Serrano v. Gallant Maritime (G.R. No.

167614, March 24, 2009)

FACTS:

Petitioner was hired by respondent for work aboard a ship as Chief Officer.

Contract of 12 months

Downgraded to Second Officer with promise to be promoted.

Left job after 3 months, and returned to Philippines, upon failure to make it as Chief Officer.

Petitioner filed with LA a complaint against respondents for constructive dismissal and payment of money claims.

DECISIONS:

LA – petitioner was illegally dismissed; awarded money claim representing 3 months of the unexpired portion of
contract.

NLRC – reduced amount

CA – affirmed NLRC but skirted constitutional issue (RA 8042, Sec. 10, Money claims – 3 months or unexpired
portion?)

ARGUMENT OF PETITIONER:

Monetary claim of petitioner to his lump-sum salary for the entire unexpired portion of his 12-month employment
contract, and not just for a period of three months

RULING:

The enactment of the subject clause in R.A. No. 8042 introduced a differentiated rule of computation of the money
claims of illegally dismissed OFWs based on their employment periods, in the process singling out one category
whose contracts have an unexpired portion of one year or more and subjecting them to the peculiar disadvantage
of having their monetary awards limited to their salaries for 3 months or for the unexpired portion thereof,
whichever is less, but all the while sparing the other category from such prejudice, simply because the latter’s
unexpired contracts fall short of one year.

Prior to R.A. No. 8042, a uniform system of computation of the monetary awards of illegally dismissed OFWs was
in place. This uniform system was applicable even to local workers with fixed-term employment.

WHEREFORE, the Court GRANTS the Petition. The subject clause “or for three months for every year of the
unexpired term, whichever is less” in the 5th paragraph of Section 10 of Republic Act No. 8042 is DECLARED
UNCONSTITUTIONAL; and the December 8, 2004 Decision and April 1, 2005 Resolution of the Court of Appeals are
MODIFIED to the effect that petitioner is AWARDED his salaries for the entire unexpired portion of his employment
contract consisting of nine months and 23 days computed at the rate of US$1,400.00 per month.
Sameer Overseas Placement Agency, Inc. (G.R. No. 170139, August 5, 2014)

FACTS

Joy Cabiles recruited by Sameer Agency for deployment as work to Taiwan Wacoal Co. – 1 yr contract

June 26-July 14 – terminated and repatriated

Joy filed complaint with NLRC for illegal dismissal, asked for money claim – placement fee, repatriation costs, salary
payments.

DECISIONS

LA dismissed Joy.

NLRC – Joy was illegaly dismissed. – awarded only 3 months’ worth of salary

CA affirmed NLRC.

RULING

Illegally terminated si Joy.

Respondent Joy Cabiles, having been illegally dismissed, is entitled to her salary for the unexpired portion of the
employment contract that was violated together with attorney’s fees and reimbursement of amounts withheld
from her salary.

Section 15 of Republic Act No. 8042 states that “repatriation of the worker and the transport of his [or her]
personal belongings shall be the primary responsibility of the agency which recruited or deployed the worker
overseas.” The exception is when “termination of employment is due solely to the fault of the worker,”80 which as
we have established, is not the case Sameer Overseas Placement Agency, Inc. vs. Cabiles, 732 SCRA 22, G.R. No.
170139 August 5, 2014

Republic Act No. 10022 was promulgated on March 8, 2010. This means that the reinstatement of the clause in
Republic Act No. 8042 was not yet in effect at the time of respondent’s termination from work in 1997.86 Republic
Act No. 8042 before it was amended by Republic Act No. 10022 governs this case. Sameer Overseas Placement
Agency, Inc. vs. Cabiles, 732 SCRA 22, G.R. No. 170139 August 5, 2014

We reiterate our finding in Serrano v. Gallant Maritime that limiting wages that should be recovered by an illegally
dismissed overseas worker to three months is both a violation of due process and the equal protection clauses of
the Constitution. Sameer Overseas Placement Agency, Inc. vs. Cabiles, 732 SCRA 22, G.R. No. 170139 August 5,
2014

We also noted in Serrano that before the passage of Republic Act No. 8042, the money claims of illegally
terminated overseas and local workers with fixed-term employment were computed in the same manner.112
Their money claims were computed based on the “unexpired portions of their contracts.”113 The adoption of the
reinstated clause in Republic Act No. 8042 subjected the money claims of illegally dismissed overseas workers with
an unexpired term of at least a year to a cap of three months worth of their salary.114 There was no such
limitation on the money claims of illegally terminated local workers with fixed-term employment.115 Sameer
Overseas Placement Agency, Inc. vs. Cabiles, 732 SCRA 22, G.R. No. 170139 August 5, 2014
Hon. Sto. Tomas v. Lazo/ Salac (G.R. No. 152642, November 13, 2012)

