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Overseas employment contract - 1

Republic of the Philippines


SUPREME COURT
Manila
EN BANC
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.:
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 ITFcontrolled 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, they
expressed its regrets for not 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

Overseas employment contract - 2


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 were 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 nonpayment of earned wages with the National Seamen Board. The Virjen 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 submit the following issues in their motion for
reconsideration: t.hqw
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.

Overseas employment contract - 3


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 self-organization 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 hen 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 injurious
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 a right 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 petitioneremployer 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

Overseas employment contract - 4


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.
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
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:
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 compel 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:
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 welltaken. 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

Overseas employment contract - 5


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).
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 increase . 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.
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 welltaken. 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

Overseas employment contract - 6


fundamental State policy all dictate that the motions for
reconsideration should be granted.
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
Fernando, C.J., Guerrero, Abad Santos, Plana, Escolin and Relova,
JJ., concur.
EN BANC
G.R. Nos. L-57999, 58143-53 August 15, 1989
RESURRECCION SUZARA, CESAR DIMAANDAL, ANGELITO
MENDOZA, ANTONIO TANEDO, AMORSOLO CABRERA,
DOMINADOR SANTOS, ISIDRO BRACIA, RAMON DE BELEN,
ERNESTO SABADO, MARTIN MALABANAN, ROMEO HUERTO
and VITALIANO PANGUE, petitioners,
vs.
THE HON. JUDGE ALFREDO L. BENIPAYO and MAGSAYSAY
LINES, INC., respondents.

the past few years shows that, following said doctrine, we should
neither deny nor diminish the enjoyment by Filipino seamen of the
same rights and freedoms taken for granted by other working men
here and abroad.
The cases at bar involve a group of Filipino seamen who were
declared by the defunct National Seamen Board (NSB) guilty of
breaching their employment contracts with the private respondent
because they demanded, upon the intervention and assistance of a
third party, the International Transport Worker's Federation (ITF), the
payment of wages over and above their contracted rates without the
approval of the NSB. The petitioners were ordered to reimburse the
total amount of US$91,348.44 or its equivalent in Philippine Currency
representing the said over-payments and to be suspended from the
NSB registry for a period of three years. The National Labor Relations
Commission (NLRC) affirmed the decision of the NSB.
In a corollary development, the private respondent, for failure of the
petitioners to return the overpayments made to them upon demand by
the former, filed estafa charges against some of the petitioners. The
criminal cases were eventually consolidated in the sala of then
respondent Judge Alfredo Benipayo. Hence, these consolidated
petitions, G.R. No. 64781-99 and G.R. Nos. 57999 and 58143-53,
which respectively pray for the nullification of the decisions of the
NLRC and the NSB, and the dismissal of the criminal cases against
the petitioners.

G.R. Nos. L-64781-99 August 15, 1989


RESURRECCION SUZARA, CESAR DIMAANDAL, ANGELITO
MENDOZA, ANTONIO TANEDO, RAYMUNDO PEREZ, AMORSOLO
CABRERA, DOMINADOR SANTOS, ISIDRO BRACIA, CATALINO
CASICA, VITALIANO PANGUE, RAMON DE BELEN, EDUARDO
PAGTALUNAN, ANTONIO MIRANDA, RAMON UNIANA, ERNESTO
SABADO, MARTIN MALABANAN, ROMEO HUERTO and
WILFREDO CRISTOBAL, petitioners,
vs.
THE HONORABLE NATIONAL LABOR RELATIONS COMMISSION,
THE NATIONAL SEAMEN BOARD (now the Philippine Overseas
Employment Administration), and MAGSAYSAY LINES,
INC., respondents.
Quasha, Asperilla, Ancheta, Pe;a and Nolasco for petitioners.
Samson S. Alcantara for private respondent.

GUTIERREZ, JR., J.:


These petitions ask for a re-examination of this Court's precedent
setting decision in Vir-Jen Shipping and Marine Services Inc. v.
National Labor Relations Commission, et al. (125 SCRA 577 [1983]).
On constitutional, statutory, and factual grounds, we find no reason to
disturb the doctrine in Vir-Jen Shipping and to turn back the clock of
progress for sea-based overseas workers. The experience gained in

The facts are found in the questioned decision of the NSB in G.R. No.
64781-99.
From the records of this case it appears that the
facts established and/or admitted by the parties
are the following: that on different dates in 1977
and 1978 respondents entered into separate
contracts of employment (Exhs. "B" to "B-17",
inclusive) with complainant (private respondent)
to work aboard vessels owned/operated/manned
by the latter for a period of 12 calendar months
and with different rating/position, salary,
overtime pay and allowance, hereinbelow
specified: ...; that aforesaid employment
contracts were verified and approved by this
Board; that on different dates in April 1978
respondents (petitioners) joined the M/V
"GRACE RIVER"; that on or about October 30,
1978 aforesaid vessel, with the respondents on
board, arrived at the port of Vancouver, Canada;
that at this port respondent received additional
wages under rates prescribed by the
Intemational Transport Worker's Federation
(ITF) in the total amount of US$98,261.70; that
the respondents received the amounts
appearing opposite their names, to wit: ...; that
aforesaid amounts were over and above the
rates of pay of respondents as appearing in their
employment contracts approved by this Board;

Overseas employment contract - 7


that on November 10, 1978, aforesaid vessel,
with respondent on board, left Vancouver,
Canada for Yokohama, Japan; that on
December 14, 1978, while aforesaid vessel, was
at Yura, Japan, they were made to disembark.
(pp. 64-66, Rollo)
Furthermore, according to the petitioners, while the vessel was docked
at Nagoya, Japan, a certain Atty. Oscar Torres of the NSB Legal
Department boarded the vessel and called a meeting of the seamen
including the petitioners, telling them that for their own good and safety
they should sign an agreement prepared by him on board the vessel
and that if they do, the cases filed against them with NSB on
November 17, 1978 would be dismissed. Thus, the petitioners signed
the "Agreement" dated December 5, 1978. (Annex C of Petition)
However, when they were later furnished xerox copies of what they
had signed, they noticed that the line "which amount(s) was/were
received and held by CREWMEMBERS in trust for SHIPOWNERS"
was inserted therein, thereby making it appear that the amounts given
to the petitioners representing the increase in their wages based on
ITF rates were only received by them in trust for the private
respondent.
When the vessel reached Manila, the private respondent demanded
from the petitioners the "overpayments" made to them in Canada. As
the petitioners refused to give back the said amounts, charges were
filed against some of them with the NSB and the Professional
Regulations Commission. Estafa charges were also filed before
different branches of the then Court of First Instance of Manila which,
as earlier stated, were subsequently consolidated in the sala of the
respondent Judge Alfredo Benipayo and which eventually led to G.R.
Nos. 57999 and 58143-53.
In G.R. Nos. 64781-99, the petitioners claimed before the NSB that
contrary to the private respondent's allegations, they did not commit
any illegal act nor stage a strike while they were on board the vessel;
that the "Special Agreement" entered into in Vancouver to pay their
salary differentials is valid, having been executed after peaceful
negotiations. Petitioners further argued that the amounts they received
were in accordance with the provision of law, citing among others,
Section 18, Rule VI, Book I of the Rules and Regulations
Implementing the Labor Code which provides that "the basic minimum
salary of seamen shall not be less than the prevailing minimum rates
established by the International Labor Organization (ILO) or those
prevailing in the country whose flag the employing vessel carries,
whichever is higher ..."; and that the "Agreement" executed in Nagoya,
Japan had been forced upon them and that intercalations were made
to make it appear that they were merely trustees of the amounts they
received in Vancouver.
On the other hand, the private respondent alleged that the petitioners
breached their employment contracts when they, acting in concert and
with the active participations of the ITF while the vessel was in
Vancouver, staged an illegal strike and by means of threats, coercion
and intimidation compelled the owners of the vessel to pay to them
various sums totalling US$104,244.35; that the respondent entered

into the "Special Agreement" to pay the petitioners' wage differentials


because it was under duress as the vessel would not be allowed to
leave Vancouver unless the said agreement was signed, and to
prevent the shipowner from incurring further delay in the shipment of
goods; and that in view of petitioners' breach of contract, the latter's
names must be removed from the NSB's Registry and that they should
be ordered to return the amounts they received over and above their
contracted rates.
The respondent NSB ruled that the petitioners were guilty of breach of
contract because despite subsisting and valid NSB-approved
employment contracts, the petitioners sought the assistance of a third
party (ITF) to demand from the private respondent wages in
accordance with the ITF rates, which rates are over and above their
rates of pay as appearing in their NSB-approved contracts. As bases
for this conclusion, the NSB stated:
1) The fact that respondents sought the aid of a
third party (ITF) and demanded for wages and
overtime pay based on ITF rates is shown in the
entries of their respective Pay-Off Clearance
Slips which were marked as their Exhs. "1" to
"18", and we quote "DEMANDED ITF WAGES,
OVERTIME, DIFFERENTIALS APRIL TO
OCTOBER 1978". Respondent Suzara admitted
that the entries in his Pay-Off Clearance Slip
(Exh. "1") are correct (TSN., p. 16, Dec. 6,
1979). Moreover, it is the policy (reiterated very
often) by the ITF that it does not interfere in the
affairs of the crewmembers and masters and/or
owners of a vessel unless its assistance is
sought by the crewmembers themselves. Under
this pronounced policy of the ITF, it is
reasonable to assume that the representatives
of the ITF in Vancouver, Canada assisted and
intervened by reason of the assistance sought
by the latter.
2) The fact that the ITF assisted and intervened
for and in behalf of the respondents in the
latter's demand for higher wages could be
gleaned from the answer of the respondents
when they admitted that the ITF acted in their
behalf in the negotiations for increase of wages.
Moreover, respondent Cesar Dimaandal
admitted that the ITF differential pay was
computed by the ITF representative (TSN, p. 7,
Dec. 12, 1979)
3) The fact that complainant and the
owner/operator of the vessel were compelled to
sign the Special Agreement (Exh. "20") and to
pay ITF differentials to respondents in order not
to delay the departure of the vessel and to
prevent further losses is shown in the
"Agreement" (Exhs. "R-21") ... (pp. 69-70, Rollo)

Overseas employment contract - 8


The NSB further said:
While the Board recognizes the rights of the
respondents to demand for higher wages,
provided the means are peaceful and legal, it
could not, however, sanction the same if the
means employed are violent and illegal. In the
case at bar, the means employed are violent and
illegal for in demanding higher wages the
respondents sought the aid of a third party and
in turn the latter intervened in their behalf and
prohibited the vessel from sailing unless the
owner and/or operator of the vessel acceded to
respondents' demand for higher wages. To avoid
suffering further incalculable losses, the owner
and/or operator of the vessel had no altemative
but to pay respondents' wages in accordance
with the ITF scale. The Board condemns the act
of a party who enters into a contract and with the
use of force/or intimidation causes the other
party to modify said contract. If the respondents
believe that they have a valid ground to demand
from the complainant a revision of the terms of
their contracts, the same should have been
done in accordance with law and not thru illegal
means. (at p. 72, Rollo).
Although the respondent NSB found that the petitioners were entitled
to the payment of earned wages and overtime pay/allowance from
November 1, 1978 to December 14, 1978, it nevertheless ruled that
the computation should be based on the rates of pay as appearing in
the petitioners' NSB-approved contracts. It ordered that the amounts to
which the petitioners are entitled under the said computation should be
deducted from the amounts that the petitioners must return to the
private respondent.
On appeal, the NLRC affirmed the NSB's findings. Hence, the petition
in G.R. Nos. 64781-99.
Meanwhile, the petitioners in G.R. Nos. 57999 and 58143-53 moved to
quash the criminal cases of estafa filed against them on the ground
that the alleged crimes were committed, if at all, in Vancouver, Canada
and, therefore, Philippine courts have no jurisdiction. The respondent
judge denied the motion. Hence, the second petition.
The principal issue in these consolidated petitions is whether or not
the petitioners are entitled to the amounts they received from the
private respondent representing additional wages as determined in the
special agreement. If they are, then the decision of the NLRC and
NSB must be reversed. Similarly, the criminal cases of estafa must be
dismissed because it follows as a consequence that the amounts
received by the petitioners belong to them and not to the private
respondent.

In arriving at the questioned decision, the NSB ruled that the


petitioners are not entitled to the wage differentials as determined by
the ITF because the means employed by them in obtaining the same
were violent and illegal and because in demanding higher wages the
petitioners sought the aid of a third party, which, in turn, intervened in
their behalf and prohibited the vessel from sailing unless the owner
and/or operator of the vessel acceded to respondents' demand for
higher wages. And as proof of this conclusion, the NSB cited the
following: (a) the entries in the petitioners Pay-Off Clearance Slip
which contained the phrase "DEMANDED ITF WAGES ..."; (b) the
alleged policy of the ITF in not interfering with crewmembers of a
vessel unless its intervention is sought by the crewmembers
themselves; (c), the petitioners' admission that ITF acted in their
behalf; and (d) the fact that the private respondent was compelled to
sign the special agreement at Vancouver, Canada.
There is nothing in the public and private respondents' pleadings, to
support the allegations that the petitioners used force and violence to
secure the special agreement signed in Vancouver, British Columbia.
There was no need for any form of intimidation coming from the
Filipino seamen because the Canadian Brotherhood of Railways and
Transport Workers (CBRT), a strong Canadian labor union, backed by
an international labor federation was actually doing all the influencing
not only on the ship-owners and employers but also against third world
seamen themselves who, by receiving lower wages and cheaper
accommodations, were threatening the employment and livelihood of
seamen from developed nations.
The bases used by the respondent NSB to support its decision do not
prove that the petitioners initiated a conspiracy with the ITF or
deliberately sought its assistance in order to receive higher wages.
They only prove that when ITF acted in petitioners' behalf for an
increase in wages, the latter manifested their support. This would be a
logical and natural reaction for any worker in whose benefit the ITF or
any other labor group had intervened. The petitioners admit that while
they expressed their conformity to and their sentiments for higher
wages by means of placards, they, nevertheless, continued working
and going about their usual chores. In other words, all they did was to
exercise their freedom of speech in a most peaceful way. The ITF
people, in turn, did not employ any violent means to force the private
respondent to accede to their demands. Instead, they simply applied
effective pressure when they intimated the possibility of interdiction
should the shipowner fail to heed the call for an upward adjustment of
the rates of the Filipino seamen. Interdiction is nothing more than a
refusal of ITF members to render service for the ship, such as to load
or unload its cargo, to provision it or to perform such other chores
ordinarily incident to the docking of the ship at a certain port. It was the
fear of ITF interdiction, not any action taken by the seamen on board
the vessel which led the shipowners to yield.
The NSB's contusion that it is ITF's policy not to intervene with the
plight of crewmembers of a vessel unless its intervention was sought
is without basis. This Court is cognizant of the fact that during the
period covered by the labor controversies in Wallem Philippines
Shipping, Inc. v. Minister of Labor (102 SCRA 835 [1981]; Vir-Jen
Shipping and Marine Services, Inc. v. NLRC (supra) and these

Overseas employment contract - 9


consolidated petitions, the ITF was militant worldwide especially in
Canada, Australia, Scandinavia, and various European countries,
interdicting foreign vessels and demanding wage increases for third
world seamen. There was no need for Filipino or other seamen to seek
ITF intervention. The ITF was waiting on its own volition in all
Canadian ports, not particularly for the petitioners' vessel but for all
ships similarly situated. As earlier stated, the ITF was not really acting
for the petitioners out of pure altruism. The ITF was merely protecting
the interests of its own members. The petitioners happened to be
pawns in a higher and broader struggle between the ITF on one hand
and shipowners and third world seamen, on the other. To subject our
seamen to criminal prosecution and punishment for having been
caught in such a struggle is out of the question.

of expression is contrary to law and public


policy. ... (at page 843)
We likewise, find the public respondents' conclusions that the acts of
the petitioners in demanding and receiving wages over and above the
rates appearing in their NSB-approved contracts is in effect an
alteration of their valid and subsisting contracts because the same
were not obtained through mutual consent and without the prior
approval of the NSB to be without basis, not only because the private
respondent's consent to pay additional wages was not vitiated by any
violence or intimidation on the part of the petitioners but because the
said NSB-approved form contracts are not unalterable contracts that
can have no room for improvement during their effectivity or which ban
any amendments during their term.

