G.R. No.

78909 June 30, 1989

MATERNITY CHILDREN'S HOSPITAL, represented by ANTERA
L. DORADO, President, petitioner,
vs.
THE HONORABLE SECRETARY OF LABOR AND THE REGIONAL
DlRECTOR OF LABOR, REGION X,respondents.
MEDIALDEA, J.:
This is a petition for certiorari seeking the annulment of the
Decision of the respondent Secretary of Labor dated September 24,
1986, affirming with modification the Order of respondent Regional
Director of Labor, Region X, dated August 4, 1986, awarding salary
differentials and emergency cost of living allowances (ECOLAS) to
employees of petitioner, and the Order denying petitioner's motion
for reconsideration dated May 13, 1987, on the ground of grave
abuse of discretion.
Petitioner is a semi-government hospital, managed by the Board of
Directors of the Cagayan de Oro Women's Club and Puericulture
Center, headed by Mrs. Antera Dorado, as holdover President. The
hospital derives its finances from the club itself as well as from
paying patients, averaging 130 per month. It is also partly
subsidized by the Philippine Charity Sweepstakes Office and the
Cagayan De Oro City government.
Petitioner has forty-one (41) employees. Aside from salary and
living allowances, the employees are given food, but the amount
spent therefor is deducted from their respective salaries (pp. 7778, Rollo).
On May 23, 1986, ten (10) employees of the petitioner employed in
different capacities/positions filed a complaint with the Office of the
Regional Director of Labor and Employment, Region X, for
underpayment of their salaries and ECOLAS, which was docketed as
ROX Case No. CW-71-86.
On June 16, 1986, the Regional Director directed two of his Labor
Standard and Welfare Officers to inspect the records of the
petitioner to ascertain the truth of the allegations in the complaints
(p. 98, Rollo). Payrolls covering the periods of May, 1974, January,

1985, November, 1985 and May, 1986, were duly submitted for
inspection.
On July 17, 1986, the Labor Standard and Welfare Officers
submitted their report confirming that there was underpayment of
wages and ECOLAs of all the employees by the petitioner, the
dispositive portion of which reads:
IN VIEW OF THE FOREGOING, deficiency on wage and
ecola as verified and confirmed per review of the
respondent payrolls and interviews with the
complainant workers and all other information
gathered
by
the
team,
it
is
respectfully
recommended to the Honorable Regional Director,
this office, that Antera Dorado, President be
ORDERED to pay the amount of SIX HUNDRED FIFTY
FOUR THOUSAND SEVEN HUNDRED FIFTY SIX &
01/100 (P654,756.01), representing underpayment of
wages and ecola to the THIRTY SIX (36) employees of
the said hospital as appearing in the attached Annex
"F" worksheets and/or whatever action equitable
under the premises. (p. 99, Rollo)
Based on this inspection report and recommendation, the Regional
Director issued an Order dated August 4, 1986, directing the
payment of P723,888.58, representing underpayment of wages and
ECOLAs to all the petitioner's employees, the dispositive portion of
which reads:
WHEREFORE, premises considered, respondent
Maternity and Children Hospital is hereby ordered to
pay the above-listed complainants the total amount
indicated opposite each name, thru this Office within
ten (10) days from receipt thereof. Thenceforth, the
respondent hospital is also ordered to pay its
employees/workers the prevailing statutory minimum
wage and allowance.
SO ORDERED. (p. 34, Rollo)
Petitioner appealed from this Order to the Minister of Labor and
Employment, Hon. Augusto S. Sanchez, who rendered a Decision on
September 24, 1986, modifying the said Order in that deficiency

wages and ECOLAs should be computed only from May 23, 1983 to
May 23, 1986, the dispositive portion of which reads:
WHEREFORE, the August 29, 1986 order is hereby
MODIFIED in that the deficiency wages and ECOLAs
should only be computed from May 23, 1983 to May
23, 1986. The case is remanded to the Regional
Director, Region X, for recomputation specifying the
amounts due each the complainants under each of
the applicable Presidential Decrees. (p. 40, Rollo)
On October 24, 1986, the petitioner filed a motion for
reconsideration which was denied by the Secretary of Labor in his
Order dated May 13, 1987, for lack of merit (p. 43 Rollo).
The instant petition questions the all-embracing applicability of the
award involving salary differentials and ECOLAS, in that it covers
not only the hospital employees who signed the complaints, but
also those (a) who are not signatories to the complaint, and (b)
those who were no longer in the service of the hospital at the time
the complaints were filed.
Petitioner likewise maintains that the Order of the respondent
Regional Director of Labor, as affirmed with modifications by
respondent Secretary of Labor, does not clearly and distinctly state
the facts and the law on which the award was based. In its
"Rejoinder to Comment", petitioner further questions the authority
of the Regional Director to award salary differentials and ECOLAs to
private respondents, (relying on the case of Encarnacion vs.
Baltazar, G.R. No. L-16883, March 27, 1961, 1 SCRA 860, as
authority for raising the additional issue of lack of jurisdiction at
any stage of the proceedings, p. 52, Rollo), alleging that the
original and exclusive jurisdiction over money claims is properly
lodged in the Labor Arbiter, based on Article 217, paragraph 3 of
the Labor Code.
The primary issue here is whether or not the Regional Director had
jurisdiction over the case and if so, the extent of coverage of any
award that should be forthcoming, arising from his visitorial and
enforcement powers under Article 128 of the Labor Code. The
matter of whether or not the decision states clearly and distinctly
statement of facts as well as the law upon which it is based,
becomes relevant after the issue on jurisdiction has been resolved.

This is a labor standards case, and is governed by Art. 128-b of the

Labor Code, as amended by E.O. No. 111. Labor standards refer to
the minimum requirements prescribed by existing laws, rules, and
regulations relating to wages, hours of work, cost of living
allowance and other monetary and welfare benefits, including
occupational, safety, and health standards (Section 7, Rule I, Rules
on the Disposition of Labor Standards Cases in the Regional Office,
dated September 16, 1987). 1 Under the present rules, a Regional
Director exercises both visitorial and enforcement power over labor
standards cases, and is therefore empowered to adjudicate money
claims, provided there
stillexists an
employer-employee
relationship, and the findings of the regional office is not
contested by the employer concerned.
Prior to the promulgation of E.O. No. 111 on December 24, 1986,
the Regional Director's authority over money claims was unclear.
The complaint in the present case was filed on May 23, 1986 when
E.O. No. 111 was not yet in effect, and the prevailing view was that
stated in the case of Antonio Ong, Sr. vs. Henry M. Parel, et al., G.R.
No. 76710, dated December 21, 1987, thus:
. . . the Regional Director, in the exercise of his
visitorial and enforcement powers under Article 128
of the Labor Code, has no authority to award money
claims, properly falling within the jurisdiction of the
labor arbiter. . . .
. . . If the inspection results in a finding that the
employer has violated certain labor standard laws,
then the regional director must order the necessary
rectifications. However, this does not include
adjudication of money claims, clearly within the
ambit of the labor arbiter's authority under Article
217 of the Code.
The Ong case relied on the ruling laid down in Zambales Base
Metals Inc. vs. The Minister of Labor, et al., (G.R. Nos. 73184-88,
November 26, 1986, 146 SCRA 50) that the "Regional Director was
not empowered to share in the original and exclusive jurisdiction
conferred on Labor Arbiters by Article 217."
We believe, however, that even in the absence of E. O. No. 111,
Regional Directors already had enforcement powers over money
claims, effective under P.D. No. 850, issued on December 16, 1975,

which transferred labor standards cases from the arbitration system

to the enforcement system.
To clarify matters, it is necessary to enumerate a series of rules and
provisions of law on the disposition of labor standards cases.
Prior to the promulgation of PD 850, labor standards cases were an
exclusive function of labor arbiters, under Article 216 of
the then Labor Code (PD No. 442, as amended by PD 570-a), which
read in part:
Art. 216. Jurisdiction of the Commission. The
Commission
shall
have
exclusive
appellate
jurisdiction over all cases decided by the Labor
Arbiters and compulsory arbitrators.

access to employers' records and premises at any

time of the day or night whenever work is being
undertaken therein, and the right to copy therefrom,
to question any employee and investigate any fact,
condition or matter which may be necessary to
determine violations or in aid in the enforcement of
this Title and of any Wage Order or regulation issued
pursuant to this Code.
With the promulgation of PD 850, Regional Directors were given
enforcement powers, in addition to visitorial powers. Article 127, as
amended, provided in part:
SEC. 10. Article 127 of the Code is hereby amended
to read as follows:
Art. 127. Visitorial and enforcement
powers.

The Labor Arbiters shall have exclusive jurisdiction to

hear and decide the following cases involving all
workers whether agricultural or non-agricultural.
xxx xxx xxx
xxx xxx xxx

(b) The Secretary of

Labor
or
his
duly
authorized
representatives shall
have the power to order
and administer, after
due
notice
and
hearing, compliance
with the labor standards
provisions of this Code
based on the findings of
labor regulation officers
or
industrial
safety
engineers made in the
course of inspection,
and to issue writs of
execution
to
the
appropriate authority for
the enforcement of their
order.

(c) All money claims of workers,

involving
non-payment
or
underpayment of wages, overtime
compensation,
separation
pay,
maternity leave and other money
claims
arising
from
employeeemployer relations, except claims for
workmen's
compensation,
social
security and medicare benefits;
(d) Violations of labor standard laws;
xxx xxx xxx
(Emphasis supplied)
The Regional Director exercised visitorial rights only under then
Article 127 of the Code as follows:
ART. 127. Visitorial Powers. The Secretary of Labor
or his duly authorized representatives, including, but
not restricted, to the labor inspectorate, shall have

xxx xxx xxx

Labor Arbiters, on the other hand, lost jurisdiction over labor

standards cases. Article 216, as then amended by PD 850, provided
in part:
SEC. 22. Article 216 of the Code is hereby amended
to read as follows:

consolidate all governing provisions on jurisdiction into one

document. 2 On April 23, 1976, MOLE Policy Instructions No. 6 was
issued, and provides in part (on labor standards cases) as follows:
POLICY INSTRUCTIONS NO. 6
TO: All Concerned

Art. 216. Jurisdiction of Labor Arbiters

and the Commission. (a) The Labor
Arbiters
shall
have exclusive
jurisdiction to hear and decide the
following cases involving all workers,
whether
agricultural
or
nonagricultural:

SUBJECT: DISTRIBUTION
LABOR CASES

Under the then Labor Code therefore (PD 442 as amended by PD

570-a, as further amended by PD 850), there were three
adjudicatory units: The Regional Director, the Bureau of Labor
Relations and the Labor Arbiter. It became necessary to clarify and

OVER

1. The following cases are under

the exclusive original jurisdiction of
the Regional Director.
a) Labor standards cases
arising from violations of
labor
standard
lawsdiscovered in the
course of inspection or
complaints
where
employer-employee
relations still exist;
xxx xxx xxx
2. The following cases are under
the exclusive original jurisdiction of
the Conciliation Section of the Regional
Office:
a) Labor standards cases
where
employeremployee
relations no longer exist;

xxx xxx xxx

(Emphasis supplied)

JURISDICTION

xxx xxx xxx

xxx xxx xxx

(3) All money claims of
workers involving nonpayment
or
underpayment of wages,
overtime or premium
compensation, maternity
or
service
incentive
leave, separation pay
and other money claims
arising from employeremployee
relations,
except
claims
for
employee's
compensation,
social
security and medicare
benefits and
as
otherwise provided in
Article 127 of this Code.

OF

xxx xxx xxx

6. The following cases are certifiable to
the Labor Arbiters:

a) Cases not settled by

the Conciliation Section
of the Regional Office,
namely:
1) labor standard cases
where
employeremployee
relations no
longer exist;
xxx xxx xxx
(Emphasis supplied)
MOLE Policy Instructions No. 7 (undated) was likewise subsequently
issued, enunciating the rationale for, and the scope of, the
enforcement power of the Regional Director, the first and second
paragraphs of which provide as follows:
POLICY INSTRUCTIONS NO. 7
TO: All Regional Directors
SUBJECT: LABOR STANDARDS CASES
Under PD 850, labor standards cases have
been taken from the arbitration system and placed
under the enforcement system, except where a)
questions of law are involved as determined by the
Regional Director, b) the amount involved exceeds
P100,000.00 or over 40% of the equity of the
employer, whichever is lower, c) the case requires
evidentiary matters not disclosed or verified in the
normal course of inspection, or d) there is no more
employer-employee relationship.
The purpose is clear: to assure the worker the rights
and benefits due to him under labor standards
laws without having to go through arbitration. The
worker need not litigate to get what legally belongs
to him. The whole enforcement machinery of the
Department of Labor exists to insure its expeditious
delivery to him free of charge. (Emphasis supplied)

Under the foregoing, a complaining employee who was denied his

rights and benefits due him under labor standards law need not
litigate. The Regional Director, by virtue of his enforcement power,
assured "expeditious delivery to him of his rights and benefits free
of charge", provided of course, he was still in the employ of the
firm.
After PD 850, Article 216 underwent a series of amendments (aside
from being re-numbered as Article 217) and with it a corresponding
change in the jurisdiction of, and supervision over, the Labor
Arbiters:
1. PD 1367 (5-1-78) gave Labor
Arbiters
exclusive
jurisdiction
over unresolved issues in collective
bargaining, etc., and those cases
arising
from
employer-employee
relationsduly indorsed by the Regional
Directors.
(It also removed his
jurisdiction over moral or other
damages) In other words, the Labor
Arbiter entertained cases certified to
him. (Article 228, 1978 Labor Code.)
2. PD 1391 (5-29-78) all regional
units of the National Labor Relations
Commission (NLRC) were integrated
into the Regional Offices Proper of the
Ministry
of
Labor;
effectively
transferring
direct
administrative
control and supervision over the
Arbitration Branch to the Director of
the Regional Office of the Ministry of
Labor. "Conciliable cases" which were
thus previously under the jurisdiction
of the defunct Conciliation Section of
the Regional Office for purposes of
conciliation or amicable settlement,
became immediately assignable to the
Arbitration Branch for joint conciliation
and
compulsory
arbitration.
In
addition, the Labor Arbiter had
jurisdiction even over termination and
labor-standards cases that may be
assigned to them for compulsory

arbitration by the Director of the

Regional Office. PD 1391 merged
conciliation and compulsory arbitration
functions in the person of the Labor
Arbiter. The procedure governing the
disposition of cases at the Arbitration
Branch paralleled those in the Special
Task Force and Field Services Division,
with one major exception: the Labor
Arbiter
exercised
full
and
untrammelled
authority
in
the
disposition of the case, particularly in
the substantive aspect, his decisions
and orders subject to review only on
appeal to the NLRC. 3

except those falling under P.D. 823, as

amended; (c) unfair labor practice
cases; and (d) overseas employment
cases, except those involving overseas
seamen, shall be assigned by the
Regional
Director
to the
Labor
Arbiter for conciliation and arbitration
without coursing them through the
conciliation section of the Regional
Office.
2.
Labor
Cases.

Cases involving violation of labor

standards
laws
where
employeremployee relationshipstill exists shall
be assigned to the Labor Arbiters
where:

3. MOLE Policy Instructions No. 37

Because of the seemingly overlapping
functions as a result of PD 1391, MOLE
Policy Instructions No. 37 was issued
on October 7, 1978, and provided in
part:

a) intricate questions of
law are involved; or

POLICY INSTRUCTIONS NO. 37

b) evidentiary matters
not disclosed or verified
in the normal course of
inspection
by
labor
regulations officers are
required for their proper
disposition.

TO: All Concerned

SUBJECT: ASSIGNMENT
ARBITERS

OF

CASES

TO

LABOR

Pursuant
to
the
provisions
of
Presidential Decree No. 1391 and to
insure speedy disposition of labor
cases, the following guidelines are
hereby established for the information
and guidance of all concerned.

3. Disposition of Cases.
When a case is assigned to a Labor
Arbiter, all issues raised therein shall
be resolved by him including those
which are originally cognizable by the
Regional Director to avoid multiplicity
of proceedings. In other words, the
whole case, and not merely issues
involved therein, shall be assigned to
and resolved by him.

1. Conciliable Cases.
Cases which are conciliable per se i.e.,
(a) labor standards cases where
employer-employee
relationship no
longer exists; (b) cases involving
deadlock in collective bargaining,

Standards

xxx xxx xxx

(Emphasis supplied)
4. PD 1691(5-1-80) original and
exclusive
jurisdiction
over unresolved issues in collective
bargaining
and
money
claims,
which includes moral
or
other
damages.
Despite the original and exclusive jurisdiction of labor
arbiters over money claims, however, the Regional
Director
nonetheless retained his
enforcement
power,
and
remained
empowered
to
adjudicate uncontested money claims.
5. BP 130 (8-21-8l) strengthened
voluntary arbitration. The decree also
returned the Labor Arbiters as part of
the NLRC, operating as Arbitration
Branch thereof.
6. BP 227(6-1- 82) original and
exclusive jurisdiction over questions
involving legality of strikes and lockouts.
The present petition questions the authority of the Regional
Director to issue the Order, dated August 4, 1986, on the basis of
his visitorial and enforcement powers under Article 128 (formerly
Article 127) of the present Labor Code. It is contended that based
on the rulings in the Ong vs. Parel (supra) and the Zambales Base
Metals, Inc. vs. The Minister of Labor (supra) cases, a Regional
Director is precluded from adjudicating money claims on the
ground that this is an exclusive function of the Labor Arbiter under
Article 217 of the present Code.
On August 4, 1986, when
128(b) 4 read as follows:

the

order

was

issued,

Article

(b) The Minister of Labor or his duly

authorized representatives shall have
the power to order and administer,
after
due
notice
and
hearing,
compliance with the labor standards

provisions of this Code based on the

findings of labor regulation officers or
industrial safety engineers made in the
course of inspection, and to issue writs
of execution to the appropriate
authority for the enforcement of
their order, except in cases where the
employer contests the findings of the
labor regulations officer and raises
issues which cannot be resolved
without
considering
evidentiary
matters that are not verifiable in the
normal course of inspection. (Emphasis
supplied)
On the other hand, Article 217 of the Labor Code as amended by
P.D. 1691, effective May 1, 1980; Batas Pambansa Blg. 130,
effective August 21, 1981; and Batas Pambansa Blg. 227, effective
June 1, 1982, inter alia, provides:
ART. 217. Jurisdiction of Labor Arbiters and the
Commission. (a) The Labor Arbiters shall have
theoriginal and exclusive jurisdiction to hear and
decide within thirty (30) working days after
submission of the case by the parties for decision,
the following cases involving all workers, whether
agricultural or non-agricultural:
1. Unfair labor practice cases;
2. Those that workers may file
involving wages, hours of work and
other
terms
and
conditions
of
employment;
3. All money claims of workers,
including those based on non-payment
or underpayment of wages, overtime
compensation, separation pay and
other benefits provided by law or
appropriate agreement, except claims
for employees' compensation, social
security, medicare and maternity
benefits;

4. Cases involving household services;

and

or industrial safety engineers made in

the course of inspection, and to issue
writs of execution to the appropriate
authority for the enforcement of their
orders, except in cases where the
employer contests the findings of the
labor regulation officer and raises
issues which cannot be resolved
without
considering
evidentiary
matters that are not verifiable in the
normal course of inspection. (Emphasis
supplied)

5. Cases arising from any violation of

Article 265 of this Code, including
questions involving the legality of
strikes
and
lock-outs.
(Emphasis
supplied)
The Ong and Zambales cases involved workers who were still
connected with the company. However, in the Ong case, the
employer disputed the adequacy of the evidentiary foundation
(employees' affidavits) of the findings of the labor standards
inspectors while in the Zambales case, the money claims which
arose from alleged violations of labor standards provisions were not
discovered in the course of normal inspection. Thus, the provisions
of MOLE Policy Instructions Nos. 6, (Distribution of Jurisdiction Over
Labor Cases) and 37 (Assignment of Cases to Labor Arbiters) giving
Regional Directors adjudicatory powers over uncontested money
claims discovered in the course of normal inspection, provided an
employer-employee relationship still exists, are inapplicable.
In the present case, petitioner admitted the charge of
underpayment of wages to workers still in its employ; in fact, it
pleaded for time to raise funds to satisfy its obligation. There was
thus no contest against the findings of the labor inspectors.
Barely less than a month after the promulgation on November 26,
1986 of the Zambales Base Metals case, Executive Order No. 111
was issued on December 24, 1986, 5 amending Article 128(b) of the
Labor Code, to read as follows:
(b) THE PROVISIONS OF ARTICLE 217
OF THIS CODE TO THE CONTRARY
NOTWITHSTANDING AND IN CASES
WHERE
THE
RELATIONSHIP
OF
EMPLOYER-EMPLOYEE STILL EXISTS,
the Minister of Labor and Employment
or his duly authorized representatives
shall have the power to order and
administer, after due notice and
hearing, compliance with the labor
standards provisions of this Code AND
OTHER LABOR LEGISLATION based on
the findings of labor regulation officers

As seen from the foregoing, EO 111 authorizes a Regional Director

to order compliance by an employer with labor standards provisions
of the Labor Code and other legislation. It is Our considered opinion
however, that the inclusion of the phrase, " The provisions of Article
217 of this Code to the contrary notwithstanding and in cases
where the relationship of employer-employee still exists" ... in
Article
128(b),
as
amended,
above-cited,
merelyconfirms/reiterates the enforcement adjudication authority
of the Regional Director over uncontested money claimsin cases
where an employer-employee relationship still exists. 6
Viewed in the light of PD 850 and read in coordination with MOLE
Policy Instructions Nos. 6, 7 and 37, it is clear that it has always
been the intention of our labor authorities to provide our workers
immediate access (when still feasible, as where an employeremployee relationship still exists) to their rights and benefits,
without being inconvenienced by arbitration/litigation processes
that prove to be not only nerve-wracking, but financially
burdensome in the long run.
Note further the second paragraph of Policy Instructions No. 7
indicating that the transfer of labor standards cases from the
arbitration system to the enforcement system is
. . to assure the workers the rights and benefits due
to him under labor standard laws, without having to
go through arbitration. . .
so that
. . the workers would not litigate to get what legally
belongs to him. .. ensuring delivery . . free of charge.

Social justice legislation, to be truly meaningful and rewarding to

our workers, must not be hampered in its application by longwinded arbitration and litigation. Rights must be asserted and
benefits received with the least inconvenience. Labor laws are
meant to promote, not defeat, social justice.

(c) Restitutions in excess of the

aforementioned amount shall be
effected at the Regional Office or at
the worksite subject to the prior
approval of the Regional Director.

This view is in consonance with the present "Rules on the

Disposition of Labor Standard Cases in the Regional Offices
" 7 issued by the Secretary of Labor, Franklin M. Drilon on
September 16, 1987.

which indicate the intention to empower the Regional Director to

award money claims in excess of P100,000.00;provided of course
the employer does not contest the findings made, based on the
provisions of Section 8 thereof:

Thus, Sections 2 and 3 of Rule II on "Money Claims Arising from

Complaint Routine Inspection", provide as follows:

Section 8. Compromise agreement. Should the

parties arrive at an agreement as to the whole or
part of the dispute, said agreement shall be reduced
in writing and signed by the parties in the presence
of the Regional Director or his duly authorized
representative.

Section 2. Complaint inspection. All such

complaints shall immediately be forwarded to the
Regional Director who shall refer the case to the
appropriate unit in the Regional Office for assignment
to a Labor Standards and Welfare Officer (LSWO) for
field inspection. When the field inspection does not
produce the desired results, the Regional Director
shall summon the parties for summary investigation
to expedite the disposition of the case. . . .
Section 3. Complaints where no employer-employee
relationship actually exists. Where employeremployee relationship no longer exists by reason of
the fact that it has already been severed, claims for
payment of monetary benefits fall within the
exclusive and original jurisdiction of the labor
arbiters. . . . (Emphasis supplied)
Likewise, it is also clear that the limitation embodied in MOLE Policy
Instructions No. 7 to amounts not exceeding P100,000.00 has been
dispensed with, in view of the following provisions of pars. (b) and
(c), Section 7 on "Restitution", the same Rules, thus:
xxx xxx xxx
(b) Plant-level
effected
for
exceeding
(P50,000.00). . .

restitutions may be
money
claims
not
Fifty
Thousand
.

E.O. No. 111 was issued on December 24, 1986 or three (3) months
after the promulgation of the Secretary of Labor's decision
upholding private respondents' salary differentials and ECOLAs on
September 24, 1986. The amendment of the visitorial and
enforcement powers of the Regional Director (Article 128-b) by said
E.O. 111 reflects the intention enunciated in Policy Instructions Nos.
6 and 37 to empower the Regional Directors to resolveuncontested
money claims in cases where an employer-employee relationship
still exists. This intention must be given weight and entitled to
great respect. As held in Progressive Workers' Union, et. al. vs. F.P.
Aguas, et. al. G.R. No. 59711-12, May 29, 1985, 150 SCRA 429:
. . The interpretation by officers of laws which are
entrusted to their administration is entitled to great
respect. We see no reason to detract from this
rudimentary rule in administrative law, particularly
when later events have proved said interpretation to
be in accord with the legislative intent. ..
The proceedings before the Regional Director must, perforce, be
upheld on the basis of Article 128(b) as amended by E.O. No. 111,
dated December 24, 1986, this executive order "to be considered in
the nature of a curative statute with retrospective application."
(Progressive Workers' Union, et al. vs. Hon. F.P. Aguas, et al.
(Supra); M. Garcia vs. Judge A. Martinez, et al., G.R. No. L- 47629,
May 28, 1979, 90 SCRA 331).

We now come to the question of whether or not the Regional

Director erred in extending the award to all hospital employees. We
answer in the affirmative.

into and verification of the compliance by employer

with existing labor standards and shall cover all
workers similarly situated. (Emphasis supplied)

The Regional Director correctly applied the award with respect to

those employees who signed the complaint, as well as those
who did not sign the complaint, but were still connected with the
hospital at the time the complaint was filed (See Order, p. 33 dated
August 4, 1986 of the Regional Director, Pedrito de Susi, p.
33, Rollo).

However, there is no legal justification for the award in favor of

those employees who were no longer connectedwith the hospital at
the time the complaint was filed, having resigned therefrom in
1984, viz:

The justification for the award to this group of employees who were
not signatories to the complaint is that the visitorial and
enforcement powers given to the Secretary of Labor is relevant to,
and exercisable over establishments, not over the individual
members/employees, because what is sought to be achieved by its
exercise is the observance of, and/or compliance by, such
firm/establishment
with
the
labor
standards
regulations.
Necessarily, in case of an award resulting from a violation of labor
legislation by such establishment, the entire members/employees
should benefit therefrom. As aptly stated by then Minister of Labor
Augusto S. Sanchez:
. . It would be highly derogatory to the rights of the
workers, if after categorically finding the respondent
hospital guilty of underpayment of wages and
ECOLAs, we limit the award to only those who signed
the complaint to the exclusion of the majority of the
workers who are similarly situated. Indeed, this would
be not only render the enforcement power of the
Minister of Labor and Employment nugatory, but
would be the pinnacle of injustice considering that it
would not only discriminate but also deprive them of
legislated benefits.
. . . (pp. 38-39, Rollo).
This view is further bolstered by the provisions of Sec. 6, Rule II of
the "Rules on the Disposition of Labor Standards cases in the
Regional Offices" (supra) presently enforced, viz:
SECTION 6. Coverage of complaint inspection. A
complaint inspection shall not be limited to the
specific allegations or violations raised by the
complainants/workers but shall be a thorough inquiry

1. Jean (Joan) Venzon (See Order, p. 33, Rollo)

2. Rosario Paclijan
3. Adela Peralta
4. Mauricio Nagales
5. Consesa Bautista
6. Teresita Agcopra
7. Felix Monleon
8. Teresita Salvador
9. Edgar Cataluna; and
10. Raymond Manija ( p.7, Rollo)
The enforcement power of the Regional Director cannot legally be
upheld in cases of separated employees. Article 129 of the Labor
Code, cited by petitioner (p. 54, Rollo) is not applicable as said
article is in aid of the enforcement power of the Regional Director;
hence, not applicable where the employee seeking to be paid
underpayment of wages is already separated from the service. His
claim is purely a money claim that has to be the subject of
arbitration proceedings and therefore within the original and
exclusive jurisdiction of the Labor Arbiter.
Petitioner has likewise questioned the order dated August 4, 1986
of the Regional Director in that it does not clearly and distinctly
state the facts and the law on which the award is based.

We invite attention to the Minister of Labor's ruling thereon, as

follows:
Finally, the respondent hospital assails the order
under appeal as null and void because it does not
clearly and distinctly state the facts and the law on
which the awards were based. Contrary to the
pretensions of the respondent hospital, we have
carefully reviewed the order on appeal and we found
that the same contains a brief statement of the (a)
facts of the case; (b) issues involved; (c) applicable
laws; (d) conclusions and the reasons therefor; (e)
specific remedy granted (amount awarded). (p.
40, Rollo)
ACCORDINGLY, this petition should be dismissed, as it is hereby
DISMISSED, as regards all persons still employed in the Hospital at
the time of the filing of the complaint, but GRANTED as regards
those employees no longer employed at that time.
SO ORDERED.

traffic. The Chairman of the National Traffic Commission, on 18 July

1940, recommended to the Director of Public Works the adoption of
the measure proposed in the resolution, in pursuance of the
provisions of Commonwealth Act 548, which authorizes said
Director of Public Works, with the approval of the Secretary of
Public Works and Communications, to promulgate rules and
regulations to regulate and control the use of and traffic on national
roads. On 2 August 1940, the Director of Public Works, in his first
indorsement to the Secretary of Public Works and Communications,
recommended to the latter the approval of the recommendation
made by the Chairman of the National Traffic Commission, with the
modification that the closing of Rizal Avenue to traffic to animaldrawn vehicles be limited to the portion thereof extending from the
railroad crossing at Antipolo Street to Azcarraga Street. On 10
August 1940, the Secretary of Public Works and Communications, in
his second indorsement addressed to the Director of Public Works,
approved the recommendation of the latter that Rosario Street and
Rizal Avenue be closed to traffic of animal-drawn vehicles, between
the points and during the hours as indicated, for a period of 1 year
from the date of the opening of the Colgante Bridge to traffic. The
Mayor of Manila and the Acting Chief of Police of Manila have

Calalang vs. Williams

[GR 47800, 2 December 1940]
First Division, Laurel (J): 4 concur
Facts: The National Traffic Commission, in its resolution of 17 July
1940, resolved to recommend to the Director of Public Works and to
the Secretary of Public Works and Communications that animaldrawn vehicles be prohibited from passing along Rosario Street
extending from Plaza Calderon de la Barca to Dasmarias Street,
from 7:30 a.m. to 12:30 p.m. and from 1:30 p.m. to 5:30 p.m.; and
along Rizal Avenue extending from the railroad crossing at Antipolo
Street to Echague Street, from 7 a.m. to 11 p.m., from a period of
one year from the date of the opening of the Colgante Bridge to

enforced and caused to be enforced the rules and regulations thus

adopted. Maximo Calalang, in his capacity as a private citizen and
as a taxpayer of Manila, brought before the Supreme court the
petition for a writ of prohibition against A. D. Williams, as Chairman
of the National Traffic Commission; Vicente Fragante, as Director of
Public Works; Sergio Bayan, as Acting Secretary of Public Works and
Communications; Eulogio Rodriguez, as Mayor of the City of Manila;
and Juan Dominguez, as Acting Chief of Police of Manila.
Issue: Whether the rules and regulations promulgated by the
Director of Public Works infringe upon the constitutional precept
regarding the promotion of social justice to insure the well-being
and economic security of all the people.

Held: The promotion of social justice is to be achieved not through

a mistaken sympathy towards any given group. Social justice is
"neither communism, nor despotism, nor atomism, nor anarchy,"
but 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. Social

PHILIPPINE ASSOCIATION OF SERVICE EXPORTERS,

INC., petitioner,
vs.
HON. FRANKLIN M. DRILON as Secretary of Labor and
Employment, and TOMAS D. ACHACOSO, as Administrator of
the Philippine Overseas Employment
Administration, respondents.

justice means the promotion of the welfare of all the people, the
adoption by the Government of measures calculated to insure
economic stability of all the competent elements of society,
through the maintenance of a proper economic and social
equilibrium in the interrelations of the members of the community,
constitutionally,

through

the

adoption

of

measures

legally

justifiable, or extra-constitutionally, through the exercise of powers

underlying the existence of all governments on the time-honored
principle of salus populi est suprema lex. Social justice, therefore,
must

be

founded

on

the

recognition

of

the

necessity

of

interdependence among divers and diverse units of a society and of

the protection that should be equally and evenly extended to all
groups as a combined force in our social and economic life,
consistent with the fundamental and paramount objective of the
state of promoting the health, comfort, and quiet of all persons,
and of bringing about "the greatest good to the greatest number."

G.R. No. 81958 June 30, 1988

SARMIENTO, J.:
The petitioner, Philippine Association of Service Exporters, Inc.
(PASEI, for short), a firm "engaged principally in the recruitment of
Filipino
workers,
male
and
female,
for
overseas
1
placement," challenges the Constitutional validity of Department
Order No. 1, Series of 1988, of the Department of Labor and
Employment, in the character of "GUIDELINES GOVERNING THE
TEMPORARY SUSPENSION OF DEPLOYMENT OF FILIPINO DOMESTIC
AND HOUSEHOLD WORKERS," in this petition for certiorari and
prohibition. Specifically, the measure is assailed for "discrimination
against males or females;" 2 that it "does not apply to all Filipino
workers but only to domestic helpers and females with similar
skills;" 3 and that it is violative of the right to travel. It is held
likewise to be an invalid exercise of the lawmaking power, police
power being legislative, and not executive, in character.
In its supplement to the petition, PASEI invokes Section 3, of Article
XIII, of the Constitution, providing for worker participation "in policy
and decision-making processes affecting their rights and benefits
as may be provided by law." 4 Department Order No. 1, it is
contended, was passed in the absence of prior consultations. It is
claimed, finally, to be in violation of the Charter's non-impairment
clause, in addition to the "great and irreparable injury" that PASEI
members face should the Order be further enforced.
On May 25, 1988, the Solicitor General, on behalf of the
respondents Secretary of Labor and Administrator of the Philippine
Overseas Employment Administration, filed a Comment informing
the Court that on March 8, 1988, the respondent Labor Secretary
lifted the deployment ban in the states of Iraq, Jordan, Qatar,
Canada, Hongkong, United States, Italy, Norway, Austria, and

Switzerland. * In submitting the validity of the challenged

"guidelines," the Solicitor General invokes the police power of the
Philippine State.
It is admitted that Department Order No. 1 is in the nature of a
police power measure. The only question is whether or not it is
valid under the Constitution.
The concept of police power is well-established in this jurisdiction. It
has been defined as the "state authority to enact legislation that
may interfere with personal liberty or property in order to promote
the general welfare." 5 As defined, it consists of (1) an imposition of
restraint upon liberty or property, (2) in order to foster the common
good. It is not capable of an exact definition but has been,
purposely, veiled in general terms to underscore its allcomprehensive embrace.
"Its scope, ever-expanding to meet the exigencies of the times,
even to anticipate the future where it could be done, provides
enough room for an efficient and flexible response to conditions
and circumstances thus assuring the greatest benefits." 6
It finds no specific Constitutional grant for the plain reason that it
does not owe its origin to the Charter. Along with the taxing power
and eminent domain, it is inborn in the very fact of statehood and
sovereignty. It is a fundamental attribute of government that has
enabled it to perform the most vital functions of governance.
Marshall, to whom the expression has been credited, 7 refers to it
succinctly as the plenary power of the State "to govern its
citizens."8
"The police power of the State ... is a power coextensive with selfprotection, and it is not inaptly termed the "law of overwhelming
necessity." It may be said to be that inherent and plenary power in
the State which enables it to prohibit all things hurtful to the
comfort, safety, and welfare of society." 9
It constitutes an implied limitation on the Bill of Rights. According to
Fernando, it is "rooted in the conception that men in organizing the
state and imposing upon its government limitations to safeguard

constitutional rights did not intend thereby to enable an individual

citizen or a group of citizens to obstruct unreasonably the
enactment of such salutary measures calculated to ensure
communal peace, safety, good order, and welfare." 10 Significantly,
the Bill of Rights itself does not purport to be an absolute guaranty
of individual rights and liberties "Even liberty itself, the greatest of
all rights, is not unrestricted license to act according to one's
will." 11 It is subject to the far more overriding demands and
requirements of the greater number.
Notwithstanding its extensive sweep, police power is not without its
own limitations. For all its awesome consequences, it may not be
exercised arbitrarily or unreasonably. Otherwise, and in that event,
it defeats the purpose for which it is exercised, that is, to advance
the public good. Thus, when the power is used to further private
interests at the expense of the citizenry, there is a clear misuse of
the power. 12
In the light of the foregoing, the petition must be dismissed.
As a general rule, official acts enjoy a presumed vahdity. 13 In the
absence of clear and convincing evidence to the contrary, the
presumption logically stands.
The petitioner has shown no satisfactory reason why the contested
measure should be nullified. There is no question that Department
Order No. 1 applies only to "female contract workers," 14 but it does
not thereby make an undue discrimination between the sexes. It is
well-settled that "equality before the law" under the
Constitution 15does not import a perfect Identity of rights among all
men and women. It admits of classifications, provided that (1) such
classifications rest on substantial distinctions; (2) they are germane
to the purposes of the law; (3) they are not confined to existing
conditions; and (4) they apply equally to all members of the same
class. 16
The Court is satisfied that the classification made-the preference
for female workers rests on substantial distinctions.

As a matter of judicial notice, the Court is well aware of the

unhappy plight that has befallen our female labor force abroad,
especially domestic servants, amid exploitative working conditions
marked by, in not a few cases, physical and personal abuse. The
sordid tales of maltreatment suffered by migrant Filipina workers,
even rape and various forms of torture, confirmed by testimonies of
returning workers, are compelling motives for urgent Government
action. As precisely the caretaker of Constitutional rights, the Court
is called upon to protect victims of exploitation. In fulfilling that
duty, the Court sustains the Government's efforts.
The same, however, cannot be said of our male workers. In the first
place, there is no evidence that, except perhaps for isolated
instances, our men abroad have been afflicted with an Identical
predicament. The petitioner has proffered no argument that the
Government should act similarly with respect to male workers. The
Court, of course, is not impressing some male chauvinistic notion
that men are superior to women. What the Court is saying is that it
was largely a matter of evidence (that women domestic workers
are being ill-treated abroad in massive instances) and not upon
some fanciful or arbitrary yardstick that the Government acted in
this case. It is evidence capable indeed of unquestionable
demonstration and evidence this Court accepts. The Court cannot,
however, say the same thing as far as men are concerned. There is
simply no evidence to justify such an inference. Suffice it to state,
then, that insofar as classifications are concerned, this Court is
content that distinctions are borne by the evidence. Discrimination
in this case is justified.
As we have furthermore indicated, executive determinations are
generally final on the Court. Under a republican regime, it is the
executive branch that enforces policy. For their part, the courts
decide, in the proper cases, whether that policy, or the manner by
which it is implemented, agrees with the Constitution or the laws,
but it is not for them to question its wisdom. As a co-equal body,
the judiciary has great respect for determinations of the Chief
Executive or his subalterns, especially when the legislature itself
has specifically given them enough room on how the law should be
effectively enforced. In the case at bar, there is no gainsaying the
fact, and the Court will deal with this at greater length shortly, that

Department Order No. 1 implements the rule-making powers

granted by the Labor Code. But what should be noted is the fact
that in spite of such a fiction of finality, the Court is on its own
persuaded that prevailing conditions indeed call for a deployment
ban.
There is likewise no doubt that such a classification is germane to
the purpose behind the measure. Unquestionably, it is the avowed
objective of Department Order No. 1 to "enhance the protection for
Filipino female overseas workers" 17 this Court has no quarrel that
in the midst of the terrible mistreatment Filipina workers have
suffered abroad, a ban on deployment will be for their own good
and welfare.
The Order does not narrowly apply to existing conditions. Rather, it
is intended to apply indefinitely so long as those conditions exist.
This is clear from the Order itself ("Pending review of the
administrative and legal measures, in the Philippines and in the
host countries . . ." 18), meaning to say that should the authorities
arrive at a means impressed with a greater degree of permanency,
the ban shall be lifted. As a stop-gap measure, it is possessed of a
necessary malleability, depending on the circumstances of each
case. Accordingly, it provides:
9. LIFTING OF SUSPENSION. The Secretary of Labor
and Employment (DOLE) may, upon recommendation
of
the
Philippine
Overseas
Employment
Administration (POEA), lift the suspension in
countries where there are:
1. Bilateral agreements or understanding with the
Philippines, and/or,
2. Existing mechanisms providing for sufficient
safeguards to ensure the welfare and protection of
Filipino workers. 19
The Court finds, finally, the impugned guidelines to be applicable to
all female domestic overseas workers. That it does not apply to "all
Filipina workers" 20 is not an argument for unconstitutionality. Had

the ban been given universal applicability, then it would have been
unreasonable and arbitrary. For obvious reasons, not all of them are
similarly circumstanced. What the Constitution prohibits is the
singling out of a select person or group of persons within an
existing class, to the prejudice of such a person or group or
resulting in an unfair advantage to another person or group of
persons. To apply the ban, say exclusively to workers deployed by
A, but not to those recruited by B, would obviously clash with the
equal protection clause of the Charter. It would be a classic case of
what Chase refers to as a law that "takes property from A and gives
it to B." 21 It would be an unlawful invasion of property rights and
freedom of contract and needless to state, an invalid
act. 22 (Fernando says: "Where the classification is based on such
distinctions that make a real difference as infancy, sex, and stage
of civilization of minority groups, the better rule, it would seem, is
to recognize its validity only if the young, the women, and the
cultural minorities are singled out for favorable treatment. There
would be an element of unreasonableness if on the contrary their
status that calls for the law ministering to their needs is made the
basis of discriminatory legislation against them. If such be the case,
it would be difficult to refute the assertion of denial of equal
protection." 23 In the case at bar, the assailed Order clearly accords
protection to certain women workers, and not the contrary.)
It is incorrect to say that Department Order No. 1 prescribes a total
ban on overseas deployment. From scattered provisions of the
Order, it is evident that such a total ban has hot been
contemplated. We quote:
5. AUTHORIZED DEPLOYMENT-The deployment of
domestic helpers and workers of similar skills defined
herein to the following [sic] are authorized under
these guidelines and are exempted from the
suspension.
5.1 Hirings by immediate members of
the family of Heads of State and
Government;

5.2 Hirings by Minister,

Minister
and
the
other
government officials; and

Deputy
senior

5.3 Hirings by senior officials of the

diplomatic corps and duly accredited
international organizations.
5.4 Hirings by employers in countries
with whom the Philippines have [sic]
bilateral
labor
agreements
or
understanding.
xxx xxx xxx
7. VACATIONING DOMESTIC HELPERS AND WORKERS
OF SIMILAR SKILLS--Vacationing domestic helpers
and/or workers of similar skills shall be allowed to
process with the POEA and leave for worksite only if
they are returning to the same employer to finish an
existing or partially served employment contract.
Those workers returning to worksite to serve a new
employer shall be covered by the suspension and the
provision of these guidelines.
xxx xxx xxx
9. LIFTING OF SUSPENSION-The Secretary of Labor
and Employment (DOLE) may, upon recommendation
of
the
Philippine
Overseas
Employment
Administration (POEA), lift the suspension in
countries where there are:
1.
Bilateral
agreements
or
understanding with the Philippines,
and/or,
2. Existing mechanisms providing for
sufficient safeguards to ensure the

welfare and
workers. 24

protection

of

Filipino

xxx xxx xxx

The consequence the deployment ban has on the right to travel
does not impair the right. The right to travel is subject, among
other things, to the requirements of "public safety," "as may be
provided by law." 25 Department Order No. 1 is a valid
implementation of the Labor Code, in particular, its basic policy to
"afford protection to labor," 26 pursuant to the respondent
Department of Labor's rule-making authority vested in it by the
Labor Code.27 The petitioner assumes that it is unreasonable simply
because of its impact on the right to travel, but as we have stated,
the right itself is not absolute. The disputed Order is a valid
qualification thereto.
Neither is there merit in the contention that Department Order No.
1 constitutes an invalid exercise of legislative power. It is true that
police power is the domain of the legislature, but it does not mean
that such an authority may not be lawfully delegated. As we have
mentioned, the Labor Code itself vests the Department of Labor
and Employment with rulemaking powers in the enforcement
whereof. 28
The petitioners's reliance on the Constitutional guaranty of worker
participation "in policy and decision-making processes affecting
their rights and benefits" 29 is not well-taken. The right granted by
this provision, again, must submit to the demands and necessities
of the State's power of regulation.
The Constitution declares that:
Sec. 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. 30
"Protection to labor" does not signify the promotion of employment
alone. What concerns the Constitution more paramountly is that

such an employment be above all, decent, just, and humane. It is

bad enough that the country has to send its sons and daughters to
strange lands because it cannot satisfy their employment needs at
home. Under these circumstances, the Government is duty-bound
to insure that our toiling expatriates have adequate protection,
personally and economically, while away from home. In this case,
the Government has evidence, an evidence the petitioner cannot
seriously dispute, of the lack or inadequacy of such protection, and
as part of its duty, it has precisely ordered an indefinite ban on
deployment.
The Court finds furthermore that the Government has not
indiscriminately made use of its authority. It is not contested that it
has in fact removed the prohibition with respect to certain countries
as manifested by the Solicitor General.
The non-impairment clause of the Constitution, invoked by the
petitioner, must yield to the loftier purposes targetted by the
Government. 31 Freedom of contract and enterprise, like all other
freedoms, is not free from restrictions, more so in this jurisdiction,
where laissez faire has never been fully accepted as a controlling
economic way of life.
This Court understands the grave implications the questioned Order
has on the business of recruitment. The concern of the
Government, however, is not necessarily to maintain profits of
business firms. In the ordinary sequence of events, it is profits that
suffer as a result of Government regulation. The interest of the
State is to provide a decent living to its citizens. The Government
has convinced the Court in this case that this is its intent. We do
not find the impugned Order to be tainted with a grave abuse of
discretion to warrant the extraordinary relief prayed for.
WHEREFORE, the petition is DISMISSED. No costs.
SO ORDERED.

G.R. No. 103144

April 4, 2001

PHILSA INTERNATIONAL PLACEMENT and SERVICES

CORPORATION, petitioner,
vs.
THE HON. SECRETARY OF LABOR AND EMPLOYMENT,
VIVENCIO DE MESA, RODRIGO MIKIN and CEDRIC LEYSON,
respondents.
GONZAGA-REYES, J.:
This is a petition for certiorari from the Order dated November 25,
1991 issued by public respondent Secretary of Labor and
Employment. The November 25, 1991 Order affirmed in toto the
August 29, 1988 Order of the Philippine Overseas Employment
Administration (hereinafter the "POEA") which found petitioner
liable for three (3) counts of illegal exaction, two (2) counts of
contract substitution and one count of withholding or unlawful
deduction from salaries of workers in POEA Case No. (L) 85-050370.
Petitioner Philsa International Placement and Services Corporation
(hereinafter referred to as "Philsa") is a domestic corporation
engaged in the recruitment of workers for overseas employment.
Sometime in January 1985, private respondents, who were
recruited by petitioner for employment in Saudi Arabia, were
required to pay placement fees in the amount of P5,000.00 for
private respondent Rodrigo L. Mikin and P6,500.00 each for private
respondents Vivencio A. de Mesa and Cedric P. Leyson.1
After the execution of their respective work contracts, private
respondents left for Saudi Arabia on January 29, 1985. They then
began work for Al-Hejailan Consultants A/E, the foreign principal of
petitioner.

While in Saudi Arabia, private respondents were allegedly made to

sign a second contract on February 4, 1985 which changed some of
the provisions of their original contract resulting in the reduction of
some of their benefits and privileges.2 On April 1, 1985, their
foreign employer allegedly forced them to sign a third contract
which increased their work hours from 48 hours to 60 hours a week
without any corresponding increase in their basic monthly salary.
When they refused to sign this third contract, the services of
private respondents were terminated by Al-Hejailan and they were
repatriated to the Philippines.3
Upon their arrival in the Philippines, private respondents demanded
from petitioner Philsa the return of their placement fees and for the
payment of their salaries for the unexpired portion of their contract.
When petitioner refused, they filed a case before the POEA against
petitioner Philsa and its foreign principal, Al-Hejailan., with the
following causes of action:
1. Illegal dismissal;
2. Payment of salary differentials;
3. Illegal deduction/withholding of salaries;
4. Illegal exactions/refund of placement fees; and
5. Contract substitution.

The case was docketed as POEA Case No. (L) 85-05 0370.
Under the rules of the POEA dated May 21, 1985, complaints
involving employer-employee relations arising out of or by virtue of
any law or contract involving Filipino workers for overseas
employment, including money claims, are adjudicated by the
Workers' Assistance and Adjudication Office (hereinafter the
"WAAO") thru the POEA Hearing Officers.5 On the other hand,
complaints involving recruitment violations warranting suspension
or cancellation of the license of recruiting agencies are cognizable
by the POEA thru its Licensing and Recruitment Office (hereinafter
the "LRO"). 6 In cases where a complaint partakes of the nature of

both an employer-employee relationship case and a recruitment

regulation case, the POEA Hearing Officer shall act as
representative of both the WAAO and the LRO and both cases shall
be heard simultaneously. In such cases, the Hearing Officer shall
submit two separate recommendations for the two aspects of the
case. 7
In the case at bench, the first two causes of action were in the
nature of money claims arising from the employer-employee
relations and were properly cognizable by the WAAO. The last two
causes of action were in the nature of recruitment violations and
may be investigated by the LRO. The third cause of action, illegal
deduction/withholding of salary, is both a money claim and a
violation of recruitment regulations and is thus under the
investigatory jurisdiction of both the WAAO and the LRO.
Several hearings were conducted before the POEA Hearing Officer
on the two aspects of private respondents' complaint. During these
hearings, private respondents supported their complaint with the
presentation of both documentary and testimonial evidence. When
it was its turn to present its evidence, petitioner failed to do so and
consequently, private respondents filed a motion to decide the case
on the basis of the evidence on record. 8
On the aspects of the case involving money claims arising from the
employer-employee relations and illegal dismissal, the POEA
rendered a decision dated August 31, 1988 9 , the dispositive
portion of which reads:
"CONFORMABLY TO THE FOREGOING, judgment is hereby
rendered ordering respondent PHILSA INTERNATIONAL
PLACEMENT
AND
SERVICE
CORPORATION
to
pay
complainants, jointly and severally with its principal AlHejailan, the following amounts, to wit:
1. TWO THOUSAND TWO HUNDRED TWENTY FIVE SAUDI
RIYALS (SR2,225.00) to each complainant, representing the
refund of their unpaid separation pay;

2. ONE THOUSAND SAUDI RIYALS (SR1,000.00) for V.A. de

Mesa alone, representing the salary deduction from his
March salary;
3. TWO THOUSAND SAUDI RIYALS (SR2,000.00) each for R.I.
Mikin and C.A.P. Leyson only, representing their differential
pay for the months of February and March, 1985; and
4. Five percent (5%) of the total awards as and by way of
attorney's fees.
All payments of the abovestated awards shall be made in
Philippine Currency equivalent to the prevailing exchange
rate according to the Central Bank at the time of payment.
All other claims of complainants as well as the
counterclaims of respondent are dismissed for lack of merit.
SO ORDERED."

10

Under the Rules and Regulations of the POEA, the decision of the
POEA-Adjudication Office on matters involving money claims arising
from the employer-employee relationship of overseas Filipino
workers may be appealed to the National Labor Relations
Commission (hereinafter the "NLRC)11 . Thus, as both felt aggrieved
by the said POEA Decision, petitioner and private respondents filed
separate appeals from the August 31, 1988 POEA Decision to the
NLRC.
In a decision dated July 26, 1989 12 , the NLRC modified the
appealed decision of the POEA Adjudication Office by deleting the
award of salary deductions and differentials. These awards to
private respondents were deleted by the NLRC considering that
these were not raised in the complaint filed by private respondents.
The NLRC likewise stated that there was nothing in the text of the
decision which would justify the award.

Private respondents then elevated the July 26, 1989 decision of the
NLRC to the Supreme Court in a petition for review for certiorari
where it was docketed as G.R. No. 89089. However, in a Resolution
dated October 25, 1989, the petition was dismissed outright for
"insufficiency in form and substance, having failed to comply with
the Rules of Court and Circular No. 1-88 requiring submission of a
certified true copy of the questioned resolution dated August 23,
1989." 13
Almost simultaneous with the promulgation of the August 31, 1988
decision of the POEA on private respondents' money claims, the
POEA issued a separate Order dated August 29, 1988 14 resolving
the recruitment violations aspect of private respondents' complaint.
In this Order, the POEA found petitioner guilty of illegal exaction,
contract substitution, and unlawful deduction. The dispositive
portion of this August 29, 1988 POEA Order reads:
"WHEREFORE, premises considered, this Office finds herein
respondent PHILSA International Placement and Services
Corporation liable for three (3) counts of illegal exaction, two
(2) counts of contract substitution and one count of
withholding or unlawful deduction from salaries of workers.
Accordingly, respondent is hereby ordered to refund the
placement fees in the amount of P2,500.00 to Rodrigo L.
Mikin, P4,000.00, each, to Vivencio A. de Mesa and Cedric
A.P. Leyson plus restitution of the salaries withheld in the
amount of SR1,000.00 to Vivencio A. de Mesa.
Moreover, respondent's license is hereby suspended for
eight (8) months to take effect immediately and to remain
as such until full refund and restitution of the above-stated
amounts have been effected or in lieu thereof, it is fined the
amount of SIXTY THOUSAND (P60,000.00) PESOS plus
restitution.
SO ORDERED."

Private respondents filed a Motion for Reconsideration but the same

was denied by the NLRC in a Resolution dated October 25; 1989.

