LaborRev Assignment No.
1 | 1
G.R. No. 211497. March 18, 2015.*
HOCHENG PHILIPPINES CORPORATION, petitioner, vs. ANTONIO M.
FARRALES, respondent.
Labor Law; Termination of Employment; To validly dismiss an employee, the
law requires the employer to prove the existence of any of the valid or
authorized causes, which, as enumerated in Article 282 of the Labor Code.—
To validly dismiss an employee, the law requires the employer to prove the
existence of any of the valid or authorized causes, which, as enumerated in
Article 282 of the Labor Code, are: (a) serious misconduct or willful
disobedience by the employee of the lawful orders of his employer or the
latter’s representative in connection with his work; (b) gross and habitual
neglect by the employee of his duties; (c) fraud or willful breach by the
employee of the trust reposed in him by his employer or his duly authorized
representative; (d) commission of a crime or offense by the employee against
the person of his employer or any immediate member of his family or his duly
authorized representative; and (e) other causes analogous to the foregoing.
As a supervisorial employee, Farrales is admittedly subject to stricter rules of
trust and confidence, and thus pursuant to its management prerogative HPC
enjoys a wider latitude of discretion to assess his continuing trustworthiness,
than if he were an ordinary rank-and-file employee. HPC therefore insists that
only substantial proof of Farrales’ guilt for theft is needed to establish the just
causes to dismiss him, as the NLRC lengthily asserted in its decision.
Same; Same; Security of Tenure; Consistent with the State’s avowed policy
to afford protection to labor, as Article 3 of the Labor Code and Section 3,
Article XIII of the 1987 Constitution have enunciated, particularly in relation to
the worker’s security of tenure, the Court held that [t]o be lawful, the cause
for termination must be a serious and grave malfeasance to justify the
deprivation of a means of livelihood.—Article 4 of the Labor Code mandates
that all doubts in the implementation and interpretation of the provisions
thereof shall be resolved in favor of labor. Consistent with the State’s avowed
policy to afford protection to labor, as Article 3 of the Labor Code and Section
3, Article XIII of the 1987 Constitution have enunciated, particularly in relation
to the worker’s security of tenure, the Court held that “[t]o be lawful, the
cause for termination must be a serious and grave malfeasance to justify the
deprivation of a means of livelihood. This is merely in keeping with the spirit
of our Constitution and laws which lean over backwards in favor of the
working class, and mandate that every doubt must be resolved in their favor.”
Moreover, the penalty imposed on the erring employee ought to be
proportionate to the offense, taking into account its nature and surrounding
circumstances.
Same; Same; Serious Misconduct; Theft; Theft committed by an employee
against a person other than his employer, if proven by substantial evidence,
is a cause analogous to serious misconduct.—Theft committed by an
employee against a person other than his employer, if proven by substantial
evidence, is a cause analogous to serious misconduct. Misconduct is
improper or wrong conduct, it is the transgression of some established and
definite rule of action, a forbidden act, a dereliction of duty, willful in
character, and implies wrongful intent and not mere error in judgment. The
misconduct to be serious must be of such grave and aggravated character
and not merely trivial or unimportant. Such misconduct, however serious,
must, nevertheless, be in connection with the employee’s work to constitute
just cause for his separation.
PETITION for review on certiorari of a decision of the Court of Appeals.
The facts are stated in the opinion of the Court.
  Zamora, Poblador, Vasquez & Bretana for petitioner.
  Frederick T. Yu for respondent.
 
REYES, J.:
Before this Court on Petition for Review on Certiorari1 is the Decision2 dated
October 17, 2013 of the Court of Appeals (CA) in CA-G.R. SP No. 125103,
which reversed the Decision3 dated February 29, 2012 and Resolution4 dated
May 7, 2012 of the National Labor Relations Commission (NLRC) in NLRC
LAC No. 08-002249-11, and reinstated with modifications the Decision 5 dated
April 29, 2011 of the Labor Arbiter (LA) in NLRC Case No. RAB-IV-03-00618-
10-C, which found that respondent Antonio M. Parrales (Parrales) was
illegally dismissed by Hocheng Philippines Corporation (HPC). The fallo of
the appellate decision reads:
WHEREFORE, premises considered, the Decision of the Labor Arbiter dated
April 29, 2011 in NLRC Case No. RAB-IV-03-00618-10-C is reinstated with
modifications. Private respondent Hocheng Philippines Corporation is liable
to pay [Farrales] the following:
(1) Full backwages from date of dismissal on February 15, 2010 until
date of decision equivalent to P276,466.67;
(2) Separation pay of one (1) month salary per year of service for a
period of twelve years equivalent to P228,800.00;
(3) Appraisal year-end bonus in the sum of P11,000.00; and,
LaborRev Assignment No. 1 | 2
(4) Attorney’s fees equivalent to 10% of the total award.
SO ORDERED.6
The Facts
Farrales was first employed by HPC on May 12, 1998 as Production
Operator, followed by promotions as (1) Leadman in 2004, (2) Acting
Assistant Unit Chief in 2007, and (3) Assistant Unit Chief of Production in
2008, a supervisory position with a monthly salary of 17,600.00. He was a
consistent recipient of citations for outstanding performance, as well as
appraisal and year-end bonuses.7
On December 2, 2009, a report reached HPC management that a motorcycle
helmet of an employee, Reymar Solas (Reymar), was stolen at the parking
lot within its premises on November 27, 2009. On December 3, 2009,
Security Officer Francisco Paragas III confirmed a video sequence recorded
on closed-circuit television (CCTV) around 3:00 p.m. on November 27, 2009
showing Farrales taking the missing helmet from a parked motorcycle, to wit:
a. At around 3:07:44, [Farrales] was seen walking towards the
motorcycle parking lot;
b. At around 3:08:47, [Farrales] walked back towards the pedestrian
gate of the company, passing by the motorcycle parking lot;
c. At around 3:08:51, [Farrales] walked back towards the motorcycle
parking lot and returned to the pedestrian gate;
d. At around 3:09:10, [Farrales] called on the person of Andy Lopega
and instructed him to get the helmet he was pointing at; [and]
e. At around 3:09:30, Andy gave the helmet to [Farrales]. 8
Later that day, HPC sent Farrales a notice to explain his involvement in the
alleged theft. The investigation was supported by the employees’ union,
ULO-Hocheng.9 Below is Farrales’ explanation, as summarized by the CA:
On November 27, 2009, [Farrales] borrowed a helmet from his co-worker Eric
Libutan ("Eric") since they reside in the same barangay. They agreed that
Eric could get it at the house of [Farrales] or the latter could return it the next
time that they will see each other. Eric told him that his motorcycle was black
in color. As there were many motorcycles with helmets, he asked another
employee, Andy Lopega ("Andy") who was in the parking area where he
could find Eric’s helmet. Andy handed over to him the supposed helmet
which he believed to be owned by Eric, then he went home.
On November 28, 2009, at around 6 o’clock in the morning, he saw Eric at
their barangay and told him to get the helmet.1âwphi1 But Eric was in a rush
to go to work, he did not bother to get it.
In the morning of December 3, 2009, upon seeing Eric in the workplace,
[Farrales] asked him why he did not get the helmet from his house. Eric told
him that, "Hindi po sa akin yung nakuha nyong helmet." [Farrales] was
shocked and he immediately phoned the HPC’s guard to report the situation
that he mistook the helmet which he thought belonged to Eric. After several
employees were asked as to the ownership of the helmet, he finally found the
owner thereof, which is Jun Reyes’s ("Jun") nephew, Reymar, who was with
him on November 27, 2009. [Farrales] promptly apologized to Jun and
undertook to return the helmet the following day and explained that it was an
honest mistake. These all happened in the morning of December 3, 2009;
[Farrales] did not know yet that HPC will send a letter demanding him to
explain.10
A hearing was held on December 10, 2009 at 1:00 p.m. Present were
Farrales, Eric Libutan (Eric), Andy Lopega (Andy), Jun Reyes, Antonio
Alinda, a witness, and Rolando Garciso, representing ULO-Hocheng. From
Andy it was learned that at the time of the alleged incident, he was already
seated on his motorcycle and about to leave the company compound when
Farrales approached and asked him to hand to him a yellow helmet hanging
from a motorcycle parked next to him. When Andy hesitated, Farrales
explained that he owned it, and so Andy complied. But Eric had specifically
told Farrales that his helmet was colored red and black and his motorcycle
was a black Honda XRM-125 with plate number 8746-DI, parked near the
perimeter fence away from the walkway to the pedestrian gate. The CCTV
showed Farrales instructing Andy to fetch a yellow helmet from a blue Rossi
110 motorcycle with plate number 3653-DN parked in the middle of the
parking lot, opposite the location given by Eric. Farrales in his defense
claimed he could no longer remember the details of what transpired that time,
nor could he explain why he missed Eric’s specific directions. 11
On February 15, 2010, the HPC issued a Notice of Termination 12 to Farrales
dismissing him for violation of Article 69, Class A, Item No. 29 of the HPC
Code of Discipline, which provides that "stealing from the company, its
employees and officials, or from its contractors, visitors or clients," is akin
LaborRev Assignment No. 1 | 3
to serious misconduct and fraud or willful breach by the employee of
the trust reposed in him by his employer or duly authorized
representative, which are just causes for termination of employment under
Article 282 of the Labor Code.
On March 25, 2010, Farrales filed a complaint for illegal dismissal, non-
payment of appraisal and mid-year bonuses, service incentive leave pay and
13th month pay. He also prayed for reinstatement, or in lieu thereof,
separation pay with full backwages, plus moral and exemplary damages and
attorney’s fees. During the mandatory conference, HPC paid Farrales
10,914.51, representing his 13th month pay for the period of January to
February 2010 and vacation leave/sick leave conversion. Farrales agreed to
waive his claim for incentive bonus.13
On April 29, 2011, the LA ruled in favor of Farrales, 14 the fallo of which is as
follows:
WHEREFORE, PREMISES CONSIDERED, all the respondents Hocheng
Phils. Corporation, Inc. Sam Chen[g] and Judy Geregale are found guilty of
illegal dismissal and ordered jointly and severally to pay complainant the
following:
1. Full backwages from date of dismissal on February 15, 2010 until
date of decision equivalent to P276,466.67.
2. Separation pay of one (1) month salary per year of service for a
period of twelve years equivalent to P228,800.00.
3. Appraisal year-end bonus in the sum of P11,000.00.
4. Moral damages in the sum of P200,000.00.
5. Exemplary damages in the sum of P100,000.00.
6. 10% of all sums owing as attorney’s fees or the amount of
P81,626.67.
SO ORDERED.15
On appeal by HPC,16 the NLRC reversed the LA,17 and denied Farrales’
motion for reconsideration, finding substantial evidence of just cause to
terminate Farrales.18
On petition for certiorari to the CA,19 Farrales sought to refute the NLRC’s
factual finding that he committed theft, as well as to question NLRC’s
jurisdiction over HPC’s appeal for non-payment of appeal fees. But the CA
found that HPC was able to perfect its appeal by posting a bond equivalent to
the monetary award of 897,893.37 and paying the appeal fees by postal
money order in the amount of 520.00.20
Concerning the substantive issues, the appellate court agreed with the LA
that Farrales’ act of taking Reymar’s helmet did not amount to theft, holding
that HPC failed to prove that Farrales’ conduct was induced by a perverse
and wrongful intent to gain, in light of the admission of Eric that he did let
Farrales borrow one of his two helmets, only that Farrales mistook Reymar’s
helmet as the one belonging to him.
Petition for Review to the Supreme Court
In this petition, HPC raises the following grounds for this Court’s review:
A. THE HONORABLE [CA] PLAINLY ERRED AND ACTED CONTRARY TO
EXISTING LAW AND JURISPRUDENCE IN REVERSING THE DECISION
OF THE [NLRC] AND DECLARING ILLEGAL THE DISMISSAL FOR [HPC's]
ALLEGED FAILURE TO PROVE THE EXISTENCE OF JUST CAUSE.
1. THERE IS SUBSTANTIAL EVIDENCE TO SHOW THAT
[FARRALES] COMMITTED THEFT IN [HPC's] PREMISES.
2. THEFT IS A JUST CAUSE FOR TERMINATION.
3. BY COMMITTING THEFT, [FARRALES], BEING A
SUPERVISORIAL EMPLOYEE, FORFEITED THE TRUST
REPOSED IN HIM BY [HPC], THUS RENDERING HIM
DISMISSIBLE FOR LOSS OF CONFIDENCE.
B. IN DECLARING ILLEGAL THE DISMISSAL OF [FARRALES], THE
HONORABLE [CA] VIOLATED DOCTRINES LAID DOWN BY THE
SUPREME COURT.
1. COURTS CANNOT SUBSTITUTE THEIR JUDGMENT FOR
THAT OF THE MANAGEMENT.
2. COURTS MUST ACCORD DUE RESPECT TO THE FINDINGS
OF ADMINISTRATIVE AGENCIES.21
LaborRev Assignment No. 1 | 4
Chiefly, HPC insists that since the complaint below involves an administrative
case, only substantial evidence, not proof of guilt beyond reasonable doubt,
is required to prove the guilt of Farrales;22 that what the CA has done is
substitute its judgment for that of the NLRC, which is vested with statutory
duty to make factual determinations based on the evidence on record. 23
Ruling of the Court
The Court resolves to deny the petition.
To validly dismiss an employee, the law requires the employer to prove the
existence of any of the valid or authorized causes, 24 which, as enumerated in
Article 282 of the Labor Code, are: (a) serious misconduct or willful
disobedience by the employee of the lawful orders of his employer or the
latter’s representative in connection with his work; (b) gross and habitual
neglect by the employee of his duties; (c) fraud or willful breach by the
employee of the trust reposed in him by his employer or his duly authorized
representative; (d) commission of a crime or offense by the employee against
the person of his employer or any immediate member of his family or his duly
authorized representative; and (e) other causes analogous to the
foregoing.25 As a supervisorial employee, Farrales is admittedly subject to
stricter rules of trust and confidence, and thus pursuant to its management
prerogative HPC enjoys a wider latitude of discretion to assess his continuing
trustworthiness, than if he were an ordinary rank-and-file employee. 26 HPC
therefore insists that only substantial proof of Farrales’ guilt for theft is
needed to establish the just causes to dismiss him, as the NLRC lengthily
asserted in its decision.
Article 4 of the Labor Code mandates that all doubts in the implementation
and interpretation of the provisions thereof shall be resolved in favor of labor.
Consistent with the State’s avowed policy to afford protection to labor, as
Article 3 of the Labor Code and Section 3, Article XIII of the 1987 Constitution
have enunciated, particularly in relation to the worker’s security of tenure, the
Court held that "[t]o be lawful, the cause for termination must be a serious
and grave malfeasance to justify the deprivation of a means of livelihood.
This is merely in keeping with the spirit of our Constitution and laws which
lean over backwards in favor of the working class, and mandate that every
doubt must be resolved in their favor." 27 Moreover, the penalty imposed on
the erring employee ought to be proportionate to the offense, taking into
account its nature and surrounding circumstances.
The Court has always taken care, therefore, that the employer does not
invoke any baseless justification, much less management prerogative, as a
subterfuge by which to rid himself of an undesirable worker, 28 and thus in
exceptional cases the Court has never hesitated to delve into the NLRC’s
factual conclusions where evidence was found insufficient to support them, or
too much was deduced from the bare facts submitted by the parties, or the
LA and the NLRC came up with conflicting positions, as is true in this case. 29
As aptly pointed out by the LA, while HPC has the onus probandi that the
taking of Reymar’s helmet by Farrales was with intent to gain, it failed to
discharge this burden, as shown by the following circumstances: Farrales
sought and obtained the permission of Eric, his co-employee as well as
barangay co-resident, to borrow his helmet; at the parking lot, Farrales asked
another employee, Andy, to fetch a yellow helmet from one of the parked
motorcycles, mistakenly thinking it belonged to Eric (whom he knew owned
two helmets); the following day, November 28, Farrales asked Eric why he
had not dropped by his house to get his helmet, and Eric replied that Farrales
got the wrong helmet because he still had his other helmet with him; Farrales
immediately sought the help of the company guards to locate the owner of
the yellow helmet, who turned out to be Reymar; Farrales apologized to
Reymar for his mistake, and his apology was promptly accepted. 30 All these
circumstances belie HPC’s claim that Farrales took Reymar’s helmet with
intent to gain, the LA said.
In ruling that Farrales’ dismissal by HPC was attended with utmost malice
and bad faith as to justify an award of moral and exemplary damages and
attorney’s fees, the LA stated that "[i]t is succinctly clear that [the]
respondents [therein] tried to blow out of proportions the indiscretion of
[Farrales] for reasons known only to them," and moreover, "[f]inding that the
dismissal on the ground of theft is unavailing, [the] respondents [therein]
immediately offered [Farrales] his former position when he filed [his]
complaint. What does this act of [the] respondents [therein] speak [of]?" 31
On the other hand, the NLRC found that Farrales lied, first, when he told
Andy, then already astride his motorbike at the parking area and about to
leave the company premises, that the yellow helmet belonged to
him,32 and second, when he claimed that Eric was his neighbor, although
they were not. It ruled as doubtful Farrales’ hazy recollection about what
happened that afternoon at the parking lot, since he could not even give a
description of the motorcycle from which he took the yellow helmet. These
circumstances, the NLRC determined, comprise substantial proof belying
Farrales’ claim of good faith. As a supervisory employee, he held a position
of high responsibility in the company making him accountable to stricter rules
of trust and confidence than an ordinary employee, and under Article 282 of
the Labor Code, he is guilty of a serious misconduct and a willful breach of
LaborRev Assignment No. 1 | 5

trust. The NLRC went on to cite a settled policy that in trying to protect the dismissal.36 If doubts exist between the evidence presented by the employer
rights of labor, the law does not authorize the oppression or self-destruction and that of the employee, the scales of justice must be tilted in favor of the
of the employer. Management also has its own rights, which as such, are latter. The employer must affirmatively show rationally adequate evidence
entitled to respect and enforcement in the interest of simple fair play. 33 that the dismissal was for a justifiable cause.37

But the Court agrees with the CA that Farrales committed no serious or willful
misconduct or disobedience to warrant his dismissal.1âwphi1 It is not
disputed that Farrales lost no time in returning the helmet to Reymar the
moment he was apprised of his mistake by Eric, which proves, according to
the CA, that he was not possessed of a depravity of conduct as would justify
HPC’s claimed loss of trust in him. Farrales immediately admitted his error to
the company guard and sought help to find the owner of the yellow helmet,
and this, the appellate court said, only shows that Farrales did indeed
mistakenly think that the helmet he took belonged to Eric.
Nonetheless, the Court agrees with the CA’s dismissal of the award of moral
and exemplary damages for lack of merit. There is no satisfactory proof that
the concerned officers of HPC acted in bad faith or with malice in terminating
Farrales. Notwithstanding the LA’s assertion to this effect, Farrales’ bare
allegations of bad faith deserve no credence, and neither is the mere fact that
he was illegally dismissed sufficient to prove bad faith on the part of HPC’s
officers.38 But concerning the award of attorney’s fees, Farrales was
dismissed for a flimsy charge, and he was compelled to litigate to secure
what is due him which HPC unjustifiably withheld.

It is not, then, difficult to surmise that when Farrales told Andy that the yellow WHEREFORE, premises considered, the petition for review is DENIED. SO
helmet was his, his intent was not to put up a pretence of ownership over it ORDERED.
and thus betray his intent to gain, as the NLRC held, but rather simply to
assuage Andy’s reluctance to heed his passing request to reach for the
helmet for him; Andy, it will be recalled, was at that moment already seated in
his motorbike and about to drive out when Farrales made his request. As to
Farrales’ claim that he and Eric were neighbors, suffice it to say that as the
CA noted, they resided in the same barangay, and thus, loosely, were
neighbors.

The CA also pointed out that although the alleged theft occurred within its
premises, HPC was not prejudiced in any way by Farrales’ conduct since the
helmet did not belong to it but to Reymar. In light of Article 69, Class A, Item
No. 29 of the HPC Code of Discipline, this observation may be irrelevant,
although it may be that the LA regarded it as proving HPC’s bad faith.

Theft committed by an employee against a person other than his employer, if

proven by substantial evidence, is a cause analogous to serious
misconduct.34 Misconduct is improper or wrong conduct, it is the
transgression of some established and definite rule of action, a forbidden act,
a dereliction of duty, willful in character, and implies wrongful intent and not
mere error in judgment. The misconduct to be serious must be of such grave
and aggravated character and not merely trivial or unimportant. Such
misconduct, however serious, must, nevertheless, be in connection with the
employee’s work to constitute just cause for his separation. 35

But where there is no showing of a clear, valid and legal cause for
termination of employment, the law considers the case a matter of illegal
LaborRev Assignment No. 1 | 6
G.R. No. 198968. January 18, 2017.*
STATUS MARITIME CORPORATION, and ADMIBROS
SHIPMANAGEMENT CO., LTD., petitioners, vs. RODRIGO C.
DOCTOLERO, respondent.
Labor Law; Seafarers; Disability Benefits; Conditions In Order for a
Seafarer’s Claim for Total and Permanent Disability Benefits to Prosper.—In
order for a seafarer’s claim for total and permanent disability benefits to
prosper, any of the following conditions should be present: (a) The company-
designated physician failed to issue a declaration as to his fitness to engage
in sea duty or disability even after the lapse of the 120-day period and there
is no indication that further medical treatment would address his temporary
total disability, hence, justify an extension of the period to 240 days; (b) 240
days had lapsed without any certification issued by the company-designated
physician; (c) The company-designated physician declared that he is fit for
sea duty within the 120-day or 240-day period, as the case may be, but his
physician of choice and the doctor chosen under Section 20-B(3) of the
POEA-SEC are of a contrary opinion; (d) The company-designated physician
acknowledged that he is partially permanently disabled but other doctors who
he consulted, on his own and jointly with his employer, believed that his
disability is not only permanent but total as well; (e) The company-designated
physician recognized that he is totally and permanently disabled but there is
a dispute on the disability grading; (f) The company-designated physician
determined that his medical condition is not compensable or work-related
under the POEA-SEC but his doctor-of-choice and the third doctor selected
under Section 20-B(3) of the POEA-SEC found otherwise and declared him
unfit to work; (g) The company-designated physician declared him totally and
permanently disabled but the employer refuses to pay him the corresponding
benefits; and (h) The company-designated physician declared him partially
and permanently disabled within the 120-day or 240-day period but he
remains incapacitated to perform his usual sea duties after the lapse of said
periods.
Same; Same; The conflict between the factual findings of the Labor Arbiter
(LA) and National Labor Relations Commission (NLRC), on one hand, and
those of the Court of Appeals (CA), on the other hand, compel the Supreme
Court (SC) to dwell on the factual matters and to reexamine the evidence
adduced by the parties.—Although the degree and extent of the seafarer’s
disability constitute a factual question that this Court should not reassess on
review, the conflict between the factual findings of the Labor Arbiter and
NLRC, on one hand, and those of the CA, on the other hand, compel the
Court to dwell on the factual matters and to reexamine the evidence adduced
by the parties. Upon its reevaluation of the records, therefore, the Court
concludes that the CA’s findings in favor of entitling Doctolero to permanent
and total disability benefits were erroneous. While the fact that Doctolero
suffered the disability during the term of his contract was undisputed, it was
evident that he had filed his complaint for disability benefits before the
company-designated physician could determine the nature and extent of his
disability, or before even the lapse of the initial 120-day period. With
Doctolero still undergoing further tests, the company-designated physician
had no occasion to determine the nature and extent of his disability upon
which to base Doctolero’s “fit to work” certification or disability grading.
Consequently, the petitioners correctly argued that Doctolero had no cause
of action for disability pay and sickness allowance at the time of the filing of
his complaint.
PETITION for review on certiorari of the decision and resolution of the Court
of Appeals.
The facts are stated in the opinion of the Court.
   Tarriela, Tagao, Ona & Associates for petitioners.
   Linsangan, Linsangan and Linsangan Law Office for respondent.
BERSAMIN, J.:
Petitioners Status Maritime Corporation (Status Maritime) and Admibros
Shipmanagement Co., Ltd. (Admibros) appeal to assail the March 17, 2011
decision 1 and October 6, 2011 resolution 2 promulgated in CA-G .R. SP No.
113206, whereby the Comi of Appeals (CA), modifying the
decision3 rendered on August 18, 2009 by the National Labor Relations
Commission (NLRC), awarded permanent and total disability benefits in favor
of respondent Rodrigo C. Doctolero.
Antecedents
On July 28, 2006, Status Maritime, acting for and in behalf of Admibros as its
principal, hired Doctolero as Chief Officer on board the vessel M/V Dimitris
Manios II for a period of nine months with a basic monthly salary of
US$1,250.00. Doctolero underwent the. required. PreEmployment Medical
LaborRev Assignment No. 1 | 7
Examination (PEME) prior to his. ei-pbarkatiqn, and was declared "fit to
work." He boarded the vessel in·Augtist 2009.
On October 28, 2006, while M/V Dimitris Manios II was in Mexico, Doctolero
experienced chest and abdominal pains. He was brought to a medical clinic
in Vera Cruz, Mexico. When no clear diagnosis could be made, he resumed
work on board the vessel. In the evening of the same day, however, he was
brought to Clinic San Luis, also in Mexico, because he again complained of
abdominal pains. He was then diagnosed to be suffering from "Esophago-
Gastritis-Duodenitis." The attending physician, Dr. Jorge Hernandez Bustos,
recommended his repatriation.
On October 29, 2006, Doctolero again experienced difficulty of breathing
while waiting for his return flight schedule. He informed the ship's agent of his
condition and requested assistance, but the latter extended no assistance to
him. Thus, he, by himself, went to the Hospitales Nacionales, where he was
admitted. He paid the hospital bills amounting to MXN$7 ,032.17 on his
own.4 Upon discharge, he sought assistance from the Philippine Embassy
until his repatriation to the Philippines in the second week of November
2006. 5
On November 16, 2006, the company-designated physician evaluated
Ooctolero 's condition and found normal upper gastro-intestinal endoscopy
and negative H. pylori test. 6 Doctolero was recommended for several other
tests that were, however, not administered.
On January 22, 2007, on account of the illness suffered while working on
board the M/V Dimitris Manios II, Doctolero filed in the NLRC his complaint
demanding payment of total and permanent disability benefits,
reimbursement of medical and hospital expenses, sickwage allowance, moral
and exemplary damages, and legal interest on his claims.7
Ruling of the Labor Arbiter
On July 18, 2008, Labor Arbiter Pablo C. Espiritu, Jr. rendered his decision
dismissing the complaint for lack of merit. 8 He opined that the initial diagnosis
of gastritis-duodenitis was not one of those listed as an occupational illness
in the Philippine Overseas Employment Administration Standard Employment
Contract (POEA-SEC); and that no evidence was adduced to establish that
such illness had been caused or aggravated by the working conditions on
board the vessel. 9
Decision of the NLRC
On appeal, the NLRC affirmed the Labor Arbiter's finding no basis for the
award of sickness allowance and disability pay but held the petitioners liable
to reimburse to Doctolero the cost of his medical treatment in the amount of
$7,040.65. It ratiocinated and disposed as follows:
x x x x The illness was clearly suffered during the term of his contract and
insofar as work relatedness is concerned, there being no contrary evidence
adduced by the respondents-appellees of the nonexistence of causative
circumstances of complainant-appellant's illness, We are constrained to rule
in the latter's favor. The latter finding is likewise supported by the consistent
ruling that it is not required that the employment be the sole factor in the
growth, development or acceleration of the illness to entitle the claimant to
the benefits incident thereto. It is enough that the employment had
contributed, even in a small measure, to the development of the disease.
That said, complainant-appellant is thus entitled to reimbursement of his
medical expenses in Veracruz, Mexico equivalent to $7,040.65. (Records, p.
28) However, with respect to his claims for sickness allowance and disability
pay, there being no declaration as yet of complainant-appellant's fitness to
return to work or degree of disability made by the company designated
physician, entitlement thereto has not attached. We take note of the fact that
the initial evaluation of the company designated physician was that the
Gastroscopy was normal and after such evaluation there had been no other
assessment on his condition made. We also note that there had been no
other assessment made by any other doctor of complainant-appellant's
condition that would controvert the findings of the company designated
physician and that this complaint has been filed before the 120 days period
given to company designated physician to make a fitness to return to work
assessment or a disability grading in the latter case. It is clear therefore that
the instant case has been prematurely filed and that the cause of action for
disability claims has not arisen.
Moreover, to this date there had been no evidence showing that complainant-
appellant is permanently and totally disabled.
WHEREFORE, premises considered, judgment is hereby rendered finding no
basis for award of sickness allowance and disability pay.1âwphi1 However,
respondents-appellees are hereby ordered to reimburse complainant-
appellant the cost of his medical treatment in the amount of $7,040.65.
Accordingly, the decision of the Labor Arbiter dated July 18, 2008 is
hereby MODIFIED.
LaborRev Assignment No. 1 | 8
SO ORDERED. 10
Doctolero moved for reconsideration, but the NLRC denied his motion for
reconsideration on January 8, 2010. 11
Decision of the CA
By petition for certiorari, Doctolero assailed the adverse decision of the
NLRC in the CA, insisting that the NLRC thereby committed grave abuse of
discretion amounting to lack or excess of jurisdiction.
On March 17, 2011, 12 the CA granted the petition for certiorari, and declared
Doctolero's illness as work-related because it had been contracted by him
while on board the vessel; that he had undergone rigid preemployment
medical examinations by virtue of which the company physicians had
declared him fit to work; that he was entitled to disability benefits because he
had been unable to perform his customary job for more than 120 days; and
that he was further entitled to moral and exemplary damages because the
petitioners had failed to shoulder the expenses he had incurred while he was
awaiting his repatriation.
The CA decision disposed thusly:
WHEREFORE, judgment is hereby rendered MODU'YING the assailed
Decision of public respondent in that private respondents arc ordered to pay
petitioner the following:
1. US $60,000.00 or its equivalent in Philippine peso at the time of actual
payment, as permanent and total disability benefits;
2. Moral and exemplary damages in the amount of Pl00,000.00.
3. US$7,040.65 by way of reimbursement of the cost of medical treatment in
Mexico City;
4. Legal interest on the monetary awards to be computed from the time of
this decision up to the actual payment thereof;
5. Sick wage allowance equivalent to 120 days of his basic salary;
6. Attorney's fees equivalent to 10% of the total awards.
SO ORDERED. 13
Upon the petitioners' motion for reconsideration, the CA amended the
dispositive portion of its decision through the resolution promulgated on
October 6, 2011, to wit:
WHEREFORE, judgment is hereby rendered MODIFYING the assailed
Decision of public respondent in that private respondents are ordered to pay
petitioner the following:
1. US $60,000.00 or its equivalent in Philippine peso at the time of actual
payment, as permanent and total disability benefits;
2. Moral and exemplary damages in the amount of ₱100,000.00;
3. $7,040.65 (MXN) by way of reimbursement of the cost of medical
treatment in Mexico City;
4. Legal interest on the monetary awards to be computed from the time of
this decision up to the actual payment thereof;
5. Sick wage allowance equivalent to 120 days of his basic salary;
6. Attorney's fees equivalent to 10% of the total awards.
SO ORDERED.
In all other respects, the motion for reconsideration is DENIED for lack of
merit.
SO ORDERED. 14
Issues
In this appeal, the petitioners argue that the PEME did not reveal the real
state of health of Doctolero; that he did not show that his illness had occurred
during the term of his contract and had been work-related or had been
aggravated by the conditions of his work; and that his illness was not listed
either as a disability or as an occupational disease under Section 32 and
Section 32-A, respectively, of the 2000 PO EA-SEC.
LaborRev Assignment No. 1 | 9
Doctolero counters that the CA did not err because its assailed decision was
based on law and jurisprudence.
It their reply, the petitioners stress that there was no finding by an
independent physician that Doctolero's illness had been work-related or had
been aggravated by his working conditions; and that Doctolero's complaint
was premature for being filed before the expiration of the 120-day period of
treatment by the company-designated physician and in the absence of the
disability grading.
Based on the foregoing, the issue to be determined is whether Doctolero was
entitled to claim permanent and total disability benefits from the petitioners.
Ruling of the Court
The appeal is meritorious.
Permanent and total disability is defined in Article 198(c )(1) of the Labor
Code, to wit:
xxxx
(c) The following disabilities shall be deemed total and permanent:
(1) Temporary total disability lasting continuously for more than one hundred
twenty days, except as otherwise provided for in the Rules.
xxxx
The relevant rule is Section 2, Rule X, of the Rules and Regulations
implementing Book IV of the labor Code, which states:
Period of entitlement. - (a) The income benefit shall be paid beginning the
first day of such disability. If caused by an injury or sickness it shall not be
paid longer than J 20 consecutive days except where such injury or sickness
still requires medical attendance beyond 120 days but not to exceed 240
days from onset of disability in which case benefit for temporary total
disability shall be paid. However, the System may declare the total and
permanent status at anytime after 120 days of continuous temporary total
disability as may be warranted by the degree of actual loss or impairment of
physical or mental functions as determined by the System.
These provisions have to be read together with the POEA-SEC, whose
Section 20(3) states:
Upon sign-off from the vessel for medical treatment, the seafarer is entitled to
sickness allowance equivalent to his basic wage until he is declared fit to
work or the degree of permanent disability has been assessed by the
company-designated physician but in no case shall this period exceed one
hundred twenty (120) days. 15
Applying the aforementioned provisions, we find the filing of the respondent's
claim to be premature.
In order for a seafarer's claim for total and permanent disability benefits to
prosper, any of the following conditions should be present:
(a) The company-designated physician failed to issue a declaration as to his
fitness to engage in sea duty or disability even after the lapse of the 120-day
period and there is no indication that further medical treatment would address
his temporary total disability, hence, justify an extension of the period to 240
days;
(b) 240 days had lapsed without any certification issued by the company
designated physician;
(c) The company-designated physician declared that he is fit for sea duty
within the 120-day or 240-day period, as the case may be, but his physician
of choice and the doctor chosen under Section 20-8(3) of the POEA-SEC are
of a contrary opinion;
(d) The company-designated physician acknowledged that he is partially
permanently disabled but other doctors who he consulted, on his own and
jointly with his employer, believed that his disability is not only permanent but
total as well;
(e) The company-designated physician recognized that he is totally and
permanently disabled but there is a dispute on the disability grading;
(f) The company-designated physician determined that his medical condition
is not compensable or work-related under the POEA-SEC but his doctor-of-
choice and the third doctor selected under Section 20-B(3) of the POEA-SEC
found otherwise and declared him unfit to work;
LaborRev Assignment No. 1 | 10

(g) The company-designated physician declared him totally and permanently

disabled but the employer refuses to pay him the corresponding benefits; and

(h) The company-designated physician declared him partially and

permanently disabled within the 120-day or 240-day period but he remains
incapacitated to perform his usual sea duties after the lapse of said
periods. 16

Although the degree and extent of the seafarer's disability constitute a factual
question that this Court should not re-assess on review, the conflict between
the factual findings of the Labor Arbiter and NLRC, on one hand, and those
of the CA, on the other hand, compel the Court to dwell on the factual
matters and to re-examine the evidence adduced by the parties. 17

Upon its re-evaluation of the records, therefore, the Court concludes that the
CA' s findings in favor of entitling Doctolero to permanent and total disability
benefits were erroneous. While the fact that Doctolero suffered the disability
during the term of his contract was undisputed, it was evident that he had
filed his complaint for disability benefits before the company designated
physician could determine the nature and extent of his disability, or before
even the lapse of the initial 120-day period. With Doctolero still undergoing
further tests, the company-designated physician had no occasion to
determine the nature and extent of his disability upon which to base
Doctolero's "fit to work" certification or disability grading. Consequently, the
petitioners correctly argued that Doctolero had no cause of action for
disability pay and sickness allowance at the time of the filing of his complaint.

WHEREFORE, the Court REVERSES and SETS ASIDE the March 17, 2011

decision and October 6, 2011 resolution of the Court of Appeals awarding
permanent disability benefits to respondent Rodrigo C.
Doctolero; REINSTATES the decision rendered on August 18, 2009 by the
National Labor Relations Commission; and ORDERS the respondent to pay
the costs of suit.