As stated in Vir-Jen Shipping (supra):


The seamen had done no 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 and valid modes of labor
activity. (at page 591)
Given these factual situations, therefore, we cannot affirm the NSB
and NLRC's finding that there was violence, physical or otherwise
employed by the petitioners in demanding for additional wages. The
fact that the petitioners placed placards on the gangway of their ship to
show support for ITF's demands for wage differentials for their own
benefit and the resulting ITF's threatened interdiction do not constitute
violence. The petitioners were exercising their freedom of speech and
expressing sentiments in their hearts when they placed the placard
We Want ITF Rates." Under the facts and circumstances of these
petitions, we see no reason to deprive the seamen of their right to
freedom of expression guaranteed by the Philippine Constitution and
the fundamental law of Canada where they happened to exercise it.
As we have ruled in Wallem Phil. Shipping Inc. v. Minister of Labor, et
al. supra:
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 now 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

For one thing, the employer can always improve the working
conditions without violating any law or stipulation.
We stated in the Vir-Jen case (supra) that:
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
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 estabhshed principles of labor
legislation. The National Labor Relations
Commission, as the appellate tribunal from the
decisions of the National Seamen Board,
correctly ruled that the seamen did not violate
their contracts to warrant their dismissal. (at
page 589)
It is impractical for the NSB to require the petitioners, caught in the
middle of a labor struggle between the ITF and owners of ocean going
vessels halfway around the world in Vancouver, British Columbia to
first secure the approval of the NSB in Manila before signing an
agreement which the employer was willing to sign. It is also totally
unrealistic to expect the petitioners while in Canada to exhibit the will
and strength to oppose the ITF's demand for an increase
in their wages, assuming they were so minded.
An examination of Annex C of the petition, the agreement signed in
Japan by the crewmembers of the M/V Grace River and a certain M.
Tabei, representative of the Japanese shipowner lends credence to
the petitioners' claim that the clause "which amount(s) was received

Overseas employment contract - 10


and held by CREWMEMBERS in trust for SHIPOWNER" was an
intercalation added after the execution of the agreement. The clause
appears too closely typed below the names of the 19 crewmen and
their wages with no similar intervening space as that which appears
between all the paragraphs and the triple space which appears
between the list of crewmembers and their wages on one hand and
the paragraph above which introduces the list, on the other. The verb
"were" was also inserted above the verb "was" to make the clause
grammatically correct but the insertion of "were" is already on the
same line as "Antonio Miranda and 5,221.06" where it clearly does not
belong. There is no other space where the word "were" could be
intercalated. (See Rollo, page 80).
At any rate, the proposition that the petitioners should have pretended
to accept the increased wages while in Vancouver but returned them
to the shipowner when they reached its country, Japan, has already
been answered earlier by the Court:
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 away 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. (Vir-Jen


Shipping, supra, pp. 587-588)
It is noteworthy to emphasize that while the Intemational Labor
Organization (ILO) set the minimum basic wage of able seamen at
US$187.00 as early as October 1976, it was only in 1979 that the
respondent NSB issued Memo Circular No. 45, enjoining all shipping
companies to adopt the said minimum basic wage. It was correct for
the respondent NSB to state in its decision that when the petitioners
entered into separate contracts between 1977-1978, the monthly
minimum basic wage for able seamen ordered by NSB was still fixed
at US$130.00. However, it is not the fault of the petitioners that the
NSB not only violated the Labor Code which created it and the Rules
and Regulations Implementing the Labor Code but also seeks to
punish the seamen for a shortcoming of NSB itself.
Article 21(c) of the Labor Code, when it created the NSB, mandated
the Board to "(O)btain the best possible terms and conditions of
employment for seamen."
Section 15, Rule V of Book I of the Rules and Regulations
Implementing the Labor Code provides:
Sec. 15. Model contract of employment. The
NSB shall devise a model contract of
employment which shall embody all the
requirements of pertinent labor and social
legislations and the prevailing standards set by
applicable International Labor Organization
Conventions. The model contract shall set the
minimum standards of the terms and conditions
to govern the employment of Filipinos on board
vessels engaged in overseas trade. All
employers of Filipinos shall adopt the model
contract in connection with the hiring and
engagement of the services of Filipino seafarers,
and in no case shall a shipboard employment
contract be allowed where the same provides for
benefits less than those enumerated in the
model employment contract, or in any way
conflicts with any other provisions embodied in
the model contract.
Section 18 of Rule VI of the same Rules and Regulations provides:
Sec. 18. Basic minimum salary of able-seamen.
The basic minimum salary of seamen shall be
not less than the prevailing minimxun rates
established by the International Labor
Organization or those prevailing in the country
whose flag the employing vessel carries,
whichever is higher. However, this provision
shall not apply if any shipping company pays its
crew members salaries above the minimum
herein provided.

Overseas employment contract - 11


Section 8, Rule X, Book I of the Omnibus Rules provides:
Section 8. Use of standard format of service
agreement. The Board shall adopt a standard
format of service agreement in accordance with
pertinent labor and social legislation and
prevailing standards set by applicable
International Labor Organization Conventions.
The standard format shall set the minimum
standard of the terms and conditions to govern
the employment of Filipino seafarers but in no
case shall a shipboard employment contract
(sic), or in any way conflict with any other
provision embodied in the standard format.
It took three years for the NSB to implement requirements which,
under the law, they were obliged to follow and execute immediately.
During those three years, the incident in Vancouver happened. The
terms and conditions agreed upon in Vancouver were well within ILO
rates even if they were above NSB standards at the time.
The sanctions applied by NSB and affirmed by NLRC are moreover
not in keeping with the basic premise that this Court stressed in
the Vir-Jen Shipping case (supra) that the Ministry now the
Department of Labor and Employment and all its agencies exist
primarily for the workingman's interest and the nation's as a whole.
Implicit in these petitions and the only reason for the NSB to take the
side of foreign shipowners against Filipino seamen is the "killing the
goose which lays the golden eggs" argument. We reiterate the ruling
of the Court in Vir-Jen Shipping (supra)
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 hen 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.
xxx xxx xxx
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 national 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 VirJen be an 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

Overseas employment contract - 12


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. (at pp. 585-586)
The Wallem Shipping case, was decided in 1981. Vir-Jen
Shipping was decided in 1983. It is now 1989. There has'been no
drying up of employment opportunities for Filipino seamen. Not only
have their wages improved thus leading ITF to be placid and quiet all
these years insofar as Filipinos are concerned but the hiring of
Philippine seamen is at its highest level ever.
Reporting its activities for the year 1988, the Philippine Overseas
Employment Administration (POEA) stated that there will be an
increase in demand for seamen based overseas in 1989 boosting the
number to as high as 105,000. This will represent a 9.5 percent
increase from the 1988 aggregate. (Business World, News
Briefs,January 11, 1989 at page 2) According to the POEA, seabased
workers numbering 95,913 in 1988 exceeded by a wide margin of
28.15 percent the year end total in 1987. The report shows that seabased workers posted bigger monthly increments compared to those
of landbased workers. (The Business Star, Indicators, January 11,
1988 at page 2)
Augmenting this optimistic report of POEA Administrator Tomas
Achacoso is the statement of Secretary of Labor Franklin M. Drilon
that the Philippines has a big jump over other crewing nations because
of the Filipinos' abilities compared with any European or westem
crewing country. Drilon added that cruise shipping is also a growing
market for Filipino seafarers because of their flexibility in handling odd
jobs and their expertise in handling almost all types of ships, including
luxury liners. (Manila Bulletin, More Filipino Seamen Expected
Development, December 27, 1988 at page 29).Parenthetically, the
minimum monthly salary of able bodied seamen set by the ILO and
adhered to by the Philippines is now $276.00 (id.) more than double
the $130.00 sought to be enforced by the public respondents in these
petitions.
The experience from 1981 to the present vindicates the finding in VirJen Shipping that a decision in favor of the seamen would not
necessarily mean severe repercussions, drying up of employment
opportunities for seamen, and other dire consequences predicted by
manning agencies and recruiters in the Philippines.
From the foregoing, we find that the NSB and NLRC committed grave
abuse of discretion in finding the petitioners guilty of using intimidation
and illegal means in breaching their contracts of employment and
punishing them for these alleged offenses. Consequently, the criminal
prosecutions for estafa in G.R. Nos. 57999 and 58143-53 should be
dismissed.

WHEREFORE, the petitions are hereby GRANTED. The decisions of


the National Seamen Board and National Labor Relations Commission
in G. R. Nos. 64781-99 are REVERSED and SET ASIDE and a new
one is entered holding the petitioners not guilty of the offenses for
which they were charged. The petitioners' suspension from the
National Seamen Board's Registry for three (3) years is LIFTED. The
private respondent is ordered to pay the petitioners their earned but
unpaid wages and overtime pay/allowance from November 1, 1978 to
December 14, 1978 according to the rates in the Special Agreement
that the parties entered into in Vancouver, Canada.
The criminal cases for estafa, subject matter of G. R. Nos. 57999 and
58143-53, are ordered DISMISSED.
SO ORDERED.
FIRST DIVISION
G.R. No. 80918 August 16, 1989
JOSEFINA M. PRINCIPE, petitioner
vs.
PHILIPPINE-SINGAPORE TRANSPORT SERVICES, INC. and
CHUAN HUP AGENCIES, PTE. LTD., NATIONAL LABOR
RELATIONS COMMISSION AND PHILIPPINE OVERSEAS
EMPLOYEES EMPLOYMENT ADMINISTRATION, respondents.
R. C. Carrera Law Firm for petitioner.
Eladio B. Samson for private respondent.
GANCAYCO, J.:
Once again this Tribunal is faced with the issue of the validity of the
quitclaim executed by the employee's heir in favor of the employer.
Petitioner is the widow of the late Abelardo Principe who was then the
Chief Engineer of M/V OSAM Falcon, a commercial vessel of
Singaporean registry owned by Chuan Hup Agencies, Pte. Ltd. (Chuan
Hup for brevity), one of the private respondents herein, who is the
principal of Philippine-Singapore Transport Services, Inc. (PSTSI),
also a private respondent herein. The contract of employment of the
deceased with private respondent Chua Hup provides, among others,
that Principe would receive Singapore $2,800.00 a month to
commence on September 7, 1982, medical benefits and insurance
coverage through group hospitalization and surgical insurance and
group and personal accident insurance for a capital sum of
US$75,000.00. It also provides that the laws of Singapore shall apply
in cases of disputes arising out of the said appointment and that said
disputes are to be resolved by the courts of the Republic of
Singapore. 1

Overseas employment contract - 13


On September 15,1982, while Principe was on duty in Malintoc Field,
Palawan, Philippines, he suddenly contracted a serious illness which
eventually resulted to his death. 2
On July 5, 1983, petitioner filed a complaint 3 against PSTSI with the
Workers Assistance and Adjudication Office of the Philippine Overseas
Employment Administration (POEA), seeking the payment of death
compensation benefits and other benefits accruing to her deceased
husband. While the aforesaid case was pending, the parties entered
into a compromise agreement. On December 22, 1983, petitioner
executed a release and quitclaim in favor of PSTSI in consideration of
the sum of Seven Thousand Pesos (P7,000.00) together with hospital,
burial and other incidental expenses previously disbursed by PSTSI in
favor of petitioner's deceased husband. 4Consequently, Atty.
Wellington Lachica, counsel for petitioner, with the latter's conformity,
filed a motion to dismiss the case with prejudice against PSTSI and
without prejudice as against Chuan Hup 5
On the basis of the compromise agreement and the motion to dismiss
dated November 23, 1983, the POEA issued an order dated
December 27, 1983, dismissing petitioner's complaint with prejudice
against PSTSI.
On April 21, 1986, petitioner filed with the POEA another claim for
death benefits against PSTSI, this time including Chuan Hup. The new
case was docketed as POEA Case No. (L) 86-04-328. In the decision
dated January 27, 1987, the POEA dismissed the complaint on the
ground that there exist identity of parties, subject matter and cause of
action between the previous case, POEA Case No. L-635-83 and the
new case, and that the present case is barred by prior judgment based
on a compromise agreement in the previous case. 6
Petitioner appealed to the National Labor Relations Commission
(NLRC).lwph1.t In a resolution dated September 25, 1987, the
NLRC dismissed the appeal for lack of merit. 7
Hence, the present petition.
It is the position of the petitioner that the release and quitclaim that she
signed in favor of private respondent PSTSI is null and void on the
ground that the consideration given in exchange thereof in the amount
of P7,000.00 is extremely low and unconscionable. Petitioner added
that she was merely misled to sign the quitclaim due to the assurance
given by PSTSI that it will help her recover the death compensation
and insurance proceeds due her deceased husband. She argued that
even on the assumption that the quitclaim is valid, the release should
benefit PSTSI alone and should not include Chua Hup as the quitclaim
was executed only in favor of PSTSI. Further she contended that
notwithstanding the quitclaim executed in favor of PSTSI, the latter
may still be held liable since it is an agent of Chuan Hup here in the
Philippines. 8
The Solicitor General supports petitioner's view stating that the
principle of res judicata is inapplicable to the case at bar since
petitioner and PSTSI agreed that the dismissal of the suit against the

latter is without prejudice insofar as the principal Chuan Hup is


concerned; that the quitclaim is null and void as the consideration
given is unconscionably low as it is not even equal to one percent
(1%) of petitioner's claim; and that the quitclaim is inequitable and
incongrous to the declared policy of the State to afford protection to
labor, citing Section 3, Article XIII of the 1987 Constitution. 9
We rule for the petitioner.
The release and quitclaim in question reads as follows: JOSEFINA M.
PRINCIPLE, of legal age, widow, and resident at 1287-E, G. Tuazon
St., Sampaloc, Manila in favor of PHILIPPINE-SINGAPORE TRANSPORT SERVICES, INC., a domestic corporation domiciled and having
its principal place of business at 205 Martinez Bldg., Dasmarinas,
Manila.
WITNESSETH, that:
WHEREAS, on July 5, 1983, Josefina M.
Principe fled a complaint for death benefits
against
Philippine-Singapore
Transport
Services, Inc. as a shipping agency of Chuan
Hup Agencies Pte. Ltd. of the Republic of
Singapore for the death of her husband, Engr.
Abelardo D. Principe, on September 15, 1982 in
Matinloc Field, Offshore Palawan, Philippines
while in the course of as employment as Chief
Engineer of OSAM Falcon' in POEA Case No.
(L) 635-83 of the Philippine Overseas
Employment Administration, entitled Josefina M.
Principe vs. Philippine-Singapore Transport
Services, Inc.;'
WHEREAS, the parties have agreed to settle the
above- entitled case amicably.
NOW, THEREFORE, for and in consideration of
the sum of SEVEN THOUSAND PESOS
(P7,000.00), Philippine currency and of the
hospital, burial and other incidental expenses
previously disbursed by Philippine-Singapore
Transport Services, Inc., receipt of which in full
is hereby acknowledged to her full and complete
satisfaction, JOSEFINA M. PRINCIPLE have
(sic) released and discharged, as she hereby
releases and discharges, Philippine-Singapore
Transport Services, Inc., its directors, officers,
employees, principals and agents from any and
all claims, actions obligations and liabilities
which she have or might have against
Philippine-Singapore Transport Services, Inc. in
connection with the death of her husband
Abelardo D. Principe on September 15, 1982 in
Matintoc Field, Offshore Palawan under the

