Labor Cases 2nd Assignment

NO.
Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 177498 January 18, 2012
STOLT-NIELSEN TRANSPORTATION GROUP, INC. AND CHUNG GAI SHIP

MANAGEMENT, Petitioners,
vs.
SULPECIO MEDEQUILLO, JR., Respondent.
DECISION
PEREZ, J.:
Before the Court is a Petition for Review on Certiorari1 of the Decision2 of the First Division
of the Court of Appeals in CA-G.R. SP No. 91632 dated 31 January 2007, denying the
petition for certiorari filed by Stolt-Nielsen Transportation Group, Inc. and Chung Gai Ship
Management (petitioners) and affirming the Resolution of the National Labor Relations
Commission (NLRC). The dispositive portion of the assailed decision reads:
WHEREFORE, the petition is hereby DENIED. Accordingly, the assailed Decision

promulgated on February 28, 2003 and the Resolution dated July 27, 2005
are AFFIRMED.3
The facts as gathered by this Court follow:
On 6 March 1995, Sulpecio Madequillo (respondent) filed a complaint before the

Adjudication Office of the Philippine Overseas Employment Administration (POEA)
against the petitioners for illegal dismissal under a first contract and for failure to deploy
under a second contract. In his complaint-affidavit,4 respondent alleged that:
1. On 6 November 1991(First Contract), he was hired by Stolt-Nielsen Marine

Services, Inc on behalf of its principal Chung-Gai Ship Management of Panama as
Third Assistant Engineer on board the vessel "Stolt Aspiration" for a period of nine
(9) months;
2. He would be paid with a monthly basic salary of $808.00 and a fixed overtime pay
of $404.00 or a total of $1,212.00 per month during the employment period
commencing on 6 November 1991;
3. On 8 November 1991, he joined the vessel MV "Stolt Aspiration";
4. On February 1992 or for nearly three (3) months of rendering service and while the
vessel was at Batangas, he was ordered by the ships master to disembark the
vessel and repatriated back to Manila for no reason or explanation;
5. Upon his return to Manila, he immediately proceeded to the petitioners office
where he was transferred employment with another vessel named MV "Stolt Pride"
under the same terms and conditions of the First Contract;
6. On 23 April 1992, the Second Contract was noted and approved by the POEA;
7. The POEA, without knowledge that he was not deployed with the vessel, certified
the Second Employment Contract on 18 September 1992.
8. Despite the commencement of the Second Contract on 21 April 1992, petitioners
failed to deploy him with the vessel MV "Stolt Pride";
9. He made a follow-up with the petitioner but the same refused to comply with the
Second Employment Contract.
10. On 22 December 1994, he demanded for his passport, seamans book and other
employment documents. However, he was only allowed to claim the said
documents in exchange of his signing a document;
11. He was constrained to sign the document involuntarily because without these
documents, he could not seek employment from other agencies.
He prayed for actual, moral and exemplary damages as well as attorneys fees for his
illegal dismissal and in view of the Petitioners bad faith in not complying with the Second
Contract.
The case was transferred to the Labor Arbiter of the DOLE upon the effectivity of the
Migrant Workers and Overseas Filipinos Act of 1995.
The parties were required to submit their respective position papers before the Labor
Arbiter. However, petitioners failed to submit their respective pleadings despite the
opportunity given to them.5
On 21 July 2000, Labor Arbiter Vicente R. Layawen rendered a judgment6 finding that the
respondent was constructively dismissed by the petitioners. The dispositive portion reads:
WHEREFORE, premises considered, judgment is hereby rendered, declaring the

respondents guilty of constructively dismissing the complainant by not honoring the
employment contract. Accordingly, respondents are hereby ordered jointly and solidarily
to pay complainant the following:
1. $12,537.00 or its peso equivalent at the time of payment. 7
The Labor Arbiter found the first contract entered into by and between the complainant
and the respondents to have been novated by the execution of the second contract. In
other words, respondents cannot be held liable for the first contract but are clearly and
definitely liable for the breach of the second contract. 8 However, he ruled that there was
no substantial evidence to grant the prayer for moral and exemplary damages. 9
The petitioners appealed the adverse decision before the National Labor Relations
Commission assailing that they were denied due process, that the respondent cannot be
considered as dismissed from employment because he was not even deployed yet and
the monetary award in favor of the respondent was exorbitant and not in accordance with
law.10
On 28 February 2003, the NLRC affirmed with modification the Decision of the Labor
Arbiter. The dispositive portion reads:
WHEREFORE, premises considered, the decision under review is hereby, MODIFIED BY

DELETING the award of overtime pay in the total amount of Three Thousand Six Hundred
Thirty Six US Dollars (US $3,636.00).
In all other respects, the assailed decision so stands as, AFFIRMED.11
Before the NLRC, the petitioners assailed that they were not properly notified of the
hearings that were conducted before the Labor Arbiter. They further alleged that after the
suspension of proceedings before the POEA, the only notice they received was a copy of
the decision of the Labor Arbiter.12
The NLRC ruled that records showed that attempts to serve the various notices of hearing
were made on petitioners counsel on record but these failed on account of their failure to
furnish the Office of the Labor Arbiter a copy of any notice of change of address. There
was also no evidence that a service of notice of change of address was served on the
POEA.13
The NLRC upheld the finding of unjustified termination of contract for failure on the part
of the petitioners to present evidence that would justify their non-deployment of the
respondent.14 It denied the claim of the petitioners that the monetary award should be
limited only to three (3) months for every year of the unexpired term of the contract. It
ruled that the factual incidents material to the case transpired within 1991-1992 or before
the effectivity of Republic Act No. 8042 or the Migrant Workers and Overseas Filipinos
Act of 1995 which provides for such limitation.15
However, the NLRC upheld the reduction of the monetary award with respect to the
deletion of the overtime pay due to the non-deployment of the respondent.16
The Partial Motion for Reconsideration filed by the petitioners was denied by the NLRC
in its Resolution dated 27 July 2005.17
The petitioners filed a Petition for Certiorari before the Court of Appeals alleging grave
abuse of discretion on the part of NLRC when it affirmed with modification the ruling of
the Labor Arbiter. They prayed that the Decision and Resolution promulgated by the
NLRC be vacated and another one be issued dismissing the complaint of the respondent.
Finding no grave abuse of discretion, the Court of Appeals AFFIRMED the Decision of
the labor tribunal.
The Courts Ruling
The following are the assignment of errors presented before this Court:
I.
THE COURT A QUO ERRED IN FINDING THAT THE SECOND CONTRACT NOVATED
THE FIRST CONTRACT.
1. THERE WAS NO NOVATION OF THE FIRST CONTRACT BY THE SECOND

CONTRACT; THE ALLEGATION OF ILLEGAL DISMISSAL UNDER THE FIRST
CONTRACT MUST BE RESOLVED SEPARATELY FROM THE ALLEGATION
OF FAILURE TO DEPLOY UNDER THE SECOND CONTRACT.
2. THE ALLEGED ILLEGAL DISMISSAL UNDER THE FIRST CONTRACT
TRANSPIRED MORE THAN THREE (3) YEARS AFTER THE CASE WAS FILED
AND THEREFORE HIS CASE SHOULD HAVE BEEN DISMISSED FOR BEING
BARRED BY PRESCRIPTION.
II.
THE COURT A QUO ERRED IN RULING THAT THERE WAS CONSTRUCTIVE

DISMISSAL UNDER THE SECOND CONTRACT.
1. IT IS LEGALLY IMPOSSIBLE TO HAVE CONSTRUCTIVE DISMISSAL WHEN

THE EMPLOYMENT HAS NOT YET COMMENCED.
2. ASSUMING THERE WAS OMISSION UNDER THE SECOND CONTRACT,
PETITIONERS CAN ONLY BE FOUND AS HAVING FAILED IN DEPLOYING
PRIVATE RESPONDENT BUT WITH VALID REASON.
III.
THE COURT A QUO ERRED IN FAILING TO FIND THAT EVEN ASSUMING THERE
WAS BASIS FOR HOLDING PETITIONER LIABLE FOR "FAILURE TO DEPLOY"
RESPONDENT, THE POEA RULES PENALIZES SUCH OMISSION WITH A MERE
"REPRIMAND."18
The petitioners contend that the first employment contract between them and the private
respondent is different from and independent of the second contract subsequently
executed upon repatriation of respondent to Manila.
We do not agree.
Novation is the extinguishment of an obligation by the substitution or change of the

obligation by a subsequent one which extinguishes or modifies the first, either by
changing the object or principal conditions, or, by substituting another in place of the
debtor, or by subrogating a third person in the rights of the creditor. In order for novation
to take place, the concurrence of the following requisites is indispensable:
1. There must be a previous valid obligation,
2. There must be an agreement of the parties concerned to a new contract,
3. There must be the extinguishment of the old contract, and
4. There must be the validity of the new contract.19
In its ruling, the Labor Arbiter clarified that novation had set in between the first and
second contract. To quote:
xxx [T]his office would like to make it clear that the first contract entered into by and
between the complainant and the respondents is deemed to have been novated by the
execution of the second contract. In other words, respondents cannot be held liable for
the first contract but are clearly and definitely liable for the breach of the second contract. 20
This ruling was later affirmed by the Court of Appeals in its decision ruling that:
Guided by the foregoing legal precepts, it is evident that novation took place in this
particular case. The parties impliedly extinguished the first contract by agreeing to enter
into the second contract to placate Medequillo, Jr. who was unexpectedly dismissed and
repatriated to Manila. The second contract would not have been necessary if the
petitioners abided by the terms and conditions of Madequillo, Jr.s employment under the
first contract. The records also reveal that the 2nd contract extinguished the first contract
by changing its object or principal. These contracts were for overseas employment aboard
different vessels. The first contract was for employment aboard the MV "Stolt Aspiration"
while the second contract involved working in another vessel, the MV "Stolt Pride."
Petitioners and Madequillo, Jr. accepted the terms and conditions of the second contract.
Contrary to petitioners assertion, the first contract was a "previous valid contract" since
it had not yet been terminated at the time of Medequillo, Jr.s repatriation to Manila. The
legality of his dismissal had not yet been resolved with finality. Undoubtedly, he was still
employed under the first contract when he negotiated with petitioners on the second
contract. As such, the NLRC correctly ruled that petitioners could only be held liable under
the second contract.21
We concur with the finding that there was a novation of the first employment contract.
We reiterate once more and emphasize the ruling in Reyes v. National Labor Relations
Commission,22 to wit:
x x x [F]indings of quasi-judicial bodies like the NLRC, and affirmed by the Court of
Appeals in due course, are conclusive on this Court, which is not a trier of facts.
xxxx
x x x Findings of fact of administrative agencies and quasi-judicial bodies, which

have acquired expertise because their jurisdiction is confined to specific matters,
are generally accorded not only respect, but finality when affirmed by the Court of
Appeals. Such findings deserve full respect and, without justifiable reason, ought not to
be altered, modified or reversed.(Emphasis supplied)23
With the finding that respondent "was still employed under the first contract when he
negotiated with petitioners on the second contract",24 novation became an unavoidable
conclusion.
Equally settled is the rule that factual findings of labor officials, who are deemed to have
acquired expertise in matters within their jurisdiction, are generally accorded not only
respect but even finality by the courts when supported by substantial evidence, i.e., the
amount of relevant evidence which a reasonable mind might accept as adequate to justify
a conclusion.25 But these findings are not infallible. When there is a showing that they
were arrived at arbitrarily or in disregard of the evidence on record, they may be examined
by the courts.26 In this case, there was no showing of any arbitrariness on the part of the
lower courts in their findings of facts. Hence, we follow the settled rule.
We need not dwell on the issue of prescription. It was settled by the Court of Appeals with
its ruling that recovery of damages under the first contract was already time-barred. Thus:
Accordingly, the prescriptive period of three (3) years within which Medequillo Jr. may
initiate money claims under the 1st contract commenced on the date of his repatriation.
xxx The start of the three (3) year prescriptive period must therefore be reckoned on
February 1992, which by Medequillo Jr.s own admission was the date of his repatriation
to Manila. It was at this point in time that Medequillo Jr.s cause of action already accrued
under the first contract. He had until February 1995 to pursue a case for illegal dismissal
and damages arising from the 1st contract. With the filing of his Complaint-Affidavit on
March 6, 1995, which was clearly beyond the prescriptive period, the cause of action
under the 1st contract was already time-barred.27
The issue that proceeds from the fact of novation is the consequence of the non-
deployment of respondent.
The petitioners argue that under the POEA Contract, actual deployment of the seafarer
is a suspensive condition for the commencement of the employment. 28 We agree with
petitioners on such point. However, even without actual deployment, the perfected
contract gives rise to obligations on the part of petitioners.
A contract is a meeting of minds between two persons whereby one binds himself, with
respect to the other, to give something or to render some service. 29 The contracting
parties may establish such stipulations, clauses, terms and conditions as they may deem
convenient, provided they are not contrary to law, morals, good customs, public order, or
public policy.30
The POEA Standard Employment Contract provides that employment shall commence
"upon the actual departure of the seafarer from the airport or seaport in the port of
hire."31 We adhere to the terms and conditions of the contract so as to credit the valid
prior stipulations of the parties before the controversy started. Else, the obligatory force
of every contract will be useless. Parties are bound not only to the fulfillment of what has
been expressly stipulated but also to all the consequences which, according to their
nature, may be in keeping with good faith, usage and law.32
Thus, even if by the standard contract employment commences only "upon actual
departure of the seafarer", this does not mean that the seafarer has no remedy in case of
non-deployment without any valid reason. Parenthetically, the contention of the
petitioners of the alleged poor performance of respondent while on board the first ship
MV "Stolt Aspiration" cannot be sustained to justify the non-deployment, for no evidence
to prove the same was presented.33
We rule that distinction must be made between the perfection of the employment contract
and the commencement of the employer-employee relationship. The perfection of the
contract, which in this case coincided with the date of execution thereof, occurred when
petitioner and respondent agreed on the object and the cause, as well as the rest of the
terms and conditions therein. The commencement of the employer-employee
relationship, as earlier discussed, would have taken place had petitioner been actually
deployed from the point of hire. Thus, even before the start of any employer-employee
relationship, contemporaneous with the perfection of the employment contract was the
birth of certain rights and obligations, the breach of which may give rise to a cause of
action against the erring party. Thus, if the reverse had happened, that is the seafarer
failed or refused to be deployed as agreed upon, he would be liable for damages. 34
Further, we do not agree with the contention of the petitioners that the penalty is a mere
reprimand.
The POEA Rules and Regulations Governing Overseas Employment 35 dated 31 May
1991 provides for the consequence and penalty against in case of non-deployment of the
seafarer without any valid reason. It reads:
Section 4. Workers Deployment. An agency shall deploy its recruits within the
deployment period as indicated below:
xxx
b. Thirty (30) calendar days from the date of processing by the administration of the
employment contracts of seafarers.
Failure of the agency to deploy a worker within the prescribed period without valid
reasons shall be a cause for suspension or cancellation of license or fine. In
addition, the agency shall return all documents at no cost to the worker.(Emphasis
and underscoring supplied)
The appellate court correctly ruled that the penalty of reprimand 36 provided under Rule
IV, Part VI of the POEA Rules and Regulations Governing the Recruitment and
Employment of Land-based Overseas Workers is not applicable in this case. The breach
of contract happened on February 1992 and the law applicable at that time was the 1991
POEA Rules and Regulations Governing Overseas Employment. The penalty for non-
deployment as discussed is suspension or cancellation of license or fine.
Now, the question to be dealt with is how will the seafarer be compensated by reason of
the unreasonable non-deployment of the petitioners?
The POEA Rules Governing the Recruitment and Employment of Seafarers do not
provide for the award of damages to be given in favor of the employees. The claim
provided by the same law refers to a valid contractual claim for compensation or
benefits arising from employer-employee relationship or for any personal injury, illness or
death at levels provided for within the terms and conditions of employment of seafarers.
However, the absence of the POEA Rules with regard to the payment of damages to the
affected seafarer does not mean that the seafarer is precluded from claiming the same.
The sanctions provided for non-deployment do not end with the suspension or
cancellation of license or fine and the return of all documents at no cost to the worker. As
earlier discussed, they do not forfend a seafarer from instituting an action for damages
against the employer or agency which has failed to deploy him. 37
We thus decree the application of Section 10 of Republic Act No. 8042 (Migrant Workers
Act) which provides for money claims by reason of a contract involving Filipino workers
for overseas deployment.lavvphil The law provides:
Sec. 10. Money Claims. Notwithstanding any provision of law to the contrary, the Labor
Arbiters of the National Labor Relations Commission (NLRC) shall have the original and
exclusive jurisdiction to hear and decide, within ninety (90) calendar days after the filing
of the complaint, the claims arising out of an employer-employee relationship or by virtue
of any law or contract involving Filipino workers for overseas deployment including claims
for actual, moral, exemplary and other forms of damages. x x x (Underscoring supplied)
Following the law, the claim is still cognizable by the labor arbiters of the NLRC under the
second phrase of the provision.
Applying the rules on actual damages, Article 2199 of the New Civil Code provides that
one is entitled to an adequate compensation only for such pecuniary loss suffered by him
as he has duly proved. Respondent is thus liable to pay petitioner actual damages in the
form of the loss of nine (9) months worth of salary as provided in the contract. 38 This is
but proper because of the non-deployment of respondent without just cause.
WHEREFORE, the appeal is DENIED. The 31 January 2007 Decision of the Court of
Appeals in CA-G.R. SP. No. 91632 is hereby AFFIRMED. The Petitioners are hereby
ordered to pay Sulpecio Medequillo, Jr., the award of actual damages equivalent to his
salary for nine (9) months as provided by the Second Employment Contract.
SO ORDERED.
JOSE PORTUGAL PEREZ

Associate Justice
WE CONCUR:
ANTONIO T. CARPIO
Associate Justice
Chairperson
MARIA LOURDES P. A. SERENO BIENVENIDO L. REYES

Associate Justice Associate Justice
ESTELA M. PERLAS-BERNABE*
Associate Justice
ATTESTATION
I attest that the conclusions in the above Decision had been reached in consultation
before the case was assigned to the writer of the opinion of the Courts Division.
ANTONIO T. CARPIO
Associate Justice
Chairperson
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution and the Division Chairpersons
Attestation, I certify that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the opinion of the Courts
Division.
RENATO C. CORONA
Chief Justice
Footnotes
* Designated as additional member per Special Order No. 1174 dated 9 January
2012.
1 Rule 45, Rule on Civil Procedure.
2 Penned by Associate Justice Mariano C. Del Castillo (now a Member of this
Court) with Presiding Justice Ruben T. Reyes (former Member of this Court) and
Associate Justice Arcangelita Romilla Lontok, concurring. Rollo, pp. 38-54.
3 Id. at 53.
4 Id. at 134-139.
5 Id. at 61.
6 Id. at 59-62.
7 Id. at 62.
8 Id.
9 Id.
10 Id. at 64.
11 Id. at 68.
12 Id. at 64-65.
13 Id. at 65.
14 Id. at 66.
15 Id. at 67.
16 Id.
17 Id. at 72.
18 Id. at 20-21.
19 Philippine Savings Bank v. Sps. Maalac, Jr., 496 Phil, 671, 686-687
(2005); Azolla Farms v. Court of Appeals, 484 Phil. 745, 754-755.
20 Rollo, p. 61.
21 Id. at 45-46.
22 G.R. No. 160233, 8 August 2007, 529 SCRA 487.
23 Id. at 494 and 499.
24 Rollo, p. 46.
25 PrinceTransport, Inc. v. Garcia, G.R. No. 167291, 12 January 2011, 639 SCRA
312, 324 citing Philippine Veterans Bank v. National Labor Relations Commission,
G.R. No. 188882, 30 March 2010, 617 SCRA 204.
26 Id.
at 324-325 citing Faeldonia v. Tong Yak Groceries, G.R. No. 182499, 2
October 2009, 602 SCRA 677, 684.
27 Rollo, pp. 47-48.
28 Id. at 48.
29 Article 1305, New Civil Code.
31 Rollo, p. 48.
33 Rollo, p. 50.
34 Santiago
v. CF Sharp Crew Management, Inc., G.R. No. 162419, 10 July 2007,
527 SCRA 165, 176.
35 Section 4, par. (b), Rule II, Book III.
36 Section 1 (C) 4. Failure to deploy a worker within the prescribed period without
valid reason:
1st Offense Reprimand.

37 Santiago v. CF Sharp Crew Management, Inc., Supra note 33 at 176-177.
38 In
Legahi v. National Labor Relations Commission, 376 Phil. 557, 566
(1999), we held: Petitioner's dismissal without a valid cause constitute a breach of
contract. Consequently, he should only be paid the unexpired portion of his
employment contract.
NO. 2
Supreme Court
Manila
EN BANC
ANTONIO M. SERRANO, G.R. No. 167614

Petitioner,
Present:
PUNO, C.J.,
QUISUMBING,
YNARES-SANTIAGO,
CARPIO,
AUSTRIA-MARTINEZ,
- versus - CORONA,
CARPIO MORALES,
TINGA,
CHICO-NAZARIO,
VELASCO, Jr.,
NACHURA,
LEONARDO-DE CASTRO,
BRION, and
GALLANT MARITIME SERVICES, PERALTA, JJ.
INC. and MARLOW NAVIGATION
CO., INC., Promulgated:
Respondents. March 24, 2009
x----------------------------------------------------------x
DECISION
AUSTRIA-MARTINEZ, J.:
For decades, the toil of solitary migrants has helped lift entire families and
communities out of poverty. Their earnings have built houses, provided health care, equipped
schools and planted the seeds of businesses. They have woven together the world by
transmitting ideas and knowledge from country to country. They have provided the dynamic
human link between cultures, societies and economies. Yet, only recently have we begun to
understand not only how much international migration impacts development, but how
smart public policies can magnify this effect.
United Nations Secretary-General Ban Ki-Moon

Global Forum on Migration and Development
Brussels, July 10, 2007[1]
For Antonio Serrano (petitioner), a Filipino seafarer, the last clause in the 5th paragraph of Section 10,
Republic Act (R.A.) No. 8042,[2] to wit:
Sec. 10. Money Claims. - x x x 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 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.
x x x x (Emphasis and underscoring supplied)
does not magnify the contributions of overseas Filipino workers (OFWs) to national development, but
exacerbates the hardships borne by them by unduly limiting their entitlement in case of illegal dismissal to
their lump-sum salary either for the unexpired portion of their employment contract or for three months for
every year of the unexpired term, whichever is less (subject clause). Petitioner claims that the last clause
violates the OFWs' constitutional rights in that it impairs the terms of their contract, deprives them of equal
protection and denies them due process.
By way of Petition for Review under Rule 45 of the Rules of Court, petitioner assails the December
8, 2004 Decision[3] and April 1, 2005 Resolution[4] of the Court of Appeals (CA), which applied the subject
clause, entreating this Court to declare the subject clause unconstitutional.
Petitioner was hired by Gallant Maritime Services, Inc. and Marlow Navigation Co., Ltd.
(respondents) under a Philippine Overseas Employment Administration (POEA)-approved Contract of
Employment with the following terms and conditions:
Duration of contract 12 months
Position Chief Officer
Basic monthly salary US$1,400.00
Hours of work 48.0 hours per week
Overtime US$700.00 per month
Vacation leave with pay 7.00 days per month[5]
On March 19, 1998, the date of his departure, petitioner was constrained to accept a downgraded
employment contract for the position of Second Officer with a monthly salary of US$1,000.00, upon the
assurance and representation of respondents that he would be made Chief Officer by the end of April 1998.[6]
Respondents did not deliver on their promise to make petitioner Chief Officer.[7] Hence, petitioner
refused to stay on as Second Officer and was repatriated to the Philippines on May 26, 1998.[8]
Petitioner's employment contract was for a period of 12 months or from March 19, 1998 up to March
19, 1999, but at the time of his repatriation on May 26, 1998, he had served only two (2) months and seven
(7) days of his contract, leaving an unexpired portion of nine (9) months and twenty-three (23) days.
Petitioner filed with the Labor Arbiter (LA) a Complaint[9] against respondents for constructive
dismissal and for payment of his money claims in the total amount of US$26,442.73, broken down as follows:
May 27/31, 1998 (5 days) incl. Leave pay US$ 413.90

June 01/30, 1998 2,590.00
July 01/31, 1998 2,590.00
August 01/31, 1998 2,590.00
Sept. 01/30, 1998 2,590.00
Oct. 01/31, 1998 2,590.00
Nov. 01/30, 1998 2,590.00
Dec. 01/31, 1998 2,590.00
Jan. 01/31, 1999 2,590.00
Feb. 01/28, 1999 2,590.00
Mar. 1/19, 1999 (19 days) incl. leave pay 1,640.00
-------------------------
-------------------------
-------------------------
-----
25,382.23
Amount adjusted to chief mate's salary
(March 19/31, 1998 to April 1/30, 1998) + 1,060.50[10]
-------------------------
-------------------------
-------------------------
-------------------
TOTAL CLAIM US$ 26,442.73[11]
as well as moral and exemplary damages and attorney's fees.
The LA rendered a Decision dated July 15, 1999, declaring the dismissal of petitioner illegal and
awarding him monetary benefits, to wit:
WHEREFORE, premises considered, judgment is hereby rendered declaring that the

dismissal of the complainant (petitioner) by the respondents in the above-entitled case was
illegal and the respondents are hereby ordered to pay the complainant [petitioner], jointly and
severally, in Philippine Currency, based on the rate of exchange prevailing at the time of
payment, the amount of EIGHT THOUSAND SEVEN HUNDRED SEVENTY U.S.
DOLLARS (US $8,770.00), representing the complainants salary for three (3) months of
the unexpired portion of the aforesaid contract of employment.
The respondents are likewise ordered to pay the complainant [petitioner], jointly and
severally, in Philippine Currency, based on the rate of exchange prevailing at the time of
payment, the amount of FORTY FIVE U.S. DOLLARS (US$ 45.00),[12] representing the
complainants claim for a salary differential. In addition, the respondents are hereby ordered
to pay the complainant, jointly and severally, in Philippine Currency, at the exchange rate
prevailing at the time of payment, the complainants (petitioner's) claim for attorneys fees
equivalent to ten percent (10%) of the total amount awarded to the aforesaid employee under
this Decision.
The claims of the complainant for moral and exemplary damages are hereby DISMISSED
for lack of merit.
All other claims are hereby DISMISSED.
SO ORDERED.[13] (Emphasis supplied)
In awarding petitioner a lump-sum salary of US$8,770.00, the LA based his computation on the
salary period of three months only -- rather than the entire unexpired portion of nine months and 23 days of
petitioner's employment contract - applying the subject clause. However, the LA applied the salary rate of
US$2,590.00, consisting of petitioner's [b]asic salary, US$1,400.00/month + US$700.00/month, fixed
overtime pay, + US$490.00/month, vacation leave pay = US$2,590.00/compensation per month.[14]
Respondents appealed[15] to the National Labor Relations Commission (NLRC) to question the
finding of the LA that petitioner was illegally dismissed.
Petitioner also appealed[16] to the NLRC on the sole issue that the LA erred in not applying the ruling
of the Court in Triple Integrated Services, Inc. v. National Labor Relations Commission[17] that in case of
illegal dismissal, OFWs are entitled to their salaries for the unexpired portion of their contracts.[18]
In a Decision dated June 15, 2000, the NLRC modified the LA Decision, to wit:
WHEREFORE, the Decision dated 15 July 1999 is MODIFIED. Respondents are

hereby ordered to pay complainant, jointly and severally, in Philippine currency, at the
prevailing rate of exchange at the time of payment the following:
1. Three (3) months salary

$1,400 x 3 US$4,200.00
2. Salary differential 45.00
US$4,245.00
3. 10% Attorneys fees 424.50
TOTAL US$4,669.50
The other findings are affirmed.

SO ORDERED.[19]
The NLRC corrected the LA's computation of the lump-sum salary awarded to petitioner by reducing
the applicable salary rate from US$2,590.00 to US$1,400.00 because R.A. No. 8042 does not provide for the
award of overtime pay, which should be proven to have been actually performed, and for vacation leave
pay.[20]
Petitioner filed a Motion for Partial Reconsideration, but this time he questioned the constitutionality
of the subject clause.[21] The NLRC denied the motion.[22]
Petitioner filed a Petition for Certiorari[23] with the CA, reiterating the constitutional challenge against
the subject clause.[24] After initially dismissing the petition on a technicality, the CA eventually gave due
course to it, as directed by this Court in its Resolution dated August 7, 2003 which granted the petition
for certiorari, docketed as G.R. No. 151833, filed by petitioner.
In a Decision dated December 8, 2004, the CA affirmed the NLRC ruling on the reduction of the
applicable salary rate; however, the CA skirted the constitutional issue raised by petitioner.[25]
His Motion for Reconsideration[26] having been denied by the CA,[27] petitioner brings his cause to
this Court on the following grounds:
I
The Court of Appeals and the labor tribunals have decided the case in a way not in
accord with applicable decision of the Supreme Court involving similar issue of granting
unto the migrant worker back wages equal to the unexpired portion of his contract of
employment instead of limiting it to three (3) months
II
In the alternative that the Court of Appeals and the Labor Tribunals were merely
applying their interpretation of Section 10 of Republic Act No. 8042, it is submitted that the
Court of Appeals gravely erred in law when it failed to discharge its judicial duty to decide
questions of substance not theretofore determined by the Honorable Supreme Court,
particularly, the constitutional issues raised by the petitioner on the constitutionality of said
law, which unreasonably, unfairly and arbitrarily limits payment of the award for back wages
of overseas workers to three (3) months.
III
Even without considering the constitutional limitations [of] Sec. 10 of Republic Act
No. 8042, the Court of Appeals gravely erred in law in excluding from petitioners award the
overtime pay and vacation pay provided in his contract since under the contract they form
part of his salary.[28]
On February 26, 2008, petitioner wrote the Court to withdraw his petition as he is already old and
sickly, and he intends to make use of the monetary award for his medical treatment and
medication.[29] Required to comment, counsel for petitioner filed a motion, urging the court to allow partial
execution of the undisputed monetary award and, at the same time, praying that the constitutional question be
resolved.[30]
Considering that the parties have filed their respective memoranda, the Court now takes up the full
merit of the petition mindful of the extreme importance of the constitutional question raised therein.
On the first and second issues
The unanimous finding of the LA, NLRC and CA that the dismissal of petitioner was illegal is not
disputed. Likewise not disputed is the salary differential of US$45.00 awarded to petitioner in all three
fora. What remains disputed is only the computation of the lump-sum salary to be awarded to petitioner by
reason of his illegal dismissal.
Applying the subject clause, the NLRC and the CA computed the lump-sum salary of petitioner at
the monthly rate of US$1,400.00 covering the period of three months out of the unexpired portion of nine
months and 23 days of his employment contract or a total of US$4,200.00.
Impugning the constitutionality of the subject clause, petitioner contends that, in addition to the
US$4,200.00 awarded by the NLRC and the CA, he is entitled to US$21,182.23 more or a total of
US$25,382.23, equivalent to his salaries for the entire nine months and 23 days left of his employment
contract, computed at the monthly rate of US$2,590.00.[31]
The Arguments of Petitioner
Petitioner contends that the subject clause is unconstitutional because it unduly impairs the freedom
of OFWs to negotiate for and stipulate in their overseas employment contracts a determinate employment
period and a fixed salary package.[32] It also impinges on the equal protection clause, for it treats OFWs
differently from local Filipino workers (local workers) by putting a cap on the amount of lump-sum salary to
which OFWs are entitled in case of illegal dismissal, while setting no limit to the same monetary award for
local workers when their dismissal is declared illegal; that the disparate treatment is not reasonable as there is
no substantial distinction between the two groups;[33] and that it defeats Section 18,[34] Article II of the
Constitution which guarantees the protection of the rights and welfare of all Filipino workers, whether
deployed locally or overseas.[35]
Moreover, petitioner argues that the decisions of the CA and the labor tribunals are not in line with
existing jurisprudence on the issue of money claims of illegally dismissed OFWs.Though there are conflicting
rulings on this, petitioner urges the Court to sort them out for the guidance of affected OFWs.[36]
Petitioner further underscores that the insertion of the subject clause into R.A. No. 8042 serves no
other purpose but to benefit local placement agencies. He marks the statement made by the Solicitor General
in his Memorandum, viz.:
Often, placement agencies, their liability being solidary, shoulder the payment of
money claims in the event that jurisdiction over the foreign employer is not acquired by the
court or if the foreign employer reneges on its obligation. Hence, placement agencies that are
in good faith and which fulfill their obligations are unnecessarily penalized for the acts of the
foreign employer. To protect them and to promote their continued helpful contribution in
deploying Filipino migrant workers, liability for money claims was reduced under Section
10 of R.A. No. 8042. [37](Emphasis supplied)
Petitioner argues that in mitigating the solidary liability of placement agencies, the subject clause
sacrifices the well-being of OFWs. Not only that, the provision makes foreign employers better off than local
employers because in cases involving the illegal dismissal of employees, foreign employers are liable for
salaries covering a maximum of only three months of the unexpired employment contract while local
employers are liable for the full lump-sum salaries of their employees. As petitioner puts it:
In terms of practical application, the local employers are not limited to the amount
of backwages they have to give their employees they have illegally dismissed, following
well-entrenched and unequivocal jurisprudence on the matter. On the other hand, foreign
employers will only be limited to giving the illegally dismissed migrant workers the
maximum of three (3) months unpaid salaries notwithstanding the unexpired term of the
contract that can be more than three (3) months.[38]
Lastly, petitioner claims that the subject clause violates the due process clause, for it deprives him of
the salaries and other emoluments he is entitled to under his fixed-period employment contract.[39]
The Arguments of Respondents
In their Comment and Memorandum, respondents contend that the constitutional issue should not be
entertained, for this was belatedly interposed by petitioner in his appeal before the CA, and not at the earliest
opportunity, which was when he filed an appeal before the NLRC.[40]
The Arguments of the Solicitor General
The Solicitor General (OSG)[41] points out that as R.A. No. 8042 took effect on July 15, 1995, its
provisions could not have impaired petitioner's 1998 employment contract. Rather, R.A. No. 8042 having
preceded petitioner's contract, the provisions thereof are deemed part of the minimum terms of petitioner's
employment, especially on the matter of money claims, as this was not stipulated upon by the parties.[42]
Moreover, the OSG emphasizes that OFWs and local workers differ in terms of the nature of their
employment, such that their rights to monetary benefits must necessarily be treated differently. The OSG
enumerates the essential elements that distinguish OFWs from local workers: first, while local workers
perform their jobs within Philippine territory, OFWs perform their jobs for foreign employers, over whom it
is difficult for our courts to acquire jurisdiction, or against whom it is almost impossible to enforce judgment;
and second, as held in Coyoca v. National Labor Relations Commission[43] and Millares v. National Labor
Relations Commission,[44] OFWs are contractual employees who can never acquire regular employment
status, unlike local workers who are or can become regular employees. Hence, the OSG posits that there are
rights and privileges exclusive to local workers, but not available to OFWs; that these peculiarities make for
a reasonable and valid basis for the differentiated treatment under the subject clause of the money claims of
OFWs who are illegally dismissed. Thus, the provision does not violate the equal protection clause nor
Section 18, Article II of the Constitution.[45]
Lastly, the OSG defends the rationale behind the subject clause as a police power measure adopted
to mitigate the solidary liability of placement agencies for this redounds to the benefit of the migrant workers
whose welfare the government seeks to promote. The survival of legitimate placement agencies helps [assure]
the government that migrant workers are properly deployed and are employed under decent and humane
conditions.[46]
The Court's Ruling
The Court sustains petitioner on the first and second issues.
When the Court is called upon to exercise its power of judicial review of the acts of its co-equals,
such as the Congress, it does so only when these conditions obtain: (1) that there is an actual case or
controversy involving a conflict of rights susceptible of judicial determination;[47](2) that the constitutional
question is raised by a proper party[48] and at the earliest opportunity;[49] and (3) that the constitutional question
is the very lis mota of the case,[50] otherwise the Court will dismiss the case or decide the same on some other
ground.[51]
Without a doubt, there exists in this case an actual controversy directly involving petitioner who is
personally aggrieved that the labor tribunals and the CA computed his monetary award based on the salary
period of three months only as provided under the subject clause.
The constitutional challenge is also timely. It should be borne in mind that the requirement that a
constitutional issue be raised at the earliest opportunity entails the interposition of the issue in the pleadings
before a competent court, such that, if the issue is not raised in the pleadings before that competent court, it
cannot be considered at the trial and, if not considered in the trial, it cannot be considered on appeal.[52] Records
disclose that the issue on the constitutionality of the subject clause was first raised, not in petitioner's appeal
with the NLRC, but in his Motion for Partial Reconsideration with said labor tribunal,[53] and reiterated in his
Petition for Certioraribefore the CA.[54] Nonetheless, the issue is deemed seasonably raised because it is not
the NLRC but the CA which has the competence to resolve the constitutional issue. The NLRC is a labor
tribunal that merely performs a quasi-judicial function its function in the present case is limited to
determining questions of fact to which the legislative policy of R.A. No. 8042 is to be applied and to resolving
such questions in accordance with the standards laid down by the law itself;[55] thus, its foremost function is
to administer and enforce R.A. No. 8042, and not to inquire into the validity of its provisions. The CA, on the
other hand, is vested with the power of judicial review or the power to declare unconstitutional a law or a
provision thereof, such as the subject clause.[56] Petitioner's interposition of the constitutional issue before the
CA was undoubtedly seasonable. The CA was therefore remiss in failing to take up the issue in its decision.
The third condition that the constitutional issue be critical to the resolution of the case likewise obtains
because the monetary claim of petitioner to his lump-sum salary for the entire unexpired portion of his 12-
month employment contract, and not just for a period of three months, strikes at the very core of the subject
clause.
Thus, the stage is all set for the determination of the constitutionality of the subject clause.
Does the subject clause violate Section 10,

Article III of the Constitution on non-impairment
of contracts?
The answer is in the negative.
Petitioner's claim that the subject clause unduly interferes with the stipulations in his contract on the
term of his employment and the fixed salary package he will receive[57] is not tenable.
Section 10, Article III of the Constitution provides:
No law impairing the obligation of contracts shall be passed.
The prohibition is aligned with the general principle that laws newly enacted have only a prospective
operation,[58] and cannot affect acts or contracts already perfected;[59] however, as to laws already in existence,
their provisions are read into contracts and deemed a part thereof.[60] Thus, the non-impairment clause under
Section 10, Article II is limited in application to laws about to be enacted that would in any way derogate from
existing acts or contracts by enlarging, abridging or in any manner changing the intention of the parties thereto.
As aptly observed by the OSG, the enactment of R.A. No. 8042 in 1995 preceded the execution of
the employment contract between petitioner and respondents in 1998. Hence, it cannot be argued that R.A.
No. 8042, particularly the subject clause, impaired the employment contract of the parties. Rather, when the
parties executed their 1998 employment contract, they were deemed to have incorporated into it all the
provisions of R.A. No. 8042.
But even if the Court were to disregard the timeline, the subject clause may not be declared
unconstitutional on the ground that it impinges on the impairment clause, for the law was enacted in the
exercise of the police power of the State to regulate a business, profession or calling, particularly the
recruitment and deployment of OFWs, with the noble end in view of ensuring respect for the dignity and well-
being of OFWs wherever they may be employed.[61]Police power legislations adopted by the State to promote
the health, morals, peace, education, good order, safety, and general welfare of the people are generally
applicable not only to future contracts but even to those already in existence, for all private contracts must
yield to the superior and legitimate measures taken by the State to promote public welfare.[62]
Does the subject clause violate Section 1,

Article III of the Constitution, and Section 18,
Article II and Section 3, Article XIII on labor
as a protected sector?
The answer is in the affirmative.

