J.A.B. Bulao & Associates

CASE 2012-0007: REPUBLIC OF THE PHILIPPINES, REPRESENTED BY THE CIVIL SERVICE COMMISSION VS. MINERVA M.P. PACHEO (G.R. NO.  178021, 25 JANUARY 2012, MENDOZA, J.)  SUBJECT/S: WHEN TRANSFER OR REASSIGNMENT CONSTITUTES CONSTRUCTIVE DISMISSAL; DIFFERENCE BETWEEN DETAIL AND REASSIGNMENT. (BRIEF TITLE: REPUBLIC VS. PACHEO)

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DISPOSITIVE:

 WHEREFORE, the petition is DENIED. The assailed February 22, 2007 Decision and May 15, 2007 Resolution of the Court of Appeals, in CA-G.R. SP No. 93781, are hereby AFFIRMED with MODIFICATION that respondent Minerva M.P. Pacheo is hereby ordered reinstated without loss of seniority rights but is only entitled to the payment of back salaries corresponding to five (5) years from the date of her invalid reassignment on May 7, 2002. 

        SO ORDERED.

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Republic of thePhilippines

Supreme Court

Manila

EN BANC

x ——————————————————————————————————-x

D E C I S I O N

MENDOZA, J.:

Before this Court is a petition for review on certiorari under Rule 45 of the Rules of Court filed by petitioner Republic of the Philippines, represented by the Office of the Solicitor General (OSG), which assails the February 22, 2007 Decision^[1][1] and the May 15, 2007 Resolution^[2][2] of the Court of Appeals (CA) in CA-G.R. SP No. 93781. The CA reversed the November 21, 2005 Resolution of the Civil Service Commission (CSC) declaring the re-assignment of respondent Minerva M.P. Pacheos (Pacheo) not valid and ordering her reinstatement to her original station but without backwages under the principle of “no work, no pay.”

The Facts

Pacheo was a Revenue Attorney IV, Assistant Chief of the Legal Division of the Bureau of Internal Revenue (BIR) in Revenue Region No. 7 (RR7),Quezon City.

        On May 7, 2002, the BIR issued Revenue Travel Assignment Order (RTAO) No. 25-2002,^[3][3] ordering the reassignment of Pacheo as Assistant Chief, Legal Division from RR7 in Quezon City to RR4 in San Fernando, Pampanga. The BIR cited exigencies of the revenue service as basis for the issuance of the said RTAO.

        Pacheo questioned the reassignment through her Letter dated May 9, 2002^[4][4] addressed to Rene G. Banez, then Commissioner of Internal Revenue (CIR). She complained that the transfer would mean economic dislocation since she would have to spend ₱200.00 on daily travel expenses or approximately ₱4,000.00 a month. It would also mean physical burden on her part as she would be compelled to wake up early in the morning for her daily travel fromQuezon City toSan Fernando, Pampanga, and to return home late at night fromSan Fernando, Pampanga toQuezon City. She was of the view that that her reassignment was merely intended to harass and force her out of the BIR in the guise of exigencies of the revenue service. In sum, she considered her transfer fromQuezon City to Pampanga as amounting to a constructive dismissal.

        Due to the then inaction of the BIR, Pacheo filed a complaint^[5][5] dated May 30, 2002, before the CSC- National Capital Region (CSC-NCR), praying for the nullification of RTAO No. 25-2002. In its July 22, 2002 Order,^[6][6] the CSC-NCR treated Pacheo’s Complaint as an appeal and dismissed the same, without prejudice, for failure to comply with Sections 73 and 74 of Rule V(b) of the Uniform Rules on Administrative Cases in the Civil Service.^[7][7] 

           In its Letter-reply^[8][8] dated September 13, 2002, the BIR, through its Deputy Commissioner for Legal and Inspection Group, Edmundo P. Guevara (Guevara), denied Pacheo’s protest for lack of merit. It contended that her reassignment could not be considered constructive dismissal as she maintained her position as Revenue Attorney IV and was designated as Assistant Chief of Legal Division. It emphasized that her appointment to the position of Revenue Attorney IV was without a specific station. Consequently, she could properly be reassigned from one organizational unit to another within the BIR. Lastly, she could not validly claim a vested right to any specific station, or a violation of her right to security of tenure.

Not in conformity with the ruling of the BIR, Pacheo appealed her case before the CSC.

On November 21, 2005, the CSC issued Resolution No. 051697^[9][9] granting Pacheo’s appeal, the dispositive portion of which reads:

WHEREFORE, the instant appeal of Minerva M.P. Pacheo is hereby GRANTED. The Bureau of Internal Revenue Revenue Travel Assignment Order No. 25-2002 dated May 7, 2002, on the reassignment of Pacheo to the Legal Division Revenue Region No. 4 San Fernanado, Pampanga, is hereby declared NOT VALID. ACCORDINGLY, Pacheo should now be recalled to her original station. This Commission, however rules and so holds that the withholding by the BIR of Pacheo’s salary for the period she did not report to work is justified.

The CSCRO No. III is directed to monitor the implementation of this Resolution.

In granting Pacheo’s appeal, the CSC explained:

On the second issue, this Commission finds merit in appellant’s contention that her reassignment in not valid.

Of pertinent application thereto is Rule III, Section 6 of CSC Memorandum Circular No. 40, series of 1998, dated December 14, 1998, which provides:

Section 6. Other Personnel Movements. The following personnel movements which will not require issuance of an appointment shall nevertheless require an office order by duly authorized official.

a.       Reassignment – Movement of an employee from one organizational unit to another in the same department or agency which does not involve reduction in rank, status or salary. If reassignment is done without consent of the employee being reassigned it shall be allowed for a maximum period of one year. Reassignment is presumed to be regular and made in the interest of public service unless proven otherwise or it constitutes constructive dismissal.

No assignment shall be undertaken if done indiscriminately or whimsically because the law is not intended as a convenient shield for the appointing/ disciplining authority to harass or oppress a subordinate on the pretext of advancing and promoting public interest.

Reassignment of small salaried employee is not permissible if it causes significant financial dislocation.’

Although reassignment is a management prerogative, the same must be done in the exigency of the service without diminution in rank, status and salary on the part of the officer or employee being temporarily reassigned. Reassignment of ‘small salaried’ employees, however is not allowed if it will cause significant financial dislocation to the employee reassigned. Otherwise the Commission will have to intervene.

The primary purpose of emphasizing ‘small salaried employees’ in the foregoing rule is to protect the ‘rank and file’ employees from possible abuse by the management in the guise of transfer/reassignment. The Supreme Court in Alzate v. Mabutas, (51 O.G. 2452) ruled:

‘ x x x [T]he protection against invalid transfer is especially needed by lower ranking employees. The Court emphasized this need when it ruled that officials in the unclassified service, presidential appointees, men in the government set up occupy positions in the higher echelon should be entitled to security of tenure, unquestionable a lesser sol[ci]itude cannot be meant for the little men, that great mass of Common underprivileged employees-thousand there are of them in the lower bracket, who generally are without connections and who pin their hopes of advancement on the merit system instituted by our civil service law.’

In other words, in order to be embraced in the term ‘small-salaried employees’, the latter must belong to the ‘rank and file’; and, his/her salary would be significantly reduced by virtue of the transfer/reassignment. ‘Rank and file’ was categorized as those occupying the position of Division Chief and below, pursuant to CSC Resolution No. 1, series of 1991, dated January 28, 1991.

The facts established on record show that Pacheo belongs to the rank and file receiving an average monthly salary of Twenty Thousand Pesos (₱20,000.00) under the salary standardization law and a monthly take home pay of Fourteen Thousand Pesos (₱14,000.00). She has to spend around Four Thousand Pesos (₱4,000.00) a month for her transportation expenses as a consequence of her reassignment, roughly twenty eight percent (28%) of her monthly take home pay. Clearly, Pacheo’s salary shall be significantly reduced as a result of her reassignment.