Overseas employment contract - 14


circumstances narrated in the aforementioned
case.
That she hereby represents and warrants to
Philippine-Singapore Transport Services, Inc.
that she is the surviving spouse legally entitled
to claim for damages/support which may arise
from the death of said Abelardo D. Principe, and
further, that she hereby manifests that any and
all rights or claims which she, as a surviving
forced heir of the late Abelardo D. Principe might
have against Philippine-Singapore Transport
Services, Inc., its directors, employees,
principals and agents arising out of or by reason
of the death of said Abelardo D. Principe are
hereby deemed waived and discharged and she
have (sic) Philippine-Singapore Transport
Services, Inc., its directors, officers, employees,
principals and agents and whoever may be held
liable, completely free and harmless from any
claim and/or liabilities that may arise from the
death of said Abelardo D. Principe (sic).
That in the event that any other person/persons,
as surviving spouse of the deceased Abelardo
D. Principe should claim against PhilippineSingapore Transport Services, Inc. for such
damages/support arising from the death of
Abelardo D. Principe, and the claim is held valid,
then Josefina M. Principe hereby undertakes
and agrees to reimburse to Philippine-Singapore
Transport Services, Inc. the amounts hereunder
received, plus legal interest therein.
That she further states that the foregoing
consideration is voluntarily accepted by her as a
full and final compromise, adjustment and
settlement of any and all claims that she may
have against Philippine-Singapore Transport
Services, Inc., its directors, officers, employees,
principals and agents; and she hereby
irrevocably affirm (sic) that Philippine-Singapore
Transport Services, Inc. has made this
settlement solely to buy peace, avoid litigation
and on human consideration, and she
acknowledges that the payment of said
consideration is not and shall never be
construed as an admission of liability or
obligation by Philippine-Singapore Transport
Services, Inc., its officers, directors, employees,
principals and agents. 10
It is true that a compromise agreement once approved by the court
has the effect of res judicata between the parties and should not be
disturbed except for vices of consent and forgery. However, settled is
the rule that the NLRC may disregard technical rules of procedure in

order to give life to the constitutional mandate affording protection to


labor and to conform to the need of protecting the working class
whose inferiority against the employer has always been earmarked by
disadvantage. 11
The Court finds that the compromise agreement entered into by the
petitioner in favor of PSTSI was not intended to totally foreclose her
right over the death benefits of her husband. First, the motion to
dismiss, filed by petitioner through Atty. Lachica before the POEA,
which cited the compromise agreement entered into by the parties,
clearly and unequivocally reflects the undertaking that the release is
without prejudice as regards private respondent Chuan Hup. This fact
was acknowledged in the decision of POEA Administrator Tomas D.
Achacoso in POEA Case No. (L) 86-04-328. It is surprising why both
the POEA and the NLRC failed to consider this aspect in the resolution
of the second complaint filed by the petitioner against PSTSI and
Chuan Hup.
The second complaint was filed by petitioner to enforce the joint and
several liability of PSTSI and Chuan Hup per joint affidavit of
responsibility executed by said parties in entering into a principal agent
relationship after PSTSI failed to live up to its commitment to assist
petitioner in the recovery of death compensation. 12 This observation is
supported by the provisions of the release signed by the petitioner
wherein the parties referred to therein were only the petitioner and
PSTSI. The release is from any claim against PSTSI. Chuan Hup is
not a party thereto. He cannot be considered covered by the release.
Moreover, the Court sees no reason why petitioner, with the
assistance of a counsel would ever agree to foreclose her right against
Chuan Hup over the death benefits of her husband in exchange for a
very measly sum of Seven Thousand Pesos (P7,000.00). They must
have been aware that should she pursue her case, she was assured
of getting at least One Hundred Thousand Eight Hundred Singapore
dollars (US$100,800.00). This Court has laid down the rule in similar
cases that applying the Singapore Maritime Laws in case of a
seaman's death, the heirs of the seaman should receive the
equivalent of 36 months wages of the deceased seaman. 13
The fact that petitioner received the sum of P7,000.00 only should not
be taken to mean as a waiver of her right. The circumstances she was
confronted with during that time left her with no other alternative but to
accept the same as she was in dire need of money due to the sudden
death of her husband. PSTSI contends that it was precisely because
of her need for cash that petitioner thereby totally waived her right over
the death benefits of her husband. We do not think so. What is
plausible is the protestation of petitioner that PSTSI took advantage of
her financial distress and led her to signing the release and quitclaim
without explaining the consequences to her. While it may be true that
her counsel assisted her in the process, said counsel must have been
persuaded by the assurance of PSTSI that it shall help obtain for her
the corresponding benefits from Chuan Hup.
Even assuming for the sake of argument that the quitclaim had
foreclosed petitioner's right over the death benefits of her husband, the

Overseas employment contract - 15


fact that the consideration given in exchange thereof was very much
less than the amount petitioner is claiming renders the quitclaim null
and void for being contrary to public policy. 14 The State must be firm in
affording protection to labor. The quitclaim wherein the consideration is
scandalously low and inequitable cannot be an obstacle to petitioner's
pursuing her legitimate claim. 15 Equity dictates that the compromise
agreement should be voided in this instance.
Lastly, it must be noted that the first complaint of petitioner was merely
an action against PSTSI whereas in the second complaint Chuan Hup
was already included. The POEA ruled that the second complaint was
merely an afterthought, and that it was a product of a pre-conceived
mind considering the interval of time from the issuance of the order of
dismissal in the previous case and the institution of the second
complaint. We do not think so. On the contrary, the Court holds that
the delay was due to PSTSI's failure to make good its promise to
assist the petitioner in recovering the death benefits of her husband.
We see no other reason thereby. Hence, even if the second action
was filed beyond the three (3) year reglementary period as
provided by law for such claims, We cannot buy PSTSI's
argument that the claim is already barred. The blame for the
delay, if any, can only be attributed to PSTSI.
On the other hand, PSTSI argues that it cannot be held responsible on
the ground that the aforesaid affidavit of undertaking with Chua Hup is
applicable only to those members of the crew recruited by PSTSI in
the Philippines for and in behalf of its principal Chuan Hup and that
since Principe was directly hired by Chuan Hup, PSTSI cannot be held
responsible as it has no privity of contract with those personnel
recruited in Singapore.
The argument is untenable. This is the first time PSTSI raised this
defense when it had all the chance to do so below. Moreover, if PSTSI
honestly believed it had no privity of contract with Principe who was
directly recruited by Chuan Hup, then there is no reason why it entered
into a compromise agreement with herein petitioner. From the very
start, it should have asked for the dismissal of the case against it on
the ground of lack of cause of action, but it did not do so. What is
obvious is that Principe was actually recruited by PSTSI and that he
signed the employment contract with the principal Chuan Hup. Thus,
private respondents stand jointly and severally liable for the claim of
petitioner.
Anent the argument that the Philippine courts are without
jurisdiction over the subject matter as jurisdiction was, by
agreement of the parties, vested in the courts of the Republic of
Singapore, it is well-settled that an agreement to deprive a court
of jurisdiction conferred on it by law is void and of no legal
effect. 16 In this jurisdiction labor cases, are within the
competence of the National Labor Relations Commission.
With respect to petitioner's monetary claim, since the parties
agreed that the laws of Singapore shall govern their relationship
and that any dispute arising from the contract shall be resolved
by the law of that country, then the petitioner is entitled to death

benefits equivalent to 36 months salary of her husband. 17 As the


wage of deceased Abelardo Principe was S$2,800.00 a month,
then petitioner is entitled to a total of S$100,800.00.
WHEREFORE, premises considered, the petition is granted. The
resolution of the NLRC dated September 25,1987 is hereby set aside
and another decision is hereby rendered ordering private respondents
PSTSI and Chuan Hup Agencies, Pte. Ltd. to jointly and severally pay
petitioner the sum of S$100,800. 00 in its equivalent in Philippine
pesos. This decision is immediately executory.
SO ORDERED.
G.R. No. L-104776 December 5, 1994
BIENVENIDO M. CADALIN, ROLANDO M. AMUL, DONATO B.
EVANGELISTA, and the rest of 1,767 NAMED-COMPLAINANTS,
thru and by their Attorney-in-fact, Atty. GERARDO A. DEL
MUNDO, petitioners,
vs.
PHILIPPINE OVERSEAS EMPLOYMENT ADMINISTRATION'S
ADMINISTRATOR, NATIONAL LABOR RELATIONS COMMISSION,
BROWN & ROOT INTERNATIONAL, INC. AND/OR ASIA
INTERNATIONAL BUILDERS CORPORATION, respondents.
QUIASON, J.:
The petition in G.R. No. 104776, entitled "Bienvenido M. Cadalin, et.
al. v. Philippine Overseas Employment Administration's Administrator,
et. al.," was filed under Rule 65 of the Revised Rules of Court:
(1) to modify the Resolution dated September 2,
1991 of the National Labor Relations
Commission (NLRC) in POEA Cases Nos.
L-84-06-555, L-85-10-777, L-85-10-779 and L86-05-460; (2) to render a new decision: (i)
declaring private respondents as in default; (ii)
declaring the said labor cases as a class suit;
(iii) ordering Asia International Builders
Corporation (AIBC) and Brown and Root
International Inc. (BRII) to pay the claims of the
1,767 claimants in said labor cases; (iv)
declaring Atty. Florante M. de Castro guilty of
forum-shopping; and (v) dismissing POEA Case
No. L-86-05-460; and
(3) to reverse the Resolution dated March 24,
1992 of NLRC, denying the motion for
reconsideration of its Resolution dated
September 2, 1991 (Rollo, pp. 8-288).
The petition in G.R. Nos. 104911-14, entitled "Bienvenido M. Cadalin,
et. al., v. Hon. National Labor Relations Commission, et. al.," was filed
under Rule 65 of the Revised Rules of Court:
(1) to reverse the Resolution dated September
2, 1991 of NLRC in POEA Cases Nos. L-84-06555,
L-85-10-777,
L-85-10-799
and

Overseas employment contract - 16


L-86-05-460 insofar as it: (i) applied the threeyear prescriptive period under the Labor Code of
the Philippines instead of the ten-year
prescriptive period under the Civil Code of the
Philippines;
and
(ii)
denied
the
"three-hour daily average" formula in the
computation of petitioners' overtime pay; and
(2) to reverse the Resolution dated March 24,
1992 of NLRC, denying the motion for
reconsideration of its Resolution dated
September 2, 1991 (Rollo, pp. 8-25; 26-220).
The petition in G.R. Nos. 105029-32, entitled "Asia International
Builders Corporation, et. al., v. National Labor Relations Commission,
et. al." was filed under Rule 65 of the Revised Rules of Court:
(1) to reverse the Resolution dated September
2, 1991 of NLRC in POEA Cases Nos. L-84-06555,
L-85-10-777,
L-85-10-779
and
L-86-05-460, insofar as it granted the claims of
149 claimants; and
(2) to reverse the Resolution dated March 21,
1992 of NLRC insofar as it denied the motions
for reconsideration of AIBC and BRII (Rollo, pp.
2-59; 61-230).
The Resolution dated September 2, 1991 of NLRC, which modified the
decision of POEA in four labor cases: (1) awarded monetary benefits
only to 149 claimants and (2) directed Labor Arbiter Fatima J. Franco
to conduct hearings and to receive evidence on the claims dismissed
by the POEA for lack of substantial evidence or proof of employment.
Consolidation of Cases
G.R. Nos. 104776 and 105029-32 were originally raffled to the Third
Division while G.R. Nos. 104911-14 were raffled to the Second
Division. In the Resolution dated July 26, 1993, the Second Division
referred G.R. Nos. 104911-14 to the Third Division (G.R. Nos. 10491114, Rollo, p. 895).
In the Resolution dated September 29, 1993, the Third Division
granted the motion filed in G.R. Nos. 104911-14 for the consolidation
of said cases with G.R. Nos. 104776 and 105029-32, which were
assigned to the First Division (G.R. Nos. 104911-14, Rollo, pp. 9861,107; G.R. Nos. 105029-30, Rollo, pp. 369-377, 426-432). In the
Resolution dated October 27, 1993, the First Division granted the
motion to consolidate G.R. Nos. 104911-14 with G.R. No. 104776
(G.R. Nos. 104911-14, Rollo, p. 1109; G.R. Nos. 105029-32, Rollo, p.
1562).
I
On June 6, 1984, Bienvenido M.. Cadalin, Rolando M. Amul and
Donato B. Evangelista, in their own behalf and on behalf of 728 other
overseas contract workers (OCWs) instituted a class suit by filing an
"Amended Complaint" with the Philippine Overseas Employment
Administration (POEA) for money claims arising from their recruitment
by AIBC and employment by BRII (POEA Case No. L-84-06-555). The
claimants were represented by Atty. Gerardo del Mundo.