Section 1, Article III of the Constitution guarantees:
No person shall be deprived of life, liberty, or property without due process of law nor shall
any person be denied the equal protection of the law.
Section 18,[63] Article II and Section 3,[64] Article XIII accord all members of the labor sector, without
distinction as to place of deployment, full protection of their rights and welfare.
To Filipino workers, the rights guaranteed under the foregoing constitutional provisions translate to
economic security and parity: all monetary benefits should be equally enjoyed by workers of similar category,
while all monetary obligations should be borne by them in equal degree; none should be denied the protection
of the laws which is enjoyed by, or spared the burden imposed on, others in like circumstances.[65]
Such rights are not absolute but subject to the inherent power of Congress to incorporate, when it sees
fit, a system of classification into its legislation; however, to be valid, the classification must comply with
these requirements: 1) it is based on substantial distinctions; 2) it is germane to the purposes of the law; 3) it
is not limited to existing conditions only; and 4) it applies equally to all members of the class.[66]
There are three levels of scrutiny at which the Court reviews the constitutionality of a classification
embodied in a law: a) the deferential or rational basis scrutiny in which the challenged classification needs
only be shown to be rationally related to serving a legitimate state interest;[67] b) the middle-tier or intermediate
scrutiny in which the government must show that the challenged classification serves an important state
interest and that the classification is at least substantially related to serving that interest;[68] and c) strict
judicial scrutiny[69] inwhich a legislative classification which impermissibly interferes with the exercise of a
fundamental right[70] or operates to the peculiar disadvantage of a suspect class[71] is
presumedunconstitutional, and the burden is upon the government to prove that the classification is necessary
to achieve a compelling state interest and that it is the least restrictive means to protect such interest.[72]
Under American jurisprudence, strict judicial scrutiny is triggered by suspect classifications[73] based
on race[74] or gender[75] but not when the classification is drawn along income categories.[76]
It is different in the Philippine setting. In Central Bank (now Bangko Sentral ng Pilipinas) Employee
Association, Inc. v. Bangko Sentral ng Pilipinas,[77] the constitutionality of a provision in the charter of
the Bangko Sentral ng Pilipinas (BSP), a government financial institution (GFI), was challenged for
maintaining its rank-and-file employees under the Salary Standardization Law (SSL), even when the rank-
and-file employees of other GFIs had been exempted from the SSL by their respective charters. Finding that
the disputed provision contained a suspect classification based on salary grade, the Court deliberately
employed the standard of strict judicial scrutiny in its review of the constitutionality of said provision. More
significantly, it was in this case that the Court revealed the broad outlines of its judicial philosophy, to wit:
Congress retains its wide discretion in providing for a valid classification, and its
policies should be accorded recognition and respect by the courts of justice except when they
run afoul of the Constitution. The deference stops where the classification violates a
fundamental right, orprejudices persons accorded special protection by the
Constitution. When these violations arise, this Court must discharge its primary role as the
vanguard of constitutional guaranties, and require a stricter and more exacting adherence to
constitutional limitations. Rational basis should not suffice.
Admittedly, the view that prejudice to persons accorded special protection by the
Constitution requires a stricter judicial scrutiny finds no support in American or English
jurisprudence. Nevertheless, these foreign decisions and authorities are not per
se controlling in this jurisdiction. At best, they are persuasive and have been used to support
many of our decisions. We should not place undue and fawning reliance upon them and
regard them as indispensable mental crutches without which we cannot come to our own
decisions through the employment of our own endowments. We live in a different ambience
and must decide our own problems in the light of our own interests and needs, and of our
qualities and even idiosyncrasies as a people, and always with our own concept of law and
justice. Our laws must be construed in accordance with the intention of our own lawmakers
and such intent may be deduced from the language of each law and the context of other local
legislation related thereto. More importantly, they must be construed to serve our own public
interest which is the be-all and the end-all of all our laws. And it need not be stressed that
our public interest is distinct and different from others.
xxxx
Further, the quest for a better and more equal world calls for the use of equal
protection as a tool of effective judicial intervention.
Equality is one ideal which cries out for bold attention and action in the
Constitution. The Preamble proclaims equality as an ideal precisely in protest against
crushing inequities in Philippine society. The command to promote social justice in Article
II, Section 10, in all phases of national development, further explicitated in Article XIII, are
clear commands to the State to take affirmative action in the direction of greater equality. x
x x [T]here is thus in the Philippine Constitution no lack of doctrinal support for a more
vigorous state effort towards achieving a reasonable measure of equality.
Our present Constitution has gone further in guaranteeing vital social and
economic rights to marginalized groups of society, including labor. Under the policy of
social justice, the law bends over backward to accommodate the interests of the working
class on the humane justification that those with less privilege in life should have more in
law. And the obligation to afford protection to labor is incumbent not only on the legislative
and executive branches but also on the judiciary to translate this pledge into a living reality.
Social justice calls for the humanization of laws and the equalization of social and
economic forces by the State so that justice in its rational and objectively secular
conception may at least be approximated.
xxxx
Under most circumstances, the Court will exercise judicial restraint in deciding
questions of constitutionality, recognizing the broad discretion given to Congress in
exercising its legislative power. Judicial scrutiny would be based on the rational basis test,
and the legislative discretion would be given deferential treatment.
But if the challenge to the statute is premised on the denial of a fundamental right,
or the perpetuation of prejudice against persons favored by the Constitution with special
protection, judicial scrutiny ought to be more strict. A weak and watered down view would
call for the abdication of this Courts solemn duty to strike down any law repugnant to the
Constitution and the rights it enshrines. This is true whether the actor committing the
unconstitutional act is a private person or the government itself or one of its instrumentalities.
Oppressive acts will be struck down regardless of the character or nature of the actor.
xxxx
In the case at bar, the challenged proviso operates on the basis of the salary grade or
officer-employee status. It is akin to a distinction based on economic class and status, with
the higher grades as recipients of a benefit specifically withheld from the lower
grades. Officers of the BSP now receive higher compensation packages that are competitive
with the industry, while the poorer, low-salaried employees are limited to the rates prescribed
by the SSL. The implications are quite disturbing: BSP rank-and-file employees are paid the
strictly regimented rates of the SSL while employees higher in rank - possessing higher and
better education and opportunities for career advancement - are given higher compensation
packages to entice them to stay. Considering that majority, if not all, the rank-and-file
employees consist of people whose status and rank in life are less and limited, especially
in terms of job marketability, it is they - and not the officers - who have the real economic
and financial need for the adjustment . This is in accord with the policy of the Constitution
"to free the people from poverty, provide adequate social services, extend to them a decent
standard of living, and improve the quality of life for all. Any act of Congress that runs
counter to this constitutional desideratum deserves strict scrutiny by this Court before it
can pass muster. (Emphasis supplied)
Imbued with the same sense of obligation to afford protection to labor, the Court in the present case
also employs the standard of strict judicial scrutiny, for it perceives in the subject clause a suspect classification
prejudicial to OFWs.
Upon cursory reading, the subject clause appears facially neutral, for it applies to all OFWs. However,
a closer examination reveals that the subject clause has a discriminatory intent against, and an invidious impact
on, OFWs at two levels:
First, OFWs with employment contracts of less than one year vis--vis OFWs with
employment contracts of one year or more;
Second, among OFWs with employment contracts of more than one year; and
Third, OFWs vis--vis local workers with fixed-period employment;
OFWs with employment contracts of less than one

year vis--vis OFWs with employment contracts of one
year or more
As pointed out by petitioner,[78] it was in Marsaman Manning Agency, Inc. v. National Labor
Relations Commission[79] (Second Division, 1999) that the Court laid down the following rules on the
application of the periods prescribed under Section 10(5) of R.A. No. 804, to wit:
A plain reading of Sec. 10 clearly reveals that the choice of which amount to
award an illegally dismissed overseas contract worker, i.e., whether his salaries for the
unexpired portion of his employment contract or three (3) months salary for every year of
the unexpired term, whichever is less, comes into play only when the employment contract
concerned has a term of at least one (1) year or more. This is evident from the words for
every year of the unexpired term which follows the words salaries x x x for three
months. To follow petitioners thinking that private respondent is entitled to three (3) months
salary only simply because it is the lesser amount is to completely disregard and overlook
some words used in the statute while giving effect to some. This is contrary to the well-
established rule in legal hermeneutics that in interpreting a statute, care should be taken that
every part or word thereof be given effect since the law-making body is presumed to know
the meaning of the words employed in the statue and to have used them advisedly. Ut res
magis valeat quam pereat.[80] (Emphasis supplied)
In Marsaman, the OFW involved was illegally dismissed two months into his 10-month contract, but was
awarded his salaries for the remaining 8 months and 6 days of his contract.
Prior to Marsaman, however, there were two cases in which the Court made conflicting rulings on
Section 10(5). One was Asian Center for Career and Employment System and Services v. National Labor
Relations Commission (Second Division, October 1998),[81] whichinvolved an OFW who was awarded
a two-year employment contract, but was dismissed after working for one year and two months. The LA
declared his dismissal illegal and awarded him SR13,600.00 as lump-sum salary covering eight months,
the unexpired portion of his contract.On appeal, the Court reduced the award to SR3,600.00 equivalent to his
three months salary, this being the lesser value, to wit:
Under Section 10 of R.A. No. 8042, a worker dismissed from overseas employment
without just, valid or authorized cause is entitled to his salary for the unexpired portion of his
employment contract or for three (3) months for every year of the unexpired term, whichever
is less.
In the case at bar, the unexpired portion of private respondents employment contract
is eight (8) months. Private respondent should therefore be paid his basic salary
corresponding to three (3) months or a total of SR3,600.[82]
Another was Triple-Eight Integrated Services, Inc. v. National Labor Relations Commission (Third
Division, December 1998),[83] which involved an OFW (therein respondent Erlinda Osdana) who was
originally granted a 12-month contract, which was deemed renewed for another 12 months. After serving for
one year and seven-and-a-half months, respondent Osdana was illegally dismissed, and the Court awarded
her salaries for the entire unexpired portion of four and one-half months of her contract.
The Marsaman interpretation of Section 10(5) has since been adopted in the following cases:
Period Applied in
Case Title Contract Period of Unexpired the Computation
Period Service Period of the Monetary
Award
Skippers v. 6 months 2 months 4 months 4 months
Maguad[84]
Bahia Shipping 9 months 8 months 4 months 4 months
v. Reynaldo
Chua [85]
Centennial 9 months 4 months 5 months 5 months
Transmarine v.
dela Cruz l[86]
Talidano v. 12 months 3 months 9 months 3 months
Falcon[87]
Univan v. 12 months 3 months 9 months 3 months
CA [88]
Oriental v. 12 months more than 2 10 months 3 months
CA [89] months
PCL v. 12 months more than 2 more or less 9 3 months
NLRC[90] months months
Olarte v. 12 months 21 days 11 months and 9 3 months
Nayona[91] days
JSS v. 12 months 16 days 11 months and 3 months
Ferrer[92] 24 days
Pentagon v. 12 months 9 months 2 months and 23 2 months and 23
Adelantar[93] and 7 days days days
Phil. Employ 12 months 10 months 2 months Unexpired portion
v. Paramio,
et al.[94]
Flourish 2 years 26 days 23 months and 4 6 months or 3
Maritime v. days months for each
Almanzor [95] year of contract
Athenna 1 year, 10 1 month 1 year, 9 months 6 months or 3
Manpower v. months and and 28 days months for each
Villanos [96] 28 days year of contract
As the foregoing matrix readily shows, the subject clause classifies OFWs into two categories. The
first category includes OFWs with fixed-period employment contracts of less than one year; in case of illegal
dismissal, they are entitled to their salaries for the entire unexpired portion of their contract. The second
category consists of OFWs with fixed-period employment contracts of one year or more; in case of illegal
dismissal, they are entitled to monetary award equivalent to only 3 months of the unexpired portion of their
contracts.
The disparity in the treatment of these two groups cannot be discounted. In Skippers, the respondent
OFW worked for only 2 months out of his 6-month contract, but was awarded his salaries for the remaining
4 months. In contrast, the respondent OFWs in Oriental and PCL who had also worked for about 2 months
out of their 12-month contracts were awarded their salaries for only 3 months of the unexpired portion of their
contracts. Even the OFWs involved in Talidano and Univan who had worked for a longer period of 3 months
out of their 12-month contracts before being illegally dismissed were awarded their salaries for only 3 months.
To illustrate the disparity even more vividly, the Court assumes a hypothetical OFW-A with an
employment contract of 10 months at a monthly salary rate of US$1,000.00 and a hypothetical OFW-B with
an employment contract of 15 months with the same monthly salary rate of US$1,000.00. Both commenced
work on the same day and under the same employer, and were illegally dismissed after one month of
work. Under the subject clause, OFW-A will be entitled to US$9,000.00, equivalent to his salaries for the
remaining 9 months of his contract, whereas OFW-B will be entitled to only US$3,000.00, equivalent to his
salaries for 3 months of the unexpired portion of his contract, instead of US$14,000.00 for the unexpired
portion of 14 months of his contract, as the US$3,000.00 is the lesser amount.
The disparity becomes more aggravating when the Court takes into account jurisprudence that, prior
to the effectivity of R.A. No. 8042 on July 14, 1995,[97] illegally dismissed OFWs, no matter how long the
period of their employment contracts, were entitled to their salaries for the entire unexpired portions of their
contracts. The matrix below speaks for itself:
Case Title Contract Period of Unexpired Period Applied in the
Period Service Period Computation of the
Monetary Award
ATCI v. CA, 2 years 2 months 22 months 22 months
et al.[98]
Phil. Integrated 2 years 7 days 23 months and 23 months and 23
v. NLRC[99] 23 days days
JGB v. NLC[100] 2 years 9 months 15 months 15 months
Agoy v. 2 years 2 months 22 months 22 months
NLRC[101]
EDI v. NLRC, 2 years 5 months 19 months 19 months
et al.[102]
Barros v. 12 months 4 months 8 months 8 months
NLRC, et al.[103]
Philippine 12 months 6 months 5 months and 5 months and 18 days
Transmarine v. and 22 days 18 days
Carilla[104]
It is plain that prior to R.A. No. 8042, all OFWs, regardless of contract periods or the unexpired
portions thereof, were treated alike in terms of the computation of their monetary benefits in case of illegal
dismissal. Their claims were subjected to a uniform rule of computation: their basic salaries multiplied by the
entire unexpired portion of their employment contracts.
The enactment of the subject clause in R.A. No. 8042 introduced a differentiated rule of computation
of the money claims of illegally dismissed OFWs based on their employment periods, in the process singling
out one category whose contracts have an unexpired portion of one year or more and subjecting them to the
peculiar disadvantage of having their monetary awards limited to their salaries for 3 months or for the
unexpired portion thereof, whichever is less, but all the while sparing the other category from such prejudice,
simply because the latter's unexpired contracts fall short of one year.
Among OFWs With Employment

Contracts of More Than One Year
Upon closer examination of the terminology employed in the subject clause, the Court now has
misgivings on the accuracy of the Marsaman interpretation.
The Court notes that the subject clause or for three (3) months for every year of the unexpired
term, whichever is less contains the qualifying phrases every year and unexpired term.By its ordinary
meaning, the word term means a limited or definite extent of time.[105]Corollarily, that every year is but part
of an unexpired term is significant in many ways: first, theunexpired term must be at least one year, for if it
were any shorter, there would be no occasionfor such unexpired term to be measured by every year;
and second, the original term must be more than one year, for otherwise, whatever would be the unexpired
term thereof will not reach even a year. Consequently, the more decisive factor in the determination of when
the subject clause for three (3) months for every year of the unexpired term, whichever is less shall apply is
not the length of the original contract period as held in Marsaman,[106] but the length of the unexpired portion
of the contract period -- the subject clause applies in cases when the unexpired portion of the contract period
is at least one year, which arithmetically requires that the original contract period be more than one year.
Viewed in that light, 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 subject clause,
and their monetary benefits limited to their salaries for three months only.
To concretely illustrate the application of the foregoing interpretation of the subject clause, the Court
assumes hypothetical OFW-C and OFW-D, who each have a 24-month contract at a salary rate of
US$1,000.00 per month. OFW-C is illegally dismissed on the 12th month, and OFW-D, on the
13th month. Considering that there is at least 12 months remaining in the contract period of OFW-C, the
subject clause applies to the computation of the latter's monetary benefits. Thus, OFW-C will be entitled, not
to US$12,000,00 or the latter's total salaries for the 12 months unexpired portion of the contract, but to the
lesser amount of US$3,000.00 or the latter's salaries for 3 months out of the 12-month unexpired term of the
contract. On the other hand, OFW-D is spared from the effects of the subject clause, for there are only 11
months left in the latter's contract period. Thus, OFW-D will be entitled to US$11,000.00, which is equivalent
to his/her total salaries for the entire 11-month unexpired portion.
OFWs vis--vis Local Workers

With Fixed-Period Employment
As discussed earlier, prior to R.A. No. 8042, a uniform system of computation of the monetary
awards of illegally dismissed OFWs was in place. This uniform system was applicable even to local workers
with fixed-term employment.[107]
The earliest rule prescribing a uniform system of computation was actually Article 299 of the Code
of Commerce (1888),[108] to wit:
Article 299. If the contracts between the merchants and their shop clerks and
employees should have been made of a fixed period, none of the contracting parties,
without the consent of the other, may withdraw from the fulfillment of said contract until
the termination of the period agreed upon.
Persons violating this clause shall be subject to indemnify the loss and damage
suffered, with the exception of the provisions contained in the following articles.
In Reyes v. The Compaia Maritima,[109] the Court applied the foregoing provision to determine the
liability of a shipping company for the illegal discharge of its managers prior to the expiration of their fixed-
term employment. The Court therein held the shipping company liable for the salaries of its managers for
the remainder of their fixed-term employment.
There is a more specific rule as far as seafarers are concerned: Article 605 of the Code of Commerce
which provides:
Article 605. If the contracts of the captain and members of the crew with the agent
should be for a definite period or voyage, they cannot be discharged until the fulfillment of
their contracts, except for reasons of insubordination in serious matters, robbery, theft,
habitual drunkenness, and damage caused to the vessel or to its cargo by malice or manifest
or proven negligence.
Article 605 was applied to Madrigal Shipping Company, Inc. v. Ogilvie,[110] in

which the Court held the shipping company liable for the salaries and subsistence allowance of its illegally
dismissed employees for the entire unexpired portion of their employment contracts.
While Article 605 has remained good law up to the present,[111] Article 299 of the Code of Commerce
was replaced by Art. 1586 of the Civil Code of 1889, to wit:
Article 1586. Field hands, mechanics, artisans, and other laborers hired for a
certain time and for a certain work cannot leave or be dismissed without sufficient cause,
before the fulfillment of the contract. (Emphasis supplied.)
Citing Manresa, the Court in Lemoine v. Alkan[112] read the disjunctive "or" in Article 1586 as a conjunctive
"and" so as to apply the provision to local workers who are employed for a time certain although for no
particular skill. This interpretation of Article 1586 was reiterated in Garcia Palomar v. Hotel de France
Company.[113] And in both Lemoine and Palomar, the Court adopted the general principle that in actions for
wrongful discharge founded on Article 1586, local workers are entitled to recover damages to the extent of
the amount stipulated to be paid to them by the terms of their contract. On the computation of the amount of
such damages, the Court in Aldaz v. Gay[114] held:
The doctrine is well-established in American jurisprudence, and nothing has been
brought to our attention to the contrary under Spanish jurisprudence, that when an employee
is wrongfully discharged it is his duty to seek other employment of the same kind in the same
community, for the purpose of reducing the damages resulting from such wrongful
discharge. However, while this is the general rule, the burden of showing that he failed to
make an effort to secure other employment of a like nature, and that other employment of a
like nature was obtainable, is upon the defendant. When an employee is wrongfully
discharged under a contract of employment his prima facie damage is the amount which
he would be entitled to had he continued in such employment until the termination of the
period. (Howard vs. Daly, 61 N. Y., 362; Allen vs. Whitlark, 99 Mich., 492; Farrell vs.
School District No. 2, 98 Mich., 43.)[115] (Emphasis supplied)
On August 30, 1950, the New Civil Code took effect with new provisions on fixed-term
employment: Section 2 (Obligations with a Period), Chapter 3, Title I, and Sections 2 (Contract of Labor) and
3 (Contract for a Piece of Work), Chapter 3, Title VIII, Book IV.[116] Much like Article 1586 of the Civil Code
of 1889, the new provisions of the Civil Code do not expressly provide for the remedies available to a fixed-
term worker who is illegally discharged. However, it is noted that in Mackay Radio & Telegraph Co., Inc. v.
Rich,[117] the Court carried over the principles on the payment of damages underlying Article 1586 of the Civil
Code of 1889 and applied the same to a case involving the illegal discharge of a local worker whose fixed-
period employment contract was entered into in 1952, when the new Civil Code was already in effect.[118]
More significantly, the same principles were applied to cases involving overseas Filipino workers
whose fixed-term employment contracts were illegally terminated, such as in First Asian Trans & Shipping
Agency, Inc. v. Ople,[119] involving seafarers who were illegally discharged. In Teknika Skills and Trade
Services, Inc. v. National Labor Relations Commission,[120] an OFW who was illegally dismissed prior to the
expiration of her fixed-period employment contract as a baby sitter, was awarded salaries corresponding to
the unexpired portion of her contract. The Court arrived at the same ruling in Anderson v. National Labor
Relations Commission,[121] which involved a foreman hired in 1988 in Saudi Arabia for a fixed term of two
years, but who was illegally dismissed after only nine months on the job -- the Court awarded him salaries
corresponding to 15 months, the unexpired portion of his contract. In Asia World Recruitment, Inc. v. National
Labor Relations Commission,[122] a Filipino working as a security officer in 1989 in Angola was awarded his
salaries for the remaining period of his 12-month contract after he was wrongfully discharged. Finally,
in Vinta Maritime Co., Inc. v. National Labor Relations Commission,[123] an OFW whose 12-month contract
was illegally cut short in the second month was declared entitled to his salaries for the remaining 10 months
of his contract.
In sum, prior to R.A. No. 8042, OFWs and local workers with fixed-term employment who were
illegally discharged were treated alike in terms of the computation of their money claims: they were uniformly
entitled to their salaries for the entire unexpired portions of their contracts. But with the enactment of R.A.
No. 8042, specifically the adoption of the subject clause, illegally dismissed OFWs with an unexpired portion
of one year or more in their employment contract have since been differently treated in that their money claims
are subject to a 3-month cap, whereas no such limitation is imposed on local workers with fixed-term
employment.
The Court concludes that the subject clause contains a suspect classification in that, in the
computation of the monetary benefits of fixed-term employees who are illegally discharged, it imposes a 3-
month cap on the claim of OFWs with an unexpired portion of one year or more in their contracts, but
none on the claims of other OFWs or local workers with fixed-term employment. The subject clause
singles out one classification of OFWs and burdens it with a peculiar disadvantage.
There being a suspect classification involving a vulnerable sector protected by the Constitution, the
Court now subjects the classification to a strict judicial scrutiny, and determines whether it serves a compelling
state interest through the least restrictive means.
What constitutes compelling state interest is measured by the scale of rights and powers arrayed in
the Constitution and calibrated by history.[124] It is akin to the paramount interest of the state[125] for which
some individual liberties must give way, such as the public interest in safeguarding health or maintaining
medical standards,[126] or in maintaining access to information on matters of public concern.[127]
In the present case, the Court dug deep into the records but found no compelling state interest that the
subject clause may possibly serve.
The OSG defends the subject clause as a police power measure designed to protect the employment
of Filipino seafarers overseas x x x. By limiting the liability to three months [sic], Filipino seafarers have better
chance of getting hired by foreign employers. The limitation also protects the interest of local placement
agencies, which otherwise may be made to shoulder millions of pesos in termination pay.[128]
The OSG explained further:

Often, placement agencies, their liability being solidary, shoulder the payment of
money claims in the event that jurisdiction over the foreign employer is not acquired by the
court or if the foreign employer reneges on its obligation. Hence, placement agencies that are
in good faith and which fulfill their obligations are unnecessarily penalized for the acts of the
foreign employer. To protect them and to promote their continued helpful contribution in
deploying Filipino migrant workers, liability for money are reduced under Section 10 of
RA 8042.
This measure redounds to the benefit of the migrant workers whose welfare the
government seeks to promote. The survival of legitimate placement agencies helps [assure]
the government that migrant workers are properly deployed and are employed under decent
and humane conditions.[129] (Emphasis supplied)
However, nowhere in the Comment or Memorandum does the OSG cite the source of its perception
of the state interest sought to be served by the subject clause.
The OSG locates the purpose of R.A. No. 8042 in the speech of Rep. Bonifacio Gallego in
sponsorship of House Bill No. 14314 (HB 14314), from which the law originated;[130] but the speech makes
no reference to the underlying reason for the adoption of the subject clause.That is only natural for none of the
29 provisions in HB 14314 resembles the subject clause.
On the other hand, Senate Bill No. 2077 (SB 2077) contains a provision on money claims, to wit:
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
the complaint, the claim arising out of an employer-employee relationship or by virtue of any
law or contract involving Filipino workers for overseas employment including claims for
actual, moral, exemplary and other forms of damages.
The liability of the principal and the recruitment/placement agency or any and all
claims under this Section shall be joint and several.
Any compromise/amicable settlement or voluntary agreement on any money claims

exclusive of damages under this Section shall not be less than fifty percent (50%) of such
money claims: Provided, That any installment payments, if applicable, to satisfy any such
compromise or voluntary settlement shall not be more than two (2) months. Any
compromise/voluntary agreement in violation of this paragraph shall be null and void.
Non-compliance with the mandatory period for resolutions of cases provided under
this Section shall subject the responsible officials to any or all of the following penalties:
(1) 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;
(2) Suspension for not more than ninety (90) days; or
(3) 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 incurred under other existing laws or rules and
regulations as a consequence of violating the provisions of this paragraph.
But significantly, Section 10 of SB 2077 does not provide for any rule on the computation of money claims.
A rule on the computation of money claims containing the subject clause was inserted and eventually
adopted as the 5th paragraph of Section 10 of R.A. No. 8042. The Court examined the rationale of the subject
clause in the transcripts of the Bicameral Conference Committee (Conference Committee) Meetings on the
Magna Carta on OCWs (Disagreeing Provisions of Senate Bill No. 2077 and House Bill No.
14314). However, the Court finds no discernible state interest, let alone a compelling one, that is sought to be
protected or advanced by the adoption of the subject clause.
In fine, the Government has failed to discharge its burden of proving the existence of a compelling
state interest that would justify the perpetuation of the discrimination against OFWs under the subject clause.
Assuming that, as advanced by the OSG, the purpose of the subject clause is to protect the
employment of OFWs by mitigating the solidary liability of placement agencies, such callous and cavalier
rationale will have to be rejected. 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 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.
Moreover, even if the purpose of the subject clause is to lessen the solidary liability of placement
agencies vis-a-vis their foreign principals, there are mechanisms already in place that can be employed to
achieve that purpose without infringing on the constitutional rights of OFWs.
The POEA Rules and Regulations Governing the Recruitment and Employment of Land-Based
Overseas Workers, dated February 4, 2002, imposes administrative disciplinary measures on erring foreign
employers who default on their contractual obligations to migrant workers and/or their Philippine agents.
These disciplinary measures range from temporary disqualification to preventive suspension. The POEA
Rules and Regulations Governing the Recruitment and Employment of Seafarers, dated May 23, 2003,
contains similar administrative disciplinary measures against erring foreign employers.
Resort to these administrative measures is undoubtedly the less restrictive means of aiding local
placement agencies in enforcing the solidary liability of their foreign principals.
Thus, the subject clause in the 5th paragraph of Section 10 of R.A. No. 8042 is violative of the right
of petitioner and other OFWs to equal protection.
Further, there would be certain misgivings if one is to approach the declaration of the unconstitutionality of
the subject clause from the lone perspective that the clause directly violates state policy on labor under Section
3,[131] Article XIII of the Constitution.
While all the provisions of the 1987 Constitution are presumed self-executing,,[132] there are some which this
Court has declared not judicially enforceable, Article XIII being one,[133]particularly Section 3 thereof, the
nature of which, this Court, in Agabon v. National Labor Relations Commission,[134] has described to be not
self-actuating:
Thus, the constitutional mandates of protection to labor and security of tenure may
be deemed as self-executing in the sense that these are automatically acknowledged and
observed without need for any enabling legislation. However, to declare that the
constitutional provisions are enough to guarantee the full exercise of the rights embodied
therein, and the realization of ideals therein expressed, would be impractical, if not unrealistic.
The espousal of such view presents the dangerous tendency of being overbroad and
exaggerated. The guarantees of "full protection to labor" and "security of tenure", when
examined in isolation, are facially unqualified, and the broadest interpretation possible
suggests a blanket shield in favor of labor against any form of removal regardless of
circumstance. This interpretation implies an unimpeachable right to continued employment-
a utopian notion, doubtless-but still hardly within the contemplation of the framers.
Subsequent legislation is still needed to define the parameters of these guaranteed rights to
ensure the protection and promotion, not only the rights of the labor sector, but of the
employers' as well. Without specific and pertinent legislation, judicial bodies will be at a loss,
formulating their own conclusion to approximate at least the aims of the Constitution.
Ultimately, therefore, Section 3 of Article XIII cannot, on its own, be a source of

a positive enforceable right to stave off the dismissal of an employee for just cause owing to
the failure to serve proper notice or hearing. As manifested by several framers of the 1987
Constitution, the provisions on social justice require legislative enactments for their
enforceability.[135] (Emphasis added)
Thus, Section 3, Article XIII cannot be treated as a principal source of direct enforceable rights, for
the violation of which the questioned clause may be declared unconstitutional. It may unwittingly risk opening
the floodgates of litigation to every worker or union over every conceivable violation of so broad a concept
as social justice for labor.
It must be stressed that Section 3, Article XIII does not directly bestow on the working class any
actual enforceable right, but merely clothes it with the status of a sector for whom the Constitution urges
protection through executive or legislative action and judicial recognition. Its utility is best limited to
being an impetus not just for the executive and legislative departments, but for the judiciary as well, to
protect the welfare of the working class. And it was in fact consistent with that constitutional agenda that
the Court in Central Bank (now Bangko Sentral ng Pilipinas) Employee Association, Inc. v. Bangko
Sentral ng Pilipinas, penned by then Associate Justice now Chief Justice Reynato S. Puno, formulated
the judicial precept that when the challenge to a statute is premised on the perpetuation of prejudice
against persons favored by the Constitution with special protection -- such as the working class or a
section thereof -- the Court may recognize the existence of a suspect classification and subject the same
to strict judicial scrutiny.
The view that the concepts of suspect classification and strict judicial scrutiny formulated in Central
Bank Employee Association exaggerate the significance of Section 3, Article XIII is a groundless
apprehension. Central Bank applied Article XIII in conjunction with the equal protection clause. Article XIII,
by itself, without the application of the equal protection clause, has no life or force of its own as elucidated
in Agabon.
Along the same line of reasoning, the Court further holds that the subject clause violates petitioner's
right to substantive due process, for it deprives him of property, consisting of monetary benefits, without any
existing valid governmental purpose.[136]
The argument of the Solicitor General, that the actual purpose of the subject clause of limiting the
entitlement of OFWs to their three-month salary in case of illegal dismissal, is to give them a better chance of
getting hired by foreign employers. This is plain speculation. As earlier discussed, there is nothing in the text
of the law or the records of the deliberations leading to its enactment or the pleadings of respondent that would
indicate that there is an existing governmental purpose for the subject clause, or even just a pretext of one.
The subject clause does not state or imply any definitive governmental purpose; and it is for that
precise reason that the clause violates not just petitioner's right to equal protection, but also her right to
substantive due process under Section 1,[137] Article III of the Constitution.
The subject clause being unconstitutional, petitioner is entitled to his salaries for the entire unexpired
period of nine months and 23 days of his employment contract, pursuant to law and jurisprudence prior to the
enactment of R.A. No. 8042.
On the Third Issue
Petitioner contends that his overtime and leave pay should form part of the salary basis in the
computation of his monetary award, because these are fixed benefits that have been stipulated into his contract.
Petitioner is mistaken.
The word salaries in Section 10(5) does not include overtime and leave pay. For seafarers like
petitioner, DOLE Department Order No. 33, series 1996, provides a Standard Employment Contract of
Seafarers, in which salary is understood as the basic wage, exclusive of overtime, leave pay and other bonuses;
whereas overtime pay is compensation for all work performed in excess of the regular eight hours, and holiday
pay is compensation for any work performed on designated rest days and holidays.
By the foregoing definition alone, there is no basis for the automatic inclusion of overtime and holiday
pay in the computation of petitioner's monetary award, unless there is evidence that he performed work during
those periods. As the Court held in Centennial Transmarine, Inc. v. Dela Cruz,[138]
However, the payment of overtime pay and leave pay should be disallowed in light
of our ruling in Cagampan v. National Labor Relations Commission, to wit:
The rendition of overtime work and the submission of sufficient

proof that said was actually performed are conditions to be satisfied before
a seaman could be entitled to overtime pay which should be computed on
the basis of 30% of the basic monthly salary. In short, the contract provision
guarantees the right to overtime pay but the entitlement to such benefit must
first be established.
In the same vein, the claim for the day's leave pay for the unexpired portion
of the contract is unwarranted since the same is given during the actual
service of the seamen.
WHEREFORE, the Court GRANTS the Petition. The subject clause or for three months for every
year of the unexpired term, whichever is less in the 5th paragraph of Section 10 of Republic Act No. 8042
is DECLARED UNCONSTITUTIONAL; and the December 8, 2004 Decision and April 1, 2005
Resolution of the Court of Appeals are MODIFIED to the effect that petitioner is AWARDED his salaries
for the entire unexpired portion of his employment contract consisting of nine months and 23 days computed
at the rate of US$1,400.00 per month.
No costs.
SO ORDERED.
MA. ALICIA AUSTRIA-MARTINEZ

Associate Justice
WE CONCUR:
REYNATO S. PUNO
Chief Justice
LEONARDO A. QUISUMBING CONSUELO YNARES-SANTIAGO

ANTONIO T. CARPIO RENATO C. CORONA
CONCHITA CARPIO MORALES DANTE O. TINGA

(On leave)
MINITA V. CHICO-NAZARIO PRESBITERO J. VELASCO, JR.
ANTONIO EDUARDO B. NACHURA TERESITA J. LEONARDO-

Associate Justice DE CASTRO
Associate Justice
(see concurring opinion)

ARTURO D. BRION DIOSDADO M. PERALTA
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified that the conclusions in the above
Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court.
REYNATO S. PUNO
Chief Justice
[1]
http://www.un.org/News/Press/docs/2007/sgsm11084.doc.htm.
[2]
Migrant Workers and Overseas Filipinos Act of 1995, effective July 15, 1995.
[3]
Penned by Associate Justice Andres B. Reyes, Jr. and concurred in by Associate Justices Lucas P. Bersamin and Celia C. Librea-
Leagogo; rollo, p. 231.
[4]
Id. at 248.
[5]
Rollo, p. 57.
[6]
Id. at 58.
[7]
Id. at 59.
[8]
Id. at 48.
[9]
Id. at 55.
[10]
According to petitioner, this amount represents the pro-rated difference between the salary of US$2,590.00 per month which he
was supposed to receive as Chief Officer from March 19, 1998 to April 30, 1998 and the salary of US$1,850.00 per month
which he was actually paid as Second Officer for the same period. See LA Decision, rollo, pp. 107 and 112.
[11]
Position Paper, id. at 53-54.
[12]
The LA awarded petitioner US$45.00 out of the US$1,480.00 salary differential to which petitioner is entitled in view of his having
received from respondents US$1,435.00 as evidenced by receipts marked as Annexes F, G and H, id. at 319-321.
[13]
Id. at 114.
[14]
Rollo, pp. 111-112.
[15]
Id. at 124.
[16]
Id. at 115.
[17]
G.R. No. 129584, December 3, 1998, 299 SCRA 608.
[18]
Appeal Memorandum, rollo, p. 121.
[19]
Id. at 134.
[20]
NLRC Decision, rollo, p. 140.
[21]
Id. at 146-150.
[22]
Id. at 153.
[23]
Id. at 155.
[24]
Id. at 166-177.
[25]
CA Decision, id. at 239-241.
[26]
Id. at 242.
[27]
Id. at 248.
[28]
Petition, rollo, p. 28.
[29]
Id. at 787.
[30]
Id. at 799.
[31]
Rollo, p. 282
[32]
Memorandum for Petitioner, id. at 741-742.
[33]
Id. at 746-753.
[34]
Section 18. The State affirms labor as a primary social economic force. It shall protect the rights of workers and promote their
welfare.
[35]
Rollo, pp. 763-766.
[36]
Petition, id. at 735.
[37]
Memorandum of the Solicitor General, rollo, p. 680.
[38]
Memorandum for Petitioner, id. at 755.
[39]
Id. at 761-763.
[40]
Rollo, pp. 645-646 and 512-513.
[41]
Alfredo L. Benipayo was Solicitor General at the time the Comment was filed. Antonio Eduardo B. Nachura (now an Associate
Justice of the Supreme Court) was Solicitor General when the Memorandum was filed.
[42]
Memorandum of the Solicitor General, id. at 662-665.
[43]
G.R. No. 113658, March 31, 1995, 243 SCRA 190.
[44]
G.R. No. 110524, July 29, 2002, 385 SCRA 306.
[45]
Memorandum of the Solicitor General, rollo, pp. 668-678.
[46]
Id. at 682.
[47]
The Province of North Cotabato v. The Government of the Republic of the Philippines Peace Panel on Ancestral Domain, G.R.
No. 183591 October 14, 2008.
[48]
Automotive Industry Workers Alliance v. Romulo, G.R. No. 157509, January 18, 2005, 449 SCRA 1.
[49]
David v. Macapagal-Arroyo, G.R. No. 171396, May 3, 2006, 489 SCRA 160.
[50]
Arceta v. Mangrobang, G.R. No. 152895, June 15, 2004, 432 SCRA 136.
[51]
Moldex Realty, Inc. v. Housing and Land Use Regulatory Board, G.R. No. 149719, June 21, 2007, 525 SCRA 198; Marasigan v.
Marasigan, G.R. No. 156078, March 14, 2008, 548 SCRA 409.
[52]
Matibag v. Benipayo, G.R. No. 149036, April 2, 2002, 380 SCRA 49.
[53]
Rollo, p. 145.
[54]
Id. at 166.
[55]
Smart Communications, Inc. v. National Telecommunications Commission, G.R. No. 151908, August 12, 2003, 408 SCRA 678.
[56]
Equi-Asia Placement, Inc. v. Department of Foreign Affairs, G.R. No. 152214, September 19, 2006, 502 SCRA 295.
[57]
Memorandum for Petitioner, rollo, pp. 741-742.
[58]
Ortigas & Co., Ltd. v. Court of Appeals, G.R. No. 126102, December 4, 2000, 346 SCRA 748.
[59]
Picop Resources, Inc. v. Base Metals Mineral Resources Corporation, G.R. No. 163509, December 6, 2006, 510 SCRA 400.
[60]
Walker v. Whitehead, 83 U.S. 314 (1873); Wood v. Lovett, 313 U.S. 362, 370 (1941); Intrata-Assurance Corporation v. Republic
of the Philippines, G.R. No. 156571, July 9, 2008; Smart Communications, Inc. v. City of Davao, G.R. No. 155491,
September 16, 2008.
[61]
Executive Secretary v. Court of Appeals, G.R. No. 131719, May 25, 2004, 429 SCRA 81, citing JMM Promotion and
Management, Inc. v. Court of Appeals, G.R. No. 120095, August 5, 1996, 260 SCRA 319.
[62]
Ortigas & Co., Ltd. v. Court of Appeals, supra note 58.
[63]
Section 18. The State affirms labor as a primary social economic force. It shall protect the rights of workers and promote their
welfare.
[64]
Section 3, The State shall afford full protection to labor, local and overseas, organized and unorganized, and promote full
employment and equality of employment opportunities for all.
[65]
See City of Manila v. Laguio, G.R. No. 118127, April 12, 2005, 455 SCRA 308; Pimentel III v. Commission on Elections, G.R.
No. 178413, March 13, 2008, 548 SCRA 169.
[66]
League of Cities of the Philippines v. Commission on Elections G.R. No. 176951, November 18, 2008; Beltran v. Secretary of
Health, G.R. No. 139147,November 25, 2005, 476 SCRA 168.
[67]
Association of Small Landowners in the Philippines v. Secretary of Agrarian Reform, G.R. No. 78742, July 14, 1989, 175 SCRA
343.
[68]
Los Angeles v. Almeda Books, Inc., 535 U.S. 425 (2002); Craig v. Boren, 429 US 190 (1976).
[69]
There is also the "heightened scrutiny" standard of review which is less demanding than "strict scrutiny" but more demanding than
the standard rational relation test. Heightened scrutiny has generally been applied to cases that involve discriminatory
classifications based on sex or illegitimacy, such as in Plyler v. Doe, 457 U.S. 202, where a heightened scrutiny standard
was used to invalidate a State's denial to the children of illegal aliens of the free public education that it made available to
other residents.
[70]
America v. Dale, 530 U.S. 640 (2000); Parents Involved in Community Schools v. Seattle School District No. 1, 551 U.S. (2007);
http://www.supremecourtus.gov/opinions/06pdf/05-908.pdf.
[71]
Adarand Constructors, Inc. v. Pea, 515 US 230 (1995).
[72]
Grutter v. Bollinger, 539 US 306 (2003); Bernal v. Fainter, 467 US 216 (1984).
[73]
The concept of suspect classification first emerged in the famous footnote in the opinion of Justice Harlan Stone in U.S. v. Carolene
Products Co., 304 U.S. 144 (1938), the full text of which footnote is reproduced below:
There may be narrower scope for operation of the presumption of constitutionality when legislation appears on its face to be within
a specific prohibition of the Constitution, such as those of the first ten amendments, which are deemed equally specific
when held to be embraced within the Fourteenth. See Stromberg v. California, 283 U.S. 359, 369-370; Lovell v. Griffin,
303 U.S. 444, 452.
It is unnecessary to consider now whether legislation which restricts those political processes which can ordinarily be expected to bring
about repeal of undesirable legislation is to be subjected to more exacting judicial scrutiny under the general prohibitions of
the Fourteenth Amendment than are most other types of legislation. On restrictions upon the right to vote, see Nixon v.
Herndon, 273 U.S. 536; Nixon v. Condon, 286 U.S. 73; on restraints upon the dissemination of information, see Near v.
Minnesota ex rel. Olson, 283 U.S. 697, 713-714, 718-720, 722; Grosjean v. American Press Co., 297 U.S. 233; Lovell v.
Griffin, supra; on interferences with political organizations, see Stromberg v. California, supra, 369; Fiske v. Kansas, 274
U.S. 380; Whitney v. California, 274 U.S. 357, 373-378; Herndon v. Lowry, 301 U.S. 242, and see Holmes, J., in Gitlow
v. New York, 268 U.S. 652, 673; as to prohibition of peaceable assembly, see De Jonge v. Oregon, 299 U.S. 353, 365.
Nor need we enquire whether similar considerations enter into the review of statutes directed at particular religious, Pierce v. Society
of Sisters, 268 U.S. 510, or national, Meyer v. Nebraska, 262 U.S. 390; Bartels v. Iowa, 262 U.S. 404; Farrington v.
Tokushige, 273 U.S. 284, or racial minorities, Nixon v. Herndon, supra; Nixon v. Condon, supra: whether prejudice against
discrete and insular minorities may be a special condition, which tends seriously to curtail the operation of those political
processes ordinarily to be relied upon to protect minorities, and which may call for a correspondingly more searching judicial
inquiry. Compare McCulloch v. Maryland, 4 Wheat. 316, 428; South Carolina v. Barnwell Bros., 303 U.S. 177, 184, n 2,
and cases cited.
[74]
Korematsu v. United States, 323 U.S. 214 (1944); Regents of the University of California v. Bakke, 438 U.S. 265 (1978).
[75]
Frontiero v. Richardson, 411 U.S. 677 (1973); U.S. v. Virginia, 518 U.S. 515 (1996).
[76]
San Antonio Independent School District v. Rodriguez, 411 U.S. 1 (1973).
[77]
G.R. No. 148208, December 15, 2004, 446 SCRA 299.
[78]
Rollo, pp. 727 and 735.
[79]
371 Phil. 827 (1999).
[80]
Id. at 840-841.
[81]
G.R. No. 131656, October 20, 1998, 297 SCRA 727.
[82]
Id.
[83]
Supra note 17.
[84]
G.R. No. 166363, August 15, 2006, 498 SCRA 639.
[85]
G.R. No. 162195, April 8, 2008, 550 SCRA 600.
[86]
G.R. No. 180719, August 22, 2008.
[87]
G.R. No. 172031, July 14, 2008, 558 SCRA 279.
[88]
G.R. No. 157534, June 18, 2003 (Resolution).
[89]
G.R. No. 153750, January 25, 2006, 480 SCRA 100.
[90]
G.R. No. 148418, July 28, 2005, 464 SCRA 314.
[91]
G.R. No. 148407, November 12, 2003, 415 SCRA 720.
[92]
[93]
G.R. No. 157373, July 27, 2004, 435 SCRA 342.
[94]
G.R. No. 144786, April 15, 2004, 427 SCRA 732.
[95]
G.R. No. 177948, March 14, 2008, 548 SCRA 712.
[96]
G.R. No. 151303, April 15, 2005, 456 SCRA 313.
[97]
Asian Center v. National Labor Relations Commission, supra note 81.
[98]
G.R. No. 143949, August 9, 2001, 362 SCRA 571.
[99]
[100]
G.R. No. 109390, March 7, 1996, 254 SCRA 457.
[101]
[102]
[103]
G.R. No. 123901, September 22, 1999, 315 SCRA 23.
[104]
G.R. No. 157975, June 26, 2007, 525 SCRA 586.
[105]
www.merriam-webster.com/dictionary visited on November 22, 2008 at 3:09.
[106]
See also Flourish, supra note 95; and Athena, supra note 96.
[107]
It is noted that both petitioner and the OSG drew comparisons between OFWs in general and local workers in general. However,
the Court finds that the more relevant comparison is between OFWs whose employment is necessarily subject to a fixed
term and local workers whose employment is also subject to a fixed term.
[108]
Promulgated on August 6, 1888 by Queen Maria Cristina of Spain and extended to the Philippines by Royal Decree of August 8,
1888. It took effect on December 1, 1888.
[109]
No. 1133, March 29, 1904, 3 SCRA 519.
[110]
No. L-8431, October 30, 1958, 104 SCRA 748.
[111]
See also Wallem Philippines Shipping, Inc. v. Hon. Minister of Labor, No. L-50734-37, February 20, 1981, 102 SCRA 835,
where Madrigal Shipping Company, Inc. v. Ogilvie is cited.
[112]
No. L-10422, January 11, 1916, 33 SCRA 162.
[113]
No. L-15878, January 11, 1922, 42 SCRA 660.
[114]
7 Phil. 268 (1907).
[115]
See also Knust v. Morse, 41 Phil 184 (1920).
[116]
Brent School, Inc. v. Zamora, No. L-48494, February 5, 1990, 181 SCRA 702.
[117]
No. L-22608, June 30, 1969, 28 SCRA 699.
[118]
The Labor Code itself does not contain a specific provision for local workers with fixed-term employment contracts. As the Court
observed in Brent School, Inc., the concept of fixed-term employment has slowly faded away from our labor laws, such that
reference to our labor laws is of limited use in determining the monetary benefits to be awarded to fixed-term workers who
are illegally dismissed.
[119]
No. L-65545, July 9, 1986., 142 SCRA 542.
[120]
G.R. No. 100399, August 4, 1992, 212 SCRA 132.
[121]
[122]
G.R. No. 113363, August 24, 1999, 313 SCRA 1.
[123]
[124]
See Estrada v. Escritor, A.M. No. P-02-1651, August 4, 2003, 408 SCRA 1.
[125]
Id.
[126]
Roe v. Wade, 410 U.S. 113 (1971); see also Carey v. Population Service International, 431 U.S. 678 (1977).
[127]
Sabio v. Gordon, G.R. Nos. 174340, 174318, 174177, October 16, 2006, 504 SCRA 704.
[128]
Comment, rollo, p. 555.
[129]
Memorandum of the Solicitor General, id. at 682-683
[130]
Id. at p. 693.
[131]
Section 3. The State shall afford full protection to labor, local and overseas, organized and unorganized, and promote full
employment and equality of employment opportunities for all.
It shall guarantee the rights of all workers to self-organization, 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. They shall also participate in policy and decision-making processes affecting their rights and benefits as
may be provided by law.
The State shall promote the principle of shared responsibility between workers and employers and the preferential use of voluntary
modes in settling disputes, including conciliation, and shall enforce their mutual compliance therewith to foster industrial
peace.
The State shall regulate the relations between workers and employers, recognizing the right of labor to its just share in the fruits of
production and the right of enterprises to reasonable returns to investments, and to expansion and growth.
[132]
Manila Prince Hotel v. Government Service Insurance System, G.R. No. 122156, February 3, 1997, 267 SCRA 408.
[133]
Basco v. Philippine Amusement and Gaming Corporation, G.R. No. 91649, May 14, 1991, 197 SCRA 52.
[134]
[135]
Agabon v. National Labor Relations Commission, supra note 134, at 686.
[136]
Associated Communications and Wireless Services, Ltd. v. Dumlao, G. R. No. 136762, November 21, 2002, 392 SCRA 269.
[137]
Section 1. No person shall be deprived of life, liberty, or property without due process of law, nor shall any person be denied the
equal protection of the laws.
[138]
G.R. No. 180719, August 22, 2008. See also PCL Shipping Philippines, Inc. v. National Labor Relations Commission. G.R. No.
153031, December 14, 2006, 511 SCRA 44.
NO. 3
THIRD DIVISION
C.F. SHARP CREW MANAGEMENT, INC., G.R. No. 155903