FACTS

On June 7, 1995 Congress enacted Republic Act (R.A.) 8042 or the Migrant Workers and Overseas Filipinos Act of
1995 that, for among other purposes, sets the Government’s policies on overseas employment and establishes a
higher standard of protection and promotion of the welfare of migrant workers, their families, and overseas
Filipinos in distress. On January 8, 2002 respondents filed a petition for certiorari, prohibition and mandamus with
application for temporary restraining order (TRO) and preliminary injunction against petitioners, the DOLE
Secretary, the POEA Administrator, and the Technical Education and Skills Development Authority (TESDA)
Secretary-General before the Regional Trial Court (RTC) of Quezon City, Branch 96. respondents sought to: 1)
nullify DOLE Department Order 10 (DOLE DO 10) and POEA Memorandum Circular 15 (POEA MC 15); 2) prohibit
the DOLE, POEA, and TESDA from implementing the same and from further issuing rules and regulations that
would regulate the recruitment and placement of overseas Filipino workers (OFWs); and 3) also enjoin them to
comply with the policy of deregulation mandated under Sections 29 and 30 of Republic Act 8042.

The Manila RTC also declared Section 7 unconstitutional on the ground that its sweeping application of the
penalties failed to make any distinction as to the seriousness of the act committed for the application of the
penalty imposed on such violation.

RULING

These consolidated cases pertain to the constitutionality of certain provisions of R.A. No. 8042, or the Migrant
Workers and Overseas Filipinos Act of 1995.

1. G.R. 152642 and G.R. 152710

Respondents question the constitutionality of Sections 29 and 30, R.A. 8042

Sections 29 and 30 of the Act commanded the Department of Labor and Employment (DOLE) to begin deregulating
within one year of its passage the business of handling the recruitment and migration of overseas Filipino workers
and phase out within five years the regulatory functions of the Philippine Overseas Employment Administration
(POEA).

*Sections 29 and 30 were repealed by RA 8042. Consequently, these 2 cases were dismissed for being moot and
academic.

1. G.R. 167590

Issue is on the constitutionality of Sections 6 (for being vague as it fails to distinguish licensed & non-licensed
recruiters), 7 (for being sweeping in its application of penalties), and 9 (for allowing the offended parties    to file
the criminal case in their place of residence instead of filing it at    the place where the crime or any of its essential
elements were committed) of R.A. 8042.

Section 6 defines the crime of “illegal recruitment” and enumerates the acts constituting the same. Section 7
provides the penalties for prohibited acts.

For Section 6 – Illegal recruitment, as defined, is clear and unambiguous and, contrary to the RTC’s finding,
actually makes a distinction between licensed and non-licensed recruiters.

By its terms, persons who engage in “canvassing, enlisting, contracting, transporting, utilizing, hiring, or
procuring workers” without the appropriate government license or authority are guilty of illegal recruitment
whether or not they commit the wrongful acts enumerated in that section. On the other hand, recruiters who
engage in the canvassing, enlisting, etc. of OFWs, although with the appropriate government license or
authority, are guilty of illegal recruitment only if they commit any of the wrongful acts enumerated in Section 6.

For Section 7 – Congress was within its prerogative to determine what individual acts are equally reprehensible,
consistent with the State policy of according full protection to labor, and deserving of the same penalties. It is
not within the power of the Court to question the wisdom of this kind of choice.

Section 9 of R.A. 8042 allowed the filing of criminal actions arising from “illegal recruitment” before the RTC of the
province or city where the offense was committed or where the offended party actually resides at the time of the
commission of the offense.

* There is nothing arbitrary or unconstitutional in Congress fixing an alternative venue for violations of Section 6
of R.A. 8042 that differs from the venue established by the Rules on Criminal Procedure. Rule 110 Sec. 15 (a) of
the Rules of Court allows exceptions. Thus:

SEC. 15. Place where action is to be instituted.— (a) Subject to existing laws, the criminal action shall be instituted
and tried in the court of the municipality or territory where the offense was committed or where any of its
essential ingredients occurred.

Section 9 of R.A. 8042, as an exception to the rule on venue of criminal actions is, consistent with that law’s
declared policy of providing a criminal justice system that protects and serves the best interests of the victims of
illegal recruitment.