In ANORE, Ma. Theresa F., this Commission ruled:

‘Anore, a lowly salaried employee, was reassigned to an isolated island 15 kilometers away from her original place of assignment. She has to travel by boat with only one trip a day to report to her new place of assignment in an office without any facilities, except its bare structure. Worst, the municipality did not provide her with transportation allowance. She was forced to be separated from her family, look for a boarding house where she can stay while in the island and spend for her board and lodging. The circumstances surrounding Anore’s reassignment is exactly the kind of reassignment that is being frowned upon by law.’

This Commission, however, rules and so holds that the withholding by the BIR of her salaries is justified as she is not entitled thereto since she is deemed not to have performed any actual work in the government on the principle of no work no pay.

Accordingly, Pacheo should now be reinstated to her original station without any right to claim back salary as she did not report to work either at her new place of assignment or at her original station.^[10][10] [Emphases in the original]

Still not satisfied, Pacheo moved for reconsideration. She argued that the CSC erred in not finding that she was constructively dismissed and, therefore, entitled to back salary.

On March 7, 2006, the CSC issued Resolution No. 060397^[11][11] denying Pacheo’s motion for reconsideration.

Undaunted, Pacheo sought recourse before the CA via a petition for review.

In its February 22, 2007 Decision, the CA reversed the CSC Resolution and ruled in favor of Pacheo, the fallo of which states:

WHEREFORE, the petition is GRANTED. Resolution nos. 051697 and 060397 dated November 21, 2005 and March 7, 2006, respectively, of the Civil Service Commission are REVERSED and SET ASIDE. A new judgment is hereby entered finding petitioner to have been constructively dismissed and ordering her immediate reinstatement with full backwages and benefits.

SO ORDERED.^[12][12]

In setting aside CSC Resolution Nos. 051697 and 060397, the CA held that:

        While this Court agrees that petitioner’s reassignment was not valid considering that a diminution in salary is enough to invalidate such reassignment, We cannot agree that the latter has not been constructively dismissed as a result thereof.

          It is well to remember that constructive dismissal does not always involve forthright dismissal or diminution in rank, compensation, benefits and privileges.  For an act of clear discrimination, insensibility, or disdain by an employer may become so unbearable on the part of the employee that it could foreclose any choice by him except to forgo his continued employment.

          The management prerogative to transfer personnel must be exercised without grave abuse of discretion and putting to mind the basic elements of justice and fair play.  The employer must be able to show that the transfer is not unreasonable, inconvenient, or prejudicial to the employee.

          In this case, petitioner’s reassignment will result in the reduction of her salary, not to mention the physical burden that she would suffer in waking up early in the morning to travel daily fromQuezon CitytoSan Fernando, Pampanga and in coming home late at night.

          Clearly, the insensibility of the employer is deducible from the foregoing circumstances and petitioner may have no other choice but to forego her continued employment.

          Moreover, it would be inconsistent to hold that the reassignment was not valid due to the significant reduction in petitioner’s salary and then rule that there is no constructive dismissal just because said reduction in salary will not render petitioner penniless if she will report to her new place of assignment.  It must be noted that there is constructive dismissal when the reassignment of an employee involves a diminution in pay.

Having determined that petitioner has been constructively dismissed as a result of her reassignment, We shall resolve whether or not she is entitled to backwages.

          In denying petitioner’s claim for backwages, the CSC held:

          This Commission, however, rules and so holds that the withholding by the BIR of her salaries is justified as she is not entitled thereto since she is deemed not to have performed any actual work in the government on the principle of no work no pay.

          Accordingly, Pacheo should now be reinstated to her original station without any right to claim back salary as she did not report for work either at her new place of assignment or at her original station.”

          Pacheo, while belonging to the rank-and-file employees, is holding a responsible position as an Assistant Division Chief, who could not just abandon her duties merely because she protested her re-assignment and filed an appeal afterwards.

We do not agree.

If there is no work performed by the employee there can be no wage or pay, unless of course the laborer was able, willing and ready to work but was illegally locked out, dismissed or suspended.  The “No work, no pay” principle contemplates a “no work” situation where the employees voluntarily absent themselves.

In this case, petitioner was forced to forego her continued employment and did not just abandon her duties.  In fact, she lost no time in protesting her reassignment as a form of constructive dismissal.  It is settled that the filing of a complaint for illegal dismissal is inconsistent with a charge of abandonment.  The filing of the complaint is proof enough of his desire to return to work, thus negating any suggestion of abandonment.

Neither do we agree with the OSG when it opined that:

          No one in the Civil Service should be allowed to decide on whether she is going to accept or not any work dictated upon by the exigency of the service.  One should consider that public office is a public trust and that the act of respondent CIR enjoys the presumption of regularity.  To uphold the failure of respondent to heed the RTAO would result in chaos.  Every employee would put his or her vested interest or personal opinion over and above the smooth functioning of the bureaucracy.

Security of tenure is a right of paramount value as recognized and guaranteed under Sec. 3, Art. XIII of the 1987 Constitution.

          The State shall afford full protection to labor, xxx and promote full employment and equality of employment opportunities for all.  It shall guarantee the rights of all workers to xxx security of tenure xxx 

          Such constitutional right should not be denied on mere speculation of any similar unclear and nebulous basis. 

In Garcia, et al. v. Lejano, et al., the Supreme Court rejected the OSG’s opinion that when the transfer is motivated solely by the interest of the service of such act cannot be considered violative of the Constitution, thus:

“We do not agree to this view.  While temporary transfers or assignments may be made of the personnel of a bureau or department without first obtaining the consent of the employee concerned within the scope of Section 79 (D) of the Administrative Code which party provides that ‘The Department Head also may, from time to time, in the interest of the service, change the distribution among the several Bureaus and offices of his Department of the employees or subordinates authorized by law,’ such cannot be undertaken when the transfer of the employee is with a view to his removal.  Such cannot be done without the consent of the employee.  And if the transfer is resorted to as a scheme to lure the employee away from his permanent position, such attitude is improper as it would in effect result in a circumvention of the prohibition which safeguards the tenure of office of those who are in the civil service.  It is not without reason that this Court made the following observation: 

To permit circumvention of the constitutional prohibition in question by allowing removal from office without lawful cause, in the form or guise of transfers from one office to another, or from one province to another, without the consent of the transferee, would blast the hopes of these young civil service officials and career men and women, destroy their security and tenure of office and make for a subservient, discontented and inefficient civil service force that sways with every political wind that blows and plays up to whatever political party is in the saddle.  That would be far from what the framers of our Constitution contemplated and desired.  Neither would that be our concept of a free and efficient Government force, possessed of self-respect and reasonable ambition.”

Clearly, the principle of “no work, no pay” does not apply in this case.  As held in Neeland v. Villanueva, Jr:

“We also cannot deny back salaries and other economic benefits on the ground that respondent Clerk of Court did not work.  For the principle of “no work, no pay” does not apply when the employee himself was forced out of job. Xxx Indeed, it is not always true that back salaries are paid only when work is done. Xxx For another, the poor employee could offer no work since he was forced out of work.  Thus, to always require complete exoneration or performance of work would ultimately leave the dismissal uncompensated no matter how grossly disproportionate the penalty was.  Clearly, it does not serve justice to simply restore the dismissed employee to his position and deny him his claim for back salaries and other economic benefits on these grounds.  We would otherwise be serving justice in halves.”

An illegally dismissed government employee who is later ordered reinstated is entitled to back wages and other monetary benefits from the time of his illegal dismissal up to his reinstatement.  This is only fair and sensible because an employee who is reinstated after having been illegally dismissed is considered as not having left his office and should be given a comparable compensation at the time of his reinstatement.

When a government official or employee in the classified civil service had been illegally dismissed, and his reinstatement had later been ordered, for all legal purposes he is considered as not having left his office, so that he is entitled to all the rights and privileges that accrue to him by virtue of the office that he held.^[13][13]

          The CSC moved for reconsideration but its motion was denied by the CA in its May 15, 2007 Resolution.