Petitioner,
Present:
- versus - YNARES-SANTIAGO, J.,

Chairperson,
AUSTRIA-MARTINEZ,
HON. UNDERSECRETARY JOSE M. CHICO-NAZARIO,
ESPANOL, JR., HON. SECRETARY NACHURA, and
LEONARDO A. QUISUMBING and RIZAL REYES, JJ.
INTERNATIONAL SHIPPING SERVICES,
Respondents. Promulgated:
September 14, 2007
x------------------------------------------------------------------------------------x
DECISION
NACHURA, J.:
The petitioner C.F. Sharp Crew Management, Inc. (C.F. Sharp) appeals by certiorari the April 30,
2002 Decision[1] of the Court of Appeals (CA) in CA-G.R. SP No. 53747 and the November 5,
2002 Resolution[2] denying its reconsideration.
In 1991, Louis Cruise Lines (LCL), a foreign corporation duly organized and existing under
the laws of Cyprus, entered into a Crewing Agreement[3] with Papadopolous Shipping, Ltd.
(PAPASHIP). PAPASHIP in turn appointed private respondent Rizal International Shipping
Services (Rizal) as manning agency in the Philippines, recruiting Filipino seamen for LCLs vessel.
On October 3, 1996, LCL terminated the Crewing Agreement with PAPASHIP to take effect
on December 31, 1996. It then appointed C.F. Sharp as crewing agent in the Philippines. C.F.
Sharp requested for accreditation as the new manning agency of LCL with the Philippine Overseas
Employment Administration (POEA), but Rizal objected on the ground that its accreditation still
existed and would only expire on December 31, 1996.
Pending approval of the accreditation, Theodoros Savva and Adrias Tjiakouris of LCL
arrived in the Philippines and conducted a series of interviews for seafarers at C.F. Sharps office.
Rizal reported LCLs recruitment activities to the POEA on December 9, 1996, and requested an
ocular inspection of C.F. Sharps premises.
On December 17, 1996, POEA representatives conducted an inspection and found Savva
and Tjiakouris at C.F. Sharp interviewing and recruiting hotel staffs, cooks, and chefs for M/V
Cyprus, with scheduled deployment in January 1997.[4] The Inspection Report[5] signed by
Corazon Aquino of the POEA and countersigned by Mr. Reynaldo Banawis of C.F. Sharp was
thereafter submitted to the POEA.
On January 2, 1997, Rizal filed a complaint[6] for illegal recruitment, cancellation or
revocation of license, and blacklisting against LCL and C.F. Sharp with the POEA, docketed as
POEA Case No. RV-97-01-004. Then, on January 31, 1997, Rizal filed a Supplemental
Complaint[7] adding violation of Section 29 of the Labor Code of the Philippines, for designating
and/or appointing agents, representatives and employees, without prior approval from the POEA.
For its part, C.F. Sharp admitted that Savva and Tjiakouris conducted interviews at C.F. Sharps
office, but denied that they were for recruitment and selection purposes.According to C.F. Sharp,
the interviews were held for LCLs ex-crew members who had various complaints against Rizal. It
belittled the inspection report of the POEA inspection team claiming that it simply stated that
interviews and recruitment were undertaken, without reference to who were conducting the
interview and for what vessels.[8] C.F. Sharp also averred that Rizal was guilty of forum shopping,
and prayed for the dismissal of the complaint on this ground and for its lack of merit. [9]
The POEA Administrator was not persuaded and found C.F. Sharp liable for illegal
recruitment. According to the Administrator, the inspection report of Ms. Aquino established that
Savva and Tjiakouris had conducted, and, at the time of the inspection, had been conducting
interviews, selection and hiring for LCL, without any authority from the POEA. The Administrator
also held that C.F. Sharp violated Section 29 of the Labor Code when it designated officers and
agents without prior approval of the POEA. [10]
Thus, the Administrator disposed:
WHEREFORE, premises considered, the respondent CF Sharp Agency is as it is

hereby ordered suspended for a period of six (6) months or in lieu thereof, it is
ordered to pay a fine of P50,000.00 for violation of Art. 29 of the Labor Code, as
amended in relation to Sec. 6(b), Rule II, Book II of the Rules and Regulations
Governing Overseas Employment in accordance with the schedule of penalties.
Further, the respondent CF Sharp is as it is hereby ordered suspended for another

period of [eighteen] (18) months or to pay the fine of P180,000.00 for committing
9 counts of violation of Article 29 of the Labor Code as amended in relation to Sec.
2(k), Rule I, Book VI of the Rules and Regulations governing Overseas
Employment.
The period of suspension shall be served cummulatively (sic).
The charges of violation of Sec. 6(b) of RA 8042 are hereby referred to the Anti-
Illegal Recruitment Branch for appropriate action.
SO ORDERED.[11]
C.F. Sharp elevated the Administrators ruling to the Department of Labor and Employment
(DOLE). On December 19, 1997, the then Secretary of Labor, Leonardo A. Quisumbing,[12] issued
an Order,[13] ruling that:
WHEREFORE, except as above MODIFIED, the Order dated March 13, 1997 of
the POEA Administrator is AFFIRMED.
Accordingly, the C.F. Sharp Crew Management, Inc. is hereby found guilty of
having violated Sec. 6, R.A. 8042 in relation to Article 13 (b) and (f), and Article
16 of the Labor Code as amended; Rule II (jj), Book I and Sec 1 and 6, Rule I, Book
II, POEA Rules and Regulations Governing Overseas Employment, for having
conspired and confederated with the [Louis] Cruise Lines, Theodorus Savva and
Andrias (sic) Tjiakouris in the recruitment of seafarers for LCLs ships, before it
was duly accredited by POEA as the manning agency of LCL, thus a non-holder of
authority at the time. The penalty imposed against it of suspension of its license for
six (6) months or in lieu thereof, to pay a fine of Fifty Thousand Pesos (P50,000.00),
is AFFIRMED.
Further, C.F. Sharp Crew Management, Inc. is hereby found guilty of one (1) count
of violation of Art. 29 of the Labor Code in relation to Sec. 2 (k), Rule I, Book VI
of the Rules and Regulations Governing Overseas Employment, and is imposed the
penalty of two (2) months suspension of its license or in lieu thereof, to pay a fine
of P20,000.00.
The penalties of suspension for both violations shall be served cumulatively.
Out of the P230,000.00 cash supersedeas bond posted by the petitioner-appellant,

let the amount of P160,000.00 be released and refunded to it, retaining P70,000.00
to be applied to the payment of the fines as imposed above, should the petitioner
opt to pay the fine instead of undergoing suspension of its license. However, the
suspension shall remain in force until such fine is paid, or in the event that the
petitioner-appellant further appeals this Order.
The charge and finding of violation of Sec. 6 (b) of R.A. 8042 are hereby referred
to the Anti-Illegal Recruitment Branch for appropriate action.
SO ORDERED.[14]
C.F. Sharps motion for reconsideration having been denied on February 5, 1999 by the then
Undersecretary, Jose M. Espanol, Jr.,[15] it elevated the case to this Court on petition for certiorari,
with the case docketed as G.R. No. 137573. But, in the June 16, 1999 Resolution, this Court
referred the petition to the CA.
In the meantime, on April 15, 1999, C.F. Sharp requested the lifting of the suspension decreed by
the Secretary of Labor in his December 19, 1997 Order,[16] which was granted by Deputy
Administrator for Licensing and Adjudication Valentin C. Guanio. C.F. Sharp was allowed to
deploy seafarers for its principals.
Consequently, on April 30, 2002, the CA denied C.F. Sharps petition

for certiorari,[17] holding that C.F. Sharp was already estopped from assailing the Secretary of
Labors ruling because it had manifested its option to have the cash bond posted answer for the
alternative fines imposed upon it. By paying the adjudged fines, C.F. Sharp effectively executed
the judgment, having acquiesced to, and ratified the execution of the assailed Orders of the
Secretary of Labor. The CA also agreed with the POEA Administrator and the Secretary of Labor
that Savva and Tjiakouris of LCL, along with C.F. Sharp, undertook recruitment activities on
December 7, 9 to 12, 1996, sans any authority. Finally, it affirmed both labor officials finding that
C.F. Sharp violated Article 29 of the Labor Code and Section 2(k), Rule I, Book VI of the POEA
Rules when it appointed Henry Desiderio as agent, without prior approval from the POEA. Thus,
the appellate court declared that the Secretary of Labor acted well within his discretion in holding
C.F. Sharp liable for illegal recruitment.
C.F. Sharp filed a motion for reconsideration,[18] but the CA denied it on November 25,
2002.[19]
Hence, this appeal, positing these issues:
A. WHETHER OR NOT THE COURT OF APPEALS PATENTLY ERRED IN

RULING THAT PETITIONER IS IN ESTOPPEL IN QUESTIONING THE
ORDER DATED DECEMBER 19, 1997 AND THE RESOLUTION
DATED FEBRUARY 5, 1999.
B. WHETHER OR NOT THE COURT OF APPEALS PATENTLY ERRED

WHEN IT RULED THAT PETITIONER IS LIABLE FOR VIOLATION OF
SECTION 6[,] R.A. NO. 8042 IN RELATION TO ARTICLE 13 (b) and (f) AND
ARTICLE 66 (sic) OF THE LABOR CODE AS AMENDED; RULE II (jj) BOOK
I; AND SECTIONS 1 AND 6, RULE I, BOOK III POEA RULES AND
REGULATIONS GOVERNING OVERSEAS EMPLOYMENT.
WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED WHEN

IT RULED THAT PETITIONER IS LIABLE FOR VIOLATION OF ARTICLE
29 OF THE LABOR CODE, AS AMENDED, IN RELATION TO SECTION II
(k)[,] RULE I, BOOK VI OF THE RULES AND REGULATIONS GOVERNING
OVERSEAS EMPLOYMENT.[20]
C.F. Sharp faults the CA for ruling that petitioner is estopped from questioning the resolutions of
the Secretary of Labor. It denied that it voluntarily executed, or acquiesced to, the assailed
resolutions of the Secretary.
The general rule is that when a judgment has been satisfied, it passes beyond review,
satisfaction being the last act and the end of the proceedings, and payment or satisfaction of the
obligation thereby established produces permanent and irrevocable discharge; hence, a judgment
debtor who acquiesces to and voluntarily complies with the judgment is estopped from taking an
appeal therefrom.[21]
In holding C.F. Sharp in estoppel, the CA apparently relied on the April 15, 1999 Order of
the POEA, and, thus, declared:
[P]etitioner C.F. Sharp had already manifested its option to have the cash bond
posted as an answer for the alternative fines imposed in the Orders dated December
19, 1997 as stated in the Order dated April 15, 1999 of the POEA, Adjudication
Office x x x. Thus, for voluntary execution of the Order of the Secretary of DOLE
dated December 19, 1997 by paying the adjudged fines, the petitioner was then
estopped from assailing such Order before Us by way of petition for
certiorari. Where a party voluntarily executes, partially or totally a judgment or
acquiesces or ratifies the execution of the same, he is estopped from appealing
therefrom. x x x.[22]
The April 15, 1999 Order of Deputy Commissioner Valentin C. Guanio reads:
Respondent C.F. Sharp Crew Management, Inc., thru counsel having

manifested its option to have the cash bond posted answer for the alternative fines
imposed in the above-entitled case; the alternative suspension imposed in the Order
of the Secretary dated December 19, 1997 is hereby Lifted.
SO ORDERED.[23]
This Order was issued in response to C.F. Sharps request to lift the suspension decree of the
Secretary of Labor. The request stated, viz.:
[W]e write in behalf of our client, C.F. Sharp Crew Management Inc., regarding
the Advice To Operating Units dated April 15, 1999, which arose from the Decision
of the Office of the Secretary of Labor in the case entitled C.F. Sharp Crew
Management, Inc. versus Rizal Shipping and docketed as RV 97-01-004.
In this connection, we would like to express our option to have the cash
bond posted by us in the case entitled C.F. Sharp Crew Management, Inc. versus
Rizal Shipping and docketed as RV 97-01-044 to answer for any fine that the
Supreme Court may finally decide that our client should pay in the Case entitled,
C.F. Sharp Crew Management, Inc. vs. Secretary Leonardo Quisumbing and Rizal
International Shipping Services and docketed as G.R. No. 137573.
Under the circumstances, it is most respectfully requested that the aforesaid

advice be RECALLED and that a clearance be issued in favor of our client, C.F.
Sharp Crew Management, Inc.
Hoping for your immediate and favorable action on the

matter.[24] (Emphasis supplied)
C.F. Sharps letter was explicit that the cash bond posted would be answerable for any fine that it
may ultimately be held liable to pay by virtue of a final decision. In fact, on March 25, 1999, prior
to the filing of the above-quoted letter-request, C.F. Sharp had already filed a petition
for certiorari assailing the Orders of the Secretary of Labor. Furthermore, there is no showing that
the assailed Order of then Secretary Quisumbing was indeed executed to warrant the appellate
courts conclusion that C.F. Sharp was estopped from assailing the said Order. Clearly, there is no
basis for the CA to rule that C.F. Sharp voluntarily executed, or acquiesced to, the execution of
the unfavorable ruling of the Secretary of Labor.
The first issue having been settled, we now resolve whether C.F. Sharp is liable for illegal
recruitment.
C.F. Sharp denies committing illegal recruitment activities in December 1996. It posits that
the interviews undertaken by Savva and Tjiakouris do not amount to illegal recruitment under
Section 6 of Republic Act No. 8042 or the Migrants Workers Act. Further, it contends that the
interviews conducted were not for selection and recruitment purposes, but were in connection with
the seamens past employment with Rizal, specifically, their complaints for non-remittance of SSS
premiums, withholding of wages, illegal exactions from medical examinations and delayed
allotments. It claims that it was only upon approval of its application for accreditation that the
employment contracts were entered into and actual deployment of the seamen was made. C.F.
Sharp, thus, concludes that it cannot be held liable for illegal recruitment.
The reasoning is specious.
Undoubtedly, in December 1996, LCL had no approved POEA license to recruit.C.F.

Sharps accreditation as LCLs new manning agency was still pending approval at that time. Yet
Savva and Tjiakouris, along with C.F. Sharp, entertained applicants for LCLs vessels, and
conducted preparatory interviews.
Article 13(b) of the Labor Code defines recruitment and placement as:
any act of canvassing, enlisting, contracting, transporting, utilizing, hiring

or procuring workers, and includes referrals, contract services, promising or
advertising for employment, locally or abroad whether for profit or not: Provided,
That any person or entity which in any manner, offers or promises for a fee
employment to two or more persons shall be deemed engaged in recruitment and
placement.
On the basis of this definition and contrary to what C.F. Sharp wants to portray - the conduct of
preparatory interviews is a recruitment activity.
The fact that C.F. Sharp did not receive any payment during the interviews is of no
moment. From the language of Article 13(b), the act of recruitment may be for profit or
not. Notably, it is the lack of the necessary license or authority, not the fact of payment, that renders
the recruitment activity of LCL unlawful.
C.F. Sharps claim that the interviews were not for selection and recruitment purposes does
not impress. As the Secretary of Labor aptly said:
This Office cannot conceive of a good reason why LCL/Savva/Tjiakouris

should be interested at the time in unearthing alleged violations committed by Rizal
Shipping whose representative status as manning agency was to be terminated in
just a few weeks thereafter, spending valuable time and money in the process. They
stood to gain nothing from such taxing exercise involving several hundreds of ex-
crew members, which could be handled by government agencies like the POEA,
NLRC, SSS. The observation of the POEA Administrator that the complaints of the
crewmen were filed only after Rizal Shipping filed its complaints with the POEA
merely to bolster the defense of CF Sharp/LCL/Savva and Tjiakouris, is telling.
Upon the other hand, it was more to LCLS gain to interview, select and recruit the
disembarking crewmen previously recruited by Rizal Shipping, using CF Sharps
facilities, as this would result in less recruitment time and cost.
Finally, the claim of Savva and Tjiakouris that Savva talked to the POEA
representative during their visit about these interviews and the violations which
were confirmed, is just an afterthought to support their defense; there is no entry in
the Inspection Report confirming such claim. If such claim were true, then the able
officer of CF Sharp (LCLs Attorney-in fact) who signed his conformity on the
4th page of the report, and put his initial on the last page of the report containing the
handwritten findings of the inspectors on the selection and recruitment activities of
Savva and Tjiakouris, would have insisted that an entry be made thereon about what
Savva told the inspectors, or he could simply himself have written thereon that the
two LCL officials merely conducted interviews on the violations committed by
Rizal Shipping. However, the report is bereft of anything to that effect. More
significant is the fact that the inspectors, in their Memorandum dated December 11,
1996 (the very same day they conducted the inspection), stated that they
approached said persons (referring to Banawis, Savva and Tjiakouris) and told us
that they were doing interview to select applicants to complement the crew of a
passenger ship for [LOUIS] CRUISE LINES.[25]
Indeed, it was Savva and Tjiakouris that conducted the interviews, and undertook selection
and hiring. However, C.F. Sharp cannot steer clear of liability for it conspired with LCL in
committing illegal recruitment activities. As the Secretary of Labor had taken pains to
demonstrate:
x x x [T]here is substantial evidence on record that as alleged by Rizal

Shipping, CF Sharp conspired with LCL and its officers Savva and Tjiakouris to
conduct recruitment activities in its offices, at a time when LCL was not yet its
POEA-accredited principal, in violation of Sec. 6, R.A. 8042 in relation to Article
13(b) and (f) and Article 16 of the Labor Code as amended; Rule II(jj) Book I, and
Sec. 1 and 6, Rule I, Book III, all of the POEA Rules and Regulations Governing
Overseas Employment.
Indeed, C.F. Sharp was aware of these violations when it alleged in its Petition for
Review that:
in any and all events, the findings relied upon by the Public Respondent show, at
best, that the parties responsible for the alleged acts of illegal recruitment are LCL
and its officers alone, or at worst, LCL and its officers, in conspiracy with
petitioner. Yet, it is petitioner alone, who is severely punished and
penalized. (underscoring supplied)
xxxx
The intention, agreement and both common design of both LCL and CF
Sharp to engage in recruitment of crewmen for LCLs ships had already been made
manifest when LCL through Savva had instructed, in the October 14, 1996 letter to
disembarking crewmembers, for the latter to report to CF Sharp for processing of
their papers. This was followed by the execution by LCL on October 17, 1996 of a
Special Power of Attorney in favor of CF Sharp as new manning agent and
attorney-in-fact of LCL, with authority, among others, to sign, authenticate and
deliver all documents necessary to complete any transaction related to the
recruitment and hiring of Filipino seamen including the necessary steps to facilitate
the departure of recruited seamen; to assume, on our behalf and for our account,
any liability that may arise in connection with the recruitment of seamen and/or
implementation of the employment contract of said seamen. And on November 8,
1996, CF Sharp applied for accreditation as manning agent of LCL for the latters
five named vessels. The discovery by the POEA inspectors of the selection and
recruitment activities undertaken by Savva and Tjiakouris at CF Sharps offices
on December 11, 1996, followed. The interviews by Savva and Tjiakouris at CF
Sharps offices on December 7, 1996 with around 300 crewmen, as sworn to by 98
crewmen (their affidavits were submitted in evidence by CF Sharp); the interviews
for selection and recruitment from December 9 to 12, 1996 as found by the POEA
inspectors; and the immediate deployment of 154 crewmen for LCL right after [the]
POEA approval of accreditation of LCL as principal of CF Sharp, could not have
been undertaken without the assistance and cooperation of CF Sharp, even before
such transfer of accreditation was granted by POEA.
The petitioner-appellant must be reminded that prior to approval of the

transfer of accreditation, no recruitment or deployment may be made by the
principal by itself or through the would-be transferee manning agency, or by the
latter, as this would constitute illegal recruitment by a non-holder of authority under
Sec. 6, R.A. 8042 in relation to Article 13(b) and (f) and Article 16 of the Labor
Code as amended; Rule II(jj), Book I, and Sec. 1 and 6, Rule 1, Book III, POEA
Rules and Regulations Governing Overseas Employment.
The petitioner-appellant alleges that there is no need for a license to enable LCLs
officers to conduct their alleged activities of interviewing, selecting and hiring
crewmen. Indeed, LCLs officers could have conducted these activities without a
license.
Such claim is without legal basis, as direct hiring by employers of Filipino workers
for overseas employment is banned; they can only do so through, among others,
licensed private recruitment and shipping/mining agencies (Art. 18, Labor Code as
amended; Sec. 1, Rule 1, Book II, POEA Rules and Regulations Governing
Overseas Employment).[26]
We need not say more.
C.F. Sharp also denies violating Article 29 of the Labor Code. It insists that Henry Desiderio was
neither an employee nor an agent of C.F. Sharp. Yet, except for its barefaced denial, no proof was
adduced to substantiate it.
Desiderios name does not appear in the list of employees and officials submitted by C.F.
Sharp to the POEA. However, his name appeared as the contact person of the applicants for the
position of 2nd and 3rd assistant engineers and machinist/fitter in C.F Sharps advertisement in
the February 2, 1997 issue of The Bulletin Today.[27]
Article 29 of the Labor Code is explicit, viz.:
Art. 29. NON-TRANSFERABILITY OF LICENSE OR AUTHORITY
No license or authority shall be used directly or indirectly by any person

other than the one in whose favor it was issued or at any place other than that stated
in the license or authority, nor may such license or authority be transferred,
conveyed or assigned to any other person or entity. Any transfer of business
address, appointment or designation of any agent or representative including the
establishment of additional offices anywhere shall be subject to the prior approval
of the Department of Labor. (Emphasis ours)
Thus, Section 2(k), Rule 1, Book VI of the POEA Rules Governing Overseas
Employment provides:
Section 2. Grounds for Suspension/Cancellation of License.
xxxx
k. Appointing or designating agents, representatives or employees without prior

approval from the Administration.
The appointment or designation of Desiderio as an employee or agent of C.F. Sharp, without prior
approval from the POEA, warrants administrative sanction. The CA, therefore, correctly rejected
C.F. Sharps posture.
Apparently, realizing the folly of its defenses, C.F. Sharp assails the admissibility of the
Memorandum and Inspection Report of the POEA. It contends that these are patently inadmissible
against C.F. Sharp for it was not given an opportunity to crossexamine the POEA inspectors
regarding the report.
The argument does not deserve even a short shrift. First, C.F. Sharp did not raise it before
the POEA and Secretary of Labor. The issue was raised for the first time in its petition
for certiorari with the CA, where the jurisdiction of the appellate court is limited to issues of
jurisdiction and grave abuse of discretion. On numerous occasions, we have made it clear that to
allow fresh issues at this stage of the proceedings is violative of fair play, justice and due
process.[28]
Second, jurisprudence is replete with rulings that administrative bodies are not bound by the
technical niceties of law and procedure and the rules obtaining in the courts of law.[29] Hence,
whatever merit C.F. Sharps argument might have in the context of ordinary civil actions, where
the rules of evidence apply with greater rigidity, disappears when adduced in connection with labor
cases.
The claim of denial of due process on the part of C.F. Sharp must also be rejected.The
essence of due process lies in the reasonable opportunity afforded a party to be heard and to submit
any evidence in support of its defense. What is vital is not the opportunity to cross-examine an
adverse witness, but an opportunity to be heard.[30]
In this case, C.F. Sharp was given ample opportunity to be heard, to adduce evidence in
support of its version of the material occurrences, and to controvert Rizals allegation and the
Inspection Report. It submitted its position paper with supporting affidavits and documents, and
additionally pleaded its causes on appeal before the Secretary of Labor. Under the circumstances,
a claim of denial of due process on C.F. Sharps part is completely unavailing.
C.F. Sharp next impugns the probative value given by the Administrator and the Secretary
of Labor to the Inspection Report. It alleges that the POEA Administrator, the Labor Secretary and
the CA relied only on the Inspection Report and gave very little or no probative value to the
affidavits that it submitted in support of its claim.
C.F. Sharp would have us re-evaluate the factual veracity and probative value of the
evidence submitted in the proceedings a quo. C.F. Sharp may well be reminded that it is not our
function to review, examine, and evaluate or weigh the evidence adduced by the parties.
Elementary is the principle that this Court is not a trier of facts. Judicial review of labor cases does
not go beyond the evaluation of the sufficiency of the evidence upon which the labor officials'
findings rest. Hence, where the factual findings of the labor tribunals or agencies conform to, and
are affirmed by, the CA, the same are accorded respect and finality, and are binding upon this
Court. It is only when the findings of the labor agencies and the appellate court are in conflict that
this Court will review the records to determine which findings should be upheld as being more in
conformity with the evidentiary facts. Where the CA affirms the labor agencies on review and
there is no showing whatsoever that said findings are patently erroneous, this Court is bound by
the said findings.[31]
Although the rule admits of several exceptions, none of them are in point in this case. In
any event, we have carefully examined the factual findings of the CA and found the same to be
borne out of the record and sufficiently anchored on the evidence presented.
WHEREFORE, the petition is DENIED. The Decision and Resolution of the Court of Appeals
in CA-G.R. SP. No. 53747 are AFFIRMED.
SO ORDERED.
ANTONIO EDUARDO B. NACHURA

Associate Justice
WE CONCUR:
CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson
MA. ALICIA AUSTRIA-MARTINEZ MINITA V. CHICO-NAZARIO

RUBEN T. REYES
Associate Justice
ATTESTATION
I attest that the conclusions in the above Decision were reached in consultation before the case was
assigned to the writer of the opinion of the Courts Division.
CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson, Third Division
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution and the Division Chairperson's Attestation,
I certify that the conclusions in the above Decision had been reached in consultation before the
case was assigned to the writer of the opinion of the Courts Division.
REYNATO S. PUNO
Chief Justice
[1]
Rollo, pp. 35-49.
[2]
Id. at 51-52.
[3]
Id. at 146-148.
[4]
Id. at 154-158.
[5]
Id.
[6]
Id. at 126-128.
[7]
Id. at 194-205.
[8]
Id. at 133-143.
[9]
Id. at 206-225.
[10]
Id. at 557-572.
[11]
Id. at 572.
[12]
Now Associate Justice of this Court.
[13]
Rollo, pp. 103-121.
[14]
Id. at 120-121.
[15]
Id. at 123-125.
[16]
Id. at 746.
[17]
Id. at 35-49.
[18]
Id. at 53-61.
[19]
Id. at 51-52.
[20]
Id. at 898.
[21]
Vital-Gozon v. Court of Appeals, G.R. No. 101428, August 5, 1992, 212 SCRA 235, 256.
[22]
Rollo, p. 41.
[23]
Id. at 746.
[24]
POEA record.
[25]
Rollo, p. 110.
[26]
Id. at 112-114.
[27]
Id. at 283.
[28]
Gualberto v. Go, G.R. No. 139843, July 21, 2005, 463 SCRA 671, 678; Philippine National Construction
Corporation (PNCC) v. National Labor Relations Commission, 315 Phil. 746, 756 (1995).
[29]
China Banking Corporation v. Borromeo, G.R. No. 156515, October 19, 2004, 440 SCRA 621, 635; Bantolino v.
Coca-Cola Bottlers Philippines, 451 Phil. 839, 846 (2003); Rabago v. National Labor Relations Commission, G.R.
No. 82868 and G.R No. 82932, August 5, 1991, 200 SCRA 158, 165.
[30]
Shoemart, Inc. v. National Labor Relations Commission, G.R. Nos. 90795-96 & 91125-26, August 13, 1993, 225
SCRA 311, 320.
[31]
Falco v. Mercury Freight International, G.R. No. 153824, August 9, 2006.
NO. 4
SECOND DIVISION
[G.R. No. 158324. March 14, 2005]
ROBERTO RAVAGO, petitioner, vs. ESSO EASTERN MARINE, LTD. and TRANS-
GLOBAL MARITIME AGENCY, INC., respondents.
DECISION
CALLEJO, SR., J.:
Before us is a petition for review on certiorari under Rule 45 of the 1997 Rules of
Court, as amended, of the Decision[1] of the Court of Appeals (CA) as well as its
Resolution in CA-G.R. SP No. 66234 which denied the motion for reconsideration thereof.
The Factual Antecedents
The Esso Eastern Marine Ltd. (EEM), now the Petroleum Shipping Ltd., is a foreign
company based in Singapore and engaged in maritime commerce. It is represented in
the Philippines by its manning agent and co-respondent Trans-Global Maritime Agency,
Inc. (Trans-Global), a corporation organized under the Philippine laws.
Roberto Ravago was hired by Trans-Global to work as a seaman on board various
Esso vessels. On February 13, 1970, Ravago commenced his duty as S/N wiper on board
the Esso Bataan under a contract that lasted until February 10, 1971. Thereafter, he was
assigned to work in different Esso vessels where he was designated diverse tasks, such
as oiler, then assistant engineer. He was employed under a total of 34 separate and
unconnected contracts, each for a fixed period, by three different companies, namely,
Esso Tankers, Inc. (ETI), EEM and Esso International Shipping (Bahamas) Co., Ltd.
(EIS), Singapore Branch. Ravago worked with Esso vessels until August 22, 1992, a
period spanning more than 22 years, thus:
CONTRACT DURATION POSITION VESSEL COMPANY
FROM TO
13 Feb 70 10 Feb 71 SN/Wiper Esso Bataan ETI[2]
07 May 71 27 May 72 Wiper Esso EEM[3]
Yokohama
07 Aug 72 02 Jul 73 Oiler Esso Kure EEM
03 Oct 73 30 Jun 74 Oiler Esso Bangkok ETI
18 Sep 74 26 July 75 Oiler Esso EEM
Yokohama
23 Oct 75 22 Jun 76 Oiler Esso Port EEM
Dickson
10 Sep 76 26 Dec 76 Oiler Esso Bangkok ETI
27 Dec 76 29 Apr 77 Temporary Jr. Esso Bangkok ETI
3AE
08 Jul 77 15 Mar 78 Jr. 3AE Esso Bombay ETI
03 Jun 78 03 Feb 79 Temporary Esso Hongkong ETI
3AE
04 Apr 79 24 Jun 79 3AE Esso Orient EEM
25 Jun 79 16 Jul 79 3AE Esso EEM
Yokohama
17 Jul 79 05 Dec 79 3AE Esso Orient EEM
10 Feb 80 25 Oct 80 3AE Esso Orient EEM
19 Jan 81 03 Jun 81 3AE Esso Port EEM
Dickson
04 Jun 81 11 Sep 81 3AE Esso Orient EEM
06 Dec 81 20 Apr 82 3AE Esso Chawan EEM
21 Apr 82 01 Aug 82 Temporary Esso Chawan EEM*
2AE
03 Nov 82 06 Feb 83 2AE Esso Jurong EEM
07 Feb 83 10 Jul 83 2AE Esso EEM
Yokohama
31 Aug 83 13 Mar 84 2AE Esso Tumasik EEM
04 May 84 08 Jan 85 2AE Esso Port EEM
Dickson
13 Mar 85 31 Oct 85 2AE Esso Castellon EEM
29 Dec 85 22 Jul 86 2AE Esso Jurong EIS[4]
13 Sep 86 09 Jan 87 2AE Esso Orient EIS
21 Mar 87 15 Oct 87 2AE Esso Port EIS
Dickson
20 Nov 87 18 Dec 87 1AE Esso Chawan EIS
Temporary
19 Dec 87 25 Jun 88 2AE Esso EIS
Melbourne
04 Aug 88 19 Mar 89 Temporary Esso Port EIS
1AE Dickson
20 Mar 89 19 May 89 1AE Esso Port EIS*
Dickson
28 Jul 89 17 Feb 90 1AE Esso EIS
Melbourne
16 Apr 90 11 Dec 90 1AE Esso Orient EIS
09 Feb 91 06 Oct 91 1AE Esso EIS
Melbourne
16 Dec 91 22 Aug 92 1AE Esso Orient EIS
* Upgraded/Confirmed on regular rank on board.[5]
On August 24, 1992, or shortly after completing his latest contract with EIS, Ravago
was granted a vacation leave with pay from August 23, 1992 until October 28, 1992.
Preparatory to his embarkation under a new contract, he was ordered to report, on
September 28, 1992, for a Medical Pre-Employment Examination.[6] The Pre-
Employment Physical Examination Record shows that Ravago passed the medical
examination conducted by the O.P. Jacinto Medical Clinic, Inc. on October 6, 1992.[7] He,
likewise, attended a Pre-Departure Orientation Seminar conducted by the Capt. I.P.
Estaniel Training Center, a division of Trans-Global, on October 7, 1992.[8]
On the night of October 12, 1992, a stray bullet hit Ravago on the left leg while he
was waiting for a bus ride in Cubao, Quezon City. He fractured his left proximal tibia and
was hospitalized at the Philippine Orthopedic Hospital. Ravagos wife, Lolita, informed
Trans-Global and EIS of the incident on October 13, 1992 for purposes of availing medical
benefits. As a result of his injury, Ravagos doctor opined that he would not be able to
cope with the job of a seaman and suggested that he be given a desk job.[9] Ravagos left
leg had become apparently shorter, making him walk with a limp. For this reason, the
company physician, Dr. Virginia G. Manzo, found him to have lost his dexterity, making
him unfit to work once again as a seaman.[10] Citing the opinion of Ravagos doctor, Dr.
Manzo wrote:
Because of his unsteady gait, pronounced limp, and loss of normal dexterity of his leg and foot,
we doubted whether Mr. Ravago can physically tackle the usual activities of a seaman in the
course of his work without any added risk over and above the ordinary or standard risk inherent
to his job. These activities include climbing up and down the engine room through a long flight
of iron stairs with narrow steps which could be slippery at times due to grease or oil, jumping
from an unsteady and floating motor launch or boat to board or alight a tanker through a flight of
steps or climbing up and down a pilot ladder, wearing of heavy safety shoes, etc.
Mr. Ravagos doctor replied that, after being informed about the nature of the job, he believes that
Mr. Ravago would not be able to cope with these kinds of activities. In effect, the Orthopedic
doctor said Mr. Ravago is not fit to go back to his work as a seaman.
We concur with the opinion of the doctor that Mr. Ravago is not fit to go back to his job as a
seaman in view of the risk of physical injury to himself as result of the deformity and loss of
dexterity of his injured leg.
As a seaman, we consider his inability partial permanent. His injury corresponds to Grade 13 in
the Schedule of Disability of the Standard Employment Contract. [11]
Consequently, instead of rehiring Ravago, EIS paid him his Career Employment
Incentive Plan (CEIP)[12] as of March 1, 1993 and his final tax refund for 1992. After
deducting his Social Security System and medical contributions from November 1992 to
February 1993, EIS remitted the net amount of P162,232.65, following Ravagos
execution of a Deed of Quitclaim and/or Release.[13]
However, on March 22, 1993, Ravago filed a complaint[14] for illegal dismissal with
prayer for reinstatement, backwages, damages and attorneys fees against Trans-Global
and EIS with the Philippine Overseas Employment Administration Adjudication Office.
In their Answer dated April 14, 1993, respondents denied that Ravago was dismissed
without notice and just cause. Rather, his services were no longer engaged in view of the
disability he suffered which rendered him unfit to work as a seafarer. This fact was further
validated by the company doctor and Ravagos attending physician. They averred that
Ravago was a contractual employee and was hired under 34 separate contracts by
different companies.
In his position paper, Ravago insisted that he was fit to resume pre-injury activities
as evidenced by the certification[15] issued by Dr. Marciano Foronda M.D., one of his
attending physicians at the Philippine Orthopedic Hospital, that at present, fracture of tibia
has completely healed and patient is fit to resume pre-injury activities anytime.[16] Ravago,
likewise, asserted that he was not a mere contractual employee because the respondents
regularly and continuously rehired him for 23 years and, for his continuous service, was
awarded a CEIP payment upon his termination from employment.
On December 15, 1996, Labor Arbiter Ramon Valentin C. Reyes rendered a decision
in favor of Ravago, the complainant. He ruled that Ravago was a regular employee
because he was engaged to perform activities which were usually necessary or desirable
in the usual trade or business of the employer. The Labor Arbiter noted that Ravagos
services were repeatedly contracted; he was even given several promotions and was paid
a monthly service experience bonus. This was in keeping with the increasing number of
long term careers established with the respondents. Finally, the Labor Arbiter resolved
that an employer cannot terminate a workers employment on the ground of disease
unless there is a certification by a competent public health authority that the said disease
is of such nature or at such a stage that it cannot be cured within a period of six months
even with proper medical treatment. He concluded that Ravago was illegally dismissed.
The decretal portion of the Labor Arbiters decision reads:
WHEREFORE, premises considered, judgment is hereby rendered finding the dismissal illegal
and ordering respondents to reinstate complainant to his former position without loss of seniority
rights and other benefits. Further, the respondents are jointly and severally liable to pay
complainant backwages from the time of his dismissal up to the promulgation of this decision.
Such backwages is provisionally fixed at US$96,285.00 less the P162,285.83 (sic) paid to the
complainant as Career Employment Incentive Plan. And ordering respondents to pay
complainant 10% of the total monetary award as attorneys fees.
All other claims are dismissed for lack of merit.
SO ORDERED.[17]
Aggrieved, the respondents appealed the decision to the National Labor Relations
Commission (NLRC) on July 3, 1997, raising the following grounds:
THE DECISION IS VITIATED BY SERIOUS ERRORS IN THE FINDINGS OF FACT

WHICH, IF NOT CORRECTED, WOULD CAUSE GRAVE OR IRREPARABLE DAMAGE
OR INJURY TO THE RESPONDENTS. THESE FINDINGS ARE:
(A) THAT COMPLAINANT WAS A REGULAR EMPLOYEE BECAUSE HE WAS

HIRED AND REHIRED IN VARIOUS CAPACITIES ON BOARD ESSO
VESSELS IN A SPAN OF 23 YEARS;
(B) THAT COMPLAINANT WAS A REGULAR EMPLOYEE BECAUSE HE WAS
ENGAGED IN THE SERVICES INDISPENSABLE IN THE
OPERATION OF THE VARIOUS VESSELS OF RESPONDENTS;
(C) THAT COMPLAINANT WAS FIT TO RESUME PRE-INJURY ACTIVITIES
AND HIS FRACTURE COMPLETELY HEALED NOTWITHSTANDING
A CONTRARY MEDICAL OPINION OF COMPLAINANTS OWN
PHYSICIAN AND RESPONDENTS COMPANY PHYSICIAN; AND
(D) THAT COMPLAINANT WAS ILLEGALLY DISMISSED BY
RESPONDENTS.[18]
On April 26, 2001, the NLRC rendered a decision affirming that of the Labor Arbiter.
The NLRC based its decision in the case of Millares v. National Labor Relations
Commission,[19]wherein it was held that:
It is, likewise, clear that petitioners had been in the employ of the private respondents for 20
years. The records reveal that petitioners were repeatedly re-hired by private respondents even
after the expiration of their respective eight-month contracts. Such repeated re-hiring which
continued for 20 years, cannot but be appreciated as sufficient evidence of the necessity and
indispensability of petitioners service to the private respondents business or trade.
Verily, as petitioners had rendered 20 years of service, performing activities which were
necessary and desirable in the business or trade of private respondents, they are, by express
provision of Article 280 of the Labor Code, considered regular employees.[20]
The NLRC, likewise, declared that Ravago was illegally dismissed and that the
quitclaim executed by him could not be considered as a waiver of his right to question the
validity of his dismissal and seek reinstatement and other reliefs. According to the NLRC,
such quitclaim is against public policy, considering the economic disadvantage of the
employee and the inevitable pressure brought about by financial capacity.
The respondents filed a motion for reconsideration of the decision, claiming that the
ruling of the Court in Millares v. NLRC[21] had not yet become final and executory.
However, the NLRC denied the motion.
Thereafter, the respondents filed a petition for certiorari before the CA on the following
grounds: (a) the ruling in Millares v. NLRC had not yet acquired finality, nor has it become
a law of the case or stare decisis because the Court was still resolving the pending motion
for reconsideration; (b) Ravago was not illegally dismissed because after the expiration
of his contract, there was no obligation on the part of the respondents to rehire him; and
(c) the quitclaim signed by Ravago was voluntarily entered into and represented a
reasonable settlement of the account due him.
On August 29, 2001, the respondents filed an Urgent Application for the Issuance of
a Temporary Restraining Order and Writ of Preliminary Injunction to enjoin and restrain
the Labor Arbiter from enforcing his decision. On September 5, 2001, the CA issued a
Resolution[22] temporarily restraining NLRC Sheriff Manolito Manuel from enforcing
and/or implementing the decision of the Labor Arbiter as affirmed by the NLRC.
On November 14, 2001, the CA granted the application for preliminary injunction upon
filing by the respondents of a bond in the amount of P500,000.00. Thus, the respondents
filed the surety bond as directed by the appellate court. Before the approval thereof,
however, Ravago filed a motion to set aside the Resolution dated November 14, 2001,
principally arguing that the instant case was a labor dispute, wherein an injunction is
proscribed under Article 254[23] of the Labor Code of the Philippines.
In their comment on Ravagos motion, the respondents professed that the case before
the CA did not involve a labor dispute within the meaning of Article 212(l)[24] of the Labor
Code of the Philippines, but a money claim against the employer as a result of termination
of employment.
On August 28, 2002, the CA rendered a decision in favor the respondents. The fallo of
the decision reads:
WHEREFORE, the petition is GRANTED. The assailed decisions of the NLRC are
hereby REVERSED and SET ASIDE and the injunctive writ issued on November 14, 2001, is
hereby made PERMANENT.
SO ORDERED.[25]
The CA ratiocinated as follows:
The employment, deployment, rights and obligation of Filipino seafarers are particularly set forth
under the rules and regulations governing overseas employment promulgated by the POEA.
Section C, Part I of the Standard Employment Contract Governing the Employment of All
Filipino Seamen on Board Ocean-Going Vessels emphatically provides the following:
SECTION C. DURATION OF CONTRACT
The period of employment shall be for a fix (sic) period but in no case to exceed 12 months and
shall be stated in the Crew Contract. Any extension of the Contract period shall be subject to the
mutual consent of the parties.
It is clear from the foregoing that seafarers are contractual employees whose terms of
employment are fixed for a certain period of time. A fixed term is an essential and natural
appurtenance of seamens employment contracts to which, whatever the nature of the
engagement, the concept of regular employment under Article 280 of the Labor Code does not
find application. The contract entered into by a seafarer with his employer sets in detail the
nature of his job, the amount of his wage and, foremost, the duration of his employment. Only a
satisfactory showing that both parties dealt with each other on more or less equal terms with no
dominance exercised by the employer over the seafarer is necessary to sustain the validity of the
employment contract. In the absence of duress, as it is in this case, the contract constitutes the
law between the parties.[26]
The CA noted that the employment status of seafarers has been established with
finality by the Courts reconsideration of its decision in Millares v. National Labor Relations
Commission,[27] wherein it was ruled that seamen are contractual employees. According
to the CA, the fact that Ravago was not rehired upon the completion of his contract did
not result in his illegal dismissal; hence, he was not entitled to reinstatement or payment
of separation pay. The CA, likewise, affirmed the writ of preliminary injunction it earlier
issued, declaring that an injunction is a preservative remedy issued for the protection of
a substantive right or interest, an antidote resorted to only when there is a pressing
necessity to avoid injurious consequences which cannot be rendered under any standard
compensation.
Hence, the present recourse.
Ravago, now the petitioner, has raised the following issues:
I.
[WHETHER OR NOT] THE COURT OF APPLEALS GRAVELY ERRED AND VIOLATED

THE LABOR CODE WHEN IT ISSUED A RESTRAINING ORDER AND THEREAFTER A
WRIT OF PRELIMINARY INJUNCTION IN CA-G.R. SP NO. 66234.
II.
[WHETHER OR NOT] THE COURT OF APPEALS GRAVELY ERRED, [AND]