In line with this August 29, 1988 Order, petitioner deposited the
check equivalent to the claims of private respondents and paid the

corresponding fine under protest. From the said Order, petitioner

filed a Motion for Reconsideration which was subsequently denied
in an Order dated October 10, 1989.
Under the POEA Rules and Regulations, the decision of the POEA
thru the LRO suspending or canceling a license or authority to act
as a recruitment agency may be appealed to the Ministry (now
Department) of Labor and Employment. 15 Accordingly, after the
denial of its motion for reconsideration, petitioner appealed the
August 21, 1988 Order to the Secretary of Labor and Employment.
However, in an Order dated September 13, 1991, 16public
respondent Secretary of Labor and Employment affirmed in toto the
assailed Order. Petitioner filed a Motion for Reconsideration but this
was likewise denied in an Order dated November 25, 1991.
Hence, the instant Petition for Certiorari where petitioner raises the
following grounds for the reversal of the questioned Orders:
I
THE PUBLIC RESPONDENT HAS ACTED WITHOUT OR IN
EXCESS OF JURISDICTION OR WITH GRAVE ABUSE OF
DISCRETION IN HOLDING PETITIONER GUILTY OF ILLEGAL
EXACTIONS. THE FINDING IS NOT SUPPORTED BY EVIDENCE
AND IN ANY EVENT, THE LAW ON WHICH THE CONVICTION IS
BASED IS VOID.

DISCRETION IN HOLDING PETITIONER LIABLE FOR ILLEGAL

DEDUCTIONS/WITHHOLDING OF SALARIES FOR THE
SUPREME COURT ITSELF HAS ALREADY ABSOLVED
PETITIONER FROM THIS CHARGE.
With respect to the first ground, petitioner would want us to
overturn the findings of the POEA, subsequently affirmed by the
Secretary of the Department of Labor and Employment, that it is
guilty of illegal exaction committed by collecting placement fees in
excess of the amounts allowed by law. This issue, however, is a
question of fact which cannot be raised in a petition for certiorari
under Rule 65. 17 As we have previously held:
"It should be noted, in the first place, that the instant
petition is a special civil action for certiorari under Rule 65 of
the Revised Rules of Court. An extraordinary remedy, its use
is available only and restrictively in truly exceptional cases
wherein the action of an inferior court, board or officer
performing judicial or quasi-judicial acts is challenged for
being wholly void on grounds of jurisdiction. The sole office
of the writ of certiorari is the correction of errors of
jurisdiction including the commission of grave abuse of
discretion amounting to lack or excess of jurisdiction. It does
not include correction of public respondent NLRC's
evaluation of the evidence and factual findings based
thereon, which are generally accorded not only great
respect but even finality." 18

II
THE PUBLIC RESPONDENT HAS ACTED WITHOUT OR IN
EXCESS OF JURISDICTION OR WITH GRAVE ABUSE OF
DISCRETION IN PENALIZING PETITIONER WITH CONTRACT
SUBSTITUTION. IN THE PREMISES, THE CONTRACT
SUBSTITUTION IS VALID AS IT IMPROVED THE TERMS AND
CONDITIONS OF PRIVATE RESPONDENTS' EMPLOYMENT.

The question of whether or not petitioner charged private

respondents placement fees in excess of that allowed by law is
clearly a question of fact which is for public respondent POEA, as a
trier of facts, to determine. As stated above, the settled rule is that
the factual findings of quasi-judicial agencies like the POEA, which
have acquired expertise because their jurisdiction is confined to
specific matters, are generally accorded not only respect, but at
times even finality if such findings are supported by substantial
evidence. 19

THE PUBLIC RESPONDENT HAS ACTED WITHOUT OR IN

EXCESS OF JURISDICTION, OR WITH GRAVE ABUSE OF

On this point, we have carefully examined the records of the case

and it is clear that the ruling of public respondent POEA that

III.

petitioner is guilty of illegal exaction is supported by substantial

evidence. Aside from the testimonial evidence offered by private
respondents, they also presented documentary evidence consisting
of receipts issued by a duly authorized representative of petitioner
which show the payment of amounts in excess of those allowed by
the POEA. In contrast, petitioner did not present any evidence
whatsoever to rebut the claims of private respondents despite the
many opportunities for them to do so.
Petitioner insists, however, that it cannot be held liable for illegal
exaction as POEA Memorandum Circular No. 11, Series of 1983,
which enumerated the allowable fees which may be collected from
applicants, is void for lack of publication.
There is merit in the argument.
In Taada vs. Tuvera

20

, the Court held, as follows:

"We hold therefore that all statutes, including those of local

application and private laws, shall be published as a
condition for their effectivity, which shall begin fifteen days
after publication unless a different effectivity date is fixed by
the legislature.
Covered by this rule are presidential decrees and executive
orders promulgated by the President in the exercise of
legislative powers whenever the same are validly delegated
by the legislature or, at present, directly conferred by the
Constitution: Administrative rules and regulations must also
be published if their purpose is to enforce or implement
existing law pursuant to a valid delegation.
Interpretative regulations and those merely internal in
nature, that is, regulating only the personnel of the
administrative agency and the public, need not be
published. Neither is publication required of the so-called
letter of instructions issued by the administrative superiors
concerning the rules or guidelines to be followed by their
subordinates in the performance of their duties."

Applying this doctrine, we have previously declared as having no

force and effect the following administrative issuances: a) Rules
and Regulations issued by the Joint Ministry of Health-Ministry of
Labor and Employment Accreditation Committee regarding the
accreditation of hospitals, medical clinics and laboratories; 21 b)
Letter of Instruction No. 416 ordering the suspension of payments
due and payable by distressed copper mining companies to the
national government; 22 c) Memorandum Circulars issued by the
POEA regulating the recruitment of domestic helpers to Hong
Kong; 23 d) Administrative Order No. SOCPEC 89-08-01 issued by
the Philippine International Trading Corporation regulating
applications for importation from the People's Republic of
China;24and e) Corporate Compensation Circular No. 10 issued by
the Department of Budget and Management discontinuing the
payment of other allowances and fringe benefits to government
officials and employees. 25 In all these cited cases, the
administrative issuances questioned therein were uniformly struck
down as they were not published or filed with the National
Administrative Register as required by the Administrative Code of
1987. 26
POEA Memorandum Circular No. 2, Series of 1983 must likewise be
declared ineffective as the same was never published or filed with
the National Administrative Register.
POEA Memorandum Order No. 2, Series of 1983 provides for the
applicable schedule of placement and documentation fees for
private employment agencies or authority holders. Under the said
Order, the maximum amount which may be collected from
prospective Filipino overseas workers is P2,500.00. The said circular
was apparently issued in compliance with the provisions of Article
32 of the Labor Code which provides, as follows:
"ARTICLE 32. Fees to be paid by workers. Any person
applying with a private fee-charging employment agency for
employment assistance shall not be charged any fee until
he has obtained employment through its efforts or has
actually commenced employment. Such fee shall be always
covered with the approved receipt clearly showing the

amount paid. The Secretary of Labor shall promulgate a

schedule of allowable fees." (italic supplied)
It is thus clear that the administrative circular under consideration
is one of those issuances which should be published for its
effectivity, since its purpose is to enforce and implement an
existing law pursuant to a valid delegation. 27 Considering that
POEA Administrative Circular No. 2, Series of 1983 has not as yet
been published or filed with the National Administrative Register,
the same is ineffective and may not be enforced.
The Office of the Solicitor General argues however that the
imposition of administrative sanctions on petitioner was based not
on the questioned administrative circular but on Article 32 and
Article 34 (a) 28 of the Labor Code.
The argument is not meritorious. The said articles of the Labor
Code were never cited, much less discussed, in the body of the
questioned Orders of the POEA and Secretary of Labor and
Employment. In fact, the said Orders were consistent in mentioning
that petitioner's violation of Administrative Circular No. 2, Series of
1983 was the basis for the imposition of administrative sanctions
against petitioner. Furthermore, even assuming that petitioner was
held liable under the said provisions of the Labor Code, Articles 32
and 34 (a) of the Labor Code presupposes the promulgation of a
valid schedule of fees by the Department of Labor and
Employment. Considering that, as, previously discussed,
Administrative Circular No. 2, Series of 1983 embodying such a
schedule of fees never took effect, there is thus no basis for the
imposition of the administrative sanctions against petitioner.
Moreover, under Book VI, Chapter II, Section 3 of the Administrative
Code of 1987, "(r)ules in force on the date of the effectivity of this
Code which are not filed within three (3) months from that date
shall not thereafter be the basis of any sanction against any party
or persons." Considering that POEA Administrative Circular No. 2
was never filed with the National Administrative Register, the same
cannot be used as basis for the imposition of administrative
sanctions against petitioner.

The Office of the Solicitor General likewise argues that the

questioned administrative circular is not among those requiring
publication contemplated by Taada vs. Tuvera as it is addressed
only to a specific group of persons and not to the general public.
Again, there is no merit in this argument.
The fact that the said circular is addressed only to a specified
group, namely private employment agencies or authority holders,
does not take it away from the ambit of our ruling in Taada vs.
Tuvera. In the case of Phil. Association of Service Exporters vs.
Torres,29 the administrative circulars questioned therein were
addressed to an even smaller group, namely Philippine and Hong
Kong agencies engaged in the recruitment of workers for Hong
Kong, and still the Court ruled therein that, for lack of proper
publication, the said circulars may not be enforced or implemented.
Our pronouncement in Taada vs. Tuvera is clear and categorical.
Administrative rules and regulations must be published if their
purpose is to enforce or implement existing law pursuant to a valid
delegation., The only exceptions are interpretative regulations,
those merely internal in nature, or those so-called letters of
instructions issued by administrative superiors concerning the rules
and guidelines to be followed by their subordinates in the
performance of their duties. Administrative Circular No. 2, Series of
1983 has not been shown to fall under any of these exceptions.
In this regard, the Solicitor General's reliance on the case
of Yaokasin vs. Commissioner of Customs 30 is misplaced. In the
said case, the validity of certain Customs Memorandum Orders
were upheld despite their lack of publication as they were
addressed to a particular class of persons, the customs collectors,
who were also the subordinates of the Commissioner of the Bureau
of Customs. As such, the said Memorandum Orders clearly fall
under one of the exceptions to the publication requirement, namely
those dealing with instructions from an administrative superior to a
subordinate regarding the performance of their duties, a
circumstance which does not obtain in the case at bench.

With respect to the second ground, petitioner would want us to

review the findings of fact of the POEA regarding the two counts of
alleged contract substitution. Again, this is a question of fact which
may not be disturbed if the same is supported by substantial
evidence. A reading of the August 29, 1988 Order of the POEA
shows that, indeed, the ruling that petitioner is guilty of two (2)
counts of prohibited contract substitution is supported by
substantial evidence. Thus:
"2. As admitted by respondent, there was definitely a
contract of substitution in the first count. The first contract
was duly approved by the Administration and, therefore, the
parties are bound by the terms and condition thereof until
its expiration. The mere intention of respondents to increase
the number of hours of work, even if there was a
corresponding increase in wage is clear violation of the
contract as approved by the Administration, and
notwithstanding the same, the amendment is evidently
contrary to law, morals, good customs and public policy and
hence, must be shunned (Art. 1306, Civil Code of the
Philippines, Book III, Title I, Chapter 1, Article 83, Labor Code
of the Philippines, as amended). Moreover, it would appear
that the proposed salary increase corresponding to the
increase in number of work bonus may just have been a
ploy as complainant were (sic) thereafter not paid at the
increased rate.
As to contract substitution in the second part, a third
contract was emphatically intended by respondent to be
signed by complainants which, however, was not
consummated due to the adamant refusal of complainants
to sign thereon. Mere intention of the respondent to commit
contract substitution for a second time should not be left
unpunished. It is the duty of this Office to repress such acts
by teaching agencies a lesson to avoid repetition of the
same violation." 31
With respect to the third ground, petitioner argues that the public
respondent committed grave abuse of discretion in holding
petitioner liable for illegal deductions/withholding of salaries

considering that the Supreme Court itself has already absolved

petitioner from this charge. Petitioner premises its argument on the
fact that the July 26, 1989 Decision of the NLRC absolving it from
private respondent de Mesa's claim for salary deduction has
already attained finality by reason of the dismissal of private
respondents' petition for certiorari of the said NLRC decision by the
Supreme Court.
Petitioner is correct in stating that the July 26, 1989 Decision of the
NLRC has attained finality by reason of the dismissal of the petition
for certiorari assailing the same. However, the said NLRC Decision
dealt only with the money claims of private respondents arising
from employer-employee relations and illegal dismissal and as
such, it is only for the payment of the said money claims that
petitioner is absolved. The administrative sanctions, which are
distinct and separate from the money claims of private
respondents, may still be properly imposed by the POEA. In fact, in
the August 31, 1988 Decision of the POEA dealing with the money
claims of private respondents, the POEA Adjudication Office
precisely declared that "respondent's liability for said money claims
is without prejudice to and independent of its liabilities for the
recruitment violations aspect of the case which is the subject of a
separate Order." 32
The NLRC Decision absolving petitioner from paying private
respondent de Mesa's claim for salary deduction based its ruling on
a finding that the said money claim was not raised in the
complaint. 33 While there may be questions regarding such finding
of the NLRC, the finality of the said NLRC Decision prevents us from
modifying or reviewing the same. But the fact that the claim for
salary deduction was not raised by private respondents in their
complaint will not bar the POEA from holding petitioner liable for
illegal deduction or withholding of salaries as a ground for the
suspension or cancellation of petitioner's license.
Under the POEA Rules and Regulations, the POEA, on its own
initiative, may conduct the necessary proceeding for the
suspension or cancellation of the license of any private placement
agency on any of the grounds mentioned therein. 34 As such, even
without a written complaint from an aggrieved party, the POEA can

initiate proceedings against an erring private placement agency

and, if the result of its investigation so warrants, impose the
corresponding administrative sanction thereof. Moreover, the POEA,
in an investigation of an employer-employee relationship case, may
still hold a respondent liable for administrative sanctions if, in the
course of its investigation, violations of recruitment regulations are
uncovered. 35 It is thus clear that even if recruitment violations
were not included in a complaint for money claims initiated by a
private complainant, the POEA, under its rules, may still take
cognizance of the same and impose administrative sanctions if the
evidence so warrants.
As such, the fact that petitioner has been absolved by final
judgment for the payment of the money claim to private
respondent de Mesa does not mean that it is likewise absolved from
the administrative sanctions which may be imposed as a result of
the unlawful deduction or withholding of private respondents'
salary. The POEA thus committed no grave abuse of discretion in
finding petitioner administratively liable of one count of unlawful
deduction/withholding of salary.
To summarize, petitioner should be absolved from the three (3)
counts of illegal exaction as POEA Administrative Circular No. 2,
Series of 1983 could not be the basis of administrative sanctions
against petitioner for lack of publication. However, we affirm the
ruling of the POEA and the Secretary of Labor and Employment that
petitioner should be held administratively liable for two (2) counts
of contract substitution and one (1) count of withholding or
unlawful deduction of salary.
Under the applicable schedule of penalties imposed by the POEA,
the penalty for each count of contract substitution is suspension of
license for two (2) months or a fine of P10,000.00 while the penalty
for withholding or unlawful deduction of salaries is suspension of
license for two (2) months or fine equal to the salary withheld but
not less than P10,000.00 plus restitution of the amount in both
instances.36 Applying the said schedule on the instant case, the
license of petitioner should be suspended for six (6) months or, in
lieu thereof, it should be ordered to pay fine in the amount of
P30,000.00. Petitioner should likewise pay the amount of

SR1,000.00 to private respondent Vivencio A. de Mesa as restitution

for the amount withheld from his salary.
WHEREFORE, premises considered, the September 13, 1991 and
November 25, 1991 Orders of public respondent Secretary of Labor
and Employment are hereby MODIFIED. As modified, the license of
private respondent Philsa International Placement and Services
Corporation is hereby suspended for six (6) months or, in lieu
thereof, it is hereby ordered to pay the amount of P30,000.00 as
fine. Petitioner is likewise ordered to pay the amount of SR1,000.00
to private respondent Vivencio A. de Mesa. All other monetary
awards are deleted.
SO ORDERED.

In addition, the disputants signed a Submission Agreement

stipulating as final, unappealable and executory the decision of the
Arbitrator, including subsequent issuances for clarificatory and/or
relief purposes, notwithstanding Article 262 of the Labor Code
which allow appeal in certain instances. 2
G.R. No. L-49582 January 7, 1986
CBTC EMPLOYEES UNION, petitioner,
vs.
THE HONORABLE JACOBO C. CLAVE, Presidential Executive
Assistant, and COMMERCIAL BANK & TRUST COMPANY OF
THE PHILIPPINES, respondents.
DE LA FUENTE, J.:
Petition for certiorari seeking to annul and set aside the decision of
the respondent Presidential Executive Assistant 1 affirming that of
the Acting Secretary of Labor who reversed the decision of the
National Labor Relations Comission which upheld the Voluntary
Arbitrator's order directing the private respondent bank to pay its
monthly paid employees their "legal holiday pay."
Petitioner Commercial Bank and Trust Company Employees' Union
(Union for short) lodged a complaint with the Regional Office No. IV,
Department of Labor, against private respondent bank (Comtrust)
for non-payment of the holiday pay benefits provided for under
Article 95 of the Labor Code in relation to Rule X, Book III of the
Rules and Regulations Implementing the Labor Code.
Failing to arrive at an amicable settlement at conciliation level, the
parties opted to submit their dispute for voluntary arbitration. The
issue presented was: "Whether the permanent employees of the
Bank within the collective bargaining unit paid on a monthly
basis are entitled to holiday pay effective November 1, 1974,
pursuant to Article 95 (now Article 94) of the Labor Code, as
amended and Rule X (now Rule IV), Book III of the Rules and
Regulations Implementing the Labor Code. "

In the course of the hearing, the Arbitrator apprised the parties of

an interpretative bulletin on "holiday pay" about to be issued by the
Department
of
Labor.
Whereupon,
the
Union
filed
a
Manifestation 3 which insofar as relevant stated:
6. That complainant union . . . has manifested its
apprehension on the contents of the said
Interpretative Bulletin in view of a well-nigh
irresistible move on the part of the employers to
exclude permanent workers similarly situated as the
employees of Comtrust from the coverage of the
holiday pay benefit despite the express and selfexplanatory provisions of the law, its implementing
rules and opinions thereon . . . .
7. That in the event that said Interpretative Bulletin
regarding holiday pay would be adverse to the
present claim . . . in that it would in effect exclude
the said employees from enjoyment of said benefit,
whether wholly or partially, complainant union
respectfully reserves the right to take such action as
may be appropriate to protect its interests, a
question of law being involved. . . . An Interpretative
Bulletin which was inexistent at the time the said
commitment was made and which may be contrary
to the law itself should not bar the right of the union
to claim for its holiday pay benefits.
On April 22, 1976, the Arbitrator handed down an award on the
dispute. Relevant portions thereof read as follows:
The uncontroverted facts of this case are as follows:

(1) That the complainant Union is the recognized sole

and exclusive collective bargaining representative of
all the permanent rank-and-file employees of the
Bank with an existing Collective Bargaining
Agreement covering the period from July 1, 1974
up to June 30, 1977;
(2) That ... the standard workweek of the Bank
generally consists of five (5) days of eight (8) hours
each day which, . . . said five days are generally from
Monday thru Friday; and, as a rule, Saturdays,
Sundays and the regular holidays are not considered
part of the standard workweek.
(3) That, in computing the equivalent daily rate of its
employees covered by the CBA who are paid on a
monthly basis, the following computation is used, as
per the provisions of Section 4, Article VII, of the CBA
(Annex "A"):
Daily Rate = Basic Monthly Salary plus
CLA x 12 250
Basic Hourly Rate = Daily Rate 8
(4) That the divisor of '250', . . . was arrived at by
subtracting the 52 Sundays, 52 Saturdays, the 10
regular holidays and December 31 (secured thru
bargaining), or a total of 115 off-days from the 365
days of the year or a difference of 250 days.
Considering the above uncontroverted facts, the
principal question to be resolved is whether or not
the monthly pay of the covered employees already
includes what Article 94 of the Labor Code requires
as regular holiday pay benefit in the amount of his
regular daily wage (100% if unworked or 200% if
worked) during the regular holidays enumerated
therein, i.e., Article 94(c) of the Labor Code.

In its latest Memorandum, filed on

March 26, 1976, the Bank relies
heavily on the provisions of Section 2,
Rule IV, Book 111, of the Rules and
Regulations implementing particularly
Article 94 (formerly Article 208) of the
Labor Code, which Section reads as
follows:
SECTION 2. Status of employees paid by the month
-Employees who are uniformly paid by the month,
irrespective of the number of' working days therein
with a salary of not less than the statutory or
established minimum wage, shall be presumed to be
paid for all days in the month whether worked or not.
For this purpose, the monthly minimum wage shall
not be less than the statutory minimum wage
multiplied by 365 days divided by twelve. (Emphasis
supplied).
While admitting that there has virtually been no
change effected by Presidential Decree No. 850,
which amended the Labor Code, other than the renumbering of the original Article 208 of said Code to
what is now Article 94, the Bank, however, attaches a
great deal of significance in the above-quoted Rule
as to render the question at issue 'moot and
academic'.
On the other hand, the Union maintains, in its own
latest Memorandum, filed also on March 26, 1976,
that the legal presumption established in the abovequoted Rule is merely a disputable presumption. This
contention of the Union is now supported by a
pronouncement categorically to that effect by no less
than the National Labor Relations Commission (NLRC)
in the case of The Chartered Bank Employees
Association vs. The Chartered Bank. NLRC Case No.

(s) RB-IV-1739-75 (RO4-5-3028-75), which reads, in

part, as follows:
. . . A disputable presumption was
sea in that it would be presumed the
salary of monthly-paid employees may
already include rest days, such as
Saturdays, Sundays, special and legal
holidays, worked or unworked, in effect
connoting
that evidence
to
the
contrary may destroy such a supposed
legal presumption. Indeed, the Rule
merely sets a presumption. It does not
conclusively presume that the salary of
monthly-paid
employees
already
includes unworked holidays. . . .
The practice of the Bank of paying its
employees a sum equivalent to Base
pay plus Premium on Saturdays,
Sundays and special and legal
holidays,
destroys
the
legal
presumption that monthly pay is for an
days of the month. For if the monthly
pay is payment for all days of the
month, then why should the employee
be paid again for working on such rest
days. (Emphasis supplied)
There is no reason at present not to adopt the above
ruling of the Honorable Comission, especially
considering the fact that this Arbitrator, in asking a
query on the nature of the presumption established
by the above Rule, from the Director of Labor
Standards in the PMAP Conference held at the Makati
Hotel on March 13, 1976, was given the categorical
answer that said presumption is merely disputable.
This answer from the Labor Standards Director is
significant inasmuch as it is his office, the Bureau of
Labor Standards, that is reportedly instrumental in

the preparation of the

particularly on Book III of
Conditions of Employment,
present Rule under discussion

implementing Rules,
the Labor Code on
to which group the
belongs.

So, rather than rendering moot and academic the

issue at hand, as suggested by the Bank, the more
logical step to take is to determine whether or not
there is sufficient evidence to overcome the
disputable presumption established by the Rule.
It is unquestioned, and as provided for in the CBA
itself, that the divisor used in determining the daily
rate of the monthly-paid employees is '250'.
xxx xxx xxx
Against this backdrop, certain relevant and logical
conclusions result, namely:
(A) The Bank maintains that, since its inception or
start of operations in 1954, all monthly-paid
employees in the Bank are paid their monthly
salaries without any deduction for unworked
Saturdays, Sundays, legals and special holidays. On
the other hand, it also maitains that, as a matter of
fact, 'always conscious of its employee who has to
work, on respondent's rest days of Saturdays and
Sundays or on a legal holiday, an employee who
works overtime on any of said days is paid one
addition regular pay for the day plus 50% of said
regular pay (Bank's Memorandum, page 3, filed
January 21, 1976). . . .
xxx xxx xxx
On the other hand, there is more reason to believe
that, if the Bank has never made any deduction from
its monthly-paid employees for unworked Saturdays,
Sundays, legal and special holidays, it is because

there is really nothing to deduct properly since the

monthly, salary never really included pay for such
unworked days-and which give credence to the
conclusion that the divisor '250' is the proper one to
use in computing the equivalent daily rate of the
monthly-paid employees.
(B) The Bank further maintains that the holiday pay
is intended only for daily-paid workers. In this regard,
the NLRC has this to say , in the same above-quoted
Chartered Bank case:
It is contended that holiday pay is
primarily for daily wage earners. Let us
examine the law, more specifically
Article 95 (now Article 94) of the Labor
Code to see whether it supports this
contention. The words used in the
Decree are 'every worker', while the
framers of the Implementing Rules
preferred the use of the phrase 'all
employees.' Both the decree itself and
the Rules mentioned enumerated the
excepted workers. It is a basic rule of
statutory construction that putting an
exception
limits
or modifies
the
enumeration or meaning made in the
law. it is thus easy to see that a mere
reading of the Decree and of the Rules
would show that the monthly-paid
employees of the Bank are not
expressly included in the enumeration
of the exception.
Special notice is made of the fact that
the criteria at once readable from the
exception referred to is the nature of
the job and the number of employees
involved,
and not whether the

employee is a daily-wage earner or a

regular monthly-paid employee.
There is no reason at all to digress from the abovequoted observation of the Honorable Commission for
purposes of the present case.
xxx xxx xxx
Finally, inasmuch as Article 94 of the Labor Code is
one of its so-called self-executing provisions,
conjointly with its corresponding implementing Rules,
it is to be taken to have taken effect, as of November
1, 1974, as per Section I (1), Rule IV, Book III , of the
Implementing Rules.
WHEREAS, all the above premises considered, this
Arbitrator rules that:
(1) All the monthly-paid employees of the Bank
herein represented by the Union and as governed by
their Collective Bargaining Agreement, are entitled to
the holiday pay benefits as provided for in Article 94
of the labor Code and as implemented by Rule IV,
Book III, of the corresponding implementing Rules,
except for any day or any longer period designated
by lawor holding a general election or referendum;
(2) Paragraph (1) hereof means that any covered
employee who does not work on any of the regular
holidays enumerated in Article 94 (c) of the Labor
Code, except that which is designated for election or
referendum purposes, is still entitled to receive an
amount equivalent to his regular daily wage in
addition to his monthly salary. If he work on any of
the regular holidays, other than that which is
designated for election or referendum purposes, he is
entitled to twice, his regular daily wage in addition to
his monthly salary. The 50% premium pay provided
for in the CBA for working on a rest day (which has

been interpreted by the parties to include the

holidays) shall be deemed already included in the
200% he receives for working on a regular holiday.
With respect to the day or any longer period
designated by law for holding a general election or
referendum, if the employee does not work on such
day or period he shall no longer be entitled to receive
any additional amount other than his monthly salary
which is deemed to include already his regular daily
wage for such day or period. If he works on such day
or period, he shall be entitled to an amount
equivalent to his regular daily wage (100%) for that
day or period in addition to his monthly salary. The
50% premium pay provided for in the CBA for
working on that day or period shall be deemed
already included in the additional 100% he receives
for working on such day or period; and

The ten (10) paid legal holidays law, to start with, is

intended to benefit principally daily employees. In
the case of monthly, only those whose monthly
salary did not yet include payment for the ten (10)
paid legal holidays are entitled to the benefit.
Under the rules implementing PD 850, this policy has
been fully clarified to eliminate controversies on the
entitlement of monthly paid employees. The new
determining rule is this: If the monthly paid
employee is receiving not less than P 240, the
maximum monthly minimum wage, and his monthly
pay is uniform from January to December, he is
presumed to be already paid the ten (10) paid legal
holidays. However, if deductions are made from his
monthly salary on account of holidays in months
where they occur, then he is still entitled to the ten
(10) paid legal holidays.

(3) The Bank is hereby ordered to pay all the above

employees in accordance with the above paragraphs
(1) and (2), retroactive from November 1, 1974.

These new interpretations must be uniformly and

consistently upheld.

SO ORDERED.

This issuance shall take effect immediately.

April 22, 1976, Manila, Philippines.

The next day, on April 23, 1976, the Department of Labor released
Policy Instructions No. 9, hereinbelow quoted:
The Rules implementing PD 850 have clarified the
policy in the implementation of the ten (10) paid
legal holidays. Before PD 850, the number of working
days a year in a firm was considered important in
determining entitlement to the benefit. Thus, where
an employee was working for at least 313 days, he
was considered definitely already paid. If he was
working for less than 313, there was no certainty
whether the ten (10) paid legal holidays were already
paid to him or not.

After receipt of a copy of the award, private respondent filed a

motion for reconsideration, followed by a supplement thereto. Said
motion for reconsideration was denied. A copy of the order of denial
was received by private respondent on July 8, 1976.
Said private respondent interposed an appeal to the National Labor
Relations Commission (NLRC), contending that the Arbitrator
demonstrated gross incompetence and/or grave abuse of discretion
when he entirely premised the award on the Chartered Bank case
and failed to apply Policy Instructions No. 9. This appeal was
dismissed on August 16, 1976, by the NLRC because it was filed
way beyond the ten-day period for perfecting an appeal and
because it contravened the agreement that the award shall be final
and unappealable.

Private respondent then appealed to the Secretary of Labor. On

June 30, 1977, the Acting Secretary of Labor reversed the NLRC
decision and ruled that the appeal was filed on time and that a
review of the case was inevitable as the money claim exceeded
P100,000.00. 5 Regarding the timeliness of the appeal, it was
pointed out that the labor Department had on several occasions
treated a motion for reconsideration (here, filed before the
Arbitrator) as an appeal to the proper appellate body in consonance
with the spirit of the Labor Code to afford the parties a just,
expeditious and inexpensive disposition of their claims, liberated
from the strict technical rules obtaining in the ordinary courts.
Anent the issue whether or not the agreement barred the appeal, it
was noted that the Manifestation, supra, "is not of slight
significance because it has in fact abrogated complainant's
commitment to abide with the decision of the Voluntary Arbitrator
without any reservation" and amounted to a "virtual repudiation of
the agreement vesting finality" 6 on the arbitrator's disposition.
And on the principal issue of holiday pay, the Acting Secretary,
guided by Policy Instructions No. 9, applied thesame
retrospectively, among other things.
In due time, the Union appealed to the Office of the President. In
affirming the assailed decision, Presidential Executive Assistant
Jacobo C. Clave relied heavily on the Manifestation and Policy
Instructions No. 9.
Hence, this petition.
On January 10, 1981, petitioner filed a motion to substitute the
Bank of the Philippine Islands as private respondent, as a
consequence of the Articles of Merger executed by said bank and
Commercial Bank & Trust Co. which inter alia designated the former
as the surviving corporate entity. Said motion was granted by the
Court.
We find the petitioner impressed with merit.

In excluding the union members of herein petitioner from the

benefits of the holiday pay law, public respondent predicated his
ruling on Section 2, Rule IV, Book III of the Rules to implement
Article 94 of the labor Code promulgated by the then Secretary of
labor and Policy Instructions No. 9.
In Insular Bank of Asia and America Employees' Union (IBAAEU) vs.
Inciong, 7 this Court's Second Division, speaking through former
Justice Makasiar, expressed the view and declared that the
aforementioned section and interpretative bulletin are null and
void, having been promulgated by the then Secretary of Labor in
excess of his rule-making authority. It was pointed out, inter
alia, that in the guise of clarifying the provisions on holiday pay,
said rule and policy instructions in effect amended the law by
enlarging the scope of the exclusions. We further stated that the
then Secretary of Labor went as far as to categorically state that
the benefit is principally intended for daily paid employees whereas
the law clearly states that every worker shall be paid their regular
holiday pay-which is incompatible with the mandatory directive, in
Article 4 of the Labor Code, that "all doubts in the implementation
and interpretation of the provisions of Labor Code, including its
implementing rules and regulations, shall be resolved in favor of
labor." Thus, there was no basis at all to deprive the union
members of their right to holiday pay.
In the more recent case of The Chartered Bank Employees
Association vs. Hon. Ople, 8 this Court in an en bancdecision had
the occasion to reiterate the above-stated pronouncement. We
added:
The questioned Section 2, Rule IV, Book III of the
Integrated Rules and the Secretary's Policy
Instruction No. 9 add another excluded group,
namely, 'employees who are uniformly paid by the
month'. While the additional exclusion is only in the
form of a presumption that all monthly paid
employees have already been paid holiday pay, it
constitutes a taking away or a deprivation which
must be in the law if it is to be valid. An
administrative interpretation which diminishes the

benefits of labor more than what the statute delimits

or withholds is obviously ultra vires.
In view of the foregoing, the challenged decision of public
respondent has no leg to stand on as it was premised principally on
the same Section 2, Rule IV, Book III of the Implementing Rules and
Policy Instructions No. 9. This being the decisive issue to be
resolved, We find no necessity to pass upon the other issues raised,
such as the effects of the Union's Manifestation and the propriety of
applying Policy Instructions No. 9 retroactively to the instant case.
WHEREFORE, the questioned decisions of the respondent
Presidential Executive Assistant and the Acting Secretary of labor
are hereby set aside, and the award of the Arbitrator reinstated.
Costs against the private respondent.
IT IS SO ORDERED.

VITUG, J.:
Petitioner Ramon C. Lozon, a certified public accountant, was a
Senior
Vice-President-Finance of Private respondent Philippine Airlines, Inc.
("PAL"), when his services were terminated on 19 December 1990
in the aftermath of the much-publicized "two-billion-peso PALscam."
Lozon started to work for the national carrier on 23 August 1967
and, for twenty-three years, steadily climbed the corporate ladder
until he became one of its vice-presidents. 1
His termination from the service was spawned by a letter sent
some time in June 1990 by a member of PAL's board of directors,
then Solicitor General Francisco Chavez, to PAL President Dante
Santos. Chavez demanded an investigation of twenty-three
irregularities allegedly committed by twenty-two high-ranking PAL
officials. Among these officials was petitioner; he had been
administratively charged by Romeo David, Senior Vice-President for
Corporate Services and Logistics Group, for his (Lozon) purported
involvement in four cases, labeled "Goldair," "Autographics," "Big
Bang of 1983" and "Middle East." 2 Pending the investigation of
these cases by a panel 3 constituted by then President Corazon C.
Aquino, petitioner was placed under preventive suspension.
In the organizational meeting of the PAL board of directors on 19
October 1990 which occasion Feliciano R. Belmonte, Jr., was elected
chairman of the board while Dante G. Santos was designated
president and chief executive officer, 4 the board deferred action on
the election or appointment of some senior officers of the company
who, like petitioner, had been charged with various offenses.

G.R. No. 107660 January 2, 1995

RAMON C. LOZON, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION (Second
Division) and PHILIPPINE AIRLINES, INC.,respondents.

On 18 January 1991, the PAL board of directors issued two

resolutions relative to the investigation conducted by the
presidential investigating panel in the "Autographics" and "Goldair"
cases. In "Autographics," petitioner was charged, along with three
other officials, 5 with "gross inefficiency, negligence, imprudence,
mismanagement, dereliction of duty, failure to observe and/or
implement administrative and executive policies" and with the
"concealment, or cover-up and prevention of the seasonal
discovery of the anomalous transactions" had with Autographics,

Inc., resulting in, among other things, an overpayment by PAL to

Autographics in the amount of around P12 million. Petitioner was
forthwith considered "resigned from the service . . . for loss of
confidence and for acts inimical to the interests of the
company." 6 A similar conclusion was arrived at by the PAL board of
directors with regard to petitioner in the "Goldair" case where he,
together with six other PAL officials, 7 were charged with like
"offenses" that had caused PAL's defraudation by Goldair, PAL's
general sales agent in Australia, of 14.6 million Australian dollars. 8
Aggrieved by the action taken by the PAL board of directors,
petitioner, on 26 June 1991 filed with the National Labor Relations
Commission ("NLRC") in Manila a complaint (docketed NLRC-NCR
Case No. 00-06-03684-91) for illegal dismissal and for
reinstatement, with backwages and "fringe benefits such as
Vacation leave, Sick leave, 13th month pay, Christmas Bonus,
Medical Expenses, car expenses, trip pass entitlement, etc., plus
moral damages of P40 Million, exemplary damages of P10 Million
and reasonable attorney's fees." 9
On 09 August 1991, 10 the PAL board of directors also held
petitioner as "resigned from the company" for loss of confidence
and for acts inimical to the interests of the company in the "Big
Bang of 1983" case for his alleged role in the irregularities that had
precipitated the write-down (write-off) of assets amounting to P553
million from the books and financial statements of PAL. 11 In the
"Middle East" case, the PAL board of directors, on the anomalous
administration of commercial marketing arrangements in which PAL
had lost an estimated P120 million. 12
PAL defended the validity of petitioner's dismissal before the Labor
Arbiter. It questioned at the same time the jurisdiction of the NLRC,
positing the theory that since the investigating panel was
constituted by then President Aquino, said panel, along with the
PAL board of directors, became "a parallel arbitration unit" which, in
legal contemplation, should be deemed to have substituted for the
NLRC. Thus, PAL averred, petitioner's recourse should have been to
appeal his case to the Office of the President. 13 On the other hand,
petitioner questioned the authority of the panel to conduct the
investigation, asseverating that the charges leveled against him

were purely administrative in nature that could have well been

ventilated under the grievance procedure outline in PAL's Code of
Discipline.
On 17 March 1992, Labor Arbiter Jose G. de Vera rendered a
decision ruling for petitioner. 14 The decretal portion of the decision
read:
WHEREFORE, all the foregoing premises being
considered, judgment is hereby rendered ordering
the respondent Philippine Airlines, Inc., to reinstate
the complainant to his former position with all the
rights, privileges, and benefits appertaining thereto
plus backwages, which as of March 15, 1992 already
amounted to P2,632,500.00, exclusive of fringes.
Further, the respondent company is ordered to pay
complainant as follows: P5,000.00 as moral
damages; P1,000,000.00 as exemplary damages,
and attorney's fees equivalent to ten percent (10%)
of all of the foregoing awards.
SO ORDERED.

15

A day after promulgating the decision, the labor arbiter issued a

writ of execution. PAL filed a motion to quash the writ petitioner
promptly opposed. After the labor arbiter had denied the motion to
quash, PAL filed a petition for injunction with the NLRC (docketed
NLRC IC Case No. 00261-92). No decision was rendered by NLRC on
this petition. 16
Meanwhile, PAL appealed the decision of the labor arbiter by filing a
memorandum on appeal, 17 assailing, once again, the jurisdiction of
the NLRC but this time on the ground that the issue pertaining to
the removal or dismissal of petitioner, a corporate officer, was
within the exclusive and original jurisdiction of the Securities and
Exchange Commission ("SEC"). Petitioner interposed a partial
appeal praying for an increase in the amount of moral and
exemplary damages awarded by the labor arbiter. 18

On 24 July 1992, the NLRC rendered a decision (in NLRC NCR Case
No. 00-06-03684-91) 19 dismissing the case on the strength of PAL's
new argument on the issue of jurisdiction. 20 Petitioner's motion for
reconsideration was denied by the NLRC.
The instant petition for certiorari filed with this Court raises these
issues: (a) Whether or not the NLRC has jurisdiction over the illegal
dismissal case, and (b) on the assumption that the SEC has that
jurisdiction, whether or not private respondent is estopped from
raising NLRC's lack of jurisdiction over the controversy.
We sustain NLRC's dismissal of the case.
Presidential Decree No. 902-A confers on the SEC original and
exclusive jurisdiction to hear and decide controversies and cases
involving
a. Intra-corporate and partnership relations between
or among the corporation, officers and stockholders
and
partners,
including
their
elections
or
appointments;
b. State and corporate affairs in relation to the legal
existence
of
corporations,
partnerships
and
associations or to their franchises; and
c. Investors and corporate affairs, particularly in
respect of devices and schemes, such as fraudulent
practices, employed by directors, officers, business
associates, and/or other stockholders, partners, or
members of registered firms; as well as
d. Petitions for suspension of payments filed by
corporations, partnerships or associations possessing
sufficient property to cover all their debts but which
foresee the impossibility of meeting them when they
respectively fall due, or possessing insufficient assets
to cover their liabilities and said entities are upon
petition
or motu
propio,
placed
under
the

management of a Rehabilitation
Management Committee.

Receiver

or

Specifically, in intra-corporate matters concerning the election or

appointment of officers of a corporation, the decree provides:
Sec. 5. In addition to the regulatory and adjudicative
functions of the Securities and Exchange Commission
over corporations, partnerships and other forms of
association registered with it as expressly granted
under existing laws and decrees, it shall have original
and exclusive jurisdiction to hear and decide cases
involving:
xxx xxx xxx
(c) Controversies in the election or appointments of
directors, trustees, officers or managers of such
corporations, partnerships or association.
Petitioner himself admits that vice presidents are senior members
of
management, 21 whose designations are no longer than just by
means of ordinary promotions. In his own case, petitioner has been
elected to the position of Senior Vice-President Finance Group by
PAL's board of directors at its organizational meeting held on 20
October 1989 pursuant to the By-laws, 22 under which, he would
serve for a term of one year and until his successor shall have been
elected and qualified. 23 Petitioner, for reasons already mentioned,
did not get to be re-elected thereafter. 24
In Fortune Cement Corporation v. NLRC, 25 the Court has quoted
with approval the Solicitor General's contention that "a corporate
officer's dismissal is always a corporate act and/or intra-corporate
controversy and that nature is not altered by the reason or wisdom
which the Board of Directors may have in taking such action." Not
the least insignificant in the case at bench is that petitioner's
dismissal is intertwined with still another intra-corporate affair,
earlier so ascribed as the "two-billion-peso PALscam," that
inevitably places the case under the specialized competence of the

SEC and well beyond the ambit of a labor arbiter's normal

jurisdiction under the general provisions of Article 217 of the Labor
Code. 26
Petitioner contends that the jurisdiction of the SEC excludes its
cognizance over claims for vacation and sick leaves, 13th month
pay, Christmas bonus, medical expenses, car expenses, and other
benefits, as well as for moral damages and attorney's fees. 27 Dy
v. NLRC 28 categorically states that the question of remuneration
being asserted by an officer of a corporation is "not a simple labor
problem but a matter that comes within the area of corporate
affairs and management, and is in fact, a corporate controversy in
contemplation of the Corporation Code." With regard to the matter
of
damages,
in Andaya
v.
29
Abadia where, in a complaint filed before the Regional Trial Court,
the president and general manager of the Armed Forces and Police
Savings and Loan Association ("AFPSLAI") questioned his ouster
from the stewardship of the association, this Court, in dismissing
the petition assailing the order of the trial court which ruled that
SEC, not the regular courts, had jurisdiction over the case, has said:
The allegations against herein respondents in the
amended complaint unquestionably reveal intracorporate controversies cleverly conceals, although
unsuccessfully, by use of civil law terms and phrases.
The
amended
complaint
impleads
herein
respondents who, in their capacity as directors of
AFPSLAI, allegedly convened an illegal meeting and
voted for the reorganization of management
resulting in petitioner's ouster as corporate
officer. While it may be said that the same corporate
acts also give rise to civil liability for damages, it
does not follow that the case is necessarily taken out
of the jurisdiction of the SEC as it may award
damages which can be considered consequential in
the exercise of its adjudicative powers. Besides,
incidental issues that properly fall within the
authority of a tribunal may also be considered by it
to avoid multiplicity of actions. Consequently, in
intra-corporate matters such as those affecting the

corporation,
its
directors,
trustees,
officers,
shareholders, the issue of consequential damages
may just as well be resolved and adjudicated by the
SEC. (Emphasis supplied.)
We here reiterate the above holdings for, indeed, controversies
within the purview of Section 5 of P.D. No. 902-A must not be so
constricted as to deny to the SEC the sound exercise of its
expertise and competence in resolving all closely related aspects of
such corporate disputes.
Petitioner maintains that PAL is estopped, nevertheless, from
questioning the jurisdiction of the NLRC considering that PAL did
not hold the dispute to be intra-corporate until after the case had
already been brought on appeal to the NLRC.
In the first place, there would not be much basis to indicate that
PAL was "effectively barred by estoppel." 30 As early as the initial
stages of the controversy PAL had already raised the issue of
jurisdiction albeit mistakenly at first on the ground that petitioner's
recourse was an appeal to the Office of the President. The error
could not alter the fact that PAL did question even then the
jurisdiction of both the labor arbiter and the NLRC.
It has long been the established rule, moreover, that jurisdiction
over a subject matter is conferred by law, 31 and the question of
lack of jurisdiction may be raised at anytime even on appeal. 32 In
the recent case of La Naval Drug Corporation vs. Court of Appeals,
G.R. No. 103200, 31 August 1994, this Court said:
Lack of jurisdiction over the subject matter of the suit
is yet another matter. Whenever it appears that the
court has no jurisdiction over the subject matter, the
action shall be dismissed (Section 2, Rule 9, Rules of
Court). This defense may be interpose at any time,
during appeal (Roxas vs. Rafferty, 37 Phil. 957) or
even after final judgment (Cruzcosa vs. Judge
Concepcion, et al., 101 Phil. 146). Such is
understandable, as this kind of jurisdiction is
conferred by law and not within the courts, let alone

the parties, to themselves determine or conveniently

set aside. In People vs. Casiano (111 Phil. 73, 93-94),
this Court, on the issue of estoppel, held:
"The operation of the principle of
estoppel on the question of jurisdiction
seemingly depends upon whether the
lower court actually had jurisdiction or
not. If it had no jurisdiction, but the
case was tried and decided upon the
theory that it had jurisdiction, the
parties are not barred, on appeal, from
assailing such jurisdiction, for the
same "must exist as a matter of law,
and may not be conferred by consent
of the parties or by estoppel" (5 C.J.S.,
861-863). However, if the lower court
had jurisdiction, and the case was
heard and decided upon a given
theory, such, for instance, as that the
court had no jurisdiction, the party who
induced it to adopt such theory will not
be permitted, on appeal, to assume a
inconsistent position that the lower
court had jurisdiction. Here, the
principle of estoppel applies. The rule
that jurisdiction is conferred by law,
and does not depend upon the will of
the parties, has no bearing thereon."
Petitioner points to "PAL's scandalous duplicity" in questioning the
jurisdiction of the NLRC in this particular controversy while
upholding it (NLRC's jurisdiction) in "Robin Dui v. Philippine Airlines"
(Case No. 00-4-20267) pending before the Commission. We need
not delve into whether or not PAL's conduct does indeed smack of
opportunities; suffice it to say that Robin Dui is entirely an
independent and separate case and, more than that, it is not before
us in this instance.

WHEREFORE, the herein petition for certiorari is DISMISSED, and

the decision appealed from is AFFIRMED, without prejudice to
petitioner's seeking, if circumstances permit, a recourse in the
proper forum. No costs.
SO ORDERED.

A. JOSE & NAPOLEON S. FERRER,petitioners,

vs.
HONORABLE SECRETARY OF AGRARIAN REFORM, respondent.
G.R. No. 79310 July 14, 1989
ARSENIO AL. ACUNA, NEWTON JISON, VICTORINO FERRARIS,
DENNIS JEREZA, HERMINIGILDO GUSTILO, PAULINO D.
TOLENTINO and PLANTERS' COMMITTEE, INC., Victorias Mill
District, Victorias, Negros Occidental, petitioners,
vs.
JOKER ARROYO, PHILIP E. JUICO and PRESIDENTIAL
AGRARIAN REFORM COUNCIL, respondents.
G.R. No. 79744 July 14, 1989
INOCENTES PABICO, petitioner,
vs.
HON. PHILIP E. JUICO, SECRETARY OF THE DEPARTMENT OF
AGRARIAN REFORM, HON. JOKER ARROYO, EXECUTIVE
SECRETARY OF THE OFFICE OF THE PRESIDENT, and Messrs.
SALVADOR TALENTO, JAIME ABOGADO, CONRADO AVANCENA
and ROBERTO TAAY, respondents.
G.R. No. 79777 July 14, 1989
NICOLAS S. MANAAY and AGUSTIN HERMANO,
JR., petitioners,
vs.
HON. PHILIP ELLA JUICO, as Secretary of Agrarian Reform,
and LAND BANK OF THE PHILIPPINES,respondents.
G.R. No. 78742 July 14, 1989
ASSOCIATION OF SMALL LANDOWNERS IN THE PHILIPPINES,
INC., JUANITO D. GOMEZ, GERARDO B. ALARCIO, FELIPE A.
GUICO, JR., BERNARDO M. ALMONTE, CANUTO RAMIR B.
CABRITO, ISIDRO T. GUICO, FELISA I. LLAMIDO, FAUSTO J.
SALVA, REYNALDO G. ESTRADA, FELISA C. BAUTISTA,
ESMENIA J. CABE, TEODORO B. MADRIAGA, AUREA J.
PRESTOSA, EMERENCIANA J. ISLA, FELICISIMA C. ARRESTO,
CONSUELO M. MORALES, BENJAMIN R. SEGISMUNDO, CIRILA

CRUZ, J.:
In ancient mythology, Antaeus was a terrible giant who blocked and
challenged Hercules for his life on his way to Mycenae after
performing his eleventh labor. The two wrestled mightily and
Hercules flung his adversary to the ground thinking him dead, but
Antaeus rose even stronger to resume their struggle. This
happened several times to Hercules' increasing amazement.
Finally, as they continued grappling, it dawned on Hercules that
Antaeus was the son of Gaea and could never die as long as any

part of his body was touching his Mother Earth. Thus forewarned,
Hercules then held Antaeus up in the air, beyond the reach of the
sustaining soil, and crushed him to death.
Mother Earth. The sustaining soil. The giver of life, without whose
invigorating touch even the powerful Antaeus weakened and died.
The cases before us are not as fanciful as the foregoing tale. But
they also tell of the elemental forces of life and death, of men and
women who, like Antaeus need the sustaining strength of the
precious earth to stay alive.
"Land for the Landless" is a slogan that underscores the acute
imbalance in the distribution of this precious resource among our
people. But it is more than a slogan. Through the brooding
centuries, it has become a battle-cry dramatizing the increasingly
urgent demand of the dispossessed among us for a plot of earth as
their place in the sun.
Recognizing this need, the Constitution in 1935 mandated the
policy of social justice to "insure the well-being and economic
security of all the people," 1 especially the less privileged. In 1973,
the new Constitution affirmed this goal adding specifically that "the
State shall regulate the acquisition, ownership, use, enjoyment and
disposition of private property and equitably diffuse property
ownership and profits." 2 Significantly, there was also the specific
injunction to "formulate and implement an agrarian reform program
aimed at emancipating the tenant from the bondage of the soil." 3
The Constitution of 1987 was not to be outdone. Besides echoing
these sentiments, it also adopted one whole and separate Article
XIII on Social Justice and Human Rights, containing grandiose but
undoubtedly sincere provisions for the uplift of the common people.
These include a call in the following words for the adoption by the
State of an agrarian reform program:
SEC. 4. The State shall, by law, undertake an agrarian reform
program founded on the right of farmers and regular farmworkers,
who are landless, to own directly or collectively the lands they till
or, in the case of other farmworkers, to receive a just share of the
fruits thereof. To this end, the State shall encourage and undertake
the just distribution of all agricultural lands, subject to such

priorities and reasonable retention limits as the Congress may

prescribe, taking into account ecological, developmental, or equity
considerations and subject to the payment of just compensation. In
determining retention limits, the State shall respect the right of
small landowners. The State shall further provide incentives for
voluntary land-sharing.
Earlier, in fact, R.A. No. 3844, otherwise known as the Agricultural
Land Reform Code, had already been enacted by the Congress of
the Philippines on August 8, 1963, in line with the above-stated
principles. This was substantially superseded almost a decade later
by P.D. No. 27, which was promulgated on October 21, 1972, along
with martial law, to provide for the compulsory acquisition of
private lands for distribution among tenant-farmers and to specify
maximum retention limits for landowners.
The people power revolution of 1986 did not change and indeed
even energized the thrust for agrarian reform. Thus, on July 17,
1987, President Corazon C. Aquino issued E.O. No. 228, declaring
full land ownership in favor of the beneficiaries of P.D. No. 27 and
providing for the valuation of still unvalued lands covered by the
decree as well as the manner of their payment. This was followed
on July 22, 1987 by Presidential Proclamation No. 131, instituting a
comprehensive agrarian reform program (CARP), and E.O. No. 229,
providing the mechanics for its implementation.
Subsequently, with its formal organization, the revived Congress of
the Philippines took over legislative power from the President and
started its own deliberations, including extensive public hearings,
on the improvement of the interests of farmers. The result, after
almost a year of spirited debate, was the enactment of R.A. No.
6657, otherwise known as the Comprehensive Agrarian Reform Law
of 1988, which President Aquino signed on June 10, 1988. This law,
while considerably changing the earlier mentioned enactments,
nevertheless gives them suppletory effect insofar as they are not
inconsistent with its provisions. 4
The above-captioned cases have been consolidated because they
involve common legal questions, including serious challenges to
the constitutionality of the several measures mentioned above.
They will be the subject of one common discussion and resolution,

The different antecedents of each case will require separate

treatment, however, and will first be explained hereunder.
G.R. No. 79777
Squarely raised in this petition is the constitutionality of P.D. No. 27,
E.O. Nos. 228 and 229, and R.A. No. 6657.
The subjects of this petition are a 9-hectare riceland worked by four
tenants and owned by petitioner Nicolas Manaay and his wife and a
5-hectare riceland worked by four tenants and owned by petitioner
Augustin Hermano, Jr. The tenants were declared full owners of
these lands by E.O. No. 228 as qualified farmers under P.D. No. 27.
The petitioners are questioning P.D. No. 27 and E.O. Nos. 228 and
229 on grounds inter alia of separation of powers, due process,
equal protection and the constitutional limitation that no private
property shall be taken for public use without just compensation.
They contend that President Aquino usurped legislative power when
she promulgated E.O. No. 228. The said measure is invalid also for
violation of Article XIII, Section 4, of the Constitution, for failure to
provide for retention limits for small landowners. Moreover, it does
not conform to Article VI, Section 25(4) and the other requisites of a
valid appropriation.
In connection with the determination of just compensation, the
petitioners argue that the same may be made only by a court of
justice and not by the President of the Philippines. They invoke the
recent cases of EPZA v. Dulay 5and Manotok v. National Food
Authority. 6 Moreover, the just compensation contemplated by the
Bill of Rights is payable in money or in cash and not in the form of
bonds or other things of value.
In considering the rentals as advance payment on the land, the
executive order also deprives the petitioners of their property rights
as protected by due process. The equal protection clause is also
violated because the order places the burden of solving the
agrarian problems on the owners only of agricultural lands. No
similar obligation is imposed on the owners of other properties.

