Due Process Termination

In line with the management prerogative, the employer is allowed to terminate the services of the employee provided that substantive and procedure due process are observed.[1]

Substantive due process is complied with once the grounds are established to justify a disciplinary action. On the other hand, procedural due process is complied with once the required processes under the law are observed.

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Employee Resignation

The employee has the right to resign from his employment resulting in its termination.[1] Resignation is “the voluntary act of an employee who is in a position where he believes that personal reasons cannot be sacrificed in favor of the exigency of the service, and he has no other choice but to disassociate himself from employment.”[2]

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Catalino B. Belmonte, Jr. v. C.F. Sharp Crew Management, Inc.

Section 20-B of the POEA-SEC provides that the seafarer is not irrevocably bound by the findings of the company-designated physician as he is allowed to seek a second opinion and consult a doctor of his choice. In case of disagreement between the findings of the company-designated physician and the seafarer’s private physician, the parties shall jointly agree to refer the matter to a third doctor whose findings shall be final and binding on both.

G.R. No. 209202, 19 November 2014

Complainant and seafarer Catalino B. Belmonte initiated a labor complaint for payment of disability benefits, among others, against defendant C.F. Sharp Crew Management, Inc. “Belmonte entered into a six (6) months contract of employment with CFSCMI as A/B Cook on board the vessel M/T Summit, with a basic monthly salary of $698.00. After undergoing the required pre-employment medical examination and being declared fit for sea duty, he was deployed on September 14, 2008.”

Complainant met an accident on board the vessel “when he was used as a human mannequin during an emergency fire drill exercise. A metal ladder accidentally hit the right sternoclavicular part of his body from which he sustained an injury. On December 13, 2008, he was brought to a clinic in France where his x-ray result showed that he has a fracture at the right sternoclavicular bone. As a result, on December 22, 2008, Belmonte was repatriated to the Philippines.”

On his arrival in the Philippines, Belmonte was referred by defendants “to the company-designated physician, Dr. Antonio A. Pobre (Dr. Pobre), an Orthopaedic Surgeon, who issued an Initial Medical Report dated December 23, 2008 assessing Belmonte’s injury as “Fracture, Non-Displaced, Sterno-Clavicular Junction, Right”. In the Follow-Up Report released on January 27, 2009, Dr. Pobre stated that Belmonte’s fracture has fully healed, but he still advised the latter to undergo physical therapy at the right sternoclavicular for at least two weeks. By February 14, 2009, Belmonte had completed three physical therapy sessions. Thus, in Dr. Pobre’s Final Medical Report dated February 17, 2009, Belmonte was declared ‘FIT TO WORK and [can] resume normal sea duties, effective immediately.’”

Complainant instituted this complaint almost after two years from the time he was declared fit to work. “To support his claim, on March 14, 2011, Belmonte consulted a private doctor, Dr. Manuel C. Jacinto, Jr. (Dr. Jacinto), to evaluate and determine his health condition. On even date, Dr. Jacinto issued a medical certificate declaring Belmonte physically unfit to go back to work.”

HELD: Complaint was dismissed. “The entitlement of a seafarer on overseas employment to disability benefits is governed by the medical findings, by law and by the parties’ contract.” Section 20-B of the POEA-SEC laid out the procedure to be followed in assessing the seafarer’s disability in addition to specifying the employer’s liabilities on account of such injury or illness. The same provision also provides that the seafarer is not irrevocably bound by the findings of the company-designated physician as he is allowed to seek a second opinion and consult a doctor of his choice. In case of disagreement between the findings of the company-designated physician and the seafarer’s private physician, the parties shall jointly agree to refer the matter to a third doctor whose findings shall be final and binding on both.”

“A review of the records of this case shows that the pertinent provisions of the parties’ Collective Bargaining Agreement are similar to those found in the 2000 POEA-SEC, that it is the finding of the company-designated physician which is controlling. If the doctor appointed by the seafarer disagrees with the assessment of the company-designated physician, a third doctor may be agreed jointly between the employer and the seafarer. The third doctor’s finding shall be final and binding on both parties. Apparently, this procedure was not availed of by Belmonte.”

“As can be recalled, upon Belmonte’s repatriation on December 22, 2008, he was immediately examined by the company-designated physician on December 23, 2008. From then on, Belmonte was continuously checked up by the company-designated physician, and has also undergone physical therapy sessions. Indeed, Belmonte had been under examination and treatment with the necessary medical procedures by the company specialists. Clearly, the respondents attended to his health condition and shouldered his medical expenses, professional fees and costs of his therapy sessions. Thus, after two months of treatment from the date of repatriation, Belmonte was declared fit to return to work on February 17, 2009 by the company-designated physician.”