BLATANTLY DISREGARDED THE CONSTITUTIONAL MANDATE ON PROTECTION
TO FILIPINO OVERSEAS WORKERS, AND COUNTENANCED UNWARRANTED
DISCRIMINATION WHEN IT RULED THAT PETITIONER CANNOT BECOME A
REGULAR EMPLOYEE.[28]
On the first issue, the petitioner asserts that the CA violated Article 254 of the Labor
Code when it issued a temporary restraining order, and thereafter a writ of preliminary
injunction, to derail the enforcement of the final and executory judgment of the Labor
Arbiter as affirmed by the NLRC. On the other hand, the respondents contend that the
issue has become academic since the CA had already decided the case on its merits.
The contention of the petitioner does not persuade.
The petitioners reliance on Article 254[29] of the Labor Code is misplaced. The law
proscribes the issuance of injunctive relief only in those cases involving or growing out of
a labor dispute. The case before the NLRC neither involves nor grows out of a labor
dispute. It did not involve the fixing of terms or conditions of employment or representation
of persons with respect thereto. In fact, the petitioners complaint revolves around the
issue of his alleged dismissal from service and his claim for backwages, damages and
attorneys fees. Moreover, Article 254 of the Labor Code specifically provides that the
NLRC may grant injunctive relief under Article 218 thereof.
Besides, the anti-injunction policy of the Labor Code, basically, is freedom at the
workplace. It is more appropriate in the promotion of the primacy of free collective
bargaining and negotiations, including voluntary arbitration, mediation and conciliation,
as modes of settling labor and industrial disputes.[30]
Generally, an injunction is a preservative remedy for the protection of a persons
substantive rights or interests. It is not a cause of action in itself but a mere provisional
remedy, an appendage to the main suit. Pressing necessity requires that it should be
resorted to only to avoid injurious consequences which cannot be remedied under any
measure of consideration. The application of an injunctive writ rests upon the presence
of an exigency or of an exceptional reason before the main case can be regularly heard.
The indispensable conditions for granting such temporary injunctive relief are: (a) that the
complaint alleges facts which appear to be satisfactory to establish a proper basis for
injunction, and (b) that on the entire showing from the contending parties, the injunction
is reasonably necessary to protect the legal rights of the plaintiff pending the litigation. [31]
It bears stressing that in the present case, the respondents petition contains facts
sufficient to warrant the issuance of an injunction under Article 218, paragraph (e) of the
Labor Code of the Philippines.[32] Further, respondents had already posted a surety bond
more than adequate to cover the judgment award.
On the second issue, the petitioner earnestly urges this Court to re-examine its
Resolution dated July 29, 2002 in Millares v. National Labor Relations Commission[33] and
reinstate the doctrine laid down in its original decision rendered on March 14, 2000,
wherein it was initially determined that a seafarer is a regular employee. The petitioner
asserts that the decision of the CA and, indirectly, that of the Resolution of this Court
dated July 29, 2002, are violative of the constitutional mandate of full protection to
labor,[34] whether local or overseas, because it deprives overseas Filipino workers, such
as seafarers, an opportunity to become regular employees without valid and serious
reasons. The petitioner maintains that the decision is discriminatory and violates the
constitutional provision on equal protection of the laws, in addition to being partial to and
overly protective of foreign employers.
The respondents, on the other hand, asseverate that there is no law or administrative
rule or regulation imposing an obligation to rehire a seafarer upon the completion of his
contract. Their refusal to secure the services of the petitioner after the expiration of his
contract can never be tantamount to a termination. The respondents aver that the
petitioner is not entitled to backwages, not only because it is without factual justification
but also because it is not warranted under the law. Furthermore, the respondents assert
that the rulings in the Coyoca v. NLRC,[35] and the latest Millares case remain good and
valid precedents that need to be reaffirmed. The respondents cited the ruling of the Court
in Coyoca case where the Court ruled that a Filipino seamans contract does not provide
for separation or termination pay because it is governed by the Rules and Regulations
Governing Overseas Employment.
The contention of the respondents is correct.
In a catena of cases, this Court has consistently ruled that seafarers are contractual,
not regular, employees.
In Brent School, Inc. v. Zamora,[36] the Court ruled that seamen and overseas contract
workers are not covered by the term regular employment as defined in Article 280 of the
Labor Code. The Court said in that case:
The question immediately provoked ... is whether or not a voluntary agreement on a fixed term
or period would be valid where the employee has been engaged to perform activities which are
usually necessary or desirable in the usual business or trade of the employer. The definition
seems non sequitur. From the premise that the duties of an employee entail activities which are
usually necessary or desirable in the usual business or trade of the employer the conclusion does
not necessarily follow that the employer and employee should be forbidden to stipulate any
period of time for the performance of those activities. There is nothing essentially contradictory
between a definite period of an employment contract and the nature of the employees duties set
down in that contract as being usually necessary or desirable in the usual business or trade of
the employer. The concept of the employees duties as being usually necessary or desirable in the
usual business or trade of the employer is not synonymous with or identical to employment with
a fixed term. Logically, the decisive determinant in term employment should not be the activities
that the employee is called upon to perform, but the day certain agreed upon by the parties for
the commencement and termination of their employment relationship, a day certain being
understood to be that which must necessarily come, although it may not be known
when. Seasonal employment, and employment for a particular projectare merely instances of
employment in which a period, were not expressly set down, is necessarily implied.[37]
...
Some familiar examples may be cited of employment contracts which may be neither for
seasonal work nor for specific projects, but to which a fixed term is an essential and natural
appurtenance: overseas employment contracts, for one, to which, whatever the nature of the
engagement, the concept of regular employment with all that it implies does not appear ever to
have been applied, Article 280 of the Labor Code notwithstanding; also appointments to the
positions of dean, assistant dean, college secretary, principal, and other administrative offices in
educational institutions, which are by practice or tradition rotated among the faculty members,
and where fixed terms are a necessity without which no reasonable rotation would be possible.
... [38]
...
Accordingly, and since the entire purpose behind the development of legislation culminating in
the present Article 280 of the Labor Code clearly appears to have been, as already observed, to
prevent circumvention of the employees right to be secure in his tenure, the clause in said article
indiscriminately and completely ruling out all written or oral agreements conflicting with the
concept of regular employment as defined therein should be construed to refer to the substantive
evil that the Code itself has singled out: agreements entered into precisely to circumvent security
of tenure. It should have no application to instances where a fixed period of employment was
agreed upon knowingly and voluntarily by the parties, without any force, duress or improper
pressure being brought to bear upon the employee and absent any other circumstances vitiating
his consent, or where it satisfactorily appears that the employer and employee dealt with each
other on more or less equal terms with no moral dominance whatever being exercised by the
former over the latter. Unless, thus, limited in its purview, the law would be made to apply to
purposes other than those explicitly stated by its framers; it thus becomes pointless and arbitrary,
unjust in its effects and apt to lead to absurd and unintended consequences.[39]
The Court made the same ruling in Coyoca v. National Labor Relations
Commission[40]and declared that a seafarer, not being a regular employee, is not entitled
to separation or termination pay.
Furthermore, petitioners contract did not provide for separation benefits. In this connection, it is
important to note that neither does the POEA standard employment contract for Filipino seamen
provide for such benefits.
As a Filipino seaman, petitioner is governed by the Rules and Regulations Governing Overseas
Employment and the said Rules do not provide for separation or termination pay. ...
...
Therefore, although petitioner may not be a regular employee of private respondent, the latter
would still have been liable for payment of the benefits had the principal failed to pay the
same. [41]
In the July 29, 2002 Resolution of this Court in Millares v. National Labor Relations
Commission,[42] it reiterated its ruling that seafarers are contractual employees and, as
such, are not covered by Article 280 of the Labor Code of the Philippines:
From the foregoing cases, it is clear that seafarers are considered contractual employees. They
cannot be considered as regular employees under Article 280 of the Labor Code. Their
employment is governed by the contracts they sign every time they are rehired and their
employment is terminated when the contract expires. Their employment is contractually fixed for
a certain period of time. They fall under the exception of Article 280 whose employment has
been fixed for a specific project or undertaking the completion or termination of which has been
determined at the time of engagement of the employee or where the work or services to be
performed is seasonal in nature and the employment is for the duration of the season. We need
not depart from the rulings of the Court in the two aforementioned cases which indeed
constitute stare decisis with respect to the employment status of seafarers.
...
... The Standard Employment Contract governing the Employment of All Filipino Seamen on
Board Ocean-Going Vessels of the POEA, particularly in Part I, Sec. C, specifically provides
that the contract of seamen shall be for a fixed period. And in no case should the contract of
seamen be longer than 12 months. It reads:
Section C. Duration of Contract
The period of employment shall be for a fixed period but in no case to exceed 12 months and
shall be stated in the Crew Contract. Any extension of the Contract period shall be subject to the
mutual consent of the parties.
Petitioners make much of the fact that they have been continually re-hired or their contracts
renewed before the contracts expired (which has admittedly been going on for twenty [20]
years). By such circumstance they claim to have acquired regular status with all the rights and
benefits appurtenant to it.
Such contention is untenable. Undeniably, this circumstance of continuous re-hiring was

dictated by practical considerations that experienced crew members are more
preferred. Petitioners were only given priority or preference because of their experience and
qualifications but this does not detract the fact that herein petitioners are contractual employees.
They can not be considered regular employees. We quote with favor the explanation of the
NLRC in this wise:
xxx The reference to permanent and probationary masters and employees in these papers is a
misnomer and does not alter the fact that the contracts for enlistment between complainants-
appellants and respondent-appellee Esso International were for a definite periods of time,
ranging from 8 to 12 months. Although the use of the terms permanent and probationary is
unfortunate, what is really meant is eligible for-re-hire. This is the only logical conclusion
possible because the parties cannot and should not violate POEAs requirement that a contract of
enlistment shall be for a limited period only; not exceeding twelve (12) months.
From all the foregoing, we hereby state that petitioners are not considered regular or permanent
employees under Article 280 of the Labor Code. Petitioners employment have automatically
ceased upon the expiration of their contracts of enlistment (COE). Since there was no dismissal
to speak of, it follows that petitioners are not entitled to reinstatement or payment of separation
pay or backwages, as provided by law. [43]
The Court ruled that the employment of seafarers for a fixed period is not
discriminatory against seafarers and in favor of foreign employers. As explained by this
Court in its July 29, 2002 Resolution in Millares:
Moreover, it is an accepted maritime industry practice that employment of seafarers are for a
fixed period only. Constrained by the nature of their employment which is quite peculiar and
unique in itself, it is for the mutual interest of both the seafarer and the employer why the
employment status must be contractual only or for a certain period of time. Seafarers spend most
of their time at sea and understandably, they can not stay for a long and an indefinite period of
time at sea. Limited access to shore society during the employment will have an adverse impact
on the seafarer. The national, cultural and lingual diversity among the crew during the COE is a
reality that necessitates the limitation of its period.[44]
In Pentagon International Shipping, Inc. v. William B. Adelantar,[45] the Court cited its
rulings in Millares and Coyoca and reiterated that a seafarer is not a regular employee
entitled to backwages and separation pay:
Therefore, Adelantar, a seafarer, is not a regular employee as defined in Article 280 of the Labor
Code. Hence, he is not entitled to full backwages and separation pay in lieu of reinstatement as
provided in Article 279 of the Labor Code. As we held in Millares, Adelantar is a contractual
employee whose rights and obligations are governed primarily by [the] Rules and Regulations of
the POEA and, more importantly, by R.A. 8042, or the Migrant Workers and Overseas Filipinos
Act of 1995.
The latest ruling of the Court in Marcial Gu-Miro v. Rolando C. Adorable and
Bergesen D.Y. Manila[46] reaffirmed yet again its rulings that a seafarer is employed only
on a contractual basis:
Clearly, petitioner cannot be considered as a regular employee notwithstanding that the work he
performs is necessary and desirable in the business of respondent company. As expounded in the
above-mentioned Millares Resolution, an exception is made in the situation of seafarers. The
exigencies of their work necessitates that they be employed on a contractual basis.
Thus, even with the continued re-hiring by respondent company of petitioner to serve as Radio
Officer onboard Bergesens different vessels, this should be interpreted not as a basis for
regularization but rather a series of contract renewals sanctioned under the doctrine set down by
the second Millarescase. If at all, petitioner was preferred because of practical considerations
namely, his experience and qualifications. However, this does not alter the status of his
employment from being contractual.
The petitioner failed to convince the Court why it should restate its decision
in Millaresand reverse its July 29, 2002 Resolution in the same case.
IN LIGHT OF ALL THE FOREGOING, the petition is hereby DENIED. The assailed
Decision dated August 28, 2002 of the Court of Appeals is hereby AFFIRMED. No
pronouncement as to costs.
SO ORDERED.
Puno, (Chairman), Austria-Martinez, Tinga, and Chico-Nazario, JJ., concur.
[1] Penned by Associate Justice Oswaldo D. Agcaoili (retired), with Associate Justices Eliezer R. de los
Santos and Danilo B. Pine, concurring.
[2] Esso Tankers, Inc.
[3] Esso Eastern Marine Ltd.
[4] Esso International Shipping (Bahamas) Co. Ltd., Singapore Branch.
[5] Rollo, p. 53.
[6] POEA Records, p. 142.
[7] Id. at 140-141.
[8] Id. at 138.
[9] Id. at 243.
[10] Id. at 242.
[11] Rollo, p. 54.
[12] NLRC Records, p. 136.
[13] CA Rollo, p. 133.
[14] POEA Records, p. 56.
[15] Id. at 137.
[16] Id.
[17] Id. at 288.
[18] NLRC Records, pp. 6-7.
[19] 328 SCRA 79 (2000).
[20] Id. at 90.
[21] Supra.
[22] CA Rollo, p. 209.
[23] ART. 254. INJUNCTION PROHIBITED No temporary or permanent injunction or restraining order in any
case involving or growing out of labor disputes shall be issued by any court or other entity, except
as otherwise provided in Articles 218 and 264 of this Code.
[24] Labor dispute includes any controversy or matter concerning terms or conditions of employment or the
association or representation of persons in negotiating, fixing, maintaining, changing or arranging
the terms and conditions of employment, regardless of whether the disputants stand in the
proximate relation of employer and employee.
[25] CA Rollo, p. 350.
[26] Id. at 346.
[27] 385 SCRA 306 (2002).
[28] Rollo, pp. 14-15.
[29] ART. 254. Injunction prohibited. No temporary or permanent injunction or restraining order in any case
involving or growing out of Labor disputes shall be issued by any court or other entity, except as,
otherwise, provided in Articles 218 and 264 of this Code.
[30] Azucena, Cesario Alvero, Jr., The Labor Code With Comments and Cases, Vol. II, 1999 ed., p. 300.
[31] Philippine Airlines, Inc. v. NLRC, 287 SCRA 672, 680 (1998), citing Del Rosario v. Court of Appeals, 255
SCRA 152 (1996).
[32] ART. 218. Powers of the Commission. The Commission shall have the power and authority:
(e) To enjoin or restrain any actual or threatened commission of any or all prohibited or unlawful acts or to
require the performance of a particular act in any labor dispute which, if not restrained or performed
forthwith, may cause grave or irreparable damage to any party or render ineffectual any decision
in favor of such party: Provided, That no temporary or permanent injunction in any case involving
or growing out of a labor dispute as defined in this Code shall be issued except after hearing the
testimony of witnesses, with opportunity for cross-examination, in support of the allegations of a
complaint made under oath, and testimony in opposition thereto, if offered, and only after a finding
of fact by the Commission, to the effect:
(1) That prohibited or unlawful acts have been threatened and will be committed and will be continued
unless restrained, but no injunction or temporary restraining order shall be issued on account of
any threat prohibited or unlawful act, except against the person or persons, association or
organization making the threat or committing the prohibited or unlawful act or actually authorizing
or ratifying the same after actual knowledge thereof;
(2) That substantial and irreparable injury to complainants property will follow;
(3) That as to each item of relief to be granted, greater injury will be inflicted upon complainant by the denial
of relief than will be inflicted upon defendants by the granting of relief;
(4) That complainant has no adequate remedy at law; and
(5) That the public officers charged with the duty to protect complainants property are unable or unwilling
to furnish adequate protection.
[33] Supra.
[34] The 1987 Philippine Constitution: Article XIII, Section 3. The State shall afford full protection to labor,
local and overseas, organized and unorganized, and promote full employment and equality of
employment opportunities for all. ...
[35] 243 SCRA 190 (1995).
[36] 181 SCRA 702 (1990).
[37] Id. at 711. (Emphasis supplied)
[38] Id. at 714.
[39] Id. at 716. (Emphasis supplied)
[40] Supra.
[41] Id. at 194-195.
[42] Supra.
[43] Id. at 318-320. (Emphasis supplied)
[44] Id. at 319.
[45] G.R. No. 157373, July 27, 2004.
[46] G.R. No. 160952, August 20, 2004. (Emphasis supplied)
NO. 5
THIRD DIVISION
SUNACE INTERNATIONAL G.R. No. 161757

MANAGEMENT SERVICES, INC.
Petitioner, Present:
QUISUMBING, J., Chairperson,

- versus - CARPIO,
CARPIO MORALES, and
TINGA, JJ.
NATIONAL LABOR RELATIONS
COMMISSION, Second Division; HON.
ERNESTO S. DINOPOL, in his capacity as
Labor Arbiter, NLRC; NCR, Arbitration
Branch, Quezon City and DIVINA A.
MONTEHERMOZO,
Respondents. Promulgated:
January 25, 2006
x - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x
DECISION
CARPIO MORALES, J.:
Petitioner, Sunace International Management Services (Sunace), a corporation duly

organized and existing under the laws of the Philippines, deployed to Taiwan Divina A.
Montehermozo (Divina) as a domestic helper under a 12-month contract effective February 1,
1997.[1] The deployment was with the assistance of a Taiwanese broker, Edmund Wang, President
of Jet Crown International Co., Ltd.
After her 12-month contract expired on February 1, 1998, Divina continued working for
her Taiwanese employer, Hang Rui Xiong, for two more years, after which she returned to the
Philippines on February 4, 2000.
Shortly after her return or on February 14, 2000, Divina filed a complaint[2] before the
National Labor Relations Commission (NLRC) against Sunace, one Adelaide Perez, the
Taiwanese broker, and the employer-foreign principal alleging that she was jailed for three months
and that she was underpaid.
The following day or on February 15, 2000, Labor Arbitration Associate Regina T. Gavin
issued Summons[3] to the Manager of Sunace, furnishing it with a copy of Divinas complaint and
directing it to appear for mandatory conference on February 28, 2000.
The scheduled mandatory conference was reset. It appears to have been concluded,
however.
On April 6, 2000, Divina filed her Position Paper[4] claiming that under her original one-
year contract and the 2-year extended contract which was with the knowledge and consent of
Sunace, the following amounts representing income tax and savings were deducted:
Year Deduction for Deduction for Savings

Income Tax
1997 NT10,450.00 NT23,100.00
1998 NT9,500.00 NT36,000.00
1999 NT13,300.00 NT36,000.00;[5]
and while the amounts deducted in 1997 were refunded to her, those deducted in 1998 and 1999
were not. On even date, Sunace, by its Proprietor/General Manager Maria Luisa Olarte, filed its
Verified Answer and Position Paper,[6] claiming as follows, quoted verbatim:
COMPLAINANT IS NOT ENTITLED

FOR THE REFUND OF HER 24 MONTHS
SAVINGS
3. Complainant could not anymore claim nor entitled for the refund of her 24 months
savings as she already took back her saving already last year and the employer did
not deduct any money from her salary, in accordance with a Fascimile
Message from the respondent SUNACEs employer, Jet Crown International Co.
Ltd., a xerographic copy of which is herewith attached as ANNEX 2 hereof;
COMPLAINANT IS NOT ENTITLED

TO REFUND OF HER 14 MONTHS TAX
AND PAYMENT OF ATTORNEYS FEES
4. There is no basis for the grant of tax refund to the complainant as the she finished her one
year contract and hence, was not illegally dismissed by her employer. She could
only lay claim over the tax refund or much more be awarded of damages such as
attorneys fees as said reliefs are available only when the dismissal of a migrant
worker is without just valid or lawful cause as defined by law or contract.
The rationales behind the award of tax refund and payment of attorneys fees is not to enrich
the complainant but to compensate him for actual injury suffered. Complainant did
not suffer injury, hence, does not deserve to be compensated for whatever kind of
damages.
Hence, the complainant has NO cause of action against respondent SUNACE for monetary
claims, considering that she has been totally paid of all the monetary benefits due
her under her Employment Contract to her full satisfaction.
6. Furthermore, the tax deducted from her salary is in compliance with

the Taiwanese law, which respondent SUNACE has no control and complainant
has to obey and this Honorable Office has no authority/jurisdiction to intervene
because the power to tax is a sovereign power which the Taiwanese Government
is supreme in its own territory. The sovereign power of taxation of a state is
recognized under international law and among sovereign states.
7. That respondent SUNACE respectfully reserves the right to file supplemental Verified
Answer and/or Position Paper to substantiate its prayer for the dismissal of the
above case against the herein respondent. AND BY WAY OF -
x x x x (Emphasis and underscoring supplied)
Reacting to Divinas Position Paper, Sunace filed on April 25, 2000 an . . . ANSWER TO
COMPLAINANTS POSITION PAPER[7] alleging that Divinas 2-year extension of her contract was
without its knowledge and consent, hence, it had no liability attaching to any claim arising
therefrom, and Divina in fact executed a Waiver/Quitclaim and Release of Responsibility and an
Affidavit of Desistance, copy of each document was annexed to said . . . ANSWER TO
COMPLAINANTS POSITION PAPER.
To Sunaces . . . ANSWER TO COMPLAINANTS POSITION PAPER, Divina filed a 2-page reply,[8]without,

however, refuting Sunaces disclaimer of knowledge of the extension of her contract and without
saying anything about the Release, Waiver and Quitclaim and Affidavit of Desistance.
The Labor Arbiter, rejected Sunaces claim that the extension of Divinas contract for two more
years was without its knowledge and consent in this wise:
We reject Sunaces submission that it should not be held responsible

for the amount withheld because her contract was extended for 2 more years
without its knowledge and consent because as Annex B[9] shows, Sunace
and Edmund Wang have not stopped communicating with each other and
yet the matter of the contracts extension and Sunaces alleged non-consent
thereto has not been categorically established.
What Sunace should have done was to write to POEA about the
extension and its objection thereto, copy furnished the complainant herself,
her foreign employer, Hang Rui Xiong and the Taiwanese broker, Edmund
Wang.
And because it did not, it is presumed to have consented to the

extension and should be liable for anything that resulted thereform
(sic).[10] (Underscoring supplied)
The Labor Arbiter rejected too Sunaces argument that it is not liable on account of Divinas
execution of a Waiver and Quitclaim and an Affidavit of Desistance. Observed the Labor Arbiter:
Should the parties arrive at any agreement as to the whole or any part of the
dispute, the same shall be reduced to writing and signed by the parties and their
respective counsel (sic), if any, before the Labor Arbiter.
The settlement shall be approved by the Labor Arbiter after being satisfied
that it was voluntarily entered into by the parties and after having explained to them
the terms and consequences thereof.
A compromise agreement entered into by the parties not in the presence of

the Labor Arbiter before whom the case is pending shall be approved by him, if
after confronting the parties, particularly the complainants, he is satisfied that they
understand the terms and conditions of the settlement and that it was entered into
freely voluntarily (sic) by them and the agreement is not contrary to law, morals,
and public policy.
And because no consideration is indicated in the documents, we strike them

down as contrary to law, morals, and public policy.[11]
He accordingly decided in favor of Divina, by decision of October 9, 2000,[12] the dispositive

portion of which reads:
Wherefore, judgment is hereby rendered ordering respondents SUNACE

INTERNATIONAL SERVICES and its owner ADELAIDA PERGE, both in their
personal capacities and as agent of Hang Rui Xiong/Edmund Wang to jointly and
severally pay complainant DIVINA A. MONTEHERMOZO the sum of
NT91,950.00 in its peso equivalent at the date of payment, as refund for the
amounts which she is hereby adjudged entitled to as earlier discussed plus 10%
thereof as attorneys fees since compelled to litigate, complainant had to engage the
services of counsel.
SO ORDERED.[13] (Underescoring supplied)
On appeal of Sunace, the NLRC, by Resolution of April 30, 2002,[14] affirmed the Labor
Arbiters decision.
Via petition for certiorari,[15] Sunace elevated the case to the Court of Appeals which
dismissed it outright by Resolution of November 12, 2002,[16] the full text of which reads:
The petition for certiorari faces outright dismissal.

The petition failed to allege facts constitutive of grave abuse of discretion
on the part of the public respondent amounting to lack of jurisdiction when the
NLRC affirmed the Labor Arbiters finding that petitioner Sunace International
Management Services impliedly consented to the extension of the contract of
private respondent Divina A. Montehermozo. It is undisputed that petitioner was
continually communicating with private respondents foreign employer (sic). As
agent of the foreign principal, petitioner cannot profess ignorance of such extension
as obviously, the act of the principal extending complainant (sic) employment
contract necessarily bound it. Grave abuse of discretion is not present in the case
at bar.
ACCORDINGLY, the petition is hereby DENIED DUE

COURSE and DISMISSED. [17]
SO ORDERED.
(Emphasis on words in capital letters in the original; emphasis on words in

small letters and underscoring supplied)
Its Motion for Reconsideration having been denied by the appellate court by Resolution of January
14, 2004,[18] Sunace filed the present petition for review on certiorari.
The Court of Appeals affirmed the Labor Arbiter and NLRCs finding that Sunace knew of
and impliedly consented to the extension of Divinas 2-year contract. It went on to state that It is
undisputed that [Sunace] was continually communicating with [Divinas] foreign employer. It thus
concluded that [a]s agent of the foreign principal, petitioner cannot profess ignorance of such
extension as obviously, the act of the principal extending complainant (sic) employment contract
necessarily bound it.
Contrary to the Court of Appeals finding, the alleged continuous communication was with
the Taiwanese broker Wang, not with the foreign employer Xiong.
The February 21, 2000 telefax message from the Taiwanese broker to Sunace,
the only basis of a finding of continuous communication, reads verbatim:
xxxx
Regarding to Divina, she did not say anything about her

saving in police station. As we contact with her employer, she took
back her saving already last years. And they did not deduct any
money from her salary. Or she will call back her employer to check
it again. If her employer said yes! we will get it back for her.
Thank you and best regards.

(sgd.)
Edmund Wang
President[19]
The finding of the Court of Appeals solely on the basis of the above-quoted telefax
message, that Sunace continually communicated with the foreign principal (sic)and therefore was
aware of and had consented to the execution of the extension of the contract is misplaced. The
message does not provide evidence that Sunace was privy to the new contract executed after the
expiration on February 1, 1998 of the original contract. That Sunace and the
Taiwanese broker communicated regarding Divinas allegedly withheld savings does not
necessarily mean that Sunace ratified the extension of the contract. As Sunace points out in its
Reply[20] filed before the Court of Appeals,
As can be seen from that letter communication, it was just an

information given to the petitioner that the private respondent had t[aken]
already her savings from her foreign employer and that no deduction was
made on her salary. It contains nothing about the extension or the petitioners
consent thereto.[21]
Parenthetically, since the telefax message is dated February 21, 2000, it is safe to assume
that it was sent to enlighten Sunace who had been directed, by Summons issued on February 15,
2000, to appear on February 28, 2000 for a mandatory conference following Divinas filing of the
complaint on February 14, 2000.
Respecting the Court of Appeals following dictum:

As agent of its foreign principal, [Sunace] cannot profess ignorance of such
an extension as obviously, the act of its principal extending [Divinas] employment
contract necessarily bound it,[22]
it too is a misapplication, a misapplication of the theory of imputed knowledge.
The theory of imputed knowledge ascribes the knowledge of the agent, Sunace, to the principal,
employer Xiong, not the other way around.[23] The knowledge of the principal-foreign employer
cannot, therefore, be imputed to its agent Sunace.
There being no substantial proof that Sunace knew of and consented to be bound under the
2-year employment contract extension, it cannot be said to be privy thereto. As such, it and its
owner cannot be held solidarily liable for any of Divinas claims arising from the 2-year
employment extension. As the New Civil Code provides,
Contracts take effect only between the parties, their assigns, and
heirs, except in case where the rights and obligations arising from the
contract are not transmissible by their nature, or by stipulation or by
provision of law.[24]
Furthermore, as Sunace correctly points out, there was an implied revocation of its agency
relationship with its foreign principal when, after the termination of the original employment
contract, the foreign principal directly negotiated with Divina and entered into a new and separate
employment contract in Taiwan. Article 1924 of the New Civil Code reading
The agency is revoked if the principal directly manages the business

entrusted to the agent, dealing directly with third persons.
thus applies.
In light of the foregoing discussions, consideration of the validity of the Waiver and
Affidavit of Desistance which Divina executed in favor of Sunace is rendered unnecessary.
WHEREFORE, the petition is GRANTED. The challenged resolutions of the Court of

Appeals are hereby REVERSED and SET ASIDE. The complaint of respondent
Divina A. Montehermozo against petitioner is DISMISSED.
SO ORDERED.
CONCHITA CARPIO MORALES

Associate Justice
WE CONCUR:
LEONARDO A. QUISUMBING
Associate Justice
Chairperson
ANTONIO T. CARPIO DANTE O. TINGA

