanding the disability he incurred. Thus, if by reason of the injury or
sickness he sustained, the employee is unable to perform his customary job for more than 120 days and he does not come
within the coverage of Rule X of the Amended Rules on Employees Compensability (which, in more detailed manner,
describes what constitutes temporary total disability), then the said employee undoubtedly suffers from ‘permanent total
disability’ regardless of whether or not he loses the use of any part of his body. (emphases supplied)

A total disability does not require that the employee be absolutely disabled, or totally paralyzed. What is necessary is that
the injury must be such that the employee cannot pursue her usual work and earn therefrom. 49 On the other hand, a total
disability is considered permanent if it lasts continuously for more than 120 days. 50 Thus, in the very recent case of
Crystal Shipping, Inc. v. Natividad,51 we held:

Permanent disability is 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.52 x x x

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.53 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 one's earning capacity.54

Applying the foregoing standards, we find that petitioner suffered from permanent total disability.

It is undisputed that petitioner started to suffer chest pains on March 16, 1998 and was repatriated on April 23, 1998 after
having been found as "not fit for duty." The medical report dated June 25, 1998 of the company-designated physician, Dr.
Abesamis, establishes the following facts, viz: a) petitioner underwent a coronary bypass on April 2, 1998; b) petitioner
was "unfit" from April 27, 1998 (date of referral) to June 25, 1998 (date of medical report); c) petitioner may not return to
sea duty within 8-10 months after June 25, 1998; and d) petitioner may return to sea duty as a piano or guitar player after
8-10 months from June 25, 1998.

These facts clearly prove that petitioner was unfit to work as drummer for at least 11-13 months -- from the onset of his
ailment on March 16, 1998 to 8-10 months after June 25, 1998. This, by itself, already constitutes permanent total
disability. What is more, private respondents were well aware that petitioner was working for them as a drummer, as
proven by the communication of respondent principal to respondent agency referring to petitioner as "drummer with our
enchanted isle quartet."55 Thus, the certification that petitioner may go back specifically as a piano or guitar player means
that the likelihood of petitioner returning to his usual work as a drummer was practically nil. From this, it is pristine clear
that petitioner's disability is total and permanent.

Private respondents' contention that it was not shown that it was impossible for petitioner to play the drums during the 8-
10 months that he was on land is specious. To our minds, petitioner's unfitness to work attached to the nature of his job
rather than to its place of performance. Indeed, playing drums per se requires physical exertion, speed and endurance. It
demands the performance of hitting strokes and repetitive movements that petitioner, having undergone a triple coronary
bypass, has become incapacitated to do.

The possibility that petitioner could work as a drummer at sea again does not negate the claim for permanent total
disability benefits. In the same case of Crystal Shipping, Inc., we held:

Petitioners tried to contest the above findings [of permanent total disability] by showing that respondent was able to work
again as a chief mate in March 2001. (citation omitted) 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. 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.56 (emphasis supplied)

That the company-designated physician did not specify that petitioner suffered from any disability should not prejudice
petitioner's claim for disability benefits. In the first place, it is well to note that it was respondent agency which referred
petitioner to the American Outpatient Clinic giving only the specific instruction that the designated physician indicate in
the medical report "the estimated treatment period and the exam conducted." 57 Moreover, what is important is that the
facts stated in the medical report clearly constitute permanent total disability as defined by law. It is well-settled that strict
rules of evidence are not applicable in claims for compensation and disability benefits. 58 Disability should not be
understood more on its medical significance but on the loss of earning capacity.59 As in the case of Crystal Shipping,
Inc.,60 an award of permanent total disability benefits in the petition at bar 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.

We do not agree that petitioner's admission that he was a heavy smoker is enough ground to disqualify him from
entitlement to disability compensation under Section 20(D) of the 1996 POEA SEC, viz:1avvphil.net

Section 20.D. No compensation shall be payable in respect of any injury, incapacity, disability or death of the seafarer
resulting from his willful or criminal act, provided however, that the employer can prove that such injury, incapacity,
disability or death is directly attributable to the seafarer.

We have held that a worker brings with him possible infirmities in the course of his employment and while the employer
is not the insurer of the health of the employees, he takes them as he finds them and assumes the risk of liability.61

In the case at bar, it is noteworthy that petitioner's habit of smoking was not a consideration when private respondents
hired petitioner. It was likewise not shown that petitioner suffered from any form of ailment prior to the heart ailment he
suffered during the course of his employment with private respondents. While smoking may contribute to the
development of a heart ailment, heart ailment may be caused by other factors such as working and living under stressful
conditions. Thus, private respondents' peremptory presumption, that petitioner's habit of smoking heavily was the willful
act which caused his illness and resulting disability, without more, cannot suffice to bar petitioner's claim for disability
benefits. Ruling otherwise would run contrary to the constitutional mandate to extend full protection to labor.

Having suffered from permanent total disability, petitioner is entitled to US$60,000.00 which is the amount due for
permanent total disability under Section 30-A of the 1996 POEA SEC.

As to the claim for sickness allowance, petitioner prays that private respondents be held jointly and severally liable to pay
him US$3,428.00, as opposed to the award of the Labor Arbiter, as affirmed by the NLRC and the CA, of only
US$3,400.00. We find this claim warranted by the undisputed fact on record that petitioner's basic salary is US$857.00
per month.62 Multiplying the 120-day sickness allowance due petitioner on the basis of the correct monthly rate of
US$857.00, he should be awarded US$3,428.00 as sickness allowance.

Under Article 2208 of the New Civil Code, attorney's fees can be recovered in actions for the recovery of wages of
laborers and actions for indemnity under employer's liability laws. Attorney's fees is also recoverable when the
defendant's act or omission has compelled the plaintiff to incur expenses to protect his interest. Such conditions being
present in the case at bar, we find that an award of attorney's fees is warranted.

IN VIEW WHEREOF, the decision and resolution of the Court of Appeals in CA-G.R. No. 67782 dated March 31, 2003
and August 14, 2003, respectively, are REVERSED and SET ASIDE. Private respondents are held jointly and severally
liable to pay petitioner: a) permanent total disability benefits of US$60,000.00 at its peso equivalent at the time of actual
payment; b) sickness allowance of US$3,428.00 at its peso equivalent at the time of actual payment; and c) attorney's fees
of ten percent (10%) of the total monetary award at its peso equivalent at the time of actual payment. Costs against private
respondents.

SO ORDERED.
 G.R. No. 193493 June 13, 2013
JAIME N. GAPAYAO, Petitioner, vs.
ROSARIO FULO, SOCIAL SECURITY SYSTEM and SOCIAL SECURITY COMMISSION, Respondents.

This is a Rule 45 Petition1 assailing the Decision2 and Resolution3 of the Court of Appeals (CA) in CA-G.R. SP. No.
101688, affirming the Resolution4 of the Social Security Commission (SSC). The SSC held petitioner Jaime N. Gapayao
liable to pay the unpaid social security contributions due to the deceased Jaime Fulo, and the Social Security System
(SSS) to pay private respondent Rosario L. Fulo, the widow of the deceased, the appropriate death benefits pursuant to the
Social Security Law.

The antecedent facts are as follows:

On 4 November 1997, Jaime Fulo (deceased) died of "acute renal failure secondary to 1st degree burn 70% secondary
electrocution"5 while doing repairs at the residence and business establishment of petitioner located at San Julian, Irosin,
Sorsogon.

Allegedly moved by his Christian faith, petitioner extended some financial assistance to private respondent. On 16
November 1997, the latter executed an Affidavit of Desistance6 stating that she was not holding them liable for the death
of her late husband, Jaime Fulo, and was thereby waiving her right and desisting from filing any criminal or civil action
against petitioner.

On 14 January 1998, both parties executed a Compromise Agreement,7 the relevant portion of which is quoted below:

We, the undersigned unto this Honorable Regional Office/District Office/Provincial Agency Office respectfully state:

1. The undersigned employer, hereby agrees to pay the sum of FORTY THOUSAND PESOS (₱40,000.00) to the
surviving spouse of JAIME POLO, an employee who died of an accident, as a complete and full payment for all
claims due the victim.

2. On the other hand, the undersigned surviving spouse of the victim having received the said amount do [sic]
hereby release and discharge the employer from any and all claims that maybe due the victim in connection with
the victim’s employment thereat.

Thereafter, private respondent filed a claim for social security benefits with the Social Security System (SSS)–Sorosogon
Branch.8 However, upon verification and evaluation, it was discovered that the deceased was not a registered member of
the SSS.9

Upon the insistence of private respondent that her late husband had been employed by petitioner from January 1983 up to
his untimely death on 4 November 1997, the SSS conducted a field investigation to clarify his status of employment. In
its field investigation report,10 it enumerated its findings as follows:

In connection with the complaint filed by Mrs. Rosario Fulo, hereunder are the findings per interview with Mr. Leonor
Delgra, Santiago Bolanos and Amado Gacelo:

1. That Mr. Jaime Fulo was an employee of Jaime Gapayao as farm laborer from 1983 to 1997.

2. Mr. Leonor Delgra and Santiago Bolanos are co-employees of Jaime Fulo.

3. Mr. Jaime Fulo receives compensation on a daily basis ranging from ₱5.00 to ₱60.00 from 1983 to 1997.

Per interview from Mrs. Estela Gapayao, please be informed that:

1. Jaime Fulo is an employee of Mr. & Mrs. Jaime Gapayao on an extra basis.

2. Sometimes Jaime Fulo is allowed to work in the farm as abaca harvester and earn 1/3 share of its harvest as his
income.

3. Mr. & Mrs. Gapayao hired the services of Jaime Fulo not only in the farm as well as in doing house repairs
whenever it is available. Mr. Fulo receives his remuneration usually in the afternoon after doing his job.

4. Mr. & Mrs. Gapayao hires 50-100 persons when necessary to work in their farm as laborer and Jaime Fulo is
one of them. Jaime Fulo receives more or less ₱50.00 a day. (Emphases in the original)

Consequently, the SSS demanded that petitioner remit the social security contributions of the deceased. When petitioner
denied that the deceased was his employee, the SSS required private respondent to present documentary and testimonial
evidence to refute petitioner’s allegations.11
Instead of presenting evidence, private respondent filed a Petition12 before the SSC on 17 February 2003. In her Petition,
she sought social security coverage and payment of contributions in order to avail herself of the benefits accruing from
the death of her husband.

On 6 May 2003, petitioner filed an Answer13 disclaiming any liability on the premise that the deceased was not the
former’s employee, but was rather an independent contractor whose tasks were not subject to petitioner’s control and
supervision.14 Assuming arguendo that the deceased was petitioner’s employee, he was still not entitled to be paid his SSS
premiums for the intervening period when he was not at work, as he was an "intermittent worker who was only
summoned every now and then as the need arose."15 Hence, petitioner insisted that he was under no obligation to report
the former’s demise to the SSS for social security coverage.

Subsequently, on 30 June 2003, the SSS filed a Petition-in-Intervention16 before the SSC, outlining the factual
circumstances of the case and praying that judgment be rendered based on the evidence adduced by the parties.

On 14 March 2007, the SSC rendered a Resolution,17 the dispositive portion of which provides:

WHEREFORE, PREMISES CONSIDERED, this Commission finds, and so holds, that Jaime Fulo, the late husband of
petitioner, was employed by respondent Jaime N. Gapayao from January 1983 to November 4, 1997, working for nine (9)
months a year receiving the minimum wage then prevailing.

Accordingly, the respondent is hereby ordered to pay ₱45,315.95 representing the unpaid SS contributions due on behalf
of deceased Jaime Fulo, the amount of ₱217,710.33 as 3% per month penalty for late remittance thereof, computed as of
March 30, 2006, without prejudice to the collection of additional penalty accruing thereafter, and the sum of ₱230,542.20
(SSS) and ₱166,000.00 (EC) as damages for the failure of the respondent to report the deceased Jaime Fulo for SS
coverage prior to his death pursuant to Section 24(a) of the SS Law, as amended.

