V.
OTHER CAUSES OF SEVERANCE OF
EMPLOYEMENT RELATION
A. RESIGNATION
184. Skippers United Pacific, Inc and Skippers Maritime
Services Inc. vs. Doza, et. al
(RESIGNATION; SEPARATION PAY; MORAL,
EXEMPLARY, & ATTORNEY’S FEES; EXCEPTION)
FACTS:
Petitioner deployed De Gracia, Lata and Aprosta to work
on board the vessel MV Wisdom Star. On December 3
1998, Skippers alleges that De Garcia smelling strongly of
alcohol, went to the cabin of Gabriel Oleszek, MV Wisdom
Stars’ Master. Skippers claims that he was rude and
shouted noisily to the master. De Gracia left the master’s
cabin after a few minutes and was heard shouting very
loudly somewhere down the corridors. The incident was
evidenced by the Captain’s Report sent on said date.
Furthermore, Skippers also claim that on January 22, 1999,
Aprosta, De Gracia, Lata and Daza arrived in the master’s
cabin and demanded immediate repatriation because they
were not satisfied with the ship. De Gracia, et al.
threatened that they may become crazy any moment and
demanded for all outstanding payments due to them. The
incident is evidenced by a telex of Cosmoship MV Wisdom
to skippers but had conflicting dates. De Gracia claims that
Skippers failed to remit their respective allotments,
compelling them to vent their grievances with the
Romanian Seafarers Union. On January 28, 1999, the
Filipino seafarers were unceremoniously discharged and
immediately repatriated. Upon arrival in the Philippines,
they filed a complaint for illegal dismissal with the LA.
The LA dismissed the seafarers’ complaint as the
seafarers’ demand for immediate repatriation due to the
dissatisfaction with the ship is considered a voluntary pre-
termination of employment. Such act was deemed akin to
resignation recognized under Article 285 of the LC. The LA
gave credence to the telex of the master’s report that the
seafarers indeed demanded immediate repatriation.
The NLRC agreed with the LA’s decision.
The CA however reversed the LA’s and the NLRC’s
decision.
ISSUE:
(1) Whether or not was validly dismiss? Does the
seafarer’s demand for immediate repatriation can be
considered an act of voluntary resignation?
(2) Whether or not the amendatory RA 10022 should
apply in this case?
RULING:
(1) NO. For a workers dismissal to be considered valid, it
must comply with both procedural and substantive due
process. The legality of the manner of dismissal constitutes
procedural due process, while the legality of the act of
dismissal constitutes substantive due process.
In this case, there was no written notice furnished to De
Gracia, et al. regarding the cause of their dismissal.
Cosmoship furnished a written notice (telex) to Skippers,
the local manning agency, claiming that De Gracia, et al.
were repatriated because the latter voluntarily pre-
terminated their contracts. This telex was given credibility
and weight by the Labor Arbiter and NLRC in deciding that
there was pre-termination of the employment contract akin
to resignation and no illegal dismissal. However, as
correctly ruled by the CA, the telex message is a biased
and self-serving document that does not satisfy the
requirement of substantial evidence. If, indeed, De Gracia,
et al. voluntarily pre-terminated their contracts, then De
Gracia, et al. should have submitted their written
resignations.
Article 285 of the Labor Code recognizes termination by
the employee of the employment contract by serving
written notice on the employer at least one (1) month in
advance. Given that provision, the law contemplates the
requirement of a written notice of resignation. In the
absence of a written resignation, it is safe to presume
that the employer terminated the seafarers. In addition,
the telex message relied upon by the Labor Arbiter and
NLRC bore conflicting dates of 22 January 1998 and 22
January 1999, giving doubt to the veracity and authenticity
of the document. In 22 January 1998, De Gracia, et al.
were not even employed yet by the foreign principal. For
these reasons, the dismissal of De Gracia, et al. was
illegal.
(2) No.
Section 10 of Republic Act No. 8042 (Migrant Workers Act)
provides for money claims in cases of unjust termination of
employment contracts:
In case of termination of overseas employment without
just, valid or authorized cause as defined by law or
contract, the workers shall be entitled to the full
reimbursement of his placement fee with interest of
twelve percent (12%) per annum, plus his salaries for
the unexpired portion of his employment contract or for
three (3) months for every year of the unexpired term,
whichever is less.
The Migrant Workers Act provides that salaries for the
unexpired portion of the employent contract or three (3)
months for every year of the unexpired term, whichever is
less, shall be awarded to the overseas Filipino worker, in
cases of illegal dismissal. However, in 24 March 2009,
Serrano v. Gallant Maritime Services and Marlow
Navigation Co. Inc.,58 the Court, in an En Banc Decision,
declared unconstitutional the clause or for three months for
every year of the unexpired term, whichever is less and
awarded the entire unexpired portion of the employment
contract to the overseas Filipino worker.
On 8 March 2010, however, Section 7 of Republic Act No.
10022 (RA 10022) amended Section 10 of the Migrant
Workers Act, and once again reiterated the provision of
awarding the unexpired portion of the employent contract
or three (3) months for every year of the unexpired term,
whichever is less.
Nevertheless, since the termination occurred on January
1999 before the passage of the amendatory RA 10022, we
shall apply RA 8042, as unamended, without touching on
the constitutionality of Section 7 of RA 10022.
 The declaration in March 2009 of the unconstitutionality of
the clause or for three months for every year of the
unexpired term, whichever is less in RA 8042 shall be
given retroactive effect to the termination that occurred in