1. G.R. 167590, G.R. 182978-79, and G.R. 184298-99

(Constitutionality of Section 10, last sentence of 2nd paragraph on the liability of the principal/employer and the
recruitment/placement agency)

The liability of corporate directors and officers is not automatic. To make them jointly and solidarily liable with
their company, there must be a finding that they were remiss in directing the affairs of that company, such as
sponsoring or tolerating the conduct of illegal activities (MAM Realty Development Corp. v. National Labor
Relations Commission, 314 Phil. 838, 845 (1995).

Eastern Mediterranean Maritime Ltd v. Surio et al (G.R. No. 154213, August 23, 2012)

FACTS

Petitioner – owner of vessel

Respondents – crewmembers

Respondents complained about delay in payment of wages, non-payment for extra work or extra overtime work,
inadequate equipment.

Negotiations took place and wage differentials were paid. Respondents were then repatriated.

Petitioner, vessel owner filed against respondents a complaint for disciplinary actions before the POEA.

During the pendency of action, RA 8042 was passed, giving to LA jurisdiction over money claims.
 DECISIONS

POEA dismissed the complaint.

Petitioners filed appeal with NLRC.

NLRC dismissed petitioners appeals for lack of jurisdiction. (Sabi ng NLRC, Sec. 10 of RA 8042 does not give them
the jurisdiction to decide on appeals from decisions arising from complaint).

CA ruled that NLRC had no jurisdiction.

ARGUMENTS

Petitioner – NLRC has appellate authority over POEA’s decision.

RULING

Petition lacks merit.

Although RA 8042, Sec. 10, transferred the original and exclusive jurisdiction to hear and decide money claims
involving OFW from POEA to LA, the law did not remove from POEA the original and exclusive jurisdiction to hear
and decide all disciplinary action cases and other special cases administrative in character involving such workers.
The obvious intent of RA 8042 was to have POEA focus its efforts in resolving all administrative matters affecting
and involving such workers.

It is clear to us therefore that the NLRC had no appellate jurisdiction to review the decision of POEA in disciplinary
cases involving OCW.

When RA 8042 withheld the appellate jurisdiction of the NRC in respect of cases decided by the POEA, the
appellate jurisdiction was vested in the Secretary of Labor.

Petroluem Shipping Limited v. NLRC (G.R. No. 148130, June 16, 2006)

FACTS

Tanchico was a Chief Engineer with Esso International Shipping, now Petroleum Shipping.

Home for two-month vacation; underwent medical exam, diagnosed with diabetes and heart disease.

Esso no longer deployed Tanchico; Tanchico accepted offer of payment of benefits.

Tanchico filed a complaint against Esso before POEA, for illegal dismissal with claims for backwages, separation
pay, disability and medical benefits and 13th month pay.

Due to passage of RA 8042, case was indorsed to NLRC.

DECISIONS

LA dismissed complaint. Lack of merit.

NLRC affirmed LA. Upon MR, Tanchico granted disability benefit and 13 th month pay.

CA affirmed NLRC MR decision. Upon MR, modified by deducting vacation from his length of service.

RULING
1. Seafarers are contractual employees. Overseas employment contract is an example of contracts where the
concept of regular employment does not apply. The agency is liable for payment of a seaman’s medical and
disability benefits in the event that the primcipal fails or refuses to pay the benefits or wages due the seaman
although the seaman may not be a regular employee of the agency. Seafarers cannot be considered regular
employees under Art. 280 of Labor Code. Their employment is governed by the contracts they sign every time they
are rehired and their employemtn is terminated when the contract expires. They fall under the exception of Art.
280 whose employment has been fixed for a specific project or undertaking the completion or termination of
which has been determined at the time of engagement of the employee or where the work or services to be
performed is seasonal in nature and the employemtn is for the duration of the season.

2. Court of Appeals premised its grant of 13 th month pay on its ruling that Tanchico was a regular employee. Again,
Tanchico was a contractual employee. PD 851 which mandates employers to pay 13 th month pay does not apply to
seafarers. PD 851 contemplates land-based workers who earn less than seafarers.

3. Vacation period is part of period of employment. Tanchico received comoensation during his vacation, the
contract did not terminate on the day he returned to Manila. It remained in force. However, Tanchico is not
entitled to disability benefits for 18 days for every year of service. Again, CA erred when it ruled that Tanchico was
a regular employee. His employment terminated with the end of each contract.

Gagui v. Dejero (G.R. No. 196036, October 23, 2013)

FACTS

Respondents Dejero and Permejo filed a complaint for illegal dismissal and money claims against PRO Agency.

LA found in favor of the complaint. Subsequently, respondents filed Motion to Implead petitioner as Vice-
president/Stockholder/Director of PRO.