The SSS is hereby directed to pay petitioner Rosario Fulo the appropriate death benefit, pursuant to Section 13 of the SS
Law, as amended, as well as its prevailing rules and regulations, and to inform this Commission of its compliance
herewith.

SO ORDERED.

On 18 May 2007, petitioner filed a Motion for Reconsideration,18 which was denied in an Order19 dated 16 August 2007.

Aggrieved, petitioner appealed to the CA on 19 December 2007.20 On 17 March 2010, the CA rendered a Decision21 in
favor of private respondent, as follows:

In fine, public respondent SSC had sufficient basis in concluding that private respondent’s husband was an employee of
petitioner and should, therefore, be entitled to compulsory coverage under the Social Security Law.

Having ruled in favor of the existence of employer-employee relationship between petitioner and the late Jaime Fulo, it is
no longer necessary to dwell on the other issues raised.

Resultantly, for his failure to report Jaime Fulo for compulsory social security coverage, petitioner should bear the
consequences thereof. Under the law, an employer who fails to report his employee for social security coverage is liable
to [1] pay the benefits of those who die, become disabled, get sick or reach retirement age; [2] pay all unpaid
contributions plus a penalty of three percent per month; and [3] be held liable for a criminal offense punishable by fine
and/or imprisonment. But an employee is still entitled to social security benefits even is (sic) his employer fails or refuses
to remit his contribution to the SSS.

WHEREFORE, premises considered, the Resolution appealed from is AFFIRMED in toto.

SO ORDERED.

In holding thus, the CA gave credence to the findings of the SSC. The appellate court held that it "does not follow that a
person who does not observe normal hours of work cannot be deemed an employee." 22 For one, it is not essential for the
employer to actually supervise the performance of duties of the employee; it is sufficient that the former has a right to
wield the power. In this case, petitioner exercised his control through an overseer in the person of Amado Gacelo, the
tenant on petitioner’s land.23 Most important, petitioner entered into a Compromise Agreement with private respondent
and expressly admitted therein that he was the employer of the deceased.24The CA interpreted this admission as a
declaration against interest, pursuant to Section 26, Rule 130 of the Rules of Court.25

Hence, this petition.

Public respondents SSS26 and SSC27 filed their Comments on 31 January 2011 and 28 February 2011, respectively, while
private respondent filed her Comment on 14 March 2011.28 On 6 March 2012, petitioner filed a "Consolidated Reply to
the Comments of the Public Respondents SSS and SSC and Private Respondent Rosario Fulo."29

ISSUE
The sole issue presented before us is whether or not there exists between the deceased Jaime Fulo and petitioner an
employer-employee relationship that would merit an award of benefits in favor of private respondent under social security
laws.

THE COURT’S RULING

In asserting the existence of an employer-employee relationship, private respondent alleges that her late husband had been
in the employ of petitioner for 14 years, from 1983 to 1997.30 During that period, he was made to work as a laborer in the
agricultural landholdings, a harvester in the abaca plantation, and a repairman/utility worker in several business
establishments owned by petitioner.31 To private respondent, the "considerable length of time during which [the deceased]
was given diverse tasks by petitioner was a clear indication of the necessity and indispensability of her late husband’s
services to petitioner’s business."32 This view is bolstered by the admission of petitioner himself in the Compromise
Agreement that he was the deceased’s employer.33

Private respondent’s position is similarly espoused by the SSC, which contends that its findings are duly supported by
evidence on record.34 It insists that pakyaw workers are considered employees, as long as the employer exercises control
over them. In this case, the exercise of control by the employer was delegated to the caretaker of his farm, Amado Gacelo.
The SSC further asserts that the deceased rendered services essential for the petitioner’s harvest. While these services
were not rendered continuously (in the sense that they were not rendered every day throughout the year), still, the
deceased had never stopped working for petitioner from year to year until the day the former died. 35 In fact, the deceased
was required to work in the other business ventures of petitioner, such as the latter’s bakery and grocery store. 36 The
Compromise Agreement entered into by petitioner with private respondent should not be a bar to an employee demanding
what is legally due the latter.37

The SSS, while clarifying that it is "neither adversarial nor favoring any of the private parties x x x as it is only tasked to
carry out the purposes of the Social Security Law,"38 agrees with both private respondent and SSC. It stresses that factual
findings of the lower courts, when affirmed by the appellate court, are generally conclusive and binding upon the Court. 39

Petitioner, on the other hand, insists that the deceased was not his employee. Supposedly, the latter, during the
performance of his function, was not under petitioner’s control. Control is not necessarily present even if the worker
works inside the premises of the person who has engaged his services.40 Granting without admitting that petitioner gave
rules or guidelines to the deceased in the process of the latter’s performing his work, the situation cannot be interpreted as
control, because it was only intended to promote mutually desired results.41

Alternatively, petitioner insists that the deceased was hired by Adolfo Gamba, the contractor whom he had hired to
construct their building;42 and by Amado Gacelo, the tenant whom petitioner instructed to manage the latter’s farm. 43 For
this reason, petitioner believes that a tenant is not beholden to the landlord and is not under the latter’s control and
supervision. So if a worker is hired to work on the land of a tenant – such as petitioner – the former cannot be the worker
of the landlord, but of the tenant’s.44

Anent the Compromise Agreement, petitioner clarifies that it was executed to buy peace, because "respondent kept on
pestering them by asking for money."45 Petitioner allegedly received threats that if the matter was not settled, private
respondent would refer the matter to the New Peoples’ Army.46 Allegedly, the Compromise Agreement was "extortion
camouflaged as an agreement."47 Likewise, petitioner maintains that he shouldered the hospitalization and burial expenses
of the deceased to express his "compassion and sympathy to a distressed person and his family," and not to admit
liability.48

Lastly, petitioner alleges that the deceased is a freelance worker. Since he was engaged on a pakyaw basis and worked for
a short period of time, in the nature of a farm worker every season, he was not precluded from working with other persons
and in fact worked for them. Under Article 280 of the Labor Code,49 seasonal employees are not covered by the
definitions of regular and casual employees.50 Petitioner cites Mercado, Sr. v. NLRC,51 in which the Court held that
seasonal workers do not become regular employees by the mere fact that they have rendered at least one year of service,
whether continuous or broken.52

We see no cogent reason to reverse the CA.

I Findings of fact of the SSC are given weight and credence.

At the outset, it is settled that the Court is not a trier of facts and will not weigh evidence all over again. Findings of fact
of administrative agencies and quasi-judicial bodies, which have acquired expertise because their jurisdiction is confined
to specific matters, are generally accorded not only respect but finality when affirmed by the CA. 53 For as long as these
findings are supported by substantial evidence, they must be upheld.54

II Farm workers may be considered regular seasonal employees.

Article 280 of the Labor Code states:

Article 280. Regular and Casual Employment. — The provisions of written agreement to the contrary notwithstanding
and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has
been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer,
except where the employment has been fixed for a specific project or undertaking the completion or termination of which
has been determined at the time of the engagement of the employee or where the work or services to be performed is
seasonal in nature and the employment is for the duration of the season.

An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That, any
employee who has rendered at least one year of service whether such service is continuous or broken, shall be considered
a regular employee with respect to the activity in which he is employed and his employment shall continue while such
actually exists.

Jurisprudence has identified the three types of employees mentioned in the provision: (1) regular employees or those who
have been engaged to perform activities that are usually necessary or desirable in the usual business or trade of the
employer; (2) project employees or those whose employment has been fixed for a specific project or undertaking, the
completion or termination of which has been determined at the time of their engagement, or those whose work or service
is seasonal in nature and is performed for the duration of the season; and (3) casual employees or those who are neither
regular nor project employees.55

Farm workers generally fall under the definition of seasonal employees. We have consistently held that seasonal
employees may be considered as regular employees.56 Regular seasonal employees are those called to work from time to
time. The nature of their relationship with the employer is such that during the off season, they are temporarily laid off;
but reemployed during the summer season or when their services may be needed. 57 They are in regular employment
because of the nature of their job,and not because of the length of time they have worked.58

The rule, however, is not absolute. In Hacienda Fatima v. National Federation of Sugarcane Workers-Food & General
Trade,59 the Court held that seasonal workers who have worked for one season only may not be considered regular
employees. Similarly, in Mercado, Sr. v. NLRC,60 it was held that when seasonal employees are free to contract their
services with other farm owners, then the former are not regular employees.

For regular employees to be considered as such, the primary standard used is the reasonable connection between the
particular activity they perform and the usual trade or business of the employer.61 This test has been explained thoroughly
in De Leon v. NLRC,62 viz:

The primary standard, therefore, of determining a regular employment is the reasonable connection between the particular
activity performed by the employee in relation to the usual business or trade of the employer. The test is whether the
former is usually necessary or desirable in the usual business or trade of the employer. The connection can be determined
by considering the nature of the work performed and its relation to the scheme of the particular business or trade in its
entirety. Also if the employee has been performing the job for at least one year, even if the performance is not continuous
or merely intermittent, the law deems the repeated and continuing need for its performance as sufficient evidence of the
necessity if not indispensability of that activity to the business. Hence, the employment is also considered regular, but
only with respect to such activity and while such activity exists.

A reading of the records reveals that the deceased was indeed a farm worker who was in the regular employ of petitioner.
From year to year, starting January 1983 up until his death, the deceased had been working on petitioner’s land by
harvesting abaca and coconut, processing copra, and clearing weeds. His employment was continuous in the sense that it
was done for more than one harvesting season. Moreover, no amount of reasoning could detract from the fact that these
tasks were necessary or desirable in the usual business of petitioner.

The other tasks allegedly done by the deceased outside his usual farm work only bolster the existence of an employer-
employee relationship. As found by the SSC, the deceased was a construction worker in the building and a helper in the
bakery, grocery, hardware, and piggery – all owned by petitioner.63 This fact only proves that even during the off season,
the deceased was still in the employ of petitioner.

The most telling indicia of this relationship is the Compromise Agreement executed by petitioner and private respondent.
It is a valid agreement as long as the consideration is reasonable and the employee signed the waiver voluntarily, with a
full understanding of what he or she was entering into.64 All that is required for the compromise to be deemed voluntarily
entered into is personal and specific individual consent.65 Once executed by the workers or employees and their
employers to settle their differences, and done in good faith, a Compromise Agreement is deemed valid and binding
among the parties.66

Petitioner entered into the agreement with full knowledge that he was described as the employer of the deceased. 67This
knowledge cannot simply be denied by a statement that petitioner was merely forced or threatened into such an
agreement.1âwphi1 His belated attempt to circumvent the agreement should not be given any consideration or weight by
this Court.

III Pakyaw workers are regular employees,

provided they are subject to the control of petitioner.

Pakyaw workers are considered employees for as long as their employers exercise control over them. In Legend Hotel
Manila v. Realuyo,68 the Court held that "the power of the employer to control the work of the employee is considered the
most significant determinant of the existence of an employer-employee relationship. This is the so-called control test and
is premised on whether the person for whom the services are performed reserves the right to control both the end achieved
and the manner and means used to achieve that end." It should be remembered that the control test merely calls for the
existence of the right to control, and not necessarily the exercise thereof. 69 It is not essential that the employer actually
supervises the performance of duties by the employee. It is enough that the former has a right to wield the power.70

In this case, we agree with the CA that petitioner wielded control over the deceased in the discharge of his functions.
Being the owner of the farm on which the latter worked, petitioner – on his own or through his overseer – necessarily had
the right to review the quality of work produced by his laborers. It matters not whether the deceased conducted his work
inside petitioner’s farm or not because petitioner retained the right to control him in his work, and in fact exercised it
through his farm manager Amado Gacelo. The latter himself testified that petitioner had hired the deceased as one of the
pakyaw workers whose salaries were derived from the gross proceeds of the harvest.71

We do not give credence to the allegation that the deceased was an independent contractor hired by a certain Adolfo
Gamba, the contractor whom petitioner himself had hired to build a building. The allegation was based on the self-serving
testimony of Joyce Gapay Demate,72 the daughter of petitioner. The latter has not offered any other proof apart from her
testimony to prove the contention.