SO ORDERED.
LaborRev Assignment No. 1 | 11
G.R. No. 181375. July 13, 2016.*
PHIL-NIPPON KYOEI, CORP., petitioner, vs. ROSALIA T. GUDELOSAO,
on her behalf and in behalf of minor children CHRISTY MAE T.
GUDELOSAO and ROSE ELDEN T. GUDELOSAO, CARMEN
TANCONTIAN, on her behalf and in behalf of the children CAMELA B.
TANCONTIAN, BEVERLY B. TANCONTIAN, and ACE B. TANCONTIAN,
respondents.
Mercantile Law; Ships and Shipping; Limited Liability Rule; Articles 587 and
590 of the Code of Commerce embody the universal principle of limited
liability in all cases wherein the shipowner or agent may be properly held
liable for the negligent or illicit acts of the captain. These articles precisely
intend to limit the liability of the shipowner or agent to the value of the vessel,
its appurtenances and freightage earned in the voyage, provided that the
owner or agent abandons the vessel.—Article 837 applies the limited liability
rule in cases of collision. Meanwhile, Articles 587 and 590 embody the
universal principle of limited liability in all cases wherein the shipowner or
agent may be properly held liable for the negligent or illicit acts of the captain.
These articles precisely intend to limit the liability of the shipowner or agent to
the value of the vessel, its appurtenances and freightage earned in the
voyage, provided that the owner or agent abandons the vessel. When the
vessel is totally lost, in which case abandonment is not required because
there is no vessel to abandon, the liability of the shipowner or agent for
damages is extinguished. Nonetheless, the limited liability rule is not absolute
and is without exceptions. It does not apply in cases: (1) where the injury or
death to a passenger is due either to the fault of the shipowner, or to the
concurring negligence of the shipowner and the captain; (2) where the vessel
is insured; and (3) in workmen’s compensation claims.
Same; Same; Same; In Abueg v. San Diego, 77 Phil. 730 (1946), the
Supreme Court (SC) ruled that the limited liability rule found in the Code of
Commerce is inapplicable in a liability created by statute to compensate
employees and laborers, or the heirs and dependents, in cases of injury
received by or inflicted upon them while engaged in the performance of their
work or employment.—In Abueg v. San Diego, 77 Phil. 730 (1946), we ruled
that the limited liability rule found in the Code of Commerce is inapplicable in
a liability created by statute to compensate employees and laborers, or the
heirs and dependents, in cases of injury received by or inflicted upon them
while engaged in the performance of their work or employment, to wit: The
real and hypothecary nature of the liability of the shipowner or agent
embodied in the provisions of the Maritime Law, Book III, Code of
Commerce, had its origin in the prevailing conditions of the maritime trade
and sea voyages during the medieval ages, attended by innumerable
hazards and perils. To offset against these adverse conditions and to
encourage shipbuilding and maritime commerce, it was deemed necessary to
confine the liability of the owner or agent arising from the operation of a ship
to the vessel, equipment, and freight, or insurance, if any, so that if the
shipowner or agent abandoned the ship, equipment, and freight, his liability
was extinguished. But the provisions of the Code of Commerce invoked by
appellant have no room in the application of the Workmen’s Compensation
Act which seeks to improve, and aims at the amelioration of, the condition of
laborers and employees. It is not the liability for the damage or loss of the
cargo or injury to, or death of, a passenger by or through the misconduct of
the captain or master of the ship; nor the liability for the loss of the ship as a
result of collision; nor the responsibility for wages of the crew, but a liability
created by a statute to compensate employees and laborers in cases of
injury received by or inflicted upon them, while engaged in the performance
of their work or employment, or the heirs and dependents of such laborers
and employees in the event of death caused by their employment. Such
compensation has nothing to do with the provisions of the Code of
Commerce regarding maritime commerce. It is an item in the cost of
production which must be included in the budget of any well-managed
industry.
Labor Law; Seafarers; POEA-Standard Employment Contract; Akin to the
death benefits under the Labor Code, these benefits under the Philippine
Overseas Employment Administration-Standard Employment Contract
(POEA-SEC) are given when the employee dies due to a work-related cause
during the term of his contract.—Akin to the death benefits under the Labor
Code, these benefits under the POEA-SEC are given when the employee
dies due to a work-related cause during the term of his contract. The liability
of the shipowner or agent under the POEA-SEC has likewise nothing to do
with the provisions of the Code of Commerce regarding maritime commerce.
The death benefits granted under the POEA-SEC is not due to the death of a
passenger by or through the misconduct of the captain or master of the ship;
nor is it the liability for the loss of the ship as result of collision; nor the liability
for wages of the crew. It is a liability created by contract between the
seafarers and their employers, but secured through the State’s intervention
as a matter of constitutional and statutory duty to protect Filipino overseas
workers and to secure for them the best terms and conditions possible, in
order to compensate the seafarers’ heirs and dependents in the event of
death while engaged in the performance of their work or employment. The
POEA-SEC prescribes the set of standard provisions established and
implemented by the POEA containing the minimum requirements prescribed
by the government for the employment of Filipino seafarers. While it is
contractual in nature, the POEA-SEC is designed primarily for the protection
and benefit of Filipino seamen in the pursuit of their employment onboard
LaborRev Assignment No. 1 | 12
ocean-going vessels. As such, it is deemed incorporated in every Filipino
seafarers’ contract of employment. It is established pursuant to POEA’s
power “to secure the best terms and conditions of employment of Filipino
contract workers and ensure compliance therewith” and “to protect the well-
being of Filipino workers overseas” pursuant to Article 17 of the Labor Code
as amended by Executive Order (EO) Nos. 797 and 247.
Same; Same; Same; While the nature of death benefits under the Labor
Code and the Philippine Overseas Employment Administration-Standard
Employment Contract (POEA-SEC) are similar, the death benefits under the
POEA-SEC are intended to be separate and distinct from, and in addition to,
whatever benefits the seafarer is entitled to under Philippine laws, including
those benefits which may be claimed from the State Insurance Fund.—But
while the nature of death benefits under the Labor Code and the POEA-SEC
are similar, the death benefits under the POEA-SEC are intended to be
separate and distinct from, and in addition to, whatever benefits the seafarer
is entitled to under Philippine laws, including those benefits which may be
claimed from the State Insurance Fund. Thus, the claim for death benefits
under the POEA-SEC is the same species as the workmen’s compensation
claims under the Labor Code — both of which belong to a different realm
from that of Maritime Law. Therefore, the limited liability rule does not apply
to petitioner’s liability under the POEA-SEC.
Same; Same; Same; Solidary Liability; The basis of the solidary liability of the
principal with the local manning agent is found in the second paragraph of
Section 10 of the Migrant Workers and Overseas Filipino Act of 1995, which,
in part, provides: “[t]he liability of the principal/employer and the
recruitment/placement agency for any and all claims under this section shall
be joint and several.” This provision, is in turn, implemented by Section 1(e)
(8), Rule 2, Part II of the Philippine Overseas Employment Administration
(POEA) Rules and Regulations Governing the Recruitment and Employment
of Seafarers, which requires the undertaking of the manning agency to
“[a]ssume joint and solidary liability with the employer for all claims and
liabilities which may arise in connection with the implementation of the
employment contract [and Philippine Overseas Employment Administration-
Standard Employment Contract (POEA-SEC)].”—Petitioner is solidarily liable
with TEMMPC and TMCL for the death benefits under the POEA-SEC. The
basis of the solidary liability of the principal with the local manning agent is
found in the second paragraph of Section 10 of the Migrant Workers and
Overseas Filipino Act of 1995, which, in part, provides: “[t]he liability of the
principal/employer and the recruitment/placement agency for any and all
claims under this section shall be joint and several.” This provision, is in turn,
implemented by Section 1(e)(8), Rule 2, Part II of the POEA Rules and
Regulations Governing the Recruitment and Employment of Seafarers, which
requires the undertaking of the manning agency to “[a]ssume joint and
solidary liability with the employer for all claims and liabilities which may arise
in connection
Same; Same; Same; Same; The rule is that the release of one solidary
debtor redounds to the benefit of the others.—The rule is that the release of
one solidary debtor redounds to the benefit of the others. Considering that
petitioner is solidarily liable with TEMMPC and TMCL, we hold that the
Release and Quitclaim executed by respondents in favor of TEMMPC and
TMCL redounded to petitioner’s benefit. Accordingly, the liabilities of
petitioner under Section 20(A)(1) and (4)(c) of the POEA-SEC to respondents
are now deemed extinguished. We emphasize, however, that this
pronouncement does not foreclose the right of reimbursement of the solidary
debtors who paid (i.e., TEMMPC and TMCL) from petitioner as their
codebtor.
Same; Overseas Filipino Workers; Labor Arbiters; Jurisdiction; The Migrant
Workers and Overseas Filipinos Act of 1995; The Migrant Workers and
Overseas Filipinos Act of 1995 gives the Labor Arbiters (LAs) of the National
Labor Relations Commission (NLRC) the original and exclusive jurisdiction
over claims arising out of an employer-employee relationship or by virtue of
any law or contract involving Filipino workers for overseas deployment,
including claims for actual, moral, exemplary and other forms of damage.—
The Migrant Workers and Overseas Filipinos Act of 1995 gives the Labor
Arbiters of the NLRC the original and exclusive jurisdiction over claims
arising out of an employer-employee relationship or by virtue of any law or
contract involving Filipino workers for overseas deployment, including claims
for actual, moral, exemplary and other forms of damage. It further creates a
joint and several liability among the principal or employer, and the
recruitment/placement agency, for any and all claims involving Filipino
workers.
Same; Same; National Labor Relations Commission; Jurisdiction; The
Philippine Overseas Employment Administration (POEA) (now the National
Labor Relations Commission [NLRC]) is vested with quasi-judicial powers
over all cases, including money claims, involving employer-employee
relations arising out of or by virtue of any law or contract involving Filipino
workers for overseas employment.—In Finman General Assurance Corp. v.
Inocencio, 179 SCRA 480 (1989), we upheld the jurisdiction of the POEA to
determine a surety’s liability under its bond. We ruled that the adjudicatory
power to do so is not vested with the Insurance Commission exclusively. The
POEA (now the NLRC) is vested with quasi-judicial powers over all cases,
including money claims, involving employer-employee relations arising out of
or by virtue of any law or contract involving Filipino workers for overseas
employment. Here, the award of the insurance proceeds arose out of the
LaborRev Assignment No. 1 | 13
personal accident insurance procured by petitioner as the local principal over
the deceased seafarers who were Filipino overseas workers. The premiums
paid by petitioner were, in actuality, part of the total compensation paid for
the services of the crew members. Put differently, the labor of the employees
is the true source of the benefits which are a form of additional compensation
to them. Undeniably, such claim on the personal accident cover is a claim
under an insurance contract involving Filipino workers for overseas
deployment within the jurisdiction of the NLRC.
Same; Seafarers; Personal Accident Insurance; While the Personal Accident
Policies are casualty insurance, they do not answer for petitioner’s liabilities
arising from the sinking of the vessel. It is an indemnity insurance procured
by petitioner for the benefit of the seafarers.—We rule that while the Personal
Accident Policies are casualty insurance, they do not answer for petitioner’s
liabilities arising from the sinking of the vessel. It is an indemnity insurance
procured by petitioner for the benefit of the seafarers. As a result, petitioner is
not directly liable to pay under the policies because it is merely the
policyholder of the Personal Accident Policies. Section 176 (formerly Sec.
174) of The Insurance Code defines casualty insurance as follows: SEC.
174. Casualty insurance is insurance covering loss or liability arising from
accident or mishap, excluding certain types of loss which by law or custom
are considered as falling exclusively within the scope of other types of
insurance such as fire or marine. It includes, but is not limited to, employer’s
liability insurance, motor vehicle liability insurance, plate glass insurance,
burglary and theft insurance, personal accident and health insurance as
written by nonlife insurance companies, and other substantially similar kinds
of insurance. (Emphasis supplied) Based on Section 176, casualty insurance
may cover liability or loss arising from accident or mishap. In a liability
insurance, the insurer assumes the obligation to pay third party in whose
favor the liability of the insured arises. On the other hand, personal accident
insurance refers to insurance against death or injury by accident or
accidental means. In an accidental death policy, the accident causing the
death is the thing insured against.
Same; Same; Same; The liability of South Sea Surety & Insurance Co., Inc.
(SSSICI) to the beneficiaries is direct under the insurance contract. Under the
contract, petitioner is the policyholder, with SSSICI as the insurer, the crew
members as the cestui que vie or the person whose life is being insured with
another as beneficiary of the proceeds, the latter’s heirs as beneficiaries of
the policies.—The liability of SSSICI to the beneficiaries is direct under the
insurance contract. Under the contract, petitioner is the policyholder, with
SSSICI as the insurer, the crew members as the cestui que vie or the person
whose life is being insured with another as beneficiary of the proceeds, and
the latter’s heirs as beneficiaries of the policies. Upon petitioner’s payment of
the premiums intended as additional compensation to the crew members,
SSSICI as insurer undertook to indemnify the crew members’ beneficiaries
from an unknown or contingent event. Thus, when the CA conditioned the
extinguishment of petitioner’s liability on SSSICI’s payment of the Personal
Accident Policies’ proceeds, it made a finding that petitioner is subsidiarily
liable for the face value of the policies. To reiterate, however, there is no
basis for such finding; there is no obligation on the part of petitioner to pay
the insurance proceeds because petitioner is, in fact, the obligee or
policyholder in the Personal Accident Policies. Since petitioner is not the
party liable for the value of the insurance proceeds, it follows that the limited
liability rule does not apply as well.
PETITION for review on certiorari of the decision and resolution of the Court
of Appeals.
The facts are stated in the opinion of the Court.
    Librojo & Associates Law Offices for petitioner.
   Dela Cruz, Entero & Associates for respondents Gudelosao, et al.
   Retoriano & Olalia-Retoriano Law Offices for Top Ever Marine
Management.
JARDELEZA, J.:
This is a petition for review on certiorari1under Rule 45 of the Revised Rules
of Court filed by Phil-Nippon Kyoei, Corp. (Petitioner) from the Decision 2 of
the Court of Appeals (CA) dated October 4, 2007 (CA Decision) and its
Resolution3 dated January 11, 2008 in CA-G.R. SP No. 95456. The CA
reinstated the Labor Arbiter's Decision 4 dated August 5, 2004 (LA Decision)
with the modification, among others, that petitioner is liable to respondents
under the insurance cover it procured from South Sea Surety & Insurance
Co., Inc. (SSSICI). The CA ruled that petitioner's liability would be
extinguished only upon payment by SSSICI of the insurance proceeds to
respondents.5
Facts
Petitioner, a domestic shipping corporation, purchased a "Ro-Ro"
passenger/cargo vessel "MV Mahlia" in Japan in February 2003. 6 For the
vessel's one month conduction voyage from Japan to the Philippines,
petitioner, as local principal, and Top Ever Marine Management Maritime
Co., Ltd. (TMCL), as foreign principal, hired Edwin C. Gudelosao, Virgilio A.
Tancontian, and six other crewmembers. They were hired through the local
manning agency of TMCL, Top Ever Marine Management Philippine
LaborRev Assignment No. 1 | 14

Corporation (TEMMPC). TEMMPC, through their president and general TANCONTIAN:

manager, Capt. Oscar Orbeta (Capt. Orbeta), and the eight crewmembers
signed separate contracts of employment. Petitioner secured a Marine
Insurance Policy (Maritime Policy No. 00001) from SSSICI over the vessel for
P10,800,000.00 against loss, damage, and third party liability or expense,
arising from the occurrence of the perils of the sea for the voyage of the
vessel from Onomichi, Japan to Batangas, Philippines. This Marine
Insurance Policy included Personal Accident Policies for the eight
crewmembers for P3,240,000.00 each in case of accidental death or injury. 7
On February 24, 2003, while still within Japanese waters, the vessel sank
due to extreme bad weather condition. Only Chief Engineer Nilo Macasling
survived the incident while the rest of the crewmembers, including Gudelosao
and Tancontian, perished.8
Respondents, as heirs and beneficiaries of Gudelosao and Tancontian, filed
separate complaints for death benefits and other damages against petitioner,
TEMMPC, Capt. Orbeta, TMCL, and SSSICI, with the Arbitration Branch of
the National Labor Relations Commission (NLRC). 9
On August 5, 2004, Labor Arbiter (LA) Pablo S. Magat rendered a
Decision10 finding solidary liability among petitioner, TEMMPC, TMCL and
Capt. Orbeta. The LA also found SSSICI liable to the respondents for the
proceeds of the Personal Accident Policies and attorney's fees. The LA,
however, ruled that the liability of petitioner shall be deemed extinguished
only upon SSSICI's payment of the insurance proceeds. The dispositive
portion of the LA Decision reads:
WHEREFORE, premises considered, CAPT. OSCAR ORBETA, [TEMMPC],
[TMCL], and PHIL-NIPPON KYOEI CORPORATION are hereby directed to
pay solidarily the complainants as follows:
Death Burial 10% atty's
Benefits Expenses [fees]
1. ROSALIA T.
US$50,000 US$1,000 US$5,100
GUDELOSAO:
4. BEVERLY B.
US$7,000 US$700
TANCONTIAN:
5. ACE B.
US$7,000 US$700
TANCONTIAN:
Further, respondent SOUTH SEA SURETY & INSURANCE CO., INC. is
hereby directed to pay as beneficiaries complainants ROSALIA T.
GUDELOSAO and CARMEN B. TANCONTIAN [P]3,240,000.00 each for the
proceeds of the Personal Accident Policy Cover it issued for each of the
deceased seafarers EDWIN C. GUDELOSAO and VIRGILIO A. T
ANCONTIAN plus 10% attorney's fees thereof at [P]324,000.00 each thereof
or a total of [P]648,000.00.
Nevertheless, upon payment of said proceeds to said widows by
respondent SOUTH SEA SURETY & INSURANCE CO., INC., respondent
PHIL-NIPPON CORPORATION's liability to all the complainants is deemed
extinguished.
Any other claim is hereby dismissed for lack of merit.
SO ORDERED.11
On appeal, the NLRC modified the LA Decision in a Resolution 12 dated
February 28, 2006, the dispositive portion of which reads:
WHEREFORE, premises considered, the Appeals of Complainants and
PNKC are GRANTED but only partially in the case of Complainants' Appeal,
and the Appeal of [SSSICI] is DISMISSED for lack of merit. Accordingly, the
Decision is SUSTAINED subject to the modification that [SSSICI] is
DIRECTED to pay Complainants in addition to their awarded claims, in the
appealed decision, additional death benefits of US$7,000 each to the minor
children of Complainant Gudelosao, namely, Christy Mae T. Gudelosao and
Rose Elden T. Gudelosao.

2. CARMEN B. As regards the other issues, the appealed Decision is SUSTAINED.

US$50,000 US$1,000 US$5,100
TANCONTIAN:
SO ORDERED.13
3. CARMELA B. US$7,000 US$700
LaborRev Assignment No. 1 | 15

The NLRC absolved petitioner, TEMMPC and TMCL and Capt. Orbeta from Further, [respondents] CAPT. OSCAR ORBETA, [TEMMPC] and [TMCL] (the
any liability based on the limited liability rule. 14 It, however, affirmed SSSICI's manning agency) are hereby directed to pay solidarily the complainants in
liability after finding that the Personal Accident Policies answer for the death addition to their awarded claims, additional death benefits of US$7,000 each
benefit claims under the Philippine Overseas Employment Administration to the minor children of petitioner Rosalia T. Gudelosao, namely, Christy Mae
Standard Employment Contract (POEASEC).15 Respondents filed a Partial T. Gudelosao and Rose Elden T. Gudelosao.
Motion for Reconsideration which the NLRC denied in a Resolution dated
May 5, 2006.16 Respondent SOUTH SEA SURETY & INSURANCE CO., INC. is hereby
directed to pay as beneficiaries complainants ROSALIA T. GUDELOSAO
Respondents filed a petition for certiorari17before the CA where they argued and CARMEN B. TANCONTIAN [P]3,240,000.00 each for the proceeds of
that the NLRC gravely abused its discretion in ruling that TEMMPC, TMCL, the Personal Accident Policy Cover it issued for each of the deceased
and Capt. Orbeta are absolved from the terms and conditions of the POEA- seafarers EDWIN C. GUDELOSAO and VIRGILIO A. TANCONTIAN plus
SEC by virtue of the limited liability rule. Respondents also argued that the 10% attorney's fees thereof at [P]324,000.00 each thereof or a total of
NLRC gravely abused its discretion in ruling that the obligation to pay the [P]648,000.00.
surviving heirs rests solely on SSSICI. The CA granted the petition, the
dispositive portion thereof reads: Nevertheless, upon payment of said proceeds to said widows by respondent
SOUTH SEA SURETY & INSURANCE CO., INC., respondent PHIL-NIPPON
WHEREFORE for being impressed with merit the petition is hereby CORPORATION's liability to all the complainants is deemed extinguished.
GRANTED. Accordingly, the Resolution dated February 28, 2006, and
Resolution, dated May 5, 2006, of the public respondent NLRC are SO ORDERED.18
hereby SET ASIDE. The Decision of the Labor Arbiter dated [August 5,
2004] is REINSTATED,  subject to the following modifications: The CA found that the NLRC erred when it ruled that the obligation of
petitioner, TEMMPC and TMCL for the payment of death benefits under the
(1) [R]espondents CAPT. OSCAR ORBETA, [TEMMPC] and [TMCL] (the POEA-SEC was ipso facto transferred to SSSICI upon the death of the
manning agency), are hereby directed to pay solidarily the complainants as seafarers. TEMMPC and TMCL cannot raise the defense of the total loss of
follows: the ship because its liability under POEA-SEC is separate and distinct from
the liability of the shipowner. 19 To disregard the contract, which has the force
of law between the parties, would defeat the purpose of the Labor Code and
Death Burial 10% atty's
the rules and regulations issued by the Department of Labor and
Benefits Expenses fees
Employment (DOLE) in setting the minimum terms and conditions of
ROSALIA T. employment for the protection of Filipino seamen. 20 The CA noted that the
US$50,000 US$1,000 US$5,1OO benefits being claimed are not dependent upon whether there is total loss of
GUDELOSAO:
the vessel, because the liability attaches even if the vessel did not
CARMEN B. sink.21 Thus, it was error for the NLRC to absolve TEMMPC and TMCL on
US$50,000 US$1,000 US$5,1OO the basis of the limited liability rule.
TANCONTIAN:

CARMELA B. Significantly though, the CA ruled that petitioner is not liable under the
US$7,000 US$700
TANCONTIAN: POEA-SEC, but by virtue of its being a shipowner. 22 Thus, petitioner is liable
for the injuries to passengers even without a determination of its fault or
BEVERLY B. negligence.1âwphi1 It is for this reason that petitioner obtained insurance
US$7,000 US$700
TANCONTIAN: from SSSICI - to protect itself against the consequences of a total loss of the
vessel caused by the perils of the sea. Consequently, SSSICI's liability as
ACE B.
US$7,000 US$700 petitioner's insurer directly arose from the contract of insurance against
TANCONTIAN: liability (i.e., Personal Accident Policy).23 The CA then ordered that
LaborRev Assignment No. 1 | 16
petitioner's liability will only be extinguished upon payment by SSSICI of the
insurance proceeds.24
Petitioner filed a Motion for Reconsideration 25 dated November 5, 2007 but
this was denied by the CA in its Resolution 26 dated January 11, 2008. On the
other hand, since SSSICI did not file a motion for reconsideration of the CA
Decision, the CA issued a Partial Entry of Judgment 27 stating that the
decision became final and executory as to SSSICI on October 27, 2007.
Hence, this petition where petitioner claims that the CA erred in ignoring the
fundamental rule in Maritime Law that the shipowner may exempt itself from
liability by abandoning the vessel and freight it may have earned during the
voyage, and the proceeds of the insurance if any. Since the liability of the
shipowner is limited to the value of the vessel unless there is insurance, any
claim against petitioner is limited to the proceeds arising from the insurance
policies procured from SSSICI. Thus, there is no reason in making
petitioner's exoneration from liability conditional on SSSICI's payment of the
insurance proceeds.
On December 8, 2008, TEMMPC filed its Manifestation 28 informing us of
TEMMPC and TMCL's Joint Motion to Dismiss the Petition and the CA's
Resolution29 dated January 11, 2008 granting it. The dismissal is based on
the execution of the Release of All Rights and Full Satisfaction
Claim30 (Release and Quitclaim) on December 14, 2007 between
respondents and TEMMPC, TMCL, and Capt. Orbeta. In a Resolution 31 dated
January 28, 2009, we noted that TEMMPC, TMCL, and Capt. Orbeta will no
longer comment on the Petition.
On the other hand, SSSICI filed its Comment 32 to the petition dated
September 3, 2010. It alleged that the NLRC has no jurisdiction over the
insurance claim because claims on the Personal Accident Policies did not
arise from employer-employee relations. It also alleged that petitioner filed a
complaint for sum of money 33 in the Regional Trial Court (RTC) of Manila,
Branch 46, where it prays for the payment of the insurance proceeds on the
individual Marine Insurance Policy with a Personal Accident Policy covering
the crewmembers of MV Mahlia. This case was eventually dismissed and is
now subject of an appeal 34 before the CA. SSSICI prays that this matter be
considered in resolving the present case.35
Issues
I. Whether the doctrine of real and hypothecary nature of maritime law (also
known as the limited liability rule) applies in favor of petitioner.
II. Whether the CA erred in ruling that the liability of petitioner is extinguished
only upon SSSICI's payment of insurance proceeds.
Discussion
I. Liability under the POEA
Standard Employment Contract.
At the outset, the CA erred in absolving petitioner from the liabilities under
the POEA-SEC. Petitioner was the local principal of the deceased seafarers
for the conduction trip of MV Mahlia. Petitioner hired them through TMCL,
which also acted through its agent, TEMMPC. Petitioner admitted its role as
a principal of its agents TMCL, TEMMPC and Capt. Orbeta in their Joint
Partial Appeal36 before the NLRC.37 As such, it is solidarily liable with
TEMMPC and TMCL for the benefits under the POEA-SEC.
Doctrine of limited liability is not
applicable to claims under POEA-SEC.
In this jurisdiction, the limited liability rule is embodied in Articles 587, 590
and 837 under Book III of the Code of Commerce, viz:
Art. 587. The ship agent shall also be civilly liable for the indemnities in favor
of third persons which arise from the conduct of the captain in the care of the
goods which the vessel carried; but he may exempt himself therefrom by
abandoning the vessel with all her equipment and the freightage he may
have earned during the voyage.
Art. 590. The co-owners of a vessel shall be civilly liable, in the proportion of
their contribution to the common fund, for the results of the acts of the
captain, referred to in Art. 587.
Each part-owner may exempt himself from this liability by the abandonment
before a notary of the part of the vessel belonging to him.
Art. 837. The civil liability incurred by the shipowners in the cases prescribed
in this section, shall be understood as limited to the value of the vessel with
all its appurtenances and freightage earned during the voyage.
Article 83 7 applies the limited liability rule in cases of collision. Meanwhile,
Articles 587 and 590 embody the universal principle of limited liability in all
cases wherein the shipowner or agent may be properly held liable for the
LaborRev Assignment No. 1 | 17
negligent or illicit acts of the captain. 38 These articles precisely intend to limit
the liability of the shipowner or agent to the value of the vessel, its
appurtenances and freightage earned in the voyage, provided that the owner
or agent abandons the vessel.39 When the vessel is totally lost, in which case
abandonment is not required because there is no vessel to abandon, the
liability of the shipowner or agent for damages is
extinguished.40 Nonetheless, the limited liability rule is not absolute and is
without exceptions. It does not apply in cases: (1) where the injury or death to
a passenger is due either to the fault of the shipowner, or to the concurring
negligence of the shipowner and the captain; (2) where the vessel is insured;
and (3) in workmen's compensation claims.41
In Abueg v. San Diego,42 we ruled that the limited liability rule found in the
Code of Commerce is inapplicable in a liability created by statute to
compensate employees and laborers, or the heirs and dependents, in cases
of injury received by or inflicted upon them while engaged in the performance
of their work or employment, to wit:
The real and hypothecary nature of the liability of the shipowner or agent
embodied in the provisions of the Maritime Law, Book III, Code of
Commerce, had its origin in the prevailing conditions of the maritime trade
and sea voyages during the medieval ages, attended by innumerable
hazards and perils. To offset against these adverse conditions and to
encourage shipbuilding and maritime commerce, it was deemed necessary to
confine the liability of the owner or agent arising from the operation of a ship
to the vessel, equipment, and freight, or insurance, if any, so that if the
shipowner or agent abandoned the ship, equipment, and freight, his liability
was extinguished.
But the provisions of the Code of Commerce invoked by appellant have no
room in the application of the Workmen's Compensation Act which seeks to
improve, and aims at the amelioration of, the condition of laborers and
employees. It is not the liability for the damage or loss of the cargo or injury
to, or death of, a passenger by or through the misconduct of the captain or
master of the ship; nor the liability for the loss of the ship as a result of
collision; nor the responsibility for wages of the crew, but a liability created by
a statute to compensate employees and laborers in cases of injury received
by or inflicted upon them, while engaged in the performance of their work or
employment, or the heirs and dependents of such laborers and employees in
the event of death caused by their employment. Such compensation has
nothing to do with the provisions of the Code of Commerce regarding
maritime commerce. It is an item in the cost of production which must be
included in the budget of any well-managed industry. 43 (Underscoring
supplied.)
We see no reason why the above doctrine should not apply here.
Act No. 3428, otherwise known as The Workmen's Compensation Act 44 is the
first law on workmen's compensation in the Philippines for work-related
injury, illness, or death. This was repealed on November 1, 1974 by the
Labor Code,45 and was further amended on December 27, 1974 by
Presidential Decree No. 626.46 The pertinent provisions are now found in Title
II, Book IV of the Labor Code on Employees Compensation and State
Insurance Fund.
The death benefits granted under Title II, Book IV of the Labor Code are
similar to the death benefits granted under the POEA-SEC. 47 Specifically, its
Section 20(A)(l) and (4)(c) provides that:
1. In case of work-related death of the seafarer, during the term of his
contract the employer shall pay his beneficiaries the Philippine Currency
equivalent to the amount of Fifty Thousand US dollars (US$50,000) and an
additional amount of Seven Thousand US dollars (US$7,000) to each child
under the age of twenty-one (21) but not exceeding four (4) children, at the
exchange rate prevailing during the time of payment.
xxx
4. The other liabilities of the employer when the seafarer dies as a result of
work-related injury or illness during the term of employment are as follows:
xxx
c. The employer shall pay the beneficiaries of the seafarer the [Philippine]
currency equivalent to the amount of One Thousand US dollars (US$1,000)
for burial expenses at the exchange rate prevailing during the time of
payment.
Akin to the death benefits under the Labor Code, these benefits under the
POEA-SEC are given when the employee dies due to a work-related cause
during the term of his contract. 48 The liability of the shipowner or agent under
the POEA-SEC has likewise nothing to do with the provisions of the Code of
Commerce regarding maritime commerce. The death benefits granted under
the POEA-SEC is not due to the death of a passenger by or through the
LaborRev Assignment No. 1 | 18
misconduct of the captain or master of the ship; nor is it the liability for the
loss of the ship as result of collision; nor the liability for wages of the crew. It
is a liability created by contract between the seafarers and their employers,
but secured through the State's intervention as a matter of constitutional and
statutory duty to protect Filipino overseas workers and to secure for them the
best terms and conditions possible, in order to compensate the seafarers'
heirs and dependents in the event of death while engaged in the
performance of their work or employment. The POEA-SEC prescribes the set
of standard provisions established and implemented by the POEA containing
the minimum requirements prescribed by the government for the employment
of Filipino seafarers. While it is contractual in nature, the POEA-SEC is
designed primarily for the protection and benefit of Filipino seamen in the
pursuit of their employment on board ocean-going vessels. 49 As such, it is
deemed incorporated in every Filipino seafarers' contract of employment. 50 It
is established pursuant to POEA's power "to secure the best terms and
conditions of employment of Filipino contract workers and ensure compliance
therewith" and "to protect the well-being of Filipino workers
overseas"51 pursuant to Article 17 of the Labor Code as amended by
Executive Order (EO) Nos. 79752 and 247.53
But while the nature of death benefits under the Labor Code and the POEA-
SEC are similar, the death benefits under the POEA-SEC are intended to be
separate and distinct from, and in addition to, whatever benefits the seafarer
is entitled to under Philippine laws, including those benefits which may be
claimed from the State Insurance Fund.54
Thus, the claim for death benefits under the POEA-SEC is the same species
as the workmen's compensation claims under the Labor Code – both of
which belong to a different realm from that of Maritime Law. Therefore, the
limited liability rule does not apply to petitioner's liability under the POEA-
SEC.
Nevertheless, the Release and Quitclaim benefit petitioner as a solidary
debtor.
All the same, the Release and Quitclaim executed between TEMMPC, TMCL
and Capt. Oscar Orbeta, and respondents redounded to the benefit of
petitioner as a solidary debtor.
Petitioner is solidarily liable with TEMMPC and TMCL for the death benefits
under the POEA-SEC. The basis of the solidary liability of the principal with
the local manning agent is found in the second paragraph of Section 10 of
the Migrant Workers and Overseas Filipino Act of 1995, 55 which, in part,
provides: "[t]he liability of the principal/employer and the
recruitment/placement agency for any and all claims under this section shall
be joint and several." This provision, is in tum, implemented by Section 1 (e)
(8), Rule 2, Part II of the POEA Rules and Regulations Governing the
Recruitment and Employment of Seafarers, which requires the undertaking of
the manning agency to "[a]ssume joint and solidary liability with the employer
for all claims and liabilities which may arise in connection with the
implementation of the employment contract [and POEA-SEC]."
We have consistently applied the Civil Code provisions on solidary
obligations, specifically Articles 121756 and 1222,57 to labor cases.58 We
explained in Varorient Shipping Co., Inc.  v. NLRC59the nature of the solidary
liability in labor cases, to wit:
x x x The POEA Rules holds her, as a corporate officer, solidarily liable with
the local licensed manning agency. Her liability is inseparable from those of
Varorient and Lagoa. If anyone of them is held liable then all of them would
be liable for the same obligation. Each of the solidary debtors, insofar as
the creditor/s is/are concerned, is the debtor of the entire amount; it is
only with respect to his co-debtors that he/she is liable to the extent of
his/her share in the obligation. Such being the case, the Civil Code
allows each solidary debtor, in actions filed by the creditor/s, to avail
himself of all defenses which are derived from the nature of the
obligation and of those which are personal to him, or pertaining to his
share. He may also avail of those defenses personally belonging to his co-
debtors, but only to the extent of their share in the debt. Thus, Varorient may
set up all the defenses pertaining to Colarina and Lagoa; whereas Colarina
and Lagoa are liable only to the extent to which Varorient may be found liable
by the court. The complaint against Varorient, Lagoa and Colarina is founded
on a common cause of action; hence, the defense or the appeal by anyone of
these solidary debtors would redound to the benefit of the others.
xxx
x x x If Varorient were to be found liable and made to pay pursuant thereto,
the entire obligation would already be extinguished even if no attempt was
made to enforce the judgment against Colarina. Because there existed a
common cause of action against the three solidary obligors, as the acts
and omissions imputed against them are one and the same, an ultimate
finding that Varorient was not liable would, under these circumstances,
logically imply a similar exoneration from liability for Colarina and
Lagoa, whether or not they interposed any defense.60 (Emphasis
supplied.)
LaborRev Assignment No. 1 | 19
Thus, the rule is that the release of one solidary debtor redounds to the
benefit of the others.61 Considering that petitioner is solidarily liable with
TEMMPC and TMCL, we hold that the Release and Quitclaim executed by
respondents in favor of TEMMPC and TMCL redounded to petitioner's
benefit. Accordingly, the liabilities of petitioner under Section 20(A)(l) and (4)
(c) of the POEA-SEC to respondents are now deemed extinguished. We
emphasize, however, that this pronouncement does not foreclose the right of
reimbursement of the solidary debtors who paid (i.e., TEMMPC and TMCL)
from petitioner as their co-debtor.
II. Liability under the Personal
Accident Policies.
The NLRC has jurisdiction over the
claim on the Personal Accident
Policies.
We find that the CA correctly upheld the NLRC's jurisdiction to order SSSICI
to pay respondents the value of the proceeds of the Personal Accident
Policies.
The Migrant Workers and Overseas Filipinos Act of 1995 gives the Labor
Arbiters of the NLRC the original and exclusive jurisdiction over claims
arising out of an employer-employee relationship or by virtue of any law or
contract involving Filipino workers for overseas deployment, including claims
for actual, moral, exemplary and other forms of damage. It further creates a
joint and several liability among the principal or employer, and the
recruitment/placement agency, for any and all claims involving Filipino
workers, viz:
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. Consistent with this mandate, the NLRC shall
endeavor to update and keep abreast with the developments in the global
services industry.
The liability of the principal/employer and the recruitment/placement agency
for any and all claims under this section shall be joint and several. This
provision shall be incorporated in the contract for overseas employment and
shall be a condition precedent for its approval. The performance bond to be
filed by the recruitment/placement agency, as provided by law, shall be
answerable for all money claims or damages that may be awarded to the
workers. If the recruitment/placement agency is a juridical being, the
corporate officers and directors and partners as the case may be, shall
themselves be jointly and solidarily liable with the corporation or partnership
for the aforesaid claims and damages. x x x (Emphasis supplied.)
In Finman General Assurance Corp. v. Inocencio, 62 we upheld the jurisdiction
of the POEA to determine a surety's liability under its bond. We ruled that the
adjudicatory power to do so is not vested with the Insurance Commission
exclusively. The POEA (now the NLRC) is vested with quasi-judicial powers
over all cases, including money claims, involving employer-employee
relations arising out of or by virtue of any law or contract involving Filipino
workers for overseas employment.63 Here, the award of the insurance
proceeds arose out of the personal accident insurance procured by petitioner
as the local principal over the deceased seafarers who were Filipino
overseas workers. The premiums paid by petitioner were, in actuality, part of
the total compensation paid for the services of the crewmembers. 64 Put
differently, the labor of the employees is the true source of the benefits which
are a form of additional compensation to them. Undeniably, such claim on the
personal accident cover is a claim under an insurance contract involving
Filipino workers for overseas deployment  within the jurisdiction of the NLRC.
It must also be noted that the amendment under Section 37-A of the Migrant
Workers and Overseas Filipinos Act of 1995 on Compulsory Insurance
Coverage does not apply.1âwphi1 The amendment requires the claimant to
bring any question or dispute in the enforcement of any insurance policy
before the Insurance Commission for mediation or adjudication. The
amendment, however, took effect on May 8, 2010 long after the Personal
Accident Policies in this case were procured in 2003. Accordingly, the NLRC
has jurisdiction over the claim for proceeds under the Personal Accident
Policies.
In any event, SSSICI can no longer assail its liability under the Personal
Accident Policies. SSSICI failed to file a motion for reconsideration on the CA
Decision. In a Resolution dated April 24, 2008, the CA certified in a Partial
Entry of Judgment that the CA Decision with respect to SSSICI has become
final and executory and is recorded in the Book of Entries of Judgments. 65 A
decision that has acquired finality becomes immutable and unalterable. This
LaborRev Assignment No. 1 | 20
quality of immutability precludes the modification of a final judgment, even if
the modification is meant to correct erroneous conclusions of fact and law.
This holds true whether the modification is made by the court that rendered it
or by the highest court in the land. Thus, SSSICI's liability on the Personal
Accident Policies can no longer be disturbed in this petition.
SSSICI 's liability as insurer under the
Personal Accident Policies is direct.
We, however, find that the CA erred in ruling that "upon payment of [the
insurance] proceeds to said widows by respondent SOUTH SEA SURETY &
INSURANCE CO., INC., respondent PHIL-NIPPON CORPORATION's
liability to all the complainants is deemed extinguished."66
This ruling makes petitioner's liability conditional upon SSSICI's payment of
the insurance proceeds. In doing so, the CA determined that the Personal
Accident Policies are casualty insurance, specifically one of liability
insurance. The CA determined that petitioner, as insured, procured from
SSSICI the Personal Accident Policies in order to protect itself from the
consequences of the total loss of the vessel caused by the perils of the sea.
The CA found that the liabilities insured against are all monetary claims,
excluding the benefits under the POEA-SEC, of respondents in connection
with the sinking of the vessel.
We rule that while the Personal Accident Policies are casualty insurance,
they do not answer for petitioner's liabilities arising from the sinking of the
vessel. It is an indemnity insurance procured by petitioner for the benefit of
the seafarers. As a result, petitioner is not directly liable to pay under the
policies because it is merely the policyholder of the Personal Accident
Policies.
Section 176 (formerly Sec. 174) of The Insurance Code 67 defines casualty
insurance as follows:
SEC. 174. Casualty insurance is insurance covering loss or liability
arising from accident or mishap, excluding certain types of loss which
by law or custom are considered as falling exclusively within the scope
of other types of insurance such as fire or marine. It includes, but is not
limited to, employer's liability insurance, motor vehicle liability insurance,
plate glass insurance, burglary and theft insurance, personal accident and
health insurance as written by non-life insurance companies, and other
substantially similar kinds of
insurance. (Emphasis supplied.)
Based on Section 176, casualty insurance may cover liability or loss arising
from accident or mishap.1âwphi1 In a liability insurance, the insurer assumes
the obligation to pay third party in whose favor the liability of the insured
arises.68 On the other hand, personal accident insurance refers to insurance
against death or injury by accident or accidental means. 69 In an accidental
death policy, the accident causing the death is the thing insured against. 70
Notably, the parties did not submit the Personal Accident Policies with the
NLRC or the CA. However, based on the pleadings submitted by the parties,
SSSICI admitted that the crewmembers of MV Mahlia are insured for the
amount of P3,240,000.00, payable upon the accidental death of the
crewmembers.71 It further admitted that the insured risk is the loss of life or
bodily injury brought about by the violent external event or accidental
means.72 Based on the foregoing, the insurer itself admits that what is being
insured against is not the liability of the shipowner for death or injuries to
passengers but the death of the seafarers arising from accident.
The liability of SSSICI to the beneficiaries is direct under the insurance
contract.73 Under the contract, petitioner is the policyholder, with SSSICI as
the insurer, the crewmembers as the cestui que vie  or the person whose life
is being insured with another as beneficiary of the proceeds, 74 and the latter's
heirs as beneficiaries of the policies. Upon petitioner's payment of the
premiums intended as additional compensation to the crewmembers, SSSICI
as insurer undertook to indemnify the crewmembers' beneficiaries from an
unknown or contingent event.75 Thus, when the CA conditioned the
extinguishment of petitioner's liability on SSSICI's payment of the Personal
Accident Policies' proceeds, it made a finding that petitioner is subsidiarily
liable for the face value of the policies. To reiterate, however, there is no
basis for such finding; there is no obligation on the part of petitioner to pay
the insurance proceeds because petitioner is, in fact, the obligee or
policyholder in the Personal Accident Policies. Since petitioner is not the
party liable for the value of the insurance proceeds, it follows that the limited
liability rule does not apply as well.
One final note. Petitioner's claim that the limited liability rule and its
corresponding exception (i.e.,  where the vessel is insured) apply here is
irrelevant because petitioner was not found liable under tort or quasi-
delict.  Moreover, the insurance proceeds contemplated under the exception
in the case of a lost vessel are the insurance over the vessel and pending
freightage for the particular voyage.76 It is not the insurance in favor of the
seafarers, the proceeds of which are intended for their beneficiaries. Thus, if
LaborRev Assignment No. 1 | 21

ever petitioner is liable for the value of the insurance proceeds under tort
or quasi-delict, it would be from the Marine Insurance Policy over the vessel
and not from the Personal Accident Policies over the seafarers.

WHEREFORE, the petition is PARTLY GRANTED. The CA Decision dated

October 4, 2007 and the Resolution dated January 11, 2008 of the Court of
Appeals are AFFIRMED WITH THE FOLLOWING MODIFICATIONS:

(1) The death benefits are limited to the amount granted under the Release
of All Rights and Full Satisfaction of Claim dated December 14, 2007
executed between respondents and Top Ever Marine Management Company
Ltd., Top Ever Marine Management Philippine Corporation, and Captain
Oscar Or beta;

(2) As a solidary co-debtor, petitioner's liability to respondents under the

POEA-SEC is also extinguished by virtue of the Release of All Rights and
Full Satisfaction of Claim dated December 14, 2007; and

(3) The last paragraph of the dispositive portion of the CA Decision dated
October 4, 2007 stating: "Nevertheless, upon payment of said proceeds to
said widows by respondent SOUTH SEA SURETY & INSURANCE CO.,
INC., respondent PHIL-NIPPON CORPORATION's liability to all the
complainants is deemed extinguished ... " is DELETED.