Exec LA ruled in favor of complaint/motion to implead: Under Sec. 10 of RA 8042, corporate officer may be held
jointly and severally liable with the placement agency.

NLRC also ruled that it is not necessary that individual officers be impleaded… A finding of liability on the part of
the corporation will necessarily mean the liability of the corporate officers or directors.

CA affirmed NLRC: no need to be impleaded; officer directors, stockholders are not liable Except when they are
made liable for their corporate act by a specific provision oflaw such as RA 8042.

RULING

Pettioner may not be held jointly and severally liable absent a finding that she was remiss in directing the affairs of
the agency.

In Sto. Tomas v. Salac,41 we had the opportunity to pass upon the constitutionality of this provision. We have thus
maintained:

The key issue that Gumabay, et al. present is whether or not the 2nd paragraph of Section 10, R.A. 8042, which
holds the corporate directors, officers, and partners of recruitment and placement agencies jointly and solidarily
liable for money claims and damages that may be adjudged against the latter agencies, is unconstitutional.

xxxx

But the Court has already held, pending adjudication of this case, that the liability of corporate directors and
officers is not automatic. To make them jointly and solidarily liable with their company, there must be a finding
that they were remiss in directing the affairs of that company, such as sponsoring or tolerating the conduct of
illegal activities. In the case of Becmen and White Falcon, while there is evidence that these companies were at
fault in not investigating the cause of Jasmin’s death, there is no mention of any evidence in the case against them
that intervenors Gumabay, et al., Becmen’s corporate officers and directors, were personally involved in their
company’s particular actions or omissions in Jasmin’s case. (Emphasis supplied)

Hence, for petitioner to be found jointly and solidarily liable, there must be a separate finding that she was remiss
in directing the affairs of the agency, resulting in the illegal dismissal of respondents. Examination of the records
would reveal that there was no finding of neglect on the part of the petitioner in directing the affairs of the agency.
In fact, respondents made no mention of any instance when petitioner allegedly failed to manage the agency in
accordance with law, thereby contributing to their illegal dismissal.

Santiago v. CF Sharp Crew Management (G.R. No. 162419, July 10, 2007)

FACTS

Petitioner Paul Santiago signed a contract of employment with respondent Sharp Crew as seafarer. (Emplyer-
employee relationship to commence only upon actual deployment)

POEA approved contract. Deployment cancelled due to complaint of possible jump ship.

Petitioner filed complaint for illegal dismissal.

DECISIONS

LA held company liable.

NLRC: complaint dismissed because no employer-employee relationship due to non-deployment; non-deployment

is valid exercise of management prerogative

CA affirmed NLRC.

ARGUMENTS

Petitioner maintains that respondent violated the
Migrant Workers Act and the POEA Rules when it
failed to deploy him within thirty (30) calendar days
without a valid reason. In doing so, it had unilaterally
and arbitrarily prevented the consummation of the
POEA- approved contract. Since it prevented his
deployment without valid basis, said deployment
being a condition to the consummation of the POEA
contract, the contract is deemed consummated, and
therefore he should be awarded actual damages,
consisting of the stipulated salary and fixed overtime
pay.18 Petitioner adds that since the contract is
deemed consummated, he should be considered an
employee for all intents and purposes, and thus the
labor arbiter and/or the NLRC has jurisdiction to take
cognizance of his claims.19
On the other hand, respondent argues that the Labor
Arbiter has no jurisdiction to award petitioner’s
monetary claims. His employment with respondent
did not commence because his deployment was
withheld for a valid reason. Consequently, the labor
arbiter and/or the NLRC cannot entertain adjudication
of petitioner’s case much less award damages to him.
The controversy involves a breach of contractual
obligations and as such is cognizable by civil courts.24
On another matter, respondent claims that the second
issue posed by petitioner involves a recalibration of
facts which is outside the jurisdiction of this Court.25

Petitioner additionally claims that he should be

considered a regular employee, having worked for five
(5) years on board the same vessel owned by the same
principal and manned by the same local agent. He
 argues that respondent’s act of not deploying him was
a scheme designed to prevent him from attaining the
status of a regular employee.20

Petitioner submits that respondent had no valid and

sufficient cause to abandon the employment contract,
as it merely relied upon alleged phone calls from his
wife and other unnamed callers in arriving at the
conclusion that he would jump ship like his brother.
He points out that his wife had executed an affidavit21
strongly denying having called respondent, and that
the other alleged callers did not even disclose their
identities to respondent.22 Thus, it was error for the
Court of Appeals to adopt the unfounded conclusion
of the NLRC, as the same was not based on substantial
evidence.23

RULING

However, a distinction must be made between the perfection of the employment contract and the
commencement of the employer-employee relationship. The perfection of the contract, which in this case
coincided with the date of execution thereof, occurred when petitioner and respondent agreed on the object and
the cause, as well as the rest of the terms and conditions therein. The commencement of the employer-employee
relationship, as earlier discussed, would have taken place had petitioner been actually deployed from the point of
hire. Thus, even before the start of any employer-employee relationship, contemporaneous with the perfection of
the employment contract was the birth of certain rights and obligations, the breach of which may give rise to a
cause of action against the erring party. Thus, if the reverse had happened, that is the seafarer failed or refused to
be deployed as agreed upon, he would be liable for damages.