The petitioners also maintain that in declaring the beneficiaries

under P.D. No. 27 to be the owners of the lands occupied by them,
E.O. No. 228 ignored judicial prerogatives and so violated due
process. Worse, the measure would not solve the agrarian problem
because even the small farmers are deprived of their lands and the
retention rights guaranteed by the Constitution.
In his Comment, the Solicitor General stresses that P.D. No. 27 has
already been upheld in the earlier cases ofChavez v.
Zobel, 7 Gonzales v. Estrella, 8 and Association of Rice and Corn
Producers of the Philippines, Inc. v. The National Land Reform
Council. 9 The determination of just compensation by the executive
authorities conformably to the formula prescribed under the
questioned order is at best initial or preliminary only. It does not
foreclose judicial intervention whenever sought or warranted. At
any rate, the challenge to the order is premature because no
valuation of their property has as yet been made by the
Department of Agrarian Reform. The petitioners are also not proper
parties because the lands owned by them do not exceed the
maximum retention limit of 7 hectares.
Replying, the petitioners insist they are proper parties because P.D.
No. 27 does not provide for retention limits on tenanted lands and
that in any event their petition is a class suit brought in behalf of
landowners with landholdings below 24 hectares. They maintain
that the determination of just compensation by the administrative
authorities is a final ascertainment. As for the cases invoked by the
public respondent, the constitutionality of P.D. No. 27 was merely
assumed in Chavez, while what was decided in Gonzales was the
validity of the imposition of martial law.
In the amended petition dated November 22, 1588, it is contended
that P.D. No. 27, E.O. Nos. 228 and 229 (except Sections 20 and 21)
have been impliedly repealed by R.A. No. 6657. Nevertheless, this
statute should itself also be declared unconstitutional because it
suffers from substantially the same infirmities as the earlier
measures.
A petition for intervention was filed with leave of court on June 1,
1988 by Vicente Cruz, owner of a 1. 83- hectare land, who
complained that the DAR was insisting on the implementation of

P.D. No. 27 and E.O. No. 228 despite a compromise agreement he

had reached with his tenant on the payment of rentals. In a
subsequent motion dated April 10, 1989, he adopted the
allegations in the basic amended petition that the abovementioned enactments have been impliedly repealed by R.A. No.
6657.
G.R. No. 79310
The petitioners herein are landowners and sugar planters in the
Victorias Mill District, Victorias, Negros Occidental. Co-petitioner
Planters' Committee, Inc. is an organization composed of 1,400
planter-members.
This
petition
seeks
to
prohibit
the
implementation of Proc. No. 131 and E.O. No. 229.
The petitioners claim that the power to provide for a
Comprehensive Agrarian Reform Program as decreed by the
Constitution belongs to Congress and not the President. Although
they agree that the President could exercise legislative power until
the Congress was convened, she could do so only to enact
emergency measures during the transition period. At that, even
assuming that the interim legislative power of the President was
properly exercised, Proc. No. 131 and E.O. No. 229 would still have
to be annulled for violating the constitutional provisions on just
compensation, due process, and equal protection.
They also argue that under Section 2 of Proc. No. 131 which
provides:
Agrarian Reform Fund.-There is hereby created a special fund, to be
known as the Agrarian Reform Fund, an initial amount of FIFTY
BILLION PESOS (P50,000,000,000.00) to cover the estimated cost of
the Comprehensive Agrarian Reform Program from 1987 to 1992
which shall be sourced from the receipts of the sale of the assets of
the Asset Privatization Trust and Receipts of sale of ill-gotten wealth
received through the Presidential Commission on Good Government
and such other sources as government may deem appropriate. The
amounts collected and accruing to this special fund shall be
considered automatically appropriated for the purpose authorized
in this Proclamation the amount appropriated is in futuro, not in
esse. The money needed to cover the cost of the contemplated

expropriation has yet to be raised and cannot be appropriated at

this time.
Furthermore, they contend that taking must be simultaneous with
payment of just compensation as it is traditionally understood, i.e.,
with money and in full, but no such payment is contemplated in
Section 5 of the E.O. No. 229. On the contrary, Section 6, thereof
provides that the Land Bank of the Philippines "shall compensate
the landowner in an amount to be established by the government,
which shall be based on the owner's declaration of current fair
market value as provided in Section 4 hereof, but subject to certain
controls to be defined and promulgated by the Presidential Agrarian
Reform Council." This compensation may not be paid fully in money
but in any of several modes that may consist of part cash and part
bond, with interest, maturing periodically, or direct payment in cash
or bond as may be mutually agreed upon by the beneficiary and
the landowner or as may be prescribed or approved by the PARC.
The petitioners also argue that in the issuance of the two
measures, no effort was made to make a careful study of the sugar
planters' situation. There is no tenancy problem in the sugar areas
that can justify the application of the CARP to them. To the extent
that the sugar planters have been lumped in the same legislation
with other farmers, although they are a separate group with
problems exclusively their own, their right to equal protection has
been violated.
A motion for intervention was filed on August 27,1987 by the
National Federation of Sugarcane Planters (NASP) which claims a
membership of at least 20,000 individual sugar planters all over the
country. On September 10, 1987, another motion for intervention
was filed, this time by Manuel Barcelona, et al., representing
coconut and riceland owners. Both motions were granted by the
Court.
NASP alleges that President Aquino had no authority to fund the
Agrarian Reform Program and that, in any event, the appropriation
is invalid because of uncertainty in the amount appropriated.
Section 2 of Proc. No. 131 and Sections 20 and 21 of E.O. No. 229
provide for an initial appropriation of fifty billion pesos and thus
specifies the minimum rather than the maximum authorized

amount. This is not allowed. Furthermore, the stated initial amount

has not been certified to by the National Treasurer as actually
available.
Two additional arguments are made by Barcelona, to wit, the failure
to establish by clear and convincing evidence the necessity for the
exercise of the powers of eminent domain, and the violation of the
fundamental right to own property.
The petitioners also decry the penalty for non-registration of the
lands, which is the expropriation of the said land for an amount
equal to the government assessor's valuation of the land for tax
purposes. On the other hand, if the landowner declares his own
valuation he is unjustly required to immediately pay the
corresponding taxes on the land, in violation of the uniformity rule.
In his consolidated Comment, the Solicitor General first invokes the
presumption of constitutionality in favor of Proc. No. 131 and E.O.
No. 229. He also justifies the necessity for the expropriation as
explained in the "whereas" clauses of the Proclamation and submits
that, contrary to the petitioner's contention, a pilot project to
determine the feasibility of CARP and a general survey on the
people's opinion thereon are not indispensable prerequisites to its
promulgation.
On the alleged violation of the equal protection clause, the sugar
planters have failed to show that they belong to a different class
and should be differently treated. The Comment also suggests the
possibility of Congress first distributing public agricultural lands and
scheduling the expropriation of private agricultural lands later. From
this viewpoint, the petition for prohibition would be premature.
The public respondent also points out that the constitutional
prohibition is against the payment of public money without the
corresponding appropriation. There is no rule that only money
already in existence can be the subject of an appropriation law.
Finally, the earmarking of fifty billion pesos as Agrarian Reform
Fund, although denominated as an initial amount, is actually the
maximum sum appropriated. The word "initial" simply means that
additional amounts may be appropriated later when necessary.

On April 11, 1988, Prudencio Serrano, a coconut planter, filed a

petition on his own behalf, assailing the constitutionality of E.O. No.
229. In addition to the arguments already raised, Serrano contends
that the measure is unconstitutional because:
(1) Only public lands should be included in the CARP;
(2) E.O. No. 229 embraces more than one subject which is not
expressed in the title;
(3) The power of the President to legislate was terminated on July 2,
1987; and
(4) The appropriation of a P50 billion special fund from the National
Treasury did not originate from the House of Representatives.
G.R. No. 79744
The petitioner alleges that the then Secretary of Department of
Agrarian Reform, in violation of due process and the requirement
for just compensation, placed his landholding under the coverage
of Operation Land Transfer. Certificates of Land Transfer were
subsequently issued to the private respondents, who then refused
payment of lease rentals to him.
On September 3, 1986, the petitioner protested the erroneous
inclusion of his small landholding under Operation Land transfer
and asked for the recall and cancellation of the Certificates of Land
Transfer in the name of the private respondents. He claims that on
December 24, 1986, his petition was denied without hearing. On
February 17, 1987, he filed a motion for reconsideration, which had
not been acted upon when E.O. Nos. 228 and 229 were issued.
These orders rendered his motion moot and academic because
they directly effected the transfer of his land to the private
respondents.
The petitioner now argues that:
(1) E.O. Nos. 228 and 229 were invalidly issued by the President of
the Philippines.

(2) The said executive orders are violative of the constitutional

provision that no private property shall be taken without due
process or just compensation.

agricultural land was deemed the owner of the land he was tilling.
The leasehold rentals paid after that date should therefore be
considered amortization payments.

(3) The petitioner is denied the right of maximum retention

provided for under the 1987 Constitution.

In his Reply to the public respondents, the petitioner maintains that

the motion he filed was resolved on December 14, 1987. An appeal
to the Office of the President would be useless with the
promulgation of E.O. Nos. 228 and 229, which in effect sanctioned
the validity of the public respondent's acts.

The petitioner contends that the issuance of E.0. Nos. 228 and 229
shortly before Congress convened is anomalous and arbitrary,
besides violating the doctrine of separation of powers. The
legislative power granted to the President under the Transitory
Provisions refers only to emergency measures that may be
promulgated in the proper exercise of the police power.
The petitioner also invokes his rights not to be deprived of his
property without due process of law and to the retention of his
small parcels of riceholding as guaranteed under Article XIII,
Section 4 of the Constitution. He likewise argues that, besides
denying him just compensation for his land, the provisions of E.O.
No. 228 declaring that:
Lease rentals paid to the landowner by the farmer-beneficiary after
October 21, 1972 shall be considered as advance payment for the
land.
is an unconstitutional taking of a vested property right. It is also his
contention that the inclusion of even small landowners in the
program along with other landowners with lands consisting of
seven hectares or more is undemocratic.
In his Comment, the Solicitor General submits that the petition is
premature because the motion for reconsideration filed with the
Minister of Agrarian Reform is still unresolved. As for the validity of
the issuance of E.O. Nos. 228 and 229, he argues that they were
enacted pursuant to Section 6, Article XVIII of the Transitory
Provisions of the 1987 Constitution which reads:
The incumbent president shall continue to exercise legislative
powers until the first Congress is convened.
On the issue of just compensation, his position is that when P.D. No.
27 was promulgated on October 21. 1972, the tenant-farmer of

G.R. No. 78742

The petitioners in this case invoke the right of retention granted by
P.D. No. 27 to owners of rice and corn lands not exceeding seven
hectares as long as they are cultivating or intend to cultivate the
same. Their respective lands do not exceed the statutory limit but
are occupied by tenants who are actually cultivating such lands.
According to P.D. No. 316,
implementation of P.D. No. 27:

which

was

promulgated

in

No tenant-farmer in agricultural lands primarily devoted to rice and

corn shall be ejected or removed from his farmholding until such
time as the respective rights of the tenant- farmers and the
landowner shall have been determined in accordance with the rules
and regulations implementing P.D. No. 27.
The petitioners claim they cannot eject their tenants and so are
unable to enjoy their right of retention because the Department of
Agrarian Reform has so far not issued the implementing rules
required under the above-quoted decree. They therefore ask the
Court for a writ of mandamus to compel the respondent to issue
the said rules.
In his Comment, the public respondent argues that P.D. No. 27 has
been amended by LOI 474 removing any right of retention from
persons who own other agricultural lands of more than 7 hectares
in aggregate area or lands used for residential, commercial,
industrial or other purposes from which they derive adequate
income for their family. And even assuming that the petitioners do
not fall under its terms, the regulations implementing P.D. No. 27
have already been issued, to wit, the Memorandum dated July 10,

1975 (Interim Guidelines on Retention by Small Landowners, with

an accompanying Retention Guide Table), Memorandum Circular
No. 11 dated April 21, 1978, (Implementation Guidelines of LOI No.
474), Memorandum Circular No. 18-81 dated December 29,1981
(Clarificatory Guidelines on Coverage of P.D. No. 27 and Retention
by Small Landowners), and DAR Administrative Order No. 1, series
of 1985 (Providing for a Cut-off Date for Landowners to Apply for
Retention and/or to Protest the Coverage of their Landholdings
under Operation Land Transfer pursuant to P.D. No. 27). For failure
to file the corresponding applications for retention under these
measures, the petitioners are now barred from invoking this right.
The public respondent also stresses that the petitioners have
prematurely initiated this case notwithstanding the pendency of
their appeal to the President of the Philippines. Moreover, the
issuance of the implementing rules, assuming this has not yet been
done, involves the exercise of discretion which cannot be controlled
through the writ of mandamus. This is especially true if this
function is entrusted, as in this case, to a separate department of
the government.
In their Reply, the petitioners insist that the above-cited measures
are not applicable to them because they do not own more than
seven hectares of agricultural land. Moreover, assuming arguendo
that the rules were intended to cover them also, the said measures
are nevertheless not in force because they have not been published
as required by law and the ruling of this Court in Tanada v.
Tuvera. 10 As for LOI 474, the same is ineffective for the additional
reason that a mere letter of instruction could not have repealed the
presidential decree.
I
Although holding neither purse nor sword and so regarded as the
weakest of the three departments of the government, the judiciary
is nonetheless vested with the power to annul the acts of either the
legislative or the executive or of both when not conformable to the
fundamental law. This is the reason for what some quarters call the
doctrine of judicial supremacy. Even so, this power is not lightly
assumed or readily exercised. The doctrine of separation of powers
imposes upon the courts a proper restraint, born of the nature of

their functions and of their respect for the other departments, in

striking down the acts of the legislative and the executive as
unconstitutional. The policy, indeed, is a blend of courtesy and
caution. To doubt is to sustain. The theory is that before the act was
done or the law was enacted, earnest studies were made by
Congress or the President, or both, to insure that the Constitution
would not be breached.
In addition, the Constitution itself lays down stringent conditions for
a declaration of unconstitutionality, requiring therefor the
concurrence of a majority of the members of the Supreme Court
who took part in the deliberations and voted on the issue during
their session en banc. 11 And as established by judge made
doctrine, the Court will assume jurisdiction over a constitutional
question only if it is shown that the essential requisites of a judicial
inquiry into such a question are first satisfied. Thus, there must be
an actual case or controversy involving a conflict of legal rights
susceptible of judicial determination, the constitutional question
must have been opportunely raised by the proper party, and the
resolution of the question is unavoidably necessary to the decision
of the case itself. 12
With particular regard to the requirement of proper party as applied
in the cases before us, we hold that the same is satisfied by the
petitioners and intervenors because each of them has sustained or
is in danger of sustaining an immediate injury as a result of the acts
or measures complained of. 13 And even if, strictly speaking, they
are not covered by the definition, it is still within the wide discretion
of the Court to waive the requirement and so remove the
impediment to its addressing and resolving the serious
constitutional questions raised.
In the first Emergency Powers Cases, 14 ordinary citizens and
taxpayers were allowed to question the constitutionality of several
executive orders issued by President Quirino although they were
invoking only an indirect and general interest shared in common
with the public. The Court dismissed the objection that they were
not proper parties and ruled that "the transcendental importance to
the public of these cases demands that they be settled promptly
and definitely, brushing aside, if we must, technicalities of

procedure." We have since then applied this exception in many

other cases. 15
The other above-mentioned requisites have also been met in the
present petitions.
In must be stressed that despite the inhibitions pressing upon the
Court when confronted with constitutional issues like the ones now
before it, it will not hesitate to declare a law or act invalid when it is
convinced that this must be done. In arriving at this conclusion, its
only criterion will be the Constitution as God and its conscience
give it the light to probe its meaning and discover its purpose.
Personal motives and political considerations are irrelevancies that
cannot influence its decision. Blandishment is as ineffectual as
intimidation.
For all the awesome power of the Congress and the Executive, the
Court will not hesitate to "make the hammer fall, and heavily," to
use Justice Laurel's pithy language, where the acts of these
departments, or of any public official, betray the people's will as
expressed in the Constitution.
It need only be added, to borrow again the words of Justice Laurel,
that
... when the judiciary mediates to allocate constitutional
boundaries, it does not assert any superiority over the other
departments; it does not in reality nullify or invalidate an act of the
Legislature, but only asserts the solemn and sacred obligation
assigned to it by the Constitution to determine conflicting claims of
authority under the Constitution and to establish for the parties in
an actual controversy the rights which that instrument secures and
guarantees to them. This is in truth all that is involved in what is
termed "judicial supremacy" which properly is the power of judicial
review under the Constitution. 16
The cases before us categorically raise constitutional questions that
this Court must categorically resolve. And so we shall.
II

We proceed first to the examination of the preliminary issues before

resolving the more serious challenges to the constitutionality of the
several measures involved in these petitions.
The promulgation of P.D. No. 27 by President Marcos in the exercise
of his powers under martial law has already been sustained
in Gonzales v. Estrella and we find no reason to modify or reverse it
on that issue. As for the power of President Aquino to promulgate
Proc. No. 131 and E.O. Nos. 228 and 229, the same was authorized
under Section 6 of the Transitory Provisions of the 1987
Constitution, quoted above.
The said measures were issued by President Aquino before July 27,
1987, when the Congress of the Philippines was formally convened
and took over legislative power from her. They are not "midnight"
enactments intended to pre-empt the legislature because E.O. No.
228 was issued on July 17, 1987, and the other measures, i.e., Proc.
No. 131 and E.O. No. 229, were both issued on July 22, 1987.
Neither is it correct to say that these measures ceased to be valid
when she lost her legislative power for, like any statute, they
continue to be in force unless modified or repealed by subsequent
law or declared invalid by the courts. A statute does not ipso
facto become inoperative simply because of the dissolution of the
legislature that enacted it. By the same token, President Aquino's
loss of legislative power did not have the effect of invalidating all
the measures enacted by her when and as long as she possessed
it.
Significantly, the Congress she is alleged to have undercut has not
rejected but in fact substantially affirmed the challenged measures
and has specifically provided that they shall be suppletory to R.A.
No. 6657 whenever not inconsistent with its provisions. 17 Indeed,
some portions of the said measures, like the creation of the P50
billion fund in Section 2 of Proc. No. 131, and Sections 20 and 21 of
E.O. No. 229, have been incorporated by reference in the CARP
Law. 18
That fund, as earlier noted, is itself being questioned on the ground
that it does not conform to the requirements of a valid
appropriation as specified in the Constitution. Clearly, however,
Proc. No. 131 is not an appropriation measure even if it does

provide for the creation of said fund, for that is not its principal
purpose. An appropriation law is one the primary and specific
purpose of which is to authorize the release of public funds from
the treasury.19 The creation of the fund is only incidental to the
main objective of the proclamation, which is agrarian reform.
It should follow that the specific constitutional provisions invoked,
to wit, Section 24 and Section 25(4) of Article VI, are not applicable.
With particular reference to Section 24, this obviously could not
have been complied with for the simple reason that the House of
Representatives, which now has the exclusive power to initiate
appropriation measures, had not yet been convened when the
proclamation was issued. The legislative power was then solely
vested in the President of the Philippines, who embodied, as it
were, both houses of Congress.
The argument of some of the petitioners that Proc. No. 131 and E.O.
No. 229 should be invalidated because they do not provide for
retention limits as required by Article XIII, Section 4 of the
Constitution is no longer tenable. R.A. No. 6657 does provide for
such limits now in Section 6 of the law, which in fact is one of its
most controversial provisions. This section declares:
Retention Limits. Except as otherwise provided in this Act, no
person may own or retain, directly or indirectly, any public or
private agricultural land, the size of which shall vary according to
factors governing a viable family-sized farm, such as commodity
produced, terrain, infrastructure, and soil fertility as determined by
the Presidential Agrarian Reform Council (PARC) created hereunder,
but in no case shall retention by the landowner exceed five (5)
hectares. Three (3) hectares may be awarded to each child of the
landowner, subject to the following qualifications: (1) that he is at
least fifteen (15) years of age; and (2) that he is actually tilling the
land or directly managing the farm; Provided, That landowners
whose lands have been covered by Presidential Decree No. 27 shall
be allowed to keep the area originally retained by them thereunder,
further, That original homestead grantees or direct compulsory
heirs who still own the original homestead at the time of the
approval of this Act shall retain the same areas as long as they
continue to cultivate said homestead.

The argument that E.O. No. 229 violates the constitutional

requirement that a bill shall have only one subject, to be expressed
in its title, deserves only short attention. It is settled that the title of
the bill does not have to be a catalogue of its contents and will
suffice if the matters embodied in the text are relevant to each
other and may be inferred from the title. 20
The Court wryly observes that during the past dictatorship, every
presidential issuance, by whatever name it was called, had the
force and effect of law because it came from President Marcos.
Such are the ways of despots. Hence, it is futile to argue, as the
petitioners do in G.R. No. 79744, that LOI 474 could not have
repealed P.D. No. 27 because the former was only a letter of
instruction. The important thing is that it was issued by President
Marcos, whose word was law during that time.
But for all their peremptoriness, these issuances from the President
Marcos still had to comply with the requirement for publication as
this Court held in Tanada v. Tuvera. 21 Hence, unless published in
the Official Gazette in accordance with Article 2 of the Civil Code,
they could not have any force and effect if they were among those
enactments successfully challenged in that case. LOI 474 was
published, though, in the Official Gazette dated November
29,1976.)
Finally, there is the contention of the public respondent in G.R. No.
78742 that the writ of mandamus cannot issue to compel the
performance of a discretionary act, especially by a specific
department of the government. That is true as a general
proposition but is subject to one important qualification. Correctly
and categorically stated, the rule is that mandamus will lie to
compel the discharge of the discretionary duty itself but not to
control the discretion to be exercised. In other words, mandamus
can issue to require action only but not specific action.
Whenever a duty is imposed upon a public official and an
unnecessary and unreasonable delay in the exercise of such duty
occurs, if it is a clear duty imposed by law, the courts will intervene
by the extraordinary legal remedy of mandamus to compel action.
If the duty is purely ministerial, the courts will require specific
action. If the duty is purely discretionary, the courts

by mandamus will require action only. For example, if an inferior

court, public official, or board should, for an unreasonable length of
time, fail to decide a particular question to the great detriment of
all parties concerned, or a court should refuse to take jurisdiction of
a cause when the law clearly gave it jurisdiction mandamus will
issue, in the first case to require a decision, and in the second to
require that jurisdiction be taken of the cause. 22
And while it is true that as a rule the writ will not be proper as long
as there is still a plain, speedy and adequate remedy available from
the administrative authorities, resort to the courts may still be
permitted if the issue raised is a question of law. 23
III
There are traditional distinctions between the police power and the
power of eminent domain that logically preclude the application of
both powers at the same time on the same subject. In the case
of City of Baguio v. NAWASA, 24 for example, where a law required
the transfer of all municipal waterworks systems to the NAWASA in
exchange for its assets of equivalent value, the Court held that the
power being exercised was eminent domain because the property
involved was wholesome and intended for a public use. Property
condemned under the police power is noxious or intended for a
noxious purpose, such as a building on the verge of collapse, which
should be demolished for the public safety, or obscene materials,
which should be destroyed in the interest of public morals. The
confiscation of such property is not compensable, unlike the taking
of property under the power of expropriation, which requires the
payment of just compensation to the owner.
In the case of Pennsylvania Coal Co. v. Mahon, 25 Justice Holmes
laid down the limits of the police power in a famous aphorism: "The
general rule at least is that while property may be regulated to a
certain extent, if regulation goes too far it will be recognized as a
taking." The regulation that went "too far" was a law prohibiting
mining which might cause the subsidence of structures for human
habitation constructed on the land surface. This was resisted by a
coal company which had earlier granted a deed to the land over its
mine but reserved all mining rights thereunder, with the grantee
assuming all risks and waiving any damage claim. The Court held

the law could not be sustained without compensating the grantor.

Justice Brandeis filed a lone dissent in which he argued that there
was a valid exercise of the police power. He said:
Every restriction upon the use of property imposed in the exercise
of the police power deprives the owner of some right theretofore
enjoyed, and is, in that sense, an abridgment by the State of rights
in property without making compensation. But restriction imposed
to protect the public health, safety or morals from dangers
threatened is not a taking. The restriction here in question is merely
the prohibition of a noxious use. The property so restricted remains
in the possession of its owner. The state does not appropriate it or
make any use of it. The state merely prevents the owner from
making a use which interferes with paramount rights of the public.
Whenever the use prohibited ceases to be noxious as it may
because of further changes in local or social conditions the
restriction will have to be removed and the owner will again be free
to enjoy his property as heretofore.
Recent trends, however, would indicate not a polarization but a
mingling of the police power and the power of eminent domain,
with the latter being used as an implement of the former like the
power of taxation. The employment of the taxing power to achieve
a police purpose has long been accepted. 26 As for the power of
expropriation, Prof. John J. Costonis of the University of Illinois
College of Law (referring to the earlier case of Euclid v. Ambler
Realty Co., 272 US 365, which sustained a zoning law under the
police power) makes the following significant remarks:
Euclid, moreover, was decided in an era when judges located the
Police and eminent domain powers on different planets. Generally
speaking, they viewed eminent domain as encompassing public
acquisition of private property for improvements that would be
available for public use," literally construed. To the police power, on
the other hand, they assigned the less intrusive task of preventing
harmful externalities a point reflected in the Euclid opinion's
reliance on an analogy to nuisance law to bolster its support of
zoning. So long as suppression of a privately authored harm bore a
plausible relation to some legitimate "public purpose," the pertinent
measure need have afforded no compensation whatever. With the
progressive growth of government's involvement in land use, the

distance between the two powers has contracted considerably.

Today government often employs eminent domain interchangeably
with or as a useful complement to the police power-- a trend
expressly approved in the Supreme Court's 1954 decision in
Berman v. Parker, which broadened the reach of eminent domain's
"public use" test to match that of the police power's standard of
"public purpose." 27

which would have been exhausted by the 59-story building that the
city refused to countenance atop the Terminal. Prevailing bulk
restrictions on neighboring sites were proportionately relaxed,
theoretically enabling Penn Central to recoup its losses at the
Terminal site by constructing or selling to others the right to
construct larger, hence more profitable buildings on the transferee
sites. 30

The Berman case sustained a redevelopment project and the

improvement of blighted areas in the District of Columbia as a
proper exercise of the police power. On the role of eminent domain
in the attainment of this purpose, Justice Douglas declared:

The cases before us present no knotty complication insofar as the

question of compensable taking is concerned. To the extent that
the measures under challenge merely prescribe retention limits for
landowners, there is an exercise of the police power for the
regulation of private property in accordance with the Constitution.
But where, to carry out such regulation, it becomes necessary to
deprive such owners of whatever lands they may own in excess of
the maximum area allowed, there is definitely a taking under the
power of eminent domain for which payment of just compensation
is imperative. The taking contemplated is not a mere limitation of
the use of the land. What is required is the surrender of the title to
and the physical possession of the said excess and all beneficial
rights accruing to the owner in favor of the farmer-beneficiary. This
is definitely an exercise not of the police power but of the power of
eminent domain.

If those who govern the District of Columbia decide that the

Nation's Capital should be beautiful as well as sanitary, there is
nothing in the Fifth Amendment that stands in the way.
Once the object is within the authority of Congress, the right to
realize it through the exercise of eminent domain is clear.
For the power of eminent domain is merely the means to the end.

28

In Penn Central Transportation Co. v. New York City, 29 decided by a

6-3 vote in 1978, the U.S Supreme Court sustained the
respondent's Landmarks Preservation Law under which the owners
of the Grand Central Terminal had not been allowed to construct a
multi-story office building over the Terminal, which had been
designated a historic landmark. Preservation of the landmark was
held to be a valid objective of the police power. The problem,
however, was that the owners of the Terminal would be deprived of
the right to use the airspace above it although other landowners in
the area could do so over their respective properties. While
insisting that there was here no taking, the Court nonetheless
recognized certain compensatory rights accruing to Grand Central
Terminal which it said would "undoubtedly mitigate" the loss
caused by the regulation. This "fair compensation," as he called it,
was explained by Prof. Costonis in this wise:
In return for retaining the Terminal site in its pristine landmark
status, Penn Central was authorized to transfer to neighboring
properties the authorized but unused rights accruing to the site
prior to the Terminal's designation as a landmark the rights

Whether as an exercise of the police power or of the power of

eminent domain, the several measures before us are challenged as
violative of the due process and equal protection clauses.
The challenge to Proc. No. 131 and E.O. Nos. 228 and 299 on the
ground that no retention limits are prescribed has already been
discussed and dismissed. It is noted that although they excited
many bitter exchanges during the deliberation of the CARP Law in
Congress, the retention limits finally agreed upon are, curiously
enough, not being questioned in these petitions. We therefore do
not discuss them here. The Court will come to the other claimed
violations of due process in connection with our examination of the
adequacy of just compensation as required under the power of
expropriation.
The argument of the small farmers that they have been denied
equal protection because of the absence of retention limits has also

become academic under Section 6 of R.A. No. 6657. Significantly,

they too have not questioned the area of such limits. There is also
the complaint that they should not be made to share the burden of
agrarian reform, an objection also made by the sugar planters on
the ground that they belong to a particular class with particular
interests of their own. However, no evidence has been submitted to
the Court that the requisites of a valid classification have been
violated.
Classification has been defined as the grouping of persons or things
similar to each other in certain particulars and different from each
other in these same particulars. 31 To be valid, it must conform to
the following requirements: (1) it must be based on substantial
distinctions; (2) it must be germane to the purposes of the law; (3)
it must not be limited to existing conditions only; and (4) it must
apply equally to all the members of the class. 32The Court finds that
all these requisites have been met by the measures here
challenged as arbitrary and discriminatory.
Equal protection simply means that all persons or things similarly
situated must be treated alike both as to the rights conferred and
the liabilities imposed. 33 The petitioners have not shown that they
belong to a different class and entitled to a different treatment. The
argument that not only landowners but also owners of other
properties must be made to share the burden of implementing land
reform must be rejected. There is a substantial distinction between
these two classes of owners that is clearly visible except to those
who will not see. There is no need to elaborate on this matter. In
any event, the Congress is allowed a wide leeway in providing for a
valid classification. Its decision is accorded recognition and respect
by the courts of justice except only where its discretion is abused to
the detriment of the Bill of Rights.
It is worth remarking at this juncture that a statute may be
sustained under the police power only if there is a concurrence of
the lawful subject and the lawful method. Put otherwise, the
interests of the public generally as distinguished from those of a
particular class require the interference of the State and, no less
important, the means employed are reasonably necessary for the
attainment of the purpose sought to be achieved and not unduly
oppressive upon individuals. 34 As the subject and purpose of

agrarian reform have been laid down by the Constitution itself, we

may say that the first requirement has been satisfied. What
remains to be examined is the validity of the method employed to
achieve the constitutional goal.
One of the basic principles of the democratic system is that where
the rights of the individual are concerned, the end does not justify
the means. It is not enough that there be a valid objective; it is also
necessary that the means employed to pursue it be in keeping with
the Constitution. Mere expediency will not excuse constitutional
shortcuts. There is no question that not even the strongest moral
conviction or the most urgent public need, subject only to a few
notable exceptions, will excuse the bypassing of an individual's
rights. It is no exaggeration to say that a, person invoking a right
guaranteed under Article III of the Constitution is a majority of one
even as against the rest of the nation who would deny him that
right.
That right covers the person's life, his liberty and his property
under Section 1 of Article III of the Constitution. With regard to his
property, the owner enjoys the added protection of Section 9, which
reaffirms the familiar rule that private property shall not be taken
for public use without just compensation.
This brings us now to the power of eminent domain.
IV
Eminent domain is an inherent power of the State that enables it to
forcibly acquire private lands intended for public use upon payment
of just compensation to the owner. Obviously, there is no need to
expropriate where the owner is willing to sell under terms also
acceptable to the purchaser, in which case an ordinary deed of sale
may be agreed upon by the parties. 35 It is only where the owner is
unwilling to sell, or cannot accept the price or other conditions
offered by the vendee, that the power of eminent domain will come
into play to assert the paramount authority of the State over the
interests of the property owner. Private rights must then yield to
the irresistible demands of the public interest on the time-honored
justification, as in the case of the police power, that the welfare of
the people is the supreme law.

But for all its primacy and urgency, the power of expropriation is by
no means absolute (as indeed no power is absolute). The limitation
is found in the constitutional injunction that "private property shall
not be taken for public use without just compensation" and in the
abundant jurisprudence that has evolved from the interpretation of
this principle. Basically, the requirements for a proper exercise of
the power are: (1) public use and (2) just compensation.
Let us dispose first of the argument raised by the petitioners in G.R.
No. 79310 that the State should first distribute public agricultural
lands in the pursuit of agrarian reform instead of immediately
disturbing property rights by forcibly acquiring private agricultural
lands. Parenthetically, it is not correct to say that only public
agricultural lands may be covered by the CARP as the Constitution
calls for "the just distribution of all agricultural lands." In any event,
the decision to redistribute private agricultural lands in the manner
prescribed by the CARP was made by the legislative and executive
departments in the exercise of their discretion. We are not justified
in reviewing that discretion in the absence of a clear showing that it
has been abused.
A becoming courtesy admonishes us to respect the decisions of the
political departments when they decide what is known as the
political question. As explained by Chief Justice Concepcion in the
case of Taada v. Cuenco: 36
The term "political question" connotes what it means in ordinary
parlance, namely, a question of policy. It refers to "those questions
which, under the Constitution, are to be decided by the people in
their sovereign capacity; or in regard to which full discretionary
authority has been delegated to the legislative or executive branch
of the government." It is concerned with issues dependent upon the
wisdom, not legality, of a particular measure.
It is true that the concept of the political question has been
constricted with the enlargement of judicial power, which now
includes the authority of the courts "to determine whether or not
there has been a grave abuse of discretion amounting to lack or
excess of jurisdiction on the part of any branch or instrumentality of
the Government." 37 Even so, this should not be construed as a

license for us to reverse the other departments simply because

their views may not coincide with ours.
The legislature and the executive have been seen fit, in their
wisdom, to include in the CARP the redistribution of private
landholdings (even as the distribution of public agricultural lands is
first provided for, while also continuing apace under the Public Land
Act and other cognate laws). The Court sees no justification to
interpose its authority, which we may assert only if we believe that
the political decision is not unwise, but illegal. We do not find it to
be so.
In U.S. v. Chandler-Dunbar Water Power Company, 38 it was held:
Congress having determined, as it did by the Act of March 3,1909
that the entire St. Mary's river between the American bank and the
international line, as well as all of the upland north of the present
ship canal, throughout its entire length, was "necessary for the
purpose of navigation of said waters, and the waters connected
therewith," that determination is conclusive in condemnation
proceedings instituted by the United States under that Act, and
there is no room for judicial review of the judgment of Congress ... .
As earlier observed, the requirement for public use has already
been settled for us by the Constitution itself No less than the 1987
Charter calls for agrarian reform, which is the reason why private
agricultural lands are to be taken from their owners, subject to the
prescribed maximum retention limits. The purposes specified in P.D.
No. 27, Proc. No. 131 and R.A. No. 6657 are only an elaboration of
the constitutional injunction that the State adopt the necessary
measures "to encourage and undertake the just distribution of all
agricultural lands to enable farmers who are landless to own
directly or collectively the lands they till." That public use, as
pronounced by the fundamental law itself, must be binding on us.
The second requirement, i.e., the payment of just compensation,
needs a longer and more thoughtful examination.
Just compensation is defined as the full and fair equivalent of the
property taken from its owner by the expropriator. 39 It has been
repeatedly stressed by this Court that the measure is not the
taker's gain but the owner's loss. 40 The word "just" is used to

intensify the meaning of the word "compensation" to convey the

idea that the equivalent to be rendered for the property to be taken
shall be real, substantial, full, ample. 41
It bears repeating that the measures challenged in these petitions
contemplate more than a mere regulation of the use of private
lands under the police power. We deal here with an actual taking of
private agricultural lands that has dispossessed the owners of their
property and deprived them of all its beneficial use and enjoyment,
to entitle them to the just compensation mandated by the
Constitution.
As held in Republic of the Philippines v. Castellvi, 42 there is
compensable taking when the following conditions concur: (1) the
expropriator must enter a private property; (2) the entry must be
for more than a momentary period; (3) the entry must be under
warrant or color of legal authority; (4) the property must be
devoted to public use or otherwise informally appropriated or
injuriously affected; and (5) the utilization of the property for public
use must be in such a way as to oust the owner and deprive him of
beneficial enjoyment of the property. All these requisites are
envisioned in the measures before us.
Where the State itself is the expropriator, it is not necessary for it
to make a deposit upon its taking possession of the condemned
property, as "the compensation is a public charge, the good faith of
the public is pledged for its payment, and all the resources of
taxation may be employed in raising the amount." 43 Nevertheless,
Section 16(e) of the CARP Law provides that:
Upon receipt by the landowner of the corresponding payment or, in
case of rejection or no response from the landowner, upon the
deposit with an accessible bank designated by the DAR of the
compensation in cash or in LBP bonds in accordance with this Act,
the DAR shall take immediate possession of the land and shall
request the proper Register of Deeds to issue a Transfer Certificate
of Title (TCT) in the name of the Republic of the Philippines. The
DAR shall thereafter proceed with the redistribution of the land to
the qualified beneficiaries.

Objection is raised, however, to the manner of fixing the just

compensation, which it is claimed is entrusted to the administrative
authorities in violation of judicial prerogatives. Specific reference is
made to Section 16(d), which provides that in case of the rejection
or disregard by the owner of the offer of the government to buy his
land... the DAR shall conduct summary administrative proceedings to
determine the compensation for the land by requiring the
landowner, the LBP and other interested parties to submit evidence
as to the just compensation for the land, within fifteen (15) days
from the receipt of the notice. After the expiration of the above
period, the matter is deemed submitted for decision. The DAR shall
decide the case within thirty (30) days after it is submitted for
decision.
To be sure, the determination of just compensation is a function
addressed to the courts of justice and may not be usurped by any
other
branch
or
official
of
the
government. EPZA
v.
44
Dulay resolved a challenge to several decrees promulgated by
President Marcos providing that the just compensation for property
under expropriation should be either the assessment of the
property by the government or the sworn valuation thereof by the
owner, whichever was lower. In declaring these decrees
unconstitutional, the Court held through Mr. Justice Hugo E.
Gutierrez, Jr.:
The method of ascertaining just compensation under the aforecited
decrees constitutes impermissible encroachment on judicial
prerogatives. It tends to render this Court inutile in a matter which
under this Constitution is reserved to it for final determination.
Thus, although in an expropriation proceeding the court technically
would still have the power to determine the just compensation for
the property, following the applicable decrees, its task would be
relegated to simply stating the lower value of the property as
declared either by the owner or the assessor. As a necessary
consequence, it would be useless for the court to appoint
commissioners under Rule 67 of the Rules of Court. Moreover, the
need to satisfy the due process clause in the taking of private
property is seemingly fulfilled since it cannot be said that a judicial

proceeding was not had before the actual taking. However, the
strict application of the decrees during the proceedings would be
nothing short of a mere formality or charade as the court has only
to choose between the valuation of the owner and that of the
assessor, and its choice is always limited to the lower of the two.
The court cannot exercise its discretion or independence in
determining what is just or fair. Even a grade school pupil could
substitute for the judge insofar as the determination of
constitutional just compensation is concerned.
xxx
In the present petition, we are once again confronted with the same
question of whether the courts under P.D. No. 1533, which contains
the same provision on just compensation as its predecessor
decrees, still have the power and authority to determine just
compensation, independent of what is stated by the decree and to
this effect, to appoint commissioners for such purpose.
This time, we answer in the affirmative.
xxx
It is violative of due process to deny the owner the opportunity to
prove that the valuation in the tax documents is unfair or wrong.
And it is repulsive to the basic concepts of justice and fairness to
allow the haphazard work of a minor bureaucrat or clerk to
absolutely prevail over the judgment of a court promulgated only
after expert commissioners have actually viewed the property,
after evidence and arguments pro and con have been presented,
and after all factors and considerations essential to a fair and just
determination have been judiciously evaluated.
A reading of the aforecited Section 16(d) will readily show that it
does not suffer from the arbitrariness that rendered the challenged
decrees constitutionally objectionable. Although the proceedings
are described as summary, the landowner and other interested
parties are nevertheless allowed an opportunity to submit evidence
on the real value of the property. But more importantly, the
determination of the just compensation by the DAR is not by any
means final and conclusive upon the landowner or any other
interested party, for Section 16(f) clearly provides:

Any party who disagrees with the decision may bring the matter to
the court of proper jurisdiction for final determination of just
compensation.
The determination made by the DAR is only preliminary unless
accepted by all parties concerned. Otherwise, the courts of justice
will still have the right to review with finality the said determination
in the exercise of what is admittedly a judicial function.
The second and more serious objection to the provisions on just
compensation is not as easily resolved.
This refers to Section 18 of the CARP Law providing in full as
follows:
SEC. 18. Valuation and Mode of Compensation. The LBP shall
compensate the landowner in such amount as may be agreed upon
by the landowner and the DAR and the LBP, in accordance with the
criteria provided for in Sections 16 and 17, and other pertinent
provisions hereof, or as may be finally determined by the court, as
the just compensation for the land.
The compensation shall be paid in one of the following modes, at
the option of the landowner:
(1) Cash payment, under the following terms and conditions:
(a) For lands above fifty (50) hectares, insofar as the excess
hectarage is concerned Twenty-five percent (25%) cash, the
balance to be paid in government financial instruments negotiable
at any time.
(b) For lands above twenty-four (24) hectares and up to fifty (50)
hectares Thirty percent (30%) cash, the balance to be paid in
government financial instruments negotiable at any time.
(c) For lands twenty-four (24) hectares and below Thirty-five
percent (35%) cash, the balance to be paid in government financial
instruments negotiable at any time.
(2) Shares of stock in government-owned or controlled
corporations, LBP preferred shares, physical assets or other

qualified investments in accordance with guidelines set by the

PARC;
(3) Tax credits which can be used against any tax liability;
(4) LBP bonds, which shall have the following features:
(a) Market interest rates aligned with 91-day treasury bill rates. Ten
percent (10%) of the face value of the bonds shall mature every
year from the date of issuance until the tenth (10th) year: Provided,
That should the landowner choose to forego the cash portion,
whether in full or in part, he shall be paid correspondingly in LBP
bonds;
(b) Transferability and negotiability. Such LBP bonds may be used
by the landowner, his successors-in- interest or his assigns, up to
the amount of their face value, for any of the following:
(i) Acquisition of land or other real properties of the government,
including assets under the Asset Privatization Program and other
assets foreclosed by government financial institutions in the same
province or region where the lands for which the bonds were paid
are situated;
(ii) Acquisition of shares of stock of government-owned or
controlled corporations or shares of stock owned by the
government in private corporations;
(iii) Substitution for surety or bail bonds for the provisional release
of accused persons, or for performance bonds;
(iv) Security for loans with any government financial institution,
provided the proceeds of the loans shall be invested in an economic
enterprise, preferably in a small and medium- scale industry, in the
same province or region as the land for which the bonds are paid;
(v) Payment for various taxes and fees to government: Provided,
That the use of these bonds for these purposes will be limited to a
certain percentage of the outstanding balance of the financial
instruments; Provided, further, That the PARC shall determine the
percentages mentioned above;

(vi) Payment for tuition fees of the immediate family of the original
bondholder in government universities, colleges, trade schools, and
other institutions;
(vii) Payment for fees of the immediate family of the original
bondholder in government hospitals; and
(viii) Such other uses as the PARC may from time to time allow.
The contention of the petitioners in G.R. No. 79777 is that the
above provision is unconstitutional insofar as it requires the owners
of the expropriated properties to accept just compensation therefor
in less than money, which is the only medium of payment allowed.
In support of this contention, they cite jurisprudence holding that:
The fundamental rule in expropriation matters is that the owner of
the property expropriated is entitled to a just compensation, which
should be neither more nor less, whenever it is possible to make
the assessment, than the money equivalent of said property. Just
compensation has always been understood to be the just and
complete equivalent of the loss which the owner of the thing
expropriated
has
to
suffer
by
reason
of
the
expropriation . 45 (Emphasis supplied.)
In J.M. Tuazon Co. v. Land Tenure Administration,

46

this Court held:

It is well-settled that just compensation means the equivalent for

the value of the property at the time of its taking. Anything beyond
that is more, and anything short of that is less, than just
compensation. It means a fair and full equivalent for the loss
sustained, which is the measure of the indemnity, not whatever
gain would accrue to the expropriating entity. The market value of
the land taken is the just compensation to which the owner of
condemned property is entitled, the market value being that sum of
money which a person desirous, but not compelled to buy, and an
owner, willing, but not compelled to sell, would agree on as a price
to be given and received for such property. (Emphasis supplied.)
In the United States, where much of our jurisprudence on the
subject has been derived, the weight of authority is also to the
effect that just compensation for property expropriated is payable
only in money and not otherwise. Thus

The medium of payment of compensation is ready money or cash.

The condemnor cannot compel the owner to accept anything but
money, nor can the owner compel or require the condemnor to pay
him on any other basis than the value of the property in money at
the time and in the manner prescribed by the Constitution and the
statutes. When the power of eminent domain is resorted to, there
must be a standard medium of payment, binding upon both parties,
and the law has fixed that standard as money in cash. 47 (Emphasis
supplied.)
Part cash and deferred payments are not and cannot, in the nature
of things, be regarded as a reliable and constant standard of
compensation. 48
"Just compensation" for property taken by condemnation means a
fair equivalent in money, which must be paid at least within a
reasonable time after the taking, and it is not within the power of
the Legislature to substitute for such payment future obligations,
bonds, or other valuable advantage. 49 (Emphasis supplied.)
It cannot be denied from these cases that the traditional medium
for the payment of just compensation is money and no other. And
so, conformably, has just compensation been paid in the past solely
in that medium. However, we do not deal here with the traditional
excercise of the power of eminent domain. This is not an ordinary
expropriation where only a specific property of relatively limited
area is sought to be taken by the State from its owner for a specific
and perhaps local purpose.
What we deal with here is a revolutionary kind of expropriation.
The expropriation before us affects all private agricultural lands
whenever found and of whatever kind as long as they are in excess
of the maximum retention limits allowed their owners. This kind of
expropriation is intended for the benefit not only of a particular
community or of a small segment of the population but of the
entire Filipino nation, from all levels of our society, from the
impoverished farmer to the land-glutted owner. Its purpose does
not cover only the whole territory of this country but goes beyond
in time to the foreseeable future, which it hopes to secure and edify
with the vision and the sacrifice of the present generation of

Filipinos. Generations yet to come are as involved in this program

as we are today, although hopefully only as beneficiaries of a richer
and more fulfilling life we will guarantee to them tomorrow through
our thoughtfulness today. And, finally, let it not be forgotten that it
is no less than the Constitution itself that has ordained this
revolution in the farms, calling for "a just distribution" among the
farmers of lands that have heretofore been the prison of their
dreams but can now become the key at least to their deliverance.
Such a program will involve not mere millions of pesos. The cost
will be tremendous. Considering the vast areas of land subject to
expropriation under the laws before us, we estimate that hundreds
of billions of pesos will be needed, far more indeed than the
amount of P50 billion initially appropriated, which is already
staggering as it is by our present standards. Such amount is in fact
not even fully available at this time.
We assume that the framers of the Constitution were aware of this
difficulty when they called for agrarian reform as a top priority
project of the government. It is a part of this assumption that when
they envisioned the expropriation that would be needed, they also
intended that the just compensation would have to be paid not in
the orthodox way but a less conventional if more practical method.
There can be no doubt that they were aware of the financial
limitations of the government and had no illusions that there would
be enough money to pay in cash and in full for the lands they
wanted to be distributed among the farmers. We may therefore
assume that their intention was to allow such manner of payment
as is now provided for by the CARP Law, particularly the payment of
the balance (if the owner cannot be paid fully with money), or
indeed of the entire amount of the just compensation, with other
things of value. We may also suppose that what they had in mind
was a similar scheme of payment as that prescribed in P.D. No. 27,
which was the law in force at the time they deliberated on the new
Charter and with which they presumably agreed in principle.
The Court has not found in the records of the Constitutional
Commission any categorical agreement among the members
regarding the meaning to be given the concept of just
compensation as applied to the comprehensive agrarian reform
program being contemplated. There was the suggestion to "fine

tune" the requirement to suit the demands of the project even as it

was also felt that they should "leave it to Congress" to determine
how payment should be made to the landowner and
reimbursement required from the farmer-beneficiaries. Such
innovations as "progressive compensation" and "State-subsidized
compensation" were also proposed. In the end, however, no special
definition of the just compensation for the lands to be expropriated
was reached by the Commission. 50
On the other hand, there is nothing in the records either that
militates against the assumptions we are making of the general
sentiments and intention of the members on the content and
manner of the payment to be made to the landowner in the light of
the magnitude of the expenditure and the limitations of the
expropriator.
With these assumptions, the Court hereby declares that the content
and manner of the just compensation provided for in the aforequoted Section 18 of the CARP Law is not violative of the
Constitution. We do not mind admitting that a certain degree of
pragmatism has influenced our decision on this issue, but after all
this Court is not a cloistered institution removed from the realities
and demands of society or oblivious to the need for its
enhancement. The Court is as acutely anxious as the rest of our
people to see the goal of agrarian reform achieved at last after the
frustrations and deprivations of our peasant masses during all
these disappointing decades. We are aware that invalidation of the
said section will result in the nullification of the entire program,
killing the farmer's hopes even as they approach realization and
resurrecting the spectre of discontent and dissent in the restless
countryside. That is not in our view the intention of the
Constitution, and that is not what we shall decree today.
Accepting the theory that payment of the just compensation is not
always required to be made fully in money, we find further that the
proportion of cash payment to the other things of value constituting
the total payment, as determined on the basis of the areas of the
lands expropriated, is not unduly oppressive upon the landowner. It
is noted that the smaller the land, the bigger the payment in
money, primarily because the small landowner will be needing it
more than the big landowners, who can afford a bigger balance in

bonds and other things of value. No less importantly, the

government financial instruments making up the balance of the
payment are "negotiable at any time." The other modes, which are
likewise available to the landowner at his option, are also not
unreasonable because payment is made in shares of stock, LBP
bonds, other properties or assets, tax credits, and other things of
value equivalent to the amount of just compensation.
Admittedly, the compensation contemplated in the law will cause
the landowners, big and small, not a little inconvenience. As
already remarked, this cannot be avoided. Nevertheless, it is
devoutly hoped that these countrymen of ours, conscious as we
know they are of the need for their forebearance and even
sacrifice, will not begrudge us their indispensable share in the
attainment of the ideal of agrarian reform. Otherwise, our pursuit of
this elusive goal will be like the quest for the Holy Grail.
The complaint against the effects of non-registration of the land
under E.O. No. 229 does not seem to be viable any more as it
appears that Section 4 of the said Order has been superseded by
Section 14 of the CARP Law. This repeats the requisites of
registration as embodied in the earlier measure but does not
provide, as the latter did, that in case of failure or refusal to register
the land, the valuation thereof shall be that given by the provincial
or city assessor for tax purposes. On the contrary, the CARP Law
says that the just compensation shall be ascertained on the basis of
the factors mentioned in its Section 17 and in the manner provided
for in Section 16.
The last major challenge to CARP is that the landowner is divested
of his property even before actual payment to him in full of just
compensation, in contravention of a well- accepted principle of
eminent domain.
The recognized rule, indeed, is that title to the property
expropriated shall pass from the owner to the expropriator only
upon full payment of the just compensation. Jurisprudence on this
settled principle is consistent both here and in other democratic
jurisdictions. Thus:

Title to property which is the subject of condemnation proceedings

does not vest the condemnor until the judgment fixing just
compensation is entered and paid, but the condemnor's title relates
back to the date on which the petition under the Eminent Domain
Act, or the commissioner's report under the Local Improvement Act,
is filed.51
... although the right to appropriate and use land taken for a canal
is complete at the time of entry, title to the property taken remains
in the owner until payment is actually made. 52 (Emphasis
supplied.)
In Kennedy v. Indianapolis, 53 the US Supreme Court cited several
cases holding that title to property does not pass to the condemnor
until just compensation had actually been made. In fact, the
decisions appear to be uniformly to this effect. As early as 1838,
in Rubottom v. McLure, 54 it was held that "actual payment to the
owner of the condemned property was a condition precedent to the
investment of the title to the property in the State" albeit "not to
the appropriation of it to public use." In Rexford v. Knight, 55 the
Court of Appeals of New York said that the construction upon the
statutes was that the fee did not vest in the State until the
payment of the compensation although the authority to enter upon
and appropriate the land was complete prior to the payment.
Kennedy further said that "both on principle and authority the rule
is ... that the right to enter on and use the property is complete, as
soon as the property is actually appropriated under the authority of
law for a public use,but that the title does not pass from the owner
without his consent, until just compensation has been made to
him."
Our own Supreme Court has held in Visayan Refining Co. v. Camus
and Paredes, 56 that:
If the laws which we have exhibited or cited in the preceding
discussion are attentively examined it will be apparent that the
method of expropriation adopted in this jurisdiction is such as to
afford absolute reassurance that no piece of land can be finally and
irrevocably taken from an unwilling owner until compensation is
paid ... . (Emphasis supplied.)