“Equally significant is the fact that almost two years had lapsed before Belmonte decided to challenge the assessment of the company-designated physician and filed a complaint before the LA. Then, on March 14, 2011, he sought the opinion of a private doctor who issued the following assessment: “He is physically unfit to go back to work”. This Court notes, however, that Belmonte did so only two months after he had already filed his complaint with the LA. Thus, Belmonte, in fact, had no ground for a disability claim at the time he filed his complaint, since he did not have any sufficient evidentiary basis to support his allegation.” To be clear, his private doctor issued medical certification only after two years and one month from the company-designated physician’s declaration of fit to work. Thus, the certification could not be given any credence “as Belmonte’s health condition could have changed during the interim period due to different factors.” This medical certificate cannot effectively negate the fit to work assessment. Moreover, the private doctor only examined him for a day whereas the company-designated physician closely monitored his medical condition and progress for almost three months, including careful analysis of the results of the diagnostic tests and procedures while he was in consultation with a therapist.

Further, there was no referral made to a third doctor chosen by both CFSCMI and Belmonte as required by Section 20(B), paragraph 3 of the POEA-SEC. “Thus, in the absence of adequate diagnostic tests and procedures and reasonable findings to support the assessments of Belmonte’s private doctor, his certification on Belmonte’s alleged disability simply cannot be taken at face value, particularly in light of the overwhelming evidence supporting the findings of the company-designated physician. The burden of proof rested on Belmonte to establish, by substantial evidence, his entitlement to disability benefits. Sadly, Belmonte failed to discharge this burden.”

In light of the circumstances, the certification from the company-designated physician prevailed. “The Court does so for the following reasons: first, the records show that Belmonte only consulted the private physician after his complaint with the LA has been filed; second, the medical certificate was issued after a one-day consultation; and third, the medical certification was not supported by particular tests or medical procedures conducted on Belmonte that would sufficiently controvert the positive results of those administered to him by the company-designated physician.”

On his assertion that his non-hiring was the most convincing proof of his disability, it is without basis. “It was not a matter of course for CFSCMI to re-hire him after the expiration of his contract. There is also no evidence on record showing that Belmonte sought reemployment with other manning agencies, but was turned down due to his illness.”

“A seafarer’s inability to resume his work after the lapse of more than 120 days from the time he suffered an injury and/or illness is not a magic wand that automatically warrants the grant of total and permanent disability benefits in his favor.” Substantial evidence must still be presented.

“Verily, while the Court adheres to the principle of liberality in favor of the seafarer in construing the POEA-SEC, awards for compensation cannot be made to rest on mere speculations and presumptions.”

Republic of the Philippines v. Apostolita San Mateo

In a petition to register a land, both CENRO certification and approval thereof by the DENR Secretary are required to be presented as proofs that the land is alienable.

G.R. No. 203560, 10 November 2014

A petition to register a land was denied for failure to present both CENRO certification and approval thereof by the DENR Secretary. As held by the Supreme Court, “a CENRO certification that a certain property is alienable, without the corresponding proof that the DENR Secretary had approved such certification, is insufficient to support a petition for registration of land. Both certification and approval are required to be presented as proofs that the land is alienable. Otherwise, the petition must be denied.”

The cited case of Republic v. Vega, which granted a petition for registration despite the absence of a DENR Certification was pro hac vice. “It must be emphasized that the present ruling on substantial compliance applies pro hac vice. It does not in any way detract from our rulings in Republic v. T.A.N. Properties, Inc., and similar cases which impose a strict requirement to prove that the public land is alienable and disposable, especially in this case when the Decisions of the lower court and the Court of Appeals were rendered prior to these rulings. To establish that the land subject of the application is alienable and disposable public land, the general rule remains: all applications for original registration under the Property Registration Decree must include both (1) a CENRO or PENRO certification and (2) a certified true copy of the original classification made by the DENR Secretary.

The Republic case goes on to add: “As an exception, however, the courts – in their sound discretion and based solely on the evidence presented on record – may approve the application, pro hac vice, on the ground of substantial compliance showing that there has been a positive act of government to show the nature and character of the land and an absence of effective opposition from the government. This exception shall only apply to applications for registration currently pending before the trial court prior to this Decision and shall be inapplicable to all future applications.”

Register drones or face P500K penalty

The Civil Aviation Authority of the Philippines (CAAP) directs owners of drones to register them. Failure to do so will result in a fine from P300,000.00 up to P500,000.00.

CAAP Deputy Director for Operations Gen. Rodante Joya (Ret.) notes that no registration has been made yet. In an interview, he said that CAAP has not yet allowed any drone to operate as there has been not a single registration.