ATTESTATION
I attest that the conclusions in the above Decision were reached in consultation before the case was
assigned to the writer of the opinion of the Courts Division.
LEONARDO A. QUISUMBING
Associate Justice
Chairperson
CERTIFICATION
Pursuant to Article VIII, Section 13 of the Constitution, and the Division Chairmans Attestation,
it is hereby certified that the conclusions in the above Decision were reached in consultation before
the case was assigned to the writer of the opinion of the Court.
ARTEMIO V. PANGANIBAN
Chief Justice
[1]
NLRC records, p. 18.
[2]
Id. at 2.
[3]
Id. at 5.
[4]
Id. at 21-26.
[5]
Id. at 52.
[6]
Id. at 13-19.
[7]
Id. at 28-34.
[8]
Id. at 36-37.
[9]
Photocopy of a telefax message of Taiwanese broker Wang to Sunace, NLRC records, p. 26.
[10]
NLRC records, pp. 55-56.
[11]
Id. at 56-57 (citations omitted).
[12]
Id. at 51-58.
[13]
Id. at 57-58.
[14]
Id. at 190-196.
[15]
CA rollo, pp. 2-113.
[16]
Penned by Associate Justice Ruben T. Reyes with Associate Justices Remedios Salazar-Fernando and Edgardo F.
Sundiam, concurring.
[17]
CA rollo, pp. 115-116 (citations omitted).
[18]
Id. at 154-157.
[19]
Supra note 9.
[20]
[21]
Id. at 148.
[22]
Id. at 29, 116 and 157.
[23]
Rovels Enterprises, Inc. v. Ocampo, G.R. No. 136821, October 17, 2002, 391 SCRA 176; vide Air France v. Court
of Appeals, et al., 211 Phil. 601 (1983).
[24]
CIVIL CODE, Article 1311.
NO. 6
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 145587 October 26, 2007
EDI-STAFFBUILDERS INTERNATIONAL, INC., petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and ELEAZAR S. GRAN, respondents.
DECISION
VELASCO, JR., J.:
The Case
This Petition for Review on Certiorari1 seeks to set aside the October 18, 2000 Decision2 of the
Court of Appeals (CA) in CA-G.R. SP No. 56120 which affirmed the January 15, 1999 Decision3 and
September 30, 1999 Resolution4 rendered by the National Labor Relations Commission (NLRC)
(Third Division) in POEA ADJ (L) 94-06-2194, ordering Expertise Search International (ESI), EDI-
Staffbuilders International, Inc. (EDI), and Omar Ahmed Ali Bin Bechr Est. (OAB) jointly and
severally to pay Eleazar S. Gran (Gran) the amount of USD 16,150.00 as unpaid salaries.
The Facts
Petitioner EDI is a corporation engaged in recruitment and placement of Overseas Filipino
Workers (OFWs).5 ESI is another recruitment agency which collaborated with EDI to process the
documentation and deployment of private respondent to Saudi Arabia.
Private respondent Gran was an OFW recruited by EDI, and deployed by ESI to work for OAB, in
Riyadh, Kingdom of Saudi Arabia.6
It appears that OAB asked EDI through its October 3, 1993 letter for curricula vitae of qualified
applicants for the position of "Computer Specialist."7 In a facsimile transmission dated November
29, 1993, OAB informed EDI that, from the applicants' curricula vitae submitted to it for
evaluation, it selected Gran for the position of "Computer Specialist." The faxed letter also stated
that if Gran agrees to the terms and conditions of employment contained in it, one of which was
a monthly salary of SR (Saudi Riyal) 2,250.00 (USD 600.00), EDI may arrange for Gran's immediate
dispatch.8
After accepting OAB's offer of employment, Gran signed an employment contract9 that granted
him a monthly salary of USD 850.00 for a period of two years. Gran was then deployed to Riyadh,
Kingdom of Saudi Arabia on February 7, 1994.
Upon arrival in Riyadh, Gran questioned the discrepancy in his monthly salaryhis employment
contract stated USD 850.00; while his Philippine Overseas Employment Agency (POEA)
Information Sheet indicated USD 600.00 only. However, through the assistance of the EDI office
in Riyadh, OAB agreed to pay Gran USD 850.00 a month.10
After Gran had been working for about five months for OAB, his employment was terminated
through OAB's July 9, 1994 letter,11 on the following grounds:
1. Non-compliance to contract requirements by the recruitment agency primarily on your salary
and contract duration.
2. Non-compliance to pre-qualification requirements by the recruitment agency[,] vide OAB
letter ref. F-5751-93, dated October 3, 1993.12
3. Insubordination or disobedience to Top Management Order and/or instructions (non-
submittal of daily activity reports despite several instructions).
On July 11, 1994, Gran received from OAB the total amount of SR 2,948.00 representing his final
pay, and on the same day, he executed a Declaration13 releasing OAB from any financial
obligation or otherwise, towards him.
After his arrival in the Philippines, Gran instituted a complaint, on July 21, 1994, against ESI/EDI,
OAB, Country Bankers Insurance Corporation, and Western Guaranty Corporation with the NLRC,
National Capital Region, Quezon City, which was docketed as POEA ADJ (L) 94-06-2194 for
underpayment of wages/salaries and illegal dismissal.
The Ruling of the Labor Arbiter
In his February 10, 1998 Decision,14 Labor Arbiter Manuel R. Caday, to whom Gran's case was
assigned, ruled that there was neither underpayment nor illegal dismissal.
The Labor Arbiter reasoned that there was no underpayment of salaries since according to the
POEA-Overseas Contract Worker (OCW) Information Sheet, Gran's monthly salary was USD
600.00, and in his Confirmation of Appointment as Computer Specialist, his monthly basic salary
was fixed at SR 2,500.00, which was equivalent to USD 600.00.
Arbiter Caday also cited the Declaration executed by Gran, to justify that Gran had no claim for
unpaid salaries or wages against OAB.
With regard to the issue of illegal dismissal, the Labor Arbiter found that Gran failed to refute
EDI's allegations; namely, (1) that Gran did not submit a single activity report of his daily activity
as dictated by company policy; (2) that he was not qualified for the job as computer specialist
due to his insufficient knowledge in programming and lack of knowledge in ACAD system; (3) that
Gran refused to follow management's instruction for him to gain more knowledge of the job to
prove his worth as computer specialist; (4) that Gran's employment contract had never been
substituted; (5) and that Gran was paid a monthly salary of USD 850.00, and USD 350.00 monthly
as food allowance.
Accordingly, the Labor Arbiter decided that Gran was validly dismissed from his work due to
insubordination, disobedience, and his failure to submit daily activity reports.
Thus, on February 10, 1998, Arbiter Caday dismissed Gran's complaint for lack of merit.
Dissatisfied, Gran filed an Appeal15 on April 6, 1998 with the NLRC, Third Division. However, it
appears from the records that Gran failed to furnish EDI with a copy of his Appeal Memorandum.
The Ruling of the NLRC
The NLRC held that EDI's seemingly harmless transfer of Gran's contract to ESI is actually
"reprocessing," which is a prohibited transaction under Article 34 (b) of the Labor Code. This
scheme constituted misrepresentation through the conspiracy between EDI and ESI in misleading
Gran and even POEA of the actual terms and conditions of the OFW's employment. In addition,
it was found that Gran did not commit any act that constituted a legal ground for dismissal. The
alleged non-compliance with contractual stipulations relating to Gran's salary and contract
duration, and the absence of pre-qualification requirements cannot be attributed to Gran but to
EDI, which dealt directly with OAB. In addition, the charge of insubordination was not
substantiated, and Gran was not even afforded the required notice and investigation on his
alleged offenses.
Thus, the NLRC reversed the Labor Arbiter's Decision and rendered a new one, the dispositive
portion of which reads:
WHEREFORE, the assailed decision is SET ASIDE. Respondents Expertise Search International, Inc.,
EDI Staffbuilders Int'l., Inc. and Omar Ahmed Ali Bin Bechr Est. (OAB) are hereby ordered jointly
and severally liable to pay the complainant Eleazar Gran the Philippine peso equivalent at the
time of actual payment of SIXTEEN THOUSAND ONE HUNDRED FIFTY US DOLLARS (US$16,150.00)
representing his salaries for the unexpired portion of his contract.
SO ORDERED.16
Gran then filed a Motion for Execution of Judgment17 on March 29, 1999 with the NLRC and
petitioner receiving a copy of this motion on the same date.18
To prevent the execution, petitioner filed an Opposition19 to Gran's motion arguing that the Writ
of Execution cannot issue because it was not notified of the appellate proceedings before the
NLRC and was not given a copy of the memorandum of appeal nor any opportunity to participate
in the appeal.
Seeing that the NLRC did not act on Gran's motion after EDI had filed its Opposition, petitioner
filed, on August 26, 1999, a Motion for Reconsideration of the NLRC Decision after receiving a
copy of the Decision on August 16, 1999.20
The NLRC then issued a Resolution21 denying petitioner's Motion for Reconsideration,
ratiocinating that the issues and arguments raised in the motion "had already been amply
discussed, considered, and ruled upon" in the Decision, and that there was "no cogent reason or
patent or palpable error that warrant any disturbance thereof."
Unconvinced of the NLRC's reasoning, EDI filed a Petition for Certiorari before the CA. Petitioner
claimed in its petition that the NLRC committed grave abuse of discretion in giving due course to
the appeal despite Gran's failure to perfect the appeal.
The Ruling of the Court of Appeals
The CA subsequently ruled on the procedural and substantive issues of EDI's petition.
On the procedural issue, the appellate court held that "Gran's failure to furnish a copy of his
appeal memorandum [to EDI was] a mere formal lapse, an excusable neglect and not a
jurisdictional defect which would justify the dismissal of his appeal."22 The court also held that
petitioner EDI failed to prove that private respondent was terminated for a valid cause and in
accordance with due process; and that Gran's Declaration releasing OAB from any monetary
obligation had no force and effect. The appellate court ratiocinated that EDI had the burden of
proving Gran's incompetence; however, other than the termination letter, no evidence was
presented to show how and why Gran was considered to be incompetent. The court held that
since the law requires the recruitment agencies to subject OFWs to trade tests before
deployment, Gran must have been competent and qualified; otherwise, he would not have been
hired and deployed abroad.
As for the charge of insubordination and disobedience due to Gran's failure to submit a "Daily
Activity Report," the appellate court found that EDI failed to show that the submission of the
"Daily Activity Report" was a part of Gran's duty or the company's policy. The court also held that
even if Gran was guilty of insubordination, he should have just been suspended or reprimanded,
but not dismissed.
The CA also held that Gran was not afforded due process, given that OAB did not abide by the
twin notice requirement. The court found that Gran was terminated on the same day he received
the termination letter, without having been apprised of the bases of his dismissal or afforded an
opportunity to explain his side.
Finally, the CA held that the Declaration signed by Gran did not bar him from demanding benefits
to which he was entitled. The appellate court found that the Declaration was in the form of a
quitclaim, and as such is frowned upon as contrary to public policy especially where the monetary
consideration given in the Declaration was very much less than what he was legally entitled to
his backwages amounting to USD 16,150.00.
As a result of these findings, on October 18, 2000, the appellate court denied the petition to set
aside the NLRC Decision.
Hence, this instant petition is before the Court.
The Issues
Petitioner raises the following issues for our consideration:
I. WHETHER THE FAILURE OF GRAN TO FURNISH A COPY OF HIS APPEAL MEMORANDUM TO
PETITIONER EDI WOULD CONSTITUTE A JURISDICTIONAL DEFECT AND A DEPRIVATION OF
PETITIONER EDI'S RIGHT TO DUE PROCESS AS WOULD JUSTIFY THE DISMISSAL OF GRAN'S
APPEAL.
II. WHETHER PETITIONER EDI HAS ESTABLISHED BY WAY OF SUBSTANTIAL EVIDENCE THAT
GRAN'S TERMINATION WAS JUSTIFIABLE BY REASON OF INCOMPETENCE. COROLLARY HERETO,
WHETHER THE PRIETO VS. NLRC RULING, AS APPLIED BY THE COURT OF APPEALS, IS APPLICABLE
IN THE INSTANT CASE.
III. WHETHER PETITIONER HAS ESTABLISHED BY WAY OF SUBSTANTIAL EVIDENCE THAT GRAN'S
TERMINATION WAS JUSTIFIABLE BY REASON OF INSUBORDINATION AND DISOBEDIENCE.
IV. WHETHER GRAN WAS AFFORDED DUE PROCESS PRIOR TO TERMINATION.
V. WHETHER GRAN IS ENTITLED TO BACKWAGES FOR THE UNEXPIRED PORTION OF HIS
CONTRACT.23
The Court's Ruling
The petition lacks merit except with respect to Gran's failure to furnish EDI with his Appeal
Memorandum filed with the NLRC.
First Issue: NLRC's Duty is to Require Respondent to Provide Petitioner a Copy of the Appeal
Petitioner EDI claims that Gran's failure to furnish it a copy of the Appeal Memorandum
constitutes a jurisdictional defect and a deprivation of due process that would warrant a rejection
of the appeal.
This position is devoid of merit.
In a catena of cases, it was ruled that failure of appellant to furnish a copy of the appeal to the
adverse party is not fatal to the appeal.
In Estrada v. National Labor Relations Commission,24 this Court set aside the order of the NLRC
which dismissed an appeal on the sole ground that the appellant did not furnish the appellee a
memorandum of appeal contrary to the requirements of Article 223 of the New Labor Code and
Section 9, Rule XIII of its Implementing Rules and Regulations.
Also, in J.D. Magpayo Customs Brokerage Corp. v. NLRC, the order of dismissal of an appeal to
the NLRC based on the ground that "there is no showing whatsoever that a copy of the appeal
was served by the appellant on the appellee"25was annulled. The Court ratiocinated as follows:
The failure to give a copy of the appeal to the adverse party was a mere formal lapse, an
excusable neglect. Time and again We have acted on petitions to review decisions of the Court
of Appeals even in the absence of proof of service of a copy thereof to the Court of Appeals as
required by Section 1 of Rule 45, Rules of Court. We act on the petitions and simply require the
petitioners to comply with the rule.26 (Emphasis supplied.)
The J.D. Magpayo ruling was reiterated in Carnation Philippines Employees Labor Union-FFW v.
National Labor Relations Commission,27 Pagdonsalan v. NLRC,28 and in Sunrise Manning Agency,
Inc. v. NLRC.29
Thus, the doctrine that evolved from these cases is that failure to furnish the adverse party with
a copy of the appeal is treated only as a formal lapse, an excusable neglect, and hence, not a
jurisdictional defect. Accordingly, in such a situation, the appeal should not be dismissed;
however, it should not be given due course either. As enunciated in J.D. Magpayo, the duty that
is imposed on the NLRC, in such a case, is to require the appellant to comply with the rule that
the opposing party should be provided with a copy of the appeal memorandum.
While Gran's failure to furnish EDI with a copy of the Appeal Memorandum is excusable, the
abject failure of the NLRC to order Gran to furnish EDI with the Appeal Memorandum
constitutes grave abuse of discretion.
The records reveal that the NLRC discovered that Gran failed to furnish EDI a copy of the Appeal
Memorandum. The NLRC then ordered Gran to present proof of service. In compliance with the
order, Gran submitted a copy of Camp Crame Post Office's list of mail/parcels sent on April 7,
1998.30 The post office's list shows that private respondent Gran sent two pieces of mail on the
same date: one addressed to a certain Dan O. de Guzman of Legaspi Village, Makati; and the
other appears to be addressed to Neil B. Garcia (or Gran),31 of Ermita, Manilaboth of whom are
not connected with petitioner.
This mailing list, however, is not a conclusive proof that EDI indeed received a copy of the Appeal
Memorandum.
Sec. 5 of the NLRC Rules of Procedure (1990) provides for the proof and completeness of service
in proceedings before the NLRC:
Section 5.32 Proof and completeness of service.The return is prima facie proof of the facts
indicated therein. Service by registered mail is complete upon receipt by the addressee or his
agent; but if the addressee fails to claim his mail from the post office within five (5) days from
the date of first notice of the postmaster, service shall take effect after such time. (Emphasis
supplied.)
Hence, if the service is done through registered mail, it is only deemed complete when the
addressee or his agent received the mail or after five (5) days from the date of first notice of the
postmaster. However, the NLRC Rules do not state what would constitute proper proof of service.
Sec. 13, Rule 13 of the Rules of Court, provides for proofs of service:
Section 13. Proof of service.Proof of personal service shall consist of a written admission of the
party served or the official return of the server, or the affidavit of the party serving, containing a
full statement of the date, place and manner of service. If the service is by ordinary mail, proof
thereof shall consist of an affidavit of the person mailing of facts showing compliance with section
7 of this Rule. If service is made by registered mail, proof shall be made by such affidavit and
registry receipt issued by the mailing office. The registry return card shall be filed immediately
upon its receipt by the sender, or in lieu thereof the unclaimed letter together with the certified
or sworn copy of the notice given by the postmaster to the addressee (emphasis supplied).
Based on the foregoing provision, it is obvious that the list submitted by Gran is not conclusive
proof that he had served a copy of his appeal memorandum to EDI, nor is it conclusive proof that
EDI received its copy of the Appeal Memorandum. He should have submitted an affidavit proving
that he mailed the Appeal Memorandum together with the registry receipt issued by the post
office; afterwards, Gran should have immediately filed the registry return card.
Hence, after seeing that Gran failed to attach the proof of service, the NLRC should not have
simply accepted the post office's list of mail and parcels sent; but it should have required Gran
to properly furnish the opposing parties with copies of his Appeal Memorandum as prescribed
in J.D. Magpayo and the other cases. The NLRC should not have proceeded with the adjudication
of the case, as this constitutes grave abuse of discretion.
The glaring failure of NLRC to ensure that Gran should have furnished petitioner EDI a copy of
the Appeal Memorandum before rendering judgment reversing the dismissal of Gran's complaint
constitutes an evasion of the pertinent NLRC Rules and established jurisprudence. Worse, this
failure deprived EDI of procedural due process guaranteed by the Constitution which can serve
as basis for the nullification of proceedings in the appeal before the NLRC. One can only surmise
the shock and dismay that OAB, EDI, and ESI experienced when they thought that the dismissal
of Gran's complaint became final, only to receive a copy of Gran's Motion for Execution of
Judgment which also informed them that Gran had obtained a favorable NLRC Decision. This is
not level playing field and absolutely unfair and discriminatory against the employer and the job
recruiters. The rights of the employers to procedural due process cannot be cavalierly
disregarded for they too have rights assured under the Constitution.
However, instead of annulling the dispositions of the NLRC and remanding the case for further
proceedings we will resolve the petition based on the records before us to avoid a protracted
litigation.33
The second and third issues have a common matterwhether there was just cause for Gran's
dismissalhence, they will be discussed jointly.
Second and Third Issues: Whether Gran's dismissal is justifiable by reason of incompetence,
insubordination, and disobedience
In cases involving OFWs, the rights and obligations among and between the OFW, the local
recruiter/agent, and the foreign employer/principal are governed by the employment contract.
A contract freely entered into is considered law between the parties; and hence, should be
respected. In formulating the contract, the parties may establish such stipulations, clauses, terms
and conditions as they may deem convenient, provided they are not contrary to law, morals,
good customs, public order, or public policy.34
In the present case, the employment contract signed by Gran specifically states that Saudi Labor
Laws will govern matters not provided for in the contract (e.g. specific causes for termination,
termination procedures, etc.). Being the law intended by the parties (lex loci intentiones) to apply
to the contract, Saudi Labor Laws should govern all matters relating to the termination of the
employment of Gran.
In international law, the party who wants to have a foreign law applied to a dispute or case has
the burden of proving the foreign law. The foreign law is treated as a question of fact to be
properly pleaded and proved as the judge or labor arbiter cannot take judicial notice of a foreign
law. He is presumed to know only domestic or forum law.35
Unfortunately for petitioner, it did not prove the pertinent Saudi laws on the matter; thus, the
International Law doctrine of presumed-identity approach or processual presumption comes into
play.36 Where a foreign law is not pleaded or, even if pleaded, is not proved, the presumption is
that foreign law is the same as ours.37 Thus, we apply Philippine labor laws in determining the
issues presented before us.
Petitioner EDI claims that it had proven that Gran was legally dismissed due to incompetence and
insubordination or disobedience.
This claim has no merit.
In illegal dismissal cases, it has been established by Philippine law and jurisprudence that the
employer should prove that the dismissal of employees or personnel is legal and just.
Section 33 of Article 277 of the Labor Code38 states that:
ART. 277. MISCELLANEOUS PROVISIONS39
(b) Subject to the constitutional right of workers to security of tenure and their right to be
protected against dismissal except for a just and authorized cause and without prejudice to the
requirement of notice under Article 283 of this Code, the employer shall furnish the worker
whose employment is sought to be terminated a written notice containing a statement of the
causes for termination and shall afford the latter ample opportunity to be heard and to defend
himself with the assistance of his representative if he so desires in accordance with company
rules and regulations promulgated pursuant to guidelines set by the Department of Labor and
Employment. Any decision taken by the employer shall be without prejudice to the right of the
workers to contest the validity or legality of his dismissal by filing a complaint with the regional
branch of the National Labor Relations Commission. The burden of proving that the termination
was for a valid or authorized cause shall rest on the employer. x x x
In many cases, it has been held that in termination disputes or illegal dismissal cases, the
employer has the burden of proving that the dismissal is for just and valid causes; and failure to
do so would necessarily mean that the dismissal was not justified and therefore illegal.40 Taking
into account the character of the charges and the penalty meted to an employee, the employer
is bound to adduce clear, accurate, consistent, and convincing evidence to prove that the
dismissal is valid and legal.41 This is consistent with the principle of security of tenure as
guaranteed by the Constitution and reinforced by Article 277 (b) of the Labor Code of the
Philippines.42
In the instant case, petitioner claims that private respondent Gran was validly dismissed for just
cause, due to incompetence and insubordination or disobedience. To prove its allegations, EDI
submitted two letters as evidence. The first is the July 9, 1994 termination letter, 43 addressed to
Gran, from Andrea E. Nicolaou, Managing Director of OAB. The second is an unsigned April 11,
1995 letter44 from OAB addressed to EDI and ESI, which outlined the reasons why OAB had
terminated Gran's employment.
Petitioner claims that Gran was incompetent for the Computer Specialist position because he had
"insufficient knowledge in programming and zero knowledge of [the] ACAD system."45 Petitioner
also claims that Gran was justifiably dismissed due to insubordination or disobedience because
he continually failed to submit the required "Daily Activity Reports."46However, other than the
abovementioned letters, no other evidence was presented to show how and why Gran was
considered incompetent, insubordinate, or disobedient. Petitioner EDI had clearly failed to
overcome the burden of proving that Gran was validly dismissed.
Petitioner's imputation of incompetence on private respondent due to his "insufficient
knowledge in programming and zero knowledge of the ACAD system" based only on the above
mentioned letters, without any other evidence, cannot be given credence.
An allegation of incompetence should have a factual foundation. Incompetence may be shown
by weighing it against a standard, benchmark, or criterion. However, EDI failed to establish any
such bases to show how petitioner found Gran incompetent.
In addition, the elements that must concur for the charge of insubordination or willful
disobedience to prosper were not present.
In Micro Sales Operation Network v. NLRC, we held that:
For willful disobedience to be a valid cause for dismissal, the following twin elements must
concur: (1) the employee's assailed conduct must have been willful, that is, characterized by a
wrongful and perverse attitude; and (2) the order violated must have been reasonable, lawful,
made known to the employee and must pertain to the duties which he had been engaged to
discharge.47
EDI failed to discharge the burden of proving Gran's insubordination or willful disobedience. As
indicated by the second requirement provided for in Micro Sales Operation Network, in order to
justify willful disobedience, we must determine whether the order violated by the employee is
reasonable, lawful, made known to the employee, and pertains to the duties which he had been
engaged to discharge. In the case at bar, petitioner failed to show that the order of the company
which was violatedthe submission of "Daily Activity Reports"was part of Gran's duties as a
Computer Specialist. Before the Labor Arbiter, EDI should have provided a copy of the company
policy, Gran's job description, or any other document that would show that the "Daily Activity
Reports" were required for submission by the employees, more particularly by a Computer
Specialist.
Even though EDI and/or ESI were merely the local employment or recruitment agencies and not
the foreign employer, they should have adduced additional evidence to convincingly show that
Gran's employment was validly and legally terminated. The burden devolves not only upon the
foreign-based employer but also on the employment or recruitment agency for the latter is not
only an agent of the former, but is also solidarily liable with the foreign principal for any claims
or liabilities arising from the dismissal of the worker.48
Thus, petitioner failed to prove that Gran was justifiably dismissed due to incompetence,
insubordination, or willful disobedience.
Petitioner also raised the issue that Prieto v. NLRC,49 as used by the CA in its Decision, is not
applicable to the present case.
In Prieto, this Court ruled that "[i]t is presumed that before their deployment, the petitioners
were subjected to trade tests required by law to be conducted by the recruiting agency to insure
employment of only technically qualified workers for the foreign principal."50 The CA, using the
ruling in the said case, ruled that Gran must have passed the test; otherwise, he would not have
been hired. Therefore, EDI was at fault when it deployed Gran who was allegedly "incompetent"
for the job.
According to petitioner, the Prieto ruling is not applicable because in the case at hand, Gran
misrepresented himself in his curriculum vitae as a Computer Specialist; thus, he was not
qualified for the job for which he was hired.
We disagree.
The CA is correct in applying Prieto. The purpose of the required trade test is to weed out
incompetent applicants from the pool of available workers. It is supposed to reveal applicants
with false educational backgrounds, and expose bogus qualifications. Since EDI deployed Gran to
Riyadh, it can be presumed that Gran had passed the required trade test and that Gran is qualified
for the job. Even if there was no objective trade test done by EDI, it was still EDI's responsibility
to subject Gran to a trade test; and its failure to do so only weakened its position but should not
in any way prejudice Gran. In any case, the issue is rendered moot and academic because Gran's
incompetency is unproved.
Fourth Issue: Gran was not Afforded Due Process
As discussed earlier, in the absence of proof of Saudi laws, Philippine Labor laws and regulations
shall govern the relationship between Gran and EDI. Thus, our laws and rules on the requisites of
due process relating to termination of employment shall apply.
Petitioner EDI claims that private respondent Gran was afforded due process, since he was
allowed to work and improve his capabilities for five months prior to his termination. 51 EDI also
claims that the requirements of due process, as enunciated in Santos, Jr. v. NLRC,52 and Malaya
Shipping Services, Inc. v. NLRC,53 cited by the CA in its Decision, were properly observed in the
present case.
This position is untenable.
In Agabon v. NLRC,54 this Court held that:
Procedurally, (1) if the dismissal is based on a just cause under Article 282, the employer must
give the employee two written notices and a hearing or opportunity to be heard if requested by
the employee before terminating the employment: a notice specifying the grounds for which
dismissal is sought a hearing or an opportunity to be heard and after hearing or opportunity to
be heard, a notice of the decision to dismiss; and (2) if the dismissal is based on authorized causes
under Articles 283 and 284, the employer must give the employee and the Department of Labor
and Employment written notices 30 days prior to the effectivity of his separation.
Under the twin notice requirement, the employees must be given two (2) notices before their
employment could be terminated: (1) a first notice to apprise the employees of their fault, and
(2) a second notice to communicate to the employees that their employment is being terminated.
In between the first and second notice, the employees should be given a hearing or opportunity
to defend themselves personally or by counsel of their choice.55
A careful examination of the records revealed that, indeed, OAB's manner of dismissing Gran fell
short of the two notice requirement. While it furnished Gran the written notice informing him of
his dismissal, it failed to furnish Gran the written notice apprising him of the charges against him,
as prescribed by the Labor Code.56 Consequently, he was denied the opportunity to respond to
said notice. In addition, OAB did not schedule a hearing or conference with Gran to defend
himself and adduce evidence in support of his defenses. Moreover, the July 9, 1994 termination
letter was effective on the same day. This shows that OAB had already condemned Gran to
dismissal, even before Gran was furnished the termination letter. It should also be pointed out
that OAB failed to give Gran the chance to be heard and to defend himself with the assistance of
a representative in accordance with Article 277 of the Labor Code. Clearly, there was no intention
to provide Gran with due process. Summing up, Gran was notified and his employment arbitrarily
terminated on the same day, through the same letter, and for unjustified grounds.
Obviously, Gran was not afforded due process.
Pursuant to the doctrine laid down in Agabon,57 an employer is liable to pay nominal damages as
indemnity for violating the employee's right to statutory due process. Since OAB was in breach
of the due process requirements under the Labor Code and its regulations, OAB, ESI, and EDI,
jointly and solidarily, are liable to Gran in the amount of PhP 30,000.00 as indemnity.
Fifth and Last Issue: Gran is Entitled to Backwages
We reiterate the rule that with regard to employees hired for a fixed period of employment, in
cases arising before the effectivity of R.A. No. 804258 (Migrant Workers and Overseas Filipinos
Act) on August 25, 1995, that when the contract is for a fixed term and the employees are
dismissed without just cause, they are entitled to the payment of their salaries corresponding to
the unexpired portion of their contract.59 On the other hand, for cases arising after the effectivity
of R.A. No. 8042, when the termination of employment is without just, valid or authorized cause
as defined by law or contract, the worker shall be entitled to the full reimbursement of his
placement fee with interest of 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.60
In the present case, the employment contract provides that the employment contract shall be
valid for a period of two (2) years from the date the employee starts to work with the
employer.61 Gran arrived in Riyadh, Saudi Arabia and started to work on February 7,
1994;62 hence, his employment contract is until February 7, 1996. Since he was illegally dismissed
on July 9, 1994, before the effectivity of R.A. No. 8042, he is therefore entitled to backwages
corresponding to the unexpired portion of his contract, which was equivalent to USD 16,150.
Petitioner EDI questions the legality of the award of backwages and mainly relies on the
Declaration which is claimed to have been freely and voluntarily executed by Gran. The relevant
portions of the Declaration are as follows:
I, ELEAZAR GRAN (COMPUTER SPECIALIST) AFTER RECEIVING MY FINAL SETTLEMENT ON THIS
DATE THE AMOUNT OF:
S.R. 2,948.00 (SAUDI RIYALS TWO THOUSAND NINE
HUNDRED FORTY EIGHT ONLY)
REPRESENTING COMPLETE PAYMENT (COMPENSATION) FOR THE SERVICES I RENDERED TO OAB
ESTABLISHMENT.
I HEREBY DECLARE THAT OAB EST. HAS NO FINANCIAL OBLIGATION IN MY FAVOUR AFTER
RECEIVING THE ABOVE MENTIONED AMOUNT IN CASH.
I STATE FURTHER THAT OAB EST. HAS NO OBLIGATION TOWARDS ME IN WHATEVER FORM.
I ATTEST TO THE TRUTHFULNESS OF THIS STATEMENT BY AFFIXING MY SIGNATURE
VOLUNTARILY.
SIGNED.
ELEAZAR GRAN
Courts must undertake a meticulous and rigorous review of quitclaims or waivers, more
particularly those executed by employees. This requirement was clearly articulated by Chief
Justice Artemio V. Panganiban in Land and Housing Development Corporation v. Esquillo:
Quitclaims, releases and other waivers of benefits granted by laws or contracts in favor of
workers should be strictly scrutinized to protect the weak and the disadvantaged. The waivers
should be carefully examined, in regard not only to the words and terms used, but also the
factual circumstances under which they have been executed.63 (Emphasis supplied.)
This Court had also outlined in Land and Housing Development Corporation, citing Periquet v.
NLRC,64 the parameters for valid compromise agreements, waivers, and quitclaims:
Not all waivers and quitclaims are invalid as against public policy. If the agreement was voluntarily
entered into and represents a reasonable settlement, it is binding on the parties and may not
later be disowned simply because of a change of mind. It is only where there is clear proof that
the waiver was wangled from an unsuspecting or gullible person, or the terms of settlement are
unconscionable on its face, that the law will step in to annul the questionable transaction. But
where it is shown that the person making the waiver did so voluntarily, with full understanding
of what he was doing, and the consideration for the quitclaim is credible and reasonable, the
transaction must be recognized as a valid and binding undertaking. (Emphasis supplied.)
Is the waiver and quitclaim labeled a Declaration valid? It is not.
The Court finds the waiver and quitclaim null and void for the following reasons:
1. The salary paid to Gran upon his termination, in the amount of SR 2,948.00, is unreasonably
low. As correctly pointed out by the court a quo, the payment of SR 2,948.00 is even lower than
his monthly salary of SR 3,190.00 (USD 850.00). In addition, it is also very much less than the USD
16,150.00 which is the amount Gran is legally entitled to get from petitioner EDI as backwages.
2. The Declaration reveals that the payment of SR 2,948.00 is actually the payment for Gran's
salary for the services he rendered to OAB as Computer Specialist. If the Declaration is a
quitclaim, then the consideration should be much much more than the monthly salary of SR
3,190.00 (USD 850.00)although possibly less than the estimated Gran's salaries for the
remaining duration of his contract and other benefits as employee of OAB. A quitclaim will
understandably be lower than the sum total of the amounts and benefits that can possibly be
awarded to employees or to be earned for the remainder of the contract period since it is a
compromise where the employees will have to forfeit a certain portion of the amounts they are
claiming in exchange for the early payment of a compromise amount. The court may however
step in when such amount is unconscionably low or unreasonable although the employee
voluntarily agreed to it. In the case of the Declaration, the amount is unreasonably small
compared to the future wages of Gran.
3. The factual circumstances surrounding the execution of the Declaration would show that Gran
did not voluntarily and freely execute the document. Consider the following chronology of
events:
a. On July 9, 1994, Gran received a copy of his letter of termination;
b. On July 10, 1994, Gran was instructed to depart Saudi Arabia and required to pay his plane
ticket;65
c. On July 11, 1994, he signed the Declaration;
d. On July 12, 1994, Gran departed from Riyadh, Saudi Arabia; and
e. On July 21, 1994, Gran filed the Complaint before the NLRC.
The foregoing events readily reveal that Gran was "forced" to sign the Declaration and
constrained to receive the amount of SR 2,948.00 even if it was against his willsince he was
told on July 10, 1994 to leave Riyadh on July 12, 1994. He had no other choice but to sign the
Declaration as he needed the amount of SR 2,948.00 for the payment of his ticket. He could have
entertained some apprehensions as to the status of his stay or safety in Saudi Arabia if he would
not sign the quitclaim.
4. The court a quo is correct in its finding that the Declaration is a contract of adhesion which
should be construed against the employer, OAB. An adhesion contract is contrary to public policy
as it leaves the weaker partythe employeein a "take-it-or-leave-it" situation. Certainly, the
employer is being unjust to the employee as there is no meaningful choice on the part of the
employee while the terms are unreasonably favorable to the employer.66
Thus, the Declaration purporting to be a quitclaim and waiver is unenforceable under Philippine
laws in the absence of proof of the applicable law of Saudi Arabia.
In order to prevent disputes on the validity and enforceability of quitclaims and waivers of
employees under Philippine laws, said agreements should contain the following:
1. A fixed amount as full and final compromise settlement;
2. The benefits of the employees if possible with the corresponding amounts, which the
employees are giving up in consideration of the fixed compromise amount;
3. A statement that the employer has clearly explained to the employee in English, Filipino, or in
the dialect known to the employeesthat by signing the waiver or quitclaim, they are forfeiting
or relinquishing their right to receive the benefits which are due them under the law; and
4. A statement that the employees signed and executed the document voluntarily, and had fully
understood the contents of the document and that their consent was freely given without any
threat, violence, duress, intimidation, or undue influence exerted on their person.
It is advisable that the stipulations be made in English and Tagalog or in the dialect known to the
employee. There should be two (2) witnesses to the execution of the quitclaim who must also
sign the quitclaim. The document should be subscribed and sworn to under oath preferably
before any administering official of the Department of Labor and Employment or its regional
office, the Bureau of Labor Relations, the NLRC or a labor attach in a foreign country. Such
official shall assist the parties regarding the execution of the quitclaim and waiver. 67 This
compromise settlement becomes final and binding under Article 227 of the Labor Code which
provides that:
[A]ny compromise settlement voluntarily agreed upon with the assistance of the Bureau of Labor
Relations or the regional office of the DOLE, shall be final and binding upon the parties and the
NLRC or any court "shall not assume jurisdiction over issues involved therein except in case of
non-compliance thereof or if there is prima facieevidence that the settlement was obtained
through fraud, misrepresentation, or coercion.
It is made clear that the foregoing rules on quitclaim or waiver shall apply only to labor contracts
of OFWs in the absence of proof of the laws of the foreign country agreed upon to govern said
contracts. Otherwise, the foreign laws shall apply.
WHEREFORE, the petition is DENIED. The October 18, 2000 Decision in CA-G.R. SP No. 56120 of
the Court of Appeals affirming the January 15, 1999 Decision and September 30, 1999 Resolution
of the NLRC
is AFFIRMED with the MODIFICATION that petitioner EDI-Staffbuilders International, Inc. shall
pay the amount of PhP 30,000.00 to respondent Gran as nominal damages for non-compliance
with statutory due process.
No costs.
SO ORDERED.
Quisumbing, Carpio, Tinga, Nachura, JJ., concur.
Footnotes
* As per October 17, 2007 raffle.
1 Rollo, pp. 9-39.
2Id. at 140-148. The Decision was penned by Associate Justice Conchita Carpio Morales (now a
Member of this Court) and concurred in by Associate Justices Candido V. Rivera and Elvi John S.
Asuncion.
3Id. at 86-99. The Decision was penned by NLRC Commissioner Ireneo B. Bernardo and
concurred in by Commissioners Lourdes C. Javier and Tito F. Genilo.
4 Id. at 106-107.
5 Id. at 140.
6 Id. at 140-141.
7 Id. at 40.
8 Id. at 41.
9Signed by Eleazar S. Gran (second party) and Mrs. Andrea Nicolaus (first party) representing
Omar Ahmed Ali Bin Bechr Est., dated January 20, 1994; id. at 42-50.
10 Id. at 141.
11 Id. at 51.
12 Supra note 7.
13 Rollo, p. 73.
14 Id. at 75.
15 CA rollo, pp. 108-113.
16 Supra note 3, at 98.
17 Rollo, p. 80.
18 Id. at 100 & 224.
19 Id. at 100-105.
20 Id. at 219.
22Supra note 2, at 145; citing Carnation Phil. Employees Labor Union-FFW v. NLRC, G.R. No. L-
64397, October 11, 1983, 125 SCRA 42 and Flexo Manufacturing Corporation v. NLRC, G.R. No.
164857, April 18, 1997, 135 SCRA 145.
23 Rollo, p. 220.
24 G.R. No. L-57735, March 19, 1982, 112 SCRA 688, 691.
25 G.R. No. L-60950, November 19, 1982, 118 SCRA 645, 646.
26 Id.
27 Supra note 22.
28 G.R. No. L-63701, January 31, 1980, 127 SCRA 463.
29 G.R. No. 146703, November 18, 2004, 443 SCRA 35.
30 Rollo, pp. 84-85.
31 Id. The handwriting is illegible.
32 Now Sec. 7 of New NLRC Rules of Procedure.
33 Marlene Crisostomo v. Florito M. Garcia, Jr., G.R. No. 164787, January 31, 2006, 481 SCRA
402; Bunao v. Social Security Sytem, G.R. No. 156652, December 13, 2005, 477 SCRA 564,
citing Vallejo v. Court of Appeals,G.R. No. 156413, April 14, 2004, 427 SCRA 658, 669; and San
Luis v. Court of Appeals, G.R. No. 142649, September 13, 2001, 417 Phil. 598, 605; Cadalin v.
POEA Administrator, G.R. Nos. 104776, 104911, 105029-32, December 5, 1994, 238 SCRA
721; Pagdonsalan v. National Labor Relations Commission, G.R. No. L-63701, January 31, 1984,
127 SCRA 463.
34 Civil Code, Art. 1306.
35 Id. Loquia and Pangalanan, p. 144.
36J.R. Coquia & E.A. Pangalangan, Conflict of Laws 157 (1995); citing Cramton, Currie, Kay,
Conflict of Laws Cases and Commentaries 56.
37 Philippine Export and Loan Guarantee Corporation v. V.P. Eusebio Construction Inc., et
al., G.R. No. 140047, July 14, 2004, 434 SCRA 202, 215.
38See Presidential Decree No. 442, "A Decree Instituting a Labor Code, Thereby Revising and
Consolidating Labor and Social Laws to Afford Protection to Labor, Promote Employment and
Human Resources Development and Ensure Industrial Peace Based on Social Justice."
39As amended by Sec. 33, R.A. 6715, "An Act to Extend Protection to Labor, Strengthen the
Constitutional Rights of Workers to Self-Organization, Collective Bargaining and Peaceful
Concerted Activities, Foster Industrial Peace and Harmony, Promote the Preferential Use of
Voluntary Modes of Settling Labor Disputes, and Reorganize the National Labor Relations
Commission, Amending for these Purposes Certain Provisions of Presidential Decree No. 442, as
amended, Otherwise Known as The Labor Code of the Philippines, Appropriating Funds
Therefore and for Other Purposes," approved on March 2, 1989.
40 Ting v. Court of Appeals, G.R. No. 146174, July 12, 2006, 494 SCRA 610.
41 Bank of the Philippine Islands v. Uy, G.R. No. 156994, August 31, 2005, 468 SCRA 633.
42 I Alcantara, Philippine Labor and Social Legislation 1052 (1999).
43 Supra note 11.
44 Rollo, pp. 155-156.
46 Id. at 29.
47 G.R. No. 155279, October 11, 2005, 472 SCRA 328, 335-336.
48 Royal Crown Internationale v. NLRC, G.R. No. 78085, October 16, 1989, 178 SCRA 569; see
also G & M (Phil.), Inc. v. Willie Batomalaque, G.R. No. 151849, June 23, 2005, 461 SCRA 111.
49 G.R. No. 93699, September 10, 1993, 266 SCRA 232.
50 Id. at 237.
51 Rollo, p. 235.
52 G.R. No. 115795, March 6, 1998, 287 SCRA 117.
53 G.R. No. 121698, March 26, 1998, 228 SCRA 181.
54 G.R. No. 158693, November 17, 2004, 442 SCRA 573, 608.
55 King of Kings Transport Inc. v. Mamac, G.R. No. 166208, June 29, 2007.
56See Article 277 (b) of the Labor Code; Sec. 2 (I) (a) Rule XXIII Rules Implementing Book V of
the Labor Code; and Sec. 2 (d) (i) Rule I, Rules Implementing Book VI of the Labor Code.
57 Supra note 54.
58Took effect on July 15, 1995, R.A. No. 8042 is "An Act to Institute the Policies of Overseas
Employment and Establish a Higher Standard of Protection and Promotion of the Welfare of
Migrant Workers their Families and Overseas Filipinos in Distress, and for Other Purposes."
59Land and Housing Development Corporation v. Esquillo, G.R. No. 152012, September 30,
2005, 471 SCRA 488, 490.
60 Supra note 58, Sec. 10.
61 Rollo, p. 45.
62 Id. at 70, OAB's Final Account of Gran's salaries receivable.
63 Supra note 59.
64 G.R. No. 91298, June 22 1990, 186 SCRA 724, 730.
66 Chretian v. Donald L. Bren Co. (1984) 151 [185 Cal. App. 3d 450].
67A form copy of the Quitclaim and Release used by the NLRC is reproduced below for the
guidance of management and labor:
Department of Labor and Employment
NATIONAL LABOR RELATIONS COMMISSION
Quezon City
CONCILIATION AND MEDIATION
QUITCLAIM AND RELEASE
PAGTALIKOD AT PAGPAPAWALANG-SAYSAY
I (Ako), _______________________________ of legal age (may sapat na gulang) residing at
(nakatira sa) ____________________________ for and in consideration of the amount of (bilang
konsiderasyon sa halagang) _________________ pesos (piso) given to me by (na ibinigay sa akin
ng) _________________________________, do hereby release and discharge (ay aking
pinawawalang-saysay at tinatalikuran) aforesaid company/corporation and its officers, person/s
(ang nabanggit na kompanya/korporasyon at ang mga tauhan nito) from any money claims (mula
sa anumang paghahabol na nauukol sa pananalapi) by way of unpaid wages (sa pamamagitan ng
di nabayarang sahod), separation pay, overtime pay otherwise (o anupaman), as may be due to
me (na karapat-dapat para sa akin) in officers/person/s (na may kaugnayan sa aking huling
pinapasukang kompanya o korporasyon at sa mga opisyales o tauhan nito).
I am executing this quitclaim and release (Isinasagawa ko ang pagtalikod o pagpapawalang-saysay
na ito), freely and voluntary (ng may kalayaan at kusang-loob) before this Honorable Office (sa
harapan ng marangal na tanggapang ito) without any force or duress (ng walang pamimilit o
pamumuwersa) and as part of the compromise agreement reached during the preventive
conciliation and mediation process conducted in the NLRC (at bilang bahagi ng napagkasunduan
buhat sa proseso ng "preventive conciliation at mediation" dito sa NLRC).
IN VIEW WHEREOF (DAHIL DITO), I hereunto set my hand this (ako'y lumagda ngayong) ______
day of (araw ng) _________________, 200__, in Quezon City (sa Lungsod ng Quezon).
_____________________
Signature of the Requesting Party
(Lagda ng Partidong Humiling ng Com-Med Conference)
Signed in presence of (Nilagdaan sa harapan ni):

____________________________________
Name in Print below Signature
(Limbagin ang pangalan sa ilalim ng lagda)
______________________________________________________________________________
________
SUBSCRIBED AND SWORN TO before me this ____ day of ____________ 200__ in Quezon City,
Philippines.
_____________________
Labor Arbiter
NO. 7
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-50734-37 February 20, 1981
WALLEM PHILIPPINES SHIPPING, INC., petitioner,
vs.
THE HON. MINISTER OF LABOR, in his capacity as Chairman of the National Seamen Board
Proper, JAIME CAUNCA, ANTONIO CABRERA, EFREN GARCIA, JOSE OJEDA and RODOLFO
PAGWAGAN, respondents.
DE CASTRO, J.:
Petition for certiorari with preliminary injunction with prayer that the Orders dated December
19, 1977 and April 3, 1979 of the National Seamen Board (NSB) be declared null and void. Private
respondents were hired by petitioner sometime in May 1975 to work as seamen for a period of
ten months on board the M/V Woermann Sanaga, a Dutch vessel owned and operated by
petitioner's European principals. While their employment contracts were still in force, private
respondents were dismissed by their employer, petitioner herein, and were discharged from the
ship on charges that they instigated the International Transport Federation (ITF) to demand the
application of worldwide ITF seamen's rates to their crew.
Private respondents were repatriated to the Philippines on October 27, 1975 and upon their
arrival in Manila, they instituted a complaint against petitioner for illegal dismissal and recovery
of wages and other benefits corresponding to the five months' unexpired period of their
shipboard employment contract.
In support of their complaint, private respondents submitted a Joint Affidavit 1 stating the
circumstances surrounding their employment and subsequent repatriation to the Philippines,
material averments of which are herein below reproduced:
JOINTAFFIDAVIT
xxx xxx xxx
5. That aside from our basic monthly salary we are entitled to two (2) months vacation leave,
daily subsistence allowance of US$8.14 each, daily food allowance of US$2.50. as well as overtime
pay which we failed to receive because our Shipboard Employment Contract was illegally
terminated;
6. That while we were in Rotterdam, on or about July 9, 1975, representative of the ITF boarded
our vessel and talked with the Ship's Captain;
7. That the following day, the representatives of the ITF returned and was followed by Mr. M.S.K.
Ogle who is the Company's Administrative Manager, again went to see the Captain;
8. That at around 7:00 in the evening all the crew members were called in the Mess Hall where
the ITF representatives informed us that they have just entered into a "Special Agreement" with
the Wallem Shipping Management, Ltd., represented by Mr. M.S.K. Ogle, Administrative
Manager, wherein new salary rates was agreed upon and that we were going to be paid our salary
differentials in view of the new rates;
9. That in the same meeting, Mr. M.S.K. Ogle also spoke where he told that a Special Agreement
has been signed and that we will be receiving new pay rate and enjoined us to work hard and be
good boys;
10. That the same evening we received our salary differentials based on the new rates negotiated
for us by the ITF.
11. That while we were in the Port Dubai, Saudi Arabia, we were not receiving our pay, since the
Ship's Captain refused to implement the world-wide rates and insisted on paying us the Far East
Rate;
12. That the Port Dubai is one that is within the Worldwide rates sphere.
13. That on October 22, 1975, Mr. Greg Nacional Operation Manager of respondent corporation,
arrived in Dubai Saudi Arabia and boarded our ship;
14. That on October 23, 1975, Mr. Nacional called all the crew members, including us to a meeting
at the Mess Hall and there he explained that the Company cannot accept the worldwide rate.
The Special Agreement signed by Mr. Ogle in behalf of the Company is nothing but a scrap of
paper. Mr. Jaime Caunca then asked Mr. Nacional, in view of what he was saying, whether the
Company will honor the Special Agreement and Mr. Nacional answered "Yes". That we must
accept the Far East Rates which was put to a vote. Only two voted for accepting the Far East
Rates;
15. That immediately thereafter Mr. Nacional left us;
16. That same evening, Mr. Nacional returned and threatened that he has received a cable from
the Home Office that if we do not accept the Far East Rate, our services will be terminated and
there will be a change in crew;
17. That when Mr. Nacional left, we talked amongst ourselves and decided to accept the Far East
Rates;
18. That in the meeting that evening because of the threat we informed Mr. Nacional we were
accepting the Far East Rate and he made us sign a document to that effect;
19. That we the complainants with the exception of Leopoldo Mamaril and Efren Garcia, were
not able to sign as we were at the time on work schedules, and Mr. Nacional did not bother
anymore if we signed or not;
20. That after the meeting Mr. Nacional cabled the Home Office, informing them that we the
complainants with the exception of Messrs. Mamaril and Garcia were not accepting the Far East
Rates;
21. That in the meeting of October 25, 1975, Mr. Nacional signed a document whereby he
promised to give no priority of first preference in "boarding a vessel and that we are not
blacklisted";
22. That in spite of our having accepted the Far East Rate, our services were terminated and
advised us that there was a change in crew;
23. That on October 27, 1975, which was our scheduled flight home, nobody attended us, not
even our clearance for our group travel and consequently we were not able to board the plane,
forcing us to sleep on the floor at the airport in the evening of October 27, 1975;
24. That the following day we went back to the hotel in Dubai which was a two hours ride from
the airport, where we were to await another flight for home via Air France;
25. That we were finally able to leave for home on November 2, 1975 arriving here on the 3rd of
November;
26. That we paid for all excess baggages;
27. That Mr. Nacional left us stranded, since he went ahead on October 27, 1975;
28. That immediately upon arriving in Manila, we went to respondent Company and saw Mr.
Nacional, who informed us that we were not blacklisted, however, Mr. Mckenzie, Administrative
Manager did inform us that we were all blacklisted;
29. That we were asking from the respondent Company our leave pay, which they refused to
give, if we did not agree to a US$100.00 deduction;
30. That with the exception of Messrs. Jaime Caunca Amado Manansala and Antonio Cabrera, we
received our leave pay with the US$100.00 deduction;
31. That in view of the written promise of Mr. Nacional in Dubai last October 23, 1975 to give us
priority and preference in boarding a vessel and that we were not blacklisted we have on several
occasions approached him regarding his promise, which up to the present he has refused to
honor.
xxx xxx xxx
Answering the complaint, petitioner countered that when the vessel was in London, private
respondents together with the other crew insisted on worldwide ITF rate as per special
agreement; that said employees threatened the ship authorities that unless they agreed to the
increased wages the vessel would not be able to leave port or would have been picketed and/or
boycotted and declared a hot ship by the ITF; that the Master of the ship was left with no
alternative but to agree; that upon the vessel's arrival at the Asian port of Dubai on October 22,
1975, a representative of petitioner went on board the ship and requested the crew together
with private respondents to desist from insisting worldwide ITF rate and instead accept the Far
East rate; that said respondents refused to accept Far East ITF rates while the rest of the Filipino
crew members accepted the Far East rates; that private respondents were replaced at the
expense of petitioner and it was prayed that respondents be required to comply with their
obligations under the contract by requiring them to pay their repatriation expenses and all other
incidental expenses incurred by the master and crew of the vessel.
After the hearing on the merits, the hearing Officer of the Secretariat rendered a decision 2 on
March 14, 1977 finding private respondents to have violated their contract of employment when
they accepted salary rates different from their contract verified and approved by the National
Seamen Board. As to the issue raised by private respondents that the original contract has been
novated, it was held that:
xxx xxx xxx
For novation to be a valid defense, it is a legal requirement that all parties to the contract should
give their consent. In the instant case only the complainants and respondents gave their consent.
The National Seamen Board had no participation in the alleged novation of the previously
approved employment contract. It would have been different if the consent of the National
Seamen Board was first secured before the alleged novation of the approved contract was
undertaken, hence, the defense of novation is not in order.
xxx xxx xxx
The Hearing Officer likewise rules that petitioner violated the contract when its representative
signed the Special Agreement and he signed the same at his own risk and must bear the
consequence of such act, and since both parties are in paridelicto, complaint and counterclaim
were dismissed for lack of merit but petitioner was ordered to pay respondents Caunca and
Cabrera their respective leave pay for the period that they have served M/V Woermann Sanaga
plus attorney's fees.
Private respondents filed a motion for reconsideration with the Board which modified the
decision of the Secretariat in an Order 3 of December 19, 1977 and ruled that petitioner is liable
for breach of contract when it ordered the dismissal of private respondents and their subsequent
repatriation before the expiration of their respective employment contracts. The Chairman of
the Board stressed that "where the contract is for a definite period, the captain and the crew
members may not be discharged until after the contract shall have been performed" citing the
case of Madrigal Shipping Co., Inc. vs. Ogilvie, et al. (104 Phil. 748). He directed petitioner to pay
private respondents the unexpired portion of their contracts and their leave pay, less the amount
they received as differentials by virtue of the special agreements entered in Rotterdam, and ten
percent of the total amounts recovered as attorney's fees.
Petitioner sought clarification and reconsideration of the said order and asked for a confrontation
with private respondents to determine the specific adjudications to be made. A series of
conferences were conducted by the Board. It was claimed by petitioner that it did not have in its
possession the records necessary to determine the exact amount of the judgment since the
records were in the sole custody of the captain of the ship and demanded that private
respondents produce the needed records. On this score, counsel for respondents manifested that
to require the master of the ship to produce the records would result to undue delay in the
disposition of the case to the detriment of his clients, some of whom are still unemployed.
Under the circumstances, the Board was left with no alternative but to issue an Order dated April
3, 1979 4 fixing the amount due private respondents at their three (3) months' salary equivalent
without qualifications or deduction. Hence,the instant petition before Us alleging grave abuse of
discretion on the part of the respondent official as Chairman of the Board, in issuing said order
which allegedly nullified the findings of the Secretariat and premised adjudication on imaginary
conditions which were never taken up with full evidence in the course of hearing on the merits.
The whole controversy is centered around the liability of petitioner when it ordered the dismissal
of herein private respondents before the expiration of their respective employment contracts.
In its Order of December 19, 1977 5 the Board, thru its Chairman, Minister Blas F. Ople, held that
there is no showing that the seamen conspired with the ITF in coercing the ship authorities to
grant salary increases, and the Special Agreement was signed only by petitioner and the ITF
without any participation from the respondents who, accordingly, may not be charged as they
were, by the Secretariat, with violation of their employment contract. The Board likewise
stressed that the crew members may not be discharged until after the expiration of the contract
which is for a definite period, and where the crew members are discharged without just cause
before the contract shall have been performed, they shall be entitled to collect from the owner
or agent of the vessel their unpaid salaries for the period they were engaged to render the
services, applying the case of Madrigal Shipping Co., Inc. vs. Jesus Ogilivie et al. 6
The findings and conclusion of the Board should be sustained. As already intimated above, there
is no logic in the statement made by the Secretariat's Hearing Officer that the private
respondents are liable for breach of their employment contracts for accepting salaries higher
than their contracted rates. Said respondents are not signatories to the Special Agreement, nor
was there any showing that they instigated the execution thereof. Respondents should not be
blamed for accepting higher salaries since it is but human for them to grab every opportunity
which would improve their working conditions and earning capacity. It is a basic right of all
workingmen to seek greater benefits not only for themselves but for their families as well, and
this can be achieved through collective bargaining or with the assistance of trade unions. The
Constitution itself guarantees the promotion of social welfare and protection to labor. It is
therefore the Hearing Officer that gravely erred in disallowing the payment of the unexpired
portion of the seamen's respective contracts of employment.
Petitioner claims that the dismissal of private respondents was justified because the latter
threatened the ship authorities in acceeding 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 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.
On the other hand, it is petitioner who is guilty of breach of contract when they dismissed the
respondents without just cause and prior to the expiration of the employment contracts. As the
records clearly show, petitioner voluntarily entered into the Special Agreement with ITF and by
virtue thereof the crew men were actually given their salary differentials in view of the new rates.
It cannot be said that it was because of respondents' fault that petitioner made a sudden turn-
about and refused to honor the special agreement.
In brief, We declare petitioner guilty of breach of contract and should therefore be made to
comply with the directives contained in the disputed Orders of December 19, 1977 and April 3,
1979.
WHEREFORE, premises considered, the decision dated March 14, 1977 of the Hearing Officer is
SET ASIDE and the Orders dated December 19, 1977 and April 3, 1979 of the National Seamen
Board are AFFIRMED in toto. This decision is immediately executory. Without costs.
SO ORDERED.
Makasiar, Fernandez, Guerrero and Melencio-Herrera, JJ., concur.
Teehankee (Chairman), J., concur in the result.
NO. 8

