1.

G.R. No. 146650

January 13, 2003

DOLE PHILIPPINES, INC., petitioner,

vs.
PAWIS NG MAKABAYANG OBRERO (PAMAO-NFL), respondent.
CORONA, J.:
Before us is a petition for review filed under Rule 45 of the 1997 Rules of Civil Procedure,
assailing the January 9, 2001 resolution of the Court of Appeals which denied petitioners motion
for reconsideration of its September 22, 2000 decision1 which in turn upheld the Order issued by
the voluntary arbitrator2 dated 12 October 1998, the dispositive portion of which reads:
WHEREFORE, premises considered, judgment is hereby rendered in favor of the
complainant. Respondent is hereby directed to extend the "free meal" benefit as
provided for in Article XVIII, Section 3 of the collective bargaining agreement to those
employees who have actually performed overtime works even for exactly three (3)
hours only.
SO ORDERED. 3
The core of the present controversy is the interpretation of the provision for "free meals" under
Section 3 of Article XVIII of the 1996-2001 Collective Bargaining Agreement (CBA) between
petitioner Dole Philippines, Inc. and private respondent labor union PAMAO-NFL. Simply put,
how many hours of overtime work must a Dole employee render to be entitled to the free meal
under Section 3 of Article XVIII of the 1996-2001 CBA? Is it when he has rendered (a) exactly, or
no less than, three hours of actual overtime work or (b) more than three hours of actual overtime
work?
The antecedents are as follows:
On February 22, 1996, a new five-year Collective Bargaining Agreement for the period starting
February 1996 up to February 2001, was executed by petitioner Dole Philippines, Inc., and
private respondent Pawis Ng Makabayang Obrero-NFL (PAMAO-NFL). Among the provisions of
the new CBA is the disputed section on meal allowance under Section 3 of Article XVIII on
Bonuses and Allowances, which reads:
Section 3. MEAL ALLOWANCE. The COMPANY agrees to grant a MEAL
ALLOWANCE of TEN PESOS (P10.00) to all employees who render at least TWO (2)
hours or more of actual overtime work on a workday, and FREE MEALS, as presently
practiced, not exceeding TWENTY FIVE PESOS (P25.00) after THREE (3) hours of
actual overtime work.4
Pursuant to the above provision of the CBA, some departments of Dole reverted to the previous
practice of granting free meals after exactly three hours of actual overtime work. However, other
departments continued the practice of granting free meals only after more than three hours of
overtime work. Thus, private respondent filed a complaint before the National Conciliation and
Mediation Board alleging that petitioner Dole refused to comply with the provisions of the 19962001 CBA because it granted free meals only to those who rendered overtime work for more
than three hours and not to those who rendered exactly three hours overtime work.

The parties agreed to submit the dispute to voluntary arbitration. Thereafter, the voluntary
arbitrator, deciding in favor of the respondent, issued an order directing petitioner Dole to extend
the "free meal" benefit to those employees who actually did overtime work even for exactly three
hours only.
Petitioner sought a reconsideration of the above order but the same was denied. Hence,
petitioner elevated the matter to the Court of Appeals by way of a petition for review on certiorari.
On September 22, 2000, the Court of Appeals rendered its decision upholding the assailed
order.
Thus, the instant petition.
Petitioner Dole asserts that the phrase "after three hours of actual overtime work" should be
interpreted to meanafter more than three hours of actual overtime work.
On the other hand, private respondent union and the voluntary arbitrator see it as meaning after
exactly three hoursof actual overtime work.
The "meal allowance" provision in the 1996-2001 CBA is not new. It was also in the 1985-1988
CBA and the 1990-1995 CBA. The 1990-1995 CBA provision on meal allowance was amended
by the parties in the 1993-1995 CBA Supplement. The clear changes in each CBA provision on
meal allowance were in the amount of the meal allowance and free meals, and the use of the
words "after" and "after more than" to qualify the amount of overtime work to be performed by an
employee to entitle him to the free meal.
To arrive at a correct interpretation of the disputed provision of the CBA, a review of the
pertinent section of past CBAs is in order.
The CBA covering the period 21 September 1985 to 20 September 1988 provided:
Section 3. MEAL ALLOWANCE. The COMPANY agrees to grant a MEAL
ALLOWANCE of FOUR (P4.00) PESOS to all employees who render at least TWO (2)
hours or more of actual overtime work on a workday, and FREE MEALS, as presently
practiced, after THREE (3) hours of actual overtime work."5
The CBA for 14 January 1990 to 13 January 1995 likewise provided:
Section 3. MEAL ALLOWANCE. The COMPANY agrees to grant a MEAL
ALLOWANCE of EIGHT PESOS (P8.00) to all employees who render at least TWO
(2) hours or more of actual overtime work on a workday, and FREE MEALS, as
presently practiced, not exceeding SIXTEEN PESOS (P16.00) after THREE (3)
hoursof actual overtime work."6
The provision above was later amended when the parties renegotiated the economic provisions
of the CBA pursuant to Article 253-A of the Labor Code. Section 3 of Article XVIII of the 14
January 1993 to 13 January 1995 Supplement to the 1990-1995 CBA reads:
Section 3. MEAL ALLOWANCE. The COMPANY agrees to grant a MEAL SUBSIDY of
NINE PESOS (P9.00) to all employees who render at least TWO (2) hours or more of
actual overtime work on a workday, and FREE MEALS, as presently practiced, not

exceeding TWENTY ONE PESOS (P21.00) after more than THREE (3) hours of
actual overtime work (Section 3, as amended)."7

situation constitutes one of the limitations. The CBA is the norm of conduct between petitioner
and private respondent and compliance therewith is mandated by the express policy of the law. 10

We note that the phrase "more than" was neither in the 1985-1988 CBA nor in the original 19901995 CBA. It was inserted only in the 1993-1995 CBA Supplement. But said phrase is again
absent in Section 3 of Article XVIII of the 1996-2001 CBA, which reverted to the phrase "after
three (3) hours".

Petitioner Dole cannot assail the voluntary arbitrators interpretation of the CBA for the supposed
impairment of its management prerogatives just because the same interpretation is contrary to
its own.
WHEREFORE, petition is hereby denied.

Petitioner asserts that the phrase "after three (3) hours of actual overtime work" does not
mean after exactly three hours of actual overtime work; it means after more than three hours of
actual overtime work. Petitioner insists that this has been the interpretation and practice of Dole
for the past thirteen years.
Respondent, on the other hand, maintains that "after three (3) hours of actual overtime work"
simply means after rendering exactly, or no less than, three hours of actual overtime work.
The Court finds logic in private respondents interpretation.
The omission of the phrase "more than" between "after" and "three hours" in the present CBA
spells a big difference.
No amount of legal semantics can convince the Court that "after more than" means the same as
"after".
Petitioner asserts that the "more than" in the 1993-1995 CBA Supplement was mere surplusage
because, regardless of the absence of said phrase in all the past CBAs, it had always been the
policy of petitioner corporation to give the meal allowance only after more than 3 hours of
overtime work. However, if this were true, why was it included only in the 1993-1995 CBA
Supplement and the parties had to negotiate its deletion in the 1996-2001 CBA?
Clearly then, the reversion to the wording of previous CBAs can only mean that the parties
intended that free meals be given to employees after exactly, or no less than, three hours of
actual overtime work.
The disputed provision of the CBA is clear and unambiguous. The terms are explicit and the
language of the CBA is not susceptible to any other interpretation. Hence, the literal meaning of
"free meals after three (3) hours of overtime work" shall prevail, which is simply that an
employee shall be entitled to a free meal if he has rendered exactly, or no less than, three hours
of overtime work, not "after more than" or "in excess of" three hours overtime work.
Petitioner also invokes the well-entrenched principle of management prerogative that "the power
to grant benefits over and beyond the minimum standards of law, or the Labor Code for that
matter, belongs to the employer x x x". According to this principle, even if the law is solicitous of
the welfare of the employees, it must also protect the right of the employer to exercise what
clearly are management prerogatives.8 Petitioner claims that, being the employer, it has the right
to determine whether it will grant a "free meal" benefit to its employees and, if so, under what
conditions. To see it otherwise would amount to an impairment of its rights as an employer.
We do not think so.
The exercise of management prerogative is not unlimited. It is subject to the limitations found in
law, a collective bargaining agreement or the general principles of fair play and justice. 9 This

SO ORDERED.

2.

G.R. No. 92009 February 17, 1993

MASTER IRON LABOR UNION (MILU), WILFREDO ABULENCIA, ROGELIO CABANA,

LOPITO SARANILLA, JESUS MOISES, BASILIO DELA CRUZ, EDGAR ARANES, ELY
BORROMEO, DANIEL BACOLON, MATIAS PAJIMULA, RESTITUTO PAYABYAB,
MELCHOR BOSE, TEOFILO ANTOLIN, ROBERT ASPURIA, JUSTINO BOTOR, ALFREDO
FABROS, AGAPITO TABIOS, BENARDO ALFON, BENIGNO BARCENA, BERNARDO
NAVARRO, MOISES LABRADOR, ERNESTO DELA CRUZ, EDUARDO ESPIRITU, IGNACIO
PAGTAMA, BAYANI PEREZ, SIMPLICIO PUASO, EDWIN VELARDE, BEATO ABOGADO,
DANILO SAN ANTONIO, BERMESI BORROMEO, and JOSE BORROMEO, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION and MASTER IRON WORKS AND
CONSTRUCTION CORPORATION, respondents.
Banzuela, Flores, Mirrales, Raeses, Sy, Taquio and Associates for petitioners.
Carlos L. Galarrita for private respondent.
MELO, J.:
The petition for certiorari before us seeks to annul and to set aside the decision of the National
Labor Relations Commission (Second Division) dated July 12, 1986 which affirmed that of Labor
Arbiter Fernando V. Cinco declaring illegal the strike staged by petitioners and terminating the
employment of the individual petitioners.
The Master Iron Works Construction Corporation (Corporation for brevity) is a duly organized
corporate entity engaged in steel fabrication and other related business activities. Sometime in
February 1987, the Master Iron Labor Union (MILU) entered into a collective barganing
agreement (CBA) with the Corporation for the three-year period between December 1, 1986 and
November 30, 1989 (Rollo, p. 7). Pertinent provisions of the CBA state:
Sec. 1. That there shall be no strike and no lockout, stoppage or shutdown
of work, or any other interference with any of the operation of the
COMPANY during the term of this AGREEMENT, unless allowed and
permitted by law.

Sec. 2. Service Allowance The COMPANY agrees to continue the

granting of service allowance of workers assigned to work outside the
company plant, in addition to his daily salary, as follows:

workers to remove the barricades and other obstructions which prevented ingress to and egress
from the company premises. The workers obliged on October 1, 1987 (Rollo, p. 25). On October
22, 1987, through its president, MILU offered to return to work in a letter which states:

(a) For those assigned to work outside the plant within

Metro Manila, the service allowance shall be P12.00;

22 Okt. 1987
Mr. Elieze Hao

(b) For those assigned to work outside Metro Manila,

the service allowance shall be P25.00/day;

Master Iron Works & Construction Corp.

(c) The present practice of conveying to and from

jobsites of workers assigned to work outside of the
company plant shall be maintained.

790 Bagbagin, Caloocan City

Dear Sir:

Right after the signing of the CBA, the Corporation subcontracted outside workers to do the
usual jobs done by its regular workers including those done outside of the company plant. As a
result, the regular workers were scheduled by the management to work on a rotation basis
allegedly to prevent financial losses thereby allowing the workers only ten (10) working days a
month (Rollo, p. 8). Thus, MILU requested implementation of the grievance procedure which had
also been agreed upon in the CBA, but the Corporation ignored the request.

Ang unyon, sa pamamagitan ng nakalagda sa ibaba, ay nagmumungkahi,

nagsusuhestiyon o nag-oofer sa inyong pangasiwaan ng aming kahilingan na bumalik
na sa trabaho dahilan din lang sa kalagayan na tuloy tuloy ang ating pag-uusap para
sa ikatitiwasay ng ating relasyon. Gusto naming manatili ang ating magandang
pagtitinginan bilang magkasangga para sa ika-uunlad ng ating kumpanya. Sana ay
unawain niyo kami dahil kailangan namin ng trabaho.

Consequently, on April 8, 1987, MILU filed a notice of strike (Rollo,

p. 54) with the Department of Labor and Employment. Upon the intervention of the DOLE,
through one Atty. Bobot Hernandez, the Corporation and MILU reached an agreement whereby
the Corporation acceded to give back the usual work to its regular employees who are members
of MILU (Rollo, p. 55).
Notwithstanding said agreement, the Corporation continued the practice of hiring outside
workers. When the MILU president, Wilfredo Abulencia, insisted in doing his regular work of
cutting steel bars which was being done by casual workers, a supervisor reprimanded him,
charged him with insubordination and suspended him for three (3) days (Rollo, pp. 9 & 51-52).
Upon the request of MILU, Francisco Jose of the DOLE called for conciliation conferences. The
Corporation, however, insisted that the hiring of casual workers was a management prerogative.
It later ignored subsequent scheduled conciliation conferences (Rollo, pp. 51-52 & 57-58).
Hence, on July 9, 1987, MILU filed a notice of strike on the following grounds: (a) violation of
CBA; (b) discrimination; (c) unreasonable suspension of union officials; and (d) unreasonable
refusal
to
entertain
grievance
(Rollo,
p. 9). On July 24, 1987, MILU staged the strike, maintaining picket lines on the road leading to
the Corporation's plant entrance and premises.
At about 11 o'clock in the morning of July 28, 1987, CAPCOM soldiers, who had been
summoned by the Corporation's counsel, came and arrested the picketers. They were brought to
Camp Karingal and, the following day, to the Caloocan City jail. Charges for illegal possession of
firearms and deadly weapons were lodged against them. Later, however, those charges were
dismissed for failure of the arresting CAPCOM soldiers to appear at the investigation (Rollo, p.
10). The dispersal of the picketlines by the CAPCOM also resulted in the temporary lifting of the
strike.
On August 4, 1987, the Corporation filed with the NLRC National Capital Region arbitration
branch
a
petition
to
declare
the
strike
illegal
(Rollo,
p. 40). On September 7, 1987, MILU, with the assistance of the Alyansa ng Manggagawa sa
Valenzuela (AMVA), re-staged the strike. Consequently, the Corporation filed a petition for
injunction before the NLRC which, on September 24, 1987, issued an order directing the

(Sgd.)
WILFREDOABULENCIA
Pangulo
(Rollo, p. 590)
On October 30, 1987, MILU filed a position paper with counter-complaint before the NLRC. In
said counter-complaint, the workers charged the Corporation with unfair labor practice for
subcontracting work that was normally done by its regular workers thereby causing the reduction
of the latter's workdays; illegal suspension of Abulencia without any investigation; discrimination
for hiring casual workers in violation of the CBA, and illegal dispersal of the picket lines by
CAPCOM agents (Rollo, pp. 26-27).
In due course, a decision dated March 16, 1988 was rendered by Labor Arbiter Fernando Cinco
declaring illegal the strike staged by MILU. The dispositive portion of the decision reads:
WHEREFORE, in the light of the foregoing premises, judgment is hereby
rendered, as follows:
1. Declaring the strike by the respondents illegal and unlawful;
2. Ordering the cancellation of the registered permit of respondent union
MILU for having committed an illegal strike;
3. Ordering the termination of employment status of the individual
respondents, including the forfeiture of whatever benefits are due them
under the law, for having actively participated in an illegal strike,
namely: Wilfredo
Abulencia,
President; Rogelio
Cabana,
Vice-

President; Lopito Saranilla, Secretary;Jesus Moises, Treasurer; Basilio dela

Cruz, Auditor; as Members of the Board: Edgar Aranes, Melchor Bose,
Restituto Payabyab, Matias Pajimula, Daniel Bacolon, and Ely Borromeo, as
Members of the Union: Teofilo Antolin, Robert Aspuria, Justino Botor,
Alfredo Fabros, Agapito Tabios, Bernardo Alfon, Benigno Barcena,
Bernardo Navaro, Moises Labrador, Ernesto dela Cruz, Eduardo Espiritu,
Ignacio Pagtama, Bayani Perez, Simplicio Puaso, Edwin Velarde, Beato
Abogado, Danila San Antonio, Bermes Borromeo and Jose Borromeo.
The respondents as appearing in Annex "A" of the Petition, but not included
as among those whose employment status were not terminated as abovementioned, are given priority of reinstatement, without backwages, in the
event petitioner starts its normal operations, or shall be paid their separation
pay according to law.
4. Ordering the respondents to cease and desist from further committing the
illegal acts complained of;
5. Ordering Respondent Union to pay the amount of P10,000.00 to
Petitioner's Counsel as attorney's fees;
6. Ordering the dismissal of the claim for damages for lack of merit; and
7. Ordering the dismissal of the counter-complaint in view of the filing of a
separate complaint by the respondents.
SO ORDERED. (pp. 35-36, Rollo.)
On appeal to the NLRC, MILU and the individual officers and workers named in Labor Arbiter
Cinco's decision alleged that said labor arbiter gravely abused his discretion and exhibited bias
in favor of the Corporation in disallowing their request to cross-examine the Corporation's
witnesses, namely, Corporate Secretary Eleazar Hao, worker Daniel Ignacio and foreman
Marcial Barcelon, who all testified on the manner in which the strike was staged and on the
coercion
and
intimidation
allegedly
perpetrated
by
the
strikers
(Rollo,
p. 151).
The Second Division of the NLRC affirmed with modifications the decision of the labor arbiter.
The decision, which was promulgated on July 12, 1989 with Commissioners Domingo H.
Zapanta and Oscar N. Abella concurring and Commissioner Daniel M. Lucas, Jr. dissenting,
disagreed with the labor arbiter on the "summary execution of the life of Master Iron Labor Union
(MILU)" on the grounds that the Corporation did not specifically pray for the cancellation of
MILU's registration and that pursuant to Articles 239 and 240 of the Labor Code, only the Bureau
of Labor Relations may cancel MILU's license or certificate of registration. It also deleted the
award of P10,000.00 as attorney's fees for lack of sufficient basis but it affirmed the labor arbiter
with regard to the declaration of illegality of the strike and the termination of employment of
certain employees and the rest of the dispositive portion of the labor arbiter's decision (Rollo, pp.
48-49).
In his dissent, Commissioner Lucas stated that he is "for the setting aside of the decision
appealed from, and remanding of the case to the labor arbiter of origin, considering the
respondent's countercharge or complaint for unfair labor practice was not resolved on the
merits" (Rollo, p. 49).

MILU filed a motion for the reconsideration but the same was denied by the NLRC for lack of
merit in its Resolution of August 9, 1989 (Rollo, p. 50). Hence, the instant petition. 1
Petitioners contend that notwithstanding the non-strike provision in the CBA, the strike they
staged was legal because the reasons therefor are non-economic in nature. They assert that the
NLRC abused its discretion in holding that there was "failure to exhaust the provision on
grievance procedure" in view of the fact that they themselves sought grievance meetings but the
Corporation ignored such requests. They charge the NLRC with bias in failing to give weight to
the fact that the criminal charges against the individual petitioners were dismissed for failure of
the CAPCOM soldiers to testify while the same individual strikers boldly faced the charges
against them. Lastly, they aver that the NLRC abused its discretion in holding that the workers'
offer to return to work was conditional.
In holding that the strike was illegal, the NLRC relied solely on the no-strike no-lockout provision
of the CBA aforequoted. As this Court has held in Philippine Metal Foundries, Inc. vs. CIR (90
SCRA 135 [1979]), a no-strike clause in a CBA is applicable only to economic strikes. Corollarily,
if the strike is founded on an unfair labor practice of the employer, a strike declared by the union
cannot be considered a violation of the no-strike clause.
An economic strike is defined as one which is to force wage or other concessions from the
employer which he is not required by law to grant (Consolidated Labor Association of the
Philippines vs. Marsman & Co., Inc., 11 SCRA 589 [1964]). In this case, petitioners enumerated
in their notice of strike the following grounds: violation of the CBA or the Corporation's practice of
subcontracting workers; discrimination; coercion of employees; unreasonable suspension of
union officials, and unreasonable refusal to entertain grievance.
Private respondent contends that petitioner's clamor for the implementation of Section 2, Article
VIII of the CBA on service allowances granted to workers who are assigned outside the
company premises is an economic issue (Rollo, p. 70). On the contrary, petitioners decry the
violation of the CBA, specifically the provision granting them service allowances. Petitioners are
not, therefore, already asking for an economic benefit not already agreed upon, but are merely
asking for the implementation of the same. They aver that the Corporation's practice of hiring
subcontractors to do jobs outside of the company premises was a way "to dodge paying service
allowance to the workers" (Rollo, pp. 61 & 70).
Much more than an economic issue, the said practice of the Corporation was a blatant violation
of the CBA and unfair labor practice on the part of the employer under Article 248(i) of the
Labor Code. Although the end result, should the Corporation be required to observe the CBA,
may be economic in nature because the workers would then be given their regular working
hours and therefore their just pay, not one of the said grounds is an economic demand within the
meaning of the law on labor strikes. Professor Perfecto Fernandez, in his
book Law on Strikes,Picketing and Lockouts (1981 edition, pp. 144-145), states that an
economic strike involves issues relating to demands for higher wages, higher pension or
overtime rates, pensions, profit sharing, shorter working hours, fewer work days for the same
pay, elimination of night work, lower retirement age, more healthful working conditions, better
health services, better sanitation and more safety appliances. The demands of the petitioners,
being covered by the CBA, are definitely within the power of the Corporation to grant and
therefore the strike was not an economic strike.
The other grounds, i.e., discrimination, unreasonable suspension of union officials and
unreasonable refusal to entertain grievance, had been ventilated before the Labor Arbiter. They
are clearly unfair labor practices as defined in Article 248 of the Labor Code. 2 The subsequent
withdrawal of petitioners' complaint for unfair labor practice (NLRC-NCR Case No. 00-11-0413287) which was granted by Labor Arbiter Ceferina Diosana who also considered the case closed

and terminated (Rollo, pp. 97 & 109) may not, therefore, be considered as having converted
their other grievance into economic demands.
Moreover, petitioners staged the strike only after the Corporation had failed to abide by the
agreement forged between the parties upon the intervention of no less than the DOLE after the
union had complained of the Corporation's unabated subcontracting of workers who performed
the usual work of the regular workers. The Corporation's insistence that the hiring of casual
employees is a management prerogative betrays its attempt to coat with legality the illicit
curtailment of its employees' rights to work under the terms of the contract of employment and to
a fair implementation of the CBA.
While it is true that an employer's exercise of management prerogatives, with or without reason,
does not per seconstitute unjust discrimination, such exercise, if clearly shown to be in grave
abuse of discretion, may be looked into by the courts (National Federation of Labor Unions vs.
NLRC, 202 SCRA 346 [1991]). Indeed, the hiring, firing, transfer, demotion, and promotion of
employees are traditionally identified as management prerogatives. However, they are not
absolute prerogatives. They are subject to limitations found in law, a collective bargaining
agreement, or general principles of fair play and justice (University of Sto. Tomas vs. NLRC, 190
SCRA 758 [1990] citing Abbott Laboratories [Phil.], Inc. vs. NLRC, 154 SCRA 713 [1987]). The
Corporation's assertion that it was exercising a management prerogative in hiring outside
workers being contrary to the contract of employment which, of necessity, states the expected
wages of the workers, as well as the CBA, is therefore untenable.
Private respondent's failure to traverse petitioners' allegations that the NLRC abused its
discretion in holding that the provision on grievance procedure had not been exhausted clearly
sustains such allegation and upholds the petitioners' contention that the Corporation refused to
undergo said procedure. It should be remembered that a grievance procedure is part of the
continuous process of collective bargaining (Republic Savings Bank. vs. CIR, et al., 21 SCRA
226 [1967]). It is intended to promote a friendly dialogue between labor and management as a
means of maintaining industrial peace. The Corporation's refusal to heed petitioners' request to
undergo the grievance procedure clearly demonstrated its lack of intent to abide by the terms of
the CBA.
Anent the NLRC's finding that Abulencia's offer to return to work is conditional, even a cursory
reading of the letter aforequoted would reveal that no conditions had been set by petitioners. It is
incongruous to consider as a "condition" the statement therein that the parties would continue
talks for a peaceful working relationship ("tuloy tuloy ang ating pag-uusap sa ikatitiwasay ng
ating relasyon"). Conferences form part of the grievance procedure and their mere mention in
Abulencia's letter did not make the same "conditional".
In the same manner, the following findings of the Labor Arbiter showed the illegal breakup of the
picket lines by the CAPCOM:
d) On 28 July 1987, CAPCOM soldiers, on surveillance mission, arrived at
the picket line of respondents and searches were made on reported deadly
weapons and firearms in the possession of the strikers. Several bladed
weapons and firearms in the possession of the strikers were confiscated by
the CAPCOM soldiers, as a result of which, the apprehended strikers were
brought to Camp Tomas Karingal in Quezon City for proper investigation
and filing of the appropriate criminal charges against them. The strikers who
were charged of illegal possession of deadly weapon and firearms were:
Edgar Aranes, Wilfredo Abulencia, Ernesto dela Cruz, Beato Abogado,
Lopito Saranilla, Restituto Payabyab, Jose Borromeo and Rogelio Cabana.
Criminal informations were filed by Inquest Fiscal, marked as Exhibits "E",
"E-1 to E-8". These strikers were jailed for sometime until they were ordered

release after putting up the required bail bond. Other strikers were also
arrested and brought to Camp Tomas Karingal, and after proper
investigation as to their involvement in the offense charged, they were
released for lack of prima facie evidence. They were Edwin Velarde, Bayani
Perez, Daniel Bacolon, Jesus Moises, Robert Aspurias and Benigno
Barcena.
After the strikers who were arrested were brought to Camp Tomas Karingal
on 28 July 1987, the rest of the strikers removed voluntarily their human and
material barricades which were placed and posted at the road leading to the
premises of the Company. (Rollo, p. 32)
The bringing in of CAPCOM soldiers to the peaceful picket lines without any reported outbreak
of violence, was clearly in violation of the following prohibited activity under Article 264 of the
Labor Code:
(d) No public official or employee, including officers and personnel of the
New Armed Forces of the Philippines or the Integrated National Police, or
armed person, shall bring in, introduce or escort in any manner any
individual who seeks to replace strikers in entering or leaving the premises
of a strike area, or work in place of the strikers. The police force shall keep
out of the picket lines unless actual violence or other criminal acts occur
therein; Provided, That nothing herein shall be interpreted to prevent any
public officer from taking any measure necessary to maintain peace and
order, protect life and property, and/or enforce the law and legal order.
(Emphasis supplied.)
As the Labor Arbiter himself found, no pervasive or widespread coercion or violence were
perpetrated by the petitioners as to warrant the presence of the CAPCOM soldiers in the picket
lines. In this regard, worth quoting is the following excerpt of the decision in Shell Oil
Workers' Union vs. Shell Company of the Philippines, Ltd., 39 SCRA 276 [1971], which was
decided by the Court under the old Industrial Peace Act but which excerpt still holds true:
. . . What is clearly within the law is the concerted activity of cessation of
work in order that . . . employer cease and desist from an unfair labor
practice. That the law recognizes as a right. There is though a disapproval
of the utilization of force to attain such an objective. For implicit in the very
concept of the legal order is the maintenance of peaceful ways. A strike
otherwise valid, if violent in character, may be placed beyond the pale. Care
is to be taken, however, especially where an unfair labor practice is
involved, to avoid stamping it with illegality just because it is tainted with
such acts. To avoid rendering illusory the recognition of the right to strike,
responsibility in such a case should be individual and not collective. A
different conclusion would be called for, of course, if the existence of force
while the strike lasts is pervasive and widespread, consistently and
deliberately resorted to as a matter of policy. It could be reasonably
concluded then that even if justified as to ends, it becomes illegal because
of the means employed. (at p. 292.)
All told, the strike staged by the petitioners was a legal one even though it may have been called
to offset what the strikers believed in good faith to be unfair labor practices on the part of the
employer (Ferrer, et al. vs. Court of Industrial Relations, et al., 17 SCRA 352 [1966]). Verily,
such presumption of legality prevails even if the allegations of unfair labor practices are
subsequently found out to be untrue (People's Industrial and Commercial Employees and
Workers Org. [FFW] vs. People's Industrial and Commercial Corporation, 112 SCRA 440

[1982]). Consonant with these jurisprudential pronouncements, is Article 263 of the Labor Code
which clearly states "the policy of the State to encourage free trade unionism and free collective
bargaining". Paragraph (b) of the same article guarantees the workers' "right to engage in
concerted activities for purposes of collective bargaining or for their mutual benefit and
protection" and recognizes the "right of legitimate labor organizations to strike and picket and of
employers to lockout" so long as these actions are "consistent with the national interest" and the
grounds therefor do not involve inter-union and intra-union disputes.
The strike being legal, the NLRC gravely abused its discretion in terminating the employment of
the individual petitioners, who, by operation of law, are entitled to reinstatement with three years
backwages. Republic Act No. 6715 which amended Art. 279 of the Labor Code by giving "full
backwages inclusive of allowances" to reinstated employees, took effect fifteen days from the
publication of the law on March 21, 1989. The decision of the Labor Arbiter having been
promulgated on March 16, 1988, the law is not applicable in this case.
WHEREFORE, the questioned decision and resolution of the NLRC as well as the decision of
the Labor Arbiter are hereby SET ASIDE and the individual petitioners are reinstated to their
positions, with three years backwages and without loss of seniority rights and other privileges.
Further, respondent corporation is ordered to desist from subcontracting work usually performed
by its regular workers.

Regional Branch No. IV of the NLRC for compulsory arbitration where it was
docketed as Case No. RB-IV-12038-77 and assigned to Labor Arbiter Ernilo
V. Pealosa. The latter conducted the hearing. By agreement of the parties,
the case was submitted for resolution upon submission of their respective
position papers. Private respondent (Juco) submitted his position paper on
July 15, 1977. He professed innocence of the criminal acts imputed against
him contending "that he was dismissed based on purely fabricated charges
purposely to harass him because he stood as a witness in the theft case
filed against certain high officials of the respondent's establishment" (NHC)
and prayed for 'his immediate reinstatement to his former position in the
(NHC) without loss of seniority rights and the consequent payment of his will
back wages plus all the benefits appertaining thereto. On July 28, 1977, the
NHC also filed its position paper alleging that the Regional Office Branch IV,
Manila, NLRC, "is without authority to entertain the case for lack of
jurisdiction, considering that the NHC is a government owned and controlled
corporation; that even assuming that this case falls within the jurisdiction of
this Office, respondent firm (now petitioner) maintains that respondent
(Juco), now private respondent, was separated from the service for valid
and justified reasons, i.e., for having sold company properties consisting of
214 pieces of scrap G.I. pipes at a junk shop in Alabang, Muntinlupa, Metro
Manila, and thereafter appropriating the proceeds thereof to his own
benefit."

SO ORDERED.
The pertinent portion of the decision of respondent National Labor Relations Commission
(NLRC) reads:

3.

G.R. No. L-64313 January 17, 1985

NATIONAL HOUSING CORPORATION, petitioner,

vs.
BENJAMIN JUCO AND THE NATIONAL LABOR RELATIONS COMMISSION, respondents.
Government Corporate Counsel for petitioner.
Amante A. Pimentel for respondents.
GUTIERREZ, JR., J.:
Are employees of the National Housing Corporation (NHC) covered by the Labor Code or by
laws and regulations governing the civil service?

The fact that in the early case of Fernandez v. Cedro (NLRC Case No.
201165-74, May 19, 1975) the Commission, (Second Division) ruled that the
respondent National Housing Corporation is a government-owned or
controlled corporation does not preclude us from later taking a contrary
stand if by doing so the ends of justice could better be served.
For although adherence to precedents (stare decisis) is a sum formula for
achieving uniformity of action and conducive to the smooth operation of an
office, Idolatrous reverence for precedents which have outlived their validity
and usefulness retards progress and should therefore be avoided. In fact,
even courts do reverse themselves for reasons of justice and equity. This
Commission as an Administrative body performing quasi judicial function is
no exception.
WHEREFORE, in the light of the foregoing, the decision appealed from is
hereby, set aside. In view, however, of the fact that the Labor Arbiter did not
resolve the issue of illegal dismissal we have opted to remand this case to
the Labor Arbiter a quo for resolution of the aforementioned issue.

The background facts of this case are stated in the respondent-appellee's brief as follows:
The records reveal that private respondent (Benjamin C. Juco) was a
project engineer of the National Housing Corporation (NHC) from November
16, 1970 to May 14, 1975. For having been implicated in a crime of theft
and/or malversation of public funds involving 214 pieces of scrap G.I. pipes
owned by the corporation which was allegedly committed on March 5, 1975.
Juco's services were terminated by (NHC) effective as of the close of
working hours on May 14, 1975. On March 25, 1977 he filed a complaint for
illegal dismissal against petitioner (NHC) with Regional Office No. 4,
Department of Labor (now Ministry of Labor and Employment) docketed as
R04-3-3309-77 (Annex A, Petition). The said complaint was certified by

The NHC is a one hundred percent (100%) government-owned corporation organized in

accordance with Executive Order No. 399, the Uniform Charter of Government Corporations,
dated January 5, 1951. Its shares of stock are owned by the Government Service Insurance
System the Social Security System, the Development Bank of the Philippines, the National
Investment and Development Corporation, and the People's Homesite and Housing Corporation.
Pursuant to Letter of Instruction No. 118, the capital stock of NHC was increased from P100
million to P250 million with the five government institutions above mentioned subscribing in
equal proportion to the increased capital stock. The NHC has never had any private
stockholders. The government has been the only stockholder from its creation to the present.

There should no longer be any question at this time that employees of government-owned or
controlled corporations are governed by the civil service law and civil service rules and
regulations.

Our decision in Alliance of Government Workers, et al v. Honorable Minister of Labor and

Employment et all. (124 SCRA 1) gives the background of the amendment which includes
government-owned or controlled corporations in the embrace of the civil service.

Section 1, Article XII-B of the Constitution specifically provides:

We stated:

The Civil Service embraces every branch, agency, subdivision, and

instrumentality of the Government, including every government-owned or
controlled corporation. ...

Records of the 1971 Constitutional Convention show that in the deliberation

held relative to what is now Section 1(1), Article XII-B, supra, the issue of
the inclusion of government-owned or controlled corporations figured
prominently.

The 1935 Constitution had a similar provision in its Section 1, Article XI I which stated:
A Civil Service embracing all branches and subdivisions of the Government
shall be provided by law.
The inclusion of "government-owned or controlled corporations" within the embrace of the civil
service shows a deliberate effort of the framers to plug an earlier loophole which allowed
government-owned or controlled corporations to avoid the full consequences of the an
encompassing coverage of the civil service system. The same explicit intent is shown by the
addition of "agency" and "instrumentality" to branches and subdivisions of the Government. All
offices and firms of the government are covered.
The amendments introduced in 1973 are not Idle exercises or a meaningless gestures. They
carry the strong message that t civil service coverage is broad and an- embracing insofar as
employment in the government in any of its governmental or corporate arms is concerned.
The constitutional provision has been implemented by statute. Presidential Decree No. 807 is
unequivocal that personnel of government-owned or controlled corporations belong to the civil
service and are subject to civil service requirements.
It provides:
SEC. 56. Government-owned or Controlled Corporations Personnel. All
permanent personnel of government-owned or controlled corporations
whose positions are now embraced in the civil service shall continue in the
service until they have been given a chance to qualify in an appropriate
examination, but in the meantime, those who do not possess the
appropriate civil service eligibility shag not be promoted until they qualify in
an appropriate civil service examination. Services of temporary personnel
may be terminated any time.
The very Labor Code, P. D. No. 442 as amended, which the respondent NLRC wants to apply in
its entirety to the private respondent provides:
ART. 277. Government employees. The terms and conditions of
employment of all government employees, including employees of
government-owned and controlled corporations shall be governed by the
Civil Service Law, rules and regulations. Their salaries shall be standardized
by the National Assembly as provided for in the New Constitution. However,
there shall be reduction of existing wages, benefits and other terms and
conditions of employment being enjoyed by them at the time of the adoption
of the Code.

The late delegate Roberto S. Oca, a recognized labor leader, vehemently

objected to the inclusion of government-owned or controlled corporations in
the Civil Service. He argued that such inclusion would put asunder the right
of workers in government corporations, recognized in jurisprudence under
the 1935 Constitution, to form and join labor unions for purposes of
collective bargaining with their employers in the same manner as in the
private section (see: records of 1971 Constitutional Convention).
In contrast, other labor experts and delegates to the 1971 Constitutional
Convention enlightened the members of the Committee on Labor on the
divergent situation of government workers under the 1935 Constitution, and
called for its rectification. Thus, in a Position Paper dated November 22, 197
1, submitted to the Committee on Labor, 1971 Constitutional Convention,
then Acting Commissioner of Civil Service Epi Rey Pangramuyen declared:
It is the stand, therefore, of this Commission that by
reason of the nature of the public employer and the
peculiar character of the public service, it must
necessary regard the right to strike given to unions in
private industry as not applying to public employees
and civil service employees. It has been stated that the
Government, in contrast to the private employer,
protects the interests of all people in the public service,
and that accordingly, such conflicting interests as are
present in private labor relations could not exist in the
relations between government and those whom they
employ.
Moreover, determination of employment conditions as
well as supervision of the management of the public
service is in the hands of legislative bodies. It is further
emphasized that government agencies in the
performance of their duties have a right to demand
undivided allegiance from their workers and must
always maintain a pronounced esprit de corps or firm
discipline among their staff members. It would be highly
incompatible with these requirements of the public
service, if personnel took orders from union leaders or
put solidarity with members of the working class above
solidarity with the Government. This would be inimical
to the public interest.
Moreover, it is asserted that public employees by
joining labor unions may be compelled to support

objectives which are political in nature and thus

jeopardize the fundamental principle that the
governmental machinery must be impartial and nonpolitical in the sense of party politics. (See: Records of
1971 Constitutional Convention).
Similar, Delegate Leandro P. Garcia, expressing for the inclusion of
government-owned or controlled corporations in the Civil Service, argued:
It is meretricious to contend that because Governmentowned or controlled corporations yield profits, their
employees are entitled to better wages and fringe
benefits than employees of Government other than
Government-owned and controlled corporations which
are not making profits. There is no gainsaying the fact
that the capital they use is the people's money. (see:
Records of the 1971 Constitutional Convention).
Summarizing the deliberations of the 1971 Constitutional Convention on the
inclusion of Government-owned or controlled corporation Dean Joaquin G.
Bernas, SJ., of the Ateneo de Manila University Professional School of Law,
stated that government-owned corporations came under attack as g cows of
a privileged few enjoying salaries far higher than their counterparts in the
various branches of government, while the capital of these corporations
belongs to the Government and government money is pumped into them
whenever on the brink of disaster, and they should therefore come under
the strict surveillance of the Civil Service System. (Bernas, The 1973
Philippine Constitution, Notes and Cases, 1974 ed., p. 524).
Applying the pertinent provisions of the Constitution, the Labor Code as amended, and the Civil
Service Decree as amended and the precedent in the Alliance of Government Workers decision,
it is clear that the petitioner National Housing Corporation comes under the jurisdiction of the
Civil Service Commission, not the Ministry of Labor and Employment.
This becomes more apparent if we consider the fact that the NHC performs governmental
functions and not proprietary ones.
The NHC was organized for the governmental objectives stated in its amended articles of
incorporation as follows:
SECOND: That the purpose for which the corporation is organized is to
assist and carry out the coordinated massive housing program of the
government, principally but not limited to low-cost housing with the
integration cooperation and assistance of all governmental agencies
concerned, through the carrying on of any or all the following activities:
l) The acquisition, development or reclamation of lands for the purpose of
construction and building therein preferably low-cost housing so as to
provide decent and durable dwelling for the greatest number of inhabitants
in the country;
2) The promotion and development of physical social and economic
community growth through the establishment of general physical plans for

urban, suburban and metropolitan areas to be characterized by efficient

land use patterns;
3) The coordination and implementation of all projects of the government for
the establishment of nationwide and massive low cost housing;
4) The undertaking and conducting of research and technical studies of the
development and promotion of construction of houses and buildings of
sound standards of design liability, durability, safety, comfort and size for
improvement of the architectural and engineering designs and utility of
houses and buildings with the utilization of new and/or native materials
economics in material and construction, distribution, assembly and
construction and of applying advanced housing and building technology.
5) Construction and installation in these projects of low-cost housing
privately or cooperatively owned water and sewerage system or waste
disposal facilities, and the formulations of a unified or officially coordinated
urban transportation system as a part of a comprehensive development plan
in these areas.
The petitioner points out that it was established as an instrumentality of the government to
accomplish governmental policies and objectives and extend essential services to the people. It
would be incongruous if employees discharging essentially governmental functions are not
covered by the same law and rules which govern those performing other governmental
functions. If government corporations discharging proprietary functions now belong to the civil
service with more reason should those performing governmental functions be governed by civil
service law.
The respondent NLRC cites a 1976 opinion of the Secretary of Justice which holds that the
phrase "government-owned or controlled corporations" in Section 1, Article XII-B of the
Constitution
contemplates
only
those
government-owned
or
controlled
corporations created by special law. The opinion states that since the Constitution provides for
the organization or regulation of private corporations only by "general law", expressly excluding
government-owned or controlled corporations, it follows that whenever the Constitution mentions
government-owned or controlled corporations, it must refer to those created by special law. P.D.
No. 868 which repeals all charters, laws, decrees, rules, and provisions exempting any branch,
agency, subdivision, or instrumentality of the government, including government- owned or
controlled corporations from the civil service law and rules is also cited to show that corporations
not governed by special charters or laws are not to be brought within civil service coverage. The
discussions in the Constitutional Convention are also mentioned. It appears that at the time the
Convention discussed government-owned or controlled corporations, all such corporations were
organized only under special laws or charters.
The fact that "private" corporations owned or controlled by the government may be created by
special charter does not mean that such corporations not created by special law are not covered
by the civil service. Nor does the decree repealing all charters and special laws granting
exemption from the civil service law imply that government corporations not created by special
law are exempt from civil service coverage. These charters and statutes are the only laws
granting such exemption and, therefore, they are the only ones which could be repealed. There
was no similar exempting provision in the general law which called for repeal. And finally, the
fact that the Constitutional Convention discussed only corporations created by special law or
charter cannot be an argument to exclude petitioner NHC from civil service coverage. As stated
in the cited speech delivered during the convention sessions of March 9, 1972, all government
corporations then in existence were organized under special laws or charters. The convention

delegates could not possibly discuss government-owned or controlled corporations which were
still non-existent or about whose existence they were unaware.
Section I of Article XII-B, Constitution uses the word "every" to modify the phrase "governmentowned or controlled corporation."
"Every" means each one of a group, without exception It means all possible and all taken one by
one. Of course, our decision in this case refers to a corporation created as a government-owned
or controlled entity. It does not cover cases involving private firms taken over by the government
in foreclosure or similar proceedings. We reserve judgment on these latter cases when the
appropriate controversy is brought to this Court.
The infirmity of the respondents' position lies in its permitting a circumvention or emasculation of
Section 1, Article XII-B of the Constitution It would be possible for a regular ministry of
government to create a host of subsidiary corporations under the Corporation Code funded by a
willing legislature. A government-owned corporation could create several subsidiary
corporations. These subsidiary corporations would enjoy the best of two worlds. Their officials
and employees would be privileged individuals, free from the strict accountability required by the
Civil Service Decree and the regulations of the Commission on Audit. Their incomes would not
be subject to the competitive restraints of the open market nor to the terms and conditions of civil
service employment. Conceivably,all government-owned or controlled corporations could be
created, no longer by special charters, but through incorporation under the general law. The
constitutional amendment including such corporations in the embrace of the civil service would
cease to have application. Certainly, such a situation cannot be allowed to exist.
WHEREFORE, the petition is hereby GRANTED. The questioned decision of the respondent
National Labor Relations Commission is SET ASIDE. The decision of the Labor Arbiter
dismissing the case before it for lack of jurisdiction is REINSTATED.
SO ORDERED.

4.

G.R. Nos. L-58674-77 July 11, 1990

PEOPLE OF THE PHILIPPINES, petitioner,

vs.
HON. DOMINGO PANIS, Presiding Judge of the Court of First Instance of Zambales &
Olongapo City, Branch III and SERAPIO ABUG, respondents.
CRUZ, J:
The basic issue in this case is the correct interpretation of Article 13(b) of P.D. 442, otherwise
known as the Labor Code, reading as follows:
(b) Recruitment and placement' refers to any act of canvassing, enlisting,
contracting, transporting, hiring, or procuring workers, and includes
referrals, contract services, promising or advertising for employment, locally
or abroad, whether for profit or not: Provided, That any person or entity
which, in any manner, offers or promises for a fee employment to two or
more persons shall be deemed engaged in recruitment and placement.

Four informations were filed on January 9, 1981, in the Court of First Instance of Zambales and
Olongapo City alleging that Serapio Abug, private respondent herein, "without first securing a
license from the Ministry of Labor as a holder of authority to operate a fee-charging employment
agency, did then and there wilfully, unlawfully and criminally operate a private fee charging
employment agency by charging fees and expenses (from) and promising employment in Saudi
Arabia" to four separate individuals named therein, in violation of Article 16 in relation to Article
39 of the Labor Code. 1
Abug filed a motion to quash on the ground that the informations did not charge an offense
because he was accused of illegally recruiting only one person in each of the four informations.
Under the proviso in Article 13(b), he claimed, there would be illegal recruitment only "whenever
two or more persons are in any manner promised or offered any employment for a fee. " 2
Denied at first, the motion was reconsidered and finally granted in the Orders of the trial court
dated June 24 and September 17, 1981. The prosecution is now before us on certiorari. 3
The posture of the petitioner is that the private respondent is being prosecuted under Article 39
in relation to Article 16 of the Labor Code; hence, Article 13(b) is not applicable. However, as the
first two cited articles penalize acts of recruitment and placement without proper authority, which
is the charge embodied in the informations, application of the definition of recruitment and
placement in Article 13(b) is unavoidable.
The view of the private respondents is that to constitute recruitment and placement, all the acts
mentioned in this article should involve dealings with two or mre persons as an indispensable
requirement. On the other hand, the petitioner argues that the requirement of two or more
persons is imposed only where the recruitment and placement consists of an offer or promise of
employment to such persons and always in consideration of a fee. The other acts mentioned in
the body of the article may involve even only one person and are not necessarily for profit.
Neither interpretation is acceptable. We fail to see why the proviso should speak only of an offer
or promise of employment if the purpose was to apply the requirement of two or more persons to
all the acts mentioned in the basic rule. For its part, the petitioner does not explain why dealings
with two or more persons are needed where the recruitment and placement consists of an offer
or promise of employment but not when it is done through "canvassing, enlisting, contracting,
transporting, utilizing, hiring or procuring (of) workers.
As we see it, the proviso was intended neither to impose a condition on the basic rule nor to
provide an exception thereto but merely to create a presumption. The presumption is that the
individual or entity is engaged in recruitment and placement whenever he or it is dealing with two
or more persons to whom, in consideration of a fee, an offer or promise of employment is made
in the course of the "canvassing, enlisting, contracting, transporting, utilizing, hiring or procuring
(of) workers. "
The number of persons dealt with is not an essential ingredient of the act of recruitment and
placement of workers. Any of the acts mentioned in the basic rule in Article 13(b) win constitute
recruitment and placement even if only one prospective worker is involved. The proviso merely
lays down a rule of evidence that where a fee is collected in consideration of a promise or offer
of employment to two or more prospective workers, the individual or entity dealing with them
shall be deemed to be engaged in the act of recruitment and placement. The words "shall be
deemed" create that presumption.
This is not unlike the presumption in article 217 of the Revised Penal Code, for example,
regarding the failure of a public officer to produce upon lawful demand funds or property
entrusted to his custody. Such failure shall be prima facie evidence that he has put them to

personal use; in other words, he shall be deemed to have malversed such funds or property. In
the instant case, the word "shall be deemed" should by the same token be given the force of a
disputable presumption or of prima facie evidence of engaging in recruitment and placement.
(Klepp vs. Odin Tp., McHenry County 40 ND N.W. 313, 314.)

In support of their complaint, private respondents submitted a Joint Affidavit 1 stating the
circumstances surrounding their employment and subsequent repatriation to the Philippines,
material averments of which are herein below reproduced:
JOINTAFFIDAVIT

It is unfortunate that we can only speculate on the meaning of the questioned provision for lack
of records of debates and deliberations that would otherwise have been available if the Labor
Code had been enacted as a statute rather than a presidential decree. The trouble with
presidential decrees is that they could be, and sometimes were, issued without previous public
discussion or consultation, the promulgator heeding only his own counsel or those of his close
advisers in their lofty pinnacle of power. The not infrequent results are rejection, intentional or
not, of the interest of the greater number and, as in the instant case, certain esoteric provisions
that one cannot read against the background facts usually reported in the legislative journals.
At any rate, the interpretation here adopted should give more force to the campaign against
illegal recruitment and placement, which has victimized many Filipino workers seeking a better
life in a foreign land, and investing hard- earned savings or even borrowed funds in pursuit of
their dream, only to be awakened to the reality of a cynical deception at the hands of theirown
countrymen.
WHEREFORE, the Orders of June 24, 1981, and September 17, 1981, are set aside and the
four informations against the private respondent reinstated. No costs.
SO ORDERED.

5.

G.R. No. L-50734-37 February 20, 1981

WALLEM PHILIPPINES SHIPPING, INC., petitioner,

vs.
THE HON. MINISTER OF LABOR, in his capacity as Chairman of the National Seamen
Board Proper, JAIME CAUNCA, ANTONIO CABRERA, EFREN GARCIA, JOSE OJEDA and
RODOLFO PAGWAGAN, respondents.

xxx xxx xxx

5. That aside from our basic monthly salary we are entitled to two (2)
months vacation leave, daily subsistence allowance of US$8.14 each, daily
food allowance of US$2.50. as well as overtime pay which we failed to
receive because our Shipboard Employment Contract was illegally
terminated;
6. That while we were in Rotterdam, on or about July 9, 1975,
representative of the ITF boarded our vessel and talked with the Ship's
Captain;
7. That the following day, the representatives of the ITF returned and was
followed by Mr. M.S.K. Ogle who is the Company's Administrative Manager,
again went to see the Captain;
8. That at around 7:00 in the evening all the crew members were called in
the Mess Hall where the ITF representatives informed us that they have just
entered into a "Special Agreement" with the Wallem Shipping Management,
Ltd., represented by Mr. M.S.K. Ogle, Administrative Manager, wherein new
salary rates was agreed upon and that we were going to be paid our salary
differentials in view of the new rates;
9. That in the same meeting, Mr. M.S.K. Ogle also spoke where he told that
a Special Agreement has been signed and that we will be receiving new pay
rate and enjoined us to work hard and be good boys;
10. That the same evening we received our salary differentials based on the
new rates negotiated for us by the ITF.

DE CASTRO, J.:
Petition for certiorari with preliminary injunction with prayer that the Orders dated December 19,
1977 and April 3, 1979 of the National Seamen Board (NSB) be declared null and void. Private
respondents were hired by petitioner sometime in May 1975 to work as seamen for a period of
ten months on board the M/V Woermann Sanaga, a Dutch vessel owned and operated by
petitioner's European principals. While their employment contracts were still in force, private
respondents were dismissed by their employer, petitioner herein, and were discharged from the
ship on charges that they instigated the International Transport Federation (ITF) to demand the
application of worldwide ITF seamen's rates to their crew.
Private respondents were repatriated to the Philippines on October 27, 1975 and upon their
arrival in Manila, they instituted a complaint against petitioner for illegal dismissal and recovery
of wages and other benefits corresponding to the five months' unexpired period of their
shipboard employment contract.

11. That while we were in the Port Dubai, Saudi Arabia, we were not
receiving our pay, since the Ship's Captain refused to implement the worldwide rates and insisted on paying us the Far East Rate;
12. That the Port Dubai is one that is within the Worldwide rates sphere.
13. That on October 22, 1975, Mr. Greg Nacional Operation Manager of
respondent corporation, arrived in Dubai Saudi Arabia and boarded our
ship;
14. That on October 23, 1975, Mr. Nacional called all the crew members,
including us to a meeting at the Mess Hall and there he explained that the
Company cannot accept the worldwide rate. The Special Agreement signed
by Mr. Ogle in behalf of the Company is nothing but a scrap of paper. Mr.
Jaime Caunca then asked Mr. Nacional, in view of what he was saying,
whether the Company will honor the Special Agreement and Mr. Nacional

answered "Yes". That we must accept the Far East Rates which was put to
a vote. Only two voted for accepting the Far East Rates;

blacklisted, however, Mr. Mckenzie, Administrative Manager did inform us

that we were all blacklisted;

15. That immediately thereafter Mr. Nacional left us;

29. That we were asking from the respondent Company our leave pay,
which they refused to give, if we did not agree to a US$100.00 deduction;

16. That same evening, Mr. Nacional returned and threatened that he has
received a cable from the Home Office that if we do not accept the Far East
Rate, our services will be terminated and there will be a change in crew;
17. That when Mr. Nacional left, we talked amongst ourselves and decided
to accept the Far East Rates;
18. That in the meeting that evening because of the threat we informed Mr.
Nacional we were accepting the Far East Rate and he made us sign a
document to that effect;

30. That with the exception of Messrs. Jaime Caunca Amado Manansala
and Antonio Cabrera, we received our leave pay with the US$100.00
deduction;
31. That in view of the written promise of Mr. Nacional in Dubai last October
23, 1975 to give us priority and preference in boarding a vessel and that we
were not blacklisted we have on several occasions approached him
regarding his promise, which up to the present he has refused to honor.
xxx xxx xxx

19. That we the complainants with the exception of Leopoldo Mamaril and
Efren Garcia, were not able to sign as we were at the time on work
schedules, and Mr. Nacional did not bother anymore if we signed or not;
20. That after the meeting Mr. Nacional cabled the Home Office, informing
them that we the complainants with the exception of Messrs. Mamaril and
Garcia were not accepting the Far East Rates;
21. That in the meeting of October 25, 1975, Mr. Nacional signed a
document whereby he promised to give no priority of first preference in
"boarding a vessel and that we are not blacklisted";
22. That in spite of our having accepted the Far East Rate, our services
were terminated and advised us that there was a change in crew;
23. That on October 27, 1975, which was our scheduled flight home,
nobody attended us, not even our clearance for our group travel and
consequently we were not able to board the plane, forcing us to sleep on
the floor at the airport in the evening of October 27, 1975;
24. That the following day we went back to the hotel in Dubai which was a
two hours ride from the airport, where we were to await another flight for
home via Air France;
25. That we were finally able to leave for home on November 2, 1975
arriving here on the 3rd of November;
26. That we paid for all excess baggages;
27. That Mr. Nacional left us stranded, since he went ahead on October 27,
1975;
28. That immediately upon arriving in Manila, we went to respondent
Company and saw Mr. Nacional, who informed us that we were not

Answering the complaint, petitioner countered that when the vessel was in London, private
respondents together with the other crew insisted on worldwide ITF rate as per special
agreement; that said employees threatened the ship authorities that unless they agreed to the
increased wages the vessel would not be able to leave port or would have been picketed and/or
boycotted and declared a hot ship by the ITF; that the Master of the ship was left with no
alternative but to agree; that upon the vessel's arrival at the Asian port of Dubai on October 22,
1975, a representative of petitioner went on board the ship and requested the crew together with
private respondents to desist from insisting worldwide ITF rate and instead accept the Far East
rate; that said respondents refused to accept Far East ITF rates while the rest of the Filipino
crew members accepted the Far East rates; that private respondents were replaced at the
expense of petitioner and it was prayed that respondents be required to comply with their
obligations under the contract by requiring them to pay their repatriation expenses and all other
incidental expenses incurred by the master and crew of the vessel.
After the hearing on the merits, the hearing Officer of the Secretariat rendered a decision 2 on
March 14, 1977 finding private respondents to have violated their contract of employment when
they accepted salary rates different from their contract verified and approved by the National
Seamen Board. As to the issue raised by private respondents that the original contract has been
novated, it was held that:
xxx xxx xxx
For novation to be a valid defense, it is a legal requirement that all parties to
the contract should give their consent. In the instant case only the
complainants and respondents gave their consent. The National Seamen
Board had no participation in the alleged novation of the previously
approved employment contract. It would have been different if the consent
of the National Seamen Board was first secured before the alleged novation
of the approved contract was undertaken, hence, the defense of novation is
not in order.
xxx xxx xxx
The Hearing Officer likewise rules that petitioner violated the contract when its representative
signed the Special Agreement and he signed the same at his own risk and must bear the
consequence of such act, and since both parties are in paridelicto, complaint and counterclaim

were dismissed for lack of merit but petitioner was ordered to pay respondents Caunca and
Cabrera their respective leave pay for the period that they have served M/V Woermann Sanaga
plus attorney's fees.

therefore the Hearing Officer that gravely erred in disallowing the payment of the unexpired
portion of the seamen's respective contracts of employment.

Private respondents filed a motion for reconsideration with the Board which modified the
decision of the Secretariat in an Order 3 of December 19, 1977 and ruled that petitioner is liable
for breach of contract when it ordered the dismissal of private respondents and their subsequent
repatriation before the expiration of their respective employment contracts. The Chairman of the
Board stressed that "where the contract is for a definite period, the captain and the crew
members may not be discharged until after the contract shall have been performed" citing the
case of Madrigal Shipping Co., Inc. vs. Ogilvie, et al. (104 Phil. 748). He directed petitioner to
pay private respondents the unexpired portion of their contracts and their leave pay, less the
amount they received as differentials by virtue of the special agreements entered in Rotterdam,
and ten percent of the total amounts recovered as attorney's fees.

Petitioner claims that the dismissal of private respondents was justified because the latter
threatened the ship authorities in acceeding to their demands, and this constitutes serious
misconduct as contemplated by the Labor Code. This contention is not well-taken. The records
fail to establish clearly the commission of any threat. But even if there had been such a threat,
respondents' behavior should not be censured because it is but natural for them to employ some
means of pressing their demands for petitioner, who refused to abide with the terms of the
Special Agreement, to honor and respect the same. They were only acting in the exercise of
their rights, and to deprive them of their freedom of expression is contrary to law and public
policy. There is no serious misconduct to speak of in the case at bar which would justify
respondents' dismissal just because of their firmness in their demand for the fulfillment by
petitioner of its obligation it entered into without any coercion, specially on the part of private
respondents.

Petitioner sought clarification and reconsideration of the said order and asked for a confrontation
with private respondents to determine the specific adjudications to be made. A series of
conferences were conducted by the Board. It was claimed by petitioner that it did not have in its
possession the records necessary to determine the exact amount of the judgment since the
records were in the sole custody of the captain of the ship and demanded that private
respondents produce the needed records. On this score, counsel for respondents manifested
that to require the master of the ship to produce the records would result to undue delay in the
disposition of the case to the detriment of his clients, some of whom are still unemployed.

On the other hand, it is petitioner who is guilty of breach of contract when they dismissed the
respondents without just cause and prior to the expiration of the employment contracts. As the
records clearly show, petitioner voluntarily entered into the Special Agreement with ITF and by
virtue thereof the crew men were actually given their salary differentials in view of the new rates.
It cannot be said that it was because of respondents' fault that petitioner made a sudden turnabout and refused to honor the special agreement.

Under the circumstances, the Board was left with no alternative but to issue an Order dated April
3, 1979 4 fixing the amount due private respondents at their three (3) months' salary equivalent
without qualifications or deduction. Hence,the instant petition before Us alleging grave abuse of
discretion on the part of the respondent official as Chairman of the Board, in issuing said order
which allegedly nullified the findings of the Secretariat and premised adjudication on imaginary
conditions which were never taken up with full evidence in the course of hearing on the merits.
The whole controversy is centered around the liability of petitioner when it ordered the dismissal
of herein private respondents before the expiration of their respective employment contracts.
In its Order of December 19, 1977 5 the Board, thru its Chairman, Minister Blas F. Ople, held
that there is no showing that the seamen conspired with the ITF in coercing the ship authorities
to grant salary increases, and the Special Agreement was signed only by petitioner and the ITF
without any participation from the respondents who, accordingly, may not be charged as they
were, by the Secretariat, with violation of their employment contract. The Board likewise
stressed that the crew members may not be discharged until after the expiration of the contract
which is for a definite period, and where the crew members are discharged without just cause
before the contract shall have been performed, they shall be entitled to collect from the owner or
agent of the vessel their unpaid salaries for the period they were engaged to render the services,
applying the case of Madrigal Shipping Co., Inc. vs. Jesus Ogilivie et al. 6
The findings and conclusion of the Board should be sustained. As already intimated above, there
is no logic in the statement made by the Secretariat's Hearing Officer that the private
respondents are liable for breach of their employment contracts for accepting salaries higher
than their contracted rates. Said respondents are not signatories to the Special Agreement, nor
was there any showing that they instigated the execution thereof. Respondents should not be
blamed for accepting higher salaries since it is but human for them to grab every opportunity
which would improve their working conditions and earning capacity. It is a basic right of all
workingmen to seek greater benefits not only for themselves but for their families as well, and
this can be achieved through collective bargaining or with the assistance of trade unions. The
Constitution itself guarantees the promotion of social welfare and protection to labor. It is

In brief, We declare petitioner guilty of breach of contract and should therefore be made to
comply with the directives contained in the disputed Orders of December 19, 1977 and April 3,
1979.
WHEREFORE, premises considered, the decision dated March 14, 1977 of the Hearing Officer
is SET ASIDE and the Orders dated December 19, 1977 and April 3, 1979 of the National
Seamen Board are AFFIRMED in toto. This decision is immediately executory. Without costs.
SO ORDERED.

6.

G.R. No. L-58011 & L-58012 November 18, 1983

VIR-JEN SHIPPING AND MARINE SERVICES, INC., petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION, ROGELIO BISULA RUBEN ARROZA JUAN
GACUTNO LEONILO ATOK, NILO CRUZ, ALVARO ANDRADA, NEMESIO ADUG
SIMPLICIO BAUTISTA, ROMEO ACOSTA, and JOSE ENCABO respondents.
Antonio R. Atienza for petitioner.
The Solicitor General for respondent NLRC,
Quasha, Asperilia, Ancheta &- Valmonte Pena Marcos Law Offices for private respondents.
RESOLUTION

GUTIERREZ, JR., J.:+.wph!1

Before the Court en banc is a motion to reconsider the decision promulgated on July 20, 1982
which set aside the decision of respondent National Labor Relations Commission and reinstated
the decision of the National Seamen Board.
To better understand the issues raised in the motion for reconsideration, we reiterate the
background facts of the case, Taken from the decision of the National Labor Relations
Commission: t.hqw
It appears that on different dates in December, 1978 and January, 1979, the
Seamen entered into separate contracts of employment with the Company,
engaging them to work on board M/T' Jannu for a period of twelve (12)
months. After verification and approval of their contracts by the NSB, the
Seamen boarded their vessel in Japan.
On 10 January 1919, the master of the vessel complainant Rogelio H.
Bisula, received a cable from the Company advising him of the possibility
that the vessel might be directed to call at ITF-controlled ports said at the
same time informing him of the procedure to be followed in the computation
of the special or additional compensation of crew members while in said
ports. ITF is the acronym for the International Transport Workers
Federation, a militant international labor organization with affiliates in
different ports of the world, which reputedly can tie down a vessel in a port
by preventing its loading or unloading, This is a sanction resorted to by ITF
to enforce the payment of its wages rates for seafarers the so-called ITF
rates, if the wages of the crew members of a vessel who have affiliated with
it are below its prescribed rates.) In the same cable of the Company, the
expressed its regrets for hot clarifying earlier the procedure in computing the
special compensation as it thought that the vessel would 'trade in Caribbean
ports only.
On 22 March 1979, the Company sent another cable to complainant Bisula,
this time informing him of the respective amounts each of the officers and
crew members would receive as special compensation when the vessel
called at the port of Kwinana Australia, an ITF-controlled port. This was
followed by another cable on 23 March 1979, informing him that the officers
and crew members had been enrolled as members of the ITF in Sidney,
Australia, and that the membership fee for the 28 personnel complement of
the vessel had already been paid.
In answer to the Company's cable last mentioned, complainant Bisula, in
representation of the other officers and crew members, sent on 24 March
1979 a cable informing the Company that the officers and crew members
were not agreeable to its 'suggestion'; that they were not contented with
their present salaries 'based on the volume of works, type of ship with
hazardous cargo and registered in a world wide trade': that the 'officers and
crew (were) not interested in ITF membership if not actually paid with ITF
rate that their 'demand is only 50% increase based on present basic salary
and that the proposed wage increase is the 'best and only solution to solve
ITF problem' since the Company's salary rates 'especially in tankers (are)
very far in comparison with other shipping agencies in Manila ...

In reply, the Company proposed a 25% increase in the basic pay of the
complainant crew members, although it claimed, that it would "suffer and
absorb considerable amount of losses." The proposal was accepted by the
Seamen with certain conditions which were accepted by the Company.
Conformably with the agreement of the parties which was effected through
the cables abovementioned, the Seamen were paid their new salary rates.
Subsequently, the Company sought authority from the NSB to cancel the
contracts of employment of the Seamen, claiming that its principals had
terminated their manning agreement because of the actuations of the
Seamen. The request was granted by the NSB Executive Director in a letter
dated 10 April 1979. Soon thereafter, the Company cabled the Seamen
informing them that their contracts would be terminated upon the vessel's
arrival in Japan. On 19 April 1979 they Arere asked to disembark from the
vessel, their contracts were terminated, and they were repatriated to Manila.
There is no showing that the Seamen were given the opportunity to at least
comment on the Company's request for the cancellation of their contracts,
although they had served only three (3) out of the twelve (12) months'
duration of their contracts.
The private respondents filed a complaint for illegal dismissal and non-payment of earned wages
with the National Seamen Board. The Vir-jen Shipping and Marine Services Inc. in turn filed a
complaint for breach of contract and recovery of excess salaries and overtime pay against the
private respondents. On July 2, 1980, the NSB rendered a decision declaring that the seamen
breached their employment contracts when they demanded and received from Vir-jen Shipping
wages over and above their contracted rates. The dismissal of the seamen was declared legal
and the seamen were ordered suspended.
The seamen appealed the decision to the NLRC which reversed the decision of the NSB and
required the petitioner to pay the wages and other monetary benefits corresponding to the
unexpired portion of the manning contract on the ground that the termination of the contract by
the petitioner was without valid cause. Vir-jen Shipping filed the present petition.
The private respondents
reconsideration: t.hqw

submit

the

following

issues

in

their

motion

for

A. THIS HONORABLE COURT DID VIOLENCE TO LAW AND

JURISPRUDENCE WHEN IT HELD THAT THE FINDING OF FACT OF
THE NATIONAL SEAMEN BOARD THAT THE SEAMEN VIOLATED
THEIR CONTRACTS IS MORE CREDIBLE THAN THE FINDING OF FACT
OF THE NATIONAL LABOR RELATIONS COMMISSION THAT THE
SEAMEN DID NOT VIOLATE THEIR CONTRACT.
B. THIS HONORABLE COURT ERRED IN FINDING THAT VIR-JEN'S
HAVING AGREED TO A 25% INCREASE OF THE SEAMEN'S BASIC
WAGE WAS NOT VOLUNTARY BUT WAS DUE TO THREATS.
C. THIS HONORABLE COURT ERRED WHEN IT TOOK COGNIZANCE
OF THE ADDENDUM AGREEMENT; ASSUMING THAT THE ADDENDUM
AGREEMENT COULD BE TAKEN COGNIZANCE OF, THIS HONORABLE
COURT ERRED WHEN' IT FOUND THAT PRIVATE RESPONDENTS HAD
VIOLATED THE SAME.

D, THIS HONORABLE COURT ERRED WHEN IT DID NOT FIND

PETITIONER VIRJEN LIABLE FOR HAVING TERMINATED BEFORE
EXPIRY DATE THE EMPLOYMENT CONTRACTS OF PRIVATE
RESPONDENTS, THERE BEING NO LEGAL AND JUSTIFIABLE
GROUND FOR SUCH TERMINATION.
E. THIS HONORABLE COURT ERRED IN FINDING THAT THE
PREPARATION BY PETITIONER OF THE TWO PAYROLLS AND THE
EXECUTION OF THE SIDE CONTRACT WERE NOT MADE IN BAD
FAITH.
F. THIS HONORABLE COURT INADVERTENTLY DISCRIMINATED
AGAINST PRIVATE RESPONDENTS.
At the outset, we are faced with the question whether or not the Court en banc should give due
course to the motion for reconsideration inspite of its having been denied twice by the Court's
Second Division. The case was referred to and accepted by the Court en banc because of the
movants' contention that the decision in this case by the Second Division deviated from Wallem
Phil. Shipping Inc. v. Minister of Labor (L-50734-37, February 20, 1981), a First Division case
with the same facts and issues. We are constrained to answer the initial question in the
affirmative.
A fundamental postulate of Philippine Constitutional Law is the fact, that there is only one
Supreme Court from whose decisions all other courts are required to take their bearings. (Albert
v. Court of First Instance, 23 SCRA 948; Barrera v. Barrera, 34 SCRA 98; Tugade v. Court of
Appeals, 85 SCRA 226). The majority of the Court's work is now performed by its two Divisions,
but the Court remains one court, single, unitary, complete, and supreme. Flowing from this
nature of the Supreme Court is the fact that, while ' individual Justices may dissent or partially
concur with one another, when the Court states what the law is, it speaks with only one voice.
And that voice being authoritative should be a clear as possible.
Any doctrine or principle of law laid down by the Court, whether en banc or in Division, may be
modified or reversed only by the Court en banc. (Section 2(3), Article X, Constitution.) In the rare
instances when one Division disagrees in its views with the other Division, or the necessary
votes on an issue cannot be had in a Division, the case is brought to the Court en banc to
reconcile any seeming conflict, to reverse or modify an earlier decision, and to declare the
Court's doctrine. This is what has happened in this case.
The decision sought to be reconsidered appears to be a deviation from the Court's decision,
speaking through the First Division, in Wallem Shipping, Inc. v. Hon. Minister of Labor (102
SCRA 835). Faced with two seemingly conflicting resolutions of basically the same issue by its
two Divisions, the Court. therefore, resolved to transfer the case to the Court en banc.
Parenthetically, the petitioner's comment on the third motion for reconsideration states that the
resolution of the motion might be the needed vehicle to make the ruling in the Wallem case
clearer and more in time with the underlying principles of the Labor Code. We agree with the
petitioner.
After an exhaustive, painstaking, and perspicacious consideration of the motions for
reconsideration and the comments, replies, and other pleadings related thereto, the Court en
banc is constrained to grant the motions. To grant the motion is to keep faith with the
constitutional mandate to afford protection to labor and to assure the rights of workers to selforganization and to just and humane conditions of work. We sustain the decision of the
respondent National labor Relations Commission.

There are various arguments raised by the petitioners but the common thread running through
all of them is the contention, if not the dismal prophecy, that if the respondent seamen are
sustained by this Court, we would in effect "kill the en that lays the golden egg." In other words,
Filipino seamen, admittedly among the best in the world, should remain satisfied with relatively
lower if not the lowest, international rates of compensation, should not agitate for higher wages
while their contracts of employment are subsisting, should accept as sacred, iron clad, and
immutable the side contracts which require them to falsely pretend to be members of
international labor federations, pretend to receive higher salaries at certain foreign ports only to
return the increased pay once the ship leaves that port, should stifle not only their right to ask for
improved terms of employment but their freedom of speech and expression, and should suffer
instant termination of employment at the slightest sign of dissatisfaction with no protection from
their Government and their courts. Otherwise, the petitioners contend that Filipinos would no
longer be accepted as seamen, those employed would lose their jobs, and the still unemployed
would be left hopeless.
This is not the first time and it will not be the last where the threat of unemployment and loss of
jobs would be used to argue against the interests of labor; where efforts by workingmen to better
their terms of employment would be characterized as prejudicing the interests of labor as a
whole.
In 1867 or one hundred sixteen years ago. Chief Justice Beasley of the Supreme Court of New
Jersey was ponente of the court's opinion declaring as a conspiracy the threat of workingmen to
strike in connection with their efforts to promote unionism, t.hqw
It is difficult to believe that a right exists in law which we can scarcely
conceive can produce, in any posture of affairs, other than injuriois results. It
is simply the right of workmen, by concert of action, and by taking
advantage of their position, to control the business of another, I am unwilling
to hold that aright which cannot, in any, event, be advantageous to the
employee, and which must always be hurtful to the employer, exists in law.
In my opinion this indictment sufficiently shows that the force of the
confederates was brought to bear upon their employer for the purpose of
oppression and mischief and that this amounts to a conspiracy, (State v.
Donaldson, 32 NJL 151, 1867. Cited in Chamberlain, Sourcebook on Labor,
p. 13. Emphasis supplied)
The same arguments have greeted every major advance in the rights of the workingman. And
they have invariably been proved unfounded and false.
Unionism, employers' liability acts, minimum wages, workmen's compensation, social security
and collective bargaining to name a few were all initially opposed by employers and even well
meaning leaders of government and society as "killing the hen or goose which lays the golden
eggs." The claims of workingmen were described as outrageously injurious not only to the
employer but more so to the employees themselves before these claims or demands were
established by law and jurisprudence as "rights" and before these were proved beneficial to
management, labor, and the nation as a whole beyond reasonable doubt.
The case before us does not represent any major advance in the rights of labor and the
workingmen. The private respondents merely sought rights already established. No matter how
much the petitioner-employer tries to present itself as speaking for the entire industry, there is no
evidence that it is typical of employers hiring Filipino seamen or that it can speak for them.
The contention that manning industries in the Philippines would not survive if the instant case is
not decided in favor of the petitioner is not supported by evidence. The Wallem case was
decided on February 20, 1981. There have been no severe repercussions, no drying up of

employment opportunities for seamen, and none of the dire consequences repeatedly
emphasized by the petitioner. Why should Vir-jen be all exception?
The wages of seamen engaged in international shipping are shouldered by the foreign principal.
The local manning office is an agent whose primary function is recruitment and who .usually gets
a lump sum from the shipowner to defray the salaries of the crew. The hiring of seamen and the
determination of their compensation is subject to the interplay of various market factors and one
key factor is how much in terms of profits the local manning office and the foreign shipowner
may realize after the costs of the voyage are met. And costs include salaries of officers and crew
members.
Filipino seamen are admittedly as competent and reliable as seamen from any other country in
the world. Otherwise, there would not be so many of them in the vessels sailing in every ocean
and sea on this globe. It is competence and reliability, not cheap labor that makes our seamen
so greatly in demand. Filipino seamen have never demanded the same high salaries as seamen
from the United States, the United Kingdom, Japan and other developed nations. But certainly
they are entitled to government protection when they ask for fair and decent treatment by their
employer.-, and when they exercise the right to petition for improved terms of employment,
especially when they feel that these are sub-standard or are capable of improvement according
to internationally accepted rules. In the domestic scene, there are marginal employers who
prepare two sets of payrolls for their employees one in keeping with minimum wages and the
other recording the sub-standard wages that the employees really receive, The reliable
employers, however, not only meet the minimums required by fair labor standards legislation but
even go way above the minimums while earning reasonable profits and prospering. The same is
true of international employment. There is no reason why this Court and the Ministry of Labor
and. Employment or its agencies and commissions should come out with pronouncements
based on the standards and practices of unscrupulous or inefficient shipowners, who claim they
cannot survive without resorting to tricky and deceptive schemes, instead of Government
maintaining labor law and jurisprudence according to the practices of honorable, competent, and
law-abiding employers, domestic or foreign.

in the course of the agreed period of time. To state, therefore, that the affected seamen cannot
petition their employer for higher salaries during the 12 months duration of the contract runs
counter to established principles of labor legislation. The National Labor Relations Commission,
as the appellate tribunal from decisions of the National Seamen Board, correctly ruled that the
seamen did not violate their contracts to warrant their dismissal.
The respondent Commission ruled: t.hqw
In the light of all the foregoing facts, we find that the cable of the seamen
proposing an increase in their wage rates was not and could not have been
intended as a threat to comp el the Company to accede to their proposals.
But even assuming, if only for the sake of argument, that the demand or
proposal for a wage increase was accompanied by a threat that they would
report to ITF if the Company did not accede to the contract revision although there really was no such threat as pointed out earlier the
Seamen should not be held at fault for asking such a demand. In the same
case cited above, the Supreme Court held: t.hqw
Petitioner claims that the dismissal of private
respondents was justified because the latter threatened
the ship authorities in acceding to their demands, and
this constitutes serious misconduct as contemplated by
the Labor Code. This contention is not well-taken. But
even if there had been such a threat, respondents'
behavior should not be censured because it is but
natural for them to employ some means of pressing
their demands for petitioner, the refusal to abide with
the terms of the Special Agreement, to honor and
respect the same, They were only acting in the exercise
of their rights, and to deprive them of their freedom of
expression is contrary to law and public policy. There is
no serious misconduct to speak of in the case at bar
which would justify respondents' dismissal just because
of their firmness in their demand for the fulfillment by
petitioner of its obligation it entered into without any
coercion, specially on the part of private respondents.
(Emphasis supplied).