SO ORDERED.
LaborRev Assignment No. 1 | 22
No. L-58011-12. July 20, 1982.*
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.
Labor Law; Shipping; Appeal; The 10-day period for appeal to the National
Labor Relations Commission contemplates calendar days, not working days.
The Minister of Labor cannot amend the law by promulgating a rule that the
appeal period shall be computed on the basis of working days.—After mature
and careful deliberation, We have arrived at the conclusion that the
shortened period of ten (10) days fixed by Article 223 contemplates calendar
days and not working days. We are persuaded to this conclusion, if only
because We believe that it is precisely in the interest of labor that the law has
commanded that labor cases be promptly, if not peremptorily, disposed of.
Long periods for any acts to be done by the contending parties can be taken
advantage of more by management than by labor. Most labor claims are
decided in their favor and management is generally the appellant. Delay, in
most instances, gives the employers more opportunity not only to prepare
even ingenious defenses, what with well-paid talented lawyers they can
afford, but even to wear out the efforts and meager resources of the workers,
to the point that not infrequently the latter either give up or compromise for
less than what is due them.
Same; Same; Same; Same.—All the foregoing notwithstanding, and bearing
in mind the peculiar circumstances of this case, particularly, the fact that
private respondents must have been misled by the implementing rules
aforementioned, We have opted to just the same pass on the merits of the
substantial issues herein, even as We admonish all concerned to henceforth
act in accordance with our foregoing view. Verily, the Minister of Labor has
no legal power to amend or alter in any material sense whatever the law itself
unequivocally specifies or fixes.
Same; Same; Contracts; Seamen’s contracts are not ordinary contracts but
are subject to and are governed by various special laws.—To begin with, let it
be borne in mind that seamen’s contracts of the nature We have before Us
now are not ordinary ones. There are special laws and rules governing them
precisely due to the peculiar circumstances that surround them.
Same; Contracts; Jurisdiction; Whether or not respondents seamen breach
their NSB-approved contracts by demanding higher wages in the midst of a
voyage is a question of fact and in such case the decision of the National
Seamens Board that respondents did should prevail over the NLRC findings.
—Comparing these two decisions, We do not hesitate to hold that the NLRC
over stepped the boundaries of its reviewing authority and was overlenient.
Whether or not respondents had breached their contract with petitioner is a
factual issue, the peculiar nuances of which were better known to the NSB,
the fact-finding authority. Indeed, even if it was nothing more than the
interpretation of the cablegram sent by respondents to petitioner on March
23, 1979 that were the only question to be resolved, that is, whether or not it
carried with it or connoted a threat which naturally panicked petitioner, which,
to be sure, could be a question of law, still, as We see it, the conclusion of
the NLRC cannot be justified.
Same; Same; Same.—At first glance it might seem that the judgment of the
NLRC should have more weight than that of NSB. Having in view, however,
the set up and relationship of these two entities framed by the Labor Code,
the NSB is not only charged directly with the administration of shipping
companies in the hiring of seamen for overseas employment by seeing to it
that our seamen “secure the best possible terms and employment for
contract seamen workers and secure compliance therewith.” Its composition
as of the time this controversy arose is worth noting-for it is made up of the
Minister of Labor as Chairman, the Deputy Minister as Vice Chairman, and a
representative each of the Ministries of Foreign Affairs, National Defense,
Education and Culture, the Central Bank, the Bureau of Employment Service,
a worker’s organization and an employee’s organization and the Executive
Director of the Overseas Employment Development Board. (Article 23, Labor
Code) It is such a board that has to approve all contracts of Filipino seamen
(Article 18, Labor Code).
Same; Same; Seamen’s contracts cannot be altered without the prior
approval of the NSB.—And after such approval, the contract becomes
unalterable, it being “unlawful” under Article 34 of the Code “for any
individual, entity, licensee or holder of authority: (i) to substitute or alter
employment contracts approved and verified by Department of Labor from
the time of actual signing thereof by the parties up to and including the period
of expiration of the same without the approval of the Department of Labor.” In
other words, it is not only that contracts may not be altered or modified or
amended without mutual consent of the parties thereto; it is further necessary
to have the change approved by the Department, otherwise, the guilty parties
would be penalized.
Same; Appeal; NLRC power over NSB decisions are principally on questions
of law.—The power of the NLRC in relation to the works and actuations of the
NSB is only appellate, according to Article 20 (b), read in relation to Article
233, principally, over questions of law, since as to factual matters, it may
exercise such appellate jurisdiction only “if errors in the findings of fact are
LaborRev Assignment No. 1 | 23
raised which would cause grave or irreparable damage or injury to the
appellant.”
Same; Shipping; Contracts; It is of insubstantial moment that shipping
management and crew entered into a side agreement, not approved by NSB,
for higher rates of pay in order to go around ITF requirements. The NSB-
approved contract remains as the one binding agreement.—It is of
insubstantial moment that the side agreement or addendum was not made
known to or presented as evidence before the NSB. We are persuaded that
more or less the NSB knows that the general practice is to have such side
contracts. More importantly, the said side contracts are not meant at all to
alter or modify the contracts approved by the NSB. Rather, they are precisely
purported to enforce them to the letter, making it clearer that even if the ships
have to call at ITF controlled ports, the same shall remain to be the real and
binding agreement between the parties, in intentional disregard of whatever
the ITF may exact.
Same; Same; Same; No bad faith can be inferred when shipowner and crew
enter into a side-agreement to go around ITF requirements.—We hold that
there was no bad faith in having said side contracts, the intent thereof being
to put into effect the NSB directed arrangements that would protect the ship
manning industry from unjust and ruinning effects of ITF intervention. Indeed,
examining the said side agreements, it is not correct to say that the
respondents were caught unaware, or by surprise when they were advised
that the ship would proceed to Kwinana, Australia, even assuming they had
been somehow informed that they would sail to the Caribbean.
Same; Same; The court will not sanction acts of employees that are meant to
trap the employer and force the latter to agree to increase wages, such a
crew’s demand for wage increase while en route at sea to a foreign port.—It
is timely to add here in closing that situations wherein employers are
practically laid in ambush or placed in a position not unlike those in a
highjack whether in the air, land or midsea must be considered to be what
they really are: acts of coercion, threat and intimidation against which the
victim has generally no recourse but to yield at the peril of irreparable loss.
And when such happenings affect the national economy, as pointed out by
the Solicitor General, they must be treated to be in the nature of economic
sabotage. They should not be tolerated. This Court has to be careful not to
sanction them.
PETITION for certiorari to review the decision of the National Labor Relations
Commission.
The facts are stated in the opinion of the Court.
     Maximo A. Savellano, Jr., for petitioner.
     Solicitor General and Romeo M. Devera for respondents.
BARREDO, 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: têñ.£îhqwâ£
It appears that on different dates in December, 1978 and
January, 1979, the Seamen entered into separate contracts
of employment with the Company, engaging them to work on
board M/T' Jannu for a period of twelve (12) months. After
verification and approval of their contracts by the NSB, the
Seamen boarded their vessel in Japan.
On 10 January 1919, the master of the vessel complainant
Rogelio H. Bisula, received a cable from the Company
advising him of the possibility that the vessel might be
directed to call at ITF-controlled ports said at the same time
informing him of the procedure to be followed in the
computation of the special or additional compensation of
crew members while in said ports. ITF is the acronym for the
International Transport Workers Federation, a militant
international labor organization with affiliates in different
ports of the world, which reputedly can tie down a vessel in a
port by preventing its loading or unloading, This is a sanction
resorted to by ITF to enforce the payment of its wages rates
for seafarers the so-called ITF rates, if the wages of the crew
members of a vessel who have affiliated with it are below its
prescribed rates.) In the same cable of the Company, the
expressed its regrets for hot clarifying earlier the procedure
in computing the special compensation as it thought that the
vessel would 'trade in Caribbean ports only.
On 22 March 1979, the Company sent another cable to
complainant Bisula, this time informing him of the respective
amounts each of the officers and crew members would
LaborRev Assignment No. 1 | 24
receive as special compensation when the vessel called at
the port of Kwinana Australia, an ITF-controlled port. This
was followed by another cable on 23 March 1979, informing
him that the officers and crew members had been enrolled
as members of the ITF in Sidney, Australia, and that the
membership fee for the 28 personnel complement of the
vessel had already been paid.
In answer to the Company's cable last mentioned,
complainant Bisula, in representation of the other officers
and crew members, sent on 24 March 1979 a cable
informing the Company that the officers and crew members
were not agreeable to its 'suggestion'; that they were not
contented with their present salaries 'based on the volume of
works, type of ship with hazardous cargo and registered in a
world wide trade': that the 'officers and crew (were) not
interested in ITF membership if not actually paid with ITF
rate that their 'demand is only 50% increase based on
present basic salary and that the proposed wage increase is
the 'best and only solution to solve ITF problem' since the
Company's salary rates 'especially in tankers (are) very far in
comparison with other shipping agencies in Manila ...
In reply, the Company proposed a 25% increase in the basic
pay of the complainant crew members, although it claimed,
that it would "suffer and absorb considerable amount of
losses." The proposal was accepted by the Seamen with
certain conditions which were accepted by the Company.
Conformably with the agreement of the parties which was
effected through the cables abovementioned, the Seamen
were paid their new salary rates.
Subsequently, the Company sought authority from the NSB
to cancel the contracts of employment of the Seamen,
claiming that its principals had terminated their manning
agreement because of the actuations of the Seamen. The
request was granted by the NSB Executive Director in a
letter dated 10 April 1979. Soon thereafter, the Company
cabled the Seamen informing them that their contracts would
be terminated upon the vessel's arrival in Japan. On 19 April
1979 they Arere asked to disembark from the vessel, their
contracts were terminated, and they were repatriated to
Manila. There is no showing that the Seamen were given the
opportunity to at least comment on the Company's request
for the cancellation of their contracts, although they had
served only three (3) out of the twelve (12) months' duration
of their contracts.
The private respondents filed a complaint for illegal dismissal and non-
payment of earned wages with the National Seamen Board. The Vir-jen
Shipping and Marine Services Inc. in turn filed a complaint for breach of
contract and recovery of excess salaries and overtime pay against the private
respondents. On July 2, 1980, the NSB rendered a decision declaring that
the seamen breached their employment contracts when they demanded and
received from Vir-jen Shipping wages over and above their contracted rates.
The dismissal of the seamen was declared legal and the seamen were
ordered suspended.
The seamen appealed the decision to the NLRC which reversed the decision
of the NSB and required the petitioner to pay the wages and other monetary
benefits corresponding to the unexpired portion of the manning contract on
the ground that the termination of the contract by the petitioner was without
valid cause. Vir-jen Shipping filed the present petition.
The private respondents submit the following issues in their motion for
reconsideration: têñ.£îhqwâ£
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.
LaborRev Assignment No. 1 | 25
D, THIS HONORABLE COURT ERRED WHEN IT DID NOT
FIND PETITIONER VIRJEN LIABLE FOR HAVING
TERMINATED BEFORE EXPIRY DATE THE
EMPLOYMENT CONTRACTS OF PRIVATE
RESPONDENTS, THERE BEING NO LEGAL AND
JUSTIFIABLE GROUND FOR SUCH TERMINATION.
E. THIS HONORABLE COURT ERRED IN FINDING THAT
THE PREPARATION BY PETITIONER OF THE TWO
PAYROLLS AND THE EXECUTION OF THE SIDE
CONTRACT WERE NOT MADE IN BAD FAITH.
F. THIS HONORABLE COURT INADVERTENTLY
DISCRIMINATED AGAINST PRIVATE RESPONDENTS.
At the outset, we are faced with the question whether or not the Court en
banc should give due course to the motion for reconsideration inspite of its
having been denied twice by the Court's Second Division. The case was
referred to and accepted by the Court en banc because of the movants'
contention that the decision in this case by the Second Division deviated
from Wallem Phil. Shipping Inc. v. Minister of Labor (L-50734-37, February
20, 1981), a First Division case with the same facts and issues. We are
constrained to answer the initial question in the affirmative.
A fundamental postulate of Philippine Constitutional Law is the fact, that
there is only one Supreme Court from whose decisions all other courts are
required to take their bearings. (Albert v. Court of First Instance, 23 SCRA
948; Barrera v. Barrera, 34 SCRA 98; Tugade v. Court of Appeals, 85 SCRA
226). The majority of the Court's work is now performed by its two Divisions,
but the Court remains one court, single, unitary, complete, and supreme.
Flowing from this nature of the Supreme Court is the fact that, while '
individual Justices may dissent or partially concur with one another, when the
Court states what the law is, it speaks with only one voice. And that voice
being authoritative should be a clear as possible.
Any doctrine or principle of law laid down by the Court, whether en banc or in
Division, may be modified or reversed only by the Court en banc. (Section
2(3), Article X, Constitution.) In the rare instances when one Division
disagrees in its views with the other Division, or the necessary votes on an
issue cannot be had in a Division, the case is brought to the Court en banc to
reconcile any seeming conflict, to reverse or modify an earlier decision, and
to declare the Court's doctrine. This is what has happened in this case.
The decision sought to be reconsidered appears to be a deviation from the
Court's decision, speaking through the First Division, in Wallem Shipping,
Inc. v. Hon. Minister of Labor  (102 SCRA 835). Faced with two seemingly
conflicting resolutions of basically the same issue by its two Divisions, the
Court. therefore, resolved to transfer the case to the Court en banc.
Parenthetically, the petitioner's comment on the third motion for
reconsideration states that the resolution of the motion might be the needed
vehicle to make the ruling in the Wallem case clearer and more in time with
the underlying principles of the Labor Code. We agree with the petitioner.
After an exhaustive, painstaking, and perspicacious consideration of the
motions for reconsideration and the comments, replies, and other pleadings
related thereto, the Court en banc is constrained to grant the motions. To
grant the motion is to keep faith with the constitutional mandate to afford
protection to labor and to assure the rights of workers to 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 en that lays the golden egg." In other words, Filipino
seamen, admittedly among the best in the world, should remain satisfied with
relatively lower if not the lowest, international rates of compensation, should
not agitate for higher wages while their contracts of employment are
subsisting, should accept as sacred, iron clad, and immutable the side
contracts which require them to falsely pretend to be members of
international labor federations, pretend to receive higher salaries at certain
foreign ports only to return the increased pay once the ship leaves that port,
should stifle not only their right to ask for improved terms of employment but
their freedom of speech and expression, and should suffer instant termination
of employment at the slightest sign of dissatisfaction with no protection from
their Government and their courts. Otherwise, the petitioners contend that
Filipinos would no longer be accepted as seamen, those employed would
lose their jobs, and the still unemployed would be left hopeless.
This is not the first time and it will not be the last where the threat of
unemployment and loss of jobs would be used to argue against the interests
of labor; where efforts by workingmen to better their terms of employment
would be characterized as prejudicing the interests of labor as a whole.
In 1867 or one hundred sixteen years ago. Chief Justice Beasley of the
Supreme Court of New Jersey was ponente of the court's opinion declaring
LaborRev Assignment No. 1 | 26
as a conspiracy the threat of workingmen to strike in connection with their
efforts to promote unionism,  the foreign principal. The local manning office is an agent whose primary
It is difficult to believe that a right exists in law which we can
scarcely conceive can produce, in any posture of affairs,
other than injuriois results. It is simply the right of workmen,
by concert of action, and by taking advantage of their
position, to control the business of another, I am unwilling to
hold that 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 petitioner-employer tries to
present itself as speaking for the entire industry, there is no evidence that it is
typical of employers hiring Filipino seamen or that it can speak for them.
The contention that manning industries in the Philippines would not survive if
the instant case is not decided in favor of the petitioner is not supported by
evidence. The Wallem case was decided on February 20, 1981. There have
been no severe repercussions, no drying up of employment opportunities for
seamen, and none of the dire consequences repeatedly emphasized by the
petitioner. Why should Vir-jen be all exception?
The wages of seamen engaged in international shipping are shouldered by
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
LaborRev Assignment No. 1 | 27
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:  procedure to be followed in the computation of special compensation of
In the light of all the foregoing facts, we find that the cable of
the seamen proposing an increase in their wage rates was
not and could not have been intended as a threat to comp el
the Company to accede to their proposals. But even
assuming, if only for the sake of argument, that the demand
or — proposal for a wage increase was accompanied by a
threat that they would report to ITF if the Company did not
accede to the contract revision - although there really was no
such threat as pointed out earlier — the Seamen should not
be held at fault for asking such a demand. In the same case
cited above, the Supreme Court held: têñ.£îhqwâ£
Petitioner claims that the dismissal of private
respondents was justified because the latter
threatened the ship authorities in acceding
to their demands, and this constitutes
serious misconduct as contemplated by the
Labor Code. This contention is not well-
taken. But even if there had been such a
threat, respondents' behavior should not be
censured because it is but natural for them
to employ some means of pressing their
demands for petitioner, the refusal to abide
with the terms of the Special Agreement, to
honor and respect the same, They were only
acting in the exercise of their rights, and to
deprive them of their freedom of expression
is contrary to law and public policy. There is
no serious misconduct to speak of in the
case at bar which would justify respondents'
dismissal just because of their firmness in
their demand for the fulfillment by petitioner
of its obligation it entered into without any
coercion, specially on the part of private
respondents. (Emphasis supplied).
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
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
LaborRev Assignment No. 1 | 28

to Vir-jen was the decision to terminate the respondents' employment
formulated.
The facts show that Virjen Initiated the discussions which led to the demand
for increased . The seamen made a proposal and the petitioner organized
with a counter-proposal. The ship had not vet gone to Australia or any ITF
controlled port. There was absolutely no mention of any strike. much less a
threat to strike. The seamen had done in act which under Philippine law or
any other civilized law would be termed illegal, oppressive, or malicious.
Whatever pressure existed, it was mild compared to accepted valid modes of
labor activity.
with the movants that there is no showing of any cause, which under the
Labor Code or any current applicable law, would warrant the termination of
the respondents' services before the expiration of their contracts. The
Constitution guarantees State assurance of the rights of workers to security
of tenure. (Sec. 9, Article II, Constitution). Presumptions and provisions of
law, the evidence on record, and fundamental State policy all dictate that the
motions for reconsideration should be granted.
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.

We reiterate our ruling in Wallem. têñ.£îhqw⣠SO ORDERED.1äwphï1.ñët

Petitioner claims that the dismissal of private Fernando, C.J., Guerrero, Abad Santos, Plana, Escolin and Relova, JJ.,
respondents was justified because the latter concur.
threatened the ship authorities in acceding
to their demands, and this constitutes  
serious misconduct as contemplated by the
Labor Code. This contention is not well-  
taken. The records fail to establish clearly
the commission of any threat, But even if
there had been such a threat, respondents'
behavior should not be censured because it
is but natural for them to employ some
means of pressing their demands for
petitioner, who refused to abide with the
terms of the Special Agreement, to honor
and respect the same, They were only
acting in the exercise of their rights, and to
deprive them of their form of expression is
contrary to law and public policy. ...

Our dismissing the petition is premised on the assumption that the Ministry of
Labor and Employment and all its agencies exist primarily for the
workinginan's interests and, of course, the nation as a whole. The points
raised by the Solicitor-General in his comments refer to the issue of allowing
what the petitioner importunes under the argument of "killing the hen which
lays the golden eggs." This is one of policy which should perhaps be directed
to the Batasang Pambansa and to our country's other policy makers for more
specific legislation on the matter, subject to the constitutional provisions
protecting labor, promoting social justice, and guaranteeing non-abridgement
of the freedom of speech, press, peaceable assembly and petition. We agree
LaborRev Assignment No. 1 | 29
G.R. No. 109808. March 1, 1995.*
ESALYN CHAVEZ, petitioner, vs. HON. EDNA BONTO-PEREZ, HON.
ROGELIO T. RAYALA, HON. DOMINGO H. ZAPANTA, HON. JOSE N.
SARMIENTO, CENTRUM PROMOTIONS & PLACEMENT CORPORATION,
JOSE A. AZUCENA, JR., and TIMES SURETY & INSURANCE COMPANY,
INC., respondents.
Labor Law; Court holds that the managerial commission agreement executed
by petitioner to authorize her Japanese employer to deduct Two Hundred
Fifty U.S. Dollars from her monthly basic salary is void because it is against
our existing laws, morals and public policy.—Firstly, we hold that the
managerial commission agreement executed by petitioner to authorize her
Japanese employer to deduct Two Hundred Fifty U.S. Dollars (US$250.00)
from her monthly basic salary is void because it is against our existing laws,
morals and public policy. It cannot supersede the standard employment
contract of December 1, 1988 approved by the POEA with the following
stipulation appended thereto: “It is understood that the terms and conditions
stated in this Employment Contract are in conformance with the Standard
Employment Contract for Entertainers prescribed by the POEA under
Memorandum Circular No. 2, Series of 1986. Any alterations or changes
made in any part of this contract without prior approval by the POEA shall be
null and void”; (Emphasis supplied.)
Same; The basic salary of One Thousand Five Hundred U.S. Dollars
guaranteed to petitioner under the parties’ standard employment contract is
in accordance with the minimum employment standards with respect to
wages set by the POEA.—Clearly, the basic salary of One Thousand Five
Hundred U.S. Dollars (US$1,500.00) guaranteed to petitioner under the
parties’ standard employment contract is in accordance with the minimum
employment standards with respect to wages set by the POEA. Thus, the
side agreement which reduced petitioner’s basic wage to Seven Hundred
Fifty U.S. Dollars (US$750.00) is null and void for violating the POEA’s
minimum employment standards, and for not having been approved by the
POEA. Indeed, this side agreement is a scheme all too frequently resorted to
by unscrupulous employers against our helpless overseas workers who are
compelled to agree to satisfy their basic economic needs.
Civil Law; Laches; Definition of Laches.—Laches has been defined as the
failure or neglect for an unreasonable and unexplained length of time to do
that which, by exercising due diligence, could or should have been done
earlier, thus giving rise to a presumption that the party entitled to assert it
either has abandoned or declined to assert it. It is not concerned with mere
lapse of time; the fact of delay, standing alone, is insufficient to constitute
laches.
Same; Same; There is no absolute rule as to what constitutes laches.—The
doctrine of laches is based upon grounds of public policy which requires, for
the peace of society, the discouragement of stale claims, and is principally a
question of the inequity or unfairness of permitting a right or claim to be
enforced or asserted. There is no absolute rule as to what constitutes laches;
each case is to be determined according to its particular circumstances. The
question of laches is addressed to the sound discretion of the court, and
since it is an equitable doctrine, its application is controlled by equitable
considerations. It cannot be worked to defeat justice or to perpetrate fraud
and injustice.
Same; Same; Court holds that the doctrine of laches is inapplicable to
petitioner.—In the case at bench, petitioner filed her claim well within the
three-year prescriptive period for the filing of money claims set forth in Article
291 of the Labor Code. For this reason, we hold the doctrine of laches
inapplicable to petitioner.
PETITION for certiorari to review a decision of the National Labor Relations
Commission.
The facts are stated in the opinion of the Court.
     Felix C. Chavez for petitioner.
     Angel E. Garrido for private respondents.
PUNO, J.:
One of the anguished cries in our society today is that while our laws appear
to protect the poor, their interpretation is sometimes anti-poor. In the case at
bench, petitioner, a poor, uncounselled entertainment dancer signed a
contract with her Japanese employer calling for a monthly salary of One
Thousand Five Hundred U.S. Dollars (US$1,500) but later had to sign an
immoral side agreement reducing her salary below the minimum standard set
by the POEA. Petitioner invoked the law to collect her salary differentials, but
LaborRev Assignment No. 1 | 30
incredibly found public respondent straining the seams of our law to disfavor
her. There is no greater disappointment to the poor like petitioner than to
discover the ugly reality behind the beautiful rhetoric of laws. We will not
allow this travesty.
This is a petition for certiorari  to review the Decision of the National Labor
Relations Commission (NLRC),1 dated December 29, 1992, which affirmed
the Decision of public respondent Philippine Overseas Employment Agency
(POEA) Administrator Jose N. Sarmiento, dated February 17, 1992,
dismissing petitioner's complaint for unpaid salaries amounting to Six
Thousand Dollars (US$6,000.00).
The facts are undisputed.
On December 1, 1988, petitioner, an entertainment dancer, entered into a
standard employment contract for overseas Filipino artists and entertainers
with Planning Japan Co., Ltd., 2 through its Philippine representative, private
respondent Centrum Placement & Promotions Corporation. The contract had
a duration of two (2) to six (6) months, and petitioner was to be paid a
monthly compensation of One Thousand Five Hundred Dollars
(US$1,5000.00). On December 5, 1888, the POEA approved the contract.
Subsequently, petitioner executed the following side agreement with her
Japanese employer through her local manager, Jaz Talents Promotion:
Date: Dec. 10, 1988
SUBJECT: Salary Deduction
MANAGERIAL COMMISSION
DATE OF DEPARTURE: _________________
ATTENTION: MR. IWATA
I, ESALYN CHAVEZ, DANCER, do hereby with my own free
will and voluntarily have the honor to authorize your good
office to please deduct the amount of TWO HUNDRED
FIFTY DOLLARS  ($250) from my contracted monthly salary
of SEVEN HUNDRED FIFTY DOLLARS ($750) as monthly
commission for my Manager, Mr. Jose A. Azucena, Jr.
That, my monthly salary (net) is FIVE HUNDRED
DOLLARS  ($500).
(
On December 16, 1988, petitioner left for Osaka, Japan, where she worked
for six (6) months, until June 10, 1989. She came back to the Philippines on
June 14, 1989.
Petitioner instituted the case at bench for underpayment of wages with the
POEA on February 21, 1991. She prayed for the payment of Six Thousand
U.S. Dollars (US$6,000.00), representing the unpaid portion of her basic
salary for six months. Charged in the case were private respondent Centrum
Promotions and Placement Corporation, the Philippine representative of
Planning Japan, Co., Inc., its insurer, Times Surety and Insurance Co., Inc.,
and Jaz Talents Promotion.
The complaint was dismissed by public respondent POEA Administrator on
February 17, 1992. He ratiocinated, inter alia:
. . . Apparently and from all indications, complainant
(referring to petitioner herein) was satisfied and did not have
any complaint (about) anything regarding her employment in
Japan until after almost two (2) years (when) she filed the
instant complaint on February 21, 1991. The records show
that after signing the Standard Employment Contract on
December 1, 1988, she entered into a side agreement with
the Japanese employer thru her local manager, Jaz Talents
Promotion consenting to a monthly salary of US$750.00
which she affirmed during the conference of May 21, 1991.
Respondent agency had no knowledge nor participation in
the said agreement such that it could not be faulted for
violation of the Standard Employment Contract regarding the
stipulated salary. We cannot take cognizance of such
violation when one of the principal party (sic) thereto opted to
receive a salary different from what has been stipulated in
their contract, especially so if the contracting party did not
consent/participate in such arrangement. Complainant
(petitioner) cannot now demand from respondent agency to
pay her the salary based (on) the processed Employment
Contract for she is now considered in bad faith and hence,
estopped from claiming thereto thru her own act of
consenting and agreeing to receive a salary not in
accordance with her contract of employment. Moreover, her
self-imposed silence for a long period of time worked to her
own disadvantage as she allowed laches to prevail which
LaborRev Assignment No. 1 | 31
barred respondent from doing something at the outset.
Normally, if a person's right (is) violated, she/he would
immediately react to protect her/his rights which is not true in
the case at bar.
The term laches has been defined as one's negligence or
failure to assert his right in due time or within reasonable
time from the accrual of his cause of action, thus, leading
another party to believe that there is nothing wrong with his
own claim. This resulted in placing the negligent party in
estoppel to assert or enforce his right. . . . Likewise, the
Supreme Court in one case held that not only is inaction
within reasonable time to enforce a right the basic premise
that underlies a valid defense of laches but such inaction
evinces implied consent or acquiescence to the violation of
the right . . .
Under the prevailing circumstances of this case, it is outside
the regulatory powers of the Administration to rule on the
liability of respondent Jaz Talents Promotions, if any, (it) not
being a licensed private agency but a promotion which trains
entertainers for abroad.
x x x           x x x          x x x
(Citations omitted.)
On appeal, the NLRC upheld the Decision, thus:
We fail to see any conspiracy that the complainant (petitioner
herein) imputes to the respondents. She has, to put it bluntly,
not established and/or laid the basis for Us to arrive at a
conclusion that the respondents have been and should be
held liable for her claims.
The way We see it, the records do not at all indicate any
connection between respondents Centrum Promotion &
Placement Corporation and Jaz Talents Promotion.
There is, therefore, no merit in the appeal. Hence, We
affirmed.4
Dissatisfied with the NLRC's Decision, petitioner instituted the present
petition, alleging that public respondents committed grave abuse of discretion
in finding: that she is guilty of laches; that she entered into a side contract on
December 10, 1988 for the reduction of her basic salary to Seven Hundred
Fifty U.S. Dollars (US$750.00) which superseded, nullified and invalidated
the standard employment contract she entered into on December 1, 1988;
and that Planning Japan Co., Ltd. and private respondents are not solidarily
liable to her for Six Thousand US Dollars (US$6,000.00) in unpaid wages. 5
The petition is meritorious.
Firstly, we hold that the managerial commission agreement executed by
petitioner to authorize her Japanese Employer to deduct Two Hundred Fifty
U.S. Dollars (US$250.00) from her monthly basic salary is void because it is
against our existing laws, morals and public policy. It cannot supersede the
standard employment contract of December 1, 1988 approved by the POEA
with the following stipulation appended thereto:
It is understood that the terms and conditions stated in this
Employment Contract are in conformance with the Standard
Employment Contract for Entertainers prescribed by the
POEA under Memorandum Circular No. 2, Series of
1986. Any alterations or changes made in any part of this
contract without prior approval by the POEA shall be null
and void;  6 (Emphasis supplied.)
The stipulation is in line with the provisions of Rule II, Book V and Section
2(f), Rule I, Book VI of the 1991 Rules and Regulations Governing Overseas
Employment, thus:
Book V, Rule II
Sec. 1. Employment Standards. The Administration shall
determine, formulate and review employment standards in
accordance with the market development and welfare
objectives of the overseas employment program and the
prevailing market conditions.
Sec. 2. Minimum Provisions for Contract. The following shall
be considered the minimum requirements for contracts of
employment:
LaborRev Assignment No. 1 | 32
a. Guaranteed wages for regular working
hours and overtime pay for services
rendered beyond regular working hours in
accordance with the standards established
by the Administration;
xxx xxx xxx
Sec. 3. Standard Employment Contract. The administration
shall undertake development and/or periodic review of
region, country and skills specific employment contracts for
landbased workers and conduct regular review of standard
employment contracts (SEC) for seafarers. These contracts
shall provide for minimum employment standards herein
enumerated under Section 2, of this Rule and shall
recognize the prevailing labor and social legislations at the
site of employment and international conventions. The SEC
shall set the minimum terms and conditions of employment.
All employers and principals shall adopt the SEC in
connection with the hiring of workers without prejudice to
their adoption of other terms and conditions of employment
over and above the minimum standards of the
Administration. (Emphasis supplied.)
and
BOOK VI, RULE I
Sec. 2. Grounds for suspension/cancellation of license.
xxx xxx xxx
f. Substituting or altering employment contracts and other
documents approved and verified by the Administration from
the time of actual signing thereof by the parties up to and
including the period of expiration of the same without the
Administration's approval.
xxx xxx xxx
(Emphasis supplied.)
Clearly, the basic salary of One Thousand Five Hundred U.S. Dollars
(US$1,500.00) guaranteed to petitioner under the parties' standard
employment contract is in accordance with the minimum employment
standards with respect to wages set by the POEA, Thus, the side agreement
which reduced petitioner's basic wage to Seven Hundred Fifty U.S. Dollars
(US$750.00) is null and void for violating the POEA's minimum employment
standards, and for not having been approved by the POEA. Indeed, this side
agreement is a scheme all too frequently resorted to by unscrupulous
employers against our helpless overseas workers who are compelled to
agree to satisfy their basic economic needs.
Secondly. The doctrine of laches or "stale demands"' cannot be applied to
petitioner. Laches has been defined as the failure or neglect for
an unreasonable and unexplained length time to do that which, by exercising
due diligence, could or should have been done earlier, 7 thus giving rise to a
presumption that the party entitled to assert it either has abandoned or
declined to assert it.8 It is not concerned with mere lapse of time; the fact of
delay, standing alone, is insufficient to constitute laches. 9
The doctrine of laches is based upon grounds of public policy which requires,
for the peace of society, the discouragement of stale claims, and is principally
a question of the inequity or unfairness of permitting a right or claim to be
enforced or asserted. 10 There is no absolute rule as to what constitutes
laches; each case is to be determined according to its particular
circumstances. The question of laches is addressed to the sound discretion
of the court, and since it is an equitable doctrine, its application is controlled
by equitable considerations. It cannot be worked to defeat justice or to
perpetrate fraud and injustice.11
In the case at bench, petitioner filed her claim well within the three-year
prescriptive period for the filing of money claims set forth in Article 291 of the
Labor Code. 12 For this reason, we hold the doctrine of laches inapplicable to
petitioner. As we ruled in Imperial Victory Shipping Agency v. NLRC, 200
SCRA 178 (1991):
. . . Laches is a doctrine in equity while prescription is based
on law. Our courts are basically courts of law not courts of
equity. Thus, laches cannot be invoked to resist the
enforcement of an existing legal right. We have ruled
in Arsenal v.  Intermediate Appellate Court . . . that it is a long
standing principle that equity follows the law. Courts
exercising equity jurisdiction are bound by rules of law and
have no arbitrary discretion to disregard them. In Zabat,
LaborRev Assignment No. 1 | 33
Jr. v.  Court of Appeals . . ., this Court was more emphatic
upholding the rules of procedure. We said therein:
As for equity, which has been aptly
described as a "justice outside legality," this
applied only in the absence of, and never
against, statutory law or, as in this case,
judicial rules of procedure. Aequetas
nunguam contravenit legis. The pertinent
positive rules being present here, they
should pre-empt and prevail over all abstract
arguments based only on equity.
Thus, where the claim was filed within the three-year
statutory period, recovery therefore cannot be barred by
laches.  Courts should never apply the doctrine of laches
earlier than the expiration of time limited for the
commencement of actions at law.
xxx xxx xxx
(Emphasis supplied. Citations omitted.)
Thirdly, private respondents Centrum and Times as well as Planning Japan
Co., Ltd. — the agency's foreign principal — are solidarily liable to petitioner
for her unpaid wages. This is in accordance with stipulation 13.7 of the
parties' standard employment contract which provides:
13.7. The Employer (in this case, Planning Japan Co., Ltd. )
and its locally (sic) agent/promoter/representative (private
respondent Centrum Promotions & Placement Corporation)
shall be jointly and severally responsible for the proper
implementation of the terms and conditions in this
Contract. 13 (Emphasis supplied.)
This solidary liability also arises from the provisions of Section 10(a)
(2), Rule V, Book I of the Omnibus Rules Implementing the Labor
Code, as amended, thus:
Sec. 10. Requirement before recruitment. — Before
recruiting any worker, the private employment agency shall
submit to the Bureau the following documents:
a) A formal appointment or agency contract executed by a
foreign-based employer in favor of the license holder to
recruit and hire personnel for the former . . . . Such formal
appointment or recruitment agreement shall contain the
following provisions, among others:
xxx xxx xxx
2. Power of the agency to sue and be sued jointly and
solidarily with the principal or foreign based employer for any
of the violations of the recruitment agreement and the
contracts of employment.
xxx xxx xxx
(Emphasis supplied.)
Our overseas workers constitute an exploited class. Most of them come from
the poorest sector of our society. They are thoroughly disadvantaged. Their
profile shows they live in suffocating slums, trapped in an environment of
crime. Hardly literate and in ill health, their only hope lies in jobs they can
hardly find in our country. Their unfortunate circumstance makes them easy
prey to avaricious employers. They will climb mountains, cross the seas,
endure slave treatment in foreign lands just to survive. Out of despondence,
they will work under sub-human conditions and accept salaries below the
minimum. The least we can do is to protect them with our laws in our land.
Regretfully, respondent public officials who should sympathize with the
working class appear to have a different orientation.
IN VIEW WHEREOF, the petition is GRANTED. The Decisions of respondent
POEA Administrator and NLRC Commissioners in POEA Case No. Adj. 91-
02-199 (ER), respectively dated February 17 and December 29, 1992, and
the Resolution of the NLRC, dated March 23, 1993, are REVERSED and
SET ASIDE. Private respondents are held jointly and severally liable to
petitioner for the payment of SIX THOUSAND US DOLLARS (US$6,000.00)
in unpaid wages. Costs against private respondents.
SO ORDERED.
LaborRev Assignment No. 1 | 34
G. R. Nos. 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 MALA-BANAN, ROMEO HUERTO and VITALIANO PANGUE,
petitioners, vs. THE HON. JUDGE ALFREDO L. BENIPAYO and
MAGSAYSAY LINES, INC., respondents.
G.R. Nos. 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.
Labor; National Seamen’s Board; Evidence; Nothing in the public and private
respondents’ pleadings to support the allegations that petitioners used force
and violence to secure the special agreement signed in Vancouver, British
Columbia.—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.
Same; Same; Same; No proof that petitioners initiated a conspiracy with the
ITF or deliberately sought its assistance in order to receive higher wages.—
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.
Same; Same; Same; Conclusion that it is ITF’s policy not to intervene with
the plight of crew members of a vessel unless its intervention was sought is
without basis.—The NSB’s conclusion 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 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 petitioner’s 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.
Same; Same; Same; Court cannot affirm the NSB and NLRC’s findings that
there was violence, physical or otherwise employed by the petitioners in
demanding for additional wages.—Given these factual situations, therefore,
we cannot affirm the NSB and NLRC’s findings 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
LaborRev Assignment No. 1 | 35
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.
Same; Same; Same; Conclusion that the acts of the petitioners in demanding
and receiving wages over and above the NSB-approved contracts rates is in
effect an alteration of their valid and subsisting contract is without basis.—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.
PETITIONS to review the decisions of the National Seamen Board and
National Labor Relations Commission.
The facts are stated in the opinion of the Court.      Quasha, Asperilla,
Ancheta, Peña 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 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.
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; that on November 10, 1978,
aforesaid vessel, with respondent on board, left Vancouver,
Canada for Yokohama, Japan; that on December 14, 1978,
LaborRev Assignment No. 1 | 36
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).lâwphî1.ñèt  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
LaborRev Assignment No. 1 | 37
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)
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
LaborRev Assignment No. 1 | 38
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 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.
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
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.
For one thing, the employer can always improve the working conditions
without violating any law or stipulation.
LaborRev Assignment No. 1 | 39
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).lâwphî1.ñèt 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 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
LaborRev Assignment No. 1 | 40
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.
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
LaborRev Assignment No. 1 | 41
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 Vir-Jen 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 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 sea-based 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).lâwphî1.ñèt  Parenthetically, the minimum monthly salary of able bodied
seamen set by the ILO and adhered to by the Philippines is now $276.00 (id.)
LaborRev Assignment No. 1 | 42