The right of an employee to be covered by the Social Security Act is premised on the existence of an employer-employee
relationship.73 That having been established, the Court hereby rules in h1vor of private respondent.

WHEREFORE, the Petition for Review on Certiorari is hereby DENIED. The assailed Decision and resolution of the
Court of Appeals in CA-G.R. SP. No. 101688 dated 17 March 2010 and 13 August 2010, respectively, are hereby
AFFIRMED.

SO ORDERED.
 G.R. No. 209741, April 15, 2015
SOCIAL SECURITY COMMISSION, Petitioner, v. EDNA A. AZOTE, Respondent.

This petition for review on certiorari1 under Rule 45 of the Rules of Court filed by petitioner Social Security Commission
(SSC) assails the August 13, 2013 Decision2 of the Court of Appeals (CA), and its October 29, 2013 Resolution3 in CA-
G.R. SP No. 122933, allowing respondent Edna A. Azote (Edna) to claim the death benefits of her late husband, Edgardo
Azote (Edgardo).

The Antecedents:

On June 19, 1992, respondent Edna and Edgardo, a member of the Social Security System (SSS), were married in civil
rites at the Regional Trial Court, Branch 9, Legazpi City, Albay (RTC). Their union produced six children4 born from
1985 to 1999. On April 27, 1994, Edgardo submitted Form E-4 to the SSS with Edna and their three older children as
designated beneficiaries. Thereafter or on September 7, 2001, Edgardo submitted another Form E-4 to the SSS
designating his three younger children as additional beneficiaries.5

On January 13, 2005, Edgardo passed away. Shortly thereafter, Edna filed her claim for death benefits with the SSS as
the wife of a deceased-member. It appeared, however, from the SSS records that Edgardo had earlier submitted another
Form E-4 on November 5, 1982 with a different set of beneficiaries, namely: Rosemarie Azote (Rosemarie), as his
spouse; and Elmer Azote (Elmer), as dependent, born on October 9, 1982. Consequently, Edna’s claim was denied. Her
children were adjudged as beneficiaries and she was considered as the legal guardian of her minor children. The benefits,
however, would be stopped once a child would attain the age of 21.6

On March 13, 2007, Edna filed a petition with the SSC to claim the death benefits, lump sum and monthly pension of
Edgardo.7 She insisted that she was the legitimate wife of Edgardo. In its answer, the SSS averred that there was a
conflicting information in the forms submitted by the deceased. Summons was published in a newspaper of general
circulation directing Rosemarie to file her answer. Despite the publication, no answer was filed and Rosemarie was
subsequently declared in default.8

In the Resolution,9 dated December 8, 2010, the SSC dismissed Edna’s petition for lack of merit. Citing Section 24(c) of
the SS Law, it explained that although Edgardo filed the Form E-4 designating Edna and their six children as
beneficiaries, he did not revoke the designation of Rosemarie as his wife-beneficiary, and Rosemarie was still presumed
to be his legal wife.

The SSC further wrote that the National Statistics Office (NSO) records revealed that the marriage of Edgardo to
one Rosemarie Teodora Sino was registered on July 28, 1982. Consequently, it opined that Edgardo’s marriage to Edna
was not valid as there was no showing that his first marriage had been annulled or dissolved. The SSC stated that there
must be a judicial determination of nullity of a previous marriage before a party could enter into a second marriage.10

In an order,11 dated June 8, 2011, the SSC denied Edna’s motion for reconsideration. It explained that it was incumbent
upon Edna to prove that her marriage to the deceased was valid, which she failed to do. It further opined that Rosemarie
could not be merely presumed dead, and that death benefits under the SSS could not be considered properties which may
be disposed of in a holographic will.12

In the assailed August 13, 2013 Decision, the CA reversed and set aside the resolution and the order of the SSC. It held
that the SSC could not make a determination of the validity or invalidity of the marriage of Edna to Edgardo considering
that no contest came from either Rosemarie or Elmer.13

The CA explained that Edna had established her right to the benefits by substantial evidence, namely, her marriage
certificate and the baptismal certificates of her children.14 It ruled that Edgardo made a deliberate change of his wife-
beneficiary in his 1994 E-4 form, as such was clearly his voluntary act manifesting his intention to revoke his former
declaration in the 1982 E-4 form.15 The 1994 E-4 form submitted by Edgardo, designating Edna as his wife, superseded
his former declaration in his 1982 E-4 form.16

It further opined that the Davac case cited by the SSC was not applicable because there were two conflicting claimants in
that case, both claiming to be wives of the deceased, while in this case, Edna was the sole claimant for the death benefits,
and that her designation as wife-beneficiary remained valid and unchallenged. It was of the view that Rosemarie’s non-
appearance despite notice could be deemed a waiver to claim death benefits from the SSS, thereby losing whatever
standing she might have had to dispute Edna’s claim.17

In the assailed October 29, 2013 Resolution,18 the CA denied the SSC’s motion for reconsideration.19

Hence, the present petition.

GROUNDS

RESPONDENT COURT OF APPEALS GRAVELY ERRED IN RULING THAT THE COMMISSION IS

BEREFT OF AUTHORITY TO DETERMINE THE VALIDITY OR INVALIDITY OF THE MARRIAGE OF
THE PRIVATE RESPONDENT AND MEMBER EDGARDO AZOTE.
RESPONDENT COURT OF APPEALS GRAVELY ERRED IN GRANTING THE PETITION OF THE
PRIVATE RESPONDENT AND FINDING HER ENTITLED TO THE SS BENEFITS.

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN RULING THAT THE DESIGNATION OF
THE PRIVATE RESPONDENT AS WIFE-BENEFICIARY IS VALID.20

The SSC argues that the findings of fact of the CA were not supported by the records. It submits that under Section 5 of
the SS Law, it is called upon to determine the rightful beneficiary in the performance of its quasi-judicial function of
adjudicating SS benefits. In fact, it cited a number of cases,21 where the SSC had passed upon the validity of marriages
for the purpose of determining who were entitled to SS benefits.22

The SSC contends that Edna was not the legitimate spouse of deceased member Edgardo as the CA failed to consider the
NSO certification showing that Edgardo was previously married to Rosemarie. With the death certificate of
Rosemarie showing that she died only on November 6, 2004, it proved that she was alive at the time Edna and Edgardo
were married, and, therefore, there existed a legal impediment to his second marriage, rendering it void. Edna is,
therefore, not a legitimate spouse who is entitled to the death benefits of Edgardo.23

The SSC claims that the right to designate a beneficiary is subject to the SS Law. The designation of a wife-beneficiary
merely creates a disputable presumption that they are legally married and may be overthrown by evidence to the
contrary. Edna’s designation became invalid with the determination of the subsistence of a previous marriage. The SSC
posits that even though Edgardo revoked and superseded his earlier designation of Rosemarie as beneficiary, his
designation of Edna was still not valid considering that only a legitimate spouse could qualify as a primary beneficiary. 24

The Court’s Ruling

The petition is meritorious.

The law in force at the time of Edgardo’s death was Republic Act (R.A.) No. 8282,25 the amendatory law of R.A. No.
1161 or the “Social Security Law.” It is a tax-exempt social security service designed to promote social justice and
provide meaningful protection to members and their beneficiaries against the hazards of disability, sickness, maternity,
old age, death, and other contingencies resulting in loss of income or financial burden.26 As a social security program of
the government, Section 8 (e) and (k) of the said law expressly provides who would be entitled to receive benefits from its
deceased-member, to wit:

SEC. 8. Terms Defined. - For purposes of this Act, the following terms shall, unless the context indicates otherwise, have
the following meanings:

xxxx

(e) Dependents - The dependents shall be the following:

(1) The legal spouse entitled by law to receive support from the member;

(2) The legitimate, legitimated or legally adopted, and illegitimate child who is unmarried, not gainfully employed, and
has not reached twenty-one (21) years of age, or if over twenty-one (21) years of age, he is congenitally or while still a
minor has been permanently incapacitated and incapable of self-support, physically or mentally; and

(3) The parent who is receiving regular support from the member.

xxxx

(k) Beneficiaries - The dependent spouse until he or she remarries, the dependent legitimate, legitimated or legally
adopted, and illegitimate children, who shall be the primary beneficiaries of the member: Provided, That the dependent
illegitimate children shall be entitled to fifty percent (50%) of the share of the legitimate, legitimated or legally adopted
children: Provided, further, That in the absence of the dependent legitimate, legitimated children of the member, his/her
dependent illegitimate children shall be entitled to one hundred percent (100%) of the benefits. In their absence, the
dependent parents who shall be the secondary beneficiaries of the member. In the absence of all the foregoing, any other
person designated by the member as his/her secondary beneficiary. (Emphasis supplied)

Applying Section 8(e) and (k) of R. A. No. 8282, it is clear that only the legal spouse of the deceased-member is qualified
to be the beneficiary of the latter’s SS benefits. In this case, there is a concrete proof that Edgardo contracted an earlier
marriage with another individual as evidenced by their marriage contract. Edgardo even acknowledged his married status
when he filled out the 1982 Form E-4 designating Rosemarie as his spouse.27

It is undisputed that the second marriage of Edgardo with Edna was celebrated at the time when the Family Code was
already in force. Article 41 of the Family Code expressly states:

Art. 41. A marriage contracted by any person during subsistence of a previous marriage shall be null and void, unless
before the celebration of the subsequent marriage, the prior spouse had been absent for four consecutive years and the
spouse present has a well-founded belief that the absent spouse was already dead. In case of disappearance where there is
danger under the circumstances set forth in the provisions of Article 391 of the Civil Code, an absence of only two years
shall be sufficient.

For the purpose of contracting a subsequent marriage under the preceding paragraph, the spouse present must institute a
summary proceeding as provided in this Code for the declaration of presumptive death of the absentee, without prejudice
to the effect of reappearance of the absent spouse. (Emphasis and underscoring supplied)

Using the parameters outlined in Article 41 of the Family Code, Edna, without doubt, failed to establish that there was no
impediment or that the impediment was already removed at the time of the celebration of her marriage to
Edgardo. Settled is the rule that “whoever claims entitlement to the benefits provided by law should establish his or her
right thereto by substantial evidence.”28 Edna could not adduce evidence to prove that the earlier marriage of Edgardo was
either annulled or dissolved or whether there was a declaration of Rosemarie’s presumptive death before her marriage to
Edgardo. What is apparent is that Edna was the second wife of Edgardo. Considering that Edna was not able to show that
she was the legal spouse of a deceased-member, she would not qualify under the law to be the beneficiary of the death
benefits of Edgardo.

The Court does not subscribe to the disquisition of the CA that the updated Form E-4 of Edgardo was determinative of
Edna’s status and eligibility to claim the death benefits of deceased-member. Although an SSS member is free to
designate a beneficiary, the designation must always conform to the statute. To blindly rely on the form submitted by the
deceased-member would subject the entire social security system to the whims and caprices of its members and would
render the SS Law inutile.