If any minor advantages given to Filipino seamen may somehow cut into the profits of local
manning agencies and foreign shipowners, that is not sufficient reason why the NSB or the ILRC
should not stand by the former instead of listening to unsubstantiated fears that they would be
killing the hen which lays the golden eggs.
Prescinding from the above, we now hold that neither the National Seamen Board nor the
National Labor Relations Commission should, as a matter of official policy, legitimize and
enforce cubious arrangements where shipowners and seamen enter into fictitious contracts
similar to the addendum agreements or side contracts in this case whose purpose is to deceive.
The Republic of the Philippines and its ministries and agencies should present a more honorable
and proper posture in official acts to the whole world, notwithstanding our desire to have as
many job openings both here and abroad for our workers. At the very least, such as sensitive
matter involving no less than our dignity as a people and the welfare of our workingmen must
proceed from the Batasang Pambansa in the form of policy legislation, not from administrative
rule making or adjudication
Another issue raised by the movants is whether or not the seamen violated their contracts of
employment.
The form contracts approved by the National Seamen Board are designed to protect Filipino
seamen not foreign shipowners who can take care of themselves. The standard forms embody'
the basic minimums which must be incorporated as parts of the employment contract. (Section
15, Rule V, Rules and Regulations Implementing the Labor Code.) They are not collective
bargaining agreements or immutable contracts which the parties cannot improve upon or modify

The above citation is from Wallem.

The facts show that when the respondents boarded the M/T Jannu there was no intention to
send their ship to Australia. On January 10, 1979, the petitioner sent a cable to respondent
shipmaster Bisula informing him of the procedure to be followed in the computation of special
compensation of crewmembers while in ITF controlled ports and expressed regrets for not
having earlier clarified the procedure as it thought that the vessel would trade in Carribean ports
only.
On March 22, 1979, the petitioner sent another cable informing Bisula of the special
compensation when the ship would call at Kwinana Australia.
The following day, shipmaster Bisula cabled Vir-jen stating that the officers and crews were not
interested in ITF membership if not paid ITF rates and that their only demand was a 50 percent
increase based on their then salaries. Bisula also pointed out that Vir-jen rates were "very far in
comparison with other shipping agencies in Manila."

In reply, Vir-jen counter proposed a 25 percent increase. Only after Kyoei Tanker Co., Ltd.,
declined to increase the lumps sum amount given monthly to Vir-jen was the decision to
terminate the respondents' employment formulated.
The facts show that Virjen Initiated the discussions which led to the demand for increased . The
seamen made a proposal and the petitioner organized with a counter-proposal. The ship had not
vet gone to Australia or any ITF controlled port. There was absolutely no mention of any strike.
much less a threat to strike. The seamen had done in act which under Philippine law or any
other civilized law would be termed illegal, oppressive, or malicious. Whatever pressure existed,
it was mild compared to accepted valid modes of labor activity.
We reiterate our ruling in Wallem. t.hqw
Petitioner claims that the dismissal of private
respondents was justified because the latter threatened
the ship authorities in acceding to their demands, and
this constitutes serious misconduct as contemplated by
the Labor Code. This contention is not well-taken. The
records fail to establish clearly the commission of any
threat, But even if there had been such a threat,
respondents' behavior should not be censured because
it is but natural for them to employ some means of
pressing their demands for petitioner, who refused to
abide with the terms of the Special Agreement, to honor
and respect the same, They were only acting in the
exercise of their rights, and to deprive them of their
form of expression is contrary to law and public policy.
...
Our dismissing the petition is premised on the assumption that the Ministry of Labor and
Employment and all its agencies exist primarily for the workinginan's interests and, of course,
the nation as a whole. The points raised by the Solicitor-General in his comments refer to the
issue of allowing what the petitioner importunes under the argument of "killing the hen which
lays the golden eggs." This is one of policy which should perhaps be directed to the Batasang
Pambansa and to our country's other policy makers for more specific legislation on the matter,
subject to the constitutional provisions protecting labor, promoting social justice, and
guaranteeing non-abridgement of the freedom of speech, press, peaceable assembly and
petition. We agree with the movants that there is no showing of any cause, which under the
Labor Code or any current applicable law, would warrant the termination of the respondents'
services before the expiration of their contracts. The Constitution guarantees State assurance of
the rights of workers to security of tenure. (Sec. 9, Article II, Constitution). Presumptions and
provisions of law, the evidence on record, and fundamental State policy all dictate that the
motions for reconsideration should be granted.

7.

G.R. No. 109808 March 1, 1995

ESALYN CHAVEZ, petitioner,

vs.
HON. EDNA BONTO-PEREZ, HON. ROGELIO T. RAYALA, HON. DOMINGO H. ZAPANTA,
HON. JOSE N. SARMIENTO, CENTRUM PROMOTIONS PLACEMENT CORPORATION,
JOSE A. AZUCENA, JR., and TIMES SURETY & INSURANCE COMPANY, INC. respondents.
PUNO, J.:
One of the anguished cries in our society today is that while our laws appear to protect the poor,
their interpretation is sometimes anti-poor. In the case at bench, petitioner, a poor, uncounselled
entertainment dancer signed a contract with her Japanese employer calling for a monthly salary
of One Thousand Five Hundred U.S. Dollars (US$1,500) but later had to sign an immoral side
agreement reducing her salary below the minimum standard set by the POEA. Petitioner
invoked the law to collect her salary differentials, but incredibly found public respondent straining
the seams of our law to disfavor her. There is no greater disappointment to the poor like
petitioner than to discover the ugly reality behind the beautiful rhetoric of laws. We will not allow
this travesty.
This is a petition for certiorari to review the Decision of the National Labor Relations Commission
(NLRC), 1 dated December 29, 1992, which affirmed the Decision of public respondent Philippine
Overseas Employment Agency (POEA) Administrator Jose N. Sarmiento, dated February 17,
1992, dismissing petitioner's complaint for unpaid salaries amounting to Six Thousand Dollars
(US$6,000.00).
The facts are undisputed.
On December 1, 1988, petitioner, an entertainment dancer, entered into a standard employment
contract for overseas Filipino artists and entertainers with Planning Japan Co., Ltd., 2 through its
Philippine representative, private respondent Centrum Placement & Promotions Corporation.
The contract had a duration of two (2) to six (6) months, and petitioner was to be paid a monthly
compensation of One Thousand Five Hundred Dollars (US$1,5000.00). On December 5, 1888,
the POEA approved the contract. Subsequently, petitioner executed the following side
agreement with her Japanese employer through her local manager, Jaz Talents Promotion:
Date: Dec. 10, 1988
SUBJECT:
MANAGERIAL COMMISSION

Salary

Deduction

DATE OF DEPARTURE: _________________

WHEREFORE, the motions for reconsideration are hereby GRANTED. The petition is
DISMISSED for lack of merit. The decision of the National Labor Relations Commission is
AFFIRMED. No costs.
SO ORDERED.1wph1.t

ATTENTION: MR. IWATA

I, ESALYN CHAVEZ, DANCER, do hereby with my own free will and
voluntarily have the honor to authorize your good office to please deduct the
amount of TWO HUNDRED FIFTY DOLLARS ($250) from my contracted
monthly salary of SEVEN HUNDRED FIFTY DOLLARS ($750) as monthly
commission for my Manager, Mr. Jose A. Azucena, Jr.
That, my monthly salary (net) is FIVE HUNDRED DOLLARS ($500).

(sgd. by petitioner) 3

(Citations omitted.)

On December 16, 1988, petitioner left for Osaka, Japan, where she worked for six (6) months,
until June 10, 1989. She came back to the Philippines on June 14, 1989.
Petitioner instituted the case at bench for underpayment of wages with the POEA on February
21, 1991. She prayed for the payment of Six Thousand U.S. Dollars (US$6,000.00),
representing the unpaid portion of her basic salary for six months. Charged in the case were
private respondent Centrum Promotions and Placement Corporation, the Philippine
representative of Planning Japan, Co., Inc., its insurer, Times Surety and Insurance Co., Inc.,
and Jaz Talents Promotion.
The complaint was dismissed by public respondent POEA Administrator on February 17, 1992.
He ratiocinated, inter alia:
. . . Apparently and from all indications, complainant (referring to petitioner
herein) was satisfied and did not have any complaint (about) anything
regarding her employment in Japan until after almost two (2) years (when)
she filed the instant complaint on February 21, 1991. The records show that
after signing the Standard Employment Contract on December 1, 1988, she
entered into a side agreement with the Japanese employer thru her local
manager, Jaz Talents Promotion consenting to a monthly salary of
US$750.00 which she affirmed during the conference of May 21, 1991.
Respondent agency had no knowledge nor participation in the said
agreement such that it could not be faulted for violation of the Standard
Employment Contract regarding the stipulated salary. We cannot take
cognizance of such violation when one of the principal party (sic) thereto
opted to receive a salary different from what has been stipulated in their
contract, especially so if the contracting party did not consent/participate in
such arrangement. Complainant (petitioner) cannot now demand from
respondent agency to pay her the salary based (on) the processed
Employment Contract for she is now considered in bad faith and hence,
estopped from claiming thereto thru her own act of consenting and agreeing
to receive a salary not in accordance with her contract of employment.
Moreover, her self-imposed silence for a long period of time worked to her
own disadvantage as she allowed laches to prevail which barred respondent
from doing something at the outset. Normally, if a person's right (is) violated,
she/he would immediately react to protect her/his rights which is not true in
the case at bar.
The term laches has been defined as one's negligence or failure to assert
his right in due time or within reasonable time from the accrual of his cause
of action, thus, leading another party to believe that there is nothing wrong
with his own claim. This resulted in placing the negligent party in estoppel to
assert or enforce his right. . . . Likewise, the Supreme Court in one case
held that not only is inaction within reasonable time to enforce a right the
basic premise that underlies a valid defense of laches but such inaction
evinces implied consent or acquiescence to the violation of the right . . .
Under the prevailing circumstances of this case, it is outside the regulatory
powers of the Administration to rule on the liability of respondent Jaz
Talents Promotions, if any, (it) not being a licensed private agency but a
promotion which trains entertainers for abroad.
xxx xxx xxx

On appeal, the NLRC upheld the Decision, thus:

We fail to see any conspiracy that the complainant (petitioner herein)
imputes to the respondents. She has, to put it bluntly, not established and/or
laid the basis for Us to arrive at a conclusion that the respondents have
been and should be held liable for her claims.
The way We see it, the records do not at all indicate any connection
between respondents Centrum Promotion & Placement Corporation and Jaz
Talents Promotion.
There is, therefore, no merit in the appeal. Hence, We affirmed. 4
Dissatisfied with the NLRC's Decision, petitioner instituted the present petition, alleging that
public respondents committed grave abuse of discretion in finding: that she is guilty of laches;
that she entered into a side contract on December 10, 1988 for the reduction of her basic salary
to Seven Hundred Fifty U.S. Dollars (US$750.00) which superseded, nullified and invalidated the
standard employment contract she entered into on December 1, 1988; and that Planning Japan
Co., Ltd. and private respondents are not solidarily liable to her for Six Thousand US Dollars
(US$6,000.00) in unpaid wages. 5
The petition is meritorious.
Firstly, we hold that the managerial commission agreement executed by petitioner to authorize
her Japanese Employer to deduct Two Hundred Fifty U.S. Dollars (US$250.00) from her monthly
basic salary is void because it is against our existing laws, morals and public policy. It cannot
supersede the standard employment contract of December 1, 1988 approved by the POEA with
the following stipulation appended thereto:
It is understood that the terms and conditions stated in this Employment
Contract are in conformance with the Standard Employment Contract for
Entertainers prescribed by the POEA under Memorandum Circular No. 2,
Series of 1986. Any alterations or changes made in any part of this contract
without prior approval by the POEA shall be null and void; 6 (Emphasis
supplied.)
The stipulation is in line with the provisions of Rule II, Book V and Section 2(f), Rule I, Book VI of
the 1991 Rules and Regulations Governing Overseas Employment, thus:
Book V, Rule II
Sec. 1. Employment Standards. The Administration shall determine,
formulate and review employment standards in accordance with the market
development and welfare objectives of the overseas employment program
and the prevailing market conditions.
Sec. 2. Minimum Provisions for Contract. The following shall be considered
the minimum requirements for contracts of employment:

a. Guaranteed wages for regular working hours and

overtime pay for services rendered beyond regular
working hours in accordance with the standards
established by the Administration;
xxx xxx xxx
Sec. 3. Standard Employment Contract. The administration shall undertake
development and/or periodic review of region, country and skills specific
employment contracts for landbased workers and conduct regular review of
standard employment contracts (SEC) for seafarers. These contracts shall
provide for minimum employment standards herein enumerated under
Section 2, of this Rule and shall recognize the prevailing labor and social
legislations at the site of employment and international conventions. The
SEC shall set the minimum terms and conditions of employment. All
employers and principals shall adopt the SEC in connection with the hiring
of workers without prejudice to their adoption of other terms and conditions
of employment over and above the minimum standards of the
Administration. (Emphasis supplied.)
and

The doctrine of laches is based upon grounds of public policy which requires, for the peace of
society, the discouragement of stale claims, and is principally a question of the inequity or
unfairness of permitting a right or claim to be enforced or asserted. 10 There is no absolute rule
as to what constitutes laches; each case is to be determined according to its particular
circumstances. The question of laches is addressed to the sound discretion of the court, and
since it is an equitable doctrine, its application is controlled by equitable considerations. It cannot
be worked to defeat justice or to perpetrate fraud and injustice. 11
In the case at bench, petitioner filed her claim well within the three-year prescriptive period for
the filing of money claims set forth in Article 291 of the Labor Code. 12 For this reason, we hold
the doctrine of laches inapplicable to petitioner. As we ruled in Imperial Victory Shipping Agency
v. NLRC, 200 SCRA 178 (1991):
. . . Laches is a doctrine in equity while prescription is based on law. Our
courts are basically courts of law not courts of equity. Thus, laches cannot
be invoked to resist the enforcement of an existing legal right. We have
ruled in Arsenal v. Intermediate Appellate Court . . . that it is a long standing
principle that equity follows the law. Courts exercising equity jurisdiction are
bound by rules of law and have no arbitrary discretion to disregard them.
In Zabat, Jr. v. Court of Appeals . . ., this Court was more emphatic
upholding the rules of procedure. We said therein:
As for equity, which has been aptly described as a
"justice outside legality," this applied only in the
absence of, and never against, statutory law or, as in
this case, judicial rules of procedure. Aequetas
nunguam contravenit legis. The pertinent positive rules
being present here, they should pre-empt and prevail
over all abstract arguments based only on equity.

BOOK VI, RULE I

Sec. 2. Grounds for suspension/cancellation of license.
xxx xxx xxx
f. Substituting or altering employment contracts and other documents
approved and verified by the Administration from the time of actual signing
thereof by the parties up to and including the period of expiration of the
same without the Administration's approval.

Thus, where the claim was filed within the three-year statutory period,
recovery therefore cannot be barred by laches. Courts should never apply
the doctrine of laches earlier than the expiration of time limited for the
commencement of actions at law.

xxx xxx xxx

xxx xxx xxx

(Emphasis supplied.)

(Emphasis supplied. Citations omitted.)

Clearly, the basic salary of One Thousand Five Hundred U.S. Dollars (US$1,500.00) guaranteed
to petitioner under the parties' standard employment contract is in accordance with
the minimum employment standards with respect to wages set by the POEA, Thus, the side
agreement which reduced petitioner's basic wage to Seven Hundred Fifty U.S. Dollars
(US$750.00) is null and void for violating the POEA's minimum employment standards, and for
not having been approved by the POEA. Indeed, this side agreement is a scheme all too
frequently resorted to by unscrupulous employers against our helpless overseas workers who
are compelled to agree to satisfy their basic economic needs.
Secondly. The doctrine of laches or "stale demands"' cannot be applied to petitioner. Laches has
been defined as the failure or neglect for an unreasonable and unexplained length time to do
that which, by exercising due diligence, could or should have been done earlier, 7 thus giving
rise to a presumption that the party entitled to assert it either has abandoned or declined to
assert it. 8 It is not concerned with mere lapse of time; the fact of delay, standing alone, is
insufficient to constitute laches. 9

Thirdly, private respondents Centrum and Times as well as Planning Japan Co., Ltd. the
agency's foreign principal are solidarily liable to petitioner for her unpaid wages. This is in
accordance with stipulation 13.7 of the parties' standard employment contract which provides:
13.7. The Employer (in this case, Planning Japan Co., Ltd. ) and its locally
(sic)
agent/promoter/representative
(private
respondent
Centrum
Promotions
&
Placement
Corporation)
shall
be jointly
and
severally responsible for the proper implementation of the terms and
conditions in this Contract. 13 (Emphasis supplied.)
This solidary liability also arises from the provisions of Section 10(a)(2), Rule V, Book I
of the Omnibus Rules Implementing the Labor Code, as amended, thus:

Sec. 10. Requirement before recruitment. Before recruiting any worker,

the private employment agency shall submit to the Bureau the following
documents:
a) A formal appointment or agency contract executed by a foreign-based
employer in favor of the license holder to recruit and hire personnel for the
former . . . . Such formal appointment or recruitment agreement shall
contain the following provisions, among others:

United
Nations
Global
Forum
Brussels, July 10, 20071

xxx xxx xxx

2. Power of the agency to sue and be sued jointly and solidarily with the
principal or foreign based employer for any of the violations of the
recruitment agreement and the contracts of employment.
xxx xxx xxx
(Emphasis supplied.)
Our overseas workers constitute an exploited class. Most of them come from the poorest sector
of our society. They are thoroughly disadvantaged. Their profile shows they live in suffocating
slums, trapped in an environment of crime. Hardly literate and in ill health, their only hope lies in
jobs they can hardly find in our country. Their unfortunate circumstance makes them easy prey
to avaricious employers. They will climb mountains, cross the seas, endure slave treatment in
foreign lands just to survive. Out of despondence, they will work under sub-human conditions
and accept salaries below the minimum. The least we can do is to protect them with our laws in
our land. Regretfully, respondent public officials who should sympathize with the working class
appear to have a different orientation.
IN VIEW WHEREOF, the petition is GRANTED. The Decisions of respondent POEA
Administrator and NLRC Commissioners in POEA Case No. Adj. 91-02-199 (ER), respectively
dated February 17 and December 29, 1992, and the Resolution of the NLRC, dated March 23,
1993, are REVERSED and SET ASIDE. Private respondents are held jointly and severally liable
to petitioner for the payment of SIX THOUSAND US DOLLARS (US$6,000.00) in unpaid wages.
Costs against private respondents.

G.R. No. 167614

on

Secretary-General
Migration

March 24, 2009

ANTONIO M. SERRANO, Petitioner,

vs.
Gallant MARITIME SERVICES, INC. and MARLOW NAVIGATION CO., INC., Respondents.

Ki-Moon
Development

For Antonio Serrano (petitioner), a Filipino seafarer, the last clause in the 5th paragraph of
Section 10, Republic Act (R.A.) No. 8042,2 to wit:
Sec. 10. Money Claims. - x x x In case of termination of overseas employment without just, valid
or authorized cause as defined by law or contract, the workers shall be entitled to the full
reimbursement of his placement fee with interest of twelve percent (12%) per annum, plus his
salaries for the unexpired portion of his employment contract or for three (3) months for every
year of the unexpired term, whichever is less.
x x x x (Emphasis and underscoring supplied)
does not magnify the contributions of overseas Filipino workers (OFWs) to national
development, but exacerbates the hardships borne by them by unduly limiting their entitlement in
case of illegal dismissal to their lump-sum salary either for the unexpired portion of their
employment contract "or for three months for every year of the unexpired term, whichever is
less" (subject clause). Petitioner claims that the last clause violates the OFWs' constitutional
rights in that it impairs the terms of their contract, deprives them of equal protection and denies
them due process.
By way of Petition for Review under Rule 45 of the Rules of Court, petitioner assails the
December 8, 2004 Decision3 and April 1, 2005 Resolution4 of the Court of Appeals (CA), which
applied the subject clause, entreating this Court to declare the subject clause unconstitutional.

Duration of contract

12 months

Position

Chief Officer

Basic monthly salary

US$1,400.00

Hours of work

48.0 hours per week

Overtime

US$700.00 per month

Vacation leave with pay

7.00 days per month5

DECISION
AUSTRIA-MARTINEZ, J.:

Ban
and

Petitioner was hired by Gallant Maritime Services, Inc. and Marlow Navigation Co., Ltd.
(respondents) under a Philippine Overseas Employment Administration (POEA)-approved
Contract of Employment with the following terms and conditions:

SO ORDERED.

8.

For decades, the toil of solitary migrants has helped lift entire families and communities out of
poverty. Their earnings have built houses, provided health care, equipped schools and planted
the seeds of businesses. They have woven together the world by transmitting ideas and
knowledge from country to country. They have provided the dynamic human link between
cultures, societies and economies. Yet, only recently have we begun to understand not only how
much international migration impacts development, but how smart public policies can magnify
this effect.

On March 19, 1998, the date of his departure, petitioner was constrained to accept a
downgraded employment contract for the position of Second Officer with a monthly salary of
US$1,000.00, upon the assurance and representation of respondents that he would be made
Chief Officer by the end of April 1998.6
Respondents did not deliver on their promise to make petitioner Chief Officer. 7 Hence, petitioner
refused to stay on as Second Officer and was repatriated to the Philippines on May 26, 1998. 8
Petitioner's employment contract was for a period of 12 months or from March 19, 1998 up to
March 19, 1999, but at the time of his repatriation on May 26, 1998, he had served only two (2)
months and seven (7) days of his contract, leaving an unexpired portion of nine (9) months and
twenty-three (23) days.
Petitioner filed with the Labor Arbiter (LA) a Complaint9 against respondents for constructive
dismissal and for payment of his money claims in the total amount of US$26,442.73, broken
down as follows:
May 27/31, 1998 (5 US$ 413.90
days) incl. Leave
pay
June 01/30, 1998

2,590.00

July 01/31, 1998

2,590.00

August 01/31, 1998

2,590.00

Sept. 01/30, 1998

2,590.00

Oct. 01/31, 1998

2,590.00

Nov. 01/30, 1998

2,590.00

Dec. 01/31, 1998

2,590.00

Jan. 01/31, 1999

2,590.00

Feb. 01/28, 1999

2,590.00

WHEREFORE, premises considered, judgment is hereby rendered declaring that the

dismissal of the complainant (petitioner) by the respondents in the above-entitled case
was illegal and the respondents are hereby ordered to pay the complainant
[petitioner], jointly and severally, in Philippine Currency, based on the rate of
exchange prevailing at the time of payment, the amount of EIGHT THOUSAND
SEVEN HUNDRED SEVENTY U.S. DOLLARS (US $8,770.00), representing the
complainants salary for three (3) months of the unexpired portion of the
aforesaid contract of employment.1avvphi1
The respondents are likewise ordered to pay the complainant [petitioner], jointly and
severally, in Philippine Currency, based on the rate of exchange prevailing at the time
of payment, the amount of FORTY FIVE U.S. DOLLARS (US$ 45.00), 12 representing
the complainants claim for a salary differential. In addition, the respondents are
hereby ordered to pay the complainant, jointly and severally, in Philippine Currency, at
the exchange rate prevailing at the time of payment, the complainants (petitioner's)
claim for attorneys fees equivalent to ten percent (10%) of the total amount awarded
to the aforesaid employee under this Decision.

All other claims are hereby DISMISSED.

SO ORDERED.13 (Emphasis supplied)
In awarding petitioner a lump-sum salary of US$8,770.00, the LA based his
computation on the salary period of three months only -- rather than the entire
unexpired portion of nine months and 23 days of petitioner's employment contract applying the subject clause. However, the LA applied the salary rate of US$2,590.00,
consisting of petitioner's "[b]asic salary, US$1,400.00/month + US$700.00/month,
fixed
overtime
pay,
+
US$490.00/month,
vacation
leave
pay
=
US$2,590.00/compensation per month."14

-------------------------------------------------------------------------------25,382.23

Respondents appealed15 to the National Labor Relations Commission (NLRC) to

question the finding of the LA that petitioner was illegally dismissed.
Petitioner also appealed16 to the NLRC on the sole issue that the LA erred in not
applying the ruling of the Court in Triple Integrated Services, Inc. v. National Labor
Relations Commission17 that in case of illegal dismissal, OFWs are entitled to their
salaries for the unexpired portion of their contracts.18

Amount adjusted to
chief mate's salary
(March 19/31, 1998 1,060.5010
to April 1/30, 1998)
+

In a Decision dated June 15, 2000, the NLRC modified the LA Decision, to wit:

---------------------------------------------------------------------------------------------US$ 26,442.73

The LA rendered a Decision dated July 15, 1999, declaring the dismissal of petitioner
illegal and awarding him monetary benefits, to wit:

The claims of the complainant for moral and exemplary damages are hereby
DISMISSED for lack of merit.

Mar. 1/19, 1999 (19 1,640.00

days) incl. leave
pay

TOTAL CLAIM

as well as moral and exemplary damages and attorney's fees.

11

WHEREFORE, the Decision dated 15 July 1999 is MODIFIED. Respondents are

hereby ordered to pay complainant, jointly and severally, in Philippine currency, at the
prevailing rate of exchange at the time of payment the following:

1. Three (3) months salary

$1,400 x 3

US$4,200.00

2. Salary differential

45.00

US$4,245.00
3. 10% Attorneys fees

424.50

TOTAL

US$4,669.50

The other findings are affirmed.

SO ORDERED.19
The NLRC corrected the LA's computation of the lump-sum salary awarded to petitioner by
reducing the applicable salary rate from US$2,590.00 to US$1,400.00 because R.A. No. 8042
"does not provide for the award of overtime pay, which should be proven to have been actually
performed, and for vacation leave pay."20
Petitioner filed a Motion for Partial Reconsideration, but this time he questioned the
constitutionality of the subject clause.21 The NLRC denied the motion.22
23

Petitioner filed a Petition for Certiorari with the CA, reiterating the constitutional challenge
against the subject clause.24 After initially dismissing the petition on a technicality, the CA
eventually gave due course to it, as directed by this Court in its Resolution dated August 7, 2003
which granted the petition for certiorari, docketed as G.R. No. 151833, filed by petitioner.
In a Decision dated December 8, 2004, the CA affirmed the NLRC ruling on the reduction of the
applicable salary rate; however, the CA skirted the constitutional issue raised by petitioner. 25
His Motion for Reconsideration26 having been denied by the CA,27 petitioner brings his cause to
this Court on the following grounds:
I
The Court of Appeals and the labor tribunals have decided the case in a way not in accord with
applicable decision of the Supreme Court involving similar issue of granting unto the migrant
worker back wages equal to the unexpired portion of his contract of employment instead of
limiting it to three (3) months
II
In the alternative that the Court of Appeals and the Labor Tribunals were merely applying their
interpretation of Section 10 of Republic Act No. 8042, it is submitted that the Court of Appeals
gravely erred in law when it failed to discharge its judicial duty to decide questions of substance
not theretofore determined by the Honorable Supreme Court, particularly, the constitutional
issues raised by the petitioner on the constitutionality of said law, which unreasonably, unfairly
and arbitrarily limits payment of the award for back wages of overseas workers to three (3)
months.

III
Even without considering the constitutional limitations [of] Sec. 10 of Republic Act No. 8042, the
Court of Appeals gravely erred in law in excluding from petitioners award the overtime pay and
vacation pay provided in his contract since under the contract they form part of his salary. 28
On February 26, 2008, petitioner wrote the Court to withdraw his petition as he is already old
and sickly, and he intends to make use of the monetary award for his medical treatment and
medication.29 Required to comment, counsel for petitioner filed a motion, urging the court to
allow partial execution of the undisputed monetary award and, at the same time, praying that the
constitutional question be resolved.30
Considering that the parties have filed their respective memoranda, the Court now takes up the
full merit of the petition mindful of the extreme importance of the constitutional question raised
therein.
On the first and second issues
The unanimous finding of the LA, NLRC and CA that the dismissal of petitioner was illegal is not
disputed. Likewise not disputed is the salary differential of US$45.00 awarded to petitioner in all
three fora. What remains disputed is only the computation of the lump-sum salary to be awarded
to petitioner by reason of his illegal dismissal.
Applying the subject clause, the NLRC and the CA computed the lump-sum salary of petitioner
at the monthly rate of US$1,400.00 covering the period of three months out of the unexpired
portion of nine months and 23 days of his employment contract or a total of US$4,200.00.
Impugning the constitutionality of the subject clause, petitioner contends that, in addition to the
US$4,200.00 awarded by the NLRC and the CA, he is entitled to US$21,182.23 more or a total
of US$25,382.23, equivalent to his salaries for the entire nine months and 23 days left of his
employment contract, computed at the monthly rate of US$2,590.00.31
The Arguments of Petitioner
Petitioner contends that the subject clause is unconstitutional because it unduly impairs the
freedom of OFWs to negotiate for and stipulate in their overseas employment contracts a
determinate employment period and a fixed salary package.32 It also impinges on the equal
protection clause, for it treats OFWs differently from local Filipino workers (local workers) by
putting a cap on the amount of lump-sum salary to which OFWs are entitled in case of illegal
dismissal, while setting no limit to the same monetary award for local workers when their
dismissal is declared illegal; that the disparate treatment is not reasonable as there is no
substantial distinction between the two groups; 33and that it defeats Section 18,34 Article II of the
Constitution which guarantees the protection of the rights and welfare of all Filipino workers,
whether deployed locally or overseas.35
Moreover, petitioner argues that the decisions of the CA and the labor tribunals are not in line
with existing jurisprudence on the issue of money claims of illegally dismissed OFWs. Though
there are conflicting rulings on this, petitioner urges the Court to sort them out for the guidance
of affected OFWs.36

Petitioner further underscores that the insertion of the subject clause into R.A. No. 8042 serves
no other purpose but to benefit local placement agencies. He marks the statement made by the
Solicitor General in his Memorandum,viz.:

these peculiarities make for a reasonable and valid basis for the differentiated treatment under
the subject clause of the money claims of OFWs who are illegally dismissed. Thus, the provision
does not violate the equal protection clause nor Section 18, Article II of the Constitution. 45

Often, placement agencies, their liability being solidary, shoulder the payment of money claims
in the event that jurisdiction over the foreign employer is not acquired by the court or if the
foreign employer reneges on its obligation. Hence, placement agencies that are in good faith
and which fulfill their obligations are unnecessarily penalized for the acts of the foreign
employer. To protect them and to promote their continued helpful contribution in deploying
Filipino migrant workers, liability for money claims was reduced under Section 10 of R.A. No.
8042. 37 (Emphasis supplied)

Lastly, the OSG defends the rationale behind the subject clause as a police power measure
adopted to mitigate the solidary liability of placement agencies for this "redounds to the benefit of
the migrant workers whose welfare the government seeks to promote. The survival of legitimate
placement agencies helps [assure] the government that migrant workers are properly deployed
and are employed under decent and humane conditions."46

Petitioner argues that in mitigating the solidary liability of placement agencies, the subject clause
sacrifices the well-being of OFWs. Not only that, the provision makes foreign employers better
off than local employers because in cases involving the illegal dismissal of employees, foreign
employers are liable for salaries covering a maximum of only three months of the unexpired
employment contract while local employers are liable for the full lump-sum salaries of their
employees. As petitioner puts it:
In terms of practical application, the local employers are not limited to the amount of backwages
they have to give their employees they have illegally dismissed, following well-entrenched and
unequivocal jurisprudence on the matter. On the other hand, foreign employers will only be
limited to giving the illegally dismissed migrant workers the maximum of three (3) months unpaid
salaries notwithstanding the unexpired term of the contract that can be more than three (3)
months.38
Lastly, petitioner claims that the subject clause violates the due process clause, for it deprives
him of the salaries and other emoluments he is entitled to under his fixed-period employment
contract.39
The Arguments of Respondents
In their Comment and Memorandum, respondents contend that the constitutional issue should
not be entertained, for this was belatedly interposed by petitioner in his appeal before the CA,
and not at the earliest opportunity, which was when he filed an appeal before the NLRC. 40
The Arguments of the Solicitor General
The Solicitor General (OSG)41 points out that as R.A. No. 8042 took effect on July 15, 1995, its
provisions could not have impaired petitioner's 1998 employment contract. Rather, R.A. No.
8042 having preceded petitioner's contract, the provisions thereof are deemed part of the
minimum terms of petitioner's employment, especially on the matter of money claims, as this
was not stipulated upon by the parties.42
Moreover, the OSG emphasizes that OFWs and local workers differ in terms of the nature of
their employment, such that their rights to monetary benefits must necessarily be treated
differently. The OSG enumerates the essential elements that distinguish OFWs from local
workers: first, while local workers perform their jobs within Philippine territory, OFWs perform
their jobs for foreign employers, over whom it is difficult for our courts to acquire jurisdiction, or
against whom it is almost impossible to enforce judgment; and second, as held in Coyoca v.
National Labor Relations Commission43 and Millares v. National Labor Relations
Commission,44 OFWs are contractual employees who can never acquire regular employment
status, unlike local workers who are or can become regular employees. Hence, the OSG posits
that there are rights and privileges exclusive to local workers, but not available to OFWs; that

The Court's Ruling

The Court sustains petitioner on the first and second issues.
When the Court is called upon to exercise its power of judicial review of the acts of its co-equals,
such as the Congress, it does so only when these conditions obtain: (1) that there is an actual
case or controversy involving a conflict of rights susceptible of judicial determination; 47 (2) that
the constitutional question is raised by a proper party48 and at the earliest opportunity;49 and (3)
that the constitutional question is the very lis mota of the case, 50otherwise the Court will dismiss
the case or decide the same on some other ground.51
Without a doubt, there exists in this case an actual controversy directly involving petitioner who
is personally aggrieved that the labor tribunals and the CA computed his monetary award based
on the salary period of three months only as provided under the subject clause.
The constitutional challenge is also timely. It should be borne in mind that the requirement that a
constitutional issue be raised at the earliest opportunity entails the interposition of the issue in
the pleadings before a competent court, such that, if the issue is not raised in the pleadings
before that competent court, it cannot be considered at the trial and, if not considered in the trial,
it cannot be considered on appeal.52 Records disclose that the issue on the constitutionality of
the subject clause was first raised, not in petitioner's appeal with the NLRC, but in his Motion for
Partial Reconsideration with said labor tribunal,53 and reiterated in his Petition
for Certiorari before the CA.54Nonetheless, the issue is deemed seasonably raised because it is
not the NLRC but the CA which has the competence to resolve the constitutional issue. The
NLRC is a labor tribunal that merely performs a quasi-judicial function its function in the
present case is limited to determining questions of fact to which the legislative policy of R.A. No.
8042 is to be applied and to resolving such questions in accordance with the standards laid
down by the law itself;55 thus, its foremost function is to administer and enforce R.A. No. 8042,
and not to inquire into the validity of its provisions. The CA, on the other hand, is vested with the
power of judicial review or the power to declare unconstitutional a law or a provision thereof,
such as the subject clause.56 Petitioner's interposition of the constitutional issue before the CA
was undoubtedly seasonable. The CA was therefore remiss in failing to take up the issue in its
decision.
The third condition that the constitutional issue be critical to the resolution of the case likewise
obtains because the monetary claim of petitioner to his lump-sum salary for the entire unexpired
portion of his 12-month employment contract, and not just for a period of three months, strikes at
the very core of the subject clause.
Thus, the stage is all set for the determination of the constitutionality of the subject clause.
Does
the
Article
III
of contracts?

subject
of
the

clause
violate
Constitution

on

Section
10,
non-impairment

The answer is in the negative.

Petitioner's claim that the subject clause unduly interferes with the stipulations in his contract on
the term of his employment and the fixed salary package he will receive57 is not tenable.
Section 10, Article III of the Constitution provides:
No law impairing the obligation of contracts shall be passed.
The prohibition is aligned with the general principle that laws newly enacted have only a
prospective operation,58and cannot affect acts or contracts already perfected; 59 however, as to
laws already in existence, their provisions are read into contracts and deemed a part
thereof.60 Thus, the non-impairment clause under Section 10, Article II is limited in application to
laws about to be enacted that would in any way derogate from existing acts or contracts by
enlarging, abridging or in any manner changing the intention of the parties thereto.
As aptly observed by the OSG, the enactment of R.A. No. 8042 in 1995 preceded the execution
of the employment contract between petitioner and respondents in 1998. Hence, it cannot be
argued that R.A. No. 8042, particularly the subject clause, impaired the employment contract of
the parties. Rather, when the parties executed their 1998 employment contract, they were
deemed to have incorporated into it all the provisions of R.A. No. 8042.
But even if the Court were to disregard the timeline, the subject clause may not be declared
unconstitutional on the ground that it impinges on the impairment clause, for the law was
enacted in the exercise of the police power of the State to regulate a business, profession or
calling, particularly the recruitment and deployment of OFWs, with the noble end in view of
ensuring respect for the dignity and well-being of OFWs wherever they may be
employed.61Police power legislations adopted by the State to promote the health, morals, peace,
education, good order, safety, and general welfare of the people are generally applicable not
only to future contracts but even to those already in existence, for all private contracts must yield
to the superior and legitimate measures taken by the State to promote public welfare. 62
Does
the
subject
Article
III
of
the
Article
II
and
Section
as a protected sector?

clause
violate
Constitution,
and
3,
Article
XIII

Section
Section
on

1,
18,
labor

Such rights are not absolute but subject to the inherent power of Congress to incorporate, when
it sees fit, a system of classification into its legislation; however, to be valid, the classification
must comply with these requirements: 1) it is based on substantial distinctions; 2) it is germane
to the purposes of the law; 3) it is not limited to existing conditions only; and 4) it applies equally
to all members of the class.66
There are three levels of scrutiny at which the Court reviews the constitutionality of a
classification embodied in a law: a) the deferential or rational basis scrutiny in which the
challenged classification needs only be shown to be rationally related to serving a legitimate
state interest;67 b) the middle-tier or intermediate scrutiny in which the government must show
that the challenged classification serves an important state interest and that the classification is
at least substantially related to serving that interest; 68 and c) strict judicial scrutiny69 in which a
legislative classification which impermissibly interferes with the exercise of a fundamental
right70 or operates to the peculiar disadvantage of a suspect class 71 is presumed
unconstitutional, and the burden is upon the government to prove that the classification is
necessary to achieve a compelling state interest and that it is the least restrictive means to
protect such interest.72
Under American jurisprudence, strict judicial scrutiny is triggered by suspect
classifications73 based on race74 or gender75 but not when the classification is drawn along
income categories.76
It is different in the Philippine setting. In Central Bank (now Bangko Sentral ng Pilipinas)
Employee Association, Inc. v. Bangko Sentral ng Pilipinas, 77 the constitutionality of a provision in
the charter of the Bangko Sentral ng Pilipinas(BSP), a government financial institution (GFI),
was challenged for maintaining its rank-and-file employees under the Salary Standardization
Law (SSL), even when the rank-and-file employees of other GFIs had been exempted from the
SSL by their respective charters. Finding that the disputed provision contained a suspect
classification based on salary grade, the Court deliberately employed the standard of strict
judicial scrutiny in its review of the constitutionality of said provision. More significantly, it was in
this case that the Court revealed the broad outlines of its judicial philosophy, to wit:
Congress retains its wide discretion in providing for a valid classification, and its policies should
be accorded recognition and respect by the courts of justice except when they run afoul of the
Constitution. The deference stops where the classification violates a fundamental right,
or prejudices persons accorded special protection by the Constitution. When these
violations arise, this Court must discharge its primary role as the vanguard of constitutional
guaranties, and require a stricter and more exacting adherence to constitutional limitations.
Rational basis should not suffice.

The answer is in the affirmative.

Section 1, Article III of the Constitution guarantees:
No person shall be deprived of life, liberty, or property without due process of law nor shall any
person be denied the equal protection of the law.
Section 18,63 Article II and Section 3,64 Article XIII accord all members of the labor sector,
without distinction as to place of deployment, full protection of their rights and welfare.
To Filipino workers, the rights guaranteed under the foregoing constitutional provisions translate
to economic security and parity: all monetary benefits should be equally enjoyed by workers of
similar category, while all monetary obligations should be borne by them in equal degree; none
should be denied the protection of the laws which is enjoyed by, or spared the burden imposed
on, others in like circumstances.65

Admittedly, the view that prejudice to persons accorded special protection by the Constitution
requires a stricter judicial scrutiny finds no support in American or English jurisprudence.
Nevertheless, these foreign decisions and authorities are not per se controlling in this
jurisdiction. At best, they are persuasive and have been used to support many of our decisions.
We should not place undue and fawning reliance upon them and regard them as indispensable
mental crutches without which we cannot come to our own decisions through the employment of
our own endowments. We live in a different ambience and must decide our own problems in the
light of our own interests and needs, and of our qualities and even idiosyncrasies as a people,
and always with our own concept of law and justice. Our laws must be construed in accordance
with the intention of our own lawmakers and such intent may be deduced from the language of
each law and the context of other local legislation related thereto. More importantly, they must
be construed to serve our own public interest which is the be-all and the end-all of all our laws.
And it need not be stressed that our public interest is distinct and different from others.
xxxx

Further, the quest for a better and more "equal" world calls for the use of equal protection as a
tool of effective judicial intervention.
Equality is one ideal which cries out for bold attention and action in the Constitution. The
Preamble proclaims "equality" as an ideal precisely in protest against crushing inequities in
Philippine society. The command to promote social justice in Article II, Section 10, in "all phases
of national development," further explicitated in Article XIII, are clear commands to the State to
take affirmative action in the direction of greater equality. x x x [T]here is thus in the Philippine
Constitution no lack of doctrinal support for a more vigorous state effort towards achieving a
reasonable measure of equality.
Our present Constitution has gone further in guaranteeing vital social and economic rights to
marginalized groups of society, including labor. Under the policy of social justice, the law bends
over backward to accommodate the interests of the working class on the humane justification
that those with less privilege in life should have more in law. And the obligation to afford
protection to labor is incumbent not only on the legislative and executive branches but also on
the judiciary to translate this pledge into a living reality. Social justice calls for the humanization
of laws and the equalization of social and economic forces by the State so that justice in its
rational and objectively secular conception may at least be approximated.
xxxx
Under most circumstances, the Court will exercise judicial restraint in deciding questions of
constitutionality, recognizing the broad discretion given to Congress in exercising its legislative
power. Judicial scrutiny would be based on the "rational basis" test, and the legislative discretion
would be given deferential treatment.
But if the challenge to the statute is premised on the denial of a fundamental right, or the
perpetuation of prejudice against persons favored by the Constitution with special
protection, judicial scrutiny ought to be more strict. A weak and watered down view would
call for the abdication of this Courts solemn duty to strike down any law repugnant to the
Constitution and the rights it enshrines. This is true whether the actor committing the
unconstitutional act is a private person or the government itself or one of its instrumentalities.
Oppressive acts will be struck down regardless of the character or nature of the actor.
xxxx
In the case at bar, the challenged proviso operates on the basis of the salary grade or officeremployee status. It is akin to a distinction based on economic class and status, with the higher
grades as recipients of a benefit specifically withheld from the lower grades. Officers of the BSP
now receive higher compensation packages that are competitive with the industry, while the
poorer, low-salaried employees are limited to the rates prescribed by the SSL. The implications
are quite disturbing: BSP rank-and-file employees are paid the strictly regimented rates of the
SSL while employees higher in rank - possessing higher and better education and opportunities
for career advancement - are given higher compensation packages to entice them to stay.
Considering that majority, if not all, the rank-and-file employees consist of people whose status
and rank in life are less and limited, especially in terms of job marketability, it is they - and not
the officers - who have the real economic and financial need for the adjustment . This is in
accord with the policy of the Constitution "to free the people from poverty, provide adequate
social services, extend to them a decent standard of living, and improve the quality of life for all."
Any act of Congress that runs counter to this constitutional desideratum deserves strict scrutiny
by this Court before it can pass muster. (Emphasis supplied)

Imbued with the same sense of "obligation to afford protection to labor," the Court in the present
case also employs the standard of strict judicial scrutiny, for it perceives in the subject clause a
suspect classification prejudicial to OFWs.
Upon cursory reading, the subject clause appears facially neutral, for it applies to all OFWs.
However, a closer examination reveals that the subject clause has a discriminatory intent
against, and an invidious impact on, OFWs at two levels:
First, OFWs with employment contracts of less than one year vis--vis OFWs with
employment contracts ofone year or more;
Second, among OFWs with employment contracts of more than one year; and
Third, OFWs vis--vis local workers with fixed-period employment;
OFWs with employment contracts of less than one year vis--vis OFWs with employment
contracts of one year or more
As pointed out by petitioner,78 it was in Marsaman Manning Agency, Inc. v. National Labor
Relations Commission79(Second Division, 1999) that the Court laid down the following rules on
the application of the periods prescribed under Section 10(5) of R.A. No. 804, to wit:
A plain reading of Sec. 10 clearly reveals that the choice of which amount to award an
illegally dismissed overseas contract worker, i.e., whether his salaries for the unexpired
portion of his employment contract or three (3) months salary for every year of the
unexpired term, whichever is less, comes into play only when the employment contract
concerned has a term of at least one (1) year or more. This is evident from the words "for
every year of the unexpired term" which follows the words "salaries x x x for three
months." To follow petitioners thinking that private respondent is entitled to three (3) months
salary only simply because it is the lesser amount is to completely disregard and overlook some
words used in the statute while giving effect to some. This is contrary to the well-established rule
in legal hermeneutics that in interpreting a statute, care should be taken that every part or word
thereof be given effect since the law-making body is presumed to know the meaning of the
words employed in the statue and to have used them advisedly. Ut res magis valeat quam
pereat.80 (Emphasis supplied)
In Marsaman, the OFW involved was illegally dismissed two months into his 10-month contract,
but was awarded his salaries for the remaining 8 months and 6 days of his contract.
Prior to Marsaman, however, there were two cases in which the Court made conflicting rulings
on Section 10(5). One was Asian Center for Career and Employment System and Services v.
National Labor Relations Commission(Second Division, October 1998),81 which involved an
OFW who was awarded a two-year employment contract, but was dismissed after working for
one year and two months. The LA declared his dismissal illegal and awarded him SR13,600.00
as lump-sum salary covering eight months, the unexpired portion of his contract. On appeal, the
Court reduced the award to SR3,600.00 equivalent to his three months salary, this being the
lesser value, to wit:
Under Section 10 of R.A. No. 8042, a worker dismissed from overseas employment without just,
valid or authorized cause is entitled to his salary for the unexpired portion of his employment
contract or for three (3) months for every year of the unexpired term, whichever is less.

In the case at bar, the unexpired portion of private respondents employment contract is eight (8)
months. Private respondent should therefore be paid his basic salary corresponding to three (3)
months or a total of SR3,600.82
Another was Triple-Eight Integrated Services, Inc. v. National Labor Relations
Commission (Third Division, December 1998),83 which involved an OFW (therein respondent
Erlinda Osdana) who was originally granted a 12-month contract, which was deemed renewed
for another 12 months. After serving for one year and seven-and-a-half months, respondent
Osdana was illegally dismissed, and the Court awarded her salaries for the entire unexpired
portion of four and one-half months of her contract.
The Marsaman interpretation of Section 10(5) has since been adopted in the following cases:

Case Title

Skippers
Maguad84
Bahia
Shipping
Reynaldo
Chua 85

Contract
Period

v.

Period
Service

of

Unexpired
Period

Period Applied
in
the
Computation of
the
Monetary
Award

6 months

2 months

4 months

4 months

9 months

8 months

4 months

4 months

Flourish
Maritime
v.
Almanzor 95

2 years

26 days

23 months and
4 days

6 months or 3
months for each
year of contract

Athenna
Manpower v.
Villanos 96

1 year, 10
months
and
28
days

1 month

1
year,
9
months and 28
days

6 months or 3
months for each
year of contract

As the foregoing matrix readily shows, the subject clause classifies OFWs into two categories.
The first category includes OFWs with fixed-period employment contracts of less than one year;
in case of illegal dismissal, they are entitled to their salaries for the entire unexpired portion of
their contract. The second category consists of OFWs with fixed-period employment contracts of
one year or more; in case of illegal dismissal, they are entitled to monetary award equivalent to
only 3 months of the unexpired portion of their contracts.
The disparity in the treatment of these two groups cannot be discounted. In Skippers, the
respondent OFW worked for only 2 months out of his 6-month contract, but was awarded his
salaries for the remaining 4 months. In contrast, the respondent OFWs in Oriental and PCL who
had also worked for about 2 months out of their 12-month contracts were awarded their salaries
for only 3 months of the unexpired portion of their contracts. Even the OFWs involved
inTalidano and Univan who had worked for a longer period of 3 months out of their 12-month
contracts before being illegally dismissed were awarded their salaries for only 3 months.

v.

Centennial
Transmarine
v. dela Cruz
l86

9 months

4 months

5 months

5 months

Talidano
Falcon87

v.

12 months

3 months

9 months

3 months

Univan
CA 88

v.

12 months

3 months

9 months

3 months

Oriental
CA89

v.

12 months

more than 2
months

10 months

3 months

PCL
NLRC90

v.

12 months

more than 2
months

more or less 9
months

3 months

Olarte
Nayona91

v.

12 months

21 days

11 months and
9 days

3 months

JSS v.Ferrer92

12 months

16 days

11 months and
24 days

3 months

Pentagon v.
Adelantar93

12 months

9
months
and 7 days

2 months and
23 days

2 months and 23
days

Phil. Employ
v. Paramio, et
al.94

12 months

10 months

2 months

Unexpired portion

To illustrate the disparity even more vividly, the Court assumes a hypothetical OFW-A with an
employment contract of 10 months at a monthly salary rate of US$1,000.00 and a hypothetical
OFW-B with an employment contract of 15 months with the same monthly salary rate of
US$1,000.00. Both commenced work on the same day and under the same employer, and were
illegally dismissed after one month of work. Under the subject clause, OFW-A will be entitled to
US$9,000.00, equivalent to his salaries for the remaining 9 months of his contract, whereas
OFW-B will be entitled to only US$3,000.00, equivalent to his salaries for 3 months of the
unexpired portion of his contract, instead of US$14,000.00 for the unexpired portion of 14
months of his contract, as the US$3,000.00 is the lesser amount.
The disparity becomes more aggravating when the Court takes into account jurisprudence
that, prior to the effectivity of R.A. No. 8042 on July 14, 1995, 97 illegally dismissed OFWs, no
matter how long the period of their employment contracts, were entitled to their salaries for the
entire unexpired portions of their contracts. The matrix below speaks for itself:

Case Title

Contract
Period

Period
Service

ATCI v. CA, et
al.98

2 years

Phil. Integrated
v. NLRC99

2 years

of

Unexpired
Period

Period
Applied
in
the
Computation
of
the
Monetary
Award

2 months

22 months

22 months

7 days

23
months
and 23 days

23
months
and 23 days

JGB v. NLC100

2 years

9 months

15 months

15 months

Agoy
NLRC101

v.

2 years

2 months

22 months

22 months

EDI v. NLRC,
et al.102

2 years

5 months

19 months

19 months

Barros
v.
NLRC, et al.103

12 months

4 months

8 months

8 months

Philippine
Transmarine v.
Carilla104

12 months

6
months
and 22 days

5 months and
18 days

5 months and
18 days

It is plain that prior to R.A. No. 8042, all OFWs, regardless of contract periods or the unexpired
portions thereof, were treated alike in terms of the computation of their monetary benefits in case
of illegal dismissal. Their claims were subjected to a uniform rule of computation: their basic
salaries multiplied by the entire unexpired portion of their employment contracts.
The enactment of the subject clause in R.A. No. 8042 introduced a differentiated rule of
computation of the money claims of illegally dismissed OFWs based on their employment
periods, in the process singling out one category whose contracts have an unexpired portion of
one year or more and subjecting them to the peculiar disadvantage of having their monetary
awards limited to their salaries for 3 months or for the unexpired portion thereof, whichever is
less, but all the while sparing the other category from such prejudice, simply because the latter's
unexpired contracts fall short of one year.
Among OFWs With Employment Contracts of More Than One Year
Upon closer examination of the terminology employed in the subject clause, the Court now has
misgivings on the accuracy of the Marsaman interpretation.
The Court notes that the subject clause "or for three (3) months for every year of the unexpired
term, whichever is less" contains the qualifying phrases "every year" and "unexpired term." By its
ordinary meaning, the word "term" means a limited or definite extent of time. 105 Corollarily, that
"every year" is but part of an "unexpired term" is significant in many ways: first, the unexpired
term must be at least one year, for if it were any shorter, there would be no occasion for such
unexpired term to be measured by every year; and second, the original term must be more than
one year, for otherwise, whatever would be the unexpired term thereof will not reach even a
year. Consequently, the more decisive factor in the determination of when the subject clause "for
three (3) months forevery year of the unexpired term, whichever is less" shall apply is not the
length of the original contract period as held in Marsaman,106 but the length of the unexpired
portion of the contract period -- the subject clause applies in cases when the unexpired portion
of the contract period is at least one year, which arithmetically requires that the original contract
period be more than one year.
Viewed in that light, the subject clause creates a sub-layer of discrimination among OFWs
whose contract periods are for more than one year: those who are illegally dismissed with less
than one year left in their contracts shall be entitled to their salaries for the entire unexpired
portion thereof, while those who are illegally dismissed with one year or more remaining in their
contracts shall be covered by the subject clause, and their monetary benefits limited to their
salaries for three months only.

To concretely illustrate the application of the foregoing interpretation of the subject clause, the
Court assumes hypothetical OFW-C and OFW-D, who each have a 24-month contract at a
salary rate of US$1,000.00 per month. OFW-C is illegally dismissed on the 12th month, and
OFW-D, on the 13th month. Considering that there is at least 12 months remaining in the
contract period of OFW-C, the subject clause applies to the computation of the latter's monetary
benefits. Thus, OFW-C will be entitled, not to US$12,000,00 or the latter's total salaries for the
12 months unexpired portion of the contract, but to the lesser amount of US$3,000.00 or the
latter's salaries for 3 months out of the 12-month unexpired term of the contract. On the other
hand, OFW-D is spared from the effects of the subject clause, for there are only 11 months left
in the latter's contract period. Thus, OFW-D will be entitled to US$11,000.00, which is equivalent
to his/her total salaries for the entire 11-month unexpired portion.
OFWs vis--vis Local
With Fixed-Period Employment

Workers

As discussed earlier, prior to R.A. No. 8042, a uniform system of computation of the monetary
awards of illegally dismissed OFWs was in place. This uniform system was applicable even to
local workers with fixed-term employment.107
The earliest rule prescribing a uniform system of computation was actually Article 299 of the
Code of Commerce (1888),108 to wit:
Article 299. If the contracts between the merchants and their shop clerks and employees should
have been made of a fixed period, none of the contracting parties, without the consent of the
other, may withdraw from the fulfillment of said contract until the termination of the period agreed
upon.
Persons violating this clause shall be subject to indemnify the loss and damage suffered, with
the exception of the provisions contained in the following articles.
In Reyes v. The Compaia Maritima,109 the Court applied the foregoing provision to determine
the liability of a shipping company for the illegal discharge of its managers prior to the expiration
of their fixed-term employment. The Court therein held the shipping company liable for the
salaries of its managers for the remainder of their fixed-term employment.
There is a more specific rule as far as seafarers are concerned: Article 605 of the Code of
Commerce which provides:
Article 605. If the contracts of the captain and members of the crew with the agent should be for
a definite period or voyage, they cannot be discharged until the fulfillment of their contracts,
except for reasons of insubordination in serious matters, robbery, theft, habitual drunkenness,
and damage caused to the vessel or to its cargo by malice or manifest or proven negligence.
Article 605 was applied to Madrigal Shipping Company, Inc. v. Ogilvie,110 in
which the Court held the shipping company liable for the salaries and subsistence allowance of
its illegally dismissed employees for the entire unexpired portion of their employment contracts.
While Article 605 has remained good law up to the present, 111 Article 299 of the Code of
Commerce was replaced by Art. 1586 of the Civil Code of 1889, to wit:

Article 1586. Field hands, mechanics, artisans, and other laborers hired for a certain time and for
a certain work cannot leave or be dismissed without sufficient cause, before the fulfillment of the
contract. (Emphasis supplied.)
Citing Manresa, the Court in Lemoine v. Alkan112 read the disjunctive "or" in Article 1586 as a
conjunctive "and" so as to apply the provision to local workers who are employed for a time
certain although for no particular skill. This interpretation of Article 1586 was reiterated in Garcia
Palomar v. Hotel de France Company.113 And in both Lemoine and Palomar, the Court adopted
the general principle that in actions for wrongful discharge founded on Article 1586, local
workers are entitled to recover damages to the extent of the amount stipulated to be paid to
them by the terms of their contract. On the computation of the amount of such damages, the
Court in Aldaz v. Gay114 held:
The doctrine is well-established in American jurisprudence, and nothing has been brought to our
attention to the contrary under Spanish jurisprudence, that when an employee is wrongfully
discharged it is his duty to seek other employment of the same kind in the same community, for
the purpose of reducing the damages resulting from such wrongful discharge. However, while
this is the general rule, the burden of showing that he failed to make an effort to secure other
employment of a like nature, and that other employment of a like nature was obtainable, is upon
the defendant. When an employee is wrongfully discharged under a contract of employment his
prima facie damage is the amount which he would be entitled to had he continued in such
employment until the termination of the period. (Howard vs. Daly, 61 N. Y., 362; Allen vs.
Whitlark, 99 Mich., 492; Farrell vs. School District No. 2, 98 Mich., 43.)115(Emphasis supplied)
On August 30, 1950, the New Civil Code took effect with new provisions on fixed-term
employment: Section 2 (Obligations with a Period), Chapter 3, Title I, and Sections 2 (Contract
of Labor) and 3 (Contract for a Piece of Work), Chapter 3, Title VIII, Book IV. 116 Much like Article
1586 of the Civil Code of 1889, the new provisions of the Civil Code do not expressly provide for
the remedies available to a fixed-term worker who is illegally discharged. However, it is noted
that in Mackay Radio & Telegraph Co., Inc. v. Rich, 117 the Court carried over the principles on
the payment of damages underlying Article 1586 of the Civil Code of 1889 and applied the same
to a case involving the illegal discharge of a local worker whose fixed-period employment
contract was entered into in 1952, when the new Civil Code was already in effect. 118
More significantly, the same principles were applied to cases involving overseas Filipino workers
whose fixed-term employment contracts were illegally terminated, such as in First Asian Trans &
Shipping Agency, Inc. v. Ople,119involving seafarers who were illegally discharged. In Teknika
Skills and Trade Services, Inc. v. National Labor Relations Commission,120 an OFW who was
illegally dismissed prior to the expiration of her fixed-period employment contract as a baby
sitter, was awarded salaries corresponding to the unexpired portion of her contract. The Court
arrived at the same ruling in Anderson v. National Labor Relations Commission, 121 which
involved a foreman hired in 1988 in Saudi Arabia for a fixed term of two years, but who was
illegally dismissed after only nine months on the job -- the Court awarded him salaries
corresponding to 15 months, the unexpired portion of his contract. In Asia World Recruitment,
Inc. v. National Labor Relations Commission,122 a Filipino working as a security officer in 1989 in
Angola was awarded his salaries for the remaining period of his 12-month contract after he was
wrongfully discharged. Finally, in Vinta Maritime Co., Inc. v. National Labor Relations
Commission,123 an OFW whose 12-month contract was illegally cut short in the second month
was declared entitled to his salaries for the remaining 10 months of his contract.
In sum, prior to R.A. No. 8042, OFWs and local workers with fixed-term employment who were
illegally discharged were treated alike in terms of the computation of their money claims: they
were uniformly entitled to their salaries for the entire unexpired portions of their contracts. But
with the enactment of R.A. No. 8042, specifically the adoption of the subject clause, illegally
dismissed OFWs with an unexpired portion of one year or more in their employment contract

have since been differently treated in that their money claims are subject to a 3-month cap,
whereas no such limitation is imposed on local workers with fixed-term employment.
The Court concludes that the subject clause contains a suspect classification in that, in
the computation of the monetary benefits of fixed-term employees who are illegally
discharged, it imposes a 3-month cap on the claim of OFWs with an unexpired portion of
one year or more in their contracts, but none on the claims of other OFWs or local
workers with fixed-term employment. The subject clause singles out one classification of
OFWs and burdens it with a peculiar disadvantage.
There being a suspect classification involving a vulnerable sector protected by the Constitution,
the Court now subjects the classification to a strict judicial scrutiny, and determines whether it
serves a compelling state interest through the least restrictive means.
What constitutes compelling state interest is measured by the scale of rights and powers arrayed
in the Constitution and calibrated by history.124 It is akin to the paramount interest of the
state125 for which some individual liberties must give way, such as the public interest in
safeguarding health or maintaining medical standards,126 or in maintaining access to information
on matters of public concern.127
In the present case, the Court dug deep into the records but found no compelling state interest
that the subject clause may possibly serve.
The OSG defends the subject clause as a police power measure "designed to protect the
employment of Filipino seafarers overseas x x x. By limiting the liability to three months [sic],
Filipino seafarers have better chance of getting hired by foreign employers." The limitation also
protects the interest of local placement agencies, which otherwise may be made to shoulder
millions of pesos in "termination pay."128
The OSG explained further:
Often, placement agencies, their liability being solidary, shoulder the payment of money claims
in the event that jurisdiction over the foreign employer is not acquired by the court or if the
foreign employer reneges on its obligation. Hence, placement agencies that are in good faith
and which fulfill their obligations are unnecessarily penalized for the acts of the foreign employer.
To protect them and to promote their continued helpful contribution in deploying Filipino migrant
workers, liability for money are reduced under Section 10 of RA 8042.
This measure redounds to the benefit of the migrant workers whose welfare the government
seeks to promote. The survival of legitimate placement agencies helps [assure] the government
that migrant workers are properly deployed and are employed under decent and humane
conditions.129 (Emphasis supplied)
However, nowhere in the Comment or Memorandum does the OSG cite the source of its
perception of the state interest sought to be served by the subject clause.
The OSG locates the purpose of R.A. No. 8042 in the speech of Rep. Bonifacio Gallego in
sponsorship of House Bill No. 14314 (HB 14314), from which the law originated; 130 but the
speech makes no reference to the underlying reason for the adoption of the subject clause. That
is only natural for none of the 29 provisions in HB 14314 resembles the subject clause.
On the other hand, Senate Bill No. 2077 (SB 2077) contains a provision on money claims, to wit:

Sec. 10. Money Claims. - Notwithstanding any provision of law to the contrary, the Labor
Arbiters of the National Labor Relations Commission (NLRC) shall have the original and
exclusive jurisdiction to hear and decide, within ninety (90) calendar days after the filing of the
complaint, the claims arising out of an employer-employee relationship or by virtue of the
complaint, the claim arising out of an employer-employee relationship or by virtue of any law or
contract involving Filipino workers for overseas employment including claims for actual, moral,
exemplary and other forms of damages.
The liability of the principal and the recruitment/placement agency or any and all claims under
this Section shall be joint and several.

another sector, especially when the favored sector is composed of private businesses such as
placement agencies, while the disadvantaged sector is composed of OFWs whose protection no
less than the Constitution commands. The idea that private business interest can be elevated to
the level of a compelling state interest is odious.
Moreover, even if the purpose of the subject clause is to lessen the solidary liability of placement
agencies vis-a-vistheir foreign principals, there are mechanisms already in place that can be
employed to achieve that purpose without infringing on the constitutional rights of OFWs.

Any compromise/amicable settlement or voluntary agreement on any money claims exclusive of

damages under this Section shall not be less than fifty percent (50%) of such money
claims: Provided, That any installment payments, if applicable, to satisfy any such compromise
or voluntary settlement shall not be more than two (2) months. Any compromise/voluntary
agreement in violation of this paragraph shall be null and void.

The POEA Rules and Regulations Governing the Recruitment and Employment of Land-Based
Overseas Workers, dated February 4, 2002, imposes administrative disciplinary measures on
erring foreign employers who default on their contractual obligations to migrant workers and/or
their Philippine agents. These disciplinary measures range from temporary disqualification to
preventive suspension. The POEA Rules and Regulations Governing the Recruitment and
Employment of Seafarers, dated May 23, 2003, contains similar administrative disciplinary
measures against erring foreign employers.

Non-compliance with the mandatory period for resolutions of cases provided under this Section
shall subject the responsible officials to any or all of the following penalties:

Resort to these administrative measures is undoubtedly the less restrictive means of aiding local
placement agencies in enforcing the solidary liability of their foreign principals.

(1) The salary of any such official who fails to render his decision or resolution within
the prescribed period shall be, or caused to be, withheld until the said official complies
therewith;

Thus, the subject clause in the 5th paragraph of Section 10 of R.A. No. 8042 is violative of the
right of petitioner and other OFWs to equal protection.1avvphi1

(2) Suspension for not more than ninety (90) days; or

(3) Dismissal from the service with disqualification to hold any appointive public office
for five (5) years.
Provided, however, That the penalties herein provided shall be without prejudice to any liability
which any such official may have incurred under other existing laws or rules and regulations as a
consequence of violating the provisions of this paragraph.
But significantly, Section 10 of SB 2077 does not provide for any rule on the computation of
money claims.
A rule on the computation of money claims containing the subject clause was inserted and
eventually adopted as the 5th paragraph of Section 10 of R.A. No. 8042. The Court examined
the rationale of the subject clause in the transcripts of the "Bicameral Conference Committee
(Conference Committee) Meetings on the Magna Carta on OCWs (Disagreeing Provisions of
Senate Bill No. 2077 and House Bill No. 14314)." However, the Court finds no discernible state
interest, let alone a compelling one, that is sought to be protected or advanced by the adoption
of the subject clause.
In fine, the Government has failed to discharge its burden of proving the existence of a
compelling state interest that would justify the perpetuation of the discrimination against OFWs
under the subject clause.
Assuming that, as advanced by the OSG, the purpose of the subject clause is to protect the
employment of OFWs by mitigating the solidary liability of placement agencies, such callous and
cavalier rationale will have to be rejected. There can never be a justification for any form of
government action that alleviates the burden of one sector, but imposes the same burden on

Further, there would be certain misgivings if one is to approach the declaration of the
unconstitutionality of the subject clause from the lone perspective that the clause directly violates
state policy on labor under Section 3,131Article XIII of the Constitution.
While all the provisions of the 1987 Constitution are presumed self-executing,132 there are some
which this Court has declared not judicially enforceable, Article XIII being one,133 particularly
Section 3 thereof, the nature of which, this Court, in Agabon v. National Labor Relations
Commission,134 has described to be not self-actuating:
Thus, the constitutional mandates of protection to labor and security of tenure may be deemed
as self-executing in the sense that these are automatically acknowledged and observed without
need for any enabling legislation. However, to declare that the constitutional provisions are
enough to guarantee the full exercise of the rights embodied therein, and the realization of ideals
therein expressed, would be impractical, if not unrealistic. The espousal of such view presents
the dangerous tendency of being overbroad and exaggerated. The guarantees of "full protection
to labor" and "security of tenure", when examined in isolation, are facially unqualified, and the
broadest interpretation possible suggests a blanket shield in favor of labor against any form of
removal regardless of circumstance. This interpretation implies an unimpeachable right to
continued employment-a utopian notion, doubtless-but still hardly within the contemplation of the
framers. Subsequent legislation is still needed to define the parameters of these guaranteed
rights to ensure the protection and promotion, not only the rights of the labor sector, but of the
employers' as well. Without specific and pertinent legislation, judicial bodies will be at a loss,
formulating their own conclusion to approximate at least the aims of the Constitution.
Ultimately, therefore, Section 3 of Article XIII cannot, on its own, be a source of a positive
enforceable rightto stave off the dismissal of an employee for just cause owing to the failure to
serve proper notice or hearing. As manifested by several framers of the 1987 Constitution, the
provisions on social justice require legislative enactments for their enforceability. 135 (Emphasis
added)

Thus, Section 3, Article XIII cannot be treated as a principal source of direct enforceable rights,
for the violation of which the questioned clause may be declared unconstitutional. It may
unwittingly risk opening the floodgates of litigation to every worker or union over every
conceivable violation of so broad a concept as social justice for labor.

Contract of Seafarers, in which salary is understood as the basic wage, exclusive of overtime,
leave pay and other bonuses; whereas overtime pay is compensation for all work "performed" in
excess of the regular eight hours, and holiday pay is compensation for any work "performed" on
designated rest days and holidays.

It must be stressed that Section 3, Article XIII does not directly bestow on the working class any
actual enforceable right, but merely clothes it with the status of a sector for whom the
Constitution urges protection through executive or legislative action and judicial recognition. Its
utility is best limited to being an impetus not just for the executive and legislative departments,
but for the judiciary as well, to protect the welfare of the working class. And it was in fact
consistent with that constitutional agenda that the Court in Central Bank (now Bangko Sentral ng
Pilipinas) Employee Association, Inc. v. Bangko Sentral ng Pilipinas, penned by then Associate
Justice now Chief Justice Reynato S. Puno, formulated the judicial precept that when the
challenge to a statute is premised on the perpetuation of prejudice against persons favored by
the Constitution with special protection -- such as the working class or a section thereof -- the
Court may recognize the existence of a suspect classification and subject the same to strict
judicial scrutiny.

By the foregoing definition alone, there is no basis for the automatic inclusion of overtime and
holiday pay in the computation of petitioner's monetary award, unless there is evidence that he
performed work during those periods. As the Court held in Centennial Transmarine, Inc. v. Dela
Cruz,138

The view that the concepts of suspect classification and strict judicial scrutiny formulated
in Central Bank Employee Association exaggerate the significance of Section 3, Article XIII is a
groundless apprehension. Central Bank applied Article XIII in conjunction with the equal
protection clause. Article XIII, by itself, without the application of the equal protection clause, has
no life or force of its own as elucidated in Agabon.
Along the same line of reasoning, the Court further holds that the subject clause violates
petitioner's right to substantive due process, for it deprives him of property, consisting of
monetary benefits, without any existing valid governmental purpose.136
The argument of the Solicitor General, that the actual purpose of the subject clause of limiting
the entitlement of OFWs to their three-month salary in case of illegal dismissal, is to give them a
better chance of getting hired by foreign employers. This is plain speculation. As earlier
discussed, there is nothing in the text of the law or the records of the deliberations leading to its
enactment or the pleadings of respondent that would indicate that there is an existing
governmental purpose for the subject clause, or even just a pretext of one.
The subject clause does not state or imply any definitive governmental purpose; and it is for that
precise reason that the clause violates not just petitioner's right to equal protection, but also her
right to substantive due process under Section 1,137 Article III of the Constitution.
The subject clause being unconstitutional, petitioner is entitled to his salaries for the entire
unexpired period of nine months and 23 days of his employment contract, pursuant to law and
jurisprudence prior to the enactment of R.A. No. 8042.