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 Vir-Jen
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.
LaborRev Assignment No. 1 | 43
G.R. No. 205727. January 18, 2017.*
RUTCHER T. DAGASDAS, petitioner, vs. GRAND PLACEMENT AND
GENERAL SERVICES CORPORATION, respondent.
Remedial Law; Civil Procedure; Appeals; Petition for Review on Certiorari; As
a rule, only questions of law may be raised in a petition under Rule 45 of the
Rules of Court. However, this rule allows certain exceptions, including a
situation where the findings of fact of the courts or tribunals below are
conflicting.—As a rule, only questions of law may be raised in a petition
under Rule 45 of the Rules of Court. However, this rule allows certain
exceptions, including a situation where the findings of fact of the courts or
tribunals below are conflicting. In this case, the CA and the NLRC arrived at
divergent factual findings anent Dagasdas’ termination. As such, the Court
deems it necessary to reexamine these findings and determine whether the
CA has sufficient basis to annul the NLRC Decision, and set aside its finding
that Dagasdas was illegally dismissed from work.
Labor Law; Management Prerogative; It is well-settled that employers have
the prerogative to impose standards on the work quantity and quality of their
employees and provide measures to ensure compliance therewith.—It is
well-settled that employers have the prerogative to impose standards on the
work quantity and quality of their employees and provide measures to ensure
compliance therewith. Noncompliance with work standards may thus be a
valid cause for dismissing an employee. Nonetheless, to ensure that
employers will not abuse their prerogatives, the same is tempered by security
of tenure whereby the employees are guaranteed substantive and procedural
due process before they are dismissed from work.
Same; Security of Tenure; Lex Loci Contractus; Since the employment
contracts of Overseas Filipino Workers (OFWs) are perfected in the
Philippines, and following the principle of lex loci contractus (the law of the
place where the contract is made), these contracts are governed by our laws,
primarily the Labor Code of the Philippines and its implementing rules and
regulations (IRR); Thus, even if a Filipino is employed abroad, he or she is
entitled to security of tenure, among other constitutional rights.—Security of
tenure remains even if employees, particularly the Overseas Filipino Workers
(OFWs), work in a different jurisdiction. Since the employment contracts of
OFWs are perfected in the Philippines, and following the principle of lex loci
contractus (the law of the place where the contract is made), these contracts
are governed by our laws, primarily the Labor Code of the Philippines and its
implementing rules and regulations. At the same time, our laws generally
apply even to employment contracts of OFWs as our Constitution explicitly
provides that the State shall afford full protection to labor, whether local or
overseas. Thus, even if a Filipino is employed abroad, he or she is entitled to
security of tenure, among other constitutional rights.
Same; Probationary Employees; As regards a probationary employee, his or
her dismissal may be allowed only if there is just cause or such reason to
conclude that the employee fails to qualify as regular employee pursuant to
reasonable standards made known to the employee at the time of
engagement.—Even assuming that Dagasdas was still a probationary
employee when he was terminated, his dismissal must still be with a valid
cause. As regards a probationary employee, his or her dismissal may be
allowed only if there is just cause or such reason to conclude that the
employee fails to qualify as regular employee pursuant to reasonable
standards made known to the employee at the time of engagement. Here,
ITM failed to prove that it informed Dagasdas of any predetermined
standards from which his work will be gauged. In the contract he signed while
still in the Philippines, Dagasdas was employed as Network Technician; on
the other hand, his new contract indicated that he was employed as
Superintendent. However, no job description — or such duties and
responsibilities attached to either position — was adduced in evidence. It
thus means that the job for which Dagasdas was hired was not definite from
the beginning. Indeed, Dagasdas was not sufficiently informed of the work
standards for which his performance will be measured. Even his position
based on the job title given him was not fully explained by his employer.
Simply put, ITM failed to show that it set and communicated work standards
for Dagasdas to follow, and on which his efficiency (or the lack thereof) may
be determined.
Same; Employment Contracts; Overseas Filipino Workers; Unless the
employment contract of an Overseas Filipino Worker (OFW) is processed
through the Philippine Overseas Employment Administration (POEA), the
same does not bind the concerned OFW because if the contract is not
reviewed by the POEA, certainly the State has no means of determining the
suitability of foreign laws to our overseas workers.—The new contract was
not shown to have been processed through the POEA. Under our Labor
Code, employers hiring OFWs may only do so through entities authorized by
the Secretary of the Department of Labor and Employment. Unless the
employment contract of an OFW is processed through the POEA, the same
does not bind the concerned OFW because if the contract is not reviewed by
the POEA, certainly the State has no means of determining the suitability of
foreign laws to our overseas workers.
Same; Termination of Employment; Overseas Filipino Workers; The
employer must inform the employee of the cause or causes for his or her
termination, and thereafter, the employer’s decision to dismiss him. Aside
LaborRev Assignment No. 1 | 44
from the notice requirement, the employee must be accorded the opportunity
to be heard.—A valid dismissal requires substantive and procedural due
process. As regards the latter, the employer must give the concerned
employee at least two notices before his or her termination. Specifically, the
employer must inform the employee of the cause or causes for his or her
termination, and thereafter, the employer’s decision to dismiss him. Aside
from the notice requirement, the employee must be accorded the opportunity
to be heard. Here, no prior notice of purported infraction, and such
opportunity to explain on any accusation against him was given to Dagasdas.
He was simply given a notice of termination. In fact, it appears that ITM
intended not to comply with the twin notice requirement. As above quoted,
under the new contract, ITM reserved in its favor the right to terminate the
contract without serving any notice to Dagasdas in specified cases, which
included such situation where the employer decides to dismiss the employee
within the probationary period. Without doubt, ITM violated the due process
requirement in dismissing an employee.
Same; Quitclaims; Generally, the employee’s waiver or quitclaim cannot
prevent the employee from demanding benefits to which he or she is entitled,
and from filing an illegal dismissal case.—Generally, the employee’s waiver
or quitclaim cannot prevent the employee from demanding benefits to which
he or she is entitled, and from filing an illegal dismissal case. This is because
waiver or quitclaim is looked upon with disfavor, and is frowned upon for
being contrary to public policy. Unless it can be established that the person
executing the waiver voluntarily did so, with full understanding of its contents,
and with reasonable and credible consideration, the same is not a valid and
binding undertaking. Moreover, the burden to prove that the waiver or
quitclaim was voluntarily executed is with the employer.
PETITION for review on certiorari of the decision and resolution of the Court
of Appeals.
The facts are stated in the opinion of the Court.
   Miguel C. Inocencio, Jr. for petitioner.
   Neal J. Chua for respondent.
DEL CASTILLO, J.:
Before us is a Petition for Review on Certiorari  assailing the September 26,
2012 Decision1 of the Court of Appeals (CA) in CA-G.R. SP No. 115396,
which annulled and set aside the March 29, 2010 2 and June 2,
20103 Resolutions of the National Labor Relations Commission (NLRC) in
NLRC LAC OFW-L-02-000071-10, and concomitantly reinstated the
November 27, 2009 Decision4 of the Labor Arbiter (LA) dismissing the
Complaint for lack of merit.
Also challenged is the January 28, 2013 Resolution 5 denying the Motion for
Reconsideration filed by Rutcher T. Dagasdas (Dagasdas ).
Factual Antecedents
Grand Placement and General Services Corp. (GPGS) is a licensed
recruitment or placement agency in the Philippines while Saudi Aramco
(Aramco) is its counterpart in Saudi Arabia. On the other hand, Industrial &
Management Technology Methods Co. Ltd. (ITM) is the principal of GPGS, a
company existing in Saudi Arabia. 6
In November 2007, GPGS, for and on behalf of ITM, employed Dagasdas as
Network Technician. He was to be deployed in Saudi Arabia under a one-
year contract7 with a monthly salary of Saudi Riyal (SR) 5,112.00. Before
leaving the Philippines, Dagasdas underwent skill training 8 and pre-departure
orientation as Network Technician.9 Nonetheless, his Job Offer10 indicated
that he was accepted by Aramco and ITM for the position of "Supt."
Dagasdas contended that although his position under his contract was as a
Network Technician, he actually applied for and was engaged as a Civil
Engineer considering that his transcript of records, 11 diploma 12 as well as his
curriculum vitae 13 showed that he had a degree in Civil Engineering, and his
work experiences were all related to this field. Purportedly9 the position of
Network Technician was only for the purpose of securing a visa for Saudi
Arabia because ITM could not support visa application for Civil Engineers. 14
On February 8, 2008, Dagasdas arrived in Saudi Arabia. 15 Thereafter, he
signed with ITM a new employment contract 16 which stipulated that the latter
contracted him as Superintendent or in any capacity within the scope of his
abilities with salary of SR5,112.00 and allowance of SR2,045.00 per month.
Under this contract, Dagasdas shall be placed under a three-month
probationary period; and, this new contract shall cancel all contracts prior to
its date from any source.
On February 11, 2008, Dagasdas reported at ITM's worksite in Khurais,
Saudi Arabia. 17 There, he was allegedly given tasks suited for a Mechanical
Engineer, which were foreign to the job he applied for and to his work
experience. Seeing that he would not be able to perform well in his work,
LaborRev Assignment No. 1 | 45
Dagasdas raised his conce1n to his Supervisor in the Mechanical
Engineering Department. Consequently, he was transferred to the Civil
Engineering Department, was temporarily given a position as Civil
Construction Engineer, and was issued anidentification card good for one
month. Dagasdas averred that on March 9, 2008, he was directed to exit the
worksite but Rashid H. Siddiqui (Siddiqui), the Site Coordinator Manager,
advised him to remain in the premises, and promised to secure him the
position he applied for. However, before Dagasdas' case was investigated,
Siddiqui had severed his employment with ITM. 18
In April 2008, Dagasdas returned to Al-Khobar and stayed at the ITM
Office.19 Later, 11M gave him a termination notice 20 indicating that his last
day of work was on April 30, 2008, and he was dismissed pursuant to clause
17.4.3 of his contract, which provided that ITM reserved the right to terminate
any employee within the three-month probationary period without need of any
notice to the employee.21
Before his repatriation, Dagasdas signed a Statement of Quitclaim 22 with
Final Settlement23 stating that ITM paid him all the salaries and benefits for
his services from February 11, 2008 to April 30, 2008 in the total amow1t of
SR7,156.80, and ITM was relieved from all financial obligations due to
Dagasdas.
On June 24, 2008, Dagasdas returned to the Philippines. 24 Thereafter, he
filed an illegal dismissal case against GPGS, ITM, and Aramco.
Dagasdas accused GPGS, ITM, and Aramco of misrepresentation, which
resulted in the mismatch in the work assigned to him. He contended that
such claim was supported by exchanges of electronic mail (e-mail)
establishing that GPGS, ITM, and Aramco were aware of the job 1nismatch
that had befallen him. 25 He also argued that although he was engaged as a
project employee, he was still entitled to security of tenure for the duration of
his contract. He maintained that GPGS, ITM, and Aramco merely invented
"imaginary cause/s" to terminate him. Thus, he claimed that he was
dismissed without cause and due process of law.26
GPGS, ITM, and Aramco countered that Dagasdas was legally dismissed.
They explained that Dagasdas was aware that he was employed as Network
Technician but he could not perform his work in accordance with the
standards of his employer. They added that Dagasdas was informed of his
poor performance, and he conformed to his termination as evidenced by his
quitclaim. 27 They also stressed that Dagasdas was only a probationary
employee since he worked for ITM for less than three months. 28
Ruling of the Labor Arbiter
On November 27, 2009, the LA dismissed the case for lack of merit. The LA
pointed out that when Dagasdas signed his new employment contract in
Saudi Arabia, he accepted its stipulations, including the fact that he had to
undergo probationary status. She declared that this new contract was more
advantageous for Dagasdas as his position was upgraded to that of a
Superintendent, and he was likewise given an allowance ofSR2,045.00 aside
from his salary of SR5,112.00 per month. According to the LA, for being more
favorable, this new contract was not prohibited by law. She also decreed that
Dagasdas fell short of the expected work performance; as such, his employer
dismissed him as part of its management prerogative.
Consequently, Dagasdas appealed to the NLRC.
Ruling of the National Labor Relations Commission
On March 29, 2010, the NLRC issued a Resolution finding Dagasdas'
dismissal illegal. The decretal portion of the NLRC Resolution reads:
WHEREFORE, the decision appealed from is hereby REVERSED, and the
respondent[s] are hereby ordered to pay the complainant the salaries
corresponding to the unexpired p01tion of his contract amounting to
SR46,008 (SR5112 x 9 months, or from May 1, 2008 to January 31, 2009),
plus ten percent (10%) thereof as attorney's foes. The respondents are jointly
and severally liable for the judgment awards, which are payable in Philippine
currency converted on the basis of the exchange rate prevailing at the time of
actual payment.
SO ORDERED.29
The NLRC stated that Dagasdas, who was a Civil Engineering graduate, was
"recruited on paper" by GPGS as Network Technician but the real
understanding between the parties was to hire him as Superintendent. It held
that GPGS erroneously recruited Dagasdas, and failed to inform him that he
was hired as a "Mechanical Superintendent" meant for a Mechanical
Engineer. It declared that while ITM has the prerogative to continue the
employment of individuals only if they were qualified, Dagasdas' dismissal
amounted to illegal termination since the mismatch between his qualifications
and the job given him was no fault of his.
LaborRev Assignment No. 1 | 46
The NLRC added that Dagasdas should not be made to suffer the
consequences of the miscommunication between GPGS and ITM
considering that the government obligates employment agencies recruiting
Filipinos for overseas work to "select only medically and technically qualified
recruits."30
On June 2, 2010, the NLRC denied the Motion for Reconsideration of its
Resolution dated March 29, 2010.
Undeterred, GPGS filed a Petition for Certiorari  with the CA ascribing grave
abuse of discretion on the part of the NLRC in ruling that Dagasdas was
illegally dismissed.
Ruling of the Court of Appeals
On September 26, 2012, the CA set aside the NLRC Resolutions and
reinstated the LA Decision dismissing the case for lack of merit.
The CA could not accede to the conclusion that the real agreement between
the parties was to employ Dagasdas as Superintendent. It stressed that
Dagasdas left the Philippines pursuant to his employment contract indicating
that he was to work as a Network Technician; when he arrived in Saudi
Arabia and signed a new contract for the position of a Superintendent, the
agreement was with no participation of GPGS, and said new contract was
only between Dagasdas and ITM. It emphasized that after commencing work
as Superintendent, Dagasdas realized that he could not perform his tasks,
and "[s]eemingly, it was [Dagasdas] himself who voluntarily withdrew from his
assigned work for lack of competence."31 It faulted the NLRC for falling to
consider that Dagasdas backed out as Superintendent on the excuse that the
same required the skills of a Mechanical Engineer.
In holding that Dagasdas' dismissal was legal, the CA gave credence to
Dagasdas' Statement of Quitclaim and Final Settlement. It ruled that for
having voluntarily accepted money from his employer, Dagasdas accepted
his termination and released his employer from future financial obligations
arising from his past employment with it.
On January 28, 2013, the CA denied Dagasdas' Motion for Reconsideration.
Hence, Dagasdas filed this Petition raising these grounds:
[1] THE HONORABLE COURT OF APPEALS COMMITIED A
REVERSIBLE ERROR WHEN TT Rt. VERSED THE FACTUAL
FINDINGS OF THE NATIONAL LABOR RELATION’S
COMMISSION.32
[2] THE HONORABLE COURT OF APPEALS PATENTLY ERRED
WITH ITS FINDINGS THAT THE CONTRACT SIGNED BY
DAGASDAS IN ALKHOBAR IS MORE ADVANTAGEOUS TO THE
LATTER AND THAT IT WAS [H]IS PERSONAL ACT OR DECISION
[TO SIGN] THE SAME.33
[3] THE HONORABLE COURT OF APPEALS ALSO GRAVELY
ERRED IN FAULTING THE NLRC FOR ITS FAILURE TO
INVALIDATE OR DISCUSS THE FINAL SETTLEMENT AND
STATEMENT OF QUITCLAIM SIGNED BY [DAGASDAS].34
Dagasdas reiterates that he was only recruited "on paper" as a Network
Technician but the real agreement between him and his employer was to
engage him as Superintendent in t'1e field of Civil Engineering, he being a
Civil Engineering graduate with vast experience in said field. He stresses that
he was terminated because of a "discipline mismatch" as his employer
actually needed a Mechanical (Engineer) Superintendent, not a Civil
Engineer.
In addition, Dagasdas insists that he did not voluntarily back out from his
work. If not for the discipline mismatch, he could have performed his job as
was expected of him. He also denies that the new employment contract he
signed while in Saudi Arabia was more advant1geous to him since the basic
salary and allowance stipulated therein are just the same with that in his Job
Offer. He argues that the new contract was even disadvantageous because it
was inserted therein that he still had to undergo probationary status for three
months.
Finally, Dagasdas contends that the new contract he signed while in Saudi
Arabia was void because it was not approved by the Philippine Overseas
Employment Administration (POEA). He also claims that CA should have
closely examined his quitclaim because he only signed it to afford his plane
ticket for his repatriation.
On the other hand, G PGS maintains that Dagasdas was fully aware that he
applied for and was accepted as Network Technician. It also stresses that it
was Dagasdas himself who decided to accept from ITM a new job offer when
LaborRev Assignment No. 1 | 47
he arrived in Saudi Arabia. It further declares that Dagasdas' quitclaim is
valid as there is no showing that he was compelled to sign it.
Issue
Was Dagasdas validly dismissed from work?
Our Ruling
The Petition is with merit.
As a rule, only questions of law may be raised in a petition under Rule 45 of
the Rules of Court. However, this rule allows certain exceptions, including a
situation where the findings of fact of the courts or tribunals below are
conflicting.35 In this case, the CA and the NLRC arrived at divergent factual
findings anent Dagasdas' termination. As such, the Court deems it necessary
to re-examine these findings and detemline whether the CA has sufficient
basis to annul the NLRC Decision, and set aside its finding that Dagasdas
was illegally dismissed from work.
Moreover, it is well-settled that employers have the prerogative to impose
standards on the work quantity and quality of their employees and provide
measures to ensure compliance therewith. Non-compliance with work
standards may thus be a valid cause for dismissing an employee.
Nonetheless, to ensure that employers will not abuse their prerogatives, the
same is tempered by security of tenure whereby the employees are
guaranteed substantive and procedural due process before they are
dismissed from work. 36
Security of tenure remains even if employees, particularly the overseas
Filipino workers (OFW), work in a different jurisdiction. Since the employment
contracts of OFWs are perfected in the Philippines, and following the
principle of lex loci contractus (the law of the place where the contract is
made), these contracts are governed by our laws, prin1arily the Labor Code
of the Philippines and its implementing rules and regulations. 37 At the same
time, our laws generally apply even to employment contracts of OFWs as our
Constitution explicitly provides that the State shall afford full protection to
labor, whether local or overseas. 38 Thus, even if a Filipino is employed
abroad, he or she is entitled to security of tenure, among other constitutional
rights.39
In this case, prior to his deployment and while still in the Philippines,
Dagasdas was made to sign a POEA-approved contract with GPGS, on
behalf of ITM; and, upon arrival in Saudi Arabia, ITM made him sign a new
employment contract. Nonetheless, this new contract, which was used as
basis for dismissing Dagasdas, is void.
First, Dagasdas' new contract is in clear violation of his right to security of
tenure.
Under the Labor Code of the Philippines the following are the just causes for
dismissing an employee:
ARTICLE 297. [282] Termination by Employer. - An employer may terminate
an employment for any of the following causes:
(a) Serious misconduct or willful disobedience by the employee of the lawful
orders of his employer or representative in connection with his work;
(b) Gross and habitual neglect by the employee of his duties;
(c) Fraud or willful breach by the employee of the trust reposed in him by his
employer or duly authorized representative;
(d) Commission of a crime or offense by the employee against the person of
his employer or any immediate member of his family or his duly authorized
representative; and
(e) Other causes analogous to the foregoing.40
However, per the notice of termination given to Dagasdas, ITM terminated
him for violating clause 17.4.3 of his new contract, viz.:
17.4 The Company reserves the right to terminate this agreement without
serving any notice to the Consultant in the following cases:
xxxx
17.4.3 If the Consultant is terminated by company or its client within the
probation period of 3 months.41
LaborRev Assignment No. 1 | 48
Based on the foregoing, there is no clear justification for the dismissal of
Dagasdas other than the exercise of ITM's right to terminate him within the
probationary period. While our Civil Code recognizes that parties may
stipulate in their contracts such terms and conditions as they may deem
convenient, these terms and conditions must not be contrary to law, morals,
good customs, public order or policy. 42 The above-cited clause is contrary to
law because as discussed, our Constitution guarantees that employees, local
or overseas, are entitled to security of tenure. To allow employers to reserve
a right to terminate employees without cause is violative of this guarantee of
security of tenure.
Moreover, even assuming that Dagasdas was still a probationary employee
when he was terminated, his dismissal must still be with a valid cause. As
regards a probationary employee, his or her dismissal may be allowed only if
there is just cause or such reason to conclude that the employee fails to
qualify as regular employee pursuant to reasonable standards made known
to the employee at the time of engagement.43
Here, ITM failed to prove that it informed Dagasdas of any predetermined
standards from which his work will be gauged. 44 In the contract he signed
while still in the Philippines, Dagsadas was employed as Network
Technician; on the other hand, his new contract indicated that he was
employed as Superintendent. However, no job description - or such duties
and responsibilities attached to either position - was adduced in evidence. It
thus means that the job for which Dagasdas was hired was not definite from
the beginning.
Indeed, Dagasdas was not sufficiently informed of the work standards for
which his performance will be measured. Even his position based on the job
title given him was not fully explained by his employer. Simply put, ITM failed
to show that it set and communicated work standards for Dagasdas to follow,
and on which his efficiency (or the lack thereof) may be determined.
Second, the new contract was not shown to have been processed through
the POEA. Under our Labor Code, employers hiring OFWs may only do so
through entities authorized by the Secretary of the Department of Labor and
Employment.45 Unless the employment contract of an OFW is processed
through the POEA, the same does not bind the concerned OFW because if
the contract is not reviewed by the POEA, certainly the State has no means
of determining the suitability of foreign laws to our overseas workers. 46
This new contract also breached Dagasdas' original contract as it was
entered into even before the expiration of the original contract approved by
the POEA. Therefore, it cannot supersede the original contract; its terms and
conditions, including reserving in favor of the employer the right to terminate
an employee without notice during the probationary period, are void. 47
Third, under this new contract, Dagasdas was not afforded procedural due
process when he was dismissed from work.
As cited above, a valid dismissal requires substantive and procedural due
process. As regards the latter, the employer must give the concerned
employee at least two notices before his or her tem1ination. Specifically, the
employer must inform the employee of the cause or causes for his or her
termination, and thereafter, the employer's decision to dismiss him. Aside
from the notice requirement, the employee must be accorded the opportunity
to be heard.48
Here, no prior notice of purported infraction, and such opportunity to explain
on any accusation against him was given to Dagasdas.1âwphi1 He was
simply given a notice of termination. In fact, it appears that ITM intended not
to comply with the twin notice requirement. As above-quoted, under the new
contract, ITM reserved in its favor the right to terminate the contract without
serving any notice to Dagasdas in specified cases, which included such
situation where the employer decides to dismiss the employee within the
probationary period. Without doubt, ITM violated the due process
requirement in dismissing an employee.
Lastly, while it is shown that Dagasdas executed a waiver in favor of his
employer, the same does not preclude him from filing this suit.
Generally, the employee's waiver or quitclaim cannot prevent the employee
from demanding benefits to which he or she is entitled, and from filing an
illegal dismissal case. This is because waiver or quitclaim is looked upon with
disfavor, and is frowned upon for being contrary to public policy. Unless it can
be established that the person executing the waiver voluntarily did so, with
full understanding of its contents, and with reasonable and credible
consideration, the same is not a valid and binding undertaking. Moreover, the
burden to prove that the waiver or quitclaim was voluntarily executed is with
the employer.49
In this case, however, neither did GPGS nor its principal, ITM, successfully
discharged its burden. GPGS and/or ITM failed to show that Dagasdas
indeed voluntarily waived his claims against the employer.
LaborRev Assignment No. 1 | 49

Indeed, even if Dagasdas signed a quitclaim, it does not necessarily follow

that he freely and voluntarily agreed to waive all his claims against his
employer.1âwphi1 Besides, there was no reasonable consideration
stipulated in said quitclaim considering that it only determined the actual
payment due to Dagasdas from February 11, 2008 to April 30, 2008. Verily,
this quitclaim, under the semblance of a final settlement, cannot absolve
GPGS nor ITM from liability arising from the employment contract of
Dagasdas.50

All told, the dismissal of Dagasdas was without any valid cause and due
process of law. Hence, the NLRC properly ruled that Dagasdas was illegally
dismissed. Evidently, it was an error on the part of the CA to hold that the
NLRC committed grave abuse of discretion amounting to lack or excess of
jurisdiction when the NLRC ruled for Dagasdas.

WHEREFORE, the Petition is GRANTED. The Decision dated September

26, 2012 and Resolution dated January 28, 2013 of the Court of Appeals in
CA-G.R. SP No. 115396 are REVERSED and SET ASIDE. Accordingly, the
March 29, 2010 and June 2, 2010 Resolutions of the National Labor
Relations Commission in NLRC LAC OFW-L-02-000071-10
are REINSTATED.