Although the SSC is not intrinsically empowered to determine the validity of marriages, it is required by Section 4(b) (7)
of R.A. No. 828229 to examine available statistical and economic data to ensure that the benefits fall into the rightful
beneficiaries. As held in Social Security Commission vs. Favila,30

SSS, as the primary institution in charge of extending social security protection to workers and their beneficiaries is
mandated by Section 4(b)(7) of RA 8282 to require reports, compilations and analyses of statistical and economic data
and to make an investigation as may be needed for its proper administration and development. Precisely, the
investigations conducted by SSS are appropriate in order to ensure that the benefits provided under the SS Law are
received by the rightful beneficiaries. It is not hard to see that such measure is necessary for the system’s proper
administration, otherwise, it will be swamped with bogus claims that will pointlessly deplete its funds. Such scenario will
certainly frustrate the purpose of the law which is to provide covered employees and their families protection against the
hazards of disability, sickness, old age and death, with a view to promoting their well-being in the spirit of social
justice. Moreover and as correctly pointed out by SSC, such investigations are likewise necessary to carry out the
mandate of Section 15 of the SS Law which provides in part, viz:

Sec. 15. Non-transferability of Benefits. – The SSS shall pay the benefits provided for in this Act to such [x x x] persons
as may be entitled thereto in accordance with the provisions of this Act x x x. (Emphasis supplied.)

The existence of two Form E-4s designating, on two different dates, two different women as his spouse is already an
indication that only one of them can be the legal spouse. As can be gleaned from the certification issued by the
NSO,31 there is no doubt that Edgardo married Rosemarie in 1982. Edna cannot be considered as the legal spouse of
Edgardo as their marriage took place during the existence of a previously contracted marriage. For said reason, the denial
of Edna’s claim by the SSC was correct. It should be emphasized that the SSC determined Edna’s eligibility on the basis
of available statistical data and documents on their database as expressly permitted by Section 4(b) (7) of R.A. No. 8282.

It is of no moment that the first wife, Rosemarie, did not participate or oppose Edna’s claim. Rosemarie’s non-
participation or her subsequent death on November 11, 200432 did not cure or legitimize the status of Edna.

WHEREFORE, the petition is GRANTED. The August 13, 2013 Decision and the October 29, 2013 Resolution of the
Court of Appeals in CA-G.R. SP No. 122933 are REVERSED and SET ASIDE. Accordingly, the petition for
entitlement of SS death benefits filed by respondent Edna Azote is DENIEDfor lack of merit.

SO ORDERED.
 G.R. No. 191237 September 24, 2014
ROBERT KUA, CAROLINE N. KUA, and MA. TERESITA N. KUA, Petitioners, vs.
GREGORIO SACUPAYO and MAXIMINIANO PANERIO, Respondents.

We heed the urgings in this petition to reverse the Decision1 of the Court of Appeals in CA-G.R. SP No. 01569-MIN
which ordered the reinstatement or Criminal Case Nos. 2006-072, 2006-073 and 2006-074 pending before, and
subsequently withdrawn by, the Regional Trial Court (RTC), Branch 20, Cagayan de Oro City.2 Petitioners Robert,
Caroline and Ma. Teresita, all surnamed Kua, were charged in the criminal cases for failure to remit Social Security
System (SSS) contributions and pay inentsion loans of respondents Gregorio Sacupayo and Maximiniano Panerio under
Section 22 (a) and (d), in relation to Section 28 (e), of Republic Act (R.A.) No. 8282, the Social Security (SS) Law.

The Court of Appeals fairly summarizes the facts, to wit:

[Petitioners] Robert Kua, Engr. Juanito Pagcaliwagan, Caroline N. Kua, Cleofe P. Adiao, Ma. Teresita N. Kua and
Francisco Alconis are members of the Board of Directors and the officers of Vicmar Development Corporation, a
domestic corporation, x x x. [Respondents] Gregorio G. Sacupayo and Maximiniano Panerio were VICMAR employees
since 1985 and 1995[,] respectively. Sacupayo was a foreman while Panerio was an assistant foreman.

As required by law, Vicmar, through its officers, deducted the Social Security System (SSS) contributions of
[respondents] from their wages. It also deducted four hundred sixty eight pesos (Php468.00) per month from the wage of
Sacupayo ashis monthly amortization for a ten thousand peso (Php10,000.00) loan he obtained from the SSS on
November 14, 2002. The deductions wereremitted by Vicmar to the SSS at first.

Sometime in 2003 and 2004, unknown to [respondents] and despite the continued SSS deductions from their wages,
Vicmar stopped remitting the same to the SSS. The un-remitted contributions for each [respondent] reached five thousand
seven hundred sixty pesos (Php5,760.00) each. For the amortizations, a total of eleven thousand two hundred thirty two
pesos (Php11,232.00) was deducted from the wages of Sacupayo as full payment for his loan. Yet only four thousand
pesos (Php4,000.00) was remitted.

Meantime, on August 7, 2004 and August 9, 2004 respectively, Sacupayo and Panerio were dismissed from employment.
Both filed complaints for illegal dismissal.

Panerio was thereafter afflicted with Chronic Persistent Asthma on September 28, 2004. But when he applied for sickness
benefits before the SSS in October 2004, the same was denied for the reason that no contributions or payments were made
for twelve (12) months prior to the semester of confinement. Sacupayo, for his part, filed another loan application before
the SSS. But thiswas also denied outright for nonpayment of a previous loan which should have been fully paid if not for
the failure of Vicmar to remit the amounts due to the SSS.

xxxx

Aggrieved by the wrongful acts of Vicmar in failing to remit the amounts due to the SSS that were deducted from their
wages, [respondents] filed complaints before the Office of the City Prosecutor in Cagayan de Oro City. Vicmar then
remitted to SSS the contributions and loan payments of [respondents] sometime thereafter. Nevertheless, probable cause
was found and three (3) separate Informations all dated June 6, 2005 were filed against [petitioners] officers of Vicmar
for violation of Section 22 (a) in relation to Section 28 (e) of RA 8282 otherwise known as the Social Security Act of
1997. The cases were first filed before the Municipal Trial Court in Cities but these were dismissed outright for lack of
jurisdiction. However, the same was also filed before the RTC where the three (3) cases were given due course, raffled
and consolidated to Branch 20 thereof.

[Petitioners] appealed the finding of probable cause against them before the Office of the Regional State Prosecutor
(RSP). This was granted by the RSP in a Resolution dated July 14, 2005, which ordered the City Prosecutor to desist from
filing the case or to withdraw the cases if one has already been filed for the following reason:

xxxx

Section 28 of RA 8282 above-cited merely lays down a disputable presumption that the members’ contribution to the SSS
is deemed misappropriated if the employer fails to remit the same to the SSS within 30 days from the date they became
due. The full payment and remittance of the same destroys this presumption. Section 22 of R.A. 1161 even allowed
delayed remittance and payment by providing for a 3% penalty. In this case, the full payment made by [petitioners] had
never been rebutted nor questioned by [respondents]. x x x [Petitioners] having already fullypaid to the SSS the total and
full membership dues for [respondents], there is no more reason to prosecute them under the aforecited section of RA
8282.

[Respondents] sought reconsideration thereto alleging lack of jurisdiction considering the prescribed penalty for the
crimes charged. But the same was denied by the RSP in a Resolution dated August 9, 2005. Hence, [respondents] filed an
appeal before the Department of Justice which seemingly remains un-acted upon to this day.

Pursuant to the Resolution of the RSP reversing the finding of probable cause by the City Prosecutor, [petitioners] filed a
Motion to Dismiss dated February 13, 2006 before [the] RTC. The City Prosecutor likewise filed a Comment manifesting
agreement to the withdrawal of the criminal cases pending resolution of the appeal with the DOJ. This was opposed by
[respondents] for the reason that the RSP lacked jurisdiction to resolve the appeal of [petitioners]. In an Order dated May
17, 2006, the trial court deemed it best to momentarily suspend the proceedings considering the pending appeal before the
DOJ.

On November 8, 2006, [petitioners] filed a second Motion to Dismiss alleging, among others, that [respondents] have
already been paid the benefits due to them in the laborcase. Moreover, the DOJ still has not acted upon on the appeal of
[respondents]. [Petitioners] then argued that the cases should be withdrawn on the ground of fairness. The public
prosecutor, pursuant to a directive of the RTC to comment on the Motion, adopted in totothe earlier manifestation of the
City Prosecutor espousing the withdrawal of the case.

This time, in the herein assailed Order dated December 5, 2006, the RTC granted the Motion of [petitioners] and ordered
the withdrawal of the criminal cases x x x:

xxxx

Considering therefore the time that elapsed without any action taked by the Department of Justice and the manifestation
of the Public Prosecutor withdrawing the case from the docket of the court and in as much as it is the Public Prosecutor
that is in control of the prosecution of all criminal cases, the motion to withdraw case is hereby granted.3

WHEREFORE, Criminal Case Nos. 2006-072, 2006-073 and 2006-074 for violation of Sec. 22 (a) and (d) in relation to
Sec. 28 (e) of R.A. 8282 is hereby ordered withdrawn from the dockets of the Court.4

Respondents filed a Petition for Certiorariand Mandamus under Rule 65 of the Rules of Court before the appellate court
toannul and set aside the trial court’s withdrawal of Criminal Case Nos. 2006-072, 2006-073 and 2006-074 from its
docket.

As stated at the outset, the Court of Appeals granted respondents’ petition, reversed and set aside the RTC’s ruling, and
reinstated the criminal cases against petitioners:

WHEREFORE, premises considered, the Order dated December 5, 2006 of the Regional Trial Court, Branch 20, Cagayan
de Oro City is REVERSED and SET ASIDE. Criminal Case Nos. 2006-072, 2006-073 and 2006-074 are REINSTATED.
The Presiding Judge of the Regional Trial Court, Branch 20, Cagayan de Oro City is DIRECTED to issue the
corresponding warrants for the arrest of the accused therein [petitioners herein] and to proceed with the disposition of the
said cases with dispatch.5

Hence, this appeal by certiorariof petitioners insisting on the withdrawal of the criminal cases against them.

In reversing the trial court, the appellate court found grave abuse of discretion in the trial court’s withdrawal of the
criminal cases from its docket by merely parroting the reasoning of the public prosecutor and not making its own
independent assessment of the merits of the case.

The Court of Appeals summarized the trial court’s reasoning:

1. The lapse of almost seven (7) months without any action taken by the DOJ; and

2. The manifestation to withdraw the case by the Public Prosecutor who is in control of the prosecution of all
criminal cases.6

and found it "flawed and insufficient to effect a withdrawal of the criminal cases" because:

1. The suspension of arraignment ofan accused, while authorized under Section 11,7 Rule 116 of the Rules of
Court, is only for a period of 60 days reckoned from the filing of the petition with the reviewing office.

2. Its own failure to act for seven (7) months without arraigning the accused cannot be an excuse to dismiss the
case, especially when the rules dictate that the deferment of arraignment in such case may only be done for a
period of 60 days.

3. The controlling case of Crespo v. Mogul8 teaches us that, while the prosecution of criminal actions is under the
discretion and control of the public prosecutor, once a complaint or information is filed, any disposition of the
case, be it a dismissal or a conviction or acquittal of an accused, rests in the sound discretion of the court.

4. Well-settled in jurisprudence is the principle that trial judges ought to make its own independent assessment of
the merits of the case and not abdicate its judicial power and act asa mere surrogate of the Secretary of Justice.

5. In any event, there exists probable cause to indict petitioners for violation of Sections 22 (a) and (d), inrelation
to Section 28 (e), of the SS Law.
 6. R.A. No. 8282, a special law, requires employers to: (a) register its employees with the SSS; (b) deduct
employee contributions from their salaries; and (3) remit these contributions to the SSS within a given period. 9

7. Violation of R.A. No. 8282, a special law, is mala prohibita: criminal liability attaches, without regard to intent
and good faith of the accused, once the law is violated.