Moreover, while the POEA Standard Contract must be recognized and respected, neither the manning agent nor
the employer can simply prevent a seafarer from being deployed without a valid reason.

Respondent’s act of preventing petitioner from departing the port of Manila and boarding "MSV Seaspread"
constitutes a breach of contract, giving rise to petitioner’s cause of action. Respondent unilaterally and
unreasonably reneged on its obligation to deploy petitioner and must therefore answer for the actual damages he
suffered.

We take exception to the Court of Appeals’ conclusion that damages are not recoverable by a worker who was not
deployed by his agency. The fact that the POEA Rules27 are silent as to the payment of damages to the affected
seafarer does not mean that the seafarer is precluded from claiming the same. The sanctions provided for non-
deployment do not end with the suspension or cancellation of license or fine and the return of all documents at no
cost to the worker. They do not forfend a seafarer from instituting an action for damages against the employer or
agency which has failed to deploy him.

The POEA Rules only provide sanctions which the POEA can impose on erring agencies. It does not provide for
damages and money claims recoverable by aggrieved employees because it is not the POEA, but the NLRC, which
has jurisdiction over such matters.

Despite the absence of an employer-employee relationship between petitioner and respondent, the Court rules
that the NLRC has jurisdiction over petitioner’s complaint. The jurisdiction of labor arbiters is not limited to claims
arising from employer-employee relationships. Section 10 of R.A. No. 8042 (Migrant Workers Act), provides that:
Sec. 10. Money Claims. – Notwithstanding any provision of law to the contrary, the Labor Arbiters of the National
Labor Relations Commission (NLRC) shall have the original and exclusive jurisdiction to hear and decide, within
ninety (90) calendar days after the filing of the complaint, the claims arising out of an employer-employee
relationship or by virtue of any law or contract involving Filipino workers for overseas deployment including claims
for actual, moral, exemplary and other forms of damages. x x x [Emphasis supplied]

Since the present petition involves the employment contract entered into by petitioner for overseas employment,
his claims are cognizable by the labor arbiters of the NLRC.

CF Sharp v. Pioneer Insurance (G.R. No. 179469, February 15, 2012)

FACTS

Respondents Agustin and Minimo applied with CF Sharp as sandblasters and painters for deployment to Libya.
Contract of Employemnt was executed. But after a month of non-deployment, respondents asked to release the
passport, seaman’s book and other documents they submitted which was refused.

Respondents filed complaint with POEA.

DECISIONS

POEA suspended the license of CF Sharp for violating Labor Code provision on unlawful withholding of documents.
It held that POEA has not authority to settle money claims.

Respondents filed complaint with RTC for breach of contract and damages. RTC ruled in favor of respondents.

CF Sharp raised issue of jurisdiction of RTC.

CA ruled that CF Sharp is estopped from raising jurisdictional issue; that RTC has jurisdiction because there is no
perfected employment contract yet between CF and respondents.

RULING

RTC sustained.

An employment contract, like any other contract, is perfected at the moment (1) the parties come to agree upon
its terms; and (2) concur in the essential elements thereof: (a) consent of the contracting parties, (b) object certain
which is the subject matter of the contract and (c) cause of the obligation. 11

We have scoured through the Contract of Employment and we hold that it is a perfected contract of employment.

The commencement of an employer-employee relationship must be treated separately from the perfection of an
employment contract. Santiago v. CF Sharp Crew Management, Inc., 14 which was promulgated on 10 July 2007, is
an instructive precedent on this point. In said case, petitioner was hired by respondent on board "MSV Seaspread"
for US$515.00 per month for nine (9) months, plus overtime pay. Respondent failed to deploy petitioner from the
port of Manila to Canada. We made a distinction between the perfection of the employment contract and the
commencement of the employer-employee relationship, thus:

The perfection of the contract, which in this case coincided with the date of execution thereof, occurred when
petitioner and respondent agreed on the object and the cause, as well as the rest of the terms and conditions
therein. The commencement of the employer-employee relationship, as earlier discussed, would have taken place
had petitioner been actually deployed from the point of hire. Thus, even before the start of any employer-employee
relationship, contemporaneous with the perfection of the employment contract was the birth of certain rights and
obligations, the breach of which may give rise to a cause of action against the erring party.15
Despite the fact that the employer-employee relationship has not commenced due to the failure to deploy
respondents in this case, respondents are entitled to rights arising from the perfected Contract of Employment,
such as the right to demand performance by C.F. Sharp of its obligation under the contract.

