Petroleum Shipping Limited and Trans—Golbal Maritime versus

NLRC and Florello W. Tanchico; G.R. NO. 148130, June 16, 2006

FACTS:

On March 6, 1978, ESSO International Shipping (Bahamas) Co.,

Ltd.(“ESSO”) through Trans—Global Maritime Agency Inc.,(Trans—Global)
hired Florello W. Tanchico (Tanchico) as First Assistant Engineer. In 1981,
Tanchico became Chief Engineer. On October 13, 1992, Tanchico
returned to the Philippines for a two month vacation after completing his
eight month development. On December 8, 1992, Tanchico underwent the
required standard medical examination prior to boarding the vessel. The
medical examination revealed that Tanchico was suffering from “Ischemic
Heart disease, Hypertensive Cardio Muscular Disease and Diabetes
Mellitus.” Tanchico took medication for two months and subsequent stress
test showed negative result. However, ESSO no longer deployed
Tanchico. Instead, ESSO offered to pay him benefits under the Career
Employment Incentive Plan. Tanchico accepted the offer.

On April 23, 1993, Tanchico filed a complaint against ESSO, Trans

—Global and Malayan Insurance, Inc. before the Philippine Overseas
Employment Administration (POEA) for illegal dismissal with claims for
back wages, separation pays, disability and medical benefits and 13 th
month pay. In view of the enactment of R.A. No. 8042, transferring to the
NLRC the jurisdiction over money claims of overseas workers, the case
was indorsed to the arbitration branch of the NCR. Labor Arbiter Jose De
Vera dismissed the complaint for lack of merit which was affirmed by the
NLRC. Tanchico moved for reconsideration of NLRC’s decision. In its
resolution, NLRC reconsidered the motion and held that Tanchico should
be entitled to disability benefits of 18 days for every year of credited
service of 14 years less the amount he already received under the
company’s Disability Plans.

ESSO and Trans—Global moved for reconsideration and the same

is denied by the NLRC. The petitioners filed a petition for certiorari before
the Court of Appeals. The Court of Appeals affirmed the decision of the
NLRC in toto. It held that Tanchico is a regular employee of ESSO now
Petroleum Shippings. Petitioners moved for reconsideration. In its
resolution, Court of Appeals modified its decision by deducting Tanchico’s
vacation from his length of service. Hence, the petitioners went to the
Supreme Court seeking for relief.

ISSUES:

1. Whether Tanchico is a regular employee of the petitioners.

2. Whether Tanchico is entitled to 13th month pay, disability benefits

and attorney’s fees.

RULINGS:
 The petition is partly meritorious.
Seafarers are contractual Employees

Tanchico is not a regular employee of Petroleum Shipping.

The issue on whether seafarers are regular employees is already a

settled matter.

In Ravago versus Esso Eastern Marine, Ltd. The court traced its
ruling in number of cases that seafarers are contractual, not regular
employees. In Brent School, Inc. versus Zamora, the Court cited overseas
employment contract as an example of contracts where the concept of
regular employment does not apply, whatever the nature of the
engagement and despite the provisions of Article 280 of the Labor Code.
In Coyoca v. NLRC, the Court held that the agency is liable for payment of
a seaman’s medical and disability benefits in the event that the principal
fails or refuses to pay the benefits or wages due the seaman although the
seaman may not be a regular employee of the agency.

The Court squarely passed upon the issue in Millares v.

NLRC where one of the issues raised was whether seafarers are regular or
contractual employees whose employment are terminated every time their
contracts of employment expire. The Court explained:
It is clear that seafarers are considered contractual employees. They
cannot be considered as regular employees under Article 280 of the Labor
Code. Their employment is governed by the contracts they sign every time
they are rehired and their employment is terminated when the contract
expires. Their employment is contractually fixed for a certain period of
time. They fall under the exception of Article 280 whose employment has
been fixed for a specific project or undertaking the completion or
termination of which has been determined at the time of 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. We need not
depart from the rulings of the Court in the two aforementioned cases which
indeed constitute stare decisis with respect to the employment status of
seafarers.
Thus, in the present case, the Court of Appeals erred in ruling that
Tanchico was a regular employee of Petroleum Shipping.

ON 13th Month pay.

Tanchico is not entitled of the 13th month pay.

We do not agree with the Court of Appeals. Tanchico, is not a

regular employee. Further P.D. No. 851 does not apply to seafarers.

P.D. No. 851 contemplates the situation of land—based workers and

not seafarers, who generally earn more than domestic land—based
workers.
 Tanchico’s employment is governed by his Contract of Enlistment
(“contract”). The contract has been approved by the POEA in accordance
with Title I, Book One of the Labor Code and the POEA Rules Governing
Employment. The coverage of the Contract includes Compensation,
Overtime, Sundays and Holidays, Vacations, Living Allowance, Sickness,
Injury and Death, Transportation and Travel Expense, Subsistance and
Living Quarters. It does not provide for the payment of 13 th month pay. The
Contract of Employment , which is the standard employment contract of
the POEA, likewise does not provide for the payment of 13th month pay.