SUPREME COURT
Manila
EN BANC
G.R. Nos. L-58674-77 July 11, 1990
PEOPLE OF THE PHILIPPINES, petitioner,

vs.
HON. DOMINGO PANIS, Presiding Judge of the Court of First Instance of Zambales &
Olongapo City, Branch III and SERAPIO ABUG, respondents.
CRUZ, J:
The basic issue in this case is the correct interpretation of Article 13(b) of P.D. 442, otherwise known
as the Labor Code, reading as follows:
(b) Recruitment and placement' refers to any act of canvassing, enlisting, contracting,
transporting, 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.
Four informations were filed on January 9, 1981, in the Court of First Instance of Zambales and
Olongapo City alleging that Serapio Abug, private respondent herein, "without first securing a license
from the Ministry of Labor as a holder of authority to operate a fee-charging employment agency, did
then and there wilfully, unlawfully and criminally operate a private fee charging employment agency
by charging fees and expenses (from) and promising employment in Saudi Arabia" to four separate
individuals named therein, in violation of Article 16 in relation to Article 39 of the Labor Code. 1
Abug filed a motion to quash on the ground that the informations did not charge an offense because
he was accused of illegally recruiting only one person in each of the four informations. Under the
proviso in Article 13(b), he claimed, there would be illegal recruitment only "whenever two or more
persons are in any manner promised or offered any employment for a fee. " 2
Denied at first, the motion was reconsidered and finally granted in the Orders of the trial court dated
June 24 and September 17, 1981. The prosecution is now before us on certiorari. 3
The posture of the petitioner is that the private respondent is being prosecuted under Article 39 in
relation to Article 16 of the Labor Code; hence, Article 13(b) is not applicable. However, as the first
two cited articles penalize acts of recruitment and placement without proper authority, which is the
charge embodied in the informations, application of the definition of recruitment and placement in
Article 13(b) is unavoidable.
The view of the private respondents is that to constitute recruitment and placement, all the acts
mentioned in this article should involve dealings with two or mre persons as an indispensable
requirement. On the other hand, the petitioner argues that the requirement of two or more persons is
imposed only where the recruitment and placement consists of an offer or promise of employment to
such persons and always in consideration of a fee. The other acts mentioned in the body of the article
may involve even only one person and are not necessarily for profit.
Neither interpretation is acceptable. We fail to see why the proviso should speak only of an offer or
promise of employment if the purpose was to apply the requirement of two or more persons to all the
acts mentioned in the basic rule. For its part, the petitioner does not explain why dealings with two or
more persons are needed where the recruitment and placement consists of an offer or promise of
employment but not when it is done through "canvassing, enlisting, contracting, transporting, utilizing,
hiring or procuring (of) workers.
As we see it, the proviso was intended neither to impose a condition on the basic rule nor to provide
an exception thereto but merely to create a presumption. The presumption is that the individual or
entity is engaged in recruitment and placement whenever he or it is dealing with two or more persons
to whom, in consideration of a fee, an offer or promise of employment is made in the course of the
"canvassing, enlisting, contracting, transporting, utilizing, hiring or procuring (of) workers. "
The number of persons dealt with is not an essential ingredient of the act of recruitment and placement
of workers. Any of the acts mentioned in the basic rule in Article 13(b) win constitute recruitment and
placement even if only one prospective worker is involved. The proviso merely lays down a rule of
evidence that where a fee is collected in consideration of a promise or offer of employment to two or
more prospective workers, the individual or entity dealing with them shall be deemed to be engaged
in the act of recruitment and placement. The words "shall be deemed" create that presumption.
This is not unlike the presumption in article 217 of the Revised Penal Code, for example, regarding
the failure of a public officer to produce upon lawful demand funds or property entrusted to his custody.
Such failure shall be prima facie evidence that he has put them to personal use; in other words, he
shall be deemed to have malversed such funds or property. In the instant case, the word "shall be
deemed" should by the same token be given the force of a disputable presumption or of prima
facie evidence of engaging in recruitment and placement. (Klepp vs. Odin Tp., McHenry County 40
ND N.W. 313, 314.)
It is unfortunate that we can only speculate on the meaning of the questioned provision for lack of
records of debates and deliberations that would otherwise have been available if the Labor Code had
been enacted as a statute rather than a presidential decree. The trouble with presidential decrees is
that they could be, and sometimes were, issued without previous public discussion or consultation,
the promulgator heeding only his own counsel or those of his close advisers in their lofty pinnacle of
power. The not infrequent results are rejection, intentional or not, of the interest of the greater number
and, as in the instant case, certain esoteric provisions that one cannot read against the background
facts usually reported in the legislative journals.
At any rate, the interpretation here adopted should give more force to the campaign against illegal
recruitment and placement, which has victimized many Filipino workers seeking a better life in a
foreign land, and investing hardearned savings or even borrowed funds in pursuit of their dream, only
to be awakened to the reality of a cynical deception at the hands of theirown countrymen.
WHEREFORE, the Orders of June 24, 1981, and September 17, 1981, are set aside and the four
informations against the private respondent reinstated. No costs.
SO ORDERED.
Teehankee, CJ, Abad Santos, Feria, Yap, Fernan, Narvasa, Melencio-Herrera, Alampay, Gutierrez,
Jr. and Paras, JJ., concur.
NO. 9
FIRST DIVISION
G.R. No. 189262, July 06, 2015
GBMLT MANPOWER SERVICES, INC., Petitioner, v. MA. VICTORIA H. MALINAO, Respondent.
DECISION
SERENO, C.J.:
Before us is a Petition for Review on Certiorari under Rule 45 of the Rules of Court assailing the Court of
Appeals (CA) Decision1 dated 29 May 2009 and Resolution2 dated 24 August 2009 in CA-G.R. SP No.
107378.
The CA found grave abuse of discretion on the part of the National Labor Relations Commission (NLRC)
when the latter reversed the decision of the labor arbiter, which granted respondent's money claims under
her complaint for illegal dismissal against petitioner. The CA Resolution denied petitioner's motion for
reconsideration.
Facts
Sometime in May 2005, respondent applied to petitioner for a job as teacher for deployment abroad.3She
went through the usual application process and was later called for an interview by the president of an
Ethiopian university.4 The interviewer endorsed her for the post of accounting lecturer.5 Petitioner issued her
a wage response slip,6 which provided that she would receive a monthly salary of USD 900.
Respondent paid petitioner the processing and placement fees equivalent to her one-month salary.7 She also
signed a Contract of Employment for Foreign Academic Personnel8 (Contract of Employment) covering a
period of two academic years. The contract had been approved by the Philippine Overseas Employment
Administration (POEA).
On 12 December 2005, respondent departed for Ethiopia. Upon her arrival, she was informed by the Vice
Minister of the Ministry of Education that her credentials would have to be re-evaluated, because it appeared
that she did not have a master's degree.9 Respondent was given a new contract for signing, which at first
she refused to sign. However, upon reading that it was a duplicate of the original contract, she affixed her
signature.10 chan robles law
Respondent was assigned to teach at the Alemaya University.11 On 10 January 2006, she unilaterally
decided to discontinue teaching the course in cooperative accounting that had been assigned to her.12The
reason she gave was that auditing, not accounting, was her specialization. Another lecturer took over the
course, and respondent spent the rest of the semester without a teaching load.
On 1 March 2006, Alemaya University Academic and Research Vice President Tena Alamirew (Vice President
Alamirew) circulated a memorandum13 addressed to the college faculties and Filipino teaching staff. It stated
that the Ministry of Education required the university to evaluate the credentials of the Filipino teaching staff
and suggest an academic rank for them pursuant to the national norm. Later, on 15 March 2006, another
memorandum14 was issued lowering the ranks of most of the Filipino teaching staff and asking them to sign
a new contract reflecting a change in rank and salary.15 In particular, respondent's designation was lowered
from lecturer to assistant lecturer16 with a monthly salary of USD 600.17 chanrob leslaw
Respondent refused to sign a new contract. Together with her affected Filipino colleagues, she went to the
Ministry of Education on 17 March 2006 to protest the re-ranking.18 They also asked for an audience with
Vice President Alamirew on 27 March 2006.19 During the meeting, respondent raised her hand in order to be
acknowledged to speak. However, Vice President Alamirew told her, "You are not allowed to speak before
this meeting. Alemaya University does not need your services anymore, you are terminated, you are
fired."20
chan roble slaw
Later that afternoon, Vice President Alamirew apologized to respondent for the retort,21 saying that she
thought the latter was the leader of the protest before the Ministry of Education. Nevertheless, in a
letter22 dated 28 March 2006, respondent requested Vice President Alamirew to issue a notice of termination
to her "in order not to prolong [her] agony."23 chanroble slaw
A memorandum24 dated 4 April 2006 was issued by Temesgen Keno, Head of the Department of Accounting
(Mr. Keno). He informed the Faculty of Business and Economics that due to a students' petition, another
instructor had been assigned to replace respondent in Auditing II. The latter was again left idle. Attached to
the memorandum was the class compliance on the performance of respondent, together with the individual
signatures of the students.25 Respondent checked the signatures and found that some had signed twice,
while two were not in her class.26 chanroble slaw
Another memorandum27 of the same date was issued by Workneh Kassa, Dean of the Faculty of Business
and Economics (Dean Kassa) addressed to Vice President Alamirew. Dean Kassa indicated that the
qualification of respondent had been highly debated as the faculty had never approved the recruitment of
expatriate staff who were bachelor's degree holders. He noted that this was the second time that the
Department of Accounting had to replace respondent in her course assignment, because "she has never
handled any course effectively."28 Dean Kassa requested Vice President Alamirew to take the necessary
action, because keeping an idle expatriate staff was unacceptable.
Respondent took great offense at being referred to as a bachelor's degree holder, insisting that she was a
certified public accountant and a law graduate.29 She responded30 to the memorandum on the same day
stating that in the Philippines, a person who had a law degree and passed the bar examinations has a
degree more than a master's, but less than a doctorate. She recognized that the university had the right to
terminate her at any time, but insisted that there was no need to discredit her.31 chan roble slaw
On 6 April 2006, Vice President Alamirew issued the notice of termination32 to respondent. The notice
alluded to the two instances when the Department of Accounting had to replace respondent in her course
assignments. Part of the notice reads: cha nRoblesvi rt ualLaw lib rary
Despite the efforts of the head of the Department, the dean of the faculty and myself to bring you on board,
it seems that you are not fitting anywhere. On the contrary, to cover up your incompetence and personal
problems, you are insulting students, the staff and the management in particular and Ethiopians in general
in the class. In view of these facts, it will be difficult to expect any positive contribution by keeping you here
any longer. But as per Article X Sub-article 2 of the contract, we are obliged to give you this three months
advance notice as regards the contract termination. In the mean time, however, you are expected to duly
carry the assignment which shall be given by your Department.Please note that if you continue insulting and
abusing any of the students, the Department or the Faculty Community, we shall be forced either to invoke
Article X Sub article 1 or bring you into the court of law. There is, therefore, to bring to your notice the fact
that the University has decided to terminate your contract three months from now. In the mean time,
however, you're strongly advised to have an iota of decency and behave rationally.33
To this notice, respondent replied in a letter dated 7 April 2006, which reads: c hanRoblesv irt ual Lawlib rary
Dear Dr. Tena: ChanRoblesVi rtua lawlib rary
You did it first! I only defended myself from all the insults I received from the students, the staff and
management. I believe this is within my constitutional rights. I did not insult anybody!
I cannot resort to such vile tactics because I am not an incompetent person, as you perceived me to be. All
the incidents that had happened were the aftermath of your evaluation and as a subsequence, the
defamation committed against me when you insulted me and fired me from my job before my colleagues.
Your accusations are merely based on hearsays, and hearsays are inadmissible in evidence under the law.
They remain allegations unless proven by substantial evidence under administrative proceedings and beyond
reasonable doubt under criminal procedure.
You cannot legally base your decision in terminating my contract on facts not proven. Your statement that it
will be difficult to expect positive contribution by keeping me here is a mere speculation. In law, it must be
conclusive, not speculative. It must be a fact that must be proved, substantially and procedurally, as
required by due process.
If you really believe I am guilty as charged, what could have prevented you anyway from enforcing it before
the court of law? I am ready to face any charges because I know I have not violated the rights of other
people and the law. I could have appreciated it better had you filed the case in court; at least I could have
been accorded my day in court.
I cannot understand why there is a need for you to open an old issue about Cooperative Accounting Course,
and use this against me, when it has already been resolved a long time ago. And please be reminded that
Auditing is an area in Accounting and you know very well that this was not my reason when I refused to
handle the abovementioned course.
In addition, your incompetent statement that Auditing is my self-acclaimed specializationshows sarcasm;

very damaging not only to my person, but also to my profession, and ultimately, to my government, and the
Professional Regulations Commission itself which conferred to me the license of being a Certified Public
Accountant.
For your further information, I am not only an expert in financial audit, but I am actually an expert in the
audit of management systems.
Again, your last sentence on the notice of termination is provocative, malicious and defamatory. You mean,
I am indecent and behaving irrationally? That is very hard to prove. I guess it is not only the undersigned
that should behave rationally.
Giving three months prior notice to the other party is required only if the termination is for no cause. To
reiterate, you are not under obligation to give me three months advance notice as per Art. X, par. 3 of the
employment contract, unless you really believe that there exists no valid ground to terminate my contract.
Thank you very much.34

While waiting for the three-month period to expire, respondent was offered a post at the Internal Audit
Department by Alemaya University President Belay Kassa (President Kassa). She accepted the job through a
letter dated 19 April 2006.35 cha nroble slaw
However, in another letter36 dated 27 April 2006 addressed to President Kassa, respondent signified her
change of mind and rejected the offered post at the Internal Audit Department. She narrated that on her
first day on the job, she was made to wait for several hours before attending a meeting. In that meeting,
the Vice President for Administration Dr. Belaineh and two staff members from the department conversed in
Amharic, which she did not understand. She was also assigned to work under the acting head, who was
merely a holder of a diploma in accounting. Respondent manifested that "[she does] not deserve to be
insulted."37
chan roble slaw
Respondent was repatriated on 27 June 2006.38 She later signed a Quitclaim and Release dated 5 July 2006
in favor of petitioner. The waiver reads as follows: chanRob lesvi rtual Lawl ibra ry
That for and in consideration of the sum of NINE HUNDRED DOLLARS ($900 USD), and for other invaluable
considerations extended to me by GBMLT MANPOWER SERVICES, INC., receipt of which is hereby
acknowledged to my full and complete satisfaction, I hereby forever release and discharge said GBMLT
MANPOWER SERVICES, INC., all its Officers and Directors, from any and all claims by way of unpaid
salaries, wages, and all other monetary claims or otherwise due me in connection with my deployment as
lecturer/teacher in Ethiopia.
I hereby state further x x x that this Quitclaim and Release is executed on my own free will and that I have
no more claims [or] right of action [of] whatever nature and kind, whether past, present and/or contingent
against GBMLT MANPOWER SERVICES, INC.[,] its Officers and Directors as a consequence of such
deployment.39
On 18 July 2006, respondent filed a complaint before the labor arbiter against petitioner as local agency and
Alemaya University as foreign principal.40 She sought full payment of the unexpired portion of the two-year
contract, moral and exemplary damages, and attorney's fees.
Ruling of the Labor Arbiter
In a Decision41 dated 29 March 2007, the labor arbiter found respondent to have been unduly repatriated in
breach of the employment contract.42 Petitioner and Alemaya University were ordered to pay her in
solidum the amounts of USD 4,500 as unrealized income - from which the amount paid to her under the
Quitclaim and Release had already been deducted - Php 30,000 as moral damages, Php 20,000 as
exemplary damages, plus costs.43 chanrob leslaw
According to the labor arbiter, respondent did not hide the fact that she had no master's degree "in the strict
sense of the word,"44 because she was a holder of a bachelor of laws degree. Some law schools in the
Philippines actually confer the degree of Juris Doctor on their graduates because a four-year undergraduate
degree is one of the qualifications for acceptance.45 Thus, it was incumbent upon Alemaya University to
allow respondent to finish her two-year employment contract instead of forcing her to sign a new contract
with lower pay, just because she did not have a master's degree.46 c han robles law
The labor arbiter also ruled that the protest of respondent and her colleagues before the Ministry of
Education, as well as the question of whether she was the leader of that protest, should not be taken
against her. The labor arbiter ruled that respondent had simply acted based on her right to protest changes
in her contract.47
chanrob leslaw
The labor arbiter gave no credence either to the allegation that respondent was dismissed for incompetence
based on the students' petition. It was noted that the petition only came out after she was fired by Vice
President Alamirew during the meeting.48 Furthermore, the alleged petition contained double signatures and
signatures of students not included in the class list.
In the end, the labor arbiter found that respondent had been constructively dismissed. She was supposedly
forced to quit because continued employment became unbearable, not only due to demotion in rank and
diminution in pay, but also due to the discrimination and disdain on the part of her employer.49 Further, no
procedural due process was accorded to respondent because no panel of her peers was ever formed to
review her performance.50 The only basis for the charge of unsatisfactory teaching was the alleged students'
petition, which was found to be questionable.
The labor arbiter also declared that the Quitclaim and Release could not work to bar the claims of
respondent, because when compared to the amount that she was entitled to receive under Section 1051of
Republic Act No. (R.A.) 8042 (Migrant Workers and Overseas Filipinos Act of 1995), the amount of USD 900
was unreasonable and prejudicial to her.52 c hanro bles law
According to the labor arbiter, respondent was also entitled to moral damages in view of the verbal abuse
she received during the meeting and the resulting humiliation.53 The exemplary damages were awarded in
order to deter others from emulating the acts of petitioner and Alemaya University.54 chan robles law
Petitioner filed an appeal before the NLRC.55 For her part, respondent filed before the NLRC a pleading
entitled "Omnibus Motion,"56 which was divided into three parts.
In her Motion to Dismiss Appeal, respondent indicated that petitioner had received a copy of the Decision of
the labor arbiter on 13 April 2007, giving it a period until 23 April 2007 within which to perfect its
appeal.57 When petitioner filed its memorandum of appeal on 20 April 2007, it issued a check as payment for
the appeal bond. The check was presented for payment only on 23 April 2007. Considering that it takes
three days for checks to clear - and that checks only produce the effect of payment when they have been
cashed - the appeal bond was posted beyond the 10-day reglementary period.58 Hence, according to
respondent, petitioner's appeal was not perfected, and the labor arbiter's ruling had attained finality.59 chanro bleslaw
In the Motion to Deny Due Course for Lack of Merit, respondent gave her counter-arguments on the
allegations of petitioner in the latter's appeal.
In the final part, the Motion for Revision/Modification of Award, respondent requested that the NLRC revise
the award made by the labor arbiter. She argued that in the dispositive portion of the decision, the labor
arbiter had left out the full reimbursement of the placement fees plus 12% interest per annum, as mandated
by Section 1060 of R.A. 8042.61 Respondent also prayed for the increase of the moral and exemplary
damages to Php 250,000 each, and the award of attorney's fees equivalent to 10% of the total award.62 chanro bleslaw
Ruling of the NLRC
The NLRC issued a Decision63 dated 30 July 2008 dismissing respondent's complaint, because her claims had
been the subject of a valid release, waiver and quitclaim.64 chan robles law
The NLRC ruled that respondent could no longer question the termination of her contract of employment
after her acceptance of the new offer of President Kassa to work at the Internal Audit Department.65 It found
that the termination of the contract did not take effect when respondent and the university agreed to the
continuance of her employment, albeit in another capacity. Thus, when respondent later wrote to President
Kassa that she did not want the new post after all and requested to be repatriated, it was she who
terminated the contract.66 Contrary to the ruling of the labor arbiter, respondent was not constructively
dismissed.
The NLRC also sustained the validity of the Quitclaim and Release. It held that respondent was a certified
public accountant and bachelor of laws graduate who could hardly be "duped into signing any document that
would be detrimental to her cause, if she was not willing [to agree] to the terms and conditions [provided
in] what she was signing [or] entering into."67 chan roble slaw
After her motion for reconsideration68 was denied in the Resolution dated 31 October 2008, respondent filed
a petition69 before the CA ascribing grave abuse of discretion on the part of the NLRC.
Ruling of the CA
In the assailed Decision70 dated 29 May 2009, the CA reinstated the Decision of the labor arbiter with
modifications. Aside from upholding the awards made by the labor arbiter, the appellate court ordered
petitioner and Alemaya University to reimburse respondent for the full amount of the placement fee she had
paid, with interest at the rate of 12% per annum, as well as her airfare from Dire Dawa to Addis Ababa in
Ethiopia.71 The awards of moral and exemplary damages were both increased to Php 50,000, plus attorney's
fees equivalent to 10% of the monetary award.72 chanrobles law
The CA ruled that the amount of USD 900 given to respondent by virtue of the Quitclaim and Release was
unconscionable and not commensurate with the unexpired portion of the contract.73 Hence, the waiver and
quitclaim was invalid.
The CA also ruled that the educational attainment of respondent should not be taken against her, because
she only signed the Quitclaim and Release by force of necessity, for she was in dire need of money.74 chanro bles law
The appellate court observed that while respondent accepted the offer of President Kassa to work at the
Internal Audit Department, such arrangement was in the purview of a new contract of employment.75 A new
contract was invalid without the approval of the POEA. According to the CA, Alemaya University was also
guilty of substitution of contracts when it required respondent to sign a second contract upon her arrival in
Ethiopia, and when it attempted in vain to have her sign a third contract demoting her in rank and lowering
her salary.76 Considering that a representative of the Ethiopian government went to the Philippines to screen
respondent and check her qualifications, the review of her credentials in Ethiopia was "truly mind
boggling."77cha nro bleslaw
As regards the appeal bond before the NLRC, the CA ruled that since petitioner's check payment was
encashed only after the reglementary period within which to appeal, the appeal was considered to have
been filed out of time.78 According to the CA, the rules provide that only a cash or surety bond may be
considered as appeal bond, and noncompliance with the rule was fatal to petitioner's cause.
Petitioner provided the plane ticket from Addis Ababa to the Philippines. However, it did not reimburse the
airfare of respondent from Dire Dawa, her place of work, to Addis Ababa. Thus, the CA ordered a
reimbursement of the airfare for the latter route, but did not allow the claim for hotel accommodations for
lack of sufficient evidence.79chan robles law
After its Motion for Reconsideration80 was denied in the challenged Resolution81 dated 24 August 2009,
petitioner filed the instant petition before us.
Issues
1. Whether respondent was illegally dismissed
2. Whether the Quitclaim and Release was valid
3. Whether petitioner's appeal was perfected on time

Our Ruling
Mode of Review
The instant petition is one for review of the CA Decision issued under a petition for certiorari, in which the
CA found that the NLRC had committed grave abuse of discretion when the latter upheld the validity of the
Quitclaim and Release. As in Montoya v. Trammed Manila Corp.,82 we shall examine in the instant Rule 45
petition the correctness of the Rule 65 decision rendered by the CA by answering this question: Did the CA
correctly determine whether the NLRC committed grave abuse of discretion in ruling on the case?
I.
Respondent was not illegally dismissed.
In ruling that the Quitclaim and Release was ineffective to bar recovery by respondent, the CA reasoned that
the consideration in the amount of USD 900 was unconscionable and not commensurate to the unexpired
portion of the Contract of Employment. This reasoning presupposes that respondent is entitled to the
salaries for the unexpired portion of her employment contract.
Under Section 1083 of R.A. 8042, workers who are illegally terminated are entitled to their salaries for the
unexpired portion of their employment contracts or for three months for every year of the unexpired term,
whichever is less, in addition to the reimbursement of their placement fee with interest at the rate of 12%
per annum.
A plain reading of the provision reveals that it applies only to an illegally dismissed overseas contract worker
or a worker dismissed from overseas employment without just, valid or authorized cause as defined by law
or contract.84 The monetary award provided in Section 10 of R.A. 8042 finds no application to cases in which
the overseas Filipino worker was not illegally dismissed.
In this case, we find that respondent was not illegally dismissed.
Article X of the POEA-approved Contract of Employment, as well as the second contract given to respondent
for signing upon her arrival in Ethiopia, provides: cha nRoblesvi rtua lLaw lib rary
ARTICLE X-TERMINATION
1. This contract may be terminated by the Employer or by the Employee in the case of breach of the
provisions of this Contract and not withstanding [sic]/fulfilling the terms and conditions set forth in Article III
here of [sic]. In such an event[,] the Employee shall be entitled to his/her salary and allowances due up to
the date of termination.
2. This contract may be terminated by the Employer in case of illness or disability satisfying the conditions
set forth in Article VIII (1) here of [sic] and of a duration in excess of twenty days in any one year. In such
an event[,] the Employee shall be entitled to his/her salary and allowances due up to the date of
commencement of said illness or disability.
3. This contract may be terminated by either party, at any time and for no cause by giving three
months notice to the other party. In such an event[,] the Employee shall be entitled to his/her salary
and allowances only up to the date of termination specified in the said notice of termination. However, the
employee shall be fully engaged in his/her duty in the period notified and up to the last date of
termination.85 (Emphasis supplied)
Based on the foregoing provisions, the Contract of Employment may be terminated by either party for cause
or at any time for no cause, as long as a three-month notice is given to the other party. In the latter case,
respondent shall still be fully engaged and entitled to her salary and allowances for the three-month period
provided in the notice of termination.
The Contract of Employment signed by respondent is first and foremost a contract, which has the force of
law between the parties as long as its stipulations are not contrary to law, morals, public order, or public
policy. We had occasion to rule that stipulations providing that either party may terminate a contract even
without cause are legitimate if exercised in good faith.86 Thus, while either party has the right to terminate
the contract at will, it cannot not act purposely to injure the other.87 chanro bles law
There is no need to delve on the attempted demotion of respondent for the reason that she did not have a
master's degree. We are more inclined to believe that the matter regarding respondent's master's degree or
her lack thereof was a result of a mere misunderstanding. While respondent may be fully justified in
claiming that she has a master's degree by virtue of her law degree here in the Philippines, it is clearly not
the master's degree that the Ministry of Education of Ethiopia required. This matter was not clarified when
the representative of the Ministry of Education of Ethiopia evaluated her qualifications prior to her
deployment, and it only became apparent upon her arrival in Ethiopia. Thus, the misunderstanding was not
the result of bad faith on the part of either party. It is for this reason that their acts regarding the matter
should not be taken against either one of them. In any case, the demotion did not materialize, and
respondent maintained her salary and benefits until she was repatriated.
Neither can we impute bad faith on the part of Alemaya University in the exercise of its right to terminate
the Contract of Employment at will for several reasons.
First, we regard the alleged statements of Vice President Alamirew during the meeting on 27 March 2006 as
an isolated personal incident that had nothing to do with the termination of respondent's employment. Vice
President Alamirew later apologized to respondent for the blunder and confessed it was because she thought
respondent led the group protest before the Ministry of Education.
Second, while it was Vice President Alamirew who eventually issued the notice of termination, the ground
cited therein was respondent's supposed failure to handle her teaching load effectively. Respondent had
previously caused some inconvenience to the management of Alemaya University when she decided to
discontinue teaching the course assigned to her and spent the rest of the semester without any teaching
load but still with pay. It also alluded to her tendency to insult students, staff, management and Ethiopians
in general.
Third, respondent never denied the grounds cited in the notice of termination. In fact, in her letter dated 31
March 2006 addressed to Mr. Keno, she affirmed that the students "told [her] bluntly that they do not want
[her] style [of teaching]."88 chan roble s law
In the exercise of the right to terminate a contract without cause, one party need only to give the other
prior written notice as provided in the contract.89 Despite the grounds cited in the notice of termination,
Alemaya University opted to take the "no cause" route in terminating the Contract of Employment. In this
case, the contract provided that the other party be given a three-month advance notice, a requirement that
Alemaya University complied with.
It is well to note that the right to terminate the Contract of Employment at will was also available to
respondent, who exercised that right when she signified her change of mind and rejected the job at the
Internal Audit Department. This detail was appreciated even by the labor arbiter who found that respondent
had quit her job.
It cannot be denied that when respondent accepted the post offered at the Internal Audit Department, the
parties had decided to revert to the status quo ante of harmonious employment relationship and to do away
with the previous termination of her employment. Respondent's letter to President Kassa is illuminative of
this point:
chanRob lesvi rtua lLawl ibra ry
Dear Prof. Belay: ChanRoblesVirtualawl ibra ry
I am glad to accept the job at the Internal Audit Department. It is an honor to work under the Office of the
President. Be rest assured that I will try my very best to live up to your expectations.
My only concern is the proximity of my residence in Harar to the campus. Convenience is necessary for the
effective and efficient performance of my duties and responsibilities. The job is a tough one that will need
my full attention and concentration. I may make use of Saturdays and Sundays for the job.
Further, the Harar residence will be very crowded as there will be two families with children or a total of
seventeen (17) persons who will be occupying the said residence when the family of Ms. Irene Ycoy arrives
on the second week of May.
In consideration thereof, may I request that I be provided with a separate housing unit inside the campus?
Thank you very much.90

Nothing in the letter gives the impression that respondent understood that the engagement was temporary
or effective only until the three-month grace period was through as provided in the termination letter. She
even requested a separate housing unit inside the campus. As correctly found by the NLRC, the logical
conclusion is that the parties had agreed to let her employment continue in the university under the
Contract of Employment, albeit in a different capacity. When respondent later decided that she did not want
the new job for personal reasons, she exercised her right to terminate the Contract of Employment.
Respondent made a belated unilateral declaration in her letter to President Kassa dated 27 April 2006.
Indeed, her declaration therein that "the advance notice of termination is still in force and effect"91cannot
operate to transfer responsibility for the termination of the Contract of Employment to Alemaya University.
Ultimately, it was she who terminated the Contract of Employment, and she cannot now claim that she was
illegally dismissed.
II.
The Quitclaim and Release is valid.
We also find that the NLRC did not commit grave abuse of discretion when it sustained the validity of the
Quitclaim and Release executed by respondent in favor of petitioner.
Where a person executing a waiver or quitclaim has done so voluntarily with a full understanding of its
terms and conditions, coupled with the other person's payment of credible and reasonable consideration, we
have no choice on the matter but to uphold the transaction as valid and binding.92 chanro bleslaw
In this case, respondent admits that she had a full understanding93 of the terms and conditions of the
Quitclaim and Release and voluntarily signed it. The bone of contention is the reasonableness of the amount
of USD 900 as consideration for the waiver of all other purported claims against petitioner. According to
respondent, this amount is minimal compared to the USD 5,400 in salaries to which she is entitled for the
unexpired portion of the Contract of Employment.94 chanrobles law
To reiterate, the entitlement to the salaries for the unexpired portion of the employment contract obtains
only for illegally dismissed employees. In view of our finding that respondent was not illegally dismissed, she
is not entitled to such salaries.
Respondent's contentions that she "was in dire need of cash"95 and that "[s]he was forced by circumstances
of need to sign the document"96 do not qualify as coercion or undue influence that give rise to a vice of
consent. "Dire necessity" is an acceptable ground to nullify quitclaims only if the consideration is
unconscionably low and the employee was tricked into accepting it.97 cha nrob leslaw
As aptly observed by the NLRC, respondent is a learned professional and a teacher no less. Anyone would be
hard put to trick her into agreeing to something like signing a waiver. In this case, no proof was presented
to show that petitioner had defrauded or deceived her into signing the document. Absent that proof, we are
bound to uphold the Quitclaim and Release as valid and binding.
III.
Petitioner's appeal was perfected on time.
According to respondent, the check issued by petitioner for the appeal bond was presented for payment only
on the last day of the period for appeal from the Decision of the labor arbiter. Given that checks have the
effect of payment only when they have been encashed - which takes three banking days from the time they
are presented for payment - the appeal bond was actually posted beyond the reglementary period for
appeal. That being the case, the appeal was not perfected, and the labor arbiter's ruling attained finality.
This position was sustained by the CA.
Nonetheless, we find otherwise and rule that petitioner has complied with the requirements of the law with
regard to the posting of the appeal bond.
The posting of a bond for the perfection of an appeal from a decision of the labor arbiter is required under
Article 22898 of the Labor Code, which provides: c hanRoble svirtual Lawlib ra ry
ARTICLE 228. 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.
xxxx
In case of a judgment involving a monetary award, an appeal by the employer may be perfected
only upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited
by the Commission in the amount equivalent to the monetary award in the judgment appealed
from. (Emphases supplied)
The requirement of an appeal bond is further emphasized in Section 6,99 Rule VI of the 2011 NLRC Rules of
Procedure. This provision clarifies that damages and attorney's fees awarded by the labor arbiter shall not
be included in the computation of the bond to be posted.
In several pronouncements,100 this Court has adopted a particular understanding of the word "only" in the
phrase "an appeal by the employer may be perfected only upon the posting of a cash or surety bond." It has
regarded the phrase as the legislative's unequivocal declaration that the posting of a cash or surety bond is
the exclusive means by which an employer's appeal from a labor arbiter's decision may be perfected.
The reason for the requirement was also enunciated by the Court in Viron Garments Manufacturing, Co., Inc.
v. NLRC,101 in which we said: chanRoble svirtual Lawli bra ry
The requirement that the employer post a cash or surety bond to perfect its/his appeal is apparently
intended to assure the workers that if they prevail in the case, they will receive the money judgment in their
favor upon the dismissal of the employer's appeal. It was intended to discourage employers from using an
appeal to delay, or even evade, their obligation to satisfy their employees' just and lawful claims.102
Proceeding from this rationale, the intention of the requirement is fulfilled when the employer is able to
deposit with the NLRC an amount that is equivalent to the monetary award adjudged by the labor arbiter in
the employee's favor, and that shall subsist until the final resolution of the appeal.
In People's Broadcasting v. Secretary of the DOLE,103 we ruled that the Deed of Assignment of savings made
by the employer in favor of the employee validly served the purpose of an appeal bond. We said that the
posting of the bond in this manner insured, during the period of appeal, against any occurrence that would
defeat or diminish the monetary judgment in favor of the employee if the judgment is eventually
affirmed.104 chan roble slaw
In this case, there is no question that the NLRC accepted the appeal bond posted by petitioner through a
current-dated check, as evidenced by Official Receipt No. 0701550 dated 20 April 2007.105 That check was
deposited to the bank account of the NLRC on 23 April 2007 without incident.106 Furthermore, respondent
has never disputed the sufficiency of the bond posted or petitioner's manifestation before us that "up to the
present, the cash bond posted x x x is still in effect and remains in the coffers of the x x x NLRC and is
susceptible to execution in the unfortunate event that this Petition fails."107 chan rob leslaw
To our mind, the appeal of petitioner has been perfected on time by virtue of its compliance with the appeal
bond requirement. We note that its payment of the appeal bond through the issuance of a check was not
even an issue before the NLRC. The latter had given due course to petitioner's appeal without any indication
of having found any defect in the appeal bond posted.
Nevertheless, we have had occasion to rule that the appeal bond requirement for judgments involving
monetary awards may be relaxed in meritorious cases,108 as in instances when a liberal interpretation would
serve the desired objective of resolving controversies on the merits.109 In the recent Balite v. SS Ventures
International, Inc.,110 we recognized that there was a need "to strike a balance between the constitutional
obligation of the state to afford protection to labor on the one hand, and the opportunity afforded to the
employer to appeal on the other."111 In this kind of undertaking, the Court is justified in giving employers
the amplest opportunity to pursue their cause while ensuring that employees will receive the money
judgment should the case be ultimately decided in their favor.
We do not see why the same liberality - if at all needed - cannot be applied to this case in particular, in
which it is clear that respondent's allegations of illegal dismissal and money claims are unfounded. In fine,
the CA committed an error when it ascribed grave abuse of discretion on the part of the NLRC when the
latter ruled in favor of petitioner.
WHEREFORE, the Court of Appeals Decision dated 29 May 2009 and Resolution dated 24 August 2009 in
CA-G.R. SP No. 107378 are REVERSED and SET ASIDE. The Decision dated 30 July 2008 issued by the
National Labor Relations Commission in NLRC CA No. 052466-07 (5), dismissing respondent's complaint,
is REINSTATED.
SO ORDERED. cralawlawlibra ry
Leonardo-De Castro, Bersamin, Perez, and Perlas-Bernabe, JJ., concur.
Endnotes:
1
Rollo, pp. 40-66. The Decision issued by the Court of Appeals Special Fifth Division was penned by
Associate Justice Remedios A. Salazar-Fernando, with Associate Justices Arturo G. Tayag and Ramon R.
Garcia concurring.
2
Id. at 82-83.
3
CA rollo, p. 94.
4
Id. at 95.
5
Id.
6
Id. at 128.
7
Id. at 95.
8
Id. at 131-137.
9
Id. at 95.
10
Id.
11
Id.
12
Id. at 173.
13
Id. at 148.
14
Id. at 149.
15
Id. at 96.
16
Id. at 150.
17
Id. at 96.
18
Id.
19
Id.
20
Id. at pp. 96, 158.
21
Id. at 160.
22
Id. at 160-162.
23
Id. at 162.
24
Id. at 165.
25
Id. at 166-169.
26
Id. at 97.
27
Id. at 170.
28
Id.
29
Id. at 171.
30
Id. at 171-172.
31
Id. at 172.
32
Id. at 173-174.
33
Id. at 174.
34
Id. at 175-176.
35
Id. at 178.
36
Id. at 179-180.
37
Id. at 179.
38
Rollo, p. 47.
39
CA rollo, p. 203.
40
Id. at 91-92.
41
Id. at 62-78; NLRC NCR Case No. (L) 06-07-02153-00.
42
Id. at 77.
43
Id. at 77-78.
44
Id. at 69.
45
Id.
46
Id. at 70.
47
Id. at 70-71.
48
Id. at 71.
49
Id. at 72-73.
50
Id. at 73.
51
SECTION 10. Money Claims. x x x
xxxx
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 of 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. (Emphasis
supplied)
52
53
Id. at 75-77.
54
Id. at 77.
55
Id. at 228-240.
56
Id. at 249-267.
57
Id. at 250.
58
Id. at 250-253.
59
Id. at 253.
60
Supra note 51.
61
62
Id. at 265.
63
Id. at 79-87; NLRC CA No. 052466-07 (5).
64
Id. at 87.
65
Id. at 85.
66
Id. at 85-86.
67
Id. at 86.
68
Id. at 274-282.
69
Id. at 6-61.
70
Id. at 345-371; CA-G.R. SP No. 107378.
71
Id. at 369-370.
72
Id. at 370.
73
Id. at 357-358.
74
Id. at 361.
75
Id. at 362.
76
Id. at 362-364.
77
Id. at 364.
78
Id. at 365-366.
79
Id. at 368.
80
Id. at 376-385.
81
Id. at 391-392.
82
613 Phil. 696 (2009).
83
Supra note 51.
International Management Services v. Logarta, G.R. No. 163657, 18 April 2012, 670 SCRA 22.
84
85
CA rollo, p. 136.
Avon Cosmetics, Inc. v. Luna, 540 Phil. 389 (2006).

86
Petrophil Corporation v. CA, 423 Phil. 182 (2001).
87
88
CA rollo, p. 164.
Avon Cosmetics, Inc. v. Luna, supra.

89
90
CA rollo, p. 178.
91
Id. at 180.
Poseidon International Maritime Services. Inc. v. Tamala, G.R. No. 186475, 26 June 2013 700 SCRA 1.
92
Rollo, p. 254.
93
94
Id at 216.
95
Id. at 255.
96
Id.
Anjero v. Philippine Communications Satellite Corporation, G.R. No. 193484, 18 January 2012, 663 SCRA
97
467, 484.
98
As amended by R.A. 6715, Section 12; and further renumbered by R.A. 10151 dated 21 June 2011.
99
SECTION 6. Bond. In case the decision of the Labor Arbiter or the Regional Director involves a
monetary award, an appeal by the employer may be perfected only upon the posting of a bond, which shall
either be in the form Of cash deposit or surety bond equivalent in amount to the monetary award, exclusive
of damages and attorney's fees.
Ramirez v. CA, 622 Phil. 782 (2009); Lopez v. Quezon City Sports Club, Inc., 596 Phil. 204
100
(2009); Accessories Specialist, Inc. v. Alabama, 581 Phil. 517 (2008); AFP General Insurance Corporation v.
Molina, 579 Phil. 116 (2008); Ciudad Fernandina Food Corp. Employees Union v. CA, 528 Phil. 415
(2006); Mers Shoes Manufacturing, Inc. v. NLRC, 350 Phil. 294 (1998); Viron Garments Manufacturing, Co.,
Inc. v. NLRC, G.R. No. 97357. 18 March 1992, 207 SCRA 339.
101
Id.
102
Id. at 342.
103
605 Phil. 801 (2009).
104
Id.
105
CA rollo, p. 268.
106
Id. at 269.
107
Rollo, p. 82.
Grand Asian Shipping Lines, Inc. v. Galvez, G.R. No. 178184, 29 January 2014; McBurnie v. Gamon, G.R.
108
Nos. 178034, 178117 & 186984-85, 17 October 2013, 707 SCRA 646; Semblante v. CA, G.R. No. 196426,
15 August 2011, 655 SCRA 444; Miguel v. JCT Group, Inc., 493 Phil. 660 (2005); Taberrah v. NLRC, 342
Phil. 394 (1997).
109
Nicol v. Footjoy Industrial Corp., 555 Phil. 275 (2007).
G.R. No. 195109, 4 February 2015,