However, the payment of overtime pay and leave pay should be disallowed in light of our ruling
in Cagampan v. National Labor Relations Commission, to wit:
The rendition of overtime work and the submission of sufficient proof that said was actually
performed are conditions to be satisfied before a seaman could be entitled to overtime pay
which should be computed on the basis of 30% of the basic monthly salary. In short, the contract
provision guarantees the right to overtime pay but the entitlement to such benefit must first be
established.
In the same vein, the claim for the day's leave pay for the unexpired portion of the contract is
unwarranted since the same is given during the actual service of the seamen.
WHEREFORE, the Court GRANTS the Petition. The subject clause "or for three months for
every year of the unexpired term, whichever is less" in the 5th paragraph of Section 10 of
Republic Act No. 8042 is DECLAREDUNCONSTITUTIONAL; and the December 8, 2004
Decision and April 1, 2005 Resolution of the Court of Appeals are MODIFIED to the effect that
petitioner is AWARDED his salaries for the entire unexpired portion of his employment contract
consisting of nine months and 23 days computed at the rate of US$1,400.00 per month.
No costs.
SO ORDERED.

9.

G.R. No. 170139

SAMEER OVERSEAS PLACEMENT AGENCY, INC., Petitioner,

vs.
JOY C. CABILES, Respondent.

On the Third Issue

Petitioner contends that his overtime and leave pay should form part of the salary basis in the
computation of his monetary award, because these are fixed benefits that have been stipulated
into his contract.

August 5, 2014

DECISION
LEONEN, J.:

Petitioner is mistaken.

This case involves an overseas Filipino worker with shattered dreams. It is our duty, given the
facts and the law, to approximate justice for her.

The word salaries in Section 10(5) does not include overtime and leave pay. For seafarers like
petitioner, DOLE Department Order No. 33, series 1996, provides a Standard Employment

We are asked to decide a petition for review1 on certiorari assailing the Court of Appeals
decision2 dated June 27, 2005. This decision partially affirmed the National Labor

RelationsCommissions resolution dated March 31, 2004, 3declaring respondents dismissal

illegal, directing petitioner to pay respondents three-month salary equivalent to New Taiwan
Dollar (NT$) 46,080.00, and ordering it to reimburse the NT$3,000.00 withheld from respondent,
and pay her NT$300.00 attorneys fees.4
Petitioner, Sameer Overseas Placement Agency, Inc., is a recruitment and placement
agency.5 Responding to an ad it published, respondent, Joy C. Cabiles, submitted her
application for a quality control job in Taiwan.6
Joys application was accepted.7 Joy was later asked to sign a oneyear employment contract for
a monthly salary of NT$15,360.00.8 She alleged that Sameer Overseas Agency required her to
pay a placement fee of P70,000.00 when she signed the employment contract.9
Joy was deployed to work for TaiwanWacoal, Co. Ltd. (Wacoal) on June 26, 1997. 10 She alleged
that in her employment contract, she agreed to work as quality control for one year. 11 In Taiwan,
she was asked to work as a cutter.12
Sameer Overseas Placement Agencyclaims that on July 14, 1997, a certain Mr. Huwang from
Wacoal informedJoy, without prior notice, that she was terminated and that "she should
immediately report to their office to get her salary and passport." 13 She was asked to "prepare
for immediate repatriation."14
Joy claims that she was told that from June 26 to July 14, 1997, she only earned a total of
NT$9,000.15 According to her, Wacoal deducted NT$3,000 to cover her plane ticket to Manila. 16
17

On October 15, 1997, Joy filed a complaint with the National Labor Relations Commission
against petitioner and Wacoal. She claimed that she was illegally dismissed. 18 She asked for the
return of her placement fee, the withheld amount for repatriation costs, payment of her salary for
23 months as well as moral and exemplary damages. 19 She identified Wacoal as Sameer
Overseas Placement Agencys foreign principal.20
Sameer Overseas Placement Agency alleged that respondent's termination was due to her
inefficiency, negligence in her duties, and her "failure to comply with the work requirements [of]
her foreign [employer]."21 The agency also claimed that it did not ask for a placement fee
of P70,000.00.22 As evidence, it showedOfficial Receipt No. 14860 dated June 10, 1997, bearing
the amount of P20,360.00.23 Petitioner added that Wacoal's accreditation with petitioner had
already been transferred to the Pacific Manpower & Management Services, Inc. (Pacific) as of
August 6, 1997.24 Thus, petitioner asserts that it was already substituted by Pacific Manpower.25
Pacific Manpower moved for the dismissal of petitioners claims against it. 26 It alleged that there
was no employer-employee relationship between them.27 Therefore, the claims against it were
outside the jurisdiction of the Labor Arbiter.28 Pacific Manpower argued that the employment
contract should first be presented so that the employers contractual obligations might be
identified.29 It further denied that it assumed liability for petitioners illegal acts. 30
On July 29, 1998, the Labor Arbiter dismissed Joys complaint. 31 Acting Executive Labor Arbiter
Pedro C.Ramos ruled that her complaint was based on mereallegations.32 The Labor Arbiter
found that there was no excess payment of placement fees, based on the official receipt
presented by petitioner.33 The Labor Arbiter found unnecessary a discussion on petitioners
transfer of obligations to Pacific34 and considered the matter immaterial in view of the dismissal
of respondents complaint.35

In a resolution37 dated March 31, 2004, the National Labor Relations Commission declared that
Joy was illegally dismissed.38 It reiterated the doctrine that the burden of proof to show that the
dismissal was based on a just or valid cause belongs to the employer. 39 It found that Sameer
Overseas Placement Agency failed to prove that there were just causes for termination.40 There
was no sufficient proofto show that respondent was inefficient in her work and that she failed to
comply with company requirements.41 Furthermore, procedural dueprocess was not observed in
terminating respondent.42
The National Labor Relations Commission did not rule on the issue of reimbursement of
placement fees for lack of jurisdiction.43 It refused to entertain the issue of the alleged transfer of
obligations to Pacific.44 It did not acquire jurisdiction over that issue because Sameer Overseas
Placement Agency failed to appeal the Labor Arbiters decision not to rule on the matter. 45
The National Labor Relations Commission awarded respondent only three (3) months worth of
salaryin the amount of NT$46,080, the reimbursement of the NT$3,000 withheld from her, and
attorneys fees of NT$300.46
The Commission denied the agencys motion for reconsideration47 dated May 12, 2004 through
a resolution48 dated July 2, 2004.
Aggrieved by the ruling, Sameer Overseas Placement Agency caused the filing of a petition49 for
certiorari with the Court of Appeals assailing the National Labor Relations Commissions
resolutions dated March 31, 2004 and July 2, 2004.
The Court of Appeals50 affirmed the decision of the National Labor Relations Commission with
respect to the finding of illegal dismissal, Joys entitlement to the equivalent of three months
worth of salary, reimbursement of withheld repatriation expense, and attorneys fees.51 The
Court of Appeals remanded the case to the National Labor Relations Commission to address the
validity of petitioner's allegations against Pacific.52 The Court of Appeals held, thus: Although the
public respondent found the dismissal of the complainant-respondent illegal, we should point out
that the NLRC merely awarded her three (3) months backwages or the amount of
NT$46,080.00, which was based upon its finding that she was dismissed without due process, a
finding that we uphold, given petitioners lack of worthwhile discussion upon the same in the
proceedings below or before us. Likewise we sustain NLRCs finding in regard to the
reimbursement of her fare, which is squarely based on the law; as well as the award of
attorneys fees.
But we do find it necessary to remand the instant case to the public respondent for further
proceedings, for the purpose of addressing the validity or propriety of petitioners third-party
complaint against the transferee agent or the Pacific Manpower & Management Services, Inc.
and Lea G. Manabat. We should emphasize that as far as the decision of the NLRC on the
claims of Joy Cabiles, is concerned, the same is hereby affirmed with finality, and we hold
petitioner liable thereon, but without prejudice to further hearings on its third party complaint
against Pacific for reimbursement.
WHEREFORE, premises considered, the assailed Resolutions are hereby partly AFFIRMED in
accordance with the foregoing discussion, but subject to the caveat embodied inthe last
sentence. No costs.
SO ORDERED.53
Dissatisfied, Sameer Overseas Placement Agency filed this petition.54

36

Joy appealed to the National Labor Relations Commission.

We are asked to determine whether the Court of Appeals erred when it affirmed the ruling of the
National Labor Relations Commission finding respondent illegally dismissed and awarding her
three months worth of salary, the reimbursement of the cost ofher repatriation, and attorneys
fees despite the alleged existence of just causes of termination.
Petitioner reiterates that there was just cause for termination because there was a finding of
Wacoal that respondent was inefficient in her work.55

case was perfected here in the Philippines. Therefore, the Labor Code, its implementing rules
and regulations, and other laws affecting labor apply in this case.Furthermore, settled is the rule
that the courts of the forum will not enforce any foreign claim obnoxious to the forums public
policy. Herein the Philippines, employment agreements are more than contractual in nature. The
Constitution itself, in Article XIII, Section 3, guarantees the special protection of workers, to wit:
The State shall afford full protection to labor, local and overseas, organized and unorganized,
and promote full employment and equality of employment opportunities for all.

Therefore, it claims that respondents dismissal was valid.56

Petitioner also reiterates that since Wacoals accreditation was validly transferred to Pacific at
the time respondent filed her complaint, it should be Pacific that should now assume
responsibility for Wacoals contractual obligations to the workers originally recruited by
petitioner.57
Sameer Overseas Placement Agencyspetition is without merit. We find for respondent.
I
Sameer Overseas Placement Agency failed to show that there was just cause for causing Joys
dismissal. The employer, Wacoal, also failed to accord her due process of law.
Indeed, employers have the prerogative to impose productivity and quality standards at
work.58 They may also impose reasonable rules to ensure that the employees comply with these
standards.59 Failure to comply may be a just cause for their dismissal. 60 Certainly, employers
cannot be compelled to retain the services of anemployee who is guilty of acts that are inimical
to the interest of the employer.61 While the law acknowledges the plight and vulnerability of
workers, it does not "authorize the oppression or self-destruction of the
employer."62 Management prerogative is recognized in law and in our jurisprudence.
This prerogative, however, should not be abused. It is "tempered with the employees right to
security of tenure."63Workers are entitled to substantive and procedural due process before
termination. They may not be removed from employment without a validor just cause as
determined by law and without going through the proper procedure.
Security of tenure for labor is guaranteed by our Constitution. 64
Employees are not stripped of their security of tenure when they move to work in a different
jurisdiction. With respect to the rights of overseas Filipino workers, we follow the principle of lex
loci contractus.Thus, in Triple Eight Integrated Services, Inc. v. NLRC,65 this court noted:
Petitioner likewise attempts to sidestep the medical certificate requirement by contending that
since Osdana was working in Saudi Arabia, her employment was subject to the laws of the host
country. Apparently, petitioner hopes tomake it appear that the labor laws of Saudi Arabia do not
require any certification by a competent public health authority in the dismissal of employees due
to illness.
Again, petitioners argument is without merit.
First, established is the rule that lex loci contractus (the law of the place where the contract is
made) governs in this jurisdiction. There is no question that the contract of employment in this

It shall guarantee the rights of all workers to selforganization, collective bargaining and
negotiations, and peaceful concerted activities, including the right to strike in accordance with
law. They shall be entitled to security of tenure, humane conditions of work, and a living wage.
Theyshall also participate in policy and decision-making processes affecting their rights and
benefits as may be provided by law.
....
This public policy should be borne in mind in this case because to allow foreign employers to
determine for and by themselves whether an overseas contract worker may be dismissed on the
ground of illness would encourage illegal or arbitrary pretermination of employment
contracts.66 (Emphasis supplied, citation omitted)
Even with respect to fundamental procedural rights, this court emphasized in PCL Shipping
Philippines, Inc. v. NLRC,67 to wit:
Petitioners admit that they did notinform private respondent in writing of the charges against him
and that they failed to conduct a formal investigation to give him opportunity to air his side.
However, petitioners contend that the twin requirements ofnotice and hearing applies strictly only
when the employment is within the Philippines and that these need not be strictly observed in
cases of international maritime or overseas employment.
The Court does not agree. The provisions of the Constitution as well as the Labor Code which
afford protection to labor apply to Filipino employees whether working within the Philippines or
abroad. Moreover, the principle of lex loci contractus (the law of the place where the contract is
made) governs in this jurisdiction. In the present case, it is not disputed that the Contract of
Employment entered into by and between petitioners and private respondent was executed here
in the Philippines with the approval of the Philippine Overseas Employment Administration
(POEA). Hence, the Labor Code together with its implementing rules and regulations and other
laws affecting labor apply in this case.68 (Emphasis supplied, citations omitted)
By our laws, overseas Filipino workers (OFWs) may only be terminated for a just or authorized
cause and after compliance with procedural due process requirements.
Article 282 of the Labor Code enumerates the just causes of termination by the employer. Thus:
Art. 282. Termination by employer. An employer may terminate an employment for any of the
following causes:
(a) Serious misconduct or willful disobedience by the employee of the lawful orders of
his employer or representative in connection with his work;
(b) Gross and habitual neglect by the employee of his duties;

(c) Fraud or willful breach by the employee of the trust reposed in him by his employer
or duly authorized representative;

standards that would govern ones employment "if [these are] to discharge in good faith [their]
duty to adjudicate."73

(d) Commission of a crime or offense by the employee against the person of his
employer or any immediate member of his family or his duly authorized
representatives; and

In this case, petitioner merely alleged that respondent failed to comply with her foreign
employers work requirements and was inefficient in her work.74 No evidence was shown to
support such allegations. Petitioner did not even bother to specify what requirements were not
met, what efficiency standards were violated, or what particular acts of respondent constituted
inefficiency.

(e) Other causes analogous to the foregoing.

Petitioners allegation that respondentwas inefficient in her work and negligent in her
duties69 may, therefore, constitute a just cause for termination under Article 282(b), but only if
petitioner was able to prove it.
The burden of proving that there is just cause for termination is on the employer. "The employer
must affirmatively show rationally adequate evidence that the dismissal was for a justifiable
cause."70 Failure to show that there was valid or just cause for termination would necessarily
mean that the dismissal was illegal.71
To show that dismissal resulting from inefficiency in work is valid, it must be shown that: 1) the
employer has set standards of conduct and workmanship against which the employee will be
judged; 2) the standards of conduct and workmanship must have been communicated tothe
employee; and 3) the communication was made at a reasonable time prior to the employees
performance assessment.
This is similar to the law and jurisprudence on probationary employees, which allow termination
ofthe employee only when there is "just cause or when [the probationary employee] fails to
qualify as a regular employee in accordance with reasonable standards made known by the
employer to the employee at the time of his [or her] engagement."72
However, we do not see why the application of that ruling should be limited to probationary
employment. That rule is basic to the idea of security of tenure and due process, which are
guaranteed to all employees, whether their employment is probationary or regular.
The pre-determined standards that the employer sets are the bases for determining the
probationary employees fitness, propriety, efficiency, and qualifications as a regular employee.
Due process requires that the probationary employee be informed of such standards at the time
of his or her engagement so he or she can adjusthis or her character or workmanship
accordingly. Proper adjustment to fit the standards upon which the employees qualifications will
be evaluated will increase ones chances of being positively assessed for regularization by his or
her employer.
Assessing an employees work performance does not stop after regularization. The employer, on
a regular basis, determines if an employee is still qualified and efficient, based on work
standards. Based on that determination, and after complying with the due process requirements
of notice and hearing, the employer may exercise its management prerogative of terminating the
employee found unqualified.
The regular employee must constantlyattempt to prove to his or her employer that he or she
meets all the standards for employment. This time, however, the standards to be met are set for
the purpose of retaining employment or promotion. The employee cannot be expected to meet
any standard of character or workmanship if such standards were not communicated to him or
her. Courts should remain vigilant on allegations of the employers failure to communicatework

There was also no showing that respondent was sufficiently informed of the standards against
which her work efficiency and performance were judged. The parties conflict as to the position
held by respondent showed that even the matter as basic as the job title was not clear.
The bare allegations of petitioner are not sufficient to support a claim that there is just cause for
termination. There is no proof that respondent was legally terminated.
Petitioner
failed
the due process requirements

to

comply

with

Respondents dismissal less than one year from hiring and her repatriation on the same day
show not onlyfailure on the partof petitioner to comply with the requirement of the existence of
just cause for termination. They patently show that the employersdid not comply with the due
process requirement.
A valid dismissal requires both a valid cause and adherence to the valid procedure of
dismissal.75 The employer is required to give the charged employee at least two written notices
before termination.76 One of the written notices must inform the employee of the particular acts
that may cause his or her dismissal.77 The other notice must "[inform] the employee of the
employers decision."78 Aside from the notice requirement, the employee must also be given "an
opportunity to be heard."79
Petitioner failed to comply with the twin notices and hearing requirements. Respondent started
working on June 26, 1997. She was told that she was terminated on July 14, 1997 effective on
the same day and barely a month from her first workday. She was also repatriated on the same
day that she was informed of her termination. The abruptness of the termination negated any
finding that she was properly notified and given the opportunity to be heard. Her constitutional
right to due process of law was violated.
II
Respondent Joy Cabiles, having been illegally dismissed, is entitled to her salary for the
unexpired portion ofthe employment contract that was violated together with attorneys fees and
reimbursement of amounts withheld from her salary.
Section 10 of Republic Act No. 8042,otherwise known as the Migrant Workers and Overseas
Filipinos Act of1995, states thatoverseas workers who were terminated without just, valid, or
authorized cause "shall be entitled to the full reimbursement of his placement fee with interest of
twelve (12%) per annum, plus his salaries for the unexpired portion of his employment contract
or for three (3) months for every year of the unexpired term, whichever is less."
Sec. 10. MONEY CLAIMS. Notwithstanding any provision of law to the contrary, the Labor
Arbiters of the National Labor Relations Commission (NLRC) shall have the original and

exclusive jurisdiction to hear and decide, within ninety (90) calendar days after filing of the
complaint, the claims arising out of an employer-employee relationship or by virtue of any law or
contract involving Filipino workers for overseas deployment including claims for actual, moral,
exemplary and other forms of damages.
The liability of the principal/employer and the recruitment/placement agency for any and all
claims under this section shall be joint and several. This provisions [sic] shall be incorporated in
the contract for overseas employment and shall be a condition precedent for its approval. The
performance bond to be filed by the recruitment/placementagency, as provided by law, shall be
answerable for all money claims or damages that may be awarded to the workers. If the
recruitment/placement agency is a juridical being, the corporate officers and directors and
partners as the case may be, shall themselves be jointly and solidarily liable with the corporation
orpartnership for the aforesaid claims and damages.
Such liabilities shall continue during the entire period or duration of the employment contract and
shall not be affected by any substitution, amendment or modification made locally or in a foreign
country of the said contract.
Any compromise/amicable settlement or voluntary agreement on money claims inclusive of
damages under this section shall be paid within four (4) months from the approval of the
settlement by the appropriate authority.
In case of termination of overseas employment without just, valid or authorized cause as defined
by law or contract, the workers shall be entitled to the full reimbursement of his placement fee
with interest of twelve (12%) per annum, plus his salaries for the unexpired portion of his
employment contract or for three (3) months for every year of the unexpired term, whichever is
less.
....
(Emphasis supplied)
Section 15 of Republic Act No. 8042 states that "repatriation of the worker and the transport of
his [or her] personal belongings shall be the primary responsibility of the agency which recruited
or deployed the worker overseas." The exception is when "termination of employment is due
solely to the fault of the worker,"80 which as we have established, is not the case. It reads: SEC.
15. REPATRIATION OF WORKERS; EMERGENCY REPATRIATION FUND. The repatriation
of the worker and the transport of his personal belongings shall be the primary responsibility of
the agency which recruited or deployed the worker overseas. All costs attendant to repatriation
shall be borne by or charged to the agency concerned and/or its principal. Likewise, the
repatriation of remains and transport of the personal belongings of a deceased worker and all
costs attendant thereto shall be borne by the principal and/or local agency. However, in cases
where the termination of employment is due solely to the fault of the worker, the
principal/employer or agency shall not in any manner be responsible for the repatriation of the
former and/or his belongings.
....
The Labor Code81 also entitles the employee to 10% of the amount of withheld wages as
attorneys feeswhen the withholding is unlawful.
The Court of Appeals affirmedthe National Labor Relations Commissions decision to award
respondent NT$46,080.00 or the threemonth equivalent of her salary, attorneys fees of

NT$300.00, and the reimbursement of the withheld NT$3,000.00 salary, which answered for her
repatriation.
We uphold the finding that respondent is entitled to all of these awards. The award of the threemonth equivalent of respondents salary should, however, be increased to the amount equivalent
to the unexpired term of the employment contract.
In Serrano v. Gallant Maritime Services, Inc. and Marlow Navigation Co., Inc., 82 this court ruled
that the clause "or for three (3) months for every year of the unexpired term, whichever is
less"83 is unconstitutional for violating the equal protection clause and substantive due process. 84
A statute or provision which was declared unconstitutional is not a law. It "confers no rights; it
imposes no duties; it affords no protection; it creates no office; it is inoperative as if it has not
been passed at all."85
We are aware that the clause "or for three (3) months for every year of the unexpired term,
whichever is less"was reinstated in Republic Act No. 8042 upon promulgation of Republic Act
No. 10022 in 2010. Section 7 of Republic Act No. 10022 provides:
Section 7.Section 10 of Republic Act No. 8042, as amended, is hereby amended to read as
follows:
SEC. 10. Money Claims. Notwithstanding any provision of law to the contrary, the Labor
Arbiters of the National Labor Relations Commission (NLRC) shall have the original and
exclusive jurisdiction to hear and decide, within ninety (90) calendar days after the filing of the
complaint, the claims arising out of an employer-employee relationship or by virtue of any law or
contract involving Filipino workers for overseas deployment including claims for actual, moral,
exemplary and other forms of damage. Consistent with this mandate, the NLRC shall endeavor
to update and keep abreast with the developments in the global services industry.
The liability of the principal/employer and the recruitment/placement agency for any and all
claims under this section shall be joint and several. This provision shall be incorporated in the
contract for overseas employment and shall be a condition precedent for its approval. The
performance bond to de [sic] filed by the recruitment/placement agency, as provided by law,
shall be answerable for all money claims or damages that may be awarded to the workers. If the
recruitment/placement agency is a juridical being, the corporate officers and directors and
partners as the case may be, shall themselves be jointly and solidarily liable with the corporation
or partnership for the aforesaid claims and damages.
Such liabilities shall continue during the entire period or duration of the employment contract and
shall not be affected by any substitution, amendment or modification made locally or in a foreign
country of the said contract.
Any compromise/amicable settlement or voluntary agreement on money claims inclusive of
damages under this section shall be paid within thirty (30) days from approval of the settlement
by the appropriate authority.
In case of termination of overseas employment without just, valid or authorized cause as defined
by law or contract, or any unauthorized deductions from the migrant workers salary, the worker
shall be entitled to the full reimbursement if [sic] his placement fee and the deductions made with
interest at twelve percent (12%) per annum, plus his salaries for the unexpired portion of his
employment contract or for three (3) months for every year of the unexpired term, whichever is
less.

In case of a final and executory judgement against a foreign employer/principal, it shall be

automatically disqualified, without further proceedings, from participating in the Philippine
Overseas Employment Program and from recruiting and hiring Filipino workers until and unless it
fully satisfies the judgement award.

Thus, when a law or a provision of law is null because it is inconsistent with the Constitution,the
nullity cannot be cured by reincorporation or reenactment of the same or a similar law or
provision. A law or provision of law that was already declared unconstitutional remains as such
unless circumstances have sochanged as to warrant a reverse conclusion.

Noncompliance with the mandatory periods for resolutions of case providedunder this section
shall subject the responsible officials to any or all of the following penalties:

We are not convinced by the pleadings submitted by the parties that the situation has so
changed so as to cause us to reverse binding precedent.

(a) The salary of any such official who fails to render his decision or resolution within
the prescribed period shall be, or caused to be, withheld until the said official complies
therewith;

(c) Dismissal from the service with disqualification to hold any appointive public office
for five (5) years.

Likewise, there are special reasons of judicial efficiency and economy that attend to these
cases. The new law puts our overseas workers in the same vulnerable position as they were
prior to Serrano. Failure to reiterate the very ratio decidendi of that case will result in the same
untold economic hardships that our reading of the Constitution intended to avoid. Obviously, we
cannot countenance added expenses for further litigation thatwill reduce their hardearned wages
as well as add to the indignity of having been deprived of the protection of our laws simply
because our precedents have not been followed. There is no constitutional doctrine that causes
injustice in the face of empty procedural niceties. Constitutional interpretation is complex, but it is
never unreasonable.

Provided, however,That the penalties herein provided shall be without prejudice to any liability
which any such official may have incured [sic] under other existing laws or rules and regulations
as a consequence of violating the provisions of this paragraph. (Emphasis supplied)

Thus, in a resolution88 dated October 22, 2013, we ordered the parties and the Office of the
Solicitor General to comment on the constitutionality of the reinstated clause in Republic Act No.
10022.

Republic Act No. 10022 was promulgated on March 8, 2010. This means that the reinstatement
of the clause in Republic Act No. 8042 was not yet in effect at the time of respondents
termination from work in 1997.86 Republic Act No. 8042 before it was amended byRepublic Act
No. 10022 governs this case.

In its comment,89 petitioner argued that the clause was constitutional. 90 The legislators intended
a balance between the employers and the employees rights by not unduly burdening the local
recruitment agency.91 Petitioner is also of the view that the clause was already declared as
constitutional in Serrano.92

When a law is passed, this court awaits an actual case that clearly raises adversarial positions in
their proper context before considering a prayer to declare it as unconstitutional.

The Office of the Solicitor General also argued that the clause was valid and
constitutional.93 However, since the parties never raised the issue of the constitutionality of the
clause asreinstated in Republic Act No. 10022, its contention is that it is beyond judicial review.94

(b) Suspension for not more than ninety (90) days; or

However, we are confronted with a unique situation. The law passed incorporates the exact
clause already declared as unconstitutional, without any perceived substantial change in the
circumstances.
This may cause confusion on the part of the National Labor Relations Commission and the Court
of Appeals.At minimum, the existence of Republic Act No. 10022 may delay the execution of the
judgment in this case, further frustrating remedies to assuage the wrong done to petitioner.

On the other hand, respondentargued that the clause was unconstitutional because it infringed
on workers right to contract.95
We observe that the reinstated clause, this time as provided in Republic Act. No. 10022, violates
the constitutional rights to equal protection and due process.96 Petitioner as well as the Solicitor
General have failed to show any compelling changein the circumstances that would warrant us
to revisit the precedent.

Hence, there is a necessity to decide this constitutional issue.

Moreover, this court is possessed with the constitutional duty to "[p]romulgate rules concerning
the protection and enforcement of constitutional rights." 87 When cases become mootand
academic, we do not hesitate to provide for guidance to bench and bar in situations where the
same violations are capable of repetition but will evade review. This is analogous to cases where
there are millions of Filipinos working abroad who are bound to suffer from the lack of protection
because of the restoration of an identical clause in a provision previously declared as
unconstitutional.
In the hierarchy of laws, the Constitution is supreme. No branch or office of the government may
exercise its powers in any manner inconsistent with the Constitution, regardless of the existence
of any law that supports such exercise. The Constitution cannot be trumped by any other law. All
laws must be read in light of the Constitution. Any law that is inconsistent with it is a nullity.

We reiterate our finding in Serrano v. Gallant Maritime that limiting wages that should be
recovered by anillegally dismissed overseas worker to three months is both a violation of due
process and the equal protection clauses of the Constitution.
Equal protection of the law is a guarantee that persons under like circumstances and falling
within the same class are treated alike, in terms of "privileges conferred and liabilities
enforced."97 It is a guarantee against "undue favor and individual or class privilege, as well as
hostile discrimination or the oppression of inequality."98
In creating laws, the legislature has the power "to make distinctions and classifications." 99
In exercising such power, it has a wide discretion.100

The equal protection clause does not infringe on this legislative power. 101 A law is void on this
basis, only if classifications are made arbitrarily. 102 There is no violation of the equal protection
clause if the law applies equally to persons within the same class and if there are reasonable
grounds for distinguishing between those falling within the class and those who do not fall within
the class.103 A law that does not violate the equal protection clause prescribesa reasonable
classification.104
A reasonable classification "(1) must rest on substantial distinctions; (2) must be germane to the
purposes of the law; (3) must not be limited to existing conditions only; and (4) must apply
equally to all members of the same class."105
The reinstated clause does not satisfy the requirement of reasonable classification.
In Serrano, we identified the classifications made by the reinstated clause. It distinguished
between fixed-period overseas workers and fixedperiod local workers. 106 It also distinguished
between overseas workers with employment contracts of less than one year and overseas
workers with employment contracts of at least one year. 107 Within the class of overseas workers
with at least one-year employment contracts, there was a distinction between those with at least
a year left in their contracts and those with less than a year left in their contracts when they were
illegally dismissed.108
The Congress classification may be subjected to judicial review. In Serrano, there is a
"legislative classification which impermissibly interferes with the exercise of a fundamental right
or operates to the peculiar disadvantage of a suspect class."109
Under the Constitution, labor is afforded special protection. 110 Thus, this court in Serrano,
"[i]mbued with the same sense of obligation to afford protection to labor, . . . employ[ed] the
standard of strict judicial scrutiny, for it perceive[d] in the subject clause a suspect classification
prejudicial to OFWs."111
We also noted in Serranothat before the passage of Republic Act No. 8042, the money claims of
illegally terminated overseas and local workers with fixed-term employment werecomputed in the
same manner.112 Their money claims were computed based onthe "unexpired portions of their
contracts."113 The adoption of the reinstated clause in Republic Act No. 8042 subjected the
money claims of illegally dismissed overseas workers with an unexpired term of at least a year
to a cap of three months worth of their salary. 114 There was no such limitation on the money
claims of illegally terminated local workers with fixed-term employment.115
We observed that illegally dismissed overseas workers whose employment contracts had a term
of less than one year were granted the amount equivalent to the unexpired portion of their
employment contracts.116 Meanwhile, illegally dismissed overseas workers with employment
terms of at least a year were granted a cap equivalent to three months of their salary for the
unexpired portions of their contracts.117
Observing the terminologies used inthe clause, we also found that "the subject clause creates a
sub-layer of discrimination among OFWs whose contract periods are for more than one year:
those who are illegally dismissed with less than one year left in their contracts shall be entitled to
their salaries for the entire unexpired portion thereof, while those who are illegally dismissed with
one year or more remaining in their contracts shall be covered by the reinstated clause, and their
monetary benefits limited to their salaries for three months only."118
We do not need strict scrutiny to conclude that these classifications do not rest on any real or
substantial distinctions that would justify different treatments in terms of the computation of
money claims resulting from illegal termination.

Overseas workers regardless of their classifications are entitled to security of tenure, at least for
the period agreed upon in their contracts. This means that they cannot be dismissed before the
end of their contract terms without due process. If they were illegally dismissed, the workers
right to security of tenure is violated.
The rights violated when, say, a fixed-period local worker is illegally terminated are neither
greater than norless than the rights violated when a fixed-period overseas worker is illegally
terminated. It is state policy to protect the rights of workers withoutqualification as to the place of
employment.119 In both cases, the workers are deprived of their expected salary, which they
could have earned had they not been illegally dismissed. For both workers, this deprivation
translates to economic insecurity and disparity.120 The same is true for the distinctions between
overseas workers with an employment contract of less than one year and overseas workers with
at least one year of employment contract, and between overseas workers with at least a year left
in their contracts and overseas workers with less than a year left in their contracts when they
were illegally dismissed.
For this reason, we cannot subscribe to the argument that "[overseas workers] are contractual
employeeswho can never acquire regular employment status, unlike local workers" 121 because it
already justifies differentiated treatment in terms ofthe computation of money claims. 122
Likewise, the jurisdictional and enforcement issues on overseas workers money claims do not
justify a differentiated treatment in the computation of their money claims. 123 If anything, these
issues justify an equal, if not greater protection and assistance to overseas workers who
generally are more prone to exploitation given their physical distance from our government.
We also find that the classificationsare not relevant to the purpose of the law, which is to
"establish a higher standard of protection and promotion of the welfare of migrant workers, their
families and overseas Filipinos in distress, and for other purposes." 124 Further, we find specious
the argument that reducing the liability of placement agencies "redounds to the benefit of the
[overseas] workers."125
Putting a cap on the money claims of certain overseas workers does not increase the standard
of protection afforded to them. On the other hand, foreign employers are more incentivizedby the
reinstated clause to enter into contracts of at least a year because it gives them more flexibility
to violate our overseas workers rights. Their liability for arbitrarily terminating overseas workers
is decreased at the expense of the workers whose rights they violated. Meanwhile, these
overseas workers who are impressed with an expectation of a stable job overseas for the longer
contract period disregard other opportunities only to be terminated earlier. They are left with
claims that are less than what others in the same situation would receive. The reinstated clause,
therefore, creates a situation where the law meant to protect them makes violation of rights
easier and simply benign to the violator.
As Justice Brion said in his concurring opinion in Serrano:
Section 10 of R.A. No. 8042 affects these well-laid rules and measures, and in fact provides a
hidden twist affecting the principal/employers liability. While intended as an incentive accruing to
recruitment/manning agencies, the law, as worded, simply limits the OFWs recovery in
wrongfuldismissal situations. Thus, it redounds to the benefit of whoever may be liable, including
the principal/employer the direct employer primarily liable for the wrongful dismissal. In this
sense, Section 10 read as a grant of incentives to recruitment/manning agencies oversteps
what it aims to do by effectively limiting what is otherwise the full liability of the foreign
principals/employers. Section 10, in short, really operates to benefit the wrong party and allows
that party, without justifiable reason, to mitigate its liability for wrongful dismissals. Because of
this hidden twist, the limitation ofliability under Section 10 cannot be an "appropriate" incentive,

to borrow the term that R.A. No. 8042 itself uses to describe the incentive it envisions under its
purpose clause.
What worsens the situation is the chosen mode of granting the incentive: instead of a grant that,
to encourage greater efforts at recruitment, is directly related to extra efforts undertaken, the law
simply limits their liability for the wrongful dismissals of already deployed OFWs. This is
effectively a legally-imposed partial condonation of their liability to OFWs, justified solely by the
laws intent to encourage greater deployment efforts. Thus, the incentive,from a more practical
and realistic view, is really part of a scheme to sell Filipino overseas labor at a bargain for
purposes solely of attracting the market. . . .
The so-called incentive is rendered particularly odious by its effect on the OFWs the benefits
accruing to the recruitment/manning agencies and their principals are takenfrom the pockets of
the OFWs to whom the full salaries for the unexpired portion of the contract rightfully belong.
Thus, the principals/employers and the recruitment/manning agencies even profit from their
violation of the security of tenure that an employment contract embodies. Conversely, lesser
protection is afforded the OFW, not only because of the lessened recovery afforded him or her
by operation of law, but also because this same lessened recovery renders a wrongful dismissal
easier and less onerous to undertake; the lesser cost of dismissing a Filipino will always bea
consideration a foreign employer will take into account in termination of employment decisions. .
. .126
Further, "[t]here can never be a justification for any form of government action that alleviates the
burden of one sector, but imposes the same burden on another sector, especially when the
favored sector is composed of private businesses suchas placement agencies, while the
disadvantaged sector is composed ofOFWs whose protection no less than the Constitution
commands. The idea thatprivate business interest can be elevated to the level of a compelling
state interest is odious."127
Along the same line, we held that the reinstated clause violates due process rights. It is arbitrary
as it deprives overseas workers of their monetary claims without any discernable valid
purpose.128
Respondent Joy Cabiles is entitled to her salary for the unexpired portion of her contract, in
accordance with Section 10 of Republic Act No. 8042. The award of the three-month
equivalence of respondents salary must be modified accordingly. Since she started working on
June 26, 1997 and was terminated on July 14, 1997, respondent is entitled to her salary from
July 15, 1997 to June 25, 1998. "To rule otherwise would be iniquitous to petitioner and other
OFWs, and would,in effect, send a wrong signal that principals/employers and
recruitment/manning agencies may violate an OFWs security of tenure which an employment
contract embodies and actually profit from such violation based on an unconstitutional provision
of law."129
III
On the interest rate, the Bangko Sentral ng Pilipinas Circular No. 799 of June 21, 2013, which
revised the interest rate for loan or forbearance from 12% to 6% in the absence of
stipulation,applies in this case. The pertinent portions of Circular No. 799, Series of 2013, read:
The Monetary Board, in its Resolution No. 796 dated 16 May 2013, approved the following
revisions governing the rate of interest in the absence of stipulation in loan contracts, thereby
amending Section 2 of Circular No. 905, Series of 1982:

Section 1. The rate of interest for the loan or forbearance of any money, goods or credits and the
rate allowed in judgments, in the absence of an express contract as to such rateof interest, shall
be six percent (6%) per annum.
Section 2. In view of the above, Subsection X305.1 of the Manual of Regulations for Banks and
Sections 4305Q.1, 4305S.3 and 4303P.1 of the Manual of Regulations for Non-Bank Financial
Institutions are hereby amended accordingly.
This Circular shall take effect on 1 July 2013.
Through the able ponencia of Justice Diosdado Peralta, we laid down the guidelines in
computing legal interest in Nacar v. Gallery Frames:130
II. With regard particularly to an award of interest in the concept of actual and compensatory
damages, the rate of interest, as well as the accrual thereof, is imposed, as follows:
1. When the obligation is breached, and it consists in the payment of a sum of money,
i.e., a loan or forbearance of money, the interest due should be that which may have
been stipulated in writing. Furthermore, the interest due shall itself earn legal interest
from the time it is judicially demanded. In the absence of stipulation, the rate of
interest shall be 6% per annum to be computed from default, i.e., from judicial or
extrajudicial demand under and subject to the provisions of Article 1169 of the Civil
Code.
2. When an obligation, not constituting a loan or forbearance of money, is breached,
an interest on the amount of damages awarded may be imposed at the discretion of
the court at the rate of 6% per annum. No interest, however, shall be adjudged on
unliquidated claims or damages, except when or until the demand can be established
with reasonable certainty. Accordingly, where the demand is established with
reasonable certainty, the interest shall begin to run from the time the claim is made
judicially or extrajudicially (Art. 1169, Civil Code), but when such certainty cannot be
so reasonably established at the time the demand is made, the interest shall begin to
run only from the date the judgment of the court is made (at which time the
quantification of damages may be deemed to have been reasonably ascertained). The
actual base for the computation of legal interest shall, in any case, be on the amount
finally adjudged. 3. When the judgment of the court awarding a sum of money
becomes final and executory, the rate of legal interest, whether the case falls under
paragraph 1 or paragraph 2, above, shall be 6% per annum from such finality until its
satisfaction, this interim period being deemed to be by then an equivalent to a
forbearance of credit.
And, in addition to the above, judgments that have become final and executory prior to July 1,
2013, shall not be disturbed and shall continue to be implemented applying the rate of interest
fixed therein.131
Circular No. 799 is applicable only in loans and forbearance of money, goods, or credits, and in
judgments when there is no stipulation on the applicable interest rate. Further, it is only
applicable if the judgment did not become final and executory before July 1, 2013. 132
We add that Circular No. 799 is not applicable when there is a law that states otherwise. While
the Bangko Sentral ng Pilipinas has the power to set or limit interest rates, 133 these interest rates
do not apply when the law provides that a different interest rate shall be applied. "[A] Central
Bank Circular cannot repeal a law. Only a law can repeal another law."134

For example, Section 10 of Republic Act No. 8042 provides that unlawfully terminated overseas
workers are entitled to the reimbursement of his or her placement fee with an interest of 12% per
annum. Since Bangko Sentral ng Pilipinas circulars cannotrepeal Republic Act No. 8042, the
issuance of Circular No. 799 does not have the effect of changing the interest on awards for
reimbursement of placement fees from 12% to 6%. This is despite Section 1 of Circular No. 799,
which provides that the 6% interest rate applies even to judgments.
Moreover, laws are deemed incorporated in contracts. "The contracting parties need not repeat
them. They do not even have to be referred to. Every contract, thus, contains not only what has
been explicitly stipulated, but the statutory provisions that have any bearing on the
matter."135 There is, therefore, an implied stipulation in contracts between the placement agency
and the overseasworker that in case the overseas worker is adjudged as entitled to
reimbursement of his or her placement fees, the amount shall be subject to a 12% interest per
annum. This implied stipulation has the effect of removing awards for reimbursement of
placement fees from Circular No. 799s coverage.
The same cannot be said for awardsof salary for the unexpired portion of the employment
contract under Republic Act No. 8042. These awards are covered by Circular No. 799 because
the law does not provide for a specific interest rate that should apply.
In sum, if judgment did not become final and executory before July 1, 2013 and there was no
stipulation in the contract providing for a different interest rate, other money claims under
Section 10 of Republic Act No. 8042 shall be subject to the 6% interest per annum in
accordance with Circular No. 799.
This means that respondent is also entitled to an interest of 6% per annum on her money claims
from the finality of this judgment.

The provision on joint and several liability in the Migrant Workers and Overseas Filipinos Act of
1995 assures overseas workers that their rights will not be frustrated with these complications.
The fundamental effect of joint and several liability is that "each of the debtors is liable for the
entire obligation."138 A final determination may, therefore, be achieved even if only oneof the joint
and several debtors are impleaded in an action. Hence, in the case of overseas employment,
either the local agency or the foreign employer may be sued for all claims arising from the
foreign employers labor law violations. This way, the overseas workers are assured that
someone the foreign employers local agent may be made to answer for violationsthat the
foreign employer may have committed.
The Migrant Workers and Overseas Filipinos Act of 1995 ensures that overseas workers have
recourse in law despite the circumstances of their employment. By providing that the liability of
the foreign employer may be "enforced to the full extent" 139 against the local agent,the overseas
worker is assured of immediate and sufficientpayment of what is due them. 140
Corollary to the assurance of immediate recourse in law, the provision on joint and several
liability in the Migrant Workers and Overseas Filipinos Act of 1995 shifts the burden of going
after the foreign employer from the overseas worker to the local employment agency. However,
it must be emphasized that the local agency that is held to answer for the overseas workers
money claims is not leftwithout remedy. The law does not preclude it from going after the foreign
employer for reimbursement of whatever payment it has made to the employee to answer for the
money claims against the foreign employer.
A further implication of making localagencies jointly and severally liable with the foreign
employer is thatan additional layer of protection is afforded to overseas workers. Local agencies,
which are businesses by nature, are inoculated with interest in being always on the lookout
against foreign employers that tend to violate labor law. Lest they risk their reputation or
finances, local agenciesmust already have mechanisms for guarding against unscrupulous
foreign employers even at the level prior to overseas employment applications.

IV
Finally, we clarify the liabilities ofWacoal as principal and petitioner as the employment agency
that facilitated respondents overseas employment.
Section 10 of the Migrant Workers and Overseas Filipinos Act of 1995 provides that the foreign
employer and the local employment agency are jointly and severally liable for money claims
including claims arising out of an employer-employee relationship and/or damages. This section
also provides that the performance bond filed by the local agency shall be answerable for such
money claims or damages if they were awarded to the employee.
This provision is in line with the states policy of affording protection to labor and alleviating
workers plight.136
In overseas employment, the filing of money claims against the foreign employer is attended by
practical and legal complications.1wphi1 The distance of the foreign employer alonemakes it
difficult for an overseas worker to reach it and make it liable for violations of the Labor Code.
There are also possible conflict of laws, jurisdictional issues, and procedural rules that may be
raised to frustrate an overseas workersattempt to advance his or her claims.
It may be argued, for instance, that the foreign employer must be impleaded in the complaint as
an indispensable party without which no final determination can be had of an action. 137

With the present state of the pleadings, it is not possible to determine whether there was indeed
a transfer of obligations from petitioner to Pacific. This should not be an obstacle for the
respondent overseas worker to proceed with the enforcement of this judgment. Petitioner is
possessed with the resources to determine the proper legal remedies to enforce its rights
against Pacific, if any.
V
Many times, this court has spoken on what Filipinos may encounter as they travel into the
farthest and mostdifficult reaches of our planet to provide for their families. In Prieto v. NLRC: 141
The Court is not unaware of the many abuses suffered by our overseas workers in the foreign
land where they have ventured, usually with heavy hearts, in pursuit of a more fulfilling future.
Breach of contract, maltreatment, rape, insufficient nourishment, sub-human lodgings, insults
and other forms of debasement, are only a few of the inhumane acts towhich they are subjected
by their foreign employers, who probably feel they can do as they please in their own country.
Whilethese workers may indeed have relatively little defense against exploitation while they are
abroad, that disadvantage must not continue to burden them when they return to their own
territory to voice their muted complaint. There is no reason why, in their very own land, the
protection of our own laws cannot be extended to them in full measure for the redress of their
grievances.142
But it seems that we have not said enough.

We face a diaspora of Filipinos. Their travails and their heroism can be told a million times over;
each of their stories as real as any other. Overseas Filipino workers brave alien cultures and the
heartbreak of families left behind daily. They would count the minutes, hours, days, months, and
years yearning to see their sons and daughters. We all know of the joy and sadness when they
come home to see them all grown up and, being so, they remember what their work has cost
them. Twitter accounts, Facetime, and many other gadgets and online applications will never
substitute for their lost physical presence.
Unknown to them, they keep our economy afloat through the ebb and flow of political and
economic crises. They are our true diplomats, they who show the world the resilience, patience,
and creativity of our people. Indeed, we are a people who contribute much to the provision of
material creations of this world.
This government loses its soul if we fail to ensure decent treatment for all Filipinos. We default
by limiting the contractual wages that should be paid to our workers when their contracts are
breached by the foreign employers. While we sit, this court will ensure that our laws will reward
our overseas workers with what they deserve: their dignity.
Inevitably, their dignity is ours as weil.
WHEREFORE, the petition is DENIED. The decision of the Court of Appeals is AFFIRMED with
modification. Petitioner Sameer Overseas Placement Agency is ORDERED to pay respondent
Joy C. Cabiles the amount equivalent to her salary for the unexpired portion of her employment
contract at an interest of 6% per annum from the finality of this judgment. Petitioner is also
ORDERED to reimburse respondent the withheld NT$3,000.00 salary and pay respondent
attorney's fees of NT$300.00 at an interest of 6% per annum from the finality of this judgment.
The clause, "or for three (3) months for every year of the unexpired term, whichever is less" in
Section 7 of Republic Act No. 10022 amending Section 10 of Republic Act No. 8042 is declared
unconstitutional and, therefore, null and void.

II, Book II of the Rules and Regulations of the Philippine Overseas Employment Administration
(POEA), Pan Pacific posted a surety bond issued by petitioner Finman General Assurance
Corporation ("Finman") and was granted a license to operate by the POEA.
Private respondents William Inocencio, Perfecto Palero, Jr., Edwin Cardones and one Edwin
Hernandez filed with the POEA separate complaints against Pan Pacific for violation of Articles
32 and 34 (a) of the Labor Code, as amended and for refund of placement fees paid to Pan
Pacific. The complainants alleged that Pan Pacific charged and collected such fees from them
but did not secure employment for them.
Acting on the complaints, the POEA Administrator motu proprio impleaded petitioner Finman as
party respondent in its capacity as surety for Pan Pacific. Separate summonses were served
upon Finman and Pan Pacific. The return of the summons served on Pan Pacific at its official
address registered in the POEA records, showed that Pan Pacific had moved out therefrom; no
prior notice of transfer or change of address was furnished by Pan Pacific to the POEA as
required under POEA rules. The POEA considered that constructive service of the complaints
had been effected upon Pan Pacific and proceeded accordingly.
For its part, petitioner Finman filed an answer denying liability and pleading, by way of special
and affirmative defenses, that: (1) the POEA had no "jurisdiction over surety bonds," that
jurisdiction being vested in the Insurance Commission or the regular courts; (2) it (Finman) had
not violated Articles 32 and 34 (a) of the Labor Code and complainants' claims had accrued
during the suspension of the principal obligor, Pan Pacific; (3) complainants had no cause of
action against Finman, since it was not privy to the transactions between them and Pan Pacific
and had not received any moneys from them; and (4) the amounts claimed by complainants had
been paid by them as deposits and not as placement fees.
A hearing was held by the POEA on 14 April 1988, at which time complainants presented their
evidence. Petitioner Finman, though notified of this hearing, did not appear.
On 30 May 1989, the POEA Administrator issued an Order which, in its dispositive portion, said:

SO ORDERED.
WHEREFORE, premises considered, respondents are hereby ordered to
pay jointly and severally complainants' claims as follows:

10. G.R. No. 90273-75 November 15, 1989

FINMAN GENERAL ASSURANCE CORP., petitioner,
vs.
WILLIAM INOCENCIO, ET AL. AND EDWIN CARDONES, THE ADMINISTRATOR,
PHILIPPINE OVERSEAS AND EMPLOYMENT ADMINISTRATION, THE SECRETARY OF
LABOR AND EMPLOYMENT, respondents.
David I. Unay, Jr. for petitioner.
RESOLUTION
FELICIANO, J.:
Pan Pacific Overseas Recruiting Services, Inc. ("Pan Pacific") is a private, fee-charging,
recruitment and employment agency. T in accordance with the requirements of Section 4, Rule

1. William Inocencio P6,000 .00

2. Perfecto Palero, Sr. P5,500 .00
3. Edwin Cardones P2,000 .00
Respondent agency is ordered to release Cardones' passport, the expenses
or obtaining the same of which (sic) shall be deducted from the amount of
P2,000.00 as it appears that it was respondent agency who applied for the
processing thereof. The claim of Edwin Hernandez is dismissed without
prejudice.
For the established violations respondent agency is hereby imposed a
penalty fine in the amount of P60,000.00. Further, the ban earlier imposed
upon it is herein reiterated.
SO ORDERED.

Petitioner Finman went on appeal to the Secretary of Labor insisting that: (1) the POEA had no
authority to implead petitioner as party respondent in the proceedings before the POEA; and that
(2) the POEA had no authority to enforce directly the surety bond against petitioner. In an Order
dated 3 August 1989, the Secretary of Labor upheld the POEA Order appealed from and denied
the appeal for lack of merit.
Petitioner Finman now comes before this Court on a Petition for certiorari with prayer for
preliminary injunction or temporary restraining order, raising much the same issues it had
already ventilated before the POEA and the Secretary of Labor. It is contended once again by
petitioner Finman that the POEA had no authority to implead petitioner in the proceedings
commenced by private respondents: and that the POEA was not authorized to require, in those
same proceedings, petitioner to pay private respondents' claims for refund against Pan Pacific
on the basis of the surety bond issued by petitioner.
Petitioner's contentions are interrelated and will be dealt with together. They are, however, quite
bereft of merit and must be rejected.
Petitioner cannot seriously dispute the direct and solidary nature of its obligations under its own
surety bond. Under Section 176 of the Insurance Code, as amended, the liability of a surety in a
surety bond is joint and several with the principal obligor. Petitioner's bond was posted by Pan
Pacific in compliance with the requirements of Article 31 of the Labor Code, which states that
Art. 31. Bonds. All applicants for license or authority shall post such cash
and surety bonds as determined by the Secretary of Labor to guarantee
compliance with prescribed recruitment procedures, rules and regulations,
and terms and, conditions of employment as appropriate.
The Secretary of Labor shall have the exclusive power to determine, decide,
order or direct payment from, or application of, the cash and surety bond for
any claim or injury covered and guaranteed by the bonds. (Emphasis
supplied).
The tenor and scope of petitioner Finman's obligations under the bond it issued are set out in
broad ranging terms by Section 4, Rule II, Book I of the POEA Rules and Regulations:
Section 4. Payment of Fees and Posting of Bonds. Upon approval of the
application by the Minister, the applicant shall pay an annual license fee of
P6,000.00. It shall also post a cash bond of P100,000.00 and a surety
bond of P150,000.00 from a bonding company acceptable to the
Administration duly accredited by the Office of the Insurance Commission.
The bonds shall answer forall valid and legal claims arising from violations
of the conditions for the grant and use of the license or authority and
contracts of employment. The bonds shall likewise guarantee compliance
with the provisions of the Labor Code and its implementing rules and
regulations relating to recruitment and placement, the rules of the
Administration and relevant issuances of the Ministry and all liabilities which
the Administration may impose. The surety bonds shall include the condition
that notice of garnishment to the principal is notice to the
surety. 1 (Emphasis supplied).
While petitioner Finman has refrained from attaching a copy of the bond it had issued to its
Petition for Certiorari, there can be no question that the conditions of the Finman surety bond
Pan Pacific had posted with the POEA include the italicized portions of Section 4, Rule 11, Book
I quoted above. It is settled doctrine that the conditions of a bond specified and required in the

provisions of the statute or regulation providing for the submission of the bond, are incorporated
or built into all bonds tendered under that statute or regulation, even though not there set out in
printer's ink. 2
In the case at bar, the POEA held, and the Secretary of Labor affirmed, that Pan Pacific had
violated Article 32 of the Labor Code, as amended
Article 32. Fees to be paid by workers. Any person applying with a
private fee charging employment agency for employment assistance shall
not be charged any fee until he has obtained employment through its efforts
or has actually commenced employment. Such fee shall be always covered
with the approved receipt clearly showing the amount paid. The Secretary of
Labor shall promulgate a schedule of allowable fees. (Emphasis supplied).
as well as Article 34 (a) of the same Code:
Article 34. Prohibited practices. It shall be unlawful for any individual,
entity, licensee, or holder of authority:
(a) To charge or accept, directly or indirectly, any amount than that specified
in the schedule of allowable fees prescribed by the Secretary of Labor, or to
make a worker pay any amount greater than actually received by him as a
loan or advance. (Emphasis supplied)
There is, hence, no question that, both under the Labor Code 3 and the POEA Rules and
Regulations, 4 Pan Pacific had violated at least one of the conditions for the grant and continued
use of the recruitment license granted to it. There can, similarly, be no question that the POEA
Administrator and the Secretary of Labor are authorized to require Pan Pacific to refund the
placement fees it had charged private respondents without securing employment for them and to
impose the fine of P60,000.00 upon Pan Pacific. Article 36 of the Labor Code authorizes the
Secretary of Labor "to restrict and regulate" the recruitment and placement activities of agencies
like Pan Pacific and "to issue orders and promulgate rules and regulations to carry out the
objectives and implement the provisions of [Title I on "Recruitment and Placement of Workers],"
including of course, Article 32 on "Fees to be paid by workers," quoted earlier. Upon the other
hand, Section 13 of Rule VI, Book I of the POEA Rules and Regulations expressly authorize the
POEA Administrator or the Secretary of Labor to impose fines "in addition to or in lieu of the
penalties of suspension or cancellation" of the violator recruitment agency's license.
If Pan Pacific is liable to private respondents for the refunds claimed by them and to the POEA
for the fine of P60,000.00, and if petitioner Finman is solidarily liable with Pan Pacific under the
operative terms of the bond, it must follow that Finman is liable both to the private respondents
and to the POEA. Petitioner Finman asserts, however, that the POEA had no authority to
implead it in the proceedings against Pan Pacific.
We are not persuaded by this assertion. Clearly, petitioner Finman is a party-in-interest in,
certainly a proper party to, the proceedings private respondents had initiated against Pan Pacific
the principal obligor. Since Pan Pacific had thoughtfully refrained from notifying the POEA of its
new address and from responding to the complaints, petitioner Finman may well I be regarded
as an indispensable party to the proceedings before the POEA. Whether Finman was an
indepensable or merely a proper party to the proceedings, we believe and so hold that the
POEA could properly implead it as party respondent either upon the request of the private
respondents or, as it happened, motu propio. Such is the situation under the Revised Rules of
Court 5 and the application thereof, directly or by analogy, by the POEA can certainly not be
regarded as arbitrary, oppressive or capricious.

The fundamental argument of Finman is that its liability under its own bond must be determined
and enforced, not by the POEA or the Secretary of Labor, but rather by the Insurance
Commission or by the regular courts. Once more, we are not moved by petitioner's argument.
There appears nothing so special or unique about the determination of a surety's liability under
its bond as to restrict that determination to the Office of the Insurance Commissioner and to the
regular courts of justice exclusively. The exact opposite is strongly stressed by the second
paragraph of Article 31 of the Labor Code:
Art. 31. Bonds. ... ...
The secretary of Labor shall have the exclusive power to determine, decide,
order or direct payment from, or application of, the cash or surety bond for
any claim or injury covered and guaranteed by the bonds. (Emphasis
supplied)
We believe and so hold that to compel the POEA and private respondents the beneficiaries of
Finman's bond-to go to the Insurance Commissioner or to a regular court of law to enforce that
bond, would be to collide with the public policy which requires prompt resolution of claims
against private recruitment and placement agencies. The Court will take judicial notice of the
appealing frequency with which some, perhaps many, of such agencies have cheated workers
avid for overseas employment by, e.g., collecting placement fees without securing employment
for them at all, extracting exorbitant fees or "kickbacks" from those for whom employment is
actually obtained, abandoning hapless and unlettered workers to exploitative foreign principals,
and so on. Cash and surety bonds are required by the POEA and its predecessor agencies from
recruitment and employment companies precisely as a means of ensuring prompt and effective
recourse against such companies when held liable for applicants or workers' claims. Clearly that
public policy will be effectively negated if POEA and the Department of Labor and Employment
were held powerless to compel a surety company to make good on its solidary undertaking in
the same quasi-judicial proceeding where the liability of the principal obligor, the recruitment or
employment agency, is determined and fixed and where the surety is given reasonable
opportunity to present any defenses it or the principal obligor may be entitled to set up. Petitioner
surety whose liability to private respondents and the POEA is neither more nor less than that of
Pan Pacific, is not entitled to another or different procedure for determination or fixing of that
liability than that which Pan Pacific is entitled and subject to.

NARVASA, J.:
In connection with the application with the Philippine Overseas Employment Administration
(POEA) of J & B Manpower Specialist, Inc. for a license to engage in business as a recruitment
agency, a surety bond was filed on January 2, 1985 by the applicant and the Eastern Assurance
and Surety Corporation, herein petitioner, in virtue of which they both held themselves
. . . firmly bound unto (said) Philippine Overseas Employment
Administration, Ministry of Labor in the penal sum of PESOS ONE
HUNDRED FIFTY THOUSAND ONLY . . . (Pl50,000.00) for the payment of
which will and truly to be made, . . . (they bound themselves, their) heirs,
executors, administrators, successors and assigns, jointly and severally . .
The bond stipulated that:
a) it was "conditioned upon the true and faithful performance and observance of the . . . principal
(J & B Manpower Specialist, Inc.) of its duties and obligations in accordance with all the rules
and regulations promulgated by the Ministry of Labor Philippine Overseas Employment
Administration and with the terms and conditions stipulated in the License;
b) the liability of the . . . Surety (petitioner) shall in no case exceed the sum of PESOS ONE
HUNDRED FIFTY THOUSAND (P150,000.00) ONLY, PHILIPPINE CURRENCY; 1
c) notice to the Principal is also a notice to the Surety; and
d) LIABILITY of the surety . . . shall expire on JANUARY 02, 1986 and this bond shall be
automatically cancelled ten (10) days after its expiration and the surety shall not be liable for any
claim not discovered and presented to it in writing within said period of . . . from expiration and
the obligee hereby expressly waives the rights to file any court action against the Surety after
termination of said period of . . . . above cited. 2
As narrated by respondent Secretary of Labor, the facts are as follows:

WHEREFORE, the Petition for certiorari with prayer for preliminary injunction or temporary
restraining order is hereby DISMISSED for lack of merit. Costs against petitioner. This
Resolution is immediately executory.

From June 1983 to December 1985 . . . thirty three (33) . . . (persons)

applied for overseas employment with . . . (J & B). In consideration of
promised deployment, complainants paid respondent various amounts for
various fees. Most of' the receipts issued were sighed by Mrs. Baby
Bundalian, Executive Vice-President of . . . (J & B).

11. G.R. No. L-79436-50 January 17, 1990

Because of non-deployment . . . (the applicants) filed separate complaints

with the Licensing and Regulation Office of POEA against . . . (J & B) for
violation of Articles 32 and 34 (a) of the Labor Code between the months of
April to October 1985.

EASTERN ASSURANCE & SURETY CORPORATION, petitioner,

vs.
SECRETARY OF LABOR, PHILIPPINE OVERSEAS EMPLOYMENT ADMINISTRATION,
ELVIRA VENTURA, ESTER TRANGUILLAN, et al., respondents.

Despite summons/notices of hearing,, . . . (J & B) failed to file Answer nor

appear in the hearings conducted.

Tanjuatco, Oreta, Tanjuatco, Berenguer & San Vicente for petitioner.

In its separate Answer, . . . EASCO essentially disclaimed liability on the

ground that the claims were not expressly covered by the bond, that POEA
had no jurisdiction to order forfeiture of the bond, that some of the claims
were paid beyond or prior to the period of effectivity of the bond.

On September 8, 1986, the POEA Administrator issued the Order in favor of

complainants ruling thus:

to refund nineteen (19) complainants in the modified amounts . .

. (particularly specified).

After careful evaluation, we find that the receipts and

testimonies of complainants, in the absence of
controverting evidence substantially establish that
respondent charged and collected fees from them in
amounts exceeding what is prescribed by this
Administration. Complainants' non-deployment strongly
indicates that there was no employment obtained for
them. Hence, violation of Articles 32 and 34 (a) of the
Labor Code, as amended, is established against
respondent. The claims of complainants having arose
(arisen) out of acts of the principal covered under the
surety (bond), the respondent surety is equally liable
therefor.

The other findings in the Order of the POEA Administrator dated September
8, 1986 affirmed in the Resolution of the then Deputy Minister . . . are also
hereby AFFIRMED. This Order is FINAL. No further Motion for
Reconsideration hereof shall be entertained.

Except for complainants Ramos, Samson, de Leon and Rizada, whose

claims were transacted prior to the effectivity of the bond, . . . EASCO was
declared jointly and severally liable with . . . (J & B) to twenty-nine (29)
complainants.
(The dispositive portion of the POEA Administrator's Order also contained
the following statement and direction, viz.:
Respondent was suspended on May 23, 1985, June 26,
1985 and January 17, 1986 all for illegal exaction.
Considering its track record of illegal exaction activities
and considering further the gross violation of
recruitment rules and regulations established against it
in the instant cases, and the expiration of its license on
February 15, 1985, it is hereby forever banned from
participation in the overseas employment program. It is
ordered to cease and desist from further engaging in
recruitment activities otherwise it shall be prosecuted
for illegal recruitment.')
(J & B filed a motion for reconsideration). On December 19, 1986, the then
deputy Minister of Labor and Employment denied the . . . Motion for
Reconsideration for lack of merit and affirmed the findings in the Order of
the POEA Administrator finding no reversible error therein.
On appeal by EASCO J & B having as aforestated taken no part in the proceeding despite
due service of summons the judgment was modified by the Secretary of Labor, by Order
dated July 1, 1987, disposing as follows: 4
WHEREFORE, in view of the foregoing, the Resolution of the then Deputy
Minister of Labor dated December 19, 1986 affirming the Order of the POEA
Administrator dated September 8, 1986 is hereby MODIFIED. Respondent J
& B Manpower Specialist is directed to refund all thirty-three (33)
complainants as listed in the Order of September 8, 1986 in the amounts
listed thereto with the modification that complainants Lucena Cabasal and
Felix Rivero are both entitled only to P15,980 and not P15,980
each. Respondent Eastern Assurance and Surety Corporation is hereby
found jointly and severally liable with respondent J & B Manpower Specialist

It is noteworthy that EASCO's liability for the refund, jointly and severally with its principal, was
limited to 19 named complainants (in contrast to verdicts of the POEA and the Deputy Minister
which both ordered payment to no less than 33 complainants) and was correspondingly reduced
from P308,751.75 and US $ 400.00 5 to the aggregate amount of P 140,817.75. 6
The special civil action of certiorari at bar was thereafter instituted by EASCO 7 praying for the
nullification of the POEA Administrator's Order of September 8, 1986, the Resolution of the
Deputy Minister of Labor of' December 19, 1986, and the Order of the Secretary of Labor of July
1, 1987, It theorizes that:
1) the POEA had no jurisdiction over the claims for refund filed by nonemployees;
2) neither did the Secretary of Labor have jurisdiction of the claims;
3) assuming they had jurisdiction, both the POEA and Secretary of Labor
also committed legal errors and acted with grave abuse of discretion when
they ruled that petitioner is liable on the claims.
EASCO contends that the POEA had no "adjudicatory jurisdiction" over the monetary claims in
question because the same "did not arise from employer-employee relations." Invoked in
support of the argument is Section 4 (a) of EO 797 providing in part 8 that the POEA has
. . . original and exclusive jurisdiction over all cases, including money
claims, involving employer-employee relations arising out of or by virtue of
any law or contract involving Filipino workers for overseas employment
including seamen . . .
The complaints are however for violation of Articles 32 and 34 a) of the Labor Code.
Article 32 and paragraph (a) of Article 34 read as follows:
Art. 32. Fees to be paid by workers.Any person applying with a private
fee-charging employment agency for employment assistance shall not be
charged any fee until he has obtained employment through its efforts or has
actually commenced employment. Such fee shall be always covered with
the approved receipt clearly showing the amount paid. The Secretary of
Labor shall promulgate a schedule of allowable fees.
Art. 34. Prohibited practices.It shall be unlawful for any individual, entity,
licensee, or holder of authority:
a) To charge or accept, directly or indirectly, any amount greater than that
specified in the schedule of allowable fees prescribed by the Secretary of

Labor, or to make a worker pay any amount greater than actually received
by him as a loan or advance; . . .

the bond on January 2, 1985 as evidence by the reciept and their

testimonies.

The penalties of suspension and cancellation of license or authority are prescribed for violations
of the above quoted provisions, among others. And the Secretary of Labor has the power under
Section 35 of the law to apply these sanctions, as well as the authority, conferred by Section 36,
not only, to "restrict and regulate the recruitment and placement activities of all agencies," but
also to "promulgate rules and regulations to carry out the objectives and implement the
provisions" governing said activities. Pursuant to this rule-making power thus granted, the
Secretary of Labor gave the POEA 9 "on its own initiative or upon filing of a complaint or report
or upon request for investigation by any aggrieved person, . . . (authority to) conduct the
necessary proceedings for the suspension or cancellation of the license or authority of any
agency or entity" for certain enumerated offenses including

The related argument, that it is also not liable for claims filed after the expiry (on January 2,
1986) of the period stipulated in the surety bond for the filing of claims against the bond, must
however be rejected, as the Secretary did. The Court discerns no grave abuse of discretion in
the Secretary's statement of his reasons for doing so, to wit:
. . . While it may be true that respondent EASCO received notice of their
claims after the ten (10) day expiration period from cancellation or after
January 12, 1986 as provided in the surety bond, records show that . . .
EASCO's principal, respondent agency, was notified/ summoned prior to the
expiration period or before January 12, 1986. Respondent agency received
summons on July 24, 1985 with respect to claims of complainants
Penarroyo, dela Cruz and Canti. It also received summons on November
26, 1985 with respect to Giovanni Garbillons' claim. Respondent agency
was likewise considered constructively notified of the claims of complainants
Calayag, Danuco Domingo and Campena on October 6, 1985. In this
connection, it may be stressed that the surety bond provides that notice to
the principal is notice to the surety. Besides, it has been held that the
contract of a compensated surety like respondent EASCO is to be
interpreted liberally in the interest of the promises and beneficiaries rather
than strictly in favor of the surety (Acoustics Inc. v. American Surety, 74
Nev-6, 320 P2d. 626, 74 Am. Jur. 2d).