          Hence, this petition.

THE ISSUES

WHETHER OR NOT THE ASSAILED DECISION IS LEGALLY CORRECT IN DECLARING THAT RESPONDENT WAS CONSTRUCTIVELY DISMISED AND ENTITLED TO BACK WAGES, NOTWITHSTANDING RESPONDENT’S REFUSAL TO COMPLY WITH BIR RTAO No. 25-2002 WHICH IS IMMEDIATELY EXECUTORY PURSUANT TO SECTION 24 (F) OF P.D. 807.

WHETHER OR NOT RESPONDENT SUFFERED A DIMINUTION IN HER SALARY IN RELATION TO SECTION 6, RULE III OF CSC MEMORANDUM CIRCULAR No. 40, SERIES OF 1998, DATED DECEMBER 14, 1998, AS A RESULT OF THE ISSUANCE [OF] BIR RTAO No. 25-2002 ORDERING HER REASSIGNMENT FROM BIR RR No. 7 IN QUEZON CITY TO BIR RR No. 4 IN SAN FERNANDO, PAMPANGA.^[14][14]

        In her Memorandum,^[15][15] Pacheo asserts that RTAO No. 25-2002, on the pretense of the exigencies of the revenue service, was solely meant to harass her and force her to resign. As a result of her invalid reassignment, she was constructively dismissed and, therefore, entitled to her back salaries and monetary benefits from the time of her illegal dismissal up to her reinstatement.

        In its own Memorandum,^[16][16] the CSC, through the OSG, argues that constructive dismissal is not applicable in this case because it was Pacheo herself who adamantly refused to report for work either in her original station or new place of assignment in clear violation of Section 24 (f) of Presidential Decree (PD) No. 807.^[17][17] Citing jurisprudence,^[18][18] the CSC avers that the RTAO is immediately executory, unless otherwise ordered by the CSC. Therefore, Pacheo should have first reported to her new place of assignment and then appealed her case to the CSC if she indeed believed that there was no justification for her reassignment. Since Pacheo did not report for work at all, she is not entitled to backwages following the principle of “no work, no pay.”

THE COURT’S RULING

        The petition fails to persuade.

It appears undisputed that the reassignment of Pacheo was not valid. In its memorandum, the OSG initially argues for the validity of RTAO No. 25-2002 authorizing Pacheo’s reassignment fromQuezon CitytoSan Fernando, Pampanga. Later, however, it specifically prays for the reinstatement of CSC Resolution Nos. 051697 and 060397, which categorically declared RTAO No. 25-2002 as not valid. In seeking such relief, the OSG has effectively accepted the finding of the CSC, as affirmed by the CA, that Pacheo’s reassignment was indeed invalid. Since the issue of Pacheo’s reassignment is already settled, the Court finds it futile to pass upon the same at this point.

The question that remains to be resolved is whether or not Pacheo’s assignment constitutes constructive dismissal and, thus, entitling her to reinstatement and backwages. Was Pacheo constructively dismissed by reason of her reassignment?

The Court agrees with the CA on this point.

While a temporary transfer or assignment of personnel is permissible even without the employee’s prior consent, it cannot be done when the transfer is a preliminary step toward his removal, or a scheme to lure him away from his permanent position, or when it is designed to indirectly terminate his service, or force his resignation. Such a transfer would in effect circumvent the provision which safeguards the tenure of office of those who are in the Civil Service.^[19][19]

Significantly, Section 6, Rule III of CSC Memorandum Circular No. 40, series of 1998, defines constructive dismissal as a situation when an employee quits his work because of the agency head’s unreasonable, humiliating, or demeaning actuations which render continued work impossible. Hence, the employee is deemed to have been illegally dismissed. This may occur although there is no diminution or reduction of salary of the employee. It may be a transfer from one position of dignity to a more servile or menial job.

        The CSC, through the OSG, contends that the deliberate refusal of Pacheo to report for work either in her original station in Quezon City or her new place of assignment in San Fernando, Pampanga negates her claim of constructive dismissal in the present case being in violation of Section 24 (f) of P.D. 807 [now Executive Order (EO) 292, Book V, Title 1, Subtitle A, Chapter 5, Section 26 (6)].^[20][20] It further argues that the subject RTAO was immediately executory, unless otherwise ordered by the CSC. It was, therefore, incumbent on Pacheo to have reported to her new place of assignment and then appealed her case to the CSC if she indeed believed that there was no justification for her reassignment.

Anent the first argument of CSC, the Court cannot sustain the proposition. It was legally impossible for Pacheo to report to her original place of assignment in Quezon Cityconsidering that the subject RTAO No. 25-2002 also reassigned Amado Rey B. Pagarigan (Pagarigan) as Assistant Chief, Legal Division, from RR4,San Fernando, Pampanga to RR7,Quezon City, the very same position Pacheo formerly held. The reassignment of Pagarigan to the same position palpably created an impediment to Pacheo’s return to her original station.

The Court finds Itself unable to agree to CSC’s argument that the subject RTAO was immediately executory. The Court deems it necessary to distinguish between a detail and reassignment, as they are governed by different rules.

A detail is defined and governed by Executive Order 292, Book V, Title 1, Subtitle A, Chapter 5, Section 26 (6), thus:

(6) Detail. A detail is the movement of an employee from one agency to another without the issuance of an appointment and shall be allowed, only for a limited period in the case of employees occupying professional, technical and scientific positions. If the employee believes that there is no justification for the detail, he may appeal his case to the Commission. Pending appeal, the decision to detail the employee shall be executory unless otherwise ordered by the Commission. [Underscoring supplied]

On the other hand, a reassignment is defined and governed by E.O. 292, Book V, Title 1, Subtitle A, Chapter 5, Section 26 (7), thus:

(7) Reassignment.—An employee may be reassigned from one organizational unit to another in the same agency; Provided, That such reassignment shall not involve a reduction in rank, status or salaries. [Underscoring supplied]

The principal distinctions between a detail and reassignment lie in the place where the employee is to be moved and in its effectivity pending appeal with the CSC. Based on the definition, a detail requires a movement from one agency to another while a reassignment requires a movement within the same agency. Moreover, pending appeal with the CSC, an order to detail is immediately executory, whereas a reassignment order does not become immediately effective.

        In the case at bench, the lateral movement of Pacheo as Assistant Chief, Legal Division from Quezon Cityto San Fernando, Pampanga within the same agency is undeniably a reassignment. The OSG posits that she should have first reported to her new place of assignment and then subsequently question her reassignment. It is clear, however, from E.O. 292, Book V, Title 1, Subtitle A, Chapter 5, Section 26 (7) that there is no such duty to first report to the new place of assignment prior to questioning an alleged invalid reassignment imposed upon an employee. Pacheo was well within her right not to report immediately to RR4,San Fernando, Pampanga, and to question her reassignment.

Reassignments involving a reduction in rank, status or salary violate an employee’s security of tenure, which is assured by the Constitution, the Administrative Code of 1987, and the Omnibus Civil Service Rules and Regulations. Security of tenure covers not only employees removed without cause, but also cases of unconsented transfers and reassignments, which are tantamount to illegal/constructive removal.^[21][21]

        The Court is not unaware that the BIR is authorized to assign or reassign internal revenue officers and employees as the exigencies of service may require. This authority of the BIR, however, should be prudently exercised in accordance with existing civil service rules.

Having ruled that Pacheo was constructively dismissed, is she entitled to reinstatement and back wages? The Court agrees with the CA that she is entitled to reinstatement, but finds Itself unable to sustain the ruling that she is entitled to full back wages and benefits. It is a settled jurisprudence^[22][22] that an illegally dismissed civil service employee is entitled to back salaries but limited only to a maximum period of five (5) years, and not full back salaries from his illegal dismissal up to his reinstatement.