The right to demand performance was a categorical pronouncement in Santiago which ruled that failure to deploy
constitutes breach of contract, thereby entitling the seafarer to damages:

Respondent’s act of preventing petitioner from departing the port of Manila and boarding "MSV Seaspread"
constitutes a breach of contract, giving rise to petitioner’s cause of action. Respondent unilaterally and
unreasonably reneged on its obligation to deploy petitioner and must therefore answer for the actual damages he
suffered.

We take exception to the Court of Appeals’ conclusion that damages are not recoverable by a worker who was not
deployed by his agency. The fact that the POEA Rules are silent as to the payment of damages to the affected
seafarer does not mean that the seafarer is precluded from claiming the same. The sanctions provided for non-
deployment do not end with the suspension or cancellation of license or fine and the return of all documents at no
cost to the worker. They do not forfend a seafarer from instituting an action for damages against the employer or
agency which has failed to deploy him.16

Sunace International Management Services v. NLRC (G.R. No. 161757, 25 January 2006)

FACTS

Sunace deployed Divina to Taiwan as domestic helper for 1 2months. Upon contract expiration she continued
working for her employer for another 2 years.

Upon coming home, she filed a complaint before NLRC against Sunace alleging that she was underpaid and
imprisoned for 3 months.

LA ruled in favor of Divina.

NLRC affirmed LA.

CA dismissed Sunace’s appeal. Ruled in favor of Divina. Sunace knew and impliedly consented to the extension of
contract by its continued communication with Divina.

RULING

Contrary to the Court of Appeals finding, the alleged continuous communication was with the
Taiwanese broker Wang, not with the foreign employer Xiong.

That Sunace and the Taiwanese broker communicated regarding Divina’s allegedly withheld savings does not
necessarily mean that Sunace ratified the extension of the contract.

The theory of imputed knowledge ascribes the knowledge of the agent, Sunace, to the principal, employer
Xiong, not the other way around.23 The knowledge of the principal-foreign employer cannot, therefore, be
imputed to its agent Sunace.

There being no substantial proof that Sunace knew of and consented to be bound under the 2-year employment
contract extension, it cannot be said to be privy thereto. As such, it and its "owner" cannot be held solidarily liable
for any of Divina’s claims arising from the 2-year employment extension. As the New Civil Code provides,

Contracts take effect only between the parties, their assigns, and heirs, except in case where the rights and
obligations arising from the contract are not transmissible by their nature, or by stipulation or by provision of law. 24

People v. Panis (G.R. Nos. L-58674-77, July 11, 1990)

 FACTS

Respondent Serapio Abug was charged with illegal recruitment under PD 442, Labor Code.

Abug filed a motion to quash. This was granted by the trial court.

ABUG’S ARGUMENT:

To constitute recruitment and placement, all the acts mentioned in this article should involve dealings with two or
mre persons as an indispensable requirement.

PROSECUTOR’S ARGUMENT:

The requirement of two or more persons is imposed only where the recruitment and placement consists of an
offer or promise of employment to such persons and always in consideration of a fee. The other acts mentioned in
the body of the article may involve even only one person and are not necessarily for profit.

RULING

Neither interpretation is acceptable. We fail to see why the proviso should speak only of an offer or promise of
employment if the purpose was to apply the requirement of two or more persons to all the acts mentioned in the
basic rule. For its part, the petitioner does not explain why dealings with two or more persons are needed where
the recruitment and placement consists of an offer or promise of employment but not when it is done through
"canvassing, enlisting, contracting, transporting, utilizing, hiring or procuring (of) workers.

As we see it, the proviso was intended neither to impose a condition on the basic rule nor to provide an exception
thereto but merely to create a presumption. The presumption is that the individual or entity is engaged in
recruitment and placement whenever he or it is dealing with two or more persons to whom, in consideration of a
fee, an offer or promise of employment is made in the course of the "canvassing, enlisting, contracting,
transporting, utilizing, hiring or procuring (of) workers. "

The number of persons dealt with is not an essential ingredient of the act of recruitment and placement of
workers. Any of the acts mentioned in the basic rule in Article 13(b) will constitute recruitment and placement
even if only one prospective worker is involved. The proviso merely lays down a rule of evidence that where a fee
is collected in consideration of a promise or offer of employment to two or more prospective workers, the
individual or entity dealing with them shall be deemed to be engaged in the act of recruitment and placement. The
words "shall be deemed" create that presumption.