1) the imposition or acceptance, directly or indirectly, of any amount of money, goods or

services, or any fee or bond in excess of what is prescribed by the Administration, and
2) any other violation of pertinent provisions of the Labor Code and other relevant laws, rules
and regulations. 10
The Administrator was also given the power to "order the dismissal of the case or the
suspension of the license or authority of the respondent agency or contractor or
recommend to the Minister the cancellation thereof." 11
Implicit in these powers is the award of appropriate relief to the victims of the offenses
committed by the respondent agency or contractor, specially the refund or reimbursement of
such fees as may have been fraudulently or otherwise illegally collected, or such money, goods
or services imposed and accepted in excess of what is licitly prescribed. It would be illogical and
absurd to limit the sanction on an offending recruitment agency or contractor to suspension or
cancellation of its license, without the concomitant obligation to repair the injury caused to its
victims. It would result either in rewarding unlawful acts, as it would leave the victims without
recourse, or in compelling the latter to litigate in another forum, giving rise to that multiplicity of
actions or proceedings which the law abhors.
Even more untenable is EASCO's next argument that the recruiter and its victims are in pari
delicto the former for having required payment, and the latter for having voluntarily paid,
"prohibited recruitment fees" and therefore, said victims are barred from obtaining relief. The
sophistical, if not callous, character of the argument is evident upon the most cursory reading
thereof; it merits no consideration whatever.
The Court is intrigued by EASCO's reiteration of its argument that it should not be held liable for
claims which accrued prior to or after the effectivity of its bond, considering that the respondent
Secretary had conceded the validity of part of said argument, at least. The Secretary ruled that
EASCO's "contention that it should not be held liable for claims/payments made to respondent
agency before the effectivity of the surety bond on January 2, 1985 is well taken." According to
the Secretary: 12
. . . A close examination of the records reveal(s) that respondent EASCO is
not jointly and severally liable with respondent agency to refund
complainants Lucena Cabasal, Felix Rivero, Romulo del Rosario, Rogelio
Banzuela, Josefina Ogatis, Francisco Sorato, Sonny Quiazon, Josefina
Dictado, Mario del Guzman and Rogelio Mercado (10 in all). These
complainants paid respondent agency in 1984, or before the effectivity of

So, too, EASCO's claim that it had not been properly served with summons as regards a few of
the complaints must be rejected, the issue being factual, and the Court having been cited to no
grave error invalidating the respondent Secretary's conclusion that summons had indeed been
duly served.
Finally, EASCO's half-hearted argument that its liability should be limited to the maximum
amount set in its surety bond, i.e., P150,000.00, is palpably without merit, since the aggregate
liability imposed on it, P140,817.75, supra, does not in fact exceed that limit.
WHEREFORE, the petition is DISMISSED for lack of merit, and this decision is declared to be
immediately executory. Costs against petitioner.
SO ORDERED

12. G.R. No. 152214

September 19, 2006

EQUI-ASIA PLACEMENT, INC., petitioner,

vs.
DEPARTMENT OF FOREIGN AFFAIRS (DFA) represented by the HON. DOMINGO L.
SIAZON, JR., SECRETARY, DEPARTMENT OF LABOR AND EMPLOYMENT (DOLE),
represented by HON. BIENVENIDO LAGUESMA, respondents.
DECISION
CHICO-NAZARIO, J.:

This is a Petition for Review on Certiorari of the Decision dated 4 October 20011 and Resolution
dated 18 February 2002 of the Court of Appeals in CA-G.R. SP No. 61904. The Decision denied
petitioner's petition for certiorari while the Resolution denied its Motion for Reconsideration.
The Court of Appeals summarized the facts of this case in this wise:
On September 16, 2000, Manny dela Rosa Razon, a native of Lemery, Batangas and
an overseas Filipino worker, died of acute cardiac arrest while asleep at the dormitory
of the Samsong Textile Processing Factory in South Korea. Informed thereof, the
Philippine Overseas Labor Office (POLO) at South Korea immediately relayed the
incident to the Philippine Embassy in South Korea. Forthwith, the [Labor] Attach of
the Philippine Embassy dispatched a letter to Eleuterio N. Gardiner, administrator of
the Overseas Workers Welfare Administration (OWWA). The letter reads:
"VERY URGENT, POLO has recently received a report that OFW Manny
dela Rosa RAZON, an undocumented worker, died last Saturday, 16
September, from an apparent pancreatic attack or 'bangungot.'
According to the verbal reports of Moises and Ronald Recarde, Manny's coworkers, he was found already lifeless inside their quarters at around 11:00
in the morning of the above date. They rushed him to Uri Hospital where the
Doctor declared him dead on arrival.
Per information gathered, the deceased is single, 29 years old, from Bukal,
Lemery, Batangas. His next-of-kins are Mrs. Rowena Razon (Auntie) and
Mr. Razon (Uncle) with telephone number (043)411-2308.
POLO is awaiting signed statements from the aforementioned workers who
promised to send it by fax this afternoon.
We are also coordinating with the deceased's employer for documentation
requirements and financial assistance for the repatriation of the remains.
We will highly appreciate if Home Office could advise the next-of-kins of the
urgent need to issue a Special Power of Attorney (SPA) to facilitate the
repatriation requirements of the subject.
In anticipation of the next-of-kins' likely move to seek financial assistance
from OWWA for the repatriation of their loved [one], please be advised in
advance that we will need about US$4,000.00 to repatriate the cadaver (to
include hospital and morgue costs) to Manila. xxx"
In turn, the OWWA, through Atty. Cesar L. Chavez, indorsed the matter, for
appropriate action, to Director R. Casco of the Welfare Employment Office of the
Philippine Overseas Employment Administration (WEO-POEA).
Upon verification by the WEO-POEA on its data base, it was discovered that Manny
Razon was recruited and deployed by petitioner Equi-Asia Placement, Inc., and was
sent to South Korea on April 3, 2000 to work-train at Yeongjin Machinery, Inc.
Thereupon, POEA addressed the herein first assailed telegram-directive dated
September 22, 2000 to the President/General Manager of the petitioner. We quote the
telegram:

"PLEASE PROVIDE PTA [Prepaid Ticket Advice] FOR THE

REPATRIATION OF REMAINS AND BELONGINGS OF OFW MANNY
DELA ROSA RAZON AS PER REQUEST OF PHILIPPINE EMBASSY,
KOREA, YOU CAN COORDINATE WITH YOUR FOREIGN EMPLOYER
AND TO WAD/OWWA (MLA) AS REGARDS TO THIS MATTER. YOU ARE
GIVEN TWO (2) DAYS FROM RECEIPT HEREOF WITHIN WHICH TO
PROVIDE SAID TICKET AND ASSISTANCE, KINDLY SUBMIT YOUR
REPORT TO ASSISTANCE AND WELFARE DIVISION (AWD), 2/F POEA,
FAILURE TO DO SO WILL CONSTRAIN US TO IMPOSE APPROPRIATE
SANCTION UNDER OUR RULES"
Responding thereto, petitioner, thru its President Daniel Morga, Jr., faxed on
September 26, 2000 the following message to the Assistance and Welfare Division of
the POEA:
"In connection with your telegram, dated 09/22/2000, requiring us to report
the circumstances surrounding the death of OFW MANNY DELA ROSA
RAZON in Korea and requesting us to issue a PTA, etc., for the repatriation
of the remains of said OFW, this is to report to your good office the
following:
1. The deceased was deployed by our agency on April 3, 2000 to Yeongjin
Machine Company in South Korea;
2. He violated his employment/training/dispatching contracts on June 25,
2000 by unlawfully escaping/running away (TNT) from his company
assignment without prior KFSMB authorization and working/staying in
unknown company/place;
3. He allegedly died of 'bangungot' thereafter;
In view thereof, we cannot heed your requests as embodied in your
telegram. However, his relatives can avail of the benefits provided for by
OWWA in cases involving undocumented/illegal Filipino workers abroad.
Trusting for your kind understanding"
On the same date September 26, 2000 Director Ricardo R. Casco of the WEOPOEA sent to the petitioner the herein second assailed letter-directive, which
pertinently reads:
"We have received a copy of your fax message dated 26 September 2000
as regards to your response to our request for PTA for aforesaid deceased
OFW. Nevertheless, may we remind you that pursuant to Sections 52, 53,
54 and 55 of the Implementing Rules Governing RA 8042, otherwise known
as the Migrant Workers and Overseas Filipino Act of 1995, the repatriation
of OFW, his/her remains and transport of his personal effects is the primary
responsibility of the principal or agency and to immediately advance the cost
of plane fare without prior determination of the cause of worker's
repatriation. The Rules further provide for the procedure to be followed in
cases when the foreign employer/agency fails to provide for the cost of the
repatriation, compliance of which is punishable by suspension of the license
of the agency or such sanction as the Administration shall deem proper.
Hence, you are required to provide the PTA for the deceased OFW in

compliance with the requirement in accordance with R.A. 8042. You are
given forty-eight (48) hours upon receipt hereof within which to provide said
ticket. Failure in this regard will constrain us to impose the appropriate
sanction under our rules."
On September 27, 2000, petitioner wrote back Director Ricardo R. Casco, thus:
"In connection with your fax letter dated September 26, 2000, re: the
repatriation of the remains of the deceased, ex-trainee (OFW) MANNY
DELA ROSA RAZON, please be informed that the provisions of
Section 53 as well as, and in relation to, Section 55 of the Omnibus Rules
and Regulations Implementing the Migrant Workers and Overseas Filipinos
Act of 1995 on the matters covering the following:
1. The responsibility of the agency to advance the cost of plane
fare without prior determination of the cause of the deceased
worker's termination.
2. The recovery of the same costs from the estate of the dead
worker before the NLRC.
3. The action to be imposed by POEA for non-compliance
therewith within 48 hours are violative of due process and/or the
principle on due delegation of power.
This is so because Sec. 15 of R.A. 8042 clearly contemplates prior notice
and hearing before responsibility thereunder could be established against
the agency that sets up the defense of sole fault in avoidance of said
responsibility -. Besides, the sections in question unduly grant the powers to
require advance payment of the plane fare, to impose the corresponding
penalty of suspension in case of non-compliance therewith, within 48 hours
and to recover said advance payment from the dead worker's estate upon
the return of his remains to the country before the NLRC, when the law itself
does not expressly provide for the grant of such powers.
x x x x x x x x x.
Please provide us immediately with the death certificate/post mortem
report/police report pertinent to above as proof of death and cause thereof."
Nonetheless, and apprehensive of the adverse repercussions which may ensue on
account of its non-compliance with the directive, petitioner, on September 29, 2000,
advanced under protest the costs for the repatriation of the remains of the late Manny
dela Rosa Razon.
Thereafter, petitioner went to this Court via the instant petition for certiorari, posing, for
Our consideration, the sole issue of
"WHETHER OR NOT SECTIONS 52, 53, 54 AND 55 OF THE OMNIBUS
RULES AND REGULATIONS IMPLEMENTING THE MIGRANT WORKERS
AND OVERSEAS FILIPINOS ACT OF 1995 (R.A. 8042), ISSUED BY DFA
AND POEA, WHICH POEA SUMMARILY ORDERED THE HEREIN

PETITIONER TO COMPLY VIZ-A-VIZ THE PAYMENT IN ADVANCE OF

THE EXPENSES FOR THE REPATRIATION OF THE REMAINS OF A
DECEASED WORKER-TRAINEE WHO, AT THE TIME OF HIS DEATH,
HAS NO EXISTING EMPLOYMENT (DISPATCHING) CONTRACT WITH
EITHER SAID PETITIONER OR HIS FOREIGN PRINCIPAL AND NO
VALID VISA OR IS NOT WORKING WITH THE FOREIGN PRINCIPAL TO
WHICH PETITIONER DEPLOYED HIM, IS ILLEGAL AND/OR VIOLATIVE
OF DUE PROCESS SUCH THAT POEA ACTED WITHOUT [OR IN]
EXCESS OF ITS JURISDICTION AND/OR IN GRAVE ABUSE OF
DISCRETION IN ISSUING SAID ORDER TO PAY SAID EXPENSES."2
On 4 October 2001, the Court of Appeals rendered the Decision which is now the subject of the
present petition. The dispositive portion of the Court of Appeals' Decision states:
WHEREFORE, for lack of merit, the instant petition is DENIED and is
accordingly DISMISSED.3
In dismissing the petition for certiorari, the Court of Appeals stated that petitioner was mainly
accusing the Philippine Overseas Employment Administration (POEA) of grave abuse of
discretion when it ordered petitioner to pay, in advance, the costs for the repatriation of the
remains of the deceased Manny dela Rosa Razon.
The Court of Appeals ruled that the POEA did not commit any grave abuse of discretion as its
directives to petitioner were issued pursuant to existing laws and regulations. 4 It likewise held
that a petition for certiorari, which was the remedy availed of by petitioner, is not the proper
remedy as the same is only available when "there is no appeal, or any plain, speedy, and
adequate remedy in the ordinary course of law."5 Section 62 of the Omnibus Rules and
Regulations Implementing the Migrant Workers and Overseas Filipinos Act of 1995 or Republic
Act 8042 ("Omnibus Rules") states that "the Labor Arbiters of NLRC shall have the original and
exclusive jurisdiction to hear and decide all claims arising out of employer-employee relationship
or by virtue of any law or contract involving Filipino workers for overseas deployment including
claims for actual, moral, exemplary and other forms of damages, subject to the rules and
procedures of the NLRC." There is, therefore, an adequate remedy available to petitioner.
Lastly, the Court of Appeals declared that it could not strike down as unconstitutional Sections
52, 53, 54, and 55 of the Omnibus Rules as the unconstitutionality of a statute or rules may not
be passed upon unless the issue is directly raised in an appropriate proceeding. 6
In the present recourse, petitioner submits the following issues for our consideration:
1. The Court of Appeals erred in the appreciation of the issue as it mistakenly
considered, in dismissing the petition before it, that petitioner is contesting the
compliance and conformity of the POEA directives with Sections 52, 53, 54, and 55 of
the Omnibus Rules and Regulations implementing in particular Section 15 of RA 8042;
2. The Court of Appeals, in dismissing the petition, again erred in ruling that
constitutional questions cannot be passed upon and adjudged in a special civil action
for certiorari under Rule 65 of the 1997 Rules of Civil Procedure;
3. The Court of Appeals erred in not holding that, under the facts of the case that gave
rise to the petition before it, the same sections of the said rules and regulations are
illegal, invalid and/or violative of the right of petitioner to due process of law and,
therefore, the POEA directives issued pursuant thereto constitute acts committed
without, or in excess of, jurisdiction and/or in grave abuse of discretion.7

In Our Resolution of 20 November 2002, we gave due course to the present petition and
directed the parties to submit their respective memoranda. 8 On 28 August 2006, we resolved to
dispense with the memorandum of the estate/heirs of deceased Manny dela Rosa Razon.
At the center of this petition are the following provisions of the omnibus rules:
Section 52. Primary Responsibility for Repatriation. The repatriation of the
worker, or his/her remains, and the transport of his/her personal effects shall be the
primary responsibility of the principal or agency which recruited or deployed him/her
abroad. All costs attendant thereto shall be borne by the principal or the agency
concerned.
Section 53. Repatriation of Workers. The primary responsibility to repatriate entails
the obligation on the part of principal or agency to advance the cost of plane fare and
to immediately repatriate the worker should the need for it arise, without a prior
determination of the cause of the termination of the worker's employment. However,
after the worker has returned to the country, the principal or agency may recover the
cost of repatriation from the worker if the termination of employment was due solely to
his/her fault.
Every contract for overseas employment shall provide for the primary responsibility of
agency to advance the cost of plane fare, and the obligation of the worker to refund
the cost thereof in case his/her fault is determined by the Labor Arbiter.
Section 54. Repatriation Procedure. When a need for repatriation arises and the
foreign employer fails to provide for it cost, the responsible personnel at site shall
simultaneously notify OWWA and the POEA of such need. The POEA shall notify the
agency concerned of the need for repatriation. The agency shall provide the plane
ticket or the prepaid ticket advice (PTA) to the Filipinos Resource Center or to the
appropriate Philippine Embassy; and notify POEA of such compliance. The POEA
shall inform OWWA of the action of the agency.
Section 55. Action on Non-Compliance. If the employment agency fails to provide
the ticket or PTA within 48 hours from receipt of the notice, the POEA shall suspend
the license of the agency or impose such sanctions as it may deem necessary. Upon
notice from the POEA, OWWA shall advance the costs of repatriation with recourse to
the agency or principal. The administrative sanction shall not be lifted until the agency
reimburses the OWWA of the cost of repatriation with legal interest.
Said provisions, on the other hand, are supposed to implement Section 15 of Republic Act No.
80429 which provides:
SEC. 15. Repatriation of Workers; Emergency Repatriation Fund. The repatriation of
the worker and the transport of his personal belongings shall be the primary
responsibility of the agency which, recruited or deployed the worker overseas. All
costs attendant to repatriation shall be borne by or charged to the agency concerned
and/or its principal. Likewise, the repatriation of remains and transport of the personal
belongings of a deceased worker and all costs attendant thereto shall be borne by the
principal and/or the local agency. However, in cases where the termination of
employment is due solely to the fault of the worker, the principal/employer or agency
shall not in any manner be responsible for the repatriation of the former and/or his
belongings.

Petitioner contends that the Court of Appeals misappreciated the issue it presented in its petition
for certiorari when, instead of resolving whether Sections 52, 53, 54, and 55 of the Omnibus
Rules are illegal and violative of due process, it merely confined itself to the question of whether
or not the POEA committed grave abuse of discretion in issuing its directives of 22 September
2000 and 27 September 2000.
Petitioner also contends that, contrary to the finding of the Court of Appeals, a special civil action
for certiorari is the appropriate remedy to raise constitutional issues.
Also, petitioner insists that the subject portions of the omnibus rules are invalid on the ground
that Section 15 of Republic Act No. 8042 does not impose on a recruitment agency the primary
responsibility for the repatriation of a deceased Overseas Filipino Worker (OFW), while Section
52 of the Omnibus Rules unduly imposes such burden on a placement agency.
Moreover, petitioner argues that the word "likewise" at the start of the third sentence of Section
15 of Republic Act No. 8042 is used merely as a connective word indicating the similarity
between a recruitment agency's financial obligation in the repatriation of living and a deceased
OFW. It does not, however, necessarily make a placement agency primarily responsible for the
repatriation of a deceased OFW unlike in the case of an OFW who is alive.
As for Section 53 of the Omnibus Rules, petitioner submits that the same is invalid as Section 15
of Republic Act No. 8042 clearly states that a placement agency shall not in any manner be
responsible for the repatriation of the deceased OFW and his or her belongings should the
termination of the OFW's employment be due to his or her fault. However, as Section 53 of the
Omnibus Rules stipulates that a placement agency or principal shall bear the primary
responsibility of repatriating an OFW and of advancing the payment for his or her plane fare, the
omibus rules, as far as this section is concerned, is an invalid exercise of legislative power by an
administrative agency.
In addition, petitioner claims Section 53 of the Omnibus Rules violates the due process clause of
the constitution as it deprives the deploying agency of the right to prior notice and hearing
through which it can prove that it should not bear the burden of repatriating an OFW.
Finally, petitioner points out that it should be the Overseas Workers Welfare Administration
which should advance the costs of repatriation of the deceased Razon with the resources
coming out of the emergency repatriation fund of said agency.
The Solicitor General for its part counters that Sections 52, 53, 54, and 55 of the Omnibus Rules
are valid quasi-legislative acts of respondents Department of Foreign Affairs and Department of
Labor and Employment.10 Because of this, the requirements of prior notice and hearing are not
essential. Besides, there are cases where even in the exercise of quasi-judicial power,
administrative agencies are allowed, sans prior notice and hearing, to effectuate measures
affecting private property, such as:
1) [F]or the summary abatement of nuisance per se which affects the immediate
safety of persons and property, or 2) in summary proceedings of distraint and levy
upon the property of delinquent taxpayers in the collection of internal revenue taxes,
fees or charges or any increment thereto, or 3) in the preventive suspension of a
public officer pending investigation. x x x.11
The Solicitor General also adds that since petitioner is engaged in the recruitment of Filipino
workers for work abroad, the nature of its business calls for the exercise of the state's police
power in order to safeguard the rights and welfare of the Filipino laborers. One such measure is

the primary responsibility imposed upon placement agencies with regard to the repatriation of an
OFW or of his remains.
The Solicitor General also argues that the wording of Section 15 of Republic Act No. 8042
leaves no doubt that a recruitment agency shall bear the primary responsibility for the
repatriation of an OFW whether the latter is dead or alive.
Lastly, the Solicitor General insists that actions assailing the validity of implementing rules and
regulations are within the original jurisdiction of the regional trial courts.
We shall first address the procedural question involved in the present petition.
There is no denying that regular courts have jurisdiction over cases involving the validity or
constitutionality of a rule or regulation issued by administrative agencies. Such jurisdiction,
however, is not limited to the Court of Appeals or to this Court alone for even the regional trial
courts can take cognizance of actions assailing a specific rule or set of rules promulgated by
administrative bodies. Indeed, the Constitution vests the power of judicial review or the power to
declare a law, treaty, international or executive agreement, presidential decree, order,
instruction, ordinance, or regulation in the courts, including the regional trial courts.12
Section 1, Rule 65 of the 1997 Rules of Civil Procedure states:
SECTION 1. Petition for Certiorari. When any tribunal, board or officer exercising
judicial or quasi-judicial functions has acted without or in excess of its or his
jurisdiction, or with grave abuse of discretion amounting to lack or excess of
jurisdiction, and there is no appeal, nor any plain, speedy, and adequate remedy in the
ordinary course of law, a person aggrieved thereby may file a verified petition in the
proper court, alleging the facts with certainty and praying that judgment be rendered
annulling or modifying the proceedings of such tribunal, board or officer, and granting
such incidental reliefs as law and justice may require.
The petition shall be accompanied by a certified true copy of the judgment, order or
resolution subject thereof, copies of all pleadings and documents relevant and
pertinent thereto, and a sworn certification of non-forum shopping as provided in the
third paragraph of Section 3, Rule 46.
From this, it is clear that in order for a petition for certiorari to prosper, the following requisites
must be present: (1) the writ is directed against a tribunal, a board or an officer exercising
judicial or quasi-judicial functions; (2) such tribunal, board or officer has acted without or in
excess of jurisdiction, or with grave abuse of discretion amounting to lack or excess of
jurisdiction; and (3) there is no appeal or any plain, speedy and adequate remedy in the ordinary
course of law.
It bears emphasizing that administrative bodies are vested with two basic powers, the quasilegislative and the quasi-judicial.13 In Abella, Jr. v. Civil Service Commission,14 we discussed the
nature of these powers to be
In exercising its quasi-judicial function, an administrative body adjudicates the rights of
persons before it, in accordance with the standards laid down by the law. The
determination of facts and the applicable law, as basis for official action and the
exercise of judicial discretion, are essential for the performance of this function. On
these considerations, it is elementary that due process requirements, as enumerated
in Ang Tibay, must be observed. These requirements include prior notice and hearing.

On the other hand, quasi-legislative power is exercised by administrative agencies

through the promulgation of rules and regulations within the confines of the granting
statute and the doctrine of non-delegation of certain powers flowing from the
separation of the great branches of the government. Prior notice to and hearing of
every affected party, as elements of due process, are not required since there is no
determination of past events or facts that have to be established or ascertained. As a
general rule, prior notice and hearing are not essential to the validity of rules or
regulations promulgated to govern future conduct.
In this case, petitioner assails certain provisions of the Omnibus Rules. However, these rules
were clearly promulgated by respondents Department of Foreign Affairs and Department of
Labor and Employment in the exercise of their quasi-legislative powers or the authority to
promulgate rules and regulations. Because of this, petitioner was, thus, mistaken in availing
himself of the remedy of an original action for certiorari as obviously, only judicial or quasijudicial acts are proper subjects thereof. If only for these, the petition deserves outright
dismissal. Be that as it may, we shall proceed to resolve the substantive issues raised in this
petition for review in order to finally remove the doubt over the validity of Sections 52, 53, 54,
and 55 of the Omnibus Rules.
It is now well-settled that delegation of legislative power to various specialized administrative
agencies is allowed in the face of increasing complexity of modern life. Given the volume and
variety of interactions involving the members of today's society, it is doubtful if the legislature can
promulgate laws dealing with the minutiae aspects of everyday life. Hence, the need to delegate
to administrative bodies, as the principal agencies tasked to execute laws with respect to their
specialized fields, the authority to promulgate rules and regulations to implement a given statute
and effectuate its policies.15 All that is required for the valid exercise of this power of subordinate
legislation is that the regulation must be germane to the objects and purposes of the law; and
that the regulation be not in contradiction to, but in conformity with, the standards prescribed by
the law.16 Under the first test or the so-called completeness test, the law must be complete in all
its terms and conditions when it leaves the legislature such that when it reaches the delegate,
the only thing he will have to do is to enforce it. 17 The second test or the sufficient standard test,
mandates that there should be adequate guidelines or limitations in the law to determine the
boundaries of the delegate's authority and prevent the delegation from running riot.18
We resolve that the questioned provisions of the Omnibus Rules meet these requirements.
Basically, petitioner is impugning the subject provisions of the Omnibus Rules for allegedly
expanding the scope of Section 15 of Republic Act No. 8042 by: first, imposing upon it the
primary obligation to repatriate the remains of the deceased Razon including the duty to
advance the cost of the plane fare for the transport of Razon's remains; and second, by ordering
it to do so without prior determination of the existence of employer-employee relationship
between itself and Razon.
Petitioner's argument that Section 15 does not provide that it shall be primarily responsible for
the repatriation of a deceased OFW is specious and plain nitpicking. While Republic Act No.
8042 does not expressly state that petitioner shall be primarily obligated to transport back here
to the Philippines the remains of the deceased Razon, nevertheless, such duty is imposed upon
him as the statute clearly dictates that "the repatriation of remains and transport of the personal
belongings of a deceased worker and all costs attendant thereto shall be borne by the
principal and/or the local agency." The mandatory nature of said obligation is characterized by
the legislature's use of the word "shall." That the concerned government agencies opted to
demand the performance of said responsibility solely upon petitioner does not make said
directives invalid as the law plainly obliges a local placement agency such as herein petitioner to
bear the burden of repatriating the remains of a deceased OFW with or without recourse to the
principal abroad. In this regard, we see no reason to invalidate Section 52 of the omnibus rules

as Republic Act No. 8042 itself permits the situation wherein a local recruitment agency can be
held exclusively responsible for the repatriation of a deceased OFW.

The Solicitor General for public respondents.

Bayani G. Diwa for private respondent.

Nor do we see any reason to stamp Section 53 of the Omnibus Rules as invalid for allegedly
contravening Section 15 of the law which states that a placement agency shall not be
responsible for a worker's repatriation should the termination of the employer-employee
relationship be due to the fault of the OFW. To our mind, the statute merely states the general
principle that in case the severance of the employment was because of the OFW's own undoing,
it is only fair that he or she should shoulder the costs of his or her homecoming. Section 15 of
Republic Act No. 8042, however, certainly does not preclude a placement agency from
establishing the circumstances surrounding an OFW's dismissal from service in an appropriate
proceeding. As such determination would most likely take some time, it is only proper that an
OFW be brought back here in our country at the soonest possible time lest he remains stranded
in a foreign land during the whole time that recruitment agency contests its liability for
repatriation. As aptly pointed out by the Solicitor General
Such a situation is unacceptable.
24. This is the same reason why repatriation is made by law an obligation of the
agency and/or its principal without the need of first determining the cause of the
termination of the worker's employment. Repatriation is in effect an unconditional
responsibility of the agency and/or its principal that cannot be delayed by an
investigation of why the worker was terminated from employment. To be left stranded
in a foreign land without the financial means to return home and being at the mercy of
unscrupulous individuals is a violation of the OFW's dignity and his human rights.
These are the same rights R.A. No. 8042 seeks to protect. 19
As for the sufficiency of standard test, this Court had, in the past, accepted as sufficient
standards the following: "public interest," "justice and equity," "public convenience and welfare,"
and "simplicity, economy and welfare."20
In this case, we hold that the legislature's pronouncements that Republic Act No. 8042 was
enacted with the thought of upholding the dignity of the Filipinos may they be here or abroad and
that the State shall at all times afford full protection to labor, both here and abroad, meet the
requirement and provide enough guidance for the formulation of the omnibus rules.
WHEREFORE, the Petition for Review is DENIED. The Court of Appeals' Decision dated 4
October 2001 and Resolution dated 18 February 2002 are hereby AFFIRMED. With costs.
SO ORDERED.

CORTES, J.:
Petitioner, in this special civil action for certiorari, alleges grave abuse of discretion on the part of
the National Labor Relations Commission in an effort to nullify the latters resolution and thus free
petitioner from liability for the disability suffered by a Filipino worker it recruited to work in Saudi
Arabia. This Court, however, is not persuaded that such an abuse of discretion was committed.
This petition must fail.
The facts of the case are quite simple.
Petitioner, a duly licensed recruitment agency, as agent of Ali and Fahd Shabokshi Group, a
Saudi Arabian firm, recruited private respondent to work in Saudi Arabia as a steelman.
The term of the contract was for one year, from May 15,1981 to May 14, 1982. However, the
contract provided for its automatic renewal:
FIFTH: The validity of this Contract is for ONE YEAR commencing from the
date the SECOND PARTY assumes hill port. This Contract is renewable
automatically if neither of the PARTIES notifies the other PARTY of his
wishes to terminate the Contract by at least ONE MONTH prior to the
expiration of the contractual period. [Petition, pp. 6-7; Rollo, pp. 7-8].
The contract was automatically renewed when private respondent was not repatriated by his
Saudi employer but instead was assigned to work as a crusher plant operator. On March 30,
1983, while he was working as a crusher plant operator, private respondent's right ankle was
crushed under the machine he was operating.
On May 15, 1983, after the expiration of the renewed term, private respondent returned to the
Philippines. His ankle was operated on at the Sta. Mesa Heights Medical Center for which he
incurred expenses.
On September 9, 1983, he returned to Saudi Arabia to resume his work. On May 15,1984, he
was repatriated.
Upon his return, he had his ankle treated for which he incurred further expenses.

13. G.R. No. 77279 April 15, 1988

MANUELA S. CATAN/M.S. CATAN PLACEMENT AGENCY, petitioners,
vs.
THE NATIONAL LABOR RELATIONS COMMISSION, PHILIPPINE OVERSEAS
EMPLOYMENT ADMINISTRATION and FRANCISCO D. REYES, respondents.
Demetria Reyes, Merris & Associates for petitioners.

On the basis of the provision in the employment contract that the employer shall compensate the
employee if he is injured or permanently disabled in the course of employment, private
respondent filed a claim, docketed as POEA Case No. 84-09847, against petitioner with
respondent Philippine Overseas Employment Administration. On April 10, 1986, the POEA
rendered judgment in favor of private respondent, the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered in favor of the complainant and
against the respondent, ordering the latter to pay to the complainant:

1. SEVEN THOUSAND NINE HUNDRED EIGHTY-FIVE PESOS and

60/100 (P7,985.60), Philippine currency, representing disability benefits;
2. TWENTY-FIVE THOUSAND NINETY-SIX Philippine pesos and 20/100
(29,096.20) representing reimbursement for medical expenses;
3. Ten percent (10%) of the abovementioned amounts as and for attorney's
fees. [NLRC Resolution, p. 1; Rollo, p. 16].
On appeal, respondent NLRC affirmed the decision of the POEA in a resolution dated December
12, 1986.
Not satisfied with the resolution of the POEA, petitioner instituted the instant special civil action
for certiorari, alleging grave abuse of discretion on the part of the NLRC.
1. Petitioner claims that the NLRC gravely abused its discretion when it ruled that petitioner was
liable to private respondent for disability benefits since at the time he was injured his original
employment contract, which petitioner facilitated, had already expired. Further, petitioner
disclaims liability on the ground that its agency agreement with the Saudi principal had already
expired when the injury was sustained.
There is no merit in petitioner's contention.
Private respondents contract of employment can not be said to have expired on May 14, 1982
as it was automatically renewed since no notice of its termination was given by either or both of
the parties at least a month before its expiration, as so provided in the contract itself. Therefore,
private respondent's injury was sustained during the lifetime of the contract.
A private employment agency may be sued jointly and solidarily with its foreign principal for
violations of the recruitment agreement and the contracts of employment:

Even if indeed petitioner and the Saudi principal had already severed their agency agreement at
the time private respondent was injured, petitioner may still be sued for a violation of the
employment contract because no notice of the agency agreement's termination was given to the
private respondent:
Art 1921. If the agency has been entrusted for the purpose of contra with
specified persons, its revocation shall not prejudice the latter if they were
not given notice thereof. [Civil Code].
In this connection the NLRC elaborated:
Suffice it to state that albeit local respondent M. S. Catan Agency was at the
time of complainant's accident resulting in his permanent partial disability
was (sic) no longer the accredited agent of its foreign principal, foreign
respondent herein, yet its responsibility over the proper implementation of
complainant's employment/service contract and the welfare of complainant
himself in the foreign job site, still existed, the contract of employment in
question not having expired yet. This must be so, because the obligations
covenanted in the recruitment agreement entered into by and between the
local agent and its foreign principal are not coterminus with the term of such
agreement so that if either or both of the parties decide to end the
agreement, the responsibilities of such parties towards the contracted
employees under the agreement do not at all end, but the same extends up
to and until the expiration of the employment contracts of the employees
recruited and employed pursuant to the said recruitment agreement.
Otherwise, this will render nugatory the very purpose for which the law
governing the employment of workers for foreign jobs abroad was
enacted. [NLRC Resolution, p. 4; Rollo, p. 18]. (Emphasis supplied).
2. Petitioner contends that even if it is liable for disability benefits, the NLRC gravely abused its
discretion when it affirmed the award of medical expenses when the said expenses were the
consequence of private respondent's negligence in returning to work in Saudi Arabia when he
knew that he was not yet medically fit to do so.

Sec. 10. Requirement before recruitment. Before recruiting any worker,

the private employment agency shall submit to the Bureau the following
documents:

Again, there is no merit in this contention.

(a) A formal appointment or agency contract executed by a foreign-based

employer in favor of the license holder to recruit and hire personnel for the
former ...

No evidence was introduced to prove that private respondent was not medically fit to work when
he returned to Saudi Arabia. Exhibit "B", a certificate issued by Dr. Shafquat Niazi, the camp
doctor, on November 1, 1983, merely stated that private respondent was "unable to walk
properly, moreover he is still complaining [of] pain during walking and different lower limbs
movement" [Annex "B", Reply; Rollo, p. 51]. Nowhere does it say that he was not medically fit to
work.

xxx xxx xxx

2. Power of the agency to sue and be sued jointly and
solidarily with the principal or foreign-based employer
for any of the violations of the recruitment agreement
and the contracts of employment. [Section 10(a) (2)
Rule V, Book I, Rules to Implement the Labor Code].
Thus, in the recent case of Ambraque International Placement & Services v. NLRC [G.R. No.
77970, January 28,1988], the Court ruled that a recruitment agency was solidarily liable for the
unpaid salaries of a worker it recruited for employment in Saudi Arabia.

Further, since petitioner even assisted private respondent in returning to work in Saudi Arabia by
purchasing his ticket for him [Exhibit "E"; Annex "A", Reply to Respondents' Comments], it is as
if petitioner had certified his fitness to work. Thus, the NLRC found:
Furthermore, it has remained unrefuted by respondent that complainant's
subsequent departure or return to Saudi Arabia on September 9, 1983 was
with the full knowledge, consent and assistance of the former. As shown in
Exhibit "E" of the record, it was respondent who facilitated the travel papers
of complainant. [NLRC Resolution, p. 5; Rollo, p. 19].

WHEREFORE, in view of the foregoing, the petition is DISMISSED for lack of merit, with costs
against petitioner. SO ORDERED.

14. G.R. No. 119361

February 19, 2001

PEOPLE OF THE PHILIPPINES, plaintiff-appellee,

vs.
CORAZON NAVARRA (At Large) RODOLFO NAVARRA, SR. and JOB NAVARRA, accused.
RODOLFO NAVARRA, SR. and JOB NAVARRA, accused-appellants.
PARDO, J.:
Deceptis non decipientibus, jura subveniunt.*
It is a sad commentary that many of our countrymen migrate to other countries for work. They
leave all that is familiar and endure loneliness and separation from their families and friends for
the coveted dollar hoping that such will better their lot and ensure their families a modicum of
economic stability.
What is more disheartening is that there are those who take advantage of the hopefuls. These
are the illegal recruiters. On them, we must let the full force of the law fall, and fall heavily.
The Case
The case is an appeal from the decision of the Regional Trial Court, Branch 90, Quezon
City1 finding accused Rodolfo Navarra, Sr. and Job Navarra (hereafter "Rodolfo" and "Job",
respectively) guilty beyond reasonable doubt of illegal recruitment committed in a large scale
resulting to economic sabotage and sentencing each of them to life imprisonment, to pay a fine
of one hundred thousand (P100,000.00) pesos, each, without subsidiary imprisonment in case of
insolvency, and to return to complainants the sums they received from them.
The Facts
Job and Rodolfo, along with Rodolfo's wife2 Corazon, operated an agency which purported to
have the authority to recruit and place workers for employment in Taiwan. The agency 3 was
named Rodolfo Navarra's Travel Consultant and General Services ("RNTCGS"), 4 which in the
course of its operation was able to victimize several hapless victims who never left Philippine
soil, and in due time, filed complaints with the Philippine Overseas Employment Agency
(hereafter "POEA") against accused for illegal recruitment.
Neither RNTCGS nor Rodolfo, Corazon or Job in their personal capacities were licensed or
authorized by the Philippine Overseas Employment Administration to recruit workers for
overseas employment.5
The trial court summarized the testimonies of complainants, thus:6
MERLIE VILLESCA identified Rodolfo as the one with whom she applied to for
employment in Taiwan on May 6, 1992, at the RNTCGS office in Novaliches, Quezon
City. As placement fee she paid fifteen thousand pesos (P15,000.00) to Inday

Padawan (Rodolfo's cook and laundrywoman, 7 hereafter, "Inday"), at Corazon and

Rodolfo's house, and another fifteen thousand pesos (P15,000.00) on December 22,
1992. She identified Job as the administrative officer of RNCTGS, who entertained her
and the other applicants during the times she visited the agency's office to follow up
her application.8
GLICERIA MARINAS singled out Job as the one who recruited her for employment in
Taiwan as a factory worker. She testified that she was recruited by Job on April 24,
1992 at RNTCGS where she was told that she and her co-applicants would leave for
Taiwan two months after they applied on April 24, 1992. She gave Job all the
requirements the agency asked for including her passport and birth certificate. She
was also required to pay a placement fee of twenty thousand pesos (P20,000.00),
although the receipt given to her was only for the amount of fifteen thousand pesos
(P15,000.00). She gave her passport to Job and she handed the placement fee to
Inday who gave it to Corazon in her presence.9
BEINVENIDA AMUTAN testified that while in Rodolfo's house in Novaliches, Quezon
City, on May 11, 1992, Rodolfo promised her that she would be able to leave for
Taiwan upon payment of a twenty thousand pesos (P20,000.00) placement fee. On
April 11, 1992, Beinvenida paid the amount to Inday who gave it to Corazon in
Beinvenida's presence. She never had the chance to go to Taiwan. Upon investigation
with the POEA, she discovered that RNTCGS was not registered. 10
ERNESTO AMUTAN testified that in April 1992, he filed an application to work at a
factory in Taiwan before Corazon in the RNTCGS office. It was Corazon who
interviewed him and asked him to submit some requirements. While at the said office,
he saw Rodolfo there, who gave him the assurance that he would be able to leave for
Taiwan immediately. He was never deployed to Taiwan, despite paying a placement
fee of twenty thousand pesos (P20,000.00).11
FLORIE ROSE RAMOS testified that she applied with RNTCGS as a factory worker
for Taiwan and that she paid a placement fee of twenty five thousand pesos
(P25,000.00) and another payment of one thousand pesos (P1,000.00) as medical
fee. She went to RNTCGS during the last weeks of February, March and April 1992
and was interviewed by Job. She was introduced to Rodolfo by her co-complainant
Evelyn Llacas. She was not able to leave for Taiwan, neither was she able to retrieve
her payments from RNTCGS for when she went to the office on December 23, 1993, it
had already been raided by the CIS and POEA for recruiting for overseas employment
without license or authority.12
LIWAYWAY CRUZ testified that she visited Rodolfo and Corazon's house and came
to know that Rodolfo was the President of RNTCGS, an agency which deported itself
to her as and agency purporting to have authority to recruit workers for placement in
Taiwan. That on April 1993, she went to Rodolfo's house to inquire about the
processing of her papers for employment in Taiwan. There she was assured by
Rodolfo that Corazon was in Taiwan and was already taking care of her application. 13
LOIDA MACASO testified that she came to know Rodolfo when she visited Inday on
December 3, 1991, at Rodolfo's house and Rodolfo and Corazon recruited her to work
as a factory worker in Taiwan. For this purpose she paid the spouses ten thousand
pesos (P10,000.00) placement fee on January 8, 1992. She was never sent to
Taiwan.14

On December 22, 1992, (PC) CIS agents arrested Inday Padawan after she received placement
fees from complainant Merlie Villesca.15 The amount received was one thousand pesos
(P1,000.00) in one hundred peso (P100.00) bills, which were dusted with ultraviolet powder. 16

The Court's Ruling

On February 26, 1993, Assistant Provincial Prosecutor of Bulacan Emily G. Reyes, on detail with
the Department of Justice, filed with the Regional Trial Court, Quezon City, Branch 90, an
information against accused for illegal recruitment committed in a large scale. We quote: 17

Bare denials, within clear and convincing evidence to support them,23 can not sway judgment.
They are self-serving statements,24 that are inherently weak and can easily be put forward.25

"That on or about February, 1992 and sometime prior and subsequent thereto in
Quezon City, Metro Manila, Philippines, and within the jurisdiction of this Honorable
Court above-named accused conspiring, confederating and mutually helping one
another, representing themselves to have the capacity to contract, enlist and transport
workers for employment abroad, did then and there willfully, unlawsfully and for a fee,
recruit and promise employment/job placement to MERLIE VILLESCA, GLICERIA
MARINAS, JOSE LLORET, BEINVENIDA AMUTAN, MELBA YACAS, MARITES DE
SAGUN, VILMA MARANA, ERNESTO AMUTAN, FLORIE ROSE RAMOS, RONALD
ALLAN SANTOS and HENRY DELA CRUZ without first securing the required license
and/or authority from Philippine Overseas Employment Administration.
"CONTRARY TO LAW."
On April 29, 1993, upon arraignment, Job pleaded "not guilty."18
On July 14, 1993, upon arraignment, Rodolfo likewise pleaded "not guilty." 19
After due trial, on December 29, 1994, the trial court rendered a decision convicting Rodolfo and
Job, thus:
"ACCORDINGLY, the Court hereby finds both accused RODOLFO NAVARRA, SR.
and JOB NAVARRA guilty of the crime of Illegal Recruitment Committed in a Large
Scale Resulting to Economic Sabotage, as charged in the Information, and hereby
sentences each of them to Life Imprisonment and also each of them to pay a fine of
P100,000.00, without subsidiary imprisonment incase of insolvency pursuant to Art. 39
(a) of the Labor Code.
"They are likewise ordered to return to complainants Florie Rose Ramos the sum of
P25,000.00; to Ernesto Amutan, P15,000.00; to Bienvenida Amutan, P15,000.00; to
Loida (Loyda) Macaso, P10,000.00; to Gliceria Marinas, P15,000.00; and to Merlie
(Merly) Villesca, P30,000.00.
"Let alias warrants of arrest be issued for accused Corazon Navarra, said warrants to
be served by both the National Bureau of Investigation and the Eastern Police District
Command.
"SO ORDERED."20
Hence, this appeal.21
Rodolfo and Job submit that the trial court gravely erred in disregarding their defense of denial
and in finding them guilty beyond reasonable doubt of the offense charged. 22

We find the appeal without merit.

The rule is well-entrenched that as an appellate court, we will not disturb the findings of the trial
court on credibility of witnesses as it was in a better position to appreciate the same. The rule is
specially so given that there is no showing that the trial court plainly overlooked certain facts of
substance or value, which, if considered, may affect the result of the case.26
Illegal recruitment has two essential elements: First, the offender has no valid license or
authority required by law to enable him to lawfully engage in the recruitment and placement of
workers. Second, the offender undertakes any activity within the meaning of "recruitment and
placement" defined under Article 13 (b), or any prohibited practices enumerated under Article 34
of the Labor Code.27
Recruitment and Placement
A "nonlicensee or nonholder of authority" means any person, corporation or entity without a valid
license or authority to engage in recruitment or placement from the Secretary of Labor, or whose
license or authority has been suspended, revoked or cancelled by the Philippine Overseas
Employment Administration or the Secretary of Labor.28 Under Article 13(b) of the Labor Code,
"recruitment and placement" refer to:
"any act of canvassing, enlisting, contracting, transporting, utilizing, hiring or
procuring workers, and includes referrals, contract services, promising or advertising
for employment, locally or abroad, whether for profit or not: Provided, that any person
or entity which in any manner, offers or promises for a fee employment to two or more
persons shall be deemed engaged in recruitment and placement."
From the evidence adduced, accused-appellants committed acts of recruitment and placement,
such as promises to the complainants of profitable employment abroad and acceptance of
placement fees. Accused-appellants gave the impression that they had the power to send the
complainants to Taiwan for employment.29
With the certification from the Department of Labor and Employment stating that RNTCGS was
not authorized to recruit workers for overseas employment, 30 and promises by the accused of
employment abroad for complainants on payment of placements fees, the conclusion is
inescapable that accused are liable for illegal recruitment. 31
Economic Sabotage
Article 38 (b) of the Labor Code, as amended by P. D. No. 2018 provides that illegal recruitment
shall be considered an offense involving economic sabotage if any of the following qualifying
circumstances exists: First, when illegal recruitment is committed by a syndicate. For purposes
of the law, a syndicate exists when three or more persons conspire or confederate with one
another in carrying out any unlawful or illegal transaction, enterprise or scheme. 32Second, there
is economic sabotage when illegal recruitment is committed in a large scale, as when it is
committed against three or more persons individually or as a group.33

The acts of accused-appellants showed unity of purpose. All these acts establish a common
criminal design mutually deliberated upon and accomplished through coordinated moves. 34
Even assuming that there was no conspiracy, the record clearly shows illegal recruitment
committed in a large scale, since at least six (6) complainants were victims, which is more than
the minimum number of persons required by law to constitute illegal recruitment in a large scale,
resulting in economic sabotage.1wphi1.nt
Penalty Imposable
The penalty imposable on such offense is life imprisonment and a fine of one hundred thousand
pesos (P100,000.00).35
The Fallo
WHEREFORE, the Court AFFIRMS the decision of the Regional Trial Court, Quezon City,
Branch 90 in Criminal Case No. 93-42592, dated December 29, 1994.
Costs against accused-appellants.
SO ORDERED.

15. G.R. No. 129577-80

February 15, 2000

PEOPLE OF THE PHILIPPINES, plaintiff-appellee,

vs.
BULU CHOWDURY, accused-appellant.
PUNO, J.:
In November 1995, Bulu Chowduly and Josephine Ong were charged before the Regional Trial
Court of Manila with the crime of illegal recruitment in large scale committed as follows:
That sometime between the period from August 1994 to October 1994 in the City of
Manila, Philippines and within the jurisdiction of this Honorable Court, the abovenamed accused, representing themselves to have the capacity to contract, enlist and
transport workers for employment abroad, conspiring, confederating and mutually
helping one another, did then and there willfully, unlawfully and feloniously recruit the
herein complainants: Estrella B. Calleja, Melvin C. Miranda and Aser S. Sasis,
individually or as a group for employment in Korea without first obtaining the required
license and/or authority from the Philippine Overseas Employment Administration.1
They were likewise charged with three counts of estafa committed against private
complainants.2 The State Prosecutor, however, later dismissed the estafa charges against
Chowdury3 and filed an amended information indicting only Ong for the offense.4
Chowdury was arraigned on April 16, 1996 while Ong remained at large. He pleaded "not guilty"
to the charge of illegal recruitment in large scale.5

Trial ensued.
The prosecution presented four witnesses: private complainants Aser Sasis, Estrella Calleja and
Melvin Miranda, and Labor Employment Officer Abbelyn Caguitla.
Sasis testified that he first met Chowdury in August 1994 when he applied with Craftrade
Overseas Developers (Craftrade) for employment as factory worker in South Korea. Chowdury,
a consultant of Craftrade, conducted the interview. During the interview, Chowdury informed him
about the requirements for employment. He told him to submit his passport, NBI clearance,
passport size picture and medical certificate. He also required him to undergo a seminar. He
advised him that placement would be on a first-come-first-serve basis and urged him to
complete the requirements immediately. Sasis was also charged a processing fee of
P25,000.00. Sasis completed all the requirements in September 1994. He also paid a total
amount of P16,000.00 to Craftrade as processing fee. All payments were received by Ong for
which she issued three receipts.6 Chowdury then processed his papers and convinced him to
complete his payment.7
Sasis further said that he went to the office of Craftrade three times to follow up his application
but he was always told to return some other day. In one of his visits to Craftrade's office, he was
informed that he would no longer be deployed for employment abroad. This prompted him to
withdraw his payment but he could no longer find Chowdury. After two unsuccessful attempts to
contact him, he decided to file with the Philippine Overseas Employment Administration (POEA)
a case for illegal recruitment against Chowdury. Upon verification with the POEA, he learned
that Craftrade's license had already expired and has not been renewed and that Chowdury, in
his personal capacity, was not a licensed recruiter. 8
Calleja testified that in June 1994, she applied with Craftrade for employment as factory worker
in South Korea. She was interviewed by Chowdury. During the interview, he asked questions
regarding her marital status, her age and her province. Toward the end of the interview,
Chowdury told her that she would be working in a factory in Korea. He required her to submit her
passport, NBI clearance, ID pictures, medical certificate and birth certificate. He also obliged her
to attend a seminar on overseas employment. After she submitted all the documentary
requirements, Chowdury required her to pay P20,000.00 as placement fee. Calleja made the
payment on August 11, 1994 to Ong for which she was issued a receipt. 9 Chowdury assured her
that she would be able to leave on the first week of September but it proved to be an empty
promise. Calleja was not able to leave despite several follow-ups. Thus, she went to the POEA
where she discovered that Craftrade's license had already expired. She tried to withdraw her
money from Craftrade to no avail. Calleja filed a complaint for illegal recruitment against
Chowdury upon advice of POEA's legal counsel.10
Miranda testified that in September 1994, his cousin accompanied him to the office of Craftrade
in Ermita, Manila and introduced him to Chowdury who presented himself as consultant and
interviewer. Chowdury required him to fill out a bio-data sheet before conducting the interview.
Chowdury told Miranda during the interview that he would send him to Korea for employment as
factory worker. Then he asked him to submit the following documents: passport, passport size
picture, NBI clearance and medical certificate. After he complied with the requirements, he was
advised to wait for his visa and to pay P25,000.00 as processing fee. He paid the amount of
P25,000.00 to Ong who issued receipts therefor.11 Craftrade, however, failed to deploy him.
Hence, Miranda filed or complaint with the POEA against Chowdury for illegal recruitment. 12
Labor Employment Officer Abbelyn Caguitla of the Licensing Branch of the POEA testified that
she prepared a certification on June 9, 1996 that Chowdury and his co-accused, Ong, were not,
in their personal capacities, licensed recruiters nor were they connected with any licensed
agency. She nonetheless stated that Craftrade was previously licensed to recruit workers for
abroad which expired on December 15, 1993. It applied for renewal of its license but was only

granted a temporary license effective December 16, 1993 until September 11, 1994. From
September 11, 1994, the POEA granted Craftrade another temporary authority to process the
expiring visas of overseas workers who have already been deployed. The POEA suspended
Craftrade's temporary license on December 6, 1994.13
For his defense, Chowdury testified that he worked as interviewer at Craftrade from 1990 until
1994. His primary duty was to interview job applicants for abroad. As a mere employee, he only
followed the instructions given by his superiors, Mr. Emmanuel Geslani, the agency's President
and General Manager, and Mr. Utkal Chowdury, the agency's Managing Director. Chowdury
admitted that he interviewed private complainants on different dates. Their office secretary
handed him their bio-data and thereafter he led them to his room where he conducted the
interviews. During the interviews, he had with him a form containing the qualifications for the job
and he filled out this form based on the applicant's responses to his questions. He then
submitted them to Mr. Utkal Chowdury who in turn evaluated his findings. He never received
money from the applicants. He resigned from Craftrade on November 12, 1994.14
Another defense witness, Emelita Masangkay who worked at the Accreditation Branch of the
POEA presented a list of the accredited principals of Craftrade Overseas Developers 15 and a list
of processed workers of Craftrade Overseas Developers from 1988 to 1994. 16
The trial court found Chowdury guilty beyond reasonable doubt of the crime of illegal recruitment
in large scale. It sentenced him to life imprisonment and to pay a fine of P100,000.00. It further
ordered him to pay Aser Sasis the amount of P16,000.00, Estrella Calleja, P20,000.00 and
Melvin Miranda, P25,000.00. The dispositive portion of the decision reads:
WHEREFORE, in view of the foregoing considerations, the prosecution having proved
the guilt of the accused Bulu Chowdury beyond reasonable doubt of the crime of
Illegal Recruitment in large scale, he is hereby sentenced to suffer the penalty of life
imprisonment and a fine of P100,000.00 under Art. 39 (b) of the New Labor Code of
the Philippines. The accused is ordered to pay the complainants Aser Sasis the
amount of P16,000.00; Estrella Calleja the amount of P20,000.00; Melvin Miranda the
amount of P25,000.00.17
Chowdury appealed.
The elements of illegal recruitment in large scale are:
(1) The accused undertook any recruitment activity defined under Article 13 (b) or any
prohibited practice enumerated under Article 34 of the Labor Code;
(2) He did not have the license or authority to lawfully engage in the recruitment and
placement of workers; and

The Revised Penal Code which supplements the law on illegal recruitment 20 defines who are the
principals, accomplices and accessories. The principals are: (1) those who take a direct part in
the execution of the act; (2) those who directly force or induce others to commit it; and (3) those
who cooperate in the commission of the offense by another act without which it would not have
been accomplished.21 The accomplices are those persons who may not be considered as
principal as defined in Section 17 of the Revised Penal Code but cooperate in the execution of
the offense by previous or simultaneous act.22 The accessories are those who, having
knowledge of the commission of the crime, and without having participated therein, either as
principals or accomplices, take part subsequent to its commission in any of the following
manner: (1) by profiting themselves or assisting the offenders to profit by the effects of the crime;
(2) by concealing or destroying the body of the crime, or the effects or instruments thereof, in
order to prevent its discovery; and (3) by harboring, concealing, or assisting in the escape of the
principal of the crime, provided the accessory acts with abuse of his public functions or
whenever the author of the crime is guilty of treason, parricide, murder, or an attempt at the life
of the chief executive, or is known to be habitually guilty of some other crime.23
Citing the second sentence of the last paragraph of Section 6 of RA 8042, accused-appellant
contends that he may not be held liable for the offense as he was merely an employee of
Craftrade and he only performed the tasks assigned to him by his superiors. He argues that the
ones who should be held liable for the offense are the officers having control, management and
direction of the agency.
As stated in the first sentence of Section 6 of RA 8042, the persons who may be held liable for
illegal recruitment are the principals, accomplices and accessories. An employee of a company
or corporation engaged in illegal recruitment may be held liable as principal, together with his
employer,24 if it is shown that he actively and consciously participated in illegal recruitment.25 It
has been held that the existence of the corporate entity does not shield from prosecution the
corporate agent who knowingly and intentionally causes the corporation to commit a crime. The
corporation obviously acts, and can act, only by and through its human agents, and it is their
conduct which the law must deter, The employee or agent of a corporation engaged in unlawful
business naturally aids and abets in the carrying on of such business and will be prosecuted as
principal if with knowledge of the business, its purpose and effect, he consciously contributes his
efforts to its conduct and promotion, however slight his contribution may be. 26 The law of
agency, as applied in civil cases, has no application in criminal cases, and no man can escape
punishment when he participates in the commission of a crime upon the ground that he simply
acted as an agent of any party.27 The culpability of the employee therefore hinges on his
knowledge of the offense and his active participation in its commission. Where it is shown that
the employee was merely acting under the direction of his superiors and was unaware that his
acts constituted a crime, he may not be held criminally liable for an act done for and in behalf of
his employer.28
The fundamental issue in this case, therefore, is whether accused-appellant knowingly and
intentionally participated in the commission of the crime charged.
We find that he did not.

(3) He committed the same against three or more persons, individually or as a

group.18
The last paragraph of Section 6 of Republic Act (RA) 8042 19 states who shall be held liable for
the offense, thus:
The persons criminally liable for the above offenses are the principals, accomplices
and accessories. In case of juridical persons, the officers having control, management
or direction of their business shall be liable.

Evidence shows that accused-appellant interviewed private complainants in the months of June,
August and September in 1994 at Craftrade's office. At that time, he was employed as
interviewer of Craftrade which was then operating under a temporary authority given by the
POEA pending renewal of its license.29 The temporary license included the authority to recruit
workers.30 He was convicted based on the fact that he was not registered with the POEA as
employee of Craftrade. Neither was he, in his personal capacity, licensed to recruit overseas
workers. Section 10 Rule II Book II of the Rules and Regulation Governing Overseas
Employment (1991) requires that every change, termination or appointment of officers,
representatives and personnel of licensed agencies be registered with the POEA. Agents or
representatives appointed by a licensed recruitment agency whose appointments are not

previously approved by the POEA are considered "non-licensee" or "non-holder of authority" and
therefore not authorized to engage in recruitment activity.31
Upon examination of the records, however, we find that the prosecution failed to prove that
accused-appellant was aware of Craftrade's failure to register his name with the POEA and that
he actively engaged in recruitment despite this knowledge. The obligation to register its
personnel with the POEA belongs to the officers of the agency. 32 A mere employee of the
agency cannot be expected to know the legal requirements for its operation. The evidence at
hand shows that accused-appellant carried out his duties as interviewer of Craftrade believing
that the agency was duly licensed by the POEA and he, in turn, was duly authorized by his
agency to deal with the applicants in its behalf. Accused-appellant in fact confined his actions to
his job description. He merely interviewed the applicants and informed them of the requirements
for deployment but he never received money from them. Their payments were received by the
agency's cashier, Josephine Ong. Furthermore, he performed his tasks under the supervision of
its president and managing director. Hence, we hold that the prosecution failed to prove beyond
reasonable doubt accused-appellant's conscious and active participation in the commission of
the crime of illegal recruitment. His conviction, therefore, is without basis.
This is not to say that private complainants are left with no remedy for the wrong committed
against them. The Department of Justice may still file a complaint against the officers having
control, management or direction of the business of Craftrade Overseas Developers (Craftrade),
so long as the offense has not yet prescribed. Illegal recruitment is a crime of economic
sabotage which need to be curbed by the strong arm of the law. It is important, however, to
stress that the government's action must be directed to the real offenders, those who perpetrate
the crime and benefit from it.
IN VIEW WHEREOF, the assailed decision of the Regional Trial Court is REVERSED and SET
ASIDE. Accused-appellant is hereby ACQUITTED. The Director of the Bureau of Corrections is
ordered to RELEASE accused-appellant unless he is being held for some other cause, and to
REPORT to this Court compliance with this order within ten (10) days from receipt of this
decision. Let a copy of this Decision be furnished the Secretary of the Department of Justice for
his information and appropriate action.1wphi1.nt
SO ORDERED.

16. G.R. No. 124439

February 5, 2004

PEOPLE OF THE PHILIPPINES, appellee

vs.
FLOR GUTIERREZ Y TIMOD, appellant.
DECISION
TlNGA, J.:
In its decision dated 22 March 1996, the Regional Trial Court (RTC) of Pasay City, Branch
1081 found accused Flor Gutierrez y Timod guilty beyond reasonable doubt of Illegal
Recruitment in Large Scale and sentenced her to suffer the penalty of life imprisonment and to
pay a fine of P100,000.00.

The Information in Criminal Case No. 95-6796 reads as follows:

That from the months of April to August 1994 in Pasay City, Philippines, and within the
jurisdiction of this Honorable Court, accused FLOR GUTIERREZ Y TIMOD conspiring and
confederating with CECILIA BAUTISTA, ESTHER GAMILDE, LINDA RABAINO and MARILYN
GARCIA (whose present whereabouts are unknown) and mutually helping one another, acting in
common accord, did then and there, willfully, unlawfully and feloniously, engage in recruitment
activities for overseas job placement and actually contract, enlist and recruit EVELYN V.
RAMOS, ROSEMARIE I. TUGADE, GENEROSA G. ASUNCION and ROSALYN B. SUMAYO
as domestic helpers in Dubai, United Arab Emirates, for a fee of various amounts ranging from
P10,000.00 to P15,000.00 each, without first obtaining the required license and/or authority from
the Philippine Overseas Employment Administration (POEA).
CONTRARY TO LAW.2
Arraigned on April 24, 1995, the accused entered a plea of not guilty. The version of the
prosecution is as follows:
On April 18, 1994, Rosemarie Tugade went to the house of one Celia Bautista, a "recruiteragent" of the accused, at Brgy. Bulala, Vigan, Ilocos Sur. 3 Celia told Rosemarie that she had to
submit the following requirements for her application to work in Dubai as a domestic helper:
P4,000.00 as placement fee, P1,200.00 for passport, P850.00 for "medical," six (6) 2x2 pictures
and her original birth certificate.4
The next day, Rosemarie, together with "recruiter-agent" Celia Bautista and fellow applicant
Evelyn Ramos, traveled to Manila to the house of one Esther Gamilde, another of the accused's
"recruiter-agents."5 There, Rosemarie and Evelyn filled out their bio-data forms. The two then
underwent a medical examination before having their whole-body picture taken. Esther told them
that they would know the results of their application from Celia.6
Two weeks later, Celia told Rosemarie that her application for Dubai was already approved and
that she will be receiving $150.00-dollars per month. For the first three (3) months, however,
there will be salary deductions.7
On August 27, 1994, Rosemarie and Evelyn, along with Celia and Esther, went to the accused's
office at Sarifudin Manpower and General Services at EDSA Extension, Pasay City.8 The
accused told Rosemarie that she needed to pay P2,000.00 more. 9 The accused said she had
received all of Rosemarie's documents and the money paid to Celia. 10 Trusting in Celia,
Rosemarie did not demand a receipt from the accused.
On August 31, 1994, the accused asked Rosemarie to give P500.00 as terminal fee for her
departure in a week's time.11 Rosemarie paid the amount, as evidenced by a receipt. 12 The
scheduled departure did not push through, however. Instead, Rosemarie was told that she was
to leave on September 15, 1994, but, again, this did not materialize. 13 A series of
postponements followed until finally she was told that she would be leaving before Christmas
1994. Almost predictably, her trip never came to pass.14
Private complainant Evelyn Ramos was with Rosemarie when she went to Celia Bautista's
house on April 19, 1994.15 Celia told Evelyn that for P4,000.00 she could leave for Dubai to work
as a domestic helper.16 Like Rosemarie, Evelyn gave all her documents and paid the fees to
Celia, who in turn handed them to Esther Gamilde in Tondo. 17 On June 10, 1994, Ramos gave
Bautista P8,000.00, which was also turned over to Gamilde. 18

On August 22, 1994, Celia told Evelyn that she only had to wait one more week before she left
for Dubai.19 On August 27, 1994, Esther brought Evelyn to the accused's office, 20 where the
accused asked for an additional P2,000.00 as processing fee for the Philippine Overseas
Employment Agency (POEA).21 Evelyn paid the amount on August 31, 1994,22 including a
terminal fee of P500.00. Like Rosemarie, Evelyn was not able to leave the country despite the
accused's promises.
Another complainant, Rosalyn D. Sumayo, also applied for overseas job placement as a
domestic helper in Dubai. Her experience was more agonizing. In her case, it was one Marilyn
Garcia who assisted Rosalyn.23 She submitted a copy of her birth certificate, six (6) copies of 2 x
2 pictures, two (2) copies of her whole-body picture, passport, and medical certificate. 24 Marilyn
also asked Rosalyn to pay: a processing fee of P7,500.00, P2,620.00 as full tax, P500.00 as
terminal fee, and P3,000.00 as service charge.25
All the documents and money given by Rosalyn to Marilyn were subsequently remitted to the
accused at her office on June 28, 1994.26 The accused told Rosalyn that she would be leaving
anytime, but after three months, Rosalyn's departure did not push through. 27
Despite the setback, the accused kept assuring Rosalyn that she would still be able to
leave.28 One time, the accused brought her to the airport and instructed her to hide in the airport
restroom.29 After fifteen minutes, the accused told her that they had to leave the airport
because "mahigpit sa immigration."30 On another occasion, the accused directed Rosalyn to
hide inside the Kayumanggi Restaurant for fifteen (15) minutes. 31 Nothing happened after,
though, and they went home.

With the promises of jobs abroad unfulfilled, complainants decided to verify if the accused was a
licensed recruiter. Upon learning from the POEA that she was not so licensed, 47 they proceeded
to the Philippine Anti-Crime Commission (PACC) to execute their respective affidavits.48
SPO4 Johnny Marqueta investigated the women's complaint. He confirmed with the POEA that
the accused was not licensed or authorized to recruit overseas contract workers. 49 The four
complainants also informed him that the accused wanted to meet with the group on January 26,
1995.50 SPO4 Marqueta thus had their money, totaling P2,000.00, 51 marked at the National
Bureau of Investigation (NBI) Forensic Section for their entrapment operation.52
On January 26, 1995, the accused met with the four complainants at Jollibee, Commonwealth
Avenue, Quezon City. As soon as she finished counting the marked money and wrapping it in
Jollibee napkins, the accused was arrested.53
In her defense, the accused claimed that as an "employee" of a duly licensed agency who was
tasked to recruit and offer job placements abroad, she could not be held liable for illegal
recruitment.54 She admitted that she had no authority to recruit in her personal capacity, 55 but
that her authority emanated from a Special Power of Attorney (SPA) and a Certification issued
by a licensed agency.56
At the time complainants applied for overseas employment, the accused was "employed" as a
Marketing Directress of Sarifudin Manpower and General Services,57 a duly licensed agency
with License No. OS-91-LB-61193-NL issued by the Department of Labor and Employment. 58 A
Special Power of Attorney (SPA) from Sarifudin, dated May 1, 1994, 59 states that she was
authorized:

On November 14, 1994, Rosalyn was again at the airport. 32 The accused warned her, though,
that if the Immigration Officer insisted on seeing her papers, it would be better for her to
leave.33 As directed, she left the airport when she was asked to produce her documents. 34

1. To negotiate, enter into business transactions for manpower supply particularly in

the Middle East countries;

Exasperated, Rosalyn went to the accused's house and demanded the return of her money and
her documents. Instead of acceding to Rosalyn's demands, the accused shouted at her and
warned her that she had to pay a cancellation fee of $300.00. 35 Rosalyn was not able to give the
amount so she stayed with the accused, who assured her that she would still be able to leave
the country and that she would receive a monthly salary of $150 to $200.36 These promises were
never fulfilled. Rosalyn thus went to the POEA, where POEA Administrator Felicisimo Joson, Jr.
informed her that the accused did not have a license to recruit. 37

2. For and in behalf of SARIFUDIN, MANPOWER AND GENERAL SERVICES using

as guidelines and terms and conditions by both parties to secure:
(a) Verified Job Orders;
(b) Special Power of Attorney;

Generosa Asuncion suffered the same fate as her co-applicants. In August 1994, she applied for
overseas job placement with one Linda Rabaino.38 Generosa submitted her passport, medical
certificate, clearance from the National Bureau of Investigation (NBI), birth certificate, bio-data
and pictures.39 She also paid P15,000.00 in two installments on September 9 and 12,
1994,40 which payments were not receipted.

(c) Copy of Certified Certificate of Business Registration;

(d) VISA Authorization and/or NOC VISA.
....60

Linda told Generosa she would be leaving on September 13, 1994. 41 However, she was not able
to leave because, according to Linda, at 25, Generosa was under-aged.42
Linda then referred Generosa to the accused in the latter's office, where Linda turned over
Generosa's documents as well as the P15,000 00 to the accused. 43 The accused promised that
Linda would be able to leave, but her departure never took place.44 When Generosa demanded
the return of her money and her documents, the accused told her that she had to pay a
cancellation fee of $600.00.45 Stunned, Linda just opted to await the further outcome of her
application.46 Her waiting was all for naught.

A Certification61 dated February 3, 1995, issued by the same agency, also states that: "MRS.
FLOR T. GUTIERREZ was (sic) employed as OVERSEAS MARKETING DIRECTRESS of
SARIFUDIN MANPOWER AND GENERAL SERVICES, effective May 1994, up to the present" 62
The defense also submitted several documents to prove compliance with the requirements of
the agency for her to assume her duties under the SPA. These include receipts63 for a cash
bond in the amount of P30,000.00 that she paid in several installments. She also paid a royalty
fee of P4,000.0064 and an office rental fee of P3,000.00.65

The accused was also required by the agency to submit a monthly report for June 1994, as
evidenced by a Memorandum signed by the General Manager, Leah Salud. 66 She submitted
said monthly report, indeed, several monthly reports. 67 A document calling on all Marketing
Directresses/Directors to attend a meeting on July 8, 1994, was also presented.68
The accused did not receive any salary or allowances from Sarifudin but received commissions
from the agency's principals, the employers from foreign countries (ten in the Middle East and
two in Singapore) at the rate of U.S. $100.00 per person.69 From her commissions, she paid rent
and royalty to Sarifudin.70
Edwin Cristobal, POEA Labor Employment Officer, confirmed that Sarifudin was duly licensed to
engage in recruitment activities.71 He presented a Certification issued by Ma. Salome S.
Mendoza, Manager of the Licensing Branch72 and containing the list of officers and staff of
Sarifudin. On said list appear the names "Florna Gutierrez" and "Flor Gutierrez," 73 apparently,
one and the same person.74 In the same Certification, appears the following:
It is further certified that the said agency revoked the appointment of Ms. Flor Gutierrez as
Overseas Mktg. Director/Manager in a letter dated Dec. 15, 1995, although this Office has not
received nor acknowledged the representation of Ms. Gutierrez.75
Cristobal explained that the POEA, "Never had a letter from Sarifudin registering or authorizing
Flor Gutierrez... rather, [what] we received [was a] revocation of her appointment." 76 He also
revealed that the name of the accused does not appear in the records of the POEA as being
employed by the agency from the assumption of its license on June 11, 1993, up to its
termination on June 11, 1995.77
The defense likewise alleged that complainants Rosemarie Tugade and Evelyn Ramos executed
Affidavits of Desistance dated May 12, 1995,78 stating that the accused had returned to them the
amounts they paid her and that the complaint was a result of a misunderstanding.

Illegal recruitment is committed when two elements concur, namely: (1) the offender has no valid
license or authority required by law to enable one to lawfully engage in recruitment and
placement of workers; and (2) he undertakes either any activity within the meaning of
"recruitment and placement" defined under Art. 13(b), or any of the prohibited practices
enumerated under Art. 34 of the Labor Code.80 Art. 13(b) of the Labor Code defines "recruitment
and placement" as "any act of canvassing, enlisting, contracting, transporting, utilizing, hiring, or
procuring workers, and includes referrals, contract services, promising or advertising for
employment, locally or abroad, whether for profit or not: Provided, That any person or entity
which, in any manner, offers or promises for a fee employment to two or more persons, shall be
deemed engaged in recruitment and placement."81
The crime becomes Illegal Recruitment in Large Scale when the two elements concur, with the
addition of a third element: the recruiter committed the same against three or more persons,
individually or as a group.82
Appellant argues that as a representative of a duly licensed recruitment agency, she cannot be
held guilty of Illegal Recruitment in Large Scale. We disagree.
Section 11, Rule II, Book II of the Rules and Regulations Governing Overseas Employment
requires the prior approval of the POEA of the appointment of representatives or agents:
Section 11. Appointment of Representatives. Every appointment of representatives or agents
of licensed agency shall be subject to prior approval or authority of the Administration.
The approval may be issued upon submission of or compliance with the following requirements:
a. Proposed appointment or Special Power of Attorney;
b. Clearances of the proposed representative or agent from NBI;

On March 22, 1996, the trial court rendered its Decision finding the accused guilty beyond
reasonable doubt of Illegal Recruitment in Large Scale:
WHEREFORE, after evaluating all the foregoing, the accused FLOR GUTIERREZ is hereby
found guilty beyond reasonable doubt of Illegal Recruitment in Large Scale, and judgment is
hereby rendered as follows:
(a) Convicting the accused of Illegal Recruitment in Large Scale and sentencing her to
suffer the penalty of life imprisonment and payment of P100,000.00 fine;
(b) No reimbursement to complainants is needed since their money have already been
returned;
(c) Accused to pay moral damages in the amount of P50,000.00 to each complainant;
(d) Accused to pay exemplary damages in the amount of P50,000.00 to each
complainant; and
(e) To pay the costs of the suit.79
Accused Flor Gutierrez filed the present appeal seeking the reversal of her conviction.

c. A sworn or verified statement by the designating or appointing person or company

assuming full responsibility for all the acts of the agent or representative done in
connection with the recruitment and placement of workers.
Approval by the Administration of the appointment or designation does not authorize the agent
or representative to establish a branch or extension office of the licensed agency represented.
Any revocation or amendment in the appointment should be communicated to the
administration. Otherwise, the designation or appointment shall be deemed as not revoked or
amended.
Section 1, Rule X of the same Book, in turn, provides that "recruitment and placement activities
of agents or representatives appointed by a licensee, whose appointments were not authorized
by the Administration shall likewise constitute illegal recruitment."
The Certification from the POEA that it "has not received nor acknowledged the representation
of Ms. Gutierrez" establishes that the appointment of appellant by Serafudin as a representative
or agent was not authorized by the POEA. It may be true that the POEA received from Serafudin
a revocation of appellant's appointment, but still is of no consequence since Serafudin in the first
place did not submit her appointment to the POEA, and so the POEA has nothing to approve.

As found by the trial court83 the evidence on record, notably appellant's own version, indicates
that she was running her own labor recruitment business.

1. Mario Tambacan;
2. Mary Jane Cantil;

Appellant cannot escape liability by claiming that she was not aware that before working for her
employer in the recruitment agency, she should first be registered with the POEA. 84 Illegal
recruitment in large scale is malum prohibitum, not malum in se.85 Good faith is not a defense.
That appellant engaged in recruitment and placement is beyond dispute. The complaining
witnesses categorically testified that the accused promised them on several occasions that they
would be leaving for work abroad. Appellant received complainants' money and documents, a
fact that the complainants themselves witnessed and which the accused acknowledged when
she returned the same to them after the filing of the case against her. Appellant even brought
complainant Rosalyn Sumayo to the airport three times, raising her expectations, but leaving her
hanging in mid-air. The accused even had the audacity to demand cancellation fees from the
complainants when they asked for a refund.
The Affidavits of Desistance executed by two of the complainants deserve little weight. The
Court attaches no persuasive value to affidavits of desistance, especially when executed as an
afterthought. As held in the case ofPeople v. Ubina,86 "it would be a dangerous rule for courts to
reject testimonies solemnly taken before the courts of justice simply because the witnesses who
had given them later on changed their mind for one reason or another; for such rule would make
solemn trials a mockery and place the investigation of truth at the mercy of unscrupulous
witnesses."87

3. Richard Araas;
4. Victoria Collantes;
5. Christine Collantes;
6. Rogelio Collantes;
7. Luther Caban;
8. Loreta Caban;
9. Jonard Genemelo;
10. Jhonely Genemelo;
11. Pedro Ozarraga;

As appellant committed illegal recruitment against three or more persons, she is liable for Illegal
Recruitment in Large Scale.
WHEREFORE, the Decision of the Regional Trial Court, finding appellant Flor Gutierrez y Timod
guilty beyond reasonable doubt of the crime of Illegal Recruitment in Large Scale and
sentencing her to life imprisonment and to pay a fine of P100,000.00 is AFFIRMED.

12. Pablo Ozarraga; and

13. Pacifico Villaver,
Without any license and/or authority to engage in recruitment and placement of
workers from the Department of Labor and Employment.1

SO ORDERED.

Upon arraignment, appellants pleaded not guilty to the above charges.

17. G.R. No. 119076

March 25, 2002

PEOPLE OF THE PHILIPPINES, plaintiff-appellee,

vs.
ROGER SEGUN and JOSEPHINE CLAM, accused-appellants.
KAPUNAN, J.:
Appellants Roger Segun and Josephine Clam were charged before the Regional Trial Court
(RTC) of Iligan City with violating Article 38 of the Labor Code, as amended, in an information
reading:
That on or about the 3rd day of March, 1993 and for sometime thereafter, at Linamon,
Lanao del Norte, Philippines and within the jurisdiction of this Honorable Court, the
above-named accused, conspiring, confederating and mutually helping each other, did
then and there willfully, unlawfully and feloniously canvass, enlist, contract, transport
and recruit for employment the following persons, namely:

The prosecution presented eight (8) witnesses, namely, Francita L. Manequis, Conchita
Tambacan, Josephine Aba, Melecio Ababa, Rogelio Collantes, Loreta Caban, Christine
Collantes and Elena Araas.
Manequis, Employment Officer III and Administrative Officer of the Department of Labor and
Employment (DOLE), identified two certifications issued by Allan Macaraya, then DOLE Director
for Region XII.2 The first Certification,3dated October 7, 1993, stated that "per records available
in this Office" appellants were "neither licensed nor authorized by this Department to recruit
workers for overseas employment." The second,4 dated May 17, 1993, was "issued upon the
request of [the] Honorable Mayor of Linamon, Lanao del Norte, Mayor Alejandro C. Alfeche." It
stated that appellants, "per records of this Office," were "not authorized to conduct recruitment
for local and overseas employment."
Conchita Tambacan, 50, married, a tobacco vendor and a resident of Linamon, Lanao del Norte
testified that her son Mario, then 17, was "recruited" by appellants on March 6, 1993 and brought
to Manila. She knew that he was recruited only because "many told [her]." Her son did not
consult her regarding the recruitment. At the time of her testimony, her son had sent her only two
letters from Cabanatuan City but had not returned home to Linamon, Lanao del Norte.

After learning of her sons recruitment, Mrs. Tambacan went to the Mayor of Linamon who, in
turn, verified from DOLE whether appellants had any authority to undertake recruitment.
Subsequently, the mayor handed Mrs. Tambacan the certification dated May 17, 1993.5
Josephine Ozarraga Aba, 28, married, a housekeeper, and a resident of Linamon, is the aunt of
twins Pedro and Pablo Ozarraga. Pedro and Pablo, then 18, are the sons of her deceased
sister. Mrs. Aba testified that sometime in March or April 1993 her nephews told her that they
wanted to go to Manila and that they were "recruited." Her nephews were then jobless and were
looking for work. Mrs. Aba went to appellants house to inquire from appellants, who were her
neighbors, if what her nephews told her was true. In appellants house, she saw appellants, her
nephews, among others. Appellants told her that her nephews would be given free fare to
Manila, free meals and good wages. These they also promised her nephews. Mrs. Aba claimed
that appellants brought one of the twins to Cabanatuan and the other to Bulacan. When she
testified, her nephews had not yet returned to Linamon.6
Melecio Ababa, 64, married, a fish vendor, and a resident of Linamon, Lanao del Norte, is the
grandfather of Jhonely and Jonard Genemelo. Sometime in April 1992, Ababa learned that
appellants had "recruited" his grandsons. Ababa asked his grandsons, "Why will you work there
[in Cabanatuan City] [when] in fact you can find jobs here?" Ababa went to the house of
appellants who assured him that the transportation to Manila was free, and that his grandsons
were to be provided free meals and paid good wages. Because of these promises, he
acquiesced to the recruitment. At the time of his testimony, Ababas grandsons had not returned
to Linamon. All he received from them were two letters but no money.7
Another complainant, Rogelio Collantes, 44, jobless and a resident of Linamon, Lanao del Norte,
is the husband of Victoria Collantes and the father of Christine, then 13, and Rogelio, Jr., then 6.
Sometime in April 1993, Rogelio learned that appellants had "recruited" Victoria, Christine and
Roger. Rogelio talked to appellants who promised that his wife and childrens transportation to
Manila and meals will be free and that they will receive good wages. Victoria, Christine and
Rogelio, Jr., who were then looking for jobs, were then brought to Cabanatuan City.
At the time of his testimony, Rogelios children had already returned to Linamon, traveling home
with appellant Josephine Clam. Collantes wife, though, was still in Nueva Ecija. She had sent
letters to Rogelio thrice, and money twice, once in the amount of P1,000.00 and the other time
P800.00.8
The prosecution also presented Rogelios daughter Christine, who was among those allegedly
recruited by appellants. Christine said her parents were jobless during the months of March and
April 1993 and were looking for work. Upon the invitation of appellants, she and her mother went
to the house of appellants on March 26, 1993. Appellants offered her mother a job. Christine
went with her mother to Cabanatuan City where her mother forced her to work. According to
Christine, those "recruited" totaled thirteen, including her mother and her brother. She and the
others took a boat to Manila and Cabanatuan City. Appellants shouldered the transportation
expenses.
In Cabanatuan, Christine did housework for a certain Engr. Sy for seven (7) months. She was
paid P500.00 a month. She returned home in Linamon on December 4, 1993. Neri Clam,
Josephines sister, paid for her fare to Manila.
Like Christine, her mother Victoria also performed housework in Cabanatuan City for a certain
Mabini Llanera. Her brother, Rogelio, Jr., was not able to find work because he was still a child. 9
Loreta Cavan,* 14, and also a resident of Linamon, Lanao del Norte, testified that sometime in
March 1993, she was "recruited" by appellants and brought to Manila then to Cabanatuan City.