January 1999 because an unconstitutional clause in the
law confers no rights, imposes no duties and affords no
protection. The unconstitutional provision is inoperative, as
if it was not passed into law at all.
NOTES:
Art. 2219. Moral damages may be recovered in the
following and analogous cases:
(1) A criminal offense resulting in physical injuries;
(2) Quasi-delicts causing physical injuries;
(3) Seduction, abduction, rape, or other lascivious acts;
(4) Adultery or concubinage;
(5) Illegal or arbitrary detention or arrest;
(6) Illegal search;
(7) Libel, slander or any other form of defamation;
(8) Malicious prosecution;
(9) Acts mentioned in Article 309;
(10) Acts and actions referred to in Articles 21, 26, 27, 28,
29, 30, 32, 34, and 35.
Art. 2229. Exemplary or corrective damages are imposed,
by way of example or correction for the public good, in
addition to the moral, temperate, liquidated or
compensatory damages.
In this case, the SC agree with the CA in not awarding
moral and exemplary damages for lack of factual basis.
The SC affirms the awarding of Attorney’s Fees since De
Gracia, et al. had to secure the services of the lawyer to
recover their unpaid salary.
Art. 2208. In the absence of stipulation, attorneys fees and
expenses of litigation, other than judicial costs, cannot be
recovered, except:
(1) When exemplary damages are awarded;
(2) When the defendants act or omission has compelled
the plaintiff to litigate with third persons or to incur
expenses to protect his interest;
(3) In criminal cases of malicious prosecution against the
plaintiff;
(4) In case of a clearly unfounded civil action or proceeding
against the plaintiff;
(5) Where the defendant acted in gross and evident bad
faith in refusing to satisfy the plaintiffs plainly valid, just and
demandable claim;
(6) In actions for legal support;
(7) In actions for the recovery of wages of household
helpers, laborers and skilled workers;
(8) In actions for indemnity under workmens compensation
and employers liability laws;
(9) In a separate civil action to recover civil liability arising
from a crime;
(10) When at least double judicial costs are awarded;
(11) In any other case where the court deems it just and
equitable that attorneys fees and expenses of litigation
should be recovered. In all cases, the attorneys fees and
expenses of litigation must be reasonable.
B. RETIREMENT
185. Bibiano C. Elegir v. Philippine Airlines
Facts:
Petitioner Bibiano C. Elegir (petitioner) was hired by
Philippine Airlines, Inc. (PAL) as a commercial pilot in
1971. Pursuant to a new flight program adopted by PAL
petitioner was appointed as one of the pilots for the B747-
400 captain positions. He and the other pilots were sent to
Seattle to undergo training for the new aircraft which he
completed in 1995. He decided to retire on May 5, 1996,
after rendering a total of more than 25 years in service
which is an option allowed by the CBA between the airline
and the Airline Pilots Association of the Philippines where
he is a member of good standing. PAL asked him to
reconsider his decision saying that they have not yet fully
recovered the full value of his training and that if he should
continue with his decision to retire the airline will be
constrained to deduct the expenses of his training from his
retirement pay.
On November 6, 1996, the petitioner went on terminal
leave for thirty (30) days and thereafter made effective his
retirement from service. Upon securing his clearance,
however, he was informed that the costs of his training will
be deducted from his retirement pay, which will be
computed at the rate of P 5,000.00 per year of service. The
petitioner argued that his retirement benefits should be
based on the computation stated in Article 287 of the
Labor Code, as amended by Republic Act (R.A.) No.
7641, and that the costs of his training should not be
deducted therefrom. PAL refused and argued that
petitioner's retirement pay should be based on PAL-
ALPAP Retirement Plan of 1967 (PAL-ALPAP
Retirement Plan) and that he should reimburse the
company with the proportionate costs of his training.
Thus, on August 27, 1997, the petitioner filed a complaint
for non-payment of retirement pay, moral damages,
exemplary damages and attorney’s fees against PAL.
LA: On February 6, 1998, the Labor Arbiter (LA) rendered
the decision for the payment of retirement benefits to the
petitioner for a total of P 4,150,106.20 saying that the law
intended to give bigger and better benefits to workers
under existing laws or CBA agreements and that PAL had
no right to withhold the petitioner's retirement benefits Due
to his retirement before the lapse of three years. There was
no document showing that the petitioner was required to
stay with the airline for three years after the training or that
he was required to reimburse the cost of his training from
his retirement benefits should he retire earlier than the
three year period. The LA also dismissed PAL's claim that
petitioner's submission of his bid for the position created an
innominate contract du ut facis between him and the
company.
NLRC: Modified the decision of the LA. Petitioner was only
52 years old when he opted to retire and therefore was not
qualified to receive the benefits offered under Article 287 of
the Labor Code, but he was eligible for retirement under
the CBA since he had served for more than 25 years with
the same company. It ruled that the benefits should be
computed in accordance with both Article 287 of the Code
and the Retirement Plan of the CBA. It also ruled that
petitioner is under obligation to reimburse a portion of the
expense for his training program as captain since it would
be grossly unfair for petitioner to reap the fruits of his
training if he would not be made to return the said benefits
in form of service for a reasonable period of time. Both
parties filed MRs. It denied PAL’s MR.