SO ORDERED.
LaborRev Assignment No. 1 | 50
G.R. No. 170139. August 5, 2014.*
SAMEER OVERSEAS PLACEMENT AGENCY, INC., petitioner, vs. JOY
C. CABILES, respondent.
Labor Law; Termination of Employment; Employers cannot be compelled to
retain the services of an employee who is guilty of acts that are inimical to the
interest of the employer.—Indeed, employers have the prerogative to impose
productivity and quality standards at work. They may also impose reasonable
rules to ensure that the employees comply with these standards. Failure to
comply may be a just cause for their dismissal. Certainly, employers cannot
be compelled to retain the services of an employee who is guilty of acts that
are inimical to the interest of the employer. While the law acknowledges the
plight and vulnerability of workers, it does not “authorize the oppression or
self-destruction of the employer.” Management prerogative is recognized in
law and in our jurisprudence. This prerogative, however, should not be
abused. It is “tempered with the employee’s right to security of tenure.”
Workers are entitled to substantive and procedural due process before
termination. They may not be removed from employment without a valid or
just cause as determined by law and without going through the proper
procedure.
Same; Same; Inefficiency; To show that dismissal resulting from inefficiency
in work is valid, it must be shown that: 1) the employer has set standards of
conduct and workmanship against which the employee will be judged; 2) the
standards of conduct and workmanship must have been communicated to
the employee; and 3) the communication was made at a reasonable time
prior to the employee’s performance assessment.—The burden of proving
that there is just cause for termination is on the employer. “The employer
must affirmatively show rationally adequate evidence that the dismissal was
for a justifiable cause.” Failure to show that there was valid or just cause for
termination would necessarily mean that the dismissal was illegal. To show
that dismissal resulting from inefficiency in work is valid, it must be shown
that: 1) the employer has set standards of conduct and workmanship against
which the employee will be judged; 2) the standards of conduct and
workmanship must have been communicated to the employee; and 3) the
communication was made at a reasonable time prior to the employee’s
performance assessment.
Same; Probationary Employees; Due Process; Due process requires that the
probationary employee be informed of such standards at the time of his or
her engagement so he or she can adjust his or her character or workmanship
accordingly.—The predetermined standards that the employer sets are the
bases for determining the probationary employee’s fitness, propriety,
efficiency, and qualifications as a regular employee. Due process requires
that the probationary employee be informed of such standards at the time of
his or her engagement so he or she can adjust his or her character or
workmanship accordingly. Proper adjustment to fit the standards upon which
the employee’s qualifications will be evaluated will increase one’s chances of
being positively assessed for regularization by his or her employer.
Same; Termination of Employment; Two-Notice Rule; The employer is
required to give the charged employee at least two written notices before
termination; Aside from the notice requirement, the employee must also be
given “an opportunity to be heard.”—A valid dismissal requires both a valid
cause and adherence to the valid procedure of dismissal. The employer is
required to give the charged employee at least two written notices before
termination. One of the written notices must inform the employee of the
particular acts that may cause his or her dismissal. The other notice must
“[inform] the employee of the employer’s decision.” Aside from the notice
requirement, the employee must also be given “an opportunity to be heard.”
Petitioner failed to comply with the twin notices and hearing requirements.
Respondent started working on June 26, 1997. She was told that she was
terminated on July 14, 1997 effective on the same day and barely a month
from her first workday. She was also repatriated on the same day that she
was informed of her termination. The abruptness of the termination negated
any finding that she was properly notified and given the opportunity to be
heard. Her constitutional right to due process of law was violated.
Same; Same; Migrant Workers and Overseas Filipinos Act of 1995 (R.A. No.
8042); Section 10 of Republic Act (R.A.) No. 8042, otherwise known as the
Migrant Workers and Overseas Filipinos Act of 1995, states that overseas
workers who were terminated without just, valid, or authorized cause “shall
be entitled to the full reimbursement of his placement fee with interest of
twelve (12%) per annum, plus his salaries for the unexpired portion of his
employment contract or for three (3) months for every year of the unexpired
term, whichever is less.”—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 10 of Republic
Act No. 8042, otherwise known as the Migrant Workers and Overseas
Filipinos Act of 1995, states that overseas workers who were terminated
without just, valid, or authorized cause “shall be entitled to the full
reimbursement of his placement fee with interest of twelve (12%) per annum,
plus his salaries for the unexpired portion of his employment contract or for
three (3) months for every year of the unexpired term, whichever is less.”
LaborRev Assignment No. 1 | 51
Same; Same; Same; Repatriation; Section 15 of Republic Act (R.A.) 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.”—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,” which as
we have established, is not the case. It reads: SEC. 15. REPATRIATION OF
WORKERS; EMERGENCY REPATRIATION FUND.—The repatriation of the
worker and the transport of his personal belongings shall be the primary
responsibility of the agency which recruited or deployed the worker overseas.
All costs attendant to repatriation shall be borne by or charged to the agency
concerned and/or its principal. Likewise, the repatriation of remains and
transport of the personal belongings of a deceased worker and all costs
attendant thereto shall be borne by the principal and/or local agency.
However, in cases where the termination of employment is due solely to the
fault of the worker, the principal/employer or agency shall not in any manner
be responsible for the repatriation of the former and/or his belongings.
Same; Same; Attorneys Fees; The Labor Code also entitles the employee to
10% of the amount of withheld wages as attorney’s fees when the
withholding is unlawful.—The Labor Code also entitles the employee to 10%
of the amount of withheld wages as attorney’s fees when the withholding is
unlawful. The Court of Appeals affirmed the National Labor Relations
Commission’s decision to award respondent NT$46,080.00 or the three-
month equivalent of her salary, attorney’s fees of NT$300.00, and the
reimbursement of the withheld NT$3,000.00 salary, which answered for her
repatriation. We uphold the finding that respondent is entitled to all of these
awards. The award of the three-month equivalent of respondent’s salary
should, however, be increased to the amount equivalent to the unexpired
term of the employment contract.
Same; Same; Constitutional Law; Equal Protection of the Laws; Due
Process; In Serrano v. Gallant Maritime Services, Inc. and Marlow Navigation
Co., Inc., 582 SCRA 254 (2009), the Supreme Court (SC) ruled that the
clause “or for three (3) months for every year of the unexpired term,
whichever is less” is unconstitutional for violating the equal protection clause
and substantive due process.—In Serrano v. Gallant Maritime Services, Inc.
and Marlow Navigation Co., Inc., 582 SCRA 254 (2009), this court ruled that
the clause “or for three (3) months for every year of the unexpired term,
whichever is less” is unconstitutional for violating the equal protection clause
and substantive due process. A statute or provision which was declared
unconstitutional is not a law. It “confers no rights; it imposes no duties; it
affords no protection; it creates no office; it is inoperative as if it has not been
passed at all.” We are aware that the clause “or for three (3) months for every
year of the unexpired term, whichever is less” was reinstated in Republic Act
No. 8042 upon promulgation of Republic Act No. 10022 in 2010.
Statutory Construction; Statutes; When a law or a provision of law is null
because it is inconsistent with the Constitution, the nullity cannot be cured by
reincorporation or reenactment of the same or a similar law or provision.—In
the hierarchy of laws, the Constitution is supreme. No branch or office of the
government may exercise its powers in any manner inconsistent with the
Constitution, regardless of the existence of any law that supports such
exercise. The Constitution cannot be trumped by any other law. All laws must
be read in light of the Constitution. Any law that is inconsistent with it is a
nullity. Thus, when a law or a provision of law is null because it is
inconsistent with the Constitution, the nullity cannot be cured by
reincorporation or reenactment of the same or a similar law or provision. A
law or provision of law that was already declared unconstitutional remains as
such unless circumstances have so changed as to warrant a reverse
conclusion.
Constitutional Law; Equal Protection of the Laws; Due Process; Equal
protection of the law is a guarantee that persons under like circumstances
and falling within the same class are treated alike, in terms of “privileges
conferred and liabilities enforced.”—We observe that the reinstated clause,
this time as provided in Republic Act. No. 10022, violates the constitutional
rights to equal protection and due process. Petitioner as well as the Solicitor
General have failed to show any compelling change in the circumstances that
would warrant us to revisit the precedent. 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. Equal
protection of the law is a guarantee that persons under like circumstances
and falling within the same class are treated alike, in terms of “privileges
conferred and liabilities enforced.” It is a guarantee against “undue favor and
individual or class privilege, as well as hostile discrimination or the
oppression of inequality.”
Same; Same; There is no violation of the equal protection clause if the law
applies equally to persons within the same class and if there are reasonable
grounds for distinguishing between those falling within the class and those
who do not fall within the class.—In creating laws, the legislature has the
power “to make distinctions and classifications.” In exercising such power, it
has a wide discretion. The equal protection clause does not infringe on this
legislative power. A law is void on this basis, only if classifications are made
LaborRev Assignment No. 1 | 52
arbitrarily. There is no violation of the equal protection clause if the law
applies equally to persons within the same class and if there are reasonable
grounds for distinguishing between those falling within the class and those
who do not fall within the class. A law that does not violate the equal
protection clause prescribes a reasonable classification. A reasonable
classification “(1) must rest on substantial distinctions; (2) must be germane
to the purposes of the law; (3) must not be limited to existing conditions only;
and (4) must apply equally to all members of the same class.” The reinstated
clause does not satisfy the requirement of reasonable classification.
Same; Same; There can never be a justification for any form of government
action that alleviates the burden of one sector, but imposes the same burden
on another sector, especially when the favored sector is composed of private
businesses such as placement agencies, while the disadvantaged sector is
composed of Overseas Filipino Workers (OFWs) whose protection no less
than the Constitution commands.—[T]here can never be a justification for any
form of government action that alleviates the burden of one sector, but
imposes the same burden on another sector, especially when the favored
sector is composed of private businesses such as placement agencies, while
the disadvantaged sector is composed of OFWs whose protection no less
than the Constitution commands. The idea that private business interest can
be elevated to the level of a compelling state interest is odious.” Along the
same line, we held that the reinstated clause violates due process rights. It is
arbitrary as it deprives overseas workers of their monetary claims without any
discernable valid purpose. Respondent Joy Cabiles is entitled to her salary
for the unexpired portion of her contract, in accordance with Section 10 of
Republic Act No. 8042. The award of the three-month equivalence of
respondent’s salary must be modified accordingly. Since she started working
on June 26, 1997 and was terminated on July 14, 1997, respondent is
entitled to her salary from July 15, 1997 to June 25, 1998. “To rule otherwise
would be iniquitous to petitioner and other OFWs, and would, in effect, send
a wrong signal that principals/employers and recruitment/manning agencies
may violate an OFW’s security of tenure which an employment contract
embodies and actually profit from such violation based on an unconstitutional
provision of law.”
Interest Rates; Bangko Sentral ng Pilipinas Circular No. 799; The Bangko
Sentral ng Pilipinas (BSP) Circular No. 799 of June 21, 2013, which revised
the interest rate for loan or forbearance from 12% to 6% in the absence of
stipulation, applies in this case.—On the interest rate, the Bangko Sentral ng
Pilipinas Circular No. 799 of June 21, 2013, which revised the interest rate for
loan or forbearance from 12% to 6% in the absence of stipulation, applies in
this case. The pertinent portions of Circular No. 799, Series of 2013, read:
The Monetary Board, in its Resolution No. 796 dated 16 May 2013, approved
the following revisions governing the rate of interest in the absence of
stipulation in loan contracts, thereby amending Section 2 of Circular No. 905,
Series of 1982: Section 1. The rate of interest for the loan or forbearance of
any money, goods or credits and the rate allowed in judgments, in the
absence of an express contract as to such rate of interest, shall be six
percent (6%) per annum. Section 2. In view of the above, Subsection X305.1
of the Manual of Regulations for Banks and Sections 4305Q.1, 4305S.3 and
4303P.1 of the Manual of Regulations for Non-Bank Financial Institutions are
hereby amended accordingly. This Circular shall take effect on 1 July 2013.
Same; Same; Loans; Circular No. 799 is applicable only in loans and
forbearance of money, goods, or credits, and in judgments when there is no
stipulation on the applicable interest rate; Circular No. 799 is not applicable
when there is a law that states otherwise.—Circular No. 799 is applicable
only in loans and forbearance of money, goods, or credits, and in judgments
when there is no stipulation on the applicable interest rate. Further, it is only
applicable if the judgment did not become final and executory before July 1,
2013. We add that Circular No. 799 is not applicable when there is a law that
states otherwise. While the Bangko Sentral ng Pilipinas has the power to set
or limit interest rates, these interest rates do not apply when the law provides
that a different interest rate shall be applied. “[A] Central Bank Circular
cannot repeal a law. Only a law can repeal another law.”
Same; Same; Labor Law; Placement Fees; There is an implied stipulation in
contracts between the placement agency and the overseas worker that in
case the overseas worker is adjudged as entitled to reimbursement of his or
her placement fees, the amount shall be subject to a 12% interest per
annum. This implied stipulation has the effect of removing awards for
reimbursement of placement fees from Circular No. 799’s coverage.—Laws
are deemed incorporated in contracts. “The contracting parties need not
repeat them. They do not even have to be referred to. Every contract, thus,
contains not only what has been explicitly stipulated, but the statutory
provisions that have any bearing on the matter.” There is, therefore, an
implied stipulation in contracts between the placement agency and the
overseas worker that in case the overseas worker is adjudged as entitled to
reimbursement of his or her placement fees, the amount shall be subject to a
12% interest per annum. This implied stipulation has the effect of removing
awards for reimbursement of placement fees from Circular No. 799’s
coverage.
Same; Same; Same; Awards of salary for the unexpired portion of the
employment contract under Republic Act (R.A.) No. 8042 are covered by
Circular No. 799 because the law does not provide for a specific interest rate
that should apply.—The same cannot be said for awards of salary for the
LaborRev Assignment No. 1 | 53
unexpired portion of the employment contract under Republic Act No. 8042.
These awards are covered by Circular No. 799 because the law does not
provide for a specific interest rate that should apply. In sum, if judgment did
not become final and executory before July 1, 2013 and there was no
stipulation in the contract providing for a different interest rate, other money
claims under Section 10 of Republic Act No. 8042 shall be subject to the 6%
interest per annum in accordance with Circular No. 799. This means that
respondent is also entitled to an interest of 6% per annum on her money
claims from the finality of this judgment.
Labor Law; Overseas Filipino Workers; Solidary Obligations; Migrant
Workers and Overseas Filipinos Act of 1995 (Republic Act [R.A.] No. 8042);
Section 10 of the Migrant Workers and Overseas Filipinos Act of 1995
provides that the foreign employer and the local employment agency are
jointly and severally liable for money claims including claims arising out of an
employer-employee relationship and/or damages.—Section 10 of the Migrant
Workers and Overseas Filipinos Act of 1995 provides that the foreign
employer and the local employment agency are jointly and severally liable for
money claims including claims arising out of an employer-employee
relationship and/or damages. This section also provides that the performance
bond filed by the local agency shall be answerable for such money claims or
damages if they were awarded to the employee. This provision is in line with
the state’s policy of affording protection to labor and alleviating workers’
plight. In overseas employment, the filing of money claims against the foreign
employer is attended by practical and legal complications. The distance of
the foreign employer alone makes it difficult for an overseas worker to reach
it and make it liable for violations of the Labor Code. There are also possible
conflict of laws, jurisdictional issues, and procedural rules that may be raised
to frustrate an overseas worker’s attempt to advance his or her claims.
Same; Same; Same; In the case of overseas employment, either the local
agency or the foreign employer may be sued for all claims arising from the
foreign employer’s labor law violations.—The fundamental effect of joint and
several liability is that “each of the debtors is liable for the entire obligation.” A
final determination may, therefore, be achieved even if only one of the joint
and several debtors are impleaded in an action. Hence, in the case of
overseas employment, either the local agency or the foreign employer may
be sued for all claims arising from the foreign employer’s labor law violations.
This way, the overseas workers are assured that someone — the foreign
employer’s local agent — may be made to answer for violations that the
foreign employer may have committed. The Migrant Workers and Overseas
Filipinos Act of 1995 ensures that overseas workers have recourse in law
despite the circumstances of their employment. By providing that the liability
of the foreign employer may be “enforced to the full extent” against the local
agent, the overseas worker is assured of immediate and sufficient payment
of what is due them.
Same; Same; Same; It must be emphasized that the local agency that is held
to answer for the overseas worker’s money claims is not left without remedy.
The law does not preclude it from going after the foreign employer for
reimbursement of whatever payment it has made to the employee to answer
for the money claims against the foreign employer.—Corollary to the
assurance of immediate recourse in law, the provision on joint and several
liability in the Migrant Workers and Overseas Filipinos Act of 1995 shifts the
burden of going after the foreign employer from the overseas worker to the
local employment agency. However, it must be emphasized that the local
agency that is held to answer for the overseas worker’s money claims is not
left without remedy. The law does not preclude it from going after the foreign
employer for reimbursement of whatever payment it has made to the
employee to answer for the money claims against the foreign employer. A
further implication of making local agencies jointly and severally liable with
the foreign employer is that an additional layer of protection is afforded to
overseas workers. Local agencies, which are businesses by nature, are
inoculated with interest in being always on the lookout against foreign
employers that tend to violate labor law. Lest they risk their reputation or
finances, local agencies must already have mechanisms for guarding against
unscrupulous foreign employers even at the level prior to overseas
employment applications.
 Brion, J., Concurring and Dissenting Opinion:
Constitutional Law; Equal Protection of the Laws; View that take exception to
the ponencia’s full adoption of the ruling in Serrano v. Gallant Maritime
Services, Inc., et al., 582 SCRA 254 (2009), to the extent that it applies the
strict scrutiny standard in invoking the equal protection guarantee.—I take
exception to the ponencia’s full adoption of the ruling in Serrano v. Gallant
Maritime Services, Inc., et al., 582 SCRA 254 (2009), to the extent that it
applies the strict scrutiny standard in invoking the equal protection guarantee.
To my mind, the circumstances of this case do not justify the ponencia’s
approach of extending and expanding the use of the strict scrutiny standard
in invalidating the subject clause (as reinstated in R.A. No. 8042 by R.A. No.
10022). The conclusion that the subject clause created a “suspect”
classification is simply misplaced. The approach, sadly, only unnecessarily
shifted the burden to the government, to prove: (1) a compelling state
interest; and (2) that the legislation is narrowly tailored to achieve the
intended result. It also unnecessarily undermines the presumed
constitutionality of statutes and of the respect that the Court accords to the
acts of a co-equal branch. The differential or rational basis scrutiny, i.e.,
LaborRev Assignment No. 1 | 54
where the challenged classification needs only be shown to be rationally
related to serving a legitimate state interest, would have undoubtedly served
the purpose without bringing these unnecessary implications.
Labor Law; Overseas Filipino Workers; Migrant Workers and Overseas
Filipinos Act of 1995 (R.A. No. 8042); View that Republic Act (R.A.) No. 8042
is discernibly a piece of social legislation that the State enacted in the
exercise of its police power, precisely to give teeth and arms to the
constitutional provisions on labor under its aim to “establish a higher standard
of protection and promotion of the welfare of migrant worker, their families
and of overseas Filipinos in distress.”—R.A. No. 8042 is discernibly a piece
of social legislation that the State enacted in the exercise of its police power,
precisely to give teeth and arms to the constitutional provisions on labor
under its aim to “establish a higher standard of protection and promotion of
the welfare of migrant worker, their families and of overseas Filipinos in
distress.” Otherwise stated, it draws power and life from the constitutional
provisions that it seeks to concretize and implement. As I pointed out in my
Serrano Opinion, “the express policy declarations of R.A. No. 8042 show that
its purposes are reiterations of the very same policies enshrined in the
Constitution x x x [They] patently characterize R.A. No. 8042 as a direct
implementation of the constitutional objectives on Filipino overseas work so
that it must be read and understood in terms of these policy objectives.
Under this interpretative guide, any provision in R.A. No. 8042 inimical to the
interest of an overseas Filipino worker (OFW) cannot have any place in the
law.” [Underscoring supplied] Note also (again, as I reflected in my Serrano
Opinion) that while R.A. No. 8042 acknowledges that the State shall
“promote full employment,” it likewise provides that “the State does not
promote overseas employment as a means to sustain economic growth and
national development. The existence of overseas employment program rests
solely on the assurance that the dignity and fundamental human rights and
freedom of Filipino citizens shall not, at any time, be compromised and
violated.” The Act, however, concludes its Declaration of Policies by stating
that “[n]onetheless, the deployment of Filipino overseas workers, whether
land-based or sea-based, by local service contractors and manning agencies
employing them shall be encouraged. Appropriate incentives may be
extended to them.”
Same; Same; Same; View that Section 10 of Republic Act (R.A.) No. 8042
obviously protects the Overseas Filipino Workers (OFWs) as against the
employer and the recruitment agency in cases of unlawful termination of
service. Unfortunately, it limits the liability to the “reimbursement of the
placement fee and interest, and the payment of his salaries for the unexpired
portion of his employment contract or for three (3) months for every year of
the unexpired term, whichever is less.”—Of particular importance to the
present case is Section 10 of R.A. No. 8042 which governs the OFWs’
money claims. Pursuant to its terms, the Act obviously protects the OFW as
against the employer and the recruitment agency in cases of unlawful
termination of service.  Unfortunately, it limits the liability to the
“reimbursement of the placement fee and interest, and the payment of his
salaries for the unexpired portion of his employment contract or for three (3)
months for every year of the unexpired term, whichever is less.”
33
This limitation is a step backward as it imposes a cap on the liability of the
foreign principal/employer and the contractor/recruitment agency even as it
earlier declared their liability joint and solidary. To be an “appropriate
incentive,” this limitation of liability can only be justified under the terms of the
law, i.e., “the incentive must necessarily relate to the law’s purpose with
reasonable expectation that it would serve this purpose; it must also accrue
to its intended beneficiaries (the recruitment/placement agencies), and not to
parties to whom the reason for the grant does not apply.”
Same; Same; Same; View that Section 10 of Republic Act (R.A.) No. 8042
actually limits what is otherwise the foreign principal/employer’s full liability
under the Act and exceeds what the Act intended — to grant incentives to
recruitment/manning agencies.—As I pointed out in my Serrano Opinion,
Section 10 of R.A. No. 8042 provides measures that collectively protect
OFWs, i.e., by ensuring the integrity of their contracts; by establishing the
responsible parties; and by providing the mechanisms for their enforcement
that imposes direct and primary liability to the foreign principal employer. Yet,
Section 10 presents a hidden twist affecting the principal/employer’s liability.
As worded, the Act “simply limits the OFWs’ recovery in wrongful dismissal
situations. Thus, it redounds to the benefit of whoever may be liable,
including the principal/employer — the direct employer primarily liable for the
wrongful dismissal.” From this perspective, Section 10 actually limits what is
otherwise the foreign principal/employer’s full liability under the Act and
exceeds what the Act intended — to grant incentives to recruitment/manning
agencies. “Section 10, in short, really operates to benefit the wrong party and
allows that party, without justifiable reason, to mitigate its liability for wrongful
dismissals.” [Emphasis supplied] “Because of this hidden twist, the limitation
of liability under Section 10 cannot be an “appropriate” incentive.”
Same; Same; Same; View that the liability limitation for wrongful dismissals
of already deployed Overseas Filipino Workers (OFWs) is really part of a
scheme to sell Filipino overseas labor at a bargain for purposes solely of
attracting the market, a scheme that sadly reduces our OFWs to mere cash
cows.—The chosen mode of granting the incentive, i.e., the liability limitation
for wrongful dismissals of already deployed OFWs, effectively imposed, with
legal sanction, a partial condonation of the foreign principal/employer’s
LaborRev Assignment No. 1 | 55
liability to OFWs. The incentive, therefore, “from a more practical and realistic
view, is really part of a scheme to sell Filipino overseas labor at a bargain for
purposes solely of attracting the market,” a scheme that sadly reduces our
OFWs to mere cash cows.
Same; Same; Same; View that the “incentive scheme” effectively benefits the
recruitment/manning agencies and foreign principal/employer at the expense
of the Overseas Filipino Workers (OFWs) from whom the salaries for the
unexpired portion of the contract are taken and to whom these salaries
rightfully belong.—The “incentive scheme” effectively benefits the
recruitment/manning agencies and foreign principal/employer at the expense
of the OFWs from whom the salaries for the unexpired portion of the contract
are taken and to whom these salaries rightfully belong. In effect, “the
principals/employers and the recruitment/manning agencies profit from their
violation of the security of tenure that an employment contract embodies.”
The OFWs, on the other hand, are afforded lesser protection because: (1)
they are afforded reduced recovery by operation of law; (2) the reduced
recovery renders wrongful dismissal situations more alluring, easier to
facilitate and less onerous to undertake which foreign employers will most
certainly consider in termination of employment decisions. These inimical
effects obviously will remain as long as the subject clause remains in Section
10 of R.A. No. 8042, this time as reinstated by R.A. No. 10022. The
“inherently oppressive, arbitrary, confiscatory and inimical provision [under
Section 10 of R.A. No. 8042 should, therefore,] be struck down for its conflict
with the substantive aspect of the constitutional due process guarantee.
Thus, I vote to declare as unconstitutional the phrase “for three (3) months
for every year of the unexpired terms, whichever is less” in the fifth and final
paragraph of Section 10 of R.A. 8042.”
PETITION for review on certiorari of a decision of the Court of Appeals.
The facts are stated in the opinion of the Court.
  Gaspar V. Tagalo for petitioner.
  Julio F. Andres, Jr. for private respondent.
LEONEN, J.:
This case involves an overseas Filipino worker with shattered dreams. It is
our duty, given the facts and the law, to approximate justice for her.
We are asked to decide a petition for review 1 on certiorari assailing the Court
of Appeals’ decision2 dated June 27, 2005. This decision partially affirmed
the National Labor RelationsCommission’s resolution dated March 31,
2004,3 declaring respondent’s dismissal illegal, directing petitioner to pay
respondent’s three-month salary equivalent to New Taiwan Dollar (NT$)
46,080.00, and ordering it to reimburse the NT$3,000.00 withheld from
respondent, and pay her NT$300.00 attorney’s fees.4
Petitioner, Sameer Overseas Placement Agency, Inc., is a recruitment and
placement agency.5 Responding to an ad it published, respondent, Joy C.
Cabiles, submitted her application for a quality control job in Taiwan. 6
Joy’s application was accepted.7 Joy was later asked to sign a oneyear
employment contract for a monthly salary of NT$15,360.00. 8 She alleged that
Sameer Overseas Agency required her to pay a placement fee of ₱70,000.00
when she signed the employment contract.9
Joy was deployed to work for TaiwanWacoal, Co. Ltd. (Wacoal) on June 26,
1997.10 She alleged that in her employment contract, she agreed to work as
quality control for one year.11 In Taiwan, she was asked to work as a cutter.12
Sameer Overseas Placement Agencyclaims that on July 14, 1997, a certain
Mr. Huwang from Wacoal informedJoy, without prior notice, that she was
terminated and that "she should immediately report to their office to get her
salary and passport."13 She was asked to "prepare for immediate
repatriation."14
Joy claims that she was told that from June 26 to July 14, 1997, she only
earned a total of NT$9,000. 15 According to her, Wacoal deducted NT$3,000
to cover her plane ticket to Manila.16
On October 15, 1997, Joy filed a complaint 17 with the National Labor
Relations Commission against petitioner and Wacoal. She claimed that she
was illegally dismissed.18 She asked for the return of her placement fee, the
withheld amount for repatriation costs, payment of her salary for 23 months
as well as moral and exemplary damages. 19 She identified Wacoal as
Sameer Overseas Placement Agency’s foreign principal. 20
Sameer Overseas Placement Agency alleged that respondent's termination
was due to her inefficiency, negligence in her duties, and her "failure to
comply with the work requirements [of] her foreign [employer]." 21 The agency
also claimed that it did not ask for a placement fee of ₱70,000.00. 22 As
evidence, it showedOfficial Receipt No. 14860 dated June 10, 1997, bearing
the amount of ₱20,360.00. 23 Petitioner added that Wacoal's accreditation
with petitioner had already been transferred to the Pacific Manpower &
LaborRev Assignment No. 1 | 56
Management Services, Inc. (Pacific) as of August 6, 1997. 24 Thus, petitioner
asserts that it was already substituted by Pacific Manpower. 25
Pacific Manpower moved for the dismissal of petitioner’s claims against it. 26 It
alleged that there was no employer-employee relationship between
them.27 Therefore, the claims against it were outside the jurisdiction of the
Labor Arbiter.28 Pacific Manpower argued that the employment contract
should first be presented so that the employer’s contractual obligations might
be identified.29 It further denied that it assumed liability for petitioner’s illegal
acts.30
On July 29, 1998, the Labor Arbiter dismissed Joy’s complaint. 31 Acting
Executive Labor Arbiter Pedro C.Ramos ruled that her complaint was based
on mereallegations.32 The Labor Arbiter found that there was no excess
payment of placement fees, based on the official receipt presented by
petitioner.33 The Labor Arbiter found unnecessary a discussion on petitioner’s
transfer of obligations to Pacific 34 and considered the matter immaterial in
view of the dismissal of respondent’s complaint.35
Joy appealed36 to the National Labor Relations Commission.
In a resolution37 dated March 31, 2004, the National Labor Relations
Commission declared that Joy was illegally dismissed. 38 It reiterated the
doctrine that the burden of proof to show that the dismissal was based on a
just or valid cause belongs to the employer. 39 It found that Sameer Overseas
Placement Agency failed to prove that there were just causes for
termination.40 There was no sufficient proofto show that respondent was
inefficient in her work and that she failed to comply with company
requirements.41 Furthermore, procedural dueprocess was not observed in
terminating respondent.42
The National Labor Relations Commission did not rule on the issue of
reimbursement of placement fees for lack of jurisdiction. 43 It refused to
entertain the issue of the alleged transfer of obligations to Pacific. 44 It did not
acquire jurisdiction over that issue because Sameer Overseas Placement
Agency failed to appeal the Labor Arbiter’s decision not to rule on the
matter.45
The National Labor Relations Commission awarded respondent only three
(3) months worth of salaryin the amount of NT$46,080, the reimbursement of
the NT$3,000 withheld from her, and attorney’s fees of NT$300. 46
The Commission denied the agency’s motion for reconsideration 47 dated May
12, 2004 through a resolution48 dated July 2, 2004.
Aggrieved by the ruling, Sameer Overseas Placement Agency caused the
filing of a petition49 for certiorari with the Court of Appeals assailing the
National Labor Relations Commission’s resolutions dated March 31, 2004
and July 2, 2004.
The Court of Appeals50 affirmed the decision of the National Labor Relations
Commission with respect to the finding of illegal dismissal, Joy’s entitlement
to the equivalent of three months worth of salary, reimbursement of withheld
repatriation expense, and attorney’s fees. 51 The Court of Appeals remanded
the case to the National Labor Relations Commission to address the validity
of petitioner's allegations against Pacific.52 The Court of Appeals held, thus:
Although the public respondent found the dismissal of the complainant-
respondent illegal, we should point out that the NLRC merely awarded her
three (3) months backwages or the amount of NT$46,080.00, which was
based upon its finding that she was dismissed without due process, a finding
that we uphold, given petitioner’s lack of worthwhile discussion upon the
same in the proceedings below or before us. Likewise we sustain NLRC’s
finding in regard to the reimbursement of her fare, which is squarely based
on the law; as well as the award of attorney’s fees.
But we do find it necessary to remand the instant case to the public
respondent for further proceedings, for the purpose of addressing the validity
or propriety of petitioner’s third-party complaint against the transferee agent
or the Pacific Manpower & Management Services, Inc. and Lea G. Manabat.
We should emphasize that as far as the decision of the NLRC on the claims
of Joy Cabiles, is concerned, the same is hereby affirmed with finality, and
we hold petitioner liable thereon, but without prejudice to further hearings on
its third party complaint against Pacific for reimbursement.
WHEREFORE, premises considered, the assailed Resolutions are hereby
partly AFFIRMED in accordance with the foregoing discussion, but subject to
the caveat embodied inthe last sentence. No costs.
SO ORDERED.53
Dissatisfied, Sameer Overseas Placement Agency filed this petition. 54
We are asked to determine whether the Court of Appeals erred when it
affirmed the ruling of the National Labor Relations Commission finding
LaborRev Assignment No. 1 | 57
respondent illegally dismissed and awarding her three months’ worth of
salary, the reimbursement of the cost ofher repatriation, and attorney’s fees
despite the alleged existence of just causes of termination.
Petitioner reiterates that there was just cause for termination because there
was a finding of Wacoal that respondent was inefficient in her work. 55
Therefore, it claims that respondent’s dismissal was valid. 56
Petitioner also reiterates that since Wacoal’s accreditation was validly
transferred to Pacific at the time respondent filed her complaint, it should be
Pacific that should now assume responsibility for Wacoal’s contractual
obligations to the workers originally recruited by petitioner. 57
Sameer Overseas Placement Agency’spetition is without merit. We find for
respondent.
I
Sameer Overseas Placement Agency failed to show that there was just
cause for causing Joy’s dismissal. The employer, Wacoal, also failed to
accord her due process of law.
Indeed, employers have the prerogative to impose productivity and quality
standards at work.58 They may also impose reasonable rules to ensure that
the employees comply with these standards. 59 Failure to comply may be a
just cause for their dismissal. 60 Certainly, employers cannot be compelled to
retain the services of anemployee who is guilty of acts that are inimical to the
interest of the employer.61 While the law acknowledges the plight and
vulnerability of workers, it does not "authorize the oppression or self-
destruction of the employer."62 Management prerogative is recognized in law
and in our jurisprudence.
This prerogative, however, should not be abused. It is "tempered with the
employee’s right to security of tenure." 63 Workers are entitled to substantive
and procedural due process before termination. They may not be removed
from employment without a validor just cause as determined by law and
without going through the proper procedure.
64
Security of tenure for labor is guaranteed by our Constitution.
Employees are not stripped of their security of tenure when they move to
work in a different jurisdiction. With respect to the rights of overseas Filipino
workers, we follow the principle of lex loci contractus.Thus, in Triple Eight
Integrated Services, Inc. v. NLRC,65 this court noted:
Petitioner likewise attempts to sidestep the medical certificate requirement by
contending that since Osdana was working in Saudi Arabia, her employment
was subject to the laws of the host country. Apparently, petitioner hopes
tomake it appear that the labor laws of Saudi Arabia do not require any
certification by a competent public health authority in the dismissal of
employees due to illness.
Again, petitioner’s argument is without merit.
First, established is the rule that lex loci contractus (the law of the place
where the contract is made) governs in this jurisdiction. There is no question
that the contract of employment in this case was perfected here in the
Philippines. Therefore, the Labor Code, its implementing rules and
regulations, and other laws affecting labor apply in this case.Furthermore,
settled is the rule that the courts of the forum will not enforce any foreign
claim obnoxious to the forum’s public policy. Herein the Philippines,
employment agreements are more than contractual in nature. The
Constitution itself, in Article XIII, Section 3, guarantees the special protection
of workers, to wit:
The State shall afford full protection to labor, local and overseas, organized
and unorganized, and promote full employment and equality of employment
opportunities for all.
It shall guarantee the rights of all workers to selforganization, collective
bargaining and negotiations, and peaceful concerted activities, including the
right to strike in accordance with law. They shall be entitled to security of
tenure, humane conditions of work, and a living wage. Theyshall also
participate in policy and decision-making processes affecting their rights and
benefits as may be provided by law.
....
This public policy should be borne in mind in this case because to allow
foreign employers to determine for and by themselves whether an overseas
contract worker may be dismissed on the ground of illness would encourage
LaborRev Assignment No. 1 | 58
illegal or arbitrary pretermination of employment contracts. 66 (Emphasis
supplied, citation omitted)
Even with respect to fundamental procedural rights, this court emphasized in
PCL Shipping Philippines, Inc. v. NLRC,67 to wit:
Petitioners admit that they did notinform private respondent in writing of the
charges against him and that they failed to conduct a formal investigation to
give him opportunity to air his side. However, petitioners contend that the
twin requirements ofnotice and hearing applies strictly only when the
employment is within the Philippines and that these need not be strictly
observed in cases of international maritime or overseas employment.
The Court does not agree. The provisions of the Constitution as well as the
Labor Code which afford protection to labor apply to Filipino employees
whether working within the Philippines or abroad. Moreover, the principle of
lex loci contractus (the law of the place where the contract is made) governs
in this jurisdiction. In the present case, it is not disputed that the Contract of
Employment entered into by and between petitioners and private respondent
was executed here in the Philippines with the approval of the Philippine
Overseas Employment Administration (POEA). Hence, the Labor Code
together with its implementing rules and regulations and other laws affecting
labor apply in this case.68 (Emphasis supplied, citations omitted)
By our laws, overseas Filipino workers (OFWs) may only be terminated for a
just or authorized cause and after compliance with procedural due process
requirements.
Article 282 of the Labor Code enumerates the just causes of termination by
the employer. Thus:
Art. 282. Termination by employer. An employer may terminate an
employment for any of the following causes:
(a) Serious misconduct or willful disobedience by the employee of
the lawful orders of his employer or representative in connection with
his work;
(b) Gross and habitual neglect by the employee of his duties;
(c) Fraud or willful breach by the employee of the trust reposed in
him by his employer or duly authorized representative;
(d) Commission of a crime or offense by the employee against the
person of his employer or any immediate member of his family or his
duly authorized representatives; and
(e) Other causes analogous to the foregoing.
Petitioner’s allegation that respondentwas inefficient in her work and
negligent in her duties69 may, therefore, constitute a just cause for
termination under Article 282(b), but only if petitioner was able to prove it.
The burden of proving that there is just cause for termination is on the
employer. "The employer must affirmatively show rationally adequate
evidence that the dismissal was for a justifiable cause." 70 Failure to show that
there was valid or just cause for termination would necessarily mean that the
dismissal was illegal.71
To show that dismissal resulting from inefficiency in work is valid, it must be
shown that: 1) the employer has set standards of conduct and workmanship
against which the employee will be judged; 2) the standards of conduct and
workmanship must have been communicated tothe employee; and 3) the
communication was made at a reasonable time prior to the employee’s
performance assessment.
This is similar to the law and jurisprudence on probationary employees,
which allow termination ofthe employee only when there is "just cause or
when [the probationary employee] fails to qualify as a regular employee in
accordance with reasonable standards made known by the employer to the
employee at the time of his [or her] engagement."72
However, we do not see why the application of that ruling should be limited to
probationary employment. That rule is basic to the idea of security of tenure
and due process, which are guaranteed to all employees, whether their
employment is probationary or regular.
The pre-determined standards that the employer sets are the bases for
determining the probationary employee’s fitness, propriety, efficiency, and
qualifications as a regular employee. Due process requires that the
probationary employee be informed of such standards at the time of his or
her engagement so he or she can adjusthis or her character or workmanship
accordingly. Proper adjustment to fit the standards upon which the
employee’s qualifications will be evaluated will increase one’s chances of
being positively assessed for regularization by his or her employer.
LaborRev Assignment No. 1 | 59
Assessing an employee’s work performance does not stop after
regularization. The employer, on a regular basis, determines if an employee
is still qualified and efficient, based on work standards. Based on that
determination, and after complying with the due process requirements of
notice and hearing, the employer may exercise its management prerogative
of terminating the employee found unqualified.
The regular employee must constantlyattempt to prove to his or her employer
that he or she meets all the standards for employment. This time, however,
the standards to be met are set for the purpose of retaining employment or
promotion. The employee cannot be expected to meet any standard of
character or workmanship if such standards were not communicated to him
or her. Courts should remain vigilant on allegations of the employer’s failure
to communicatework standards that would govern one’s employment "if
[these are] to discharge in good faith [their] duty to adjudicate." 73
In this case, petitioner merely alleged that respondent failed to comply with
her foreign employer’s work requirements and was inefficient in her
work.74 No evidence was shown to support such allegations. Petitioner did
not even bother to specify what requirements were not met, what efficiency
standards were violated, or what particular acts of respondent constituted
inefficiency.
There was also no showing that respondent was sufficiently informed of the
standards against which her work efficiency and performance were judged.
The parties’ conflict as to the position held by respondent showed that even
the matter as basic as the job title was not clear.
The bare allegations of petitioner are not sufficient to support a claim that
there is just cause for termination. There is no proof that respondent was
legally terminated.
Petitioner failed to comply with
the due process requirements
Respondent’s dismissal less than one year from hiring and her repatriation
on the same day show not onlyfailure on the partof petitioner to comply with
the requirement of the existence of just cause for termination. They patently
show that the employersdid not comply with the due process requirement.
A valid dismissal requires both a valid cause and adherence to the valid
procedure of dismissal.75 The employer is required to give the charged
employee at least two written notices before termination. 76 One of the written
notices must inform the employee of the particular acts that may cause his or
her dismissal.77 The other notice must "[inform] the employee of the
employer’s decision."78 Aside from the notice requirement, the employee
must also be given "an opportunity to be heard."79
Petitioner failed to comply with the twin notices and hearing requirements.
Respondent started working on June 26, 1997. She was told that she was
terminated on July 14, 1997 effective on the same day and barely a month
from her first workday. She was also repatriated on the same day that she
was informed of her termination. The abruptness of the termination negated
any finding that she was properly notified and given the opportunity to be
heard. Her constitutional right to due process of law was violated.
II
Respondent Joy Cabiles, having been illegally dismissed, is entitled to her
salary for the unexpired portion ofthe employment contract that was violated
together with attorney’s fees and reimbursement of amounts withheld from
her salary.
Section 10 of Republic Act No. 8042,otherwise known as the Migrant
Workers and Overseas Filipinos Act of1995, states thatoverseas workers
who were terminated without just, valid, or authorized cause "shall be entitled
to the full reimbursement of his placement fee with interest of twelve (12%)
per annum, plus his salaries for the unexpired portion of his employment
contract or for three (3) months for every year of the unexpired term,
whichever is less."
Sec. 10. MONEY CLAIMS. – Notwithstanding any provision of law to the
contrary, the Labor Arbiters of the National Labor Relations Commission
(NLRC) shall have the original and exclusive jurisdiction to hear and decide,
within ninety (90) calendar days after filing of the complaint, the claims
arising out of an employer-employee relationship or by virtue of any law or
contract involving Filipino workers for overseas deployment including claims
for actual, moral, exemplary and other forms of damages.
The liability of the principal/employer and the recruitment/placement agency
for any and all claims under this section shall be joint and several. This
provisions [sic] shall be incorporated in the contract for overseas employment
and shall be a condition precedent for its approval. The performance bond to
be filed by the recruitment/placementagency, as provided by law, shall be
answerable for all money claims or damages that may be awarded to the
LaborRev Assignment No. 1 | 60
workers. If the recruitment/placement agency is a juridical being, the
corporate officers and directors and partners as the case may be, shall
themselves be jointly and solidarily liable with the corporation orpartnership
for the aforesaid claims and damages.
Such liabilities shall continue during the entire period or duration of the
employment contract and shall not be affected by any substitution,
amendment or modification made locally or in a foreign country of the said
contract.
Any compromise/amicable settlement or voluntary agreement on money
claims inclusive of damages under this section shall be paid within four (4)
months from the approval of the settlement by the appropriate authority.
In case of termination of overseas employment without just, valid or
authorized cause as defined by law or contract, the workers shall be entitled
to the full reimbursement of his placement fee with interest of twelve (12%)
per annum, plus his salaries for the unexpired portion of his employment
contract or for three (3) months for every year of the unexpired term,
whichever is less.
....
(Emphasis supplied)
Section 15 of Republic Act No. 8042 states that "repatriation of the worker
and the transport of his [or her] personal belongings shall be the primary
responsibility of the agency which recruited or deployed the worker
overseas." The exception is when "termination of employment is due solely to
the fault of the worker," 80 which as we have established, is not the case. It
reads: SEC. 15. REPATRIATION OF WORKERS; EMERGENCY
REPATRIATION FUND. – The repatriation of the worker and the transport of
his personal belongings shall be the primary responsibility of the agency
which recruited or deployed the worker overseas. All costs attendant to
repatriation shall be borne by or charged to the agency concerned and/or its
principal. Likewise, the repatriation of remains and transport of the personal
belongings of a deceased worker and all costs attendant thereto shall be
borne by the principal and/or local agency. However, in cases where the
termination of employment is due solely to the fault of the worker, the
principal/employer or agency shall not in any manner be responsible for the
repatriation of the former and/or his belongings.
....
The Labor Code81 also entitles the employee to 10% of the amount of
withheld wages as attorney’s feeswhen the withholding is unlawful.
The Court of Appeals affirmedthe National Labor Relations Commission’s
decision to award respondent NT$46,080.00 or the threemonth equivalent of
her salary, attorney’s fees of NT$300.00, and the reimbursement of the
withheld NT$3,000.00 salary, which answered for her repatriation.
We uphold the finding that respondent is entitled to all of these awards. The
award of the three-month equivalent of respondent’s salary should, however,
be increased to the amount equivalent to the unexpired term of the
employment contract.
In Serrano v. Gallant Maritime Services, Inc. and Marlow Navigation Co.,
Inc.,82 this court ruled that the clause "or for three (3) months for every year of
the unexpired term, whichever is less"83 is unconstitutional for violating the
equal protection clause and substantive due process. 84
A statute or provision which was declared unconstitutional is not a law. It
"confers no rights; it imposes no duties; it affords no protection; it creates no
office; it is inoperative as if it has not been passed at all."85
We are aware that the clause "or for three (3) months for every year of the
unexpired term, whichever is less"was reinstated in Republic Act No. 8042
upon promulgation of Republic Act No. 10022 in 2010. Section 7 of Republic
Act No. 10022 provides:
Section 7.Section 10 of Republic Act No. 8042, as amended, is hereby
amended to read as follows:
SEC. 10. Money Claims.– Notwithstanding any provision of law to the
contrary, the Labor Arbiters of the National Labor Relations Commission
(NLRC) shall have the original and exclusive jurisdiction to hear and decide,
within ninety (90) calendar days after the filing of the complaint, the claims
arising out of an employer-employee relationship or by virtue of any law or
contract involving Filipino workers for overseas deployment including claims
for actual, moral, exemplary and other forms of damage. Consistent with this
mandate, the NLRC shall endeavor to update and keep abreast with the
developments in the global services industry.
LaborRev Assignment No. 1 | 61
The liability of the principal/employer and the recruitment/placement agency
for any and all claims under this section shall be joint and several. This
provision shall be incorporated in the contract for overseas employment and
shall be a condition precedent for its approval. The performance bond to de
[sic] filed by the recruitment/placement agency, as provided by law, shall be
answerable for all money claims or damages that may be awarded to the
workers. If the recruitment/placement agency is a juridical being, the
corporate officers and directors and partners as the case may be, shall
themselves be jointly and solidarily liable with the corporation or partnership
for the aforesaid claims and damages.
Such liabilities shall continue during the entire period or duration of the
employment contract and shall not be affected by any substitution,
amendment or modification made locally or in a foreign country of the said
contract.
Any compromise/amicable settlement or voluntary agreement on money
claims inclusive of damages under this section shall be paid within thirty (30)
days from approval of the settlement by the appropriate authority.
In case of termination of overseas employment without just, valid or
authorized cause as defined by law or contract, or any unauthorized
deductions from the migrant worker’s salary, the worker shall be entitled to
the full reimbursement if [sic] his placement fee and the deductions made
with interest at twelve percent (12%) per annum, plus his salaries for the
unexpired portion of his employment contract or for three (3) months for
every year of the unexpired term, whichever is less.
In case of a final and executory judgement against a foreign
employer/principal, it shall be automatically disqualified, without further
proceedings, from participating in the Philippine Overseas Employment
Program and from recruiting and hiring Filipino workers until and unless it
fully satisfies the judgement award.
Noncompliance with the mandatory periods for resolutions of case
providedunder this section shall subject the responsible officials to any or all
of the following penalties:
(a) The salary of any such official who fails to render his decision or
resolution within the prescribed period shall be, or caused to be,
withheld until the said official complies therewith;
(b) Suspension for not more than ninety (90) days; or
(c) Dismissal from the service with disqualification to hold any
appointive public office for five (5) years.
Provided, however,That the penalties herein provided shall be without
prejudice to any liability which any such official may have incured [sic] under
other existing laws or rules and regulations as a consequence of violating the
provisions of this paragraph. (Emphasis supplied)
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 byRepublic Act No. 10022 governs this case.
When a law is passed, this court awaits an actual case that clearly raises
adversarial positions in their proper context before considering a prayer to
declare it as unconstitutional.
However, we are confronted with a unique situation. The law passed
incorporates the exact clause already declared as unconstitutional, without
any perceived substantial change in the circumstances.
This may cause confusion on the part of the National Labor Relations
Commission and the Court of Appeals.At minimum, the existence of Republic
Act No. 10022 may delay the execution of the judgment in this case, further
frustrating remedies to assuage the wrong done to petitioner.
Hence, there is a necessity to decide this constitutional issue.
Moreover, this court is possessed with the constitutional duty to "[p]romulgate
rules concerning the protection and enforcement of constitutional
rights."87 When cases become mootand academic, we do not hesitate to
provide for guidance to bench and bar in situations where the same violations
are capable of repetition but will evade review. This is analogous to cases
where there are millions of Filipinos working abroad who are bound to suffer
from the lack of protection because of the restoration of an identical clause in
a provision previously declared as unconstitutional.
In the hierarchy of laws, the Constitution is supreme. No branch or office of
the government may exercise its powers in any manner inconsistent with the
Constitution, regardless of the existence of any law that supports such
LaborRev Assignment No. 1 | 62
exercise. The Constitution cannot be trumped by any other law. All laws must
be read in light of the Constitution. Any law that is inconsistent with it is a
nullity.
Thus, when a law or a provision of law is null because it is inconsistent with
the Constitution,the nullity cannot be cured by reincorporation or reenactment
of the same or a similar law or provision. A law or provision of law that was
already declared unconstitutional remains as such unless circumstances
have sochanged as to warrant a reverse conclusion.
We are not convinced by the pleadings submitted by the parties that the
situation has so changed so as to cause us to reverse binding precedent.
Likewise, there are special reasons of judicial efficiency and economy that
attend to these cases. The new law puts our overseas workers in the same
vulnerable position as they were prior to Serrano. Failure to reiterate the very
ratio decidendi of that case will result in the same untold economic hardships
that our reading of the Constitution intended to avoid. Obviously, we cannot
countenance added expenses for further litigation thatwill reduce their
hardearned wages as well as add to the indignity of having been deprived of
the protection of our laws simply because our precedents have not been
followed. There is no constitutional doctrine that causes injustice in the face
of empty procedural niceties. Constitutional interpretation is complex, but it is
never unreasonable.
Thus, in a resolution88 dated October 22, 2013, we ordered the parties and
the Office of the Solicitor General to comment on the constitutionality of the
reinstated clause in Republic Act No. 10022.
In its comment,89 petitioner argued that the clause was constitutional. 90 The
legislators intended a balance between the employers’ and the employees’
rights by not unduly burdening the local recruitment agency. 91 Petitioner is
also of the view that the clause was already declared as constitutional in
Serrano.92
The Office of the Solicitor General also argued that the clause was valid and
constitutional.93 However, since the parties never raised the issue of the
constitutionality of the clause asreinstated in Republic Act No. 10022, its
contention is that it is beyond judicial review.94
On the other hand, respondentargued that the clause was unconstitutional
because it infringed on workers’ right to contract.95
We observe that the reinstated clause, this time as provided in Republic Act.
No. 10022, violates the constitutional rights to equal protection and due
process.96 Petitioner as well as the Solicitor General have failed to show any
compelling changein the circumstances that would warrant us to revisit the
precedent.
We reiterate our finding in Serrano v. Gallant Maritime that limiting wages
that should be recovered by anillegally dismissed overseas worker to three
months is both a violation of due process and the equal protection clauses of
the Constitution.
Equal protection of the law is a guarantee that persons under like
circumstances and falling within the same class are treated alike, in terms of
"privileges conferred and liabilities enforced." 97 It is a guarantee against
"undue favor and individual or class privilege, as well as hostile
discrimination or the oppression of inequality."98
In creating laws, the legislature has the power "to make distinctions and
classifications."99
In exercising such power, it has a wide discretion.100
The equal protection clause does not infringe on this legislative power. 101 A
law is void on this basis, only if classifications are made arbitrarily. 102 There is
no violation of the equal protection clause if the law applies equally to
persons within the same class and if there are reasonable grounds for
distinguishing between those falling within the class and those who do not fall
within the class.103 A law that does not violate the equal protection clause
prescribesa reasonable classification.104
A reasonable classification "(1) must rest on substantial distinctions; (2) must
be germane to the purposes of the law; (3) must not be limited to existing
conditions only; and (4) must apply equally to all members of the same
class."105
The reinstated clause does not satisfy the requirement of reasonable
classification.
In Serrano, we identified the classifications made by the reinstated clause. It
distinguished between fixed-period overseas workers and fixedperiod local
workers.106 It also distinguished between overseas workers with employment
contracts of less than one year and overseas workers with employment
LaborRev Assignment No. 1 | 63
contracts of at least one year.107 Within the class of overseas workers with at
least one-year employment contracts, there was a distinction between those
with at least a year left in their contracts and those with less than a year left
in their contracts when they were illegally dismissed.108
The Congress’ classification may be subjected to judicial review. In Serrano,
there is a "legislative classification which impermissibly interferes with the
exercise of a fundamental right or operates to the peculiar disadvantage of a
suspect class."109
Under the Constitution, labor is afforded special protection. 110 Thus, this court
in Serrano, "[i]mbued with the same sense of ‘obligation to afford protection
to labor,’ . . . employ[ed] the standard of strict judicial scrutiny, for it
perceive[d] in the subject clause a suspect classification prejudicial to
OFWs."111
We also noted in Serranothat before the passage of Republic Act No. 8042,
the money claims of illegally terminated overseas and local workers with
fixed-term employment werecomputed in the same manner. 112 Their money
claims were computed based onthe "unexpired portions of their
contracts."113 The adoption of the reinstated clause in Republic Act No. 8042
subjected the money claims of illegally dismissed overseas workers with an
unexpired term of at least a year to a cap of three months worth of their
salary.114 There was no such limitation on the money claims of illegally
terminated local workers with fixed-term employment.115
We observed that illegally dismissed overseas workers whose employment
contracts had a term of less than one year were granted the amount
equivalent to the unexpired portion of their employment
contracts.116 Meanwhile, illegally dismissed overseas workers with
employment terms of at least a year were granted a cap equivalent to three
months of their salary for the unexpired portions of their contracts. 117
Observing the terminologies used inthe clause, we also found that "the
subject clause creates a sub-layer of discrimination among OFWs whose
contract periods are for more than one year: those who are illegally
dismissed with less than one year left in their contracts shall be entitled to
their salaries for the entire unexpired portion thereof, while those who are
illegally dismissed with one year or more remaining in their contracts shall be
covered by the reinstated clause, and their monetary benefits limited to their
salaries for three months only."118
We do not need strict scrutiny to conclude that these classifications do not
rest on any real or substantial distinctions that would justify different
treatments in terms of the computation of money claims resulting from illegal
termination.
Overseas workers regardless of their classifications are entitled to security of
tenure, at least for the period agreed upon in their contracts. This means that
they cannot be dismissed before the end of their contract terms without due
process. If they were illegally dismissed, the workers’ right to security of
tenure is violated.
The rights violated when, say, a fixed-period local worker is illegally
terminated are neither greater than norless than the rights violated when a
fixed-period overseas worker is illegally terminated. It is state policy to protect
the rights of workers withoutqualification as to the place of employment. 119 In
both cases, the workers are deprived of their expected salary, which they
could have earned had they not been illegally dismissed. For both workers,
this deprivation translates to economic insecurity and disparity. 120 The same
is true for the distinctions between overseas workers with an employment
contract of less than one year and overseas workers with at least one year of
employment contract, and between overseas workers with at least a year left
in their contracts and overseas workers with less than a year left in their
contracts when they were illegally dismissed.
For this reason, we cannot subscribe to the argument that "[overseas
workers] are contractual employeeswho can never acquire regular
employment status, unlike local workers"121 because it already justifies
differentiated treatment in terms ofthe computation of money claims. 122
Likewise, the jurisdictional and enforcement issues on overseas workers’
money claims do not justify a differentiated treatment in the computation of
their money claims.123 If anything, these issues justify an equal, if not greater
protection and assistance to overseas workers who generally are more prone
to exploitation given their physical distance from our government.
We also find that the classificationsare not relevant to the purpose of the law,
which is to "establish a higher standard of protection and promotion of the
welfare of migrant workers, their families and overseas Filipinos in distress,
and for other purposes."124 Further, we find specious the argument that
reducing the liability of placement agencies "redounds to the benefit of the
[overseas] workers
LaborRev Assignment No. 1 | 64
Putting a cap on the money claims of certain overseas workers does not
increase the standard of protection afforded to them. On the other hand,
foreign employers are more incentivizedby the reinstated clause to enter into
contracts of at least a year because it gives them more flexibility to violate
our overseas workers’ rights. Their liability for arbitrarily terminating overseas
workers is decreased at the expense of the workers whose rights they
violated. Meanwhile, these overseas workers who are impressed with an
expectation of a stable job overseas for the longer contract period disregard
other opportunities only to be terminated earlier. They are left with claims that
are less than what others in the same situation would receive. The reinstated
clause, therefore, creates a situation where the law meant to protect them
makes violation of rights easier and simply benign to the violator.
As Justice Brion said in his concurring opinion in Serrano:
Section 10 of R.A. No. 8042 affects these well-laid rules and measures, and
in fact provides a hidden twist affecting the principal/employer’s liability.
While intended as an incentive accruing to recruitment/manning agencies,
the law, as worded, simply limits the OFWs’ recovery in wrongfuldismissal
situations. Thus, it redounds to the benefit of whoever may be liable,
including the principal/employer – the direct employer primarily liable for the
wrongful dismissal. In this sense, Section 10 – read as a grant of incentives
to recruitment/manning agencies – oversteps what it aims to do by effectively
limiting what is otherwise the full liability of the foreign principals/employers.
Section 10, in short, really operates to benefit the wrong party and allows that
party, without justifiable reason, to mitigate its liability for wrongful dismissals.
Because of this hidden twist, the limitation ofliability under Section 10 cannot
be an "appropriate" incentive, to borrow the term that R.A. No. 8042 itself
uses to describe the incentive it envisions under its purpose clause.
What worsens the situation is the chosen mode of granting the incentive:
instead of a grant that, to encourage greater efforts at recruitment, is directly
related to extra efforts undertaken, the law simply limits their liability for the
wrongful dismissals of already deployed OFWs. This is effectively a legally-
imposed partial condonation of their liability to OFWs, justified solely by the
law’s intent to encourage greater deployment efforts. Thus, the incentive,from
a more practical and realistic view, is really part of a scheme to sell Filipino
overseas labor at a bargain for purposes solely of attracting the market. . . .
The so-called incentive is rendered particularly odious by its effect on the
OFWs — the benefits accruing to the recruitment/manning agencies and their
principals are takenfrom the pockets of the OFWs to whom the full salaries
for the unexpired portion of the contract rightfully belong. Thus, the
principals/employers and the recruitment/manning agencies even profit from
their violation of the security of tenure that an employment contract
embodies. Conversely, lesser protection is afforded the OFW, not only
because of the lessened recovery afforded him or her by operation of law,
but also because this same lessened recovery renders a wrongful dismissal
easier and less onerous to undertake; the lesser cost of dismissing a Filipino
will always bea consideration a foreign employer will take into account in
termination of employment decisions. . . .126
Further, "[t]here can never be a justification for any form of government
action that alleviates the burden of one sector, but imposes the same burden
on another sector, especially when the favored sector is composed of private
businesses suchas placement agencies, while the disadvantaged sector is
composed ofOFWs whose protection no less than the Constitution
commands. The idea thatprivate business interest can be elevated to the
level of a compelling state interest is odious."127
Along the same line, we held that the reinstated clause violates due process
rights. It is arbitrary as it deprives overseas workers of their monetary claims
without any discernable valid purpose.128
Respondent Joy Cabiles is entitled to her salary for the unexpired portion of
her contract, in accordance with Section 10 of Republic Act No. 8042. The
award of the three-month equivalence of respondent’s salary must be
modified accordingly. Since she started working on June 26, 1997 and was
terminated on July 14, 1997, respondent is entitled to her salary from July 15,
1997 to June 25, 1998. "To rule otherwise would be iniquitous to petitioner
and other OFWs, and would,in effect, send a wrong signal that
principals/employers and recruitment/manning agencies may violate an
OFW’s security of tenure which an employment contract embodies and
actually profit from such violation based on an unconstitutional provision of
law."129
III
On the interest rate, the Bangko Sentral ng Pilipinas Circular No. 799 of June
21, 2013, which revised the interest rate for loan or forbearance from 12% to
6% in the absence of stipulation,applies in this case. The pertinent portions of
Circular No. 799, Series of 2013, read: The Monetary Board, in its Resolution
No. 796 dated 16 May 2013, approved the following revisions governing the
rate of interest in the absence of stipulation in loan contracts, thereby
amending Section 2 of Circular No. 905, Series of 1982:
LaborRev Assignment No. 1 | 65
Section 1. The rate of interest for the loan or forbearance of any money,
goods or credits and the rate allowed in judgments, in the absence of an
express contract as to such rateof interest, shall be six percent (6%) per
annum.
Section 2. In view of the above, Subsection X305.1 of the Manual of
Regulations for Banks and Sections 4305Q.1, 4305S.3 and 4303P.1 of the
Manual of Regulations for Non-Bank Financial Institutions are hereby
amended accordingly.
This Circular shall take effect on 1 July 2013.
Through the able ponencia of Justice Diosdado Peralta, we laid down the
guidelines in computing legal interest in Nacar v. Gallery Frames: 130
II. With regard particularly to an award of interest in the concept of actual and
compensatory damages, the rate of interest, as well as the accrual thereof, is
imposed, as follows:
1. When the obligation is breached, and it consists in the payment of
a sum of money, i.e., a loan or forbearance of money, the interest
due should be that which may have been stipulated in writing.
Furthermore, the interest due shall itself earn legal interest from the
time it is judicially demanded. In the absence of stipulation, the rate
of interest shall be 6% per annum to be computed from default, i.e.,
from judicial or extrajudicial demand under and subject to the
provisions of Article 1169 of the Civil Code.
2. When an obligation, not constituting a loan or forbearance of
money, is breached, an interest on the amount of damages awarded
may be imposed at the discretion of the court at the rate of 6% per
annum. No interest, however, shall be adjudged on unliquidated
claims or damages, except when or until the demand can be
established with reasonable certainty. Accordingly, where the
demand is established with reasonable certainty, the interest shall
begin to run from the time the claim is made judicially or
extrajudicially (Art. 1169, Civil Code), but when such certainty cannot
be so reasonably established at the time the demand is made, the
interest shall begin to run only from the date the judgment of the
court is made (at which time the quantification of damages may be
deemed to have been reasonably ascertained). The actual base for
the computation of legal interest shall, in any case, be on the amount
finally adjudged. 3. When the judgment of the court awarding a sum
of money becomes final and executory, the rate of legal interest,
whether the case falls under paragraph 1 or paragraph 2, above,
shall be 6% per annum from such finality until its satisfaction, this
interim period being deemed to be by then an equivalent to a
forbearance of credit.
And, in addition to the above, judgments that have become final and
executory prior to July 1, 2013, shall not be disturbed and shall continue to
be implemented applying the rate of interest fixed therein. 131
Circular No. 799 is applicable only in loans and forbearance of money,
goods, or credits, and in judgments when there is no stipulation on the
applicable interest rate. Further, it is only applicable if the judgment did not
become final and executory before July 1, 2013.132
We add that Circular No. 799 is not applicable when there is a law that states
otherwise. While the Bangko Sentral ng Pilipinas has the power to set or limit
interest rates,133 these interest rates do not apply when the law provides that
a different interest rate shall be applied. "[A] Central Bank Circular cannot
repeal a law. Only a law can repeal another law."134
For example, Section 10 of Republic Act No. 8042 provides that unlawfully
terminated overseas workers are entitled to the reimbursement of his or her
placement fee with an interest of 12% per annum. Since Bangko Sentral ng
Pilipinas circulars cannotrepeal Republic Act No. 8042, the issuance of
Circular No. 799 does not have the effect of changing the interest on awards
for reimbursement of placement fees from 12% to 6%. This is despite Section
1 of Circular No. 799, which provides that the 6% interest rate applies even to
judgments.
Moreover, laws are deemed incorporated in contracts. "The contracting
parties need not repeat them. They do not even have to be referred to. Every
contract, thus, contains not only what has been explicitly stipulated, but the
statutory provisions that have any bearing on the matter." 135 There is,
therefore, an implied stipulation in contracts between the placement agency
and the overseasworker that in case the overseas worker is adjudged as
entitled to reimbursement of his or her placement fees, the amount shall be
subject to a 12% interest per annum. This implied stipulation has the effect of
removing awards for reimbursement of placement fees from Circular No.
799’s coverage.
The same cannot be said for awardsof salary for the unexpired portion of the
employment contract under Republic Act No. 8042. These awards are
LaborRev Assignment No. 1 | 66
covered by Circular No. 799 because the law does not provide for a specific
interest rate that should apply.
In sum, if judgment did not become final and executory before July 1, 2013
and there was no stipulation in the contract providing for a different interest
rate, other money claims under Section 10 of Republic Act No. 8042 shall be
subject to the 6% interest per annum in accordance with Circular No. 799.
This means that respondent is also entitled to an interest of 6% per annum
on her money claims from the finality of this judgment.
IV
Finally, we clarify the liabilities ofWacoal as principal and petitioner as the
employment agency that facilitated respondent’s overseas employment.
Section 10 of the Migrant Workers and Overseas Filipinos Act of 1995
provides that the foreign employer and the local employment agency are
jointly and severally liable for money claims including claims arising out of an
employer-employee relationship and/or damages. This section also provides
that the performance bond filed by the local agency shall be answerable for
such money claims or damages if they were awarded to the employee.
This provision is in line with the state’s policy of affording protection to labor
and alleviating workers’ plight.136
In overseas employment, the filing of money claims against the foreign
employer is attended by practical and legal complications.1âwphi1 The
distance of the foreign employer alonemakes it difficult for an overseas
worker to reach it and make it liable for violations of the Labor Code. There
are also possible conflict of laws, jurisdictional issues, and procedural rules
that may be raised to frustrate an overseas worker’sattempt to advance his or
her claims.
It may be argued, for instance, that the foreign employer must be impleaded
in the complaint as an indispensable party without which no final
determination can be had of an action.137
The provision on joint and several liability in the Migrant Workers and
Overseas Filipinos Act of 1995 assures overseas workers that their rights will
not be frustrated with these complications. The fundamental effect of joint
and several liability is that "each of the debtors is liable for the entire
obligation."138 A final determination may, therefore, be achieved even if only
oneof the joint and several debtors are impleaded in an action. Hence, in the
case of overseas employment, either the local agency or the foreign
employer may be sued for all claims arising from the foreign employer’s labor
law violations. This way, the overseas workers are assured that someone —
the foreign employer’s local agent — may be made to answer for
violationsthat the foreign employer may have committed.
The Migrant Workers and Overseas Filipinos Act of 1995 ensures that
overseas workers have recourse in law despite the circumstances of their
employment. By providing that the liability of the foreign employer may be
"enforced to the full extent"139 against the local agent,the overseas worker is
assured of immediate and sufficientpayment of what is due them. 140
Corollary to the assurance of immediate recourse in law, the provision on
joint and several liability in the Migrant Workers and Overseas Filipinos Act of
1995 shifts the burden of going after the foreign employer from the overseas
worker to the local employment agency. However, it must be emphasized
that the local agency that is held to answer for the overseas worker’s money
claims is not leftwithout remedy. The law does not preclude it from going after
the foreign employer for reimbursement of whatever payment it has made to
the employee to answer for the money claims against the foreign employer.
A further implication of making localagencies jointly and severally liable with
the foreign employer is thatan additional layer of protection is afforded to
overseas workers. Local agencies, which are businesses by nature, are
inoculated with interest in being always on the lookout against foreign
employers that tend to violate labor law. Lest they risk their reputation or
finances, local agenciesmust already have mechanisms for guarding against
unscrupulous foreign employers even at the level prior to overseas
employment applications.
With the present state of the pleadings, it is not possible to determine
whether there was indeed a transfer of obligations from petitioner to Pacific.
This should not be an obstacle for the respondent overseas worker to
proceed with the enforcement of this judgment. Petitioner is possessed with
the resources to determine the proper legal remedies to enforce its rights
against Pacific, if any.
V
LaborRev Assignment No. 1 | 67

