PERT/CPM MANPOWER EXPONENT CO., INC.

, petitioner,
vs .
ARMANDO A. VINUYA, LOUIE M. ORDOVEZ, ARSENIO S. 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.]

J. Brion

Digest Author: Jude Fanila

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

Case Summary: 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 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.

Parties Involved – Petitioner: Pert/CPM Manpower – Recruiting Agency | Respondents – Former

Employees sent by petitioner to work at another company by petitioner.

Doctrines Involved: 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 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.

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 raising the following arguments:
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

ARGUMENTS BEFORE THE SUPREME COURT:

 Petitioner’s Argument related to Doctrine:
o No Illegal Dismissal – Respondents voluntarily resigned
o Quitclaim and release are controlling, no showing that there was duress during the time
they were executed.
o Compromise agreement with POEA – forum shopping as not limited to recruitment
violations but also covered current issues

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.
 o Serrano ruling – should not be made retroactive, as case was filed in 2007 whereas
Serrano was promulgated in 2009; RA 10022 which amended RA 8042 restored the
provisions deleted in Serrano.
 Respondent’s Argument related to Doctrine:
o Illegal Dismissal – working conditions left them no choice but to resign
o Quitclaim and release affidavits – under duress as agency would not release papers and
remaining salaries unless they signed
o Compromise agreement with POEA – limited to recruitment/pre-deployment issues thus
covers issues different from the ones tackled in the current case
o Serrano ruling – should be made retroactive as it is curative and remedial in nature; issue
of RA 10022 cannot be raised now as it was not raised before the lower courts, even if it
was law is prospective in its application.
 Also asked court to strike down Sec. 7 of RA 10022 which restored the provision
deleted in Serrano.

ISSUES + HELD:
1. W/N there was illegal dismissal? – YES
o (1) Agency and Modern metal guilty of contract substitution & illegal recruitment –
under Art. 34 and 38 of the Labor Code alteration or substitution of employment
contracts without the approval of the Secretary of Labor 3 - In the case, the parties
entered into a POEA approved two-year employment contract but the respondents were
later made to sign new employment contracts without the approval of POEA.
o (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.
o (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.
 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).
 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.

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[.]
 o (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.
o (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)
 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.

SO ORDERED.

NOTES:

1.