BRII is a foreign corporation with headquarters in Houston, Texas, and


is engaged in construction; while AIBC is a domestic corporation
licensed as a service contractor to recruit, mobilize and deploy Filipino
workers for overseas employment on behalf of its foreign principals.
The amended complaint principally sought the payment of the
unexpired portion of the employment contracts, which was terminated
prematurely, and secondarily, the payment of the interest of the
earnings of the Travel and Reserved Fund, interest on all the unpaid
benefits; area wage and salary differential pay; fringe benefits; refund
of SSS and premium not remitted to the SSS; refund of withholding tax
not remitted to the BIR; penalties for committing prohibited practices;
as well as the suspension of the license of AIBC and the accreditation
of BRII (G.R. No. 104776, Rollo, pp. 13-14).
At the hearing on June 25, 1984, AIBC was furnished a copy of the
complaint and was given, together with BRII, up to July 5, 1984 to file
its answer.
On July 3, 1984, POEA Administrator, upon motion of AIBC and BRII,
ordered the claimants to file a bill of particulars within ten days from
receipt of the order and the movants to file their answers within ten
days from receipt of the bill of particulars. The POEA Administrator
also scheduled a pre-trial conference on July 25, 1984.
On July 13, 1984, the claimants submitted their "Compliance and
Manifestation." On July 23, 1984, AIBC filed a "Motion to Strike Out of
the Records", the "Complaint" and the "Compliance and
Manifestation." On July 25, 1984, the claimants filed their "Rejoinder
and Comments," averring, among other matters, the failure of AIBC
and BRII to file their answers and to attend the pre-trial conference on
July 25, 1984. The claimants alleged that AIBC and BRII had waived
their right to present evidence and had defaulted by failing to file their
answers and to attend the pre-trial conference.
On October 2, 1984, the POEA Administrator denied the "Motion to
Strike Out of the Records" filed by AIBC but required the claimants to
correct the deficiencies in the complaint pointed out in the order.
On October 10, 1984, claimants asked for time within which to comply
with the Order of October 2, 1984 and filed an "Urgent Manifestation,"
praying that the POEA Administrator direct the parties to submit
simultaneously their position papers, after which the case should be
deemed submitted for decision. On the same day, Atty. Florante de
Castro filed another complaint for the same money claims and benefits
in behalf of several claimants, some of whom were also claimants in
POEA Case No. L-84-06-555 (POEA Case No. 85-10-779).
On October 19, 1984, claimants filed their "Compliance" with the Order
dated October 2, 1984 and an "Urgent Manifestation," praying that the
POEA direct the parties to submit simultaneously their position papers
after which the case would be deemed submitted for decision. On the
same day, AIBC asked for time to file its comment on the "Compliance"
and "Urgent Manifestation" of claimants. On November 6, 1984, it filed
a second motion for extension of time to file the comment.
On November 8, 1984, the POEA Administrator informed AIBC that its
motion for extension of time was granted.

Overseas employment contract - 17


On November 14, 1984, claimants filed an opposition to the motions
for extension of time and asked that AIBC and BRII be declared in
default for failure to file their answers.
On November 20, 1984, AIBC and BRII filed a "Comment" praying,
among other reliefs, that claimants should be ordered to amend their
complaint.
On December 27, 1984, the POEA Administrator issued an order
directing AIBC and BRII to file their answers within ten days from
receipt of the order.
On February 27, 1985, AIBC and BRII appealed to NLRC seeking the
reversal of the said order of the POEA Administrator. Claimants
opposed the appeal, claiming that it was dilatory and praying that AIBC
and BRII be declared in default.
On April 2, 1985, the original claimants filed an "Amended Complaint
and/or Position Paper" dated March 24, 1985, adding new demands:
namely, the payment of overtime pay, extra night work pay, annual
leave differential pay, leave indemnity pay, retirement and savings
benefits and their share of forfeitures (G.R. No. 104776, Rollo, pp. 1416). On April 15, 1985, the POEA Administrator directed AIBC to file its
answer to the amended complaint (G.R. No. 104776, Rollo, p. 20).
On May 28, 1985, claimants filed an "Urgent Motion for Summary
Judgment." On the same day, the POEA issued an order directing
AIBC and BRII to file their answers to the "Amended Complaint,"
otherwise, they would be deemed to have waived their right to present
evidence and the case would be resolved on the basis of
complainant's evidence.
On June 5, 1985, AIBC countered with a "Motion to Dismiss as
Improper Class Suit and Motion for Bill of Particulars Re: Amended
Complaint dated March 24, 1985." Claimants opposed the motions.
On September 4, 1985, the POEA Administrator reiterated his directive
to AIBC and BRII to file their answers in POEA Case No. L-84-06-555.
On September 18, 1985, AIBC filed its second appeal to the NLRC,
together with a petition for the issuance of a writ of injunction. On
September 19, 1985, NLRC enjoined the POEA Administrator from
hearing the labor cases and suspended the period for the filing of the
answers of AIBC and BRII.
On September 19, 1985, claimants asked the POEA Administrator to
include additional claimants in the case and to investigate alleged
wrongdoings of BRII, AIBC and their respective lawyers.
On October 10, 1985, Romeo Patag and two co-claimants filed a
complaint (POEA Case No. L-85-10-777) against AIBC and BRII with
the POEA, demanding monetary claims similar to those subject of
POEA Case No. L-84-06-555. In the same month, Solomon Reyes
also filed his own complaint (POEA Case No. L-85-10-779) against
AIBC and BRII.
On October 17, 1985, the law firm of Florante M. de Castro &
Associates asked for the substitution of the original counsel of record
and the cancellation of the special powers of attorney given the
original counsel.

On December 12, 1985, Atty. Del Mundo filed in NLRC a notice of the
claim to enforce attorney's lien.
On May 29, 1986, Atty. De Castro filed a complaint for money claims
(POEA Case No. 86-05-460) in behalf of 11 claimants including
Bienvenido Cadalin, a claimant in POEA Case No. 84-06-555.
On December 12, 1986, the NLRC dismissed the two appeals filed on
February 27, 1985 and September 18, 1985 by AIBC and BRII.
In narrating the proceedings of the labor cases before the POEA
Administrator, it is not amiss to mention that two cases were filed in
the Supreme Court by the claimants, namely G.R. No. 72132 on
September 26, 1985 and Administrative Case No. 2858 on March 18,
1986. On May 13, 1987, the Supreme Court issued a resolution in
Administrative Case No. 2858 directing the POEA Administrator to
resolve the issues raised in the motions and oppositions filed in POEA
Cases Nos. L-84-06-555 and L-86-05-460 and to decide the labor
cases with deliberate dispatch.
AIBC also filed a petition in the Supreme Court (G.R. No. 78489),
questioning the Order dated September 4, 1985 of the POEA
Administrator. Said order required BRII and AIBC to answer the
amended complaint in POEA Case No. L-84-06-555. In a resolution
dated November 9, 1987, we dismissed the petition by informing AIBC
that all its technical objections may properly be resolved in the
hearings before the POEA.
Complaints were also filed before the Ombudsman. The first was filed
on September 22, 1988 by claimant Hermie Arguelles and 18 coclaimants against the POEA Administrator and several NLRC
Commissioners. The Ombudsman merely referred the complaint to the
Secretary of Labor and Employment with a request for the early
disposition of POEA Case No. L-84-06-555. The second was filed on
April 28, 1989 by claimants Emigdio P. Bautista and Rolando R.
Lobeta charging AIBC and BRII for violation of labor and social
legislations. The third was filed by Jose R. Santos, Maximino N.
Talibsao and Amado B. Bruce denouncing AIBC and BRII of violations
of labor laws.
On January 13, 1987, AIBC filed a motion for reconsideration of the
NLRC Resolution dated December 12, 1986.
On January 14, 1987, AIBC reiterated before the POEA Administrator
its motion for suspension of the period for filing an answer or motion
for extension of time to file the same until the resolution of its motion
for reconsideration of the order of the NLRC dismissing the two
appeals. On April 28, 1987, NLRC en banc denied the motion for
reconsideration.
At the hearing on June 19, 1987, AIBC submitted its answer to the
complaint. At the same hearing, the parties were given a period of 15
days from said date within which to submit their respective position
papers. On June 24, 1987 claimants filed their "Urgent Motion to Strike
Out Answer," alleging that the answer was filed out of time. On June
29, 1987, claimants filed their "Supplement to Urgent Manifestational
Motion" to comply with the POEA Order of June 19, 1987. On
February 24, 1988, AIBC and BRII submitted their position paper. On
March 4, 1988, claimants filed their "Ex-Parte Motion to Expunge from
the Records" the position paper of AIBC and BRII, claiming that it was
filed out of time.

Overseas employment contract - 18


On September 1, 1988, the claimants represented by Atty. De Castro
filed their memorandum in POEA Case No. L-86-05-460. On
September 6, 1988, AIBC and BRII submitted their Supplemental
Memorandum. On September 12, 1988, BRII filed its "Reply to
Complainant's Memorandum." On October 26, 1988, claimants
submitted their "Ex-Parte Manifestational Motion and CounterSupplemental Motion," together with 446 individual contracts of
employments and service records. On October 27, 1988, AIBC and
BRII filed a "Consolidated Reply."
On January 30, 1989, the POEA Administrator rendered his decision in
POEA Case No. L-84-06-555 and the other consolidated cases, which
awarded the amount of $824,652.44 in favor of only 324 complainants.
On February 10, 1989, claimants submitted their "Appeal
Memorandum For Partial Appeal" from the decision of the POEA. On
the same day, AIBC also filed its motion for reconsideration and/or
appeal in addition to the "Notice of Appeal" filed earlier on February 6,
1989 by another counsel for AIBC.
On February 17, 1989, claimants filed their "Answer to Appeal,"
praying for the dismissal of the appeal of AIBC and BRII.
On March 15, 1989, claimants filed their "Supplement to
Complainants' Appeal Memorandum," together with their "newly
discovered evidence" consisting of payroll records.
On April 5, 1989, AIBC and BRII submitted to NLRC their
"Manifestation," stating among other matters that there were only 728
named claimants. On April 20, 1989, the claimants filed their "CounterManifestation," alleging that there were 1,767 of them.
On July 27, 1989, claimants filed their "Urgent Motion for Execution" of
the Decision dated January 30, 1989 on the grounds that BRII had
failed to appeal on time and AIBC had not posted the supersedeas
bond in the amount of $824,652.44.
On December 23, 1989, claimants filed another motion to resolve the
labor cases.
On August 21, 1990, claimants filed their "Manifestational Motion,"
praying that all the 1,767 claimants be awarded their monetary claims
for failure of private respondents to file their answers within the
reglamentary period required by law.
On September 2, 1991, NLRC promulgated its Resolution, disposing
as follows:
WHEREFORE, premises considered, the
Decision of the POEA in these consolidated
cases is modified to the extent and in
accordance with the following dispositions:
1. The claims of the 94
complainants
identified
and listed in Annex "A"
hereof are dismissed for
having prescribed;

2. Respondents AIBC and


Brown & Root are hereby
ordered,
jointly
and
severally, to pay the 149
complainants, identified
and listed in Annex "B"
hereof,
the
peso
equivalent, at the time of
payment, of the total
amount in US dollars
indicated opposite their
respective names;
3. The awards given by
the POEA to the 19
complainants classified
and listed in Annex "C"
hereof, who appear to
have worked elsewhere
than in Bahrain are hereby
set aside.
4. All claims other than
those indicated in Annex
"B", including those for
overtime
work
and
favorably granted by the
POEA,
are
hereby
dismissed for lack of
substantial evidence in
support thereof or are
beyond the competence of
this Commission to pass
upon.
In addition, this Commission, in the exercise of
its powers and authority under Article 218(c) of
the Labor Code, as amended by R.A. 6715,
hereby directs Labor Arbiter Fatima J. Franco of
this Commission to summon parties, conduct
hearings and receive evidence, as expeditiously
as possible, and thereafter submit a written
report to this Commission (First Division) of the
proceedings taken, regarding the claims of the
following:
(a) complainants identified
and listed in Annex "D"
attached and made an
integral part of this
Resolution, whose claims
were dismissed by the
POEA for lack of proof of
employment in Bahrain
(these
complainants
numbering 683, are listed
in pages 13 to 23 of the
decision of POEA, subject
of the appeals) and,
(b) complainants identified
and listed in Annex "E"
attached and made an

Overseas employment contract - 19


integral part of this
Resolution, whose awards
decreed by the POEA, to
Our mind, are not
supported by substantial
evidence" (G.R. No.
104776; Rollo, pp. 113115; G.R. Nos. 104911-14,
pp. 85-87; G.R. Nos.
105029-31, pp. 120-122).
On November 27, 1991, claimant Amado S. Tolentino and 12
co-claimants, who were former clients of Atty. Del Mundo, filed a
petition for certiorari with the Supreme Court (G.R. Nos. 120741-44).
The petition was dismissed in a resolution dated January 27, 1992.
Three motions for reconsideration of the September 2, 1991
Resolution of the NLRC were filed. The first, by the claimants
represented by Atty. Del Mundo; the second, by the claimants
represented by Atty. De Castro; and the third, by AIBC and BRII.
In its Resolution dated March 24, 1992, NLRC denied all the motions
for reconsideration.
Hence, these petitions filed by the claimants represented by Atty. Del
Mundo (G.R. No. 104776), the claimants represented by Atty. De
Castro (G.R. Nos. 104911-14) and by AIBC and BRII (G.R. Nos.
105029-32).
II
Compromise Agreements
Before this Court, the claimants represented by Atty. De Castro and
AIBC and BRII have submitted, from time to time, compromise
agreements for our approval and jointly moved for the dismissal of
their respective petitions insofar as the claimants-parties to the
compromise agreements were concerned (See Annex A for list of
claimants who signed quitclaims).
Thus the following manifestations that the parties had arrived at a
compromise agreement and the corresponding motions for the
approval of the agreements were filed by the parties and approved by
the Court:
1) Joint Manifestation and Motion involving
claimant Emigdio Abarquez and 47 co-claimants
dated September 2, 1992 (G.R. Nos. 10491114, Rollo, pp. 263-406; G.R. Nos. 10502932, Rollo,
pp.
470-615);
2) Joint Manifestation and Motion involving
petitioner Bienvenido Cadalin and 82 copetitioners dated September 3, 1992 (G.R. No.
104776, Rollo, pp. 364-507);
3) Joint Manifestation and Motion involving
claimant
Jose
M. Aban and 36 co-claimants dated September
17, 1992 (G.R. Nos. 105029-32, Rollo, pp. 613-

722; G.R. No. 104776, Rollo, pp. 518-626; G.R.