It is true that P.D. No. 27 expressly ordered the emancipation of

tenant-farmer as October 21, 1972 and declared that he shall "be
deemed the owner" of a portion of land consisting of a family-sized
farm except that "no title to the land owned by him was to be
actually issued to him unless and until he had become a fullfledged member of a duly recognized farmers' cooperative." It was
understood, however, that full payment of the just compensation
also had to be made first, conformably to the constitutional
requirement.
When E.O. No. 228, categorically stated in its Section 1 that:
All qualified farmer-beneficiaries are now deemed full owners as of
October 21, 1972 of the land they acquired by virtue of Presidential
Decree No. 27. (Emphasis supplied.)
it was obviously referring to lands already validly acquired under
the said decree, after proof of full-fledged membership in the
farmers' cooperatives and full payment of just compensation.
Hence, it was also perfectly proper for the Order to also provide in
its Section 2 that the "lease rentals paid to the landowner by the
farmer- beneficiary after October 21, 1972 (pending transfer of
ownership after full payment of just compensation), shall be
considered as advance payment for the land."
The CARP Law, for its part, conditions the transfer of possession
and ownership of the land to the government on receipt by the
landowner of the corresponding payment or the deposit by the DAR
of the compensation in cash or LBP bonds with an accessible bank.
Until then, title also remains with the landowner. 57 No outright
change of ownership is contemplated either.
Hence, the argument that the assailed measures violate due
process by arbitrarily transferring title before the land is fully paid
for must also be rejected.
It is worth stressing at this point that all rights acquired by the
tenant-farmer under P.D. No. 27, as recognized under E.O. No. 228,
are retained by him even now under R.A. No. 6657. This should
counter-balance the express provision in Section 6 of the said law
that "the landowners whose lands have been covered by
Presidential Decree No. 27 shall be allowed to keep the area

originally retained by them thereunder, further, That original

homestead grantees or direct compulsory heirs who still own the
original homestead at the time of the approval of this Act shall
retain the same areas as long as they continue to cultivate said
homestead."
In connection with these retained rights, it does not appear in G.R.
No. 78742 that the appeal filed by the petitioners with the Office of
the President has already been resolved. Although we have said
that the doctrine of exhaustion of administrative remedies need not
preclude immediate resort to judicial action, there are factual
issues that have yet to be examined on the administrative level,
especially the claim that the petitioners are not covered by LOI 474
because they do not own other agricultural lands than the subjects
of their petition.
Obviously, the Court cannot resolve these issues. In any event,
assuming that the petitioners have not yet exercised their retention
rights, if any, under P.D. No. 27, the Court holds that they are
entitled to the new retention rights provided for by R.A. No. 6657,
which in fact are on the whole more liberal than those granted by
the decree.
V
The CARP Law and the other enactments also involved in these
cases have been the subject of bitter attack from those who point
to the shortcomings of these measures and ask that they be
scrapped entirely. To be sure, these enactments are less than
perfect; indeed, they should be continuously re-examined and
rehoned, that they may be sharper instruments for the better
protection of the farmer's rights. But we have to start somewhere.
In the pursuit of agrarian reform, we do not tread on familiar
ground but grope on terrain fraught with pitfalls and expected
difficulties. This is inevitable. The CARP Law is not a tried and
tested project. On the contrary, to use Justice Holmes's words, "it is
an experiment, as all life is an experiment," and so we learn as we
venture forward, and, if necessary, by our own mistakes. We cannot
expect perfection although we should strive for it by all means.
Meantime, we struggle as best we can in freeing the farmer from

the iron shackles that have unconscionably, and for so long,

fettered his soul to the soil.
By the decision we reach today, all major legal obstacles to the
comprehensive agrarian reform program are removed, to clear the
way for the true freedom of the farmer. We may now glimpse the
day he will be released not only from want but also from the
exploitation and disdain of the past and from his own feelings of
inadequacy and helplessness. At last his servitude will be ended
forever. At last the farm on which he toils will be his farm. It will be
his portion of the Mother Earth that will give him not only the staff
of life but also the joy of living. And where once it bred for him only
deep despair, now can he see in it the fruition of his hopes for a
more fulfilling future. Now at last can he banish from his small plot
of earth his insecurities and dark resentments and "rebuild in it the
music and the dream."
WHEREFORE, the Court holds as follows:
1. R.A. No. 6657, P.D. No. 27, Proc. No. 131, and E.O. Nos. 228 and
229 are SUSTAINED against all the constitutional objections raised
in the herein petitions.
2. Title to all expropriated properties shall be transferred to the
State only upon full payment of compensation to their respective
owners.
3. All rights previously acquired by the tenant- farmers under P.D.
No. 27 are retained and recognized.
4. Landowners who were unable to exercise their rights of retention
under P.D. No. 27 shall enjoy the retention rights granted by R.A.
No. 6657 under the conditions therein prescribed.
5. Subject to the above-mentioned rulings all the petitions are
DISMISSED, without pronouncement as to costs.
SO ORDERED.

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.

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.

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 feecharging 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

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.

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

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 beprima 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 hard- earned 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.

[G.R. No. 151303. April 15, 2005]

ATHENNA* INTERNATIONAL
MANPOWER
SERVICES,
INC., petitioner, vs. NONITO VILLANOS, respondent.
DECISION
QUISUMBING, J.:
For review on certiorari are the Decision[1] dated May 23, 2001
and Resolution[2] dated November 23, 2001, of the Court of
Appeals in CA-G.R. SP No. 59594. The Court of Appeals reversed
the Resolutions[3] of the National Labor Relations Commission and
reinstated the Labor Arbiters Decision[4] in NLRC Case No. Sub-RAB09-OFW-(LB)-02-00002-99.
The antecedent facts, as summarized by the Court of Appeals,
are as follows:
Petitioner Athenna International Manpower Services, Inc. is a
domestic corporation engaged in recruitment and placement of
workers for overseas employment. Respondent Nonito Villanos is a
contract worker recruited by petitioner to work as a caretaker in
Taiwan.
Respondent applied to work overseas thru petitioner sometime
in February 1998. He alleged that he was assessed P100,000
placement fee by petitioner. As he had only P30,000 to pay
petitioner, respondent begged for a reduced fee. Petitioner agreed
and the placement fee was reduced to P94,000 only, on the
condition that the remaining balance of P64,000 shall be paid
through salary deductions upon his deployment. Respondent
received no receipt for the P30,000 cash that he advanced as
partial placement fee. Instead, petitioner gave him a schedule of
his monthly salary deduction payments for one year for his
balance, which included interest and other charges, amounting
to P90,725.

In October 1998, respondents Contract of Employment with a

certain Wei Yu Hsien arrived. Under this contract, he was to work
as caretaker for one year, ten months and twenty-eight days with a
monthly pay of New Taiwan Dollars (NT$) 15,840.
On October 15, 1998, he flew to Taiwan. Respondent alleged
that upon his arrival in Taiwan, he was assigned to a mechanical
shop, owned by Hsien, as a hydraulic installer/repairer for car
lifters, instead of the job for which he was hired. He found out that
Hsien was actually engaged in the installation and repair of
hydraulic machines for gasoline stations and other mechanical
shops. Since then, he traveled from one place to another, even
during nighttime as hydraulic installer/repair man for car lifters, as
required by his employer. He did not, however, complain because
he needed money to pay for the debts he incurred back home.
Barely a month after his placement, he was terminated by
Hsien. On November 14, 1998, respondent was made to sign a
document stating that he was not qualified for the position. He did
not, however, sign the document. At dawn of November 16, 1998,
[5]
respondent was handed his salary, with the accompanying
computation and instruction for his departure to the Philippines.
Upon his arrival in the Philippines, he immediately went to
petitioners office and confronted its representative, Lorenza Ching,
about the assignment given to him and demanded that he be
reimbursed the P30,000 he paid as downpayment. Instead of
returning the said amount, petitioner gave him a summary of
expenses amounting to P30,493, which it allegedly incurred for his
deployment abroad.
Aggrieved, respondent filed a complaint docketed as POEA
Case No. RV98-12-1586, before the Adjudication Office of the
Philippine Overseas Employment Administration (POEA).
However, because of financial constraints, he had to go home
to Polanco, Zamboanga del Norte where, on February 17, 1999, he
filed a complaint against petitioner for illegal dismissal, violation of
contract, and recovery of unpaid salaries and other benefits before
the NLRC Sub-Regional Arbitration Branch No. 9, Dipolog City.

In its defense, petitioner alleged that it hired respondent to

work in Taiwan for one year and that for his deployment, he was
charged a placement fee of merely P15,840 plus P5,050 for
documentation expenses. Petitioner further claimed that under the
employment contract, respondent was to undergo a probationary
period of forty (40) days. However, at the job site, respondent was
found to be unfit for his work, thus he resigned from his
employment and requested for his repatriation signing a statement
to that effect.
On
May
14,
1999,
the
Labor
Arbiter
rendered
a Decision holding petitioner and Wei Yu Hsien solidarily liable for
the wages representing the unserved portion of the employment
contract, the amount unlawfully deducted from respondents
monthly wage, moral damages, exemplary damages and attorneys
fees. For the remittance of illegal placement fee in the amount
of P99,110, petitioner was held solely liable. The dispositive
portion of the decision reads:

Lorenza Ching and/or Wei Yu Hsien, 1-11 Hsia Yuan Rd.

Tali City, Taichung Country, Taiwan, ROC, [which] specific
amount is reflected in paragraph 6 hereof.
(2)

declaring further that the deductions made by

respondent Wei Yu Hsien, from the monthly wage of
complainant, to be illegal, since the act is incidental to
the unlawful scheme of having terminated complainants
employment untimely in the guise of inefficiency in the
performance of work wrongly assigned to him and in
breach of the provisions of the valid contract of
employment having been entered into by the parties.
For this reason, respondents are hereby jointly and
severally directed to remit the exact amount of
complainants salary withheld, which amount is
specifically found in paragraph 6.

(3)

holding that the imposition of the placement fee of

P120,000.00 against complainant as illegal, which in
effect
making
respondent
Athena
International
Manpower Services, Inc., [r]epresented by Lorenza Ching
individually to pay complainant the exact amount which
is likewise found in paragraph 6 hereof.

(4)

imposing moral and exemplary damages arising from

breach of contract and bad faith of respondents, which
shall be paid by respondents in solidum, and which
amounts are specifically reflected in paragraph 6.

(5)

establishing liability upon respondents severally to pay

attorneys fees equivalent to ten percent (10%) of the
aggregate amount payable to complainant by
respondents.

(6)

And, specifically ordering respondents to pay

complainant the following, as based on the preceding
paragraphs:

WHEREFORE, couched in the foregoing premises, judgment is

hereby rendered:
(1)

declaring that the respondents act for having severed

complainants employment, after service of one (1)
month founded on unjustifiable grounds and encroaching
against the safeguard of fundamental due process and
security of tenure clauses as well as for being in
contradiction to the well engendered basic policy of the
state to grant ample protection to labor, to be illegal.
Thus, in effect hereof, on the basis of established
jurisprudence and mandate of the law, complainant
Nonito Villanos, as a contractual employee, is entitled to
be paid of the supposed wages which he could have
received throughout the period of employment
manifested in the contract, had not because of the
unceremonious, abnormal and unlawful act of
respondents in having put his employment to an end
after about one (1) month services, which entitlement
shall be paid jointly and severally by respondents Athena
International Manpower Services, Inc., [r]epresented by

A.) JOINT AND SEVERALLY LIABILITIES OF RESPONDENTS IN THIS CASE:

a.)

Supposed wages of the

B.) INDIVIDUAL OR PERSONAL LIABILITY OF RESPONDENT

ATHENA INTERNATIONAL MANPOWER SERVICES, INC.,
REPRESENTED BY LORENZA CHING;

unserved portion of
complainants duration
of employment ..............................
NT$ 348,480.00;

a.)

Remittance of illegal
placement fee . P 99,110.00.

SO ORDERED.[6]
(subject to proper future
conversion to Philippine Peso)
b.)

Amount unlawfully deducted

On appeal, the NLRC reversed the Labor Arbiter and dismissed

the complaint for lack of merit. It found that respondent was not at
all dismissed, much less illegally. Respondent seasonably filed a
motion for reconsideration, which the NLRC denied in its second
resolution.

from complainants monthly

wage .................................................
NT$ 11, 114.00;
(subject to proper future
conversion to Philippine Currency)
(c.)

Moral damages ........................ P 50,000.00;

d.)

Exemplary damages P 30,000.00; and

e.)

Attorneys fees ...

Ten Percent (10%) of the aggregate
amount
of liabilities of respondents,
whether joint or several, or

individual liabilities.

Undaunted, respondent appealed to the Court of Appeals

ascribing grave abuse of discretion to the NLRC in its ruling that
there was no violation of the contract of employment by petitioner
and in holding that respondent was not illegally dismissed.
The Court of Appeals held that Wei Yu Hsien violated the
contract of employment when respondent was made to work as
hydraulic installer/repairer, not as caretaker. The appellate court
concluded that the supposed voluntary resignation of respondent
was inconsistent with his immediate demand for refund of the
placement fee upon his arrival in the Philippines; his filing of an
administrative case before the POEA Adjudication Office; and his
subsequent filing of the complaint with the Labor Arbiter. The
Court of Appeals decreed:
WHEREFORE, the petition is hereby GRANTED reversing the
questioned resolutions of the National Labor Relations Commission,
Fifth Division, Cagayan de Oro City and REINSTATING the decision of
the Labor Arbiter in NLRC Case No. Sub-RAB-09-OFW-(LB)-0200002-99.
SO ORDERED.[7]
Hence, the instant appeal, raising the following issues:

1. Did the respondent voluntarily resign or was he illegally

dismissed?
2. Assuming that the respondent was illegally dismissed,
was it proper for the Court of Appeals to affirm in
toto the monetary awards in the Decision of the Labor
Arbiter, especially: (a) the award of his supposed
salaries for the entire unexpired portion of his
employment contract, i.e., NT$348,480.00 and (b) the
award of remittance of placement fee in the amount
of P99,110.00?[8]
Anent the first issue, petitioner insists that respondent was not
illegally dismissed but voluntarily resigned; that respondent failed
to prove that he was made to work as hydraulic installer/repairer
instead of a caretaker; and that the documents he adduced were
self-serving and immaterial.
Petitioner further contends that although the resignation of
respondent was in a pre-printed form, it did not mean his
resignation was involuntary. The requirement that the employer
has the burden of proof that the employee was illegally dismissed
is, says petitioner, applicable only when the fact of dismissal is
established. Petitioner submits that, in this case, respondent bore
the burden of proving that his resignation was involuntary.
For his part, respondent avers that he did not resign voluntarily
but, he was asked to sign a letter of resignation. Furthermore, he
avers that petitioner did not explain why he was unqualified.
Neither was he informed of any qualifications needed for the job
prior to his deployment, as mandated by Article 281 [9] of the Labor
Code.
Respondent points out that the allegation he resigned
voluntarily is belied by petitioners own admission in its position
paper that he was, in fact, found unfit for the job. He maintains
that his purported resignation was obviously inconsistent with his
filing a complaint for illegal dismissal against petitioner.

After a thorough consideration of the submissions of the

parties, we find no persuasive grounds nor substantial basis to
reverse the decision and the resolution of the appellate court.
An employee voluntarily resigns when he finds himself in a
situation where he believes that personal reasons cannot be
sacrificed in favor of the exigency of the service; thus, he has no
other choice but to disassociate himself from his employment. [10]
Records show that upon his repatriation from Taiwan,
respondent immediately went to petitioners office and confronted
its representative, Lorenza Ching, about the assignment given to
him which was contrary to the agreed position of caretaker, for
which he specifically applied. He demanded that he be reimbursed
the P30,000 he paid as downpayment. When refused, he lodged a
complaint with the POEA. He also immediately filed a complaint for
illegal dismissal before Labor Arbiter Cresencio R. Iniego, upon his
arrival in his hometown, indicating that respondent did not
voluntarily resign, but was forced to resign, which was tantamount
to a dismissal.[11] Petitioner did not refute respondents contentions
regarding these incidents. Further, it failed to prove the legality of
the dismissal, despite the fact that the burden of proof lies on the
employment and recruitment agency. Thus, the presumption
stands to the effect that respondent was illegally dismissed by his
employer.
Even assuming respondent was a mere probationary employee
as claimed by petitioner, respondent could only be terminated for a
pertinent and just cause, such as when he fails to qualify as a
regular employee in accordance with reasonable standards of
employment made known to him by his employer at the time of his
engagement.[12] Here, it appears that the petitioner failed to prove
that, at the time of respondents engagement, the employers
reasonable standards for the job were made known to respondent.
Moreover, in this case, respondent was assigned to a job different
from the one he applied and was hired for.
On the second issue. Petitioner claims that Section 10 of
Republic Act No. 8042,[13] entitles respondent only to six months
worth of the unserved portion of his employment contract; and that

the order to refund the amount of P99,110 as placement fee has no

factual basis because respondent himself admitted he only
paid P30,000 as placement fee, albeit, he was assessed the amount
of P94,000.

Note that the fraction of nine months and twenty-eight days is

considered as one whole year following the Labor Code. Thus,
respondents lump-sum salary should be computed as follows:
3 months x 2 (years)

Respondent counters that he worked for only a month because

he was hastily and unceremoniously terminated; and that he was
entitled to his salary corresponding to the remaining portion of the
employment contract. Further, he demands full reimbursement of
the P30,000 he paid as placement fee.

6 months x (NT$) 15,840

6 months worth of salary

=

NT$95,040, subject to
proper conversion to
Philippine currency by
Labor Arbiter Cresencio
Iniego.

Pertinent to this issue is Section 10 of Rep. Act No. 8042

SEC. 10. Money Claims. - . . .
In case of termination of overseas employment 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 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.
. . .
Thus, for the computation of the lump-sum salary due an
illegally dismissed overseas employee, there are two clauses as
points of reckoning: first is the cumulative salary for the unexpired
portion of his employment; and the other is the grant of three
months salary for every year of the unexpired term, whichever is
lesser.
Since respondent was dismissed after only one month of
service, the unexpired portion of his contract is admittedly one
year, nine months and twenty-eight days. But the applicable
clause is not the first but the second: three months salary for every
year of the unexpired term, as the lesser amount, hence it is what
is due the respondent.

Under the aforequoted provision, an illegally dismissed

overseas worker is also entitled to the full reimbursement of his
placement fee with interest at twelve percent (12%) per annum.
We note that while respondent was assessed P94,000 in
placement fee, he paid only P30,000 on the agreement that the
balance of P64,000 would be paid on a monthly salary deduction
upon his deployment. Hence, we cannot grant respondent
reimbursement of the entire assessed amount of P94,000. He is
only entitled to the reimbursement of the amount of placement fee
he actually paid, which is the P30,000 he gave as downpayment
plus interest at twelve percent (12%) per annum.
Lastly, because of the breach of contract and bad faith alleged
against the employer and the petitioner, we must sustain the award
of P50,000 in moral damages and P50,000 as exemplary damages,
in addition to attorneys fees of ten percent (10%) of the aggregate
monetary awards.
WHEREFORE, the petition is DENIED. The assailed Decision
dated May 23, 2001, and Resolution dated November 23, 2001, of
the Court of Appeals are AFFIRMED with MODIFICATION. Petitioner
Athenna International Manpower Services, Inc. is hereby DECLARED
solidarily liable with Wei Yu Hsien to pay respondent NONITO
VILLANOS the amount of NT$95,040.00, subject to proper
conversion to Philippine currency, as unpaid salary of respondent
equivalent to six months service under Rep. Act No. 8042, Section
10 as well as P50,000.00 in moral damages, and P50,000.00 as

exemplary damages suffered by respondent; and ten percent (10%)

of the aggregate monetary awards as attorneys fees, pursuant to
law and jurisprudence. Petitioner herein is also ordered to pay
respondent the amount of P30,000.00 as reimbursement of the
placement fee, with 12% interest per annum until fully paid.
SO ORDERED.

G.R. No. 127195. August 25, 1999

MARSAMAN MANNING AGENCY, INC. and DIAMANTIDES

MARITIME,
INC., petitioners,
vs.
NATIONAL
LABOR
RELATIONS
COMMISSION
and
WILFREDO
T.
CAJERAS, respondents.
DECISION
BELLOSILLO, J.:
MARSAMAN MANNING AGENCY, INC. (MARSAMAN) and its
foreign principal DIAMANTIDES MARITIME, INC. (DIAMANTIDES)
assail the Decision of public respondent National Labor Relations
Commission dated 16 September 1996 as well as its Resolution
dated 12 November 1996 affirming the Labor Arbiter's decision
finding them guilty of illegal dismissal and ordering them to pay

respondent Wilfredo T. Cajeras salaries corresponding to the

unexpired portion of his employment contract, plus attorney's fees.
Private respondent Wilfredo T. Cajeras was hired by petitioner
MARSAMAN, the local manning agent of petitioner DIAMANTIDES,
as Chief Cook Steward on the MV Prigipos, owned and operated by
DIAMANTIDES, for a contract period of ten (10) months with a
monthly salary of US$600.00, evidenced by a contract between the
parties dated 15 June 1995. Cajeras started work on 8 August 1995
but less than two (2) months later, or on 28 September 1995, he
was repatriated to the Philippines allegedly by mutual consent.
On 17 November 1995 private respondent Cajeras filed a
complaint for illegal dismissal against petitioners with the NLRC
National Capital Region Arbitration Branch alleging that he was
dismissed illegally, denying that his repatriation was by mutual
consent, and asking for his unpaid wages, overtime pay, damages,
and attorneys fees.[1] Cajeras alleged that he was assigned not
only as Chief Cook Steward but also as assistant cook and
messman in addition to performing various inventory and
requisition jobs. Because of his additional assignments he began to
feel sick just a little over a month on the job constraining him to
request for medical attention. He was refused at first by Capt.
Kouvakas Alekos, master of the MV Prigipos, who just ordered him
to continue working. However a day after the ships arrival at the
port of Rotterdam, Holland, on 26 September 1995 Capt. Alekos
relented and had him examined at the Medical Center for
Seamen. However, the examining physician, Dr. Wden Hoed,
neither apprised private respondent about the diagnosis nor issued
the requested medical certificate allegedly because he himself
would forward the results to private respondents superiors. Upon
returning to the vessel, private respondent was unceremoniously
ordered to prepare for immediate repatriation the following day as
he was said to be suffering from a disease of unknown origin.
On 28 September 1995 he was handed his Seaman's Service
Record Book with the following entry: "Cause of discharge - Mutual
Consent."[2] Private respondent promptly objected to the entry but
was not able to do anything more as he was immediately ushered
to a waiting taxi which transported him to the Amsterdam Airport

for the return flight to Manila. After his arrival in Manila on 29

September 1995 Cajeras complained to MARSAMAN but to no avail.
[3]

MARSAMAN and DIAMANTIDES, on the other hand, denied the

imputation of illegal dismissal. They alleged that Cajeras
approached Capt. Alekos on 26 September 1995 and informed the
latter that he could not sleep at night because he felt something
crawling over his body. Furthermore, Cajeras reportedly declared
that he could no longer perform his duties and requested for
repatriation. The following paragraph in the vessel's Deck Log was
allegedly entered by Capt. Alekos, to wit:
Cajeras approached me and he told me that he cannot sleep at
night and that he feels something crawling on his body and he
declared that he can no longer perform his duties and he must be
repatriated.[4]
Private respondent was then sent to the Medical Center for Seamen
at Rotterdam where he was examined by Dr. Wden Hoed whose
diagnosis appeared in a Medical Report as paranoia and other
mental
problems.[5]Consequently,
upon
Dr.
Hoeds
recommendation, Cajeras was repatriated to the Philippines on 28
September 1995.
On 29 January 1996 Labor Arbiter Ernesto S. Dinopol resolved
the dispute in favor of private respondent Cajeras ruling that the
latter's discharge from the MV Prigipos allegedly by mutual
consent was not proved by convincing evidence. The entry made
by Capt. Alekos in the Deck Log was dismissed as of little probative
value because it was a mere unilateral act unsupported by any
document showing mutual consent of Capt. Alekos, as master of
the MV Prigipos, and Cajeras to the premature termination of the
overseas employment contract as required by Sec. H of
the Standard Employment Contract Governing the Employment of
all Filipino Seamen on Board Ocean-Going Vessels. Dr. Hoeds
diagnosis that private respondent was suffering from paranoia
and other mental problems was likewise dismissed as being of
little evidentiary value because it was not supported by evidence
on how the paranoia was contracted, in what stage it was, and how

it affected respondent's functions as Chief Cook Steward which, on

the contrary, was even rated Very Good in respondent's Service
Record Book. Thus, the Labor Arbiter disposed of the case as
follows:
WHEREFORE, judgment is hereby rendered declaring the
repatriation and dismissal of complaint Wilfredo T. Cajeras as illegal
and ordering respondents Marsaman Manning Agency, Inc. and
Diamantides Maritime, Inc. to jointly and severally pay complainant
the sum of USD 5,100.00 or its peso equivalent at the time of
payment plus USD 510.00 as 10% attorneys fees it appearing that
complainant had to engage the service of counsel to protect his
interest in the prosecution of this case.
The claims for nonpayment of wages and overtime pay are
dismissed for having been withdrawn (Minutes, December 18,
1995). The claims for damages are likewise dismissed for lack of
merit, since no evidence was presented to show that bad faith
characterized the dismissal.[6]
Petitioners appealed to the NLRC. [7] On 16 September 1996 the
NLRC affirmed the appealed findings and conclusions of the Labor
Arbiter.[8] The NLRC subscribed to the view that Cajeras repatriation
by alleged mutual consent was not proved by petitioners, especially
after noting that private respondent did not actually sign his
Seamans Service Record Book to signify his assent to the
repatriation as alleged by petitioners. The entry made by Capt.
Alekos in the Deck Log was not considered reliable proof that
private respondent agreed to his repatriation because no
opportunity was given the latter to contest the entry which was
against his interest. Similarly, the Medical Report issued by Dr.
Hoed of Holland was dismissed as being of dubious value since it
contained only a sweeping statement of the supposed ailment of
Cajeras without any elaboration on the factual basis thereof.
Petitioners' motion for reconsideration was denied by the NLRC
in its Resolution dated 12 November 1996. [9] Hence, this petition
contending that the NLRC committed grave abuse of discretion: (a)
in not according full faith and credit to the official entry by Capt.
Alekos in the vessels Deck Log conformably with the rulings

in Haverton Shipping Ltd. v. NLRC [10] and Wallem Maritime Services,

Inc. v. NLRC;[11] (b) in not appreciating the Medical Report issued by
Dr. Wden Hoed as conclusive evidence that respondent Cajeras was
suffering from paranoia and other mental problems; (c) in affirming
the award of attorneys fees despite the fact that Cajeras' claim for
exemplary damages was denied for lack of merit; and, (d) in
ordering a monetary award beyond the maximum of three (3)
months salary for every year of service set by RA 8042.
We
deny
the
petition. In
the Contract
of
Employment[12] entered into with private respondent, petitioners
convenanted strict and faithful compliance with the terms and
conditions of the Standard Employment Contract approved by the
POEA/DOLE[13] which provides:
1. The employment of the seaman shall cease upon expiration of
the contract period indicated in the Crew Contract unless the
Master and the Seaman, by mutual consent, in writing, agree to an
early termination x x x x (underscoring ours).
Clearly, under the foregoing, the employment of a Filipino seaman
may be terminated prior to the expiration of the stipulated period
provided that the master and the seaman (a) mutually
consent thereto and (b) reduce their consent in writing.
In the instant case, petitioners do not deny the fact that they
have fallen short of the requirement. No document exists whereby
Capt. Alekos and private respondent reduced to writing their
alleged mutual consent to the termination of their employment
contract. Instead, petitioners presented the vessel's Deck Log
wherein an entry unilaterally made by Capt. Alekos purported to
show
that
private
respondent
himself
asked
for
his
repatriation. However, the NLRC correctly dismissed its evidentiary
value. For one thing, it is a unilateral act which is vehemently
denied by private respondent. Secondly, the entry in no way
satisfies the requirement of a bilateral documentation to prove
early termination of an overseas employment contract by mutual
consent required by the Standard Employment Contract. Hence,
since the latter sets the minimum terms and conditions of
employment for the protection of Filipino seamen subject only to

the adoption of better terms and conditions over and above the
minimum standards,[14] the NLRC could not be accused of grave
abuse of discretion in not accepting anything less.
However petitioners contend that the entry should be
considered prima facie evidence that respondent himself requested
his repatriation conformably with the rulings in Haverton Shipping
Ltd. v. NLRC[15] andAbacast Shipping and Management Agency, Inc.
v. NLRC.[16] Indeed, Haverton says that a vessels log book is prima
facie evidence of the facts stated therein as they are official entries
made by a person in the performance of a duty required by
law. However, this jurisprudential principle does not apply to win
the case for petitioners. In Wallem Maritime Services, Inc. v.
NLRC[17] the Haverton ruling was not given unqualified application
because the log book presented therein was a mere typewritten
collation of excerpts from what could be the log book. [18] The Court
reasoned that since the log book was the only piece of evidence
presented to prove just cause for the termination of respondent
therein, the log book had to be duly identified and authenticated
lest an injustice would result from a blind adoption of its contents
which were but prima facie evidence of the incidents stated
therein.
In the instant case, the disputed entry in the Deck Log was
neither
authenticated
nor
supported
by
credible
evidence. Although petitioners claim that Cajeras signed his
Seamans Service Record Book to signify his conformity to the
repatriation, the NLRC found the allegation to be actually untrue
since no signature of private respondent appeared in the Record
Book.
Neither could the Medical Report prepared by Dr. Hoed be
considered corroborative and conclusive evidence that private
respondent was suffering from paranoia and other mental
problems, supposedly just causes for his repatriation. Firstly,
absolutely no evidence, not even an allegation, was offered to
enlighten the NLRC or this Court as to Dr. Hoed's qualifications to
diagnose mental illnesses. It is a matter of judicial notice that there
are various specializations in medical science and that a general
practitioner is not competent to diagnose any and all kinds of

illnesses and diseases. Hence, the findings of doctors who are not
proven experts are not binding on this Court. [19] Secondly, the
Medical Report prepared by Dr. Hoed contained only a general
statement that private respondent was suffering from paranoia
and other mental problems without providing the details on how
the diagnosis was arrived at or in what stage the illness was. If Dr.
Hoed indeed competently examined private respondent then he
would have been able to discuss at length the circumstances and
precedents of his diagnosis. Petitioners cannot rely on the
presumption of regularity in the performance of official duties to
make the Medical Report acceptable because the presumption
applies only to public officers from the highest to the lowest in the
service of the Government, departments, bureaus, offices, and/or
its political subdivisions,[20] which Dr. Wden Hoed was not shown to
be. Furthermore, neither did petitioners prove that private
respondent was incompetent or continuously incapacitated for the
duties for which he was employed by reason of his alleged mental
state. On the contrary his ability as Chief Cook Steward, up to the
very moment of his repatriation, was rated Very Good in his
Seamans Service Record Book as correctly observed by public
respondent.
Considering all the foregoing we cannot ascribe grave abuse of
discretion on the part of the NLRC in ruling that petitioners failed to
prove just cause for the termination of private respondent's
overseas employment. Grave abuse of discretion is committed only
when the judgment is rendered in a capricious, whimsical, arbitrary
or despotic manner, which is not true in the present case. [21]
With respect to attorneys fees, suffice it to say that in actions
for recovery of wages or where an employee was forced to litigate
and thus incurred expenses to protect his rights and interests, a
maximum award of ten percent (10%) of the monetary award by
way of attorneys fees is legally and morally justifiable under Art.
111 of the Labor Code, [22] Sec. 8, Rule VIII, Book III of its
Implementing Rules,[23] and par. 7, Art. 2208[24] of the Civil Code.
[25]
The case of Albenson Enterprises Corporation v. Court of
Appeals[26] cited by petitioners in arguing against the award of
attorneys fees is clearly not applicable, being a civil action for
damages which deals with only one of the eleven (11) instances

when attorneys fees could be recovered under Art. 2208 of the

Civil Code.
Lastly, on the amount of salaries due private respondent, the
rule has always been that an illegally dismissed worker whose
employment is for a fixed period is entitled to payment of his
salaries corresponding to the unexpired portion of his employment.
[27]
However on 15 July 1995, RA 8042 otherwise known as the
Migrant Workers and Overseas Filipinos Act of 1995 took effect,
Sec. 10 of which provides:
Sec. 10. In case of termination of overseas employment 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 at twelve percent (12%) per annum, plus his
salaries for the unexpired portion of the employment contract or for
three (3) months for every year of the unexpired term whichever is
less (underscoring ours).
The Labor Arbiter, rationalizing that the aforesaid law did not apply
since it became effective only one (1) month after respondent's
overseas employment contract was entered into on 15 June 1995,
simply awarded private respondent his salaries corresponding to
the unexpired portion of his employment contract, i.e., for 8.6
months. The NLRC affirmed the award and the Office of the
Solicitor General (OSG) fully agreed. But petitioners now insist that
Sec. 10, RA 8042 is applicable because although private
respondents contract of employment was entered into before the
law became effective his alleged cause of action, i.e., his
repatriation on 28 September 1995 without just, valid or authorized
cause, occurred when the law was already in effect. Petitioners'
purpose in so arguing is to invoke the law in justifying a lesser
monetary award to private respondent, i.e., salaries for three (3)
months only pursuant to the last portion of Sec. 10 as opposed to
the salaries for 8.6 months awarded by the Labor Arbiter and
affirmed by the NLRC.
We agree with petitioners that Sec. 10, RA 8042, applies in the
case of private respondent and to all overseas contract workers
dismissed on or after its effectivity on 15 July 1995 in the same way

that Sec. 34,[28] RA 6715,[29] is made applicable to locally employed

workers dismissed on or after 21 March 1989. [30] However, we
cannot subscribe to the view that private respondent is entitled to
three (3) months salary only. 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[31] since the
law-making body is presumed to know the meaning of the words
employed in the statue and to have used them advisedly. [32] Ut res
magis valeat quam pereat.[33]
WHEREFORE, the questioned Decision and Resolution dated
16 September 1996 and 12 November 1996, respectively, of public
respondent
National
Labor
Relations
Commission
are
AFFIRMED. Petitioners MARSAMAN MANNING AGENCY, INC., and
DIAMANTIDES MARITIME, INC., are ordered, jointly and severally, to
pay private respondent WILFREDO T. CAJERAS his salaries for the
unexpired portion of his employment contract or USD$5,100.00,
reimburse the latter's placement fee with twelve percent (12%)
interest per annum conformably with Sec. 10 of RA 8042, as well as
attorney's fees of ten percent (10%) of the total monetary
award. Costs against petitioners.
SO ORDERED.

insofar as the same apply to herein petitioner, and further from

performing an act in violation of the constitutional rights of the
petitioner.
As gathered from the records, the factual background of this case,
is as follows:
On June 10, 1988, the President of the Philippines approved R.A. No.
6657, which includes the raising of livestock, poultry and swine in
its coverage (Rollo, p. 80).
On January 2, 1989, the Secretary of Agrarian Reform promulgated
the Guidelines and Procedures Implementing Production and Profit
Sharing as embodied in Sections 13 and 32 of R.A. No. 6657 (Rollo,
p. 80).
On January 9, 1989, the Secretary of Agrarian Reform promulgated
its Rules and Regulations implementing Section 11 of R.A. No. 6657
(Commercial Farms). (Rollo, p. 81).
Luz Farms, petitioner in this case, is a corporation engaged in the
livestock and poultry business and together with others in the same
business allegedly stands to be adversely affected by the
enforcement of Section 3(b), Section 11, Section 13, Section 16(d)
and 17 and Section 32 of R.A. No. 6657 otherwise known as
Comprehensive Agrarian Reform Law and of the Guidelines and
Procedures Implementing Production and Profit Sharing under R.A.
No. 6657 promulgated on January 2, 1989 and the Rules and
Regulations Implementing Section 11 thereof as promulgated by
the DAR on January 9, 1989 (Rollo, pp. 2-36).: rd

G.R. No. 86889 : December 4, 1990

192 SCRA 51
LUZ FARMS, Petitioner, vs. THE HONORABLE SECRETARY OF
THE DEPARTMENT OF AGRARIAN REFORM, Respondent.
DECISION
PARAS, J.:
This is a petition for prohibition with prayer for restraining order
and/or preliminary and permanent injunction against the Honorable
Secretary of the Department of Agrarian Reform for acting without
jurisdiction in enforcing the assailed provisions of R.A. No. 6657,
otherwise known as the Comprehensive Agrarian Reform Law of
1988 and in promulgating the Guidelines and Procedure
Implementing Production and Profit Sharing under R.A. No. 6657,

Hence, this petition praying that aforesaid laws, guidelines and

rules be declared unconstitutional. Meanwhile, it is also prayed that
a writ of preliminary injunction or restraining order be issued
enjoining public respondents from enforcing the same, insofar as
they are made to apply to Luz Farms and other livestock and
poultry raisers.
This Court in its Resolution dated July 4, 1939 resolved to deny,
among others, Luz Farms' prayer for the issuance of a preliminary
injunction in its Manifestation dated May 26, and 31, 1989. (Rollo,
p. 98).
Later, however, this Court in its Resolution dated August 24, 1989
resolved to grant said Motion for Reconsideration regarding the
injunctive relief, after the filing and approval by this Court of an
injunction bond in the amount of P100,000.00. This Court also gave
due course to the petition and required the parties to file their
respective memoranda (Rollo, p. 119).

The petitioner filed its Memorandum on September 6, 1989 (Rollo,

pp. 131-168).
On December 22, 1989, the Solicitor General adopted his Comment
to the petition as his Memorandum (Rollo, pp. 186-187).
Luz Farms questions the following provisions of R.A. 6657, insofar
as they are made to apply to it:
(a) Section 3(b) which includes the "raising of livestock (and
poultry)" in the definition of "Agricultural, Agricultural
Enterprise or Agricultural Activity."
(b) Section 11 which defines "commercial farms" as "private
agricultural lands devoted to commercial, livestock, poultry
and swine raising . . ."
(c) Section 13 which calls upon petitioner to execute a
production-sharing plan.
(d) Section 16(d) and 17 which vest on the Department of
Agrarian Reform the authority to summarily determine the
just compensation to be paid for lands covered by the
Comprehensive Agrarian Reform Law.
(e) Section 32 which spells out the production-sharing plan
mentioned in Section 13
". . . (W)hereby three percent (3%) of the gross sales from
the production of such lands are distributed within sixty (60)
days of the end of the fiscal year as compensation to regular
and other farmworkers in such lands over and above the
compensation they currently receive: Provided, That these
individuals or entities realize gross sales in excess of five
million pesos per annum unless the DAR, upon proper
application, determine a lower ceiling.
In the event that the individual or entity realizes a profit, an
additional ten (10%) of the net profit after tax shall be
distributed to said regular and other farmworkers within
ninety (90) days of the end of the fiscal year . . ."
The main issue in this petition is the constitutionality of Sections
3(b), 11, 13 and 32 of R.A. No. 6657 (the Comprehensive Agrarian
Reform Law of 1988), insofar as the said law includes the raising of
livestock, poultry and swine in its coverage as well as the
Implementing Rules and Guidelines promulgated in accordance
therewith.:-cralaw
The constitutional provision under consideration reads as follows:
ARTICLE XIII

x x x
AGRARIAN AND NATURAL RESOURCES REFORM
Section 4. The State shall, by law, undertake an agrarian
reform program founded on the right of farmers and regular
farmworkers, who are landless, to own directly or
collectively the lands they till or, in the case of other
farmworkers, to receive a just share of the fruits thereof. To
this end, the State shall encourage and undertake the just
distribution of all agricultural lands, subject to such priorities
and reasonable retention limits as the Congress may
prescribe, taking into account ecological, developmental, or
equity considerations, and subject to the payment of just
compensation. In determining retention limits, the State
shall respect the rights of small landowners. The State shall
further provide incentives for voluntary land-sharing.
x x x"
Luz Farms contended that it does not seek the nullification
of R.A. 6657 in its entirety. In fact, it acknowledges the
correctness of the decision of this Court in the case of the
Association of Small Landowners in the Philippines, Inc.
vs. Secretary of Agrarian Reform (G.R. 78742, 14 July 1989)
affirming the constitutionality of the Comprehensive
Agrarian Reform Law. It, however, argued that Congress in
enacting the said law has transcended the mandate of the
Constitution, in including land devoted to the raising of
livestock, poultry and swine in its coverage (Rollo, p. 131).
Livestock or poultry raising is not similar to crop or tree
farming. Land is not the primary resource in this
undertaking and represents no more than five percent (5%)
of the total investment of commercial livestock and poultry
raisers. Indeed, there are many owners of residential lands
all over the country who use available space in their
residence for commercial livestock and raising purposes,
under
"contract-growing
arrangements,"
whereby
processing corporations and other commercial livestock and
poultry raisers (Rollo, p. 10). Lands support the buildings
and other amenities attendant to the raising of animals and
birds. The use of land is incidental to but not the principal
factor or consideration in productivity in this industry.
Including backyard raisers, about 80% of those in
commercial livestock and poultry production occupy five
hectares or less. The remaining 20% are mostly corporate
farms (Rollo, p. 11).

On the other hand, the public respondent argued that livestock and
poultry raising is embraced in the term "agriculture" and the
inclusion of such enterprise under Section 3(b) of R.A. 6657 is
proper. He cited that Webster's International Dictionary, Second
Edition (1954), defines the following words:
"Agriculture the art or science of cultivating the ground
and raising and harvesting crops, often, including also,
feeding, breeding and management of livestock, tillage,
husbandry, farming.
It includes farming, horticulture, forestry, dairying, sugarmaking . . .
Livestock domestic animals used or raised on a farm, especially
for profit.
Farm a plot or tract of land devoted to the raising of domestic or
other animals." (Rollo, pp. 82-83).
The petition is impressed with merit.
The question raised is one of constitutional construction. The
primary task in constitutional construction is to ascertain and
thereafter assure the realization of the purpose of the framers in
the adoption of the Constitution (J.M. Tuazon & Co. vs. Land Tenure
Administration, 31 SCRA 413 [1970]).: rd
Ascertainment of the meaning of the provision of Constitution
begins with the language of the document itself. The words used in
the Constitution are to be given their ordinary meaning except
where technical terms are employed in which case the significance
thus attached to them prevails (J.M. Tuazon & Co. vs. Land Tenure
Administration, 31 SCRA 413 [1970]).
It is generally held that, in construing constitutional provisions
which are ambiguous or of doubtful meaning, the courts may
consider the debates in the constitutional convention as throwing
light on the intent of the framers of the Constitution. It is true that
the intent of the convention is not controlling by itself, but as its
proceeding was preliminary to the adoption by the people of the
Constitution the understanding of the convention as to what was
meant by the terms of the constitutional provision which was the
subject of the deliberation, goes a long way toward explaining the
understanding of the people when they ratified it (Aquino, Jr. v.
Enrile, 59 SCRA 183 [1974]).
The transcripts of the deliberations of the Constitutional
Commission of 1986 on the meaning of the word "agricultural,"
clearly show that it was never the intention of the framers of the
Constitution to include livestock and poultry industry in the

coverage of the constitutionally-mandated agrarian reform program

of the Government.
The Committee adopted the definition of "agricultural land" as
defined under Section 166 of R.A. 3844, as laud devoted to any
growth, including but not limited to crop lands, saltbeds, fishponds,
idle and abandoned land (Record, CONCOM, August 7, 1986, Vol. III,
p. 11).
The intention of the Committee is to limit the application of the
word "agriculture." Commissioner Jamir proposed to insert the word
"ARABLE" to distinguish this kind of agricultural land from such
lands as commercial and industrial lands and residential properties
because all of them fall under the general classification of the word
"agricultural". This proposal, however, was not considered because
the Committee contemplated that agricultural lands are limited to
arable and suitable agricultural lands and therefore, do not include
commercial, industrial and residential lands (Record, CONCOM,
August 7, 1986, Vol. III, p. 30).
In the interpellation, then Commissioner Regalado (now a Supreme
Court Justice), posed several questions, among others, quoted as
follows:
x x x
"Line 19 refers to genuine reform program founded on the
primary right of farmers and farmworkers. I wonder if it
means that leasehold tenancy is thereby proscribed under
this provision because it speaks of the primary right of
farmers and farmworkers to own directly or collectively the
lands they till. As also mentioned by Commissioner Tadeo,
farmworkers include those who work in piggeries and
poultry projects.
I was wondering whether I am wrong in my appreciation that
if somebody puts up a piggery or a poultry project and for
that purpose hires farmworkers therein, these farmworkers
will automatically have the right to own eventually, directly
or ultimately or collectively, the land on which the piggeries
and poultry projects were constructed. (Record, CONCOM,
August 2, 1986, p. 618).
x x x
The questions were answered and explained in the
statement of then Commissioner Tadeo, quoted as follows:
x x x

"Sa pangalawang katanungan ng Ginoo ay medyo hindi

kami nagkaunawaan. Ipinaaalam ko kay Commissioner
Regalado na hindi namin inilagay ang agricultural worker sa
kadahilanang kasama rito ang piggery, poultry at livestock
workers. Ang inilagay namin dito ay farm worker kaya hindi
kasama ang piggery, poultry at livestock workers (Record,
CONCOM, August 2, 1986, Vol. II, p. 621).

power of the Congress and Executive, the Court will not hesitate "to
make the hammer fall heavily," where the acts of these
departments, or of any official, betray the people's will as
expressed in the Constitution (Association of Small Landowners of
the Philippines, Inc. v. Secretary of Agrarian Reform, G.R. 78742;
Acuna v. Arroyo, G.R. 79310; Pabico v. Juico, G.R. 79744; Manaay v.
Juico, G.R. 79777, 14 July 1989).

It is evident from the foregoing discussion that Section II of R.A.

6657 which includes "private agricultural lands devoted to
commercial livestock, poultry and swine raising" in the definition of
"commercial farms" is invalid, to the extent that the aforecited
agro-industrial activities are made to be covered by the agrarian
reform program of the State. There is simply no reason to include
livestock and poultry lands in the coverage of agrarian reform.
(Rollo, p. 21).

Thus, where the legislature or the executive acts beyond the scope
of its constitutional powers, it becomes the duty of the judiciary to
declare what the other branches of the government had assumed
to do, as void. This is the essence of judicial power conferred by the
Constitution "(I)n one Supreme Court and in such lower courts as
may be established by law" (Art. VIII, Section 1 of the 1935
Constitution; Article X, Section I of the 1973 Constitution and which
was adopted as part of the Freedom Constitution, and Article VIII,
Section 1 of the 1987 Constitution) and which power this Court has
exercised in many instances (Demetria v. Alba, 148 SCRA 208
[1987]).

Hence, there is merit in Luz Farms' argument that the requirement

in Sections 13 and 32 of R.A. 6657 directing "corporate farms"
which include livestock and poultry raisers to execute and
implement "production-sharing plans" (pending final redistribution
of their landholdings) whereby they are called upon to distribute
from three percent (3%) of their gross sales and ten percent (10%)
of their net profits to their workers as additional compensation is
unreasonable for being confiscatory, and therefore violative of due
process (Rollo, p. 21).:-cralaw
It has been established that this Court will assume jurisdiction over
a constitutional question only if it is shown that the essential
requisites of a judicial inquiry into such a question are first
satisfied. Thus, there must be an actual case or controversy
involving a conflict of legal rights susceptible of judicial
determination, the constitutional question must have been
opportunely raised by the proper party, and the resolution of the
question is unavoidably necessary to the decision of the case itself
(Association of Small Landowners of the Philippines, Inc. v.
Secretary of Agrarian Reform, G.R. 78742; Acuna v. Arroyo, G.R.
79310; Pabico v. Juico, G.R. 79744; Manaay v. Juico, G.R. 79777, 14
July 1989, 175 SCRA 343).
However, despite the inhibitions pressing upon the Court when
confronted with constitutional issues, it will not hesitate to declare
a law or act invalid when it is convinced that this must be done. In
arriving at this conclusion, its only criterion will be the Constitution
and God as its conscience gives it in the light to probe its meaning
and discover its purpose. Personal motives and political
considerations are irrelevancies that cannot influence its decisions.
Blandishment is as ineffectual as intimidation, for all the awesome

PREMISES CONSIDERED, the instant petition is hereby GRANTED.

Sections 3(b), 11, 13 and 32 of R.A. No. 6657 insofar as the
inclusion of the raising of livestock, poultry and swine in its
coverage as well as the Implementing Rules and Guidelines
promulgated in accordance therewith, are hereby DECLARED null
and void for being unconstitutional and the writ of preliminary
injunction issued is hereby MADE permanent.
SO ORDERED.

Are the local crewing or manning agent and its foreign principal
(the shipowner) liable for the death of a Filipino seaman-employee
who, after having been discharged, was killed in transit while being
repatriated home?
The instant petition[1] seeks the reversal and/or modification of
the Resolution[2] dated March 30, 1994 of public respondent
National Labor Relations Commission[3]dismissing the appeals of
petitioners and affirming the decision dated November 16,
1992[4] of Philippine Overseas Employment Administration (POEA)
Administrator Felicisimo C. Joson, which ordered that: [5]
WHEREFORE, in view of the foregoing consideration, respondents
are hereby jointly and severally held liable to pay the complainant
the following amounts:
1. P130,000.00 as death compensation benefits.
2. P18,000.00 as burial expenses.
The Facts
The proceedings below originated as a claim for death
compensation benefits filed by Constancia Pineda as heir of her
deceased son, seaman Jeremias Pineda, against Interorient
Maritime Enterprises, Inc. and its foreign principal, Fircroft Shipping
Corporation and the Times Surety and Insurance Co., Inc. The
following facts were found by the POEA Administrator:[6]
G.R. No. 115497. September 16, 1996
INTERORIENT MARITIME ENTERPRISES, INC., FIRCROFT
SHIPPING CORPORATION and TIMES SURETY &
INSURANCE CO., INC., petitioners, vs. NATIONAL
LABOR RELATIONS COMMISSION and CONSTANCIA
PINEDA, respondents.
DECISION
PANGANIBAN, J.:

As can be gathered from the records of the case, it was alleged

that deceased seaman, Jeremias Pineda was contracted to work as
Oiler on board the vessel, MV Amazonia, owned and operated by
its foreign principal, Fircroft Shipping Corporation for a period of
nine (9) months with additional three (3) months upon mutual
consent of both parties with a monthly basic salary of US$276.00
plus fixed overtime rate of US$83.00 and a leave pay of 2 1/2 days
per month; that on October 2, 1989, he met his death when he was
shot by a Thai Policeman in Bangkok, Thailand; that considering
that the deceased seaman was suffering from mental disorders

aggravated by threats on his life by his fellow seamen, the Ship

Captain should not have allowed him to travel alone.
xxx

xxx

xxx

In its Answer/Position Paper, respondent agency averred that

deceased seaman signed a contract of employment as Oiler for a
period of nine (9) months with additional three (3) months upon
mutual consent of both parties with a monthly salary of US$276.00,
fixed overtime rate of US$83.00; that on December 21, 1988,
deceased seaman joined the vessel MV Amazonia and proceeded to
discharge his duties as Oiler; that on September 28, 1989, he
finished his contract and was discharged from the port of Dubai for
repatriation to Manila; that his flight schedule from Dubai to the
Philippines necessitated a stopover at Bangkok, Thailand, and
during said stopover he disembarked on his own free will and failed
to join the connecting flight to Hongkong with final destination to
Manila; that on October 5, 1990, it received a fax transmission from
the Department of Foreign Affairs to the effect that Jeremias Pineda
was shot by a Thai Officer on duty on October 2, 1989 at around
4:00 P.M.; that the police report submitted to the Philippine
Embassy in Bangkok confirmed that it was Pineda who approached
and tried to stab the police sergeant with a knife and that therefore
he was forced to pull out his gun and shot Pineda; that they are not
liable to pay any death/burial benefits pursuant to the provisions of
Par. 6, Section C, Part II, POEA Standard Format of Employment
which state(s) that no compensation shall be payable in respect of
any injury, (in)capacity, disability or death resulting from a willful
(sic) act on his own life by the seaman; that the deceased seaman
died due to his own wilfull (sic) act in attacking a policeman in
Bangkok who shot him in self-defense.
After the parties presented their respective evidence, the POEA
Administrator rendered his decision holding petitioners liable for
death compensation benefits and burial expenses.
Petitioners appealed the POEA decision to the public
respondent. In a Decision dated March 30, 1994, public respondent
upheld the POEA.

Thus, this recourse to this Court by way of a special civil action

for certiorari per Rule 65 of the Rules of Court.
The Issues
The petitioners made the following assignment of errors:
Respondent NLRC committed a grave abuse of discretion in ruling
that herein petitioners are liable for death compensation benefits
despite the fact that there is no direct evidence proving that Pineda
was mentally sick at the time of repatriation.
Respondent NLRC committed a serious error of law in not upholding
the provisions of Par. 6, Section C, Part II of the POEA standard
format Contract of Employment.
Respondent NLRC committed a grave abuse of discretion in finding
for compensability of Pinedas death when respondents (should
read petitioners) have proven that his death was not workconnected.
The principal issue in this case is whether the petitioners can
be held liable for the death of seaman Jeremias Pineda.
The petitioners challenge the factual bases of the NLRC
Decision, and argue that there was no evidence, whether
documentary or testimonial, that the deceased Pineda, at the time
of his repatriation was not in full control of his mental faculties,
and that there (was) no showing that seaman Pineda acted
strangely when he disembarked from the vessel in Dubai where he
was discharged, and from which point he flew to Bangkok without
any untoward incident during the entire trip. They thus insist that
they were under no obligation to have Pineda accompanied home
when he was discharged at the end of the contract term of nine
months, that they were in no position to control the deceaseds
movements and behavior after he was repatriated and therefore
should not be held answerable for the deceaseds own voluntary
acts, and that the deceased could have, while in Bangkok, ingested
some drugs or other mind-altering substance resulting in his
aggressive behavior and untimely demise.