110
<http://sc.judiciary.gov.ph/pdf/web/viewer.html?file=/jurisprudence/2015/february2015/195109.pdf>
111
Id at 8. chanro
NO. 10
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 198367 August 6, 2014
OSG SHIPMANAGEMENT MANILA, INC., MERCEDES M. RAVANOPOLOUS, OSG
SHIPMANAGEMENT (UK) LTD. & M/T DELPHINA, Petitioners,
vs.
JOSELITO B. PELLAZAR, Respondent.
DECISION
BRION, J.:
For resolution is the present petition for review on certiorari, 1 assailing the decision2 dated May
12, 2011 and resolution3 dated August 24, 2011 of the Court of Appeals (CA) in CA-G.R. SP No.
108877.
The Antecedents
In September 2006, the respondent Joselito B. Pellazar (Pellazar), an oiler in the vessel MIT
Delphina, filed a complaint for permanent total disability benefits and damages against the
petitioners,4 local manning agent C.F. Sharp Crew Management (CF. Sharp) and its President,
Arturo Rocha. The complaint was amended to include C.F. Sharp's principal, OSG Ship
Management (UK) Ltd., operated by Mercedes Ravanopoulos (Ravanopoulos). The petitioners
manifested that the Philippine OverseasEmployment Administration (POEA) accreditation of the
M/T Delphina had been transferred to OSG Ship Management Manila, Inc. (OSG Manila) and, that
in accordance with POEA procedures, OSG Manila assumed full responsibility for all contractual
obligations to seafarers incurred by C.F. Sharp.
Pellazar was deployed to the M/T Delphinaon July 3, 2005 under an employment contract for
eight months. On November 12, 2005, while he was on duty onboard the vessel, his right hand
was injured after it was struck by a solid iron pipe. He was given medical attention in a hospital
in Brazil. On November 26, 2005, he was medically repatriated.
Upon his arrival in Manila, Pellazar reported to OSG Manila and was referred on November 29,
2005 to the company-designated physicians, Dr. Pedro S. De Guzman (Dr. De Guzman) and Dr.
Raymond C. Banaga (Dr. Banaga) of the Physicians Diagnostic Services Center, Inc. Dr. De
Guzman was also the Medical Directorof the Center while Dr. Banaga was Pellazars
attendingphysician. Pellazars working diagnosis was "complete fracture, distal part of 5th finger,
right hand post-casting." He continued to report tothe company-designated physicians until
August 14, 20065 for evaluation and treatment.
For the duration of Pellazars treatment and evaluation, he was subjected to an x-ray examination
(his right finger), went through therapy sessions and was referred to an orthopedic specialist, as
well as a physiatrist. He also underwent surgery (removal of pin, 5th digit, right hand) at the Dr.
Fe del Mundo Medical Center Foundation Philippines, Inc.6 The company-designated physicians
gave Pellazar a Grade 10 disability rating7 for "loss of grasping power for large objects between
fingers and palm of one hand."8
On September 30, 2006, Pellazar consulted a physician of his choice, Dr. Raul F. Sabado (Dr.
Sabado) of the Dagupan Orthopedic Center in Dagupan City, who diagnosed him with "loss of
grasping power of 5th finger, loss of opposition between finger and thumb (r) and ankylosis of
the 5th finger (r)," and certified that he was "permanently unfit for any sea duty."9 In addition to
Dr. Sabados certification, Pellazar claimed that despite the lapse of 120 days, and the fact that
he had already undergone maximum medicalcare, he was still unfit for sea work; thus, the
complaint for disability benefits under the Collective Bargaining Agreement (CBA).10
The petitioners denied liability. They asked that the complaint be dismissed for prematurity. They
alleged that Pellazar, a member of the Associated Marine Officers and Seamens Union of the
Philippines (AMOSUP) bypassed the provisions of the CBA requiring that a seafarer with a
complaint should follow the grievance procedure onboard the vessel or, through the union upon
his return home. Further, under the POEA-approved contract, the parties covered by a CBA are
required to submit their claim or dispute to a voluntary arbitrator or panel of voluntary
arbitrators. Pellazar, theyargued, failed to comply with his duty to observe the dispute resolution
provisions of the CBA.
The foregoing notwithstanding, the petitioners argued that Pellazar was not entitled to disability
compensation higher than what was provided under a Grade 10 disability rating as that was the
companydesignated physicians assessment ofhis disability. A Grade 10 disability is compensated
US$10,075.00 under the POEA Standard Employment Contract (POEA-SEC).
The Compulsory Arbitration Rulings
In a decision11 dated April 23, 2007, Labor Arbiter Florentino R. Darlucio ruled in Pellazars favor
and awarded him permanent total disability benefits of US$75,000.00 under the parties CBA,
plus $7,500.00 as attorneys fees, to be paid, jointly and severally, by OSG Manila, OSG (UK),
Ravanopoulos and M/T Delphina. LA Darlucio held that Pellazar was entitled to permanent total
disability benefits since he had been incapacitated to continue his employment as a seafarer.
The petitioners appealed. In its decision12 of November 29, 2008, the National Labor Relations
Commission (NLRC) modified the labor arbiters decision. It ruled that Pellazar is entitled only to
an award of $10,075.01 which is the equivalent of a Grade 10 disability in accordance with the
disability rating given to him by the companydesignated physicians; the loss of grasping power
for large objects between the fingers and palm of a hand has been classified as Grade 10 disability
under the POEA-SEC.
The NLRC gave more weight tothe assessment of the companydesignated physicians, particularly
Dr. Banaga, over that of Dr. Sabado who examined Pellazar for only a day. It stressed that it was
Dr. Banaga who painstakingly treated Pellazar for a reasonable period of time. Through the
extensive medical attention given to Pellazar, the NLRC emphasized, Dr. Banagaacquired a
detailed knowledge and familiarity with Pellazars injury which enabled him to arrive at a more
accurate appraisal of Pellazars condition as compared to Dr. Sabado who had not been privy to
Pellazars case from the very beginning.
Pellazar moved for reconsideration, but the NLRC denied the motion in its resolution of February
27, 2009,13prompting him to seek relief from the CA through a petition for certiorari.
In its decision under review, the CA granted the petition, reversed the challenged NLRC rulings
and, reinstated LA Darlucios award of permanent total disability benefits to Pellazar thereby
disregarding the Grade 10 disability ratingin accordance with the POEA-SECof the company-
designated physicians. It stressed that permanent total disability is not determined by gradings
but by the number of days the disability has lasted.It explained that under Article 192 of the Labor
Code, a disability shall be deemed total and permanent if the temporary disability has lasted for
more than a continuous period of 120 days and this is the concept of permanent total disability
that the Supreme Court has applied in Wallem Maritime Services, Inc. v. NLRC, 14 reiterated in
subsequent cases as Crystal Shipping, Inc., v. Natividad15 and lately, Oriental
ShipmanagementCo., Inc. v. Bastol.16 The petitioners moved for reconsideration, but the CA
denied the motion in its resolution of August 24 2010;17 hence, the present petition.
The Petition
The petitioners seek a reversalof the NLRC rulings on the following grounds:
1. The CA committed a serious error of law when it automatically declared Pellazar permanently
and totally disabled for the reason that he had been unable to work for more than 120 days from
his repatriation. In making such a conclusion, the CA disregarded the provisions of the POEA-SEC
and the CBA on a seafarers entitlement to disability compensation.
Under Section 20 (B) 3 of the POEA-SEC, it is the companydesignated physician who determines
the fitness to work or the disability of a seafarer as a result of a work-related injury orillness.
Under Section 20 (B) 6, in case of permanent total or partial disability, the seafarer shall be
compensated in accordancewith the schedule of benefits (impediment grades with the
corresponding amount of compensation) enumerated in Section 32 of the same document;
computation of his benefits shall be governed by the rates and rules of compensation applicable
at the time the illness or injury was contracted.
Also, under Section 20.1.5 of the CBA which Pellazar himself cited in his submissions, the
certification that a seafarer is permanently unfit for further sea service in any capacity is lodged
solely and exclusively with the company doctor.A seafarer assessed at less than 50% disability
grading shall be entitled to full disability benefits of US $75,000.00 only if the company doctor
certifies that he is permanently unfit to work. There was no such certification in Pellazars case
as he was given only a disability Grade 10 rating by Drs. De Guzman and Banaga.
2. The assessment of the company-designated physicians with respect to Pellazars condition or
disability should be accorded respect not only because they are the ones entrusted in providing
medical care and declaring Pellazars fitness for work, but also because of the amount of time
and effort they spent in treating and evaluating him. Pellazars treatment and evaluation involved
surgery, physical therapy and constant medical attention and close observation, as compared
with the "single and fleeting medical treatment" of Pellazar by Dr. Sabado, his chosen physician.
3. The award of attorneys fees toPellazar is not warranted in the absence of bad faith in their
denial of his claim for permanent total disability compensation. From the inception of Pellazars
medical repatriation, they have extended unconditional support to him providing him immediate
medical treatment and prompt payment of illness wages. The company-designated physicians,
complemented by a team of specialists, took care of him for the entire duration of his evaluation
and treatment and issued to Pellazar a Grade 10 disability rating which petitioners have no reason
to doubt inthe absence of evidence that their findings were arrived at arbitrarily or fraudulently.
The Case for Pellazar
In his Comment,18 Pellazar prays that the petition be denied for lack of merit. He contends that
the CA committed no palpable error or grave abuse of discretion in reinstating the labor arbiters
decision as it was supported by substantial evidence.
Pellazar insists that his chosenphysician, Dr. Sabado, certified him to be totally unfit for sea duty
because of the right hand injury which he sustained while in the employ of the petitioners. He
maintains that the injury had never been resolved and even deteriorated despite medical
treatment by the doctors for more than 120 days making his disability permanent and total not
only under the POEA-SEC but also under the Labor Code, as wellas jurisprudence, citing Wallem
Maritime Services, Inc. v. NLRC.19
Pellazar contends that he is not precluded from seeking a second opinion as the POEA-SEC does
not exclusively provide that only the company-designated physician can evaluate and treat a
seafarer who sustained an injury or illness. Hesubmits that the assessment of the company-
designated physician is not binding on the courts.
The Courts Ruling
We grant the petition.
Preliminary considerations
a. Certiorari under Rule 65 before the CA and appeal under Rule 45 before the Court
In a Rule 45 petition for review of the CA decision, which was rendered under a Rule 65
proceeding, what the Court determines is the legal correctness of the CA decision, i.e., whether
the CA correctly determined the presence or absence ofgrave abuse of discretion in the NLRC
decision brought before it - not whether the NLRC decision on the merits of the case was correct.
In ruling for legal correctness, the Court views the CA decision in the same context that the
petition for certiorariit ruled upon was presented to it.
From the substantive point of view, the CA may not go beyond the determination of whether the
NLRCsdecision is tainted with grave abuse of discretion because the ruling that is brought before
it is already a final and executory ruling of the NLRC, there being no appeal provided for under
the law. Accordingly, the Court generally accords respect to the NLRCs factual findings and its
conclusions from these findings since the absence of an appeal from the NLRCs ruling is a
statutory recognition of the labor tribunals expertise on the field of labor standards, labor
relations and allied legislation.
The substantive justification goes hand in hand with the procedural justification. From the
procedural point of view, the CA has a limited scope in reviewing the NLRC decision because of
the intrinsic limitation of the sole available remedy itself. A writ of certiorariis a remedy that lies
only to correct actsrendered without jurisdiction, in excess of jurisdiction, or with grave abuse of
discretion - and not mere errors of judgment. For emphasis therefore, when a petition for
certiorariis filed, the judicial inquiry should be limited to the issue of whether the NLRC acted
with grave abuse of discretion amounting to lack or in excess of jurisdiction 20 - and not whether
the NLRC ruling is intrinsically correct or not.21
Given this framework, the Court finds that the CA legally erred in its determination of the
presence or absence of grave abuse of discretion.
Substantive Considerations
A. Disability benefits as a matter of contract and law
1. Mere lapse of the 120 day period does not warrant payment of permanent total disability
benefits
Entitlement to disability benefitsby seamen on overseas work is a matter governed, not only by
medical findings but, by Philippine law and by the contract between the parties.
The material statutory provisions are Articles 191 to 193 under Chapter VI (Disability Benefits) of
the Labor Code, in relation with Rule X of the Rules and Regulations Implementing Book IV of the
Labor Code.
By contract, Department Order No. 4, series of 2000 of the Department of Labor and Employment
(the POEA Standard Employment Contract) and the parties' CBA bind the seaman and his
employer to each other. The terms under the POEA-SEC are to be read in accordance with what
the Philippine law provides.
In Vergara v. Hammonia Maritime Services,22 the Court interpreted the interplay of these legal
and contractual provisions relating to the kind of disability recognized and the period involved.
The Court observed:
As these provisions operate, the seafarer, upon sign-off from his vessel, must report to the
company-designated physician within three (3) days from arrival for diagnosis and treatment. For
the duration of the treatment but in nocase to exceed 120 days, the seaman is on temporary
total disabilityas he is totally unable to work. He receives his basic wage during this period until
he is declared fit to work or his temporary disability is acknowledged by the company to be
permanent, either partially or totally, as his condition is defined under the POEA Standard
Employment Contract and by applicable Philippine laws. If the 120 days initial period is exceeded
and no such declaration is made because the seafarer requires further medical attention, then
the temporary total disability period may be extended up to a maximum of 240 days, subject to
the right of the employer to declare within this period that a permanent partial or total disability
already exists. The seaman may of course also be declared fit to work at any time such declaration
is justified by his medical condition.
In other words, the mere lapse of the 120-day period itself does not automatically warrant the
payment of permanent total disability benefits. Hence, the NLRC could not have gravely abused
its discretion in not granting Pellazar permanent total disability benefits based on this as the
entitlement to disability is governed not by the period of disability per sebut by the specific
provisions of the law and contract. It must be observed that Pellazar continued to undergo
medical treatment under the care of the petitioners company designated doctors until he was
finally given a Grade 10 disability in August 2006.
Under the CBA and the POEA-SEC, it is the company-designated physician who shall determine a
seafarers disability or his fitness to work. In granting Pellazar a Grade 10 disability rating in
accordance with the finding of the company designated physician, the NLRC simply observed the
provisions of the parties POEA-SEC. For this reason, no grave abuse of discretion can similarly be
imputed against the NLRC.
2. The NLRCs reliance on the findings of company- designated physician is not tainted with grave
abuse of discretion on two grounds:
i. Non-compliance with the procedure under the POEA- SEC and CBA
Under the POEA-SEC and the AMOSUP/IMEC TCCC CBA, the degree of disability arising from a
work-connected injury or illness of a seafarer or his fitness to workshall be assessed by the
company- designated physician to make the employer liable. Section 20(B) 3 of the POEA-SEC
provides:
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 degreeof permanent disability
has been assessed by the company-designated physician but in no case shall this period exceed
one hundred twenty (120) days.
For this purpose, the seafarer shall submit himself to a postemployment medical examination by
a company-designated physician within three working days upon his return except when he is
physically incapacitated to do so, in which case a written notice to the agency within the same
period is deemed as compliance. Failure of the seafarer to comply with the mandatory reporting
requirement shall result in his forfeiture of the right to claim the above benefits.
If a doctor appointed by the seafarer disagrees with the assessment, a third doctor may be agreed
jointly between the Employer and the seafarer. The third doctors decision shall be final and
binding on both parties.
The parties CBA,23 on the other hand, states:
The degree of disability which the Employer, subject to this agreement, is liable to pay shall be
determined by a doctor appointed by the Employer. If the doctor appointed by the seafarer and
his union disagrees with the assessment, a third doctor may agree jointly between the Employer
and the Seafarer and his Union, and the third doctors decision shall be final and binding on both
parties.
After Pellazar was medically repatriated because of his injury, he immediately reported to the
company-designated physicians, as required by the POEA-SEC, led by Dr. DeGuzman. He then
underwent evaluation and treatment under the management of Dr. Banaga. This treatment
started immediately upon his referral to the two doctors on November 29, 2005 and lasted for
several months until August 14, 2006. Eventually, the company-designated physicians granted
him a Grade 10 disability.
Controversy arose, however, whenPellazar consulted a physician of his choice, whose findings
are in conflict with those of the companydesignated physicians. This conflict invariably leads to
the question of whose findings should prevail.
The Court was faced with the same question in Philippine Hammonia v. Dumadag.24 Applying the
similar provisions in the POEASEC and in the parties CBA, the Court observed that the parties are
bound by the terms and conditions contained in these instruments, particularly the above quoted
provision on the mechanism prescribed to determine liability for a disability benefits claim. Since
the seafarer pursued his claim before the labortribunals without referring the conflicting opinions
to a third doctor for final determination, the seafarer actually breached his contractual
obligation. In reversing the labor tribunals rulings (and the CA which affirmed it), the Court said:
We find the rulings of the labor authorities seriously flawed as they were rendered in total
disregard of the law between the parties the POEA-SEC and the CBA on the prescribed
procedure for the determination ofdisability compensation claims, particularly with respect to
the resolution of conflicting disability assessments of the company-designated physician and
Dumadags physicians, without saying why it was disregarded or ignored; it was as if the POEA-
SEC and the CBA did not exist.This is grave abuse of discretion, considering that, as labor dispute
adjudicators, the LA and the NLRC are expected to uphold the law.
In the present case, since there isa conflict in the assessment of the company-designated
physicians and Dr. Sabados certification in relation to Pellazars fitness or unfitness to work, the
matter should have been referred to a third doctor for final determination as required by the
POEA-SEC and the parties CBA. Since Pellazar was responsible for the non-referral to the third
doctor because of his failure to inform the manning agency that he would be consulting Dr.
Sabado, he should suffer the consequences of the absence of a binding third opinion. Thus, the
NLRC was well within the bounds of its jurisdiction, in upholding the disability assessment of Drs.
De Guzman and Banaga as against Pellazars physician of choice.
ii. The company designated physicians findings, although not binding on the Court, generally
prevails over other medical findings
By recognizing that a disagreement between the companydesignated physicians and the
physician chosen by the seafarer may exist, the POEA-SEC itself impliedly recognizesthe
seafarers right to request a second medical opinion from a physician of his own choice. That the
seafarer should not be prevented from seeking an independent medical opinion proceeds from
the theory that a company-designated physician, naturally, may downplay the compensation due
to the seafarer because that is what the employer, after all, expects of him. 25 Accordingly, the
Court observed that labor tribunals and the courts are not bound by the medical findings of the
company-designated physician and that the inherent merits of its medical findings will be
weighed and duly considered.26
However, even on this context, the NLRCs ruling awarding Pellazar disability benefits based on
the Grade 10 rating of Drs. De Guzman and Banaga can fully withstand a Rule 65 challenge since
the Grade 10 rating had ample basis in the extensive evaluation and treatment of Pellazar by
these two company doctors, including an orthopedic specialist and a physiatrist.
In stark contrast, Dr. Sabado,Pellazars chosen physician, examined him only once and could have
treated him for a few hours only, considering as the petitioners point out, that Pellazar came all
the way from Antipolo, where he resides, to Dagupan City, where Dr. Sabado is practicing his
profession.27 It is as if, the petitioners aver, Pellazar sought out Dr. Sabado inDagupan City for a
favorable certification.
While Dr. Sabados diagnosis was consistent with that of the company-designated physicians
(which centered on the injury in Pellazars 5th right finger and the resulting loss of grasping power
of said fifth finger), Dr. Sabado certified Pellazar to be permanently unfit for sea
service.28 Notwithstanding Dr. Sabados unfit-to-work certification (which the LA relied uponin
ruling in Pellazarsfavor), the NLRC gave more credence to the Grade 10 disability rating of
Pellazar than the assessment of Dr. Sabado.
The NLRCs mere disagreement with the LA, however, does not give rise to grave abuse of
discretion, unless the NLRCs contrary conclusion had no basis in fact and law. In the present case,
the NLRC ruling was actually based on the extensive evaluation and treatment of Pellazars
medical condition by the company doctors. Under a Rule 65 petition, the CA does not determine
which of the conflicting findings or assessment should be preferred; butrather, whether in
deciding to uphold one over the other, the NLRC exceeded the bounds of its jurisdiction or
committed grave abuse of discretion.1wphi1 The CAs finding in this regard finds no support in
itsdecision because of its misplaced reliance on the 120-day period,as earlier discussed.1wphi1
3. No entitlement to full disability benefits
Since the company-designated physicians gave Pellazar only a Grade 10 disability - and not a
permanent total disability - he cannot be entitled to the full disability benefits of US$75,000.00
under the AMOSUP-IMEC TCCC CBA. Section 20.1.5 of the CBA on Permanent Medical Unfitness
provides:
A seafarer whose disability is assessed at 50% or more under the POEA Employment Contract
shall, for the purpose of this paragraph as regarded (sic) as permanently unfit for further sea
service in any capacity and entitled to 100% compensation, i.e. US$125,000 for senior officers,
US$100,000 for junior officers and US$75,000 for ratings. Furthermore, any seafarer assessed at
less than 50% disability under the contract but certified as permanently unfit for further sea
service in any capacity by the company doctor, shall be entitled to 100% compensation (emphasis
and underscoring ours).1wphi1
We find no ambiguity in the language of this cited CBA provision. There can be no interpretation
of its meaning other than that Pellazar cannot be entitled to the full disability benefits of
US$75,000 as the company-designated physicians had not certified him to be permanently unfit
for further sea service. He is entitled only to the Grade 10 disability rating certified by Drs. De
Guzman and Banaga equivalent to US$10,075.01 pursuant to the POEA-SEC which provides that
"in case of permanent total or partial disabilitv of the seafarer caused bv injurv or illness the
seafarer shall be compensated in accordance with the schedule of benefits enumerated in the
Contract. "29
B. Award for attorney's fees
Lastly, the award of attorney's fees is without legal basis as the petitioners, in light of the above
discussion, are well within their rights under the POEA-SEC and the CBA to deny Pellazar's claim
for permanent total disability benefits.
WHEREFORE, premises considered, we GRANT the petition. The assailed decision and resolution
of the Court of Appeals are SET ASIDE. The decision dated November 29, 2008 of the National
Labor Relations Commission is REINSTATED.
SO ORDERED.
ARTURO D. BRION
Associate Justice
WE CONCUR:
ANTONIO T. CARPIO
Associate Justice
Chairperson
MARIANO C. DEL CASTILLO JOSE PORTUGAL PEREZ

ESTELA M. PERLAS-BERNABE
Associate Justice
ATTESTATION
I attest that the conclusions in the above Decision had been reached in consultation before the
case was assigned to the writer of the opinion of the Court's Division.
ANTONIO T. CARPIO
Associate Justice
Chairperson, Second Division
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairperson's
Attestation, I certify that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the opinion of the Court's Division.
MARIA LOURDES P. A. SERENO
Chief Justice
Footnotes
1 Rollo, pp. 24-56.
2Id. at 11-19 and 67-75; penned by Associate Justice Mario L. Guarifla m and concurred in by
Associate Justices Apolinario D. Bruselas, Jr. and Manuel M. Barrios.
3 Id. at 22 and 79.
4 CA Rollo, pp. 44-45.
5 Id. at 123-140 and 338-352.
6 Id. at 67.
7 Supranote 4, at 140 and 352.
8 CA rollo, p. 140.
9 Id. at 80.
10This CBA refers to the Associated Marine Officers and Seamens Union of the
Philippines/International Maritime Employees Committees, Total Crew Cost, Collective
Bargaining Agreement (AMOSUP/IMEC TCC CBA), id. at 153-176.
11 Id. at 21-28.
12 Id. at 30-36.
13 Id. at 39-40.
14 G.R. No. 163838, 566, September 25, 2008, 566 SCRA, 338, 348.
15 510 Phil. 332 (2005).
16 G.R. No. 186289, June 29, 2010, 622 SCRA 352.
17 Supranote 3.
18 Rollo, pp. 131-146.
19 Supranote 13.
20Empire Insurance Company v. NLRC, G.R. No. 121879, August 14 1998, 294 SCRA 263, 269-
270.
21
Tagle v. Equitable PC Bank, G.R. No. 172299, April 22, 2008, 552 SCRA 424, 440-441, citing
Madrigal Transport, Inc. v. Lapanday Holdings Corporation, supranote 4.
22588 Phil. 895 (2008). See also Magsaysay Maritime Corp. v. Lobusta, G.R. No. 177578, 664
SCRA 137, 144-148 (2012).
23 Supranote 9, at 14, Section 20.1.4.2.
24 G.R. No. 194362, June 26, 2013.
25Crystal Shipping, Inc. v. Natividad, G.R. No. 154798, October 20, 2005, 473 SCRA 559. See also
the Resolution in G.R. No. 154798 dated February 12, 2007. See also NYK-Fil Ship Management,
Inc. v. Talavera, G.R. No. 175894, November 14, 2008, 571 SCRA 183, 193.
26 In Maersk Filipinas Crewing Inc. v. Mesina, G.R. No. 200837, 697 SCRA 601, 616 (2013), the
Court observed that "[w]hile it has been held that failure to resort to a third doctor will render
the company doctors diagnosis controlling, it is not the absolute and automatic consequence in
all cases."
27 Rollo, p. 93, Petitioners Motion for Reconsideration with the CA, p.14, last paragraph.
28 Supranote 8.
29 Section 20(B) 6.
NO. 11
SUPREME COURT
Manila
EN BANC
G.R. No. 170139 August 5, 2014
SAMEER OVERSEAS PLACEMENT AGENCY, INC., Petitioner,
vs.
JOY C. CABILES, Respondent.
DECISION
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 review1 on certiorari assailing the Court of Appeals
decision2 dated June 27, 2005. This decision partially affirmed the National Labor
RelationsCommissions resolution dated March 31, 2004, 3declaring respondents dismissal
illegal, directing petitioner to pay respondents 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 attorneys 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
Joys 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 complaint17 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 Agencys 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 & 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 petitioners 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 employers contractual obligations
might be identified.29 It further denied that it assumed liability for petitioners illegal acts. 30
On July 29, 1998, the Labor Arbiter dismissed Joys 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 petitioners
transfer of obligations to Pacific34 and considered the matter immaterial in view of the
dismissal of respondents 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 Arbiters 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
attorneys fees of NT$300.46
The Commission denied the agencys motion for reconsideration47 dated May 12, 2004 through
a resolution48 dated July 2, 2004.
Aggrieved by the ruling, Sameer Overseas Placement Agency caused the filing of a petition 49 for
certiorari with the Court of Appeals assailing the National Labor Relations Commissions
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, Joys entitlement to the equivalent of three months
worth of salary, reimbursement of withheld repatriation expense, and attorneys 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 petitioners lack of worthwhile discussion upon the same in the
proceedings below or before us. Likewise we sustain NLRCs finding in regard to the
reimbursement of her fare, which is squarely based on the law; as well as the award of
attorneys 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 petitioners 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 respondent illegally dismissed and awarding
her three months worth of salary, the reimbursement of the cost ofher repatriation, and
attorneys 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 respondents dismissal was valid.56
Petitioner also reiterates that since Wacoals accreditation was validly transferred to Pacific at
the time respondent filed her complaint, it should be Pacific that should now assume
responsibility for Wacoals contractual obligations to the workers originally recruited by
petitioner.57
Sameer Overseas Placement Agencyspetition is without merit. We find for respondent.
I
Sameer Overseas Placement Agency failed to show that there was just cause for causing Joys
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 employees right to
security of tenure."63Workers 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.
Security of tenure for labor is guaranteed by our Constitution. 64
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, petitioners 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 forums
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 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.
Petitioners 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 employees
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 employees 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 employees
qualifications will be evaluated will increase ones chances of being positively assessed for
regularization by his or her employer.
Assessing an employees 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 employers failure to
communicatework standards that would govern ones 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
employers 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
Respondents 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
employers 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 attorneys 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
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 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
attorneys feeswhen the withholding is unlawful.
The Court of Appeals affirmedthe National Labor Relations Commissions decision to award
respondent NT$46,080.00 or the threemonth equivalent of her salary, attorneys 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 respondents 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
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.
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 workers 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 respondents
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 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 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."125
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/employers 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 laws 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 respondents 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 OFWs 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:
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. 799s 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 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 respondents 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 states 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.1wphi1 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 workersattempt 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 employers labor law violations. This way, the overseas workers
are assured that someone the foreign employers 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
workers 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
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
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.
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.
MARVIC MARIO VICTOR F. LEONEN
Associate Justice
WE CONCUR:
(On Leave)
MARIA LOURDES P. A. SERENO*
Chief Justice
ANTONIO T. CARPIO PRESBITERO J. VELASCO, JR.

Acting Chief Justice Associate Justice
See: Concur/Dissenting Opn.

TERESITA J. LEONARDO-DE CASTRO
ARTURO D. BRION
Associate Justice
Associate Justice
DIOSDADO M. PERALTA LUCAS P. BERSAMIN

MARIANO C. DEL CASTILLO MARTIN S. VILLARAMA, JR.

JOSE PORTUGAL PEREZ JOSE CATRAL MENDOZA

BIENVENIDO L. REYES ESTELA M. PERLAS-BERNABE

CERTIFICATION
I certify that the conclusions in the above Decision had been reached in consultation before
the case was assigned to the writer of the opinion of the court.
ANTONIO T. CARPIO
Acting Chief Justice
Footnotes
* On Leave.
1 Rollo, pp. 329.
2 Id. at 3244.
3 Id. at 125131.
4 Id. at 131.
5 Id. at 3.
6 Id. at 126.
7 Id. at 102.
8 Id.
9 Id.
10 Id. at 54 and 102.
11 Id. at 67 and 195196.
12 Id. at 36.
13 Id.
14 Id.
15 Id. at 127.
16 Id.
17 Id. at 53.
18 Id.
19 Id. at 33, 53, and 54.
20 Id.
21 Id. at 11.
22 Id. at 56.
23 Id. at 56 and 62.
24 Id. at 57.
25 Id.
26 Id. at 107.
27 Id.
28 Id.
29 Id. at 108.
30 Id.
31 Id. at 101112.
32 Id. at 108110.
33 Id. at 110.
34 Id. at 111112.
35 Id.
36 Id. at 113123.
37 Id. at 125131.
38 Id. at 131.
39 Id. at 129.
40 Id.
41 Id.
42 Id at 130.
43 Id.
44 Id. at 131.
45 Id.
46 Id.
47 Id. at 132137.
48 Id. at 139141.
49 Id. at 142153.
50Thirteenth Division, decision penned by Associate Justice Renato C.Dacudao with Associate
Justices Edgardo F. Sundiam and Japar B. Dimaampao concurring.
51 Rollo, pp. 4344.
52 Id.
53 Id.
54 Id. at 329.
55 Id. at 11.
56 Id.
57 Id. at 911.
58Leonardo v. National Labor Relations Commission, 389 Phil. 118, 126127 (2000) [Per J. De
Leon, Jr., Second Division].
59 Id.
60 Id.
61San Miguel Corporation v. Ubaldo, G.R. No. 92859, February 1, 1993, 218 SCRA 293, 301
[Per J. Campos, Jr., Second Division].
62 Id.
63 Bascon v. Court of Appeals, 466 Phil. 719, 732 (2004) [Per J. Quisumbing, Second Division].
64 CONST., art. XIII, sec. 3.
65 359 Phil. 955 (1998) [Per J. Romero, Third Division].
66 Id. at 968969.
67 540 Phil. 65 (2006) [Per J. Austria-Martinez, First Division].
68 Id. at 8081.
69 Rollo, p. 11.
70Hilton Heavy Equipment Corporation v. Dy, G.R. No. 164860, February 2, 2010, 611 SCRA
329, 338 [Per J. Carpio, Second Division], citing Dizon v. NLRC, 259 Phil. 523, 529 (1989) [Per J.
Feliciano, Third Division].
71Skippers United Pacific, Inc. v. National Labor Relations Commission, 527 Phil. 248, 257
(2006) [Per J. Austria-Martinez, First Division].
72LABOR CODE, art. 281; See also Tamsons Enterprises, Inc. v. Court of Appeals, G.R. No.
192881, November 16, 2011, 660 SCRA 374, 383 [Per J. Mendoza, Third Division].
73Seedissenting opinion of J. Brion in Abbott Laboratories Philippines v. Alcaraz, G.R. No.
192571, July 23, 2013, 701 SCRA 682, 752 [Per J. Perlas-Bernabe, En Banc]. This ponencia
joined J. Brion.
74 Rollo, p. 129.
75Skippers United Pacific, Inc. v. Doza, et al., G.R. No. 175558, February 8, 2012, 665 SCRA
412, 426 [Per J. Carpio, Second Division].
76 Id.
77 Id.
78 Id.
79 Id.
80 Rep. Act. No. 8042 (1995), sec. 15.
81Article 111. Attorneys Fees (a) In cases of unlawful withholding of wages, the culpable
party may be assessed attorneys fees equivalent to ten percent of the amount of wages
recovered.
82 601 Phil. 245 (2009) [Per J. Austria-Martinez, En Banc].
83 Rep. Act. No. 8042 (1995), sec. 10, par. 5.
84
Serrano v. Gallant Maritime Services, Inc., 601 Phil. 245, 302 and 304 (2009) [Per J. Austria-
Martinez, En Banc].
85Yap v. Thenamaris Ships Management, G.R. No. 179532, May 30, 2011, 649 SCRA 369, 380
[Per J. Nachura, Second Division].
86See also Skippers United Pacific, Inc. v. Doza, et al., G.R. No. 175558, February 8, 2012, 665
SCRA 430 [Per J. Carpio, Second Division].
87 CONST., art. VIII, sec. 5(5).
88 Rollo, pp. 266267.
89 Id. at 309328.
90 Id. at 311.
91 Id.
92 Id.
93 Id. at 364371.
94 Id. at 371.
95 Id. at 304.
96CONST., art. III, sec. 1. No person shall be deprived of life, liberty, or property without due
process of law, nor shall any person be denied the equal protection of the laws.
97 Ichong v. Hernandez, 101 Phil. 1155, 1164 (1957) [Per J. Labrador, En Banc].
98 Id. at 1164.
99 Id. at 1177.
100 Id.
101 Id. at 1164 and 1177.
102 Id. at 1165 and 1177.
103 Id. at 1164.
104 People v. Cayat, 68 Phil. 12, 18 (1939) [Per J. Moran, En Banc].
105 Id. at 18.
106
Serrano v. Gallant Maritime Services, Inc., 601 Phil. 245, 294298 (2009) [Per J. Austria-
Martinez, En Banc].
107 Id. at 287292.
108 Id. at 292294.
109 Id. at 282.
110 CONST., art. XIII, sec. 3.
111
Martinez, En Banc].
112 Id. at 297298.
113 Id. at 298.
114 Id.
115 Id.
116 Id. at 287292.
117 Id.
118 Id. at 293.
119 Id. at 281.
120 Id.
121 Id. at 277.
122 Id.
123 Id. at 276277.
124 Rep. Act. No. 8042 (1995); See alsoRep. Act No. 10022 (2010).
125
Martinez, En Banc].
126
Seeconcurring opinion of J. Brion in Serrano v. Gallant Maritime Services, Inc., 601 Phil.
245, 319321 (2009) [Per J. Austria-Martinez, En Banc].
127 Id. at 301.
128 Id. at 304.
129Yap v. Thenamaris Ships Management, G.R. No. 179532, May 30, 2011, 649 SCRA 369, 381
[Per J. Nachura, Second Division].
130 G.R. No. 189871, August 13, 2013, 703 SCRA 439 [Per J. Peralta, En Banc].
131
Id. at 457458. This court modified the guidelines laid down in Eastern Shipping Lines v.
Court of Appeals, G.R. No. 97412, July 12, 1994, 234 SCRA 78, 97[Per J. Vitug, En Banc] to
embody Bangko Sentral ng Pilipinas Circular No. 799.
132Nacar v. Gallery Frames, G.R. No. 189871, August 13, 2013, 703 SCRA 439, 457 [Per J.
Peralta, En Banc].
133 Id.
134
Palanca v. Court of Appeals, G.R. No. 106685, December 2, 1994,238 SCRA 593, 601 [Per J.
Quiason, En Banc].
135Maritime Company of the Philippines v. Reparations Commission, 148-B Phil. 65, 70 (1971)
[Per J. Fernando, En Banc].
136ATCI Overseas Corporation v. Echin,G.R. No. 178551, October 11, 2010, 632 SCRA 528, 533
[Per J. Carpio-Morales, Third Division], citing Datuman v. First Cosmopolitan Manpower and
Promotion Services, Inc., 591 Phil. 662, 673 (2008) [Per J. Leonardo-De Castro, First Division];
Migrant Workers and Overseas Filipinos Act of 1995, sec. 2(b).
137 RULES OF COURT, Rule 3, sec. 7.
138PH Credit Corporation v. Court of Appeals, 421 Phil. 821, 832 (2001) [Per J. Panganiban,
Third Division].
139 See alsoC. A. AZUCENA, JR., EVERYONES LABOR CODE29 (5th ed., 2007).
140 Id.
141 G..R. No. 93699, September 10, 1993, 226 SCRA 232 [Per J. Cruz, First Division].
142Id. at 239240, also cited in Triple Eight Integrated Services v. NLRC, 359 Phil. 955, 968
(1998) [Per J. Romero, Third Division].
NO. 12
SECOND DIVISION
G.R. No. 198426, September 02, 2015
REPUBLIC OF THE PHILIPPINES, REPRESENTED BY THE PHILIPPINE

OVERSEAS EMPLOYMENT ADMINISTRATION
(POEA), Petitioner, v. PRINCIPALIA MANAGEMENT AND PERSONNEL
CONSULTANTS, INC., Respondent.
DECISION
DEL CASTILLO, J.:
This Petition for Review on Certiorari1 assails the April 4, 2011 Decision2 of the
Court of Appeals (CA) in CA-G.R. SP No. 111874 which denied the Petition
for Certiorari and Prohibition3 filed therein by petitioner Republic of the Philippines
(the Republic), through the Philippine Overseas Employment Administration
(POEA), questioning the Orders4 dated July 28, 2009 and October 5, 2009 of the
Regional Trial Court (RTC) of Mandaluyong City, Branch 212 in Civil Case No. MC09-
4043. Also assailed is the August 31, 2011 CA Resolution5 which denied the
Republic's Motion for Reconsideration thereto.
Factual Antecedents
In the Order6 of June 8, 2009 in POEA Case No. RV 07-03-0442, respondent

Principalia Management and Personnel Consultants, Inc. (Principalia), a recruitment
agency, was found by the POEA to have collected from complainant Alejandro
Ramos an excessive placement fee. It was thus declared to have violated Section
2(b), Rule I, Part VI7 of the 2002 POEA Rules and Regulations (POEA Rules), a
serious offense which carries the penalty of cancellation of license for the first
offense.8 Accordingly, upon Principalia's receipt of the aforesaid Order on June 24,
2009, the POEA immediately cancelled its license based on Section 5, Rule V, Part
VI of the POEA Rules, viz.:ChanRoblesvirtualLawlibrary
Stay of Execution. The decision of the Administration shall be stayed during the
pendency of the appeal; Provided that where the penalty imposed carries the
maximum penalty of twelve months suspension or cancellation of license,
the decision shall be immediately executory despite the pendency of the
appeal.
Provided further that where the penalty imposed is suspension of license for one
month or less, the decision shall be immediately executory and may only be
appealed on ground of grave abuse of discretion. (Emphasis supplied)
Two days later or on June 26, 2009, Principalia sought to stay the implementation
of the June 8, 2009 POEA Order by filing with the RTC of Mandaluyong City a
Complaint for Injunction with Application for Issuance of a Temporary Restraining
Order (TRO) and/or Writ of Preliminary Prohibitory and Mandatory Injunction.9 It
contended that the immediate cancellation of its license not only deprived it of due
process but also jeopardized the deployment of hundreds of overseas Filipino
workers. That same day, the Executive Judge of RTC Mandaluyong issued a 72-hour
TRO10 to allow the deployment of six workers who were already scheduled to leave
for work abroad.
In the meantime, Principalia appealed the June 8, 2009 POEA Order with the Office
of the Secretary of the Department of Labor and Employment (DOLE Secretary) on
July 8, 2009.11cralawrednad
On July 22, 2009, POEA filed with the RTC a Motion to Dismiss12 based on the
grounds of lack of jurisdiction, failure to exhaust administrative remedies and
forum-shopping. According to it, (1) it is the DOLE Secretary and not the RTC which
has jurisdiction over cases assailing POEA Orders which direct the cancellation of
license of a recruitment agency; (2) assuming that the RTC has jurisdiction,
Principalia nevertheless failed to exhaust administrative remedies since it failed to
first seek recourse from the DOLE; and, (3) Principalia committed forum-shopping
when it also later appealed the June 8, 2009 POEA Order with the DOLE.
Ruling of the Regional Trial Court
In its July 28, 2009 Order,13 the RTC rejected POEA's arguments in its Motion to
Dismiss. It held that: 1) it was conferred jurisdiction over injunction actions by
Section 21 of Batas Pambansa Blg. 129 (BP 129), or the Judiciary Reorganization
Act of 1980, as amended by Republic Act No. 7691 (RA 7691); 2) the case falls
under the exception to the rule on exhaustion of administrative remedies since it
appears that Principalia may suffer irreparable damage as a result of the immediate
cancellation of its license; and, 3) there is no forum-shopping because there is
neither identity of parties nor identity of relief between the injunction case and the
appeal before the DOLE. Hence, the RTC denied the said motion.
POEA moved for reconsideration14 but the RTC remained unconvinced of its
contentions that it denied the same in its October 5, 2009 Order.15cralawrednad
Recapitulating the arguments in the said Motion to Dismiss, the Republic, through
the POEA, questioned by way of Petition for Certiorari and Prohibition16 the
aforementioned July 28, 2009 and October 5, 2009 Orders of the RTC before the
CA.
Ruling of the Court of Appeals
In its April 4, 2011 Decision,17 the CA debunked the argument of the Republic that
the injunction case is in reality an action for the reversal of the POEA's order of
cancellation of license over which the DOLE Secretary has jurisdiction. It explained
that contrary to the Republic's contention, the injunction case is only meant to
determine the legality or propriety of the immediate cancellation of Principalia's
license. This is pursuant to Principalia's claim that under the 2002 POEA Rules, it
has the right to be protected from an unwarranted immediate execution of a
cancellation order. Thus, pursuant to BP 129 which confers upon the RTC
jurisdiction over actions for injunction, the trial court correctly assumed jurisdiction
over the injunction case. The CA further noted that the RTC had not even ruled yet
on the merits of the injunction case and thus, the Republic cannot claim that the
latter already intruded into a matter that falls under the exclusive realm of
authority of the DOLE Secretary. Lastly, it opined that the provisions of the 2002
POEA Rules upon which the Republic heavily relies cannot deprive the regular
courts of jurisdiction to entertain an injunction complaint. Accordingly, the CA found
no grave abuse of discretion on the part of the RTC in issuing its assailed Orders.
In a Resolution18 dated August 31, 2011, the CA stood its ground by denying the
Republic's Motion for Reconsideration.
Unrelenting in its opinion that the RTC should have dismissed outright the
injunction suit, the Republic filed this Petition on October 20, 2011.
However, on May 22, 2013, Principalia, filed a Motion to Dismiss (With Leave of
Court)19 before the RTC. It averred that due to the length of time that the case has
been pending, it is no longer interested in pursuing the same. Aside from this,
Principalia believed that the issues involved in this case have already become moot
and academic in view of the subsequent renewal of its license. It thus prayed that
its action for injunction be dismissed pursuant to Section 2,20 Rule 17 of the Rules
of Court. On June 5, 2013, the RTC granted the motion and dismissed the
case.21cralawrednad
The Parties' Arguments
Principalia, aside from refuting the substantial arguments of the Republic, asserts
that the present Petition is already moot and academic. This is in view of the fact
that its 2007 license which was ordered cancelled by the POEA had already long
expired and in fact has been renewed by the POEA many times over. Principalia
thus asserts that a ruling on this Petition will no longer be of practical value
considering that the subject matter that Principalia then sought to enjoin was the
immediate enforcement of the POEA Order cancelling its 2007 license. For this
reason, the Petition should be dismissed.22cralawrednad
The Republic, on the other hand, argues that the renewal of Principal's license does
not bar this Court from ruling on the matters raised in the Petition. Even assuming
that the Petition has indeed become moot and academic, the case at bench falls
under the exceptions that authorize courts to pass upon questions that are already
moot. To farther convince the Court, the Republic avers that in view of the plethora
of pending similar cases that seek injunction from regular courts, the resolution of
the instant Petition is necessary in settling once and for all which between the DOLE
Secretary and the RTC has jurisdiction over actions assailing a POEA Order that
involves immediate enforcement of penalties for serious offenses such as
cancellation of license. The Republic likewise buttresses its other arguments that
Principalia failed to exhaust administrative remedies when it directly filed the
injunction case with the RTC and that it committed forum-shopping.23cralawrednad
Issue
The central issue in this case is whether the RTC has jurisdiction over the injunction
case.
Our Ruling
At the outset, it must be noted that the Petition is dismissible for being moot and
academic. It should be recalled that what impelled Principalia to file the main action
for injunction was the June 8, 2009 POEA Order directing the immediate cancellation
of its license. Since Principalia could not then engage in recruitment activities because
of the said Order, it resorted to the RTC to question and seek to enjoin such
immediate cancellation for the obvious reason that it wanted to continue the
operation of its business. Significantly, however, Principalia, to date, is a POEA-
accredited recruitment agency licensed to do business until April 1, 2016.24 As things
stand, therefore, Principalia has no more claim for relief against POEA since this has
been mooted by the latter's renewal of its license to do business. In fact and as
mentioned, Principalia already moved for the dismissal of the injunction case before
the RTC which the said court correctly granted.
"A case becomes moot and academic when, by virtue of supervening events, there
is no more actual controversy between the parties and no useful purpose can be
served in passing upon the merits."25cralawred In Arevalo v. Planters Development
Bank,26 the Court expounded:ChanRoblesvirtualLawlibrary
The Constitution provides that judicial power 'includes the duty of the courts of justice
to settle actual controversies involving rights which are legally demandable and
enforceable.' The exercise of judicial power requires an actual case calling for
it. The courts have no authority to pass upon issues through advisory opinions, or to
resolve hypothetical or feigned problems or friendly suits collusively arranged
between parties without real adverse interests. Furthermore, courts do not sit to
adjudicate mere academic questions to satisfy scholarly interest, however
intellectually challenging. As a condition precedent to the exercise of judicial
power, an actual controversy between litigants must first exist. An actual
case or controversy involves a conflict of legal rights, an assertion of opposite legal
claims susceptible of judicial resolution, as distinguished from a hypothetical or
abstract difference or dispute. There must be a contrariety of legal rights that can be
interpreted and enforced on the basis of existing law and jurisprudence. (Emphases
supplied)
However, the Court agrees with the Republic that while the case has indeed been
rendered moot, it can still pass upon the main issue for the guidance of both bar
and bench. It is settled that courts will decide a question otherwise moot and
academic if the case is capable of repetition yet evading review.27cralawrednad
In stressing that the RTC is bereft of jurisdiction to entertain the injunction case,
the Republic avers that it is the POEA which has original and exclusive jurisdiction
to hear and decide all pre-employment cases which are administrative in character
involving or arising out of violations of recruitment regulations, or violations of
conditions for the issuance of license to recruit workers, under Section 3(d) of
Executive Order No. 24728 (EO 247) and as reiterated in Section 1, Rule I, Part VI
of the 2002 POEA Rules.29 On the other hand, the remedy of an appeal/petition for
review of an Order issued by the POEA in the exercise of such exclusive jurisdiction
is lodged exclusively with the DOLE Secretary as provided under Section 1, Rule V,
Part VI of the 2002 POEA Rules.30 Notably, however, nothing in EO 247 and the
2002 POEA Rules relied upon by the Republic provides for the grant to a
recruitment agency of an injunctive relief from the immediate execution of penalties
for serious offenses (e.g., cancellation to operate, suspension of license for a
maximum period of 12 months). Conversely, they do not deprive the courts of the
power to entertain injunction petitions to stay the execution of a POEA order
imposing such penalties.
The Court thus agrees with the CA in holding that the RTC can take cognizance of
the injunction complaint, which "is a suit which has for its purpose the enjoinment
of the defendant, perpetually or for a particular time, from the commission or
continuance of a specific act, or his compulsion to continue performance of a
particular act."31 Actions for injunction and damages lie within the exclusive and
original jurisdiction of the RTC pursuant to Section 1932 of Batas Pambansa Blg.
129, otherwise known as the Judiciary Reorganization Act of 1980, as amended by
RA 7691.33cralawrednad
While "[w]ell-entrenched is the rule that courts will not interfere in matters which
are addressed to the sound discretion of the government agency entrusted with the
regulation of activities coming under the special and technical training and
knowledge of such agency,"34 it is not entirely correct to say that an action by an
administrative agency, such as in the case at bar, cannot be questioned in an
injunction suit. It has been held that "[c]ourts cannot enjoin an agency from
performing an act within its prerogative, except when in the exercise of its
authority it gravely abused or exceeded its jurisdiction."35 Indeed, administrative
decisions on matters within the executive jurisdiction can be set aside on proof of
grave abuse of discretion, fraud, or error of law, and in such cases, injunction may
be granted.36cralawrednad
The Republic further argues that Principalia committed forum-shopping when it

sought relief both from the RTC and the DOLE Secretary. The Court, however, finds
otherwise. What Principalia questioned before the DOLE Secretary was the merits of
the case which brought about the POEA's issuance of its order cancelling
Principalia's license. Whereas before the RTC, the relief sought by Principalia is
limited to enjoining the POEA from immediately enforcing such cancellation. Clearly,
the reliefs sought by Principalia from the two fora were different and this negates
forum-shopping.37 Neither would the RTC, in resolving the injunction suit, encroach
upon the DOLE Secretary's authority since Principalia was not asking the said court
to prohibit the DOLE Secretary from resolving the appeal before it or for Principalia
to be allowed to continue operating its business regardless of the judgment in the
appeal.
Anent the failure of Principalia to observe the principle of exhaustion of

administrative remedies, suffice it to say that this principle admits of
exceptions,38 and notably, Principalia raised one of these exceptions, i.e.,
deprivation of due process, as an issue in its suit. And since this issue is a question
of fact which the Court can only determine after the trial is had, the RTC was
correct in not dismissing the case and in allowing the same to proceed to trial.
Significantly, this likewise goes true with respect to the main relief for injunction.
As the elements for its issuance, i.e., (1) there must be a right to be protected; and
(2) the acts against which the injunction is to be directed are violative of said
right,39 are matters that must be proved during trial, the RTC merely acted in its
judicial sphere when it proceeded to try the case.
WHEREFORE, the instant Petition is DENIED. The April 4, 2011 Decision and
August 31, 2011 Resolution of the Court of Appeals in CA-G.R. SP No. 111874
are AFFIRMED.
SO ORDERED.chanrobles virtuallawlibrary
Carpio, (Chairperson), Brion, Mendoza, and Leonen, JJ., concur. ChanRoblesVi rt ualawlib ra ry
Endnotes:
Rollo, pp. 10-48.