WHEREFORE, the petition is DENIED. The assailed February 22, 2007 Decision and May 15, 2007 Resolution of the Court of Appeals, in CA-G.R. SP No. 93781, are hereby AFFIRMED with MODIFICATION that respondent Minerva M.P. Pacheo is hereby ordered reinstated without loss of seniority rights but is only entitled to the payment of back salaries corresponding to five (5) years from the date of her invalid reassignment on May 7, 2002. 

        SO ORDERED.

JOSE CATRAL MENDOZA

                                                             Associate Justice

WE CONCUR:

RENATO C. CORONA

Chief Justice

ANTONIO T. CARPIO                         PRESBITERO J. VELASCO, JR. 

        Associate Justice                                          Associate Justice               

TERESITA J. LEONARDO-DE CASTRO    ARTURO D. BRION

Associate Justice                                    Associate Justice

DIOSDADO M. PERALTA                                 LUCAS P. BERSAMIN

Associate Justice                                                Associate Justice

MARIANO C. DEL CASTILLO                             ROBERTO A. ABAD

Associate Justice                                      Associate Justice

MARTIN S. VILLARAMA, JR.                   JOSE PORTUGAL PEREZ

Associate Justice                                    Associate Justice

MARIA LOURDES P. A. SERENO              BIENVENIDO L. REYES

Associate Justice                                 Associate Justice

ESTELA M. PERLAS-BERNABE

Associate Justice

C E R T I F I C A T I O N

        Pursuant to Section 13, Article VIII of the Constitution, I hereby certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court.

                                                        RENATO C. CORONA

                                                                Chief Justice

CASE 2012-0006: ANITA L. MIRANDA VS. THE PEOPLE OF THE PHILIPPINES (G.R. No. 176298, 25 JANUARY 2012, VILLARAMA, JR., J.) SUBJECT/S: ACCOUNTANT DEPOSITED CHECKS TO ACCOUNT OF VIVA AND WITHDREW PROCEEDS, LIABLE FOR QUALIFIED THEFT, NOT ESTAFA; COMPUTATION OF PENALTY FOR QUALIFIED THEFT; PENALTY INCREASED TO RECLUSION PERPETUA FOR STOLEN AMOUNT OF P797,187.85. (BRIEF TITLE: MIRANDA VS. PEOPLE).

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DISPOSITIVE:

WHEREFORE, the January 11, 2007 Decision of the Court of Appeals in CA-G.R. CR No. 29858 affirming the conviction of petitioner Anita L. Miranda for the crime of qualified theft is AFFIRMED with the MODIFICATION that the penalty is increased to reclusion perpetua.

With costs against the petitioner.

SO ORDERED.

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FIRST DIVISION

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DECISION

VILLARAMA, JR., J.:

Petitioner Anita L. Miranda appeals the January 11, 2007 Decision¹ of the Court of Appeals (CA) affirming the judgment² of the Regional Trial Court (RTC) of Manila, Branch 20, convicting her of qualified theft.

Petitioner was charged with qualified theft in an Information dated November 28, 2002. The Information reads:

That in or about and during the period comprised between April 28, 1998 and May 2, 2002, inclusive, in the City of Manila, Philippines, the said accused, did then and there wilfully, unlawfully and feloniously, with intent of gain and without the knowledge and consent of the owner thereof, take, steal and carry away the total amount of P797,187.85 belonging to VIDEO CITY COMMERCIAL, INC. and VIVA VIDEOCITY, INC. represented by MIGUEL Q. SAMILLANO, in the following manner, to wit: by making herself the payee in forty-two pre-signed BPI Family Bank checks in the account of Video City Commercial and Jefferson Tan (the latter as franchise[e]) and encashing said checks in the total amount of P797,187.85, for her personal benefit, to the damage and prejudice of said owner in the aforesaid amount of P797,187.85, Philippine Currency.

That the said accused acted with grave abuse of confidence, she being then employed as bookkeeper in the aforesaid firm and as such was privy to the financial records and checks belonging to complainant and was actually entrusted with the said financial records, documents and checks and their transactions thereof in behalf of complainant.³

Upon arraignment, petitioner pleaded not guilty. Trial thereafter ensued.

Summarily, the prosecution proved the following facts: Video City Commercial, Inc. (VCCI) and Viva Video City, Inc. (Viva) were sister companies which managed a chain of stores known as VideoCity. These stores, some company-owned while others were operated in joint ventures with franchisees, were engaged in the sale and rental of video-related merchandises. During the period of April 28, 1998 to May 2, 2002, petitioner was the accounting clerk and bookkeeper of VCCI and Viva. One of her duties was to disburse checks for the accounts she handled. She was assigned to handle twelve (12) VideoCitystore franchise accounts, including those of Tommy Uy, Wilma Cheng, Jefferson Tan and Sharon Cuneta. As regards the franchisee Jefferson Tan, who was out of the country most of the time, Tan pre-signed checks to cover the store’s disbursements and entrusted them to petitioner. The pre-signed checks by Jefferson Tan were from a current account maintained jointly by VCCI and Jefferson Tan at BPI Family Bank, Sta. Mesa. There was also an existing agreement with the bank that any disbursement not exceeding P20,000.00 would require only Tan’s signature.⁴

Taking advantage of Tan’s constant absence from the country, petitioner was able to use Tan’s joint-venture bank account with VCCI as a clearing house for her unauthorized transfer of funds. Petitioner deposited VCCI checks coming from other franchisees’ accounts into the said bank account, and withdrew the funds by writing checks to her name using the checks pre-signed by Tan. It was only after petitioner went on maternity leave and her subsequent resignation from the company in May 2002 that an audit was conducted since she refused to turn over all the financial records in her possession. The audit was made on all the accounts handled by petitioner and it was discovered that she made unauthorized withdrawals and fund transfers amounting to P4,877,759.60.⁵

The prosecution, in proving that petitioner had unlawfully withdrawn P797,187.85 for her own benefit, presented as its witness Jose Laureola, the assistant manager/acting cashier of BPI Family Bank, Sta. Mesa Branch. Laureola presented a microfilm of the checks, the encashed checks and deposit slips. He also presented the bank statement of VCCI which showed the encashment of forty-two (42) checks from the account of VCCI and Jefferson Tan amounting to P797,187.85.⁶

In the face of the prosecution’s evidence, petitioner chose not to present any evidence during trial.

On October 7, 2005, the RTC found petitioner guilty beyond reasonable doubt of qualified theft. The RTC sentenced her to suffer the indeterminate penalty of eight (8) years and one (1) day of prision mayor, as minimum, to eighteen (18) years, two (2) months and twenty-one (21) days of reclusion temporal, as maximum, and to pay VCCI P797,187.85 plus costs.⁷

The RTC found that the prosecution was able to establish that the checks deposited to the joint account of VCCI and Jefferson Tan at BPI Family Bank were unlawfully withdrawn by the petitioner without VCCI’s consent. Petitioner took advantage of her position with VCCI and her access to the checks and its bank accounts.

On appeal, the CA affirmed the decision of the RTC. The CA held that contrary to petitioner’s claim that the prosecution failed to show who was the absolute owner of the thing stolen, there was no doubt that the personal property taken by petitioner does not belong to her but to Jefferson Tan and his joint venture partner VCCI. Thus, petitioner was able to gain from taking other people’s property without their consent. More, she was able to perpetrate the crime due to her position in VCCI which gave her access to the joint venture account of VCCI and Jefferson Tan, both of whom reposed trust and confidence in her. She exploited said trust and confidence to their damage in the amount of P797,187.85.

Undaunted, petitioner filed the instant petition for review on certiorari before this Court, raising the following issues:

1. WHETHER OR NOT THE ACCUSED IS GUILTY BEYOND REASONABLE DOUBT OF THE CRIME OF QUALIFIED THEFT.

1-a. WHETHER THE PHRASE “X X X SHALL TAKE THE PERSONAL PROPERTY OF ANOTHER WITHOUT THE LATTER’S CONSENT X X X” IN ARTICLE 308 OF THE REVISED PENAL CODE IN RELATION TO ARTICLE 310 OF THE SAME CODE WOULD REQUIRE AS AN ELEMENT OF “QUALIFIED THEFT” AN ESTABLISHED PROOF OF “OWNERSHIP” OF THE PROPERTY ALLEGEDLY STOLEN?