8. The case in point is Tan, et al. v. Ballena, et al.10 where good faith and absence of malicious intentof the
accused and the subsequent remittance of the SSS contributions and loan amortizations, held no sway over the
accused’s criminal liability under the SS Law for failure to remit SSS contributions and loan amortizations of
accused’s employees.

9. On the whole, petitioners’ admission of their violations of the provisions of the SS Law clearlyand readily
established a prima facie case against them and the trial court should not have ordered the withdrawal of the
criminal cases.

Against the foregoing, petitioners are adamant that:

41. In the case at bar, the Petitioners did not fail to remit the SSS contributions of the Respondents. They have, in fact,
fully paid the same, albeit belatedly. Still, in this case, there was only delayed remittance of SSS contributions. There was
no non-remittance thereof.

Thus, the presumption of misappropriation in the SSS law is effectively rebutted. In view thereof, no criminal liability
attaches to the Petitioners.

42. The Office of the Solicitor General, in behalf of the State, joined the foregoing conclusion by stating thus[:]

Considering that [petitioners] had already fully paid and remitted [respondents’] SSS contributions, albeit belatedly, there
is no more reason to hold them liable under Section 28 (e) of Republic Act No. 8282. In remitting [respondents’]
contributions, it issafe to conclude that there was no malicious intent on the part of [petitioners] to misappropriate the
same. As explained by [petitioners], their failure to remit the deductions on time was due to the financial crisis that the
corporation suffered at that time. The presumption, therefore, that [petitioners] had intended to misappropriate the
amounts deducted from the [respondents’] salaries had already been destroyed by their full payments of the same to the
SSS.11

The ruling of the appellate court is sound and backed by jurisprudence.

Sections 22 (a) and (d) and 28 (e) of R.A. No. 8282 read:

SEC. 22. Remittance of Contributions. ‐(a) The contribution imposed in the preceding section shall be remitted to the SSS
within the first ten (10) days of each calendar month following the month for which they are applicable or within
suchtime as the Commission may prescribe. Every employer required to deduct and to remit such contributions shall be
liable for their payment and if any contribution is not paid to the SSS as herein prescribed, he shall pay besides the
contribution a penalty thereon of three percent (3%) per month from the date the contribution falls due until paid. If
deemed expedient and advisable by the Commission, the collection and remittance of contributions shall be made
quarterly or semi‐ annually in advance, the contributions payable by the employees to be advanced by their respective
employers: Provided, That upon separation of an employee, any contribution so paid in advance but not due shall be
credited or refunded to his employer.

xxxx

(d) The last complete record of monthly contributions paid by the employer or the average of the monthly contributions
paid during the past three (3) years as of the date of filing of the action for collection shall be presumed to be the monthly
contributions payable by and due from the employer to the SSS for each of the unpaid month, unless contradicted and
overcome by other evidence: Provided, That the SSS shall not be barred from determining and collecting the true and
correct contributions due the SSS even after full payment pursuant to this paragraph, nor shall the employer be relieved of
his liability under Section Twenty‐eight of this Act.

SEC. 28. Penal Clause. ‐x x x

(e) Whoever fails or refuses to complywith the provisions of this Act or with the rules and regulations promulgated by the
Commission, shall be punished by a fine of not less thanFive thousand pesos (₱5,000.00) nor more than Twenty thousand
pesos (₱20,000.00), or imprisonment for not less than six (6) years and one (1) day nor more than twelve (12) years or
both, at the discretion of the court: Provided, That where the violation consists in failure or refusal to register employees
or himself, in case of the covered self‐employed, or to deduct contributions from the employees' compensation and remit
the same to the SSS, the penalty shall be a fine of not less than Five thousand pesos (₱5,000.00) nor more than Twenty
thousand pesos (₱20,000.00) and imprisonment for not less than six (6) years and one (1) day nor more than twelve (12)
years.
The elements of criminal liability under Section 22 (a) are:

1. The employer fails to register its employees with the SSS;

2. The employer fails to deduct monthly contributions from the salaries and/or wages of its employees; and

3. Having deducted the SSS contributions and/or loan payments to SSS, the employer fails to remit these to the
SSS.

In this case, petitioners split hairs that they "did not fail to remit the SSS contributions of respondents;" they "fully paid
the same, albeit belatedly."

We affirm the finding of a prima facie case of petitioners’ failure to remit the SSS contributions and loan amortization of
respondents for a period of approximately two (2) years, in 2003 and 2004. In October 2004, after respondents were
successively dismissed from employment by Vicmar in August 2004, they separately filed for SSS benefits, relating to
sickness and procurement of a loan, which were both denied outright for lack of contributions or payments twelve months
(12) prior to the semester of confinement and failure to pay a prior loan. After respondents filed criminal complaints
against petitioners, the latter then remitted their SSS wage deductions and loan payments to the SSS.

The factual milieu obtaining herein does not denote a simple delay in payment. Again, petitioners initially failed to remit
the SSS contributions and payments of respondents such thatrespondents were denied benefits under the SS Law which
they wanted to avail of. It was only under threat of criminal liability that petitioners subsequently remitted what they had
long deducted from the wages of respondents.

Indeed, the affidavit of Vicmar’s Plant Manager, Juanito Pagcaliwagan, admits the fact of non-payment of contributions:

x x x "[W]hen funds became available, as Plant Manager, I immediately caused the payment to SSS [of] the contributions
of the employees and the employer’s share, together with the payment of loans of the employees,"12 x x x.

In Tan, et al. v. Ballena, et al.13 likewise involving the determination of probable cause to indict petitioners therein for
failing to remit SSS contributions and loan payments of their employees, we affirmed the Court of Appeals’ and our
power to intervene and exercise our own powers of review with respect to the DOJ’s finding. We ruled that in the
exceptional case in which grave abuse of discretion is committed, as when a clear sufficiency or insufficiency of evidence
to support a finding of probable cause is ignored, the Court of Appeals may take cognizance of the case viaa petition
under Rules 65 of the Rules of Court.

More so in this instance when the trial court has already taken cognizance and acquired jurisdiction over the criminal
cases against petitioners. On more than one occasion,we have declared that while the recommendation of the public
prosecutor of the ruling of the DOJ Secretary is persuasive, it is not binding on courts. 14 Here, the trial court abdicated its
judicial power and refused to performa positive duty enjoined by law, which is the independent resolution of the issue of
probable cause. It is the court’s bounden duty to assess independently the merits of the motion, and the assessment must
be embodied in a written order disposing of the motion.15

The trial court failed in that regard.

Significantly, we note that the issue before us is the validity of the order of the trial court directing the withdrawal from
its dockets of "Criminal Case Nos. 2006-072, 2006-073 and 2006-074 for violation of Sec. 22 (a) and (d) in relation to
Sec. 28 (e) of R.A. No. 8282."

The culpability of the accused under the indictment is not yet before us. Yet to be determined during the ensuing trial are
considerations such as the extent and reason for the delay, the date of actual remittance and all other circumstances that
attended such remittance.1âwphi1 All these are matters of defense that need proof during trial.

WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals in CA-G.R. SP No. 01569-MIN is
AFFIRMED. Criminal Case Nos. 2006-072, 2006-073 and 2006-074 pending before the Regional Trial Court, Branch 20,
Cagayan de Oro City are REINSTATED and the Presiding Judge thereof is DIRECTED to dispose of the cases with
dispatch.

SO ORDERED.
 G.R. No. 170735 December 17, 2007
IMMACULADA L. GARCIA, petitioner, vs.
SOCIAL SECURITY COMMISSION LEGAL AND COLLECTION, SOCIAL SECURITY SYSTEM, respondents.

This is petition for review on Certiorari under Rule 45 of the Rules of Court is assailing the 2 June 2005 Decision 1and 8
December 2005 Resolution2 both of the Court of Appeals in CA-G.R. SP No. 85923. the appellate court affirmed the ---
Order and --- Resolution both of the Social Security Commission (SSC) in SSC Case No. 10048, finding Immaculada L.
Garcia (Garcia), the sole surviving director of Impact Corporation, petitioner herein, liable for unremitted, albeit
collected, SSS contributions.

Petitioner Immaculada L. Garcia, Eduardo de Leon, Ricardo de Leon, Pacita Fernandez, and Consuelo Villanueva were
directors3 of Impact Corporation. The corporation was engaged in the business of manufacturing aluminum tube
containers and operated two factories. One was a "slug" foundry-factory located in Cuyapo, Nueva Ecija, while the other
was an Extrusion Plant in Cainta, Metro Manila, which processed the "slugs" into aluminum collapsible tubes and similar
containers for toothpaste and other related products.

Records show that around 1978, Impact Corporation started encountering financial problems. By 1980, labor unrest
besieged the corporation.

In March 1983, Impact Corporation filed with the Securities and Exchange Commission (SEC) a Petition for Suspension
of Payments,4 docketed as SEC Case No. 02423, in which it stated that:

[Impact Corporation] has been and still is engaged in the business of manufacturing aluminum tube containers x x
x.

xxxx

In brief, it is an on-going, viable, and profitable enterprise.

On 8 May 1985, the union of Impact Corporation filed a Notice of Strike with the Ministry of Labor which was followed
by a declaration of strike on 28 July 1985. Subsequently, the Ministry of Labor certified the labor dispute for compulsory
arbitration to the National Labor Relations Commission (NLRC) in an Order5 dated 25 August 1985. The Ministry of
Labor, in the same Order, noted the inability of Impact Corporation to pay wages, 13th month pay, and SSS remittances
due to cash liquidity problems. A portion of the order reads:

On the claims of unpaid wages, unpaid 13th month pay and non-remittance of loan amortization and SSS
premiums, we are for directing the company to pay the same to the workers and to remit loan amortizations and
SSS premiums previously deducted from their wages to the Social Security System. Such claims were never
contested by the company both during the hearing below and in our office. In fact, such claims were admitted by
the company although it alleged cash liquidity as the main reason for such non-payment.

WHEREFORE, the dispute at Impact Corporation is hereby certified to the National Labor Relations
Commission for compulsory arbitration in accordance with Article 264 (g) of the Labor Code, as amended.

xxxx

The company is directed to pay all the entitled workers unpaid wages, unpaid 13th month pay and to remit to the
Social Security System loan amortizations and SSS premiums previously deducted from the wages of the
workers.6

On 3 July 1985, the Social Security System (SSS), through its Legal and Collection Division (LCD), filed a case before
the SSC for the collection of unremitted SSS premium contributions withheld by Impact Corporation from its employees.
The case which impleaded Impact Corporation as respondent was docketed as SSC Case No. 10048.7

Impact Corporation was compulsorily covered by the SSS as an employer effective 15 July 1963 and was assigned
Employer I.D. No. 03-2745100-21.

In answer to the allegations raised in SSC Case No. 10048, Impact Corporation, through its then Vice President Ricardo
de Leon, explained in a letter dated 18 July 1985 that it had been confronted with strikes in 1984 and layoffs were
effected thereafter. It further argued that the P402,988.93 is erroneous. It explained among other things, that its operations
had been suspended and that it was waiting for the resolution on its Petition for Suspension of Payments by the SEC
under SEC Case No. 2423. Despite due notice, the corporation failed to appear at the hearings. The SSC ordered the
investigating team of the SSS to determine if it can still file its claim for unpaid premium contributions against the
corporation under the Petition for Suspension of Payments.