She related that she met appellants in the house of Josephine Clam, where she was recruited.
Appellants told her that Cabanatuan City was a "good place" "because the salary [was] big."
Loreta agreed to go. Loreta further stated that those "recruited" by the couple totaled thirteen,
including the twin brothers Pedro and Pablo, a certain woman named Pasbel, a certain Johnny,
and Loretas sister Luther.
At Cabanatuan City, Loreta was able to work for a certain Barangay Captain Centioco for three
(3) months for P600.00 a month. Loreta purportedly was not paid for her services since her two
months salary was supposed to pay for her fare to Manila.
Loreta denied that she went to the house of appellants to seek their help. Rather, appellants
allegedly offered her a job. Appellants invited her to go to their house on March 27, 1993. Loreta
learned from her sister Luther that appellants were recruiting.
Loretas sister Luther, who was among those listed in the information as having been recruited
by appellants, went to Manila to work but her job was not provided by appellants. 10
The prosecution also offered the testimony of Ester Cavan, the mother of Loreta Cavan, to
corroborate the latters testimony. The same was dispensed with, however, the corroborative
nature thereof having been admitted by counsel for the defense.11
Finally, Elena Araas, mother of Richard Araas, related that on March 6, 1993 appellants
brought her son, then 19, to Cabanatuan City. Her son, who was then looking for work, was
promised that he would be given a good salary. She learned of the promise when she went to
appellants house where she saw appellants, her son, among others. Elena claimed that she
was present when appellants approached her son and offered him work in Cabanatuan City.
Elena agreed to the recruitment of her son because of the promise of a good salary. However,
she has not heard from her son since he left nor had she received any money from him. 12
Appellants defense was predicated on denial. They presented five witnesses to support their
case.
Myrna Sasil, 35, married, a housekeeper and a resident of Iligan City, testified that in March
1993 she went to the appellants residence to ask them to find a job in Manila for her daughter
Margie. Prior to that, Myrna had known appellants for almost a year. She knew that appellants
could help their daughter find work in Manila because they just came from Manila themselves.
She said that before she went to appellants house, she did not know that appellants were
sending people to Manila for work. As Myrnas family was then suffering from financial
difficulties, Josephine agreed to find work for Myrnas daughter.
According to Myrna, Margie left with the thirteen persons listed in the information as having been
recruited by appellants. Appellants paid for Margies fare to Manila, which she reimbursed from
her salary. At the time of Myrnas testimony, Margie was still working in Cabanatuan City and
was sending Myrna money from her salary.13
Losendo Servano, 50, married, a farmer and a resident of Linamon, Lanao del Norte, is a
neighbor of appellants as well as those of the thirteen persons they allegedly recruited. Losendo
had known Josephine Clam since she was born, and Roger Segun when the latter and
Josephine got married.
Losendo testified that his son Ruel did not have work in Linamon. If Ruel stayed in Linamon,
Losendo said he would become a hoodlum or a delinquent. His son thus requested appellants to

take him with them to Manila and find work for him, saying "Manang, Manong, I just go with you
to Manila."

Appellant Josephine Clam, 28, single, and residing at Linamon, Lanao del Norte, used to work
as a house helper in Pangasinan and Bulacan for a year after which she returned to Linamon.

In April 1993, Ruel, appellants and thirteen others left for Manila by boat. Appellants shouldered
Ruels expenses in going to Manila. When Ruel was able to find work, he paid appellants by
installment. Losendo claims that his son found work through the help of appellants. 14

Around March and April 1993, the thirteen persons listed in the information went to her house to
ask her help to find them work. They knew that Josephine used to work in Pangasinan and
Dagupan. She told them she would try her best to help them but informed them that she was not
a recruiter.1wphi1.nt

Virgincita Ozarraga, 30, a housekeeper and a resident of Linamon, Lanao del Norte, is the sister
of appellant Josephine Clam. She is also the aunt of the twins Pedro and Pablo Ozarraga and a
neighbor of the thirteen persons allegedly recruited by appellants.
According to Virgincita, Josephine Clam went to Nueva Ecija in 1991 but transferred in 1992 to
Dagupan City. In both places, Josephine worked as a house helper. Roger Segun, on the other
hand, worked as liaison officer for Rolmar Employment Services.
Virgincita disputed Conchita Tambacans testimony that appellants recruited the latters son
Mario. She said that Mario went to appellants house. Josephine did not promise him a job
because they were not recruiters although appellants assured him they would help him find a
job.
Virgincita further testified that in March 1993 Pedro and Pablo Ozarraga also went to the house
of Virgincitas mother to ask appellants to help them find work because there were times they
could not eat. Josephine allegedly told the twins that she was not a recruiter but she would help
them find work. She purportedly said the same thing to Jhonely and Jonard Genemelo, Victoria
and Christine Collantes, and Loreta and Luther Cavan. Josephine also told them that she was
not promising them anything.
Appellants and the thirteen persons they purportedly recruited left for Manila by boat. Appellants
paid for their fare and were able to find work for them in Manila, Cabanatuan and other places in
Luzon. Thereafter, appellants returned to Linamon. To Virgincitas knowledge, no people sought
their help to find them jobs after the couple returned from Manila.15

Roger and Josephine shouldered their neighbors transportation and food expenses on the
condition that their neighbors reimburse appellants once they found jobs. Some of them
eventually paid them back although others did not. Appellants were able to find jobs for the
thirteen since Roger had many friends.
Josephine admitted that she did not have any license to recruit since she was not a recruiter.
She and Roger helped their neighbors find jobs because she took pity on them when they
begged her to help them find jobs. She even spent her and Rogers joint savings to answer for
her neighbors expenses.17
Based on the foregoing evidence, the Iligan City RTC convicted appellants for violating Article 38
of the Labor Code, as amended:
WHEREFORE, finding the accused guilty beyond reasonable doubt of Illegal
Recruitment of the 13 persons mentioned in the information, namely: Mario
Tambacan, Mary Jane Cantil, Richard Aranas, Victoria Collantes, Christine Collantes,
Rogelio Collantes, Luther Caban, Loreta Caban, Jonard Genemilo, Jhonely Genemilo,
Pedro Ozarraga, Pablo Ozarraga and Pacifico Villaver in a large scale, the accused
are hereby sentenced to suffer a penalty of life imprisonment for each of them and to
pay a fine of P100,000.00 each. The bail bond put up by the accused is hereby
ordered cancelled, in view of the penalty imposed by this Court of life imprisonment,
which is a nonbailable offense.
SO ORDERED.18

Appellant Roger Segun, 34, single, is an employee of the Rolmar Employment Services. As the
liaison officer of the agency, appellant undertakes the processing of the papers for the agencys
license.
According to appellant, around April and May of 1993, the thirteen persons listed in the
information went to the house of Josephine Clam to ask her to help them find jobs in
Cabanatuan City. Their neighbors knew that Josephine used to work in Cabanatuan City,
Pangasinan and Dagupan City. Josephine told them that she was not a recruiter although she
would help them find work.
Appellants accompanied the thirteen to Manila as they (appellants) were going there anyway.
Appellants shouldered their neighbors transportation and other expenses from Linamon to
Cabanatuan City upon the promise that they (appellants) would be paid back. Eventually, some
paid while others did not. Roger did not bother to ask for payment from those who did not pay.
He claimed he was able to help find jobs for their neighbors by recommending them to friends
who needed helpers and workers. Until they were able to find jobs, the thirteen stayed in Rogers
house in Cabanatuan City.
Roger admitted that neither he nor Josephine Clam had a license to recruit. He said he was not
a recruiter. He also revealed that after he brought the thirteen to Manila, he tried to secure a
license to recruit but his application was disapproved. 16

Appellants contend that their guilt was not proven beyond reasonable doubt. They maintain that
it was their neighbors who approached them in the house of Josephine Clams mother and
solicited their assistance in their (the neighbors) desire to go to Manila. Josephine Clam had a
history of employment in Luzon and had just returned to Linamon. In Josephine, the neighbors
saw an opportunity to taste economic progress and escape poverty and stagnation. Appellants
took pity on them and helped them find jobs, even defraying their neighbors travel expenses.
They submit, therefore, that they were not engaged in the recruitment of persons for
employment but in pursuit of a lawful and noble endeavor for the benefit of the less fortunate.
They neither collected nor received any consideration for their efforts. Appellants point out that
of the 13 allegedly recruited only Christine Collantes and Loreta Cavan testified against them.
Considering these circumstances, appellants submit that the evidence against them is at most
ambiguous and inconclusive.19
The crime of illegal recruitment in large scale is committed when three elements concur. First,
the offender has no valid license or authority required by law to enable one to lawfully engage in
recruitment and placement of workers. Second, he or she undertakes either any activity within
the meaning of "recruitment and placement" defined under Article 13 (b), or any prohibited
practices enumerated under Article 34 of the Labor Code. Third, the offender commits said acts
against three or more persons, individually or as a group.20

There is no dispute that the first element is present in this case. The certification dated May 17,
1993 and issued by DOLE Region XII Director Allen Macaraya, states that appellants "were not
authorized to conduct recruitment for local and overseas employment." Both appellants
conceded they have no license to recruit.21
The next question is whether appellants undertook any activity constituting recruitment and
placement as defined by Article 13 (b) of the Labor Code, which states:
"Recruitment and Placement" refers to any act of canvassing, enlisting, contracting,
transporting, utilizing, hiring or procuring workers, and includes referrals, contract
services, promising or advertising for employment, locally or abroad, whether for profit
or not: Provided, That any person or entity which, in any manner, offers or promises
for a fee employment to two or more persons shall be deemed engaged in recruitment
and placement.
Did the prosecution prove beyond a reasonable doubt that appellants canvassed, enlisted,
contracted and transported the thirteen persons listed in the information? In examining the
prosecutions evidence, we bear in mind that a conviction for large scale illegal recruitment must
be based on a finding in each case of illegal recruitment of three (3) or more persons whether
individually or as a group.22 While the law does not require that at least three (3) victims testify at
the trial, it is necessary that there is sufficient evidence proving that the offense was committed
against three (3) or more persons.23
There is no evidence that appellant undertook the recruitment of Mary Jane Cantil and Pacifico
Villaver. Neither Cantil nor Villaver testified in court. No witness testified as to the fact of their
recruitment.
As regards Mario Tambacan, his mother Conchita testified that she learned of his recruitment
only from other persons. On direct examination she said:
Q

How did you know that he was recruited?

Many told me.24

On cross-examination, she further revealed:

Q

You claimed that he was recruited but you did not see the recruitment?

A
This Josephine Clam and a companion recruited my son because many saw
them.

I was not present.

You were only informed?

Yes.

Your testimony here that he was recruited was only told to you?

Yes.25

Conchita Tambacans testimony is clearly hearsay and, thus, of little probative value. 26 It hardly
suffices to prove Mario Tambacans recruitment beyond reasonable doubt.
We now examine the evidence offered to prove the recruitment of the Collanteses. The
prosecutions evidence consists of the testimonies of Rogelio Collantes and his daughter
Christine. Rogelio testified that his wife and children were "recruited" by appellants, that
appellants promised that his wife and children were to be provided free meals and transportation
to Manila and good wages, and that appellants brought his wife and children to Manila.
Q
Do you recall what happen[ed] to Victoria, Cristine and Roger Collantes, Jr.,
sometime in April, 1993?
A

They were recruited.

By whom?

Roger Segun and Josephine Clam.

xxx
Q
When you learn[ed] that your wife Victoria, Cristine your daughter and son
Roger Segun, Jr., were being recruited by the accused whom you just identified, what
did you do then?
A

I verified about their recruited (sic).

You mean you were to talk to Josephine Clam and Roger Segun?

Yes.

Have you talked to Josephine Clam and Roger Segun?

Yes.

What did they tell you?

ATTY. BAYRON:
That is hearsay.
COURT:
Q
But you, yourself, you did not see that he was recruited? Were you present
when Mario Tambacan was recruited by the accused?

A
They promised that the transportation to Manila will be free and the meals and
good wages.

xxx

Yes, sir.

Q
Were these two accused Roger Segun and Josephine Clam able to bring your
wife and children to Manila?

And that includes you also?

Yes.

Yes.

Do you know what place in Manila they were taken?

Q
Did you agree to their proposal that you will be given job in Cabanatuan City if
you will go there?

In Cabanatuan City.27

Yes, sir.

By itself, Rogelios testimony is far from conclusive that appellants actually recruited his wife and
children. Rogelio used the term "recruit" which is a conclusion of law; the prosecution did not
elicit from him the specific act constituting the recruitment. Section 36, Rule 130 of the Rules of
Court states that a witness can testify only to thosefacts which he knows of his personal
knowledge. He is not permitted to testify as to a conclusion of law. Law in the sense here used
embraces whatever conclusions belong properly to the court. 28 Thus, it has been held that the
bare statements of a rape victim that she was "sexually assaulted" or "raped" by the accused are
not sufficient to establish the accuseds guilt for the crime of rape. 29 Testimony constituting
conclusions of law has no probative value and is not binding upon the court. 30

How about your mother?

Yes, sir.

How about your brother?

My brother went with my mother.

Rogelio also said that appellants made certain promises but it is not clear if these were made to
Rogelio or to his wife and children. That appellants "brought" them to Manila does not
necessarily mean that they were "transported" in the context of Article 13 (b) for if we subscribe
to the defenses account, appellants merely accompanied Rogelios family to Manila. If two
inculpatory facts are capable of two different interpretations, that which would favor the accused
should be adopted.31

Q
When you agree[d] with your mother, were you able to go in Cabanatuan City
together with the accused as they promised?
A

Yes, sir.

That includes the others recruited with the total of 13 of you?

Yes, sir.

Q
Do you recall sometime in April, 1993 what transpired between you and these 2
accused in this case?

What means of transportation did you take from here to Manila?

William Lines.

Who shoulder[ed] the expenses of that boat in going there from here?

Josephine Clam and Roger Segun.

When you arrived in Manila you proceeded to Cabanatuan City, is that correct?

Yes.

That includes your mother and your brother?

Yes, sir.

On the other hand, Christine Collantes testified on direct examination:

They treated me well.

Q
How did it happen that these 2 accused treated you well sometime in April,
1993?
A

They told us we would be given work.

Where will you be given work?

In Cabanatuan City, sir.

Q
In other words how many were you these 2 accused promised to give you work
in Cabanatuan City?
A

We were 13.

That includes your mother and your brother Rogelio, Jr.?

Q
As promised by the accused that you would be given a job, were [you] able to
have a job there in Cabanatuan City?

Yes, sir.

Yes, sir.

What is your work there?

The accused did not offer [a] job for your mother?

House work.

She offered.

To whom did you work with?

You went along with your mother to Cabanatuan City, is that correct?

With Engr. Sy.

Yes.

How much did he agree as your wages?

Q
Now, will you please tell the court why did you go along with your mother to
Cabanatuan City?

P500.00 a month.
A

Q
Do you know if your mother was able to secure a job as promised by the
accused?
A

Q
The accused did not offer you [a] job but you only went along with your mother
to Cabanatuan City, is that correct?

Yes.
A

In order to work.

No.

Was she able to get a job?

COURT

Yes.

What kind of job?

House work.

How about your younger brother, was he able to have a work there?

What do you mean when you say no?

I was forced by my mother to work in Cabanatuan City.33

And on re-cross:
ATTY. BAYRON
A

No he is still a child.

COURT
Q

To whom did your mother work?

Mabini Llanera in Cabanatuan City.32

On cross-examination, she related:

Q
The accused did not invite you to go to their house on March 26, 1993, am I
correct?
A

We were invited.

Q
You and your mother went to the house of the accused because you ask[ed] for
help to find a job, am I correct?
FISCAL BALABAGAN

Q
Is it not a fact that your mother went to the house of the accused and beg[ged]
you to find a job?
A

Yes, sir.

Q
You also went with your parents when your mother went to the house of the
accused?

Already answered, Your Honor.

COURT
Answer.
WITNESS

We were invited.34

Christines testimony establishes beyond a reasonable doubt that appellants recruited

Christines mother Victoria. Christine explicitly stated that appellants offered her mother a job
and told them that they "would be given work." Victoria thus agreed to appellants "proposal" that
she would be given a job in Cabanatuan City.
However, there is reasonable doubt whether appellants actually recruited Christine herself since
Christine said that she "was forced by [her] mother to work in Cabanatuan City."
The Court also entertains grave doubts regarding the alleged recruitment of Christines brother
Rogelio, Jr., who, according to Christine, went with their mother and was not able to work
because, at 6, he was "still a child." Did Rogelio, Jr. go to Cabanatuan City to work or did he just
go together with his mother so she could look after him? The former is unlikely while the latter is
not farfetched since the child was too young to work and still needed looking after.

COURT
Q

Prior to that when for the first time you met the accused?

WITNESS
A

At the time when we are recruited.

How did they recruit you?

They told me that the salary in that place is good.

FISCAL BALABAGAN
And because they told you that the salary is good, you are referring to
Cabanatuan City?

The prosecution, however, succeeded in proving that appellants recruited Loreta Cavan. Loreta
testified that appellants told her that the salary in Cabanatuan City was good, that she agreed to
their proposal for her to work there, and that they brought her to Manila then to Cabanatuan City:

WITNESS
Q

Who brought you to Manila and then Cabanatuan City?

Josephine Clam and Roger Segun.

Why did they bring you to Manila then to Cabanatuan City?

Yes.

When they told you that the salary is good, what did you do?

I am willing to go.

According to them that place is good because the salary is big.

Q
You mean you agreed with their proposal to you and that you are going to work
there?

xxx
Q
You said you were brought to Manila by these two accused on March 27, 1993,
before that March 27, was there any occasion that you met the accused in this case?
A

Yes, sir.

Where did you meet them?

In Linamon.

In the house of Mrs. Josephine Clam?

Yes, sir.

Q
What transpired when you first met with the accused Josephine Clam in their
house in Linamon?
A
They told us that in the boat where we are going to take, we are prohibited to go
around the boat.

Yes, sir.35

On cross-examination, she said that appellants offered her employment and she went to
appellants house because they were recruiting:
ATTY. BAYRON
Q
You said awhile ago that you went to the house of the accused in Linamon,
Lanao del Norte, can you recall when was that when you went to the house of the
accused in this case?
A

March 27.

Did you go to the house of the accused alone or with companion?

I have companions.

Q
Please tell the court why did you go to the house of the accused on March 27,
1993?

Because they have recruited us.

Q
Is it not a fact that you went to the house of the accused in Linamon because
you sought their help to find a job?
A

No, sir.

The accused in this case did not offer you a job?

They offered me.

Q
Is it not a fact that you beg[ged] the accused to help you find a job outside
Linamon, Lanao del Norte?
A

No, sir.

You went there on March 27, 1993 on your own volition, am I correct?

Sir, sir.

Q
You are familiar with the house of the accused in Linamon, Lanao del Norte, am
I correct?
Yes, sir.

Q
In the house of the accused you can not find any signboard that they are
recruiting people for jobs, am I correct?
A

I was told by my sister.

Luther is your elder sister?

Yes.36

The prosecution however failed to prove that appellants recruited Loretas sister, Luther. Loreta
testified, thus:
Q

How many of you were brought and were recruited by the accused?

We were 13.

Can you mention who were your companions?

The twin brother, Pedro and Pablo.

No, sir.

Q
The accused in this case did not invite you to go in their house on March 27,
1993?

No, sir.

COURT
Q

What is your purpose in going to the house of the accused?

Because they are recruiting.

Prior to that when you went there, you have not met them before?

No, sir.

Why did you go to the house of the accused and knew that they are recruiting?

xxx
Q

Who else?

Luther Caban.

What is your relation with Luther Cavan?

She is my sister.

xxx
FISCAL BALABAGAN
Q
You said that you were recruited together with your sister and others and were
brought to Cabanatuan City, is that correct?
A

Yes, sir.

Who brought you there?

ATTY. BAYRON
Already answered.
COURT
Witness may answer.
WITNESS

Josephine Clam and Roger Segun.37

Again, the term "recruit" is a conclusion of law. The prosecution failed to elicit from Loreta how
appellants "recruited" Luther. While Loreta also said that Luther was among the thirteen brought
to Manila, it does not necessarily mean that her transportation was for purposes of employment.
Moreover, Loreta said that Luthers job, at least at the time Loreta testified, was not a result of
appellants efforts.
Q

How about your sister Luther, where is she now?

She is in Manila.

Why [is] she is still in Manila until now?

She went there to work.

Who gave her work, were the accused in this case as promised to you?

No, sir.38

These circumstances give rise to doubts whether appellants indeed recruited Luther Cavan.
Neither was the prosecution able to establish that appellants recruited the twins Pedro and
Pablo Ozarraga. Josephine Ozarraga Aba, the twins aunt, testified:

Where did they brought your nephews?

One in Cabanatuan and the other one in Bulacan.39

As we held earlier, "recruit" is a legal conclusion. The witness must testify as to the facts that
would prove recruitment. It does not suffice that the witness simply state that the accused
"recruited" the "victim." Hence, the testimony of Josephine Aba that appellants "recruited" her
nephews is, by itself, insufficient to convict appellants for the recruitment of Pedro and Pablo
Ozarraga.
That appellants allegedly told Josephine Aba that her nephews would be given free fare and
meals is not inconsistent with appellants account that they paid for their neighbors expenses.
The same holds true for the claim that appellants brought the twins to Cabanatuan and Bulacan.
According to appellants, they accompanied the thirteen persons to help them find work. The
reference to good wages could mean that the rates of compensation in Cabanatuan or Bulacan
are relatively high compared to those in Lanao del Norte. These circumstances do not
necessarily mean that appellants recruited Pedro and Pablo Ozarraga.
We cannot give much credence to Josephines statement that appellants also promised free fare
and meals, and good wages to her nephews since the prosecution did not show that Josephine
was present when appellants made this supposed promise to her nephews.
Neither did the prosecution prove beyond reasonable doubt that appellants recruited Jhonely
and Jonard Genemelo. Melecio Ababa, grandfather of Jhonely and Jonard testified on direct
examination:

Sometime in March or April, 1993, what happen to these two nephews of yours?

Q
Do you recall what happen to your 2 grandsons sometime in the month of April,
1993?

They were recruited by Josephine Clam and Roger Segun.

They were recruited by Roger Segun and Josephine Clam.

xxx

xxx

Q
You said that these 2 accused were the ones who recruited your 2 nephews
sometime in March or April, 1993. When you learn that they were recruited what did
you do if any?

FISCAL BALABAGAN

A
I went to their house and confronted them about my nephews and they told me
that my nephews will be given free fare to Manila, free meals and good wages and
they also promised that to my nephews.
Q
You said they promised your nephews free fare to Manila, free meals and good
wages, whom are you referring they?
A

Q
When you learn that your grandsons were being recruited by Roger and Segun
and Josephine Clam, what did you do?
A

I went to their house.

You said you went to their house, whose house are your referring?

The house of Roger Segun and Josephine Clam.

Josephine Clam and Roger Segun.

xxx

Why were Josephine Clam and Roger Segun able to recruit your two nephews?
FISCAL BALABAGAN

Because they brought them.

Q

Who were the people you met inside the house of Josephine Clam?

Them.

Are you referring Roger Segun and Josephine Clam?

Q
You were not present when your two grandsons were allegedly recruited by the
two accused?

Yes.
A

Q
Because of this free meals and transportation to Manila they promised to your
grandsons and you what happen?
A

They brought them to Cabanatuan City.

Did you agree with this?

Yes, I agree.

Q
You agreed because of this promise of free transportation and good wages for
your grandchildren?
Yes.40

On cross-examination, Melecio said:

Q
You only learn from somebody that your grandsons were recruited by the two
accused?
A
Q

Lastly, Elena Araas testimony on her son Richards alleged recruitment is insufficient to prove
appellants guilt. Elena testified on direct examination:
FISCAL BALABAGAN
Q

Mrs. Elena Araas, do you know Richard Araas?

WITNESS
A

Yes, he is my son.

Where is he now?

In Cabanatuan City brought by Josephine Clam

Do you know what is the family name of Josephine?

Yes, Clam.

When was your son brought by Josephine Clam and Roger Segun?

March 6, that was Saturday.

You mean the house of your grandson?

I went to the house of the recruiters because they were staying in my house.

When you went to their house your grandsons were not there?

My two grandsons were there.

Q
Can you recall when your two grandsons Johnely and Jonard allegedly recruited
by the two accused?

Note again the use of the term "recruit," a defect present in the testimonies of Rogelio Collantes,
Loreta Cavan and Josephine Aba. While Melecio Aba said that appellants promised his
grandsons free transportation and meals, and good wages, these promises, as we have
observed in analyzing Josephine Abas testimony, are not incongruent with appellants version.

From them personally because I went to their house.

I was there present.41

Then what happen there when you went to the house of the accused?

A
They promised that the transportation to Manila is free and free meals and good
wages.

April.

Q
Do you know the reason why they brought your son in Cabanatuan on March 6,
1993?
A

Because of the promise that he would be given good salary.

COURT
Q

How do you know that he was promised of a good salary?

Because I went to their house.

Sometime on the 16 or 17th.

What month?
FISCAL BALABAGAN

Are you referring to the house of Josephine Clam?

The accused tell (sic) your son that they will help your son to find a job?

Yes.

Yes, sir.43

Were there people there when you arrived there?

Yes, Josephine Clam, Roger Segun, my son and others.

Did you agree to recruitment that your son will be brought to Cabanatuan City?

Yes.

Why did you agree?

Because of the promise that they would receive good salary.

Did he went there personally?

No.

xxx
FISCAL BALABAGAN
Q

How was your son recruited by the accused in this case?

As they promised that the salary is quite big.42

On cross-examination, Elena said:

Q

You were not present when your son was allegedly recruited by the accused?

I was there.

Elenas testimony fails to state the specific act constituting the recruitment. Elena merely
declared that her son was"recruited" a legal conclusion. Appellants also supposedly said that
"they have work in Cabanatuan City" and that "they will help [her] son to find a job." Elena did
not state the context and the circumstances under which these statements were made.
Moreover, the statements attributed to appellants are ambiguous and hardly incongruous with
appellants claim that they assisted their neighbors find work, which assistance does not
necessarily translate to an act of recruitment. That there was a supposed promise of a good
salary is also ambiguous for, as noted earlier, the reference to good wages could mean that the
rates of compensation in Cabanatuan City are higher compared to those in Lanao del
Norte.1wphi1.nt
In sum, the prosecution failed to elicit from many of its witnesses the specific acts constituting
the recruitment of the other alleged victims. The prosecution was able to prove that appellants
performed recruitment activities only in the cases of Victoria Collantes and Loreta Cavan. The
third element of illegal recruitment, i.e., that the offender commits the acts of recruitment against
three or more persons is, therefore, absent. Consequently, appellants can be convicted only of
two counts of "simple" illegal recruitment.
WHEREFORE, the Decision of the Regional Trial Court is MODIFIED. Appellants are
found GUILTY beyond reasonable doubt of two counts of illegal recruitment, as defined and
punished by Article 38 (a) of the Labor Code, in relation to Articles 13 (b) and 39 thereof. They
are each sentenced to suffer for each count imprisonment of four (4) to five (5) years.
SO ORDERED.

18. G.R. Nos. 115150-55 September 27, 1996

PEOPLE OF THE PHILIPPINES, plaintiff-appellee,
vs.
REYDANTE CALONZO Y AMBROSIO, accused-appellant.
BELLOSILLO, J.:

Q
The accused in this case did not offer to your son but it was your son who asked
helped (sic) to find a job?
A

My son was recruited that he would be given work.

REYDANTE CALONZO Y AMBROSIO was charged with Illegal Recruitment in Large

Scale and five (5) counts of Estafa by Bernardo Miranda, Danilo de los Reyes, Elmer
Clamor, Belarmino Torregrosa and Hazel de Paula. On 5 April 1994 the Regional Trial
Court of Pasig found the accused guilty as charged and sentenced

COURT
Q

The 2 accused never approached your son they have work in Cabanatuan City?

Yes, they said that.

ATTY. BAYRON

1. In criminal Case No. 98850 for Estafa, to suffer an indeterminate prison

term of eleven (11) years, eleven (11) months and eleven (11) days
of prision mayor to fifteen (15) years, eight (8) months and twenty-one (21)
days of reclusion temporal, to reimburse the complainant-victim Bernardo
Miranda in the amount of P120,000.00 and to pay the costs.
2. In criminal Case No. 98851 for Estafa, to suffer an indeterminate prison
term of eleven (11) years, eleven (11) months and eleven (11) days

of prision mayor to fifteen (15) years, eight (8) months and twenty-one (21)
days of reclusion temporal, to reimburse the complainant-victim Danilo de
los Reyes in the amount of P120,000.00 and to pay the costs.
3. In Criminal Case No. 98852 for Estafa, to suffer an indeterminate prison
term of eleven (11) years, eleven (11) months and eleven (11) days
of prision mayor to fifteen (15) years, eight (8) months and twenty-one (21)
days of reclusion temporal, to reimburse the complainant-victim Elmer
Clamor in the amount of P120,000.00 and to pay the costs.
4. In Criminal Case No. 98853 for Estafa, to suffer an indeterminate prison
term of nine (9) years, eleven (11) months and eleven (11) days of prision
mayor to thirteen (13) years, eight (8) months and twenty-one (21) days
of reclusion temporal, to reimburse the complainant-victim Belarmino
Torresgrosa in the amount of P100,000.00 and to pay the costs.
5. In Criminal Case No. 98854 for Estafa, to suffer an indeterminate prison
term of eleven (11) years, eleven (11) months and eleven (11) days
of prison mayor fifteen a (15) years, eight (8) months and twenty-one (21)
days of reclusion temporal, to reimburse the complainant-victim Hazel de
Paula in the amount of P120,000.00 and to pay the costs.
6. In Criminal Case No. 98855 for Illegal Recruitment (Large Scale), to
suffer the penalty of life imprisonment, to pay a fine of One Hundred
Thousand Pesos (P100,000.00) and to pay a fine of One Hundred
Thousand Pesos (P100,000.00) and to pay the costs.
In the successive service of his sentences, the accused shall be credited in
full with the period of his preventive imprisonment.
The above terms shall also be subject to the application of the Three-Fold
Rule 1
Accused-appellant in this appeal assails his conviction by the trial court. He claims that the court
below erred in disregarding the testimony of Nenita Mercado, an employee of the Philippine
Overseas Employment Administration (POEA), who categorically stated that their records
indicated that Calonzo never processed complainants' applications for employment abroad. He
concludes from that fact alone that he cannot be deemed to have engaged in the recruitment of
workers for employment abroad.
As regards the estafa cases, accused-appellant contends that the court a quo erred in giving
credence to the testimonies of prosecution witnesses considering that the amounts claimed to
have been collected by him did not correspond to the amounts indicated in the receipts
presented by the complaining witnesses.
The antecedents: Sometime in February 1992 Danilo de los Reyes and his brother-in-law
Belarmino Torregrosa met Reydante Calonzo in the house of Loreta Castaeda at No. 10 P.
Burgos Street, Pasig, Metro Manila. In that meeting Calonzo lost no time in informing them that
he could provide them employment abroad, particularly Italy, for a fee. Calonzo was glib and
persuasive that De los Reyes and Torregrosa were quickly convinced to cast their lot with him.
Upon returning home they took stock of their assets and resources and came up with the figures
sufficient for the processing of their applications for employment abroad. Two months after their
initial meeting, or on 13 April 1992, De los Reyes gave Calonzo P50,000.00. He also pledged
the Ford Fiera of his brother-in-law to Calonzo for P70,000.00 in order to come up with the

P120,000.00 processing fee imposed by Calonzo. The latter then informed De los Reyes of his
"scheduled" departure for Italy on 29 April 1992. However, despite the lapse of the period, De
los Reyes and Torregrosa remained in the Philippines although their recruiter reiterated his
promise to send them to Italy.
On 1 May 1992, instead of sending them to Italy, they were billeted at Aloha Hotel along Roxas
Boulevard. The following day, or on 2 May 1992, they boarded a plane that was supposed to
take them to Italy. But Calonzo had another destination in mind. They landed in Bangkok instead
where their visas for Italy, according to Calonzo, would be processed. They stayed at P.S. Guest
Hotel for one and a half months. While in Bangkok the accused again collected money from
them purportedly to defray the expenses for their visas. They also incurred expenses for food
and accommodation, and for overstaying, De los Reyes had to pay 2800 bahts to the
immigration authorities only to discover to their utter dismay that Calonzo had already returned
to the Philippines.
In their helplessness in a foreign land they sought the help of Loreta Castaeda by calling her up
in Manila. Castaeda promptly fetched them from Bangkok and brought them back to the
Philippines. The day following their arrival they went to the office of Calonzo on Padre Faura.
Despite their frustrations in Bangkok Calonzo still insisted that he would send them to Italy as he
promised. In their naivete which was no match to the unmitigated audacity of Calonzo, De los
Reyes and Torregrosa still clung to the promises of Calonzo hoping against hope that the latter
would still fulfill them. However the promises remained unfulfilled so they looked again for
Calonzo. But this time their quarry had already absconded.
They verified from the POEA whether Calonzo or his R.A.C. Business Agency was duly
authorized and licensed to recruit people for employment abroad. The POEA certified that
R.A.C. Business Agency was not licensed to recruit workers for overseas employment.
Torregrosa substantiated the above account. He testified that he gave Calonzo a total of
P100,000.00. On cross-examination however he stated that he gave such amount on 27 April
1992 and not on 13 April 1992 as testified to by De los Reyes. But the date appearing on the
receipt marked Exhibit A is 13 April 1992. Torregrosa also claimed that while in Bangkok he
gave Calonzo an additional amount of US$100.00.
On her part, Hazel de Paula testified that she first met appellant and the other complainants at
the house of Loreta Castaeda at No. 10 P. Burgos Street, Pasig, Metro Manila. Convinced that
she would eventually be employed in Italy as a domestic helper she gave Calonzo P120,000.00.
Unlike the other complaining witnesses, she was not able to fly to Bangkok on 2 May 1992 as
her passport was not yet available. She left only on 6 May 1992 where she was met by Calonzo
at the airport and brought to the P.S. Guest Hotel where her companions who had arrived earlier
were already billeted. She said that while in Bangkok Calonzo asked money again from her.
Elmer Clamor, a 28-year old resident of Gen. Trias, Cavite, was similarly situated with Hazel de
Paula. Clamor narrated that he gave Calonzo P120,000.00 for the latter's commitment to send
him to Italy, and in fact while in Bangkok he gave Calonzo US$250.00 more.
Bernardo Miranda, a construction worker from Talisay, Batangas, was another victim of Calonzo.
Lured by the latter's assurances that he would be sent to Italy, he gave Calonzo a total of
P120,000.00 for the processing of his application for work in Italy. But, like all the rest of them,
Miranda only reached Bangkok. The promised job, his hard-earned money and Calonzo himself
eventually disappeared.

Senior Labor Employment Office Nenita Mercado of the POEA confirmed that neither Reydante
Calonzo nor hisR.A.C. Business Agency was authorized to recruit workers for employment
abroad.
Reydante Calonzo tells us his own story. He admits being engaged in the consultancy business
through his R.A.C.Business Agency but denies any involvement in recruitment activities. He
admits knowing Loreta Castaeda and Leticia Solis as the two have sought his assistance
regarding their real estate business. He denies knowing the complaining witnesses except
Danilo de los Reyes and Belarmino Torregrosa who once visited him in his office. While he
disclaims the receipts presented by the prosecution as official receipts of his R.A.C. Business
Agency he admits that the signatures thereon were similar to his.
We frustrate the expectations of the accused. Article 13, par. (b), of the Labor Code defines
recruitment and placement as
(A)ny act of canvassing, enlisting, contracting, transporting, utilizing, hiring
or procuring workers, and includes referrals, contract services, promising or
advertising for employment, locally or abroad, whether for profit or
not; Provided, that any person or entity which, in any manner, offers or
promises for a fee employment to two or more persons shall be deemed
engaged in recruitment and placement.
Illegal recruitment is specifically defined in Art. 38 of the Code thus
(a) Any recruitment activities, including the prohibited practices enumerated
under Article 34 of this Code, to be undertaken by non-licensees or nonholders of authority shall be deemed illegal and punishable under Article 39
of this Code . . .
(b) Illegal recruitment when committed by a syndicate or in large scale shall
be considered an offense involving economic sabotage and shall be
penalized in accordance with Article 39 hereof.
Illegal recruitment is deemed committed by a syndicate if carried out by a
group of three (3) or more persons conspiring and/or confederating with one
another in carrying out any unlawful or illegal transaction, enterprise or
scheme defined under the first paragraph hereof. Illegal recruitment is
deemed committed in large scale if committed against three (3) or more
persons individually or as a group.
All the five (5) complaining witnesses met each other for the first time at the house of Loreta
Castaeda. They were not in any way acquainted with one another prior to that meeting save for
Danilo de los Reyes and his brother-in-law Belarmino Torregrosa. They all came from different
places, yet, they were all united in pointing to Calonzo as the person who enticed them to apply
for employment abroad. Of course, Calonzo could not explain what motivated the complaining
witnesses to file these cases against him. The most that Calonzo could do on the witness stand
was to deny all the charges against him. Alas, his denial is at most lame and cannot prevail over
the positive assertions of the complaining witnesses. In People v. Villafuerte 2 we ruled
. . . The absence of evidence as to an improper motive actuating the
principal witnesses of the prosecution strongly tends to sustain no improper
motive existed and their testimony is worthy of full faith and credit. Accusedappellant's denial cannot prevail over the positive assertions of

complainants who had no motive to testify falsely against her except to tell
the truth.
Illegal recruitment in large scale is committed when a person "(a) undertakes any recruitment
activity defined under Article 13(b) or any prohibited practice enumerated under Article 34 of the
Labor Code; (b) does not have a license or authority to lawfully engage in the recruitment and
placement of workers; and (c) commits the same against three or more persons, individually or
as a group." 3 The testimony of complainants evidently showed that Calonzo was engaged in
recruitment activities in large scale. Firstly, he deluded complainants into believing that jobs
awaited them in Italy by distinctly impressing upon them that he had the facility to send them for
work abroad. He even showed them his passport to lend credence to his claim. To top it all, he
brought them to Bangkok and not to Italy. Neither did he have any arrangements in Bangkok for
the transfer of his recruits to Italy. Secondly, POEA likewise certified that neither Calonzo
norR.A.C. Business Agency was licensed to recruit workers for employment abroad. Appellant
admitted this fact himself. Thirdly, appellant recruited five (5) workers thus making the crime
illegal recruitment in large scale constituting economic sabotage.
In his attempt to exculpate himself, although belatedly, Calonzo denies having received money
from the complainants. But as against their positive testimonies, this denial of appellant is
worthless and at most self-serving. All the complaining witnesses testified that they gave their
money to Calonzo through Loreta Castaeda who in turn gave the amounts to Calonzo in their
presence. In support thereof complainants even presented receipts issued by
the R.A.C. Business Agency with Calonzo's signature affixed thereon. Nobody corroborated
Calonzo's denial. Even Loreta who could have confirmed such denial testified that all the
amounts given by the complainants were turned over by her to Calonzo. The attempt of the
defense at reinforcing such denial proved futile when it presented Carmeo Alix to testify that
appellant owned another import-export business as it had no relevance to his defense.
As regards the conviction of Calonzo for estafa on five (5) counts we ruled in People
v. Turda 4 that recruitment of persons for overseas employment without the necessary recruiting
permit or authority from the POEA constitutes illegal recruitment; however, where some other
crimes or felonies are committed in the process, conviction under the Labor Code does not
preclude punishment under other statutes. In People v. Romero 5 we said that the elements of
estafa were: (a) that the accused defrauded another abuse of confidence or by means of deceit,
and (b) that damage or prejudice capable of pecuniary estimation is caused to the offended
party or third person. Corollarily, Art. 315 of the Revised Penal Code provides for its penalty thus

1st. The penalty of prision correccional in its maximum period to prision

mayor in its minimum period, if the amount of the fraud is over P12,000 but
does not exceed P22,000, and if such amount exceeds the latter sum, the
penalty provided in this paragraph shall be imposed in its maximum period,
adding one year for each additional P10,000; but the total penalty which
may be imposed shall not exceed twenty years. In such a case, and in
connection with the accessory penalties which may be imposed and for the
purpose of the other provisions of this Code, the penalty shall be
termed prision mayor or reclusion temporal, as the case may be.
In the case before us, we are convinced that Calonzo defrauded complainants through deceit.
They were obviously misled into believing that he could provide them employment in Italy. As a
result, the five (5) complainants who desperately wanted to augment their income and improve
their lot parted with their hard-earned money. In Crim. Cases Nos. 98850, 98851, 98852 and
98854 the amount defrauded of each complainant was P120,000.00. In consonance with Art.
315 of the Revised Penal Code, the imposable penalty is prision correccional in its maximum
period to prision mayor in its minimum period the range of which is four (4) years, two (2) months
and one (1) day, to five (5) years, five (5) months and ten (10) days as minimum, while the

medium period is from five (5) years, five (5) months and eleven (11) days, to six (6) years, eight
(8) months and twenty (20) days, and the maximum is six (6) years, eight (8) months and
twenty-one (21) days, to eight (8) years. Since the amount of P120,000.00 was defrauded in
each case, the maximum penalty should be taken from the maximum period of the penalty
prescribed, plus one (1) year for every P10,000.00 in excess of P22,000.00 which, in these four
(4) cases is equivalent to nine (9) additional years. Hence, the maximum imposable penalty
should be fifteen (15) years, eight (8) months and twenty-one (21) days, to seventeen (17) years
of reclusion temporal medium. Applying the Indeterminate Sentence Law, the minimum penalty
shall be within the range of the penalty next lower in degree to that prescribed in the
Code, i.e., prision correccional minimum to prision correccional medium in any of its
periods. Prision correccionalminimum to prision correccional medium ranges from six (6) months
and one (1) day, to four (4) years and two (2) months. Clearly, the penalty imposed by the court
below in each of the aforesaid cases, which is eleven (11) years, eleven (11) months and eleven
(11) days of prision mayor medium, to fifteen (15) years, eight (8) months and twenty-one (21)
days of reclusion temporal medium, is properly within the range of the imposable penalty.
The same principle would apply to Crim. Case No. 98853 where the amount defrauded was
P100,000.00. The trial court therefore correctly imposed the penalty of nine (9) years, eleven
(11) months and eleven (11) days of prision mayor medium, to thirteen (13) years, eight (8)
months and twenty-one (21) days of reclusion temporal minimum, which is properly within the
range of the imposable penalty.
WHEREFORE, the judgment of the court a quo finding acccused-appellant REYDANTE
CALONZO Y AMBROSIO guilty of Illegal Recruitment in Large Scale in Crim. Case No. 98855
(G.R. No. 115155), and of Estafa in Crim. Case No. 98850 (G.R. No. 115150), Crim. Case No.
98851 (G.R. No. 115151), Crim. Case No. 98852 (G.R. No. 115152), Crim. Case No. 98853
(G.R. No. 115153) and Crim. Case No. 98854 (G.R. No. 115154) as well as the corresponding
penalties imposed by the court a quo is AFFIRMED, with costs against accused-appellant.
In the service of the various prison terms herein imposed upon accused-appellant, the provisions
of Art. 70 of the Revised Penal Code shall be observed.

SERVICES, INC., DAHLZEN INTERNATIONAL SERVICES, INC., INTERWORLD

PLACEMENT CENTER, INC., LAKAS TAO CONTRACT SERVICES LTD. CO., SSC MULTISERVICES, DMJ INTERNATIONAL, and MIP INTERNATIONAL MANPOWER SERVICES,
represented by its proprietress, MARCELINA I. PAGSIBIGAN, Respondents.
x-----------------------x
G.R. No. 167590
REPUBLIC OF THE PHILIPPINES, represented by the HONORABLE EXECUTIVE
SECRETARY, the HONORABLE SECRETARY OF LABOR AND EMPLOYMENT (DOLE), the
PHILIPPINE OVERSEAS EMPLOYMENT ADMINISTRATION (POEA), the OVERSEAS
WORKERS WELFARE ADMINISTRATION (OWWA), the LABOR ARBITERS OF THE
NATIONAL LABOR RELATIONS COMMISSION (NLRC), the HONORABLE SECRETARY OF
JUSTICE, the HONORABLE SECRETARY OF FOREIGN AFFAIRS and the COMMISSION
ON AUDIT (COA), Petitioners,
vs.
PHILIPPINE ASSOCIATION OF SERVICE EXPORTERS, INC. (P ASEI), Respondent.
x-----------------------x
G.R. Nos. 182978-79
BECMEN SERVICE EXPORTER AND PROMOTION, INC., Petitioner,
vs.
SPOUSES SIMPLICIO AND MILA CUARESMA (for and in behalf of daughter, Jasmin G.
Cuaresma), WHITE FALCON SERVICES, INC., and JAIME ORTIZ (President of White
Falcon Services, Inc.), Respondents.
x-----------------------x
G.R. Nos. 184298-99
SPOUSES SIMPLICIO AND MILA CUARESMA (for and in behalf of deceased daughter,
Jasmin G. Cuaresma), Petitioners,
vs.
WHITE FALCON SERVICES, INC. and BECMEN SERVICES EXPORTER AND PROMOTION,
INC., Respondents.
DECISION
ABAD, J.:
These consolidated cases pertain to the constitutionality of certain provisions of Republic Act
8042, otherwise known as the Migrant Workers and Overseas Filipinos Act of 1995.

SO ORDERED.

The Facts and the Case

19. G.R. No. 152642

November 13, 2012

HON. PATRICIA A. STO.TOMAS, ROSALINDA BALDOZ and LUCITA LAZO, Petitioners,

vs.
REY SALAC, WILLIE D. ESPIRITU, MARIO MONTENEGRO, DODGIE BELONIO, LOLIT
SALINEL and BUDDY BONNEVIE, Respondents.
x-----------------------x
G.R. No. 152710
HON. PATRICIA A. STO. TOMAS, in her capacity as Secretary of Department of Labor and
Employment (DOLE), HON. ROSALINDA D. BALDOZ, in her capacity as Administrator,
Philippine Overseas Employment Administration (POEA), and the PHILIPPINE OVERSEAS
EMPLOYMENT ADMINISTRATION GOVERNING BOARD, Petitioners,
vs.
HON. JOSE G. PANEDA, in his capacity as the Presiding Judge of Branch 220, Quezon
City, ASIAN RECRUITMENT COUNCIL PHILIPPINE CHAPTER, INC. (ARCOPHIL), for itself
and in behalf of its members: WORLDCARE PHILIPPINES SERVIZO INTERNATIONALE,
INC., STEADFAST INTERNATIONAL RECRUITMENT CORP., VERDANT MANPOWER
MOBILIZATION CORP., BRENT OVERSEAS PERSONNEL, INC., ARL MANPOWER

On June 7, 1995 Congress enacted Republic Act (R.A.) 8042 or the Migrant Workers and
Overseas Filipinos Act of 1995 that, for among other purposes, sets the Governments policies
on overseas employment and establishes a higher standard of protection and promotion of the
welfare of migrant workers, their families, and overseas Filipinos in distress.
G.R. 152642 and G.R. 152710
(Constitutionality of Sections 29 and 30, R.A. 8042)
Sections 29 and 30 of the Act1 commanded the Department of Labor and Employment (DOLE)
to begin deregulating within one year of its passage the business of handling the recruitment and
migration of overseas Filipino workers and phase out within five years the regulatory functions of
the Philippine Overseas Employment Administration (POEA).
On January 8, 2002 respondents Rey Salac, Willie D. Espiritu, Mario Montenegro, Dodgie
Belonio, Lolit Salinel, and Buddy Bonnevie (Salac, et al.) filed a petition for certiorari, prohibition
and mandamus with application for temporary restraining order (TRO) and preliminary injunction
against petitioners, the DOLE Secretary, the POEA Administrator, and the Technical Education

and Skills Development Authority (TESDA) Secretary-General before the Regional Trial Court
(RTC) of Quezon City, Branch 96.2
Salac, et al. sought to: 1) nullify DOLE Department Order 10 (DOLE DO 10) and POEA
Memorandum Circular 15 (POEA MC 15); 2) prohibit the DOLE, POEA, and TESDA from
implementing the same and from further issuing rules and regulations that would regulate the
recruitment and placement of overseas Filipino workers (OFWs); and 3) also enjoin them to
comply with the policy of deregulation mandated under Sections 29 and 30 of Republic Act
8042.
On March 20, 2002 the Quezon City RTC granted Salac, et al.s petition and ordered the
government agencies mentioned to deregulate the recruitment and placement of OFWs. 3 The
RTC also annulled DOLE DO 10, POEA MC 15, and all other orders, circulars and issuances
that are inconsistent with the policy of deregulation under R.A. 8042.
Prompted by the RTCs above actions, the government officials concerned filed the present
petition in G.R. 152642 seeking to annul the RTCs decision and have the same enjoined
pending action on the petition.
On April 17, 2002 the Philippine Association of Service Exporters, Inc. intervened in the case
before the Court, claiming that the RTC March 20, 2002 Decision gravely affected them since it
paralyzed the deployment abroad of OFWs and performing artists. The Confederated
Association of Licensed Entertainment Agencies, Incorporated (CALEA) intervened for the same
purpose.4
On May 23, 2002 the Court5 issued a TRO in the case, enjoining the Quezon City RTC, Branch
96, from enforcing its decision.
In a parallel case, on February 12, 2002 respondents Asian Recruitment Council Philippine
Chapter, Inc. and others (Arcophil, et al.) filed a petition for certiorari and prohibition with
application for TRO and preliminary injunction against the DOLE Secretary, the POEA
Administrator, and the TESDA Director-General,6 before the RTC of Quezon City, Branch 220,
to enjoin the latter from implementing the 2002 Rules and Regulations Governing the
Recruitment and Employment of Overseas Workers and to cease and desist from issuing other
orders, circulars, and policies that tend to regulate the recruitment and placement of OFWs in
violation of the policy of deregulation provided in Sections 29 and 30 of R.A. 8042.
On March 12, 2002 the Quezon City RTC rendered an Order, granting the petition and enjoining
the government agencies involved from exercising regulatory functions over the recruitment and
placement of OFWs. This prompted the DOLE Secretary, the POEA Administrator, and the
TESDA Director-General to file the present action in G.R. 152710. As in G.R. 152642, the Court
issued on May 23, 2002 a TRO enjoining the Quezon City RTC, Branch 220 from enforcing its
decision.

(b.1) Philippine Overseas Employment Administration The Administration shall regulate private
sector participation in the recruitment and overseas placement of workers by setting up a
licensing and registration system. It shall also formulate and implement, in coordination with
appropriate entities concerned, when necessary, a system for promoting and monitoring the
overseas employment of Filipino workers taking into consideration their welfare and the
domestic manpower requirements.
In addition to its powers and functions, the administration shall inform migrant workers not only
of their rights as workers but also of their rights as human beings, instruct and guide the workers
how to assert their rights and provide the available mechanism to redress violation of their rights.
In the recruitment and placement of workers to service the requirements for trained and
competent Filipino workers of foreign governments and their instrumentalities, and such other
employers as public interests may require, the administration shall deploy only to countries
where the Philippines has concluded bilateral labor agreements or arrangements: Provided, That
such countries shall guarantee to protect the rights of Filipino migrant workers; and: Provided,
further, That such countries shall observe and/or comply with the international laws and
standards for migrant workers.
SEC. 2. Section 29 of the same law is hereby repealed.
SEC. 3. Section 30 of the same law is also hereby repealed.
xxxx
On August 20, 2009 respondents Salac, et al. told the Court in G.R. 152642 that they
agree9 with the Republics view that the repeal of Sections 29 and 30 of R.A. 8042 renders the
issues they raised by their action moot and academic. The Court has no reason to disagree.
Consequently, the two cases, G.R. 152642 and 152710, should be dismissed for being moot
and academic.
G.R. 167590
(Constitutionality of Sections 6, 7, and 9 of R.A. 8042)
On August 21, 1995 respondent Philippine Association of Service Exporters, Inc. (PASEI) filed a
petition for declaratory relief and prohibition with prayer for issuance of TRO and writ of
preliminary injunction before the RTC of Manila, seeking to annul Sections 6, 7, and 9 of R.A.
8042 for being unconstitutional. (PASEI also sought to annul a portion of Section 10 but the
Court will take up this point later together with a related case.)
Section 6 defines the crime of "illegal recruitment" and enumerates the acts constituting the
same. Section 7 provides the penalties for prohibited acts. Thus:

On December 4, 2008, however, the Republic informed the Court that on April 10, 2007 former
President Gloria Macapagal-Arroyo signed into law R.A. 94228 which expressly repealed
Sections 29 and 30 of R.A. 8042 and adopted the policy of close government regulation of the
recruitment and deployment of OFWs. R.A. 9422 pertinently provides:
xxxx
SEC. 1. Section 23, paragraph (b.1) of Republic Act No. 8042, otherwise known as the "Migrant
Workers and Overseas Filipinos Act of 1995" is hereby amended to read as follows:

SEC. 6. Definition. For purposes of this Act, illegal recruitment shall mean any act of
canvassing, enlisting, contracting, transporting, utilizing, hiring, procuring workers and includes
referring, contract services, promising or advertising for employment abroad, whether for profit or
not, when undertaken by a non-license or non-holder of authority contemplated under Article
13(f) of Presidential Decree No. 442, as amended, otherwise known as the Labor Code of the
Philippines: Provided, That such non-license or non-holder, who, in any manner, offers or
promises for a fee employment abroad to two or more persons shall be deemed so engaged. It

shall likewise include the following acts, whether committed by any person, whether a nonlicensee, non-holder, licensee or holder of authority:

legislative policy has been further stressed in July 2010 with the enactment of R.A.
1002212 which increased even more the duration of the penalties of imprisonment and the
amounts of fine for the commission of the acts listed under Section 7.

xxxx
SEC. 7. Penalties.
(a) Any person found guilty of illegal recruitment shall suffer the penalty of
imprisonment of not less than six (6) years and one (1) day but not more than twelve
(12) years and a fine not less than two hundred thousand pesos (P200,000.00) nor
more than five hundred thousand pesos (P500,000.00).
(b) The penalty of life imprisonment and a fine of not less than five hundred thousand
pesos (P500,000.00) nor more than one million pesos (P1,000,000.00) shall be
imposed if illegal recruitment constitutes economic sabotage as defined herein.
Provided, however, That the maximum penalty shall be imposed if the person illegally recruited
is less than eighteen (18) years of age or committed by a non-licensee or non-holder of
authority.10
Finally, Section 9 of R.A. 8042 allowed the filing of criminal actions arising from "illegal
recruitment" before the RTC of the province or city where the offense was committed or where
the offended party actually resides at the time of the commission of the offense.
The RTC of Manila declared Section 6 unconstitutional after hearing on the ground that its
definition of "illegal recruitment" is vague as it fails to distinguish between licensed and nonlicensed recruiters11 and for that reason gives undue advantage to the non-licensed recruiters in
violation of the right to equal protection of those that operate with government licenses or
authorities.
But "illegal recruitment" as defined in Section 6 is clear and unambiguous and, contrary to the
RTCs finding, actually makes a distinction between licensed and non-licensed recruiters. By its
terms, persons who engage in "canvassing, enlisting, contracting, transporting, utilizing, hiring,
or procuring workers" without the appropriate government license or authority are guilty of illegal
recruitment whether or not they commit the wrongful acts enumerated in that section. On the
other hand, recruiters who engage in the canvassing, enlisting, etc. of OFWs, although with the
appropriate government license or authority, are guilty of illegal recruitment only if they commit
any of the wrongful acts enumerated in Section 6.

Obviously, in fixing such tough penalties, the law considered the unsettling fact that OFWs must
work outside the countrys borders and beyond its immediate protection. The law must,
therefore, make an effort to somehow protect them from conscienceless individuals within its
jurisdiction who, fueled by greed, are willing to ship them out without clear assurance that their
contracted principals would treat such OFWs fairly and humanely.
As the Court held in People v. Ventura,13 the State under its police power "may prescribe such
regulations as in its judgment will secure or tend to secure the general welfare of the people, to
protect them against the consequence of ignorance and incapacity as well as of deception and
fraud." Police power is "that inherent and plenary power of the State which enables it to prohibit
all things hurtful to the comfort, safety, and welfare of society." 14
The Manila RTC also invalidated Section 9 of R.A. 8042 on the ground that allowing the
offended parties to file the criminal case in their place of residence would negate the general rule
on venue of criminal cases which is the place where the crime or any of its essential elements
were committed. Venue, said the RTC, is jurisdictional in penal laws and, allowing the filing of
criminal actions at the place of residence of the offended parties violates their right to due
process. Section 9 provides:
SEC. 9. Venue. A criminal action arising from illegal recruitment as defined herein shall be filed
with the Regional Trial Court of the province or city where the offense was committed or where
the offended party actually resides at the time of the commission of the offense: Provided, That
the court where the criminal action is first filed shall acquire jurisdiction to the exclusion of other
courts: Provided, however, That the aforestated provisions shall also apply to those criminal
actions that have already been filed in court at the time of the effectivity of this Act.
But there is nothing arbitrary or unconstitutional in Congress fixing an alternative venue for
violations of Section 6 of R.A. 8042 that differs from the venue established by the Rules on
Criminal Procedure. Indeed, Section 15(a), Rule 110 of the latter Rules allows exceptions
provided by laws. Thus:
SEC. 15. Place where action is to be instituted. (a) Subject to existing laws, the criminal action
shall be instituted and tried in the court of the municipality or territory where the offense was
committed or where any of its essential ingredients occurred. (Emphasis supplied)
xxxx

The Manila RTC also declared Section 7 unconstitutional on the ground that its sweeping
application of the penalties failed to make any distinction as to the seriousness of the act
committed for the application of the penalty imposed on such violation. As an example, said the
trial court, the mere failure to render a report under Section 6(h) or obstructing the inspection by
the Labor Department under Section 6(g) are penalized by imprisonment for six years and one
day and a minimum fine of P200,000.00 but which could unreasonably go even as high as life
imprisonment if committed by at least three persons.
Apparently, the Manila RTC did not agree that the law can impose such grave penalties upon
what it believed were specific acts that were not as condemnable as the others in the lists. But,
in fixing uniform penalties for each of the enumerated acts under Section 6, Congress was within
its prerogative to determine what individual acts are equally reprehensible, consistent with the
State policy of according full protection to labor, and deserving of the same penalties. It is not
within the power of the Court to question the wisdom of this kind of choice. Notably, this

Section 9 of R.A. 8042, as an exception to the rule on venue of criminal actions is, consistent
with that laws declared policy15 of providing a criminal justice system that protects and serves
the best interests of the victims of illegal recruitment.
G.R. 167590, G.R. 182978-79,16 and G.R. 184298-9917
(Constitutionality of Section 10, last sentence of 2nd paragraph)
G.R. 182978-79 and G.R. 184298-99 are consolidated cases. Respondent spouses Simplicio
and Mila Cuaresma (the Cuaresmas) filed a claim for death and insurance benefits and
damages against petitioners Becmen Service Exporter and Promotion, Inc. (Becmen) and White

Falcon Services, Inc. (White Falcon) for the death of their daughter Jasmin Cuaresma while
working as staff nurse in Riyadh, Saudi Arabia.
The Labor Arbiter (LA) dismissed the claim on the ground that the Cuaresmas had already
received insurance benefits arising from their daughters death from the Overseas Workers
Welfare Administration (OWWA). The LA also gave due credence to the findings of the Saudi
Arabian authorities that Jasmin committed suicide.
On appeal, however, the National Labor Relations Commission (NLRC) found Becmen and
White Falcon jointly and severally liable for Jasmins death and ordered them to pay the
Cuaresmas the amount of US$113,000.00 as actual damages. The NLRC relied on the
Cabanatuan City Health Offices autopsy finding that Jasmin died of criminal violence and rape.
Becmen and White Falcon appealed the NLRC Decision to the Court of Appeals (CA). 18 On
June 28, 2006 the CA held Becmen and White Falcon jointly and severally liable with their Saudi
Arabian employer for actual damages, with Becmen having a right of reimbursement from White
Falcon. Becmen and White Falcon appealed the CA Decision to this Court.
On April 7, 2009 the Court found Jasmins death not work-related or work-connected since her
rape and death did not occur while she was on duty at the hospital or doing acts incidental to her
employment. The Court deleted the award of actual damages but ruled that Becmens corporate
directors and officers are solidarily liable with their company for its failure to investigate the true
nature of her death. Becmen and White Falcon abandoned their legal, moral, and social duty to
assist the Cuaresmas in obtaining justice for their daughter. Consequently, the Court held the
foreign employer Rajab and Silsilah, White Falcon, Becmen, and the latters corporate directors
and officers jointly and severally liable to the Cuaresmas for: 1) P2,500,000.00 as moral
damages; 2) P2,500,000.00 as exemplary damages; 3) attorneys fees of 10% of the total
monetary award; and 4) cost of suit.
On July 16, 2009 the corporate directors and officers of Becmen, namely, Eufrocina Gumabay,
Elvira Taguiam, Lourdes Bonifacio and Eddie De Guzman (Gumabay, et al.) filed a motion for
leave to Intervene. They questioned the constitutionality of the last sentence of the second
paragraph of Section 10, R.A. 8042 which holds the corporate directors, officers and partners
jointly and solidarily liable with their company for money claims filed by OFWs against their
employers and the recruitment firms. On September 9, 2009 the Court allowed the intervention
and admitted Gumabay, et al.s motion for reconsideration.
The key issue that Gumabay, et al. present is whether or not the 2nd paragraph of Section 10,
R.A. 8042, which holds the corporate directors, officers, and partners of recruitment and
placement agencies jointly and solidarily liable for money claims and damages that may be
adjudged against the latter agencies, is unconstitutional.

The liability of the principal/employer and the recruitment/placement agency for any and all
claims under this section shall be joint and several. This provision shall be incorporated in the
contract for overseas employment and shall be a condition precedent for its approval. The
performance bond to be filed by the recruitment/placement agency, as provided by law, shall be
answerable for all money claims or damages that may be awarded to the workers. If the
recruitment/placement agency is a juridical being, the corporate officers and directors and
partners as the case may be, shall themselves be jointly and solidarily liable with the corporation
or partnership for the aforesaid claims and damages. (Emphasis supplied)
But the Court has already held, pending adjudication of this case, that the liability of corporate
directors and officers is not automatic. To make them jointly and solidarily liable with their
company, there must be a finding that they were remiss in directing the affairs of that company,
such as sponsoring or tolerating the conduct of illegal activities. 19 In the case of Becmen and
White Falcon,20 while there is evidence that these companies were at fault in not investigating
the cause of Jasmins death, there is no mention of any evidence in the case against them that
intervenors Gumabay, et al., Becmens corporate officers and directors, were personally
involved in their companys particular actions or omissions in Jasmins case.
As a final note, R.A. 8042 is a police power measure intended to regulate the recruitment and
deployment of OFWs. It aims to curb, if not eliminate, the injustices and abuses suffered by
numerous OFWs seeking to work abroad. The rule is settled that every statute has in its favor
the presumption of constitutionality. The Court cannot inquire into the wisdom or expediency of
the laws enacted by the Legislative Department. Hence, in the absence of a clear and
unmistakable case that the statute is unconstitutional, the Court must uphold its validity.
WHEREFORE, in G.R. 152642 and 152710, the Court DISMISSES the petitions for having
become moot and academic.1wphi1
In G.R. 167590, the Court SETS ASIDE the Decision of the Regional Trial Court ofManila dated
December 8, 2004 and DECLARES Sections 6, 7, and 9 of Republic Act 8042 valid and
constitutional.
In G.R. 182978-79 and G.R. 184298-99 as well as in G.R. 167590, the Court HOLDS the last
sentence of the second paragraph of Section 10 of Republic Act 8042 valid and constitutional.
The Court, however, RECONSIDERS and SETS ASIDE the portion of its Decision in G.R.
182978-79 and G.R. 184298-99 that held intervenors Eufrocina Gumabay, Elvira Taguiam,
Lourdes Bonifacio, and Eddie De Guzman jointly and solidarily liable with respondent Becmen
Services Exporter and Promotion, Inc. to spouses Simplicia and Mila Cuaresma for lack of a
finding in those cases that such intervenors had a part in the act or omission imputed to their
corporation.
SO ORDERED.

In G.R. 167590 (the PASEI case), the Quezon City RTC held as unconstitutional the last
sentence of the 2nd paragraph of Section 10 of R.A. 8042. It pointed out that, absent sufficient
proof that the corporate officers and directors of the erring company had knowledge of and
allowed the illegal recruitment, making them automatically liable would violate their right to due
process of law.
The pertinent portion of Section 10 provides:
SEC. 10. Money Claims. x x x

20. G.R. No. 81510 March 14, 1990

HORTENCIA
SALAZAR, petitioner,
vs.
HON. TOMAS D. ACHACOSO, in his capacity as Administrator of the Philippine Overseas
Employment Administration, and FERDIE MARQUEZ, respondents.
Gutierrez & Alo Law Offices for petitioner.

SARMIENTO, J.:
This concerns the validity of the power of the Secretary of Labor to issue warrants of arrest and
seizure under Article 38 of the Labor Code, prohibiting illegal recruitment.

lumipat
ako
ng
ibang
company pero ayaw niyang ibigay
and
PECC
Card
ko.
2. On November 3, 1987, public respondent Atty. Ferdinand Marquez to
whom said complaint was assigned, sent to the petitioner the following
telegram:
YOU ARE HEREBY DIRECTED TO APPEAR BEFORE
FERDIE
MARQUEZ
POEA
ANTI
ILLEGAL
RECRUITMENT UNIT 6TH FLR. POEA BLDG. EDSA
COR. ORTIGAS AVE. MANDALUYONG MM ON
NOVEMBER 6, 1987 AT 10 AM RE CASE FILED
AGAINST YOU. FAIL NOT UNDER PENALTY OF
LAW.
4. On the same day, having ascertained that the petitioner had no license to
operate a recruitment agency, public respondent Administrator Tomas D.
Achacoso issued his challenged CLOSURE AND SEIZURE ORDER NO.
1205 which reads:

The facts are as follows:

xxx xxx xxx
1. On October 21, 1987, Rosalie Tesoro of 177 Tupaz Street, Leveriza,
Pasay City, in a sworn statement filed with the Philippine Overseas
Employment Administration (POEA for brevity) charged petitioner Hortencia
Salazar, viz:
04. T: Ano ba ang dahilan at ikaw
ngayon
ay
narito
at
nagbibigay ng salaysay.
S: Upang ireklamo sa dahilan ang aking PECC Card
ay
ayaw ibigay sa akin ng dati kong manager. Horty
Salazar 615 R.O. Santos, Mandaluyong, Mla.

HORTY
No.
615
Mandaluyong, Metro Manila

R.O.

Santos

SALAZAR
St.

Pursuant to the powers vested in me under Presidential Decree No. 1920

and Executive Order No. 1022, I hereby order the CLOSURE of your
recruitment agency being operated at No. 615 R.O. Santos St.,
Mandaluyong, Metro Manila and the seizure of the documents and
paraphernalia being used or intended to be used as the means of
committing illegal recruitment, it having verified that you have
(1) No valid license or authority from the Department of
Labor and Employment to recruit and deploy workers
for overseas employment;

05. T: Kailan at saan naganap and

ginawang
panloloko
sa
iyo ng tao/mga taong inireklamo
mo?

(2) Committed/are committing acts prohibited under

Article 34 of the New Labor Code in relation to Article
38 of the same code.

S. Sa bahay ni Horty Salazar.

This ORDER is without prejudice to your criminal

prosecution under existing laws.

06. T: Paano naman naganap ang

pangyayari?
S. Pagkagaling ko sa Japan
ipinatawag niya ako. Kinuha
ang PECC Card ko at sinabing
hahanapan
ako
ng
booking sa Japan. Mag 9 month's
na
ako
sa
Phils.
ay
hindi pa niya ako napa-alis. So

Done in the City of Manila, this 3th day of November,

1987.
5. On January 26, 1988 POEA Director on Licensing and Regulation Atty.
Estelita B. Espiritu issued an office order designating respondents Atty.
Marquez, Atty. Jovencio Abara and Atty. Ernesto Vistro as members of a
team tasked to implement Closure and Seizure Order No. 1205. Doing so,
the group assisted by Mandaluyong policemen and mediamen Lito Castillo
of the People's Journal and Ernie Baluyot of News Today proceeded to the

residence of the petitioner at 615 R.O. Santos St., Mandaluyong, Metro

Manila. There it was found that petitioner was operating Hannalie Dance
Studio. Before entering the place, the team served said Closure and Seizure
order on a certain Mrs. Flora Salazar who voluntarily allowed them entry into
the premises. Mrs. Flora Salazar informed the team that Hannalie Dance
Studio was accredited with Moreman Development (Phil.). However, when
required to show credentials, she was unable to produce any. Inside the
studio, the team chanced upon twelve talent performers practicing a
dance number and saw about twenty more waiting outside, The team
confiscated assorted costumes which were duly receipted for by Mrs.
Asuncion Maguelan and witnessed by Mrs. Flora Salazar.
6. On January 28, 1988, petitioner filed with POEA the following letter:

7. On February 2, 1988, before POEA could answer the letter, petitioner

filed the instant petition; on even date, POEA filed a criminal complaint
against her with the Pasig Provincial Fiscal, docketed as IS-88-836. 1
On February 2, 1988, the petitioner filed this suit for prohibition. Although the acts sought to be
barred are alreadyfait accompli, thereby making prohibition too late, we consider the petition as
one for certiorari in view of the grave public interest involved.
The Court finds that a lone issue confronts it: May the Philippine Overseas Employment
Administration (or the Secretary of Labor) validly issue warrants of search and seizure (or arrest)
under Article 38 of the Labor Code? It is also an issue squarely raised by the petitioner for the
Court's resolution.
Under the new Constitution, which states:

Gentlemen:
On behalf of Ms. Horty Salazar of 615 R.O. Santos, Mandaluyong, Metro
Manila, we respectfully request that the personal properties seized at her
residence last January 26, 1988 be immediately returned on the ground that
said seizure was contrary to law and against the will of the owner thereof.
Among our reasons are the following:
1. Our client has not been given any prior notice or
hearing, hence the Closure and Seizure Order No.
1205 dated November 3, 1987 violates "due process of
law" guaranteed under Sec. 1, Art. III, of the Philippine
Constitution.
2. Your acts also violate Sec. 2, Art. III of the Philippine
Constitution which guarantees right of the people "to be
secure in their persons, houses, papers, and effects
against unreasonable searches and seizures of
whatever nature and for any purpose."
3. The premises invaded by your Mr. Ferdi Marquez
and five (5) others (including 2 policemen) are
the private residence of the Salazar family, and the
entry, search as well as the seizure of the personal
properties belonging to our client were without her
consent and were done with unreasonable force and
intimidation, together with grave abuse of the color of
authority, and constitute robbery and violation of
domicile under Arts. 293 and 128 of the Revised Penal
Code.
Unless said personal properties worth around TEN
THOUSAND PESOS (P10,000.00) in all (and which
were already due for shipment to Japan) are returned
within twenty-four (24) hours from your receipt hereof,
we shall feel free to take all legal action, civil and
criminal, to protect our client's interests.
We trust that you will give due attention to these
important matters.