The Courts Ruling

Procedural and Substantive Defects
At the outset, we note that the petition suffers from serious
procedural
defects
that
warrant
its
being
dismissed
outright. Petitioners acted prematurely, not having filed any
motion for reconsideration with the public respondent before
bringing the instant petition to this Court. This constitutes a fatal
infirmity.
x x x The unquestioned rule in this jurisdiction is that certiorari will
lie only if there is no appeal or any other plain, speedy and
adequate remedy in the ordinary course of law against the acts of
public respondent. In the instant case, the plain and adequate
remedy expressly provided by the law was a motion for
reconsideration of the assailed decision, based on palpable or
patent errors, to be made under oath and filed within ten (10)
calendar days from receipt of the questioned decision. [7]
(T)he filing of such a motion is intended to afford public
respondent an opportunity to correct any actual or fancied error
attributed to it by way of a re-examination of the legal and factual
aspects of the case. Petitioners inaction or negligence under the
circumstances is tantamount to a deprivation of the right and
opportunity of the respondent Commission to cleanse itself of an
error unwittingly committed or to vindicate itself of an act unfairly
imputed. x x x[8]
x x x And for failure to avail of the correct remedy expressly
provided by law, petitioner has permitted the subject Resolution to
be come final and executory after the lapse of the ten day period
within which to file such motion for reconsideration.[9]
But even if the aforesaid procedural defect were to be
overlooked, the instant petition nevertheless suffers from serious
substantive flaws. The petition assails the Resolution of the
respondent Commission as lacking factual and legal bases to
support the same. A petition for certiorari under Rule 65 of the
Rules of Court will lie only in cases where a grave abuse of

discretion or an act without or in excess of jurisdiction is clearly

shown to have been committed by the respondent Commission,
and this Courts jurisdiction to review decisions or resolutions of the
respondent NLRC does not include a correction of its evaluation of
the evidence.[10] Moreover, it is a fundamental rule that the factual
findings of quasi-judicial agencies like the respondent NLRC, if
supported by substantial evidence, are generally accorded not only
great respect but even finality, and are binding upon this Court,
unless the petitioner is able to clearly demonstrate that respondent
Commission had arbitrarily disregarded evidence before it or had
misapprehended evidence to such an extent as to compel a
contrary conclusion if such evidence had been properly
appreciated.[11]
First Issue: No Direct Evidence of Mental State?
At any rate, even disregarding for the nonce the substantive as
well as procedural defects discussed above, a judicious review of
the records of this case turns up no indication whatsoever that the
respondent Commission committed any grave abuse or acted
beyond or without jurisdiction. On the contrary, the petitioners
contention that the assailed Resolution has no factual and legal
bases is belied by the adoption with approval by the public
respondent of the findings of the POEA Administrator, which recites
at length the reasons for holding that the deceased Pineda was
mentally sick prior to his death and concomitantly, was no longer in
full control of his mental faculties.
First, a word about the evidence supporting the findings of the
POEA Administrator. We have held that claims of overseas workers
against their foreign employers should not be subjected to the rules
of evidence and procedure that courts usually apply to other
complainants who have more facility in obtaining the required
evidence to prove their demands. [12] Section 5, Rule 133 of the
Rules of Court provides that in cases filed before administrative or
quasi-judicial bodies (like the POEA), a fact may be deemed
established if it is supported by substantial evidence, i.e., that
amount of evidence which a reasonable mind might accept as
adequate to justify a conclusion.[13] In this instance, seaman Pineda,
who was discharged in Dubai, a foreign land, could not reasonably

be expected to immediately resort to and avail of psychiatric

examination, assuming that he was still capable of submitting
himself to such examination at that time, not to mention the fact
that when he disembarked in Dubai, he was already discharged and
without employment -- his contract having already run its full term
-- and he had already been put on a plane bound for the
Philippines. This explains the lack or absence of direct evidence
showing his mental state.
The circumstances prior to and surrounding his death,
however, provide substantial evidence of the existence of such
mental defect or disorder. Such mental disorder became evident
when he failed to join his connecting flight to Hongkong, having
during said stopover wandered out of the Bangkok airports
immigration area on his own. We can perceive no sane and
sufficient reason for a Pinoy overseas contract worker or seaman to
want to while away his time in a foreign land, when he is
presumably unfamiliar with its native tongue, with nothing to do
and no source of income, and after having been absent from kith
and kin, hearth and home for almost an entire year. Nor can we
find any plausible reason for him to be wielding a knife and scaring
away passersby, and even taking a stab at an armed policeman,
unless he is no longer in full possession of his sanity. To our mind,
these circumstances are sufficient in themselves to produce a firm
conviction that the deceased seaman in this case was no longer in
full control of his senses when he left his work. To reiterate, in this
case, no more than substantial evidence is required.
Second Issue: Employer Exempted from Liability?
It is petitioners contention that Pinedas death caused by his
own willful act of attacking a Thai policeman and getting shot at in
self-defense is not compensable, inasmuch as Par. 6, Section C,
Part II of the POEAs Standard Format Contract of Employment for
Seamen states that:
No compensation shall be payable in respect of any injury,
incapacity, disability or death resulting from a (deliberate or) willful
act on his own life by the seaman(,) provided, however, that the

employer can prove that such injury, incapacity, disability or death

is directly attributable to the seaman. (underscoring supplied).
Moreover, petitioners contend that this Court already held in the
case of Mabuhay Shipping Services, Inc. vs. NLRC and Cecilia
Sentina[14] that the employer is not liable for the willful act of an
employee on his own life. Further, Article 172 of the Labor Code
provides for a limitation on the liability of the State Insurance Fund
when the disability or death was occasioned by the employees
intoxication, willful intention to injure or kill himself or another,
notorious negligence x x x.
Petitioners are in error. This Court agrees with the POEA
Administrator that seaman Pineda was no longer acting sanely
when he attacked the Thai policeman. The report of the Philippine
Embassy in Thailand dated October 9, 1990 depicting the
deceaseds strange behavior shortly before he was shot dead, after
having wandered around Bangkok for four days, clearly shows that
the man was not in full control of his own self:[15]
(CAD) IN REPLY TO TELEX SENT TO EMBASSY BY ADM.
SARMIENTO/DELA ROSA OF OWWA/DOLE RE CAUSE OF DEATH OF
DECEASED SEAMAN JEREMIAS PINEDA, KINDLY ADVISE HIS OFFICE
THAT SUBJECT ARRIVED BANGKOK 1515H ON BOARD XC903 ON A
STOP OVER FLIGHT FROM DUBAI ON HIS WAY TO HONGKONG
PROCEEDING TO MANILA. UNFORTUNATELY PINEDA FAILED TO TAKE
THE SAME FLIGHT OUT AT 1630H, CHECKED OUT OF IMMIGRATION,
WENT OUT OF AIRPORT AND WANDERED OUT AND FEW DAYS
LATER MET HIS UNTIMELY DEMISE. PLS. REFER TO OURAD DATED 5
OCT 89 QUOTING FULL TEXT OF POLICE REPORT ADDRESSED TO
THIS EMBASSY RECOUNTING INCIDENT LEADING TO FATAL
SHOOTING OF PINEDA. KINDLY FURNISH OWWA/DOLE FULL TEXT
OF SAID REPORT FOR THEIR INFO.
PER REPORT RECEIVED FROM AIRPORT PERSONNEL PINEDA WAS
ACTING STRANGELY, REFUSED TO BOARD HIS SCHEDULED FLIGHT
AND DISAPPEARED FROM AIRPORT. POLICE REPORT ALSO
CONFIRMED HIS STRANGE BEHAVIOR LEADING TO HIS ARREST,
THEN RUNNING AMOK AND CAUSING TROUBLE TO PASSERS AND

ATTEMPT TO STAB THE DUTY POLICEMAN WHO TRIED TO PACIFY

HIM.
PINEDA SEEMED TO HAVE BEEN SUFFERING FROM SOME MENTAL
DISORDER AS CAN BE GLEANED FROM HIS PERSONAL LETTERS
DISCOVERED AMONG HIS PERSONAL EFFECTS. HE COMPLAINED OF
SUFFERING FROM SEVERE HEAD PAINS AND EVEN REPORTED TO
CAPTAIN OF A SHIP ABOUT THREATS ON HIS LIFE BY FELLOW
SEAMAN WHICH INVARIABLY LEAD (sic) TO HIS BEING REPATRIATED
HOME WHICH GREATLY AFFECTED HIS DISPOSITION.
SUGGEST DOLE CONTACT CAPTAIN OF M/V AMAZSON (sic) AND
ASCERTAIN AS TO WHY PINEDA HAVE (sic) TO DISEMBARK AND
SUBSEQUENTLY REPATRIATED. IF PINEDA WAS ALREADY SUFFERING
FROM MENTAL DISORDER AS FEARED, HE SHOULD HAVE NOT BEEN
ALLOWED TO TRAVEL HOME ALONE AND SHOULD HAVE BEEN
ACCOMPANIED BY A PHYSICIAN. (underscoring supplied)
The POEA Administrator ruled, and this Court agrees, that since
Pineda attacked the Thai policeman when he was no longer in
complete control of his mental faculties, the aforequoted provision
of the Standard Format Contract of Employment exempting the
employer from liability should not apply in the instant case. Firstly,
the fact that the deceased suffered from mental disorder at the
time of his repatriation means that he must have been deprived of
the full use of his reason, and that thereby, his will must have been
impaired, at the very least. Thus, his attack on the policeman can
in no wise characterized as a deliberate, willful or voluntary act on
his part. Secondly, and apart from that, we also agree that in light
of the deceaseds mental condition, petitioners should have
observed some precautionary measures and should not have
allowed said seaman to travel home alone,[16] and their failure to
do so rendered them liable for the death of Pineda. Indeed, the
obligations and liabilities of the (herein petitioners) do not end upon
the expiration of the contracted period as (petitioners are) duty
bound to repatriate the seaman to the point of hire to effectively
terminate the contract of employment.[17]
The instant case should be distinguished from the case
of Mabuhay, where the deceased, Romulo Sentina, had been in a

state of intoxication, then ran amuck and inflicted injury upon

another person, so that the latter in his own defense fought back
and in the process killed Sentina. Previous to said incident, there
was no proof of mental disorder on the part of Sentina. The cause
of Sentinas death is categorized as a deliberate and willful act on
his own life directly attributable to him. But seaman Pineda was
not similarly situated.
Incidentally, petitioners conjecture that the deceased could
have been on drugs when he assaulted the policeman. If this had
been the case, the Thai police and the Philippine Embassy in
Bangkok would most certainly have made mention thereof in their
respective reports. But they did not do so.
Third Issue: Was Death Work-Related?
Petitioners further argue that the cause of Pinedas death is
not one of the occupational diseases listed by law, and that in the
case of De Jesus vs. Employees Compensation Commission, [18] this
Court held that x x x for the sickness and the resulting disability or
death to be compensable, the sickness must be the result of an
occupational disease listed under Annex A of the Rules (the
Amended Rules on Employees Compensation) with the conditions
set therein satisfied; otherwise, proof must be shown that the risk
of contracting the disease is increased by the working
conditions.[19]
Petitioners reliance on De Jesus is misplaced, as the death and
burial benefits being claimed in this case are not payable by the
Employees Compensation Commission and chargeable against the
State Insurance Fund. These claims arose from the responsibility of
the foreign employer together with the local agency for the safety
of the employee during his repatriation and until his arrival in this
country, i.e., the point of hire. Though the termination of the
employment contract was duly effected in Dubai, still, the
responsibility of the foreign employer to see to it that Pineda was
duly repatriated to the point of hiring subsisted. Section 4, Rule VIII
of the Rules and Regulations Governing Overseas Employment
clearly provides for the duration of the mandatory personal

accident and life insurance covering accidental

dismemberment and disability of overseas workers:

death,

Section 4. Duration of Insurance Coverage. -- The minimum

coverage shall take effect upon payment of the premium and shall
be extended worldwide, on and off the job, for the duration of the
workers contract plus sixty (60) calendar days after termination of
the contract of employment; provided that in no case shall the
duration of the insurance coverage be less than one year.
(underscoring supplied)
The foreign employer may not have been obligated by its
contract to provide a companion for a returning employee, but it
cannot deny that it was expressly tasked by its agreement to
assure the safe return of said worker. The uncaring attitude
displayed by petitioners who, knowing fully well that its employee
had been suffering from some mental disorder, nevertheless still
allowed him to travel home alone, is appalling to say the
least. Such attitude harks back to another time when the landed
gentry practically owned the serfs, and disposed of them when the
latter had grown old, sick or otherwise lost their usefulness.
WHEREFORE,
premises
considered,
the
hereby DISMISSED and the Decision assailed in
is AFFIRMED. Costs against petitioners.
SO ORDERED.

petition
is
this petition

G.R. No. 116629 January 16, 1998

NFD INTERNATIONAL MANNING AGENTS and BARBER
INTERNATIONAL
A/S, petitioners,
vs.
THE NATIONAL LABOR RELATIONS COMMISSION and NELIA
MISADA, for herself and in behalf of her minor children
CAESAR and ALPHA JOY, all surnamed MISADA and HIMAYA
ENVIDIADO, for herself and in behalf of her minor children
HENREA,
HAZEL,
and
HENDRICK,
all
surnamed
ENVIDIADO, respondents.
PUNO, J.:
This special civil action for certiorari seeks to annul and set aside
the decision dated April 25, 1994 of the National Labor Relations
Commission which ordered petitioners to pay a total of U.S.
$26,641.42 as death benefits to private respondents.
Petitioner NFD International Manning Agents, Inc., a domestic
manning corporation, engaged the services of Eduardo P. Misada
and Enrico A. Envidiado to work for petitioner Barber International
A/S (Barber), a Norwegian shipping company. Misada and Envidiado
were hired as second and third officers, respectively, on board the
vessel M/V Pan Victoria. They were to travel from Sweden to South
Korea for a period of ten months from January 1991 to November
1991.
On July 5, 1991, private respondent Nelia Misada received notice
that her husband, Eduardo Misada, died on June 28, 1991 while on
board the M/V Pan Victoria. On July 12 1991, private respondent

Himaya Envidiado likewise received notice that her husband, Enrico

Envidiado, died on board the vessel.
As heirs of the deceased seamen, private respondents, in their
behalf and in behalf of their minor children, filed for death
compensation benefits under the Philippine Overseas Employment
Agency (POEA) Standard Contract of Employment and the
Norwegian National Insurance Scheme (NIS) for Filipino Officers.
Their claims were denied by petitioners.
Private respondents filed separate complaints before the POEA
Adjudication Office. They prayed for U.S. $13,000.00 each as death
compensation under the POEA Standard Contract of Employment
and U.S. $30,000.00 for each wife and U.S. $8,000.00 for each child
under eighteen years under the Norwegian NIS. 1
In their Answer, petitioners claimed that private respondents are
not entitled to death benefits on the ground that the seamen's
deaths were due to their own willful act. They alleged that the
deceased were among three (3) Filipino seamen who implanted
fragments of reindeer horn in their respective sexual organs on or
about June 18, 1991; that due to the lack of sanitary conditions at
the time and place of implantation, all three seamen suffered
"severe tetanus" and "massive viral infections;" that Misada and
Envidiado died within days of the other; that the third seaman,
Arturo Fajardo, narrowly missed death only because the vessel was
at port in Penang, Malaysia at the time the tetanus became
critical. 2
The complaints were consolidated and the parties filed their
respective position papers and documentary evidence. On October
20, 1993, the POEA Administrator dismissed the case for lack of
merit.
Private respondents appealed to respondent Commission. During
the pendency of the appeal, private respondents submitted
additional documentary evidence in support of their Memorandum
on Appeal.

On April 25, 1994, respondent Commission reversed the POEA

Administrator and ordered petitioners to pay private respondents
the following:
(a) To complainant Nelia F. Misada and her two minor
children, Julius Caesar and Alpha Joy, all surnamed Misada:
(1) Death compensation of U.S. $13,000.00 under the
POEA Standard Format;
(b) To complainant Himaya G. Envidiado and her three (3)
minor children, Henrea, Hazel and Hendrick, all surnamed
Envidiado;
(1) Death compensation of U.S. $13,000.00 under the
provisions of the POEA Rules and Regulations; and
(2) Backwages as of July 1991 amounting to U.S.
$641.42 or its peso equivalent.
SO ORDERED. 3
Hence this petition. Petitioners claim that:
I
FIRSTLY, THE NLRC COMMITTED GRAVE ABUSE OF
DISCRETION IN CONSIDERING DOCUMENTS WHICH DO NOT
FORM PART OF THE EVIDENCE IN THE INSTANT CASE,
THEREBY DEPRIVING PETITIONERS OF DUE PROCESS;
II
SECONDLY, THE NLRC COMMITTED GRAVE ABUSE OF
DISCRETION WHEN IT OVERTURNED WHAT HAS BEEN
ESTABLISHED BY CIRCUMSTANTIAL AND DOCUMENTARY
EVIDENCE ON THE BASIS OF DOCUMENTS WHICH AT BEST
ARE HEARSAY; and

III
THIRDLY, THE NLRC COMMITTED GRAVE ABUSE OF
DISCRETION IN REVERSING THE POEA DECISION ON THE
BASIS OF DOCUMENTS WHICH AT BEST ARE NOT
CONCLUSIVE AS TO THE CAUSE OF DEATH OF SUBJECT
SEAMEN. 4
Petitioners claim respondent Commission gravely abused its
discretion in admitting private respondent's additional evidence on
appeal. Petitioners allege that the additional evidence were
"surreptitiously" submitted in violation of petitioner's right to due
process.
The submission of additional evidence before the respondent
Commission is not prohibited by the New Rules of Procedure of the
NLRC. After all, rules of evidence prevailing in courts of law or
equity are not controlling in labor cases. 5 The NLRC and labor
arbiters are directed to use every and all reasonable means to
ascertain the facts in each case speedily and objectively, without
regard to technicalities of law and procedure all in the interest of
substantial justice. 6 In keeping with this directive, it has been held
that the NLRC may consider evidence, such as documents and
affidavits, submitted by the parties for the first time on
appeal. 7 The submission of additional evidence on appeal does not
prejudice the other party for the latter could submit counterevidence. 8
In the case at bar, the additional evidence was submitted by
private respondents before the respondent Commission in their
Memorandum on Appeal dated November 8, 1993. The decision of
respondent Commission was rendered on April 25, 1994, i.e., six (6)
months after the additional documents were submitted. Petitioners
had ample opportunity to object and refute the documents. They
had the chance to submit counter-evidence during this period but
they did not do so. It was only when they moved for reconsideration
of the decision of respondent Commission that they questioned the
admission of these evidence.

The essence of due process is simply an opportunity to be heard, or

as applied to administrative proceedings, a fair and reasonable
opportunity to explain one's side. 9 It is also an opportunity to seek
a reconsideration of the action or ruling complained of. 10 It is not
the denial of the right to be heard but denial of the opportunity to
be heard that constitutes violation of due process of law. 11
Procedural matters having been disposed of, the substantive issue
in this case is whether respondent Commission gravely erred in
finding that the deaths of the two seamen, Eduardo Misada and
Enrico Envidiado, did not come as a result of their willful and
deliberate act.
Part II, Section C, No. 1, Paragraph 1 of the POEA "Standard
Employment Contract Governing the Employment of All Filipino
Seamen on Board Ocean-Going Vessels" 12 provides that:
1. In case of death of the seaman during the term of this
contract, the employer shall pay his beneficiaries the
Philippine Currency equivalent to the amount of U.S.
$50,000.00 and an additional amount of U.S. $7,000.00 to
each child under the age of twenty-one (21) but not
exceeding four children at the exchange rate prevailing
during the time of payment.
xxx xxx xxx 13
Part II, Section C, No. 6 of the same Standards Employment
Contract also provides:
6. No compensation shall be payable in respect of any
injury, incapacity, disability or death resulting from a willful
act on his own life by the seaman, provided, however, that
the employer can prove that such injury, incapacity,
disability or death is directly attributable to him. 14
The death of a seaman during the term of his employment makes
the employer liable to the former's heirs for death compensation
benefits. The POEA Standard Employment Contract fixes the
amount at U.S. $50,000.00 and an additional amount of U.S.

$7,000.00 for each child, not exceeding four, under twenty-one

years of age. The employer becomes liable once it is established
that the seaman died during the effectivity of his employment
contract. This rule, however, is not absolute. The employer may be
exempt from liability if he can successfully prove that the seaman's
death was caused by an injury directly attributable to his deliberate
or willful act. 15
In the instant case, petitioners claim that the deaths of the two
seamen came as a result of their self-inflicted injuries. As proof,
petitioners presented written from the master of the M/V Pan
Victoria, the medical reports of Misada, Envidiado and Arturo
Fajardo, the seaman who survived the infection, and the written
statements of three (3) officers of the vessel taken during a special
inquiry conducted after their deaths.
Petitioners contend that Misada and Envidiado and Arturo Fajardo
implanted fragments of the horn of a reindeer or antelope in their
respective sexual organs while on a voyage on board the M/V Pan
Victoria. The horn was left by a Greek officer from a previous
voyage. Misada found the horn and asked for it from the Chief
Officer. Misada gave the horn to the Second Engineer to carve and
shape for implantation. Thereafter, shaped fragments of the horn
were inserted by Misada and Envidiado subcutaneously into their
respective sex organs on June 19, 1991 while that of Fajardo was
implanted two or three days later. The implantations were made
surgically in the absence of sanitary and sterile facilities.
Several days later, Misada complained of difficulty in swallowing
and breathing. He had severe tonsillitis and was suffering from
spasms and convulsions. 16 The ship captain was compelled to alter
course and drop anchor at Colombo, Sri Lanka for medical
treatment. 17 Misada, however, died on board the vessel on June
28, 1991. His dead body was examined at the Colombo General
Hospital, Colombo, Sri Lanka, where the cause of his death was
placed as "acute laryngo-trachea bronchitis with pneumonia due to
viral infection." 18
It was after the vessel left Colombo on June 30, 1991 that Envidiado
started exhibiting the same symptoms as Misada. The ship captain

had to drop anchor at the nearest port which was Galle, Sri
Lanka. 19 Envidiado was brought ashore and admitted to hospital.
He died a few days later.
On July 3, 1991, Arturo Fajardo started exhibiting the same
symptoms as the two other seamen. On inquiry, the master of the
vessel learned that Misada, Envidiado and Fajardo implanted pieces
of reindeer horn in their sex organs. Fajardo's condition worsened
and the master was compelled to drop anchor at Penang, Malaysia
where Fajardo was admitted to hospital on July 5, 1991. He was
diagnosed to be suffering from tetanus and given medication for
said illness. Fajardo recovered two weeks later. 20
As a result of this chain of events, the master of the vessel
conducted a formal inquiry to verify the cause of the seamen's
deaths and illness. Written testimonies as to the events leading to
their deaths were taken from the master, the Chief Officer, Second
Engineer and Second Cook.
The testimonies of the officers are insufficient to prove the fact that
Misada's and Envidiado's deaths were caused by self-inflicted
injuries. The testimonies were given by people who merely
observed and narrated the circumstances surrounding the deaths
of the two seamen and the illness of Fajardo. Fajardo himself did
not submit any testimony regarding the implantation. The
testimonies of the officers are, at best, hearsay. Moreover, the
officers did not have the competence to make a medical finding as
to the actual cause of the deaths. No autopsy report was presented
to corroborate their testimonies. On the contrary, Eduardo Misada
was medically diagnosed to have died of "acute laryngo-trachea
bronchitis with pneumonia probably due to viral cause." 21 This was
declared in his "Cause of Death Form" after his dead body was
examined on June 29, 1991 by Dr. Sydney Prematirat, a Judicial
Medical Officer at Colombo, Sri Lanka.
Enrico Envidiado was not issued a "Cause of Death Form." While
still alive, he was examined in Galle, Sri Lanka by Consultant
Physician Chandima de Mel who found a wound in his penis and
diagnosed his illness as "severe tetanus." 22 His "Certificate for
Removal of A Dead Body" dated July 8, 1991 issued by Dr. T.L.

Seneviratne, Chief Medical Officer of Health, Municipal Council,

Colombo, Sri Lanka, 23 and "Certificate of Embalming" dated July 8,
1991 issued by Keith Anthony Raymond 24 stated that Envidiado
died of "viral myocarditis natural causes."

ANTONIO CABRERA, EFREN GARCIA, JOSE OJEDA and

RODOLFO PAGWAGAN,respondents.

The "Certificate for Removal of a Dead Body" and "Certificate of

Embalming" are not proofs of the real cause of death. Their
probative value is confined only to the fact of death. 25 These
documentary evidence, however, did not at all indicate that
Envidiado died of tetanus as previously diagnosed by Dr. de Mel.
And despite Dr. de Mel's allegedly correct diagnosis, Envidiado died
a few days later.

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.

As correctly found by respondent Commission, petitioners' evidence

insufficiently proves the fact that the deaths of the two seamen
were caused by their own willful and deliberate act. And even if the
seamen implanted fragments of reindeer horn in their sex organs,
the evidence does not substantially prove that they contracted
tetanus as a result of the unsanitary surgical procedures they
performed on their bodies. Neither does the evidence show that the
tetanus was the direct cause of their deaths.
IN VIEW WHEREOF, the petition is dismissed and the decision of
respondent National Labor Relations Commission in NLRC CA No.
006490-94 is affirmed.
SO ORDERED.

DE CASTRO, J.:

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

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,

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.

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.

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.

Taken from the decision

Commission: t.hqw

of

the

National

Labor

Relations

It appears that on different dates in December, 1978

and January, 1979, the Seamen entered into
separate contracts of employment with the
Company, engaging them to work on board M/T'
Jannu for a period of twelve (12) months. After
verification and approval of their contracts by the
NSB, the Seamen boarded their vessel in Japan.

G.R. No. L-58011 & L-58012 November 18, 1983

VIR-JEN SHIPPING AND MARINE SERVICES, INC., petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, ROGELIO
BISULA RUBEN ARROZA JUAN GACUTNO LEONILO ATOK, NILO
CRUZ, ALVARO ANDRADA, NEMESIO ADUG SIMPLICIO
BAUTISTA, ROMEO ACOSTA, and JOSE ENCABO respondents.
RESOLUTION
GUTIERREZ, JR., J.:
Before the Court en banc is a motion to reconsider the decision
promulgated on July 20, 1982 which set aside the decision of
respondent National Labor Relations Commission and reinstated the
decision of the National Seamen Board.
To better understand the issues raised in the motion for
reconsideration, we reiterate the background facts of the case,

On 10 January 1919, the master of the vessel

complainant Rogelio H. Bisula, received a cable from
the Company advising him of the possibility that the
vessel might be directed to call at ITF-controlled
ports said at the same time informing him of the
procedure to be followed in the computation of the
special or additional compensation of crew members
while in said ports. ITF is the acronym for the
International Transport Workers Federation, a militant
international labor organization with affiliates in
different ports of the world, which reputedly can tie
down a vessel in a port by preventing its loading or
unloading, This is a sanction resorted to by ITF to
enforce the payment of its wages rates for seafarers
the so-called ITF rates, if the wages of the crew
members of a vessel who have affiliated with it are
below its prescribed rates.) In the same cable of the
Company, the expressed its regrets for hot clarifying
earlier the procedure in computing the special
compensation as it thought that the vessel would
'trade in Caribbean ports only.
On 22 March 1979, the Company sent another cable
to complainant Bisula, this time informing him of the
respective amounts each of the officers and crew
members would receive as special compensation
when the vessel called at the port of Kwinana
Australia, an ITF-controlled port. This was followed by
another cable on 23 March 1979, informing him that

the officers and crew members had been enrolled as

members of the ITF in Sidney, Australia, and that the
membership fee for the 28 personnel complement of
the vessel had already been paid.
In answer to the Company's cable last mentioned,
complainant Bisula, in representation of the other
officers and crew members, sent on 24 March 1979 a
cable informing the Company that the officers and
crew members were not agreeable to its 'suggestion';
that they were not contented with their present
salaries 'based on the volume of works, type of ship
with hazardous cargo and registered in a world wide
trade': that the 'officers and crew (were) not
interested in ITF membership if not actually paid with
ITF rate that their 'demand is only 50% increase
based on present basic salary and that the proposed
wage increase is the 'best and only solution to solve
ITF problem' since the Company's salary rates
'especially in tankers (are) very far in comparison
with other shipping agencies in Manila ...
In reply, the Company proposed a 25% increase in
the basic pay of the complainant crew members,
although it claimed, that it would "suffer and absorb
considerable amount of losses." The proposal was
accepted by the Seamen with certain conditions
which were accepted by the Company. Conformably
with the agreement of the parties which was effected
through the cables abovementioned, the Seamen
were paid their new salary rates.
Subsequently, the Company sought authority from
the NSB to cancel the contracts of employment of
the Seamen, claiming that its principals had
terminated their manning agreement because of the
actuations of the Seamen. The request was granted
by the NSB Executive Director in a letter dated 10
April 1979. Soon thereafter, the Company cabled the
Seamen informing them that their contracts would be

terminated upon the vessel's arrival in Japan. On 19

April 1979 they Arere asked to disembark from the
vessel, their contracts were terminated, and they
were repatriated to Manila. There is no showing that
the Seamen were given the opportunity to at least
comment on the Company's request for the
cancellation of their contracts, although they had
served only three (3) out of the twelve (12) months'
duration of their contracts.
The private respondents filed a complaint for illegal dismissal and
non-payment of earned wages with the National Seamen Board.
The Vir-jen Shipping and Marine Services Inc. in turn filed a
complaint for breach of contract and recovery of excess salaries
and overtime pay against the private respondents. On July 2, 1980,
the NSB rendered a decision declaring that the seamen breached
their employment contracts when they demanded and received
from Vir-jen Shipping wages over and above their contracted rates.
The dismissal of the seamen was declared legal and the seamen
were ordered suspended.
The seamen appealed the decision to the NLRC which reversed the
decision of the NSB and required the petitioner to pay the wages
and other monetary benefits corresponding to the unexpired
portion of the manning contract on the ground that the termination
of the contract by the petitioner was without valid cause. Vir-jen
Shipping filed the present petition.
The private respondents submit the following issues in their motion
for reconsideration: t.hqw
A. THIS HONORABLE COURT DID VIOLENCE TO LAW
AND JURISPRUDENCE WHEN IT HELD THAT THE
FINDING OF FACT OF THE NATIONAL SEAMEN BOARD
THAT THE SEAMEN VIOLATED THEIR CONTRACTS IS
MORE CREDIBLE THAN THE FINDING OF FACT OF THE
NATIONAL LABOR RELATIONS COMMISSION THAT THE
SEAMEN DID NOT VIOLATE THEIR CONTRACT.

B. THIS HONORABLE COURT ERRED IN FINDING THAT

VIR-JEN'S HAVING AGREED TO A 25% INCREASE OF
THE SEAMEN'S BASIC WAGE WAS NOT VOLUNTARY
BUT WAS DUE TO THREATS.
C. THIS HONORABLE COURT ERRED WHEN IT TOOK
COGNIZANCE OF THE ADDENDUM AGREEMENT;
ASSUMING THAT THE ADDENDUM AGREEMENT
COULD
BE
TAKEN
COGNIZANCE
OF,
THIS
HONORABLE COURT ERRED WHEN' IT FOUND THAT
PRIVATE RESPONDENTS HAD VIOLATED THE SAME.
D, THIS HONORABLE COURT ERRED WHEN IT DID
NOT FIND PETITIONER VIRJEN LIABLE FOR HAVING
TERMINATED BEFORE EXPIRY DATE THE EMPLOYMENT
CONTRACTS OF PRIVATE RESPONDENTS, THERE
BEING NO LEGAL AND JUSTIFIABLE GROUND FOR
SUCH TERMINATION.
E. THIS HONORABLE COURT ERRED IN FINDING THAT
THE PREPARATION BY PETITIONER OF THE TWO
PAYROLLS AND THE EXECUTION OF THE SIDE
CONTRACT WERE NOT MADE IN BAD FAITH.
F.
THIS
HONORABLE
COURT
INADVERTENTLY
DISCRIMINATED AGAINST PRIVATE RESPONDENTS.
At the outset, we are faced with the question whether or not the
Court en banc should give due course to the motion for
reconsideration inspite of its having been denied twice by the
Court's Second Division. The case was referred to and accepted by
the Court en banc because of the movants' contention that the
decision in this case by the Second Division deviated from Wallem
Phil. Shipping Inc. v. Minister of Labor (L-50734-37, February 20,
1981), a First Division case with the same facts and issues. We are
constrained to answer the initial question in the affirmative.
A fundamental postulate of Philippine Constitutional Law is the fact,
that there is only one Supreme Court from whose decisions all other
courts are required to take their bearings. (Albert v. Court of First

Instance, 23 SCRA 948; Barrera v. Barrera, 34 SCRA 98; Tugade v.

Court of Appeals, 85 SCRA 226). The majority of the Court's work is
now performed by its two Divisions, but the Court remains one
court, single, unitary, complete, and supreme. Flowing from this
nature of the Supreme Court is the fact that, while ' individual
Justices may dissent or partially concur with one another, when the
Court states what the law is, it speaks with only one voice. And that
voice being authoritative should be a clear as possible.
Any doctrine or principle of law laid down by the Court, whether en
banc or in Division, may be modified or reversed only by the Court
en banc. (Section 2(3), Article X, Constitution.) In the rare instances
when one Division disagrees in its views with the other Division, or
the necessary votes on an issue cannot be had in a Division, the
case is brought to the Court en banc to reconcile any seeming
conflict, to reverse or modify an earlier decision, and to declare the
Court's doctrine. This is what has happened in this case.
The decision sought to be reconsidered appears to be a deviation
from the Court's decision, speaking through the First Division,
in Wallem Shipping, Inc. v. Hon. Minister of Labor (102 SCRA 835).
Faced with two seemingly conflicting resolutions of basically the
same issue by its two Divisions, the Court. therefore, resolved to
transfer the case to the Court en banc. Parenthetically, the
petitioner's comment on the third motion for reconsideration states
that the resolution of the motion might be the needed vehicle to
make the ruling in the Wallem case clearer and more in time with
the underlying principles of the Labor Code. We agree with the
petitioner.
After an exhaustive, painstaking, and perspicacious consideration
of the motions for reconsideration and the comments, replies, and
other pleadings related thereto, the Court en banc is constrained to
grant the motions. To grant the motion is to keep faith with the
constitutional mandate to afford protection to labor and to assure
the rights of workers to self-organization and to just and humane
conditions of work. We sustain the decision of the respondent
National labor Relations Commission.

There are various arguments raised by the petitioners but the

common thread running through all of them is the contention, if not
the dismal prophecy, that if the respondent seamen are sustained
by this Court, we would in effect "kill the en that lays the golden
egg." In other words, Filipino seamen, admittedly among the best in
the world, should remain satisfied with relatively lower if not the
lowest, international rates of compensation, should not agitate for
higher wages while their contracts of employment are subsisting,
should accept as sacred, iron clad, and immutable the side
contracts which require them to falsely pretend to be members of
international labor federations, pretend to receive higher salaries at
certain foreign ports only to return the increased pay once the ship
leaves that port, should stifle not only their right to ask for
improved terms of employment but their freedom of speech and
expression, and should suffer instant termination of employment at
the slightest sign of dissatisfaction with no protection from their
Government and their courts. Otherwise, the petitioners contend
that Filipinos would no longer be accepted as seamen, those
employed would lose their jobs, and the still unemployed would be
left hopeless.
This is not the first time and it will not be the last where the threat
of unemployment and loss of jobs would be used to argue against
the interests of labor; where efforts by workingmen to better their
terms of employment would be characterized as prejudicing the
interests of labor as a whole.
In 1867 or one hundred sixteen years ago. Chief Justice Beasley of
the Supreme Court of New Jersey was ponente of the court's
opinion declaring as a conspiracy the threat of workingmen to
strike in connection with their efforts to promote unionism, t.
hqw
It is difficult to believe that a right exists in law which
we can scarcely conceive can produce, in any
posture of affairs, other than injuriois results. It is
simply the right of workmen, by concert of action,
and by taking advantage of their position, to control
the business of another, I am unwilling to hold that
a right which cannot, in any, event, be advantageous

to the employee, and which must always be hurtful

to the employer, exists in law. In my opinion this
indictment sufficiently shows that the force of the
confederates was brought to bear upon their
employer for the purpose of oppression and mischief
and that this amounts to a conspiracy, (State v.
Donaldson, 32 NJL 151, 1867. Cited in Chamberlain,
Sourcebook on Labor, p. 13. Emphasis supplied)
The same arguments have greeted every major advance in the
rights of the workingman. And they have invariably been proved
unfounded and false.
Unionism, employers' liability acts, minimum wages, workmen's
compensation, social security and collective bargaining to name a
few were all initially opposed by employers and even well meaning
leaders of government and society as "killing the hen or goose
which lays the golden eggs." The claims of workingmen were
described as outrageously injurious not only to the employer but
more so to the employees themselves before these claims or
demands were established by law and jurisprudence as "rights" and
before these were proved beneficial to management, labor, and the
nation as a whole beyond reasonable doubt.
The case before us does not represent any major advance in the
rights of labor and the workingmen. The private respondents
merely sought rights already established. No matter how much the
petitioner-employer tries to present itself as speaking for the entire
industry, there is no evidence that it is typical of employers hiring
Filipino seamen or that it can speak for them.
The contention that manning industries in the Philippines would not
survive if the instant case is not decided in favor of the petitioner is
not supported by evidence. The Wallem case was decided on
February 20, 1981. There have been no severe repercussions, no
drying up of employment opportunities for seamen, and none of
the dire consequences repeatedly emphasized by the petitioner.
Why should Vir-jen be all exception?

The wages of seamen engaged in international shipping are

shouldered by the foreign principal. The local manning office is an
agent whose primary function is recruitment and who .usually gets
a lump sum from the shipowner to defray the salaries of the crew.
The hiring of seamen and the determination of their compensation
is subject to the interplay of various market factors and one key
factor is how much in terms of profits the local manning office and
the foreign shipowner may realize after the costs of the voyage are
met. And costs include salaries of officers and crew members.
Filipino seamen are admittedly as competent and reliable as
seamen from any other country in the world. Otherwise, there
would not be so many of them in the vessels sailing in every ocean
and sea on this globe. It is competence and reliability, not cheap
labor that makes our seamen so greatly in demand. Filipino seamen
have never demanded the same high salaries as seamen from the
United States, the United Kingdom, Japan and other developed
nations. But certainly they are entitled to government protection
when they ask for fair and decent treatment by their employer.-,
and when they exercise the right to petition for improved terms of
employment, especially when they feel that these are sub-standard
or are capable of improvement according to internationally
accepted rules. In the domestic scene, there are marginal
employers who prepare two sets of payrolls for their employees
one in keeping with minimum wages and the other recording the
sub-standard wages that the employees really receive, The reliable
employers, however, not only meet the minimums required by fair
labor standards legislation but even go way above the minimums
while earning reasonable profits and prospering. The same is true
of international employment. There is no reason why this Court and
the Ministry of Labor and. Employment or its agencies and
commissions should come out with pronouncements based on the
standards and practices of unscrupulous or inefficient shipowners,
who claim they cannot survive without resorting to tricky and
deceptive schemes, instead of Government maintaining labor law
and jurisprudence according to the practices of honorable,
competent, and law-abiding employers, domestic or foreign.

that is not sufficient reason why the NSB or the ILRC should not
stand by the former instead of listening to unsubstantiated fears
that they would be killing the hen which lays the golden eggs.
Prescinding from the above, we now hold that neither the National
Seamen Board nor the National Labor Relations Commission should,
as a matter of official policy, legitimize and enforce cubious
arrangements where shipowners and seamen enter into fictitious
contracts similar to the addendum agreements or side contracts in
this case whose purpose is to deceive. The Republic of the
Philippines and its ministries and agencies should present a more
honorable and proper posture in official acts to the whole world,
notwithstanding our desire to have as many job openings both here
and abroad for our workers. At the very least, such as sensitive
matter involving no less than our dignity as a people and the
welfare of our workingmen must proceed from the Batasang
Pambansa in the form of policy legislation, not from administrative
rule making or adjudication
Another issue raised by the movants is whether or not the seamen
violated their contracts of employment.
The form contracts approved by the National Seamen Board are
designed to protect Filipino seamen not foreign shipowners who can
take care of themselves. The standard forms embody' the basic
minimums which must be incorporated as parts of the employment
contract. (Section 15, Rule V, Rules and Regulations Implementing
the Labor Code.) They are not collective bargaining agreements or
immutable contracts which the parties cannot improve upon or
modify in the course of the agreed period of time. To state,
therefore, that the affected seamen cannot petition their employer
for higher salaries during the 12 months duration of the contract
runs counter to established principles of labor legislation. The
National Labor Relations Commission, as the appellate tribunal from
decisions of the National Seamen Board, correctly ruled that the
seamen did not violate their contracts to warrant their dismissal.
The respondent Commission ruled: t.hqw

If any minor advantages given to Filipino seamen may somehow cut

into the profits of local manning agencies and foreign shipowners,

In the light of all the foregoing facts, we find that the

cable of the seamen proposing an increase in their
wage rates was not and could not have been
intended as a threat to comp el the Company to
accede to their proposals. But even assuming, if only
for the sake of argument, that the demand or
proposal for a wage increase was accompanied by a
threat that they would report to ITF if the Company
did not accede to the contract revision - although
there really was no such threat as pointed out earlier
the Seamen should not be held at fault for asking
such a demand. In the same case cited above, the
Supreme Court held: t.hqw
Petitioner claims that the dismissal of
private respondents was justified
because the latter threatened the ship
authorities in acceding to their
demands, and this constitutes serious
misconduct as contemplated by the
Labor Code. This contention is not welltaken. But even if there had been such
a threat, respondents' behavior should
not be censured because it is but
natural for them to employ some
means of pressing their demands for
petitioner, the refusal to abide with the
terms of the Special Agreement, to
honor and respect the same, They
were only acting in the exercise of
their rights, and to deprive them of
their freedom of expression is contrary
to law and public policy. There is no
serious misconduct to speak of in the
case at bar which would justify
respondents' dismissal just because of
their firmness in their demand for the
fulfillment
by
petitioner
of
its
obligation it entered into without any
coercion, specially on the part of

private
respondents.
supplied).

(Emphasis

The above citation is from Wallem.

The facts show that when the respondents boarded the M/T Jannu
there was no intention to send their ship to Australia. On January
10, 1979, the petitioner sent a cable to respondent shipmaster
Bisula informing him of the procedure to be followed in the
computation of special compensation of crewmembers while in ITF
controlled ports and expressed regrets for not having earlier
clarified the procedure as it thought that the vessel would trade in
Carribean ports only.
On March 22, 1979, the petitioner sent another cable informing
Bisula of the special compensation when the ship would call at
Kwinana Australia.
The following day, shipmaster Bisula cabled Vir-jen stating that the
officers and crews were not interested in ITF membership if not
paid ITF rates and that their only demand was a 50 percent
increase based on their then salaries. Bisula also pointed out that
Vir-jen rates were "very far in comparison with other shipping
agencies in Manila."
In reply, Vir-jen counter proposed a 25 percent increase. Only after
Kyoei Tanker Co., Ltd., declined to increase the lumps sum amount
given monthly to Vir-jen was the decision to terminate the
respondents' employment formulated.
The facts show that Virjen Initiated the discussions which led to the
demand for increased . The seamen made a proposal and the
petitioner organized with a counter-proposal. The ship had not vet
gone to Australia or any ITF controlled port. There was absolutely
no mention of any strike. much less a threat to strike. The seamen
had done in act which under Philippine law or any other civilized
law would be termed illegal, oppressive, or malicious. Whatever
pressure existed, it was mild compared to accepted valid modes of
labor activity.

We reiterate our ruling in Wallem. t.hqw

Petitioner claims that the dismissal of
private respondents was justified
because the latter threatened the ship
authorities in acceding to their
demands, and this constitutes serious
misconduct as contemplated by the
Labor Code. This contention is not welltaken. The records fail to establish
clearly the commission of any threat,
But even if there had been such a
threat, respondents' behavior should
not be censured because it is but
natural for them to employ some
means of pressing their demands for
petitioner, who refused to abide with
the terms of the Special Agreement, to
honor and respect the same, They
were only acting in the exercise of
their rights, and to deprive them of
their form of expression is contrary to
law and public policy. ...
Our dismissing the petition is premised on the assumption that the
Ministry of Labor and Employment and all its agencies exist
primarily for the workinginan's interests and, of course, the nation
as a whole. The points raised by the Solicitor-General in his
comments refer to the issue of allowing what the petitioner
importunes under the argument of "killing the hen which lays the
golden eggs." This is one of policy which should perhaps be
directed to the Batasang Pambansa and to our country's other
policy makers for more specific legislation on the matter, subject to
the constitutional provisions protecting labor, promoting social
justice, and guaranteeing non-abridgement of the freedom of
speech, press, peaceable assembly and petition. We agree with the
movants that there is no showing of any cause, which under the
Labor Code or any current applicable law, would warrant the
termination of the respondents' services before the expiration of
their contracts. The Constitution guarantees State assurance of the

rights of workers to security of tenure. (Sec. 9, Article II,

Constitution). Presumptions and provisions of law, the evidence on
record, and fundamental State policy all dictate that the motions
for reconsideration should be granted.
WHEREFORE, the motions for reconsideration are hereby GRANTED.
The petition is DISMISSED for lack of merit. The decision of the
National Labor Relations Commission is AFFIRMED. No costs.
SO ORDERED.

G.R. Nos. L-57999, 58143-53 August 15, 1989

RESURRECCION SUZARA, CESAR DIMAANDAL, ANGELITO
MENDOZA, ANTONIO TANEDO, AMORSOLO CABRERA,
DOMINADOR SANTOS, ISIDRO BRACIA, RAMON DE BELEN,
ERNESTO SABADO, MARTIN MALABANAN, ROMEO HUERTO
and VITALIANO PANGUE, petitioners,
vs.
THE HON. JUDGE ALFREDO L. BENIPAYO and MAGSAYSAY
LINES, INC., respondents.
G.R. Nos. L-64781-99 August 15, 1989
RESURRECCION SUZARA, CESAR DIMAANDAL, ANGELITO
MENDOZA, ANTONIO TANEDO, RAYMUNDO PEREZ,
AMORSOLO CABRERA, DOMINADOR SANTOS, ISIDRO
BRACIA, CATALINO CASICA, VITALIANO PANGUE, RAMON DE
BELEN, EDUARDO PAGTALUNAN, ANTONIO MIRANDA,
RAMON UNIANA, ERNESTO SABADO, MARTIN MALABANAN,
ROMEO HUERTO and WILFREDO CRISTOBAL, petitioners,
vs.
THE HONORABLE NATIONAL LABOR RELATIONS
COMMISSION, THE NATIONAL SEAMEN BOARD (now the
Philippine Overseas Employment Administration), and
MAGSAYSAY LINES, INC., respondents.
GUTIERREZ, JR., J.:

These petitions ask for a re-examination of this Court's precedent

setting decision in Vir-Jen Shipping and Marine Services Inc. v.
National Labor Relations Commission, et al. (125 SCRA 577 [1983]).
On constitutional, statutory, and factual grounds, we find no reason
to disturb the doctrine in Vir-Jen Shipping and to turn back the clock
of progress for sea-based overseas workers. The experience gained
in the past few years shows that, following said doctrine, we should
neither deny nor diminish the enjoyment by Filipino seamen of the
same rights and freedoms taken for granted by other working-men
here and abroad.
The cases at bar involve a group of Filipino seamen who were
declared by the defunct National Seamen Board (NSB) guilty of
breaching their employment contracts with the private respondent
because they demanded, upon the intervention and assistance of a
third party, the International Transport Worker's Federation (ITF),
the payment of wages over and above their contracted rates
without the approval of the NSB. The petitioners were ordered to
reimburse the total amount of US$91,348.44 or its equivalent in
Philippine Currency representing the said over-payments and to be
suspended from the NSB registry for a period of three years. The
National Labor Relations Commission (NLRC) affirmed the decision
of the NSB.
In a corollary development, the private respondent, for failure of
the petitioners to return the overpayments made to them upon
demand by the former, filed estafa charges against some of the
petitioners. The criminal cases were eventually consolidated in the
sala of then respondent Judge Alfredo Benipayo. Hence, these
consolidated petitions, G.R. No. 64781-99 and G.R. Nos. 57999 and
58143-53, which respectively pray for the nullification of the
decisions of the NLRC and the NSB, and the dismissal of the
criminal cases against the petitioners.
The facts are found in the questioned decision of the NSB in G.R.
No. 64781-99.
From the records of this case it appears that the facts
established and/or admitted by the parties are the
following: that on different dates in 1977 and 1978

respondents entered into separate contracts of

employment (Exhs. "B" to "B-17", inclusive) with
complainant (private respondent) to work aboard
vessels owned/operated/manned by the latter for a
period of 12 calendar months and with different
rating/position, salary, overtime pay and allowance,
hereinbelow specified: ...; that aforesaid employment
contracts were verified and approved by this Board;
that on different dates in April 1978 respondents
(petitioners) joined the M/V "GRACE RIVER"; that on
or about October 30, 1978 aforesaid vessel, with the
respondents on board, arrived at the port of
Vancouver, Canada; that at this port respondent
received additional wages under rates prescribed by
the Intemational Transport Worker's Federation (ITF)
in the total amount of US$98,261.70; that the
respondents received the amounts appearing
opposite their names, to wit: ...; that aforesaid
amounts were over and above the rates of pay of
respondents as appearing in their employment
contracts approved by this Board; that on November
10, 1978, aforesaid vessel, with respondent on
board, left Vancouver, Canada for Yokohama, Japan;
that on December 14, 1978, while aforesaid vessel,
was at Yura, Japan, they were made to disembark.
(pp. 64-66, Rollo)
Furthermore, according to the petitioners, while the vessel was
docked at Nagoya, Japan, a certain Atty. Oscar Torres of the NSB
Legal Department boarded the vessel and called a meeting of the
seamen including the petitioners, telling them that for their own
good and safety they should sign an agreement prepared by him on
board the vessel and that if they do, the cases filed against them
with NSB on November 17, 1978 would be dismissed. Thus, the
petitioners signed the. "Agreement" dated December 5, 1978.
(Annex C of Petition) However, when they were later furnished
xerox copies of what they had signed, they noticed that the line
"which amount(s) was/were received and held by CREWMEMBERS
in trust for SHIPOWNERS" was inserted therein, thereby making it
appear that the amounts given to the petitioners representing the

increase in their wages based on ITF rates were only received by

them in trust for the private respondent.
When the vessel reached Manila, the private respondent demanded
from the petitioners the "overpayments" made to them in Canada.
As the petitioners refused to give back the said amounts, charges
were filed against some of them with the NSB and the Professional
Regulations Commission. Estafa charges were also filed before
different branches of the then Court of First Instance of Manila
which, as earlier stated, were subsequently consolidated in the sala
of the respondent Judge Alfredo Benipayo and which eventually led
to G.R. Nos. 57999 and 58143-53.
In G.R. Nos. 64781-99, the petitioners claimed before the NSB that
contrary to the private respondent's allegations, they did not
commit any illegal act nor stage a strike while they were on board
the vessel; that the "Special Agreement" entered into in Vancouver
to pay their salary differentials is valid, having been executed after
peaceful negotiations. Petitioners further argued that the amounts
they received were in accordance with the provision of law, citing
among others, Section 18, Rule VI, Book I of the Rules and
Regulations Implementing the Labor Code which provides that "the
basic minimum salary of seamen shall not be less than the
prevailing minimum rates established by the International Labor
Organization (ILO) or those prevailing in the country whose flag the
employing vessel carries, whichever is higher ..."; and that the
"Agreement" executed in Nagoya, Japan had been forced upon
them and that intercalations were made to make it appear that
they were merely trustees of the amounts they received in
Vancouver.
On the other hand, the private respondent alleged that the
petitioners breached their employment contracts when they, acting
in concert and with the active participations of the ITF while the
vessel was in Vancouver, staged an illegal strike and by means of
threats, coercion and intimidation compelled the owners of the
vessel to pay to them various sums totalling US$104,244.35; that
the respondent entered into the "Special Agreement" to pay the
petitioners' wage differentials because it was under duress as the
vessel would not be allowed to leave Vancouver unless the said

agreement was signed, and to prevent the shipowner from

incurring further delay in the shipment of goods; and that in view of
petitioners' breach of contract, the latter's names must be removed
from the NSB's Registry and that they should be ordered to return
the amounts they received over and above their contracted rates.
The respondent NSB ruled that the petitioners were guilty of breach
of contract because despite subsisting and valid NSB-approved
employment contracts, the petitioners sought the assistance of a
third party (ITF) to demand from the private respondent wages in
accordance with the ITF rates, which rates are over and above their
rates of pay as appearing in their NSB-approved contracts. As
bases for this conclusion, the NSB stated:
1) The fact that respondents sought the aid of a third
party (ITF) and demanded for wages and overtime
pay based on ITF rates is shown in the entries of their
respective Pay-Off Clearance Slips which were
marked as their Exhs. "1" to "18", and we quote
"DEMANDED ITF WAGES, OVERTIME, DIFFERENTIALS
APRIL TO OCTOBER 1978". Respondent Suzara
admitted that the entries in his Pay-Off Clearance
Slip (Exh. "1") are correct (TSN., p. 16, Dec. 6,
1979).lwph1.t Moreover,
it
is
the
policy
(reiterated very often) by the ITF that it does not
interfere in the affairs of the crewmembers and
masters and/or owners of a vessel unless its
assistance
is sought
by
the
crewmembers
themselves. Under this pronounced policy of the ITF,
it is reasonable to assume that the representatives of
the ITF in Vancouver, Canada assisted and
intervened by reason of the assistance sought by the
latter.
2) The fact that the ITF assisted and intervened for
and in behalf of the respondents in the latter's
demand for higher wages could be gleaned from the
answer of the respondents when they admitted that
the ITF acted in their behalf in the negotiations for
increase of wages. Moreover, respondent Cesar

Dimaandal admitted that the ITF differential pay was

computed by the ITF representative (TSN, p. 7, Dec.
12, 1979)
3) The fact that complainant and the owner/operator
of the vessel were compelled to sign the Special
Agreement (Exh. "20") and to pay ITF differentials to
respondents in order not to delay the departure of
the vessel and to prevent further losses is shown in
the "Agreement" (Exhs. "R-21") ... (pp. 69-70, Rollo)
The NSB further said:
While the Board recognizes the rights of the
respondents to demand for higher wages, provided
the means are peaceful and legal, it could not,
however, sanction the same if the means employed
are violent and illegal. In the case at bar, the means
employed are violent and illegal for in demanding
higher wages the respondents sought the aid of a
third party and in turn the latter intervened in their
behalf and prohibited the vessel from sailing unless
the owner and/or operator of the vessel acceded to
respondents' demand for higher wages. To avoid
suffering further incalculable losses, the owner
and/or operator of the vessel had no altemative but
to pay respondents' wages in accordance with the ITF
scale. The Board condemns the act of a party who
enters into a contract and with the use of force/or
intimidation causes the other party to modify said
contract. If the respondents believe that they have a
valid ground to demand from the complainant a
revision of the terms of their contracts, the same
should have been done in accordance with law and
not thru illegal means. (at p. 72, Rollo).
Although the respondent NSB found that the petitioners were
entitled to the payment of earned wages and overtime
pay/allowance from November 1, 1978 to December 14, 1978, it
nevertheless ruled that the computation should be based on the

rates of pay as appearing in the petitioners' NSB-approved

contracts. It ordered that the amounts to which the petitioners are
entitled under the said computation should be deducted from the
amounts that the petitioners must return to the private respondent.
On appeal, the NLRC affirmed the NSB's findings. Hence, the
petition in G.R. Nos. 64781-99.
Meanwhile, the petitioners in G.R. Nos. 57999 and 58143-53 moved
to quash the criminal cases of estafa filed against them on the
ground that the alleged crimes were committed, if at all, in
Vancouver, Canada and, therefore, Philippine courts have no
jurisdiction. The respondent judge denied the motion. Hence, the
second petition.
The principal issue in these consolidated petitions is whether or not
the petitioners are entitled to the amounts they received from the
private respondent representing additional wages as determined in
the special agreement. If they are, then the decision of the NLRC
and NSB must be reversed. Similarly, the criminal cases of estafa
must be dismissed because it follows as a consequence that the
amounts received by the petitioners belong to them and not to the
private respondent.
In arriving at the questioned decision, the NSB ruled that the
petitioners are not entitled to the wage differentials as determined
by the ITF because the means employed by them in obtaining the
same were violent and illegal and because in demanding higher
wages the petitioners sought the aid of a third party, which, in turn,
intervened in their behalf and prohibited the vessel from sailing
unless the owner and/or operator of the vessel acceded to
respondents' demand for higher wages. And as proof of this
conclusion, the NSB cited the following: (a) the entries in the
petitioners Pay-Off Clearance Slip which contained the phrase
"DEMANDED ITF WAGES ..."; (b) the alleged policy of the ITF in not
interfering with crewmembers of a vessel unless its intervention is
sought by the crewmembers themselves; (c), the petitioners'
admission that ITF acted in their behalf; and (d) the fact that the
private respondent was compelled to sign the special agreement at
Vancouver, Canada.