In the meantime, the Petition for Suspension of Payments was dismissed which was pending before the SEC in an
Order8 dated 12 December 1985. Impact Corporation resumed operations but only for its winding up and
dissolution.9 Due to Impact Corporation’s liability and cash flow problems, all of its assets, namely, its machineries,
equipment, office furniture and fixtures, were sold to scrap dealers to answer for its arrears in rentals.
On 1 December 1995, the SSS-LCD filed an amended Petition10 in SSC Case No. 10048 wherein the directors of Impact
Corporation were directly impleaded as respondents, namely: Eduardo de Leon, Ricardo de Leon, 11 Pacita Fernandez,
Consuelo Villanueva, and petitioner. The amounts sought to be collected totaled P453,845.78 and P10,856.85 for the
periods August 1980 to December 1984 and August 1981 to July 1984, respectively, and the penalties for late remittance
at the rate of 3% per month from the date the contributions fell due until fully paid pursuant to Section 22(a) of the Social
Security Law,12 as amended, in the amounts of P49,941.67 and P2,474,662.82.

Period Unremitted Amount Penalties Total

(3% Interest Per Month)
August 1980 to December 1984 P 453,845.78 P49, 941.67 503,787.45
August 1981 to July 1984 P 10,856.85 P2, 474, 662.82 2,485,519.67

Summonses were not served upon Eduardo de Leon, Pacita Fernandez, and Consuelo Villanueva, their whereabouts
unknown. They were all later determined to be deceased. On the other hand, due to failure to file his responsive pleading,
Ricardo de Leon was declared in default.

Petitioner filed with the SSC a Motion to Dismiss13 on grounds of prescription, lack of cause of action and cessation of
business, but the Motion was denied for lack of merit.14 In her Answer with Counterclaim15 dated 20 May 1999, petitioner
averred that Impact Corporation had ceased operations in 1980. In her defense, she insisted that she was a mere director
without managerial functions, and she ceased to be such in 1982. Even as a stockholder and director of Impact
Corporation, petitioner contended that she cannot be made personally liable for the corporate obligations of Impact
Corporation since her liability extended only up to the extent of her unpaid subscription, of which she had none since her
subscription was already fully paid. The petitioner raised the same arguments in her Position Paper. 16

On 23 January 1998, Ricardo de Leon died following the death, too, of Pacita Fernandez died on 7 February 2000. In an
Order dated 11 April 2000, the SSC directed the System to check if Impact Corporation had leviable properties to which
the investigating team of respondent SSS manifested that the Impact Corporation had already been dissolved and its
assets disposed of.17

In a Resolution dated 28 May 2003, the Social Security Commission ruled in favor of SSS and declared petitioner liable
to pay the unremitted contributions and penalties, stating the following:

WHEREFORE, premises considered, this Commission finds, and so holds, that respondents Impact Corporation
and/or Immaculada L. Garcia, as director and responsible officer of the said corporation, is liable to pay the SSS
the amounts of P442,988.93, representing the unpaid SS contributions of their employees for the period August
1980 to December 1984, not inclusive, and P10,856.85, representing the balance of the unpaid SS contributions
in favor of Donato Campos, Jaime Mascarenas, Bonifacio Franco and Romeo Fullon for the period August 1980
to December 1984, not inclusive, as well as the 3% per month penalty imposed thereon for late payment in the
amounts of P3,194,548.63 and P78,441.33, respectively, computed as of April 30, 2003. This is without prejudice
to the right of the SSS to collect the penalties accruing after April 30, 2003 and to institute other appropriate
actions against the respondent corporation and/or its responsible officers.

Should the respondents pay their liability for unpaid SSS contributions within sixty (60) days from receipt of a
copy of this Resolution, the 3% per month penalty for late payment thereof shall be deemed condoned pursuant to
SSC Res. No. 397-S.97, as amended by SSC Res. Nos. 112-S.98 and 982-S.99, implementing the provision on
condonation of penalty under Section 30 of R.A. No. 8282.

In the event the respondents fail to pay their liabilities within the aforestated period, let a writ of execution be
issued, pursuant to Section 22 (c) [2] of the SS Law, as amended, for the satisfaction of their liabilities to the
SSS.18

Petitioner filed a Motion for Reconsideration19 of the afore-quoted Decision but it was denied for lack of merit in an
Order20 dated 4 August 2004, thus:

Nowhere in the questioned Resolution dated May 28, 2003 is it stated that the other directors of the defunct
Impact Corporation are absolved from their contribution and penalty liabilities to the SSS. It is certainly farthest
from the intention of the petitioner SSS or this Commission to pin the entire liability of Impact Corporation on
movant Immaculada L. Garcia, to the exclusion of the directors of the corporation namely: Eduardo de Leon,
Ricardo de Leon, Pacita Fernandez and Conzuelo Villanueva, who were all impleaded as parties-respondents in
this case.

The case record shows that there was failure of service of summonses upon respondents Eduardo de Leon, Pacita
Fernandez and Conzuelo Villanueva, who are all deceased, for the reason that their whereabouts are unknown.
Moreover, neither the legal heirs nor the estate of the defaulted respondent Ricardo de Leon were substituted as
parties-respondents in this case when he died on January 23, 1998. Needless to state, the Commission did not
acquire jurisdiction over the persons or estates of the other directors of Impact Corporation, hence, it could not
validly render any pronouncement as to their liabilities in this case.
 Furthermore, the movant cannot raise in a motion for reconsideration the defense that she was no longer a
director of Impact Corporation in 1982, when she was allegedly eased out by the managing directors of Impact
Corporation as purportedly shown in the Deed of Sale and Assignment of Shares of Stock dated January 22,
1982. This defense was neither pleaded in her Motion to Dismiss dated January 17, 1996 nor in her Answer with
Counterclaim dated May 18, 1999 and is, thus, deemed waived pursuant to Section 1, Rule 9 of the 1997 Rules of
Civil Procedure, which has suppletory application to the Revised Rules of Procedure of the Commission.

Finally, this Commission has already ruled in the Order dated April 27, 1999 that since the original Petition was
filed by the SSS on July 3, 1985, and was merely amended on December 1, 1995 to implead the responsible
officers of Impact Corporation, without changing its causes of action, the same was instituted well within the 20-
year prescriptive period provided under Section 22 (b) of the SS Law, as amended, considering that the
contribution delinquency assessment covered the period August 1980 to December 1984.

In view thereof, the instant Motion for Reconsideration is hereby denied for lack of merit.

Petitioner elevated her case to the Court of Appeals via a Petition for Review. Respondent SSS filed its Comment dated
20 January 2005, and petitioner submitted her Reply thereto on 4 April 2005.

The Court of Appeals, applying Section 28(f) of the Social Security Law,21 again ruled against petitioner. It dismissed the
petitioner’s Petition in a Decision dated 2 June 2005, the dispositive portion of which reads:

WHEREFORE, premises considered, the petition is DISMISSED for lack of merit. The assailed Resolution dated
28 May 2003 and the Order dated 4 August 2004 of the Social Security Commission are AFFIRMED in toto.22

Aggrieved, petitioner filed a Motion for Reconsideration of the appellate court’s Decision but her Motion was denied in a
Resolution dated 8 December 2005.

Hence, the instant Petition in which petitioner insists that the Court of Appeals committed grave error in holding her
solely liable for the collected but unremitted SSS premium contributions and the consequent late penalty payments due
thereon. Petitioner anchors her Petition on the following arguments:

I. SECTION 28(F) OF THE SSS LAW PROVIDES THAT A MANAGING HEAD, DIRECTOR OR PARTNER
IS LIABLE ONLY FOR THE PENALTIES OF THE EMPLOYER CORPORATION AND NOT FOR UNPAID
SSS CONTRIBUTIONS OF THE EMPLOYER CORPORATION.

II. UNDER THE SSS LAW, IT IS THE MANAGING HEADS, DIRECTORS OR PARTNERS WHO SHALL
BE LIABLE TOGETHER WITH THE CORPORATION. IN THIS CASE, PETITIONER HAS CEASED TO BE
A STOCKHOLDER OF IMPACT CORPORATION IN 1982. EVEN WHILE SHE WAS A STOCKHOLDER,
SHE NEVER PARTICIPATED IN THE DAILY OPERATIONS OF IMPACT CORPORATION.

III. UNDER SECTION 31 OF THE CORPORATION CODE, ONLY DIRECTORS, TRUSTEES OR

OFFICERS WHO PARTICIPATE IN UNLAWFUL ACTS OR ARE GUILTY OF GROSS NEGLIGENCE
AND BAD FAITH SHALL BE PERSONALLY LIABLE. OTHERWISE, BEING A MERE STOCKHOLDER,
SHE IS LIABLE ONLY TO THE EXTENT OF HER SUBSCRIPTION.

IV. IMPACT CORPORATION SUFFERED IRREVERSIBLE ECONOMIC LOSSES, EVENTS WHICH

WERE NEITHER DESIRED NOR CAUSED BY ANY ACT OF THE PETITIONER. THUS, BY REASON OF
FORTUITOUS EVENTS, THE PETITIONER SHOULD BE ABSOLVED FROM LIABILITY.

V. RESPONDENT SOCIAL SECURITY SYSTEM FAILED MISERABLY IN EXERTING EFFORTS TO

ACQUIRE JURISDICTION OVER THE LEVIABLE ASSETS OF IMPACT CORPORATION, PERSON/S
AND/OR ESTATE/S OF THE OTHER DIRECTORS OR OFFICERS OF IMPACT CORPORATION.

VI. THE HONORABLE COMMISSION SERIOUSLY ERRED IN NOT RENDERING A JUDGMENT BY

DEFAULT AGAINST THE DIRECTORS UPON WHOM IT ACQUIRED JURISDICTION.

Based on the foregoing, petitioner prays that the Decision dated 2 June 2005 and the Resolution dated 8 December 2005
of the Court of Appeals be reversed and set aside, and a new one be rendered absolving her of any and all liabilities under
the Social Security Law.

In sum, the core issue to be resolved in this case is whether or not petitioner, as the only surviving director of Impact
Corporation, can be made solely liable for the corporate obligations of Impact Corporation pertaining to unremitted SSS
premium contributions and penalties therefore.

As a covered employer under the Social Security Law, it is the obligation of Impact Corporation under the provisions of
Sections 18, 19 and 22 thereof, as amended, to deduct from its duly covered employee’s monthly salaries their shares as
premium contributions and remit the same to the SSS, together with the employer’s shares of the contributions to the
petitioner, for and in their behalf.
From all indications, the corporation has already been dissolved. Respondents are now going after petitioner who is the
only surviving director of Impact Corporation.

A cursory review of the alleged grave errors of law committed by the Court of Appeals above reveals there seems to be
no dispute as to the assessed liability of Impact Corporation for the unremitted SSS premiums of its employees for the
period January 1980 to December 1984.

There is also no dispute as to the fact that the employees’ SSS premium contributions have been deducted from their
salaries by Impact Corporation.

Petitioner in assailing the Court of Appeals Decision, distinguishes the penalties from the unremitted or unpaid SSS
premium contributions. She points out that although the appellate court is of the opinion that the concerned officers of an
employer corporation are liable for the penalties for non-remittance of premiums, it still affirmed the SSC Resolution
holding petitioner liable for the unpaid SSS premium contributions in addition to the penalties.

Petitioner avers that under the aforesaid provision, the liability does not include liability for the unremitted SSS premium
contributions.

Petitioner’s argument is ridiculous. The interpretation petitioner would like us to adopt finds no support in law or in
jurisprudence. While the Court of Appeals Decision provided that Section 28(f) refers to the liabilities pertaining to
penalty for the non-remittance of SSS employee contributions, holding that it is distinct from the amount of the supposed
SSS remittances, petitioner mistakenly concluded that Section 28(f) is applicable only to penalties and not to the liability
of the employer for the unremitted premium contributions. Clearly, a simplistic interpretation of the law is untenable. It is
a rule in statutory construction that every part of the statute must be interpreted with reference to the context, i.e., that
every part of the statute must be considered together with the other parts, and kept subservient to the general intent of the
whole enactment.23 The liability imposed as contemplated under the foregoing Section 28(f) of the Social Security Law
does not preclude the liability for the unremitted amount. Relevant to Section 28(f) is Section 22 of the same law.

