University of the Philippines College of Law

Illegal Recruitment – Prohibited Practices and Integration of POEA Standard Employment Contract in Every
Contract - terms, and conditions.

PERT/CPM MANPOWER EXPONENT CO., INC. , petitioner,

vs .
ARMANDO A. VINUYA, LOUIE M. ORDOVEZ, ARSENIO S.
Case Name LUMANTA, JR., ROBELITO S. ANIPAN, VIRGILIO R.
ALCANTARA, MARINO M. ERA, SANDY O. ENJAMBRE and
NOEL T. LADEA, respondents.

[G.R. No. 197528. September 5, 2012.]

DN | Date

Ponente J. Brion
Petitioner/s Pert/CPM Manpower – Recruiting Agency
Armando A Vinuya, Louie M. Ordovez, Arsenio S. Lumanta, Jr., Robelito S. Anipan, Virgilio R.
Respondent/s Alcantara, Marino M. Era, Sandy O. Enjambre and Noel T. Ladea - Employees sent by
petitioner to work at another company.
Case involves respondents, who were recruited by the petitioner, a recruitment agency for
work in Dubai. Parties signed an employment contract that was certified by the PH Overseas
Employment
Administration (POEA) but respondents were later made to sign another contract once they
were in Dubai that altered the terms of their employment.

Upon arrival at Dubai living and working conditions were vastly different from what was
Case
Summary
promised in the original employment contract i.e. appallingly substandard.

Respondents eventually resigned and filed a case for illegal dismissal. SC affirmed NLRC
decision, finding petitioner guilty of illegal recruitment under Art. 38 of the Labor Code
due to the alteration/substitution of the employment contracts. Also found guilty of
illegal dismissal due to the deplorable living and working conditions + contract
substitution serving as constructive illegal dismissal.

Art. 38 of the Labor Code as amended by RA 8042 defines contract substitution as illegal
recruitment - Art. 38 Illegal Recruitment - (i) To substitute or alter to the prejudice of the
worker, employment contracts approved and verified by the Department of Labor and
Doctrine Employment from the time of actual signing thereof by the parties up to and including the
period of the expiration of the same without the approval of the Department of Labor and
Employment[.]
 Terms and Conditions – Contract substitution of contracts approved and verified by
DOLE/POEA is considered as illegal recruitment. Contract substitution, when it acts to
the prejudice of workers is considered as grounds for constructive dismissal.

RELEVANT FACTS
1. Present Case – Certiorari, assailing decision of CA which affirmed NLRC decision which found
petitioner guilty of illegal dismissal.
2. Respondents are various workers who were recruited by Petitioner, a recruiting agency between March
29 2007 to May 12 2007 to work as aluminum fabricators/installers for Modern Metal Solution
LLC/MMS Modern Metal Solution LLC (Modern Metal) in Dubai.
3. Respondents’ employment contracts as approved by the Philippine Overseas Employment
Administration (POEA) provided the following terms:
a. (2) year employment | (9) hour work - day | 1,350 AED salary with overtime pay | Food
allowance | Free and suitable housing (4 people per room max) | free transportation | Free
laundry | Free medical and dental services
i. Respondents paid P15k each for the POEA processing fee
4. April 2 2007 – Modern Metal gave respondents (except for Marino Era) appointment letters with terms
different from the employment contracts certified by POEA
a. Employment – (3) years | 1,000 – 1,200 AED in salary | 200 AED in food allowance
5. Upon arrival at Dubai respondents were met with vastly different working conditions than what was
promised
a. 6:30am – 6:30 pm work hours | Breaktime of 1 hour – 1 hour and 30 minutes | Overtime
work unpaid or underpaid | Poor housing, shared with 27 other occupants | Lodging was
distant from jobsite, long travel time led to 3-4 hour sleep + no potable water + air pollution
6. Respondents lodged a complaint with the agency and were assured that their concerns would be
addressed promptly.
a. Spoiler: concerns were never addressed
7. May 5 2007 – Modern metal required the respondents to sign new employment contracts (except for
Marino Era who was made to sign at a later date)
a. New contracts had the same terms as their appointment letters (uncertified ones)
i. Respondents raised matters again with the agency, but no action was taken again.
8. Aug 5 2007 – respondents resigned from Modern Metal due to the unbearable living/working
conditions, respondents also signed affidavits of quitclaim and release shortly after resigning.
a. All of them except for Era cited personal/family problems as reason for resignation out of
fear that Modern metal would not give them their release papers and salaries.
b. Marino Era only one who indicated real reason for resignation – “because I don’t want the
company policy”
9. September 2007 – Respondents returned to Manila with everyone except for Ordovez and Enjambre
shouldering the costs for their airfare.
10. March 5 2008 – respondents filed a complaint against the agency (PERT/CPM) for illegal dismissal
before the NLRC which referred the case to Labor Arbiter Ligerio Ancheta.
a. Respondent agency raised the following defense:
 i. That there was no illegal dismissal, as petitioners voluntarily resigned from Modern
Metal to take a higher paying job at another company which then fell through leading
to them having to return home.
ii. That respondents voluntarily signed affidavits of quitclaim and release after their
resignation – thus making their claim for benefits under RA 8042 1 + Damages &
Attorney’s fees unfounded
11. April 30 2008 – Labor Arbiter ruled in favor of PERT/CPM finding that:
a. There was voluntary resignation on the part of the respondents.
b. 4 respondents – Alcantara, era, Anipan and Lumanta executed a compromise agreement with
quitclaim and release (this is different from the quitclaim and release that they signed after
resigning) before the POEA, thereby violating the rule on forum shopping.
12. Respondents appealed to the NLRC.
13. May 12 2009 – NLRC granted the appeal, finding that there was illegal dismissal because respondents
were virtually forced to resign due to working conditions.
a. Ruling was anchored on the fact that respondents were made to sign new employment
contracts in Dubai – stressing that this constituted illegal practice, especially since the new
contracts had inferior benefits in comparison to the POEA-approved contracts.
b. Quitclaim and release were executed under duress due to fear that they would not be allowed
to return to the Philippines if they did not sign the documents.
c. Compromise agreement executed before POEA was not forum shopping, as the POEA case
dealt with pre-deployment issues whereas current NLRC case dealt with illegal dismissal and
money claims arising from employment.
14. NLRC ordered the agency, its president, and Modern Metal to pay respondents jointly and severally
their underpaid salaries + placement fees + salaries covering unexpired portion of appointment
contract + attorney’s fees.
15. Both parties moved for reconsideration – NLRC granted respondents motion for reconsideration –
CA later upheld the ruling of the NLRC leading to current appeal. (See notes for table of awards)
a. Petitioner – argued that appeal to NLRC was never perfected
b. Respondents – Award of salaries should also cover unexpired portion of employment
contracts pursuant to doctrine in Serrano v. Gallant Maritime Services, Inc. 2