Nos. 104911-14, Rollo, pp. 407-516);
4) Joint Manifestation and Motion involving
claimant Antonio T. Anglo and 17 co-claimants
dated October 14, 1992 (G.R. Nos.
105029-32, Rollo, pp. 778-843; G.R. No.
104776, Rollo, pp. 650-713; G.R. Nos. 10491114, Rollo, pp. 530-590);
5) Joint Manifestation and Motion involving
claimant Dionisio Bobongo and 6 co-claimants
dated January 15, 1993 (G.R. No.
104776, Rollo, pp. 813-836; G.R. Nos. 10491114, Rollo, pp. 629-652);
6) Joint Manifestation and Motion involving
claimant Valerio A. Evangelista and 4 coclaimants dated March 10, 1993 (G.R. Nos.
104911-14, Rollo, pp. 731-746; G.R. No.
104776, Rollo, pp. 1815-1829);
7) Joint Manifestation and Motion involving
claimants Palconeri Banaag and 5 co-claimants
dated March 17, 1993 (G.R. No. 104776, Rollo,
pp. 1657-1703; G.R. Nos. 104911-14, Rollo, pp.
655-675);
8) Joint Manifestation and Motion involving
claimant Benjamin Ambrosio and 15 other coclaimants dated May 4, 1993 (G.R. Nos.
105029-32, Rollo, pp. 906-956; G.R. Nos.
104911-14, Rollo, pp. 679-729; G.R. No.
104776, Rollo, pp. 1773-1814);
9) Joint Manifestation and Motion involving
Valerio Evangelista and 3 co-claimants dated
May 10, 1993 (G.R. No. 104776, Rollo, pp.
1815-1829);
10) Joint Manifestation and Motion involving
petitioner Quiterio R. Agudo and 36 co-claimants
dated June 14, 1993 (G.R. Nos. 10502932, Rollo, pp. 974-1190; G.R. Nos. 10491114, Rollo, pp. 748-864; G.R. No. 104776, Rollo,
pp. 1066-1183);
11) Joint Manifestation and Motion involving
claimant Arnaldo J. Alonzo and 19 co-claimants
dated July 22, 1993 (G.R. No. 104776, Rollo,
pp. 1173-1235; G.R. Nos. 105029-32, Rollo, pp.
1193-1256; G.R. Nos. 104911-14, Rollo, pp.
896-959);
12) Joint Manifestation and Motion involving
claimant Ricardo C. Dayrit and 2 co-claimants
dated September 7, 1993 (G.R. Nos.
105029-32, Rollo, pp. 1266-1278; G.R. No.
104776, Rollo, pp. 1243-1254; G.R. Nos.
104911-14,Rollo, pp. 972-984);

Overseas employment contract - 20


13) Joint Manifestation and Motion involving
claimant Dante C. Aceres and 37 co-claimants
dated September 8, 1993 (G.R. No.
104776, Rollo, pp. 1257-1375; G.R. Nos.
104911-14, Rollo, pp. 987-1105; G.R. Nos.
105029-32, Rollo, pp. 1280-1397);
14) Joint Manifestation and Motion involving
Vivencio V. Abella and 27 co-claimants dated
January 10, 1994 (G.R. Nos. 105029-32, Rollo,
Vol. II);
15) Joint Manifestation and Motion involving
Domingo B. Solano and six co-claimants dated
August 25, 1994 (G.R. Nos. 105029-32; G.R.
No. 104776; G.R. Nos. 104911-14).

xxx xxx xxx


3. HOURS OF WORK AND COMPENSATION
a) The Employee is employed at the hourly rate
and overtime rate as set out in Part B of this
Document.
b) The hours of work shall be those set forth by
the Employer, and Employer may, at his sole
option, change or adjust such hours as maybe
deemed necessary from time to time.

III
The facts as found by the NLRC are as follows:
We have taken painstaking efforts to sift over
the more than fifty volumes now comprising the
records of these cases. From the records, it
appears that the complainants-appellants allege
that they were recruited by respondent-appellant
AIBC for its accredited foreign principal, Brown
& Root, on various dates from 1975 to 1983.
They were all deployed at various projects
undertaken by Brown & Root in several
countries in the Middle East, such as Saudi
Arabia, Libya, United Arab Emirates and
Bahrain, as well as in Southeast Asia, in
Indonesia and Malaysia.
Having been officially processed as overseas
contract workers by the Philippine Government,
all the individual complainants signed standard
overseas employment contracts (Records, Vols.
25-32. Hereafter, reference to the records would
be sparingly made, considering their chaotic
arrangement) with AIBC before their departure
from the Philippines. These overseas
employment contracts invariably contained the
following relevant terms and conditions.
PART B
(1) Employment Position

(Code) :

(7)
Overtime
Rate
Per
Hour
:

(8)
Projected
Period
of
Service
(Subject to C(1) of this [sic]) :

Months
and/or
Job Completion

Classification

(2)
Company
Employment
Status
:

(3) Date of Employment to Commence on :

(4) Basic Working Hours Per Week :

(5) Basic Working Hours Per Month :

(6) Basic Hourly Rate :

4. TERMINATION
a) Notwithstanding any other terms and
conditions of this agreement, the Employer may,
at his sole discretion, terminate employee's
service with cause, under this agreement at any
time. If the Employer terminates the services of
the Employee under this Agreement because of
the completion or termination, or suspension of
the work on which the Employee's services were
being utilized, or because of a reduction in force
due to a decrease in scope of such work, or by
change in the type of construction of such work.
The Employer will be responsible for his return
transportation to his country of origin. Normally
on the most expeditious air route, economy
class accommodation.
xxx xxx xxx
10. VACATION/SICK LEAVE BENEFITS
a) After one (1) year of continuous service
and/or satisfactory completion of contract,
employee shall be entitled to 12-days vacation
leave with pay. This shall be computed at the
basic wage rate. Fractions of a year's service
will be computed on a pro-rata basis.
b) Sick leave of 15-days shall be granted to the
employee for every year of service for non-work
connected injuries or illness. If the employee
failed to avail of such leave benefits, the same
shall be forfeited at the end of the year in which
said sick leave is granted.
11. BONUS

Overseas employment contract - 21


A bonus of 20% (for offshore work) of gross
income will be accrued and payable only upon
satisfactory completion of this contract.
12. OFFDAY PAY
The seventh day of the week shall be observed
as a day of rest with 8 hours regular pay. If work
is performed on this day, all hours work shall be
paid at the premium rate. However, this offday
pay provision is applicable only when the laws of
the Host Country require payments for rest day.
In the State of Bahrain, where some of the
individual complainants were deployed, His
Majesty Isa Bin Salman Al Kaifa, Amir of
Bahrain, issued his Amiri Decree No. 23 on June
16, 1976, otherwise known as the Labour Law
for the Private Sector (Records, Vol. 18). This
decree took effect on August 16, 1976. Some of
the provisions of Amiri Decree No. 23 that are
relevant to the claims of the complainantsappellants are as follows (italics supplied only
for emphasis):
Art. 79: . . . A worker shall
receive payment for each
extra hour equivalent to
his wage entitlement
increased by a minimum
of
twenty-five per
centum thereof for hours
worked during the day;
and by a minimum of fifty
per centum thereof for
hours worked during the
night which
shall be
deemed to being from
seven o'clock in the
evening
until
seven
o'clock in the morning. . . .
Art. 80: Friday shall be
deemed to be a weekly
day of rest on full pay.
. . . an employer may
require a worker, with his
consent, to work on his
weekly day of rest if
circumstances so require
and in respect of which an
additional sum equivalent
to 150% of his normal
wage shall be paid to him.
...
Art. 81: . . . When
conditions of work require
the worker to work on any
official holiday, he shall be
paid an additional sum

equivalent to 150% of his


normal wage.
Art. 84: Every worker who
has completed one year's
continuous service with
his employer shall be
entitled to leave on full
pay for a period of not
less than 21 days for each
year increased to a period
not less than 28 days
after five continuous years
of service.
A worker shall be entitled
to such leave upon
a quantum
meruit in
respect of the proportion
of his service in that year.
Art. 107: A contract of
employment made for a
period
of
indefinite
duration
may
be
terminated by either party
thereto after giving the
other party thirty days'
prior notice before such
termination, in writing, in
respect of monthly paid
workers and fifteen days'
notice in respect of other
workers. The
party
terminating a contract
without giving the required
notice shall pay to the
other party compensation
equivalent to the amount
of wages payable to the
worker for the period of
such notice or the
unexpired portion thereof.
Art. 111: . . . the employer
concerned shall pay to
such
worker,
upon
termination
of
employment,
a leaving
indemnity for the period of
his
employment
calculated on the basis of
fifteen days' wages for
each year of the first three
years of service and of
one month's wages for
each year of service
thereafter. Such worker
shall be entitled to
payment
of
leaving
indemnity
upon
a quantum
meruit in
proportion to the period of

Overseas employment contract - 22


his service
within a year.

completed

jurisdiction over Brown &


Root International, Inc.;

All
the
individual
complainants-appellants
have
already
been
repatriated
to
the
Philippines at the time of
the filing of these cases
(R.R. No. 104776, Rollo,
pp. 59-65).

(d) Whether or not the


judgment awards are
supported by substantial
evidence;

IV
The issues raised before and resolved by the NLRC were:
First: Whether or not complainants are
entitled to the benefits provided by Amiri Decree
No. 23 of Bahrain;
(a) Whether or not the
complainants who have
worked in Bahrain are
entitled to the abovementioned benefits.
(b) Whether or not Art. 44
of the same Decree
(allegedly prescribing a
more favorable treatment
of alien employees) bars
complainants
from
enjoying its benefits.
Second: Assuming that Amiri Decree No. 23
of Bahrain is applicable in these cases, whether
or not complainants' claim for the benefits
provided therein have prescribed.
Third: Whether or not the instant cases
qualify as a class suit.
Fourth: Whether or not the proceedings
conducted by the POEA, as well as the decision
that is the subject of these appeals, conformed
with the requirements of due process;
(a) Whether or not the
respondent-appellant was
denied its right to due
process;
(b) Whether or not the
admission of evidence by
the POEA after these
cases were submitted for
decision was valid;
(c) Whether or not the
POEA
acquired

(e) Whether or not the


awards based on the
averages and formula
presented
by
the
complainants-appellants
are
supported
by
substantial evidence;
(f) Whether or not the
POEA awarded sums
beyond
what
the
complainants-appellants
prayed for; and, if so,
whether or not these
awards are valid.
Fifth: Whether or not the POEA erred in
holding respondents AIBC and Brown & Root
jointly and severally liable for the judgment
awards despite the alleged finding that the
former was the employer of the complainants;
(a) Whether or not the
POEA has acquired
jurisdiction over Brown &
Root;
(b) Whether or not the
undisputed fact that AIBC
was
a
licensed
construction
contractor
precludes a finding that
Brown & Root is liable for
complainants claims.
Sixth: Whether or not the POEA
Administrators failure to hold respondents in
default constitutes a reversible error.
Seventh: Whether or not the POEA
Administrator erred in dismissing the following
claims:
a. Unexpired portion of
contract;
b. Interest earnings of
Travel and Reserve Fund;
c. Retirement and Savings
Plan benefits;

Overseas employment contract - 23


d. War Zone bonus or
premium pay of at least
100% of basic pay;

Administrator that the Amiri Decree No. 23, being more favorable and
beneficial to the workers, should form part of the overseas
employment contract of the complainants.

e. Area Differential Pay;

NLRC, however, held that the Amiri Decree No. 23 applied only to the
claimants, who worked in Bahrain, and set aside awards of the POEA
Administrator in favor of the claimants, who worked elsewhere.

f. Accrued interests on all


the unpaid benefits;
g. Salary differential pay;
h. Wage differential pay;
i. Refund of SSS
premiums not remitted to
SSS;
j. Refund of withholding
tax not remitted to BIR;
k. Fringe benefits under B
& Rs A Summary of
Employee
Benefits
(Annex Q of Amended
Complaint);
l. Moral and exemplary
damages;
m. Attorneys fees of at
least ten percent of the
judgment award;
n. Other reliefs, like
suspending
and/or
cancelling the license to
recruit of AIBC and the
accreditation of B & R
issued by POEA;
o. Penalty for violations of
Article 34 (prohibited
practices), not excluding
reportorial requirements
thereof.
Eighth: Whether or not the POEA
Administrator erred in not dismissing POEA
Case No. (L) 86-65-460 on the ground of
multiplicity of suits (G.R. Nos. 104911-14, Rollo,
pp. 25-29, 51-55).
Anent the first issue, NLRC set aside Section 1, Rule 129 of the 1989
Revised Rules on Evidence governing the pleading and proof of a
foreign law and admitted in evidence a simple copy of the Bahrains
Amiri Decree No. 23 of 1976 (Labour Law for the Private Sector).
NLRC invoked Article 221 of the Labor Code of the Philippines, vesting
on the Commission ample discretion to use every and all reasonable
means to ascertain the facts in each case without regard to the
technicalities of law or procedure. NLRC agreed with the POEA

On the second issue, NLRC ruled that the prescriptive period for the
filing of the claims of the complainants was three years, as provided in
Article 291 of the Labor Code of the Philippines, and not ten years as
provided in Article 1144 of the Civil Code of the Philippines nor one
year as provided in the Amiri Decree No. 23 of 1976.
On the third issue, NLRC agreed with the POEA Administrator that the
labor cases cannot be treated as a class suit for the simple reason that
not all the complainants worked in Bahrain and therefore, the subject
matter of the action, the claims arising from the Bahrain law, is not of
common or general interest to all the complainants.
On the fourth issue, NLRC found at least three infractions of the
cardinal rules of administrative due process: namely, (1) the failure of
the POEA Administrator to consider the evidence presented by AIBC
and BRII; (2) some findings of fact were not supported by substantial
evidence; and (3) some of the evidence upon which the decision was
based were not disclosed to AIBC and BRII during the hearing.
On the fifth issue, NLRC sustained the ruling of the POEA
Administrator that BRII and AIBC are solidarily liable for the claims of
the complainants and held that BRII was the actual employer of the
complainants, or at the very least, the indirect employer, with AIBC as
the labor contractor.
NLRC also held that jurisdiction over BRII was acquired by the POEA
Administrator through the summons served on AIBC, its local agent.
On the sixth issue, NLRC held that the POEA Administrator was
correct in denying the Motion to Declare AIBC in default.
On the seventh issue, which involved other money claims not based
on the Amiri Decree No. 23, NLRC ruled:
(1) that the POEA Administrator has no
jurisdiction over the claims for refund of the SSS
premiums and refund of withholding taxes and
the claimants should file their claims for said
refund with the appropriate government
agencies;
(2) the claimants failed to establish that they are
entitled to the claims which are not based on the
overseas employment contracts nor the Amiri
Decree No. 23 of 1976;
(3) that the POEA Administrator has no
jurisdiction over claims for moral and exemplary
damages and nonetheless, the basis for
granting said damages was not established;

Overseas employment contract - 24


(4) that the claims for salaries corresponding to
the unexpired portion of their contract may be
allowed if filed within the three-year prescriptive
period;
(5) that the allegation that complainants were
prematurely repatriated prior to the expiration of
their overseas contract was not established; and
(6) that the POEA Administrator has no
jurisdiction over the complaint for the
suspension or cancellation of the AIBCs
recruitment license and the cancellation of the
accreditation of BRII.
NLRC passed sub silencio the last issue, the claim that POEA Case
No. (L) 86-65-460 should have been dismissed on the ground that the
claimants in said case were also claimants in POEA Case No. (L) 8406-555. Instead of dismissing POEA Case No. (L) 86-65-460, the
POEA just resolved the corresponding claims in POEA Case No. (L)
84-06-555. In other words, the POEA did not pass upon the same
claims twice.
V
G.R. No. 104776
Claimants in G.R. No. 104776 based their petition for certiorari on the
following grounds:
(1) that they were deprived by NLRC and the
POEA of their right to a speedy disposition of
their cases as guaranteed by Section 16, Article
III of the 1987 Constitution. The POEA
Administrator allowed private respondents to file
their answers in two years (on June 19, 1987)
after the filing of the original complaint (on April
2, 1985) and NLRC, in total disregard of its own
rules, affirmed the action of the POEA
Administrator;
(2) that NLRC and the POEA Administrator
should have declared AIBC and BRII in default
and should have rendered summary judgment
on the basis of the pleadings and evidence
submitted by claimants;
(3) the NLRC and POEA Administrator erred in
not holding that the labor cases filed by AIBC
and BRII cannot be considered a class suit;
(4) that the prescriptive period for the filing of the
claims is ten years; and
(5) that NLRC and the POEA Administrator
should have dismissed POEA Case No. L-8605-460, the case filed by Atty. Florante de
Castro (Rollo, pp. 31-40).