SEC. 22. Remittance of Contributions. -- (a) The contributions imposed in the preceding Section shall be remitted
to the SSS within the first ten (10) days of each calendar month following the month for which they are
applicable or within such time as the Commission may prescribe. Every employer required to deduct and to remit
such contributions shall be liable for their payment and if any contribution is not paid to the SSS as herein
prescribed, he shall pay besides the contribution a penalty thereon of three percent (3%) per month from the date
the contribution falls due until paid. If deemed expedient and advisable by the Commission, the collection and
remittance of contributions shall be made quarterly or semi-annually in advance, the contributions payable by the
employees to be advanced by their respective employers: Provided, That upon separation of an employee, any
contribution so paid in advance but not due shall be credited or refunded to his employer.

Under Section 22(a), every employer is required to deduct and remit such contributions penalty refers to the 3% penalty
that automatically attaches to the delayed SSS premium contributions. The spirit, rather than the letter of a law determines
construction of a provision of law. It is a cardinal rule in statutory construction that in interpreting the meaning and scope
of a term used in the law, a careful review of the whole law involved, as well as the intendment of the law, must be
made.24 Nowhere in the provision or in the Decision can it be inferred that the persons liable are absolved from paying the
unremitted premium contributions.

Elementary is the rule that when laws or rules are clear, it is incumbent upon the judge to apply them regardless of
personal belief or predilections - when the law is unambiguous and unequivocal, application not interpretation thereof is
imperative.25 However, where the language of a statute is vague and ambiguous, an interpretation thereof is resorted to.
An interpretation thereof is necessary in instances where a literal interpretation would be either impossible or absurd or
would lead to an injustice. A law is deemed ambiguous when it is capable of being understood by reasonably well-
informed persons in either of two or more senses.26 The fact that a law admits of different interpretations is the best
evidence that it is vague and ambiguous.27 In the instant case, petitioner interprets Section 28(f) of the Social Security
Law as applicable only to penalties and not to the liability of the employer for the unremitted premium contributions.
Respondents present a more logical interpretation that is consistent with the provisions as a whole and with the legislative
intent behind the Social Security Law.

This Court cannot be made to accept an interpretation that would defeat the intent of the law and its legislators. 28

Petitioner also challenges the finding of the Court of Appeals that under Section 28(f) of the Social Security Law, a mere
director or officer of an employer corporation, and not necessarily a "managing" director or officer, can be held liable for
the unpaid SSS premium contributions.

Section 28(f) of the Social Security Law provides the following:

(f) If the act or omission penalized by this Act be committed by an association, partnership, corporation or any
other institution, its managing head, directors or partners shall be liable to the penalties provided in this Act for
the offense.
This Court agrees in petitioner’s observation that the SSS did not even deny nor rebut the claim that petitioner was not the
"managing head" of Impact Corporation. However, the Court of Appeals rightly held that petitioner, as a director of
Impact Corporation, is among those officers covered by Section 28(f) of the Social Security Law.

Petitioner invokes the rule in statutory construction called ejusdem generic; that is, where general words follow an
enumeration of persons or things, by words of a particular and specific meaning, such general words are not to be
construed in their widest extent, but are to be held as applying only to persons or things of the same kind or class as those
specifically mentioned. According to petitioner, to be held liable under Section 28(f) of the Social Security Law, one must
be the "managing head," "managing director," or "managing partner." This Court though finds no need to resort to
statutory construction. Section 28(f) of the Social Security Law imposes penalty on:

(1) the managing head;

(2) directors; or

(3) partners, for offenses committed by a juridical person

The said provision does not qualify that the director or partner should likewise be a "managing director" or "managing
partner."29 The law is clear and unambiguous.

Petitioner nonetheless raises the defense that under Section 31 of the Corporation Code, only directors, trustees or officers
who participate in unlawful acts or are guilty of gross negligence and bad faith shall be personally liable, and that being a
mere stockholder, she is liable only to the extent of her subscription.

Section 31 of the Corporation Code, stipulating on the liability of directors, trustees, or officers, provides:

SEC. 31. Liability of directors, trustees or officers. - Directors or trustees who willfully and knowingly vote for or
assent to patently unlawful acts of the corporation or who are guilty of gross negligence or bad faith in directing
the affairs of the corporation or acquire any personal or pecuniary interest in conflict with their duty as such
directors, or trustees shall be liable jointly and severally for all damages resulting therefrom suffered by the
corporation, its stockholders or members and other persons.

Basic is the rule that a corporation is invested by law with a personality separate and distinct from that of the persons
composing it as well as from that of any other legal entity to which it may be related. A corporation is a juridical entity
with legal personality separate and distinct from those acting for and in its behalf and, in general, from the people
comprising it. Following this, the general rule applied is that obligations incurred by the corporation, acting through its
directors, officers and employees, are its sole liabilities.30 A director, officer, and employee of a corporation are generally
not held personally liable for obligations incurred by the corporation.

Being a mere fiction of law, however, there are peculiar situations or valid grounds that can exist to warrant the disregard
of its independent being and the lifting of the corporate veil. This situation might arise when a corporation is used to
evade a just and due obligation or to justify a wrong, to shield or perpetrate fraud, to carry out other similar unjustifiable
aims or intentions, or as a subterfuge to commit injustice and so circumvent the law. 31 Thus, Section 31 of the
Corporation Law provides:

Taking a cue from the above provision, a corporate director, a trustee or an officer, may be held solidarily liable with the
corporation in the following instances:

1. When directors and trustees or, in appropriate cases, the officers of

a corporation--

(a) vote for or assent to patently unlawful acts of the corporation;

(b) act in bad faith or with gross negligence in directing the corporate affairs;

(c) are guilty of conflict of interest to the prejudice of the corporation, its stockholders or members, and
other persons.

2. When a director or officer has consented to the issuance of watered stocks or who, having knowledge thereof,
did not forthwith file with the corporate secretary his written objection thereto.

3. When a director, trustee or officer has contractually agreed or stipulated to hold himself personally and
solidarily liable with the Corporation.

4. When a director, trustee or officer is made, by specific provision of law, personally liable for his corporate
action. 32

The aforesaid provision states:

 SEC. 31. Liability of directors, trustees or officers. - Directors or trustees who willfully and knowingly vote for or
assent to patently unlawful acts of the corporation or who are guilty of gross negligence or bad faith in directing
the affairs of the corporation or acquire any personal or pecuniary interest in conflict with their duty as such
directors, or trustees shall be liable jointly and severally for all damages resulting therefrom suffered by the
corporation, its stockholders or members and other persons.

The situation of petitioner, as a director of Impact Corporation when said corporation failed to remit the SSS premium
contributions falls exactly under the fourth situation. Section 28(f) of the Social Security Law imposes a civil liability for
any act or omission pertaining to the violation of the Social Security Law, to wit:

(f) If the act or omission penalized by this Act be committed by an association, partnership, corporation or any
other institution, its managing head, directors or partners shall be liable to the penalties provided in this Act for
the offense.

In fact, criminal actions for violations of the Social Security Law are also provided under the Revised Penal Code. The
Social Security Law provides, in Section 28 thereof, to wit:

(h) Any employer who, after deducting the monthly contributions or loan amortizations from his employees’
compensation, fails to remit the said deductions to the SSS within thirty (30) days from the date they became due
shall be presumed to have misappropriated such contributions or loan amortizations and shall suffer the penalties
provided in Article Three hundred fifteen of the Revised Penal Code.

(i) Criminal action arising from a violation of the provisions of this Act may be commenced by the SSS or the
employee concerned either under this Act or in appropriate cases under the Revised Penal Code: x x x.

Respondents would like this Court to apply another exception to the rule that the persons comprising a corporation are not
personally liable for acts done in the performance of their duties.

The Court of Appeals in the appealed Decision stated:

Anent the unpaid SSS contributions of Impact Corporation’s employees, the officers of a corporation are liable in
behalf of a corporation, which no longer exists or has ceased operations. Although as a rule, the officers and
members of a corporation are not personally liable for acts done in performance of their duties, this rule admits of
exception, one of which is when the employer corporation is no longer existing and is unable to satisfy the
judgment in favor of the employee, the officers should be held liable for acting on behalf of the corporation.
Following the foregoing pronouncement, petitioner, as one of the directors of Impact Corporation, together with
the other directors of the defunct corporation, are liable for the unpaid SSS contributions of their employees.33

On the other hand, the SSC, in its Resolution, presented this discussion:

Although as a rule, the officers and members of a corporation are not personally liable for acts done in the
performance of their duties, this rule admits of exceptions, one of which is when the employer corporation is no
longer existing and is unable to satisfy the judgment in favor of the employee, the officers should be held liable
for acting on behalf of the corporation. x x x.34

The rationale cited by respondents in the two preceding paragraphs need not have been applied because the personal
liability for the unremitted SSS premium contributions and the late penalty thereof attaches to the petitioner as a director
of Impact Corporation during the period the amounts became due and demandable by virtue of a direct provision of law.

Petitioner’s defense that since Impact Corporation suffered irreversible economic losses, and by reason of fortuitous
events, she should be absolved from liability, is also untenable. The evidence adduced totally belies this claim. A
reference to the copy of the Petition for Suspension of Payments filed by Impact Corporation on 18 March 1983 before
the SEC contained an admission that:

"[I]t has been and still is engaged in business" and "has been and still is engaged in the business of manufacturing
aluminum tube containers" and "in brief, it is an on-going, viable, and profitable enterprise" which has "sufficient
assets" and "actual and potential income-generation capabilities."

The foregoing document negates petitioner’s assertion and supports the contention that during the period involved Impact
Corporation was still engaged in business and was an ongoing, viable, profitable enterprise. In fact, the latest SSS form
RIA submitted by Impact Corporation is dated 7 May 1984. The assessed SSS premium contributions and penalty are
obligations imposed upon Impact Corporation by law, and should have been remitted to the SSS within the first 10 days
of each calendar month following the month for which they are applicable or within such time as the SSC prescribes.35

This Court also notes the evident failure on the part of SSS to issue a judgment in default against Ricardo de Leon, who
was the vice-president and officer of the corporation, upon his non-filing of a responsive pleading after summons was
served on him. As can be gleaned from Section 11 of the SSS Revised Rules of Procedure, the Commissioner is mandated
to render a decision either granting or denying the petition. Under the aforesaid provision, if respondent fails to answer
within the time prescribed, the Hearing Commissioner may, upon motion of petitioner, or motu proprio, declare
respondent in default and proceed to receive petitioner’s evidence ex parte and thereafter recommend to the Commission
either the granting or denial of the petition as the evidence may warrant.36

On a final note, this Court sees it proper to quote verbatim respondents’ prefatory statement in their Comment:

The Social Security System is a government agency imbued with a salutary purpose to carry out the policy of the
State to establish, develop, promote and perfect a sound and viable tax exempt social security system suitable to
the needs of the people throughout the Philippines which shall promote social justice and provide meaningful
protection to members and their beneficiaries against the hazards of disability, sickness, maternity, old-age, death
and other contingencies resulting in loss of income or financial burden.

The soundness and viability of the funds of the SSS in turn depends on the contributions of its covered employee
and employer members, which it invests in order to deliver the basic social benefits and privileges to its members.
The entitlement to and amount of benefits and privileges of the covered members are contribution-based. Both
the soundness and viability of the funds of the SSS as well as the entitlement and amount of benefits and
privileges of its members are adversely affected to a great extent by the non-remittance of the much-needed
contributions.37

The sympathy of the law on social security is toward its beneficiaries. This Court will not turn a blind eye on the
perpetration of injustice. This Court cannot and will not allow itself to be made an instrument nor be privy to any attempt
at the perpetration of injustice.