1-b. WHETHER IT IS IMPERATIVE THAT THE DUE EXECUTION AND AUTHENTICITY OF THE ALLEGED SIGNATURES OF THE ACCUSED IN THE CHECKS BE FULLY ESTABLISHED AND IDENTIFIED AND IF NOT SO ESTABLISHED AND IDENTIFIED, THE SAME WOULD BE A FATAL FLAW IN THE EVIDENCE OF THE PROSECUTION WHICH INEVITABLY WOULD LEAD TO ACCUSED’S ACQUITTAL?

1-c. WHETHER THE FAILURE TO ESTABLISH AND AUTHENTICATE OR IDENTIFY THE SIGNATURES OF THE ACCUSED ANNIE MIRANDA AND JEFFERSON TAN CONSTITUTED A FATAL FLAW IN PROVING THAT THE ACCUSED AND JEFFERSON TAN WERE THE AUTHORS OF SAID SIGNATURES?

1-d. [WHETHER THE] CONCLUSION OF FACTS BY THE REGIONAL TRIAL COURT AND COURT OF APPEALS ARE NOT SUPPORTED BY EVIDENCE.

1-e. WHETHER THE CHECKS AND VOUCHERS PRESENTED AS EVIDENCE NOT IN THEIR ORIGINALS SHOULD HAVE BEEN DENIED ADMISSION BY THE COURT A QUO, THERE BEING NO SUFFICIENT FACTS ADDUCED TO JUSTIFY THE PRESENTATION OF XEROX COPIES OR SECONDARY EVIDENCE.⁸

Essentially, the issue for our resolution is whether the CA correctly affirmed petitioner’s conviction for qualified theft.

Petitioner insists that she should not have been convicted of qualified theft as the prosecution failed to prove the private complainant’s absolute ownership of the thing stolen. Further, she maintains that Jefferson Tan’s signatures on the checks were not identified by any witness who is familiar with his signature. She likewise stresses that the checks and vouchers presented by the prosecution were not original copies and that no secondary evidence was presented in lieu of the former.

The appeal lacks merit.

A careful review of the records of this case and the parties’ submissions leads the Court to conclude that there exists no cogent reason to disturb the decision of the CA. We note that the arguments raised by petitioner in her petition are a mere rehash of her arguments raised before, and correctly resolved by, the CA.

The elements of the crime of theft as provided for in Article 308⁹ of the Revised Penal Code are as follows: (1) that there be taking of personal property; (2) that said property belongs to another; (3) that the taking be done with intent to gain; (4) that the taking be done without the consent of the owner; and (5) that the taking be accomplished without the use of violence against or intimidation of persons or force upon things.¹⁰ Theft becomes qualified when any of the following circumstances under Article 310¹¹ is present: (1) the theft is committed by a domestic servant; (2) the theft is committed with grave abuse of confidence; (3) the property stolen is either a motor vehicle, mail matter or large cattle; (4) the property stolen consists of coconuts taken from the premises of a plantation; (5) the property stolen is fish taken from a fishpond or fishery; and (6) the property was taken on the occasion of fire, earthquake, typhoon, volcanic eruption, or any other calamity, vehicular accident or civil disturbance.¹²

Here, the prosecution was able to prove beyond reasonable doubt that the amount of P797,187.85 taken does not belong to petitioner but to VCCI and that petitioner took it without VCCI’s consent and with grave abuse of confidence by taking advantage of her position as accountant and bookkeeper. The prosecution’s evidence proved that petitioner was entrusted with checks payable to VCCI or Viva by virtue of her position as accountant and bookkeeper. She deposited the said checks to the joint account maintained by VCCI and Jefferson Tan, then withdrew a total of P797,187.85 from said joint account using the pre-signed checks, with her as the payee. In other words, the bank account was merely the instrument through which petitioner stole from her employer VCCI.

We find no cogent reason to disturb the above findings of the trial court which were affirmed by the CA and fully supported by the evidence on record. Time and again, the Court has held that the facts found by the trial court, as affirmed in toto by the CA, are as a general rule, conclusive upon this Court¹³ in the absence of any showing of grave abuse of discretion. In this case, none of the exceptions to the general rule on conclusiveness of said findings of facts are applicable.¹⁴ The Court gives weight and respect to the trial court’s findings in criminal prosecution because the latter is in a better position to decide the question, having heard the witnesses in person and observed their deportment and manner of testifying during the trial.¹⁵ Absent any showing that the lower courts overlooked substantial facts and circumstances, which if considered, would change the result of the case, this Court gives deference to the trial court’s appreciation of the facts and of the credibility of witnesses.

Moreover, we agree with the CA when it gave short shrift to petitioner’s argument that full ownership of the thing stolen needed to be established first before she could be convicted of qualified theft. As correctly held by the CA, the subject of the crime of theft is any personal property belonging to another. Hence, as long as the property taken does not belong to the accused who has a valid claim thereover, it is immaterial whether said offender stole it from the owner, a mere possessor, or even a thief of the property.¹⁶ In any event, as stated above, the factual findings of the courts a quo as to the ownership of the amount petitioner stole is conclusive upon this Court, the finding being adequately supported by the evidence on record.

However, notwithstanding the correctness of the finding of petitioner’s guilt, a modification is called for as regards the imposable penalty. On the imposition of the correct penalty, People v. Mercado¹⁷ is instructive. Pursuant to said case, in the determination of the penalty for qualified theft, note is taken of the value of the property stolen, which is P797,187.85 in this case. Since the value exceeds P22,000.00, the basic penalty is prision mayor in its minimum and medium periods to be imposed in the maximum period, that is, eight (8) years, eight (8) months and one (1) day to ten (10) years of prision mayor.

To determine the additional years of imprisonment to be added to the basic penalty, the amount of P22,000.00 is deducted from P797,187.85, which yields a remainder of P775,187.85. This amount is then divided by P10,000.00, disregarding any amount less than P10,000.00. The end result is that 77 years should be added to the basic penalty. However, the total imposable penalty for simple theft should not exceed 20 years. Thus, had petitioner committed simple theft, the penalty would be 20 years of reclusion temporal. As the penalty for qualified theft is two degrees higher, the trial court, as well as the appellate court, should have imposed the penalty of reclusion perpetua.

WHEREFORE, the January 11, 2007 Decision of the Court of Appeals in CA-G.R. CR No. 29858 affirming the conviction of petitioner Anita L. Miranda for the crime of qualified theft is AFFIRMED with the MODIFICATION that the penalty is increased to reclusion perpetua.

With costs against the petitioner.

SO ORDERED.

\

C E R T I F I C A T I O N

Pursuant to Section 13, Article VIII of the 1987 Constitution, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

1Rollo, pp. 24-35. Penned by Associate Justice Amelita G. Tolentino with Associate Justices Conrado M. Vasquez, Jr. and Lucenito N. Tagle concurring. The assailed decision was rendered in CA-G.R. CR No. 29858.

2CA rollo, pp. 33-42. The decision of the RTC was penned by Judge Marivic T. Balisi-Umali.

3Records, p. 1.

4CA rollo, pp. 34-39; rollo, pp. 26-27.

5Id.

6Id. at 38.

7Id. at 39-41.

8Rollo, pp. 12-14.

9Art. 308. Who are liable for theft. – Theft is committed by any person who, with intent to gain but without violence against, or intimidation of persons nor force upon things, shall take personal property of another without the latter’s consent.

x x x x

10People v. Sison, G.R. No. 123183, January 19, 2000, 322 SCRA 345, 363-364.

11Art. 310. Qualified theft. – The crime of theft shall be punished by the penalties next higher by two degrees than those respectively specified in the next preceding article, if committed by a domestic servant, or with grave abuse of confidence, or if the property stolen is motor vehicle, mail matter or large cattle or consists of coconuts taken from the premises of a plantation, fish taken from a fishpond or fishery or if property is taken on the occasion of fire, earthquake, typhoon, volcanic eruption, or any other calamity, vehicular accident or civil disturbance.