There is nothing in the public and private respondents' pleadings,

to support the allegations that the petitioners used force and
violence to secure the special agreement signed in Vancouver.
British Columbia. There was no need for any form of intimidation
coming from the Filipino seamen because the Canadian
Brotherhood of Railways and Transport Workers (CBRT), a strong
Canadian labor union, backed by an international labor federation
was actually doing all the influencing not only on the ship-owners
and employers but also against third world seamen themselves
who, by receiving lower wages and cheaper accommodations, were
threatening the employment and livelihood of seamen from
developed nations.
The bases used by the respondent NSB to support its decision do
not prove that the petitioners initiated a conspiracy with the ITF or
deliberately sought its assistance in order to receive higher wages.
They only prove that when ITF acted in petitioners' behalf for an
increase in wages, the latter manifested their support. This would
be a logical and natural reaction for any worker in whose benefit
the ITF or any other labor group had intervened. The petitioners
admit that while they expressed their conformity to and their
sentiments for higher wages by means of placards, they,
nevertheless, continued working and going about their usual
chores. In other words, all they did was to exercise their freedom of
speech in a most peaceful way. The ITF people, in turn, did not
employ any violent means to force the private respondent to
accede to their demands. Instead, they simply applied effective
pressure when they intimated the possibility of interdiction should
the shipowner fail to heed the call for an upward adjustment of the
rates of the Filipino seamen. Interdiction is nothing more than a
refusal of ITF members to render service for the ship, such as to
load or unload its cargo, to provision it or to perform such other
chores ordinarily incident to the docking of the ship at a certain
port. It was the fear of ITF interdiction, not any action taken by the
seamen on board the vessel which led the shipowners to yield.
The NSB's contusion that it is ITF's policy not to intervene with the
plight of crewmembers of a vessel unless its intervention was
sought is without basis. This Court is cognizant of the fact that
during the period covered by the labor controversies in Wallem

Philippines Shipping, Inc. v. Minister of Labor (102 SCRA 835

[1981]; Vir-Jen Shipping and Marine Services, Inc. v. NLRC (supra)
and these consolidated petitions, the ITF was militant worldwide
especially in Canada, Australia, Scandinavia, and various European
countries, interdicting foreign vessels and demanding wage
increases for third world seamen. There was no need for Filipino or
other seamen to seek ITF intervention. The ITF was waiting on its
own volition in all Canadian ports, not particularly for the
petitioners' vessel but for all ships similarly situated. As earlier
stated, the ITF was not really acting for the petitioners out of pure
altruism. The ITF was merely protecting the interests of its own
members. The petitioners happened to be pawns in a higher and
broader struggle between the ITF on one hand and shipowners and
third world seamen, on the other. To subject our seamen to criminal
prosecution and punishment for having been caught in such a
struggle is out of the question.
As stated in Vir-Jen Shipping (supra):
The seamen had done no act which under Philippine
law or any other civilized law would be termed illegal,
oppressive, or malicious. Whatever pressure existed,
it was mild compared to accepted and valid modes of
labor activity. (at page 591)
Given these factual situations, therefore, we cannot affirm the NSB
and NLRC's finding that there was violence, physical or otherwise
employed by the petitioners in demanding for additional wages.
The fact that the petitioners placed placards on the gangway of
their ship to show support for ITF's demands for wage differentials
for their own benefit and the resulting ITF's threatened interdiction
do not constitute violence. The petitioners were exercising their
freedom of speech and expressing sentiments in their hearts when
they placed the placard We Want ITF Rates." Under the facts and
circumstances of these petitions, we see no reason to deprive the
seamen of their right to freedom of expression guaranteed by the
Philippine Constitution and the fundamental law of Canada where
they happened to exercise it.

As we have ruled in Wallem Phil. Shipping Inc. v. Minister of Labor,

et al. supra:
Petitioner claims that the dismissal of private
respondents was justified because the latter
threatened the ship authorities in acceding to their
demands, and this constitutes serious misconduct as
contemplated by the Labor Code. This contention is
now well-taken. The records fail to establish clearly
the commission of any threat. But even if there had
been such a threat, respondents' behavior should not
be censured because it is but natural for them to
employ some means of pressing their demands for
petitioner, who refused to abide with the terms of the
Special Agreement, to honor and respect the same.
They were only acting in the exercise of their rights,
and to deprive them of their freedom of expression is
contrary to law and public policy. ... (at page 843)
We likewise, find the public respondents' conclusions that the acts
of the petitioners in demanding and receiving wages over and
above the rates appearing in their NSB-approved contracts is in
effect an alteration of their valid and subsisting contracts because
the same were not obtained through. mutual consent and without
the prior approval of the NSB to be without basis, not only because
the private respondent's consent to pay additional wages was not
vitiated by any violence or intimidation on the part of the
petitioners but because the said NSB-approved form contracts are
not unalterable contracts that can have no room for improvement
during their effectivity or which ban any amendments during their
term.
For one thing, the employer can always improve the working
conditions without violating any law or stipulation.
We stated in the Vir-Jen case (supra) that:
The form contracts approved by the National Seamen
Board are designed to protect Filipino seamen not
foreign shipowners who can take care of themselves.

The standard forms embody the basic minimums

which must be incorporated as parts of the
employment contract. (Section 15, Rule V, Rules and
Regulations
Implementing
the
Labor
Code).lwph1.t They are not collective bargaining
agreements or immutable contracts which the
parties cannot improve upon or modify in the course
of the agreed period of time. To state, therefore, that
the affected seamen cannot petition their employer
for higher salaries during the 12 months duration of
the contract runs counter to estabhshed principles of
labor legislation. The National Labor Relations
Commission, as the appellate tribunal from the
decisions of the National Seamen Board, correctly
ruled that the seamen did not violate their contracts
to warrant their dismissal. (at page 589)
It is impractical for the NSB to require the petitioners, caught in the
middle of a labor struggle between the ITF and owners of ocean
going vessels halfway around the world in Vancouver, British
Columbia to first secure the approval of the NSB in Manila before
signing an agreement which the employer was willing to sign. It is
also totally unrealistic to expect the petitioners while in Canada to
exhibit the will and strength to oppose the ITF's demand for an
increase in their wages, assuming they were so minded.
An examination of Annex C of the petition, the agreement signed in
Japan by the crewmembers of the M/V Grace River and a certain M.
Tabei, representative of the Japanese shipowner lends credence to
the petitioners' claim that the clause "which amount(s) was
received and held by CREWMEMBERS in trust for SHIPOWNER" was
an intercalation added after the execution of the agreement. The
clause appears too closely typed below the names of the 19
crewmen and their wages with no similar intervening space as that
which appears between all the paragraphs and the triple space
which appears between the list of crewmembers and their wages
on one hand and the paragraph above which introduces the list, on
the other. The verb "were" was also inserted above the verb "was"
to make the clause grammatically correct but the insertion of
"were" is already on the same line as "Antonio Miranda and

5,221.06" where it clearly does not belong. There is no other space

where the word "were" could be intercalated. (See Rollo, page 80).
At any rate, the proposition that the petitioners should have
pretended to accept the increased wages while in Vancouver but
returned them to the shipowner when they reached its country,
Japan, has already been answered earlier by the Court:
Filipino seamen are admittedly as competent and
reliable as seamen from any other country in the
world. Otherwise, there would not be so many of
them in the vessels sailing in every ocean and sea on
this globe. It is competence and reliability, not cheap
labor that makes our seamen so greatly in demand.
Filipino seamen have never demanded the same high
salaries as seamen from the United States, the
United Kingdom, Japan and other developed nations.
But certainly they are entitled to government
protection when they ask for fair and decent
treatment by their employer and when they exercise
the right to petition for improved terms of
employment, especially when they feel that these
are sub-standard or are capable of improvement
according to internationally accepted rules. In the
domestic scene, there are marginal employers who
prepare two sets of payrolls for their employees
one in keeping with minimum wages and the other
recording the sub-standard wages that the
employees really receive. The reliable employers,
however, not only meet the minimums required by
fair labor standards legislation but even go away
above the minimums while earning reasonable
profits and prospering. The same is true of
international employment. There is no reason why
this court and the Ministry of Labor and Employment
or its agencies and commissions should come out
with pronouncements based on the standards and
practices of unscrupulous or inefficient shipowners,
who claim they cannot survive without resorting to
tricky
and
deceptive
schemes,
instead
of

Government maintaining labor law and jurisprudence

according to the practices of honorable, competent,
and law-abiding employers, domestic or foreign. (VirJen Shipping, supra, pp. 587-588)
It is noteworthy to emphasize that while the Intemational Labor
Organization (ILO) set the minimum basic wage of able seamen at
US$187.00 as early as October 1976, it was only in 1979 that the
respondent NSB issued Memo Circular No. 45, enjoining all shipping
companies to adopt the said minimum basic wage. It was correct
for the respondent NSB to state in its decision that when the
petitioners entered into separate contracts between 1977-1978,
the monthly minimum basic wage for able seamen ordered by NSB
was still fixed at US$130.00. However, it is not the fault of the
petitioners that the NSB not only violated the Labor Code which
created it and the Rules and Regulations Implementing the Labor
Code but also seeks to punish the seamen for a shortcoming of NSB
itself.
Article 21(c) of the Labor Code, when it created the NSB, mandated
the Board to "(O)btain the best possible terms and conditions of
employment for seamen."
Section 15, Rule V of Book I of the Rules and Regulations
Implementing the Labor Code provides:
Sec. 15. Model contract of employment. The NSB
shall devise a model contract of employment which
shall embody all the requirements of pertinent labor
and social legislations and the prevailing standards
set by applicable International Labor Organization
Conventions. The model contract shall set the
minimum standards of the terms and conditions to
govern the employment of Filipinos on board vessels
engaged in overseas trade. All employers of Filipinos
shall adopt the model contract in connection with the
hiring and engagement of the services of Filipino
seafarers, and in no case shall a shipboard
employment contract be allowed where the same
provides for benefits less than those enumerated in

the model employment contract, or in any way

conflicts with any other provisions embodied in the
model contract.
Section 18 of Rule VI of the same Rules and Regulations provides:
Sec. 18. Basic minimum salary of able-seamen.
The basic minimum salary of seamen shall be not
less than the prevailing minimxun rates established
by the International Labor Organization or those
prevailing in the country whose flag the employing
vessel carries, whichever is higher. However, this
provision shall not apply if any shipping company
pays its crew members salaries above the minimum
herein provided.
Section 8, Rule X, Book I of the Omnibus Rules provides:
Section 8. Use of standard format of service
agreement. The Board shall adopt a standard
format of service agreement in accordance with
pertinent labor and social legislation and prevailing
standards set by applicable International Labor
Organization Conventions. The standard format shall
set the minimum standard of the terms and
conditions to govern the employment of Filipino
seafarers but in no case shall a shipboard
employment contract (sic), or in any way conflict
with any other provision embodied in the standard
format.
It took three years for the NSB to implement requirements which,
under the law, they were obliged to follow and execute
immediately. During those three years, the incident in Vancouver
happened. The terms and conditions agreed upon in Vancouver
were well within ILO rates even if they were above NSB standards
at the time.
The sanctions applied by NSB and affirmed by NLRC are moreover
not in keeping with the basic premise that this Court stressed in

the Vir-Jen Shipping case (supra) that the Ministry now the
Department of Labor and Employment and all its agencies exist
primarily for the workingman's interest and the nation's as a whole.
Implicit in these petitions and the only reason for the NSB to take
the side of foreign shipowners against Filipino seamen is the "killing
the goose which lays the golden eggs" argument. We reiterate the
ruling of the Court in Vir-Jen Shipping (supra)
There are various arguments raised by the
petitioners but the common thread running through
all of them is the contention, if not the dismal
prophecy, that if the respondent seamen are
sustained by this Court, we would in effect "kill the
hen that lays the golden egg." In other words, Filipino
seamen, admittedly among the best in the world,
should remain satisfied with relatively lower if not the
lowest, international rates of compensation, should
not agitate for higher wages while their contracts of
employment are subsisting, should accept as sacred,
iron clad, and immutable the side contracts which
require: them to falsely pretend to be members of
international labor federations, pretend to receive
higher salaries at certain foreign ports only to return
the increased pay once the ship leaves that port,
should stifle not only their right to ask for improved
terms of employment but their freedom of speech
and expression, and should suffer instant termination
of employment at the slightest sign of dissatisfaction
with no protection from their Government and their
courts. Otherwise, the petitioners contend that
Filipinos would no longer be accepted as seamen,
those employed would lose their jobs, and the still
unemployed would be left hopeless.
This is not the first time and it will not be the last where the threat
of unemployment and loss of jobs would be used to argue against
the interests of labor; where efforts by workingmen to better their
terms of employment would be characterized as prejudicing the
interests of labor as a whole.

xxx xxx xxx

Unionism, employers' liability acts, minimum wages,
workmen's compensation, social security and
collective bargaining to name a few were all initially
opposed by employers and even well meaning
leaders of government and society as "killing the hen
or goose which lays the golden eggs." The claims of
workingmen were described as outrageously
injurious not only to the employer but more so to the
employees themselves before these claims or
demands were established by law and jurisprudence
as "rights" and before these were proved beneficial
to management, labor, and the national as a whole
beyond reasonable doubt.
The case before us does not represent any major
advance in the rights of labor and the workingmen.
The private respondents merely sought rights already
established. No matter how much the petitioneremployer tries to present itself as speaking for the
entire industry, there is no evidence that it is typical
of employers hiring Filipino seamen or that it can
speak for them.
The contention that manning industries in the
Philippines would not survive if the instant case is not
decided in favor of the petitioner is not supported by
evidence. The Wallem case was decided on February
20, 1981. There have been no severe repercussions,
no drying up of employment opportunities for
seamen, and none of the dire consequences
repeatedly emphasized by the petitioner. Why should
Vir-Jen be an exception?
The wages of seamen engaged in international
shipping are shouldered by the foreign principal. The
local manning office is an agent whose primary
function is recruitment and who usually gets a lump
sum from the shipowner to defray the salaries of the

crew. The hiring of seamen and the determination of

their compensation is subject to the interplay of
various market factors and one key factor is how
much in terms of profits the local manning office and
the foreign shipowner may realize after the costs of
the voyage are met. And costs include salaries of
officers and crew members. (at pp. 585-586)
The Wallem Shipping case,
was
decided
in
1981. Vir-Jen
Shipping was decided in 1983. It is now 1989. There has'been no
drying up of employment opportunities for Filipino seamen. Not
only have their wages improved thus leading ITF to be placid and
quiet all these years insofar as Filipinos are concerned but the
hiring of Philippine seamen is at its highest level ever.
Reporting its activities for the year 1988, the Philippine Overseas
Employment Administration (POEA) stated that there will be an
increase in demand for seamen based overseas in 1989 boosting
the number to as high as 105,000. This will represent a 9.5 percent
increase from the 1988 aggregate. (Business World, News
Briefs,January 11, 1989 at page 2) According to the POEA, seabased
workers numbering 95,913 in 1988 exceeded by a wide margin of
28.15 percent the year end total in 1987. The report shows that
sea-based workers posted bigger monthly increments compared to
those of landbased workers. (The Business Star, Indicators, January
11, 1988 at page 2)
Augmenting this optimistic report of POEA Administrator Tomas
Achacoso is the statement of Secretary of Labor Franklin M. Drilon
that the Philippines has a big jump over other crewing nations
because of the Filipinos' abilities compared with any European or
westem crewing country. Drilon added that cruise shipping is also a
growing market for Filipino seafarers because of their flexibility in
handling odd jobs and their expertise in handling almost all types of
ships, including luxury liners. (Manila Bulletin, More Filipino
Seamen Expected Development, December 27, 1988 at page
29).lwph1.t Parenthetically, the minimum monthly salary of
able bodied seamen set by the ILO and adhered to by the
Philippines is now $276.00 (id.) more than double the $130.00
sought to be enforced by the public respondents in these petitions.

The experience from 1981 to the present vindicates the finding

in Vir-Jen Shipping that a decision in favor of the seamen would not
necessarily mean severe repercussions, drying up of employment
opportunities for seamen, and other dire consequences predicted
by manning agencies and recruiters in the Philippines.
From the foregoing, we find that the NSB and NLRC committed
grave abuse of discretion in finding the petitioners guilty of using
intimidation and illegal means in breaching their contracts of
employment and punishing them for these alleged offenses.
Consequently, the criminal prosecutions for estafa in G.R. Nos.
57999 and 58143-53 should be dismissed.
WHEREFORE, the petitions are hereby GRANTED. The decisions of
the National Seamen Board and National Labor Relations
Commission in G. R. Nos. 64781-99 are REVERSED and SET ASIDE
and a new one is entered holding the petitioners not guilty of the
offenses for which they were charged. The petitioners' suspension
from the National Seamen Board's Registry for three (3) years is
LIFTED. The private respondent is ordered to pay the petitioners
their earned but unpaid wages and overtime pay/allowance from
November 1, 1978 to December 14, 1978 according to the rates in
the Special Agreement that the parties entered into in Vancouver,
Canada.
The criminal cases for estafa, subject matter of G. R. Nos. 57999
and 58143-53, are ordered DISMISSED.
SO ORDERED.

G.R. No. 109808 March 1, 1995

ESALYN CHAVEZ, petitioner,
vs.
HON. EDNA BONTO-PEREZ, HON. ROGELIO T. RAYALA, HON.
DOMINGO H. ZAPANTA, HON. JOSE N. SARMIENTO, CENTRUM
PROMOTIONS PLACEMENT CORPORATION, JOSE A.
AZUCENA, JR., and TIMES SURETY & INSURANCE COMPANY,
INC. respondents.
PUNO, J.:
One of the anguished cries in our society today is that while our
laws appear to protect the poor, their interpretation is sometimes
anti-poor. In the case at bench, petitioner, a poor, uncounselled
entertainment dancer signed a contract with her Japanese
employer calling for a monthly salary of One Thousand Five
Hundred U.S. Dollars (US$1,500) but later had to sign an immoral
side agreement reducing her salary below the minimum standard
set by the POEA. Petitioner invoked the law to collect her salary
differentials, but incredibly found public respondent straining the
seams of our law to disfavor her. There is no greater
disappointment to the poor like petitioner than to discover the ugly
reality behind the beautiful rhetoric of laws. We will not allow this
travesty.
This is a petition for certiorari to review the Decision of the National
Labor Relations Commission (NLRC), 1 dated December 29, 1992,
which affirmed the Decision of public respondent Philippine
Overseas Employment Agency (POEA) Administrator Jose N.
Sarmiento, dated February 17, 1992, dismissing petitioner's
complaint for unpaid salaries amounting to Six Thousand Dollars
(US$6,000.00).

The facts are undisputed.

On December 1, 1988, petitioner, an entertainment dancer,
entered into a standard employment contract for overseas Filipino
artists and entertainers with Planning Japan Co., Ltd., 2 through its
Philippine representative, private respondent Centrum Placement &
Promotions Corporation. The contract had a duration of two (2) to
six (6) months, and petitioner was to be paid a monthly
compensation
of
One
Thousand
Five
Hundred
Dollars
(US$1,5000.00). On December 5, 1888, the POEA approved the
contract. Subsequently, petitioner executed the following side
agreement with her Japanese employer through her local manager,
Jaz Talents Promotion:
Date: Dec. 10, 1988
SUBJECT: Salary Deduction
MANAGERIAL COMMISSION
DATE OF DEPARTURE: _________________
ATTENTION: MR. IWATA
I, ESALYN CHAVEZ, DANCER, do hereby with my own
free will and voluntarily have the honor to authorize
your good office to please deduct the amount
of TWO HUNDRED FIFTY DOLLARS ($250) from my
contracted monthly salary of SEVEN HUNDRED
FIFTY DOLLARS ($750) as monthly commission for
my Manager, Mr. Jose A. Azucena, Jr.
That, my monthly salary (net) is FIVE HUNDRED
DOLLARS ($500).
(sgd. by petitioner) 3
On December 16, 1988, petitioner left for Osaka, Japan, where she
worked for six (6) months, until June 10, 1989. She came back to
the Philippines on June 14, 1989.

Petitioner instituted the case at bench for underpayment of wages

with the POEA on February 21, 1991. She prayed for the payment
of Six Thousand U.S. Dollars (US$6,000.00), representing the
unpaid portion of her basic salary for six months. Charged in the
case were private respondent Centrum Promotions and Placement
Corporation, the Philippine representative of Planning Japan, Co.,
Inc., its insurer, Times Surety and Insurance Co., Inc., and Jaz
Talents Promotion.
The complaint was dismissed by public respondent POEA
Administrator on February 17, 1992. He ratiocinated,inter alia:
. . . Apparently and from all indications, complainant
(referring to petitioner herein) was satisfied and did
not have any complaint (about) anything regarding
her employment in Japan until after almost two (2)
years (when) she filed the instant complaint on
February 21, 1991. The records show that after
signing the Standard Employment Contract on
December 1, 1988, she entered into a side
agreement with the Japanese employer thru her local
manager, Jaz Talents Promotion consenting to a
monthly salary of US$750.00 which she affirmed
during the conference of May 21, 1991. Respondent
agency had no knowledge nor participation in the
said agreement such that it could not be faulted for
violation of the Standard Employment Contract
regarding the stipulated salary. We cannot take
cognizance of such violation when one of the
principal party (sic) thereto opted to receive a salary
different from what has been stipulated in their
contract, especially so if the contracting party did not
consent/participate
in
such
arrangement.
Complainant (petitioner) cannot now demand from
respondent agency to pay her the salary based (on)
the processed Employment Contract for she is now
considered in bad faith and hence, estopped from
claiming thereto thru her own act of consenting and
agreeing to receive a salary not in accordance with
her contract of employment. Moreover, her self-

imposed silence for a long period of time worked to

her own disadvantage as she allowed laches to
prevail which barred respondent from doing
something at the outset. Normally, if a person's right
(is) violated, she/he would immediately react to
protect her/his rights which is not true in the case at
bar.

The way We see it, the records do not at all indicate

any connection between respondents Centrum
Promotion & Placement Corporation and Jaz Talents
Promotion.

The term laches has been defined as one's

negligence or failure to assert his right in due time or
within reasonable time from the accrual of his cause
of action, thus, leading another party to believe that
there is nothing wrong with his own claim. This
resulted in placing the negligent party in estoppel to
assert or enforce his right. . . . Likewise, the Supreme
Court in one case held that not only is inaction within
reasonable time to enforce a right the basic premise
that underlies a valid defense of laches but such
inaction evinces implied consent or acquiescence to
the violation of the right . . .

Dissatisfied with the NLRC's Decision, petitioner instituted the

present petition, alleging that public respondents committed grave
abuse of discretion in finding: that she is guilty of laches; that she
entered into a side contract on December 10, 1988 for the
reduction of her basic salary to Seven Hundred Fifty U.S. Dollars
(US$750.00) which superseded, nullified and invalidated the
standard employment contract she entered into on December 1,
1988; and that Planning Japan Co., Ltd. and private respondents are
not solidarily liable to her for Six Thousand US Dollars
(US$6,000.00) in unpaid wages. 5

Under the prevailing circumstances of this case, it is

outside the regulatory powers of the Administration
to rule on the liability of respondent Jaz Talents
Promotions, if any, (it) not being a licensed private
agency but a promotion which trains entertainers for
abroad.

Firstly, we hold that the managerial commission agreement

executed by petitioner to authorize her Japanese Employer to
deduct Two Hundred Fifty U.S. Dollars (US$250.00) from her
monthly basic salary is void because it is against our existing laws,
morals and public policy. It cannot supersede the standard
employment contract of December 1, 1988 approved by the POEA
with the following stipulation appended thereto:

There is, therefore, no merit in the appeal. Hence, We

affirmed. 4

The petition is meritorious.

xxx xxx xxx

(Citations omitted.)
On appeal, the NLRC upheld the Decision, thus:
We fail to see any conspiracy that the complainant
(petitioner herein) imputes to the respondents. She
has, to put it bluntly, not established and/or laid the
basis for Us to arrive at a conclusion that the
respondents have been and should be held liable for
her claims.

It is understood that the terms and conditions stated

in this Employment Contract are in conformance with
the Standard Employment Contract for Entertainers
prescribed by the POEA under Memorandum Circular
No. 2, Series of 1986. Any alterations or changes
made in any part of this contract without prior
approval by the POEA shall be null and
void; 6 (Emphasis supplied.)

The stipulation is in line with the provisions of Rule II, Book V and
Section 2(f), Rule I, Book VI of the 1991 Rules and Regulations
Governing Overseas Employment, thus:
Book V, Rule II

of other terms and conditions of employment over

and above the minimum standards of the
Administration. (Emphasis supplied.)
and

Sec. 1. Employment Standards. The Administration

shall determine, formulate and review employment
standards
in
accordance
with
the
market
development and welfare objectives of the overseas
employment program and the prevailing market
conditions.

BOOK VI, RULE I

Sec. 2. Minimum Provisions for Contract. The

following shall be considered the minimum
requirements for contracts of employment:

f. Substituting or altering employment contracts and

other documents approved and verified by the
Administration from the time of actual signing
thereof by the parties up to and including the period
of
expiration
of
the
same
without
the
Administration's approval.

a. Guaranteed wages for regular

working hours and overtime pay for
services rendered beyond regular
working hours in accordance with the
standards
established
by
the
Administration;
xxx xxx xxx
Sec. 3. Standard Employment Contract. The
administration shall undertake development and/or
periodic review of region, country and skills specific
employment contracts for landbased workers and
conduct regular review of standard employment
contracts (SEC) for seafarers. These contracts shall
provide for minimum employment standards herein
enumerated under Section 2, of this Rule and shall
recognize the prevailing labor and social legislations
at the site of employment and international
conventions. The SEC shall set the minimum terms
and conditions of employment. All employers and
principals shall adopt the SEC in connection with the
hiring of workers without prejudice to their adoption

Sec. 2.
license.

Grounds

for

suspension/cancellation

of

xxx xxx xxx

xxx xxx xxx

(Emphasis supplied.)
Clearly, the basic salary of One Thousand Five Hundred U.S. Dollars
(US$1,500.00) guaranteed to petitioner under the parties' standard
employment
contract
is
in
accordance
with
the minimum employment standards with respect to wages set by
the POEA, Thus, the side agreement which reduced petitioner's
basic wage to Seven Hundred Fifty U.S. Dollars (US$750.00) is null
and void for violating the POEA's minimum employment standards,
and for not having been approved by the POEA. Indeed, this side
agreement is a scheme all too frequently resorted to by
unscrupulous employers against our helpless overseas workers who
are compelled to agree to satisfy their basic economic needs.
Secondly. The doctrine of laches or "stale demands"' cannot be
applied to petitioner. Laches has been defined as the failure or
neglect for an unreasonable and unexplained length time to do that
which, by exercising due diligence, could or should have been done

earlier, 7 thus giving rise to a presumption that the party entitled to

assert it either has abandoned or declined to assert it. 8 It is not
concerned with mere lapse of time; the fact of delay, standing
alone, is insufficient to constitute laches. 9
The doctrine of laches is based upon grounds of public policy which
requires, for the peace of society, the discouragement of stale
claims, and is principally a question of the inequity or unfairness of
permitting a right or claim to be enforced or asserted. 10 There is no
absolute rule as to what constitutes laches; each case is to be
determined according to its particular circumstances. The question
of laches is addressed to the sound discretion of the court, and
since it is an equitable doctrine, its application is controlled by
equitable considerations. It cannot be worked to defeat justice or to
perpetrate fraud and injustice. 11

judicial rules of procedure. Aequetas

nunguam
contravenit
legis.
The
pertinent positive rules being present
here, they should pre-empt and prevail
over all abstract arguments based only
on equity.
Thus, where the claim was filed within the three-year
statutory period, recovery therefore cannot be
barred by laches. Courts should never apply the
doctrine of laches earlier than the expiration of time
limited for the commencement of actions at law.
xxx xxx xxx
(Emphasis supplied. Citations omitted.)

In the case at bench, petitioner filed her claim well within the threeyear prescriptive period for the filing of money claims set forth in
Article 291 of the Labor Code. 12 For this reason, we hold the
doctrine of laches inapplicable to petitioner. As we ruled in Imperial
Victory Shipping Agency v. NLRC, 200 SCRA 178 (1991):
. . . Laches is a doctrine in equity while prescription is
based on law. Our courts are basically courts of law
not courts of equity. Thus, laches cannot be invoked
to resist the enforcement of an existing legal right.
We have ruled in Arsenal v. Intermediate Appellate
Court . . . that it is a long standing principle that
equity follows the law. Courts exercising equity
jurisdiction are bound by rules of law and have no
arbitrary discretion to disregard them. In Zabat,
Jr. v. Court of Appeals . . ., this Court was more
emphatic upholding the rules of procedure. We said
therein:
As for equity,
described as
legality," this
absence of,
statutory law

which has been aptly

a "justice outside
applied only in the
and never against,
or, as in this case,

Thirdly, private respondents Centrum and Times as well as Planning

Japan Co., Ltd. the agency's foreign principal are solidarily
liable to petitioner for her unpaid wages. This is in accordance with
stipulation 13.7 of the parties' standard employment contract which
provides:
13.7. The Employer (in this case, Planning Japan Co.,
Ltd.
)
and
its
locally
(sic)
agent/promoter/representative (private respondent
Centrum Promotions & Placement Corporation) shall
be jointly and severally responsible for the proper
implementation of the terms and conditions in this
Contract. 13 (Emphasis supplied.)
This solidary liability also arises from the provisions of
Section 10(a)(2), Rule V, Book I of the Omnibus Rules
Implementing the Labor Code, as amended, thus:
Sec. 10. Requirement before recruitment. Before
recruiting any worker, the private employment
agency shall submit to the Bureau the following
documents:

a) A formal appointment or agency contract executed

by a foreign-based employer in favor of the license
holder to recruit and hire personnel for the
former . . . . Such formal appointment or recruitment
agreement shall contain the following provisions,
among others:
xxx xxx xxx
2. Power of the agency to sue and be sued jointly
and solidarily with the principal or foreign based
employer for any of the violations of the recruitment
agreement and the contracts of employment.
xxx xxx xxx
(Emphasis supplied.)
Our overseas workers constitute an exploited class. Most of them
come from the poorest sector of our society. They are thoroughly
disadvantaged. Their profile shows they live in suffocating slums,
trapped in an environment of crime. Hardly literate and in ill health,
their only hope lies in jobs they can hardly find in our country. Their
unfortunate circumstance makes them easy prey to avaricious
employers. They will climb mountains, cross the seas, endure slave
treatment in foreign lands just to survive. Out of despondence, they
will work under sub-human conditions and accept salaries below
the minimum. The least we can do is to protect them with our laws
in our land. Regretfully, respondent public officials who should
sympathize with the working class appear to have a different
orientation.
IN VIEW WHEREOF, the petition is GRANTED. The Decisions of
respondent POEA Administrator and NLRC Commissioners in POEA
Case No. Adj. 91-02-199 (ER), respectively dated February 17 and
December 29, 1992, and the Resolution of the NLRC, dated March
23, 1993, are REVERSED and SET ASIDE. Private respondents are
held jointly and severally liable to petitioner for the payment of SIX
THOUSAND US DOLLARS (US$6,000.00) in unpaid wages. Costs
against private respondents.

SO ORDERED.

G.R. No. L-104776 December 5, 1994

BIENVENIDO M. CADALIN, ROLANDO M. AMUL, DONATO B.
EVANGELISTA, and the rest of 1,767 NAMEDCOMPLAINANTS, thru and by their Attorney-in-fact, Atty.
GERARDO A. DEL MUNDO, petitioners,
vs.
PHILIPPINE OVERSEAS EMPLOYMENT ADMINISTRATION'S
ADMINISTRATOR, NATIONAL LABOR RELATIONS
COMMISSION, BROWN & ROOT INTERNATIONAL, INC.
AND/OR ASIA INTERNATIONAL BUILDERS
CORPORATION, respondents.
G.R. Nos. 104911-14 December 5, 1994
BIENVENIDO M. CADALIN, ET AL., petitioners,
vs.
HON. NATIONAL LABOR RELATIONS COMMISSION, BROWN &
ROOT INTERNATIONAL, INC. and/or ASIA INTERNATIONAL
BUILDERS CORPORATION, respondents.
G.R. Nos. 105029-32 December 5, 1994
ASIA INTERNATIONAL BUILDER CORPORATION and BROWN &
ROOT INTERNATIONAL, INC., petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, BIENVENIDO M.
CADALIN, ROLANDO M. AMUL, DONATO B. EVANGELISTA,
ROMEO PATAG, RIZALINO REYES, IGNACIO DE VERA,
SOLOMON B. REYES, JOSE M. ABAN, EMIGDIO N. ABARQUEZ,
ANTONIO ACUPAN, ROMEO ACUPAN, BENJAMIN ALEJANDRE,
WILFREDO D. ALIGADO, MARTIN AMISTAD, JR., ROLANDO B.
AMUL, AMORSOLO ANADING, ANTONIO T. ANGLO, VICENTE
ARLITA, HERBERT AYO, SILVERIO BALATAZO, ALFREDO
BALOBO, FALCONERO BANAAG, RAMON BARBOSA, FELIX
BARCENA, FERNANDO BAS, MARIO BATACLAN, ROBERTO S.

BATICA, ENRICO BELEN, ARISTEO BICOL, LARRY C. BICOL,

PETRONILLO BISCOCHO, FELIX M. BOBIER, DIONISIO
BOBONGO, BAYANI S. BRACAMANTE, PABLITO BUSTILLO,
GUILLERMO CABEZAS, BIENVENIDO CADALIN, RODOLFO
CAGATAN, AMANTE CAILAO, IRENEO CANDOR, JOSE
CASTILLO, MANUEL CASTILLO, REMAR CASTROJERES,
REYNALDO CAYAS, ROMEO CECILIO, TEODULO CREUS,
BAYANI DAYRIT, RICARDO DAYRIT, ERNESTO T. DELA CRUZ,
FRANCISCO DE GUZMAN, ONOFRE DE RAMA, IGNACIO DE
VERA, MODESTO DIZON, REYNALDO DIZON, ANTONIO S.
DOMINGUEZ, GILBERT EBRADA, RICARDO EBRADA, ANTONIO
EJERCITO, JR., EDUARTE ERIDAO, ELADIO ESCOTOTO, JOHN
ESGUERRA, EDUARDO ESPIRITU, ERNESTO ESPIRITU,
RODOLFO ESPIRITU, NESTOR M. ESTEVA, BENJAMIN
ESTRADA, VALERIO EVANGELISTA, OLIGARIO FRANCISCO,
JESUS GABAWAN, ROLANDO GARCIA, ANGEL GUDA, PACITO
HERNANDEZ, ANTONIO HILARIO, HENRY L. JACOB, HONESTO
JARDINIANO, ANTONIO JOCSON, GERARDO LACSAMANA,
EFREN U. LIRIO LORETO LONTOC, ISRAEL LORENZO,
ALEJANDRO LORINO, JOSE MABALAY, HERMIE MARANAN,
LEOVIGILDO MARCIAL, NOEL MARTINEZ, DANTE MATREO,
LUCIANO MELENDEZ, RENATO MELO, FRANCIS MEDIODIA,
JOSE C. MILANES, RAYMUNDO C. MILAY, CRESENCIANO
MIRANDA, ILDEFONSO C. MOLINA, ARMANDO B. MONDEJAR
RESURRECCION D. NAZARENO, JUAN OLINDO, FRANCISCO R.
OLIVARES, PEDRO ORBISTA, JR., RICARDO ORDONEZ, ERNIE
PANCHO, JOSE PANCHO, GORGONIO P. PARALA, MODESTO
PINPIN, JUANITO PAREA, ROMEO I. PATAG, FRANCISCO
PINPIN, LEONARDO POBLETE, JAIME POLLOS, DOMINGO
PONDALIS, EUGENIO RAMIREZ, LUCIEN M. RESPALL,
GAUDENCIO RETANAN, JR., TOMAS B. RETENER, ALVIN C.
REYES, RIZALINO REYES, SOLOMON B. REYES, VIRGILIO G.
RICAZA, RODELIO RIETA, JR., BENITO RIVERA, JR.,
BERNARDO J. ROBILLOS, PABLO A. ROBLES, JOSE ROBLEZA,
QUIRINO RONQUILLO, AVELINO M. ROQUE, MENANDRO L.
SABINO, PEDRO SALGATAR, EDGARDO SALONGA,
NUMERIANO SAN MATEO, FELIZARDO DE LOS SANTOS, JR.,
GABRIEL SANTOS, JUANITO SANTOS, PAQUITO SOLANTE,
CONRADO A. SOLIS, JR., RODOLFO SULTAN, ISAIAS
TALACTAC, WILLIAM TARUC, MENANDRO TEMPROSA,

BIENVENIDO S. TOLENTINO, BENEDICTO TORRES,

MAXIMIANO TORRES, FRANCISCO G. TRIAS, SERGIO A.
URSOLINO, ROGELIO VALDEZ, LEGORIO E. VERGARA, DELFIN
VICTORIA, GILBERT VICTORIA, HERNANE VICTORIANO,
FRANCISCO VILLAFLORES, DOMINGO VILLAHERMOSA,
ROLANDO VILLALOBOS, ANTONIO VILLAUZ, DANILO
VILLANUEVA, ROGELIO VILLANUEVA, ANGEL VILLARBA,
JUANITO VILLARINO, FRANCISCO ZARA, ROGELIO AALAGOS,
NICANOR B. ABAD, ANDRES ABANES, REYNALDO ABANES,
EDUARDO ABANTE, JOSE ABARRO, JOSEFINO ABARRO,
CELSO S. ABELANIO, HERMINIO ABELLA, MIGUEL ABESTANO,
RODRIGO G. ABUBO, JOSE B. ABUSTAN, DANTE ACERES,
REYNALDO S. ACOJIDO, LEOWILIN ACTA, EUGENIO C.
ACUEZA, EDUARDO ACUPAN, REYNALDO ACUPAN, SOLANO
ACUPAN, MANUEL P. ADANA, FLORENTINO R. AGNE,
QUITERIO R. AGUDO, MANUEL P. AGUINALDO, DANTE
AGUIRRE, HERMINIO AGUIRRE, GONZALO ALBERTO, JR.,
CONRADO ALCANTARA, LAMBERTO Q. ALCANTARA,
MARIANITO J. ALCANTARA, BENCIO ALDOVER, EULALIO V.
ALEJANDRO, BENJAMIN ALEJANDRO, EDUARDO L.
ALEJANDRO, MAXIMINO ALEJANDRO, ALBERTO ALMENAR,
ARNALDO ALONZO, AMADO ALORIA, CAMILO ALVAREZ,
MANUEL C. ALVAREZ, BENJAMIN R. AMBROCIO, CARLOS
AMORES, BERNARD P. ANCHETA, TIMOTEO O. ANCHETA,
JEOFREY ANI, ELINO P. ANTILLON, ARMANDRO B. ANTIPONO,
LARRY T. ANTONIO, ANTONIO APILADO, ARTURO P. APILADO,
FRANCISCO APOLINARIO, BARTOLOME M. AQUINO, ISIDRO
AQUINO, PASTOR AQUINO, ROSENDO M. AQUINO, ROBERTO
ARANGORIN, BENJAMIN O. ARATEA, ARTURO V. ARAULLO,
PRUDENCIO ARAULLO, ALEXANDER ARCAIRA, FRANCISCO
ARCIAGA, JOSE AREVALO, JUANTO AREVALO, RAMON
AREVALO, RODOLFO AREVALO, EULALIO ARGUELLES,
WILFREDO P. ARICA, JOSE M. ADESILLO, ANTONIO
ASUNCION, ARTEMIO M. ASUNCION, EDGARDO ASUNCION,
REXY M. ASUNCION, VICENTE AURELIO, ANGEL AUSTRIA,
RICARDO P. AVERILLA, JR., VIRGILIO AVILA, BARTOLOME
AXALAN, ALFREDO BABILONIA, FELIMON BACAL, JOSE L.
BACANI, ROMULO R. BALBIERAN, VICENTE BALBIERAN,
RODOLFO BALITBIT, TEODORO Y. BALOBO, DANILO O.
BARBA, BERNARDO BARRO, JUAN A. BASILAN, CEFERINO

BATITIS, VIVENCIO C. BAUAN, GAUDENCIO S. BAUTISTA,

LEONARDO BAUTISTA, JOSE D. BAUTISTA, ROSTICO
BAUTISTA, RUPERTO B. BAUTISTA, TEODORO S. BAUTISTA,
VIRGILIO BAUTISTA, JESUS R. BAYA, WINIEFREDO BAYACAL,
WINIEFREDO BEBIT, BEN G. BELIR, ERIC B. BELTRAN,
EMELIANO BENALES, JR., RAUL BENITEZ, PERFECTO
BENSAN, IRENEO BERGONIO, ISABELO BERMUDEZ, ROLANDO
I. BERMUDEZ, DANILO BERON, BENJAMIN BERSAMIN,
ANGELITO BICOL, ANSELMO BICOL, CELESTINO BICOL, JR.,
FRANCISCO BICOL, ROGELIO BICOL, ROMULO L. BICOL,
ROGELIO BILLIONES, TEOFILO N. BITO, FERNANDO BLANCO,
AUGUSTO BONDOC, DOMINGO BONDOC, PEPE S. BOOC,
JAMES R. BORJA, WILFREDO BRACEROS, ANGELES C.
BRECINO, EURECLYDON G. BRIONES, AMADO BRUGE,
PABLITO BUDILLO, ARCHIMEDES BUENAVENTURA, BASILIO
BUENAVENTURA, GUILLERMO BUENCONSEJO, ALEXANDER
BUSTAMANTE, VIRGILIO BUTIONG, JR., HONESTO P.
CABALLA, DELFIN CABALLERO, BENEDICTO CABANIGAN,
MOISES CABATAY, HERMANELI CABRERA, PEDRO CAGATAN,
JOVEN C. CAGAYAT, ROGELIO L. CALAGOS, REYNALDO V.
CALDEJON, OSCAR C. CALDERON, NESTOR D. CALLEJA,
RENATO R. CALMA, NELSON T. CAMACHO, SANTOS T.
CAMACHO, ROBERTO CAMANA, FLORANTE C. CAMANAG
EDGARDO M. CANDA, SEVERINO CANTOS, EPIFANIO A.
CAPONPON, ELIAS D. CARILLO, JR., ARMANDO CARREON,
MENANDRO M. CASTAEDA, BENIGNO A. CASTILLO,
CORNELIO L. CASTILLO, JOSEPH B. CASTILLO, ANSELMO
CASTILLO, JOAQUIN CASTILLO, PABLO L. CASTILLO, ROMEO P.
CASTILLO, SESINANDO CATIBOG, DANILO CASTRO,
PRUDENCIO A. CASTRO, RAMO CASTRO, JR., ROMEO A. DE
CASTRO, JAIME B. CATLI, DURANA D. CEFERINO, RODOLFO B.
CELIS, HERMINIGILDO CEREZO, VICTORIANO CELESTINO,
BENJAMIN CHAN, ANTONIO C. CHUA, VIVENCIO B. CIABAL,
RODRIGO CLARETE, AUGUSTO COLOMA, TURIANO
CONCEPCION, TERESITO CONSTANTINO, ARMANDO
CORALES, RENATO C. CORCUERA, APOLINAR CORONADO,
ABELARDO CORONEL, FELIX CORONEL, JR., LEONARDO
CORPUZ, JESUS M. CORRALES, CESAR CORTEMPRATO,
FRANCISCO O. CORVERA, FRANCISCO COSTALES, SR.,
CELEDONIO CREDITO, ALBERTO A. CREUS, ANACLETO V.

CRUZ, DOMINGO DELA CRUZ, AMELIANO DELA CRUZ, JR.,

PANCHITO CRUZ, REYNALDO B. DELA CRUZ, ROBERTO P.
CRUZ, TEODORO S. CRUZ, ZOSIMO DELA CRUZ, DIONISIO A.
CUARESMA, FELIMON CUIZON, FERMIN DAGONDON,
RICHARD DAGUINSIN, CRISANTO A. DATAY, NICASIO
DANTINGUINOO, JOSE DATOON, EDUARDO DAVID, ENRICO T.
DAVID, FAVIO DAVID, VICTORIANO S. DAVID, EDGARDO N.
DAYACAP, JOSELITO T. DELOSO, CELERINO DE GUZMAN,
ROMULO DE GUZMAN, LIBERATO DE GUZMAN, JOSE DE
LEON, JOSELITO L. DE LUMBAN, NAPOLEON S. DE LUNA,
RICARDO DE RAMA, GENEROSO DEL ROSARIO, ALBERTO
DELA CRUZ, JOSE DELA CRUZ, LEONARDO DELOS REYES,
ERNESTO F. DIATA, EDUARDO A. DIAZ, FELIX DIAZ, MELCHOR
DIAZ, NICANOR S. DIAZ, GERARDO C. DIGA, CLEMENTE
DIMATULAC, ROLANDO DIONISIO, PHILIPP G. DISMAYA,
BENJAMIN DOCTOLERO, ALBERTO STO. DOMINGO, BENJAMIN
E. DOZA, BENJAMIN DUPA, DANILO C. DURAN, GREGORIO D.
DURAN, RENATO A. EDUARTE, GODOFREDO E. EISMA,
ARDON B. ELLO, UBED B. ELLO, JOSEFINO ENANO,
REYNALDO ENCARNACION, EDGARDO ENGUANCIO, ELIAS
EQUIPANO, FELIZARDO ESCARMOSA, MIGUEL ESCARMOSA,
ARMANDO ESCOBAR, ROMEO T. ESCUYOS, ANGELITO
ESPIRITU, EDUARDO S. ESPIRITU, REYNALDO ESPIRITU,
ROLANDO ESPIRITU, JULIAN ESPREGANTE, IGMIDIO
ESTANISLAO, ERNESTO M. ESTEBAN, MELANIO R. ESTRO,
ERNESTO M. ESTEVA, CONRADO ESTUAR, CLYDE ESTUYE,
ELISEO FAJARDO, PORFIRIO FALQUEZA, WILFREDO P.
FAUSTINO, EMILIO E. FERNANDEZ, ARTEMIO FERRER,
MISAEL M. FIGURACION, ARMANDO F. FLORES, BENJAMIN
FLORES, EDGARDO C. FLORES, BUENAVENTURA FRANCISCO,
MANUEL S. FRANCISCO, ROLANDO FRANCISCO, VALERIANO
FRANCISCO, RODOLFO GABAWAN, ESMERALDO GAHUTAN,
CESAR C. GALANG, SANTIAGO N. GALOSO, GABRIEL
GAMBOA, BERNARDO GANDAMON, JUAN GANZON, ANDRES
GARCIA, JR., ARMANDO M. GARCIA, EUGENIO GARCIA,
MARCELO L. GARCIA, PATRICIO L. GARCIA, JR., PONCIANO G.
GARCIA, PONCIANO G. GARCIA, JR., RAFAEL P. GARCIA,
ROBERTO S. GARCIA, OSIAS G. GAROFIL, RAYMUNDO C.
GARON, ROLANDO G. GATELA, AVELINO GAYETA, RAYMUNDO
GERON, PLACIDO GONZALES, RUPERTO H. GONZALES,

ROGELIO D. GUANIO, MARTIN V. GUERRERO, JR., ALEXIS

GUNO, RICARDO L. GUNO, FRANCISCO GUPIT, DENNIS J.
GUTIERREZ, IGNACIO B. GUTIERREZ, ANGELITO DE GUZMAN,
JR., CESAR H. HABANA, RAUL G. HERNANDEZ, REYNALDO
HERNANDEZ, JOVENIANO D. HILADO, JUSTO HILAPO,
ROSTITO HINAHON, FELICISIMO HINGADA, EDUARDO
HIPOLITO, RAUL L. IGNACIO, MANUEL L. ILAGAN, RENATO L.
ILAGAN, CONRADO A. INSIONG, GRACIANO G. ISLA, ARNEL L.
JACOB, OSCAR J. JAPITENGA, CIRILO HICBAN, MAXIMIANO
HONRADES, GENEROSO IGNACIO, FELIPE ILAGAN, EXPEDITO
N. JACOB, MARIO JASMIN, BIENVENIDO JAVIER, ROMEO M.
JAVIER, PRIMO DE JESUS, REYNALDO DE JESUS, CARLOS A.
JIMENEZ, DANILO E. JIMENEZ, PEDRO C. JOAQUIN, FELIPE W.
JOCSON, FELINO M. JOCSON, PEDRO N. JOCSON, VALENTINO
S. JOCSON, PEDRO B. JOLOYA, ESTEBAN P. JOSE, JR., RAUL
JOSE, RICARDO SAN JOSE, GERTRUDO KABIGTING, EDUARDO
S. KOLIMLIM, SR., LAURO J. LABAY, EMMANUEL C. LABELLA,
EDGARDO B. LACERONA, JOSE B. LACSON, MARIO J.
LADINES, RUFINO LAGAC, RODRIGO LAGANAPAN, EFREN M.
LAMADRID, GUADENCIO LATANAN, VIRGILIO LATAYAN,
EMILIANO LATOJA, WENCESLAO LAUREL, ALFREDO
LAXAMANA, DANIEL R. LAZARO, ANTONIO C. LEANO,
ARTURO S. LEGASPI, BENITO DE LEMOS, JR., PEDRO G. DE
LEON, MANOLITO C. LILOC, GERARDO LIMUACO, ERNESTO S.
LISING, RENATO LISING, WILFREDO S. LISING, CRISPULO
LONTOC, PEDRO M. LOPERA, ROGELIO LOPERA, CARLITO M.
LOPEZ, CLODY LOPEZ, GARLITO LOPEZ, GEORGE F. LOPEZ,
VIRGILIO M. LOPEZ, BERNARDITO G. LOREJA, DOMINGO B.
LORICO, DOMINGO LOYOLA, DANTE LUAGE, ANTONIO M.
LUALHATI, EMMANUEL LUALHATI, JR., LEONIDEZ C.
LUALHATI, SEBASTIAN LUALHATI, FRANCISCO LUBAT,
ARMANDO LUCERO, JOSELITO L. DE LUMBAN, THOMAS
VICENTE O. LUNA, NOLI MACALADLAD, ALFREDO MACALINO,
RICARDO MACALINO, ARTURO V. MACARAIG, ERNESTO V.
MACARAIG, RODOLFO V. MACARAIG, BENJAMIN
MACATANGAY, HERMOGENES MACATANGAY, RODEL
MACATANGAY, ROMULO MACATANGAY, OSIAS Q.
MADLANGBAYAN, NICOLAS P. MADRID, EDELBERTO G.
MAGAT, EFREN C. MAGBANUA, BENJAMIN MAGBUHAT,
ALFREDO C. MAGCALENG, ANTONIO MAGNAYE, ALFONSO

MAGPANTAY, RICARDO C. MAGPANTAY, SIMEON M.