Issue/s Ratio Decidendi

1. W/N (1) Agency and Modern metal guilty of contract substitution & illegal recruitment – under
there was Art. 34 and 38 of the Labor Code alteration or substitution of employment contracts
illegal without the approval of the Secretary of Labor 3 - In the case, the parties entered into

1. AN ACT TO INSTITUTE THE POLICIES OF OVERSEAS EMPLOYMENT AND ESTABLISH A HIGHER STANDARD
OF PROTECTION AND PROMOTION OF THE WELFARE OF MIGRANT WORKERS, THEIR FAMILIES AND
OVERSEAS FILIPINOS IN DISTRESS, AND FOR OTHER PURPOSES

2 Serrano struck down a section of RA 8042 which limited the entitlement of illegally dismissed OFWs to the salaries for the unexpired
term of their contract or three months, whichever amount was less.
 dismissal? a POEA approved two-year employment contract but the respondents were later made
– YES to sign new employment contracts without the approval of POEA.
(2) Agency and Modern Metal committed breach of contract – both the POEA contracts
and the appointment contracts provided for free housing and transportation to and
from the jobsite. Respondents were given deplorable living conditions (see above
testimony) which the agency failed to remedy even after complaints were brought to
them.
(3) Constructive Dismissal – Constructive dismissal is “defined as a quitting because continued
employment is rendered impossible, unreasonable, or unlikely, as, an offer involving a demotion in rank
and a diminution in pay” in the present case, the substitution of the POEA contract as well
as the oppressive living and working conditions in breach of the contract cast doubt on
the resignation of the respondents particularly because the wording of the resignation
letters frees the employer from any liability + they all quit due to “family problems” at
the same time.
o Respondents maintain that the real reason they cited family problems as a
reason was out of fear that they would not receive their salaries and release
papers if they stated the actual reason for their resignation (shitty working
conditions).
o Affidavits of quitclaim and release similarly suspect, they appear to be based
off of ready made templates in order to reinforce the resignation letters. Several
affidavits mention a recruitment agency totally unrelated to the parties which
is indicative that affidavits are part of the employer’s rushed attempt to avoid
liability.
(4) Compromise Agreement with POEA – the compromise agreement only covered the
airfare that the respondents shouldered for their return to the Philippines, no showing
that it fully settled all other claims before the NLRC i.e. illegal dismissal, monetary
benefits, etc.
(5) Serrano Ruling – the SC in Yap v. Thenamaris Ship’s Management sustained the retroactive
application of the Serrano ruling. Similarly, amendment made by RA 10022 cannot be
made retroactive as there is no express declaration of retroactivity in the law and doing
so will result in the impairment of a right already accrued (entitlement of respondents
to salaries for the unexpired portion of their contracts)
o Court declines to rule on constitutionality of RA 10022

RULING

WHEREFORE, premises considered, the petition is DENIED. The assailed Decision dated May 9, 2011 and
the Resolution dated June 23, 2011 of the Court of Appeals in CAG. R. SP No. 114353 are AFFIRMED.
Let this Decision be brought to the attention of the Honorable Secretary of Labor and Employment and
the Administrator of the Philippine Overseas Employment Administration as a black mark in the
deployment record of petitioner Pert/CPM Manpower Exponent Co., Inc., and as a record that should be
considered in any similar future violations.

Costs against the petitioner.

3 Art. 34. Prohibited Practices. — It shall be unlawful for any individual, entity, licensee, or holder of authority: (i) To substitute or alter
employment contracts approved and verified by the Department of Labor from the time of actual signing thereof by the parties
up to and including the periods of expiration of the same without the approval of the Secretary of Labor[.]
Art. 38 – Illegal Recruitment - (i) To substitute or alter to the prejudice of the worker, employment contracts approved and verified
by the Department of Labor and Employment from the time of actual signing thereof by the parties up to and including the period
of the expiration of the same without the approval of the Department of Labor and Employment[.]
SO ORDERED.

Notes