. . . no search warrant or warrant of arrest shall issue except upon probable

cause to be determined personally by the judge after examination under
oath or affirmation of the complainant and the witnesses he may produce,
and particularly describing the place to be searched and the persons or
things to be seized. 2
it is only a judge who may issue warrants of search and arrest. 3 In one case, it was declared
that mayors may not exercise this power:
xxx xxx xxx
But it must be emphasized here and now that what has just been described
is the state of the law as it was in September, 1985. The law has since been
altered. No longer does the mayor have at this time the power to conduct
preliminary investigations, much less issue orders of arrest. Section 143 of
the Local Government Code, conferring this power on the mayor has been
abrogated, rendered functus officio by the 1987 Constitution which took
effect on February 2, 1987, the date of its ratification by the Filipino people.
Section 2, Article III of the 1987 Constitution pertinently provides that "no
search warrant or warrant of arrest shall issue except upon probable cause
to be determined personally by the judge after examination under oath or
affirmation of the complainant and the witnesses he may produce, and
particularly describing the place to be searched and the person or things to
be seized." The constitutional proscription has thereby been manifested that
thenceforth, the function of determining probable cause and issuing, on the
basis thereof, warrants of arrest or search warrants, may be validly
exercised only by judges, this being evidenced by the elimination in the
present Constitution of the phrase, "such other responsible officer as may
be authorized by law" found in the counterpart provision of said 1973
Constitution, who, aside from judges, might conduct preliminary
investigations and issue warrants of arrest or search warrants. 4
Neither may it be done by a mere prosecuting body:
We agree that the Presidential Anti-Dollar Salting Task Force exercises, or
was meant to exercise, prosecutorial powers, and on that ground, it cannot
be said to be a neutral and detached "judge" to determine the existence of
probable cause for purposes of arrest or search. Unlike a magistrate, a
prosecutor is naturally interested in the success of his case. Although his

office "is to see that justice is done and not necessarily to secure the
conviction of the person accused," he stands, invariably, as the accused's
adversary and his accuser. To permit him to issue search warrants and
indeed, warrants of arrest, is to make him both judge and jury in his own
right, when he is neither. That makes, to our mind and to that extent,
Presidential Decree No. 1936 as amended by Presidential Decree No.
2002, unconstitutional. 5

The Solicitor General's reliance on the case of Morano v. Vivo 9 is not well-taken. Vivo involved a
deportation case, governed by Section 69 of the defunct Revised Administrative Code and by
Section 37 of the Immigration Law. We have ruled that in deportation cases, an arrest (of an
undesirable alien) ordered by the President or his duly authorized representatives, in order to
carry out a final decision of deportation is valid. 10 It is valid, however, because of the recognized
supremacy of the Executive in matters involving foreign affairs. We have held: 11
xxx xxx xxx

Section 38, paragraph (c), of the Labor Code, as now written, was entered as an amendment by
Presidential Decrees Nos. 1920 and 2018 of the late President Ferdinand Marcos, to
Presidential Decree No. 1693, in the exercise of his legislative powers under Amendment No. 6
of the 1973 Constitution. Under the latter, the then Minister of Labor merely exercised
recommendatory powers:
(c) The Minister of Labor or his duly authorized representative shall have the
power to recommend the arrest and detention of any person engaged in
illegal recruitment. 6
On May 1, 1984, Mr. Marcos promulgated Presidential Decree No. 1920, with the avowed
purpose of giving more teeth to the campaign against illegal recruitment. The Decree gave the
Minister of Labor arrest and closure powers:
(b) The Minister of Labor and Employment shall have the power to cause
the arrest and detention of such non-licensee or non-holder of authority if
after proper investigation it is determined that his activities constitute a
danger to national security and public order or will lead to further
exploitation of job-seekers. The Minister shall order the closure of
companies, establishment and entities found to be engaged in the
recruitment of workers for overseas employment, without having been
licensed or authorized to do so. 7
On January 26, 1986, he, Mr. Marcos, promulgated Presidential Decree No. 2018, giving the
Labor Minister search and seizure powers as well:
(c) The Minister of Labor and Employment or his duly authorized
representatives shall have the power to cause the arrest and detention of
such non-licensee or non-holder of authority if after investigation it is
determined that his activities constitute a danger to national security and
public order or will lead to further exploitation of job-seekers. The Minister
shall order the search of the office or premises and seizure of documents,
paraphernalia, properties and other implements used in illegal recruitment
activities and the closure of companies, establishment and entities found to
be engaged in the recruitment of workers for overseas employment, without
having been licensed or authorized to do so.8
The above has now been etched as Article 38, paragraph (c) of the Labor Code.
The decrees in question, it is well to note, stand as the dying vestiges of authoritarian rule in its
twilight moments.
We reiterate that the Secretary of Labor, not being a judge, may no longer issue search or arrest
warrants. Hence, the authorities must go through the judicial process. To that extent, we declare
Article 38, paragraph (c), of the Labor Code, unconstitutional and of no force and effect.

The State has the inherent power to deport undesirable aliens (Chuoco
Tiaco vs. Forbes, 228 U.S. 549, 57 L. Ed. 960, 40 Phil. 1122, 1125). That
power may be exercised by the Chief Executive "when he deems such
action necessary for the peace and domestic tranquility of the nation."
Justice Johnson's opinion is that when the Chief Executive finds that there
are aliens whose continued presence in the country is injurious to the public
interest, "he may, even in the absence of express law, deport them".
(Forbes vs. Chuoco Tiaco and Crossfield, 16 Phil. 534, 568, 569; In re
McCulloch Dick, 38 Phil. 41).
The right of a country to expel or deport aliens because their continued
presence is detrimental to public welfare is absolute and unqualified (Tiu
Chun Hai and Go Tam vs. Commissioner of Immigration and the Director of
NBI, 104 Phil. 949, 956). 12
The power of the President to order the arrest of aliens for deportation is, obviously, exceptional.
It (the power to order arrests) can not be made to extend to other cases, like the one at bar.
Under the Constitution, it is the sole domain of the courts.
Moreover, the search and seizure order in question, assuming, ex gratia argumenti, that it was
validly issued, is clearly in the nature of a general warrant:
Pursuant to the powers vested in me under Presidential Decree No. 1920
and Executive Order No. 1022, I hereby order the CLOSURE of your
recruitment agency being operated at No. 615 R.O. Santos St.,
Mandaluyong, Metro Manila and the seizure of the documents and
paraphernalia being used or intended to be used as the means of
committing illegal recruitment, it having verified that you have
(1) No valid license or authority from the Department of
Labor and Employment to recruit and deploy workers
for overseas employment;
(2) Committed/are committing acts prohibited under
Article 34 of the New Labor Code in relation to Article
38 of the same code.
This ORDER is without prejudice to your criminal prosecution under existing
laws. 13
We have held that a warrant must identify clearly the things to be seized, otherwise, it is null and
void, thus:

xxx xxx xxx

Another factor which makes the search warrants under consideration
constitutionally objectionable is that they are in the nature of general
warrants. The search warrants describe the articles sought to be seized in
this wise:
1) All printing equipment, paraphernalia, paper, ink,
photo equipment, typewriters, cabinets, tables,
communications/ recording equipment, tape recorders,
dictaphone and the like used and/or connected in the
printing of the "WE FORUM" newspaper and any and
all documents/communications, letters and facsimile of
prints related to the "WE FORUM" newspaper.
2) Subversive documents, pamphlets, leaflets, books,
and other publications to promote the objectives and
purposes of the subversive organizations known as
Movement for Free Philippines, Light-a-Fire Movement
and April 6 Movement; and
3) Motor vehicles used in the distribution/circulation of
the "WE FORUM" and other subversive materials and
propaganda, more particularly,

In the Stanford case, the U.S. Supreme court calls to mind a notable
chapter in English history; the era of disaccord between the Tudor
Government and the English Press, when "Officers of the Crown were given
roving commissions to search where they pleased in order to suppress and
destroy the literature of dissent both Catholic and Puritan." Reference
herein to such historical episode would not be relevant for it is not the policy
of our government to suppress any newspaper or publication that speaks
with "the voice of non-conformity" but poses no clear and imminent danger
to state security. 14
For the guidance of the bench and the bar, we reaffirm the following principles:
1. Under Article III, Section 2, of the l987 Constitution, it is only judges, and
no other, who may issue warrants of arrest and search:
2. The exception is in cases of deportation of illegal and undesirable aliens,
whom the President or the Commissioner of Immigration may order
arrested, following a final order of deportation, for the purpose of
deportation.
WHEREFORE, the petition is GRANTED. Article 38, paragraph (c) of the Labor Code is
declared UNCONSTITUTIONAL and null and void. The respondents are ORDERED to return all
materials seized as a result of the implementation of Search and Seizure Order No. 1205.
No costs. SO ORDERED.

1) Toyota-Corolla, colored yellow with Plate No. NKA

892;
2) DATSUN, pick-up colored white with Plate No. NKV
969;
3) A delivery truck with Plate No. NBS 542;
4) TOYOTA-TAMARAW, colored white with Plate No.
PBP 665; and
5) TOYOTA Hi-Lux, pick-up truck with Plate No. NGV
472 with marking "Bagong Silang."
In Stanford v. State of Texas, the search warrant which authorized the
search for "books, records, pamphlets, cards, receipts, lists, memoranda,
pictures, recordings and other written instruments concerning the
Communist Parties of Texas, and the operations of the Community Party in
Texas," was declared void by the U.S. Supreme Court for being too general.
In like manner, directions to "seize any evidence in connection with the
violation of SDC 13-3703 or otherwise" have been held too general, and
that portion of a search warrant which authorized the seizure of any
"paraphernalia which could be used to violate Sec. 54-197 of the
Connecticut General Statutes (the statute dealing with the crime of
conspiracy)" was held to be a general warrant, and therefore invalid. The
description of the articles sought to be seized under the search warrants in
question cannot be characterized differently.

21. G.R. No. 168715

September 15, 2010
MEDLINE MANAGEMENT, INC. and GRECOMAR SHIPPING AGENCY, Petitioners,
vs.
GLICERIA ROSLINDA and ARIEL ROSLINDA, Respondents.
DECISION
DEL CASTILLO, J.:
If a seafarer dies after the termination of his contract of employment, the Court can only
commiserate with his heirs because it has no alternative but to declare that his beneficiaries are
not entitled to the death benefits provided in the Philippine Overseas Employment Administration
(POEA) Standard Employment Contract (SEC).
This Petition for Review on Certiorari1 assails the Decision2 dated March 11, 2005 of the Court of
Appeals (CA) in CA-G.R. SP No. 87648, which dismissed the petition for certiorari with prayer
for the issuance of a writ of preliminary injunction and/or restraining order challenging the
Resolution dated August 31, 20043 and October 15, 20044 of the National Labor Relations
Commission (NLRC) in NLRC NCR CA No. 040435-04. Also assailed is the Resolution5 dated
June 22, 2005 denying the Motion for Reconsideration.
Factual Antecedents
Petitioner Medline Management, Inc. (MMI), on behalf of its foreign principal, petitioner
Grecomar Shipping Agency (GSA), hired Juliano Roslinda (Juliano) to work on board the vessel
MV "Victory." Juliano was previously employed by the petitioners under two successive separate
employment contracts of varying durations. His latest contract was approved by the POEA on

September 9, 1998 for a duration of nine months.6 In accordance with which, he boarded the
vessel MV "Victory" on October 25, 1998 as an oiler and, after several months of extension, was
discharged on January 20, 2000.
Months after his repatriation, or on March 6, 2000, Juliano consulted Dr. Pamela R. Lloren (Dr.
Lloren) of Metropolitan Hospital. He complained about abdominal distention which is the medical
term for a patient who vomits previously ingested foods. From March 8 to August 24, 2000,
Juliano visited Dr. Lloren for a series of medical treatment. 7 In a Medical Certificate8 issued by
Dr. Lloren, the condition of Juliano required hemodialysis which was initially done twice a week
for a period of two months and then once every 10 days. In medicine, hemodialysis is the
method of removing waste products such as creatinine and urea, as well as freeing water from
the blood, when the kidneys are in renal failure.9
On August 27, 2001, Juliano died. On September 4, 2003, his wife Gliceria Roslinda and son
Ariel Roslinda, respondents herein, filed a complaint against MMI and GSA for payment of death
compensation, reimbursement of medical expenses, damages, and attorney's fees before the
Labor Arbitration Branch of the NLRC.
Petitioners received on September 25, 2003 a copy of the summons 10 and complaint. Instead of
filing an answer, they filed a Motion to Dismiss 11 on the grounds of prescription, lack of
jurisdiction and prematurity. Petitioners contended that the action has already prescribed
because it was filed three years, seven months and 22 days from the time the deceased
seafarer reached the point of hire. They also argued that the case should be dismissed outright
for prematurity because respondents failed to comply with a condition precedent by not availing
of the grievance machinery. Lastly, petitioners opined that the Labor Arbiter had no jurisdiction
because there exists no employer-employee relationship between the parties.

Arbiter also erred when she issued an order without resolving the other issues in their Motion to
Dismiss. The Labor Arbiter failed to take into consideration that respondents have no employeremployee relationship with herein petitioners, which means that the former have no cause of
action against the latter. Lastly, they opined that the Labor Arbiter failed to resolve the issue of
prematurity when the present case was filed without passing through the grievance committee.
On August 31, 2004, the NLRC issued its Resolution, the dispositive portion of which provides:
PREMISES CONSIDERED, respondents' appeal from the Order dated April 21, 2004 is hereby
DISMISSED for lack of merit. Let records herein be REMANDED to Arbitration Branch of origin
for immediate appropriate proceedings.
SO ORDERED.16
Ruling of the Court of Appeals
After reviewing the case on certiorari, the CA ruled that the claim was filed within the three-year
prescriptive period which must be reckoned from the time of Juliano's death on August 27, 2001
and not from the date of his repatriation on January 20, 2000. As to the denial of the Motion to
Dismiss, it found that under Section 3 of Rule V of the NLRC Rules of Procedure, an order
denying the Motion to Dismiss or suspension of its resolution until the final determination of the
case, is not appealable. Anent the issue that the Labor Arbiter had no jurisdiction over the case
because there exists no employee-employer relationship between the parties, the CA held that
such matter is a factual issue which should be threshed out in the trial of the case. Being a
factual matter needing evidence for its existence, a motion to dismiss is not the proper remedy.
The dispositive portion of the CA Decision states:

On January 9, 2004, respondents submitted their Position Paper with Opposition to Motion to
Dismiss.12 On January 26, 2004, petitioners submitted their Comment/Reply with Motion to
Expunge Complainant's Position Paper.13

IN VIEW OF ALL THE FOREGOING, the instant petition is ordered DISMISSED. Costs against
the petitioners.

Ruling of the Labor Arbiter

SO ORDERED.17

On April 21, 2004, Labor Arbiter Fatima Jambaro-Franco denied the Motion to Dismiss filed by
the petitioners. The dispositive portion provides:

After the denial by the CA of their Motion for Reconsideration, petitioners filed the present
petition for review on certiorari.

WHEREFORE, premises considered, the Motion to Dismiss is hereby DENIED for lack of merit.

Issues

In order to expedite the proceedings of this case, the respondents [herein petitioners] are hereby
ordered to submit their position paper on May 18, 2004 at 9:30 a.m.

Petitioners raise the following issues:

I.

SO ORDERED.14
Ruling of the National Labor Relations Commission
Petitioners, instead of complying with the order of the Labor Arbiter to submit their position
paper, filed their Notice of Appeal with Memorandum 15 of Appeal on May 7, 2004 with the NLRC.

Whether the CA seriously erred in holding that the Order of the Labor Arbiter dismissing the
Motion to Dismiss is not appealable.
II.
Whether the CA seriously erred in ruling that the claim is not yet barred by

Petitioners asserted that the Labor Arbiter seriously erred in disregarding the basic provision of
the POEA Contract. According to them, the POEA contract is clear that any claim arising from
the employment of a seafarer should be filed within one year from the seafarer's return to the
point of hire; otherwise, it shall be barred forever. In addition, petitioners claimed that the Labor

prescription despite the fact that it was filed beyond the one-year prescriptive period provided by
the POEA Standard Employment Contract.

III.

Prescription

Whether the ruling of the CA is contrary to the jurisprudence laid down in the case of Fem's
Elegance Lodging House vs. Murillo decided by this Court.

The employment contract signed by Juliano stated that "Upon approval, the same shall be
deemed an integral part of the Standard Employment Contract

Petitioners' Arguments

(SEC) for seafarers."18 Section 28 of the POEA SEC states:

Petitioners contend that although Rule 1, Section 3 of the NLRC Rules of Procedure provides for
the suppletory application of the Rules of Court, the same is proper only in the absence of
applicable provision in the NLRC Rules of Procedure to the issue at hand. Here, Section 1, Rule
VI of the NLRC Rules of Procedure and Article 223 of the Labor Code specifically provide that
any order of the Labor Arbiter is appealable to the NLRC, regardless if it is final or interlocutory
in nature. Hence, there is no room for the suppletory application of the Rules of Court in the case
at bench.

SECTION 28. JURISDICTION

Petitioners also argue that the POEA SEC provides that the employer and the seafarer agree
that all claims arising from the contract shall be made within one year from the date of seafarer's
return to the point of hire. Hence, respondents claim for death benefits has clearly prescribed
because they filed their complaint before the NLRC Arbitration Branch only on September 11,
2003 or three years seven months and 22 days after the return of Juliano to the point of hire on
January 20, 2000.
Respondents' Arguments
Respondents posit that Section 3, Rule V of the NLRC Rules of Procedure clearly provides that
an order denying a motion to dismiss or suspension of its resolution until the final determination
of the case is not appealable. It is for this reason that petitioners were required to proceed with
the Arbitration Branch of origin for further proceedings.
Moreover, respondents argue that the Motion to Dismiss filed by the petitioners was properly
denied by the Labor Arbiter because the cause of action has not yet prescribed. The prescriptive
period that should apply is three years and not one year as provided for in the POEA SEC.
Therefore, when the complaint was filed on September 4, 2003, it is well within the three-year
prescriptive period. The reckoning point is the time when the cause of action accrued which is
from the time of death of the seafarer and not from the time of repatriation.

The Philippine Overseas Employment Administration (POEA) or the National Labor Relations
Commission (NLRC) shall have original and exclusive jurisdiction over any and all disputes or
controversies arising out of or by virtue of this Contract.
Recognizing the peculiar nature of overseas shipboard employment, the employer and the
seafarer agree that all claims arising from this contract shall be made within one (1) year from
the date of the seafarer's return to the point of hire. (Emphasis supplied)
On the other hand, the Labor Code states:
ART. 291. Money claims. All money claims arising from employer-employee relations accruing
during the effectivity of this Code shall be filed within three (3) years from the time the cause of
action accrued; otherwise they shall forever be barred.
x x x x (Emphasis supplied)
In Southeastern Shipping v. Navarra, Jr.,19 we ruled that "Article 291 is the law governing the
prescription of money claims of seafarers, a class of overseas contract workers. This law
prevails over Section 28 of the Standard Employment Contract for Seafarers which provides for
claims to be brought only within one year from the date of the seafarer's return to the point of
hire." We further declared that "for the guidance of all, Section 28 of the Standard Employment
Contract for Seafarers, insofar as it limits the prescriptive period within which the seafarers may
file their money claims, is hereby declared null and void. The applicable provision is Article 291
of the Labor Code, it being more favorable to the seafarers and more in accord with the State's
declared policy to afford full protection to labor. The prescriptive period in the present case is
thus three years from the time the cause of action accrues."

Our Ruling
A close perusal of the three issues presented for our review readily reveals a single issue of
substance that the Labor Arbiter seriously erred in denying the Motion to Dismiss filed by the
petitioners without ruling on all the grounds raised by them. Another issue involved a procedural
ground that the CA erred in dismissing the petition assailing the denial of the Motion to Dismiss
based on Section 3, Rule V of the NLRC Rules of Procedure.
The Labor Arbiter Properly Denied the Motion to Dismiss
The denial of the Motion to Dismiss by the Labor Arbiter, the NLRC, and the CA was made in
accordance with prevailing law and jurisprudence. It should be noted that in the Motion to
Dismiss filed by the petitioners before the Labor Arbiter, they cited prescription, lack of
jurisdiction and failure to comply with a condition precedent, as the three grounds for dismissal
of the case.

In the present case, the cause of action accrued on August 27, 2001 when Juliano died. Hence,
the claim has not yet prescribed, since the complaint was filed with the arbitration branch of the
NLRC on September 4, 2003.
Lack of Jurisdiction
Petitioners claim that the Labor Arbiter has no jurisdiction to hear the case for want of employeremployee relationship between the parties lacks merit. Petitioners have not taken into
consideration that respondents, as heirs of Juliano, have the personality to file the claim for
death benefits. As the parties claiming benefits for the death of a seafarer, they can file a case
with the Labor Arbiter as provided for under Section 28 of the POEA SEC. It is clearly provided
therein that the NLRC shall have original and exclusive jurisdiction over any and all disputes or
controversies arising out of or by virtue of the Contract.

Furthermore, Section 20 of the Standard Terms and Conditions Governing the Employment of
Filipino Seafarers On-Board Ocean-Going Vessels states:
A. COMPENSATION AND BENEFITS FOR DEATH
1. In the case of work-related death of the seafarer during the term of his contract, the employer
shall pay his beneficiaries the Philippine Currency equivalent to the amount of Fifty Thousand
US dollars (US$ 50,000.00) and an additional amount of Seven Thousand US Dollars (US$
7,000.00) to each child under the age of twenty-one (21) but not exceeding four (4) children, at
the exchange rate prevailing during the time of payment.
xxxx
In filing the complaint for payment of death compensation, reimbursement of medical expenses,
damages and attorney's fees before the Labor Arbitration Branch of the NLRC, respondents are
actually enforcing their entitlement to the above provision of the contract of Juliano with
petitioners. They are the real parties in interest as they stand to be benefited or injured by the
judgment in this case, or the parties entitled to the avails of the case.
Having shown that respondents have the personality to file the complaint and that the Labor
Arbiter has the original and exclusive jurisdiction over the said claims, then this ground for
petitioners' Motion to Dismiss has no basis and, therefore, its denial was proper.
Failure to Comply with a Condition Precedent
Petitioners likewise contend that the present claim should have been dismissed on the ground
that respondents prematurely filed the present complaint because the employment contract
requires respondents to first bring their claim before the Grievance Machinery.
Indeed, the records of this case would not give us any idea on what actions were taken by
respondents before they filed the case. What can only be deduced from the records is that
respondents demanded from petitioners the payment of death benefits and the reimbursement
of medical expenses incurred by Juliano from the time of his repatriation on January 20, 2000
until his death on August 27, 2001 amounting to P149,490.00 which was refused by petitioners.
There is therefore no showing that they complied with the provisions of the employment contract
to first bring the matter before the Grievance Machinery.
Having shown that respondents failed to bring this matter to the Grievance Machinery as
provided in the POEA SEC, can we now conclude that the Labor Arbiter erred in denying the
Motion to Dismiss on the ground that respondents failed to comply with a condition precedent?
We answer this in the negative. The denial by the Labor Arbiter of the Motion to Dismiss filed by
petitioners on the ground of non-compliance with a condition precedent is still proper.
Section 4, Rule III of the New Rules of Procedure of the NLRC (As amended by NLRC
Resolution No. 01-02, series of 2002) provides:

xxxx
The above provision thus explicitly provides that a motion to dismiss that can be availed of is
one which is based on lack of jurisdiction over the subject matter, improper venue, res judicata,
prescription and forum shopping. Conversely, a motion to dismiss on the ground of failure to
comply with a condition precedent is, therefore, a prohibited pleading. Hence, the Labor Arbiter
did not commit any grave abuse of discretion amounting to lack or excess of jurisdiction when
she denied the Motion to Dismiss filed by petitioners.
Having shown that the Labor Arbiter properly denied the Motion to Dismiss, the NLRC and the
CA have likewise acted in accordance with law in denying the appeal of the dismissal of such
Motion to Dismiss.
The CA Properly Denied the Petition Based on Section 3, Rule V of the NLRC Rules of
Procedure
Petitioners contend that Section 3 (now Section 6), Rule V of the NLRC Rules of Procedure is in
direct conflict with the provisions of Section 1, Rule VI of the same NLRC Rules of Procedure
and Article 223 of the Labor Code and, hence, it should be the latter which should prevail.
We do not agree.
Section 3 (now Section 6) of Rule V and Section 1 of Rule VI of the NLRC Rules of Procedure,
as amended, provide:
SECTION 3. MOTION TO DISMISS. On or before the date set for the conference, the
respondent may file a motion to dismiss. Any motion to dismiss on the ground of lack of
jurisdiction, improper venue, or that the cause of action is barred by prior judgment, prescription
or forum shopping, shall be immediately resolved by the Labor Arbiter by a written order. An
order denying the motion to dismiss or suspending its resolution until the final determination of
the case is not appealable.
SECTION 1. PERIODS OF APPEAL. Decisions, resolutions or orders of the Labor Arbiter shall
be final and executory unless appealed to the Commission by any or both parties within ten (10)
calendar days from receipt of such decisions, resolutions or orders of the Labor Arbiter and in
case of a decision of the Regional Director within five (5) calendar days from receipt of such
decisions, resolutions, or orders. If the 10th or 5th day, as the case may be, falls on a Saturday,
Sunday or a holiday, the last day to perfect the appeal shall be the next working day.
Another provision cited by petitioners is Article 223 of the Labor Code which states:
ART. 223. Appeal. Decisions, awards, or orders of the Labor Arbiter are final and executory
unless appealed to the Commission by any or both parties within ten (10) calendar days from
receipt of such decisions, awards, or orders. Such appeal may be entertained only on any of the
following grounds:

SECTION 4. PROHIBITED PLEADINGS AND MOTIONS. The following pleadings, motions or

petitions shall not be allowed in the cases covered by these Rules:

xxxx

(a) Motion to dismiss the complaint except on the ground of lack of jurisdiction over the subject
matter, improper venue, res adjudicata, prescription and forum shopping;

However, all the three provisions above-mentioned refer to final orders and not interlocutory
ones, such as, a denial of a motion to dismiss. Based on the above provisions, the Labor
Arbiter's decisions, resolutions or orders shall be final and executory unless appealed to the
Commission. Only a final order can attain the final and executory stage; an interlocutory order

cannot go that far. Consequently, when the law says that the orders appealable to the
Commission are those which will become final and executory if not appealed, it can only refer to
a final order, not an interlocutory order, such as a denial of a motion to dismiss.
There is no conflict between the above provisions. The CA therefore correctly dismissed the
petition assailing the denial of the Motion to Dismiss based on Section 3 (now Section 6), Rule V
of the NLRC Rules of Procedure because it involved an interlocutory order. Admittedly, the order
denying a Motion to Dismiss is an interlocutory order because it still requires a party to perform
certain acts leading to the final adjudication of a case.
Lastly, petitioners' reliance in FEM's Elegance Lodging House v. Murillo 20 to justify their position
that an interlocutory order like the denial of their Motion to Dismiss can be appealed is
misplaced. The CA properly addressed this issue in this wise:
Reliance in the case of FEM's Elegance vs. Murillo is misdirected. In that case, the Labor
Arbiter's denial was appealed directly to the Supreme Court and did not pass the Court of
Appeals. In ruling that orders of the Labor Arbiter shall be appealable to the Court of Appeals,
the High Court, to Our mind, was simply saying that you cannot go and seek review directly from
the Labor Arbiter to the Supreme Court. One has to pass first the NLRC.21
For Expediency, this Court can Decide the Merits of this Case
This Court is aware that in this case, since the petition is denied, the normal procedure is for it to
remand the case to the Labor Arbiter for further proceedings. "However, when there is enough
basis on which the Court may render a proper evaluation of the merits of petitioners case, x x x
the Court may dispense with the time[-]consuming procedure in order to prevent further delays in
the disposition of the case."22 Indeed, remand of the case to the Labor Arbiter for further
reception of evidence is not conducive to the speedy administration of justice and it becomes
unnecessary where the Court is in a position to resolve the dispute based on the records before
it. Briefly stated, a remand of the instant case to the Labor Arbiter would serve no purpose save
to further delay its disposition contrary to the spirit of fair play.
"It is an accepted precept of procedural law that the Court may resolve the dispute in a single
proceeding, instead of remanding the case to the lower court for further proceedings if, based on
the records, pleadings, and other evidence, the matter can readily be ruled upon." 23 Instead of
remanding the case to the Labor Arbiter for further proceedings, we will resolve the dispute to
serve the ends of justice.1avvphi1
The complete records of this case have already been elevated to this Court. The pleadings on
record will fully support this adjudication.
Respondents are not Entitled to the Death Benefits Provided Under the POEA Standard
Employment Contract
In Southeastern Shipping v. Navarra, Jr.,24 we declared that "in order to avail of death benefits,
the death of the employee should occur during the effectivity of the employment contract." "The
death of a seaman during the term of employment makes the employer liable to his heirs for
death compensation benefits. Once it is established that the seaman died during the effectivity of
his employment contract, the employer is liable."25
Juliano did not die while he was under the employ of petitioners. His contract of employment
ceased when he was discharged on January 20, 2000, after having completed his contract
thereat. He died on August 27, 2001 or one year, seven months and seven days after the

expiration of his contract. Thus, his beneficiaries are not entitled to the death benefits under the
Standard Employment Contract for Seafarers.
Moreover, there is no evidence to show that Julianos illness was acquired during the term of his
employment with petitioners. In respondents Position Paper,26 they admitted that Juliano was
discharged not because of any illness but due to the expiration of his employment
contract.27 Although they stated that Juliano was hospitalized on August 28, 1999, or five months
before his contract expired, they presented no proof to support this allegation. Instead, what
respondents presented were the Medical Certificates 28 issued by Dr. Lloren attesting to the fact
that on March 6, 2000, Juliano consulted her complaining of abdominal distention. We find this
not substantial evidence to prove that Julianos illness which caused his death was contracted
during the term of his contract.29 "Indeed, the death of a seaman several months after his
repatriation for illness does not necessarily mean that: a) the seaman died of the same illness; b)
his working conditions increased the risk of contracting the illness which caused his death; and
c) the death is compensable, unless there is some reasonable basis to support otherwise." 30 In
the instant case, Juliano was repatriated not because of any illness but because his contract of
employment expired. There is likewise no proof that he contracted his illness during the term of
his employment or that his working conditions increased the risk of contracting the illness which
caused his death.
"While the Court adheres to the principle of liberality in favor of the seafarer in construing the
Standard Employment Contract, we cannot allow claims for compensation based on surmises.
When the evidence presented negates compensability, this Court has no choice but to deny the
claim, lest we cause injustice to the employer."31
WHEREFORE, the instant petition for review on certiorari is DENIED.
We hereby declare that the claim for death benefits of respondents Gliceria Roslinda and Ariel
Roslinda has not yet prescribed but petitioners are not liable to pay to respondents death
compensation benefits under the Standard Employment Contract for Seafarers considering that
Juliano's death occurred after the effectivity of his contract. The Labor Arbiter is therefore
DIRECTED to dismiss the complaint filed by herein respondents against the petitioners for
payment of death compensation, reimbursement of medical expenses, damages and attorneys
fees. SO ORDERED.

22. G.R. No. 171282

November 27, 2013
SKM
ART
CRAFT
CORPORATION, Petitioner,
vs.
EFREN BAUCA, PATRICIO OLMILLA ZALDY ESCALARES, PEDRITO OLMILLA PEDRO
BERAY, DANILO SOLDE, NOEL P ALARCA, JULIUS CESAR MIGUELA, OCTAVIO OBIAS,
ARVIN ABINES, RADDY TERENCIO FE RANIDO, EDNAMANSUETO SANDRO RODRIGUEZ
RENATO TANGO, HERMOGENES OBIAS, DOMINGO LAROCO DANTE AQUINO,
ARMANDO VILLA, ROGELIO DELOS REYES, NOMER MANAGO, ANTONIO BALUDCAL
and LUDIVICO STA. CLARA, Respondents.
x-----------------------x
SKM
ART
CRAFT
CORPORATION, Petitioner,
vs.
EFREN BAUCA PATRICIO OLMILLA ZALDY ESCALARES PEDRITO OLMILLA PEDRO
BERAY, DANILO SOLDE, NOEL PALARCA, JULIUS CESAR MIGUELA, OCTAVIO OBIAS,
ARVIN ABINES, RADDY TERENCIO, FE RANIDO, EDNA MANSUETO, SANDRO
RODRIGUEZ, RENATO TANGO, HERMOGENES OBIAS, DOMINGO LAROCO, DANTE
AQUINO, ARMANDO VILLA and ROGELIO DELOS REYES, Respondents.

DECISION

xxxx

VILLARAMA, JR., J.:

1) Basic:

For our resolution is the petition for review on certiorari in G.R. No. 171282 which assails the
November 9, 2005 Decision1 and January 24, 2006 Resolution2 of the Court of Appeals (CA) in
CA-G.R. SP No. 76670. The petition was earlier consolidated with the petition docketed as G.R.
No. 183484, but said petition was denied on October 10, 2011 and said denial has become final
on January 25, 2012, per the entry of judgment3 in G.R. No. 183484.

x x x x 54,498.73
2) 13th Month Pay: x x x 4,541.56
3) Service Incentive Leave Pay: x x x 878.12

The facts of the case follow:

TOTAL BACK WAGES P59,918.41
The 23 respondents in G.R. No. 171282 were employed by petitioner SKM Art Craft Corporation
which is engaged in the handicraft business. On April 18, 2000, around 1:12 a.m., a fire occurred
at the inspection and receiving/repair/packing area of petitioners premises in Intramuros,
Manila. The fire investigation report4 stated that the structure and the beach rubber building were
totally damaged. Also burned were four container vans and a trailer truck. The estimated
damage was P22 million.
On May 8, 2000, petitioner informed respondents that it will suspend its operations for six
months, effective May 9, 2000.5
On May 16, 2000, only eight days after receiving notice of the suspension of petitioners
operations, the 23 respondents (and other co-workers) filed a complaint for illegal dismissal,
docketed as NLRC NCR (South) Case No. 30-05-03012-00, 30-05-03028-00 and 30-05-0304500. They alleged that there was discrimination in choosing the workers to be laid off and that
petitioner had discovered that most of them were members of a newly-organized union.6
Petitioner denied the claim of illegal dismissal and said that Article 2867 of the Labor Code
allows the bona fide suspension of a business or undertaking for a period not exceeding six
months. Petitioner claimed that the fire cost it millions in losses and that it is impossible to
resume its normal operations for a significant period of time. 8
In her Decision9 dated June 29, 2001, the Labor Arbiter ruled that respondents were illegally
dismissed and ordered petitioner to reinstate them and pay them back wages of P59,918.41
each, the amount being subject to further computation up to the date of their actual
reinstatement. The Labor Arbiter ruled that the fire that burned a part of petitioners premises
may validate the suspension of respondents employment, but the suspension must not exceed
six months. Since petitioner failed to recall respondents after the lapse of six months, the Labor
Arbiter held that respondents were illegally dismissed. The fallo of the Labor Arbiters Decision
reads:
WHEREFORE, premises considered, judgment is hereby rendered declaring the dismissal of
[respondents] Efren Bauca, Patricio Olmilla, Zaldy Escalares, Gaudencio Gutierrez, Pedrito
lmilla, Pedro Beray, Edwin Penasa, Danilo Solde, Noel Palarca, Julius [Cesar] Miguela, Raul
Baray, Octavio Obias, Marcelo Balbuena, Arvin Abines, Raddy O. [Terencio], Fe Ranido, Edna
Mansueto, Ludivico Sta. Clara, Sandro Rodriguez, Antonio Baludcal, Nomer Manago, Renato
Tango, Hermogenes [Obias], Domingo Laroco, [Wenceslao] Ranido, Dante Aquino, Armando
Villa, Ramir Sevilla and Danili Portes, Rogelio [delos] Reyes, Luciano T. Obias, illegal and
ordering the [petitioner] SKM Art Craft Corp[oration] to reinstate them to their former position
without loss of seniority rights and privileges and to pay the following amount representing
back wages.

The amount of back wages shall be subject to further computation up to the date of their actual
reinstatement.
The [complaint as to] Gaudencio Gutierrez, Danilo Portes, Wenceslao Ranido, Lucino Obias,
Edwin Penaso, Marcelo Balbuena, Raul Beray, Ramir Sevilla [is] dismissed with prejudice in
view of the execution of their Release, Waiver and Quitclaim[s].
SO ORDERED.10
The National Labor Relations Commission (NLRC) set aside the Labor Arbiters Decision and
ruled that there was no illegal dismissal. The NLRC ordered that respondents be reinstated to
their former positions but it deleted the award of back wages. The NLRC noted that the fire
caused millions in damages to petitioner. Thus, petitioners suspension of operations is valid
under Article 286 of the Labor Code. It was not meant to remove respondents because they
were union members. The NLRC added that the illegal dismissal complaint filed by respondents
was premature for it was filed during the six-month period of suspension of operations. The fallo
of the NLRCs Decision11 dated July 30, 2002 reads:
WHEREFORE, premises considered, the assailed decision of the Labor Arbiter is hereby SET
ASIDE and a new judgment is hereby rendered ordering the reinstatement of [respondents] to
their former xxx positions without payment of backwages. If reinstatement is no longer feasible
for reasons already stated herein, [petitioner is] hereby ordered to pay the remaining
[respondents] with the exclusion of all those who have already executed quitclaims and
releases, the equivalent of one month pay for every year of service, a fraction of at least six
months being considered as one whole year.
The [complaint as to] Nomer Manago, Ludivico Sta. Clara and Antonio Baludcud are dismissed
[as said complainants have already] executed quitclaims and releases.
The award of proportionate 13th month pay is hereby GRANTED while the award of service
incentive leave pay is DISMISSED for lack of basis.
SO ORDERED.12
The NLRC denied the parties motions for reconsideration in its Resolution dated January 27,
2003.13

In the assailed Decision, the CA set aside the NLRC Decision and Resolution and reinstated the
Labor Arbiters Decision. The CA considered the merits of the petition for certiorari filed by
respondents and the conflicting findings of the Labor Arbiter and the NLRC as justification for its
decision to decide the case on the merits even if only nine of the respondents had signed the
verification and certification against forum shopping attached to the petition.
The CA ruled that petitioner failed to prove that its suspension of operations is bona fide . The
CA noted that the proof of alleged losses the list of items and materials allegedly burned was
not even certified or signed by petitioners accountant or comptroller. And even if the suspension
of operations is considered bona fide, the CA said that respondents were not reinstated after six
months. Thus, respondents are deemed to have been illegally dismissed. The CA also noted
that petitioners manifestation that it is willing to admit the respondents if they return to work was
belatedly made after almost one year from the expiration of the suspension of operations.
The CA also held that the NLRC committed grave abuse of discretion in dismissing the
complaints of Nomer Manago, Ludivico Sta. Clara and Antonio Baludcal since the Release,
Waiver and Quitclaims executed by them pertain to another case, NLRC-NCR Case No. 00-0201495. In fact, their quitclaims were executed on July 28, 1999 or long before the fire occurred
on April 18, 2000. The fallo of the assailed CA Decision reads:
WHEREFORE, premises considered, the Petition is GRANTED. The Decision dated 30 July
2002 and Resolution dated 27 January 2003 of the NLRC (Second Division) in NLRC NCR 3005-03012-00 (CA No. 029182-01) are REVERSED and SET ASIDE and the Decision dated 29
June 2001 of Labor Arbiter Dolores M. Peralta-Beley is hereby REINSTATED. Costs against
[petitioner].
SO ORDERED.14
In the assailed Resolution, the CA denied petitioners motion for reconsideration.
Petitioner in G.R. No. 171282 raised the following issues:
I.
Whether the CA gravely erred in not summarily dismissing the [CA] petition insofar as xxx
Patricio Olmilla [et al., or those who did not sign the verification and certification against forum
shopping,] are concerned.

Whether the CA gravely erred in reversing and setting aside the [NLRC Decision and
Resolution] and in reinstating the Decision of [the Labor Arbiter.]15
We will address first the first two issues raised by petitioner. Then, we will resolve the conflicting
rulings on the issue of illegal dismissal and the quitclaims executed by almost all of the
respondents.
On the first issue, we disagree with petitioner that the CA erred in giving due course to the
petition filed by respondents even if only nine of them signed the verification and certification
against forum shopping.16 We hold that the verification signed by nine of the respondents
substantially complied with the verification requirement since respondents share a common
interest and cause of action in the case. The apparent merit of respondents CA petition and the
conflicting findings of the Labor Arbiter and the NLRC also justified the CAs decision to rule on
the merits of the case.
The CA aptly noted that in Torres v. Specialized Packaging Development Corporation, 17 only two
of the 25 petitioners therein signed the verification and certification against forum shopping. We
said that the problem is not the lack of a verification, but the adequacy of one executed by only
two of the 25 petitioners. These two signatories, we added, are unquestionably real parties in
interest, who undoubtedly have sufficient knowledge and belief to swear to the truth of the
allegations in the petition. This verification is enough assurance that the matters alleged therein
have been made in good faith or are true and correct, not merely speculative. Hence, we ruled
that the requirement of verification was substantially complied with. In Altres v. Empleo, 18 we
also ruled that the verification requirement is deemed substantially complied with when one who
has ample knowledge to swear to the truth of the allegations in the complaint or petition signs
the verification, and when matters alleged in the petition have been made in good faith or are
true and correct, as in this case.
In Altres, we likewise stated the general rule that the certification against forum shopping must
be signed by all the plaintiffs or petitioners in a case; otherwise, those who did not sign will be
dropped as parties to the case. We also said, however, that under reasonable or justifiable
circumstances, as when all the plaintiffs or petitioners share a common interest and invoke a
common cause of action or defense, as in this case, the signature of only one of them in the
certification against forum shopping substantially complies with the certification requirement. 19 In
Torres, we also considered the apparent merits of the case as a special circumstance or
compelling reason for allowing the petition. We noted the conflicting findings of the NLRC and
the Labor Arbiter and held this as ample justification for the CAs review of the merits. We
stressed that rules of procedure are established to secure substantial justice. Being instruments
of the speedy and efficient administration of justice, they must be used to achieve such end, not
to derail it. Technical requirements may thus be dispensed with in meritorious appeals. 20

II.
Whether the CA gravely erred in invalidating the quitclaims executed by Nomer Manago,
Ludivico Sta. Clara and Antonio Baludcal.

On the second issue, we likewise disagree with petitioner. The CA properly rejected the
Release, Waiver and Quitclaims21 executed by Nomer Manago, Ludivico Sta. Clara and Antonio
Baludcal. Said quitclaims are irrelevant to this case for they pertain to another case, NLRC-NCR
Case No. 00-02-01495-99, and were executed on July 28, 1999, long before the fire occurred on
April 18, 2000.

III.
Whether the CA gravely erred in not dismissing the claims of Edna Mansueto, Rogelio Delos
Reyes, Pedro Beray and Raddy Terencio, as they have already executed valid quitclaims in
favor of the petitioner.
IV.

On the issue of illegal dismissal, while we agree with the NLRC that the suspension of
petitioners operation is valid, the Labor Arbiter and the CA are correct that respondents were
illegally dismissed since they were not recalled after six months, after the bona fide suspension
of petitioners operations.
It is admitted that petitioners premises was burned on April 18, 2000. 22 Petitioner also submitted
pictures23 of its premises after the fire, the certification24 by the Barangay Chairman that
petitioners factory was burned, and the fire investigation report 25 of the Bureau of Fire

Protection. To prove the damages, petitioner submitted a list26 of burned machines, its
inventory27 for April 2000 and the fire investigation report which stated that the estimated
damage isP22 million.
We therefore agree with the NLRC that petitioners suspension of operations is valid because
the fire caused substantial losses to petitioner and damaged its factory. On this point, we
disagree with the CA that petitioner failed to prove that its suspension of operations is bona fide.
The list of materials burned was not the only evidence submitted by petitioner. It was
corroborated by pictures and the fire investigation report, and they constitute substantial
evidence of petitioners losses.
Under Article 286 of the Labor Code, the bona fide suspension of the operations of a business or
undertaking for a period not exceeding six months shall not terminate employment. Article 286
provides,
ART. 286. When employment not deemed terminated. The bona fide suspension of the
operations of a business or undertaking for a period not exceeding six (6) months, or the
fulfillment by the employee of a military or civic duty shall not terminate employment.
In all such cases, the employer shall reinstate the employee to his former position without loss of
seniority rights if he indicates his desire to resume his work not later than one (1) month from the
resumption of operations of his employer or from his relief from the military or civic duty.
The NLRC correctly noted that the complaint for illegal dismissal filed by respondents was
premature since it was filed only eight days after petitioner announced that it will suspend its
operations for six months. In Nippon Housing Phil., Inc. v. Leynes, 28 we said that a complaint for
illegal dismissal filed prior to the lapse of said six months is generally considered as prematurely
filed.
In this case, however, we agree with the Labor Arbiter and the CA that respondents were
already considered illegally dismissed since petitioner failed to recall them after six months,
when its bona fide suspension of operations lapsed. We stress that under Article 286 of the
Labor Code, the employment will not be deemed terminated if the bona fide suspension of
operations does not exceed six months. But if the suspension of operations exceeds six months,
the employment will be considered terminated. In Valdez v. NLRC,29 we explained:

operations expired in November 2000. We find that petitioner no longer recalled, nor wanted to
recall, respondents after six months.
Petitioner claims now that despite its liberality and gesture of goodwill, none of the respondents
reported for work, and that aside from respondents self-serving claims made in the form of
manifestations filed before the Labor Arbiter, nothing on record will show that respondents
actually presented themselves to petitioner for reinstatement.32
We seriously doubt petitioners liberality or goodwill. In its manifestation, petitioner even opposed
the motion filed by respondents for execution of the reinstatement aspect of the Labor Arbiters
Decision, to wit:
1. [Petitioner] vehemently opposes the Motion for Execution on the Reinstatement Aspect filed
by [respondents].33
And when the Labor Arbiter granted the motion for execution of the reinstatement aspect of her
decision, petitioner filed a manifestation and motion to quash the writ of execution. 34 In this
motion to quash, petitioner claimed that none of the respondents indicated their desire to return
to work either through the office of the Labor Arbiter or through their counsel, by filing the
appropriate notice or manifestation.35 Notably, petitioner wanted the Labor Arbiter to believe that
no manifestation was filed by respondents. But now, petitioner admits that manifestations were
in fact filed by respondents before the Labor Arbiter. Petitioners lack of candor to the Labor
Arbiter is unfair. Petitioners declaration that it is willing to reinstate respondents also lacks
credence because it was in fact opposing such reinstatement.
Now, petitioner and almost all of the respondents have agreed to settle this case. To recall our
February 27, 2012 Resolution,36 17 of the 23 respondents have opted to settle the case, to wit:
For the reasons explained below, we deny petitioners prayer in its manifestation and motion for
clarification dated January 20, 2012 that we consider these petitions closed and terminated in
view of the amicable settlement entered into by all the parties.

Under Art. 286 of the Labor Code, a bona fide suspension of business operations for not more
than six (6) months does not terminate employment. After six (6) months, the employee may be
recalled to work or be permanently laid off. In this case, more than six (6) months have elapsed
from the time the Club ceased to operate. Hence, respondents termination became permanent.

As regards G.R. No. 171282, there are 23 named respondents but only 17 of them, based on
our records, have opted to settle the case. In this case, we received a manifestation and motion
dated January 16, 2007 filed by Esguerra and Blanco Law Office as counsel for petitioner and
Atty. Lily S. Dayaon-Ireno as counsel for respondents. Counsels stated that petitioner and 15
respondents have arrived at a compromise agreement and that the 15 respondents have
executed a Release, Waiver and Quitclaim. Counsels named these 15 respondents as: (1) Efren
Bauca, (2) Noel Palarca, (3) Patricio Olmilla, (4) Pedrito Olmilla, (5) Zaldy Escalares, (6) Danilo
Solde, (7) Julius [Cesar] Miguela, (8) Fe R. Ranido-Miguela, (9) Hermogenes T. Obias, (10)
Antonio Baludcal, (11) Renato Tango, (12) Armando Villa, (13) Arvin Abines, (14) the heirs of
Ludivico Sta. Clara, and (15) Octavio T. Obias. Another manifestation and motion dated June
13, 2007 was later filed involving respondent Dante Aquino. Thus, in our Resolution dated
September 19, 2007 in G.R. No. 171282, we granted the two motions that the petition be
dismissed insofar as the aforenamed 16 respondents are concerned. On October 11, 2011, we
also considered these cases (G.R. No. 171282 and G.R. No. 183484) closed and terminated as
to respondent Sandro Rodriguez who executed his own Release, Waiver and Quitclaim.
Nonetheless, nothing prevents petitioner from withdrawing its own petition if it is convinced that it
has settled its dispute with all 23 respondents. If it decides to do so, we can consider the petition
withdrawn. And if it turns out that some of the 23 respondents have not agreed to settle this
case, then they can have succor from the favorable judgment of the Court of Appeals. 37

Indeed, petitioners manifestation31 dated October 2, 2001 that it is willing to admit respondents if
they return to work was belatedly made, almost one year after petitioners suspension of

In our Resolution dated January 7, 2013,38 we noted that petitioner did not file a motion to
withdraw the petition in G.R. No. 171282. Hence, we said that our doubt remains regarding the

Under Article 286 of the Labor Code, the bona fide suspension of the operation of a business or
undertaking for a period not exceeding six months shall not terminate employment.
Consequently, when the bona fide suspension of the operation of a business or undertaking
exceeds six months, then the employment of the employee shall be deemed terminated. By the
same token and applying said rule by analogy, if the employee was forced to remain without
work or assignment for a period exceeding six months, then he is in effect constructively
dismissed.
In Waterfront Cebu City Hotel v. Jimenez,30 we also said:

claim that all 23 respondents have entered into an amicable settlement with petitioner. We
repeated that nothing prevents petitioner from withdrawing its petition in G.R. No. 171282 if it is
convinced that it has settled its dispute with all the respondents. We added that if it decides to do
so, we will willingly consider the petition withdrawn for then our action will not prejudice any
respondent. Nonetheless, we gave the parties a chance to prove the claim. Thus, we suspended
for 90 days the period to file the parties memoranda, to wit:
WHEREFORE, we DENY the prayer in the joint manifestation and motion dated September 24,
2012 that we consider the petition in G.R. No. 171282 closed and terminated, without prejudice
to the filing by petitioner of an appropriate motion to withdraw its petition in G.R. No. 171282, or
to the submission of verified admissions by all the 23 respondents in G.R. No. 171282 that they
have entered into a settlement agreement with the petitioner or of original copies of their
Release, Waiver and Quitclaim.
Accordingly, the period to file the parties memoranda in G.R. No. 171282 is SUSPENDED for
90 days only, counted from receipt of this Resolution.39
Still, no motion to withdraw the petition in G.R. No. 171282 was filed. Nor did we receive the
verified admissions by the 23 respondents that they have entered into a settlement agreement
with petitioner, or the original copies of their Release, Waiver and Quitclaims.
On October 23, 2013, we dispensed with the filing of the parties memoranda and considered the
case submitted for resolution.
On the issue of validity of the Release, Waiver and Quitclaims signed by Edna Mansueto,
Rogelio delos Reyes, Pedro Beray and Raddy O. Terencio, we note that the CA did not rule on
the validity of their quitclaims. While no original copies of their quitclaims were submitted to us
despite our Resolution dated January 7, 2013, the copies 40attached to the petition are not
disowned by respondents. And copies of the identification cards of Mansueto, delos Reyes,
Beray and Terencio are attached to these quitclaims which were subscribed and sworn to before
NLRC Commissioner Raul T. Aquino. To our mind, they have signed these quitclaims voluntarily
and we affirm their validity.
In sum, while we agree with the CA in setting aside the NLRC Decision and Resolution and in
reinstating the Labor Arbiter s Decision, the CA and Labor Arbiter s Decisions will now be
subject to the settlement agreements entered into by petitioner and almost all of the
respondents.
WHEREFORE, we DENY the petition in G.R. No. 171282 and AFFIRM the Decision dated
November 9, 2005 and Resolution dated January 24, 2006 of the Court of Appeals in CA-G.R.
SP No. 76670, subject to the settlement agreements and quitclaims signed by almost all of the
respondents.
No pronouncement as to costs. SO ORDERED.

23. G.R. No. 192394

July 3, 2013
ROY D. P ASOS, Petitioner,
vs.
PHILIPPINE NATIONAL CONSTRUCTION CORPORATION, Respondent.
DECISION

VILLARAMA, JR., J.:

Before us is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil
Procedure, as amended, assailing the March 26, 2010 Decision1 and May 26, 2010
Resolution2 of the Court of Appeals (CA) in CA-G.R. SP No. 107805. The appellate court had
affirmed the Decision3 of the National Labor Relations Commission (NLRC) dismissing the illegal
dismissal complaint filed by petitioner Roy D. Pasos against respondent Philippine National
Construction Corporation (PNCC).
The antecedent facts follow:
Petitioner Roy D. Pasos started working for respondent PNCC on April 26, 1996. Based on the
PNCC's "Personnel Action Form Appointment for Project Employment" dated April 30,
1996,4 petitioner was designated as "Clerk II (Accounting)" and was assigned to the "NAIA II
Project." It was likewise stated therein:
PARTICULARS: Project employment starting on April 26, 1996 to July 25, 1996. This contract
maybe terminated at anytime for cause as provided for by law and/or existing Company Policy.
This maybe terminated if services are unsatisfactory, or when it shall no longer needed, as
determined by the Company. If services are still needed beyond the validity of this contract, the
Company shall extend your services. After services are terminated, the employee shall be under
no obligation to re-employ with the Company nor shall the Company be obliged to re-employ the
employee.5 (Emphasis supplied.)
Petitioners employment, however, did not end on July 25, 1996 but was extended until August
4, 1998, or more than two years later, based on the "Personnel Action Form Project
Employment" dated July 7, 1998.6
Based on PNCCs "Appointment for Project Employment" dated November 11, 1998, 7 petitioner
was rehired on even date as "Accounting Clerk (Reliever)" and assigned to the "PCSO Q.I.
Project." It was stated therein that his employment shall end on February 11, 1999 and may be
terminated for cause or in accordance with the provisions of Article 282 of the Labor Code, as
amended. However, said employment did not actually end on February 11, 1999 but was
extended until February 19, 1999 based on the "Personnel Action Form-Project Employment"
dated February 17, 1999.8
On February 23, 1999, petitioner was again hired by PNCC as "Accounting Clerk" and was
assigned to the "SM-Project" based on the "Appointment for Project Employment" dated
February 18, 1999.9 It did not specify the date when his employment will end but it was stated
therein that it will be "co-terminus with the completion of the project." Said employment
supposedly ended on August 19, 1999 per "Personnel Action Form Project Employment"
dated August 18, 1999,10 where it was stated, "termination of petitioners project employment
due to completion of assigned phase/stage of work or project effective at the close of office
hours on 19 August 1999." However, it appears that said employment was extended per
"Appointment for Project employment" dated August 20, 199911 as petitioner was again
appointed as "Accounting Clerk" for "SM Project (Package II)." It did not state a specific date up
to when his extended employment will be, but it provided that it will be "co-terminus with the x x
x project." In "Personnel Action Form Project Employment" dated October 17, 2000,12 it
appears that such extension would eventually end on October 19, 2000.
Despite the termination of his employment on October 19, 2000, petitioner claims that his
superior instructed him to report for work the following day, intimating to him that he will again be
employed for the succeeding SM projects. For purposes of reemployment, he then underwent a

medical examination which allegedly revealed that he had pneumonitis. Petitioner was advised
by PNCCs physician, Dr. Arthur C. Obena, to take a 14-day sick leave.
On November 27, 2000, after serving his sick leave, petitioner claims that he was again referred
for medical examination where it was revealed that he contracted Kochs disease. He was then
required to take a 60-day leave of absence.13 The following day, he submitted his application for
sick leave but PNCCs Project Personnel Officer, Mr. R.S. Sanchez, told him that he was not
entitled to sick leave because he was not a regular employee.
Petitioner still served a 60-day sick leave and underwent another medical examination on
February 16, 2001. He was then given a clean bill of health and was given a medical clearance
by Dr. Obena that he was fit to work.
Petitioner claims that after he presented his medical clearance to the Project Personnel Officer
on even date, he was informed that his services were already terminated on October 19, 2000
and he was already replaced due to expiration of his contract. This prompted petitioner on
February 18, 2003 to file a complaint14 for illegal dismissal against PNCC with a prayer for
reinstatement and back wages. He argued that he is deemed a regular employee of PNCC due
to his prolonged employment as a project employee as well as the failure on the part of PNCC to
report his termination every time a project is completed. He further contended that his
termination without the benefit of an administrative investigation was tantamount to an illegal
dismissal.
PNCC countered that petitioner was hired as a project employee in several projects with specific
dates of engagement and termination and had full knowledge and consent that his appointment
was only for the duration of each project. It further contended that it had sufficiently complied
with the reportorial requirements to the Department of Labor and Employment (DOLE). It
submitted photocopies of three Establishment Termination Reports it purportedly filed with the
DOLE. They were for: (1) the "PCSOQ.I. Project" for February 1999;15 (2) "SM Project" for
August 1999;16 and (3) "SM Project" for October 2000,17 all of which included petitioner as
among the affected employees. The submission of termination reports by PNCC was however
disputed by petitioner based on the verifications 18 issued by the DOLE NCR office that he was
not among the affected employees listed in the reports filed by PNCC in August 1998, February
1999, August 1999 and October 2000.
On March 28, 2006, the Labor Arbiter rendered a Decision19 in favor of petitioner. The fallo
reads:
WHEREFORE, premises considered, the complainant had attained regular employment thereby
making his termination from employment illegal since it was not for any valid or authorized
causes. Consequently, Respondent is ordered to pay complainant his full backwages less six (6)
months computed as follows:

The reinstatement could not as well be ordered due to the strained relations between the parties,
that in lieu thereof, separation pay is ordered paid to complainant in the amount of P37,662.00
[P6,277.00 x 6].
SO ORDERED.20
The Labor Arbiter ruled that petitioner attained regular employment status with the repeated
hiring and rehiring of his services more so when the services he was made to render were usual
and necessary to PNCCs business. The Labor Arbiter likewise found that from the time
petitioner was hired in 1996 until he was terminated, he was hired and rehired by PNCC and
made to work not only in the project he had signed to work on but on other projects as well,
indicating that he is in fact a regular employee. He also noted petitioners subsequent contracts
did not anymore indicate the date of completion of the contract and the fact that his first contract
was extended way beyond the supposed completion date. According to the Labor Arbiter, these
circumstances indicate that the employment is no longer a project employment but has
graduated into a regular one. Having attained regular status, the Labor Arbiter ruled that
petitioner should have been accorded his right to security of tenure.
Both PNCC and petitioner appealed the Labor Arbiters decision. PNCC insisted that petitioner
was just a project employee and his termination was brought about by the completion of the
contract and therefore he was not illegally dismissed. Petitioner, on the other hand, argued that
his reinstatement should have been ordered by the Labor Arbiter since there was no proof that
there were strained relations between the parties. He also questioned the deduction of six
months pay from the back wages awarded to him and the failure of the Labor Arbiter to award
him damages and attorneys fees. Petitioner likewise moved to dismiss PNCCs appeal
contending that the supersedeas bond in the amount of P422,630.41 filed by the latter was
insufficient considering that the Labor Arbiters monetary award is P460,292.41. He also argued
that the person who verified the appeal, Felix M. Erece, Jr., Personnel Services Department
Head of PNCC, has no authority to file the same for and in behalf of PNCC.
On October 31, 2008, the NLRC rendered its Decision granting PNCCs appeal but dismissing
that of petitioner. The dispositive portion reads:
WHEREFORE, premises considered, the appeal of respondent is GRANTED and the Decision
dated 28 March 2006 is REVERSED and SET ASIDE.
A new Decision is hereby issued ordering respondent Philippine National Construction
Corporation to pay completion bonus to complainant Roy Domingo Pasos in the amount
of P25,000.
Complainants appeal is DISMISSED for lack of merit.
SO ORDERED.21

Backwages:
Feb. 18, 2000 March 28, 2006 = 73.33 mos.
P6,277.00 x 73.33 =

P460,292.41

Less:
P6,277.00 X 6 mos. =

37,662.00
P422,630.41

As to the procedural issues raised by petitioner, the NLRC ruled that there was substantial
compliance with the requirement of an appeal bond and that Mr. Erece, Jr., as head of the
Personnel Services Department, is the proper person to represent PNCC. As to the substantive
issues, the NLRC found that petitioner was employed in connection with certain construction
projects and his employment was co-terminus with each project as evidenced by the Personnel
Action Forms and the Termination Report submitted to the DOLE. It likewise noted the presence
of the following project employment indicators in the instant case, namely, the duration of the
project for which petitioner was engaged was determinable and expected completion was known
to petitioner; the specific service that petitioner rendered in the projects was that of an
accounting clerk and that was made clear to him and the service was connected with the

projects; and PNCC submitted termination reports to the DOLE and petitioners name was
included in the list of affected employees.
Petitioner elevated the case to the CA via a petition for certiorari but the appellate court
dismissed the same for lack of merit.
Hence this petition. Petitioner argues that the CA erred when it:
I.
SUSTAINED THAT THE AMOUNT OF THE BOND POSTED BY THE RESPONDENTS FOR
PURPOSES OF APPEAL WAS SUFFICIENT NOTWITHSTANDING THAT THE SAME IS LESS
THAN THE ADJUDGED AMOUNT.
II.
SUSTAINED THAT FELIX M. ERECE, JR., HEAD OF RESPONDENT PNCCS PERSONNEL
SERVICE DEPARTMENT, IS DULY AUTHORIZED TO REPRESENT RESPONDENT IN THIS
CASE NOTWITHSTANDING THE ABSENCE OF ANY BOARD RESOLUTION OR
SECRETARYS CERTIFICATE OF THE RESPONDENT STATING THAT INDEED HE WAS
DULY AUTHORIZED TO INSTITUTE THESE PROCEEDINGS.

VII.
SUSTAINED THE FAILURE OF THE NATIONAL LABOR RELATIONS COMMISSION TO
RECTIFY THE ERROR COMMITTED BY LABOR ARBITER LIBO-ON IN DEDUCTING THE
EQUIVALENT OF SIX MONTHS PAY OF BACKWAGES DESPITE THE MANDATE OF THE
LABOR CODE THAT WHEN THERE IS A FINDING OF ILLEGAL DISMISSAL, THE PAYMENT
OF FULL BACKWAGES FROM DATE OF DIMISSAL UP TO ACTUAL REINSTATEMENT
SHOULD BE AWARDED.
VIII.
SUSTAINED THE FAILURE OF THE NATIONAL LABOR RELATIONS COMMISSION TO
RECTIFY THE ERROR COMMITTED BY LABOR ARBITER LIBO-ON IN FAILING TO AWARD
DAMAGES AND ATTORNEYS FEES TO THE PETITIONER.22
Petitioner contends that PNCCs appeal from the Labor Arbiters decision should not have been
allowed since the appeal bond filed was insufficient. He likewise argues that the appellate court
erred in heavily relying in the case of Cagayan Valley Drug Corporation v. Commissioner of
Internal Revenue23 which enumerated the officials and employees who can sign the verification
and certification without need of a board resolution. He contends that in said case, there was
substantial compliance with the requirement since a board resolution was submitted albeit
belatedly unlike in the instant case where no board resolution was ever submitted even
belatedly.

III.
SUSTAINED THAT PETITIONER WAS A PROJECT EMPLOYEE DESPITE THE FACT THAT
RESPONDENT PNCC HAD NOT SUBMITTED THE REQUISITE TERMINATION REPORTS IN
ALL OF THE ALLEGED PROJECTS WHERE THE PETITIONER WAS ASSIGNED.
IV.
SUSTAINED THAT THE PETITIONER IS A PROJECT EMPLOYEE DESPITE THE
CIRCUMSTANCE THAT THE ACTUAL WORK UNDERTAKEN BY THE PETITIONER WAS
NOT LIMITED TO THE WORK DESCRIBED IN HIS ALLEGED APPOINTMENT AS A
PROJECT EMPLOYEE.
V.
FAILED TO FIND THAT AT SOME TIME, THE EMPLOYMENT OF THE PETITIONER WAS
UNREASONABLY EXTENDED BEYOND THE DATE OF ITS COMPLETION AND AT OTHER
TIMES THE SAME DID NOT BEAR A DATE OF COMPLETION OR THAT THE SAME WAS
READILY DETERMINABLE AT THE TIME OF PETITIONERS ENGAGEMENT THEREBY
INDICATING THAT HE WAS NOT HIRED AS A PROJECT EMPLOYEE.
VI.
FAILED TO ORDER THE REINSTATEMENT OF THE PETITIONER BY FINDING THAT
THERE WAS STRAINED RELATIONS BETWEEN THE PARTIES NOTWITHSTANDING THAT
THE RESPONDENT NEVER EVEN ALLEGED NOR PROVED IN ITS PLEADINGS THE
CIRCUMSTANCE OF STRAINED RELATIONS.

As to the substantive issue, petitioner submits that the CA erroneously concluded that he was a
project employee when there are indicators which point otherwise. He contends that even if he
was just hired for the NAIA 2 Project from April 26, 1996 to July 25, 1996, he was made to work
until August 4, 1998. He also avers the DOLE had certified that he was not among the
employees listed in the termination reports submitted by PNCC which belies the photocopies of
termination reports attached by PNCC to its pleadings listing petitioner as one of the affected
employees. Petitioner points out that said termination reports attached to PNCCs pleadings are
mere photocopies and were not even certified by the DOLE-NCR as true copies of the originals
on file with said office. Further, he argues that in violation of the requirement of Department
Order No. 19 that the duration of the project employment is reasonably determinable, his
contracts for the SM projects did not specify the date of completion of the project nor was the
completion determinable at the time that petitioner was hired.
PNCC counters that documentary evidence would show that petitioner was clearly a project
employee and remained as such until his last engagement. It argues that the repeated rehiring
of petitioner as accounting clerk in different projects did not make him a regular employee. It also
insists that it complied with the reportorial requirements and that it filed and reported the
termination of petitioner upon every completion of project to which he was employed.
In sum, three main issues are presented before this Court for resolution: (1) Should an appeal
be dismissed outright if the appeal bond filed is less than the adjudged amount? (2) Can the
head of the personnel department sign the verification and certification on behalf of the
corporation sans any board resolution or secretarys certificate authorizing such officer to do the
same? and (3) Is petitioner a regular employee and not a mere project employee and thus can
only be dismissed for cause?
Substantial compliance with appeal
bond requirement

The perfection of an appeal within the reglementary period and in the manner prescribed by law
is jurisdictional, and noncompliance with such legal requirement is fatal and effectively renders
the judgment final and executory. As provided in Article 223 of the Labor Code, as amended, in
case of a judgment involving a monetary award, an appeal by the employer may be perfected
only upon the posting of a cash or surety bond issued by a reputable bonding company duly
accredited by the Commission in the amount equivalent to the monetary award in the judgment
appealed from.
However, not only in one case has this Court relaxed this requirement in order to bring about the
immediate and appropriate resolution of cases on the merits. 24 In Quiambao v. National Labor
Relations Commission,25 this Court allowed the relaxation of the requirement when there is
substantial compliance with the rule. Likewise, in Ong v. Court of Appeals, 26 the Court held that
the bond requirement on appeals may be relaxed when there is substantial compliance with the
Rules of Procedure of the NLRC or when the appellant shows willingness to post a partial bond.
The Court held that "while the bond requirement on appeals involving monetary awards has
been relaxed in certain cases, this can only be done where there was substantial compliance of
the Rules or where the appellants, at the very least, exhibited willingness to pay by posting a
partial bond."
In the instant case, the Labor Arbiter in his decision ordered PNCC to pay petitioner back wages
amounting toP422,630.41 and separation pay of P37,662 or a total of P460,292.41. When
PNCC filed an appeal bond amounting to P422,630.41 or at least 90% of the adjudged amount,
there is no question that this is substantial compliance with the requirement that allows
relaxation
of
the
rules.
Validity
of
the
verification
and
certification
signed
by
a
corporate
officer
on
behalf
of
the
corporation
without
the
requisite
board
resolution or secretarys certificate
It has been the constant holding of this Court in cases instituted by corporations that an
individual corporate officer cannot exercise any corporate power pertaining to the corporation
without authority from the board of directors pursuant to Section 23, in relation to Section 25 of
the Corporation Code which clearly enunciates that all corporate powers are exercised, all
business conducted, and all properties controlled by the board of directors. However, we have in
many cases recognized the authority of some corporate officers to sign the verification and
certification against forum-shopping. Some of these cases were enumerated in Cagayan Valley
Drug Corporation v. Commissioner of Internal Revenue27 which was cited by the appellate court:
In Mactan-Cebu International Airport Authority v. CA, we recognized the authority of a general
manager or acting general manager to sign the verification and certificate against forum
shopping; in Pfizer v. Galan, we upheld the validity of a verification signed by an "employment
specialist" who had not even presented any proof of her authority to represent the company; in
Novelty Philippines, Inc. v. CA, we ruled that a personnel officer who signed the petition but did
not attach the authority from the company is authorized to sign the verification and non-forum
shopping certificate; and in Lepanto Consolidated Mining Company v. WMC Resources
International Pty. Ltd. (Lepanto), we ruled that the Chairperson of the Board and President of the
Company can sign the verification and certificate against non-forum shopping even without the
submission of the boards authorization.
In sum, we have held that the following officials or employees of the company can sign the
verification and certification without need of a board resolution: (1) the Chairperson of the Board
of Directors, (2) the President of a corporation, (3) the General Manager or Acting General
Manager, (4) Personnel Officer, and (5) an Employment Specialist in a labor case.

While the above cases do not provide a complete listing of authorized signatories to the
verification and certification required by the rules, the determination of the sufficiency of the
authority was done on a case to case basis. The rationale applied in the foregoing cases is to
justify the authority of corporate officers or representatives of the corporation to sign the
verification or certificate against forum shopping, being "in a position to verify the truthfulness
and correctness of the allegations in the petition."28 (Citations omitted.)
While we agree with petitioner that in Cagayan Valley, the requisite board resolution was
submitted though belatedly unlike in the instant case, this Court still recognizes the authority of
Mr. Erece, Jr. to sign the verification and certification on behalf of PNCC sans a board resolution
or secretarys certificate as we have allowed in Pfizer, Inc. v. Galan, 29 one of the cases cited in
Cagayan Valley. In Pfizer, the Court ruled as valid the verification signed by an employment
specialist as she was in a position to verify the truthfulness and correctness of the allegations in
the petition30 despite the fact that no board resolution authorizing her was ever submitted by
Pfizer, Inc. even belatedly. We believe that like the employment specialist in Pfizer, Mr. Erece,
Jr. too, as head of the Personnel Services Department of PNCC, was in a position to assure that
the allegations in the pleading have been prepared in good faith and are true and correct.
Even assuming that the verification in the appeal filed by PNCC is defective, it is well settled that
rules of procedure in labor cases maybe relaxed. As provided in Article 221 of the Labor Code,
as amended, "rules of evidence prevailing in courts of law or equity shall not be controlling and it
is the spirit and intention of this Code that the Commission and its members and the Labor
Arbiters shall use every and all reasonable means to ascertain the facts in each case speedily
and objectively and without regard to technicalities of law or procedure, all in the interest of due
process." Moreover, the requirement of verification is merely formal and not jurisdictional. As
held in Pacquing v. Coca-Cola Philippines, Inc.31:
As to the defective verification in the appeal memorandum before the NLRC, the same liberality
applies. After all, the requirement regarding verification of a pleading is formal, not jurisdictional.
Such requirement is simply a condition affecting the form of pleading, the noncompliance of
which does not necessarily render the pleading fatally defective. Verification is simply intended
to secure an assurance that the allegations in the pleading are true and correct and not the
product of the imagination or a matter of speculation, and that the pleading is filed in good faith.
The court or tribunal may order the correction of the pleading if verification is lacking or act on
the pleading although it is not verified, if the attending circumstances are such that strict
compliance with the rules may be dispensed with in order that the ends of justice may thereby
be served.32
Duration
should
hiring

be

of
determined

project
at

the

time

employment
of

In the instant case, the appointments issued to petitioner indicated that he was hired for specific
projects. This Court is convinced however that although he started as a project employee, he
eventually became a regular employee of PNCC.
Under Article 280 of the Labor Code, as amended, a project employee is one whose
"employment has been fixed for a specific project or undertaking the completion or termination of
which has been determined at the time of the engagement of the employee or where the work or
services to be performed is seasonal in nature and the employment is for the duration of the
season." Thus, the principal test used to determine whether employees are project employees is
whether or not the employees were assigned to carry out a specific project or undertaking, the
duration or scope of which was specified at the time the employees were engaged for that
project.33

In the case at bar, petitioner worked continuously for more than two years after the supposed
three-month duration of his project employment for the NAIA II Project. While his appointment for
said project allowed such extension since it specifically provided that in case his "services are
still needed beyond the validity of the contract, the Company shall extend his services," there
was no subsequent contract or appointment that specified a particular duration for the extension.
His services were just extended indefinitely until "Personnel Action Form Project Employment"
dated July 7, 1998 was issued to him which provided that his employment will end a few weeks
later or on August 4, 1998. While for first three months, petitioner can be considered a project
employee of PNCC, his employment thereafter, when his services were extended without any
specification of as to the duration, made him a regular employee of PNCC. And his status as a
regular employee was not affected by the fact that he was assigned to several other projects and
there were intervals in between said projects since he enjoys security of tenure.

show that they did not. Policy Instruction No. 20 is explicit that employers of project employees
are exempted from the clearance requirement but not from the submission of termination report.
We have consistently held that failure of the employer to file termination reports after every
project completion proves that the employees are not project employees. Nowhere in the New
Labor Code is it provided that the reportorial requirement is dispensed with. The fact is that
Department Order No. 19 superseding Policy Instruction No. 20 expressly provides that the
report of termination is one of the indicators of project employment.37

Failure
of
an
termination
reports
project
completion
employee is not a project employee

Petitioners regular employment was terminated by PNCC due to contract expiration or project
completion, which are both not among the just or authorized causes provided in the Labor Code,
as amended, for dismissing a regular employee. Thus, petitioner was illegally dismissed.

employer

to
after

proves

that

file
every
an

As a rule, the findings of fact of the CA are final and conclusive and this Court will not review
them on appeal.34 The rule, however, is subject to the following exceptions:
The jurisdiction of the Court in cases brought before it from the appellate court is limited to
reviewing errors of law, and findings of fact of the Court of Appeals are conclusive upon the
Court since it is not the Courts function to analyze and weigh the evidence all over again.
Nevertheless, in several cases, the Court enumerated the exceptions to the rule that factual
findings of the Court of Appeals are binding on the Court: (1) when the findings are grounded
entirely on speculations, surmises or conjectures; (2) when the inference made is manifestly
mistaken, absurd or impossible; (3) when there is grave abuse of discretion; (4) when the
judgment is based on a misapprehension of facts; (5) when the findings of fact are conflicting;
(6) when in making its findings the Court of Appeals went beyond the issues of the case, or its
findings are contrary to the admissions of both the appellant and the appellee; (7) when the
findings are contrary to that of the trial court; (8) when the findings are conclusions without
citation of specific evidence on which they are based; (9) when the facts set forth in the petition
as well as in the petitioners main and reply briefs are not disputed by the respondent; (10) when
the findings of fact are premised on the supposed absence of evidence and contradicted by the
evidence on record; or (11) when the Court of Appeals manifestly overlooked certain relevant
facts not disputed by the parties, which, if properly considered, would justify a different
conclusion.35
In this case, records clearly show that PNCC did not report the termination of petitioners
supposed project employment for the NAIA II Project to the DOLE. Department Order No. 19, or
the "Guidelines Governing the Employment of Workers in the Construction Industry," requires
employers to submit a report of an employees termination to the nearest public employment
office every time an employees employment is terminated due to a completion of a project.
PNCC submitted as evidence of its compliance with the requirement supposed photocopies of
its termination reports, each listing petitioner as among the employees affected. Unfortunately,
none of the reports submitted pertain to the NAIA II Project. Moreover, DOLE NCR verified that
petitioner is not included in the list of affected workers based on the termination reports filed by
PNCC on August 11, 17, 20 and 24, 1998 for petitioners supposed dismissal from the NAIA II
Project effective August 4, 1998. This certification from DOLE was not refuted by PNCC. In
Tomas Lao Construction v. NLRC,36 we emphasized the indispensability of the reportorial
requirement:
Moreover, if private respondents were indeed employed as "project employees," petitioners
should have submitted a report of termination to the nearest public employment office every time
their employment was terminated due to completion of each construction project. The records

A
regular
cause
other
authorized
causes
illegally dismissed

employee
than
provided

dismissed
the
by

for
just
law

a
or
is

Article 279 of the Labor Code, as amended, provides that an illegally dismissed employee is
entitled to reinstatement, full back wages, inclusive of allowances, and to his other benefits or
their monetary equivalent from the time his compensation was withheld from him up to the time
of his actual reinstatement.
We agree with petitioner that there was no basis for the Labor Arbiters finding of strained
relations and order of separation pay in lieu of reinstatement. This was neither alleged nor
proved. Moreover, it has long been settled that the doctrine of strained relations should be
strictly applied so as not to deprive an illegally dismissed employee of his right to reinstatement.
As held in Globe-Mackay Cable and Radio Corporation v. NLRC:38
Obviously, the principle of "strained relations" cannot be applied indiscriminately. Otherwise,
reinstatement can never be possible simply because some hostility is invariably engendered
between the parties as a result of litigation. That is human nature.
Besides, no strained relations should arise from a valid and legal act of asserting ones right;
otherwise an employee who shall assert his right could be easily separated from the service, by
merely paying his separation pay on the pretext that his relationship with his employer had
already become strained.39
As to the back wages due petitioner, there is likewise no basis in deducting therefrom back
wages equivalent to six months "representing the maximum period of confinement PNCC can
require him to undergo medical treatment." Besides, petitioner was not dismissed on the ground
of disease but expiration of term of project employment.
Regarding moral and exemplary damages, this Court rules that petitioner is not entitled to
them.1wphi1 Worth reiterating is the rule that moral damages are recoverable where the
dismissal of the employee was attended by bad faith or fraud or constituted an act oppressive to
labor, or was done in a manner contrary to morals, good customs, or public policy. Likewise,
exemplary damages may be awarded if the dismissal was effected in a wanton, oppressive or
malevolent manner.40 Apart from his allegations, petitioner did not present any evidence to prove
that his dismissal was attended with bad faith or was done oppressively.
Petitioner is also entitled to attorney's fees m the amount of ten percent (10%) of his total
monetary award, having been forced to litigate in order to seek redress of his grievances, as
provided in Article 111 of the Labor Code, as amended, and following this Court's
pronouncement in Exodus International Construction Corporation v. Biscocho. 41

In line with current jurisprudence, the award of back wages shall earn legal interest at the rate of
six percent ( 6%) per annum from the date of petitioner's dismissal until the finality of this
decision.42 Thereafter, it shall earn 12% legal interest until fully paid43 in accordance with the
guidelines in Eastern Shipping Lines, Inc. v. Court of Appeals. 44
WHEREFORE, the petition is GRANTED. The assailed March 26, 2010 Decision and May 26,
2010 Resolution of the Court of Appeals in CAG.R. SP No. 107805 are hereby REVERSED. The
decision of the Labor Arbiter is hereby REINSTATED with the following MODIFICATIONS:
1) respondent PNCC is DIRECTED to pay petitioner Roy D. Pasos full back wages
from the time of his illegal dismissal on October 19, 2000 up to the finality of this
Decision, with interest at 6% per annum, and 12% legal interest thereafter until fully
paid;
2) respondent PNCC is ORDERED to reinstate petitioner Pasos to his former position
or to a substantially equivalent one, without loss of seniority rights and other benefits
attendant to the position; and
3) respondent PNCC is DIRECTED to pay petitioner Pasos attorney's fees equivalent
to 10% of his total monetary award.
No pronouncement as to costs. SO ORDERED.