AIBC and BRII, commenting on the petition in G.R. No. 104776,


argued:
(1) that they were not responsible for the delay
in the disposition of the labor cases, considering
the great difficulty of getting all the records of the
more than 1,500 claimants, the piece-meal filing
of the complaints and the addition of hundreds
of new claimants by petitioners;
(2) that considering the number of complaints
and claimants, it was impossible to prepare the
answers within the ten-day period provided in
the NLRC Rules, that when the motion to
declare AIBC in default was filed on July 19,
1987, said party had already filed its answer,
and that considering the staggering amount of
the claims (more than US$50,000,000.00) and
the complicated issues raised by the parties, the
ten-day rule to answer was not fair and
reasonable;
(3) that the claimants failed to refute NLRCs
finding
that
there was no common or general interest in the
subject matter of the controversy which was
the applicability of the Amiri Decree No. 23.
Likewise, the nature of the claims varied, some
being based on salaries pertaining to the
unexpired portion of the contracts while others
being for pure money claims. Each claimant
demanded separate claims peculiar only to
himself and depending upon the particular
circumstances obtaining in his case;
(4) that the prescriptive period for filing the
claims is that prescribed by Article 291 of the
Labor Code of the Philippines (three years) and
not the one prescribed by Article 1144 of the
Civil Code of the Philippines (ten years); and
(5) that they are not concerned with the issue of
whether POEA Case No. L-86-05-460 should be
dismissed, this being a private quarrel between
the two labor lawyers (Rollo, pp. 292-305).
Attorneys Lien
On November 12, 1992, Atty. Gerardo A. del Mundo moved to strike
out the joint manifestations and motions of AIBC and BRII dated
September 2 and 11, 1992, claiming that all the claimants who entered
into the compromise agreements subject of said manifestations and
motions were his clients and that Atty. Florante M. de Castro had no
right to represent them in said agreements. He also claimed that the
claimants were paid less than the award given them by NLRC; that
Atty. De Castro collected additional attorneys fees on top of the 25%
which he was entitled to receive; and that the consent of the claimants
to the compromise agreements and quitclaims were procured by fraud
(G.R. No. 104776, Rollo, pp. 838-810). In the Resolution dated
November 23, 1992, the Court denied the motion to strike out the Joint
Manifestations and Motions dated September 2 and 11, 1992 (G.R.
Nos. 104911-14, Rollo, pp. 608-609).

Overseas employment contract - 25


On December 14, 1992, Atty. Del Mundo filed a Notice and Claim to
Enforce Attorneys Lien, alleging that the claimants who entered into
compromise agreements with AIBC and BRII with the assistance of
Atty. De Castro, had all signed a retainer agreement with his law firm
(G.R. No. 104776, Rollo, pp. 623-624; 838-1535).
Contempt of Court
On February 18, 1993, an omnibus motion was filed by Atty. Del
Mundo to cite Atty. De Castro and Atty. Katz Tierra for contempt of
court and for violation of Canons 1, 15 and 16 of the Code of
Professional Responsibility. The said lawyers allegedly misled this
Court, by making it appear that the claimants who entered into the
compromise agreements were represented by Atty. De Castro, when
in fact they were represented by Atty. Del Mundo (G.R. No.
104776, Rollo, pp. 1560-1614).
On September 23, 1994, Atty. Del Mundo reiterated his charges
against Atty. De Castro for unethical practices and moved for the
voiding of the quitclaims submitted by some of the claimants.
G.R. Nos. 104911-14
The claimants in G.R. Nos. 104911-14 based their petition
for certiorari on the grounds that NLRC gravely abused its discretion
when it: (1) applied the three-year prescriptive period under the Labor
Code of the Philippines; and (2) it denied the claimants formula based
on an average overtime pay of three hours a day (Rollo, pp. 18-22).

No. 23 of 1976 was applicable, NLRC erred when it did not apply the
one-year prescription provided in said law (Rollo, pp. 29-30).
VI
G.R. No. 104776; G.R. Nos. 104911-14; G.R. Nos. 105029-32
All the petitions raise the common issue of prescription although they
disagreed as to the time that should be embraced within the
prescriptive period.
To the POEA Administrator, the prescriptive period was ten years,
applying Article 1144 of the Civil Code of the Philippines. NLRC
believed otherwise, fixing the prescriptive period at three years as
provided in Article 291 of the Labor Code of the Philippines.
The claimants in G.R. No. 104776 and G.R. Nos. 104911-14, invoking
different grounds, insisted that NLRC erred in ruling that the
prescriptive period applicable to the claims was three years, instead of
ten years, as found by the POEA Administrator.
The Solicitor General expressed his personal view that the prescriptive
period was one year as prescribed by the Amiri Decree No. 23 of 1976
but he deferred to the ruling of NLRC that Article 291 of the Labor
Code of the Philippines was the operative law.
The POEA Administrator held the view that:

The claimants argue that said method was proposed by BRII itself
during the negotiation for an amicable settlement of their money
claims in Bahrain as shown in the Memorandum dated April 16, 1983
of the Ministry of Labor of Bahrain (Rollo, pp. 21-22).

These money claims (under Article 291 of the


Labor Code) refer to those arising from the
employers violation of the employees right as
provided by the Labor Code.

BRII and AIBC, in their Comment, reiterated their contention in G.R.


No. 104776 that the prescriptive period in the Labor Code of the
Philippines, a special law, prevails over that provided in the Civil Code
of the Philippines, a general law.

In the instant case, what the respondents


violated are not the rights of the workers as
provided by the Labor Code, but the provisions
of the Amiri Decree No. 23 issued in Bahrain,
which ipso factoamended the worker's contracts
of employment. Respondents consciously failed
to conform to these provisions which specifically
provide for the increase of the worker's rate. It
was only after June 30, 1983, four months after
the brown builders brought a suit against B & R
in Bahrain for this same claim, when respondent
AIBC's contracts have undergone amendments
in Bahrain for the new hires/renewals
(Respondent's Exhibit 7).

As to the memorandum of the Ministry of Labor of Bahrain on the


method of computing the overtime pay, BRII and AIBC claimed that
they were not bound by what appeared therein, because such
memorandum was proposed by a subordinate Bahrain official and
there was no showing that it was approved by the Bahrain Minister of
Labor. Likewise, they claimed that the averaging method was
discussed in the course of the negotiation for the amicable settlement
of the dispute and any offer made by a party therein could not be used
as an admission by him (Rollo, pp. 228-236).
G.R. Nos. 105029-32
In G.R. Nos. 105029-32, BRII and AIBC claim that NLRC gravely
abused its discretion when it: (1) enforced the provisions of the Amiri
Decree No. 23 of 1976 and not the terms of the employment contracts;
(2) granted claims for holiday, overtime and leave indemnity pay and
other benefits, on evidence admitted in contravention of petitioners
constitutional right to due process; and (3) ordered the POEA
Administrator to hold new hearings for the 683 claimants whose claims
had been dismissed for lack of proof by the POEA Administrator or
NLRC itself. Lastly, they allege that assuming that the Amiri Decree

Hence, premises considered, the applicable law


of prescription to this instant case is Article 1144
of the Civil Code of the Philippines, which
provides:
Art. 1144. The following
actions may be brought
within ten years from the
time the cause of action
accrues:

Overseas employment contract - 26


(1) Upon
contract;

written

(2) Upon an obligation


created by law;
Thus, herein money claims of the complainants
against the respondents shall prescribe in ten
years from August 16, 1976. Inasmuch as all
claims were filed within the ten-year prescriptive
period, no claim suffered the infirmity of being
prescribed (G.R. No. 104776, Rollo, 89-90).
In overruling the POEA Administrator, and holding that the prescriptive
period is three years as provided in Article 291 of the Labor Code of
the Philippines, the NLRC argued as follows:
The Labor Code provides that "all money claims
arising from employer-employee relations . . .
shall be filed within three years from the time the
cause of action accrued; otherwise they shall be
forever barred" (Art. 291, Labor Code, as
amended). This three-year prescriptive period
shall be the one applied here and which should
be reckoned from the date of repatriation of
each individual complainant, considering the fact
that the case is having (sic) filed in this country.
We do not agree with the POEA Administrator
that this three-year prescriptive period applies
only to money claims specifically recoverable
under the Philippine Labor Code. Article 291
gives no such indication. Likewise, We can not
consider complainants' cause/s of action to have
accrued from a violation of their employment
contracts. There was no violation; the claims
arise from the benefits of the law of the country
where they worked. (G.R. No. 104776, Rollo, pp.
90-91).
Anent the applicability of the one-year prescriptive period as provided
by the Amiri Decree No. 23 of 1976, NLRC opined that the applicability
of said law was one of characterization, i.e., whether to characterize
the foreign law on prescription or statute of limitation as "substantive"
or "procedural." NLRC cited the decision in Bournias v. Atlantic
Maritime Company (220 F. 2d. 152, 2d Cir. [1955], where the issue
was the applicability of the Panama Labor Code in a case filed in the
State of New York for claims arising from said Code. In said case, the
claims would have prescribed under the Panamanian Law but not
under the Statute of Limitations of New York. The U.S. Circuit Court of
Appeals held that the Panamanian Law was procedural as it was not
"specifically intended to be substantive," hence, the prescriptive period
provided in the law of the forum should apply. The Court observed:
. . . And where, as here, we are dealing with a
statute of limitations of a foreign country, and it
is not clear on the face of the statute that its
purpose was to limit the enforceability, outside
as well as within the foreign country concerned,
of the substantive rights to which the statute
pertains, we think that as a yardstick for
determining whether that was the purpose this
test is the most satisfactory one. It does not lead

American courts into the necessity of examining


into the unfamiliar peculiarities and refinements
of different foreign legal systems. . .
The court further noted:
xxx xxx xxx
Applying that test here it appears to us that the
libelant is entitled to succeed, for the
respondents have failed to satisfy us that the
Panamanian period of limitation in question was
specifically aimed against the particular rights
which the libelant seeks to enforce. The Panama
Labor Code is a statute having broad objectives,
viz: "The present Code regulates the relations
between capital and labor, placing them on a
basis of social justice, so that, without injuring
any of the parties, there may be guaranteed for
labor the necessary conditions for a normal life
and to capital an equitable return to its
investment." In pursuance of these objectives
the Code gives laborers various rights against
their employers. Article 623 establishes the
period of limitation for all such rights, except
certain ones which are enumerated in Article
621. And there is nothing in the record to
indicate that the Panamanian legislature gave
special consideration to the impact of Article 623
upon the particular rights sought to be enforced
here, as distinguished from the other rights to
which that Article is also applicable. We were
confronted with the question of whether the
limitation period of Article 621 (which carves out
particular rights to be governed by a shorter
limitation period) is to be regarded as
"substantive" or "procedural" under the rule of
"specifity" we might have a different case; but
here on the surface of things we appear to be
dealing with a "broad," and not a "specific,"
statute of limitations (G.R. No. 104776, Rollo,
pp.
92-94).
Claimants in G.R. Nos. 104911-14 are of the view that Article 291 of
the Labor Code of the Philippines, which was applied by NLRC, refers
only to claims "arising from the employer's violation of the employee's
right as provided by the Labor Code." They assert that their claims are
based on the violation of their employment contracts, as amended by
the Amiri Decree No. 23 of 1976 and therefore the claims may be
brought within ten years as provided by Article 1144 of the Civil Code
of the Philippines (Rollo, G.R. Nos. 104911-14, pp.
18-21). To bolster their contention, they cite PALEA v. Philippine
Airlines, Inc., 70 SCRA 244 (1976).
AIBC and BRII, insisting that the actions on the claims have prescribed
under the Amiri Decree No. 23 of 1976, argue that there is in force in
the Philippines a "borrowing law," which is Section 48 of the Code of
Civil Procedure and that where such kind of law exists, it takes
precedence over the common-law conflicts rule (G.R. No.
104776,Rollo, pp. 45-46).