12People v. Sison, supra note 10 at 364.

13See Cosmos Bottling Corporation v. Nagrama, Jr., G.R. No. 164403, March 4, 2008, 547 SCRA 571, 584, citing The Philippine American Life and General Insurance Co. v. Gramaje, G.R. No. 156963, November 11, 2004, 442 SCRA 274, 283.

14See Reyes v. CA, 328 Phil. 171, 179-180 (1996) citing Floro v. Llenado, 314 Phil. 715, 727-728 (1995). The Court, however, may determine the factual milieu of cases or controversies under specific circumstances, such as:

(1) when the inference made is manifestly mistaken, absurd or impossible;

(2) when there is a grave abuse of discretion;

(3) when the finding is grounded entirely on speculations, surmises or conjectures;

(4) when the judgment of the Court of Appeals is based on misapprehension of facts;

(5) when the findings of fact are conflicting;

(6) when the Court of Appeals, in making its findings, went beyond the issues of the case and the same is contrary to the admissions of both appellant and appellee;

(7) when the findings of the Court of Appeals are contrary to those of the trial court;

(8) when the findings of fact are conclusions without citation of specific evidence on which they are based;

(9) when the Court of Appeals manifestly overlooked certain relevant facts not disputed by the parties and which, if properly considered, would justify a different conclusion;

(10) when the findings of fact of the Court of Appeals are premised on the absence of evidence and are contradicted by the evidence on record.

15People v. Martinada, G.R. Nos. 66401-03, February 13, 1991, 194 SCRA 36, 41.

16Florenz D. Regalado, Criminal Law Conspectus, First edition, p. 522.

17G.R. No. 143676, February 19, 2003, 397 SCRA 746, 758.

CASE 2012-0005: MAGSAYSAY MARITIME CORPORATION AND/OR WASTFEL-LARSEN MANAGEMENT A/S VS. OBERTO S. LOBUSTA (G.R. NO. 177578, 25 JANUARY 2012, VILLARAMA, JR., J.) SUBJECT/S: LABOR CODE APPLIES TO CLAIMS UNDER POEA-APPROVED CONTRACTS; CONCEPT OF PERMANENT TOTAL DISABILITY; ORDERS OF COURT TO FILE PLEADINGS ARE NOT MERE REQUESTS, DISOBEDIENCE CONSTITUTES CONTEMPT. (BRIEF TITLE: MAGSAYSAY MARITIME VS. LOBUSTA)

========================

DISPOSITIVE:

WHEREFORE, we DENY the present petition for review on certiorari and AFFIRM the Decision dated August 18, 2006 of the Court of Appeals and its Resolution dated April 19, 2007 in CA-G.R. SP No. 74035. We ORDER petitioners Magsaysay Maritime Corporation and/or Wastfel-Larsen Management A/S to pay respondent Oberto S. Lobusta US$65,163 as total award, to be paid in Philippine pesos at the exchange rate prevailing during the time of payment.

With costs against the petitioners.

SO ORDERED.

========================

FIRST DIVISION

x- – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – -x

DECISION

VILLARAMA, JR., J.:

Petitioners appeal the Decision¹ dated August 18, 2006 of the Court of Appeals (CA) in CA-G.R. SP No. 74035 and its Resolution² dated April 19, 2007, denying the motion for reconsideration thereof. The CA declared that respondent is suffering from permanent total disability and ordered petitioners to pay him US$2,060 as medical allowance, US$60,000 as disability benefits and 5% of the total monetary award as attorney’s fees.

The facts follow:

Petitioner Magsaysay Maritime Corporation is a domestic corporation and the local manning agent of the vessel MV “Fossanger” and of petitioner Wastfel-Larsen Management A/S.³

Respondent Oberto S. Lobusta is a seaman who has worked for Magsaysay Maritime Corporation since 1994.⁴ In March 1998, he was hired again as Able Seaman by Magsaysay Maritime Corporation in behalf of its principal Wastfel-Larsen Management A/S. The employment contract⁵ provides for Lobusta’s basic salary of US$515 and overtime pay of US$206 per month. It also provides that the standard terms and conditions governing the employment of Filipino seafarers on board ocean-going vessels, approved per Department Order No. 33 of the Department of Labor and Employment and Memorandum Circular No. 55 of the Philippine Overseas Employment Administration (POEA Standard Employment Contract), both series of 1996, shall be strictly and faithfully observed.

Lobusta boarded MV “Fossanger” on March 16, 1998.⁶ After two months, he complained of breathing difficulty and back pain. On May 12, 1998, while the vessel was in Singapore, Lobusta was admitted at Gleneagles Maritime Medical Center and was diagnosed to be suffering from severe acute bronchial asthma with secondary infection and lumbosacral muscle strain. Dr. C K Lee certified that Lobusta was fit for discharge on May 21, 1998, for repatriation for further treatment.⁷

Upon repatriation, Lobusta was referred to MetropolitanHospital. The medical coordinator, Dr. Robert Lim, issued numerous medical reports regarding Lobusta’s condition. Lobusta was first seen by a Pulmonologist and an Orthopedic Surgeon on May 22, 1998.⁸ Upon reexamination by the Orthopedic Surgeon on August 11, 1998, he opined that Lobusta needs surgery, called decompression laminectomy,⁹ which was done on August 30, 1998.¹⁰ On October 12, 1998, Dr. Lim issued another medical report stating the opinion of the Orthopedic Surgeon that the prognosis for Lobusta’s recovery after the spine surgery is good. However, the Pulmonologist opined that Lobusta’s obstructive airway disease needs to be monitored regularly and that Lobusta needs to be on bronchodilator indefinitely. Hence, Lobusta should be declared disabled with a suggested disability grading of 10-20%.¹¹ The suggestion was not heeded and Lobusta’s treatment continued.

On February 16, 1999, Lobusta was reexamined. Dr. Lim reported that Lobusta still complains of pain at the lumbosacral area although the EMG/NCV¹² test revealed normal findings. Lobusta was prescribed medications and was advised to return on March 16, 1999 for re-evaluation.¹³

On February 19, 1999, Dr. Lim reported that Lobusta has been diagnosed to have a moderate obstructive pulmonary disease which tends to be a chronic problem, such that Lobusta needs to be on medications indefinitely. Dr. Lim also stated that Lobusta has probably reached his maximum medical care.¹⁴

Petitioners “then faced the need for confirmation and grading by a second opinion” and “it took the parties time to agree on a common doctor, until they agreed on Dr. Camilo Roa.”¹⁵ Dr. Roa’s clinical summary states that Lobusta’s latest follow-up check-up was on December 16, 1999; that Lobusta is not physically fit to resume his normal work as a seaman due to the persistence of his symptoms; that his asthma will remain chronically active and will be marked by intermittent exacerbations; and that he needs multiple controller medications for his asthma.¹⁶

As the parties failed to reach a settlement as to the amount to which Lobusta is entitled, Lobusta filed on October 2, 2000, a complaint¹⁷ for disability/medical benefits against petitioners before the National Labor Relations Commission (NLRC).

Sometime in October 2000, Magsaysay Maritime Corporation suggested that Lobusta be examined by another company-designated doctor for an independent medical examination. The parties agreed on an independent medical examination by Dr. Annette M. David, whose findings it was agreed upon, would be considered final.

On November 17, 2000, Dr. David interviewed and examined Lobusta.¹⁸ Pertinent portions of Dr. David’s report read:

xxx Based on the Classes of Respiratory Impairment as described in the American Medical Association’s Guidelines for the Evaluation of Permanent Impairment, this is equivalent to Class 2 or Mild Impairment of the Whole Person (level of impairment: 10-25% of the whole person). Given the persistence of the symptoms despite an adequate medical regimen, the impairment may be considered permanent.