24. G.R. No. 159730

February 11, 2008
NORKIS TRADING CO., INC. and/or MANUEL GASPAR E. ALBOS, JR., petitioner,
vs.
MELVIN GNILO, respondent.**
DECISION
AUSTRIA-MARTINEZ, J.:
Before us is a Petition for Review on Certiorari under Rule 45 of the Rules of Court seeking to
annul and set aside the Decision1 dated June 20, 2003 and the Resolution2 dated August 25,
2003 of the Court of Appeals (CA) in CA G.R. SP No. 72568.
Melvin R. Gnilo (respondent) was initially hired by Norkis Trading Co., Inc. (petitioner Norkis) as
Norkis Installment Collector (NIC) in April 1988. Manuel Gaspar E. Albos, Jr. (petitioner Albos) is
the Senior Vice-President of petitioner Norkis. Respondent held various positions in the
company until he was appointed as Credit and Collection Manager of Magna Financial Services
Group, Inc.-Legaspi Branch, petitioner Norkiss sister company, in charge of the areas of Albay
and Catanduanes with travel and transportation allowances and a service car.
A special audit team was conducted in respondent's office in Legaspi, Albay from March 13 to
April 5, 2000 when it was found out that respondent forwarded the monthly collection reports of
the NICs under his supervision without checking the veracity of the same. It appeared that the
monthly collection highlights for the months of April to September 1999 submitted by respondent
to the top management were all overstated particularly the account handled by NIC Dennis
Cadag, who made it appear that the collection efficiency was higher than it actually was; and
that the top management was misled into believing that respondents area of responsibility
obtained a favorable collection efficiency.

Respondent was then charged by petitioners' Inquiry Assistance Panel (Panel) with negligence
of basic duties and responsibilities resulting in loss of trust and confidence and laxity in directing
and supervising his own subordinates. During the investigation, respondent admitted that he was
negligent for failing to regularly check the report of each NIC under his supervision; that he only
checked at random the NIC's monthly collection highlight reports; and that as a leader, he is
responsible for the actions of his subordinates. He however denied being lax in supervising his
subordinates, as he imposed discipline on them if the need arose.
On May 30, 2000, petitioner Norkis through its Human Resource Manager issued a
memorandum3 placing respondent under 15 days suspension without pay, travel and
transportation allowance, effective upon receipt thereof. Respondent filed a letter protesting his
suspension and seeking a review of the penalty imposed.
Another memorandum4 dated June 30, 2000 was issued to respondent requiring him to report
on July 5, 2000 to the head office of petitioner Norkis in Mandaluyong City for a re-training or a
possible new assignment without prejudice to his request for a reconsideration or an appeal of
his suspension. He was then assigned to the Marketing Division directly reporting to petitioner
Albos.
In a letter5 dated July 27, 2000, respondent requested petitioner Albos that he be assigned as
Sales Engineer or to any position commensurate with his qualifications. However, on July 28,
2000, respondent was formally appointed as Marketing Assistant to petitioner Albos, which
position respondent subsequently assumed.
However, on October 4, 2000, respondent filed with the Labor Arbiter (LA) a complaint for illegal
suspension, constructive dismissal, non-payment of allowance, vacation/sick leave, damages
and attorney's fees against petitioners.
On March 30, 2001, the LA rendered his decision6 dismissing the complaint for lack of merit.
The LA found that the position of Credit and Collection Manager held by respondent involved a
high degree of responsibility requiring trust and confidence; that his failure to observe the
required procedure in the preparation of reports, which resulted in the overstated collection
reports continuously for more than six months, was sufficient to breach the trust and confidence
of petitioners and was a valid ground for termination; that instead of terminating him, petitioners
merely imposed a 15-day suspension which was not illegal; and that petitioners exercised their
inherent prerogative as an employer when they appointed respondent as a Marketing Assistant.
Respondent appealed the LA decision to the National Labor Relations Commission (NLRC). In a
Resolution7 dated January 29, 2002, the NLRC reversed the LA, the dispositive portion of which
reads:
WHEREFORE, premises considered, complainant's appeal is partly GRANTED. The
Labor Arbiter's decision in the above-entitled case is REVERSED. It is hereby
declared that complainant was constructively dismissed from his employment.
Respondent Norkis Trading Co., Inc is ordered to pay complainant the amount
ofP411,796.00 as backwages and separation pay, plus ten percent (10%) thereof as
attorney's fees.8
In so ruling, the NLRC found that the 15-day suspension cannot be considered harsh and
unconscionable as petitioners validly exercised their management prerogative to impose
discipline on an erring employee for negligence by submitting unreliable and inaccurate reports
for six consecutive months to the top management who used the reports in their planning and
decision-making activities, and thus caused damage or injury one way or another to petitioners.

It however held that the transfer of respondent from the position of Credit and Collection
Manager to Marketing Assistant resulted in his demotion in rank from Manager to a mere rank
and file employee, which was tantamount to constructive dismissal and therefore illegal.
The NLRC ruled that respondent was constructively dismissed and therefore he was entitled to
reinstatement and payment of full backwages from the time he quit working on October 19, 2000
due to his demotion up to the time of his actual reinstatement. However, it found that the parties'
relationship was already strained on account of this case; thus, it ordered the payment of
respondents separation pay equivalent to his one-month salary for every year of service. It
upheld the LA's dismissal of respondent's prayer for damages for failure to submit substantial
evidence to support the same, but awarded attorney's fees.
Petitioners filed their Motion for Reconsideration while respondent filed his Motion for
Reconsideration/Clarification.
On June 24, 2002, the NLRC issued another Resolution,9 the dispositive portion of which reads:
WHEREFORE, premises considered, respondents' [petitioners] motion for
reconsideration is DENIED for lack of merit while complainant's [respondent] motion
for reconsideration is GRANTED. This Commission's January 29, 2002 Resolution in
the above-entitled case is hereby AFFIRMED with the MODIFICATION that
respondent Norkis Trading Company, Inc. is ordered to pay complainant the adjusted
amount of P444,739.38 as backwages, separation pay, 13th month pay and refund of
provident fund contribution.10
In granting respondent's motion for reconsideration, the NLRC found that petitioners admitted in
their Rejoinder that they had not paid respondent his 13th-month pay and that respondent had
yet to make a written request for the refund of his provident fund contribution; thus, respondent
was entitled thereto and the provident fund contribution must also be returned to him.
Petitioners filed a petition for certiorari with the CA. Subsequently, they also filed a Motion for the
Issuance of a Temporary Restraining Order or a Writ of Preliminary Injunction, as respondent
had filed a Motion for the Issuance of a Writ of Execution with the NLRC.
On June 20, 2003, the CA rendered its assailed Decision denying the petition and affirming the
NLRC Resolutions.
On August 25, 2003, the CA denied petitioners Motion for Reconsideration.
Hence, herein petition wherein petitioners assigned the following errors committed by the CA:
THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN UPHOLDING
THE ERRONEOUS FINDINGS OF THE NLRC DESPITE THE FACT THAT THE
NLRC OVERLOOKED, MISAPPRECIATED OR MISAPPLIED SOME FACTS THAT
WOULD HAVE AFFECTED THE RESULT OF THE CASE.
THE HONORABLE COURT OF APPEALS ACTED CONTRARY TO LAW AND
JURISPRUDENCE WHEN IT HELD THAT PRIVATE RESPONDENT WAS
CONSTRUCTIVELY DISMISSED. 11
Petitioners contend that factual findings of quasi-judicial agencies, while generally accorded
finality, may be reviewed by this Court when the findings of the NLRC and the LA are

contradictory; that in the exercise of its equity jurisdiction, this Court may look into the records of
the case to re-examine the questioned findings.
Petitioners claim that they were merely exercising their inherent prerogative as an employer
when they appointed respondent as Marketing Assistant to the Senior Vice-President for
Marketing; that respondent's performance evaluations during the previous years showed that he
was weak in the financial aspect of operation, but was good in marketing; thus, he would
function with utmost efficiency and maximum benefit to the company in the Marketing
Department; and that he had accepted his appointment unconditionally.
Petitioners submit that the positions of Credit and Collection Manager and Marketing Assistant
are co-equal and of the same level of authority; that the scope of work of a Marketing Assistant
is wider, since he has access to confidential informations and has the chance to communicate
directly with higher officers of the company; that his area of responsibility as Credit and
Collection Manager was limited to branches located in Legaspi City and Virac, Catanduanes;
whereas as Marketing Assistant, he is responsible for analyzing and coordinating all marketing
information relevant to the company's motorcycles from all over Luzon, and his reports are
necessary for the planning and decision-making activities of petitioners' top management; and
that there is no demotion, since respondent's position is more encompassing and vital to the
company and he is receiving the same salary.
Petitioners also contend that they should not be adjudged to pay attorney's fees as they did not
act in bad faith.
In his Comment, respondent states that it is not the function of this Court to analyze and weigh
all over again the evidence already considered in the proceedings below, as its jurisdiction is
limited to reviewing errors of law; that the CA had not only passed upon the legal/factual issues
and arguments presented by the parties but had waded into the records and found out that the
findings of the NLRC were supported by substantial evidence. He informs this Court that he was
able to enforce the writ of execution issued by the NLRC and subsequently secured the release
of the monetary award on November 14, 2003.
The parties thereafter filed their respective memoranda.
The issue for resolution is whether respondent's transfer from the position of Credit and
Collection Manager to that of a Marketing Assistant amounts to a constructive dismissal. This is
a factual matter. Rule 45 of the Rules of Court provides that only questions of law may be raised
in a petition for review on certiorari. The raison d'etre is that the Court is not a trier of facts. It is
not to re-examine and re-evaluate the evidence on record. The general rule is that the factual
findings of the NLRC, as affirmed by the CA, are accorded high respect and finality unless the
factual findings and conclusions of the LA clash with those of the NLRC and the CA, as it
appears in this case. Thus we have to review the records and the arguments of the parties to
resolve the factual issues and render substantial justice to the parties. 12
Well-settled is the rule that it is the prerogative of the employer to transfer and reassign
employees for valid reasons and according to the requirement of its business. 13 An owner of a
business enterprise is given considerable leeway in managing his business. Our law recognizes
certain rights, collectively called management prerogative as inherent in the management of
business enterprises. We have consistently recognized and upheld the prerogative of
management to transfer an employee from one office to another within the business
establishment, provided that there is no demotion in rank or diminution of his salary, benefits and
other privileges14 and the action is not motivated by discrimination, made in bad faith, or effected
as a form of punishment or demotion without sufficient cause. 15 This privilege is inherent in the
right of employers to control and manage their enterprises effectively.16

The right of employees to security of tenure does not give them vested rights to their positions to
the extent of depriving management of its prerogative to change their assignments or to transfer
them. Managerial prerogatives, however, are subject to limitations provided by law, collective
bargaining agreements, and general principles of fair play and justice. 17
The employer bears the burden of showing that the transfer is not unreasonable, inconvenient or
prejudicial to the employee; and does not involve a demotion in rank or a diminution of his
salaries, privileges and other benefits.18Should the employer fail to overcome this burden of
proof, the employees transfer shall be tantamount to constructive dismissal. 19
Constructive dismissal is defined as a quitting because continued employment is rendered
impossible, unreasonable or unlikely; when there is a demotion in rank or a diminution of
pay.20 Likewise, constructive dismissal exists when an act of clear discrimination, insensibility or
disdain by an employer becomes unbearable to the employee, leaving him with no option but to
forego his continued employment.21
A transfer is defined as a "movement from one position to another which is of equivalent rank,
level or salary, without break in service."22 Promotion, on the other hand, is the "advancement
from one position to another with an increase in duties and responsibilities as authorized by law,
and usually accompanied by an increase in salary."23Conversely, demotion involves a situation
in which an employee is relegated to a subordinate or less important position constituting a
reduction to a lower grade or rank, with a corresponding decrease in duties and responsibilities,
and usually accompanied by a decrease in salary.24
In this case, while the transfer of respondent from Credit and Collection Manager to Marketing
Assistant did not result in the reduction of his salary, there was a reduction in his duties and
responsibilities which amounted to a demotion tantamount to a constructive dismissal as
correctly held by the NLRC and the CA.
A comparison in the nature of work of these two positions shows a great difference. As Credit
and Collection Manager, respondent was clothed with all the duties and responsibilities of a
managerial employee. He could devise and implement action plans to meet his objectives and
exercise independent judgment in resolving problem accounts. He had power and control over
NICs, Branch Control Officers (BCOs) and Cashiers under his supervision, and he provided
them training in the performance of their respective works. Further, he had the authority to
ensure reserves in the NICs, BCOs and Cashiers in case of expansion, reassignment and/or
termination. There is no doubt that said position of Credit and Collection Manager entails great
duties and responsibilities and involves discretionary powers. In fact, even in petitioners
pleadings, they repeatedly stated that the position involved a high degree of responsibility
requiring trust and confidence as it relates closely to the financial interest of the company.
On the other hand, the work of a Marketing Assistant is clerical in nature, which does not involve
the exercise of any discretion. Such job entails mere data gathering on vital marketing
informations relevant to petitioners' motorcycles and making reports to his direct supervisor. He
is a mere staff member in the office of the Senior Vice-President for Marketing. While petitioners
claim that the position of a Marketing Assistant covers a wide area as compared with the
position of Credit and Collection Manager, the latter is reposed with managerial duties in
overseeing petitioners business in his assigned area, unlike the former in which he merely
collates raw data. These two positions are not of the same level of authority.
There is constructive dismissal when an employee's functions, which were originally supervisory
in nature, were reduced; and such reduction is not grounded on valid grounds such as genuine
business necessity.25

We quote with approval the findings of the CA on the matter of respondent's demotion in his
functions, thus:
x x x Studying minutely the proof proffered by both sides, our considered ruling is that
there is more than the requisite quantum of evidence in support of the NLRC's
conclusion that indeed, private respondent was constructively dismissed. This is
evident, not only from the much reduced powers and prerogatives of the private
respondent when his position was changed from Credit and Collection Manager to
Marketing Assistant to the Senior Vice President; the variance in the duties between
the two, as may be gleaned from the definition of functions made of record, in this
case, are glaring and indubitable. As Credit and Collection Manager, private
respondent had the authority to "devise and implement action plans x x x, manage
and control the security and safety of collections and repossessed units x x x,
effectively supervise, teach and train BCO and cashiers x x x, discipline NIC's, BCO's
and cashiers, x x x," among others. In other words, he was part of management, or
was at the supervisory level, to say the least. On the other hand, as Marketing
Assistant to the Senior Vice President, private respondent was stripped of all
management and oversize wherewithal, and became an appendage of his immediate
supervisor, confined to such mundane functions as to "analyze monthly LTO data x x
x, coordinate with Sales Engineers x x x, and make quarterly reports x x x," give inputs
on such dreary information such as prices of rice and copra, tobacco and gasoline,
sources of people's income, peace and order situation, prepare brochures, etc., which
are humdrum clerical tasks requiring little or no discretion. Worse, he lost all the
people under him, and had no staff, and was relegated to a "mere rank and file
employee who had no one under his supervision and whose duties were merely
routinary and clerical in nature which did not require the use of independent
judgment."26
Moreover, petitioners failed to refute respondents claim that as Credit and Collection Manager,
he was provided with a service car which was no longer available to him as Marketing Assistant;
thus, such was a reduction in his benefit.
There is also constructive dismissal when an act of clear discrimination, insensibility, or disdain
by an employer becomes so unbearable on the part of the employee as to foreclose any choice
on his part except to resign from such employment.27 As aptly observed by the CA, to wit:
While we may allow petitioners the leeway of disciplining its employees, which is why
we uphold the finding of the NLRC that the fifteen-day suspension of private
respondent was legal and proper, We cannot countenance the barbaric treatment
suffered by the latter in the hands of his bosses. Undisputed it is that not only was
private respondent made to look like an idiot when he was not given work in his new
assignment, but that he was humiliated and debased when petitioner Albos, in a very
uncouth manner, hurled expletives at the private respondent, calling him bobo,
gago and screaming putang ina mo in front of him, at the same time "crumpling (his)
report" and throwing it into his face. Such undignified and boorish deeds perpetrated
against private respondent directly caused him to forthwith leave the employ of
petitioner corporation, which he served loyally for some twelve (12) years. 28
Respondents demotion in the nature of his functions coupled with petitioner Alboss act of
insensibility no doubt amounts to his constructive dismissal.
Anent petitioners' claim that respondent unconditionally accepted his formal appointment as
Marketing Assistant on August 3, 2000, we note that in a letter dated July 27, 2000 addressed to
petitioner Albos when he learned that he would be assigned as a Marketing Assistant,
respondent had expressed reservations on such assignment and asked that he instead be

assigned as Sales Engineer or to any position commensurate to his qualifications. Respondent

could not be faulted for accepting the position of a Marketing Assistant, since he did so and
stayed put in order to compare and evaluate his position. However, he experienced not only a
demotion in his duties and responsibilities, an undignified treatment by his immediate superior,
which prompted him to file this case.
Petitioners argue that it is patently inimical to their interest if respondent would be maintained in
the position of Credit and Collection Manager, as he was negligent in the performance of his
duties as such; that the 1999 incident was not the first time that respondent forwarded to top
management overstated collection reports, since three of the NICs under respondent's
supervision committed similar misrepresentations in 1997; and that it has been held that the
mere existence of a basis for believing that the supervisor or other personnel occupying
positions of responsibility has breached the trust and confidence reposed in him by his employer
is a sufficient ground for dismissal.
While petitioners have the prerogative to transfer respondent to another position, such transfer
should be done without diminution of rank and benefits which has been shown to be present in
respondent's case. He could have been transferred to a job of managerial position and not to
that of a Marketing Assistant. Moreover, petitioners failed to substantiate their claim that
respondent was weak in the financial aspect of operation, but he was good in marketing, as the
performance evaluation report relied upon by petitioners would not suffice. On the other hand,
the evaluation report dated March 10, 1997 stated that respondent's track records in sales and
collection showed his potential for advancement and could be the basis for his promotion to
Marketing Manager.
We note that the alleged overstated collection reports of three NICs under respondent's
supervision submitted in 1997, were already mentioned in the IAP report of the 1999 incident for
which respondent was meted the penalty of 15- day suspension without salary, travel and
transportation allowance; thus, the same could no longer be used to justify his transfer.
Moreover, respondent's demotion, which was a punitive action, was, in effect, a second penalty
for the same negligent act of respondent.
Finally, we find no error committed by the NLRC in awarding attorney's fees. In San Miguel
Corporation v. Aballa,29we held that in actions for recovery of wages or where an employee was
forced to litigate and thus incur expenses to protect his rights and interests, a maximum of 10%
of the total monetary award by way of attorney's fees is justifiable under Article 111 of the Labor
Code,30 Section 8, Rule VIII, Book III of its Implementing Rules; 31 and paragraph 7, Article 2208
of the Civil Code.32 The award of attorney's fees is proper and there need not be any showing
that the employer acted maliciously or in bad faith when it withheld the wages. There need only
be a showing that the lawful wages were not paid accordingly. 33
WHEREFORE, the petition is DENIED. The Decision dated June 20, 2003 and the Resolution
dated August 25, 2003 of the Court of Appeals are AFFIRMED.
Costs against petitioners. SO ORDERED.

This resolves petitioner Jerome M. Daabays (Daabay) Verified Petition for Review 1 , which
assails the Decision2dated June 24, 2011 and Resolution3 dated December 9, 2011 of the Court
of Appeals (CA) in CA-G.R. SP No. 03369-MIN.
The case stems from a complaint for illegal dismissal, illegal suspension, unfair labor practice
and monetary claims filed by Daabay against respondent Coca-Cola Bottlers Phils., Inc. (CocaCola) and three officers of the company.4The records indicate that the employment of Daabay
with Coca-Cola as Sales Logistics Checker was terminated by the company in June
2005,5 following receipt of information from one Cesar Sorin (Sorin) that Daabay was part of a
conspiracy that allowed the pilferage of company property. 6
The allegations of Sorin were embodied in an affidavit which he executed on April 16,
2005.7 The losses to the company were also confirmed by an inventory and audit conducted by
Coca-Colas Territory Finance Head, Silvia Ang. Such losses comprised of cases of assorted
softdrinks, empty bottles, missing shells and missing pallets valued at P20,860,913.00.8
Coca-Cola then served upon Daabay a Notice to Explain with Preventive Suspension, which
required him to explain in writing his participation in the scheme that was reported to involve
logistics checkers and gate guards. In compliance therewith, Daabay submitted an Explanation
dated April 19, 2005 wherein he denied any participation in the reported pilferage. 9
A formal investigation on the matter ensued. Eventually, Coca-Cola served upon Daabay a
Notice of Termination that cited pilferage, serious misconduct and loss of trust and confidence
as grounds. At the time of his dismissal, Daabay had been a regular employee of Coca-Cola for
eight years, and was receiving a monthly pay of P20,861.00, exclusive of other benefits.10
Daabay then filed the subject labor complaint against Coca-Cola and Roberto Huang (Huang),
Raymund Salvador (Salvador) and Alvin Garcia (Garcia), who were the President and Plant
Logistics Managers, respectively, of Coca-Cola at the time of the dispute.11 On April 18, 2008,
Executive Labor Arbiter Noel Augusto S. Magbanua (ELA Magbanua) rendered his Decision 12 in
favor of Daabay. He ruled that Daabay was illegally dismissed because his participation in the
alleged conspiracy was not proved by substantial evidence. In lieu of reinstatement and
considering the already strained relations between the parties, ELA Magbanua ordered the
payment to Daabay of backwages and separation pay or retirement benefits, as may be
applicable. The dispositive portion of ELA Magbanuas Decision reads:
WHEREFORE, premises considered, judgment is hereby rendered declaring the dismissal of
complainant Jerome Daabay as illegal, and ordering respondents to pay complainant his
backwages in the amount of [P]750,996.00.
Additionally, respondents are hereby ordered to pay complainant his separation pay at one (1)
month for every year of service, or his retirement benefits based on the latest Collective
Bargaining Agreement prior to his suspension/termination.
Other claims are hereby ordered dismissed for failure to substantiate.
SO ORDERED.13

25. G.R. No. 199890

August 19, 2013
JEROME M. DAABAY, PETITIONER,
vs.
COCA-COLA BOTTLERS PHILS., INC., RESPONDENT.
DECISION
REYES, J.:

Dissatisfied, Coca-Cola, Huang, Salvador and Garcia, appealed from ELA Magbanuas Decision
to the National Labor Relations Commission (NLRC). Daabay filed a separate appeal to ask for
his reinstatement without loss of seniority rights, the payment of backwages instead of
separation pay or retirement benefits, and an award of litigation expenses, moral and exemplary
damages and attorneys fees.

The NLRC reversed the finding of illegal dismissal. In a Resolution14 dated August 27, 2009, the
NLRC held that there was "reasonable and well-founded basis to dismiss [Daabay], not only for
serious misconduct, but also for breach of trust or loss of confidence arising from such company
losses."15 Daabays participation in the conspiracy was sufficiently established. Several
documents such as checkers receipts and sales invoices that made the fraudulent scheme
possible were signed by Daabay.16 The NLRC also found fault in Daabay for his failure to detect
the pilferage, considering that the "timely recording and monitoring as security control for the
outgoing [sic] of company products are necessarily connected with the functions, duties and
responsibilities reposed in him as Sales Logistics Checker." 17 Notwithstanding its ruling on the
legality of the dismissal, the NLRC awarded retirement benefits in favor of Daabay. The
dispositive portion of its Resolution reads:

Daabays motion for reconsideration was denied in a Resolution25 dated December 9, 2011;
hence, this petition.

WHEREFORE, premises considered, the appeal of complainant is DENIED for lack of merit,
while that of respondent Coca-Cola Bottlers Philippines, Inc. is GRANTED.

We deny the petition.

Accordingly, the assailed 18 April 2008 Decision of the Executive Labor Arbiter is hereby
REVERSED and SET ASIDE, and a new judgment is entered DISMISSING the present
complaint for want of evidence.
Let, however, this case be REMANDED to the Executive Labor Arbiter or the Regional
Arbitration Branch of origin for the computation of complainants retirement benefits in
accordance with the latest Collective Bargaining Agreement prior to his termination.
SO ORDERED.18
Coca-Colas partial motion for reconsideration to assail the award of retirement benefits was
denied by the NLRC in a Resolution19 dated October 30, 2009. The NLRC explained that there
was a need "to humanize the severe effects of dismissal" 20 and "tilt the scales of justice in favor
of labor as a measure of equity and compassionate social justice." 21 Daabay also moved to
reconsider, but his motion remained unresolved by the NLRC.22 Undaunted, Coca-Cola
appealed to the CA.
The CA agreed with Coca-Cola that the award of retirement benefits lacked basis considering
that Daabay was dismissed for just cause. It explained:
We are not oblivious of the instances where the Court awarded financial assistance to dismissed
employees, even though they were terminated for just causes. Equity and social justice was the
vague justification. Quickly realizing the unjustness of these [s]o-called equitable awards, the
Supreme Court took the opportunity to curb and rationalize the grant of financial assistance to
legally dismissed employees. Thus, in Philippine Long Distance Telephone Company v. National
Labor Relations Commission, the Supreme Court recognized the harsh realities faced by
employees that forced them, despite their good intentions, to violate company policies, for which
the employer can rightfully terminate their employment. For these instances, the award of
financial assistance was allowed. But, in clear and unmistakable language, the Supreme Court
also held that the award of financial assistance should not be given to validly terminated
employees, whose offenses are iniquitous or reflective of some depravity in their moral
character. x x x.23 (Citation omitted)
Thus, the dispositive portion of its Decision dated June 24, 2011 reads:
FOR THESE REASONS, the writ of certiorari is GRANTED; the portion of the Resolution
promulgated on 27 August 2009 remanding of the case to the Executive Labor Arbiter or the
Regional Arbitration Branch of origin for computation of retirement benefits is DELETED.
SO ORDERED.24

It bears stressing that although the assailed CA decision and resolution are confined to the issue
of Daabays entitlement to retirement benefits, Daabay attempts to revive through the present
petition the issue of whether or not his dismissal had factual and legal bases. Thus, instead of
confining itself to the issue of whether or not Daabay should be entitled to the retirement benefits
that were awarded by the NLRC, the petition includes a plea upon the Court to affirm ELA
Magbanuas Decision, with the modification to include: (a) his allowances and other benefits or
their monetary equivalent in the computation of his backwages; (b) his actual reinstatement; and
(c) damages, attorneys fees and litigation expenses.

We emphasize that the appeal to the CA was brought not by Daabay but by Coca-Cola, and was
limited to the issue of whether or not the award of retirement benefits in favor of Daabay was
proper. Insofar as CA-G.R. SP No. 03369-MIN was concerned, the correctness of the NLRCs
pronouncement on the legality of Daabays dismissal was no longer an issue, even beyond the
appellate courts authority to modify. In Andaya v. NLRC, 26 the Court emphasized that a party
who has not appealed from a decision may not obtain any affirmative relief from the appellate
court other than what he had obtained from the lower court, if any, whose decision is brought up
on appeal.27 Further, we explained in Yano v. Sanchez,28 that the entrenched procedural rule in
this jurisdiction is that a party who did not appeal cannot assign such errors as are designed to
have the judgment modified. All that he can do is to make a counter-assignment of errors or to
argue on issues raised below only for the purpose of sustaining the judgment in his favor. 29 Due
process prevents the grant of additional awards to parties who did not appeal.30 Considering that
Daabay had not yet appealed from the NLRCs Resolution to the CA, his plea for the
modification of the NLRCs findings was then misplaced. For the Court to review all matters that
are raised in the petition would be tolerant of what Daabay was barred to do before the appellate
court.
Before the CA and this Court, Daabay attempts to justify his plea for relief by stressing that he
had filed his own motion for reconsideration of the NLRCs Resolution dated August 27, 2009
but the same remained unacted upon by the NLRC. Such bare allegation, however, is
insufficient to allow the issue to be disturbed through this petition. We take note of Daabays
failure to attach to his petition a copy of the motion which he allegedly filed with the NLRC. It is
also quite baffling why Daabay does not appear to have undertaken steps to seek the NLRCs
resolution on the motion, even after it remained unresolved for more than two years from its
supposed filing.
Granting that such motion to reconsider was filed with the NLRC, the labor tribunal shall first be
given the opportunity to review its findings and rulings on the issue of the legality of Daabays
dismissal, and then correct them should it find that it erred in its disposition. The Court cannot,
by this petition, pre-empt the action which the NLRC, and the CA in case of an appeal, may take
on the matter.
Even as we limit our present review to the lone issue that was involved in the assailed CA
decision and resolution, the Court finds no cogent reason to reverse the ruling of the CA.
Daabay was declared by the NLRC to have been lawfully dismissed by Coca-Cola on the
grounds of serious misconduct, breach of trust and loss of confidence. Our pronouncement in
Philippine Airlines, Inc. v. NLRC31 on the issue of whether an employee who is dismissed for just
cause may still claim retirement benefits equally applies to this case. We held:
At the risk of stating the obvious, private respondent was not separated from petitioners employ
due to mandatory or optional retirement but, rather, by termination of employment for a just

cause. Thus, any retirement pay provided by PALs "Special Retirement & Separation Program"
dated February 15, 1988 or, in the absence or legal inadequacy thereof, by Article 287 of the
Labor Code does not operate nor can be made to operate for the benefit of private respondent.
Even private respondents assertion that, at the time of her lawful dismissal, she was already
qualified for retirement does not aid her case because the fact remains that private respondent
was already terminated for cause thereby rendering nugatory any entitlement to mandatory or
optional retirement pay that she might have previously possessed. 32 (Citation omitted and
emphasis ours)
In ruling against the grant of the retirement benefits, we also take note of the NLRCs lone
justification for the award, to wit:
Where from the facts obtaining, as in this case, there is a need to humanize the severe effects of
dismissal and where complainants entitlement to retirement benefits are even admitted in
[Coca-Colas] motion to reduce bond, [w]e can do no less but tilt the scales of justice in favor of
labor as a measure of equity and compassionate social justice, taking into consideration the
circumstances obtaining in this case.33 (Emphasis ours)
Being intended as a mere measure of equity and social justice, the NLRCs award was then akin
to a financial assistance or separation pay that is granted to a dismissed employee
notwithstanding the legality of his dismissal. Jurisprudence on such financial assistance and
separation pay then equally apply to this case. The Court has ruled, time and again, that
financial assistance, or whatever name it is called, as a measure of social justice is allowed only
in instances where the employee is validly dismissed for causes other than serious misconduct
or those reflecting on his moral character.34 We explained in Philippine Long Distance
Telephone Company v. NLRC35:
[S]eparation pay shall be allowed as a measure of social justice only in those instances where
the employee is validly dismissed for causes other than serious misconduct or those reflecting
on his moral character. Where the reason for the valid dismissal is, for example, habitual
intoxication or an offense involving moral turpitude, like theft or illicit sexual relations with a
fellow worker, the employer may not be required to give the dismissed employee separation pay,
or financial assistance, or whatever other name it is called, on the ground of social justice.
A contrary rule would, as the petitioner correctly argues, have the effect, of rewarding rather than
punishing the erring employee for his offense. And we do not agree that the punishment is his
dismissal only and that the separation pay has nothing to do with the wrong he has committed.
Of course it has. Indeed, if the employee who steals from the company is granted separation pay
even as he is validly dismissed, it is not unlikely that he will commit a similar offense in his next
employment because he thinks he can expect a like leniency if he is again found out. This kind
of misplaced compassion is not going to do labor in general any good as it will encourage the
infiltration of its ranks by those who do not deserve the protection and concern of the
Constitution.36 (Emphasis ours)
Clearly, considering that Daabay was dismissed on the grounds of serious misconduct, breach
of trust and loss of confidence, the award based on equity was unwarranted.1wphi1
Even the NLRCs reliance on the alleged admission by Coca-Cola in its motion to reduce bond
that Daabay is entitled to retirement benefits is misplaced. Apparently, the supposed admission
by Coca-Cola was based on the following:
In support of its motion to reduce bond, Coca-cola seeks leniency for its failure to include in the
posting of the bond the monetary award for [Daabays] retirement benefits which, as directed by
the Executive Labor Arbiter, should be computed in accordance with the latest Collective
Bargaining Agreement prior to his termination. Coca-Cola explains that the amount of the

retirement benefits has not been determined and there is a need to compute the same on
appeal. x x x.37
It is patent that the statements made by Coca-Cola were in light of ELA Magbanuas ruling that
Daabay was illegally dismissed. Furthermore, any admission was only for the purpose of
explaining the non-inclusion of the amount of retirement benefits in the computation of the
appeal bond posted with the NLRC. Coca-Colas statements should be taken in such context,
and could not be deemed to bind the company even after the NLRC had reversed the finding of
illegal dismissal. And although retirement benefits, where not mandated by law, may still be
granted by agreement of the employees and their employer or as a voluntary act of the
employer,38 there is no proof that any of these incidents attends the instant case.
WHEREFORE, the petition is DENIED. The Decision dated June 24, 2011 and Resolution dated
December 9, 2011 of the Court of Appeals in CA-G.R. SP No. 03369-MIN are AFFIRMED.
SO ORDERED.

26. G.R. No. 170054

January 21, 2013
GOYA, INC., Petitioner,
vs.
GOYA, INC. EMPLOYEES UNION-FFW, Respondent.
DECISION
PERALTA, J.:
This petition for review on certiorari under Rule 45 of the Rules of Civil Procedure seeks to
reverse and set aside the June 16, 2005 Decision1 and October 12, 2005 Resolution2 of the
Court of Appeals in CA-G.R. SP No. 87335, which sustained the October 26, 2004 Decision 3 of
Voluntary Arbitrator Bienvenido E. Laguesma, the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered declaring that the Company is NOT guilty of unfair
labor practice in engaging the services of PESO.
The company is, however, directed to observe and comply with its commitment as it pertains to
the hiring of casual employees when necessitated by business circumstances. 4
The facts are simple and appear to be undisputed.
Sometime in January 2004, petitioner Goya, Inc. (Company), a domestic corporation engaged in
the manufacture, importation, and wholesale of top quality food products, hired contractual
employees from PESO Resources Development Corporation (PESO) to perform temporary and
occasional services in its factory in Parang, Marikina City. This prompted respondent Goya, Inc.
Employees UnionFFW (Union) to request for a grievance conference on the ground that the
contractual workers do not belong to the categories of employees stipulated in the existing
Collective Bargaining Agreement (CBA).5 When the matter remained unresolved, the grievance
was referred to the National Conciliation and Mediation Board (NCMB) for voluntary arbitration.
During the hearing on July 1, 2004, the Company and the Union manifested before Voluntary
Arbitrator (VA) Bienvenido E. Laguesma that amicable settlement was no longer possible;
hence, they agreed to submit for resolution the solitary issue of "[w]hether or not the Company is
guilty of unfair labor acts in engaging the services of PESO, a third party service provider, under
the existing CBA, laws, and jurisprudence."6 Both parties thereafter filed their respective
pleadings.

The Union asserted that the hiring of contractual employees from PESO is not a management
prerogative and in gross violation of the CBA tantamount to unfair labor practice (ULP). It noted
that the contractual workers engaged have been assigned to work in positions previously
handled by regular workers and Union members, in effect violating Section 4, Article I of the
CBA, which provides for three categories of employees in the Company, to wit:
Section 4. Categories of Employees. The parties agree on the following categories of
employees:
(a) Probationary Employee. One hired to occupy a regular rank-and-file position in the
Company and is serving a probationary period. If the probationary employee is hired or comes
from outside the Company (non-Goya, Inc. employee), he shall be required to undergo a
probationary period of six (6) months, which period, in the sole judgment of management, may
be shortened if the employee has already acquired the knowledge or skills required of the job. If
the employee is hired from the casual pool and has worked in the same position at any time
during the past two (2) years, the probationary period shall be three (3) months.
(b) Regular Employee. An employee who has satisfactorily completed his probationary period
and automatically granted regular employment status in the Company.
(c) Casual Employee, One hired by the Company to perform occasional or seasonal work
directly connected with the regular operations of the Company, or one hired for specific projects
of limited duration not connected directly with the regular operations of the Company.
It was averred that the categories of employees had been a part of the CBA since the 1970s and
that due to this provision, a pool of casual employees had been maintained by the Company
from which it hired workers who then became regular workers when urgently necessary to
employ them for more than a year. Likewise, the Company sometimes hired probationary
employees who also later became regular workers after passing the probationary period. With
the hiring of contractual employees, the Union contended that it would no longer have
probationary and casual employees from which it could obtain additional Union members; thus,
rendering inutile Section 1, Article III (Union Security) of the CBA, which states:
Section 1. Condition of Employment. As a condition of continued employment in the Company,
all regular rank-and-file employees shall remain members of the Union in good standing and that
new employees covered by the appropriate bargaining unit shall automatically become regular
employees of the Company and shall remain members of the Union in good standing as a
condition of continued employment.
The Union moreover advanced that sustaining the Companys position would easily weaken and
ultimately destroy the former with the latters resort to retrenchment and/or retirement of
employees and not filling up the vacant regular positions through the hiring of contractual
workers from PESO, and that a possible scenario could also be created by the Company
wherein it could "import" workers from PESO during an actual strike.
In countering the Unions allegations, the Company argued that: (a) the law expressly allows
contracting and subcontracting arrangements through Department of Labor and Employment
(DOLE) Order No. 18-02; (b) the engagement of contractual employees did not, in any way,
prejudice the Union, since not a single employee was terminated and neither did it result in a
reduction of working hours nor a reduction or splitting of the bargaining unit; and (c) Section 4,
Article I of the CBA merely provides for the definition of the categories of employees and does
not put a limitation on the Companys right to engage the services of job contractors or its
management prerogative to address temporary/occasional needs in its operation.

On October 26, 2004, VA Laguesma dismissed the Unions charge of ULP for being purely
speculative and for lacking in factual basis, but the Company was directed to observe and
comply with its commitment under the CBA. The VA opined:
We examined the CBA provision Section 4, Article I of the CBAallegedly violated by the
Company and indeed the agreement prescribes three (3) categories of employees in the
Company and provides for the definition, functions and duties of each. Material to the case at
hand is the definition as regards the functions of a casual employee described as follows:
Casual Employee One hired by the COMPANY to perform occasional or seasonal work
directly connected with the regular operations of the COMPANY, or one hired for specific
projects of limited duration not connected directly with the regular operations of the COMPANY.
While the foregoing agreement between the parties did eliminate managements prerogative of
outsourcing parts of its operations, it serves as a limitation on such prerogative particularly if it
involves functions or duties specified under the aforequoted agreement. It is clear that the
parties agreed that in the event that the Company needs to engage the services of additional
workers who will perform "occasional or seasonal work directly connected with the regular
operations of the COMPANY," or "specific projects of limited duration not connected directly with
the regular operations of the COMPANY", the Company can hire casual employees which is
akin to contractual employees. If we note the Companys own declaration that PESO was
engaged to perform "temporary or occasional services" (See the Companys Position Paper, at
p. 1), then it should have directly hired the services of casual employees rather than do it
through PESO.
It is evident, therefore, that the engagement of PESO is not in keeping with the intent and spirit
of the CBA provision in question. It must, however, be stressed that the right of management to
outsource parts of its operations is not totally eliminated but is merely limited by the CBA. Given
the foregoing, the Companys engagement of PESO for the given purpose is indubitably a
violation of the CBA.7
While the Union moved for partial reconsideration of the VA Decision, 8 the Company
immediately filed a petition for review9 before the Court of Appeals (CA) under Rule 43 of the
Revised Rules of Civil Procedure to set aside the directive to observe and comply with the CBA
commitment pertaining to the hiring of casual employees when necessitated by business
circumstances. Professing that such order was not covered by the sole issue submitted for
voluntary arbitration, the Company assigned the following errors:
THE HONORABLE VOLUNTARY ARBITRATOR EXCEEDED HIS POWER WHICH WAS
EXPRESSLY GRANTED AND LIMITED BY BOTH PARTIES IN RULING THAT THE
ENGAGEMENT OF PESO IS NOT IN KEEPING WITH THE INTENT AND SPIRIT OF THE
CBA.10
THE HONORABLE VOLUNTARY ARBITRATOR COMMITTED A PATENT AND PALPABLE
ERROR IN DECLARING THAT THE ENGAGEMENT OF PESO IS NOT IN KEEPING WITH
THE INTENT AND SPIRIT OF THE CBA.11
On June 16, 2005, the CA dismissed the petition. In dispensing with the merits of the
controversy, it held:
This Court does not find it arbitrary on the part of the Hon. Voluntary Arbitrator in ruling that "the
engagement of PESO is not in keeping with the intent and spirit of the CBA." The said ruling is
interrelated and intertwined with the sole issue to be resolved that is, "Whether or not the
Company is guilty of unfair labor practice in engaging the services of PESO, a third party service

provider, under existing CBA, laws, and jurisprudence." Both issues concern the engagement of
PESO by the Company which is perceived as a violation of the CBA and which constitutes as
unfair labor practice on the part of the Company. This is easily discernible in the decision of the
Hon. Voluntary Arbitrator when it held:
x x x x While the engagement of PESO is in violation of Section 4, Article I of the CBA, it does
not constitute unfair labor practice as it (sic) not characterized under the law as a gross violation
of the CBA. Violations of a CBA, except those which are gross in character, shall no longer be
treated as unfair labor practice. Gross violations of a CBA means flagrant and/or malicious
refusal to comply with the economic provisions of such agreement. x x x
Anent the second assigned error, the Company contends that the Hon. Voluntary Arbitrator
erred in declaring that the engagement of PESO is not in keeping with the intent and spirit of the
CBA. The Company justified its engagement of contractual employees through PESO as a
management prerogative, which is not prohibited by law. Also, it further alleged that no provision
under the CBA limits or prohibits its right to contract out certain services in the exercise of
management prerogatives.
Germane to the resolution of the above issue is the provision in their CBA with respect to the
categories of the employees:
xxxx
A careful reading of the above-enumerated categories of employees reveals that the PESO
contractual employees do not fall within the enumerated categories of employees stated in the
CBA of the parties. Following the said categories, the Company should have observed and
complied with the provision of their CBA. Since the Company had admitted that it engaged the
services of PESO to perform temporary or occasional services which is akin to those performed
by casual employees, the Company should have tapped the services of casual employees
instead of engaging PESO.
In justifying its act, the Company posits that its engagement of PESO was a management
prerogative. It bears stressing that a management prerogative refers to the right of the employer
to regulate all aspects of employment, such as the freedom to prescribe work assignments,
working methods, processes to be followed, regulation regarding transfer of employees,
supervision of their work, lay-off and discipline, and dismissal and recall of work, presupposing
the existence of employer-employee relationship. On the basis of the foregoing definition, the
Companys engagement of PESO was indeed a management prerogative. This is in consonance
with the pronouncement of the Supreme Court in the case of Manila Electric Company vs.
Quisumbing where it ruled that contracting out of services is an exercise of business judgment or
management prerogative.
This management prerogative of contracting out services, however, is not without limitation. In
contracting out services, the management must be motivated by good faith and the contracting
out should not be resorted to circumvent the law or must not have been the result of malicious
arbitrary actions. In the case at bench, the CBA of the parties has already provided for the
categories of the employees in the Companysestablishment. These categories of employees
particularly with respect to casual employees serve as limitation to the Companys prerogative to
outsource parts of its operations especially when hiring contractual employees. As stated earlier,
the work to be performed by PESO was similar to that of the casual employees. With the
provision on casual employees, the hiring of PESO contractual employees, therefore, is not in
keeping with the spirit and intent of their CBA. (Citations omitted)12
The Company moved to reconsider the CA Decision,13 but it was denied;14 hence, this petition.

Incidentally, on July 16, 2009, the Company filed a Manifestation15 informing this Court that its
stockholders and directors unanimously voted to shorten the Companys corporate existence
only until June 30, 2006, and that the three-year period allowed by law for liquidation of the
Companys affairs already expired on June 30, 2009. Referring to Gelano v. Court of
Appeals,16 Public Interest Center, Inc. v. Elma,17 and Atienza v. Villarosa,18 it urged Us, however,
to still resolve the case for future guidance of the bench and the bar as the issue raised herein
allegedly calls for a clarification of a legal principle, specifically, whether the VA is empowered to
rule on a matter not covered by the issue submitted for arbitration.
Even if this Court would brush aside technicality by ignoring the supervening event that renders
this case moot and academic19 due to the permanent cessation of the Companys business
operation on June 30, 2009, the arguments raised in this petition still fail to convince Us.
We confirm that the VA ruled on a matter that is covered by the sole issue submitted for
voluntary arbitration. Resultantly, the CA did not commit serious error when it sustained the
ruling that the hiring of contractual employees from PESO was not in keeping with the intent and
spirit of the CBA. Indeed, the opinion of the VA is germane to, or, in the words of the CA,
"interrelated and intertwined with," the sole issue submitted for resolution by the parties. This
being said, the Companys invocation of Sections 4 and 5, Rule IV20 and Section 5, Rule VI21 of
the Revised Procedural Guidelines in the Conduct of Voluntary Arbitration Proceedings dated
October 15, 2004 issued by the NCMB is plainly out of order.
Likewise, the Company cannot find solace in its cited case of Ludo & Luym Corporation v.
Saornido.22 In Ludo, the company was engaged in the manufacture of coconut oil, corn starch,
glucose and related products. In the course of its business operations, it engaged the arrastre
services of CLAS for the loading and unloading of its finished products at the wharf. The arrastre
workers deployed by CLAS to perform the services needed were subsequently hired, on
different dates, as Ludos regular rank-and-file employees. Thereafter, said employees joined
LEU, which acted as the exclusive bargaining agent of the rank-and-file employees. When LEU
entered into a CBA with Ludo, providing for certain benefits to the employees (the amount of
which vary according to the length of service rendered), it requested to include in its members
period of service the time during which they rendered arrastre services so that they could get
higher benefits. The matter was submitted for voluntary arbitration when Ludo failed to act. Per
submission agreement executed by both parties, the sole issue for resolution was the date of
regularization of the workers. The VA Decision ruled that: (1) the subject employees were
engaged in activities necessary and desirable to the business of Ludo, and (2) CLAS is a laboronly contractor of Ludo. It then disposed as follows: (a) the complainants were considered
regular employees six months from the first day of service at CLAS; (b) the complainants, being
entitled to the CBA benefits during the regular employment, were awarded sick leave, vacation
leave, and annual wage and salary increases during such period; (c) respondents shall pay
attorneys fees of 10% of the total award; and (d) an interest of 12% per annum or 1% per month
shall be imposed on the award from the date of promulgation until fully paid. The VA added that
all separation and/or retirement benefits shall be construed from the date of regularization
subject only to the appropriate government laws and other social legislation. Ludo filed a motion
for reconsideration, but the VA denied it. On appeal, the CA affirmed in toto the assailed
decision; hence, a petition was brought before this Court raising the issue, among others, of
whether a voluntary arbitrator can award benefits not claimed in the submission agreement. In
denying the petition, We ruled:
Generally, the arbitrator is expected to decide only those questions expressly delineated by the
submission agreement. Nevertheless, the arbitrator can assume that he has the necessary
power to make a final settlement since arbitration is the final resort for the adjudication of
disputes. The succinct reasoning enunciated by the CA in support of its holding, that the
Voluntary Arbitrator in a labor controversy has jurisdiction to render the questioned arbitral
awards, deserves our concurrence, thus:

In general, the arbitrator is expected to decide those questions expressly stated and limited in
the submission agreement. However, since arbitration is the final resort for the adjudication of
disputes, the arbitrator can assume that he has the power to make a final settlement. Thus,
assuming that the submission empowers the arbitrator to decide whether an employee was
discharged for just cause, the arbitrator in this instance can reasonably assume that his powers
extended beyond giving a yes-or-no answer and included the power to reinstate him with or
without back pay.

A collective bargaining agreement or CBA refers to the negotiated contract between a legitimate
labor organization and the employer concerning wages, hours of work and all other terms and
conditions of employment in a bargaining unit.1wphi1 As in all contracts, the parties in a CBA
may establish such stipulations, clauses, terms and conditions as they may deem convenient
provided these are not contrary to law, morals, good customs, public order or public policy.
Thus, where the CBA is clear and unambiguous, it becomes the law between the parties and
compliance therewith is mandated by the express policy of the law.

In one case, the Supreme Court stressed that "xxx the Voluntary Arbitrator had plenary
jurisdiction and authority to interpret the agreement to arbitrate and to determine the scope of his
own authority subject only, in a proper case, to the certiorari jurisdiction of this Court. The
Arbitrator, as already indicated, viewed his authority as embracing not merely the determination
of the abstract question of whether or not a performance bonus was to be granted but also, in
the affirmative case, the amount thereof.

Moreover, if the terms of a contract, as in a CBA, are clear and leave no doubt upon the
intention of the contracting parties, the literal meaning of their stipulations shall control. x x x.24

By the same token, the issue of regularization should be viewed as two-tiered issue. While the
submission agreement mentioned only the determination of the date or regularization, law and
jurisprudence give the voluntary arbitrator enough leeway of authority as well as adequate
prerogative to accomplish the reason for which the law on voluntary arbitration was created
speedy labor justice. It bears stressing that the underlying reason why this case arose is to
settle, once and for all, the ultimate question of whether respondent employees are entitled to
higher benefits. To require them to file another action for payment of such benefits would
certainly undermine labor proceedings and contravene the constitutional mandate providing full
protection to labor.23
Indubitably, Ludo fortifies, not diminishes, the soundness of the questioned VA Decision. Said
case reaffirms the plenary jurisdiction and authority of the voluntary arbitrator to interpret the
CBA and to determine the scope of his/her own authority. Subject to judicial review, the leeway
of authority as well as adequate prerogative is aimed at accomplishing the rationale of the law
on voluntary arbitration speedy labor justice. In this case, a complete and final adjudication of
the dispute between the parties necessarily called for the resolution of the related and incidental
issue of whether the Company still violated the CBA but without being guilty of ULP as, needless
to state, ULP is committed only if there is gross violation of the agreement.
Lastly, the Company kept on harping that both the VA and the CA conceded that its engagement
of contractual workers from PESO was a valid exercise of management prerogative. It is
confused. To emphasize, declaring that a particular act falls within the concept of management
prerogative is significantly different from acknowledging that such act is a valid exercise thereof.
What the VA and the CA correctly ruled was that the Companys act of contracting
out/outsourcing is within the purview of management prerogative. Both did not say, however,
that such act is a valid exercise thereof. Obviously, this is due to the recognition that the CBA
provisions agreed upon by the Company and the Union delimit the free exercise of management
prerogative pertaining to the hiring of contractual employees. Indeed, the VA opined that "the
right of the management to outsource parts of its operations is not totally eliminated but is
merely limited by the CBA," while the CA held that "this management prerogative of contracting
out services, however, is not without limitation. x x x These categories of employees particularly
with respect to casual employees serve as limitation to the Companys prerogative to outsource
parts of its operations especially when hiring contractual employees."
A collective bargaining agreement is the law between the parties:
It is familiar and fundamental doctrine in labor law that the CBA is the law between the parties
and they are obliged to comply with its provisions. We said so in Honda Phils., Inc. v. Samahan
ng Malayang Manggagawa sa Honda:

In this case, Section 4, Article I (on categories of employees) of the CBA between the Company
and the Union must be read in conjunction with its Section 1, Article III (on union security). Both
are interconnected and must be given full force and effect. Also, these provisions are clear and
unambiguous. The terms are explicit and the language of the CBA is not susceptible to any other
interpretation. Hence, the literal meaning should prevail. As repeatedly held, the exercise of
management prerogative is not unlimited; it is subject to the limitations found in law, collective
bargaining agreement or the general principles of fair play and justice25 Evidently, this case has
one of the restrictions- the presence of specific CBA provisions-unlike in San Miguel Corporation
Employees Union-PTGWO v. Bersamira,26 De Ocampo v. NLRC,27 Asian Alcohol Corporation v.
NLRC,28 and Serrano v. NLRC29cited by the Company. To reiterate, the CBA is the norm of
conduct between the parties and compliance therewith is mandated by the express policy of the
law.30
WHEREFORE, the petition is DENIED. The assailed June 16, 2005 Decision, as well as the
October 12, 2005 Resolution of the Court of Appeals, which sustained the October 26, 2004
Decision of the Voluntary Arbitrator, are hereby AFFIRMED. SO ORDERED.

27. G.R. No. 200094

June 10, 2013
BENIGNO M. VIGILLA, ALFONSO M. BONGOT, ROBERTO CALLESA, LINDA C. CALLO,
NILO B. CAMARA, ADELIA T. CAMARA, ADOLFO G. PINON, JOHN A. FERNANDEZ,
FEDERICO A. CALLO, MAXIMA P. ARELLANO, JULITO B. COST ALES, SAMSON F.
BACHAR, EDWIN P. DAMO, RENA TO E. FERNANDEZ, GENARO F.CALLO, JIMMY C.
ALETA,
and
EUGENIO
SALINAS, Petitioners,
vs.
PHILIPPINE COLLEGE OFCRIMINOLOGY INC. and/or GREGORY ALAN F.
BAUTISTA, Respondents.
DECISION
MENDOZA, J.:
This is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the
September 16, 2011 Decision1 of the Court of Appeals (CA), in CA-G.R. SP No. 120225, which
affirmed the February 11, 2011 Resolution2 and the April 28, 20113 Resolution of the National
Labor Relations Commission (NLRC). The two NLRC resolutions affirmed with modifications the
July 30, 2010 Decision4 of the Labor Arbiter (LA) finding that (a) Metropolitan Building Services,
Inc. (MBMSI) was a labor-only contractor; (b) respondent Philippine College of Criminology Inc.
(PCCr) was the petitioners real principal employer; and (c) PCCr acted in bad faith in dismissing
the petitioners. The NLRC, however, declared that the claims of the petitioners were settled
amicably because of the releases, waivers and quitclaims they had executed.
The Antecedents

PCCr is a non-stock educational institution, while the petitioners were janitors, janitresses and
supervisor in the Maintenance Department of PCCr under the supervision and control of Atty.
Florante A. Seril (Atty. Seril), PCCrs Senior Vice President for Administration. The petitioners,
however, were made to understand, upon application with respondent school, that they were
under MBMSI, a corporation engaged in providing janitorial services to clients. Atty. Seril is also
the President and General Manager of MBMSI.
Sometime in 2008, PCCr discovered that the Certificate of Incorporation of MBMSI had been
revoked as of July 2, 2003. On March 16, 2009, PCCr, through its President, respondent
Gregory Alan F. Bautista (Bautista), citing the revocation, terminated the schools relationship
with MBMSI, resulting in the dismissal of the employees or maintenance personnel under
MBMSI, except Alfonso Bongot (Bongot) who was retired.
In September, 2009, the dismissed employees, led by their supervisor, Benigno Vigilla (Vigilla),
filed their respective complaints for illegal dismissal, reinstatement, back wages, separation pay
(for Bongot), underpayment of salaries, overtime pay, holiday pay, service incentive leave, and
13th month pay against MBMSI, Atty. Seril, PCCr, and Bautista.
In their complaints, they alleged that it was the school, not MBMSI, which was their real
employer because (a) MBMSIs certification had been revoked; (b) PCCr had direct control over
MBMSIs operations; (c) there was no contract between MBMSI and PCCr; and (d) the selection
and hiring of employees were undertaken by PCCr.
On the other hand, PCCr and Bautista contended that (a) PCCr could not have illegally
dismissed the complainants because it was not their direct employer; (b) MBMSI was the one
who had complete and direct control over the complainants; and (c) PCCr had a contractual
agreement with MBMSI, thus, making the latter their direct employer.
On September 11, 2009, PCCr submitted several documents before LA Ronaldo Hernandez,
including releases, waivers and quitclaims in favor of MBMSI executed by the complainants to
prove that they were employees of MBMSI and not PCCr. 5 The said documents appeared to
have been notarized by one Atty. Ramil Gabao. A portion of the releases, waivers and quitclaims
uniformly reads:
For and in consideration of the total amount of ______________, as and by way of separation
pay due to the closure of the Company brought about by serious financial losses, receipt of the
total amount is hereby acknowledged, I _______________, x x x forever release and discharge
x x x METROPOLITAN BUILDING MAINTENANCE SERVICES, INC., of and from any and all
claims, demands, causes of actions, damages, costs, expenses, attorneys fees, and obligations
of any nature whatsoever, known or unknown, in law or in equity, which the undersigned has, or
may hereafter have against the METROPOLITAN BUILDING MAINTENANCE SERVICES, INC.,
whether administrative, civil or criminal, and whether or not arising out of or in relation to my
employment with the above company or third persons.6
Ruling of the Labor Arbiter
After due proceedings, the LA handed down his decision, finding that (a) PCCr was the real
principal employer of the complainants ; (b) MBMSI was a mere adjunct or alter ego/labor-only
contractor; (c) the complainants were regular employees of PCCr; and (d) PCCr/Bautista were in
bad faith in dismissing the complainants.
The LA ordered the respondents (a) to reinstate petitioners except Bongot who was deemed
separated/retired; (b) to pay their full back wages from the date of their illegal dismissal until
actual reinstatement (totaling P2,963,584.25); (c) to pay Bongots separation or retirement pay

benefit under the Labor Code (amounting to P254,010.00); (d) to pay their 3-year Service
Incentive Leave Pay (P4,245.60 each) except Vigilla (P5,141.40); (e) to pay all the petitioners
moral and exemplary damages in the combined amount of P150,000.00; and finally (f) to pay
10% of the total computable award as Attorneys Fees.
The LA explained that PCCr was actually the one which exercised control over the means and
methods of the work of the petitioners, thru Atty. Seril, who was acting, throughout the time in his
capacity as Senior Vice President for Administration of PCCr, not in any way or time as the
supposed employer/general manager or president of MBMSI.
Despite the presentation by the respondents of the releases, waivers and quitclaims executed by
petitioners in favor of MBMSI, the LA did not touch on the validity and authenticity of the same.
Neither did he discuss the effects of such releases, waivers and quitclaims on petitioners
claims.
Ruling of the NLRC
Not satisfied, the respondents filed an appeal before the NLRC. In its Resolution, dated
February 11, 2011, the NLRC affirmed the LAs findings. Nevertheless, the respondents were
excused from their liability by virtue of the releases, waivers and quitclaims executed by the
petitioners. Specifically, the NLRC pointed out:
As Respondent MBMSI and Atty. Seril, together are found to be labor only contractor, they are
solidarily liable with Respondent PCCr and Gregory Alan F. Bautista for the valid claims of
Complainants pursuant to Article 109 of the Labor Code on the solidary liability of the employer
and indirect employer. This liability, however, is effectively expunged by the acts of the 17
Complainants of executing Release, Waiver, and Quitclaims (pp. 170-184, Records) in favor of
Respondent MBMSI. The liability being joined, the release of one redounds to the benefit of the
others, pursuant to Art. 1217 of the Civil Code, which provides that "Payment made by one of
the solidary debtors extinguishes the obligation. x x x."7
In their motion for reconsideration, petitioners attached as annexes their affidavits denying that
they had signed the releases, waivers, and quitclaims. They prayed for the reinstatement in toto
of the July 30, 2010 Decision of the LA.8MBMSI/Atty. Seril also filed a motion for
reconsideration9 questioning the declaration of the NLRC that he was solidarily liable with PCCr.
On April 28, 2011, NLRC modified its February 11, 2011 Resolution by affirming the July 30,
2010 Decision10 of the LA only in so far as complainants Ernesto B. Ayento and Eduardo B.
Salonga were concerned. As for the other 17 complainants, the NLRC ruled that their awards
had been superseded by their respective releases, waivers and quitclaims.
The seventeen (17) complainants filed with the CA a petition for certiorari under Rule 65 faulting
the NLRC with grave abuse of discretion for absolving the respondents from their liability by
virtue of their respective releases, waivers and quitclaims.
Ruling of the Court of Appeals
On September 16, 2011, the CA denied the petition and affirmed the two Resolutions of the
NLRC, dated February 11, 2011 and April 28, 2011. The CA pointed out that based on the
principle of solidary liability and Article 121711 of the New Civil Code, petitioners respective
releases, waivers and quitclaims in favor of MBMSI and Atty. Seril redounded to the benefit of
the respondents. The CA also upheld the factual findings of the NLRC as to the authenticity and
due execution of the individual releases, waivers and quitclaims because of the failure of

petitioners to substantiate their claim of forgery and to overcome the presumption of regularity of
a notarized document. Petitioners motion for reconsideration was likewise denied by the CA in
its January 4, 2012 Resolution.

Petitioners vehemently deny having executed any release, waiver or quitclaim in favor of
MBMSI. They insist that PCCr forged the documents just to evade their legal obligations to them,
alleging that the contents of the documents were written by one person, whom they identified as
Reynaldo Chavez, an employee of PCCr, whose handwriting they were familiar with. 13

Hence, this petition under Rule 45 challenging the CA Decision anchored on the following
GROUNDS
The Hon. Court of Appeals COMMITTED REVERSIBLE ERRORS when:
A. IT CONSIDERED RESPONDENT METROPOLITAN BUILDING MAINTENANCE
SERVICES, INC.S LIABILITY AS SOLIDARY TO RESPONDENT PHILIPPINE
COLLEGE OF CRIMINOLOGY, INC., WHEN IN FACT THERE IS NO LEGAL BASIS
TO THAT EFFECT.
B. IT DID NOT AFFIRM THE DECISION OF THE HON. LABOR ARBITER, DATED
JULY 30, 2010, AS TO 17 PETITIONERS IN THIS CASE, DISREGARDING THE
CORPORATION LAW AND JURISPRUDENCE OF THE HON. SUPREME COURT IN
SO FAR AS QUITLCLAIMS, RELEASE AND WAIVERS ARE CONCERNED IN
LABOR CASES.
C. IT AFFIRMED THE DECISION OF THE HON. NATIONAL LABOR RELATIONS
COMMISSION, THAT THE 17 COMPLAINANTS HAVE SETTLED THEIR CLAIMS BY
VIRTUE OF ALLEGED RELEASES, WAIVERS AND QUITCLAIMS SIGNED BY THE
COMPLAINANTS IN FAVOR OF METROPOLITAN BUILDING MAINTENANCE, INC.
D. IT DID NOT TAKE INTO CONSIDERATION SUBSTANTIAL EVIDENCE OF
PETITIONERS/COMPLAINANTS
DISPUTING
THE
ALLEGED
WAIVERS,
RELEASES AND QUITCLAIMS, INCLUDING THE ALLEGED NOTARIZATION
THEREOF.12
The petition fails.
The grounds cited by the petitioners boil down to this basic issue: whether or not their claims
against the respondents were amicably settled by virtue of the releases, waivers and quitclaims
which they had executed in favor of MBMSI.
In resolving this case, the Court must consider three (3) important sub-issues, to wit:

To begin with, their posture was just an afterthought. Petitioners had several opportunities to
question the authenticity of the said documents but did not do so. The records disclose that
during the proceedings before the LA, PCCr submitted several documents, including the subject
releases, waivers and quitclaims executed on September 11, 2009 in favor of MBMSI, 14 but
petitioners never put their genuineness and due execution at issue. These were brought up
again by the respondents in their Memorandum of Appeal, 15 but again petitioners did not bother
to dispute them.
It was only after the NLRCs declaration in its February 11, 2011 Resolution that the claims of
petitioners had been settled amicably by virtue of the releases, waivers and quitclaims, that
petitioners, in their motion for reconsideration,16 denied having executed any of these
instruments. This passiveness and inconsistency of petitioners will not pass the scrutiny of this
Court.
At any rate, it is quite apparent that this petition raises questions of fact inasmuch as this Court
is being asked to revisit and assess anew the factual findings of the CA and the NLRC regarding
the validity, authenticity and due execution of the subject releases, waivers and quitclaims.
Well-settled is the rule that this Court is not a trier of facts and this doctrine applies with greater
force in labor cases. Questions of fact are for the labor tribunals to resolve. 17 Only errors of law
are generally reviewed in petitions for review on certiorari criticizing decisions of the CA.
Moreover, findings of fact of quasi-judicial bodies like the NLRC, as affirmed by the CA, are
generally conclusive on this Court.18 Hence, as correctly declared by the CA, the following NLRC
factual findings are binding and conclusive on this Court:
We noted that the individual quitclaims, waivers and releases executed by the complainants
showing that they received their separation pay from MBMSI were duly notarized by a Notary
Public. Such notarization gives prima facie evidence of their due execution. Further, said
releases, waivers, and quitclaims were not refuted nor disputed by complainants herein, thus,
we have no recourse but to uphold their due execution.19
Even if the Court relaxes the foregoing rule, there is still no reason to reverse the factual findings
of the NLRC and the CA. What is on record is only the self-serving allegation of petitioners that
the releases, waivers and quitclaims were mere forgeries. Petitioners failed to substantiate this
allegation. As correctly found by the CA: "petitioners have not offered concrete proof to
substantiate their claim of forgery. Allegations are not evidence."20

(a) whether or not petitioners executed the said releases, waivers and quitclaims;
(b) whether or not a dissolved corporation can enter into an agreement such as
releases, waivers and quitclaims beyond the 3-year winding up period under Section
122 of the Corporation Code; and
(c) whether or not a labor-only contractor is solidarily liable with the employer.
The
Quitclaims are Valid

Releases,

Waivers

and

On the contrary, the records confirm that petitioners were really paid their separation pay and
had executed releases, waivers and quitclaims in return. In his motion for reconsideration of the
February 11, 2011 Resolution of the NLRC, Atty. Seril, President and General Manager of
MBMSI, stated that the amount of 2,000,000.00 "was coursed by PCCr to me, to be handed to
the complainants, through its employee, Rey Chavez."21
Petitioners requested the Court to take a look at such releases, waivers and quitclaims,
particularly their contents and the handwriting, but they failed to attach to the records copies of
the said documents which they claimed to have been forged. The petition is dismissible on this
ground alone. The Rules of Court require the petition to be accompanied by such material
portions of the record as would support the petition.22 Failure to comply with the requirements

regarding "the contents of and the documents which should accompany the petition" is a ground
for the dismissal of the appeal.23
Moreover, mere unsubstantiated allegations of lack of voluntariness in executing the documents
will not suffice to overcome the presumption of authenticity and due execution of a duly
notarized document. As correctly held by the NLRC, "such notarization gives prima facie
evidence of their due execution."24
Petitioners contend that the alleged notarization of the releases, waivers and quitclaims by one
Atty. Ramil Gabao did not take place, because there were no records of such documents in the
Notary Section of Manila. Thus, the prima facie evidence thereof has been disputed.
The Court is not moved. Respondents should not be penalized for the failure of the notary public
to submit his Notarial Report. In Destreza v. Rinoza-Plazo,25 this Court stated that "the notarized
deed of sale should be admitted as evidence despite the failure of the Notary Public in
submitting his notarial report to the notarial section of the RTC Manila." The Court expounded:
It is the swearing of a person before the Notary Public and the latters act of signing and affixing
his seal on the deed that is material and not the submission of the notarial report. Parties who
appear before a notary public to have their documents notarized should not be expected to
follow up on the submission of the notarial reports. They should not be made to suffer the
consequences of the negligence of the Notary Public in following the procedures prescribed by
the Notarial Law.26
It would have been different if the notary public was not a lawyer or was not commissioned as
such. In this regard, however, petitioners offered no proof.
On
the
Certificate of Incorporation

Revocation

of

MBMSIs

Petitioners further argue that MBMSI had no legal personality to incur civil liabilities as it did not
exist as a corporation on account of the fact that its Certificate of Incorporation had been
revoked on July 2, 2003. Petitioners ask this Court to exempt MBMSI from its liabilities because
it is no longer existing as a corporation.
The Court cannot accommodate the prayer of petitioners.
The executed releases, waivers and quitclaims are valid and binding notwithstanding the
revocation of MBMSIs Certificate of Incorporation. The revocation does not result in the
termination of its liabilities. Section 12227 of the Corporation Code provides for a three-year
winding up period for a corporation whose charter is annulled by forfeiture or otherwise to
continue as a body corporate for the purpose, among others, of settling and closing its affairs.
Even if said documents were executed in 2009, six (6) years after MBMSIs dissolution in 2003,
the same are still valid and binding upon the parties and the dissolution will not terminate the
liabilities incurred by the dissolved corporation pursuant to Sections 122 and 14528 of the
Corporation Code. In the case of Premiere Development Bank v. Flores, 29 the Court held that a
corporation is allowed to settle and close its affairs even after the winding up period of three (3)
years. The Court wrote:
As early as 1939, this Court held that, although the time during which the corporation, through its
own officers, may conduct the liquidation of its assets and sue and be sued as a corporation is

limited to three years from the time the period of dissolution commences, there is no time limit
within which the trustees must complete a liquidation placed in their hands. What is provided in
Section 122 of the Corporation Code is that the conveyance to the trustees must be made within
the three-year period. But it may be found impossible to complete the work of liquidation within
the three-year period or to reduce disputed claims to judgment. The trustees to whom the
corporate assets have been conveyed pursuant to the authority of Section 122 may sue and be
sued as such in all matters connected with the liquidation.
Furthermore, Section 145 of the Corporation Code clearly provides that "no right or remedy in
favor of or against any corporation, its stockholders, members, directors, trustees, or officers,
nor any liability incurred by any such corporation, stockholders, members, directors, trustees, or
officers, shall be removed or impaired either by the subsequent dissolution of said corporation."
Even if no trustee is appointed or designated during the three-year period of the liquidation of
the corporation, the Court has held that the board of directors may be permitted to complete the
corporate liquidation by continuing as "trustees" by legal implication. 30 [Emphases supplied;
citations omitted]
A
Labor-only
Liable with the Employer

Contractor

is

Solidarily

The issue of whether there is solidary liability between the labor-only contractor and the
employer is crucial in this case. If a labor-only contractor is solidarily liable with the employer,
then the releases, waivers and quitclaims in favor of MBMSI will redound to the benefit of PCCr.
On the other hand, if a labor-only contractor is not solidarily liable with the employer, the latter
being directly liable, then the releases, waivers and quitclaims in favor of MBMSI will not
extinguish the liability of PCCr.
On this point, petitioners argue that there is no solidary liability to speak of in case of an
existence of a labor-only contractor. Petitioners contend that under Article 10631 of the Labor
Code, a labor-only contractors liability is not solidary as it is the employer who should be directly
responsible to the supplied worker. They argue that Article 10932 of the Labor Code (solidary
liability of employer/indirect employer and contractor/subcontractor) and Article 1217 of the New
Civil Code (extinguishment of solidary obligation) do not apply in this case. Hence, the said
releases, waivers and quitclaims which they purportedly issued in favor of MBMSI and Atty. Seril
do not automatically release respondents from their liability.
Again, the Court disagrees.
The NLRC and the CA correctly ruled that the releases, waivers and quitclaims executed by
petitioners in favor of MBMSI redounded to the benefit of PCCr pursuant to Article 1217 of the
New Civil Code. The reason is that MBMSI is solidarily liable with the respondents for the valid
claims of petitioners pursuant to Article 109 of the Labor Code.
As correctly pointed out by the respondents, the basis of the solidary liability of the principal with
those engaged in labor-only contracting is the last paragraph of Article 106 of the Labor Code,
which in part provides: "In such cases labor-only contracting, the person or intermediary shall be
considered merely as an agent of the employer who shall be responsible to the workers in the
same manner and extent as if the latter were directly employed by him."
Section 19 of Department Order No. 18-02 issued by the Department of Labor and Employment
(DOLE), which was still in effect at the time of the promulgation of the subject decision and
resolution, interprets Article 106 of the Labor Code in this wise:

Section 19. Solidary liability. The principal shall be deemed as the direct employer of the
contractual employees and therefore, solidarily liable with the contractor or subcontractor for
whatever monetary claims the contractual employees may have against the former in the case of
violations as provided for in Sections 5 (LaborOnly contracting), 6 (Prohibitions), 8 (Rights of
Contractual Employees) and 16 (Delisting) of these Rules. In addition, the principal shall also be
solidarily liable in case the contract between the principal and contractor or subcontractor is
preterminated for reasons not attributable to the fault of the contractor or subcontractor.
[Emphases supplied].
The DOLE recognized anew this solidary liability of the principal employer and the labor-only
contractor when it issued Department Order No. 18-A, series of 2011, which is the latest set of
rules implementing Articles 106-109 of the Labor Code. Section 27 thereof reads:
Section 27. Effects of finding of labor-only contracting and/or violation of Sections 7, 8 or 9 of the
Rules. A finding by competent authority of labor-only contracting shall render the principal jointly
and severally liable with the contractor to the latters employees, in the same manner and extent
that the principal is liable to employees directly hired by him/her, as provided in Article 106 of the
Labor Code, as amended.
A finding of commission of any of the prohibited activities in Section 7, or violation of either
Sections 8 or 9 hereof, shall render the principal the direct employer of the employees of the
contractor or subcontractor, pursuant to Article 109 of the Labor Code, as amended. (Emphasis
supplied.)
These legislative rules and regulations designed to implement a primary legislation have the
force and effect of law. A rule is binding on the courts so long as the procedure fixed for its
promulgation is followed and its scope is within the statutory authority granted by the
legislature.33
Jurisprudence is also replete with pronouncements that a job-only contractor is solidarily liable
with the employer. One of these is the case of Philippine Bank of Communications v.
NLRC34 where this Court explained the legal effects of a job-only contracting, to wit:
Under the general rule set out in the first and second paragraphs of Article 106, an employer
who enters into a contract with a contractor for the performance of work for the employer, does
not thereby create an employer-employees relationship between himself and the employees of
the contractor. Thus, the employees of the contractor remain the contractor's employees and his
alone. Nonetheless when a contractor fails to pay the wages of his employees in accordance
with the Labor Code, the employer who contracted out the job to the contractor becomes jointly
and severally liable with his contractor to the employees of the latter "to the extent of the work
performed under the contract" as such employer were the employer of the contractor's
employees. The law itself, in other words, establishes an employer-employee relationship
between the employer and the job contractor's employees for a limited purpose, i.e., in order to
ensure that the latter get paid the wages due to them.
A similar situation obtains where there is "labor only" contracting. The "labor-only" contractor-i.e
"the person or intermediary" - is considered "merely as an agent of the employer." The employer
is made by the statute responsible to the employees of the "labor only" contractor as if such
employees had been directly employed by the employer. Thus, where "labor-only" contracting
exists in a given case, the statute itself implies or establishes an employer-employee relationship
between the employer (the owner of the project) and the employees of the "labor only"
contractor, this time for a comprehensive purpose: "employer for purposes of this Code, to
prevent any violation or circumvention of any provision of this Code." The law in effect holds
both the employer and the "laboronly" contractor responsible to the latter's employees for the

more effective safeguarding of the employees' rights under the Labor Code. 35 [Emphasis
supplied].
The case of San Miguel Corporation v. MAERC Integrated Services, Inc.36 also recognized this
solidary liability between a labor-only contractor and the employer. In the said case, this Court
gave the distinctions between solidary liability in legitimate job contracting and in labor-only
contracting, to wit:
In legitimate job contracting, the law creates an employer-employee relationship for a limited
purpose, i.e., to ensure that the employees are paid their wages. The principal employer
becomes jointly and severally liable with the job contractor only for the payment of the
employees' wages whenever the contractor fails to pay the same. Other than that, the principal
employer is not responsible for any claim made by the employees.
On the other hand, in labor-only contracting, the statute creates an employer-employee
relationship for a comprehensive purpose: to prevent a circumvention of labor laws. The
contractor is considered merely an agent of the principal employer and the latter is responsible
to the employees of the labor-only contractor as if such employees had been directly employed
by the principal employer. The principal employer therefore becomes solidarily liable with the
labor-only contractor for all the rightful claims of the employees.37 [Emphases supplied; Citations
omitted]
Recently, this Court reiterated this solidary liability of labor-only contractor in the case of 7K
Corporation v. NLRC38where it was ruled that the principal employer is solidarily liable with the
labor-only contractor for the rightful claims of the employees.
Conclusion
Considering that MBMSI, as the labor-only contractor, is solidarily liable with the respondents, as
the principal employer, then the NLRC and the CA correctly held that the respondents solidary
liability was already expunged by virtue of the releases, waivers and quitclaims executed by
each of the petitioners in favor of MBMSI pursuant to Article 1217 of the Civil Code which
provides that "payment made by one of the solidary debtors extinguishes the obligation."
This Court has constantly applied the Civil Code provisions on solidary liability, specifically
Articles 1217 and 1222,39 to labor cases. In Varorient Shipping Co., Inc. v. NLRC, 40 this Court
held:
The POEA Rules holds her, as a corporate officer, solidarily liable with the local licensed
manning agency. Her liability is inseparable from those of Varorient and Lagoa. If anyone of
them is held liable then all of them would be liable for the same obligation. Each of the solidary
debtors, insofar as the creditor/s is/are concerned, is the debtor of the entire amount; it is only
with respect to his co-debtors that he/she is liable to the extent of his/her share in the obligation.
Such being the case, the Civil Code allows each solidary debtor, in actions filed by the creditor/s,
to avail himself of all defenses which are derived from the nature of the obligation and of those
which are personal to him, or pertaining to his share [citing Section 1222 of the Civil Code]. He
may also avail of those defenses personally belonging to his co-debtors, but only to the extent of
their share in the debt. Thus, Varorient may set up all the defenses pertaining to Colarina and
Lagoa; whereas Colarina and Lagoa are liable only to the extent to which Varorient may be
found liable by the court.1wphi1
xxxx

If Varorient were to be found liable and made to pay pursuant thereto, the entire obligation would
already be extinguished [citing Article 1217 of the Civil Code] even if no attempt was made to
enforce the judgment against Colarina. Because there existed a common cause of action
against the three solidary obligors, as the acts and omissions imputed against them are one and
the same, an ultimate finding that Varorient was not liable would, under these circumstances,
logically imply a similar exoneration from liability for Colarina and Lagoa, whether or not they
interposed any defense.41 [Emphases supplied]
In light of these conclusions, the Court holds that the releases, waivers and quitclaims executed
by petitioners in favor of MBMSI redounded to the respondents' benefit. The liabilities of the
respondents to petitioners are now deemed extinguished. The Court cannot allow petitioners to
reap the benefits given to them by MBMSI in exchange for the releases, waivers and quitclaims
and, again, claim the same benefits from PCCr.
While it is the duty of the courts to prevent the exploitation of employees, it also behooves the
courts to protect the sanctity of contracts that do not contravene the law. 42 The law in protecting
the rights of the laborer authorizes neither oppression nor self-destruction of the employer. While
the Constitution is committed to the policy of social justice and the protection of the working
class, it should not be supposed that every labor dispute will be automatically decided in favor of
labor. Management also has its own rights, which, as such, are entitled to respect and
enforcement in the interest of simple fair play. Out of its concern for those with less privileges in
life, the Court has inclined more often than not toward the worker and upheld his cause in his
conflicts with the employer. Such favoritism, however, has not blinded the Court to the rule that
justice is in every case for the deserving, to be dispensed in the light of the established facts and
applicable law and doctrine.43
WHEREFORE, the petition is DENIED. SO ORDERED.