Many times, this court has spoken on what Filipinos may encounter as they
travel into the farthest and mostdifficult reaches of our planet to provide for
their families. In Prieto v. NLRC:141
The Court is not unaware of the many abuses suffered by our overseas
workers in the foreign land where they have ventured, usually with heavy
hearts, in pursuit of a more fulfilling future. Breach of contract, maltreatment,
rape, insufficient nourishment, sub-human lodgings, insults and other forms
of debasement, are only a few of the inhumane acts towhich they are
subjected by their foreign employers, who probably feel they can do as they
please in their own country. Whilethese workers may indeed have relatively
little defense against exploitation while they are abroad, that disadvantage
must not continue to burden them when they return to their own territory to
voice their muted complaint. There is no reason why, in their very own land,
the protection of our own laws cannot be extended to them in full measure for
the redress of their grievances.142
WHEREFORE, the petition is DENIED. The decision of the Court of Appeals
is AFFIRMED with modification. Petitioner Sameer Overseas Placement
Agency is ORDERED to pay respondent Joy C. Cabiles the amount
equivalent to her salary for the unexpired portion of her employment contract
at an interest of 6% per annum from the finality of this judgment. Petitioner is
also ORDERED to reimburse respondent the withheld NT$3,000.00 salary
and pay respondent attorney's fees of NT$300.00 at an interest of 6% per
annum from the finality of this judgment.
The clause, "or for three (3) months for every year of the unexpired term,
whichever is less" in Section 7 of Republic Act No. 10022 amending Section
10 of Republic Act No. 8042 is declared unconstitutional and, therefore, null
and void.
SO ORDERED.

But it seems that we have not said enough.

We face a diaspora of Filipinos. Their travails and their heroism can be told a
million times over; each of their stories as real as any other. Overseas
Filipino workers brave alien cultures and the heartbreak of families left behind
daily. They would count the minutes, hours, days, months, and years
yearning to see their sons and daughters. We all know of the joy and
sadness when they come home to see them all grown up and, being so, they
remember what their work has cost them. Twitter accounts, Facetime, and
many other gadgets and online applications will never substitute for their lost
physical presence.

Unknown to them, they keep our economy afloat through the ebb and flow of
political and economic crises. They are our true diplomats, they who show
the world the resilience, patience, and creativity of our people. Indeed, we
are a people who contribute much to the provision of material creations of
this world.

This government loses its soul if we fail to ensure decent treatment for all
Filipinos. We default by limiting the contractual wages that should be paid to
our workers when their contracts are breached by the foreign employers.
While we sit, this court will ensure that our laws will reward our overseas
workers with what they deserve: their dignity.

Inevitably, their dignity is ours as weil.

LaborRev Assignment No. 1 | 68
G.R. No. 168715. September 15, 2010.*
MEDLINE MANAGEMENT, INC. and GRECOMAR SHIPPING AGENCY,
petitioners, vs. GLICERIA ROSLINDA and ARIEL ROSLINDA,
respondents.
Labor Law; Seafarers; Money Claims; Prescription; Article 291 of the Labor
Code is the law governing the prescription of money claims of seafarers, a
class of overseas contract workers; Article 291 prevails over Section 28 of
the Standard Employment Contract for Seafarers which provides for claims to
be brought only within one year from the date of the seafarer’s return to the
point of hire; Section 28 insofar as it limits the prescriptive period within which
the seafarers may file their money claims, is hereby declared null and void.—
In Southeastern Shipping v. Navarra, Jr., 621 SCRA 361 (2010), we ruled
that “Article 291 is the law governing the prescription of money claims of
seafarers, a class of overseas contract workers. This law prevails over
Section 28 of the Standard Employment Contract for Seafarers which
provides for claims to be brought only within one year from the date of the
seafarer’s return to the point of hire.” We further declared that “for the
guidance of all, Section 28 of the Standard Employment Contract for
Seafarers, insofar as it limits the prescriptive period within which the
seafarers may file their money claims, is hereby declared null and void. The
applicable provision is Article 291 of the Labor Code, it being more favorable
to the seafarers and more in accord with the State’s declared policy to afford
full protection to labor. The prescriptive period in the present case is thus
three years from the time the cause of action accrues.”
Same; Same; Same; Same; Parties in Interest; As the parties claiming
benefits for the death of a seafarer, respondents can file a case with the
Labor Arbiter as provided for under Section 28 of the POEA SEC.—
Petitioners’ claim that the Labor Arbiter has no jurisdiction to hear the case
for want of employer-employee relationship between the parties lacks merit.
Petitioners have not taken into consideration that respondents, as heirs of
Juliano, have the personality to file the claim for death benefits. As the
parties claiming benefits for the death of a seafarer, they can file a case with
the Labor Arbiter as provided for under Section 28 of the POEA SEC. It is
clearly provided therein that the NLRC shall have original and exclusive
jurisdiction over any and all disputes or controversies arising out of or by
virtue of the Contract.
Same; Same; Death Benefits; In order to avail of death benefits, the death of
the employee should occur during the effectivity of the employment contract.
—In Southeastern Shipping v. Navarra, Jr., 621 SCRA 361 (2010), we
declared that “in order to avail of death benefits, the death of the employee
should occur during the effectivity of the employment contract.” “The death of
a seaman during the term of employment makes the employer liable to his
heirs for death compensation benefits. Once it is established that the seaman
died during the effectivity of his employment contract, the employer is liable.”
Juliano did not die while he was under the employ of petitioners. His contract
of employment ceased when he was discharged on January 20, 2000, after
having completed his contract thereat. He died on August 27, 2001 or one
year, seven months and seven days after the expiration of his contract. Thus,
his beneficiaries are not entitled to the death benefits under the Standard
Employment Contract for Seafarers.
Same; Labor Code; Motion to Dismiss; A motion to dismiss on the ground of
failure to comply with a condition precedent is a prohibited pleading.—A
motion to dismiss that can be availed of is one which is based on lack of
jurisdiction over the subject matter, improper venue, res judicata, prescription
and forum shopping. Conversely, a motion to dismiss on the ground of failure
to comply with a condition precedent is, therefore, a prohibited pleading.
Hence, the Labor Arbiter did not commit any grave abuse of discretion
amounting to lack or excess of jurisdiction when she denied the Motion to
Dismiss filed by petitioners.
Same; Same; Appeals; When the law says that the orders appealable to the
Commission are those which will become final and executory if not appealed,
it can only refer to a final order, not an interlocutory order such as a denial of
a motion to dismiss.—All the three provisions above-mentioned refer to final
orders and not interlocutory ones, such as, a denial of a motion to dismiss.
Based on the above provisions, the Labor Arbiter’s decisions, resolutions or
orders shall be final and executory unless appealed to the Commission.
Only a final order can attain the final and executory stage; an interlocutory
order cannot go that far. Consequently, when the law says that the orders
appealable to the Commission are those which will become final and
executory if not appealed, it can only refer to a final order, not an
interlocutory order, such as a denial of a motion to dismiss.
PETITION for review on certiorari of the decision and resolution of the Court
of Appeals.
  The facts are stated in the opinion of the Court.
 Del Rosario and Del Rosario for petitioners.
 Dela Cruz, Entero & Associates for respondents.
DEL CASTILLO, J.:
LaborRev Assignment No. 1 | 69
If a seafarer dies after the termination of his contract of employment, the
Court can only commiserate with his heirs because it has no alternative but
to declare that his beneficiaries are not entitled to the death benefits provided
in the Philippine Overseas Employment Administration (POEA) Standard
Employment Contract (SEC).
This Petition for Review on Certiorari 1 assails the Decision2 dated March 11,
2005 of the Court of Appeals (CA) in CA-G.R. SP No. 87648, which
dismissed the petition for certiorari  with prayer for the issuance of a writ of
preliminary injunction and/or restraining order challenging the Resolution
dated August 31, 20043 and October 15, 20044 of the National Labor
Relations Commission (NLRC) in NLRC NCR CA No. 040435-04. Also
assailed is the Resolution5 dated June 22, 2005 denying the Motion for
Reconsideration.
Factual Antecedents
Petitioner Medline Management, Inc. (MMI), on behalf of its foreign principal,
petitioner Grecomar Shipping Agency (GSA), hired Juliano Roslinda (Juliano)
to work on board the vessel MV "Victory." Juliano was previously employed
by the petitioners under two successive separate employment contracts of
varying durations. His latest contract was approved by the POEA on
September 9, 1998 for a duration of nine months. 6 In accordance with which,
he boarded the vessel MV "Victory" on October 25, 1998 as an oiler and,
after several months of extension, was discharged on January 20, 2000.
Months after his repatriation, or on March 6, 2000, Juliano consulted Dr.
Pamela R. Lloren (Dr. Lloren) of Metropolitan Hospital. He complained about
abdominal distention which is the medical term for a patient who vomits
previously ingested foods. From March 8 to August 24, 2000, Juliano visited
Dr. Lloren for a series of medical treatment. 7 In a Medical Certificate8 issued
by Dr. Lloren, the condition of Juliano required hemodialysis which was
initially done twice a week for a period of two months and then once every 10
days. In medicine, hemodialysis is the method of removing waste products
such as creatinine and urea, as well as freeing water from the blood, when
the kidneys are in renal failure.9
On August 27, 2001, Juliano died. On September 4, 2003, his wife Gliceria
Roslinda and son Ariel Roslinda, respondents herein, filed a complaint
against MMI and GSA for payment of death compensation, reimbursement of
medical expenses, damages, and attorney's fees before the Labor Arbitration
Branch of the NLRC.
Petitioners received on September 25, 2003 a copy of the summons 10 and
complaint. Instead of filing an answer, they filed a Motion to Dismiss 11 on the
grounds of prescription, lack of jurisdiction and prematurity. Petitioners
contended that the action has already prescribed because it was filed three
years, seven months and 22 days from the time the deceased seafarer
reached the point of hire. They also argued that the case should be
dismissed outright for prematurity because respondents failed to comply with
a condition precedent by not availing of the grievance machinery. Lastly,
petitioners opined that the Labor Arbiter had no jurisdiction because there
exists no employer-employee relationship between the parties.
On January 9, 2004, respondents submitted their Position Paper with
Opposition to Motion to Dismiss. 12 On January 26, 2004, petitioners
submitted their Comment/Reply with Motion to Expunge Complainant's
Position Paper.13
Ruling of the Labor Arbiter
On April 21, 2004, Labor Arbiter Fatima Jambaro-Franco denied the Motion
to Dismiss filed by the petitioners. The dispositive portion provides:
WHEREFORE, premises considered, the Motion to Dismiss is hereby
DENIED for lack of merit.
In order to expedite the proceedings of this case, the respondents [herein
petitioners] are hereby ordered to submit their position paper on May 18,
2004 at 9:30 a.m.
SO ORDERED.14
Ruling of the National Labor Relations Commission
Petitioners, instead of complying with the order of the Labor Arbiter to submit
their position paper, filed their Notice of Appeal with Memorandum 15 of
Appeal on May 7, 2004 with the NLRC.
Petitioners asserted that the Labor Arbiter seriously erred in disregarding the
basic provision of the POEA Contract. According to them, the POEA contract
is clear that any claim arising from the employment of a seafarer should be
filed within one year from the seafarer's return to the point of hire; otherwise,
it shall be barred forever. In addition, petitioners claimed that the Labor
Arbiter also erred when she issued an order without resolving the other
LaborRev Assignment No. 1 | 70
issues in their Motion to Dismiss. The Labor Arbiter failed to take into
consideration that respondents have no employer-employee relationship with
herein petitioners, which means that the former have no cause of action
against the latter. Lastly, they opined that the Labor Arbiter failed to resolve
the issue of prematurity when the present case was filed without passing
through the grievance committee.
On August 31, 2004, the NLRC issued its Resolution, the dispositive portion
of which provides:
PREMISES CONSIDERED, respondents' appeal from the Order dated April
21, 2004 is hereby DISMISSED for lack of merit. Let records herein be
REMANDED to Arbitration Branch of origin for immediate appropriate
proceedings.
SO ORDERED.16
Ruling of the Court of Appeals
After reviewing the case on certiorari, the CA ruled that the claim was filed
within the three-year prescriptive period which must be reckoned from the
time of Juliano's death on August 27, 2001 and not from the date of his
repatriation on January 20, 2000. As to the denial of the Motion to Dismiss, it
found that under Section 3 of Rule V of the NLRC Rules of Procedure, an
order denying the Motion to Dismiss or suspension of its resolution until the
final determination of the case, is not appealable. Anent the issue that the
Labor Arbiter had no jurisdiction over the case because there exists no
employee-employer relationship between the parties, the CA held that such
matter is a factual issue which should be threshed out in the trial of the case.
Being a factual matter needing evidence for its existence, a motion to dismiss
is not the proper remedy. The dispositive portion of the CA Decision states:
IN VIEW OF ALL THE FOREGOING, the instant petition is
ordered DISMISSED. Costs against the petitioners.
SO ORDERED.17
After the denial by the CA of their Motion for Reconsideration, petitioners filed
the present petition for review on certiorari.
Issues
Petitioners raise the following issues:
I.
Whether the CA seriously erred in holding that the Order of the Labor Arbiter
dismissing the Motion to Dismiss is not appealable.
II.
Whether the CA seriously erred in ruling that the claim is not yet barred by
prescription despite the fact that it was filed beyond the one-year prescriptive
period provided by the POEA Standard Employment Contract.
III.
Whether the ruling of the CA is contrary to the jurisprudence laid down in the
case of Fem's Elegance Lodging House vs. Murillo decided by this Court.
Petitioners' Arguments
Petitioners contend that although Rule 1, Section 3 of the NLRC Rules of
Procedure provides for the suppletory application of the Rules of Court, the
same is proper only in the absence of applicable provision in the NLRC
Rules of Procedure to the issue at hand. Here, Section 1, Rule VI of the
NLRC Rules of Procedure and Article 223 of the Labor Code specifically
provide that any order of the Labor Arbiter is appealable to the NLRC,
regardless if it is final or interlocutory in nature. Hence, there is no room for
the suppletory application of the Rules of Court in the case at bench.
Petitioners also argue that the POEA SEC provides that the employer and
the seafarer agree that all claims arising from the contract shall be made
within one year from the date of seafarer's return to the point of hire. Hence,
respondents’ claim for death benefits has clearly prescribed because they
filed their complaint before the NLRC Arbitration Branch only on September
11, 2003 or three years seven months and 22 days after the return of Juliano
to the point of hire on January 20, 2000.
Respondents' Arguments
LaborRev Assignment No. 1 | 71
Respondents posit that Section 3, Rule V of the NLRC Rules of Procedure
clearly provides that an order denying a motion to dismiss or suspension of
its resolution until the final determination of the case is not appealable. It is
for this reason that petitioners were required to proceed with the Arbitration
Branch of origin for further proceedings.
Moreover, respondents argue that the Motion to Dismiss filed by the
petitioners was properly denied by the Labor Arbiter because the cause of
action has not yet prescribed. The prescriptive period that should apply is
three years and not one year as provided for in the POEA SEC. Therefore,
when the complaint was filed on September 4, 2003, it is well within the
three-year prescriptive period. The reckoning point is the time when the
cause of action accrued which is from the time of death of the seafarer and
not from the time of repatriation.
Our Ruling
A close perusal of the three issues presented for our review readily reveals a
single issue of substance – that the Labor Arbiter seriously erred in denying
the Motion to Dismiss filed by the petitioners without ruling on all the grounds
raised by them. Another issue involved a procedural ground – that the CA
erred in dismissing the petition assailing the denial of the Motion to Dismiss
based on Section 3, Rule V of the NLRC Rules of Procedure.
The Labor Arbiter Properly Denied the Motion to Dismiss
The denial of the Motion to Dismiss by the Labor Arbiter, the NLRC, and the
CA was made in accordance with prevailing law and jurisprudence. It should
be noted that in the Motion to Dismiss filed by the petitioners before the
Labor Arbiter, they cited prescription, lack of jurisdiction and failure to comply
with a condition precedent, as the three grounds for dismissal of the case.
Prescription
The employment contract signed by Juliano stated that "Upon approval, the
same shall be deemed an integral part of the Standard Employment Contract
(SEC) for seafarers."18 Section 28 of the POEA SEC states:
SECTION 28. JURISDICTION
The Philippine Overseas Employment Administration (POEA) or the National
Labor Relations Commission (NLRC) shall have original and exclusive
jurisdiction over any and all disputes or controversies arising out of or by
virtue of this Contract.
Recognizing the peculiar nature of overseas shipboard employment, the
employer and the seafarer agree that all claims arising from this contract
shall be made within one (1) year from the date of the seafarer's return to the
point of hire. (Emphasis supplied)
On the other hand, the Labor Code states:
ART. 291. Money claims. – All money claims arising from employer-
employee relations accruing during the effectivity of this Code shall be
filed within three (3) years from the time the cause of action accrued;
otherwise they shall forever be barred.
x x x x (Emphasis supplied)
In Southeastern Shipping v. Navarra, Jr.,19 we ruled that "Article 291 is the
law governing the prescription of money claims of seafarers, a class of
overseas contract workers. This law prevails over Section 28 of the Standard
Employment Contract for Seafarers which provides for claims to be brought
only within one year from the date of the seafarer's return to the point of hire."
We further declared that "for the guidance of all, Section 28 of the Standard
Employment Contract for Seafarers, insofar as it limits the prescriptive period
within which the seafarers may file their money claims, is hereby declared
null and void. The applicable provision is Article 291 of the Labor Code, it
being more favorable to the seafarers and more in accord with the State's
declared policy to afford full protection to labor. The prescriptive period in the
present case is thus three years from the time the cause of action accrues."
In the present case, the cause of action accrued on August 27, 2001 when
Juliano died. Hence, the claim has not yet prescribed, since the complaint
was filed with the arbitration branch of the NLRC on September 4, 2003.
Lack of Jurisdiction
Petitioners’ claim that the Labor Arbiter has no jurisdiction to hear the case
for want of employer-employee relationship between the parties lacks merit.
Petitioners have not taken into consideration that respondents, as heirs of
Juliano, have the personality to file the claim for death benefits. As the
LaborRev Assignment No. 1 | 72
parties claiming benefits for the death of a seafarer, they can file a case with
the Labor Arbiter as provided for under Section 28 of the POEA SEC. It is
clearly provided therein that the NLRC shall have original and exclusive
jurisdiction over any and all disputes or controversies arising out of or by
virtue of the Contract.
Furthermore, Section 20 of the Standard Terms and Conditions Governing
the Employment of Filipino Seafarers On-Board Ocean-Going Vessels states:
A. COMPENSATION AND BENEFITS FOR DEATH
1. In the case of work-related death of the seafarer during the term of his
contract, the employer shall pay his beneficiaries the Philippine Currency
equivalent to the amount of Fifty Thousand US dollars (US$ 50,000.00) and
an additional amount of Seven Thousand US Dollars (US$ 7,000.00) to each
child under the age of twenty-one (21) but not exceeding four (4) children, at
the exchange rate prevailing during the time of payment.
xxxx
In filing the complaint for payment of death compensation, reimbursement of
medical expenses, damages and attorney's fees before the Labor Arbitration
Branch of the NLRC, respondents are actually enforcing their entitlement to
the above provision of the contract of Juliano with petitioners. They are the
real parties in interest as they stand to be benefited or injured by the
judgment in this case, or the parties entitled to the avails of the case.
Having shown that respondents have the personality to file the complaint and
that the Labor Arbiter has the original and exclusive jurisdiction over the said
claims, then this ground for petitioners' Motion to Dismiss has no basis and,
therefore, its denial was proper.
Failure to Comply with a Condition Precedent
Petitioners likewise contend that the present claim should have been
dismissed on the ground that respondents prematurely filed the present
complaint because the employment contract requires respondents to first
bring their claim before the Grievance Machinery.
Indeed, the records of this case would not give us any idea on what actions
were taken by respondents before they filed the case. What can only be
deduced from the records is that respondents demanded from petitioners the
payment of death benefits and the reimbursement of medical expenses
incurred by Juliano from the time of his repatriation on January 20, 2000 until
his death on August 27, 2001 amounting to ₱149,490.00 which was refused
by petitioners. There is therefore no showing that they complied with the
provisions of the employment contract to first bring the matter before the
Grievance Machinery.
Having shown that respondents failed to bring this matter to the Grievance
Machinery as provided in the POEA SEC, can we now conclude that the
Labor Arbiter erred in denying the Motion to Dismiss on the ground that
respondents failed to comply with a condition precedent? We answer this in
the negative. The denial by the Labor Arbiter of the Motion to Dismiss filed by
petitioners on the ground of non-compliance with a condition precedent is still
proper.
Section 4, Rule III of the New Rules of Procedure of the NLRC (As amended
by NLRC Resolution No. 01-02, series of 2002) provides:
SECTION 4. PROHIBITED PLEADINGS AND MOTIONS. – The following
pleadings, motions or petitions shall not be allowed in the cases covered by
these Rules:
(a) Motion to dismiss the complaint except on the ground of lack of
jurisdiction over the subject matter, improper venue, res adjudicata,
prescription and forum shopping;
xxxx
The above provision thus explicitly provides that a motion to dismiss that can
be availed of is one which is based on lack of jurisdiction over the subject
matter, improper venue, res judicata, prescription and forum shopping.
Conversely, a motion to dismiss on the ground of failure to comply with a
condition precedent is, therefore, a prohibited pleading. Hence, the Labor
Arbiter did not commit any grave abuse of discretion amounting to lack or
excess of jurisdiction when she denied the Motion to Dismiss filed by
petitioners.
Having shown that the Labor Arbiter properly denied the Motion to Dismiss,
the NLRC and the CA have likewise acted in accordance with law in denying
the appeal of the dismissal of such Motion to Dismiss.
LaborRev Assignment No. 1 | 73
The CA Properly Denied the Petition Based on Section 3, Rule V of the
NLRC Rules of Procedure
Petitioners contend that Section 3 (now Section 6), Rule V of the NLRC
Rules of Procedure is in direct conflict with the provisions of Section 1, Rule
VI of the same NLRC Rules of Procedure and Article 223 of the Labor Code
and, hence, it should be the latter which should prevail.
We do not agree.
Section 3 (now Section 6) of Rule V and Section 1 of Rule VI of the NLRC
Rules of Procedure, as amended, provide:
SECTION 3. MOTION TO DISMISS. – On or before the date set for the
conference, the respondent may file a motion to dismiss. Any motion to
dismiss on the ground of lack of jurisdiction, improper venue, or that the
cause of action is barred by prior judgment, prescription or forum shopping,
shall be immediately resolved by the Labor Arbiter by a written order. An
order denying the motion to dismiss or suspending its resolution until the final
determination of the case is not appealable.
SECTION 1. PERIODS OF APPEAL. – Decisions, resolutions or orders of
the Labor Arbiter shall be final and executory unless appealed to the
Commission by any or both parties within ten (10) calendar days from receipt
of such decisions, resolutions or orders of the Labor Arbiter and in case of a
decision of the Regional Director within five (5) calendar days from receipt of
such decisions, resolutions, or orders. If the 10th or 5th day, as the case may
be, falls on a Saturday, Sunday or a holiday, the last day to perfect the
appeal shall be the next working day.
Another provision cited by petitioners is Article 223 of the Labor Code which
states:
ART. 223. Appeal. – Decisions, awards, or orders of the Labor Arbiter are
final and executory unless appealed to the Commission by any or both
parties within ten (10) calendar days from receipt of such decisions, awards,
or orders. Such appeal may be entertained only on any of the following
grounds:
xxxx
However, all the three provisions above-mentioned refer to final orders and
not interlocutory ones, such as, a denial of a motion to dismiss. Based on the
above provisions, the Labor Arbiter's decisions, resolutions or orders shall be
final and executory unless appealed to the Commission. Only a final order
can attain the final and executory stage; an interlocutory order cannot go that
far. Consequently, when the law says that the orders appealable to the
Commission are those which will become final and executory if not appealed,
it can only refer to a final order, not an interlocutory order, such as a denial of
a motion to dismiss.
There is no conflict between the above provisions. The CA therefore correctly
dismissed the petition assailing the denial of the Motion to Dismiss based on
Section 3 (now Section 6), Rule V of the NLRC Rules of Procedure because
it involved an interlocutory order. Admittedly, the order denying a Motion to
Dismiss is an interlocutory order because it still requires a party to perform
certain acts leading to the final adjudication of a case.
Lastly, petitioners' reliance in FEM's Elegance Lodging House v. Murillo 20 to
justify their position that an interlocutory order like the denial of their Motion
to Dismiss can be appealed is misplaced. The CA properly addressed this
issue in this wise:
Reliance in the case of FEM's Elegance vs. Murillo is misdirected. In that
case, the Labor Arbiter's denial was appealed directly to the Supreme Court
and did not pass the Court of Appeals. In ruling that orders of the Labor
Arbiter shall be appealable to the Court of Appeals, the High Court, to Our
mind, was simply saying that you cannot go and seek review directly from the
Labor Arbiter to the Supreme Court. One has to pass first the NLRC. 21
For Expediency, this Court can Decide the Merits of this Case
This Court is aware that in this case, since the petition is denied, the normal
procedure is for it to remand the case to the Labor Arbiter for further
proceedings. "However, when there is enough basis on which the Court may
render a proper evaluation of the merits of petitioners’ case, x x x the Court
may dispense with the time[-]consuming procedure in order to prevent further
delays in the disposition of the case." 22 Indeed, remand of the case to the
Labor Arbiter for further reception of evidence is not conducive to the speedy
administration of justice and it becomes unnecessary where the Court is in a
position to resolve the dispute based on the records before it. Briefly stated, a
remand of the instant case to the Labor Arbiter would serve no purpose save
to further delay its disposition contrary to the spirit of fair play.
LaborRev Assignment No. 1 | 74

"It is an accepted precept of procedural law that the Court may resolve the
dispute in a single proceeding, instead of remanding the case to the lower
court for further proceedings if, based on the records, pleadings, and other
evidence, the matter can readily be ruled upon."23 Instead of remanding the
case to the Labor Arbiter for further proceedings, we will resolve the dispute
to serve the ends of justice.1avvphi1
The complete records of this case have already been elevated to this Court.
The pleadings on record will fully support this adjudication.
Respondents are not Entitled to the Death Benefits Provided Under the
POEA Standard Employment Contract
illness but because his contract of employment expired. There is likewise no
proof that he contracted his illness during the term of his employment or that
his working conditions increased the risk of contracting the illness which
caused his death.
"While the Court adheres to the principle of liberality in favor of the seafarer
in construing the Standard Employment Contract, we cannot allow claims for
compensation based on surmises. When the evidence presented negates
compensability, this Court has no choice but to deny the claim, lest we cause
injustice to the employer."31
WHEREFORE, the instant petition for review on certiorari is DENIED.

In Southeastern Shipping v. Navarra, Jr.,24 we declared that "in order to avail
of death benefits, the death of the employee should occur during the
effectivity of the employment contract." "The death of a seaman during the
term of employment makes the employer liable to his heirs for death
compensation benefits. Once it is established that the seaman died during
the effectivity of his employment contract, the employer is liable." 25
Juliano did not die while he was under the employ of petitioners. His contract
of employment ceased when he was discharged on January 20, 2000, after
having completed his contract thereat. He died on August 27, 2001 or one
year, seven months and seven days after the expiration of his contract. Thus,
his beneficiaries are not entitled to the death benefits under the Standard
Employment Contract for Seafarers.
We hereby declare that the claim for death benefits of respondents Gliceria
Roslinda and Ariel Roslinda has not yet prescribed but petitioners are not
liable to pay to respondents death compensation benefits under the Standard
Employment Contract for Seafarers considering that Juliano's death occurred
after the effectivity of his contract. The Labor Arbiter is therefore DIRECTED
to dismiss the complaint filed by herein respondents against the petitioners
for payment of death compensation, reimbursement of medical expenses,
damages and attorney’s fees.
SO ORDERED.