Overseas employment contract - 27


First to be determined is whether it is the Bahrain law on prescription
of action based on the Amiri Decree No. 23 of 1976 or a Philippine law
on prescription that shall be the governing law.
Article 156 of the Amiri Decree No. 23 of 1976 provides:
A claim arising out of a contract of employment
shall not be actionable after the lapse of one
year from the date of the expiry of the contract.
(G.R. Nos. 105029-31, Rollo, p. 226).
As a general rule, a foreign procedural law will not be applied in the
forum. Procedural matters, such as service of process, joinder of
actions, period and requisites for appeal, and so forth, are governed
by the laws of the forum. This is true even if the action is based upon a
foreign substantive law (Restatement of the Conflict of Laws, Sec.
685; Salonga, Private International Law, 131 [1979]).
A law on prescription of actions is sui generis in Conflict of Laws in the
sense that it may be viewed either as procedural or substantive,
depending on the characterization given such a law.
Thus in Bournias v. Atlantic Maritime Company, supra, the American
court applied the statute of limitations of New York, instead of the
Panamanian law, after finding that there was no showing that the
Panamanian law on prescription was intended to be substantive.
Being considered merely a procedural law even in Panama, it has to
give way to the law of the forum on prescription of actions.
However, the characterization of a statute into a procedural or
substantive law becomes irrelevant when the country of the forum has
a "borrowing statute." Said statute has the practical effect of treating
the foreign statute of limitation as one of substance (Goodrich, Conflict
of Laws 152-153 [1938]). A "borrowing statute" directs the state of the
forum to apply the foreign statute of limitations to the pending claims
based on a foreign law (Siegel, Conflicts, 183 [1975]). While there are
several kinds of "borrowing statutes," one form provides that an action
barred by the laws of the place where it accrued, will not be enforced
in the forum even though the local statute has not run against it
(Goodrich and Scoles, Conflict of Laws, 152-153 [1938]). Section 48 of
our Code of Civil Procedure is of this kind. Said Section provides:
If by the laws of the state or country where the
cause of action arose, the action is barred, it is
also barred in the Philippines Islands.
Section 48 has not been repealed or amended by the Civil Code of the
Philippines. Article 2270 of said Code repealed only those provisions
of the Code of Civil Procedures as to which were inconsistent with it.
There is no provision in the Civil Code of the Philippines, which is
inconsistent with or contradictory to Section 48 of the Code of Civil
Procedure (Paras, Philippine Conflict of Laws 104 [7th ed.]).
In the light of the 1987 Constitution, however, Section 48 cannot be
enforced ex proprio vigore insofar as it ordains the application in this
jurisdiction of Section 156 of the Amiri Decree No. 23 of 1976.
The courts of the forum will not enforce any foreign claim obnoxious to
the forum's public policy (Canadian Northern Railway Co. v. Eggen,
252 U.S. 553, 40 S. Ct. 402, 64 L. ed. 713 [1920]). To enforce the oneyear prescriptive period of the Amiri Decree No. 23 of 1976 as regards

the claims in question would contravene the public policy on the


protection to labor.
In the Declaration of Principles and State Policies, the 1987
Constitution emphasized that:
The state shall promote social justice in all
phases of national development. (Sec. 10).
The state affirms labor as a primary social
economic force. It shall protect the rights of
workers and promote their welfare (Sec. 18).
In article XIII on Social Justice and Human Rights, the 1987
Constitution provides:
Sec. 3. 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.
Having determined that the applicable law on prescription
Philippine law, the next question is whether the prescriptive
governing the filing of the claims is three years, as provided
Labor Code or ten years, as provided by the Civil Code
Philippines.

is the
period
by the
of the

The claimants are of the view that the applicable provision is Article
1144 of the Civil Code of the Philippines, which provides:
The following actions must be brought within ten
years from the time the right of action accrues:
(1) Upon a written contract;
(2) Upon an obligation created by law;
(3) Upon a judgment.
NLRC, on the other hand, believes that the applicable provision is
Article 291 of the Labor Code of the Philippines, which in pertinent part
provides:
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 be forever barred.
xxx xxx xxx
The case of Philippine Air Lines Employees Association v. Philippine
Air Lines, Inc., 70 SCRA 244 (1976) invoked by the claimants in G.R.
Nos. 104911-14 is inapplicable to the cases at bench (Rollo, p. 21).
The said case involved the correct computation of overtime pay as
provided in the collective bargaining agreements and not the EightHour Labor Law.

Overseas employment contract - 28


As noted by the Court: "That is precisely why petitioners did not make
any reference as to the computation for overtime work under the EightHour Labor Law (Secs. 3 and 4, CA No. 494) and instead insisted that
work computation provided in the collective bargaining agreements
between the parties be observed. Since the claim for pay differentials
is primarily anchored on the written contracts between the litigants, the
ten-year prescriptive period provided by Art. 1144(1) of the New Civil
Code should govern."
Section 7-a of the Eight-Hour Labor Law (CA No. 444 as amended by
R.A. No. 19933) provides:
Any action to enforce any cause of action under
this Act shall be commenced within three years
after the cause of action accrued otherwise such
action shall be forever barred, . . . .
The court further explained:
The three-year prescriptive period fixed in the
Eight-Hour Labor Law (CA No. 444 as amended)
will apply, if the claim for differentials for
overtime work is solely based on said law, and
not on a collective bargaining agreement or any
other contract. In the instant case, the claim for
overtime compensation is not so much because
of Commonwealth Act No. 444, as amended but
because the claim is a demandable right of the
employees, by reason of the above-mentioned
collective bargaining agreement.
Section 7-a of the Eight-Hour Labor Law provides the prescriptive
period for filing "actions to enforce any cause of action under said law."
On the other hand, Article 291 of the Labor Code of the Philippines
provides the prescriptive period for filing "money claims arising from
employer-employee relations." The claims in the cases at bench all
arose from the employer-employee relations, which is broader in
scope than claims arising from a specific law or from the collective
bargaining agreement.
The contention of the POEA Administrator, that the three-year
prescriptive period under Article 291 of the Labor Code of the
Philippines applies only to money claims specifically recoverable
under said Code, does not find support in the plain language of the
provision. Neither is the contention of the claimants in G.R. Nos.
104911-14 that said Article refers only to claims "arising from the
employer's violation of the employee's right," as provided by the Labor
Code supported by the facial reading of the provision.
VII

Claimants invoke a new provision incorporated in the 1987


Constitution, which provides:
Sec. 16. All persons shall have the right to a
speedy disposition of their cases before all
judicial, quasi-judicial, or administrative bodies.
It is true that the constitutional right to "a speedy disposition of cases"
is not limited to the accused in criminal proceedings but extends to all
parties in all cases, including civil and administrative cases, and in all
proceedings, including judicial and quasi-judicial hearings. Hence,
under the Constitution, any party to a case may demand expeditious
action on all officials who are tasked with the administration of justice.
However, as held in Caballero v. Alfonso, Jr., 153 SCRA 153 (1987),
"speedy disposition of cases" is a relative term. Just like the
constitutional guarantee of "speedy trial" accorded to the accused in
all criminal proceedings, "speedy disposition of cases" is a flexible
concept. It is consistent with delays and depends upon the
circumstances of each case. What the Constitution prohibits are
unreasonable, arbitrary and oppressive delays which render rights
nugatory.
Caballero laid down the factors that may be taken into consideration in
determining whether or not the right to a "speedy disposition of cases"
has been violated, thus:
In the determination of whether or not the right
to a "speedy trial" has been violated, certain
factors may be considered and balanced against
each other. These are length of delay, reason for
the delay, assertion of the right or failure to
assert it, and prejudice caused by the delay. The
same factors may also be considered in
answering judicial inquiry whether or not a
person officially charged with the administration
of justice has violated the speedy disposition of
cases.
Likewise, in Gonzales v. Sandiganbayan, 199 SCRA 298, (1991), we
held:
It must be here emphasized that the right to a
speedy disposition of a case, like the right to
speedy trial, is deemed violated only when the
proceeding is attended by vexatious, capricious,
and oppressive delays; or when unjustified
postponements of the trial are asked for and
secured, or when without cause or justified
motive a long period of time is allowed to elapse
without the party having his case tried.

G.R. No. 104776


A. As to the first two grounds for the petition in G.R. No. 104776,
claimants aver: (1) that while their complaints were filed on June 6,
1984 with POEA, the case was decided only on January 30, 1989, a
clear denial of their right to a speedy disposition of the case; and (2)
that NLRC and the POEA Administrator should have declared AIBC
and
BRII
in
default
(Rollo,
pp.
31-35).

Since July 25, 1984 or a month after AIBC and BRII were served with
a copy of the amended complaint, claimants had been asking that
AIBC and BRII be declared in default for failure to file their answers
within the ten-day period provided in Section 1, Rule III of Book VI of
the Rules and Regulations of the POEA. At that time, there was a
pending motion of AIBC and BRII to strike out of the records the
amended complaint and the "Compliance" of claimants to the order of
the POEA, requiring them to submit a bill of particulars.

Overseas employment contract - 29


The cases at bench are not of the run-of-the-mill variety, such that
their final disposition in the administrative level after seven years from
their inception, cannot be said to be attended by unreasonable,
arbitrary and oppressive delays as to violate the constitutional rights to
a speedy disposition of the cases of complainants.
The amended complaint filed on June 6, 1984 involved a total of 1,767
claimants. Said complaint had undergone several amendments, the
first being on April 3, 1985.
The claimants were hired on various dates from 1975 to 1983. They
were deployed in different areas, one group in and the other groups
outside of, Bahrain. The monetary claims totalling more than US$65
million according to Atty. Del Mundo, included:

the motion of AIBC for a bill of particulars. When claimants filed their
"Compliance and Manifestation," AIBC moved to strike out the
complaint from the records for failure of claimants to submit a proper
bill of particulars. While the POEA Administrator denied the motion to
strike out the complaint, he ordered the claimants "to correct the
deficiencies" pointed out by AIBC.
Before an intelligent answer could be filed in response to the
complaint, the records of employment of the more than 1,700
claimants had to be retrieved from various countries in the Middle
East. Some of the records dated as far back as 1975.
The hearings on the merits of the claims before the POEA
Administrator were interrupted several times by the various appeals,
first to NLRC and then to the Supreme Court.

1. Unexpired portion of contract;


2. Interest earnings of Travel and Fund;
3. Retirement and Savings Plan benefit;
4. War Zone bonus or premium pay of at least
100% of basic pay;
5. Area Differential pay;
6. Accrued Interest of all the unpaid benefits;
7. Salary differential pay;
8. Wage Differential pay;
9. Refund of SSS premiums not remitted to
Social Security System;
10. Refund of Withholding Tax not remitted to
Bureau of Internal Revenue (B.I.R.);
11. Fringe Benefits under Brown & Root's "A
Summary of Employees Benefits consisting of
43 pages (Annex "Q" of Amended Complaint);
12. Moral and Exemplary Damages;
13. Attorney's fees of at least ten percent of
amounts;
14. Other reliefs, like suspending and/or
cancelling the license to recruit of AIBC and
issued by the POEA; and
15. Penalty for violation of Article 34 (Prohibited
practices) not excluding reportorial requirements
thereof (NLRC Resolution, September 2, 1991,
pp. 18-19; G.R. No. 104776, Rollo, pp. 73-74).
Inasmuch as the complaint did not allege with sufficient definiteness
and clarity of some facts, the claimants were ordered to comply with

Aside from the inclusion of additional claimants, two new cases were
filed against AIBC and BRII on October 10, 1985 (POEA Cases Nos.
L-85-10-777 and L-85-10-779). Another complaint was filed on May
29, 1986 (POEA Case No. L-86-05-460). NLRC, in exasperation,
noted that the exact number of claimants had never been completely
established (Resolution, Sept. 2, 1991, G.R. No. 104776, Rollo, p. 57).
All the three new cases were consolidated with POEA Case No. L-8406-555.
NLRC blamed the parties and their lawyers for the delay in terminating
the proceedings, thus:
These cases could have been spared the long
and arduous route towards resolution had the
parties and their counsel been more interested
in pursuing the truth and the merits of the claims
rather than exhibiting a fanatical reliance on
technicalities. Parties and counsel have made
these cases a litigation of emotion. The
intransigence of parties and counsel is
remarkable. As late as last month, this
Commission made a last and final attempt to
bring the counsel of all the parties (this
Commission issued a special order directing
respondent Brown & Root's resident agent/s to
appear) to come to a more conciliatory stance.
Even this failed (Rollo, p. 58).
The squabble between the lawyers of claimants added to the delay in
the disposition of the cases, to the lament of NLRC, which complained:
It is very evident from the records that the
protagonists in these consolidated cases appear
to be not only the individual complainants, on
the one hand, and AIBC and Brown & Root, on
the other hand. The two lawyers for the
complainants, Atty. Gerardo Del Mundo and Atty.
Florante De Castro, have yet to settle the right of
representation, each one persistently claiming to
appear in behalf of most of the complainants. As
a result, there are two appeals by the
complainants. Attempts by this Commission to
resolve counsels' conflicting claims of their
respective authority to represent the
complainants prove futile. The bickerings by
these two counsels are reflected in their

Overseas employment contract - 30


pleadings. In the charges and countercharges of
falsification of documents and signatures, and in
the disbarment proceedings by one against the
other. All these have, to a large extent, abetted
in confounding the issues raised in these cases,
jumble the presentation of evidence, and even
derailed the prospects of an amicable
settlement. It would not be far-fetched to
imagine that both counsel, unwittingly, perhaps,
painted a rainbow for the complainants, with the
proverbial pot of gold at its end containing more
than US$100 million, the aggregate of the claims
in these cases. It is, likewise, not improbable
that their misplaced zeal and exuberance
caused them to throw all caution to the wind in
the matter of elementary rules of procedure and
evidence (Rollo, pp. 58-59).
Adding to the confusion in the proceedings before NLRC, is the listing
of some of the complainants in both petitions filed by the two lawyers.
As noted by NLRC, "the problem created by this situation is that if one
of the two petitions is dismissed, then the parties and the public
respondents would not know which claim of which petitioner was
dismissed and which was not."
B. Claimants insist that all their claims could properly be consolidated
in a "class suit" because "all the named complainants have similar
money claims and similar rights sought irrespective of whether they
worked in Bahrain, United Arab Emirates or in Abu Dhabi, Libya or in
any part of the Middle East" (Rollo, pp. 35-38).
A class suit is proper where the subject matter of the controversy is
one of common or general interest to many and the parties are so
numerous that it is impracticable to bring them all before the court
(Revised Rules of Court, Rule 3, Sec. 12).
While all the claims are for benefits granted under the Bahrain Law,
many of the claimants worked outside Bahrain. Some of the claimants
were deployed in Indonesia and Malaysia under different terms and
conditions of employment.
NLRC and the POEA Administrator are correct in their stance that
inasmuch as the first requirement of a class suit is not present
(common or general interest based on the Amiri Decree of the State of
Bahrain), it is only logical that only those who worked in Bahrain shall
be entitled to file their claims in a class suit.
While there are common defendants (AIBC and BRII) and the nature
of the claims is the same (for employee's benefits), there is no
common question of law or fact. While some claims are based on the
Amiri Law of Bahrain, many of the claimants never worked in that
country, but were deployed elsewhere. Thus, each claimant is
interested only in his own demand and not in the claims of the other
employees of defendants. The named claimants have a special or
particular interest in specific benefits completely different from the
benefits in which the other named claimants and those included as
members of a "class" are claiming (Berses v. Villanueva, 25 Phil. 473
[1913]). It appears that each claimant is only interested in collecting
his own claims. A claimant has no concern in protecting the interests of
the other claimants as shown by the fact, that hundreds of them have
abandoned their co-claimants and have entered into separate
compromise settlements of their respective claims. A principle basic to

the concept of "class suit" is that plaintiffs brought on the record must
fairly represent and protect the interests of the others (Dimayuga v.
Court of Industrial Relations, 101 Phil. 590 [1957]). For this matter, the
claimants who worked in Bahrain cannot be allowed to sue in a class
suit in a judicial proceeding. The most that can be accorded to them
under the Rules of Court is to be allowed to join as plaintiffs in one
complaint (Revised Rules of Court, Rule 3, Sec. 6).
The Court is extra-cautious in allowing class suits because they are
the exceptions to the condition sine qua non, requiring the joinder of all
indispensable parties.
In an improperly instituted class suit, there would be no problem if the
decision secured is favorable to the plaintiffs. The problem arises
when the decision is adverse to them, in which case the others who
were impleaded by their self-appointed representatives, would surely
claim denial of due process.
C. The claimants in G.R. No. 104776 also urged that the POEA
Administrator and NLRC should have declared Atty. Florante De
Castro guilty of "forum shopping, ambulance chasing activities,
falsification, duplicity and other unprofessional activities" and his
appearances as counsel for some of the claimants as illegal (Rollo, pp.
38-40).
The Anti-Forum Shopping Rule (Revised Circular No. 28-91) is
intended to put a stop to the practice of some parties of filing multiple
petitions and complaints involving the same issues, with the result that
the courts or agencies have to resolve the same issues. Said Rule,
however, applies only to petitions filed with the Supreme Court and the
Court of Appeals. It is entitled "Additional Requirements For Petitions
Filed with the Supreme Court and the Court of Appeals To Prevent
Forum Shopping or Multiple Filing of Petitioners and Complainants."
The first sentence of the circular expressly states that said circular
applies to and governs the filing of petitions in the Supreme Court and
the Court of Appeals.
While Administrative Circular No. 04-94 extended the application of the
anti-forum shopping rule to the lower courts and administrative
agencies, said circular took effect only on April 1, 1994.
POEA and NLRC could not have entertained the complaint for
unethical conduct against Atty. De Castro because NLRC and POEA
have no jurisdiction to investigate charges of unethical conduct of
lawyers.
Attorney's Lien
The "Notice and Claim to Enforce Attorney's Lien" dated December 14,
1992 was filed by Atty. Gerardo A. Del Mundo to protect his claim for
attorney's fees for legal services rendered in favor of the claimants
(G.R. No. 104776, Rollo, pp. 841-844).
A statement of a claim for a charging lien shall be filed with the court or
administrative agency which renders and executes the money
judgment secured by the lawyer for his clients. The lawyer shall cause
written notice thereof to be delivered to his clients and to the adverse
party (Revised Rules of Court, Rule 138, Sec. 37). The statement of
the claim for the charging lien of Atty. Del Mundo should have been
filed with the administrative agency that rendered and executed the
judgment.