28. G.R. No. 160138

July 13, 2011
AUTOMOTIVE ENGINE REBUILDERS, INC. (AER), ANTONIO T. INDUCIL, LOURDES T.
INDUCIL, JOCELYN T. INDUCIL and MA. CONCEPCION I. DONATO, Petitioners,
vs.
PROGRESIBONG UNYON NG MGA MANGGAGAWA SA AER, ARNOLD VILLOTA, FELINO
E. AGUSTIN, RUPERTO M. MARIANO II, EDUARDO S. BRIZUELA, ARNOLD S.
RODRIGUEZ, RODOLFO MAINIT, JR., FROILAN B. MADAMBA, DANILO D. QUIBOY,
CHRISTOPHER R. NOLASCO, ROGER V. BELATCHA, CLEOFAS B. DELA BUENA, JR.,
HERMINIO P. PAPA, WILLIAM A. RITUAL, ROBERTO CALDEO, RAFAEL GACAD, JAMES
C. CAAMPUED, ESPERIDION V. LOPEZ, JR., FRISCO M. LORENZO, JR., CRISANTO
LUMBAO, JR., and RENATO SARABUNO, Respondents.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 160192
PROGRESIBONG UNYON NG MGA MANGGAGAWA SA AER, ARNOLD VILLOTA, FELINO
E. AGUSTIN, RUPERTO M. MARIANO II, EDUARDO S. BRIZUELA, ARNOLD S.
RODRIGUEZ, RODOLFO MAINIT, JR., FROILAN B. MADAMBA, DANILO D. QUIBOY,
CHRISTOPHER R. NOLASCO, ROGER V. BELATCHA, CLEOFAS B. DELA BUENA, JR.,
HERMINIO P. PAPA, WILLIAM A. RITUAL, ROBERTO CALDEO, RAFAEL GACAD, JAMES
C. CAAMPUED, ESPERIDION V. LOPEZ, JR., FRISCO M. LORENZO, JR., CRISANTO
LUMBAO,
JR.,
and
RENATO
SARABUNO, Petitioners,
vs.
AUTOMOTIVE ENGINE REBUILDERS, INC., and ANTONIO T. INDUCIL, Respondents.
DECISION
MENDOZA, J.:

Challenged in these consolidated petitions for review is the October 1, 2003 Amended
Decision1 of the Court of Appeals (CA), in CA-G.R. SP No. 73161, which modified the
Resolution2 of the National Labor Relations Commission (NLRC), by ordering the immediate
reinstatement of all the suspended employees of Automotive Engine Rebuilders, Inc. (AER)
without backwages.
Records show that AER is a company engaged in the automotive engine repair and rebuilding
business and other precision and engineering works for more than 35 years. Progresibong
Unyon Ng Mga Manggagawa sa AER(Unyon) is the legitimate labor union of the rank and file
employees of AER which was formed in the year 1998.
Due to a dispute between the parties, both filed a complaint against each other before the
NLRC. AER accused the Unyon of illegal concerted activities (illegal strike, illegal walkout, illegal
stoppage, and unfair labor practice) while Unyon accused AER of unfair labor practice, illegal
suspension and illegal dismissal.
AERs Managements Version
On January 28, 1999, eighteen (18) employees of AER, acting collectively and in concert,
suddenly and without reason staged a walkout and assembled illegally in the company
premises.
Despite managements plea for them to go back to work, the concerned employees refused and,
instead, walked out of the company premises and proceeded to the office of the AER
Performance and Service Center (AER-PSC)located on another street. Upon arrival, they
collectively tried to cart away one (1) line boring machine owned by AER out of the AER-PSC
premises. They threatened and forced the company guards and some company officers and
personnel to open the gate of the AER-PSC compound. They also urged the AER-PSC
employees to likewise stop working.
The concerned employees occupied the AER-PSC premises for several hours,
thus, disrupting the work of the other employees and AERs services to its clients. They refused
to stop their unlawful acts despite the intervention of the barangay officers. They left the AERPSC premises only when the police intervened and negotiated with them.
Subsequently, management issued a memorandum requiring the employees who joined the
illegal walkout to explain in writing why they should not be disciplined administratively and
dismissed for their unjustified and illegal acts.
The concerned employees submitted their written explanation which contained their admissions
regarding their unjustified acts. Finding their explanation unsatisfactory, AER terminated the
services of the concerned employees.
On February 22, 1999, the concerned employees started a wildcat strike, barricaded company
premises, and prevented the free ingress and egress of the other employees, officers, clients,
and visitors and the transportation of company equipments. They also tried to use force and
inflict violence against the other employees. Their wildcat strike stopped after the NLRC issued
and served a temporary restraining order (TRO).
Meantime, six (6) of the concerned employees, namely: Oscar Macaranas, Bernardino Acosta,
Ferdinand Flores, Benson Pingol, Otillo Rabino, and Jonathan Taborda resigned from the
company and signed quitclaims.

Unyons Version
On December 22, 1998, Unyon filed a petition for certification election before the Department of
Labor and Employment (DOLE) after organizing their employees union within AER. Resenting
what they did, AER forced all of its employees to submit their urine samples for drug testing.
Those who refused were threatened with dismissal.
On January 8, 1999, the results of the drug test came out and the following employees were
found positive for illegal drugs: Froilan Madamba, Arnold Rodriguez, Roberto Caldeo, Roger
Bilatcha, Ruperto Mariano, Edwin Fabian, and Nazario Madala.
On January 12, 1999, AER issued a memorandum suspending these employees from work for
violation of Article D, Item 2 of the Employees handbook which reads as follows:
Coming to work under the influence of intoxicating liquor or any drug or drinking any alcoholic
beverages on the premises on company time.
Out of the seven (7) suspended employees, only Edwin Fabian and Nazario Madala were
allowed by AER to report back to work. The other five (5) suspended employees were not
admitted by AER without first submitting the required medical certificate attesting to their fitness
to work.
While they were in the process of securing their respective medical certificates, however, they
were shocked to receive a letter from AER charging them with insubordination and absence
without leave and directing them to explain their acts in writing. Despite their written explanation,
AER refused to reinstate them.
Meanwhile, Unyon found out that AER was moving out machines from the main building to the
AER-PSC compound located on another street. Sensing that management was going to engage
in a runaway shop, Unyon tried to prevent the transfer of the machines which prompted AER to
issue a memorandum accusing those involved of gross insubordination, work stoppage and
other offenses.
On February 2, 1999, the affected workers were denied entry into the AER premises by order of
management. Because of this, the affected workers staged a picket in front of company
premises hoping that management would accept them back to work. When their picket proved
futile, they filed a complaint for unfair labor practice, illegal suspension and illegal dismissal.
Ruling of the Labor Arbiter
On August 9, 2001, the Labor Arbiter (LA) rendered a decision3 in favor of Unyon by directing
AER to reinstate the concerned employees but without backwages effective October 16, 2001.
The LA ruled, among others, that the concerned employees were suspended from work without
a valid cause and without due process. In finding that there was illegal suspension, the LA held
as follows:
There is no doubt that the hostile attitude of the management to its workers and vice versa
started when the workers began organizing themselves into a union. As soon as the
management learned and received summons regarding the petition for certification election filed
by the employees, they retaliated by causing the employees to submit themselves to drug test.
And out of the seven who were found positive, five were placed on a 12 day suspension namely:

(1) Froilan Madamba; (2) Arnold Rodriguez; (3) Roberto Caldeo; (4) Roger Belatcha; and (5)
Ruperto Mariano.
This is illegal suspension plain and simple. Even if they were found positive for drugs, they
should have been caused to explain why they were found so. It could have been that they have
taken drugs as cure for ailment under a physicians prescription and supervision. Doubts should
be in favor of the working class in the absence of evidence that they are drug addicts or they
took prohibited or regulated drugs without any justifiable reason at all. In fact, there is not even a
showing by the company that the performance of these employees was already adversely
affected by their use of drugs.
Lest be misunderstood that we are considering use of prohibited drug or regulated drugs, what
we abhor is suspension without valid cause and without due process.4
The LA further held that AER was guilty of illegal dismissal for refusing to reinstate the five (5)
employees unless they submit a medical certificate that they were fit to work. Thus:
x x x Firstly, the employer has not even established that the five employees are sick of ailments
which are not curable within six months, a burden which rests upon the employers and granting
that they were sick or drug addicts, the remedy is not dismissal but to allow them to be on sick
leave and be treated of their illness and if not cured within 6 months, that is the time that they
may be separated from employment but after payment of months salary for every year of
service by way of separation pay.5
Finally, the LA held that the concerned employees were not totally without fault. The concerted
slowdown of work that they conducted in protesting their illegal suspension was generally illegal
and unjustifiable. The LA, thus, ruled that both parties were in pari delicto and, therefore, must
suffer the consequences of the wrong they committed.
NLRC Ruling
Both parties filed their respective appeals with the NLRC. The concerned employees argued that
the LA erred in 1) not awarding backwages to them during the period of their suspension; 2) not
holding that AER is guilty of unfair labor practice; and 3) not holding that they were illegally
dismissed from their jobs.6 AER, on the other hand, claimed that the LA erred in finding that
there was illegal dismissal and in ordering the reinstatement of the concerned employees
without backwages.7
On March 5, 2002, the NLRC issued a Resolution8 modifying the LA decision by setting aside
the order of reinstatement as it found no illegal dismissal.
The NLRC, however, considered only three (3) out of the eighteen concerned employees, (18)
namely: Froilan Madamba, Ruperto Mariano, and Roberto Caldeo because their names were
commonly identified in the LA decision and in the concerned employees position paper as those
employees who were allegedly illegally suspended.
It wrote that these three (3) employees were validly suspended because they were found
positive for illegal drugs in the drug test conducted by AER. Management was just exercising its
management prerogative in requiring them to submit a medical fit-to-work certificate before they
could be admitted back to work. The drug test was found to be not discriminatory because all
employees of AER were required to undergo the drug test. Neither was the drug test related to
any union activity.

Finally, the NLRC ruled that the concerned employees had no valid basis in conducting a strike.
Considering that the concerted activity was illegal, AER had the right to immediately dismiss
them.

The petitioners themselves have admitted that all of them were ordered to give their urine
samples for the drug test; that the drug test was applicable to all the employees lends credence
that such test was not related to any union activity. The union members were not singled out for
said drug testing.

Unyon and the concerned employees filed a petition before the CA advancing the following
ARGUMENTS
PUBLIC RESPONDENT ACTED WITH GRAVE ABUSE OF DISCRETION IN HOLDING THAT
THERE ARE ONLY THREE (3) REMAINING COMPLAINANTS IN THE CASE FILED BY THE
PETITIONERS.
PUBLIC RESPONDENT ACTED WITH GRAVE ABUSE OF DISCRETION IN HOLDING THAT
THE SUSPENSION OF SEVERAL PETITIONERS WAS VALID DESPITE THE ABSENCE OF
DUE PROCESS.
PUBLIC RESPONDENT ACTED WITH GRAVE ABUSE OF DISCRETION IN SUSTAINING
THE VALIDITY OF THE DISMISSAL OF EMPLOYEES WHO TESTED POSITIVE DURING THE
DRUG TEST.
PUBLIC RESPONDENT ACTED WITH GRAVE ABUSE OF DISCRETION IN ABSOLVING
PRIVATE RESPONDENTS OF THE OFFENSE OF UNFAIR LABOR PRACICE.
PUBLIC RESPONDENT ACTED WITH GRAVE ABUSE OF DISCRETION IN DISMISSING
PETITIONERS COMPLAINT FOR ILLEGAL DISMISSAL.

The complainants who tested positive for illegal drugs were validly suspended under the
company rules. The Employees Handbook of Company Rules and Regulations prohibit
employees from reporting for work under the influence of intoxicating liquor and drugs.
With the finding that the petitioners tested positive for illegal drugs, AER merely exercised their
management prerogative to require a medical certificate that said employees were already fit to
work before they can be admitted back to work.
Due to the failure of the affected petitioners to submit a medical certificate that they are already
fit to work, they were dismissed. Petitioners act of not reporting for duty upon presentation of the
medical certificate that they are fit to work as per agreement with the DOLE NCMB on January
25, 1999 had the marks of willful disobedience giving AER the right to terminate employment. 11
The CA further ruled that both parties were guilty of unfair labor practice. It stated that the hostile
attitude of AER towards its workers and vice-versa started when the workers began organizing
themselves into a union. AER tried to have a runaway shop when it transferred some of its
machinery from the main building to the AER-PSC office located on another street on the pretext
that the main building was undergoing renovation. AER also prevented its employees, even
those who were excluded from its complaint, from going back to work for allegedly staging an
illegal strike. On the other hand, the concerted work slowdown staged by the concerned
employees as a result of their alleged illegal suspension was unjustified. Hence, both parties
were found by the CA to be in pari delicto and must bear the consequences of their own
wrongdoing.

The CA Ruling
On June 27, 2003, the CA rendered a decision,9 the dispositive portion of which reads as
follows:

On October 1, 2003, upon the motion for partial reconsideration filed by Unyon praying for the
payment of full backwages and the reinstatement of all suspended employees, the CA rendered
the assailed Amended Decision, the dispositive portion of which reads, as follows:

WHEREFORE, premises considered, the petition is GRANTED. Respondents are hereby

directed to reinstate the petitioners effective immediately but without backwages, except those
who were tested positive for illegal drugs and have failed to submit their respective medical
certificates.

WHEREFORE, the partial motion for reconsideration is GRANTED insofar as the reinstatement
of the suspended employees is concerned. This Courts decision dated June 27, 2003 is hereby
MODIFIED. Private respondents are hereby directed to reinstate all the petitioners immediately
without backwages.

SO ORDERED.10

SO ORDERED.12

The CA explained that there still remained 26 complaining employees and not just three (3) as
claimed by the NLRC, because 32 members of Unyon signed and filed the complaint, and from
the 32 complaining members, only six (6) voluntarily signed quitclaims in favor of AER. It
reasoned out that the number of parties to a complaint would correspond to the number of
signatories thereto and not necessarily to the names commonly appearing or identified in the
position paper and the LA decision. Citing Section 6 of the Rules of Court, the CA held that all
persons in whom or against whom any right to relief in respect to or arising out of the same
transaction or series of transactions is alleged to exist, whether jointly, severally, or in the
alternative, may join as plaintiffs or be joined as defendants in one complaint.

Unsatisfied, both parties filed the present consolidated petitions on the following

The CA, however, agreed with the NLRC on the legality and validity of the suspension. The CA
wrote:

GROUNDS
FOR UNYON:
THE COURT OF APPEALS LEGALLY ERRED IN NOT AWARDING BACKWAGES TO
INDIVIDUAL
PETITIONERS
NOTWITHSTANDING
HAVING
ORDERED
THEIR
REINSTATEMENT TO THEIR PREVIOUS POSITIONS.
FOR AER:

THE HONORABLE COURT OF APPEALS ERRED GRIEVOUSLY WHEN IT GAVE SO MUCH

WEIGHT ON THE PRIVATE RESPONDENTS PARTIAL MOTION FOR RECONSIDERATION
BY AMENDING ITS DECISION IN ORDERING THEIR IMMEDIATE REINSTATEMENT
INCLUDING THOSE WHO HAVE TESTED POSITIVE FOR ILLEGAL DRUGS (DRUG
ADDICTS) AND HAVE FAILED TO SUBMIT ANY MEDICAL CERTIFICATE.
G.R. No. 160138
AERs Position
AER questions the findings of the CA that there were 32 complaining employees, which number
was reduced to only 26 because six (6) resigned and signed waivers and quitclaims. It argues
that the CA should have respected the findings of the LA and the NLRC that there were only
18 complaining employees, which was reduced to 12 due to the resignations and signing of the
corresponding Release and Quitclaims by six (6) of them. The figure was further reduced to 8,
and finally to just 3 complaining employees.
AER argues that the reinstatement of those employees who tested positive for drugs and
refused to submit their respective medical certificate certifying that they were fit to work, violated
AERs rules and regulations, and the law in general because it would allow the sheltering of drug
addicts in company premises.
AER likewise insists that the drug test that it conducted was not related to any union activity
because the test covered all employees. The drug test was part of company rules and guidelines
designed to instill discipline and good behavior among its employees as contained in its
Employees Manual Company Rules and Regulations. AER also claims that it simply exercised
its employers prerogative in requiring a medical certificate from the affected employees.
Finally, AER avers that the complaining employees, who did not report back to work despite their
medical certificate attesting that they were fit to work, committed willful disobedience. AER
claims that the complaining employees violated their agreement with the DOLE-National
Conciliation and Mediation Board (NCMB) dated January 25, 1999. AER likewise contends that
the complaining employees are deemed to have lost their employment status when they
engaged in unlawful activities such as abandonment of work, stoppage of work and the
commission of attempted theft involving its boring machine. Hence, the termination of their
employment was valid.
Unyons Position
Unyon argues that the complaint it filed indicated that there were 32 complainants who signed
the complaint. Out of the 32, six (6) executed waivers and quitclaims leaving 26 complainants,
not 3 as claimed by AER.
Unyon likewise avers that the dismissal of the affected employees was unlawful for lack of valid
ground and prior notice. Although it admits that some of the complainant employees tested
positive for drugs, it posits that AER should have, at least, required those affected employees to
explain why they tested positive for drugs because it could be possible that the drug taken was a
regulated drug for an ailment and prescribed by a doctor. Therefore, prior notice or due process
was still necessary.
Unyon further asserts that the penalty for testing positive for illegal drugs was only a 15-day
suspension, which was already served by the affected employees. It also points out that AER
never imposed the policy of drug examination on its employees before the union was organized.

Clearly, AER adopted a hostile attitude towards the workers when they organized themselves
into a union.
Moreover, of the 32 complaining employees in the illegal dismissal case against AER, only 18
were charged by AER with illegal strike. Unyon argues that AER should have admitted back to
work those employees who were not included in the charge. There was no allegation either that
those excluded were involved in the January 28, 1999 incident.
Lastly, Unyon claims that the penalty of outright dismissal against the eighteen (18) employees
charged with illegal strike was grossly disproportionate to their offense.
G.R. 160192
Unyons Position
Unyon basically argues that there was enough proof that AER acted in bad faith and it was guilty
of illegal lock-out for preventing the affected employees from going back to work. Hence, the
complaining employees are entitled to backwages.
AERs Position
AER counters that there are only three (3) remaining complaining employees who were validly
suspended, namely: Froilan Madamba, Ruperto Mariano and Roberto Caldeo. AER claims that
these employees are not entitled to backwages or even reinstatement because their separation
from work was valid due to their unlawful activities and willful disobedience. AER further states
that Unyon failed to properly file a verified position paper. Hence, the complaining employees
who failed to file a verified position paper should be excluded from the petition.
In sum, the main issue to be resolved in these consolidated cases is whether or not the CA erred
in ruling for the reinstatement of the complaining employees but without grant of backwages.
The Courts Ruling
The Court agrees with the ruling of the CA that there were 32 complaining employees who filed
and signed their complaint dated February 18, 1999 for unfair labor practice, illegal dismissal
and illegal suspension.13 Out of the 32, six (6) undeniably resigned and signed waivers and
quitclaims, leaving 26 remaining complainant employees. Thus, the Court adopts and affirms the
following CA ruling on this matter:
The number of parties to a complaint corresponds to the number of signatories thereto and not
necessarily to the names commonly appearing or identified in the position paper. All persons in
whom or against whom any right to relief in respect to or arising out of the same transaction or
series of transactions is alleged to exist whether jointly, severally, or in the alternative, may,
except as otherwise provided in these Rules, join as plaintiffs or be joined as defendants in one
complaint, where any question of law or fact common to all such plaintiffs or to all such
defendants may arise in the action; but the court may make such orders as may be just to
prevent any plaintiff or defendant from being embarrassed or put to expense in connection with
any proceedings in which he may have no interest.14
This Court likewise affirms the ruling of the CA favoring the reinstatement of all the complaining
employees including those who tested positive for illegal drugs, without backwages. The Court is

in accord with the ruling of the LA and the CA that neither party came to court with clean hands.
Both were in pari delicto.
It cannot be disputed that both parties filed charges against each other, blaming the other party
for violating labor laws. AER filed a complaint against Unyon and its 18 members for illegal
concerted activities. It likewise suspended 7 union members who tested positive for illegal drugs.
On the other hand, Unyon filed a countercharge accusing AER of unfair labor practice, illegal
suspension and illegal dismissal. In other words, AER claims that Unyon was guilty of staging an
illegal strike while Unyon claims that AER committed an illegal lockout.

Drug testing shall conform with the procedures as prescribed by the Department of Health
(DOH) (www.doh.gov.ph).Only drug testing centers accredited by the DOH shall be utilized.
A list of accredited centers may be accessed through the OSHC website
(www.oshc.dole.gov.ph).
Drug testing shall consist of both the screening test and the confirmatory test; the latter
to be carried out should the screening test turn positive. The employee concerned must be
informed of the test results whether positive or negative.
In Social Justice Society v. Dangerous Drugs Board, we explained:

AERs fault is obvious from the fact that a day after the union filed a petition for certification
election before the DOLE, it hit back by requiring all its employees to undergo a compulsory drug
test. Although AER argues that the drug test was applied to all its employees, it was silent as to
whether the drug test was a regular company policy and practice in their 35 years in the
automotive engine repair and rebuilding business. As the Court sees it, it wasAERs first ever
drug test of its employees immediately implemented after the workers manifested their desire to
organize themselves into a union. Indeed, the timing of the drug test was suspicious.
Moreover, AER failed to show proof that the drug test conducted on its employees was
performed by an authorized drug testing center. It did not mention how the tests were conducted
and whether the proper procedure was employed. The case of Nacague v. Sulpicio Lines,15 is
instructive:
Contrary to Sulpicio Lines allegation, Nacague was already questioning the credibility of S.M.
Lazo Clinic as early as the proceedings before the Labor Arbiter. In fact, the Labor Arbiter
declared that the S.M. Lazo Clinic drug test result was doubtful since it is not under the
supervision of the Dangerous Drug Board.
The NLRC and the Court of Appeals ruled that Sulpicio Lines validly terminated Nacagues
employment because he was found guilty of using illegal drugs which constitutes serious
misconduct and loss of trust and confidence. However, we find that Sulpicio Lines failed to
clearly show that Nacague was guilty of using illegal drugs. We agree with the Labor Arbiter that
the lack of accreditation of S.M. Lazo Clinic made its drug test results doubtful.
Section 36 of R.A. No. 9165 provides that drug tests shall be performed only by
authorized drug testing centers. Moreover, Section 36 also prescribes that drug testing
shall consist of both the screening test and the confirmatory test. Section 36 of R.A. No.
9165 reads:
SEC. 36. Authorized Drug Testing. Authorized drug testing shall be done by any
government forensic laboratories or by any of the drug testing laboratories accredited
and monitored by the DOH to safeguard the quality of test results. The DOH shall take
steps in setting the price of the drug test with DOH accredited drug testing centers to further
reduce the cost of such drug test. The drug testing shall employ, among others, two (2)
testing methods, the screening test which will determine the positive result as well as the
type of drug used and the confirmatory test which will confirm a positive screening test. x
x x (Emphases supplied)

As to the mechanics of the test, the law specifies that the procedure shall employ two testing
methods, i.e., the screening test and the confirmatory test, doubtless to ensure as much
as possible the trustworthiness of the results. But the more important consideration lies in
the fact that the tests shall be conducted by trained professionals in access-controlled
laboratories monitored by the Department of Health (DOH) to safeguard against results
tampering and to ensure an accurate chain of custody.
The law is clear that drug tests shall be performed only by authorized drug testing centers. In
this case, Sulpicio Lines failed to prove that S.M. Lazo Clinic is an accredited drug testing
center. Sulpicio Lines did not even deny Nacagues allegation that S.M. Lazo Clinic was not
accredited. Also, only a screening test was conducted to determine if Nacague was guilty of
using illegal drugs. Sulpicio Lines did not confirm the positive result of the screening test with a
confirmatory test. Sulpicio Lines failed to indubitably prove that Nacague was guilty of using
illegal drugs amounting to serious misconduct and loss of trust and confidence. Sulpicio Lines
failed to clearly show that it had a valid and legal cause for terminating Nacagues employment.
When the alleged valid cause for the termination of employment is not clearly proven, as in this
case, the law considers the matter a case of illegal dismissal. (Emphases supplied)
Furthermore, AER engaged in a runaway shop when it began pulling out machines from the
main AER building to the AER-PSC compound located on another street on the pretext that the
main building was undergoing renovation. Certainly, the striking workers would have no reason
to run and enter the AER-PSC premises and to cause the return of the machines to the AER
building if they were not alarmed that AER was engaging in a runaway shop.
AER committed another infraction when it refused to admit back those employees who were not
included in its complaint against the union. Thirty-two (32) employees filed a complaint for illegal
dismissal, illegal suspension and unfair labor practice against AER. AER charged 18 employees
with illegal strike. AER should have reinstated the 14 employees excluded from its complaint.
Regarding AERs contention that the affected workers abandoned their jobs, the Court has
thoroughly reviewed the records and found no convincing proof that they deliberately abandoned
their jobs. Besides, this Court has consistently declared in a myriad of labor cases that
abandonment is totally inconsistent with the immediate filing of a complaint for illegal dismissal.
In any event, the penalty of dismissal imposed by AER against the striking employees, who, by
the way, only staged a one day walkout, was too severe. The pronouncement in the case
of Tupas Local Chapter No. 979 v. NLRC16 is worth reiterating:

Department Order No. 53-03 further provides:

Drug Testing Program for Officers and Employees

Neither respondent commission's decision nor the labor arbiter's decision as affirmed with
modification by it cites any substantial facts or evidence to warrant the terribly harsh imposition
of the capital penalty of dismissal and forfeiture of employment on twenty-two of forty-four
workers for having staged the so-called one-day (more accurately, a one-morning) "sitdown
strike" on August 19, 1980 to inform respondent employer of their having formed their own

union and to present their just requests for allowances, overtime pay and service incentive leave
pay. Prescinding from respondent commission's misappreciation of the facts and evidence and
accepting for the nonce its factual conclusion that the petitioners staged a one-morning sit-down
strike instead of making a mass representation for the employer to recognize their newly formed
union and negotiate their demands, respondent commission's decision is not in consonance with
the constitutional injunction that the Court has invariably invoked and applied to afford protection
to labor and assure the workers' rights to self-organization, collective bargaining, security of
tenure and just and humane conditions of work. The said decision likewise is not in accordance
with settled and authoritative doctrine and legal principles that a mere finding of the illegality
of a strike does not automatically warrant a wholesale dismissal of the strikers from their
employment and that a premature or improvident strike should not be visited with a
consequence so severe as dismissal where a penalty less punitive would
suffice. Numerous precedents to this effect have been cited and reaffirmed x x x.
x x x x.
In the analogous case of PBM Employees Organization vs. PBM Co., Inc.,17[10]/ the Court, in
setting aside the questioned industrial court's orders held that "the dismissal or termination of
the employment of the petitioning eight (8) leaders of the union is harsh for a one-day
absence from work." They had been ordered dismissed for having carried out a mass
demonstration at Malacaang on March 4, 1969 in protest against alleged abuses of the Pasig
police department, upon two days' prior notice to respondent employer company, as against the
latter's insistence that the first shift should not participate but instead report for work, under pain
of dismissal. The Court held that they were merely exercising their basic human rights and
fighting for their very survival "in seeking sanctuary behind their freedom of expression as well
as their right of assembly and of petition against alleged persecution of local officialdom." We
ruled that "(T)he appropriate penalty - if it deserves any penalty at all - should have been simply
to charge said one-day absence against their vacation or sick leave. But to dismiss the eight (8)
leaders of the petitioner Union is a most cruel penalty, since as aforestated the Union leaders
depend on their wages for their daily sustenance as well as that of their respective families aside
from the fact that it is a lethal blow to unionism, while at the same time strengthening the
oppressive hand of the petty tyrants in the localities." [Emphases supplied]
It must also be noted that there were no injuries during the brief walkout. Neither was there proof
that the striking workers inflicted harm or violence upon the other employees. In fact, the Police
Memorandum18 dated January 29, 1999 reported no violent incidents and stated that all parties
involved in the January 28, 1999 incident were allowed to go home and the employees involved
were just given a stern warning.
To the Courts mind, the complaining workers temporarily walked out of their jobs because they
strongly believed that management was committing an unfair labor practice. They had no
intention of hurting anybody or steal company property. Contrary to AERs assertion, the striking
workers did not intend to steal the line boring machine which they tried to cart away from the
AER-PSC compound; they just wanted to return it to the main AER building.
Like management, the union and the affected workers were also at fault for resorting to a
concerted work slowdown and walking out of their jobs of protest for their illegal suspension. It
was also wrong for them to have forced their way to the AER-PSC premises to try to bring out
the boring machine. The photos19 shown by AER are enough proof that the picketing employees
prevented the entry and exit of non-participating employees and possibly AERs clients.
Although the unions sudden work stoppage lasted a day, it surely caused serious disturbance
and tension within AERs premises and could have adversely affected AERs clients and
business in general.

The in pari delicto doctrine in labor cases is not novel to us. It has been applied in the case
of Philippines Inter-Fashion, Inc. v NLRC,20 where the Court held:
The Solicitor General has correctly stated in his comment that "from these facts are derived the
following conclusions which are likewise undisputed: that petitioner engaged in an illegal
lockout while the NAFLU engaged in an illegal strike; that the unconditional offer of the 150
striking employees to return to work and to withdraw their complaint of illegal lockout against
petitioner constitutes condonation of the illegal lock-out; and that the unqualified acceptance of
the offer of the 150 striking employees by petitioner likewise constitutes condonation of the
illegal strike insofar as the reinstated employees are concerned."
The issues at bar arise, however, from respondent commission's approval of its commissioner's
conclusions that (1) petitioner must be deemed to have waived its right to pursue the case of
illegal strike against the 114 employees who were not reinstated and who pursued their illegal
lockout claim against petitioner; and (2) the said 114 employees are entitled to reinstatement
with three months' backwages.
The Court approves the stand taken by the Solicitor General that there was no clear and
unequivocal waiver on the part of petitioner and on the contrary the record shows that it
tenaciously pursued its application for their dismissal, but nevertheless in view of the undisputed
findings of illegal strike on the part of the 114 employees and illegal lockout on petitioner's
part, both parties are in pari delicto and such situation warrants the restoration of the
status quo ante and bringing the parties back to the respective positions before the
illegal strike and illegal lockout through the reinstatement of the said 114 employees, as
follows:
The Bisaya case (102 Phil. 438) is inapplicable to the present case, because in the former, there
were only two strikers involved who were both reinstated by their employer upon their request to
return to work. However, in the present case, there were more than 200 strikers involved, of
which 150 who desired to return to work were reinstated. The rest were not reinstated because
they did not signify their intention to return to work. Thus, the ruling cited in the Bisaya case that
the employer waives his defense of illegality of the strike upon reinstatement of strikers is
applicable only to strikers who signified their intention to return to work and were accepted back
...
Truly, it is more logical and reasonable for condonation to apply only to strikers who signified
their intention to return and did return to work. The reason is obvious. These strikers took the
initiative in normalizing relations with their employer and thus helped promote industrial peace.
However, as regards the strikers who decided to pursue with the case, as in the case of the 114
strikers herein, the employer could not be deemed to have condoned their strike, because they
had not shown any willingness to normalize relations with it. So, if petitioner really had any
intention to pardon the 114 strikers, it would have included them in its motion to withdraw on
November 17, 1980. The fact that it did not, but instead continued to pursue the case to the end,
simply means that it did not pardon the 114 strikers.
xxx

xxx

xxx

The finding of illegal strike was not disputed. Therefore, the 114 strikers employees who
participated therein are liable for termination (Liberal Labor Union v. Phil. Can Co., 91 Phil. 72;
Insurefco Employees Union v. Insurefco, 95 Phil. 761). On the other hard, the finding of illegal
lockout was likewise not disputed. Therefore, the 114 employees affected by the lockout are also
subject to reinstatement. Petitioner, however, contends that the application for readmission to
work by the 150 strikers constitutes condonation of the lockout which should likewise bind the
114 remaining strikers. Suffice it to say that the 150 strikers acted for themselves, not on behalf

of the 114 remaining strikers, and therefore the latter could not be deemed to have condoned
petitioner's lockout.

CARPIO, J.:
The Case

The findings show that both petitioner and the 114 strikers are in pari delicto, a situation which
warrants the maintenance of the status quo. This means that the contending parties must be
brought back to their respective positions before the controversy; that is, before the strike.
Therefore, the order reinstating the 114 employees is proper.
With such restoration of the status quo ante it necessarily follows, as likewise submitted by the
Solicitor General, that the petition must be granted insofar as it seeks the setting aside of the
award of three months' backwages to the 114 employees ordered reinstated on the basis of the
general rule that strikers are not entitled to backwages (with some exceptions not herein
applicable, such as where the employer is guilty of oppression and union-busting activities and
strikers ordered reinstated are denied such reinstatement and therefore are declared entitled to
backwages from the date of such denial). More so, is the principle of "no work, no pay"
applicable to the case at bar, in view of the undisputed finding of illegality of the strike.
Likewise, the in pari delicto doctrine was applied in the case of First City Interlink Transportation
Co. Inc. v The Honorable Secretary,21 thus:
3) Petitioner substantially complied with the Return to Work Order. The medical examination,
NBI, Police and Barangay Clearances as well as the driver's and conductor's/conductress
licenses and photographs required as conditions for reinstatement were reasonable
management prerogatives. However, the other requirements imposed as condition for
reinstatement were unreasonable considering that the employees were not being hired for the
first time, although the imposition of such requirements did not amount to refusal on the part of
the employer to comply with the Return to Work Order or constitute illegal lockout so as to
warrant payment of backwages to the strikers. If at all, it is the employees' refusal to return to
work that may be deemed a refusal to comply with the Return to Work Order resulting in loss of
their employment status. As both the employer and the employees were, in a sense, at fault
or in pari delicto, the nonreturning employees, provided they did not participate in illegal acts;
should be considered entitled to reinstatement. But since reinstatement is no longer feasible,
they should be given separation pay computed up to March 8, 1988 (the date set for the return
of the employees) in lieu of reinstatement.1avvphi1[Emphases and underscoring supplied]
In the case at bar, since both AER and the union are at fault or in pari delicto, they should be
restored to their respective positions prior to the illegal strike and illegal lockout. Nonetheless, if
reinstatement is no longer feasible, the concerned employees should be given separation pay up
to the date set for the return of the complaining employees in lieu of reinstatement.
WHEREFORE, the petitions are DENIED. Accordingly, the complaining employees should be
reinstated without backwages. If reinstatement is no longer feasible, the concerned employees
should be given separation pay up to the date set for their return in lieu of reinstatement. SO
ORDERED.

This is a petition for review of the 23 January 2006 Decision and 19 April 2006 Resolution of the
Court of Appeals in CA-G.R. CEB SP No. 01065. In its 23 January 2006 Decision, the Court of
Appeals dismissed the petition for certiorari filed by petitioner Jeffrey Nacague (Nacague) and
affirmed the 21 March 2005 Decision and 31 May 2005 Resolution of the National Labor
Relations Commission (NLRC) in NLRC Case No. V-000481-04. In its 19 April 2006 Resolution,
the Court of Appeals denied Nacagues motion for reconsideration.
The Facts
On 15 June 1995, respondent Sulpicio Lines, Inc. (Sulpicio Lines) hired Nacague as "hepe de
viaje" or the representative of Sulpicio Lines on board its vessel M/V Princess of the World (the
ship).
On 25 January 2003, Sulpicio Lines received an anonymous letter reporting the use of illegal
drugs on board the ship. On 14 February 2003, Ceasar T. Chico, a housekeeper on the ship,
submitted a report regarding the drug paraphernalia found inside the Mopalla Suite Room and
the threat on his life made by Nacague and Chief Mate Reynaldo Doroon after he found the drug
paraphernalia.
On 15 February 2003, Sulpicio Lines sent a notice of investigation to Nacague informing him of
the charges against him for use of illegal drugs and threatening a co-employee.
When the ship docked in the port of Manila on 18 February 2003, some crew members of the
ship, together with Nacague, were subjected to a random drug test. They were taken to S.M.
Lazo Medical Clinic (S.M. Lazo Clinic) and were required to submit urine samples. The result of
the random drug test revealed that Nacague was positive for methamphetamine hydrochloride or
shabu.
On 20 February 2003, Sulpicio Lines subjected Nacague to a formal investigation. Nacague
denied using illegal drugs.
On 23 February 2003, Nacague went to Chong Hua Hospital in Cebu City to undergo a voluntary
drug test. The drug test with Chong Hua Hospital yielded a negative result. Nacague submitted
this test result to Sulpicio Lines.
However, on 7 March 2003, Sulpicio Lines sent a memorandum to Nacague terminating him
from the service. The memorandum reads:
After a careful consideration of your case with the evidence available, including your
explanation, and with the positive drug test result, management finds you culpable of grave
misconduct and loss of trust and confidence.

29. G.R. No. 172589

August 8, 2010
JEFFREY
vs.
SULPICIO LINES, INC., Respondent.
DECISION

NACAGUE, Petitioner,

In view thereof, the company is constrained to terminate your employment effective today,
March 7, 2003.
Feeling aggrieved, Nacague filed a complaint for illegal suspension, illegal dismissal and for
reinstatement with backwages.

On 12 November 2003, Labor Arbiter Ernesto F. Carreon rendered a decision in favor of

Nacague and declared that Sulpicio Lines illegally dismissed Nacague. The dispositive portion of
the Labor Arbiters 12 November 2003 Decision reads:
WHEREFORE, premises considered, judgment is hereby rendered ordering the respondent
Sulpicio Lines, Inc. to pay complainant Jeffrey Nacague the following:

evidence presented by Sulpicio Lines was sufficient to justify the conclusion that Nacague
committed serious misconduct and a breach of trust and confidence warranting his dismissal
from employment. The Court of Appeals agreed with the NLRC that Nacague failed to prove his
allegation that S.M. Lazo Clinic lacks accreditation. On the procedural requirements, the Court of
Appeals found that Sulpicio Lines complied with the twin-notice requirements and conducted a
formal hearing.

Separation pay

P75,600.00

Nacague filed a motion for reconsideration. In its 19 April 2006 Resolution, the Court of Appeals
denied the motion.

Backwages

P77,415.00

Hence, this petition.

Total

P153,015.00
The Issue

The other claims are dismissed for lack of merit.

Nacague raises the sole issue of whether the Court of Appeals erred in ruling that his
termination from employment was valid.

SO ORDERED.
The Ruling of the Court
According to the Labor Arbiter, the termination of employment of employees found positive for
using illegal drugs should not be exercised indiscriminately and thoughtlessly. The Labor Arbiter
agreed with Nacague that the drug test result from S.M. Lazo Clinic was questionable because
the clinic is not accredited by the Dangerous Drug Board and not under its supervision. The
Labor Arbiter gave more weight to the drug test performed by Chong Hua Hospital because it
was accredited by the Dangerous Drug Board. The Labor Arbiter said that doubts must be
resolved in favor of the employee. The Labor Arbiter also ruled that reinstatement is no longer
viable due to the strained relations between Nacague and Sulpicio Lines and, thus, awarded
separation pay to Nacague.

The petition is meritorious.

Dissatisfied with the Labor Arbiters Decision, Sulpicio Lines appealed to the NLRC. In its 21
March 2005 Decision, the NLRC reversed the Labor Arbiters decision and dismissed Nacagues
complaint for lack of merit.

Nacague maintains that the S.M. Lazo Clinic drug test was not credible because Sulpicio Lines
failed to show that S.M. Lazo Clinic is an authorized drug testing center. Nacague also alleges
that the urine samples were gathered carelessly without proper labels to identify their owners
and that S.M. Lazo Clinic did not ask Nacague if he was taking any medication that might alter
the results of the drug test. Nacague adds that Republic Act No. 9165 (R.A. No. 9165) and the
Department of Labor and Employment Order No. 53-03 (Department Order No. 53-03) require
two drug tests a screening test and a confirmatory test. Nacague maintains that, since only a
screening test was conducted, he was illegally dismissed based on an incomplete drug test.
Nacague argues that Sulpicio Lines failed to discharge its burden of proving that the termination
of his employment was legal.

According to the NLRC, since Nacague, who was performing a task involving trust and
confidence, was found positive for using illegal drugs, he was guilty of serious misconduct and
loss of trust and confidence. The NLRC added that Sulpicio Lines Code of Conduct specified
that the penalty for the use and illegal possession of prohibited drugs is dismissal. The NLRC
also said that there is a presumption that S.M. Lazo Clinic is an accredited drug testing center
and that it was incumbent upon Nacague to show otherwise.

On the other hand, Sulpicio Lines questions the belated attempt of Nacague to question the
credibility of S.M. Lazo Clinic. Sulpicio Lines also argues that since Nacague knew that the
residue of the drug would no longer be detectable in his body after five days, Nacague
underwent another drug test with the Chong Hua Hospital. Sulpicio Lines insists that the most
accurate drug test is the random drug test conducted by S.M. Lazo Clinic and that the test with
Chong Hua Hospital was a "planned" test.

Nacague filed a motion for reconsideration. In its 31 May 2005 Resolution, the NLRC denied
Nacagues motion.

Under Article 279 of the Labor Code, an employer may terminate the services of an employee
for just causes or for authorized causes. Furthermore, under Article 277(b) of the Labor Code,
the employer must send the employee who is about to be terminated, a written notice stating the
causes for termination and must give the employee the opportunity to be heard and to defend
himself. Thus, to constitute valid dismissal from employment, two requisites must concur: (1) the
dismissal must be for a just or authorized cause; and (2) the employee must be afforded an
opportunity to be heard and to defend himself.

Nacague filed a petition for certiorari with the Court of Appeals. Nacague alleged that the NLRC
gravely abused its discretion when it declared that Sulpicio Lines validly terminated his
employment.
The Ruling of the Court of Appeals
According to the Court of Appeals, Sulpicio Lines complied with both the procedural and
substantive requirements of the law when it terminated the employment of Nacague. The Court
of Appeals said that the positive result of the S.M. Lazo Clinic drug test was the main basis of
Sulpicio Lines in terminating Nacagues employment. The Court of Appeals declared that the

Contrary to Sulpicio Lines allegation, Nacague was already questioning the credibility of S.M.
Lazo Clinic as early as the proceedings before the Labor Arbiter. In fact, the Labor Arbiter
declared that the S.M. Lazo Clinic drug test result was doubtful since it is not under the
supervision of the Dangerous Drug Board.

The NLRC and the Court of Appeals ruled that Sulpicio Lines validly terminated Nacagues
employment because he was found guilty of using illegal drugs which constitutes serious
misconduct and loss of trust and confidence. However, we find that Sulpicio Lines failed to
clearly show that Nacague was guilty of using illegal drugs. We agree with the Labor Arbiter that
the lack of accreditation of S.M. Lazo Clinic made its drug test results doubtful.
Section 36 of R.A. No. 9165 provides that drug tests shall be performed only by authorized drug
testing centers. Moreover, Section 36 also prescribes that drug testing shall consist of both the
screening test and the confirmatory test. Section 36 of R.A. No. 9165 reads:
SEC. 36. Authorized Drug Testing. Authorized drug testing shall be done by any government
forensic laboratories orby any of the drug testing laboratories accredited and monitored by
the DOH to safeguard the quality of test results. The DOH shall take steps in setting the price
of the drug test with DOH accredited drug testing centers to further reduce the cost of such drug
test. The drug testing shall employ, among others, two (2) testing methods, the screening test
which will determine the positive result as well as the type of drug used and the confirmatory test
which will confirm a positive screening test. x x x (Emphasis supplied)

We agree with the Labor Arbiter that Nacagues reinstatement is no longer feasible due to
strained relations between Nacague and Sulpicio Lines and that Nacague should instead be
granted separation pay.
WHEREFORE, we GRANT the petition. We SET ASIDE the 23 January 2006 Decision and the
19 April 2006 Resolution of the Court of Appeals in CA-G.R. CEB SP No. 01065.
We REINSTATE the 12 November 2003 Decision of the Labor Arbiter.
SO ORDERED.

30. G.R. No. 197384

January 30, 2013
SAMPAGUITA
AUTO
TRANSPORT
CORPORATION, Petitioner,
vs.
NATIONAL LABOR RELATIONS COMMMISSION and EFREN I. SAGAD, Respondents.
DECISION

Department Order No. 53-03 further provides:

BRION, J.:
Drug Testing Program for Officers and Employees
Drug testing shall conform with the procedures as prescribed by the Department of
Health (DOH) (www.doh.gov.ph). Only drug testing centers accredited by the DOH
shall be utilized. A list of accredited centers may be accessed through the OSHC
website (www.oshc.dole.gov.ph).
Drug testing shall consist of both the screening test and the confirmatory
test; the latter to be carried out should the screening test turn positive. The
employee concerned must be informed of the test results whether positive or negative.
(Emphasis supplied)
In Social Justice Society v. Dangerous Drugs Board, we explained:
As to the mechanics of the test, the law specifies that the procedure shall employ two testing
methods, i.e., the screening test and the confirmatory test, doubtless to ensure as much as
possible the trustworthiness of the results. But the more important consideration lies in the fact
that the tests shall be conducted by trained professionals in access-controlled laboratories
monitored by the Department of Health (DOH) to safeguard against results tampering and to
ensure an accurate chain of custody.
The law is clear that drug tests shall be performed only by authorized drug testing
centers.1avvphi1 In this case, Sulpicio Lines failed to prove that S.M. Lazo Clinic is an
accredited drug testing center. Sulpicio Lines did not even deny Nacagues allegation that S.M.
Lazo Clinic was not accredited. Also, only a screening test was conducted to determine if
Nacague was guilty of using illegal drugs. Sulpicio Lines did not confirm the positive result of the
screening test with a confirmatory test. Sulpicio Lines failed to indubitably prove that Nacague
was guilty of using illegal drugs amounting to serious misconduct and loss of trust and
confidence. Sulpicio Lines failed to clearly show that it had a valid and legal cause for
terminating Nacagues employment. When the alleged valid cause for the termination of
employment is not clearly proven, as in this case, the law considers the matter a case of illegal
dismissal.

Before the Court is the petition for review on certiorari1 in caption, assailing the decision2 dated
March 4, 2011 and the resolution3 dated June 13, 2011 of the Court of Appeals (CA) in CA-G.R.
SP No. 112760.
The Antecedents
In a complaint4 dated August 10, 2007, respondent Efren I. Sagad charged the petitioner
Sampaguita Auto Transport Corporation (company); Andy Adagio, President and General
Manager; Monina Ariola Adagio, Vice-President and Finance Manager; Virgilio Olunan (referred
to as Olonan by Sagad), Operations Manager; and Gerry Dimate, HRO Officer, with illegal
dismissal and damages plus attorney's fees.
Sagad alleged that on May 14, 2006, the company hired him as a regular bus driver, not as a
probationary employee as the company claimed. He disowned his purported signature on the
contract of probationary Employment5 submitted in evidence by the company. He maintained
that his signature was forged. He further alleged that on November 5, 2006, he was dismissed
by the company for allegedly conniving with conductor Vitola in issuing tickets outside their
assigned route.
The company countered that it employed Sagad as a probationary bus driver (evidenced by a
probationary employment contract6) from May 14, 2006 to October 14, 2006; he was duly
informed of his corresponding duties and responsibilities. 7 He was further informed that during
the probationary period, his attendance, performance and work attitude shall be evaluated to
determine whether he would qualify for regular employment. For this purpose and as a matter of
company policy, an evaluator was deployed on a company bus (in the guise of a passenger) to
observe the drivers work performance and attitude.
Allegedly, on September 21, 2006, an evaluator boarded Sagads bus. The evaluator described
Sagads manner of driving as "reckless driver, nakikipaggitgitan, nakikipaghabulan, nagsasakay
sa gitna ng kalsada, sumusubsob ang pasahero." 8 Sagad disputed the evaluators observations.
In an explanation (rendered in Filipino),9 he claimed that he could not have been driving as
reported because his wife (who was pregnant) and one of his children were with him on the bus.
He admitted though that at one time, he chased an "Everlasting" bus to serve warning on its

driver not to block his bus when he was overtaking. He also admitted that once in a while, he
sped up to make up for lost time in making trips.
The company further alleged that on October 13, 2006, it conducted a thorough evaluation of
Sagads performance. It requested conductors who had worked with Sagad to comment on his
work. Conductors A. Hemoroz and Israel Lucero revealed that Sagad proposed that they cheat
on the company by way of an unreported early bus trip. 10Dispatcher E. Castillo likewise
submitted a negative report and even recommended the termination of Sagads
employment.11 The company also cited Sagads involvement in a hit-and-run accident on
September 9, 2006 along Commonwealth Avenue in Quezon City while on a trip (bus with Plate
No. NYK-216 and Body No. 3094).12Allegedly, Sagad did not report the accident to the
company.
On October 15, 2006, upon conclusion of the evaluation, the company terminated Sagads
employment for his failure to qualify as a regular employee.13
The Compulsory Arbitration Rulings
In her decision dated May 8, 2008,14 Labor Arbiter Marita V. Padolina dismissed the complaint
for lack of merit. She ruled that the company successfully proved that Sagad failed to qualify as
a regular employee. Labor Arbiter Padolina stressed that on October 15, 2006, the company
ordered Sagad not to work anymore as his probationary employment had expired. While Sagad
claimed that he worked until November 5, 2006, she pointed out that "there is no record to show
that he worked beyond October 14, 2006."15
Sagad appealed the Labor Arbiters ruling. On July 10, 2009, the National Labor Relations
Commission (NLRC) rendered a decision16 declaring that Sagad had been illegally dismissed. It
held that Sagad was not a probationary employee as the company failed to prove by substantial
evidence the due execution of Sagads supposed probationary employment contract. It found
credible Sagads submission that his signature on the purported contract was a forgery. It opined
that his signature on the contract was "extremely different" from his signatures in his pleadings
and in other documents on record. Further, the NLRC brushed aside the company memorandum
dated October 15, 200617 supposedly terminating Sagads probationary employment as there
was no showing that the memorandum had been served on him.
The NLRC disregarded Sagads alleged infractions that served as grounds for the termination of
his employment, holding that his dismissal was not based on these infractions but on his alleged
connivance with a conductor in defrauding the company. The NLRC awarded Sagad backwages
of P559,050.00 and separation pay of P45,000.00 in lieu of reinstatement, in view of the strained
relations between the parties resulting from the filing of the complaint.
Both parties moved for reconsideration of the NLRC decision, to no avail. The company then
elevated the case to the CA through a petition for certiorari under Rule 65 of the Rules of Court.
The CA Decision
The CA, in its currently assailed decision,18 affirmed the NLRC rulings in toto, finding no grave
abuse of discretion in the labor tribunals reversal of the labor arbiters dismissal of the
complaint. It found the "genuineness of respondents signature on the employment contract is
tainted with doubt."19 It agreed with the NLRC that Sagad had been illegally dismissed
considering, as it noted, that the grounds the company relied upon for the termination of Sagads
employment were not among the causes for a valid dismissal enumerated under Article 282 of
the Labor Code. It added that even if it had been otherwise, the company failed to comply with
the twin-notice requirement in employee dismissals.

The Petition
The company seeks the reversal of the appellate courts decision through the present
appeal,20 and raises the following issues:
1. Whether it dismissed Sagad illegally; and
2. Whether Sagad is entitled to backwages and separation pay, totaling P604,050.00,
after working with the company for barely five months.
The company insists that Sagad entered into a contract of probationary employment with it. It
was thus surprised with Sagads allegation that his signature appearing in the contract was a
forgery. It explained that his signature on the contract is the same as his signatures on his
employment papers (which include the probationary employment contract). In any event, it faults
the NLRC for not considering other pieces of evidence indicating Sagads actual employment
status.
The company points out that one such piece of competent and compelling evidence is Sagads
admission of the nature of his employment expressed in his letter dated October 16, 2006,
addressed to Adagio and Olunan.21 In this letter, he asked for another chance to work with the
company.
The company posits that with the letter, Sagad acknowledged that his probationary employment
had expired.22
The company maintains that it terminated Sagads employment in good faith. They are not
expected to follow the procedure for dismissing a regular employee, as the NLRC opined,
considering that Sagad was merely on probation. Lastly, it contends that the award of
backwages and separation pay to Sagad amounting to P604,050.00 is unwarranted and
confiscatory since he worked for only five months. It laments that the award would put a
premium on reckless driving and would encourage other drivers to follow Sagads example.
The company disputes the NLRCs basis for the award Sagads purported average daily
commission ofP1,000.00 as non-existent. They contend in this respect that the payslips
Sagad submitted to the NLRC rarely showed his daily commission to reach P1,000.00. It
explains that Sagad presented only one (1) payslip for November 2006, five (5) for October
2006, one (1) each for July, August and September 2006. It posits that the company payrolls
from June 29, 2006 to October 8, 2006 showed that his daily commissions were
below P1,000.00.
The Case for Sagad
Through his Comment (on the Petition),23 Sagad asks that the petition be denied due course. He
presents the following arguments:
1. He was not a probationary employee. The signature on the alleged probationary
employment contract attributed to him was not his; it was a forgery, as confirmed by
the NLRC and the CA. The same thing is true with the supposed letter (dated October
16, 2006)24 in which he allegedly appealed to be given another chance to work for the
company. Not only was the letter not in his handwriting (it allegedly belonged to Vitara,
a bus conductor of the company), the signature on the letter attributed to him was also
falsified.

2. On the assumption that he was a probationary employee, it is not correct to say that
he failed to qualify for regular employment. The written statements of bus conductors
Hemoroz and Lucero25 regarding his alleged attempt to cheat on the company are
without probative value. The statements were not under oath and the irregular acts he
allegedly proposed could only be done by the conductors.
The companys claim that he figured in a "hit-and-run" accident on September 9, 2006, which he
allegedly did not report to management, is not also correct. It was not his bus that was involved
in the accident that he duly reported to the management. Further, the companys contention that
he drove recklessly on September 16, 2006 cannot be used to support his dismissal as he had
already been penalized for the incident with a five-day suspension.26
Also, the company grounds in Castillos evaluation report 27 (that the company relied upon to
justify the non-renewal of his contract) are not just causes for the termination of his employment
as the CA correctly ruled.
3. He was a regular employee. He continued to work as driver until November 4, 2006.
The companys notice of termination of his Employment 28 was not served on him
because no such letter existed. If his probationary employment was to expire on
October 14, 2006, he asks: why was he evaluated only on October 13 and 14, 2006
and why did the company serve him the termination notice only on October 15, 2006,
when he was supposed to have been separated the previous day, October 14, 2006?
He adds: when was the notice served on him that would have prompted him to write
the company a letter on October 16, 2006 to ask for a second chance? All these
nagging questions, he stresses, demonstrate the incredibility of the companys claim
that he was a probationary employee.
4. He does not have to prove his denial that the signatures on the above-mentioned
documents were not really his. He posits that evidence need not be given in support of
a negative allegation and this is particularly true in dismissal cases where the burden
of proof is on the employer.
5. The petition suffers from a procedural defect as it raises only questions of fact and
not of law, in violation of Rule 45 of the Rules of Court.
The Courts Ruling
The procedural issue
This Court, as a rule, only reviews questions of law in a Rule 45 petition for review. In labor
cases, the factual findings of the labor arbiter and of the NLRC are generally respected and, if
supported by substantial evidence, accorded finality. This rule, however, is not absolute. When
the factual findings of the CA conflict with those of the labor authorities, the Court is forced to
review the evidence on record.29
In this case, the labor arbiters factual conclusions, on the one hand, and those of the NLRC and
the CA, on the other hand, differ. The labor arbiter found that Sagad was a probationary
employee and was validly dismissed for his failure to qualify for regular employment, whereas
the NLRC and the CA concluded that he was a regular employee and was illegally dismissed.
We thus find the need to review the facts in the present labor dispute.
The merits of the case

After a review of the records, we are convinced that Sagad was dismissed, not as a probationary
employee, but as one who had attained regular status. The companys evidence on Sagads
purported hiring as a probationary employee is inconclusive. To start with, Sagad denied that he
entered into a probationary employment contract with the company, arguing that the signature
on the supposed contract was not his.30 He also denied receiving the alleged notice31 terminating
his probationary employment. The same thing is true with his purported letter32 asking that he be
given another chance to work for the company. He asserts that not only is the letter not in his
handwriting, the signature on the letter was also not his.
The submissions of the parties on the issue created a doubt on whether Sagad really entered
into a probationary employment contract with the company. The NLRC resolved the doubt in
Sagads favor, ruling that Sagads signature on the contract was not his, because it was a
forgery. It declared that his signature on the contract "is extremely different from those in his
pleadings and from the other documents on record,"33 without explaining how and why the two
sets of signatures were vastly different. Lending further support to the NLRC conclusion, which
the CA upheld, is its finding that the company failed to refute Sagads denial of his signature in
the contract, which the labor tribunal considered as an admission of the veracity of Sagads
statement, pursuant to the Rules of Court.34
Independently of the above discussion and even if we were to consider that Sagad went through
a probationary period, the records indicate that he was retained even beyond the expiration of
his supposed probationary employment on October 14, 2006. As the NLRC noted, Sagad
claimed that he was dismissed by the company on November 5, 2006, after he was accused of
conniving with conductor Vitola in issuing tickets outside their assigned route.
The company never refuted this particular assertion of Sagad and its silence can only mean that
Sagad remained in employment until November 4, 2006, thereby attaining regular status as of
that date. Under the law, "an employee who is allowed to work after a probationary period shall
be considered a regular employee."35
Further, when the company questioned the payslips submitted by Sagad to substantiate his
claim that he earned on the average a daily commission of P1,000.00, it pointed out that Sagad
presented only one (1) payslip for the whole month of November 2006, five (5) payslips for the
month of October 2006, and one (1) payslip each for the months of July, August and September
2006.36 This seemingly harmless allegation is significant in that it revealed that Sagad continued
working until the first week of November 2006 and was paid his salary for at least one payroll
period. Sagad, therefore, had become a regular employee when he was dismissed on
November 5, 2006.
Is Sagads dismissal illegal?
The NLRC and the CA ruled in the affirmative. The labor tribunal opined that the infractions
which Sagad allegedly committed and which disqualified him from attaining regular status are
"unavailing" with respect to his dismissal because the dismissal was not based on those
infractions but on his alleged connivance with conductor Vitola to cheat on the company.
The CA concurred with the NLRC but for a different reason. It declared that the "grounds upon
which petitioners based respondents termination from employment, viz: hindi lahat ng schedule
nailalabas, mababa ang revenue ng bus, laging kasama ang asawa sa byahe and maraming
naririnig na kwento tungkol sa kanya, nag-uutos ng conductor para kumita sa hindi magandang
paraan, xxx are not among those enumerated under Article 282 of the Labor Code as just
causes for termination of employment."37 The CA added that on the assumption that the cited
grounds can be considered just causes, the company nonetheless failed to comply with the twinnotice requirement for the termination of Sagads employment.

We disagree with the finding that Sagads dismissal had no basis.

First. It is not disputed that the company called Sagads attention to his negative actuations as a
bus driver, which were reported by a company evaluator38 who boarded his bus on September
21, 2006. The evaluator reported that he was driving recklessly, racing and jostling for position
on the road, thereby jarring the passengers on their seats, and picking up passengers on the
middle of the road. He disputed the evaluators observations, 39 claiming that he could not have
been driving as reported because his pregnant wife and one of his children were with him on the
bus at the time. He admitted, however, that on one occasion, he chased an "Everlasting" bus to
warn its driver not to block him. He also admitted that once in a while, he sped up to compensate
for lost time in his trips.

Third. The CA misappreciated the law when it declared that the grounds relied upon by the
company in terminating Sagads employment are not among those enumerated under Article
282 of the Labor Code as just causes for employee dismissals.1wphi1 Article 282 of the Code
provides:
Art. 282. Termination by employer. An employer may terminate an employment for any of the
following causes:
(a) Serious misconduct or willful disobedience by the employee of the lawful orders of
his employer or representative in connection with his work;

Sagads explanation reveals more than what it stated. During his brief employment with the
company, he exhibited the tendency to speed up when he finds the need for it, very obviously in
violation of traffic rules, regulations and company policy. Instead of negating the evaluators
observations, his admissions make them credible.

(b) Gross and habitual neglect by the employee of his duties;

Second. He was also asked to react to the comments of conductors who had worked with him
(Hemoroz and Lucero) to the effect that he proposed to them that they cheat on the company by
making early (but not to be reported) bus trips.40 Further, there was Castillos evaluation dated

(d) Commission of a crime or offense by the employee against the person of his
employer or any immediate member of his family or his duly authorized representative;
and

October 13, 2006,41 rating Sagads work performance as poor on account of: (1) the low revenue
of Sagads bus; (2) his inability to make all his scheduled trips; and (3) his habit of bringing his
wife with him on his trips. Castillo also heard of talks of Sagads orders to the conductors to earn
money in a questionable way.

(e) Other causes analogous to the foregoing. [emphasis supplied]

During the arbitration, Sagad disputed the conductors comments, maintaining that they were not
under oath and that the fraudulent proposal they mentioned could only be committed by
conductors. With respect to Castillos evaluation, Sagad invoked the CAs pronouncement that
the infractions mentioned in the report are not just causes for the termination of his employment.
Sagads position fails to convince us. We find no evidence that Hemoroz and Lucero had an ax
to grind against Sagad so that they would lie about their impression of him as a bus driver.
Significantly, their statements validate Castillos own observation that he heard talks of Sagads
orders to the conductors for them to cheat on the company. The scheme, contrary to Sagads
explanation, can only be committed with the cooperation, or even at the behest, of the driver, as
the proposed scheme is for the bus to make unscheduled, but unreported, early trips.
Lastly, the company cites Sagads involvement in a hit-and-run incident on September 9, 2006
while driving his assigned bus (with Plate No. NYK-216 and Body No. 3094).42 Once more, he
denies the charge, claiming that it was not his bus, but two other vehicles, a Honda City and an
Elf truck, which figured in the incident.43 To prove his point, he submitted the "SALAYSAY"44 of
his replacement driver, Carlito Laude, for September 10, 2006, saying that there was no dents or
scratches on the bus.
Again, Sagads stance fails to persuade us. Sagads statements vis--vis the incident, as well as
those of Laude, are belied by the Traffic Accident Investigation Report45 which mentioned the
"Unidentified driver of Public Utility Bus with plate No. NYK-216 and Body No. 3094." The report
was corroborated by the sworn statements of Ronald Apura, driver of the Elf truck, UFF-597, the
second party in the incident,46 and Bibiana Fuentes, driver of the White Honda City, WDV-422
(owned by Purefoods Hormel Co.), the first party in the vehicular accident. There was also the
letter to the company of Standard Insurance Co., Inc. dated February 14, 2007 47 demanding the
reimbursement of P24,667.54 it paid to Purefoods Hormel Co. by way of damages sustained by
the Honda City.

(c) Fraud or willful breach by the employee of the trust reposed in him by his employer
or duly authorized representative;

The irregularities or infractions committed by Sagad in connection with his work as a bus driver
constitute a serious misconduct or, at the very least, conduct analogous to serious misconduct,
under the above-cited Article 282 of the Labor Code. To be sure, his tendency to speed up
during his trips, his reckless driving, his picking up passengers in the middle of the road, his
racing with other buses and his jostling for vantage positions do not speak well of him as a bus
driver. While he denies being informed, when he was hired, of the duties and responsibilities of a
driver contained in a document submitted in evidence by the company48 the requirement
"3. to obey traffic rules and regulations as well as the company policies. 4. to ensure the safety
of the riding public as well as the other vehicles and motorist (sic)"49 is so fundamental and so
universal that any bus driver is expected to satisfy the requirement whether or not he has been
so informed.
Sagad tries to minimize the adverse effect of the evaluators report of September 21, 2006 about
his conduct as a driver with the argument that he had already been penalized with a five-day
suspension for chasing an "Everlasting" bus at one time. The suspension is of no moment. He
was penalized for one reckless driving incident, but it does not erase all the other infractions he
committed. The conductors comments and the dispatchers evaluation, together with the earlier
on-board evaluation, all paint a picture of a reckless driver who endangers the safety of his
passengers, other motorists and the general public. With this record, it is not surprising that he
figured in a hit-and-run accident on September 9, 2006.
Under the circumstances, Sagad has become a liability rather than an asset to his employer,
more so when we consider that he attempted to cheat on the company or could have, in fact,
defrauded the company during his brief tenure as a bus driver. This calls to mind Castillos report
on the low revenue of Sagads bus, an observation which is validated by the companys Daily
Operation Reports from June to October 2006.50
All told, we find substantial evidence supporting Sagads removal as a bus driver. Through his
reckless driving and his schemes to defraud the company, Sagad committed serious misconduct
and breach of the trust and confidence of his employer, which, without doubt, are just causes for
his separation from the service. It is well to stress, at this point, an earlier pronouncement of the

Court "that justice is in every case for the deserving, to be dispensed in the light of the
established facts and applicable law and doctrine."51
The twin-notice requirement
Even as we find a just cause for Sagads dismissal, we agree with the CA that the company
failed to comply with the two-notice rule. It failed to serve notice of: (1) the particular acts for
which Sagad was being dismissed on November 5, 2006 and (2) his actual dismissal. Consistent
with our ruling in Agabon v. NLRC, 52 we hold that the violation of Sagad's right to procedural
due process entitles him to an indemnity in the form of nominal damages. Considering the
circumstances in the present case, we deem it appropriate to award Sagad P30,000.00.
WHEREFORE, premises considered, the appeal is granted. The assailed decision and
resolution of the Court of Appeals are SET ASIDE. The complaint is DISMISSED for lack of
merit. Efren I. Sagad is awarded nominal damages of P30,000.00 for violation of his right to
procedural due process.
SO ORDERED.