MAGPANTAY, ARMANDO M. MAGSINO, MACARIO S. MAGSINO,
ANTONIO MAGTIBAY, VICTOR V. MAGTIBAY, GERONIMO
MAHILUM, MANUEL MALONZO, RICARDO MAMADIS,
RODOLFO MANA, BERNARDO A. MANALILI, MANUEL
MANALILI, ANGELO MANALO, AGUILES L. MANALO,
LEOPOLDO MANGAHAS, BAYANI MANIGBAS, ROLANDO C.
MANIMTIM, DANIEL MANONSON, ERNESTO F. MANUEL,
EDUARDO MANZANO, RICARDO N. MAPA, RAMON MAPILE,
ROBERTO C. MARANA, NEMESIO MARASIGAN, WENCESLAO
MARASIGAN, LEONARDO MARCELO, HENRY F. MARIANO,
JOEL MARIDABLE, SANTOS E. MARINO, NARCISO A.
MARQUEZ, RICARDO MARTINEZ, DIEGO MASICAMPO,
AURELIO MATABERDE, RENATO MATILLA, VICTORIANO
MATILLA, VIRGILIO MEDEL, LOLITO M. MELECIO, BENIGNO
MELENDEZ, RENER J. MEMIJE, REYNALDO F. MEMIJE, RODEL
MEMIJE, AVELINO MENDOZA, JR., CLARO MENDOZA,
TIMOTEO MENDOZA, GREGORIO MERCADO, ERNANI DELA
MERCED, RICARDO MERCENA, NEMESIO METRELLO, RODEL
MEMIJE, GASPAR MINIMO, BENJAMIN MIRANDA, FELIXBERTO
D. MISA, CLAUDIO A. MODESTO, JR., OSCAR MONDEDO,
GENEROSO MONTON, RENATO MORADA, RICARDO MORADA,
RODOLFO MORADA, ROLANDO M. MORALES, FEDERICO M.
MORENO, VICTORINO A. MORTEL, JR., ESPIRITU A. MUNOZ,
IGNACIO MUNOZ, ILDEFONSO MUNOZ, ROGELIO MUNOZ,
ERNESTO NAPALAN, MARCELO A. NARCIZO, REYNALDO
NATALIA, FERNANDO C. NAVARETTE, PACIFICO D. NAVARRO,
FLORANTE NAZARENO, RIZAL B. NAZARIO, JOSUE NEGRITE,
ALFREDO NEPUMUCENO, HERBERT G. NG, FLORENCIO
NICOLAS, ERNESTO C. NINON, AVELINO NUQUI, NEMESIO D.
OBA, DANILO OCAMPO, EDGARDO OCAMPO, RODRIGO E.
OCAMPO, ANTONIO B. OCCIANO, REYNALDO P. OCSON,
BENJAMIN ODESA, ANGEL OLASO, FRANCISCO OLIGARIO,
ZOSIMO OLIMBO, BENJAMIN V. ORALLO, ROMEO S.
ORIGINES, DANILO R. ORTANEZ, WILFREDO OSIAS, VIRGILIO
PA-A, DAVID PAALAN, JESUS N. PACHECO, ALFONSO L.
PADILLA, DANILO PAGSANJAN, NUMERIANO PAGSISIHAN,
RICARDO T. PAGUIO, EMILIO PAKINGAN, LEANDRO
PALABRICA, QUINCIANO PALO, JOSE PAMATIAN, GONZALO
PAN, PORFIRIO PAN, BIENVENIDO PANGAN, ERNESTO

PANGAN, FRANCISCO V. PASIA, EDILBERTO PASIMIO, JR.,

JOSE V. PASION, ANGELITO M. PENA, DIONISIO PENDRAS,
HERMINIO PERALTA, REYNALDO M. PERALTA, ANTONIO
PEREZ, ANTOLIANO E. PEREZ, JUAN PEREZ, LEON PEREZ,
ROMEO E. PEREZ, ROMULO PEREZ, WILLIAM PEREZ,
FERNANDO G. PERINO, FLORENTINO DEL PILAR, DELMAR F.
PINEDA, SALVADOR PINEDA, ELIZALDE PINPIN, WILFREDO
PINPIN, ARTURO POBLETE, DOMINADOR R. PRIELA,
BUENAVENTURA PRUDENTE, CARMELITO PRUDENTE, DANTE
PUEYO, REYNALDO Q. PUEYO, RODOLFO O. PULIDO,
ALEJANDRO PUNIO, FEDERICO QUIMAN, ALFREDO L.
QUINTO, ROMEO QUINTOS, EDUARDO W. RACABO, RICARDO
C. DE RAMA, RICARDO L. DE RAMA, ROLANDO DE RAMA,
FERNANDO A. RAMIREZ, LITO S. RAMIREZ, RICARDO G.
RAMIREZ, RODOLFO V. RAMIREZ, ALBERTO RAMOS,
ANSELMO C. RAMOS, TOBIAS RAMOS, WILLARFREDO
RAYMUNDO, REYNALDO RAQUEDAN, MANUEL F. RAVELAS,
WILFREDO D. RAYMUNDO, ERNESTO E. RECOLASO, ALBERTO
REDAZA, ARTHUR REJUSO, TORIBIO M. RELLAMA, JAIME
RELLOSA, EUGENIO A. REMOQUILLO, GERARDO RENTOZA,
REDENTOR C. REY, ALFREDO S. REYES, AMABLE S. REYES,
BENEDICTO R. REYES, GREGORIO B. REYES, JOSE A. REYES,
JOSE C. REYES, ROMULO M. REYES, SERGIO REYES, ERNESTO
F. RICO, FERNANDO M. RICO, EMMANUEL RIETA, RICARDO
RIETA, LEO B. ROBLES, RUBEN ROBLES, RODOLFO ROBLEZA,
RODRIGO ROBLEZA, EDUARDO ROCABO, ANTONIO R.
RODRIGUEZ, BERNARDO RODRIGUEZ, ELIGIO RODRIGUEZ,
ALMONTE ROMEO, ELIAS RONQUILLO, ELISE RONQUILLO,
LUIS VAL B. RONQUILLO, REYNOSO P. RONQUILLO, RODOLFO
RONQUILLO, ANGEL ROSALES, RAMON ROSALES, ALBERTO
DEL ROSARIO, GENEROSO DEL ROSARIO, TEODORICO DEL
ROSARIO, VIRGILIO L. ROSARIO, CARLITO SALVADOR, JOSE
SAMPARADA, ERNESTO SAN PEDRO, ADRIANO V. SANCHA,
GERONIMO M. SANCHA, ARTEMIO B. SANCHEZ, NICASIO
SANCHEZ, APOLONIO P. SANTIAGO, JOSELITO S. SANTIAGO,
SERGIO SANTIAGO, EDILBERTO C. SANTOS, EFREN S.
SANTOS, RENATO D. SANTOS, MIGUEL SAPUYOT, ALEX S.
SERQUINA, DOMINADOR P. SERRA, ROMEO SIDRO, AMADO
M. SILANG, FAUSTINO D. SILANG, RODOLFO B. DE SILOS,
ANICETO G. SILVA, EDGARDO M. SILVA, ROLANDO C.

SILVERTO, ARTHUR B. SIMBAHON, DOMINGO SOLANO,

JOSELITO C. SOLANTE, CARLITO SOLIS, CONRADO SOLIS, III,
EDGARDO SOLIS, ERNESTO SOLIS, ISAGANI M. SOLIS,
EDUARDO L. SOTTO, ERNESTO G. STA. MARIA, VICENTE G.
STELLA, FELIMON SUPANG, PETER TANGUINOO, MAXIMINO
TALIBSAO, FELICISMO P. TALUSIK, FERMIN TARUC, JR., LEVY
S. TEMPLO, RODOLFO S. TIAMSON, LEONILO TIPOSO, ARNEL
TOLENTINO, MARIO M. TOLENTINO, FELIPE TORRALBA,
JOVITO V. TORRES, LEONARDO DE TORRES, GAVINO U.
TUAZON, AUGUSTO B. TUNGUIA, FRANCISCO UMALI,
SIMPLICIO UNIDA, WILFREDO V. UNTALAN, ANTONIO
VALDERAMA, RAMON VALDERAMA, NILO VALENCIANO,
EDGARDO C. VASQUEZ, ELPIDIO VELASQUEZ, NESTOR DE
VERA, WILFREDO D. VERA, BIENVENIDO VERGARA, ALFREDO
VERGARA, RAMON R. VERZOSA, FELICITO P. VICMUNDO,
ALFREDO VICTORIANO, TEOFILO P. VIDALLO, SABINO N.
VIERNEZ, JESUS J. VILLA, JOVEN VILLABLANCO, EDGARDO G.
VILLAFLORES, CEFERINO VILLAGERA, ALEX VILLAHERMOZA,
DANILO A. VILLANUEVA, ELITO VILLANUEVA, LEONARDO M.
VILLANUEVA, MANUEL R. VILLANUEVA, NEPTHALI VILLAR,
JOSE V. VILLAREAL, FELICISIMO VILLARINO, RAFAEL
VILLAROMAN, CARLOS VILLENA, FERDINAND VIVO, ROBERTO
YABUT, VICENTE YNGENTE, AND ORO C. ZUNIGA,respondents.
QUIASON, J.:
The petition in G.R. No. 104776, entitled "Bienvenido M. Cadalin, et.
al.
v.
Philippine
Overseas
Employment
Administration's
Administrator, et. al.," was filed under Rule 65 of the Revised Rules
of Court:
(1) to modify the Resolution dated September 2,
1991 of the National Labor Relations Commission
(NLRC)
in
POEA
Cases
Nos.
L-84-06-555, L-85-10-777, L-85-10-779 and L-86-05460; (2) to render a new decision: (i) declaring
private respondents as in default; (ii) declaring the
said labor cases as a class suit; (iii) ordering Asia
International Builders Corporation (AIBC) and Brown
and Root International Inc. (BRII) to pay the claims of

the 1,767 claimants in said labor cases; (iv) declaring

Atty. Florante M. de Castro guilty of forum-shopping;
and (v) dismissing POEA Case No. L-86-05-460; and
(3) to reverse the Resolution dated March 24, 1992 of
NLRC, denying the motion for reconsideration of its
Resolution dated September 2, 1991 (Rollo, pp. 8288).
The petition in G.R. Nos. 104911-14, entitled "Bienvenido M.
Cadalin, et. al., v. Hon. National Labor Relations Commission, et.
al.," was filed under Rule 65 of the Revised Rules of Court:

(2) to reverse the Resolution dated March 21, 1992 of

NLRC insofar as it denied the motions for
reconsideration of AIBC and BRII (Rollo, pp. 2-59; 61230).
The Resolution dated September 2, 1991 of NLRC, which modified
the decision of POEA in four labor cases: (1) awarded monetary
benefits only to 149 claimants and (2) directed Labor Arbiter Fatima
J. Franco to conduct hearings and to receive evidence on the claims
dismissed by the POEA for lack of substantial evidence or proof of
employment.
Consolidation of Cases

(1) to reverse the Resolution dated September 2,

1991 of NLRC in POEA Cases Nos. L-84-06-555, L-8510-777,
L-85-10-799
and
L-86-05-460 insofar as it: (i) applied the three-year
prescriptive period under the Labor Code of the
Philippines instead of the ten-year prescriptive period
under the Civil Code of the Philippines; and (ii)
denied
the
"three-hour
daily
average"
formula
in
the
computation of petitioners' overtime pay; and
(2) to reverse the Resolution dated March 24, 1992 of
NLRC, denying the motion for reconsideration of its
Resolution dated September 2, 1991 (Rollo, pp. 8-25;
26-220).
The petition in G.R. Nos. 105029-32, entitled "Asia International
Builders Corporation, et. al., v. National Labor Relations
Commission, et. al." was filed under Rule 65 of the Revised Rules of
Court:
(1) to reverse the Resolution dated September 2,
1991 of NLRC in POEA Cases Nos. L-84-06-555, L-8510-777,
L-85-10-779
and
L-86-05-460, insofar as it granted the claims of 149
claimants; and

G.R. Nos. 104776 and 105029-32 were originally raffled to the Third
Division while G.R. Nos. 104911-14 were raffled to the Second
Division. In the Resolution dated July 26, 1993, the Second Division
referred G.R. Nos. 104911-14 to the Third Division (G.R. Nos.
104911-14, Rollo, p. 895).
In the Resolution dated September 29, 1993, the Third Division
granted the motion filed in G.R. Nos. 104911-14 for the
consolidation of said cases with G.R. Nos. 104776 and 105029-32,
which were assigned to the First Division (G.R. Nos. 10491114, Rollo, pp. 986-1,107; G.R. Nos. 105029-30, Rollo, pp. 369-377,
426-432). In the Resolution dated October 27, 1993, the First
Division granted the motion to consolidate G.R. Nos. 104911-14
with G.R. No. 104776 (G.R. Nos. 104911-14, Rollo, p. 1109; G.R.
Nos. 105029-32, Rollo, p. 1562).
I
On June 6, 1984, Bienvenido M.. Cadalin, Rolando M. Amul and
Donato B. Evangelista, in their own behalf and on behalf of 728
other overseas contract workers (OCWs) instituted a class suit by
filing an "Amended Complaint" with the Philippine Overseas
Employment Administration (POEA) for money claims arising from
their recruitment by AIBC and employment by BRII (POEA Case No.
L-84-06-555). The claimants were represented by Atty. Gerardo del
Mundo.

BRII is a foreign corporation with headquarters in Houston, Texas,

and is engaged in construction; while AIBC is a domestic
corporation licensed as a service contractor to recruit, mobilize and
deploy Filipino workers for overseas employment on behalf of its
foreign principals.
The amended complaint principally sought the payment of the
unexpired portion of the employment contracts, which was
terminated prematurely, and secondarily, the payment of the
interest of the earnings of the Travel and Reserved Fund, interest on
all the unpaid benefits; area wage and salary differential pay; fringe
benefits; refund of SSS and premium not remitted to the SSS;
refund of withholding tax not remitted to the BIR; penalties for
committing prohibited practices; as well as the suspension of the
license of AIBC and the accreditation of BRII (G.R. No.
104776, Rollo, pp. 13-14).
At the hearing on June 25, 1984, AIBC was furnished a copy of the
complaint and was given, together with BRII, up to July 5, 1984 to
file its answer.
On July 3, 1984, POEA Administrator, upon motion of AIBC and BRII,
ordered the claimants to file a bill of particulars within ten days
from receipt of the order and the movants to file their answers
within ten days from receipt of the bill of particulars. The POEA
Administrator also scheduled a pre-trial conference on July 25,
1984.
On July 13, 1984, the claimants submitted their "Compliance and
Manifestation." On July 23, 1984, AIBC filed a "Motion to Strike Out
of the Records", the "Complaint" and the "Compliance and
Manifestation." On July 25, 1984, the claimants filed their
"Rejoinder and Comments," averring, among other matters, the
failure of AIBC and BRII to file their answers and to attend the pretrial conference on July 25, 1984. The claimants alleged that AIBC
and BRII had waived their right to present evidence and had
defaulted by failing to file their answers and to attend the pre-trial
conference.

On October 2, 1984, the POEA Administrator denied the "Motion to

Strike Out of the Records" filed by AIBC but required the claimants
to correct the deficiencies in the complaint pointed out in the order.
On October 10, 1984, claimants asked for time within which to
comply with the Order of October 2, 1984 and filed an "Urgent
Manifestation," praying that the POEA Administrator direct the
parties to submit simultaneously their position papers, after which
the case should be deemed submitted for decision. On the same
day, Atty. Florante de Castro filed another complaint for the same
money claims and benefits in behalf of several claimants, some of
whom were also claimants in POEA Case No. L-84-06-555 (POEA
Case No. 85-10-779).
On October 19, 1984, claimants filed their "Compliance" with the
Order dated October 2, 1984 and an "Urgent Manifestation,"
praying that the POEA direct the parties to submit simultaneously
their position papers after which the case would be deemed
submitted for decision. On the same day, AIBC asked for time to file
its comment on the "Compliance" and "Urgent Manifestation" of
claimants. On November 6, 1984, it filed a second motion for
extension of time to file the comment.
On November 8, 1984, the POEA Administrator informed AIBC that
its motion for extension of time was granted.
On November 14, 1984, claimants filed an opposition to the
motions for extension of time and asked that AIBC and BRII be
declared in default for failure to file their answers.
On November 20, 1984, AIBC and BRII filed a "Comment" praying,
among other reliefs, that claimants should be ordered to amend
their complaint.
On December 27, 1984, the POEA Administrator issued an order
directing AIBC and BRII to file their answers within ten days from
receipt of the order.
On February 27, 1985, AIBC and BRII appealed to NLRC seeking the
reversal of the said order of the POEA Administrator. Claimants

opposed the appeal, claiming that it was dilatory and praying that
AIBC and BRII be declared in default.
On April 2, 1985, the original claimants filed an "Amended
Complaint and/or Position Paper" dated March 24, 1985, adding
new demands: namely, the payment of overtime pay, extra night
work pay, annual leave differential pay, leave indemnity pay,
retirement and savings benefits and their share of forfeitures (G.R.
No. 104776, Rollo, pp. 14-16). On April 15, 1985, the POEA
Administrator directed AIBC to file its answer to the amended
complaint (G.R. No. 104776, Rollo, p. 20).
On May 28, 1985, claimants filed an "Urgent Motion for Summary
Judgment." On the same day, the POEA issued an order directing
AIBC and BRII to file their answers to the "Amended Complaint,"
otherwise, they would be deemed to have waived their right to
present evidence and the case would be resolved on the basis of
complainant's evidence.
On June 5, 1985, AIBC countered with a "Motion to Dismiss as
Improper Class Suit and Motion for Bill of Particulars Re: Amended
Complaint dated March 24, 1985." Claimants opposed the motions.
On September 4, 1985, the POEA Administrator reiterated his
directive to AIBC and BRII to file their answers in POEA Case No. L84-06-555.
On September 18, 1985, AIBC filed its second appeal to the NLRC,
together with a petition for the issuance of a writ of injunction. On
September 19, 1985, NLRC enjoined the POEA Administrator from
hearing the labor cases and suspended the period for the filing of
the answers of AIBC and BRII.
On September 19, 1985, claimants asked the POEA Administrator
to include additional claimants in the case and to investigate
alleged wrongdoings of BRII, AIBC and their respective lawyers.
On October 10, 1985, Romeo Patag and two co-claimants filed a
complaint (POEA Case No. L-85-10-777) against AIBC and BRII with
the POEA, demanding monetary claims similar to those subject of

POEA Case No. L-84-06-555. In the same month, Solomon Reyes

also filed his own complaint (POEA Case No. L-85-10-779) against
AIBC and BRII.
On October 17, 1985, the law firm of Florante M. de Castro &
Associates asked for the substitution of the original counsel of
record and the cancellation of the special powers of attorney given
the original counsel.
On December 12, 1985, Atty. Del Mundo filed in NLRC a notice of
the claim to enforce attorney's lien.
On May 29, 1986, Atty. De Castro filed a complaint for money
claims (POEA Case No. 86-05-460) in behalf of 11 claimants
including Bienvenido Cadalin, a claimant in POEA Case No. 84-06555.
On December 12, 1986, the NLRC dismissed the two appeals filed
on February 27, 1985 and September 18, 1985 by AIBC and BRII.
In narrating the proceedings of the labor cases before the POEA
Administrator, it is not amiss to mention that two cases were filed
in the Supreme Court by the claimants, namely G.R. No. 72132
on September 26, 1985 and Administrative Case No. 2858 on March
18, 1986. On May 13, 1987, the Supreme Court issued a resolution
in Administrative Case No. 2858 directing the POEA Administrator
to resolve the issues raised in the motions and oppositions filed in
POEA Cases Nos. L-84-06-555 and L-86-05-460 and to decide the
labor cases with deliberate dispatch.
AIBC also filed a petition in the Supreme Court (G.R. No. 78489),
questioning the Order dated September 4, 1985 of the POEA
Administrator. Said order required BRII and AIBC to answer the
amended complaint in POEA Case No. L-84-06-555. In a resolution
dated November 9, 1987, we dismissed the petition by informing
AIBC that all its technical objections may properly be resolved in
the hearings before the POEA.
Complaints were also filed before the Ombudsman. The first was
filed on September 22, 1988 by claimant Hermie Arguelles and 18

co-claimants against the POEA Administrator and several NLRC

Commissioners. The Ombudsman merely referred the complaint to
the Secretary of Labor and Employment with a request for the early
disposition of POEA Case No. L-84-06-555. The second was filed on
April 28, 1989 by claimants Emigdio P. Bautista and Rolando R.
Lobeta charging AIBC and BRII for violation of labor and social
legislations. The third was filed by Jose R. Santos, Maximino N.
Talibsao and Amado B. Bruce denouncing AIBC and BRII of
violations of labor laws.

On September 1, 1988, the claimants represented by Atty. De

Castro filed their memorandum in POEA Case No. L-86-05-460. On
September 6, 1988, AIBC and BRII submitted their Supplemental
Memorandum. On September 12, 1988, BRII filed its "Reply to
Complainant's Memorandum." On October 26, 1988, claimants
submitted their "Ex-Parte Manifestational Motion and CounterSupplemental Motion," together with 446 individual contracts of
employments and service records. On October 27, 1988, AIBC and
BRII filed a "Consolidated Reply."

On January 13, 1987, AIBC filed a motion for reconsideration of the

NLRC Resolution dated December 12, 1986.

On January 30, 1989, the POEA Administrator rendered his decision

in POEA Case No. L-84-06-555 and the other consolidated cases,
which awarded the amount of $824,652.44 in favor of only 324
complainants.

On January 14, 1987, AIBC reiterated before the POEA Administrator

its motion for suspension of the period for filing an answer or
motion for extension of time to file the same until the resolution of
its motion for reconsideration of the order of the NLRC dismissing
the two appeals. On April 28, 1987, NLRC en banc denied the
motion for reconsideration.
At the hearing on June 19, 1987, AIBC submitted its answer to the
complaint. At the same hearing, the parties were given a period of
15 days from said date within which to submit their respective
position papers. On June 24, 1987 claimants filed their "Urgent
Motion to Strike Out Answer," alleging that the answer was filed out
of time. On June 29, 1987, claimants filed their "Supplement to
Urgent Manifestational Motion" to comply with the POEA Order of
June 19, 1987. On February 24, 1988, AIBC and BRII submitted their
position paper. On March 4, 1988, claimants filed their "ExParte Motion to Expunge from the Records" the position paper of
AIBC and BRII, claiming that it was filed out of time.

On February 10, 1989, claimants submitted their "Appeal

Memorandum For Partial Appeal" from the decision of the POEA. On
the same day, AIBC also filed its motion for reconsideration and/or
appeal in addition to the "Notice of Appeal" filed earlier on February
6, 1989 by another counsel for AIBC.
On February 17, 1989, claimants filed their "Answer to Appeal,"
praying for the dismissal of the appeal of AIBC and BRII.
On March 15, 1989, claimants filed their "Supplement to
Complainants' Appeal Memorandum," together with their "newly
discovered evidence" consisting of payroll records.
On April 5, 1989, AIBC and BRII submitted to NLRC their
"Manifestation," stating among other matters that there were only
728 named claimants. On April 20, 1989, the claimants filed their
"Counter-Manifestation," alleging that there were 1,767 of them.
On July 27, 1989, claimants filed their "Urgent Motion for Execution"
of the Decision dated January 30, 1989 on the grounds that BRII
had failed to appeal on time and AIBC had not posted the
supersedeas bond in the amount of $824,652.44.
On December 23, 1989, claimants filed another motion to resolve
the labor cases.

On August 21, 1990, claimants filed their "Manifestational Motion,"

praying that all the 1,767 claimants be awarded their monetary
claims for failure of private respondents to file their answers within
the reglamentary period required by law.
On September 2, 1991, NLRC promulgated its Resolution, disposing
as follows:
WHEREFORE, premises considered, the Decision of
the POEA in these consolidated cases is modified to
the extent and in accordance with the following
dispositions:
1. The claims of the 94 complainants
identified and listed in Annex "A"
hereof are dismissed for having
prescribed;
2. Respondents AIBC and Brown & Root
are hereby ordered, jointly and
severally,
to
pay
the
149
complainants, identified and listed in
Annex "B" hereof, the peso equivalent,
at the time of payment, of the total
amount in US dollars indicated
opposite their respective names;
3. The awards given by the POEA to
the 19 complainants classified and
listed in Annex "C" hereof, who appear
to have worked elsewhere than in
Bahrain are hereby set aside.
4. All claims other than those indicated
in Annex "B", including those for
overtime work and favorably granted
by the POEA, are hereby dismissed for
lack of substantial evidence in support
thereof or are beyond the competence
of this Commission to pass upon.

In addition, this Commission, in the exercise of its

powers and authority under Article 218(c) of the
Labor Code, as amended by R.A. 6715, hereby
directs Labor Arbiter Fatima J. Franco of this
Commission to summon parties, conduct hearings
and receive evidence, as expeditiously as possible,
and thereafter submit a written report to this
Commission (First Division) of the proceedings taken,
regarding the claims of the following:
(a) complainants identified and listed
in Annex "D" attached and made an
integral part of this Resolution, whose
claims were dismissed by the POEA for
lack of proof of employment in Bahrain
(these complainants numbering 683,
are listed in pages 13 to 23 of the
decision of POEA, subject of the
appeals) and,
(b) complainants identified and listed
in Annex "E" attached and made an
integral part of this Resolution, whose
awards decreed by the POEA, to Our
mind, are not supported by substantial
evidence" (G.R. No. 104776; Rollo, pp.
113-115; G.R. Nos. 104911-14, pp. 8587; G.R. Nos. 105029-31, pp. 120-122).
On November 27, 1991, claimant Amado S. Tolentino and 12
co-claimants, who were former clients of Atty. Del Mundo, filed a
petition for certiorari with the Supreme Court (G.R. Nos. 12074144). The petition was dismissed in a resolution dated January 27,
1992.
Three motions for reconsideration of the September 2, 1991
Resolution of the NLRC were filed. The first, by the claimants
represented by Atty. Del Mundo; the second, by the claimants
represented by Atty. De Castro; and the third, by AIBC and BRII.

In its Resolution dated March 24, 1992, NLRC denied all the motions
for reconsideration.
Hence, these petitions filed by the claimants represented by Atty.
Del Mundo (G.R. No. 104776), the claimants represented by Atty.
De Castro (G.R. Nos. 104911-14) and by AIBC and BRII (G.R. Nos.
105029-32).
II
Compromise Agreements
Before this Court, the claimants represented by Atty. De Castro and
AIBC and BRII have submitted, from time to time, compromise
agreements for our approval and jointly moved for the dismissal of
their respective petitions insofar as the claimants-parties to the
compromise agreements were concerned (See Annex A for list of
claimants who signed quitclaims).

3) Joint Manifestation and Motion involving claimant

Jose
M. Aban and 36 co-claimants dated September 17,
1992 (G.R. Nos. 105029-32, Rollo, pp. 613-722; G.R.
No. 104776, Rollo, pp. 518-626; G.R. Nos. 10491114, Rollo, pp. 407-516);
4) Joint Manifestation and Motion involving claimant
Antonio T. Anglo and 17 co-claimants dated October
14,
1992
(G.R.
Nos.
105029-32, Rollo,
pp.
778-843;
G.R.
No.
104776, Rollo, pp. 650-713; G.R. Nos. 10491114, Rollo, pp. 530-590);
5) Joint Manifestation and Motion involving claimant
Dionisio Bobongo and 6 co-claimants dated January
15, 1993 (G.R. No. 104776, Rollo, pp. 813-836; G.R.
Nos. 104911-14, Rollo, pp. 629-652);

Thus the following manifestations that the parties had arrived at a

compromise agreement and the corresponding motions for the
approval of the agreements were filed by the parties and approved
by the Court:

6) Joint Manifestation and Motion involving claimant

Valerio A. Evangelista and 4 co-claimants dated
March 10, 1993 (G.R. Nos. 104911-14, Rollo, pp. 731746; G.R. No. 104776, Rollo, pp. 1815-1829);

1) Joint Manifestation and Motion involving claimant

Emigdio Abarquez and 47 co-claimants dated
September 2, 1992 (G.R. Nos. 104911-14, Rollo, pp.
263-406;
G.R.
Nos.
105029-32, Rollo,
pp.
470-615);

7) Joint Manifestation and Motion involving claimants

Palconeri Banaag and 5 co-claimants dated March 17,
1993 (G.R. No. 104776, Rollo, pp. 1657-1703; G.R.
Nos. 104911-14, Rollo, pp. 655-675);

2) Joint Manifestation and Motion involving petitioner

Bienvenido Cadalin and 82 co-petitioners dated
September 3, 1992 (G.R. No. 104776, Rollo, pp. 364507);

8) Joint Manifestation and Motion involving claimant

Benjamin Ambrosio and 15 other co-claimants dated
May 4, 1993 (G.R. Nos. 105029-32, Rollo, pp. 906956; G.R. Nos. 104911-14, Rollo, pp. 679-729; G.R.
No. 104776, Rollo, pp. 1773-1814);
9) Joint Manifestation and Motion involving Valerio
Evangelista and 3 co-claimants dated May 10, 1993
(G.R. No. 104776, Rollo, pp. 1815-1829);

10) Joint Manifestation and Motion involving

petitioner Quiterio R. Agudo and 36 co-claimants
dated June 14, 1993 (G.R. Nos. 105029-32, Rollo, pp.
974-1190; G.R. Nos. 104911-14, Rollo, pp. 748-864;
G.R. No. 104776, Rollo, pp. 1066-1183);
11) Joint Manifestation and Motion involving claimant
Arnaldo J. Alonzo and 19 co-claimants dated July 22,
1993 (G.R. No. 104776, Rollo, pp. 1173-1235; G.R.
Nos. 105029-32, Rollo, pp. 1193-1256; G.R. Nos.
104911-14, Rollo, pp. 896-959);
12) Joint Manifestation and Motion involving claimant
Ricardo C. Dayrit and 2 co-claimants dated
September
7,
1993
(G.R.
Nos.
105029-32, Rollo,
pp.
1266-1278;
G.R.
No.
104776, Rollo, pp. 1243-1254; G.R. Nos. 10491114,Rollo, pp. 972-984);
13) Joint Manifestation and Motion involving claimant
Dante C. Aceres and 37 co-claimants dated
September 8, 1993 (G.R. No. 104776, Rollo, pp.
1257-1375; G.R. Nos. 104911-14, Rollo, pp. 9871105; G.R. Nos. 105029-32, Rollo, pp. 1280-1397);
14) Joint Manifestation and Motion involving Vivencio
V. Abella and 27 co-claimants dated January 10, 1994
(G.R. Nos. 105029-32, Rollo, Vol. II);
15) Joint Manifestation and Motion involving Domingo
B. Solano and six co-claimants dated August 25,
1994 (G.R. Nos. 105029-32; G.R. No. 104776; G.R.
Nos. 104911-14).
III
The facts as found by the NLRC are as follows:
We have taken painstaking efforts to sift over the
more than fifty volumes now comprising the records

of these cases. From the records, it appears that the

complainants-appellants allege that they were
recruited by respondent-appellant AIBC for its
accredited foreign principal, Brown & Root, on
various dates from 1975 to 1983. They were all
deployed at various projects undertaken by Brown &
Root in several countries in the Middle East, such as
Saudi Arabia, Libya, United Arab Emirates and
Bahrain, as well as in Southeast Asia, in Indonesia
and Malaysia.
Having been officially processed as overseas contract
workers by the Philippine Government, all the
individual complainants signed standard overseas
employment contracts (Records, Vols. 25-32.
Hereafter, reference to the records would be
sparingly
made,
considering
their
chaotic
arrangement) with AIBC before their departure from
the Philippines. These overseas employment
contracts invariably contained the following relevant
terms and conditions.
PART B
(1)
Employment
Position

(Code) :

Classification

(2) Company Employment Status :

(3) Date of Employment to Commence on :

(4) Basic Working Hours Per Week :

(5)
Basic
Working
Hours
Per
Month
:

(6)
Basic
Hourly
Rate
:
(7) Overtime Rate Per Hour :
(8)
Projected
Period
of
Service
(Subject to C(1) of this [sic]) :
Months
and/or
Job Completion

xxx xxx xxx

3. HOURS OF WORK AND COMPENSATION
a) The Employee is employed at the hourly rate and
overtime rate as set out in Part B of this Document.
b) The hours of work shall be those set forth by the
Employer, and Employer may, at his sole option,
change or adjust such hours as maybe deemed
necessary from time to time.

b) Sick leave of 15-days shall be granted to the

employee for every year of service for non-work
connected injuries or illness. If the employee failed to
avail of such leave benefits, the same shall be
forfeited at the end of the year in which said sick
leave is granted.
11. BONUS
A bonus of 20% (for offshore work) of gross income
will be accrued and payable only upon satisfactory
completion of this contract.

4. TERMINATION
12. OFFDAY PAY
a) Notwithstanding any other terms and conditions of
this agreement, the Employer may, at his sole
discretion, terminate employee's service with cause,
under this agreement at any time. If the Employer
terminates the services of the Employee under this
Agreement because of the completion or termination,
or suspension of the work on which the Employee's
services were being utilized, or because of a
reduction in force due to a decrease in scope of such
work, or by change in the type of construction of
such work. The Employer will be responsible for his
return transportation to his country of origin.
Normally on the most expeditious air route, economy
class accommodation.
xxx xxx xxx
10. VACATION/SICK LEAVE BENEFITS
a) After one (1) year of continuous service and/or
satisfactory completion of contract, employee shall
be entitled to 12-days vacation leave with pay. This
shall be computed at the basic wage rate. Fractions
of a year's service will be computed on a prorata basis.

The seventh day of the week shall be observed as a

day of rest with 8 hours regular pay. If work is
performed on this day, all hours work shall be paid at
the premium rate. However, this offday pay provision
is applicable only when the laws of the Host Country
require payments for rest day.
In the State of Bahrain, where some of the individual
complainants were deployed, His Majesty Isa Bin
Salman Al Kaifa, Amir of Bahrain, issued his Amiri
Decree No. 23 on June 16, 1976, otherwise known as
the Labour Law for the Private Sector (Records, Vol.
18). This decree took effect on August 16, 1976.
Some of the provisions of Amiri Decree No. 23 that
are relevant to the claims of the complainantsappellants are as follows (italics supplied only for
emphasis):
Art. 79: . . . A worker shall receive
payment
for
each
extra
hour
equivalent to his wage entitlement
increased by a minimum of twentyfive per centum thereof for hours
worked during the day; and by a
minimum of fifty per centum thereof

for
hours
worked
during
the
night which shall be deemed to being
from seven o'clock in the evening until
seven o'clock in the morning. . . .

thirty days' prior notice before such

termination, in writing, in respect of
monthly paid workers and fifteen days'
notice in respect of other workers. The
party terminating a contract without
giving the required notice shall pay to
the
other
party
compensation
equivalent to the amount of wages
payable to the worker for the period of
such notice or the unexpired portion
thereof.

Art. 80: Friday shall be deemed to be a

weekly day of rest on full pay.
. . . an employer may require a
worker, with his consent, to work on
his weekly day of rest if circumstances
so require and in respect of which an
additional sum equivalent to 150% of
his normal wage shall be paid to
him. . . .

Art. 111: . . . the employer concerned

shall pay to such worker, upon
termination of employment, a leaving
indemnity for the period of his
employment calculated on the basis of
fifteen days' wages for each year of
the first three years of service and of
one month's wages for each year of
service thereafter. Such worker shall
be entitled to payment of leaving
indemnity upon a quantum meruit in
proportion to the period of his service
completed within a year.

Art. 81: . . . When conditions of work

require the worker to work on any
official holiday, he shall be paid an
additional sum equivalent to 150% of
his normal wage.
Art. 84: Every worker who has
completed one year's continuous
service with his employer shall be
entitled to leave on full pay for a
period of not less than 21 days for
each year increased to a period not
less than 28 days after five continuous
years of service.
A worker shall be entitled to such leave
upon a quantum meruit in respect of
the proportion of his service in that
year.
Art. 107: A contract of employment
made for a period of indefinite duration
may be terminated by either party
thereto after giving the other party

All
the
individual
complainantsappellants
have
already
been
repatriated to the Philippines at the
time of the filing of these cases (R.R.
No. 104776, Rollo, pp. 59-65).
IV
The issues raised before and resolved by the NLRC were:
First: Whether or not complainants are entitled to
the benefits provided by Amiri Decree No. 23 of
Bahrain;

(a) Whether or not the complainants

who have worked in Bahrain are
entitled to the
above-mentioned
benefits.
(b) Whether or not Art. 44 of the
Decree (allegedly prescribing a
favorable
treatment
of
employees) bars complainants
enjoying its benefits.

same
more
alien
from

Second: Assuming that Amiri Decree No. 23 of

Bahrain is applicable in these cases, whether or not
complainants' claim for the benefits provided therein
have prescribed.
Third: Whether or not the instant cases qualify as
a class suit.
Fourth: Whether or not the proceedings conducted
by the POEA, as well as the decision that is the
subject of these appeals, conformed with the
requirements of due process;
(a) Whether or not the respondentappellant was denied its right to due
process;
(b) Whether or not the admission of
evidence by the POEA after these
cases were submitted for decision was
valid;
(c) Whether or not the POEA acquired
jurisdiction over Brown & Root
International, Inc.;
(d) Whether or not the judgment
awards are supported by substantial
evidence;

(e) Whether or not the awards based

on
the
averages
and
formula
presented
by
the
complainantsappellants
are
supported
by
substantial evidence;
(f) Whether or not the POEA awarded
sums beyond what the complainantsappellants prayed for; and, if so,
whether or not these awards are valid.
Fifth: Whether or not the POEA erred in holding
respondents AIBC and Brown & Root jointly are
severally liable for the judgment awards despite the
alleged finding that the former was the employer of
the complainants;
(a) Whether or not the POEA has
acquired jurisdiction over Brown &
Root;
(b) Whether or not the undisputed fact
that AIBC was a licensed construction
contractor precludes a finding that
Brown & Root is liable for complainants
claims.
Sixth: Whether or not the POEA Administrator's
failure to hold respondents in default constitutes a
reversible error.
Seventh: Whether or not the POEA Administrator
erred in dismissing the following claims:
a. Unexpired portion of contract;
b. Interest earnings of Travel and
Reserve Fund;

c. Retirement
benefits;

and

Savings

Plan

d. War Zone bonus or premium pay of

at least 100% of basic pay;
e. Area Differential Pay;
f. Accrued interests on all the unpaid
benefits;
g. Salary differential pay;
h. Wage differential pay;
i. Refund of SSS
remitted to SSS;

premiums

j. Refund of withholding
remitted to BIR;

tax

not

not

k. Fringe benefits under B & R's "A

Summary of Employee Benefits"
(Annex "Q" of Amended Complaint);
l. Moral and exemplary damages;
m. Attorney's fees of at least ten
percent of the judgment award;
n. Other reliefs, like suspending and/or
cancelling the license to recruit of AIBC
and the accreditation of B & R issued
by POEA;
o. Penalty for violations of Article 34
(prohibited practices), not excluding
reportorial requirements thereof.

Eighth: Whether or not the POEA Administrator

erred in not dismissing POEA Case No. (L) 86-65-460
on the ground of multiplicity of suits (G.R. Nos.
104911-14, Rollo, pp. 25-29, 51-55).
Anent the first issue, NLRC set aside Section 1, Rule 129 of the
1989 Revised Rules on Evidence governing the pleading and proof
of a foreign law and admitted in evidence a simple copy of the
Bahrain's Amiri Decree No. 23 of 1976 (Labour Law for the Private
Sector). NLRC invoked Article 221 of the Labor Code of the
Philippines, vesting on the Commission ample discretion to use
every and all reasonable means to ascertain the facts in each case
without regard to the technicalities of law or procedure. NLRC
agreed with the POEA Administrator that the Amiri Decree No. 23,
being more favorable and beneficial to the workers, should form
part of the overseas employment contract of the complainants.
NLRC, however, held that the Amiri Decree No. 23 applied only to
the claimants, who worked in Bahrain, and set aside awards of the
POEA Administrator in favor of the claimants, who worked
elsewhere.
On the second issue, NLRC ruled that the prescriptive period for the
filing of the claims of the complainants was three years, as
provided in Article 291 of the Labor Code of the Philippines, and not
ten years as provided in Article 1144 of the Civil Code of the
Philippines nor one year as provided in the Amiri Decree No. 23 of
1976.
On the third issue, NLRC agreed with the POEA Administrator that
the labor cases cannot be treated as a class suit for the simple
reason that not all the complainants worked in Bahrain and
therefore, the subject matter of the action, the claims arising from
the Bahrain law, is not of common or general interest to all the
complainants.
On the fourth issue, NLRC found at least three infractions of the
cardinal rules of administrative due process: namely, (1) the failure
of the POEA Administrator to consider the evidence presented by
AIBC and BRII; (2) some findings of fact were not supported by

substantial evidence; and (3) some of the evidence upon which the
decision was based were not disclosed to AIBC and BRII during the
hearing.

(5) that the allegation that complainants were

prematurely repatriated prior to the expiration of
their overseas contract was not established; and

On the fifth issue, NLRC sustained the ruling of the POEA

Administrator that BRII and AIBC are solidarily liable for the claims
of the complainants and held that BRII was the actual employer of
the complainants, or at the very least, the indirect employer, with
AIBC as the labor contractor.

(6) that the POEA Administrator has no jurisdiction

over the complaint for the suspension or cancellation
of the AIBC's recruitment license and the cancellation
of the accreditation of BRII.

NLRC also held that jurisdiction over BRII was acquired by the POEA
Administrator through the summons served on AIBC, its local agent.
On the sixth issue, NLRC held that the POEA Administrator was
correct in denying the Motion to Declare AIBC in default.
On the seventh issue, which involved other money claims not
based on the Amiri Decree No. 23, NLRC ruled:
(1) that the POEA Administrator has no jurisdiction
over the claims for refund of the SSS premiums and
refund of withholding taxes and the claimants should
file their claims for said refund with the appropriate
government agencies;
(2) the claimants failed to establish that they are
entitled to the claims which are not based on the
overseas employment contracts nor the Amiri Decree
No. 23 of 1976;
(3) that the POEA Administrator has no jurisdiction
over claims for moral and exemplary damages and
nonetheless, the basis for granting said damages
was not established;
(4) that the claims for salaries corresponding to the
unexpired portion of their contract may be allowed if
filed within the three-year prescriptive period;

NLRC passed sub silencio the last issue, the claim that POEA Case
No. (L) 86-65-460 should have been dismissed on the ground that
the claimants in said case were also claimants in POEA Case No. (L)
84-06-555. Instead of dismissing POEA Case No. (L) 86-65-460, the
POEA just resolved the corresponding claims in POEA Case No. (L)
84-06-555. In other words, the POEA did not pass upon the same
claims twice.
V
G.R. No. 104776
Claimants in G.R. No. 104776 based their petition for certiorari on
the following grounds:
(1) that they were deprived by NLRC and the POEA of
their right to a speedy disposition of their cases as
guaranteed by Section 16, Article III of the 1987
Constitution. The POEA Administrator allowed private
respondents to file their answers in two years (on
June 19, 1987) after the filing of the original
complaint (on April 2, 1985) and NLRC, in total
disregard of its own rules, affirmed the action of the
POEA Administrator;
(2) that NLRC and the POEA Administrator should
have declared AIBC and BRII in default and should
have rendered summary judgment on the basis of
the pleadings and evidence submitted by claimants;

(3) the NLRC and POEA Administrator erred in not

holding that the labor cases filed by AIBC and BRII
cannot be considered a class suit;
(4) that the prescriptive period for the filing of the
claims is ten years; and
(5) that NLRC and the POEA Administrator should
have dismissed POEA Case No. L-86-05-460, the case
filed by Atty. Florante de Castro (Rollo, pp. 31-40).
AIBC and BRII, commenting on the petition in G.R. No. 104776,
argued:
(1) that they were not responsible for the delay in the
disposition of the labor cases, considering the great
difficulty of getting all the records of the more than
1,500 claimants, the piece-meal filing of the
complaints and the addition of hundreds of new
claimants by petitioners;
(2) that considering the number of complaints and
claimants, it was impossible to prepare the answers
within the ten-day period provided in the NLRC Rules,
that when the motion to declare AIBC in default was
filed on July 19, 1987, said party had already filed its
answer, and that considering the staggering amount
of the claims (more than US$50,000,000.00) and the
complicated issues raised by the parties, the ten-day
rule to answer was not fair and reasonable;
(3) that the claimants failed to refute NLRC's finding
that
there was no common or general interest in the
subject matter of the controversy which was the
applicability of the Amiri Decree No. 23. Likewise, the
nature of the claims varied, some being based on
salaries pertaining to the unexpired portion of the
contracts while others being for pure money claims.
Each claimant demanded separate claims peculiar

only to himself and depending upon the particular

circumstances obtaining in his case;
(4) that the prescriptive period for filing the claims is
that prescribed by Article 291 of the Labor Code of
the Philippines (three years) and not the one
prescribed by Article 1144 of the Civil Code of the
Philippines (ten years); and
(5) that they are not concerned with the issue of
whether POEA Case No. L-86-05-460 should be
dismissed, this being a private quarrel between the
two labor lawyers (Rollo, pp. 292-305).
Attorney's Lien
On November 12, 1992, Atty. Gerardo A. del Mundo moved to strike
out the joint manifestations and motions of AIBC and BRII dated
September 2 and 11, 1992, claiming that all the claimants who
entered into the compromise agreements subject of said
manifestations and motions were his clients and that Atty. Florante
M. de Castro had no right to represent them in said agreements. He
also claimed that the claimants were paid less than the award
given them by NLRC; that Atty. De Castro collected additional
attorney's fees on top of the 25% which he was entitled to receive;
and that the consent of the claimants to the compromise
agreements and quitclaims were procured by fraud (G.R. No.
104776, Rollo, pp. 838-810). In the Resolution dated November 23,
1992, the Court denied the motion to strike out the Joint
Manifestations and Motions dated September 2 and 11, 1992 (G.R.
Nos. 104911-14, Rollo, pp. 608-609).
On December 14, 1992, Atty. Del Mundo filed a "Notice and Claim
to Enforce Attorney's Lien," alleging that the claimants who entered
into compromise agreements with AIBC and BRII with the
assistance of Atty. De Castro, had all signed a retainer agreement
with his law firm (G.R. No. 104776, Rollo, pp. 623-624; 838-1535).
Contempt of Court

On February 18, 1993, an omnibus motion was filed by Atty. Del

Mundo to cite Atty. De Castro and Atty. Katz Tierra for contempt of
court and for violation of Canons 1, 15 and 16 of the Code of
Professional Responsibility. The said lawyers allegedly misled this
Court, by making it appear that the claimants who entered into the
compromise agreements were represented by Atty. De Castro,
when in fact they were represented by Atty. Del Mundo (G.R. No.
104776, Rollo, pp. 1560-1614).

As to the memorandum of the Ministry of Labor of Bahrain on the

method of computing the overtime pay, BRII and AIBC claimed that
they were not bound by what appeared therein, because such
memorandum was proposed by a subordinate Bahrain official and
there was no showing that it was approved by the Bahrain Minister
of Labor. Likewise, they claimed that the averaging method was
discussed in the course of the negotiation for the amicable
settlement of the dispute and any offer made by a party therein
could not be used as an admission by him (Rollo, pp. 228-236).

On September 23, 1994, Atty. Del Mundo reiterated his charges

against Atty. De Castro for unethical practices and moved for the
voiding of the quitclaims submitted by some of the claimants.
G.R. Nos. 104911-14
The claimants in G.R. Nos. 104911-14 based their petition
for certiorari on the grounds that NLRC gravely abused its
discretion when it: (1) applied the three-year prescriptive period
under the Labor Code of the Philippines; and (2) it denied the
claimant's formula based on an average overtime pay of three
hours a day (Rollo, pp. 18-22).
The claimants argue that said method was proposed by BRII itself
during the negotiation for an amicable settlement of their money
claims in Bahrain as shown in the Memorandum dated April 16,
1983 of the Ministry of Labor of Bahrain (Rollo, pp. 21-22).
BRII and AIBC, in their Comment, reiterated their contention in G.R.
No. 104776 that the prescriptive period in the Labor Code of the
Philippines, a special law, prevails over that provided in the Civil
Code of the Philippines, a general law.

G.R. Nos. 105029-32

In G.R. Nos. 105029-32, BRII and AIBC claim that NLRC gravely
abused its discretion when it: (1) enforced the provisions of the
Amiri Decree No. 23 of 1976 and not the terms of the employment
contracts; (2) granted claims for holiday, overtime and leave
indemnity pay and other benefits, on evidence admitted in
contravention of petitioner's constitutional right to due process;
and (3) ordered the POEA Administrator to hold new hearings for
the 683 claimants whose claims had been dismissed for lack of
proof by the POEA Administrator or NLRC itself. Lastly, they allege
that assuming that the Amiri Decree No. 23 of 1976 was applicable,
NLRC erred when it did not apply the one-year prescription provided
in said law (Rollo, pp. 29-30).
VI
G.R. No. 104776; G.R. Nos. 104911-14; G.R. Nos. 105029-32
All the petitions raise the common issue of prescription although
they disagreed as to the time that should be embraced within the
prescriptive period.
To the POEA Administrator, the prescriptive period was ten years,
applying Article 1144 of the Civil Code of the Philippines. NLRC
believed otherwise, fixing the prescriptive period at three years as
provided in Article 291 of the Labor Code of the Philippines.
The claimants in G.R. No. 104776 and G.R. Nos. 104911-14,
invoking different grounds, insisted that NLRC erred in ruling that

the prescriptive period applicable to the claims was three years,

instead of ten years, as found by the POEA Administrator.
The Solicitor General expressed his personal view that the
prescriptive period was one year as prescribed by the Amiri Decree
No. 23 of 1976 but he deferred to the ruling of NLRC that Article
291 of the Labor Code of the Philippines was the operative law.
The POEA Administrator held the view that:
These money claims (under Article 291 of the Labor
Code) refer to those arising from the employer's
violation of the employee's right as provided by the
Labor Code.
In the instant case, what the respondents violated
are not the rights of the workers as provided by the
Labor Code, but the provisions of the Amiri Decree
No. 23 issued in Bahrain, which ipso factoamended
the worker's contracts of employment. Respondents
consciously failed to conform to these provisions
which specifically provide for the increase of the
worker's rate. It was only after June 30, 1983, four
months after the brown builders brought a suit
against B & R in Bahrain for this same claim, when
respondent AIBC's contracts have undergone
amendments in Bahrain for the new hires/renewals
(Respondent's Exhibit 7).
Hence, premises considered, the applicable law of
prescription to this instant case is Article 1144 of the
Civil Code of the Philippines, which provides:
Art. 1144. The following actions may
be brought within ten years from the
time the cause of action accrues:
(1) Upon a written contract;
(2) Upon an obligation created by law;

Thus, herein money claims of the complainants

against the respondents shall prescribe in ten years
from August 16, 1976. Inasmuch as all claims were
filed within the ten-year prescriptive period, no claim
suffered the infirmity of being prescribed (G.R. No.
104776, Rollo, 89-90).
In overruling the POEA Administrator, and holding that the
prescriptive period is three years as provided in Article 291 of the
Labor Code of the Philippines, the NLRC argued as follows:
The Labor Code provides that "all money claims
arising from employer-employee relations . . . shall
be filed within three years from the time the cause of
action accrued; otherwise they shall be forever
barred" (Art. 291, Labor Code, as amended). This
three-year prescriptive period shall be the one
applied here and which should be reckoned from the
date of repatriation of each individual complainant,
considering the fact that the case is having (sic) filed
in this country. We do not agree with the POEA
Administrator that this three-year prescriptive period
applies only to money claims specifically recoverable
under the Philippine Labor Code. Article 291 gives no
such indication. Likewise, We can not consider
complainants' cause/s of action to have accrued from
a violation of their employment contracts. There was
no violation; the claims arise from the benefits of the
law of the country where they worked. (G.R. No.
104776, Rollo,
pp.
90-91).
Anent the applicability of the one-year prescriptive period as
provided by the Amiri Decree No. 23 of 1976, NLRC opined that the
applicability of said law was one of characterization, i.e., whether to
characterize the foreign law on prescription or statute of limitation
as "substantive" or "procedural." NLRC cited the decision
in Bournias v. Atlantic Maritime Company (220 F. 2d. 152, 2d Cir.
[1955], where the issue was the applicability of the Panama Labor
Code in a case filed in the State of New York for claims arising from

said Code. In said case, the claims would have prescribed under the
Panamanian Law but not under the Statute of Limitations of New
York. The U.S. Circuit Court of Appeals held that the Panamanian
Law was procedural as it was not "specifically intended to be
substantive," hence, the prescriptive period provided in the law of
the forum should apply. The Court observed:
. . . And where, as here, we are dealing with a statute
of limitations of a foreign country, and it is not clear
on the face of the statute that its purpose was to
limit the enforceability, outside as well as within the
foreign country concerned, of the substantive rights
to which the statute pertains, we think that as a
yardstick for determining whether that was the
purpose this test is the most satisfactory one. It does
not lead American courts into the necessity of
examining into the unfamiliar peculiarities and
refinements of different foreign legal systems. . .
The court further noted:
xxx xxx xxx
Applying that test here it appears to us that the
libelant is entitled to succeed, for the respondents
have failed to satisfy us that the Panamanian period
of limitation in question was specifically aimed
against the particular rights which the libelant seeks
to enforce. The Panama Labor Code is a statute
having broad objectives, viz: "The present Code
regulates the relations between capital and labor,
placing them on a basis of social justice, so that,
without injuring any of the parties, there may be
guaranteed for labor the necessary conditions for a
normal life and to capital an equitable return to its
investment." In pursuance of these objectives the
Code gives laborers various rights against their
employers. Article 623 establishes the period of
limitation for all such rights, except certain ones
which are enumerated in Article 621. And there is

nothing in the record to indicate that the Panamanian

legislature gave special consideration to the impact
of Article 623 upon the particular rights sought to be
enforced here, as distinguished from the other rights
to which that Article is also applicable. Were we
confronted with the question of whether the
limitation period of Article 621 (which carves out
particular rights to be governed by a shorter
limitation period) is to be regarded as "substantive"
or "procedural" under the rule of "specifity" we might
have a different case; but here on the surface of
things we appear to be dealing with a "broad," and
not a "specific," statute of limitations (G.R. No.
104776, Rollo,
pp.
92-94).
Claimants in G.R. Nos. 104911-14 are of the view that Article 291 of
the Labor Code of the Philippines, which was applied by NLRC,
refers only to claims "arising from the employer's violation of the
employee's right as provided by the Labor Code." They assert that
their claims are based on the violation of their employment
contracts, as amended by the Amiri Decree No. 23 of 1976 and
therefore the claims may be brought within ten years as provided
by Article 1144 of the Civil Code of the Philippines (Rollo, G.R. Nos.
104911-14,
pp.
18-21). To bolster their contention, they cite PALEA v. Philippine
Airlines, Inc., 70 SCRA 244 (1976).
AIBC and BRII, insisting that the actions on the claims have
prescribed under the Amiri Decree No. 23 of 1976, argue that there
is in force in the Philippines a "borrowing law," which is Section 48
of the Code of Civil Procedure and that where such kind of law
exists, it takes precedence over the common-law conflicts rule (G.R.
No. 104776,Rollo, pp. 45-46).
First to be determined is whether it is the Bahrain law on
prescription of action based on the Amiri Decree No. 23 of 1976 or
a Philippine law on prescription that shall be the governing law.
Article 156 of the Amiri Decree No. 23 of 1976 provides:

A claim arising out of a contract of employment shall

not be actionable after the lapse of one year from the
date of the expiry of the contract. (G.R. Nos. 10502931, Rollo, p. 226).
As a general rule, a foreign procedural law will not be applied in the
forum. Procedural matters, such as service of process, joinder of
actions, period and requisites for appeal, and so forth, are governed
by the laws of the forum. This is true even if the action is based
upon a foreign substantive law (Restatement of the Conflict of
Laws, Sec. 685; Salonga, Private International Law, 131 [1979]).
A law on prescription of actions is sui generis in Conflict of Laws in
the sense that it may be viewed either as procedural or
substantive, depending on the characterization given such a law.
Thus in Bournias v. Atlantic Maritime Company, supra, the American
court applied the statute of limitations of New York, instead of the
Panamanian law, after finding that there was no showing that the
Panamanian law on prescription was intended to be substantive.
Being considered merely a procedural law even in Panama, it has to
give way to the law of the forum on prescription of actions.
However, the characterization of a statute into a procedural or
substantive law becomes irrelevant when the country of the forum
has a "borrowing statute." Said statute has the practical effect of
treating the foreign statute of limitation as one of substance
(Goodrich, Conflict of Laws 152-153 [1938]). A "borrowing statute"
directs the state of the forum to apply the foreign statute of
limitations to the pending claims based on a foreign law (Siegel,
Conflicts, 183 [1975]). While there are several kinds of "borrowing
statutes," one form provides that an action barred by the laws of
the place where it accrued, will not be enforced in the forum even
though the local statute has not run against it (Goodrich and
Scoles, Conflict of Laws, 152-153 [1938]). Section 48 of our Code of
Civil Procedure is of this kind. Said Section provides:
If by the laws of the state or country where the cause
of action arose, the action is barred, it is also barred
in the Philippines Islands.