Following the doctrine laid down in Laguna Transportation Co., Inc. v. Social Security System,38 this Court rules that
although a corporation once formed is conferred a juridical personality separate and distinct from the persons comprising
it, it is but a legal fiction introduced for purposes of convenience and to subserve the ends of justice. The concept cannot
be extended to a point beyond its reasons and policy, and when invoked in support of an end subversive of this policy,
will be disregarded by the courts.

WHEREFORE, pursuant to the foregoing, the Decision of the Court of Appeals dated 2 June 2005 in CA-G.R. SP No.
85923 is hereby AFFIRMED WITH FINALITY. Petitioner Immaculada L. Garcia, as sole surviving director of Impact
Corporation is hereby ORDERED to pay for the collected and unremitted SSS contributions of Impact Corporation. The
case is REMANDED to the SSS for computation of the exact amount and collection thereof.

SO ORDERED.
 G.R. No. 101630 August 24, 1992
VICTOR DE JESUS, petitioner, vs.
COURT OF APPEALS, JUDGE EDDIE R. ROJAS, MTCC, Br. II, General Santos City, CITY PROSECUTOR
FRANKLIN GACAL and SALUSTIANO SONIDO, respondents.

Petitioner Victor de Jesus, then Director and Finance Officer of Southern Island Colleges, together with his octogenarian
stepmother, Eugenia de Jesus, who was then the Directress-Chairman of the Board of Directors, was charged with
violation of Section 28 (h) of the Social Security Law for failure to remit the SSS loan amortizations of private respondent
Salustiano Sonido, an employee, in the amount; of P583.35 covering the period from January to August 1988. The
Information, signed by Third Assistant City Prosecutor Andres Lorenzo, Jr., was filed with the Municipal Trial Court in
Cities, Br. II, General Santos City, docketed as Crim. Case No. 16886-2, presided by respondent Judge Eddie R. Rojas.

Petitioner filed a motion to quash the Information on the ground that (a) the City Prosecutor was not authorized to file the
Information in the absence of prior authority from the SSS; (b) the SSS and not the MTCC has jurisdiction over the case;
(c) the criminal action has been extinguished by the sale of his shares in the school before the complaint for estafa was
filed against him and his stepmother; and, (d) damage as an element of estafa was not present in view of Sec. 22 (b) of the
Social Security Law which guarantees enjoyment of SSS benefits by the employee notwithstanding failure of his
employer to remit deductions.

On 27 February 1991, respondent Judge denied the motion to quash for lack of merit.1

Petitioner challenged before the Court of Appeals by way of a petition for certiorari, prohibition and mandamus the
Order of respondent Judge denying his motion to quash.

On 31 July 1991, the appellate court dismissed the petition holding

thus —

We refrain from any discussion on the merits of this case since it involves an Order of a Municipal Trial Court
whose decisions are not directly reviewable by this Court. . . . The instant petition should have been filed with the
Regional Trial Court, the proper and competent tribunal. 2

His motion for reconsideration having been denied by respondent Court of Appeals on 28 August 1991, petitioner now
comes to Us seeking inter alia to set aside the resolutions dismissing his petition.

Outright, We discern a procedural misconception by the Court of Appeals of its jurisdiction over matters brought to it by
way of petition for certiorari, prohibition and mandamus from Municipal Trial Courts. Obviously, it is error to hold that
decisions of Municipal Trial Courts are not directly reviewable by the Court of Appeals, and that such petition should
have been filed with the Regional Trial Court being "the proper and competent tribunal."

Under Sec. 9 of B.P. 129, the Court of Appeals has original jurisdiction to issue writs of mandamus,
prohibition, certiorari, habeas corpus and quo warranto, whether or not in aid of its appellate jurisdiction. Such
jurisdiction is concurrent with that of Supreme Court 3 and with the Regional Trial Courts, for writs enforceable within
their respective regions. 4

Indeed, the refusal of the Court of Appeals to take cognizance of the petition would have been proper prior to the
effectivity of B.P. 129 5 when the writ of certiorari was available in the appellate court only in aid of its appellate
jurisdiction. As explained in Breslin vs. Luzon Stevedoring Co. 6

A writ of mandamus, prohibition or certiorari against a lower court is said to be in aid of the appellate jurisdiction of
the Court of Appeals within the meaning of section 30 of Republic Act No. 296, known as the Judiciary Act of 1948,
and the corresponding provision of the former Organic Act of the Court of Appeals, if the latter has jurisdiction to
review, by appeal or writ of error, the final orders or decisions of the former, and said writs are issued by the Court of
Appeals in the exercise of its supervisory power or jurisdiction over the wrongful acts or omissions of the lower court
that are not appealable. But if the Court of Appeals has no appellate jurisdiction it could not issue writs of mandamus,
prohibition or certiorari in aid of an appellate jurisdiction which it does not have . . .

Perforce, the Resolution of 31 July and 28 August 1991 must be reversed for want of basis in law.

While We are not unaware of the practice of the Court of Appeals of remanding to the proper Regional Trial Court for
appropriate disposition petitions of this nature, yet, this is done only when there is no cogent reason advanced why the
appellate court should hear the case. Plainly, therefore, respondent Court of Appeals could still have transmitted the
petition to the Regional Trial Court of General Santos City not because the former has no jurisdiction but more of
convenience and propriety as the latter court exercises administrative supervision over the Municipal Trial Court as the
next higher tribunal in the judicial hierarchy, instead of the Court of Appeals. Indeed, such established practice is not
without basis. For, in Vergara, Sr. v. Suelto, 7 penned by Chief Justice Andres R. Narvasa (then Associate Justice), this
Court discussed quite extensively the concurrent jurisdiction of the Supreme Court, Court of Appeals and Regional Trial
Court over judgments and orders of Municipal Courts —
 We turn now to the second question posed . . . as to the propriety of a direct resort to this Court for the
remedy of mandamus or other extraordinary writ against a municipal court, instead of an attempt to
initially obtain that relief from the Regional Trial Court of the district or the Court of Appeals, both of
which tribunals share this Court's jurisdiction to issue the writ. As a matter of policy such a direct
recourse to this Court should not be allowed. The Supreme Court is a court of last resort, and must so
remain if it is to satisfactorily perform the functions assigned to it by the fundamental charter and
immemorial tradition. It cannot and should not be burdened with the task of dealing with causes in the
first instance. Its original jurisdiction to issue the so-called extraordinary writs should be exercised only
where absolutely necessary or where serious and important reasons exist therefor. Hence, that jurisdiction
should generally be exercised relative to actions or proceedings before the Court of Appeals, or before
constitutional or other tribunals, bodies or agencies whose acts for some reason or another, are not
controllable by the Court of Appeals. Where the issuance of an extraordinary writ is also within the
competence of the Court of Appeals or a Regional Trial Court, it is in either of these courts that the
specific action for the writ's procurement must be presented. This is and should continue to be the policy
in this regard, a policy that courts and lawyers must strictly observe.

Ordinarily, the next step would be to remand this case to the Court of Appeals to resolve the propriety of the denial of
petitioner's motion to quash. But this is no longer necessary. Since the records are with Us, We are now in a position to
settle the issue with dispatch. Consequently, We opt to meet the issue right here if only to obviate further delay in this
seemingly uncomplicated case.

On the first ground raised by petitioner, Sec. 28 (i) of the Social Security Law provides:

(i) Criminal action arising from a violation of the provisions of this Act may be commenced by the SSS
or the employee concerned either under this Act or in appropriate cases under the Revised Penal
Code: Provided, That such criminal action may be filed by the SSS in the city or municipality where the
SSS provincial or regional office is located if the violation was committed within its territorial
jurisdiction or in Metro Manila, at the option of the SSS. 8

Clearly, prior consent of the Social Security System (SSS) is not essential before an employee can commence a criminal
action arising from a violation of the Social Security Law. In other words, whether under the Social Security Law or "in
appropriate cases under the Revised Penal Code," the employee can institute criminal suits independently of the SSS.

On the second ground, petitioner submits that it is the SSS and not the regular courts which is empowered to prosecute the
alleged estafa pursuant to Sec. 5 of the Social Security Law. This is untenable. Section 5 provides:

Sec. 5. Settlement of Disputes. — (a) Any dispute arising under this Act with respect to coverage,
benefits, contributions and penalties thereon or any other matter related thereto, shall be cognizable by
the Commission, and any case filed with respect thereto shall be heard by the Commission, or any of its
members, or by hearing officers duly authorized by the Commission and decided within twenty days after
the submission of the evidence. The filing, determination and settlement of dispute shall be governed by
the rules and regulations promulgated by the Commission. 9

The foregoing defines the "dispute" falling within the coverage of the Social Security Law and lays down the procedure to
be followed by the SSS in any case filed before it with respect to such "dispute." Definitely, prosecution of criminal
offenses is not alluded to above, as this will require further legislation to clothe the SSS with the necessary jurisdiction.
Consequently, the SSS is not vested with legal competence to adjudicate criminal complaints and must necessarily seek
recourse in the regular courts for the prosecution of criminal actions arising from violations of the Revised Penal Code
and the Social Security Law. 10

On the third ground, it must be stressed that criminal liability is personal to the offender and cannot be transferred to
another by contract. Criminal culpability attaches to the offender upon the commission of the offense, and from that
instant, liability appends to him until extinguished as provided by law. The time of filing of the criminal complaint is
material only for determining prescription. Consequently, petitioner's reported transfer of his shares in the Southern Island
Colleges to Ramon Magsaysay Memorial Colleges did not extinguish his criminal liability nor transfer the same to his
vendee or assignee.

On the fourth ground, the argument that there is no estafa for want of damage since the employee's entitlement to SSS
benefits is not impaired by his employer's neglect to remit loan payments from his compensation is likewise untenable. It
must be noted that petitioner was charged in connection with Sec. 28 (h) of the Social Security Law which states:

(h) Any employer who, after deducting the monthly contributions or loan amortizations from his
employee's compensation, fails to remit the said deductions to the SSS within thirty days from the date
they became due shall be presumed to have misappropriated such contributions or loan amortizations and
shall suffer the penalties provided in Article Three Hundred Fifteen of the Revised Penal Code, 11

and not under Art. 315 of the Revised Penal Code, which is material only in determining the penalty to be
imposed.
Section 28 (h) speaks of two elements which must concur: (1) the employer deducts monthly contributions or loan
amortizations from his employee's compensation, and (2) said employer fails to remit said deductions to the SSS within
30 days from the date they fall due, after which the employer is ipso facto presumed to have misappropriated such
contributions or amortizations of the employee and accordingly penalized under Art. 315 of the Penal Code. Plainly,
damage is not an element in the act punished under Sec. 28 (h) as differentiated from the ordinary estafa wherein deceit
and damage are considered essential elements.

Other arguments advanced by petitioner which were not contained in his motion to quash may not be passed upon in this
extraordinary petition, for no abuse of discretion may be ascribed to respondent Judge when he was not provided with the
opportunity to rule thereon.

WHEREFORE, as regards the Resolutions of 31 July and 28 August 1991 of respondent Court of Appeals, the same are
SET ASIDE. However, with respect to the Order of 27 February 1991 of respondent Judge, the writ prayed for is denied
and the petition is DISMISSED for lack of merit, hereby AFFIRMING his Order denying petitioner's motion to quash.
Consequently, respondent Judge is directed to proceed with the trial of Criminal Case No. 16886-2 pending before his
court.

SO ORDERED.