This is not unlike the presumption in article 217 of the Revised Penal Code, for example, regarding the failure of a
public officer to produce upon lawful demand funds or property entrusted to his custody. Such failure shall
be prima facie evidence that he has put them to personal use; in other words, he shall be deemed to have
malversed such funds or property. In the instant case, the word "shall be deemed" should by the same token be
given the force of a disputable presumption or of prima facie evidence of engaging in recruitment and placement.
(Klepp vs. Odin Tp., McHenry County 40 ND N.W. 313, 314.)

It is unfortunate that we can only speculate on the meaning of the questioned provision for lack of records of
debates and deliberations that would otherwise have been available if the Labor Code had been enacted as a
statute rather than a presidential decree. The trouble with presidential decrees is that they could be, and
sometimes were, issued without previous public discussion or consultation, the promulgator heeding only his own
counsel or those of his close advisers in their lofty pinnacle of power. The not infrequent results are rejection,
intentional or not, of the interest of the greater number and, as in the instant case, certain esoteric provisions that
one cannot read against the background facts usually reported in the legislative journals.

CF Sharp Crew Management Inc v. Hon. Espanol, et al (G.R. No. 155903 September 14, 2007)
 FACTS

Rizal Shipping Services filed with the POEA a complaint against Louis Cruise Lines and CF Sharp for illegal
recruitment. Rizal was the manning agency of LCL in the Philippines. CF Sharp had originally requested to be
accredited as LCL’s manning agency but Rizal objected. Pending approval of accreditation, LCL conducted a series
of interviews for seafarers at CF Sharp’s office.

DECISIONS

POEA Administrator found CF Sharp liable for illegal recruitment. Also violated Sec. 29 of Labor Code when it
designated officers and agents without prior approval of POEA.

DOLE Secretary affirmed.

CA denied CF Sharp’s certiorari petition. MR denied.

ARGUMENTS

CF SHARP
the interviews conducted were not for selection and
recruitment purposes, but were in connection with
the seamen’s past employment with Rizal

RULING

1. CF Sharp is guilty of illegal recruitment.

LCL had no approved POEA license to recruit. C.F. Sharp’s accreditation as LCL’s new manning agency was still
pending approval at that time. Yet Savva and Tjiakouris, along with C.F. Sharp, entertained applicants for LCL’s
vessels, and conducted preparatory interviews.

Article 13(b) of the Labor Code defines recruitment and placement as:

any act of canvassing, enlisting, contracting, transporting, utilizing, hiring or procuring workers, and includes
referrals, contract services, promising or advertising for employment, locally or abroad whether for profit or not:
Provided, That any person or entity which in any manner, offers or promises for a fee employment to two or more
persons shall be deemed engaged in recruitment and placement.

On the basis of this definition – and contrary to what C.F. Sharp wants to portray - the conduct of preparatory
interviews is a recruitment activity.

The fact that C.F. Sharp did not receive any payment during the interviews is of no moment. From the language of
Article 13(b), the act of recruitment may be "for profit or not." Notably, it is the lack of the necessary license or
authority, not the fact of payment, that renders the recruitment activity of LCL unlawful.

Indeed, it was Savva and Tjiakouris that conducted the interviews, and undertook selection and hiring. However,
C.F. Sharp cannot steer clear of liability for it conspired with LCL in committing illegal recruitment activities.

The petitioner-appellant must be reminded that prior to approval of the transfer of accreditation, no recruitment
or deployment may be made by the principal by itself or through the would-be transferee manning agency, or by
the latter, as this would constitute illegal recruitment by a non-holder of authority under Sec. 6, R.A. 8042 in
relation to Article 13(b) and (f) and Article 16 of the Labor Code as amended; Rule II(jj), Book I, and Sec. 1 and 6,
Rule 1, Book III, POEA Rules and Regulations Governing Overseas Employment.
The petitioner-appellant alleges that "there is no need for a license to enable LCL’s officers to conduct their alleged
activities of interviewing, selecting and hiring crewmen. Indeed, LCL’s officers could have conducted these activities
without a license."