1
2
CA rollo, pp. 413-420; penned by Associate Justice Manuel M. Barrios and concurred in by Associate
Justices Mario L. Guaria III and Apolinario D. Bruselas, Jr.
3
Id. at 3-26.
4
Records, Vol. 2, pp. 560-565 and 688-689, respectively; penned by Judge Rizalina T. Capco-Umali.
5
6
Records, Vol. 1, pp. 62-69.
7
Section 2. Grounds for imposition of administrative sanctions: ChanRoblesvi rt ualLaw lib rary
xxxx
b. Charging or accepting directly or indirectly an amount greater than that specified in the schedule of
allowable fees prescribed by the Secretary, or making a worker pay any amount greater than that actually
received by him as a loan or advance;
8
Per Section 1A (6), Rule IV, Part VI of the 2002 POEA Rules and Regulations.
9
Records, Vol. I, pp. 2-21.
10
Id. at 142.
11
Id. at 280-301.
12
Id. at 267-279.
13
Records, Vol. 2, pp. 560-565.
14
See Motion for Partial Reconsideration, id. at 590-601.
15
Id. at 688-689.
16
CA rollo, pp. 3-26.
17
Id. at 413-420.
18
Id. at 491-492.
19
Records, Vol. 6, pp. 2376-2379.
Section 2. Dismissal upon motion of plaintiff. Except as provided in the preceding section, a complaint
shall not be dismissed at the plaintiffs instance save upon approval of the court and upon such terms and
conditions as the court deems proper. If a counterclaim has been pleaded by a defendant prior to the service
upon him of the plaintiffs motion for dismissal, the dismissal shall be limited to the complaint. The dismissal
shall be without prejudice to the right of the defendant to prosecute his counterclaim in a separate action
unless within fifteen (15) days from notice of the motion he manifests his preference to have his
counterclaim resolved in the same action. Unless otherwise specified in the order, a dismissal under this
paragraph shall be without prejudice. A class suit shall not be dismissed or compromised without the
approval of the court.
21
See RTC Resolution of even date; records, Vol. 6, p. 2431.
22
See Principalia's Memorandum, rollo, pp. 451 -464.
23
See the Republic's Memorandum, id. at 474-519.
24
http://www/poea.gov.ph/cgi-bin/agSearch.asp (typing "Principalia" as the agency name), last visited on
August 25, 2015.
25
cralaw red Stradcom Corporation v. Laqui, G.R. No. 172712, March 21, 2012, 668 SCRA 652, 661.
26
G.R. No. 193415, April 18, 2012, 670 SCRA 252, 262-263.
Caneland Sugar Corporation v. Hon. Alon, 559 Phil. 462, 467 (2007), citing Acop v. Guingona, Jr., 433
27
Phil. 62, 67-68 (2002).

28
Entitled "Reorganizing the Philippine Overseas Employment Administration and For Other Purposes,"
Section 3(d) states: In the pursuit of its mandate, the Administration shall have the following powers and
functions: ChanRoblesvi rtual Lawli bra ry
xxxx
(d) Exercise original and exclusive jurisdiction to hear and decide all claims arising out of an employer-
employee relationship or by virtue of any law or contract involving Filipino workers for overseas employment
including the disciplinary cases; and all pre- employment cases which are administrative in character
involving or arising out of violation or requirement laws, rules and regulations including money claims
arising therefrom, or violation of the conditions for issuance of license or authority to recruit workers.
29
Section 1. Jurisdiction. The Administration shall exercise original and exclusive jurisdiction to hear and
decide all cases which are administrative in character, involving or arising out of violations of recruitment
rules and regulations including refund of fees collected from workers and violation of the conditions for
issuance of license to recruit workers.
30
Section 1. Jurisdiction. The Secretary of Labor and Employment shall have exclusive jurisdiction to act on
appeals/petitions for review of recruitment violation cases and other related cases decided by the
Administration.
Bank of the Philippine Islands v. Hong, 682 Phil. 66,73 (2012).

31
32
Sec. 19. Jurisdiction in civil cases. Regional Trial Courts shall exercise exclusive original jurisdiction: ChanRob lesvi rtua lLawl ibra ry
(1) In all civil actions in which the subject of the litigations is incapable of pecuniary estimation;
xxxx
(8) In all other cases in which the demand, exclusive of interest, damages of whatever kind, attorneys fees,
litigation expenses, and costs or the value of the property in controversy exceeds Three hundred thousand
pesos (P300,000.00) or, in such other cases in Metro Manila, where the demand exclusive of the above-
mentioned items exceeds Four hundred thousand pesos (P400,000.00). x x x
33
An Act Expanding The Jurisdiction of the Metropolitan Trial Courts, Municipal Trial Courts, and Municipal
Circuit Trial Courts, Amending For The Purpose Batas Pambansa Big. 129, Otherwise Known as the "Judiciary
Reorganization Act of 1980."
Geronimo v. Calderon, G.R. No. 201781, December 10,2014.

34
Zabat v. Court of Appeals, 393 Phil. 195, 205 (2000).

35
36
Id.
37
In First Philippine International Bank v. Court of Appeals, 311 Phil. 280 (1996), the Court held that the
filing by a party of two apparently different actions, but with the same objective, constituted forum-
shopping.
38
In Go v. Distinction Properties Development and Construction, Inc., G.R. No. 194024, April 25,2012, 671
SCRA 461, 480-481, the Court enumerated the exceptions to the principle of non-exhaustion of
administrative remedies as follows: "(a) where there is estoppel on the part of the party invoking the
doctrine; (b) where the challenged administrative act is patently illegal, amounting to lack of jurisdiction; (c)
where there is unreasonable delay or official inaction that will irretrievably prejudice the complainant; (d)
where the amount involved is relatively so small as to make the rule impractical and oppressive; (e) where
the question involved is purely legal and will ultimately have to be decided by the courts of justice; (f) where
judicial intervention is urgent; (g) where the application of the doctrine may cause great and irreparable
damage; (h) where the controverted acts violate due process; (i) where the issue of non-exhaustion of
administrative remedies has been rendered moot; (j) where there is no other plain, speedy and adequate
remedy; (k) where strong public interest is involved; and (1) in quo warranto proceedings."
Philippine Economic Zone Authority v. Carantes, 635 Phil. 541, 548 (2010).
39
NO. 13
THIRD DIVISION
G.R. No. 205188, April 22, 2015
REPUBLIC OF THE PHILIPPINES, REPRESENTED BY HONORABLE LOURDES

M. TRASMONTE IN HER CAPACITY AS UNDERSECRETARY OF THE
DEPARTMENT OF LABOR AND EMPLOYMENT, AND AHONORABLE JENNIFER
JARDIN-MANALILI, IN HER CAPACITY AS THEN PHILIPPINE OVERSEAS
EMPLOYMENT ADMINISTRATOR, Petitioner, v. HUMANLINK MANPOWER
CONSULTANTS, INC. (FORMERLY MHY NEW RECRUITMENT
INTERNATIONAL, INC.), Respondent.
DECISION
VILLARAMA, JR., J.:
Before us is a petition for review on certiorari1 filed by the Republic of the

Philippines represented by the Secretary of the Department of Labor and
Employment (DOLE) and the Administrator of the Philippine Overseas Employment
Administration (POEA) assailing the Court of Appeals' September 24, 2012
Decision2 and January 14, 2013 Resolution3 in CA-G.R. SP No. 121332. The petition
questions whether the Court of Appeals (CA) erred when it ruled that the POEA had
no power to declare that the officers and directors of Humanlink Manpower
Consultants, Inc.4 (Humanlink) were disqualified from participating in the overseas
employment program.5
A complaint6 for violation of Section 2(b) (excessive collection of fees), (d)

(collecting a fee without issuing a receipt) and (e) (misrepresentation) of Rule
I,7 Part VI of the POEA Rules and Regulations Governing the Recruitment and
Employment of Land-Based Overseas Workers (POEA Rules and Regulations) was
filed by Renelson8 L. Carlos against Worldview International Services Corporation
(Worldview) and Humanlink before the POEA Adjudication Office.
Briefly, the facts of the case.
Carlos applied at Worldview as a heavy equipment driver in Doha, Qatar with a

salary of US$700.00. After undergoing the required medical examination,
Worldview submitted Carlos' application and other documents to the POEA under
Humanlink as his recruiting agency.9 During processing of his application, he paid
placement fee adding up to a total of P60,000.0010 but no receipt was issued. On
December 2, 2007, while awaiting his departure at the airport, he was made to sign
an employment contract stating that he was to work as a duct man with a salary of
US$400.00, instead of the heavy equipment driver position he applied for. He was
told that the duct man contract was only for entry purposes and was assured that
he would work as a heavy equipment driver in Doha as advertised.
Upon his arrival in Doha, he worked as a duct installer with a salary of

US$400.00.11 Carlos complained that the terms of the employment contract were
not complied with.12 In March 2008, the foreign employer made Carlos sign a new
employment contract reducing his monthly salary in half.13 Carlos filed a complaint
with the Philippine Overseas Labor Office but the complaint was not acted upon.
This prompted him to speak with the Qatar Labor Office where he discussed his
grievance. On April 29, 2008, Carlos was informed that his visa was cancelled and
that he was being repatriated at his own expense.
Approximately a week after his return to the Philippines, Humanlink's

President14 persuaded him to sign a quitclaim15 absolving it of any liability from the
collection of the placement fee.16
On March 31, 2010, the POEA Adjudication Office found the assertions of Carlos
credible and supported by sufficient evidence. First, it noticed that no receipts were
issued to Carlos for the payments he made. Second, considering that Carlos' salary
only amounted to US$400.00, the amount of P60,000.0017collected from him as
placement fee was patently excessive. Lastly, it further found that in advertising for
a heavy equipment driver but having Carlos sign a contract for a duct man,
Humanlink engaged in misrepresentation. It thus found Humanlink liable for
violation of Section 2(b), (d) and (e) of the 2002 POEA Rules and Regulations.
Worldview was only found liable for violating Section 2(e) of the 2002 POEA Rules
and Regulations.18 The fallo reads:chanroblesvirtuallawlibrary
WHEREFORE, premises considered, for the established violation of Section 2 (b),

(d), and (e) of Rule I, Part VI of the Rules and Regulations Governing the
Recruitment and Employment of Land-based Overseas Workers, the penalty of
cancellation of license and fine in the amount of PHP80,000.00 is hereby imposed
upon [Humanlink Manpower Consultants, Inc.] As a consequence of the
cancellation of its license, its officers and directors as of November 2007
are hereby ordered disqualified from participating in the overseas
employment program of the government.19(Emphasis ours)
Humanlink appealed20 before the DOLE but the same was dismissed for lack of
merit in the DOLE February 17, 2011 Order.21 It moved for reconsideration but the
same was denied.22
Humanlink appealed to the CA via a petition for certiorari.23 In its September 24,
2012 Decision, the CA affirmed with modification the February 17, 2011 Order. It
agreed that Humanlink was guilty of violating Section 2 (b), (d), and (e) of the
POEA Rules and Regulations and ordered the cancellation of its license. However, it
disagreed that as a consequence of the cancellation of the license, automatic
disqualification of officers and directors from participating in government's overseas
employment program should be imposed. It considered such penalty to be violative
of due process and in excess of the POEA's supervisory powers. It
stated:chanroblesvirtuallawlibrary
As a general rule, the Legislature cannot surrender or abdicate its legislative power,
for doing so will be unconstitutional. Although the power to make laws cannot be
delegated by the Legislature to any other authority, a power that is not legislative
in character may be delegated. Under certain circumstances, the Legislature can
delegate to executive officers and administrative boards the authority to adopt and
promulgate Implementing Rules and Regulations [IRRs]. To render such delegation
lawful, the Legislature must declare the policy of the law and fix the legal principles
that are to control in given cases. The Legislature should set a definite or primary
standard to guide those empowered to execute the law. The authority to make IRRs
in order to carry out an express legislative purpose, or to effect the operation and
enforcement of a law is not a power exclusively legislative in character, but is
rather administrative in nature. The rules and regulations adopted and promulgated
must not, however, subvert or be contrary to existing statutes. The function of
promulgating IRRs may be legitimately exercised only for the purpose of carrying
out the provisions of a law. The power of administrative agencies is confined
to implementing the law or putting it into effect. Thus, the [POEA] cannot go
beyond the extent and scope of the concerned particular implementing rules which
are merely putting into effect the mandate of the Labor Code of the Philippines.
Also, it goes without saying that the automatic disqualification of officers and
directors of herein petitioner, without specifically impleading the parties concerned,
cannot be enforced without violating the due process of law as they were deprived
of every opportunity to put up their respective defenses.24cralawlawlibrary
The CA thus decreed:chanroblesvirtuallawlibrary
WHEREFORE, premises considered, the instant petition is DENIED. Accordingly,
the Order and Resolution dated February 17, 2011 and July 6, 2011 of the
Undersecretary of the Department of Labor and Employment in OS-POEA-0098-
0521-2010 [POEA Case No. RV 08-08-1455] are hereby AFFIRMED with a
modification in that the affirmation as to the declaration disqualifying the officers
and directors of Humanlink Manpower Consultants, Inc. to engage in the overseas
employment program of the government is declared null and void.
SO ORDERED.25cralawlawlibrary
Humanlink moved for reconsideration but it was denied. Hence, this petition.
The DOLE and POEA contend that the disqualification of the officers and directors
from participation in the overseas employment program of the government is
expressly sanctioned under Section 2(f), Rule I, Part II of the POEA Rules and
Regulations which reads:chanroblesvirtuallawlibrary
Section 2. Disqualification. The following are not qualified to engage in the business
of recruitment and placement of Filipino workers overseas.
xxxx
f. Persons or partners, officers and Directors of corporations whose licenses have

been previously cancelled or revoked for violation of recruitment laws.
It claims that the disqualification is within the delegated powers of the DOLE
Secretary and the POEA and argues that the provision "upholds the purpose of the
law to establish a higher standard of protection and promotion of the welfare of
migrant workers."26
Humanlink, on the other hand, reiterates its position that petitioner did not raise
any substantial argument to warrant the reversal of the CA Decision.27
The issue for consideration before this Court is whether the POEA has the power to
automatically disqualify officers and directors from participating in the
government's overseas employment program upon the cancellation of a license.
We rule in the affirmative.
We have long settled the role of the POEA and the DOLE with respect to the
recruitment, placement and deployment of overseas workers.28
While Section 2(c),29 Republic Act (R.A.) No. 804230 states that the State does not
promote overseas employment as a means to sustain economic growth, the State
recognizes the vital role of overseas Filipino workers to the nation's economy and
development. Aware that overseas workers are vulnerable to exploitation, the State
sought to protect the interests and well-being of these workers with creation of
specialized bodies such as the POEA under the direct supervision of the DOLE
Secretary.
One of the roles of the POEA is the regulation and adjudication of private sector
participation in the recruitment and placement of overseas workers.31 Article 25 of
the Labor Code, as amended, reads:chanroblesvirtuallawlibrary
ART. 25. Private Sector Participation in the Recruitment and Placement of Workers.
Pursuant to national development objectives and in order to harness and
maximize the use of private sector resources and initiative in the development and
implementation of a comprehensive employment program, the private
employment sector shall participate in the recruitment and placement of
workers, locally and overseas,under such guidelines, rules and
regulations as may be issued by the Secretary of Labor. (Emphasis supplied)
This is echoed in Article 35 of the Labor Code, as amended, and Section 23(b.l),
R.A. No. 8042 as amended by R.A. No. 9422, where the legislature empowered the
DOLE and POEA to regulate private sector participation in the recruitment and
overseas placement of workers, to wit:chanroblesvirtuallawlibrary
ART. 35. Suspension and/or Cancellation of License Authority. - The Secretary of
Labor shall have the power to suspend or cancel any license or authority to
recruit employees for overseas employment for violation of rules and
regulations issued by the Secretary of Labor, the Overseas Employment
Development Board, and the National Seamen Board, or for violation of the
provisions of this and other applicable laws, General Orders and Letters of
Instruction. (Emphasis supplied)
Section 23. x x x
xxxx
(b.1) Philippine Overseas Employment Administration. The Administration shall

regulate private sector participation in the recruitment and overseas
placement of workers by setting up a licensing and registration system. It
shall also formulate and implement, in coordination with appropriate entities
concerned, when necessary, a system for promoting and monitoring the overseas
employment of Filipino workers taking into consideration their welfare and the
domestic manpower requirements.
In addition to its powers and functions, the administration shall inform migrant
workers not only of their rights as workers but also of their rights as human beings,
instruct and guide the workers how to assert their rights and provide the available
mechanism to redress violation of their rights.
In the recruitment and placement of workers to service the requirements for

trained and competent Filipino workers of foreign governments and their
instrumentalities, and such other employers as public interests may require, the
administration shall deploy only to countries where the Philippines has concluded
bilateral labor agreements or arrangements: Provided, That such countries shall
guarantee to protect the rights of Filipino migrant workers; and: Provided, further,
That such countries shall observe and/or comply with the international laws and
standards for migrant workers. (Emphasis supplied)
This Court in Eastern Assurance and Surety Corporation v. Secretary of
Labor32 affirmed the POEA's power to cancel the license of erring recruitment
agencies as a consequence of not adhering to the rules and regulations set by the
POEA and DOLE. Rules and regulations referred to includes POEA Rules and
Regulations.
Sections 1 and 2, Rule I, Part II of the POEA Rules and Regulations provide the
qualifications and disqualifications for private sector participation in the overseas
employment program. Section 1 of this rule provides that for persons to participate
in recruitment and placement of land-based overseas Filipino workers, they must
not possess any of the disqualifications as provided in Section 2. Section 1 partly
reads:chanroblesvirtuallawlibrary
Section 1. Qualifications. Only those who possess the following qualifications may
be permitted to engage in the business of recruitment and placement of Filipino
workers:
xxxx
c. Those not otherwise disqualified by law or other government regulations to

engage in the recruitment and placement of workers for overseas employment.
In connection with the foregoing, Section 2 provides for the disqualifications.
Specifically, Section 2(d)(4) and (f) provides that persons, directors and officers of
whose licenses have been previously revoked or cancelled are disqualified from
engaging in the recruitment and placement of workers. It
states:chanroblesvirtuallawlibrary
Section 2. Disqualification. The following are not qualified to engage in the
business of recruitment and placement of Filipino workers overseas.
xxxx
d. Persons, partnerships or corporations which have derogatory records,

such asbut not limited to the following:
xxxx
4. Those agencies whose licenses have been previously revoked or

cancelled by the Administration for violation of RA 8042, PD
442 as amended and their implementing rules and
regulations as well as these rules and regulations.
xxxx
f. Persons or partners, officers and Directors of corporations whose licenses
have been previously cancelled or revoked for violation of recruitment
laws. (Emphases supplied)
Thus, upon the cancellation of a license, persons, officers and directors of the
concerned corporations are automatically prohibited from engaging in recruiting and
placement of land-based overseas Filipino workers. The grant of a license is a
privilege and not a right thus making it a proper subject of its regulatory powers. If
we are to protect the welfare of vulnerable overseas workers, then we must prevent
all instances wherein they may be taken advantage upon. This must be so since the
rules must be read as a whole to achieve its particular purpose. Particular words,
clauses and phrases should not be studied as detached and isolated expressions but
as a whole and every part of the statute must be considered in fixing the meaning
of any of its parts and in order to produce a harmonious whole.33
It is inconsequential therefore whether or not the POEA or the DOLE stated then in
their decision that persons, officers and directors are disqualified from participating
in the government's overseas employment program. The law and rules
implementing the same unequivocally state that once a recruitment license of an
entity is cancelled, its officers and directors are automatically prohibited from
engaging in such activity. The failure of the POEA and DOLE to indicate this fact
cannot by any means indicate the contrary. Dura lex sed lex.
Given the foregoing, we therefore affirm with modification the decision of the CA
and reiterate that officers and directors of Humanlink are prohibited from engaging
in the recruitment and placement of overseas workers upon cancellation of
Humanlink's license. Based on the listed qualifications and disqualifications of the
Rules, they are not qualified to participate in the government's overseas
employment program upon such cancellation. It was thus unnecessary for the POEA
or the DOLE to issue a separate decision explicitly stating that persons, officers or
directors of Humanlink are disqualified from participating in government overseas
recruitment programs.cralawred
WHEREFORE, the petition is GRANTED. The Decision dated September 24, 2012
of the Court of Appeals in CA-G.R. SP No. 121332 is hereby PARTIALLY
REVERSED insofar as it modified the February 17, 2011 Order and July 6, 2011
Resolution of the Undersecretary of the Department of Labor and Employment in
OS-POEA-0098-0521-2010 [POEA Case No. RV 08-08-1455] by declaring the
disqualification of the officers and directors of Humanlink Manpower Consultants,
Inc. to engage in the overseas employment program of the government as null and
void. Accordingly, the aforesaid order and resolution of the DOLE Undersecretary
are AFFIRMED and UPHELD in toto.
SO ORDERED.chanroblesvirtuallawlibrary
Velasco, Jr., (Chairperson), Peralta, Bersamin,* and Reyes, JJ., concur.
Endnotes:
*
Designated additional Member per Raffle dated October 20, 2014.
1
Under Rule 45 of the Revised Rules of Court.
2
Rollo, pp. 71-90. Penned by Associate Justice Franchito N. Diamante and concurred in by Associate Justices
Celia C. Librea-Leagogo and Danton Q. Bueser.
3
Id. at 92-95.
4
Formerly known as MHY New Recruitment International, Inc.
Rollo, pp. 42-43.

5
6
Filed on August 1, 2008 and docketed as POEA Case No. RV 08-08-1455.
7
POEA RULES AND REGULATIONS GOVERNING THE RECRUITMENT AND EMPLOYMENT OF LAND-BASED
OVERSEAS WORKERS, Section 2 (b), (d), and (e) provides:
Section 2. Grounds for imposition of administrative sanctions:
xxxx
b. Charging or accepting directly or indirectly any amount greater than that
of specified in the schedule of allowable fees prescribed by the
Secretary, or making a worker pay any amount greater than that
actually received by him as a loan or advance;
xxxx
d. Collecting any fee from a worker without issuing the appropriate receipt
clearly showing the amount paid and the purpose for which payment was
made;
e. Engaging in act/s of misrepresentation in connection with recruitment

and placement of workers, such as furnishing or publishing any false
notice, information or document in relation to recruitment or
employment;
xxxx
8
Also referred to as "Nelson" in some parts of the pleadings.
Rollo, pp. 138, 146-147.

9
10
Sometime May for P20,000 and November 29, 2007 for P40,000.00 out of the proceeds of a loan which he
obtained with the help of the employees of the agency. Carlos paid the amount in instalments.
11
Equivalent to 1,500.00 Qatar Riyal. Rollo, p. 141.
12
Lack of medical assistance, clean water, food allowance, and monthly slip. Carlos also alleged poor
accommodation was provided. Id.
13
750.00 Qatar Riyal. Id.
14
Marilyn N. Raquidan.
15
Records, p. 51.
16
Rollo, p. 141.
17
Generally, placement fees are equivalent to one month salary of the overseas worker deployed, except in
instances where a higher amount is authorized to be collected or no placement fee is required.
18
Rollo, pp. 122-134. Signed by Administrator Jennifer Jardin-Manalili.
19
Id. at 133.
20
Docketed as OS-POEA-0098-0521-2010.
21
Rollo, pp. 136-150. Signed by then DOLE Undersecretary Danilo P. Cruz.
22
Id. at 152-156. DOLE Resolution dated July 6, 2011 signed by Undersecretary Lourdes M. Trasmonte.
23
Under Rule 65 of the Rules of Court and docketed as CA-G.R. SP No. 121332.
24
Rollo, pp. 87-88.
25
Id. at 89.
26
Id. at 46.
27
Id. at 292-301.
28
See People v. Diaz, 328 Phil. 794, 806 (1996).
29
R.A. No. 8042, Section 2(c) provides: c han roblesv irt uallawl ibra ry
SEC. 2. Declaration of Policies.
xxxx
(c) While recognizing the significant contribution of Filipino migrant workers to the national economy
through their foreign exchange remittances, the State does not promote overseas employment as a means
to sustain economic growth and achieve national development. The existence of the overseas employment
program rests solely on the assurance that the dignity and fundamental human rights and freedoms of the
Filipino citizen shall not, at any time, be compromised or violated. The State, therefore, shall continuously
create local employment opportunities and promote the equitable distribution of wealth and the benefits of
development.
xxxx
30
Entitled "AN ACT TO INSTITUTE THE POLICIES OF OVERSEAS EMPLOYMENT AND ESTABLISH A HIGHER
STANDARD OF PROTECTION AND PROMOTION OF THE WELFARE OF MIGRANT WORKERS, THEIR FAMILIES
AND OVERSEAS FILIPINOS IN DISTRESS, AND FOR OTHER PURPOSES" otherwise known as the "Migrant
Workers and Overseas Filipinos Act of 1995."
31
R.A. No. 8042, Sec. 23 (b.1).
32
260 Phil. 115, 121-122 (1990).
National Tobacco Administration v. COA, 370 Phil. 793, 808 (1999).

33
NO. 14
G.R. No. 205153, September 09, 2015
PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee, v. SUZETTE ARNAIZ A.K.A. "BABY

ROSAL", Accused-Appellant.
DECISION
VILLARAMA, JR., J.:
On appeal is the June 25, 2012 Decision1 of the Court of Appeals (CA) in CA-G.R. CR.-H.C. No. 04762
affirming the conviction of appellant Suzette Arnaiz a.k.a. "Baby Rosal" for illegal recruitment in large scale
and two counts of estafa. chanrobles law
Facts
In Criminal Case No. 02-199399, appellant Suzette Arnaiz, Ruel P. Garcia and Chita Lorenzo were charged
with the crime of illegal recruitment committed in large scale and by a syndicate. In Criminal Case No. 02-
199404, appellant and her two co-accused were charged with estafa. In Criminal Case No. 02-199406,
appellant and her two co-accused were also charged with estafa.
Appellant pleaded not guilty to the charges against her. Trial on the merits ensued.
Prosecution witness Edenelda Cayetano testified that she learned that appellant was recruiting workers for
Australia. On December 16, 1999, Cayetano gave appellant P30,000 for the processing of her papers. She
gave another P40,000 on January 19, 2000, P30,000 on February 4, 2000, and $500 on March 8, 2000.
However, she was not able to leave for Australia. She then confronted appellant, who tried to refund the
amount by issuing a check for P175,000. Unfortunately, Cayetano was not able to recover her money since
the account was already closed.2
Witness Napoleon Bunuan testified that in June 2000, he went to appellant's travel agency, Florida Travel
and Tours located in Manila after learning that it was recruiting factory workers for South Korea. On June 6,
2000, Bunuan gave appellant P45,000 believing that he will be deployed soon. On June 19, 2000, he gave
appellant another P25,000 for which he was issued a receipt, even though he had no employment contract.
Bunuan again paid P20,000 but this time he was not given a receipt. After paying a total of P90,000,
Bunuan discovered that appellant sent 26 persons to Korea but all were sent back to the Philippines. He
went to appellant's office only to find out that it was already padlocked.3
Another witness, Flerminio Cantor, Jr., testified that he went to appellant's office sometime in May 2000 to
apply as a factory worker in Korea. He gave appellant the total amount of P110,000 evidenced by cash
vouchers. When he arrived in Korea, he was sent back by the Immigration Officer after confirming that his
visa and passport were fake. Cantor, Jr. reported back to appellant, who promised that she will change
Cantor, Jr.'s name in the passport. He later found out that appellant was arrested by the National Bureau of
Investigation.4
During trial, all the complainants identified appellant in open court as Suzette Arnaiz also known as
Baby/Rosita Rosal to whom they gave their money.5
The Labor and Employment Officer of the Philippine Overseas Employment Administration (POEA), Mildred
N. Versoza, confirmed that based on the records of their office, appellant and Florida Travel and Tours were
not licensed to recruit workers for deployment abroad.6
On the other hand, appellant testified that her office was only a travel agency and they only processed the
issuance of visas in the different embassies in the Philippines. She claimed that Bunuan went to her office in
June 2000 with Julie Landicho, and it was Landicho who recruited Bunuan and assisted him in getting a visa
from their office. Appellant averred that Bunuan went to their office with Cantor, Jr. who said that his
brother in Korea instructed him to get a Korean visa. Two weeks later, Bunuan and Cantor, Jr. were able to
get their visas after paying P65,000, covering the airfare, consultancy and visa assistance fees. The two
were able to leave for Korea but were held at the airport. Appellant claimed that she was able to refund
Bunuan and Cantor, Jr. the amount of P135,000 each.7 She asserted that the signature appearing on the
voucher was that of her secretary Suzette Arnaiz who is now residing abroad, and insisted that her name is
Rosita Rosal.8
In its Decision,9 the Regional Trial Court (RTC) found appellant guilty of illegal recruitment in large scale in
Criminal Case No. 02-199399. Appellant was sentenced to life imprisonment and ordered to pay a fine of
P500,000. The RTC also found appellant guilty of estafa in Criminal Case No. 02-199404 and sentenced her
to an indeterminate penalty of 4 years and 2 months of prision correccional as minimum, to 14 years
of reclusion temporal as maximum. She was ordered to pay the amount of P70,000 as payment for the
sums paid by Bunuan. The RTC likewise found appellant guilty of estafa in Criminal Case No. 02-199406 and
sentenced her to an indeterminate penalty of 4 years and 2 months of prision correccional as minimum, to
15 years of reclusion temporal as maximum. She was ordered to pay Cantor, Jr. the amount of P100,000.
The RTC held that the prosecution was able to establish that appellant undertook recruitment activities and
promised employment abroad to the complainants without a valid license or authority to engage in
recruitment and placement of workers.
On the estafa charges, the RTC noted the elements of the crime of estafa under Article 315(2)(a) of
the Revised Penal Code, as amended, and held that appellant, by her false pretenses that she can deploy
the complainants for work abroad, was able to induce them to part with their money which caused them
damage. We note, however, that the fallo of the RTC Decision convicted appellant of two counts
of estafaunder Article 315(1)(b) of the Revised Penal Code, as amended.
Appellant appealed to the CA.
The CA denied the appeal and affirmed the conviction of appellant for illegal recruitment in large scale and
two counts of estafa. However, it reduced the penalty of imprisonment imposed in Criminal Case No. 02-
199404 to an indeterminate penalty of 6 months and 1 day of prision correccional as minimum, to 10 years
of prision mayor as maximum. Appellant was also ordered to refund to Bunuan the reduced amount of
P45,000.
In affirming appellant's conviction for illegal recruitment in large scale, the CA cited the testimonies of the
complainants that appellant led them to believe that she had the power to send them to work in Korea and
Australia. They were required to submit their bio-data and passports. They were also asked to give
substantial amounts of money on several occasions for the processing of their visas and other documents
necessary for deployment. Still, they were not able to leave the country and work abroad. Efforts to have
their money refunded also failed, said the CA.
On the estafa charges, the CA ruled that the elements of estafa under Article 315(2)(a) of the Revised Penal
Code, as amended, were present. The CA again noted the clear and categorical testimonies of the
complainants that they were made to believe that appellant had the authority to send them to work in
Australia and Korea, for which reason they gave her substantial amounts of money.
Hence, this appeal. chanro bleslaw
Issue
The essential issue is whether appellant's guilt was proven beyond reasonable doubt. chanrob leslaw
Our Ruling
We rule in the affirmative. The appeal lacks merit.
Section 6 of Republic Act No. 8042 (RA 8042) defines illegal recruitment as follows: c hanR oblesvi rtual Lawl ibra ry
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. It shall likewise include the following acts, whether committed by any person,
whether a non-licensee, non-holder, licensee or holder of authority:
xxxx
(m) Failure to reimburse expenses incurred by the worker in connection with his documentation and
processing for purposes of deployment, in cases where the deployment does not actually take place without
the worker's fault. Illegal recruitment when committed by a syndicate or in large scale shall be considered
an offense involving economic sabotage.
Illegal recruitment is deemed committed by a syndicate if carried out by a group of three (3) or more
persons conspiring or confederating with one another. It is deemed committed in large scale if committed
against three (3) or more persons individually or as a group. ChanRoblesVirtualawl ibra ry
To constitute illegal recruitment in large scale, three elements must concur: (a) the offender has no valid
license or authority required by law to enable him to lawfully engage in recruitment and placement of
workers; (b) the offender undertakes any of the activities within the meaning of "recruitment and
placement" under Article 13(b) of the Labor Code, or any of the prohibited practices under Article 34 of the
said Code (now Section 6 of RA 8042); and (c) the offender committed the same against three or more
persons, individually or as a group.10
Article 13(b) of the Labor Code defines recruitment and placement as "any act of canvassing, enlisting,
contracting, transporting, utilizing, hiring or procuring workers; and includes referrals, contract services,
promising or advertising for employment, locally or abroad, whether for profit or not." In the simplest terms,
illegal recruitment is committed by persons who, without authority from the government, give the
impression that they have the power to send workers abroad for employment purposes.11
The elements of illegal recruitment in large scale were proven in this case. One, appellant has no valid
license or authority to engage in recruitment and placement of workers. The Labor and Employment Officer
of the POEA, Mildred N. Versoza, confirmed that based on the records of their office, appellant and Florida
Travel and Tours were not licensed to recruit workers for deployment abroad. Two, appellant clearly
engaged in recruitment activities and promised employment abroad to the complainants as proven by their
testimonies. Three, appellant committed illegal recruitment against three persons.
Thus, we uphold appellant's conviction for illegal recruitment in large scale. We also agree with the RTC and
CA in imposing the penalty of life imprisonment and ordering appellant to pay a fine of P500,000 for being in
conformity with Section 712 of RA 8042.
Appellant insists on the veracity of her own testimony in claiming that the prosecution failed to prove that
she is guilty of illegal recruitment in large scale. Her testimony, however, was rejected by the RTC which
found the testimonies of the complainants credible and truthful.13 Settled is the rule that the findings and
conclusion of the trial court on the credibility of witnesses are entitled to great respect because the trial
courts have the advantage of observing the demeanor of witnesses as they testify.14The CA likewise believed
the complainants' testimonies and found them to be clear and categorical.15The determination by the trial
court of the credibility of witnesses, when affirmed by the appellate court, as in this case, is accorded full
weight and credit as well as great respect, if not conclusive effect.16
We also agree with the CA that appellant is guilty of two counts of estafa under Article 315(2)(a) of
the Revised Penal Code, as amended. It is settled that a person may be charged and convicted separately of
illegal recruitment under RA 8042, in relation to the Labor Code, and estafa under Article 315(2)(a) of
the Revised Penal Code.17 Article 315(2)(a) of the Revised Penal Code, as amended, defines estafaas: chanRoblesvirtual Lawlib ra ry
ART. 315. Swindling (estafa). - Any person who shall defraud another by any of the means mentioned
hereinbelow x x x:
xxxx
2. By means of any of the following false pretenses or fraudulent acts executed prior to or simultaneously
with the commission of the fraud:
(a) By using a fictitious name, or falsely pretending to possess power, influence, qualifications, property,
credit, agency, business or imaginary transactions; or by means of other similar deceits. ChanRobles Vi rtua lawlib rary
The elements of estafa are: (a) that the accused defrauded another by abuse of confidence or by means of
deceit, and (b) that damage or prejudice capable of pecuniary estimation is caused to the offended party or
third person.18 These elements were proven in this case. By means of deceit, appellant made complainants
believe that she had the proper authority to send them to work in Australia and Korea, for which reason
they gave her substantial amounts of money. Appellant clearly misled the complainants who believed she
had the power to send them to work in Australia and Korea. They were required to submit their bio-data and
passports, and were asked to give substantial amounts of money for the processing of their visas and other
documents necessary for deployment. Efforts to recover their money after they were not deployed for the
promised work abroad failed resulting to monetary damages on their part.
The penalty for estafa depends on the amount defrauded. Per Article 315 of the Revised Penal Code: chanRoble svirtual Lawli bra ry
ART. 315. Swindling (estafa). - Any person who shall defraud another by any of the means mentioned
hereinbelow shall be punished by:
1st. The penalty of prision correccional in its maximum period to prision mayor in its minimum period, if the
amount of the fraud is over 12,000 pesos but does not exceed 22,000 pesos; and if such amount exceeds
the latter sum, the penalty provided in this paragraph shall be imposed in its maximum period, adding one
year for each additional 10,000 pesos; but the total penalty which may be imposed shall not exceed twenty
years. In such cases, and in connection with the accessory penalties which may be imposed and for the
purpose of the other provisions of this Code, the penalty shall be termed prision mayor or reclusion
temporal, as the case may be. ChanRobles Vi rtualawl ib rary
The prescribed penalty for estafa under Article 315 of the Revised Penal Code, when the amount of fraud is
over P12,000 but not exceeding P22,000, is prision correccional maximum to prision mayor minimum (i.e.,
from 4 years, 2 months, and 1 day to 8 years). Under the Indeterminate Sentence Law, the minimum term
shall be within the range of the penalty next lower to that prescribed by the Revised Penal Code, or
anywhere within prision correccional minimum and medium (i.e., from 6 months and 1 day to 4 years and 2
months).19
The maximum term under the Indeterminate Sentence Law shall be that which, in view of attending
circumstances, could be properly imposed under the rules of the Revised Penal Code. To compute the
minimum, medium, and maximum periods of the prescribed penalty for estafa when the amount of fraud
exceeds P12,000, the time included in prision correccional maximum to prision mayor minimum shall be
divided into three equal portions, with each portion forming a period. Following this computation, the
minimum period for prision correccional maximum to prision mayor minimum is from 4 years, 2 months and
1 day to 5 years, 5 months and 10 days; the medium period is from 5 years, 5 months and 11 days to 6
years, 8 months and 20 days; and the maximum period is from 6 years, 8 months and 21 days to 8 years.
Any incremental penalty (i.e., one year for every P10,000 in excess of P22,000) shall thus be added to
anywhere from 6 years, 8 months and 21 days to 8 years, at the discretion of the court, provided that the
total penalty does not exceed 20 years.20
Based on the foregoing discussion, the RTC and the CA correctly sentenced appellant to suffer an
indeterminate penalty of 4 years and 2 months of prision correccional as minimum to 15 years of reclusion
temporal as maximum in Criminal Case No. 02-199406. The CA was also correct in imposing an
indeterminate penalty of 6 months and 1 day of prision correccional as minimum to 10 years of prision
mayor as maximum in Criminal Case No. 02-199404.
Interest at the rate of 6% per annum shall also be paid by appellant to Bunuan and Cantor, Jr. from the
time the Informations (February 8, 2002) were filed until the amounts paid by them are fully paid.21
WHEREFORE, we DISMISS the appeal. We AFFIRM with MODIFICATIONS the Decision dated June 25,
2012 of the Court of Appeals in CA-G.R. CR.-H.C. No. 04762 to read as follows:
1. In Criminal Case No. 02-199399, appellant Suzette Arnaiz a.k.a. "Baby Rosal" is found guilty
beyond reasonable doubt of the crime of illegal recruitment in large scale and is hereby sentenced
to suffer the penalty of life imprisonment and to pay a fine of P500,000.
beyond reasonable doubt of the crime of estafa under Article 315(2)(a) of the Revised Penal Code,
as amended, and is hereby sentenced to suffer an indeterminate penalty of 6 months and 1 day
of prision correccional as minimum to 10 years of prision mayor as maximum. Appellant is further
ordered to indemnify Napoleon R. Bunuan in the amount of P45,000 as actual damages, with legal
interest of 6% per annum computed from the filing of the Information, i.e., February 8, 2002, until
the amount is fully paid.
beyond reasonable doubt of the crime of estafa under Article 315(2)(a) of the Revised Penal Code,
as amended, and is hereby sentenced to suffer an indeterminate penalty of 4 years and 2 months
of prision correccional as minimum to 15 years of reclusion temporal as maximum. Appellant is
further ordered to indemnify Herminio Cantor, Jr. in the amount of P100,000 as actual damages,
with legal interest of 6% per annum computed from the filing of the Information, i.e., February 8,
2002, until the amount is fully paid.
With costs against the appellant.
SO ORDERED. chanroblesvi rtua llawli bra ry
Velasco, Jr., (Chairperson), Peralta, Perez,* and Leonen,**JJ., concur.
Endnotes:
*
Designated Acting Member in lieu of Associate Justice Bienvenido L. Reyes, per Special Order No. 2084
dated June 29, 2015.
**
Designated additional Member in lieu of Associate Justice Francis H. Jardeleza, per Raffle dated January 5,
2015.
1
Rollo, pp. 2-16. Penned by Associate Justice Jose C. Reyes, Jr. with Associate Justices Priscilla J. Baltazar-
Padilla and Agnes Reyes-Carpio concurring.
2
TSN, August 15, 2005, pp. 5-33.
3
TSN, January 22, 2007, pp. 6-11.
4
Id. at 16-20.
5
TSN, August 15, 2005, pp. 9, 38; TSN, January 22, 2007, pp. 5, 16.
6
TSN, August 1, 2008, pp. 3-7.
7
TSN, May 27, 2009, pp. 4-8.
8
Id. at 12.
9
CA rollo, pp. 50-60. Penned by Presiding Judge Reynaldo G. Ros.
10
People v. Gallemit, G.R. No. 107539, June 2, 2014, 724 SCRA 359, 376-377.
11
People v. Gallemit, id. at 375.
12
SEC. 7. Penalties. -
(a) Any person found guilty of illegal recruitment shall suffer the penalty of imprisonment of not less than
six (6) years and one (1) day but not more than twelve (12) years and a fine of not less than Two hundred
thousand pesos (P200,000.00) nor more than Five hundred thousand pesos (P500,000.00).
(b) The penalty of life imprisonment and a fine of not less than Five hundred thousand pesos (P500,000.00)
nor more than One million pesos (P1,000,000.00) shall be imposed if illegal recruitment constitutes
economic sabotage as defined herein.
Provided, however, That the maximum penalty shall be imposed if the person illegally recruited is less than
eighteen (18) years of age or committed by a non-licensee or non-holder of authority.
13
CA rollo, p. 57.
14
People v. Lazaro, Jr., 619 Phil. 235, 254 (2009).
15
Rollo, pp. 11-13.
16
People v. Sabadlab, 679 Phil. 425, 438 (2012).
17
People v. Gallemit, supra note 10, at 382.
18
19
People v. Gallemit, id. at 385, citing People v. Temporada, 594 Phil. 680, 714-715.
20
People v. Gallemit, id. at 386, citing People v. Temporada, id.
21

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NO.

Republic of the Philippines

G.R. No. 177498 January 18, 2012

STOLT-NIELSEN TRANSPORTATION GROUP, INC. AND CHUNG GAI SHIP

WHEREFORE, the petition is hereby DENIED. Accordingly, the assailed Decision

The facts as gathered by this Court follow:

On 6 March 1995, Sulpecio Madequillo (respondent) filed a complaint before the

1. On 6 November 1991(First Contract), he was hired by Stolt-Nielsen Marine

WHEREFORE, premises considered, judgment is hereby rendered, declaring the

1. $12,537.00 or its peso equivalent at the time of payment. 7

WHEREFORE, premises considered, the decision under review is hereby, MODIFIED BY

In all other respects, the assailed decision so stands as, AFFIRMED.11

The Courts Ruling

1. THERE WAS NO NOVATION OF THE FIRST CONTRACT BY THE SECOND

THE COURT A QUO ERRED IN RULING THAT THERE WAS CONSTRUCTIVE

1. IT IS LEGALLY IMPOSSIBLE TO HAVE CONSTRUCTIVE DISMISSAL WHEN

Novation is the extinguishment of an obligation by the substitution or change of the

2. There must be an agreement of the parties concerned to a new contract,

3. There must be the extinguishment of the old contract, and

4. There must be the validity of the new contract.19

x x x Findings of fact of administrative agencies and quasi-judicial bodies, which

JOSE PORTUGAL PEREZ

MARIA LOURDES P. A. SERENO BIENVENIDO L. REYES

1st Offense Reprimand.

ANTONIO M. SERRANO, G.R. No. 167614

United Nations Secretary-General Ban Ki-Moon

Sec. 10. Money Claims. - x x x In case of termination of overseas employment

May 27/31, 1998 (5 days) incl. Leave pay US$ 413.90

as well as moral and exemplary damages and attorney's fees.

WHEREFORE, premises considered, judgment is hereby rendered declaring that the

All other claims are hereby DISMISSED.

SO ORDERED.[13] (Emphasis supplied)

WHEREFORE, the Decision dated 15 July 1999 is MODIFIED. Respondents are

1. Three (3) months salary

The other findings are affirmed.

On the first and second issues

The Arguments of Respondents

The Arguments of the Solicitor General

The Court sustains petitioner on the first and second issues.

Does the subject clause violate Section 10,

The answer is in the negative.

Section 10, Article III of the Constitution provides:

No law impairing the obligation of contracts shall be passed.

Does the subject clause violate Section 1,

The answer is in the affirmative.

Third, OFWs vis--vis local workers with fixed-period employment;

OFWs with employment contracts of less than one

Among OFWs With Employment

OFWs vis--vis Local Workers

Article 605 was applied to Madrigal Shipping Company, Inc. v. Ogilvie,[110] in

The OSG explained further:

Any compromise/amicable settlement or voluntary agreement on any money claims

Ultimately, therefore, Section 3 of Article XIII cannot, on its own, be a source of

On the Third Issue

The rendition of overtime work and the submission of sufficient

MA. ALICIA AUSTRIA-MARTINEZ

LEONARDO A. QUISUMBING CONSUELO YNARES-SANTIAGO

CONCHITA CARPIO MORALES DANTE O. TINGA

ANTONIO EDUARDO B. NACHURA TERESITA J. LEONARDO-