Moreover, there is no evidence to show that Juliano’s illness was acquired

during the term of his employment with petitioners. In respondents’ Position
Paper,26 they admitted that Juliano was discharged not because of any
illness but due to the expiration of his employment contract.27 Although they
stated that Juliano was hospitalized on August 28, 1999, or five months
before his contract expired, they presented no proof to support this
allegation. Instead, what respondents presented were the Medical
Certificates28 issued by Dr. Lloren attesting to the fact that on March 6, 2000,
Juliano consulted her complaining of abdominal distention. We find this not
substantial evidence to prove that Juliano’s illness which caused his death
was contracted during the term of his contract. 29 "Indeed, the death of a
seaman several months after his repatriation for illness does not necessarily
mean that: a) the seaman died of the same illness; b) his working conditions
increased the risk of contracting the illness which caused his death; and c)
the death is compensable, unless there is some reasonable basis to support
otherwise."30 In the instant case, Juliano was repatriated not because of any
LaborRev Assignment No. 1 | 75
G.R. Nos. 79436-50. January 17, 1990.*
EASTERN ASSURANCE & SURETY CORPORATION, petitioner, vs.
SECRETARY OF LABOR, PHILIPPINE OVERSEAS EMPLOYMENT
ADMINISTRATION, ELVIRA VENTURA, ESTER TRANGUILLAN, et al.,
respondents.
Labor; Secretary of Labor has the power and authority not only to restrict and
regulate the recruitment and placement activities of all agencies but also to
promulgate rules and regulations to carry out the objectives and implement
the provisions governing said activities.—The penalties of suspension and
cancellation of license or authority are prescribed for violations of the above
quoted provisions, among others. And the Secretary of Labor has the power
under Section 35 of the law to apply these sanctions, as well as the authority,
conferred by Section 36, not only to “restrict and regulate the recruitment and
placement activities of all agencies,” but also to “promulgate rules and
regulations to carry out the objectives and implement the provisions,”
governing said activities. Pursuant to this rule-making power thus granted,
the Secretary of Labor gave the POEA, “on its own initiative or upon filing of
a complaint or report or upon request for investigation by any aggrieved
person, x x (authority to) conduct the necessary proceedings for the
suspension or cancellation of the license or authority of any agency or entity”
for certain enumerated offenses.
Same; Same; Implicit in these powers is the award of appropriate relief to the
victims of the offenses committed by the respondent agency or contractor.—
Implicit in these powers is the award of appropriate relief to the victims of the
offenses committed by the respondent agency or contractor, specially the
refund or reimbursement of such fees as may have been fraudulently or
otherwise illegally collected, or such money, goods or services imposed and
accepted in excess of what is licitly prescribed. It would be illogical and
absurd to limit the sanction on an offending recruitment agency or contractor
to suspension or cancellation of its license, without the concomitant
obligation to repair the injury caused to its victims. It would result either in
rewarding unlawful acts, as it would leave the victims without recourse, or in
compelling the latter to litigate in another forum, giving rise to that multiplicity
of actions or proceedings which the law abhors.
Same; Same; Same; Argument that the recruiter and its victims are in pari
delicto.—Even more untenable is EASCO’s next argument that the recruiter
and its victims are in pari delicto—the former for having required payment,
and the latter for having voluntarily paid, “prohibited recruitment fees”—and
therefore, said victims are barred from obtaining relief. The sophistical, if not
callous, character of the argument is evident upon the most cursory reading
thereof; it merits no consideration whatever.
Same; EASCO’s claim that it had not been properly served with summons as
regards a few of the complaints must be rejected.—So, too, EASCO’s claim
that it had not been properly served with summons as regards a few of the
complaints must be rejected, the issue being factual, and the Court having
been cited to no grave error invalidating the respondent Secretary’s
conclusion that summons had indeed been duly served.
SPECIAL CIVIL ACTION of certiorari to review the order of the Secretary of
Labor.
The facts are stated in the opinion of the Court.
Tanjuatco, Oreta, Tanjuatco, Berenguer & San Vicente for petitioner.
NARVASA, J.:
In connection with the application with the Philippine Overseas Employment
Administration (POEA) of J & B Manpower Specialist, Inc. for a license to
engage in business as a recruitment agency, a surety bond was filed on
January 2, 1985 by the applicant and the Eastern Assurance and Surety
Corporation, herein petitioner, in virtue of which they both held themselves —
. . . firmly bound unto (said) Philippine Overseas Employment
Administration, Ministry of Labor in the penal sum of PESOS ONE
HUNDRED FIFTY THOUSAND ONLY . . . (Pl50,000.00) for the
payment of which will and truly to be made, . . . (they bound
themselves, their) heirs, executors, administrators, successors and
assigns, jointly and severally . .
The bond stipulated that:
a) it was "conditioned upon the true and faithful performance and observance
of the . . . principal (J & B Manpower Specialist, Inc.) of its duties and
obligations in accordance with all the rules and regulations promulgated by
the Ministry of Labor Philippine Overseas Employment Administration and
with the terms and conditions stipulated in the License;
b) the liability of the . . . Surety (petitioner) shall in no case exceed the sum of
PESOS ONE HUNDRED FIFTY THOUSAND (P150,000.00) ONLY,
PHILIPPINE CURRENCY; 1
LaborRev Assignment No. 1 | 76
c) notice to the Principal is also a notice to the Surety; and
d) LIABILITY of the surety . . . shall expire on JANUARY 02, 1986 and this
bond shall be automatically cancelled ten (10) days after its expiration and
the surety shall not be liable for any claim not discovered and presented to it
in writing within said period of . . . from expiration and the obligee hereby
expressly waives the rights to file any court action against the Surety after
termination of said period of . . . . above cited. 2
As narrated by respondent Secretary of Labor, the facts are as follows: 3
From June 1983 to December 1985 . . . thirty three (33) . . .
(persons) applied for overseas employment with . . . (J & B). In
consideration of promised deployment, complainants paid
respondent various amounts for various fees. Most of' the receipts
issued were sighed by Mrs. Baby Bundalian, Executive Vice-
President of . . . (J & B).
Because of non-deployment . . . (the applicants) filed separate
complaints with the Licensing and Regulation Office of POEA against
. . . (J & B) for violation of Articles 32 and 34 (a) of the Labor Code
between the months of April to October 1985.
Despite summons/notices of hearing,, . . . (J & B) failed to file
Answer nor appear in the hearings conducted.
In its separate Answer, . . . EASCO essentially disclaimed liability on
the ground that the claims were not expressly covered by the bond,
that POEA had no jurisdiction to order forfeiture of the bond, that
some of the claims were paid beyond or prior to the period of
effectivity of the bond.
On September 8, 1986, the POEA Administrator issued the Order in
favor of complainants ruling thus:
After careful evaluation, we find that the receipts and
testimonies of complainants, in the absence of controverting
evidence substantially establish that respondent charged
and collected fees from them in amounts exceeding what is
prescribed by this Administration. Complainants' non-
deployment strongly indicates that there was no employment
obtained for them. Hence, violation of Articles 32 and 34 (a)
of the Labor Code, as amended, is established against
respondent. The claims of complainants having arose
(arisen) out of acts of the principal covered under the surety
(bond), the respondent surety is equally liable therefor.
Except for complainants Ramos, Samson, de Leon and Rizada,
whose claims were transacted prior to the effectivity of the bond, . . .
EASCO was declared jointly and severally liable with . . . (J & B) to
twenty-nine (29) complainants.
(The dispositive portion of the POEA Administrator's Order also
contained the following statement and direction, viz.:
Respondent was suspended on May 23, 1985, June 26,
1985 and January 17, 1986 all for illegal exaction.
Considering its track record of illegal exaction activities and
considering further the gross violation of recruitment rules
and regulations established against it in the instant cases,
and the expiration of its license on February 15, 1985, it is
hereby forever banned from participation in the overseas
employment program. It is ordered to cease and desist from
further engaging in recruitment activities otherwise it shall be
prosecuted for illegal recruitment.')
(J & B filed a motion for reconsideration). On December 19, 1986,
the then deputy Minister of Labor and Employment denied the . . .
Motion for Reconsideration for lack of merit and affirmed the findings
in the Order of the POEA Administrator finding no reversible error
therein.
On appeal by EASCO — J & B having as aforestated taken no part in the
proceeding despite due service of summons — the judgment was modified
by the Secretary of Labor, by Order dated July 1, 1987, disposing as
follows: 4
WHEREFORE, in view of the foregoing, the Resolution of the then
Deputy Minister of Labor dated December 19, 1986 affirming the
Order of the POEA Administrator dated September 8, 1986 is hereby
MODIFIED. Respondent J & B Manpower Specialist is directed to
refund all thirty-three (33) complainants as listed in the Order of
September 8, 1986 in the amounts listed thereto with the
modification that complainants Lucena Cabasal and Felix Rivero are
both entitled only to P15,980 and not P15,980 each. Respondent
LaborRev Assignment No. 1 | 77
Eastern Assurance and Surety Corporation is hereby found jointly
and severally liable with respondent J & B Manpower Specialist to
refund nineteen (19) complainants in the modified
amounts . . .  (particularly specified).
The other findings in the Order of the POEA Administrator dated
September 8, 1986 affirmed in the Resolution of the then Deputy
Minister . . . are also hereby AFFIRMED. This Order is FINAL. No
further Motion for Reconsideration hereof shall be entertained.
It is noteworthy that EASCO's liability for the refund, jointly and severally with
its principal, was limited to 19 named complainants (in contrast to verdicts of
the POEA and the Deputy Minister which both ordered payment to no less
than 33 complainants) and was correspondingly reduced from P308,751.75
and US $ 400.00 5 to the aggregate amount of P 140,817.75. 6
The special civil action of certiorari at bar was thereafter instituted by
EASCO 7 praying for the nullification of the POEA Administrator's Order of
September 8, 1986, the Resolution of the Deputy Minister of Labor of'
December 19, 1986, and the Order of the Secretary of Labor of July 1, 1987,
It theorizes that:
1) the POEA had no jurisdiction over the claims for refund filed by
non-employees;
2) neither did the Secretary of Labor have jurisdiction of the claims;
3) assuming they had jurisdiction, both the POEA and Secretary of
Labor also committed legal errors and acted with grave abuse of
discretion when they ruled that petitioner is liable on the claims.
EASCO contends that the POEA had no "adjudicatory jurisdiction" over the
monetary claims in question because the same "did not arise from employer-
employee relations." Invoked in support of the argument is Section 4 (a) of
EO 797 providing in part 8 that the POEA has —
. . . original and exclusive jurisdiction over all cases, including money
claims, involving employer-employee relations arising out of or by
virtue of any law or contract involving Filipino workers for overseas
employment including seamen . . .
The complaints are however for violation of Articles 32 and 34 a) of the Labor
Code. Article 32 and paragraph (a) of Article 34 read as follows:
Art. 32. Fees to be paid by workers.—Any person applying with a
private fee-charging employment agency for employment assistance
shall not be charged any fee until he has obtained employment
through its efforts or has actually commenced employment. Such fee
shall be always covered with the approved receipt clearly showing
the amount paid. The Secretary of Labor shall promulgate a
schedule of allowable fees.
Art. 34. Prohibited practices.—It shall be unlawful for any individual,
entity, licensee, or holder of authority:
a) To charge or accept, directly or indirectly, any amount greater than
that specified in the schedule of allowable fees prescribed by the
Secretary of Labor, or to make a worker pay any amount greater
than actually received by him as a loan or advance; . . .
The penalties of suspension and cancellation of license or authority are
prescribed for violations of the above quoted provisions, among others. And
the Secretary of Labor has the power under Section 35 of the law to apply
these sanctions, as well as the authority, conferred by Section 36, not only, to
"restrict and regulate the recruitment and placement activities of all
agencies," but also to "promulgate rules and regulations to carry out the
objectives and implement the provisions" governing said activities. Pursuant
to this rule-making power thus granted, the Secretary of Labor gave the
POEA 9 "on its own initiative or upon filing of a complaint or report or upon
request for investigation by any aggrieved person, . . . (authority to) conduct
the necessary proceedings for the suspension or cancellation of the license
or authority of any agency or entity" for certain enumerated offenses
including —
1) the imposition or acceptance, directly or indirectly, of any amount of
money, goods or services, or any fee or bond in excess of what is prescribed
by the Administration, and
2) any other violation of pertinent provisions of the Labor Code and other
relevant laws, rules and regulations. 10
The Administrator was also given the power to "order the dismissal
of the case or the suspension of the license or authority of the
LaborRev Assignment No. 1 | 78
respondent agency or contractor or recommend to the Minister the
cancellation thereof." 11
Implicit in these powers is the award of appropriate relief to the victims of the
offenses committed by the respondent agency or contractor, specially the
refund or reimbursement of such fees as may have been fraudulently or
otherwise illegally collected, or such money, goods or services imposed and
accepted in excess of what is licitly prescribed. It would be illogical and
absurd to limit the sanction on an offending recruitment agency or contractor
to suspension or cancellation of its license, without the concomitant
obligation to repair the injury caused to its victims. It would result either in
rewarding unlawful acts, as it would leave the victims without recourse, or in
compelling the latter to litigate in another forum, giving rise to that multiplicity
of actions or proceedings which the law abhors.
Even more untenable is EASCO's next argument that the recruiter and its
victims are in  pari delicto  — the former for having required payment, and the
latter for having voluntarily paid, "prohibited recruitment fees" — and
therefore, said victims are barred from obtaining relief. The sophistical, if not
callous, character of the argument is evident upon the most cursory reading
thereof; it merits no consideration whatever.
The Court is intrigued by EASCO's reiteration of its argument that it should
not be held liable for claims which accrued prior to or after the effectivity of its
bond, considering that the respondent Secretary had conceded the validity of
part of said argument, at least. The Secretary ruled that EASCO's "contention
that it should not be held liable for claims/payments made to respondent
agency before the effectivity of the surety bond on January 2, 1985 is well
taken." According to the Secretary: 12
. . . A close examination of the records reveal(s) that respondent
EASCO is not jointly and severally liable with respondent agency to
refund complainants Lucena Cabasal, Felix Rivero, Romulo del
Rosario, Rogelio Banzuela, Josefina Ogatis, Francisco Sorato,
Sonny Quiazon, Josefina Dictado, Mario del Guzman and Rogelio
Mercado (10 in all). These complainants paid respondent agency in
1984, or before the effectivity of the bond on January 2, 1985 as
evidence by the reciept and their testimonies.
The related argument, that it is also not liable for claims filed after the expiry
(on January 2, 1986) of the period stipulated in the surety bond for the filing
of claims against the bond, must however be rejected, as the Secretary did.
The Court discerns no grave abuse of discretion in the Secretary's statement
of his reasons for doing so, to wit:
. . . While it may be true that respondent EASCO received notice of
their claims after the ten (10) day expiration period from cancellation
or after January 12, 1986 as provided in the surety bond, records
show that . . . EASCO's principal, respondent agency, was notified/
summoned prior to the expiration period or before January 12, 1986.
Respondent agency received summons on July 24, 1985 with
respect to claims of complainants Penarroyo, dela Cruz and Canti. It
also received summons on November 26, 1985 with respect to
Giovanni Garbillons' claim. Respondent agency was likewise
considered constructively notified of the claims of complainants
Calayag, Danuco Domingo and Campena on October 6, 1985. In this
connection, it may be stressed that the surety bond provides that
notice to the principal is notice to the surety. Besides, it has been
held that the contract of a compensated surety like respondent
EASCO is to be interpreted liberally in the interest of the promises
and beneficiaries rather than strictly in favor of the surety (Acoustics
Inc. v. American Surety, 74 Nev-6, 320 P2d. 626, 74 Am. Jur. 2d).
So, too, EASCO's claim that it had not been properly served with summons
as regards a few of the complaints must be rejected, the issue being factual,
and the Court having been cited to no grave error invalidating the respondent
Secretary's conclusion that summons had indeed been duly served.
Finally, EASCO's half-hearted argument that its liability should be limited to
the maximum amount set in its surety bond, i.e., P150,000.00, is palpably
without merit, since the aggregate liability imposed on it, P140,817.75, supra,
does not in fact exceed that limit.
WHEREFORE, the petition is DISMISSED for lack of merit, and this decision
is declared to be immediately executory. Costs against petitioner.
SO ORDERED.
LaborRev Assignment No. 1 | 79
G.R. No. 125044. July 13, 1998.*
IMELDA DARVIN, petitioner, vs. HON. COURT OF APPEALS and
PEOPLE OF THE PHILIPPINES, respondents.
Criminal Law; Labor Law; Illegal Recruitment; Elements.—Applied to the
present case, to uphold the conviction of accused-appellant, two elements
need to be shown: (1) the person charged with the crime must have
undertaken recruitment activities; and (2) the said person does not have a
license or authority to do so.
Same; Same; Same; To prove that the accused was engaged in recruitment
activities as to commit the crime of illegal recruitment, it must be shown that
the accused gave the victim the impression that she had the power or ability
to send the latter abroad for work such that the latter was convinced to part
with her money in order to be so employed.—It is not disputed that accused-
appellant does not have a license or authority to engage in recruitment
activities. The pivotal issue to be determined, therefore, is whether the
accused-appellant indeed engaged in recruitment activities, as defined under
the Labor Code. Applying the rule laid down in the case of People v. Goce, to
prove that accused-appellant was engaged in recruitment activities as to
commit the crime of illegal recruitment, it must be shown that the accused-
appellant gave private respondent the distinct impression that she had the
power or ability to send the private respondent abroad for work such that the
latter was convinced to part with her money in order to be so employed.
Same; Same; Same; The claim of the accused that the P150,000.00 was for
payment of the complainant’s air fare and US visa and other expenses
cannot be ignored where the receipt for the P150,000.00, which was
presented by both parties during the trial of the case, stated that it was “f or
Air Fare and Visa to USA.”—In this case, we find no sufficient evidence to
prove that accused-appellant offered a job to private respondent. It is not
clear that accused gave the impression that she was capable of providing the
private respondent work abroad. What is established, however, is that the
private respondent gave accused-appellant P150,000.00. The claim of the
accused that the P150,000.00 was for payment of private respondent’s air
fare and US visa and other expenses cannot be ignored because the receipt
for the P150,000.00, which was presented by both parties during the trial of
the case, stated that it was “for Air Fare and Visa to USA.” Had the amount
been for something else in addition to air fare and visa expenses, such as
work placement abroad, the receipt should have so stated.
Same; Same; Same; By themselves, procuring a passport, airline tickets and
foreign visa for another individual, without more, can hardly qualify as
recruitment activities.—By themselves, procuring a passport, airline tickets
and foreign visa for another individual, without more, can hardly qualify as
recruitment activities. Aside from the testimony of private respondent, there is
nothing to show that accused-appellant engaged in recruitment activities. We
also note that the prosecution did not present the testimonies of witnesses
who could have corroborated the charge of illegal recruitment, such as
Florencio Rivera, and Leonila Rivera, when it had the opportunity to do so.
As it stands, the claim of private respondent that accused-appellant promised
her employment abroad is uncorroborated. All these, taken collectively, cast
reasonable doubt on the guilt of the accused.
Same; Presumption of Innocence; Proof beyond reasonable doubt does not
mean such a degree of proof as, excluding the possibility of error, produces
absolute certainty—moral certainty only is required, or that degree of proof
which produces conviction in an unprejudiced mind, but suspicion alone is
insufficient.—In criminal cases, the burden is on the prosecution to prove,
beyond reasonable doubt, the essential elements of the offense with which
the accused is charged; and if the proof fails to establish any of the essential
elements necessary to constitute a crime, the defendant is entitled to an
acquittal. Proof beyond reasonable doubt does not mean such a degree of
proof as, excluding the possibility of error, produces absolute certainty. Moral
certainty only is required, or that degree of proof which produces conviction
in an unprejudiced mind. At best, the evidence proffered by the prosecution
only goes so far as to create a suspicion that accused-appellant probably
perpetrated the crime charged. But suspicion alone is insufficient, the
required quantum of evidence being proof beyond reasonable doubt. When
the People’s evidence fail to indubitably prove the accused’s authorship of
the crime of which he stands accused, then it is the Court’s duty, and the
accused’s right, to proclaim his innocence. Acquittal, therefore, is in order.
PETITION for review on certiorari of a decision of the Court of Appeals.
The facts are stated in the opinion of the Court.
     Ricardo A. Remulla for petitioner.
     The Solicitor General for respondents.
ROMERO, J.:
Before us is a petition for review of the decision of the Court of Appeals in
C.A.-G.R. No. 15624 dated January 31, 1996, 1 which affirmed in toto the
judgment of the Regional Trial Court, Branch 19, Bacoor, Cavite, convicting
accused-appellant, Imelda Darvin for simple illegal recruitment under Article
38 and Article 39, in relation to Article 13 (b) and (c), of the Labor Code as
amended.
LaborRev Assignment No. 1 | 80
Accused-appellant was charged under the following information:
That on our about the 13th day of April 1992, in the
Municipality of Bacoor, Province of Cavite, Philippines and
within the jurisdiction of this Honorable Court, the above-
named accused, through fraudulent representation to one
Macaria Toledo to the effect that she has the authority to
recruit workers and employees for abroad and can facilitate
the necessary papers in connection thereof, did, then and
there, wilfully, unlawfully and feloniously, hire, recruit and
promise a job abroad to one Macaria Toledo, without first
securing the necessary license and permit from the
Philippine Overseas Employment Administration to do so,
thereby causing damage and prejudice to the aforesaid
Macaria Toledo.
Contrary to law. 2
The evidence for the prosecution, based on the testimony of private
respondent, Macaria Toledo, shows that sometime in March, 1992, she met
accused-appellant Darvin in the latter's residence at Dimasalang, Imus,
Cavite, through the introduction of their common friends, Florencio Jake
Rivera and Leonila Rivera. In said meeting, accused-appellant allegedly
convinced Toledo that by giving her P150,000.00, the latter can immediately
leave for the United States without any appearance before the U.S.
embassy. 3 Thus, on April 13, 1992, Toledo gave Darvin the amount of
P150,000.00, as evidenced by a receipt stating that the "amount of
P150,000.00 was for U.S. Visa and Air fare." 4 After receiving the money,
Darvin assured Toledo that she can leave within one week. However, when
after a week, there was no word from Darvin, Toledo went to her residence to
inquire about any development, but could not find Darvin. Thereafter, on May
7, 1992, Toledo filed a complaint with the Bacoor Police Station against
Imelda Darvin. Upon further investigation, a certification was issued by the
Philippine Overseas Employment Administration (POEA) stating that Imelda
Darvin is neither licensed nor authorized to recruit workers for overseas
employment. 5 Accused-appellant was then charged for estafa and illegal
recruitment by the Office of the Provincial Prosecutor of Cavite.
Accused-appellant, on the other hand, testified that she used to be
connected with Dale Travel Agency and that in 1992, or thereabouts, she
was assisting individuals in securing passports, visa, and airline tickets. She
came to know Toledo through Florencio Jake Rivera, Jr. and Leonila Rivera,
alleging that Toledo sought her help to secure a passport, US visa and airline
tickets to the States. She claims that she did not promise any employment in
the U.S. to Toledo. She, however, admits receiving the amount of
P150,000.00 from the latter on April 13, 1992 but contends that it was used
for necessary expenses of an intended trip to the United States of Toledo
and her friend, Florencio Rivera 6 as follows. P45,000.00 for plane fare for
one person; P1,500.00 for passport, documentation and other incidental
expenses for each person; P20,000.00 for visa application cost for each
person; and P17,000.00 for services. 7 After receiving the money, she
allegedly told Toledo that the papers will be released within 45 days. She
likewise testified that she was able to secure Toledo's passport on April 20,
1992 and even set up a date for an interview with the US embassy. Accused
alleged that she was not engaged in illegal recruitment but merely acted as a
travel agent in assisting individuals to secure passports and visa.
In its judgment rendered on June 17, 1993, the Bacoor, Cavite RTC found
accused-appellant guilty of the crime of simple illegal recruitment but
acquitted her of the crime of estafa. The dispositive portion of the judgment
reads as follows:
WHEREFORE, premises considered, accused Imelda Darvin
is hereby found guilty beyond reasonable doubt of the crime
of Simple Illegal Recruitment for having committed the
prohibited practice as defined by paragraph (b) of Article 34
and punished by paragraph (c) of Article 39 of the Labor
Code, as amended by PD 2018.
Accused Imelda Darvin is hereby ordered to suffer the prison
term of Four (4) years, as minimum, to Eight (8) years, as
maximum; and to pay the fine of P25,000.00.
Regarding her civil liability, she is hereby ordered to
reimburse the private complainant the sum of P150,000.00
and attorney's fees of P10,000.00.
She is hereby acquitted of the crime of Estafa.
SO ORDERED. 8
On appeal, the Court of Appeals affirmed the decision of the trial court in
toto, hence this petition.
LaborRev Assignment No. 1 | 81
Before this Court, accused-appellant assails the decision of the trial and
appellate courts in convicting her of the crime of simple illegal recruitment.
She contends that based on the evidence presented by the prosecution, her
guilt was not proven beyond reasonable doubt.
We find the appeal impressed with merit.
Art. 13 of the Labor Code, as amended, provides the definition of recruitment
and placement as:
. . .; b) 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 other hand, Article 38 of the Labor Code provides:
a) Any recruitment activities, including the prohibited
practices enumerated under Article 34 of this Code, to be
undertaken by non-licensees or non-holders of authority
shall be deemed illegal and punishable under Article 39 of
this Code. The Ministry of Labor and Employment or any law
enforcement officer may initiate complaints under this Article.
x x x           x x x          x x x
Applied to the present case, to uphold the conviction of accused-appellant,
two elements need to be shown: (1) the person charged with the crime must
have undertaken recruitment activities; and (2) the said person does not have
a license or authority to do so. 9
In this case, private respondent, Macaria Toledo alleged that she was offered
a job in the United States as nursing aide 10 by accused-appellant. In her
direct examination, she testified as follows:
Atty. Alejandro:
Q : How did you come to know the accused?
Witness : I was introduced by my two
friends. One of whom is my best friend. That
according to them, this accused has
connections and authorizations, that she can
make people leave for abroad, sir.
Court : What connections?
Witness : That she has connections with the
Embassy and with people whom she can
approach regarding work abroad, your
Honor.
x x x           x x x          x x x
Q : When you came to meet for the first time
in Imus, Cavite, what transpired in that
meeting of yours?
A : When I came to her house, the accused
convinced me that by means of
P150,000.00, I will be able to leave
immediately without any appearance to any
embassy, non-appearance, Sir.
Q : When you mentioned non-appearance,
as told to you by the accused, precisely,
what do you mean by that?
A : I was told by the accused that non-
appearance, means without working
personally for my papers and through her
efforts considering that she is capacitated as
according to her I will be able to leave the
country, Sir.
x x x           x x x          x x x
Atty. Alejandro : What transpired after the
accused told you all these things that you
will be able to secure all the documents
without appearing to anybody or to any
LaborRev Assignment No. 1 | 82
embassy and that you will be able to work
abroad?
Witness : She told me to get ready with my
P150,000.00, that is if I want to leave
immediately, Sir.
Atty. Alejandro : When you mentioned
kaagad, how many days or week?
Witness : She said that if I will able to part
with my P150,000.00. I will be able to leave
in just one week time, Sir.
xxx xxx xxx 11
The prosecution, as evidence, presented the certification issued by the
POEA that accused-appellant Imelda Darvin is not licensed to recruit workers
abroad.
It is not disputed that accused-appellant does not have a license or authority
to engage in recruitment activities. The pivotal issue to be determined,
therefore, is whether the accused-appellant indeed engaged in recruitment
activities, as defined under the Labor Code. Applying the rule laid down in the
case of People v. Goce, 12 to prove that accused-appellant was engaged in
recruitment activities as to commit the crime of illegal recruitment, it must be
shown that the accused appellant gave private respondent the distinct
impression that she had the power or ability to send the private respondent
abroad for work such that the latter was convinced to part with her money in
order to be so employed.
In this case, we find no sufficient evidence to prove that accused-ppellant
offered a job to private respondent. It is not clear that accused gave the
impression that she was capable of providing the private respondent work
abroad. What is established, however, is that the private respondent gave
accused-appellant P150,000.00. The claim of the accused that the
P150,000.00 was for payment of private respondent's air fare and US visa
and other expenses cannot be ignored because the receipt for the
P150,000.00, which was presented by both parties during the trial of the
case, stated that it was "for Air Fare and Visa to USA." 13 Had the amount
been for something else in addition to air fare and visa expenses, such as
work placement abroad, the receipt should have so stated.
By themselves, procuring a passport, airline tickets and foreign visa for
another individual, without more, can hardly qualify as recruitment activities.
Aside from the testimony of private respondent, there is nothing to show that
accused-appellant engaged in recruitment activities. We also note that the
prosecution did not present the testimonies of witnesses who could have
corroborated the charge of illegal recruitment, such as Florencio Rivera, and
Leonila Rivera, when it had the opportunity to do so. As it stands, the claim of
private respondent that accused-appellant promised her employment abroad
is uncorroborated. All these, taken collectively, cast reasonable doubt on the
guilt of the accused.
This Court can hardly rely on the bare allegations of private respondent that
she was offered by accused-appellant employment abroad, nor on mere
presumptions and conjectures, to convict the latter. No sufficient evidence
was shown to sustain the conviction, as the burden of proof lies with the
prosecution to establish that accused-appellant indeed engaged in
recruitment activities, thus committing the crime of illegal recruitment.
In criminal cases, the burden is on the prosecution to prove, beyond
reasonable doubt, the essential elements of the offense with which the
accused is charged; and if the proof fails to establish any of the essential
elements necessary to constitute a crime, the defendant is entitled to an
acquittal. Proof beyond reasonable doubt does not mean such a degree of
proof as, excluding the possibility of error, produces absolute certainty. Moral
certainty only is required, or that degree of proof which produces conviction
in an unprejudiced mind. 14
At best, the evidence proffered by the prosecution only goes so far as to
create a suspicion that accused-appellant probably perpetrated the crime
charged. But suspicion alone is insufficient, the required quantum of
evidence being proof beyond reasonable doubt. When the People's evidence
fail to indubitably prove the accused' s authorship of the crime of which he
stands accused, then it is the Court's duty, and the accused's right, to
proclaim his innocence. Acquittal, therefore, is in order. 15
WHEREFORE, the appeal is hereby GRANTED and the decision of the
Court of Appeals in CA-G.R. CR No. 15624 dated January 31, 1996, is
REVERSED and SET ASIDE. Accused-appellant Imelda Darvin is hereby
ACQUITTED on ground of reasonable doubt. Accordingly, let the accused be
immediately released from her place of confinement unless there is reason to
detain her further for any other legal or valid cause. No pronouncement as to
costs.
LaborRev Assignment No. 1 | 83

SO ORDERED.
LaborRev Assignment No. 1 | 84
G.R. No. 169076. January 23, 2007.*
PEOPLE OF THE PHILIPPINES, appellee, vs. JOSEPH JAMILOSA,
appellant.
Labor Law; Criminal Law; Illegal Recruitment in Large Scale; Elements; Any
recruitment activities to be undertaken by non-licensee or non-holder of
contracts shall be deemed illegal and punishable under Article 39 of the
Labor Code of the Philippines.—Any recruitment activities to be undertaken
by non-licensee or non-holder of contracts shall be deemed illegal and
punishable under Article 39 of the Labor Code of the Philippines. Illegal
recruitment is deemed committed in large scale if committed against three (3)
or more persons individually or as a group. To prove illegal recruitment in
large scale, the prosecution is burdened to prove three (3) essential
elements, to wit: (1) the person charged undertook a recruitment activity
under Article 13(b) or any prohibited practice under Article 34 of the Labor
Code; (2) accused did not have the license or the authority to lawfully engage
in the recruitment and placement of workers; and (3) accused committed the
same against three or more persons individually or as a group. As gleaned
from the collective testimonies of the complaining witnesses which the trial
court and the appellate court found to be credible and deserving of full
probative weight, the prosecution mustered the requisite quantum of
evidence to prove the guilt of accused beyond reasonable doubt for the crime
charged. Indeed, the findings of the trial court, affirmed on appeal by the CA,
are conclusive on this Court absent evidence that the tribunals ignored,
misunderstood, or misapplied substantial fact or other circumstance.
Same; Same; Same; Even in the absence of money or other valuables given
as consideration for the “services” of the recruiter, he is still considered as
being engaged in recruitment activities—it can be gleaned from the language
of Article 13(b) of the Labor Code that the act of recruitment may be for profit
or not.—The failure of the prosecution to adduce in evidence any receipt or
document signed by appellant where he acknowledged to have received
money and liquor does not free him from criminal liability. Even in the
absence of money or other valuables given as consideration for the
“services” of appellant, the latter is considered as being engaged in
recruitment activities. It can be gleaned from the language of Article 13(b) of
the Labor Code that the act of recruitment may be for profit or not. It is
sufficient that the accused promises or offers for a fee employment to warrant
conviction for illegal recruitment. As the Court held in People v. Sagaydo, 341
SCRA 329 (2000): Such is the case before us. The complainants parted with
their money upon the prodding and enticement of accused-appellant on the
false pretense that she had the capacity to deploy them for employment
abroad. In the end, complainants were neither able to leave for work abroad
nor get their money back. The fact that private complainants Rogelio Tibeb
and Jessie Bolinao failed to produce receipts as proof of their payment to
accused-appellant does not free the latter from liability. The absence of
receipts cannot defeat a criminal prosecution for illegal recruitment. As long
as the witnesses can positively show through their respective testimonies
that the accused is the one involved in prohibited recruitment, he may be
convicted of the offense despite the absence of receipts.
APPEAL from a decision of the Regional Trial Court of Quezon City, Br. 217.
The facts are stated in the opinion of the Court.
     The Solicitor General for appellee.
     Public Attorney’s Office for appellant.
CALLEJO, SR., J.:
This is an appeal from the Decision1 of the Regional Trial Court (RTC) of
Quezon City in Criminal Case No. Q-97-72769 convicting appellant Joseph
Jamilosa of large scale illegal recruitment under Sections 6 and 7 of Republic
Act (R.A.) No. 8042, and sentencing him to life imprisonment and to pay
a P500,000.00 fine.
The Information charging appellant with large scale illegal recruitment was
filed by the Senior State Prosecutor on August 29, 1997. The inculpatory
portion of the Information reads:
That sometime in the months of January to February, 1996, or thereabout in
the City of Quezon, Metro Manila, Philippines, and within the jurisdiction of
this Honorable Court, representing to have the capacity, authority or license
to contract, enlist and deploy or transport workers for overseas employment,
did then and there, willfully, unlawfully and criminally recruit, contract and
promise to deploy, for a fee the herein complainants, namely, Haide R.
Ruallo, Imelda D. Bamba, Geraldine M. Lagman and Alma E. Singh, for work
or employment in Los Angeles, California, U.S.A. in Nursing Home and Care
Center without first obtaining the required license and/or authority from the
Philippine Overseas Employment Administration (POEA).
Contrary to law.2
On arraignment, the appellant, assisted by counsel, pleaded not guilty to the
charge.
LaborRev Assignment No. 1 | 85
The case for the prosecution, as synthesized by the Court of Appeals (CA), is
as follows:
The prosecution presented three (3) witnesses, namely: private complainants
Imelda D. Bamba, Geraldine M. Lagman and Alma E. Singh.
Witness Imelda D. Bamba testified that on January 17, 1996, she met the
appellant in Cubao, Quezon City on board an aircon bus. She was on her
way to Shoemart (SM), North EDSA, Quezon City where she was working as
a company nurse. The appellant was seated beside her and introduced
himself as a recruiter of workers for employment abroad. The appellant told
her that his sister is a head nurse in a nursing home in Los Angeles,
California, USA and he could help her get employed as a nurse at a monthly
salary of Two Thousand US Dollars ($2,000.00) and that she could leave in
two (2) weeks time. He further averred that he has connections with the US
Embassy, being a US Federal Bureau of Investigation (FBI) agent on official
mission in the Philippines for one month. According to the appellant, she has
to pay the amount of US$300.00 intended for the US consul. The appellant
gave his pager number and instructed her to contact him if she is interested
to apply for a nursing job abroad.
On January 21, 1996, the appellant fetched her at her office. They then went
to her house where she gave him the photocopies of her transcript of
records, diploma, Professional Regulatory Commission (PRC) license and
other credentials. On January 28 or 29, 1996, she handed to the appellant
the amount of US$300.00 at the McDonalds outlet in North EDSA, Quezon
City, and the latter showed to her a photocopy of her supposed US visa. The
appellant likewise got several pieces of jewelry which she was then selling
and assured her that he would sell the same at the US embassy. However,
the appellant did not issue a receipt for the said money and jewelry.
Thereafter, the appellant told her to resign from her work at SM because she
was booked with Northwest Airlines and to leave for Los Angeles, California,
USA on February 25, 1996.
The appellant promised to see her and some of his other recruits before their
scheduled departure to hand to them their visas and passports; however, the
appellant who was supposed to be with them in the flight failed to show up.
Instead, the appellant called and informed her that he failed to give the
passport and US visa because he had to go to the province because his wife
died. She and her companions were not able to leave for the United States.
They went to the supposed residence of the appellant to verify, but nobody
knew him or his whereabouts. They tried to contact him at the hotel where he
temporarily resided, but to no avail. They also inquired from the US embassy
and found out that there was no such person connected with the said office.
Thus, she decided to file a complaint with the National Bureau of
Investigation (NBI).
Prosecution witness Geraldine Lagman, for her part, testified that she is a
registered nurse by profession. In the morning of January 22, 1996, she went
to SM North EDSA, Quezon City to visit her cousin Imelda Bamba. At that
time, Bamba informed her that she was going to meet the appellant who is an
FBI agent and was willing to help nurses find a job abroad. Bamba invited
Lagman to go with her. On the same date at about 2:00 o’clock in the
afternoon, she and Bamba met the appellant at the SM Fast-Food Center,
Basement, North EDSA, Quezon City. The appellant convinced them of his
ability to send them abroad and told them that he has a sister in the United
States. Lagman told the appellant that she had no working experience in any
hospital but the appellant assured her that it is not necessary to have one.
The appellant asked for US$300.00 as payment to secure an American visa
and an additional amount of Three Thousand Four Hundred Pesos
(P3,400.00) as processing fee for other documents.
On January 24, 1996, she and the appellant met again at SM North EDSA,
Quezon City wherein she handed to the latter her passport and transcript of
records. The appellant promised to file the said documents with the US
embassy. After one (1) week, they met again at the same place and the
appellant showed to her a photocopy of her US visa. This prompted her to
give the amount of US$300.00 and two (2) bottles of Black Label to the
appellant. She gave the said money and liquor to the appellant without any
receipt out of trust and after the appellant promised her that he would issue
the necessary receipt later. The appellant even went to her house, met her
mother and uncle and showed to them a computer printout from Northwest
Airlines showing that she was booked to leave for Los Angeles, California,
USA on February 25, 1996.
Four days after their last meeting, Extelcom, a telephone company, called
her because her number was appearing in the appellant’s cellphone
documents. The caller asked if she knew him because they were trying to
locate him, as he was a swindler who failed to pay his telephone bills in the
amount of P100,000.00. She became suspicious and told Bamba about the
matter. One (1) week before her scheduled flight on February 25, 1996, they
called up the appellant but he said he could not meet them because his
mother passed away. The appellant never showed up, prompting her to file a
complaint with the NBI for illegal recruitment.
LaborRev Assignment No. 1 | 86
Lastly, witness Alma Singh who is also a registered nurse, declared that she
first met the appellant on February 13, 1996 at SM North EDSA, Quezon City
when Imelda Bamba introduced the latter to her. The appellant told her that
he is an undercover agent of the FBI and he could fix her US visa as he has
a contact in the US embassy. The appellant told her that he could help her
and her companions Haidee Raullo, Geraldine Lagman and Imelda Bamba
find jobs in the US as staff nurses in home care centers.
On February 14, 1996 at about 6:30 in the evening, the appellant got her
passport and picture. The following day or on February 15, 1996, she gave
the appellant the amount of US$300.00 and a bottle of cognac as "grease
money" to facilitate the processing of her visa. When she asked for a receipt,
the appellant assured her that there is no need for one because she was
being directly hired as a nurse in the United States.
She again met the appellant on February 19, 1996 at the Farmers Plaza and
this time, the appellant required her to submit photocopies of her college
diploma, nursing board certificate and PRC license. To show his sincerity, the
appellant insisted on meeting her father. They then proceeded to the office of
her father in Barrio Ugong, Pasig City and she introduced the appellant.
Thereafter, the appellant asked permission from her father to allow her to go
with him to the Northwest Airlines office in Ermita, Manila to reserve airline
tickets. The appellant was able to get a ticket confirmation and told her that
they will meet again the following day for her to give P10,000.00 covering the
half price of her plane ticket. Singh did not meet the appellant as agreed
upon. Instead, she went to Bamba to inquire if the latter gave the appellant
the same amount and found out that Bamba has not yet given the said
amount. They then paged the appellant through his beeper and told him that
they wanted to see him. However, the appellant avoided them and reasoned
out that he could not meet them as he had many things to do. When the
appellant did not show up, they decided to file a complaint for illegal
recruitment with the NBI.
The prosecution likewise presented the following documentary evidence:
Exh. "A" – Certification dated February 23, 1998 issued by Hermogenes C.
Mateo, Director II, Licensing Branch, POEA.
Exh. "B" – Affidavit of Alma E. Singh dated February 23, 1996. 3
On the other hand, the case for the appellant, as culled from his Brief, is as
follows:
Accused JOSEPH JAMILOSA testified on direct examination that he got
acquainted with Imelda Bamba inside an aircon bus bound for Caloocan City
when the latter borrowed his cellular phone to call her office at Shoe Mart
(SM), North Edsa, Quezon City. He never told Bamba that he could get her a
job in Los Angeles, California, USA, the truth being that she wanted to leave
SM as company nurse because she was having a problem thereat. Bamba
called him up several times, seeking advice from him if Los Angeles,
California is a good place to work as a nurse. He started courting Bamba and
they went out dating until the latter became his girlfriend. He met Geraldine
Lagman and Alma Singh at the Shoe Mart (SM), North Edsa, Quezon City
thru Imelda Bamba. As complainants were all seeking advice on how they
could apply for jobs abroad, lest he be charged as a recruiter, he made
Imelda Bamba, Geraldine Lagman and Alma Singh sign separate
certifications on January 17, 1996 (Exh. "2"), January 22, 1996 (Exh. "4"),
and February 19, 1996 (Exh. "3"), respectively, all to the effect that he never
recruited them and no money was involved. Bamba filed an Illegal
Recruitment case against him because they quarreled and separated. He
came to know for the first time that charges were filed against him in
September 1996 when a preliminary investigation was conducted by Fiscal
Dañosos of the Department of Justice. (TSN, October 13, 1999, pp. 3-9 and
TSN, December 8, 1999, pp. 2-9)4
On November 10, 2000, the RTC rendered judgment finding the accused
guilty beyond reasonable doubt of the crime charged. 5 The fallo of the
decision reads:
WHEREFORE, judgment is hereby rendered finding accused guilty beyond
reasonable doubt of Illegal Recruitment in large scale; accordingly, he is
sentenced to suffer the penalty of life imprisonment and to pay a fine of Five
Hundred Thousand Pesos (P500,000.00), plus costs.
Accused is ordered to indemnify each of the complainants, Imelda Bamba,
Geraldine Lagman and Alma Singh the amount of Three Hundred US Dollars
($300.00).
SO ORDERED.6
In rejecting the defenses of the appellant, the trial court declared:
To counter the version of the prosecution, accused claims that he did not
recruit the complainants for work abroad but that it was they who sought his
advice relative to their desire to apply for jobs in Los Angeles, California,
USA and thinking that he might be charged as a recruiter, he made them sign
LaborRev Assignment No. 1 | 87
three certifications, Exh. "2," "3" and "4," which in essence state that accused
never recruited them and that there was no money involved.
Accused’s contention simply does not hold water. Admittedly, he executed
and submitted a counter-affidavit during the preliminary investigation at the
Department of Justice, and that he never mentioned the aforesaid
certifications, Exhibits 2, 3 and 4 in said counter-affidavit. These certifications
were allegedly executed before charges were filed against him. Knowing that
he was already being charged for prohibited recruitment, why did he not bring
out these certifications which were definitely favorable to him, if the same
were authentic. It is so contrary to human nature that one would suppress
evidence which would belie the charge against him.
Denials of the accused can not stand against the positive and categorical
narration of each complainant as to how they were recruited by accused who
had received some amounts from them for the processing of their papers.
Want of receipts is not fatal to the prosecution’s case, for as long as it has
been shown, as in this case, that accused had engaged in prohibited
recruitment. (People v. Pabalan, 262 SCRA 574).
That accused is neither licensed nor authorized to recruit workers for
overseas employment, is shown in the Certification issued by POEA, Exh.
"A."
In fine, the offense committed by the accused is Illegal Recruitment in large
scale, it having been committed against three (3) persons, individually. 7
Appellant appealed the decision to this Court on the following assignment of
error:
THE TRIAL COURT ERRED IN CONVICTING ACCUSED-APPELLANT OF
THE CRIME OF ILLEGAL RECRUITMENT IN LARGE SCALE DESPITE
THE FACT THAT THE LATTER’S GUILT WAS NOT PROVED BEYOND
REASONABLE DOUBT BY THE PROSECUTION. 8
According to appellant, the criminal Information charging him with illegal
recruitment specifically mentioned the phrase "for a fee," and as such,
receipts to show proof of payment are indispensable. He pointed out that the
three (3) complaining witnesses did not present even one receipt to prove the
alleged payment of any fee. In its eagerness to cure this "patent flaw," the
prosecution resorted to presenting the oral testimonies of complainants which
were "contrary to the ordinary course of nature and ordinary habits of life
[under Section 3(y), Rule 131 of the Rules on Evidence] and defied
credulity." Appellant also pointed out that complainants’ testimony that they
paid him but no receipts were issued runs counter to the presumption under
Section [3](d), Rule 131 of the Rules on Evidence that persons take ordinary
care of their concern. The fact that complainants were not able to present
receipts lends credence to his allegation that it was they who sought advice
regarding their desire to apply for jobs in Los Angeles, California, USA. Thus,
thinking that he might be charged as a recruiter, he made them sign three (3)
certifications stating that he never recruited them and there was no money
involved. On the fact that the trial court disregarded the certifications due to
his failure to mention them during the preliminary investigation at the
Department of Justice (DOJ), appellant pointed out that there is no provision
in the Rules of Court which bars the presentation of evidence during the
hearing of the case in court. He also pointed out that the counter-affidavit
was prepared while he was in jail "and probably not assisted by a lawyer." 9
Appellee, through the Office of the Solicitor General (OSG), countered that
the absence of receipts signed by appellant acknowledging receipt of the
money and liquor from the complaining witnesses cannot defeat the
prosecution and conviction for illegal recruitment. The OSG insisted that the
prosecution was able to prove the guilt of appellant beyond reasonable doubt
via the collective testimonies of the complaining witnesses, which the trial
court found credible and deserving of full probative weight. It pointed out that
appellant failed to prove any ill-motive on the part of the complaining
witnesses to falsely charge him of illegal recruitment.
On appellant’s claim that the complaining witness Imelda Bamba was his
girlfriend, the OSG averred:
Appellant’s self-serving declaration that Imelda is his girlfriend and that she
filed a complaint for illegal recruitment after they quarreled and separated is
simply preposterous. No love letters or other documentary evidence was
presented by appellant to substantiate such claim which could be made with
facility. Imelda has no reason to incriminate appellant except to seek justice.
The evidence shows that Alma and Geraldine have no previous quarrel with
appellant. Prior to their being recruited by appellant, Alma and Geraldine
have never met appellant. It is against human nature and experience for
private complainants to conspire and accuse a stranger of a most serious
crime just to mollify their hurt feelings. (People v. Coral, 230 SCRA 499, 510
[1994])10
LaborRev Assignment No. 1 | 88
The OSG posited that the appellant’s reliance on the
certifications11 purportedly signed by the complaining witnesses is misplaced,
considering that the certifications are barren of probative weight.
On February 23, 2005, the Court resolved to transfer the case to the
CA.12 On June 22, 2005, the CA rendered judgment affirming the decision of
the RTC.13
The OSG filed a Supplemental Brief, while the appellant found no need to file
one.
The appeal has no merit.
Article 13(b) of the Labor Code of the Philippines defines recruitment and
placement as follows:
(b) "Recruitment and placement" refers to any act of canvassing, enlisting,
contracting, transporting, utilizing, hiring, or procuring workers, and includes
referrals, contract services, promising or advertising for employment, locally
or abroad, whether for profit or not. Provided, That any person or entity
which, in any manner, offers or promises for a fee employment to two or
more persons shall be deemed engaged in recruitment and placement.
Section 6 of R.A. No. 8042 defined when recruitment is illegal:
SEC. 6. Definition. – For purposes of this Act, illegal recruitment shall mean
any act of canvassing, enlisting, contracting, transporting, utilizing, hiring, or
procuring workers and includes referring, contract services, promising or
advertising for employment abroad, whether for profit or not, when
undertaken by a non-licensee or non-holder of authority contemplated under
Article 13(f) of Presidential Decree No. 442, as amended, otherwise known
as the Labor Code of the Philippines: Provided, That any such non-licensee
or non-holder who, in any manner, offers or promises for a fee employment
abroad to two or more persons shall be deemed so engaged. x x x
Any recruitment activities to be undertaken by non-licensee or non-holder of
contracts shall be deemed illegal and punishable under Article 39 of the
Labor Code of the Philippines.14 Illegal recruitment is deemed committed in
large scale if committed against three (3) or more persons individually or as a
group.15
To prove illegal recruitment in large scale, the prosecution is burdened to
prove three (3) essential elements, to wit: (1) the person charged undertook a
recruitment activity under Article 13(b) or any prohibited practice under Article
34 of the Labor Code; (2) accused did not have the license or the authority to
lawfully engage in the recruitment and placement of workers; and (3)
accused committed the same against three or more persons individually or
as a group.16 As gleaned from the collective testimonies of the complaining
witnesses which the trial court and the appellate court found to be credible
and deserving of full probative weight, the prosecution mustered the requisite
quantum of evidence to prove the guilt of accused beyond reasonable doubt
for the crime charged. Indeed, the findings of the trial court, affirmed on
appeal by the CA, are conclusive on this Court absent evidence that the
tribunals ignored, misunderstood, or misapplied substantial fact or other
circumstance.
The failure of the prosecution to adduce in evidence any receipt or document
signed by appellant where he acknowledged to have received money and
liquor does not free him from criminal liability. Even in the absence of money
or other valuables given as consideration for the "services" of appellant, the
latter is considered as being engaged in recruitment activities.
It can be gleaned from the language of Article 13(b) of the Labor Code that
the act of recruitment may be for profit or not. It is sufficient that the accused
promises or offers for a fee employment to warrant conviction for illegal
recruitment.17 As the Court held in People v. Sagaydo:18
Such is the case before us. The complainants parted with their money upon
the prodding and enticement of accused-appellant on the false pretense that
she had the capacity to deploy them for employment abroad. In the end,
complainants were neither able to leave for work abroad nor get their money
back.
The fact that private complainants Rogelio Tibeb and Jessie Bolinao failed to
produce receipts as proof of their payment to accused-appellant does not
free the latter from liability. The absence of receipts cannot defeat a criminal
prosecution for illegal recruitment. As long as the witnesses can positively
show through their respective testimonies that the accused is the one
involved in prohibited recruitment, he may be convicted of the offense despite
the absence of receipts.19
Appellant’s reliance on the certifications purportedly signed by the
complaining witnesses Imelda Bamba, Alma Singh and Geraldine
Lagman20 is misplaced. Indeed, the trial court and the appellate court found
LaborRev Assignment No. 1 | 89