Overseas employment contract - 31


Contempt of Court
The complaint of Atty. Gerardo A. Del Mundo to cite Atty. Florante De
Castro and Atty. Katz Tierra for violation of the Code of Professional
Responsibility should be filed in a separate and appropriate
proceeding.
G.R. No. 104911-14
Claimants charge NLRC with grave abuse of discretion in not
accepting their formula of "Three Hours Average Daily Overtime" in
computing the overtime payments. They claim that it was BRII itself
which proposed the formula during the negotiations for the settlement
of their claims in Bahrain and therefore it is in estoppel to disclaim said
offer (Rollo, pp. 21-22).
Claimants presented a Memorandum of the Ministry of Labor of
Bahrain dated April 16, 1983, which in pertinent part states:
After the perusal of the memorandum of
the Vice President and the Area Manager,
Middle East, of Brown & Root Co. and the
Summary of the compensation offered by the
Company to the employees in respect of the
difference of pay of the wages of the overtime
and the difference of vacation leave and the
perusal of the documents attached thereto i.e.,
minutes of the meetings between the
Representative of the employees and the
management of the Company, the complaint
filed by the employees on 14/2/83 where they
have claimed as hereinabove stated, sample of
the Service Contract executed between one of
the employees and the company through its
agent in (sic)Philippines, Asia International
Builders Corporation where it has been provided
for 48 hours of work per week and an annual
leave of 12 days and an overtime wage of 1 &
1/4 of the normal hourly wage.
xxx xxx xxx
The Company in its computation reached the
following averages:
A. 1. The average duration of the actual service
of the employee is 35 months for the Philippino
(sic) employees . . . .
2. The average wage per hour for the Philippino
(sic) employee is US$2.69 . . . .
3. The average hours for the overtime is 3 hours
plus in all public holidays and weekends.
4. Payment of US$8.72 per months (sic) of
service as compensation for the difference of
the wages of the overtime done for each
Philippino (sic) employee . . . (Rollo, p.22).

BRII and AIBC countered: (1) that the Memorandum was not prepared
by them but by a subordinate official in the Bahrain Department of
Labor; (2) that there was no showing that the Bahrain Minister of Labor
had approved said memorandum; and (3) that the offer was made in
the course of the negotiation for an amicable settlement of the claims
and therefore it was not admissible in evidence to prove that anything
is due to the claimants.
While said document was presented to the POEA without observing
the rule on presenting official documents of a foreign government as
provided in Section 24, Rule 132 of the 1989 Revised Rules on
Evidence, it can be admitted in evidence in proceedings before an
administrative body. The opposing parties have a copy of the said
memorandum, and they could easily verify its authenticity and
accuracy.
The admissibility of the offer of compromise made by BRII as
contained in the memorandum is another matter. Under Section 27,
Rule 130 of the 1989 Revised Rules on Evidence, an offer to settle a
claim is not an admission that anything is due.
Said Rule provides:
Offer of compromise not admissible. In civil
cases, an offer of compromise is not an
admission of any liability, and is not admissible
in evidence against the offeror.
This Rule is not only a rule of procedure to avoid the cluttering of the
record with unwanted evidence but a statement of public policy. There
is great public interest in having the protagonists settle their
differences amicably before these ripen into litigation. Every effort
must be taken to encourage them to arrive at a settlement. The
submission of offers and counter-offers in the negotiation table is a
step in the right direction. But to bind a party to his offers, as what
claimants would make this Court do, would defeat the salutary
purpose of the Rule.
G.R. Nos. 105029-32
A. NLRC applied the Amiri Decree No. 23 of 1976, which provides for
greater benefits than those stipulated in the overseas-employment
contracts of the claimants. It was of the belief that "where the laws of
the host country are more favorable and beneficial to the workers, then
the laws of the host country shall form part of the overseas
employment contract." It quoted with approval the observation of the
POEA Administrator that ". . . in labor proceedings, all doubts in the
implementation of the provisions of the Labor Code and its
implementing regulations shall be resolved in favor of labor" (Rollo, pp.
90-94).
AIBC and BRII claim that NLRC acted capriciously and whimsically
when it refused to enforce the overseas-employment contracts, which
became the law of the parties. They contend that the principle that a
law is deemed to be a part of a contract applies only to provisions of
Philippine law in relation to contracts executed in the Philippines.
The overseas-employment contracts, which were prepared by AIBC
and BRII themselves, provided that the laws of the host country
became applicable to said contracts if they offer terms and conditions

Overseas employment contract - 32


more favorable that those stipulated therein. It was stipulated in said
contracts that:
The Employee agrees that while in the employ
of the Employer, he will not engage in any other
business or occupation, nor seek employment
with anyone other than the Employer; that he
shall devote his entire time and attention and his
best energies, and abilities to the performance
of such duties as may be assigned to him by the
Employer; that he shall at all times be subject to
the direction and control of the Employer; and
that the benefits provided to Employee
hereunder are substituted for and in lieu of all
other benefits provided by any applicable
law, provided of course, that total remuneration
and benefits do not fall below that of the host
country regulation or custom, it being
understood that should applicable laws
establish that fringe benefits, or other such
benefits additional to the compensation herein
agreed cannot be waived, Employee agrees that
such compensation will be adjusted downward
so that the total compensation hereunder, plus
the non-waivable benefits shall be equivalent to
the compensation herein agreed (Rollo, pp. 352353).
The overseas-employment contracts could have been drafted more
felicitously. While a part thereof provides that the compensation to the
employee may be "adjusted downward so that the total computation
(thereunder) plus the non-waivable benefits shall be equivalent to the
compensation" therein agreed, another part of the same provision
categorically states "that total remuneration and benefits do not fall
below that of the host country regulation and custom."
Any ambiguity in the overseas-employment contracts should be
interpreted against AIBC and BRII, the parties that drafted it (Eastern
Shipping Lines, Inc. v. Margarine-Verkaufs-Union, 93 SCRA 257
[1979]).
Article 1377 of the Civil Code of the Philippines provides:
The interpretation of obscure words or
stipulations in a contract shall not favor the party
who caused the obscurity.
Said rule of interpretation is applicable to contracts of adhesion where
there is already a prepared form containing the stipulations of the
employment contract and the employees merely "take it or leave it."
The presumption is that there was an imposition by one party against
the other and that the employees signed the contracts out of necessity
that reduced their bargaining power (Fieldmen's Insurance Co., Inc. v.
Songco, 25 SCRA 70 [1968]).
Applying the said legal precepts, we read the overseas-employment
contracts in question as adopting the provisions of the Amiri Decree
No. 23 of 1976 as part and parcel thereof.
The parties to a contract may select the law by which it is to be
governed (Cheshire, Private International Law, 187 [7th ed.]). In such
a case, the foreign law is adopted as a "system" to regulate the

relations of the parties, including questions of their capacity to enter


into the contract, the formalities to be observed by them, matters of
performance,
and
so
forth
(16
Am
Jur
2d,
150-161).
Instead of adopting the entire mass of the foreign law, the parties may
just agree that specific provisions of a foreign statute shall be deemed
incorporated into their contract "as a set of terms." By such reference
to the provisions of the foreign law, the contract does not become a
foreign contract to be governed by the foreign law. The said law does
not operate as a statute but as a set of contractual terms deemed
written in the contract (Anton, Private International Law, 197 [1967];
Dicey and Morris, The Conflict of Laws, 702-703, [8th ed.]).
A basic policy of contract is to protect the expectation of the parties
(Reese, Choice of Law in Torts and Contracts, 16 Columbia Journal of
Transnational Law 1, 21 [1977]). Such party expectation is protected
by giving effect to the parties' own choice of the applicable law (Fricke
v. Isbrandtsen Co., Inc., 151 F. Supp. 465, 467 [1957]). The choice of
law must, however, bear some relationship to the parties or their
transaction (Scoles and Hayes, Conflict of Law 644-647 [1982]). There
is no question that the contracts sought to be enforced by claimants
have a direct connection with the Bahrain law because the services
were rendered in that country.
In Norse Management Co. (PTE) v. National Seamen Board, 117
SCRA 486 (1982), the "Employment Agreement," between Norse
Management Co. and the late husband of the private respondent,
expressly provided that in the event of illness or injury to the employee
arising out of and in the course of his employment and not due to his
own misconduct, "compensation shall be paid to employee in
accordance with and subject to the limitation of the Workmen's
Compensation Act of the Republic of the Philippines or the Worker's
Insurance Act of registry of the vessel, whichever is greater." Since the
laws of Singapore, the place of registry of the vessel in which the late
husband of private respondent served at the time of his death, granted
a better compensation package, we applied said foreign law in
preference to the terms of the contract.
The case of Bagong Filipinas Overseas Corporation v. National Labor
Relations Commission, 135 SCRA 278 (1985), relied upon by AIBC
and BRII is inapposite to the facts of the cases at bench. The issue in
that case was whether the amount of the death compensation of a
Filipino seaman should be determined under the shipboard
employment contract executed in the Philippines or the Hongkong law.
Holding that the shipboard employment contract was controlling, the
court differentiated said case from Norse Management Co. in that in
the latter case there was an express stipulation in the employment
contract that the foreign law would be applicable if it afforded greater
compensation.
B. AIBC and BRII claim that they were denied by NLRC of their right to
due process when said administrative agency granted Friday-pay
differential, holiday-pay differential, annual-leave differential and leave
indemnity pay to the claimants listed in Annex B of the Resolution. At
first, NLRC reversed the resolution of the POEA Administrator granting
these benefits on a finding that the POEA Administrator failed to
consider the evidence presented by AIBC and BRII, that some findings
of fact of the POEA Administrator were not supported by the evidence,
and that some of the evidence were not disclosed to AIBC and BRII
(Rollo, pp. 35-36; 106-107). But instead of remanding the case to the
POEA Administrator for a new hearing, which means further delay in
the termination of the case, NLRC decided to pass upon the validity of

Overseas employment contract - 33


the claims itself. It is this procedure that AIBC and BRII complain of as
being irregular and a "reversible error."

whose claims had been found by NLRC itself as not "supported by


evidence" (Rollo, pp. 41-45).

They pointed out that NLRC took into consideration evidence


submitted on appeal, the same evidence which NLRC found to have
been "unilaterally submitted by the claimants and not disclosed to the
adverse parties" (Rollo, pp. 37-39).

NLRC based its ruling on Article 218(c) of the Labor Code of the
Philippines, which empowers it "[to] conduct investigation for the
determination of a question, matter or controversy, within its
jurisdiction, . . . ."

NLRC noted that so many pieces of evidentiary matters were


submitted to the POEA administrator by the claimants after the cases
were deemed submitted for resolution and which were taken
cognizance of by the POEA Administrator in resolving the cases. While
AIBC and BRII had no opportunity to refute said evidence of the
claimants before the POEA Administrator, they had all the opportunity
to rebut said evidence and to present their counter-evidence before
NLRC. As a matter of fact, AIBC and BRII themselves were able to
present before NLRC additional evidence which they failed to present
before the POEA Administrator.

It is the posture of AIBC and BRII that NLRC has no authority under
Article 218(c) to remand a case involving claims which had already
been dismissed because such provision contemplates only situations
where there is still a question or controversy to be resolved (Rollo, pp.
41-42).

Under Article 221 of the Labor Code of the Philippines, NLRC is


enjoined to "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."
In deciding to resolve the validity of certain claims on the basis of the
evidence of both parties submitted before the POEA Administrator and
NLRC, the latter considered that it was not expedient to remand the
cases to the POEA Administrator for that would only prolong the
already protracted legal controversies.

A principle well embedded in Administrative Law is that the technical


rules of procedure and evidence do not apply to the proceedings
conducted by administrative agencies (First Asian Transport &
Shipping Agency, Inc. v. Ople, 142 SCRA 542 [1986]; Asiaworld
Publishing House, Inc. v. Ople, 152 SCRA 219 [1987]). This principle is
enshrined in Article 221 of the Labor Code of the Philippines and is
now the bedrock of proceedings before NLRC.
Notwithstanding the non-applicability of technical rules of procedure
and evidence in administrative proceedings, there are cardinal rules
which must be observed by the hearing officers in order to comply with
the due process requirements of the Constitution. These cardinal rules
are collated in Ang Tibay v. Court of Industrial Relations, 69 Phil. 635
(1940).
VIII

Even the Supreme Court has decided appealed cases on the merits
instead of remanding them to the trial court for the reception of
evidence, where the same can be readily determined from the
uncontroverted facts on record (Development Bank of the Philippines
v. Intermediate Appellate Court, 190 SCRA 653 [1990]; Pagdonsalan v.
National Labor Relations Commission, 127 SCRA 463 [1984]).
C. AIBC and BRII charge NLRC with grave abuse of discretion when it
ordered the POEA Administrator to hold new hearings for 683
claimants listed in Annex D of the Resolution dated September 2, 1991
whose claims had been denied by the POEA Administrator "for lack of
proof" and for 69 claimants listed in Annex E of the same Resolution,

The three petitions were filed under Rule 65 of the Revised Rules of
Court on the grounds that NLRC had committed grave abuse of
discretion amounting to lack of jurisdiction in issuing the questioned
orders. We find no such abuse of discretion.
WHEREFORE, all the three petitions are DISMISSED.
SO ORDERED.