Such claim is without legal basis, as direct hiring by employers of Filipino workers for overseas employment is
banned; they can only do so through, among others, licensed private recruitment and shipping/mining agencies
(Art. 18, Labor Code as amended; Sec. 1, Rule 1, Book II, POEA Rules and Regulations Governing Overseas
Employment).26

2. C.F. Sharp also denies violating Article 29 of the Labor Code. It insists that Henry Desiderio was neither an
employee nor an agent of C.F. Sharp. Yet, except for its barefaced denial, no proof was adduced to substantiate it.

Desiderio’s name does not appear in the list of employees and officials submitted by C.F. Sharp to the POEA.
However, his name appeared as the contact person of the applicants for the position of 2 nd and 3rd assistant
engineers and machinist/fitter in C.F Sharp’s advertisement in the February 2, 1997 issue of The Bulletin Today.27

Article 29 of the Labor Code is explicit, viz.:

Art. 29. NON-TRANSFERABILITY OF LICENSE OR AUTHORITY

No license or authority shall be used directly or indirectly by any person other than the one in whose favor it was
issued or at any place other than that stated in the license or authority, nor may such license or authority be
transferred, conveyed or assigned to any other person or entity. Any transfer of business address, appointment or
designation of any agent or representative including the establishment of additional offices anywhere shall be
subject to the prior approval of the Department of Labor. (Emphasis ours)

Thus, Section 2(k), Rule 1, Book VI of the POEA Rules Governing Overseas Employment provides:

Section 2. Grounds for Suspension/Cancellation of License.

xxxx

k. Appointing or designating agents, representatives or employees without prior approval from the Administration.

The appointment or designation of Desiderio as an employee or agent of C.F. Sharp, without prior approval from
the POEA, warrants administrative sanction.

People v. Nogra, (G.R. No. 170834, August 29, 2008)

FACTS

Several complainants filed a complaint for illegal recruitment against Antonio Nogra of Loran International
Overseas Recuitment Co, for failure to deploy them.

DECISIONS

RTC found him guilty.

CA affirmed RTC: Being employee is not a valid defense since employees who have knowledge and active
participation in the recruitment activities may be held liable.

ARGUMENTS:

NOGRA PEOPLE
Agency under management and control of ORciga; he Not mere clerk or employee, but operations manager
was a mere employee; not validly issued special
 authority to recruit hence not liable

RULING

Guilty of illegal recruitment.

1. International Overseas Recruitment Co., Ltd. is a duly licensed recruitment agency with authority to establish a
branch office. However, under R.A. No. 8042, even a licensee or holder of authority can be held liable for illegal
recruitment, should he commit or omit to do any of the acts enumerated in Section 6.

A thorough scrutiny of the prosecution's evidence reveals that it failed to prove appellant's liability under Section 6
(l) of R.A. No. 8042. The law requires not only that the failure to deploy be without valid reason "as determined by
the Department of Labor and Employment." The law envisions that there be independent evidence from the DOLE
to establish the reason for non-deployment, such as the absence of a proper job order. No document from the
DOLE was presented in the present case to establish the reason for the accused's failure to actually deploy private
complainants. Thus, appellant cannot be held liable under Section 6 (l) of R.A. No. 8042.

2. The penultimate paragraph of Section 6 of R.A. No. 8042 explicitly states that those criminally liable are the
"principals, accomplices, and accessories. In case of juridical persons, the officers having control, management or
direction of their business shall be liable." Contrary to appellant's claim, the testimonies of the complaining
witnesses and the documentary evidence for the prosecution clearly established that he was not a mere employee
of Loran, but its Operations Manager. The license of Loran, the files of the POEA and the nameplate prominently
displayed on his office desk reflected his position as Operations Manager. As such, he received private
complainants' job applications; and interviewed and informed them of the agency’s requirements prior to their
deployment, such as NBI clearance, police clearance, medical certificate, previous employment certificate and the
payment of placement fee. He was also responsible for the radio advertisements and leaflets, which enticed
complaining witnesses to apply for employment with the agency. Clearly, as Operations Manager, he was in the
forefront of the recruitment activities.

The defense of being a mere employee is not a shield against his conviction for large scale illegal recruitment.
In People v. Gasacao18 and People v. Sagayaga,19 the Court reiterated the ruling in People v. Cabais,20 People v.
Chowdury21 and People v. Corpuz22 that an employee of a company or corporation engaged in illegal recruitment
may be held liable as principal by direct participation, together with its employer, if it is shown that he actively and
consciously participated in the recruitment process.

In the present case, it was clearly established that appellant dealt directly with the private complainants. He
interviewed and informed them of the documentary requirements and placement fee. He promised deployment
within a three or four month-period upon payment of the fee, but failed to deploy them and to reimburse, upon
demand, the placement fees paid.