The determination of disability and fitness for duty/return-to-work is more complex. During asymptomatic periods, Mr. Lobusta could conceivably be capable of performing the duties and responsibilities of an Able Seaman as listed in the memos provided by Pandiman (Duties of an Able Seaman on board an average vessel, January 26, 2000; and Deck Crew general Responsibilities, 95.11.01). However, consideration needs to be given to the following:

• During the personal interview, Mr. Lobusta reported the need to use a self-contained breathing apparatus (SCBA) for “double bottom” work. While the use of these devices may not appreciably increase the work of breathing, an individual who develops an acute asthmatic attack under conditions requiring the use of an SCBA (oxygen-poor atmospheres) may be at increased risk for a poor outcome.
• When out at sea, the medical facilities on board an average vessel may not be adequate to provide appropriate care for an acute asthmatic exacerbation. Severe asthmatic attacks require life-sustaining procedures such as endotracheal intubation and on occasion, mechanical ventilation. Asthma can be fatal if not treated immediately. The distance from and the time required to transport an individual having an acute asthmatic attack on a vessel at sea to the appropriate medical facilities on land are important factors in the decision regarding fitness for duty.
• Several of the duties listed for an Able Seaman require the use of a variety of chemical substances (e.g. grease, solvents, cleaning agents, de-greasers, paint, etc.), many of which are known or suspected asthma triggers in sensitized individuals. The potential for an Able Seaman’s exposure to these asthma triggers is considerable.

Taken altogether, it is my opinion that Mr. Lobusta ought not to be considered fit to return to work as an Able Seaman. While the degree of impairment is mild, for the reasons stated above, it would be in the interest of all parties involved if he were to no longer be considered as capable of gainful employment as a seafarer. It is possible that he may perform adequately in another capacity, given a land-based assignment.¹⁹ (Stress in the original by Dr. David.)

As no settlement was reached despite the above findings, the Labor Arbiter ordered the parties to file their respective position papers.

On April 20, 2001, the Labor Arbiter rendered a decision²⁰ ordering petitioners to pay Lobusta (a) US$2,060 as medical allowance, (b) US$20,154 as disability benefits, and (c) 5% of the awards as attorney’s fees.

The Labor Arbiter ruled that Lobusta suffered illness during the term of his contract. Hence, petitioners are liable to pay Lobusta his medical allowance for 120 days or a total of US$2,060. The Labor Arbiter held that provisions of the Labor Code, as amended, on permanent total disability do not apply to overseas seafarers. Hence, he awarded Lobusta US$20,154 instead of US$60,000, the maximum rate for permanent and total disability under Section 30 and 30-A of the 1996 POEA Standard Employment Contract. The Labor Arbiter also awarded attorney’s fees equivalent to 5% of the total award since Lobusta was assisted by counsel.²¹

Lobusta appealed. The NLRC dismissed his appeal and affirmed the Labor Arbiter’s decision. The NLRC ruled that Lobusta’s condition may only be considered permanent partial disability. While Dr. David suggested that Lobusta’s prospects as seafarer may have been restricted by his bronchial asthma, Dr. David also stated that the degree of impairment is mild. Said qualification puts Lobusta’s medical condition outside the definition of total permanent disability, said the NLRC.²² Later, the NLRC also denied Lobusta’s motion for reconsideration.

Unsatisfied, Lobusta brought the case to the CA under Rule 65 of the 1997 Rules of Civil Procedure, as amended. As aforesaid, the CA declared that Lobusta is suffering from permanent total disability and increased the award of disability benefits in his favor to US$60,000, to wit:

WHEREFORE, the petition for certiorari is hereby GRANTED. The challenged resolution of the NLRC dated 20 June 2002 is MODIFIED, declaring [Lobusta] to be suffering from permanent total disability.

[Petitioners] are ORDERED to pay [Lobusta] the following:

a) US$2,060.00 as medical allowance,

b) US$60,000.00 as disability benefits, and

c) 5% of the total monetary award as attorney’s fees

x x x x²³

The CA faulted the NLRC for “plucking only particular phrases” from Dr. David’s report and said that the NLRC cannot wantonly disregard the full import of said report. The CA ruled that Lobusta’s disability brought about by his bronchial asthma is permanent and total as he had been unable to work since May 14, 1998 up to the present or for more than 120 days, and because Dr. David found him not fit to return to work as an able seaman.

Hence, this petition which raises two legal issues:

WHETHER OR NOT THE POEA CONTRACT CONSIDERS THE MERE LAPSE OF MORE THAN ONE HUNDRED TWENTY (120) DAYS AS TOTAL AND PERMANENT DISABILITY.

WHETHER OR NOT THERE IS LEGAL BASIS TO AWARD RESPONDENT LOBUSTA ATTORNEY’S FEES.²⁴

Petitioners argue that the CA erred in applying the provisions of the Labor Code instead of the provisions of the POEA contract in determining Lobusta’s disability, and in ruling that the mere lapse of 120 days entitles Lobusta to total and permanent disability benefits. The CA allegedly erred also in holding them liable for attorney’s fees, despite the absence of legal and factual bases.

The petition lacks merit.

Petitioners are mistaken that it is only the POEA Standard Employment Contract that must be considered in determining Lobusta’s disability. In Palisoc v. Easways Marine, Inc.,²⁵ we said that whether the Labor Code’s provision on permanent total disability applies to seafarers is already a settled matter. In Palisoc, we cited the earlier case of Remigio v. National Labor Relations Commission²⁶ where we said (1) that the standard employment contract for seafarers was formulated by the POEA pursuant to its mandate under Executive Order No. 247²⁷ “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”; (2) that Section 29 of the 1996 POEA Standard Employment Contract itself provides that all rights and obligations of the parties to the contract, including the annexes thereof, shall be governed by the laws of the Republic of the Philippines, international conventions, treaties and covenants where the Philippines is a signatory; and (3) that even without this provision, a contract of labor is so impressed with public interest that the 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.²⁸

In affirming the Labor Code concept of permanent total disability, Remigio further stated:

Thus, the Court has applied the Labor Code concept of permanent total disability to the case of seafarers. In Philippine Transmarine Carriers v. NLRC, seaman Carlos Nietes was found to be suffering from congestive heart failure and cardiomyopathy and was declared as unfit to work by the company-accredited physician. The Court affirmed the award of disability benefits to the seaman, citing ECC v. Sanico, GSIS v. CA, and Bejerano v. ECC that “disability should not be understood more on its medical significance but on the loss of earning capacity. Permanent total disability means disablement of an employee to earn wages in the same kind of work, or work of similar nature that [he] was trained for or accustomed to perform, or any kind of work which a person of [his] mentality and attainment could do. It does not mean absolute helplessness.” It likewise cited Bejerano v. ECC, that in a disability compensation, it is not the injury which is compensated, but rather it is the incapacity to work resulting in the impairment of one’s earning capacity.

The same principles were cited in the more recent case of Crystal Shipping, Inc. v. Natividad. In addition, the Court cited GSIS v. Cadiz and Ijares v. CA 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.”

x x x x

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. x x x²⁹

In Vergara v. Hammonia Maritime Services, Inc.,³⁰ we also said that the standard terms of the POEA Standard Employment Contract agreed upon are intended to be read and understood in accordance with Philippine laws, particularly, Articles 191 to 193 of the Labor Code, as amended, and the applicable implementing rules and regulations in case of any dispute, claim or grievance.

Thus, the CA was correct in applying the Labor Code provisions in Lobusta’s claim for disability benefits. The Labor Arbiter erred in failing to apply them.