Joya stresses the importance of safety.  If someone is injured by a drone, the owner will be made liable.

“They cannot fly drones over congregations of people, on busy streets, near government buildings and installations, especially within airports due to safety concerns,” warns Joya.

For the upcoming visit of Pope Francis and the ongoing Sinulog, CAAP has imposed a no-drone policy.

BIR: Tax deductions on donations require proof

In the season of giving, the Bureau of Internal Revenue (BIR) reminds tax deduction claimants that donations made to accredited non-stock, non-profit corporations have to be accompanied by pieces of evidence or proofs.

BIR reiterates its power to examine books of accounts and other pertinent records for purposes of ascertaining tax compliance, including tax deductions. To be exact, the NIRC provides: “[a]ny provision of existing general or special law to the contrary notwithstanding, the books of accounts and other pertinent records of tax-exempt organizations or grantees of tax incentives shall be subject to examination by the Bureau of Internal Revenue for purposes of ascertaining compliance with the conditions under which they have been granted tax exemptions or tax incentives, and their tax liability, if any” (Paragraph 2, Sec. 235 cf. Sec. 34 [H] [4], NIRC).

Proof of Deductions

Taxpayers are, thus, reminded to obtain a certificate of donation for contributions or donations made. The certificate has to state the following: (a) actual receipt of the recipient of the contribution or donation; (b) date of receipt; (c) amount of the donation or contribution, be they cash or property, if the latter the acquisition cost thereof; (d) description of the property with a counter-signature by an authorized representative of the donee; (e) a statement of acquisition cost and net book value of the property by the donor as reflected in the financial statements; (f) deed of sale over the property as evidence of its acquisition cost with such document also being counter-signed by an authorized representative of the donee.

Contributions or gifts as tax deductions

Contributions or gifts are tax deductible if they are actually paid or made within the taxable year to, or they are are made for the use of:

(a) the Government of the Philippines or any of its agencies or any political subdivision thereof exclusively for public purposes; or

(b) accredited domestic corporation or associations organized and operated exclusively for religious, charitable, scientific, youth and sports development, cultural or educational purposes or for the rehabilitation of veterans, or to social welfare institutions, or to non-government organizations (Sec. 34 [H] [1], NIRC).

In either of the above-listed recipients, no part of the net income of which inures to the benefit of any private stockholder or individual in an amount not in excess of ten percent (10%) in the case of an individual, and five percent (%) in the case of a corporation, of the taxpayer’s taxable income derived from trade, business or profession as computed without the benefit of this and the following subparagraphs (Par. 2, Sec. 34 [H] [1], NIRC).

The tax deductions are made against the gross income of the taxpayer (Sec. 34, NIRC).

Further,notwithstanding above, contributions or donations are deductibe in full if made to the following institutions or entities:

(a) Donations to the Government. – Donations to the Government of the Philippines or to any of its agencies or political subdivisions, including fully-owned government corporations, exclusively to finance, to provide for, or to be used in undertaking priority activities in education, health, youth and sports development, human settlements, science and culture, and in economic development according to a National Priority Plan determined by the National Economic and Development Authority (NEDA), in consultation with appropriate government agencies, including its regional development councils and private philantrophic persons and institutions: Provided, That any donation which is made to the Government or to any of its agencies or political subdivisions not in accordance with the said annual priority plan shall be subject to the limitations prescribed in paragraph (1) of this Subsection (Sec. 34 [H] [2] [a], NIRC);

(b) Donations to Certain Foreign Institutions or International Organizations. – Donations to foreign institutions or international organizations which are fully deductible in pursuance of or in compliance with agreements, treaties, or commitments entered into by the Government of the Philippines and the foreign institutions or international organizations or in pursuance of special laws (Sec. 34 [H] [2] [b], NIRC);

(c) Donations to Accredited Nongovernment Organizations. – The term ‘nongovernment organization’ means a non profit domestic corporation:

(1) Organized and operated exclusively for scientific, research, educational, character-building and youth and sports development, health, social welfare, cultural or charitable purposes, or a combination thereof, no part of the net income of which inures to the benefit of any private individual (Sec. 34 [H] [2] [c] [1], NIRC);

(2) Which, not later than the 15th day of the third month after the close of the accredited nongovernment organizations taxable year in which contributions are received, makes utilization directly for the active conduct of the activities constituting the purpose or function for which it is organized and operated, unless an extended period is granted by the Secretary of Finance in accordance with the rules and regulations to be promulgated, upon recommendation of the Commissioner (Sec. 34 [H] [2] [c] [2], NIRC);

(3) The level of administrative expense of which shall, on an annual basis, conform with the rules and regulations to be prescribed by the Secretary of Finance, upon recommendation of the Commissioner, but in no case to exceed thirty percent (30%) of the total expenses (Sec. 34 [H] [2] [c] [3], NIRC); and

(4) The assets of which, in the even of dissolution, would be distributed to another nonprofit domestic corporation organized for similar purpose or purposes, or to the state for public purpose, or would be distributed by a court to another organization to be used in such manner as in the judgment of said court shall best accomplish the general purpose for which the dissolved organization was organized (Sec. 34 [H] [2] [c] [4], NIRC).