In Coyoca v. NLRC1 which involves a claim for a claim for separation

pay, this Court held:
Furthermore, petitioner’s contract did not provide for separation
benefits. In this connection, it is important to note that neither does POEA
standard employment contract for Filipino seamen provide for such
benefits.
“As a Filipino seaman, petitioner is governed by the Rules and
Regulations Governing Overseas Employment and the said Rules do not
provide for separation or termination pay. x x x”
Hence, in the absence of any provision in his Contract governing the
payment of 13th month pay, Tanchico is not entitled to the benefit.
On the Disability Benefits
Tanchico is entitled to disability benefits for 18 days only.

The Court of Appeals erred when it ruled that Tanchico is entitled to

Disability benefits of 18 days for every year of service. The Court of
Appeals assumed that Tanchico was a regular employee. It failed to
consider that Tanchico’s employment terminated with the end of each
contract.

Indications that Tanchico was suffering from ischemia were detected

on 8 December 1992 during Tanchico’s vacation period. Thus, petitioners
paid him disability benefits for 18 days in accordance with the Contract.
Tanchico cannot claim that he only acquired the illness during his last
deployment since the Medical Report he submitted to the NLRC showed
that he has been hypertensive since 1983 and diabetic since 1987. In the
absence of concrete proof that Tanchico acquired his disability during his
last deployment and not during his vacation, he is only entitled to disability
benefits for 18 days.

Petitioners claim that they already paid Tanchico his disability

benefits for 18 days but he refused to sign the receipt. Tanchico alleged
that he was only paid under the Career Employment Incentive Plan. This is
a factual matter which this Court cannot resolve. This matter has to be
remanded to the Labor Arbiter for resolution.

1
KING OF KINGS TRANSPORT INC. (KTTI), CLAIRE DELA FUENTE and
MELISSA LIM, petitioners, versus SANTIAGO O. MAMAC, respondent.
G.R. No. 166208, June 29, 2007

FACTS:

Petitioner KKTI is a corporation engaged in public transportation and

managed by Claire Dela Fuente and Melissa Lim. Respondent Mamac was
hired as bus conductor on Don Mariano Transit Corporation (DMTC) on
April 29, 1999. The DMTC employees including respondent formed the
Damayan ng mga Manggagawa, Tsuper at Conductor-Transport Workers
Union and registered it with the Department of Labor and Employment.
Pending the holding of a certification election in DMTC, petitioner KTTI
was incorporated with the Securities and Exchange Commission (SEC)
which acquired new buses. Many DMTC employees were transferred to
KTTI and excluded from the election.
The KTTI employees organized the Kaisahan ng mga Kawani sa
King of Kings (KKKK) which was registered with DOLE. Respondent was
elected KKKK president.
Upon audit of the October 28, 2001 Conductor’s Report of
respondent, KTTI noted an irregularity. It discovered that respondent
declared several sold tickets as returned tickets causing KTTI to lose an
income of eight hundred and ninety pesos. While no irregularity report was
prepared on October 28, 2001 incident, KTTI nevertheless asked
respondent to explain the discrepancy. In his letter, respondent said that
erroneous declaration in his October 28, 2001 Trip Report was
unintentional. He explained that during that day’s trip, the windshield of the
bus assigned to them was smashed; and they had to cut short the trip in
order to immediately report the matter to the police. As a result of the
incident, he got confused in making the trip report.
On November 26, 2001, respondent received a letter terminating his
employment effective November 29, 2001. The dismissal letter alleged that
the October 28, 2012 irregularity was an act of fraud against the company.
KKTI also cited as basis for respondent’s dismissal the other offenses he
allegedly committed since 1999.
On December 11, 2001, respondent filed a Complaint for illegal
dismissal, illegal deductions, non-payment of 13th-Month pay, service
incentive leave, and separation pay. He denied committing any infraction
and alleged that his dismissal was intended to bust union activities.
Moreover, he acclaimed that his dismissal was affected without due
process.
KKTI contended that respondent was legally dismissed after his
commission of a series of misconducts and misdeeds. It claimed that
respondent had violated the trust and confidence reposed upon him by
KTTI. Also, it averred that it had observed due process in dismissing
respondent and maintained that respondent was not entitled to his money
claims such as service incentive leave and 13th-month pay because he was
paid on commission or percentage basis.
 Labor Arbiter Ramon Valentin C. Reyes rendered judgement
dismissing respondent’s Complaint for lack of merit. Aggrieved, respondent
appealed to the NLRC which rendered decision that respondent KKTI is
ordered to indemnify complainant for failure to comply with due process
prior to termination, while affirming other findings.
Thereafter, a Petition for Certiorari was filed before the CA. The CA
held that there was just cause for respondent’s dismissal. It ruled that
respondent’s act in “declaring sold tickets xxx constituted fraud or acts of
dishonesty justifying his dismissal.” The CA further held that respondent is
entitled to the 13th-month pay benefit.
ISSUES:

1. Whether KTTI complied with the due process requirements in

terminating Mamac’s employment.
2. Whether the CA erred in awarding in favor of the
complainant/private respondent, full back wages, despite denial of
his petition for certiorari.
3. Whether Mamac is entitled to 13th-month pay benefits.

RULINGS:

The petition is partly meritorious.

Compliance with due process requirements

KTTI was not compliant with the procedural due process

requirements in terminating Mamac’s employment.

Due process under the Labor Code involves two aspects: first,
substantive and second, procedural. The question to be determined in this
case is whether the procedural requirements were complied with.