Article 192(c)(1) under Title II, Book IV of the Labor Code, as amended, reads:

ART. 192. Permanent total disability. – x x x

x x x x

(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 x

Section 2(b), Rule VII of the Implementing Rules of Title II, Book IV of the Labor Code, as amended, or the Amended Rules on Employees’ Compensation Commission (ECC Rules), reads:

Sec. 2. Disability. – x x x

(b) A disability is total and permanent if as a result of the injury or sickness the employee is unable to perform any gainful occupation for a continuous period exceeding 120 days, except as otherwise provided for in Rule X of these Rules.

x x x x

Section 2, Rule X of the ECC Rules reads:

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 any time after 120 days of continuous temporary total disability as may be warranted by the degree of actual loss or impairment of physical or mental functions as determined by the System.

x x x x

According to Vergara,³¹ these provisions of the Labor Code, as amended, and implementing rules are to be read hand in hand with the first paragraph of Section 20(B)(3) of the 2000 POEA Standard Employment Contract which reads:

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

Vergara continues:

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.

x x x x

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.³²

To be sure, there is one Labor Code concept of permanent total disability, as stated in Article 192(c)(1) of the Labor Code, as amended, and the ECC Rules. We also note that the first paragraph of Section 20(B)(3) of the 2000 POEA Standard Employment Contract was lifted verbatim from the first paragraph of Section 20(B)(3) of the 1996 POEA Standard Employment Contract, to wit:

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

Applying the foregoing considerations, we agree with the CA that Lobusta suffered permanent total disability. On this point, the NLRC ruling was not in accord with law and jurisprudence.

Upon repatriation, Lobusta was first examined by the Pulmonologist and Orthopedic Surgeon on May 22, 1998. The maximum 240-day (8-month) medical-treatment period expired, but no declaration was made that Lobusta is fit to work. Nor was there a declaration of the existence of Lobusta’s permanent disability. On February 16, 1999, Lobusta was still prescribed medications for his lumbosacral pain and was advised to return for reevaluation. May 22, 1998 to February 16, 1999 is 264 days or 6 days short of 9 months.

On Lobusta’s other ailment, Dr. Roa’s clinical summary also shows that as of December 16, 1999, Lobusta was still unfit to resume his normal work as a seaman due to the persistence of his symptoms. But neither did Dr. Roa declare the existence of Lobusta’s permanent disability. Again, the maximum 240-day medical treatment period had already expired. May 22, 1998 to December 16, 1999 is 19 months or 570 days. In Remigio, unfitness to work for 11-13 months was considered permanent total disability. So it must be in this case. And Dr. David’s much later report that Lobusta “ought not to be considered fit to return to work as an Able Seaman” validates that his disability is permanent and total as provided under the POEA Standard Employment Contract and the Labor Code, as amended.

In fact, the CA has found that Lobusta was not able to work again as a seaman and that his disability is permanent “as he has been unable to work since 14 May 1998 to the present or for more than 120 days.” This period is more than eight years, counted until the CA decided the case in August 2006. On the CA ruling that Lobusta’s disability is permanent since he was unable to work “for more than 120 days,” we have clarified in Vergara that this “temporary total disability period may be extended up to a maximum of 240 days.”

Thus, we affirm the award to Lobusta of US$60,000 as permanent total disability benefits, the maximum award under Section 30 and 30-A of the 1996 POEA Standard Employment Contract. We also affirm the award of US$2,060 as sickness allowance which is not contested and appears to have been accepted by the parties.

On the matter of attorney’s fees, under Article 2208³³ of the Civil Code, attorney’s fees can be recovered in actions for recovery of wages of laborers and actions for indemnity under employer’s liability laws. Attorney’s fees are also recoverable when the defendant’s act or omission has compelled the plaintiff to incur expenses to protect his interest.³⁴ Such conditions being present here, we affirm the award of attorney’s fees, which we compute as US$3,103 or 5% of US$62,060.

Before we end, we note petitioners’ repeated failure to comply with our resolutions, as well as the orders issued by the tribunals below. We remind petitioners and their counsels that our resolutions requiring them to file pleadings are not to be construed as mere requests, nor should they be complied with partially, inadequately or selectively. Counsels are also reminded that lawyers are called upon to obey court orders and willful disregard thereof will subject the lawyer not only for contempt but to disciplinary sanctions as well.³⁵ We may also dismiss petitioners’ appeal for their failure to comply with any circular, directive or order of the Supreme Court without justifiable cause.³⁶ In fact, we actually denied the instant petition on July 9, 2008 since petitioners failed to file the required reply to the comment filed by Lobusta.³⁷ On reconsideration, however, we reinstated the petition.³⁸ But when we required the parties to submit memoranda, petitioners again did not comply.³⁹ As regards the proceedings below, they did not file their position paper on time, despite the extensions granted by the Labor Arbiter.⁴⁰ Nor did they file the comment and memorandum required by the CA.⁴¹

Finally, we note that the Labor Arbiter improperly included Miguel Magsaysay as respondent in his decision.⁴² It should be noted that Lobusta sued Magsaysay Maritime Corporation and/or Wastfel-Larsen Management A/S in his complaint.⁴³ He also named them as the respondents in his position paper.⁴⁴ Petitioners are the proper parties.

WHEREFORE, we DENY the present petition for review on certiorari and AFFIRM the Decision dated August 18, 2006 of the Court of Appeals and its Resolution dated April 19, 2007 in CA-G.R. SP No. 74035. We ORDER petitioners Magsaysay Maritime Corporation and/or Wastfel-Larsen Management A/S to pay respondent Oberto S. Lobusta US$65,163 as total award, to be paid in Philippine pesos at the exchange rate prevailing during the time of payment.

With costs against the petitioners.

SO ORDERED.

C E R T I F I C A T I O N

Pursuant to Section 13, Article VIII of the 1987 Constitution, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

• ·Also referred to as Westfal-Larsen Management A/S.

*Designated additional member per Raffle dated February 10, 2010 vice Associate Justice Lucas P. Bersamin who recused himself from the case due to prior action in the Court of Appeals.

1Rollo, pp. 34-44. Penned by Associate Justice Santiago Javier Ranada with the concurrence of Associate Justices Portia Aliño-Hormachuelos and Amelita G. Tolentino.

2Id. at 46-47. Penned by Associate Justice Portia Aliño-Hormachuelos with the concurrence of Associate Justices Lucas P. Bersamin (now a Member of this Court) and Amelita G. Tolentino.

3Id. at 11.

4Records, p. 50.

5Id. at 3.

6Rollo, p. 49.

7Id. at 34-35, 73.

8Id. at 74.

9Id. at 81.

10Id. at 83.

11Id. at 84-85.

12Electromyography/Nerve Conduction Velocity.

13Rollo, p. 91.

14Id. at 92.

15Id. at 53.

16Id. at 95.

17Records, p. 2.

18Rollo, pp. 101-103.

19Id. at 103.

20Id. at 43-57.

21Id. at 51-56.

22Id. at 334-336.

23Rollo, p. 43.

24Id. at 18.

25G.R. No. 152273, September 11, 2007, 532 SCRA 585, 592.

26G.R. No. 159887, April 12, 2006, 487 SCRA 190.

27Reorganizing the Philippine Overseas Employment Administration and for Other Purposes.

28Supra note 26 at 207.

29Id. at 207-208, 212.

30G.R. No. 172933, October 6, 2008, 567 SCRA 610, 626.

31Id. at 627.

32Id. at 628-629.

33ART. 2208. In the absence of stipulation, attorney’s fees and expenses of litigation, other than judicial costs, cannot be recovered except:

x x x x

(7) In actions for the recovery of wages of x x x laborers x x x;

(8) In actions for indemnity under workmen’s compensation and employer’s liability laws;

x x x x

34Remigio v. National Labor Relations Commission, supra note 26 at 215.

35Sebastian v. Bajar, A.C. No. 3731, September 7, 2007, 532 SCRA 435, 449.

36Rules of Court, Rule 56, Section 5. Grounds for dismissal of appeal. – x x x

x x x x

(e) Failure to comply with any circular, directive or order of the Supreme Court without justifiable cause.

x x x x

37Rollo, p. 300.

38Id. at 319.

39Id. at 337.

40Records, p. 48.

41CA rollo, pp. 182, 183-245.

42Records, p. 43.

43Id. at 2.

44Id. at 18.