the certifications barren of credence and probative weight. We agree with the
following pronouncement of the appellate court:
Anent the claim of the appellant that the trial court erred in not giving weight
to the certifications (Exhs. "2," "3" & "4") allegedly executed by the
complainants to the effect that he did not recruit them and that no money was
involved, the same deserves scant consideration.
The appellant testified that he was in possession of the said certifications at
the time the same were executed by the complainants and the same were
always in his possession; however, when he filed his counter-affidavit during
the preliminary investigation before the Department of Justice, he did not
mention the said certifications nor attach them to his counter-
affidavit.lavvphil.net
certifications because the State Prosecutor did not require him to submit any
counter-affidavit, and that he was told that the criminal complaint would be
dismissed on account of the failure of the complaining witnesses to appear
during the preliminary investigation. The prevarications of appellant were
exposed by Public Prosecutor Pedro Catral on cross-examination, thus:
Q Mr. Witness, you said that a preliminary investigation [was] conducted by
the Department of Justice through State Prosecutor Dañosos. Right?
A Yes, Sir.
Q Were you requested to file your Counter-Affidavit?
A Yes, Sir. I was required.

We find it unbelievable that the appellant, a college graduate, would not Q Did you file your Counter-Affidavit?
divulge the said certifications which would prove that, indeed, he is not an
illegal recruiter. By failing to present the said certifications prior to the trial,
the appellant risks the adverse inference and legal presumption that, indeed, A Yes, Sir, but he did not accept it.
such certifications were not genuine. When a party has it in his possession or
power to produce the best evidence of which the case in its nature is Q Why?
susceptible and withholds it, the fair presumption is that the evidence is
withheld for some sinister motive and that its production would thwart his evil A Because he said "never mind" because the witness is not appearing so he
or fraudulent purpose. As aptly pointed out by the trial court: dismissed the case.

"x x x These certifications were allegedly executed before charges were filed Q Are you sure that he did not accept your Counter-Affidavit, Mr. Witness?
against him. Knowing that he was already being charged for prohibited
recruitment, why did he not bring out these certifications which were definitely A I don’t know of that, Sir.
favorable to him, if the same were authentic. It is so contrary to human nature
that one would suppress evidence which would belie the charge against
Q If I show you that Counter-Affidavit you said you prepared, will you be able
him." (Emphasis Ours)21
to identify the same, Mr. Witness?
At the preliminary investigation, appellant was furnished with copies of the
A Yes, Sir.
affidavits of the complaining witnesses and was required to submit his
counter-affidavit. The complaining witnesses identified him as the culprit who
"recruited" them. At no time did appellant present the certifications Q I will show you the Counter-Affidavit dated June 16, 1997 filed by one
purportedly signed by the complaining witnesses to belie the complaint Joseph J. Jamilosa, will you please go over this and tell if this is the same
against him. He likewise did not indicate in his counter-affidavit that the Counter-Affidavit you said you prepared and you are going to file with the
complaining witnesses had executed certifications stating that they were not investigating state prosecutor?
recruited by him and that he did not receive any money from any of them. He
has not come forward with any valid excuse for his inaction. It was only when A Yes, Sir. This the same Counter-Affidavit.
he testified in his defense that he revealed the certifications for the first time.
Even then, appellant lied when he claimed that he did not submit the
LaborRev Assignment No. 1 | 90
Q There is a signature over the typewritten name Joseph J. Jamilosa, will
you please go over this and tell this Honorable Court if this is your signature,
Mr. Witness?
A Yes, Sir. This is my signature.
Q During the direct examination you were asked to identify [the] Certification
as Exh. "2" dated January 17, 1996, allegedly issued by Bamba, one of the
complainants in this case, when did you receive this Certification issued by
Imelda Bamba, Mr. Witness?
A That is the date, Sir.
Q You mean the date appearing in the Certification.
A Yes, Sir.
Q Where was this handed to you by Imelda Bamba, Mr. Witness?
A At SM North Edsa, Sir.
Q During the direct examination you were also asked to identify a
Certification Exh. "3" for the defense dated February 19, 1996, allegedly
issued by Alma Singh, one of the complainants in this case, will you please
go over this and tell us when did Alma Singh allegedly issue to you this
Certification?
A On February 19, 1996, Sir.
Q And also during the direct examination, you were asked to identify a
Certification which was already marked as Exh. "4" for the defense dated
January 22, 1996 allegedly issued by Geraldine M. Lagman, one of the
complainants in this case, will you please tell the court when did Geraldine
Lagman give you this Certification?
A January 22, 1996, Sir.
Q During that time, January 22, 1996, January 17, 1996 and February 19,
1996, you were in possession of all these Certification. Correct, Mr. Witness?
A Yes, Sir.
Q These were always in your possession. Right?
A Yes, Sir, with my papers.
Q Do you know when did the complainants file cases against you?
A I don’t know, Sir.
Q Alright. I will read to you this Counter-Affidavit of yours, and I quote "I,
Joseph Jamilosa, of legal age, married and resident of Manila City Jail, after
having duly sworn to in accordance with law hereby depose and states that:
1) the complainants sworn under oath to the National Bureau of Investigation
that I recruited them and paid me certain sums of money assuming that there
is truth in those allegation of this (sic) complainants. The charge filed by them
should be immediately dismissed for certain lack of merit in their Sworn
Statement to the NBI Investigator; 2) likewise, the complainants’ allegation is
not true and I never recruited them to work abroad and that they did not give
me money, they asked me for some help so I [helped] them in assisting and
processing the necessary documents, copies for getting US Visa; 3) the
complainant said under oath that they can show a receipt to prove that they
can give me sums or amount of money. That is a lie. They sworn (sic), under
oath, that they can show a receipt that I gave to them to prove that I got the
money from them. I asked the kindness of the state prosecutor to ask the
complainants to show and produce the receipts that I gave to them that was
stated in the sworn statement of the NBI; 4) the allegation of the
complainants that the charges filed by them should be dismissed because I
never [received] any amount from them and they can not show any receipt
that I gave them," Manila City Jail, Philippines, June 16, 1997. So, Mr.
Witness, June 16, 1997 is the date when you prepared this. Correct?
A Yes, Sir.
Q Now, my question to you, Mr. Witness, you said that you have with you all
the time the Certification issued by [the] three (3) complainants in this case,
did you allege in your Counter-Affidavit that this Certification you said you
claimed they issued to you?
A I did not say that, Sir.
Q So, it is not here in your Counter-Affidavit?
A None, Sir.
LaborRev Assignment No. 1 | 91

Q What is your educational attainment, Mr. Witness? A I did not receive any resolution, Sir. It’s just now that I learned about the
finding.
A I am a graduate of AB Course Associate Arts in 1963 at the University of
the East. Q You said you learned here in court, did you read the resolution filed against
you, Mr. Witness?
Q You said that the State Prosecutor of the Department of Justice did not
accept your Counter-Affidavit, are you sure of that, Mr. Witness? A I did not read it, Sir.

A Yes, Sir. Q Did you read by yourself the resolution made by State Prosecutor
Dañosos, Mr. Witness?
Q Did you receive a copy of the dismissal which you said it was dismissed?
A Not yet, Sir.
A No, Sir. I did not receive anything.
Q What did you take, if any, when you received the subpoena from this
Q Did you receive a resolution from the Department of Justice? court?

A No, Sir. A I was in court already when I asked Atty. Usita to investigate this case.

Q Did you go over the said resolution you said you received here?
A I just learned about it now, Sir.
Q Did you read the content of the resolution?
A Not yet, Sir. It’s only now that I am going to read.
Q You said a while ago that your Affidavit was not accepted by State
Prosecutor Dañosos. Is that correct?
A Yes, Sir.
Q Will you please read to us paragraph four (4), page two (2) of this
resolution of State Prosecutor Dañosos.

(witness reading par. 4 of the resolution)

COURT

Alright. What did you understand of this paragraph 4, Mr. Witness?

Q You said it was dismissed. Correct?

A Probably, guilty to the offense charge.22

A Yes, Your Honor.

It turned out that appellant requested the complaining witnesses to sign the
Q Did you receive a resolution of this dismissal?
certifications merely to prove that he was settling the cases:
A No, Your Honor.
COURT
FISCAL CATRAL
Q These complainants, why did you make them sign in the certifications?
Q What did you receive?
LaborRev Assignment No. 1 | 92

A Because one of the complainants told me to sign and they are planning to
sue me.

Q You mean they told you that they are filing charges against you and yet
you [made] them sign certifications in your favor, what is the reason why you
made them sign?

A To prove that I’m settling this case.

Q Despite the fact that they are filing cases against you and yet you were
able to make them sign certifications?

A Only one person, Your Honor, who told me and he is not around.

Q But they all signed these three (3) certifications and yet they filed charges
against you and yet you made them sign certifications in your favor, so what
is the reason why you made them sign?

(witness can not answer)23

The Court notes that the trial court ordered appellant to refund US$300.00 to
each of the complaining witnesses. The ruling of the appellate court must be
modified. Appellant must pay only the peso equivalent of US$300.00 to each
of the complaining witnesses.

IN LIGHT OF ALL THE FOREGOING, the appeal is DISMISSED. The

Decision of the Court of Appeals affirming the conviction of Joseph Jamilosa
for large scale illegal recruitment under Sections 6 and 7 of Republic Act No.
8042 is AFFIRMED WITH MODIFICATION. The appellant is hereby ordered
to refund to each of the complaining witnesses the peso equivalent of
US$300.00. Costs against appellant.

SO ORDERED.
LaborRev Assignment No. 1 | 93
G.R. No. 113161. August 29, 1995.*
PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs. LOMA GOCE y
OLALIA, DAN GOCE and NELLY D. AGUSTIN, accused. NELLY D.
AGUSTIN, accused-appellant.
Labor Law; Criminal Law; Illegal Recruitment; Circumstances that qualify
illegal recruitment as an offense involving economic sabotage.—Herein
appellant is accused of violating Articles 38 and 39 of the Labor Code. Article
38 of the Labor Code, as amended by Presidential Decree No. 2018,
provides that any recruitment activity, including the prohibited practices
enumerated in Article 34 of said Code, undertaken by non-licensees or non-
holders of authority shall be deemed illegal and punishable under Article 39
thereof. The same article further provides that illegal recruitment shall be
considered an offense involving economic sabotage if any of these qualifying
circumstances exist, namely, (a) when illegal recruitment is committed by a
syndicate, i.e., if it is carried out by a group of three or more persons
conspiring and/or confederating with one another; or (b) when illegal
recruitment is committed in large scale, i.e., if it is committed against three or
more persons individually or as a group.
Same; Same; Same; Words and Phrases; “Recruitment and Placement” and
“Referral,” Defined.—Under said Code, recruitment and placement refer to
any act of canvassing, enlisting, contracting, transporting, utilizing, hiring or
procuring workers, and includes referrals, contract services, promising or
advertising for employment, locally or abroad, whether for profit or not;
provided, that any person or entity which, in any manner, offers or promises
for a fee employment to two or more persons shall be deemed engaged in
recruitment and placement. On the other hand, referral is the act of passing
along or forwarding of an applicant for employment after an initial interview of
a selected applicant for employment to a selected employer, placement
officer or bureau.
Same; Same; Same; An employee who actually makes referrals to the
agency of which she is a part is engaged in recruitment activity.—Hence, the
inevitable query is whether or not appellant Agustin merely introduced
complainants to the Goce couple or her actions went beyond that. The
testimonial evidence hereon show that she indeed further committed acts
constitutive of illegal recruitment. All four prosecution witnesses testified that
it was Agustin whom they initially approached regarding their plans of
working overseas. It was from her that they learned about the fees they had
to pay, as well as the papers that they had to submit. It was after they had
talked to her that they met the accused spouses who owned the placement
agency. As correctly held by the trial court, being an employee of the Goces,
it was therefore logical for appellant to introduce the applicants to said
spouses, they being the owners of the agency. As such, appellant was
actually making referrals to the agency of which she was a part. She was
therefore engaging in recruitment activity.
Same; Same; Same; There is illegal recruitment when one gives the
impression of having the ability to send a worker abroad.—There is illegal
recruitment when one gives the impression of having the ability to send a
worker abroad. It is undisputed that appellant gave complainants the distinct
impression that she had the power or ability to send people abroad for work
such that the latter were convinced to give her the money she demanded in
order to be so employed.
Same; Same; Same; The act of collecting from each of the complainants
payment for their respective passports, training fees, placement fees,
medical tests and other sundry expenses unquestionably constitutes an act
of recruitment within the meaning of the law.—It cannot be denied that
Agustin received from complainants various sums for purpose of their
applications. Her act of collecting from each of the complainants payment for
their respective passports, training fees, placement fees, medical tests and
other sundry expenses unquestionably constitutes an act of recruitment
within the meaning of the law. In fact, appellant demanded and received from
complainants amounts beyond the allowable limit of P5,000.00 under
government regulations. It is true that the mere act of a cashier in receiving
money far exceeding the amount allowed by law was not considered per se
as “recruitment and placement” in contemplation of law, but that was
because the recipient had no other participation in the transactions and did
not conspire with her co-accused in defrauding the victims. That is not the
case here.
Same; Same; Same; Evidence; Documentary Evidence; Xerox Copies;
Where original copies of the receipts/vouchers were lost, xerox copies
thereof may be presented and admitted.—Apparently, the original copies of
said receipts/vouchers were lost, hence only xerox copies thereof were
presented and which, under the circumstances, were admissible in evidence.
When the original writing has been lost or destroyed or cannot be produced
in court, upon proof of its execution and loss or destruction, or unavailability,
its contents may be proved by a copy or a recital of its contents in some
authentic document, or by the recollection of witnesses.
Same; Same; Same; Same; Same; Witnesses; Even in the absence of
receipts, the testimonies of complainants that the accused was involved in
recruitment may suffice to establish the factum probandum.—Even assuming
arguendo that the xerox copies presented by the prosecution as secondary
LaborRev Assignment No. 1 | 94
evidence are not allowable in court, still the absence thereof does not warrant
the acquittal of appellant. In People vs. Comia, where this particular issue
was involved, the Court held that the complainants’ failure to ask for receipts
for the fees they paid to the accused therein, as well as their consequent
failure to present receipts before the trial court as proof of the said payments,
is not fatal to their case. The complainants duly proved by their respective
testimonies that said accused was involved in the entire recruitment process.
Their testimonies in this regard, being clear and positive, were declared
sufficient to establish that factum probandum.
Same; Same; Same; Same; Same; Same; Denials; The positive and
affirmative statements of the prosecution witnesses is more worthy of credit
than the mere uncorroborated and self-serving denials of the accused.—
Indeed, the trial court was justified and correct in accepting the version of the
prosecution witnesses, their statements being positive and affirmative in
nature. This is more worthy of credit than the mere uncorroborated and self-
serving denials of appellant. The lame defense consisting of such bare
denials by appellant cannot overcome the evidence presented by the
prosecution proving her guilt beyond reasonable doubt.
Same; Same; Same; Same; Same; Same; Where the issue essentially
involves the credibility of witnesses, this is best left to the judgment of the trial
court.—The presence of documentary evidence notwithstanding, this case
essentially involves the credibility of witnesses which is best left to the
judgment of the trial court, in the absence of abuse of discretion therein. The
findings of fact of a trial court, arrived at only after a hearing and evaluation of
what can usually be expected to be conflicting testimonies of witnesses,
certainly deserve respect by an appellate court. Generally, the findings of fact
of the trial court on the matter of credibility of witnesses will not be disturbed
on appeal.
Constitutional Law; Equal Protection; Criminal Law; Criminal Procedure; The
non-prosecution of another suspect provides no ground for the accused to
fault the decision of the trial court convicting him.—In
People vs. Sendon, we held that the non-prosecution of another suspect
therein provided no ground for the appellant concerned to fault the decision
of the trial court convicting her. The prosecution of other persons, equally or
more culpable than herein appellant, may come later after their true identities
and addresses shall have been ascertained and said malefactors duly taken
into custody. We see no reason why the same doctrinal rule and course of
procedure should not apply in this case.
APPEAL from a decision of the Regional Trial Court of Manila, Br. 5.
The facts are stated in the opinion of the Court.
     The Solicitor General for plaintiff-appellee.
     Pablo Baltazar for accused-appellant.
REGALADO, J.:
On January 12, 1988, an information for illegal recruitment committed by a
syndicate and in large scale, punishable under Articles 38 and 39 of the
Labor Code (Presidential Decree No. 442) as amended by Section 1(b) of
Presidential Decree No. 2018, was filed against spouses Dan and Loma
Goce and herein accused-appellant Nelly Agustin in the Regional Trial Court
of Manila, Branch 5, alleging —
That in or about and during the period comprised between
May 1986 and June 25, 1987, both dates inclusive, in the
City of Manila, Philippines, the said accused, conspiring and
confederating together and helping one another,
representing themselves to have the capacity to contract,
enlist and transport Filipino workers for employment abroad,
did then and there willfully and unlawfully, for a fee, recruit
and promise employment/job placement abroad, to (1)
Rolando Dalida y Piernas, (2) Ernesto Alvarez y Lubangco,
(3) Rogelio Salado y Savillo, (4) Ramona Salado y Alvarez,
(5) Dionisio Masaya y de Guzman, (6) Dave Rivera y de
Leon, (7) Lorenzo Alvarez y Velayo, and (8) Nelson Trinidad
y Santos, without first having secured the required license or
authority from the Department of Labor.1
On January 21, 1987, a warrant of arrest was issued against the three
accused but not one of them was arrested. 2 Hence, on February 2, 1989, the
trial court ordered the case archived but it issued a standing warrant of arrest
against the accused.3
Thereafter, on learning of the whereabouts of the accused, one of the
offended parties, Rogelio Salado, requested on March 17, 1989 for a copy of
the warrant of arrest.4 Eventually, at around midday of February 26, 1993,
Nelly Agustin was apprehended by the Parañaque police. 5 On March 8,
1993, her counsel filed a motion to revive the case and requested that it be
set for hearing "for purposes of due process and for the accused to
immediately have her day in court" 6 Thus, on April 15, 1993, the trial court
reinstated the case and set the arraignment for May 3, 1993, 7 on which date
of Agustin pleaded not guilty8 and the case subsequently went to trial.
LaborRev Assignment No. 1 | 95
Four of the complainants testified for the prosecution. Rogelio Salado was
the first to take the witness stand and he declared that sometime in March or
April, 1987, he was introduced by Lorenzo Alvarez, his brother-in-law and a
co-applicant, to Nelly Agustin in the latter's residence at Factor, Dongalo,
Parañaque, Metro Manila. Representing herself as the manager of the Clover
Placement Agency, Agustin showed him a job order as proof that he could
readily be deployed for overseas employment. Salado learned that he had to
pay P5,000.00 as processing fee, which amount he gave sometime in April or
May of the same year. He was issued the corresponding receipt. 9
Also in April or May, 1987, Salado, accompanied by five other applicants who
were his relatives, went to the office of the placement agency at Nakpil
Street, Ermita, Manila where he saw Agustin and met the spouses Dan and
Loma Goce, owners of the agency. He submitted his bio-data and learned
from Loma Goce that he had to give P12,000.00, instead of the original
amount of P5,000.00 for the placement fee. Although surprised at the new
and higher sum, they subsequently agreed as long as there was an
assurance that they could leave for abroad.10
Thereafter, a receipt was issued in the name of the Clover Placement
Agency showing that Salado and his aforesaid co-applicants each paid
P2,000.00, instead of the P5,000.00 which each of them actually paid.
Several months passed but Salado failed to leave for the promised overseas
employment. Hence, in October, 1987, along with the other recruits, he
decided to go to the Philippine Overseas Employment Administration (POEA)
to verify the real status of Clover Placement Agency. They discovered that
said agency was not duly licensed to recruit job applicants. Later, upon
learning that Agustin had been arrested, Salado decided to see her and to
demand the return of the money he had paid, but Agustin could only give him
P500.00. 11
Ramona Salado, the wife of Rogelio Salado, came to know through her
brother, Lorenzo Alvarez, about Nelly Agustin. Accompanied by her husband,
Rogelio, Ramona went to see Agustin at the latter's residence. Agustin
persuaded her to apply as a cutter/sewer in Oman so that she could join her
husband. Encouraged by Agustin's promise that she and her husband could
live together while working in Oman, she instructed her husband to give
Agustin P2,000.00 for each of them as placement fee, or the total sum of
P4,000.00. 12
Much later, the Salado couple received a telegram from the placement
agency requiring them to report to its office because the "NOC" (visa) had
allegedly arrived. Again, around February, or March, 1987, Rogelio gave
P2,000.00 as payment for his and his wife's passports. Despite follow-up of
their papers twice a week from February to June, 1987, he and his wife failed
to leave for abroad. 13
Complainant Dionisio Masaya, accompanied by his brother-in-law, Aquiles
Ortega, applied for a job in Oman with the Clover Placement Agency at
Parañaque, the agency's former office address. There, Masaya met Nelly
Agustin, who introduced herself as the manager of the agency, and the Goce
spouses, Dan and Loma, as well as the latter's daughter. He submitted
several pertinent documents, such as his bio-data and school credentials. 14
In May, 1986, Masaya gave Dan Goce P1,900.00 as an initial downpayment
for the placement fee, and in September of that same year, he gave an
additional P10,000.00. He was issued receipts for said amounts and was
advised to go to the placement office once in a while to follow up his
application, which he faithfully did. Much to his dismay and chagrin, he failed
to leave for abroad as promised. Accordingly, he was forced to demand that
his money be refunded but Loma Goce could give him back only P4,000.00
in installments. 15
As the prosecution's fourth and last witness, Ernesto Alvarez took the
witness stand on June 7, 1993. He testified that in February, 1987, he met
appellant Agustin through his cousin, Larry Alvarez, at her residence in
Parañaque. She informed him that "madalas siyang nagpapalakad sa Oman"
and offered him a job as an ambulance driver at the Royal Hospital in Oman
with a monthly salary of about $600.00 to $700.00. 16
On March 10, 1987, Alvarez gave an initial amount of P3,000.00 as
processing fee to Agustin at the latter's residence. In the same month, he
gave another P3,000.00, this time in the office of the placement agency.
Agustin assured him that he could leave for abroad before the end of 1987.
He returned several times to the placement agency's office to follow up his
application but to no avail. Frustrated, he demanded the return of the money
he had paid, but Agustin could only give back P500.00. Thereafter, he looked
for Agustin about eight times, but he could no longer find her. 17
Only herein appellant Agustin testified for the defense. She asserted that Dan
and Loma Goce were her neighbors at Tambo, Parañaque and that they
were licensed recruiters and owners of the Clover Placement Agency.
Previously, the Goce couple was able to send her son, Reynaldo Agustin, to
Saudi Arabia. Agustin met the aforementioned complainants through Lorenzo
Alvarez who requested her to introduce them to the Goce couple, to which
request she acceded. 18
LaborRev Assignment No. 1 | 96
Denying any participation in the illegal recruitment and maintaining that the
recruitment was perpetrated only by the Goce couple, Agustin denied any
knowledge of the receipts presented by the prosecution. She insisted that the
complainants included her in the complaint thinking that this would compel
her to reveal the whereabouts of the Goce spouses. She failed to do so
because in truth, so she claims, she does not know the present address of
the couple. All she knew was that they had left their residence in 1987. 19
Although she admitted having given P500.00 each to Rogelio Salado and
Alvarez, she explained that it was entirely for different reasons. Salado had
supposedly asked for a loan, while Alvarez needed money because he was
sick at that time. 20
On November 19, 1993, the trial court rendered judgment finding herein
appellant guilty as a principal in the crime of illegal recruitment in large scale,
and sentencing her to serve the penalty of life imprisonment, as well as to
pay a fine of P100,000.00. 21
In her present appeal, appellant Agustin raises the following arguments: (1)
her act of introducing complainants to the Goce couple does not fall within
the meaning of illegal recruitment and placement under Article 13(b) in
relation to Article 34 of the Labor Code; (2) there is no proof of conspiracy to
commit illegal recruitment among appellant and the Goce spouses; and (3)
there is no proof that appellant offered or promised overseas employment to
the complainants. 22 These three arguments being interrelated, they will be
discussed together.
Herein appellant is accused of violating Articles 38 and 39 of the Labor Code.
Article 38 of the Labor Code, as amended by Presidential Decree No. 2018,
provides that any recruitment activity, including the prohibited practices
enumerated in Article 34 of said Code, undertaken by non-licensees or non-
holders of authority shall be deemed illegal and punishable under Article 39
thereof. The same article further provides that illegal recruitment shall be
considered an offense involving economic sabotage if any of these qualifying
circumstances exist, namely, (a) when illegal recruitment is committed by a
syndicate, i.e., if it is carried out by a group of three or more persons
conspiring and/or confederating with one another; or (b) when illegal
recruitment is committed in large scale, i.e., if it is committed against three or
more persons individually or as a group.
At the outset, it should be made clear that all the accused in this case were
not authorized to engage in any recruitment activity, as evidenced by a
certification issued by Cecilia E. Curso, Chief of the Licensing and Regulation
Office of the Philippine Overseas Employment Administration, on November
10, 1987. Said certification states that Dan and Loma Goce and Nelly Agustin
are neither licensed nor authorized to recruit workers for overseas
employment. 23 Appellant does not dispute this. As a matter of fact her
counsel agreed to stipulate that she was neither licensed nor authorized to
recruit applicants for overseas employment. Appellant, however, denies that
she was in any way guilty of illegal recruitment. 24
It is appellant's defensive theory that all she did was to introduce
complainants to the Goce spouses. Being a neighbor of said couple, and
owing to the fact that her son's overseas job application was processed and
facilitated by them, the complainants asked her to introduce them to said
spouses. Allegedly out of the goodness of her heart, she complied with their
request. Such an act, appellant argues, does not fall within the meaning of
"referral" under the Labor Code to make her liable for illegal recruitment.
Under said Code, recruitment and placement refers to any act of canvassing,
enlisting, contracting, transporting, utilizing, hiring or procuring workers, and
includes referrals, contract services, promising or advertising for
employment, locally or abroad, whether for profit or not;  provided, that any
person or entity which, in any manner, offers or promises for a fee
employment to two or more persons shall be deemed engaged in recruitment
and placement. 25 On the other hand, referral is the act of passing along or
forwarding of an applicant for employment after an initial interview of a
selected applicant for employment to a selected employer, placement officer
or bureau. 26
Hence, the inevitable query is whether or not appellant Agustin merely
introduced complainants to the Goce couple or her actions went beyond that.
The testimonial evidence hereon show that she indeed further committed
acts constitutive of illegal recruitment. All four prosecution witnesses testified
that it was Agustin whom they initially approached regarding their plans of
working overseas. It was from her that they learned about the fees they had
to pay, as well as the papers that they had to submit. It was after they had
talked to her that they met the accused spouses who owned the placement
agency.
As correctly held by the trial court, being an employee of the Goces, it was
therefore logical for appellant to introduce the applicants to said spouses,
they being the owners of the agency. As such, appellant was actually making
referrals to the agency of which she was a part. She was therefore engaging
in recruitment activity. 27
LaborRev Assignment No. 1 | 97
Despite Agustin's pretensions that she was but a neighbor of the Goce
couple, the testimonies of the prosecution witnesses paint a different picture.
Rogelio Salado and Dionisio Masaya testified that appellant represented
herself as the manager of the Clover Placement Agency. Ramona Salado
was offered a job as a cutter/sewer by Agustin the first time they met, while
Ernesto Alvarez remembered that when he first met Agustin, the latter
represented herself as "nagpapaalis papunta sa Oman." 28 Indeed, Agustin
played a pivotal role in the operations of the recruitment agency, working
together with the Goce couple.
There is illegal recruitment when one gives the impression of having the
ability to send a worker abroad." 29 It is undisputed that appellant gave
complainants the distinct impression that she had the power or ability to send
people abroad for work such that the latter were convinced to give her the
money she demanded in order to be so employed. 30
It cannot be denied that Agustin received from complainants various sums for
purpose of their applications. Her act of collecting from each of the
complainants payment for their respective passports, training fees,
placement fees, medical tests and other sundry expenses unquestionably
constitutes an act of recruitment within the meaning of the law. In fact,
appellant demanded and received from complainants amounts beyond the
allowable limit of P5,000.00 under government regulations. It is true that the
mere act of a cashier in receiving money far exceeding the amount allowed
by law was not considered  per se  as "recruitment and placement" in
contemplation of law, but that was because the recipient had no other
participation in the transactions and did not conspire with her co-accused in
defrauding the victims. 31 That is not the case here.
Appellant further argues that "there is no evidence of receipts of
collections/payments from complainants to appellant." On the contrary, xerox
copies of said receipts/vouchers were presented by the prosecution. For
instance, a cash voucher marked as Exhibit D, 32 showing the receipt of
P10,000.00 for placement fee and duly signed by appellant, was presented
by the prosecution. Another receipt, identified as Exhibit E, 33 was issued and
signed by appellant on February 5, 1987 to acknowledge receipt of
P4,000.00 from Rogelio and Ramona Salado for "processing of documents
for Oman." Still another receipt dated March 10, 1987 and presented in
evidence as Exhibit F, shows that appellant received from Ernesto Alvarez
P2,000.00 for "processing of documents for Oman." 34
Apparently, the original copies of said receipts/vouchers were lost, hence
only xerox copies thereof were presented and which, under the
circumstances, were admissible in evidence. When the original writing has
been lost or destroyed or cannot be produced in court, upon proof of its
execution and loss or destruction, or unavailability, its contents may be
proved by a copy or a recital of its contents in some authentic document, or
by the recollection of witnesses. 35
Even assuming arguendo that the xerox copies presented by the prosecution
as secondary evidence are not allowable in court, still the absence thereof
does not warrant the acquittal of appellant. In People vs.  Comia, 36 where this
particular issue was involved, the Court held that the complainants' failure to
ask for receipts for the fees they paid to the accused therein, as well as their
consequent failure to present receipts before the trial court as proof of the
said payments, is not fatal to their case. The complainants duly proved by
their respective testimonies that said accused was involved in the entire
recruitment process. Their testimonies in this regard, being clear and
positive, were declared sufficient to establish that factum probandum.
Indeed, the trial court was justified and correct in accepting the version of the
prosecution witnesses, their statements being positive and affirmative in
nature. This is more worthy of credit than the mere uncorroborated and self-
serving denials of appellant. The lame defense consisting of such bare
denials by appellant cannot overcome the evidence presented by the
prosecution proving her guilt beyond reasonable doubt. 37
The presence of documentary evidence notwithstanding, this case essentially
involves the credibility of witnesses which is best left to the judgment of the
trial court, in the absence of abuse of discretion therein. The findings of fact
of a trial court, arrived at only after a hearing and evaluation of what can
usually be expected to be conflicting testimonies of witnesses, certainly
deserve respect by an appellate court. 38 Generally, the findings of fact of the
trial court on the matter of credibility of witnesses will not be disturbed on
appeal. 39
In a last-ditch effort to exculpate herself from conviction, appellant argues
that there is no proof of conspiracy between her and the Goce couple as to
make her liable for illegal recruitment. We do not agree. The evidence
presented by the prosecution clearly establish that appellant confabulated
with the Goces in their plan to deceive the complainants. Although said
accused couple have not been tried and convicted, nonetheless there is
sufficient basis for appellant's conviction as discussed above.
In People vs.  Sendon, 40 we held that the non-prosecution of another suspect
therein provided no ground for the appellant concerned to fault the decision
LaborRev Assignment No. 1 | 98

of the trial court convicting her. The prosecution of other persons, equally or
more culpable than herein appellant, may come later after their true identities
and addresses shall have been ascertained and said malefactors duly taken
into custody. We see no reason why the same doctrinal rule and course of
procedure should not apply in this case. WHEREFORE, the appealed
judgment of the court a quo is hereby AFFIRMED in toto, with costs against
accused-appellant Nelly D. Agustin. SO ORDERED.