Subject to such terms and conditions as may be prescribed by the Secretary of Finance, the term ‘utilization’ means:

(i) Any amount in cash or in kind (including administrative expenses) paid or utilized to accomplish one or more purposes for which the accredited nongovernment organization was created or organized (Sec. 34 [H] [2] [c] [4], par. 2, NIRC); or

(ii) Any amount paid to acquire an asset used (or held for use) directly in carrying out one or more purposes for which the accredited nongovernment organization was created or organized (Sec. 34 [H] [2] [c] [4], par. 2, NIRC).

An amount set aside for a specific project which comes within one or more purposes of the accredited nongovernment organization may be treated as a utilization, but only if at the time such amount is set aside, the accredited nongovernment organization has established to the satisfaction of the Commissioner that the amount will be paid for the specific project within a period to be prescribed in rules and regulations to be promulgated by the Secretary of Finance, upon recommendation of the Commissioner, but not to exceed five (5) years, and the project is one which can be better accomplished by setting aside such amount than by immediate payment of funds (Sec. 34 [H] [2] [c] [4], par. 3, NIRC).

Valuation

To compute for the amount of a charitable contribution of a property, the acquisition cost thereof will serve as the basis (Sec. 34 [H] [3], NIRC).

Reformation of Instruments

When a written agreement does not reflect or express the true intentions of the parties, the contract may be reformed or changed. This is the right to reformation of instruments. This remedy is available so that the instrument may be accordingly revised to better manifest the agreement of the parties.

A party has the right to ask for the reformation of the instrument if it does not properly express the intent of the parties. This right is granted only to the extent that the true intentions may properly be reflected. Otherwise stated, it is only the provisions which are unclear and ambiguous which may be revised. If the parties agree to change clear and unambiguous provisions, they may be entering into a supplemental contract, a new contract, or a novation of the original contract.

Example 1: In a contract of sale of a condominium unit, the buyer obligated itself to pay the purchase price through a 24 monthly installments. On the other hand, the Realty Company selling the unit obligated itself to transfer and deliver ownership to the buyer upon full and complete payment of the purchase price. The transaction entered into by the parties is a contract to sell; however, they executed a contract of sale. As the intention of the parties is to enter into a contract to sell, their contract of sale may be modified accordingly to the extent that the will of the parties be shown.

Example 2: Using the same example above. If the parties later on agree to change the contract of sale such that the buyer will pay in full the purchase price and the Realty Company will transfer and deliver ownership of the condominium unit, they have entered into a novation of the original contract.

The grounds for invoking the right of reformation is due to the written instrument being unable to reflect the agreement or intentions of the parties by reason of: (a) mistake; (b) fraud; (c) inequitable conduct; or (d) accident. If the latter circumstances had actually prevented a meeting of the minds, the proper remedy is for the annulment of the contract. This is so as the consent of the parties may be defective or vitiated.

The remedy of reformation of the instrument is available even if there was a mutual mistake resulting in the failure of the instrument to reflect or disclose their agreement. Either party (or his successors-in-interest) may ask for the reformation of instrument. The party who was mistaken has the right to ask for reformation of the instrument, even if the other party knew or believed that there was a mistake and even concealed that fact to the other. If the mistake was due to one party, it is only the injured party (or his successors-in-interest) who can ask for reformation.

The remedy is not available to a party who acted fraudulently or inequitably in such a way that the instrument does not show their true intention. The erring party should not be rewarded for his unscrupulous behavior. If such conduct is permitted, it will wreak havoc on contracts as a party with evil intentions may simply ask for reformation if his plans do not work out.

Upon a complaint, the courts may order that the instrument be reformed if the instrument is defective due to ignorance, lack of skill, negligence or bad faith on the clerk, typist, or person who drafted the agreement. In so doing, the courts will factor in the principle of adhesion – wherein a contract will be construed against the party who prepared it.

A party who has already brought an action to enforce the contract cannot subsequently ask for its reformation. By filing a case, the said party declares that the contract reflects the intentions of the parties resulting in the waiver of the defects therein.

Notwithstanding the foregoing and what has been discussed, there cannot be any reformation in the following cases: (a) simple donations inter vivos wherein no condition is imposed; (b) wills; and (c) when the real agreement is void.