CA: Reversed the decision of the NLRC. It ruled that

retirement pay should be computed in accordance with
CBA retirement plan as ruled in PAL v. Airline Pilots
Association of the Philippines. It denied petitioner’s MR.

Issues: Should retirement benefits be computed based on

Article 287 of the Labor Code or PAL’s retirement Plan?

Ruling:

Petitioner’s retirement pay should be based on the PAL

retirement plans. The two retirement schemes are
alternative in nature such that the retired pilot can only be
entitled to that which provides for the superior benefit.
Even if there is an existing CBA but if it provides lesser
benefits than what is provided in the Labor Code, the Code
will apply to assure the retiree of the reasonable amount of
retirement pay. Consistent with the purpose of the law, the
CA correctly held that the PAL retirement plan applies
because it provides for higher benefits. Under the PAL
retirement plan petitioner qualified for late retirement since
he rendered more than 20 years as pilot and is entitled to
receive a lump sum of P 125, 000 for his services. He is
also entitled to equity of the retirement fund under the
Retirement Benefit Plan. This is more compared to what he
will receive under the Labor Code which is equivalent to at
least ½ of his monthly salary for every year of service. The
benefits under the PAL retirement plan are to the
petitioner’s advantage.

It also ruled that the petitioner shall reimburse PAL for his
training costs. The court recognized PAL’s right to recoup
losses incurred due to pilot training and modified the
provision on age limits for pilots seeking advanced
positions. Pilots 57 years old shall be frozen in their
position while those 55 years of age that have previously
qualified in the company turbo jet aircraft are permitted to
occupy any position in the turbo jet fleet. Allowing the
petitioner to leave the company before he has fulfilled his
reasonable expectation of service will result to unjust
enrichment since the training gave him new skills and
increased his salary. Reason and fairness dictate that he
must return to PAL a proportionate costs of training.