Section 48 has not been repealed or amended by the Civil Code of

the Philippines. Article 2270 of said Code repealed only those
provisions of the Code of Civil Procedures as to which were
inconsistent with it. There is no provision in the Civil Code of the
Philippines, which is inconsistent with or contradictory to Section 48
of the Code of Civil Procedure (Paras, Philippine Conflict of Laws
104 [7th ed.]).
In the light of the 1987 Constitution, however, Section 48 cannot be
enforced ex proprio vigore insofar as it ordains the application in
this jurisdiction of Section 156 of the Amiri Decree No. 23 of 1976.
The courts of the forum will not enforce any foreign claim
obnoxious to the forum's public policy (Canadian Northern Railway
Co. v. Eggen, 252 U.S. 553, 40 S. Ct. 402, 64 L. ed. 713 [1920]). To
enforce the one-year prescriptive period of the Amiri Decree No. 23
of 1976 as regards the claims in question would contravene the
public policy on the protection to labor.
In the Declaration of Principles and State Policies, the 1987
Constitution emphasized that:
The state shall promote social justice in all phases of
national development. (Sec. 10).
The state affirms labor as a primary social economic
force. It shall protect the rights of workers and
promote their welfare (Sec. 18).
In article XIII on Social Justice and Human Rights, the 1987
Constitution provides:
Sec. 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.
Having determined that the applicable law on prescription is the
Philippine law, the next question is whether the prescriptive period
governing the filing of the claims is three years, as provided by the

Labor Code or ten years, as provided by the Civil Code of the

Philippines.

contracts between the litigants, the ten-year prescriptive period

provided by Art. 1144(1) of the New Civil Code should govern."

The claimants are of the view that the applicable provision is Article
1144 of the Civil Code of the Philippines, which provides:

Section 7-a of the Eight-Hour Labor Law (CA No. 444 as amended
by R.A. No. 19933) provides:

The following actions must be brought within ten

years from the time the right of action accrues:

Any action to enforce any cause of action under this

Act shall be commenced within three years after the
cause of action accrued otherwise such action shall
be forever barred, . . . .

(1) Upon a written contract;

(2) Upon an obligation created by law;
(3) Upon a judgment.
NLRC, on the other hand, believes that the applicable provision is
Article 291 of the Labor Code of the Philippines, which in pertinent
part provides:
Money claims-all money claims arising from
employer-employee relations accruing during the
effectivity of this Code shall be filed within three (3)
years from the time the cause of action accrued,
otherwise they shall be forever barred.
xxx xxx xxx
The case of Philippine Air Lines Employees Association v. Philippine
Air Lines, Inc., 70 SCRA 244 (1976) invoked by the claimants in G.R.
Nos. 104911-14 is inapplicable to the cases at bench (Rollo, p. 21).
The said case involved the correct computation of overtime pay as
provided in the collective bargaining agreements and not the EightHour Labor Law.
As noted by the Court: "That is precisely why petitioners did not
make any reference as to the computation for overtime work under
the Eight-Hour Labor Law (Secs. 3 and 4, CA No. 494) and instead
insisted that work computation provided in the collective
bargaining agreements between the parties be observed. Since the
claim for pay differentials is primarily anchored on the written

The court further explained:

The three-year prescriptive period fixed in the EightHour Labor Law (CA No. 444 as amended) will apply,
if the claim for differentials for overtime work is
solely based on said law, and not on a collective
bargaining agreement or any other contract. In the
instant case, the claim for overtime compensation is
not so much because of Commonwealth Act No. 444,
as amended but because the claim is demandable
right of the employees, by reason of the abovementioned collective bargaining agreement.
Section 7-a of the Eight-Hour Labor Law provides the prescriptive
period for filing "actions to enforce any cause of action under said
law." On the other hand, Article 291 of the Labor Code of the
Philippines provides the prescriptive period for filing "money claims
arising from employer-employee relations." The claims in the cases
at bench all arose from the employer-employee relations, which is
broader in scope than claims arising from a specific law or from the
collective bargaining agreement.
The contention of the POEA Administrator, that the three-year
prescriptive period under Article 291 of the Labor Code of the
Philippines applies only to money claims specifically recoverable
under said Code, does not find support in the plain language of the
provision. Neither is the contention of the claimants in G.R. Nos.
104911-14 that said Article refers only to claims "arising from the

employer's violation of the employee's right," as provided by the

Labor Code supported by the facial reading of the provision.

Caballero laid down the factors that may be taken into

consideration in determining whether or not the right to a "speedy
disposition of cases" has been violated, thus:

VII

A. As to the first two grounds for the petition in G.R. No. 104776,
claimants aver: (1) that while their complaints were filed on June 6,
1984 with POEA, the case was decided only on January 30, 1989, a
clear denial of their right to a speedy disposition of the case; and
(2) that NLRC and the POEA Administrator should have declared
AIBC
and
BRII
in
default
(Rollo,
pp.
31-35).

In the determination of whether or not the right to a

"speedy trial" has been violated, certain factors may
be considered and balanced against each other.
These are length of delay, reason for the delay,
assertion of the right or failure to assert it, and
prejudice caused by the delay. The same factors may
also be considered in answering judicial inquiry
whether or not a person officially charged with the
administration of justice has violated the speedy
disposition of cases.

Claimants invoke a new provision incorporated in the 1987

Constitution, which provides:

Likewise, in Gonzales v. Sandiganbayan, 199 SCRA 298, (1991), we

held:

Sec. 16. All persons shall have the right to a speedy

disposition of their cases before all judicial, quasijudicial, or administrative bodies.

It must be here emphasized that the right to a

speedy disposition of a case, like the right to speedy
trial, is deemed violated only when the proceeding is
attended by vexatious, capricious, and oppressive
delays; or when unjustified postponements of the
trial are asked for and secured, or when without
cause or justified motive a long period of time is
allowed to elapse without the party having his case
tried.

G.R. No. 104776

It is true that the constitutional right to "a speedy disposition of

cases" is not limited to the accused in criminal proceedings but
extends to all parties in all cases, including civil and administrative
cases, and in all proceedings, including judicial and quasi-judicial
hearings. Hence, under the Constitution, any party to a case may
demand expeditious action on all officials who are tasked with the
administration of justice.
However, as held in Caballero v. Alfonso, Jr., 153 SCRA 153 (1987),
"speedy disposition of cases" is a relative term. Just like the
constitutional guarantee of "speedy trial" accorded to the accused
in all criminal proceedings, "speedy disposition of cases" is a
flexible concept. It is consistent with delays and depends upon the
circumstances of each case. What the Constitution prohibits are
unreasonable, arbitrary and oppressive delays which render rights
nugatory.

Since July 25, 1984 or a month after AIBC and BRII were served with
a copy of the amended complaint, claimants had been asking that
AIBC and BRII be declared in default for failure to file their answers
within the ten-day period provided in Section 1, Rule III of Book VI
of the Rules and Regulations of the POEA. At that time, there was a
pending motion of AIBC and BRII to strike out of the records the
amended complaint and the "Compliance" of claimants to the order
of the POEA, requiring them to submit a bill of particulars.
The cases at bench are not of the run-of-the-mill variety, such that
their final disposition in the administrative level after seven years
from their inception, cannot be said to be attended by

unreasonable, arbitrary and oppressive delays as to violate the

constitutional rights to a speedy disposition of the cases of
complainants.
The amended complaint filed on June 6, 1984 involved a total of
1,767 claimants. Said complaint had undergone several
amendments, the first being on April 3, 1985.
The claimants were hired on various dates from 1975 to 1983. They
were deployed in different areas, one group in and the other groups
outside of, Bahrain. The monetary claims totalling more than US$65
million according to Atty. Del Mundo, included:

12. Moral and Exemplary Damages;

13. Attorney's fees of at least ten percent of
amounts;
14. Other reliefs, like suspending and/or cancelling
the license to recruit of AIBC and issued by the POEA;
and
15. Penalty for violation of Article 34 (Prohibited
practices) not excluding reportorial requirements
thereof (NLRC Resolution, September 2, 1991, pp. 1819; G.R. No. 104776, Rollo, pp. 73-74).

1. Unexpired portion of contract;

2. Interest earnings of Travel and Fund;
3. Retirement and Savings Plan benefit;
4. War Zone bonus or premium pay of at least 100%
of basic pay;

Inasmuch as the complaint did not allege with sufficient

definiteness and clarity of some facts, the claimants were ordered
to comply with the motion of AIBC for a bill of particulars. When
claimants filed their "Compliance and Manifestation," AIBC moved
to strike out the complaint from the records for failure of claimants
to submit a proper bill of particulars. While the POEA Administrator
denied the motion to strike out the complaint, he ordered the
claimants "to correct the deficiencies" pointed out by AIBC.

5. Area Differential pay;

6. Accrued Interest of all the unpaid benefits;
7. Salary differential pay;
8. Wage Differential pay;
9. Refund of SSS premiums not remitted to Social
Security System;
10. Refund of Withholding Tax not remitted to Bureau
of Internal Revenue (B.I.R.);
11. Fringe Benefits under Brown & Root's "A
Summary of Employees Benefits consisting of 43
pages (Annex "Q" of Amended Complaint);

Before an intelligent answer could be filed in response to the

complaint, the records of employment of the more than 1,700
claimants had to be retrieved from various countries in the Middle
East. Some of the records dated as far back as 1975.
The hearings on the merits of the claims before the POEA
Administrator were interrupted several times by the various
appeals, first to NLRC and then to the Supreme Court.
Aside from the inclusion of additional claimants, two new cases
were filed against AIBC and BRII on October 10, 1985 (POEA Cases
Nos.
L-85-10-777 and L-85-10-779). Another complaint was filed on May
29, 1986 (POEA Case No. L-86-05-460). NLRC, in exasperation,
noted that the exact number of claimants had never been
completely established (Resolution, Sept. 2, 1991, G.R. No.

104776, Rollo, p. 57). All the three new cases were consolidated
with POEA Case No. L-84-06-555.
NLRC blamed the parties and their lawyers for the delay in
terminating the proceedings, thus:
These cases could have been spared the long and
arduous route towards resolution had the parties and
their counsel been more interested in pursuing the
truth and the merits of the claims rather than
exhibiting a fanatical reliance on technicalities.
Parties and counsel have made these cases a
litigation of emotion. The intransigence of parties and
counsel is remarkable. As late as last month, this
Commission made a last and final attempt to bring
the counsel of all the parties (this Commission issued
a special order directing respondent Brown & Root's
resident agent/s to appear) to come to a more
conciliatory stance. Even this failed (Rollo,
p. 58).
The squabble between the lawyers of claimants added to the delay
in the disposition of the cases, to the lament of NLRC, which
complained:
It is very evident from the records that the
protagonists in these consolidated cases appear to
be not only the individual complainants, on the one
hand, and AIBC and Brown & Root, on the other
hand. The two lawyers for the complainants, Atty.
Gerardo Del Mundo and Atty. Florante De Castro,
have yet to settle the right of representation, each
one persistently claiming to appear in behalf of most
of the complainants. As a result, there are two
appeals by the complainants. Attempts by this
Commission to resolve counsels' conflicting claims of
their respective authority to represent the
complainants prove futile. The bickerings by these
two counsels are reflected in their pleadings. In the
charges and countercharges of falsification of

documents and signatures, and in the disbarment

proceedings by one against the other. All these have,
to a large extent, abetted in confounding the issues
raised in these cases, jumble the presentation of
evidence, and even derailed the prospects of an
amicable settlement. It would not be far-fetched to
imagine that both counsel, unwittingly, perhaps,
painted a rainbow for the complainants, with the
proverbial pot of gold at its end containing more than
US$100 million, the aggregate of the claims in these
cases. It is, likewise, not improbable that their
misplaced zeal and exuberance caused them to
throw all caution to the wind in the matter of
elementary rules of procedure and evidence (Rollo,
pp. 58-59).
Adding to the confusion in the proceedings before NLRC, is the
listing of some of the complainants in both petitions filed by the
two lawyers. As noted by NLRC, "the problem created by this
situation is that if one of the two petitions is dismissed, then the
parties and the public respondents would not know which claim of
which petitioner was dismissed and which was not."
B. Claimants insist that all their claims could properly be
consolidated in a "class suit" because "all the named complainants
have similar money claims and similar rights sought irrespective of
whether they worked in Bahrain, United Arab Emirates or in Abu
Dhabi, Libya or in any part of the Middle East" (Rollo, pp. 35-38).
A class suit is proper where the subject matter of the controversy is
one of common or general interest to many and the parties are so
numerous that it is impracticable to bring them all before the court
(Revised Rules of Court, Rule 3, Sec. 12).
While all the claims are for benefits granted under the Bahrain Law,
many of the claimants worked outside Bahrain. Some of the
claimants were deployed in Indonesia and Malaysia under different
terms and conditions of employment.

NLRC and the POEA Administrator are correct in their stance that
inasmuch as the first requirement of a class suit is not present
(common or general interest based on the Amiri Decree of the
State of Bahrain), it is only logical that only those who worked in
Bahrain shall be entitled to file their claims in a class suit.
While there are common defendants (AIBC and BRII) and the nature
of the claims is the same (for employee's benefits), there is no
common question of law or fact. While some claims are based on
the Amiri Law of Bahrain, many of the claimants never worked in
that country, but were deployed elsewhere. Thus, each claimant is
interested only in his own demand and not in the claims of the
other employees of defendants. The named claimants have a
special or particular interest in specific benefits completely
different from the benefits in which the other named claimants and
those included as members of a "class" are claiming (Berses v.
Villanueva, 25 Phil. 473 [1913]). It appears that each claimant is
only interested in collecting his own claims. A claimants has no
concern in protecting the interests of the other claimants as shown
by the fact, that hundreds of them have abandoned their coclaimants and have entered into separate compromise settlements
of their respective claims. A principle basic to the concept of "class
suit" is that plaintiffs brought on the record must fairly represent
and protect the interests of the others (Dimayuga v. Court of
Industrial Relations, 101 Phil. 590 [1957]). For this matter, the
claimants who worked in Bahrain can not be allowed to sue in a
class suit in a judicial proceeding. The most that can be accorded to
them under the Rules of Court is to be allowed to join as plaintiffs in
one complaint (Revised Rules of Court, Rule 3, Sec. 6).
The Court is extra-cautious in allowing class suits because they are
the exceptions to the condition sine qua non, requiring the joinder
of all indispensable parties.
In an improperly instituted class suit, there would be no problem if
the decision secured is favorable to the plaintiffs. The problem
arises when the decision is adverse to them, in which case the
others who were impleaded by their self-appointed representatives,
would surely claim denial of due process.

C. The claimants in G.R. No. 104776 also urged that the POEA
Administrator and NLRC should have declared Atty. Florante De
Castro guilty of "forum shopping, ambulance chasing activities,
falsification, duplicity and other unprofessional activities" and his
appearances as counsel for some of the claimants as illegal (Rollo,
pp. 38-40).
The Anti-Forum Shopping Rule (Revised Circular No. 28-91) is
intended to put a stop to the practice of some parties of filing
multiple petitions and complaints involving the same issues, with
the result that the courts or agencies have to resolve the same
issues. Said Rule, however, applies only to petitions filed with the
Supreme Court and the Court of Appeals. It is entitled "Additional
Requirements For Petitions Filed with the Supreme Court and the
Court of Appeals To Prevent Forum Shopping or Multiple Filing of
Petitioners and Complainants." The first sentence of the circular
expressly states that said circular applies to an governs the filing of
petitions in the Supreme Court and the Court of Appeals.
While Administrative Circular No. 04-94 extended the application of
the anti-forum shopping rule to the lower courts and administrative
agencies, said circular took effect only on April 1, 1994.
POEA and NLRC could not have entertained the complaint for
unethical conduct against Atty. De Castro because NLRC and POEA
have no jurisdiction to investigate charges of unethical conduct of
lawyers.
Attorney's Lien
The "Notice and Claim to Enforce Attorney's Lien" dated December
14, 1992 was filed by Atty. Gerardo A. Del Mundo to protect his
claim for attorney's fees for legal services rendered in favor of the
claimants (G.R. No. 104776, Rollo, pp. 841-844).
A statement of a claim for a charging lien shall be filed with the
court or administrative agency which renders and executes the
money judgment secured by the lawyer for his clients. The lawyer
shall cause written notice thereof to be delivered to his clients and
to the adverse party (Revised Rules of Court, Rule 138, Sec. 37).

The statement of the claim for the charging lien of Atty. Del Mundo
should have been filed with the administrative agency that
rendered and executed the judgment.

and an overtime wage of 1 & 1/4 of the normal

hourly wage.
xxx xxx xxx

Contempt of Court
The complaint of Atty. Gerardo A. Del Mundo to cite Atty. Florante
De Castro and Atty. Katz Tierra for violation of the Code of
Professional Responsibility should be filed in a separate and
appropriate proceeding.

The Company in its

following averages:

computation

reached

the

A. 1. The average duration of the actual service of

the employee is 35 months for the Philippino (sic)
employees . . . .

G.R. No. 104911-14

Claimants charge NLRC with grave abuse of discretion in not
accepting their formula of "Three Hours Average Daily Overtime" in
computing the overtime payments. They claim that it was BRII itself
which proposed the formula during the negotiations for the
settlement of their claims in Bahrain and therefore it is in estoppel
to disclaim said offer (Rollo, pp. 21-22).
Claimants presented a Memorandum of the Ministry of Labor of
Bahrain dated April 16, 1983, which in pertinent part states:
After the perusal of the memorandum of the Vice
President and the Area Manager, Middle East, of
Brown & Root Co. and the Summary of the
compensation offered by the Company to the
employees in respect of the difference of pay of the
wages of the overtime and the difference of vacation
leave and the perusal of the documents attached
thereto i.e., minutes of the meetings between the
Representative
of
the
employees
and
the
management of the Company, the complaint filed by
the employees on 14/2/83 where they have claimed
as hereinabove stated, sample of the Service
Contract executed between one of the employees
and
the
company
through its
agent
in (sic)Philippines,
Asia
International
Builders
Corporation where it has been provided for 48 hours
of work per week and an annual leave of 12 days

2. The average wage per hour for the Philippino (sic)

employee is US$2.69 . . . .
3. The average hours for the overtime is 3 hours plus
in all public holidays and weekends.
4. Payment of US$8.72 per months (sic) of service as
compensation for the difference of the wages of
the overtime done for each Philippino (sic)
employee . . . (Rollo, p.22).
BRII and AIBC countered: (1) that the Memorandum was not
prepared by them but by a subordinate official in the Bahrain
Department of Labor; (2) that there was no showing that the
Bahrain Minister of Labor had approved said memorandum; and (3)
that the offer was made in the course of the negotiation for an
amicable settlement of the claims and therefore it was not
admissible in evidence to prove that anything is due to the
claimants.
While said document was presented to the POEA without observing
the rule on presenting official documents of a foreign government
as provided in Section 24, Rule 132 of the 1989 Revised Rules on
Evidence, it can be admitted in evidence in proceedings before an
administrative body. The opposing parties have a copy of the said
memorandum, and they could easily verify its authenticity and
accuracy.

The admissibility of the offer of compromise made by BRII as

contained in the memorandum is another matter. Under Section 27,
Rule 130 of the 1989 Revised Rules on Evidence, an offer to settle a
claim is not an admission that anything is due.
Said Rule provides:
Offer of compromise not admissible. In civil cases,
an offer of compromise is not an admission of any
liability, and is not admissible in evidence against the
offeror.
This Rule is not only a rule of procedure to avoid the cluttering of
the record with unwanted evidence but a statement of public policy.
There is great public interest in having the protagonists settle their
differences amicable before these ripen into litigation. Every effort
must be taken to encourage them to arrive at a settlement. The
submission of offers and counter-offers in the negotiation table is a
step in the right direction. But to bind a party to his offers, as what
claimants would make this Court do, would defeat the salutary
purpose of the Rule.
G.R. Nos. 105029-32
A. NLRC applied the Amiri Decree No. 23 of 1976, which provides
for greater benefits than those stipulated in the overseasemployment contracts of the claimants. It was of the belief that
"where the laws of the host country are more favorable and
beneficial to the workers, then the laws of the host country shall
form part of the overseas employment contract." It quoted with
approval the observation of the POEA Administrator that ". . . in
labor proceedings, all doubts in the implementation of the
provisions of the Labor Code and its implementing regulations shall
be resolved in favor of labor" (Rollo, pp. 90-94).

AIBC and BRII claim that NLRC acted capriciously and whimsically
when it refused to enforce the overseas-employment contracts,
which became the law of the parties. They contend that the
principle that a law is deemed to be a part of a contract applies
only to provisions of Philippine law in relation to contracts executed
in the Philippines.
The overseas-employment contracts, which were prepared by AIBC
and BRII themselves, provided that the laws of the host country
became applicable to said contracts if they offer terms and
conditions more favorable that those stipulated therein. It was
stipulated in said contracts that:
The Employee agrees that while in the employ of the
Employer, he will not engage in any other business
or occupation, nor seek employment with anyone
other than the Employer; that he shall devote his
entire time and attention and his best energies, and
abilities to the performance of such duties as may be
assigned to him by the Employer; that he shall at all
times be subject to the direction and control of the
Employer; and that the benefits provided to
Employee hereunder are substituted for and in lieu of
all other benefits provided by any applicable
law, provided of course, that total remuneration and
benefits do not fall below that of the host country
regulation or custom, it being understood that should
applicable laws establish that fringe benefits, or
other such benefits additional to the compensation
herein agreed cannot be waived, Employee agrees
that such compensation will be adjusted downward
so that the total compensation hereunder, plus the
non-waivable benefits shall be equivalent to the
compensation herein agreed (Rollo, pp. 352-353).
The overseas-employment contracts could have been drafted more
felicitously. While a part thereof provides that the compensation to
the employee may be "adjusted downward so that the total
computation (thereunder) plus the non-waivable benefits shall be
equivalent to the compensation" therein agreed, another part of

the same provision categorically states "that total remuneration

and benefits do not fall below that of the host country regulation
and custom."
Any ambiguity in the overseas-employment contracts should be
interpreted against AIBC and BRII, the parties that drafted it
(Eastern Shipping Lines, Inc. v. Margarine-Verkaufs-Union, 93 SCRA
257 [1979]).
Article 1377 of the Civil Code of the Philippines provides:
The interpretation of obscure words or stipulations in
a contract shall not favor the party who caused the
obscurity.
Said rule of interpretation is applicable to contracts of adhesion
where there is already a prepared form containing the stipulations
of the employment contract and the employees merely "take it or
leave it." The presumption is that there was an imposition by one
party against the other and that the employees signed the
contracts out of necessity that reduced their bargaining power
(Fieldmen's Insurance Co., Inc. v. Songco, 25 SCRA 70 [1968]).
Applying the said legal precepts, we read the overseas-employment
contracts in question as adopting the provisions of the Amiri Decree
No. 23 of 1976 as part and parcel thereof.
The parties to a contract may select the law by which it is to be
governed (Cheshire, Private International Law, 187 [7th ed.]). In
such a case, the foreign law is adopted as a "system" to regulate
the relations of the parties, including questions of their capacity to
enter into the contract, the formalities to be observed by them,
matters of performance, and so forth (16 Am Jur 2d,
150-161).
Instead of adopting the entire mass of the foreign law, the parties
may just agree that specific provisions of a foreign statute shall be
deemed incorporated into their contract "as a set of terms." By
such reference to the provisions of the foreign law, the contract
does not become a foreign contract to be governed by the foreign

law. The said law does not operate as a statute but as a set of
contractual terms deemed written in the contract (Anton, Private
International Law, 197 [1967]; Dicey and Morris, The Conflict of
Laws, 702-703, [8th ed.]).
A basic policy of contract is to protect the expectation of the parties
(Reese, Choice of Law in Torts and Contracts, 16 Columbia Journal
of Transnational Law 1, 21 [1977]). Such party expectation is
protected by giving effect to the parties' own choice of the
applicable law (Fricke v. Isbrandtsen Co., Inc., 151 F. Supp. 465, 467
[1957]). The choice of law must, however, bear some relationship
to the parties or their transaction (Scoles and Hayes, Conflict of
Law 644-647 [1982]). There is no question that the contracts
sought to be enforced by claimants have a direct connection with
the Bahrain law because the services were rendered in that
country.
In Norse Management Co. (PTE) v. National Seamen Board, 117
SCRA 486 (1982), the "Employment Agreement," between Norse
Management Co. and the late husband of the private respondent,
expressly provided that in the event of illness or injury to the
employee arising out of and in the course of his employment and
not due to his own misconduct, "compensation shall be paid to
employee in accordance with and subject to the limitation of the
Workmen's Compensation Act of the Republic of the Philippines or
the Worker's Insurance Act of registry of the vessel, whichever is
greater." Since the laws of Singapore, the place of registry of the
vessel in which the late husband of private respondent served at
the time of his death, granted a better compensation package, we
applied said foreign law in preference to the terms of the contract.
The case of Bagong Filipinas Overseas Corporation v. National
Labor Relations Commission, 135 SCRA 278 (1985), relied upon by
AIBC and BRII is inapposite to the facts of the cases at bench. The
issue in that case was whether the amount of the death
compensation of a Filipino seaman should be determined under the
shipboard employment contract executed in the Philippines or the
Hongkong law. Holding that the shipboard employment contract
was controlling, the court differentiated said case from Norse
Management Co. in that in the latter case there was an express

stipulation in the employment contract that the foreign law would

be applicable if it afforded greater compensation.
B. AIBC and BRII claim that they were denied by NLRC of their right
to due process when said administrative agency granted Friday-pay
differential, holiday-pay differential, annual-leave differential and
leave indemnity pay to the claimants listed in Annex B of the
Resolution. At first, NLRC reversed the resolution of the POEA
Administrator granting these benefits on a finding that the POEA
Administrator failed to consider the evidence presented by AIBC
and BRII, that some findings of fact of the POEA Administrator were
not supported by the evidence, and that some of the evidence were
not disclosed to AIBC and BRII (Rollo, pp. 35-36; 106-107). But
instead of remanding the case to the POEA Administrator for a new
hearing, which means further delay in the termination of the case,
NLRC decided to pass upon the validity of the claims itself. It is this
procedure that AIBC and BRII complain of as being irregular and a
"reversible error."
They pointed out that NLRC took into consideration evidence
submitted on appeal, the same evidence which NLRC found to have
been "unilaterally submitted by the claimants and not disclosed to
the adverse parties" (Rollo, pp. 37-39).
NLRC noted that so many pieces of evidentiary matters were
submitted to the POEA administrator by the claimants after the
cases were deemed submitted for resolution and which were taken
cognizance of by the POEA Administrator in resolving the cases.
While AIBC and BRII had no opportunity to refute said evidence of
the claimants before the POEA Administrator, they had all the
opportunity to rebut said evidence and to present their
counter-evidence before NLRC. As a matter of fact, AIBC and BRII
themselves were able to present before NLRC additional evidence
which they failed to present before the POEA Administrator.
Under Article 221 of the Labor Code of the Philippines, NLRC is
enjoined to "use every and all reasonable means to ascertain the
facts in each case speedily and objectively and without regard to
technicalities of law or procedure, all in the interest of due
process."

In deciding to resolve the validity of certain claims on the basis of

the evidence of both parties submitted before the POEA
Administrator and NLRC, the latter considered that it was not
expedient to remand the cases to the POEA Administrator for that
would only prolong the already protracted legal controversies.
Even the Supreme Court has decided appealed cases on the merits
instead of remanding them to the trial court for the reception of
evidence, where the same can be readily determined from the
uncontroverted facts on record (Development Bank of the
Philippines v. Intermediate Appellate Court, 190 SCRA 653 [1990];
Pagdonsalan v. National Labor Relations Commission, 127 SCRA
463 [1984]).
C. AIBC and BRII charge NLRC with grave abuse of discretion when
it ordered the POEA Administrator to hold new hearings for 683
claimants listed in Annex D of the Resolution dated September 2,
1991 whose claims had been denied by the POEA Administrator "for
lack of proof" and for 69 claimants listed in Annex E of the same
Resolution, whose claims had been found by NLRC itself as not
"supported by evidence" (Rollo, pp. 41-45).
NLRC based its ruling on Article 218(c) of the Labor Code of the
Philippines, which empowers it "[to] conduct investigation for the
determination of a question, matter or controversy, within its
jurisdiction, . . . ."
It is the posture of AIBC and BRII that NLRC has no authority under
Article 218(c) to remand a case involving claims which had already
been dismissed because such provision contemplates only
situations where there is still a question or controversy to be
resolved (Rollo, pp. 41-42).
A principle well embedded in Administrative Law is that the
technical rules of procedure and evidence do not apply to the
proceedings conducted by administrative agencies (First Asian
Transport & Shipping Agency, Inc. v. Ople, 142 SCRA 542 [1986];
Asiaworld Publishing House, Inc. v. Ople, 152 SCRA 219 [1987]).
This principle is enshrined in Article 221 of the Labor Code of the
Philippines and is now the bedrock of proceedings before NLRC.

Notwithstanding the non-applicability of technical rules of

procedure and evidence in administrative proceedings, there are
cardinal rules which must be observed by the hearing officers in
order to comply with the due process requirements of the
Constitution. These cardinal rules are collated in Ang Tibay v. Court
of Industrial Relations, 69 Phil. 635 (1940).
VIII
The three petitions were filed under Rule 65 of the Revised Rules of
Court on the grounds that NLRC had committed grave abuse of
discretion amounting to lack of jurisdiction in issuing the
questioned orders. We find no such abuse of discretion.
WHEREFORE, all the three petitions are DISMISSED.
SO ORDERED.

CORTES, J.:
Petitioner, in this special civil action for certiorari, alleges grave
abuse of discretion on the part of the National Labor Relations
Commission in an effort to nullify the latters resolution and thus
free petitioner from liability for the disability suffered by a Filipino
worker it recruited to work in Saudi Arabia. This Court, however, is
not persuaded that such an abuse of discretion was committed.
This petition must fail.
The facts of the case are quite simple.
Petitioner, a duly licensed recruitment agency, as agent of Ali and
Fahd Shabokshi Group, a Saudi Arabian firm, recruited private
respondent to work in Saudi Arabia as a steelman.
The term of the contract was for one year, from May 15,1981 to
May 14, 1982. However, the contract provided for its automatic
renewal:
FIFTH: The validity of this Contract is for ONE YEAR
commencing from the date the SECOND PARTY
assumes hill port. This Contract is renewable
automatically if neither of the PARTIES notifies the
other PARTY of his wishes to terminate the Contract
by at least ONE MONTH prior to the expiration of the
contractual period. [Petition, pp. 6-7; Rollo, pp. 7-8].

G.R. No. 77279 April 15, 1988

MANUELA
S.
CATAN/M.S.
CATAN
PLACEMENT
AGENCY, petitioners,
vs.
THE NATIONAL LABOR RELATIONS COMMISSION, PHILIPPINE
OVERSEAS EMPLOYMENT ADMINISTRATION and FRANCISCO
D. REYES, respondents.

The contract was automatically renewed when private respondent

was not repatriated by his Saudi employer but instead was
assigned to work as a crusher plant operator. On March 30, 1983,
while he was working as a crusher plant operator, private
respondent's right ankle was crushed under the machine he was
operating.
On May 15, 1983, after the expiration of the renewed term, private
respondent returned to the Philippines. His ankle was operated on
at the Sta. Mesa Heights Medical Center for which he incurred
expenses.

On September 9, 1983, he returned to Saudi Arabia to resume his

work. On May 15,1984, he was repatriated.
Upon his return, he had his ankle treated for which he incurred
further expenses.

employment contract, which petitioner facilitated, had already

expired. Further, petitioner disclaims liability on the ground that its
agency agreement with the Saudi principal had already expired
when the injury was sustained.
There is no merit in petitioner's contention.

On the basis of the provision in the employment contract that the

employer shall compensate the employee if he is injured or
permanently disabled in the course of employment, private
respondent filed a claim, docketed as POEA Case No. 84-09847,
against petitioner with respondent Philippine Overseas Employment
Administration. On April 10, 1986, the POEA rendered judgment in
favor of private respondent, the dispositive portion of which reads:

Private respondents contract of employment can not be said to

have expired on May 14, 1982 as it was automatically renewed
since no notice of its termination was given by either or both of the
parties at least a month before its expiration, as so provided in the
contract itself. Therefore, private respondent's injury was sustained
during the lifetime of the contract.

WHEREFORE, judgment is hereby rendered in favor of

the complainant and against the respondent,
ordering the latter to pay to the complainant:

A private employment agency may be sued jointly and solidarily

with its foreign principal for violations of the recruitment agreement
and the contracts of employment:

1. SEVEN THOUSAND NINE HUNDRED EIGHTY-FIVE

PESOS and 60/100 (P7,985.60), Philippine currency,
representing disability benefits;

Sec. 10. Requirement before recruitment. Before

recruiting any worker, the private employment
agency shall submit to the Bureau the following
documents:

2. TWENTY-FIVE THOUSAND NINETY-SIX Philippine

pesos
and
20/100
(29,096.20)
representing
reimbursement for medical expenses;
3. Ten percent (10%) of the abovementioned
amounts as and for attorney's fees. [NLRC
Resolution, p. 1; Rollo, p. 16].
On appeal, respondent NLRC affirmed the decision of the POEA in a
resolution dated December 12, 1986.
Not satisfied with the resolution of the POEA, petitioner instituted
the instant special civil action for certiorari, alleging grave abuse of
discretion on the part of the NLRC.
1. Petitioner claims that the NLRC gravely abused its discretion
when it ruled that petitioner was liable to private respondent for
disability benefits since at the time he was injured his original

(a) A formal appointment or agency contract

executed by a foreign-based employer in favor of the
license holder to recruit and hire personnel for the
former ...
xxx xxx xxx
2. Power of the agency to sue and be
sued jointly and solidarily with the
principal or foreign-based employer for
any of the violations of the recruitment
agreement and the contracts of
employment. [Section 10(a) (2) Rule V,
Book I, Rules to Implement the Labor
Code].

Thus, in the recent case of Ambraque International Placement &

Services v. NLRC [G.R. No. 77970, January 28,1988], the Court ruled
that a recruitment agency was solidarily liable for the unpaid
salaries of a worker it recruited for employment in Saudi Arabia.
Even if indeed petitioner and the Saudi principal had already
severed their agency agreement at the time private respondent
was injured, petitioner may still be sued for a violation of the
employment contract because no notice of the agency agreement's
termination was given to the private respondent:
Art 1921. If the agency has been entrusted for the
purpose of contra with specified persons, its
revocation shall not prejudice the latter if they were
not given notice thereof. [Civil Code].
In this connection the NLRC elaborated:
Suffice it to state that albeit local respondent M. S.
Catan Agency was at the time of complainant's
accident resulting in his permanent partial disability
was (sic) no longer the accredited agent of its foreign
principal, foreign respondent herein, yet its
responsibility over the proper implementation of
complainant's employment/service contract and the
welfare of complainant himself in the foreign job site,
still existed, the contract of employment in question
not having expired yet. This must be so, because the
obligations
covenanted
in
the
recruitment
agreement entered into by and between the local
agent and its foreign principal are not coterminus
with the term of such agreement so that if either or
both of the parties decide to end the agreement, the
responsibilities of such parties towards the
contracted employees under the agreement do not
at all end, but the same extends up to and until the
expiration of the employment contracts of the
employees recruited and employed pursuant to the
said recruitment agreement. Otherwise, this will
render nugatory the very purpose for which the law

governing the employment of workers for foreign

jobs abroad was enacted. [NLRC Resolution, p. 4;
Rollo, p. 18]. (Emphasis supplied).
2. Petitioner contends that even if it is liable for disability benefits,
the NLRC gravely abused its discretion when it affirmed the award
of medical expenses when the said expenses were the
consequence of private respondent's negligence in returning to
work in Saudi Arabia when he knew that he was not yet medically
fit to do so.
Again, there is no merit in this contention.
No evidence was introduced to prove that private respondent was
not medically fit to work when he returned to Saudi Arabia. Exhibit
"B", a certificate issued by Dr. Shafquat Niazi, the camp doctor, on
November 1, 1983, merely stated that private respondent was
"unable to walk properly, moreover he is still complaining [of] pain
during walking and different lower limbs movement" [Annex "B",
Reply; Rollo, p. 51]. Nowhere does it say that he was not medically
fit to work.
Further, since petitioner even assisted private respondent in
returning to work in Saudi Arabia by purchasing his ticket for him
[Exhibit "E"; Annex "A", Reply to Respondents' Comments], it is as if
petitioner had certified his fitness to work. Thus, the NLRC found:
Furthermore, it has remained unrefuted by
respondent that complainant's subsequent departure
or return to Saudi Arabia on September 9, 1983 was
with the full knowledge, consent and assistance of
the former. As shown in Exhibit "E" of the record, it
was respondent who facilitated the travel papers of
complainant. [NLRC Resolution, p. 5; Rollo, p. 19].
WHEREFORE, in view of the foregoing, the petition is DISMISSED for
lack of merit, with costs against petitioner.
SO ORDERED.

G.R. No. 78085 October 16, 1989

ROYAL CROWN INTERNATIONALE, petitioner,
vs.

NATIONAL LABOR RELATIONS COMMISSI0N and VIRGILIO P.

NACIONALES, respondents.
CORTES, J.:
Petitioner Royal Crown Internationale seeks the nullification of a
resolution of the National Labor Relations Commission (NLRC) which
affirmed a decision of the Philippine Overseas Employment
Administration (POEA) holding it liable to pay, jointly and severally
with Zamel-Turbag Engineering and Architectural Consultant
(ZAMEL), private respondent Virgilio P. Nacionales' salary and
vacation pay corresponding to the unexpired portion of his
employment contract with ZAMEL.
In 1983, petitioner, a duly licensed private employment agency,
recruited and deployed private respondent for employment with
ZAMEL as an architectural draftsman in Saudi Arabia. On May 25,
1983, a service agreement was executed by private respondent
and ZAMEL whereby the former was to receive per month a salary
of US$500.00 plus US$100.00 as allowance for a period of one (1)
year commencing from the date of his arrival in Saudi Arabia.
Private respondent departed for Saudi Arabia on June 28,1983.
On February 13, 1984, ZAMEL terminated the employment of
private respondent on the ground that his performance was below
par. For three (3) successive days thereafter, he was detained at his
quarters and was not allowed to report to work until his exit papers
were ready. On February 16, 1984, he was made to board a plane
bound for the Philippines.
Private respondent then filed on April 23, 1984 a complaint for
illegal termination against petitioner and ZAMEL with the POEA,
docketed as POEA Case No. (L) 84-04-401.
Based on a finding that petitioner and ZAMEL failed to establish
that private respondent was terminated for just and valid cause,
the Workers' Assistance and Adjudication Office of the POEA issued
a decision dated June 23, 1986 signed by Deputy Administrator and
Officer-in-Charge Crescencio M. Siddayao, the dispositive portion of
which reads:

WHEREFORE, judgment is hereby rendered in favor of

the complainant and against respondents, ordering
the latter to pay, jointly and severally, to
complainant the following amounts:
1. TWO THOUSAND SIX HUNDRED FORTY US
DOLLARS (US$2,640.00) or its equivalent in
Philippine currency at the time of payment,
representing the salaries corresponding to the
unexpired portion of complainant's contract;
2. SIX HUNDRED US DOLLARS (US$ 600.00) less
partial payment of FIVE HUNDRED FIFTY-EIGHT SAUDI
RIYALS (SR558), or its equivalent in Philippine
currency at the time of actual payment, representing
the unpaid balance of complainant's vacation pay;
3. THREE HUNDRED FIFTY US DOLLARS (US$350.00)
or its equivalent in Philippine currency at the time of
actual payment representing reimbursement of
salary deductions for return travel fund;
4. Ten percent (10%) of the above-stated amounts,
as and for attorney's fees.
Complainant's claim for legal and transportation
expenses are hereby DISMISSED for lack of merit.
SO ORDERED.
[POEA Decision, p. 5; Rollo, p. 34.]
On July 18, 1986, petitioner filed thru its new counsel a motion for
reconsideration which was treated as an appeal to the NLRC by the
POEA. Petitioner alleged that the POEA erred in holding it solidarity
liable for ZAMEL's violation of private respondent's service
agreement even if it was not a party to the agreement.
In a resolution promulgated on December 11, 1986, the NLRC
affirmed the POEA decision, holding that, as a duly licensed private

employment agency, petitioner is jointly and severally liable with

its foreign principal ZAMEL for all claims and liabilities which may
arise in connection with the implementation of the employment
contract or service agreement [NLRC Decision, pp. 3-4; Rollo, pp.
26-27].
On March 30, 1987, the NLRC denied for lack of merit petitioner's
motion for reconsideration.
Hence, petitioner filed the present petition captioned as "Petition
for Review".
At this point, it is not amiss to note that the filing of a "Petition for
Review" under Rule 45 of the Rules of Court is not the proper
means by which NLRC decisions are appealed to the Supreme
Court. It is only through a petition for certiorari under Rule 65 that
NLRC decisions may be reviewed and nullified on the grounds of
lack of jurisdiction or grave abuse of discretion amounting to lack or
excess of jurisdiction. Nevertheless, in the interest of justice, this
Court opted to treat the instant petition as if it were a petition
for certiorari. Thus, after the filing of respondents' comments,
petitioner's joint reply thereto, and respondents' rejoinders, the
Court resolved to consider the issues joined and the case submitted
for decision.
The case at bar involves two principal issues, to wit:
I. Whether or not petitioner as a private employment
agency may be held jointly and severally liable with
the foreign-based employer for any claim which may
arise in connection with the implementation of the
employment contracts of the employees recruited
and deployed abroad;
II. Whether or not sufficient evidence was presented
by petitioner to establish the termination of private
respondent's employment for just and valid cause.
I.

Petitioner contends that there is no provision in the Labor Code, or

the omnibus rules implementing the same, which either provides
for the "third-party liability" of an employment agency or recruiting
entity for violations of an employment agreement performed
abroad, or designates it as the agent of the foreign-based employer
for purposes of enforcing against the latter claims arising out of an
employment agreement. Therefore, petitioner concludes, it cannot
be held jointly and severally liable with ZAMEL for violations, if any,
of private respondent's service agreement.
Petitioner's conclusion is erroneous. Petitioner conveniently
overlooks the fact that it had voluntarily assumed solidary liability
under the various contractual undertakings it submitted to the
Bureau of Employment Services. In applying for its license to
operate a private employment agency for overseas recruitment and
placement, petitioner was required to submit, among others, a
document or verified undertaking whereby it assumed all
responsibilities for the proper use of its license and the
implementation of the contracts of employment with the workers it
recruited and deployed for overseas employment [Section 2(e),
Rule V, Book 1, Rules to Implement the Labor Code (1976)]. It was
also required to file with the Bureau a formal appointment or
agency contract executed by the foreign-based employer in its
favor to recruit and hire personnel for the former, which contained
a provision empowering it to sue and be sued jointly and solidarily
with the foreign principal for any of the violations of the
recruitment agreement and the contracts of employment [Section
10 (a) (2), Rule V, Book I of the Rules to Implement the Labor Code
(1976)]. Petitioner was required as well to post such cash and
surety bonds as determined by the Secretary of Labor to guarantee
compliance with prescribed recruitment procedures, rules and
regulations, and terms and conditions of employment as
appropriate [Section 1 of Pres. Dec. 1412 (1978) amending Article
31 of the Labor Code].
These contractual undertakings constitute the legal basis for
holding petitioner, and other private employment or recruitment
agencies, liable jointly and severally with its principal, the foreignbased employer, for all claims filed by recruited workers which may
arise in connection with the implementation of the service

agreements or employment contracts [See Ambraque International

Placement and Services v. NLRC, G.R. No. 77970, January 28, 1988,
157 SCRA 431; Catan v. NLRC, G.R. No. 77279, April 15, 1988, 160
SCRA 691; Alga Moher International Placement Services v. Atienza,
G.R. No. 74610, September 30, 1988].
In a belated attempt to bolster its position, petitioner contends in
its joint reply that the omnibus rules implementing the Labor Code
are invalid for not having been published in the Official Gazette
pursuant to the Court's pronouncements in the cases of Tanada v.
Tuvera [G.R. No. 63915, April 25, 1985, 136 SCRA 27; December 29,
1986, 146 SCRA 446]. Petitioner further contends that the 1985
POEA Rules and Regulations, in particular Section 1, Rule I of Book
VII** quoted in the NLRC decision, should not have been
retroactively applied to the case at bar.
But these contentions are irrelevant to the issues at bar. They
proceed from a misapprehension of the legal basis of petitioner's
liabilities as a duly licensed private employment agency. It bears
repeating that the basis for holding petitioner jointly and severally
liable with the foreign-based employer ZAMEL is the contractual
undertakings described above which it had submitted to the Bureau
of Employment Services. The sections of the omnibus rules
implementing the Labor Code cited by this Court merely enumerate
the various documents or undertakings which were submitted by
petitioner as applicant for the license to operate a private
employment agency for overseas recruitment and placement.
These sections do not create the obligations and liabilities of a
private employment agency to an employee it had recruited and
deployed for work overseas. It must be emphasized again that
petitioner assumed the obligations and liabilities of a private
employment agency by contract. Thus, whether or not the omnibus
rules are effective in accordance with Tanada v. Tuvera is an issue
the resolution of which does not at all render nugatory the binding
effect upon petitioner of its own contractual undertakings.
The Court, consequently, finds it unnecessary to pass upon both
the implications of Tanada v. Tuvera on the omnibus rules
implementing the Labor Code as well as the applicability of the
1985 POEA Rules and Regulations.

Petitioner further argues that it cannot be held solidarily liable with

ZAMEL since public respondent had not acquired jurisdiction over
ZAMEL through extra-territorial service of summons as mandated
by Section 17, Rule 14 of the Rules of Court.
This argument is untenable. It is well-settled that service upon any
agent of a foreign corporation, whether or not engaged in business
in the Philippines, constitutes personal service upon that
corporation, and accordingly, judgment may be rendered against
said foreign corporation [Facilities Management Corporation v. De la
Osa, G.R. No. L-38649, March 26, 1979, 89 SCRA 131]. In the case
at bar, it cannot be denied that petitioner is an agent of ZAMEL.
The service agreement was executed in the Philippines between
private respondent and Milagros G. Fausto, the General Manager of
petitioner, for and in behalf of ZAMEL [Annex "D" of Petition, p. 3;
Rollo, p. 37]. Moreover, one of the documents presented by
petitioner as evidence, i.e., the counter-affidavit of its General
Manager Ms. Fausto, contains an admission that it is the
representative and agent of ZAMEL [See Paragraph No. 1 of Annex
"H" of Petition; Rollo. p. 43].
Considering the foregoing, the Court holds that the NLRC
committed no grave abuse of discretion amounting to lack or
excess of jurisdiction in declaring petitioner jointly and severally
liable with its foreign principal ZAMEL for all claims which have
arisen in connection with the implementation of private
respondent's employment contract.
II.
Petitioner asserts that the NLRC failed to consider the
overwhelming evidence it had presented before the POEA which
establishes the fact that private respondent was terminated for just
and valid cause in accordance with his service agreement with
ZAMEL.

This assertion is without merit. The NLRC upheld the POEA finding
that petitioner's evidence was insufficient to prove termination
from employment for just and valid cause. And a careful study of
the evidence thus far presented by petitioner reveals to this Court
that there is legal basis for public respondent's conclusion.
It must be borne in mind that the basic principle in termination
cases is that the burden of proof rests upon the employer to show
that the dismissal is for just and valid cause, and failure to do so
would necessarily mean that the dismissal was not justified and,
therefore, was illegal [Polymedic General Hospital v. NLRC, G.R. No.
64190, January 31, 1985,134 SCRA 420; and also Article 277 of the
Labor Code]. And where the termination cases involve a Filipino
worker recruited and deployed for overseas employment, the
burden naturally devolves upon both the foreign-based employer
and the employment agency or recruitment entity which recruited
the worker, for the latter is not only the agent of the former, but is
also solidarily liable with its foreign principal for any claims or
liabilities arising from the dismissal of the worker.
In the case at bar, petitioner had indeed failed to discharge the
burden of proving that private respondent was terminated from
employment for just and valid cause. Petitioner's evidence
consisted only of the following documents:
(1) A letter dated May l5, 1984 allegedly written by
an official of ZAMEL, stating that a periodic
evaluation of the entire staff was conducted; that the
personnel concerned were given a chance to
improve; that complainant's performance was found
below par; and that on February 13,1984, at about
8:30 AM, complainant was caught on the way out of
the office to look for another job during office hours
without the permission of his supervisor;
(2) A telex message allegedly sent by employees of
ZAMEL, stating that they have not experienced
maltreatment, and that the working conditions (in
ZAMEL) are good;

(3) The signatures of fifteen (15) persons who

allegedly sent the telex message;
(4) A receipt dated February 16, 1984 signed by
complainant, stating that he was paid SR915
representing his salary and SR558, representing
vacation pay for the month of February 1984;
(5) The counter-affidavit of Milagros G. Fausto, the
General Manager of Royal Crown, stating that
complainant was dismissed because of poor
performance, acts of dishonesty and misconduct, and
denying complainant's claim that his salary and
leave pay were not paid, and that he was maltreated
[See POEA Decision, p. 3; Rollo, p. 32, See also
Annexes "E", "F", "F-1 ", "G" and "H" of Petition; Rollo,
pp. 38-43].
Certainly, the telex message supposedly sent by the employees of
ZAMEL is not relevant in the determination of the legality of private
respondent's dismissal. On the other hand, the receipt signed by
private respondent does not prove payment to him of the salary
and vacation pay corresponding to the unexpired portion of his
contract.
More importantly, except for its allegation that private respondent
was caught on February 13,1984 on his way out of the office
compound without permission, petitioner had failed to allege and to
prove with particularity its charges against private respondent. The
letter dated May 15, 1984 allegedly written by the Actg. Project
Architect and the counter-affidavit of petitoner's General Manager
merely stated that the grounds for the employee's dismissal were
his unsatisfactory performance and various acts of dishonesty,
insubordination and misconduct. But the particular acts which
would indicate private respondent's incompetence or constitute the
above infractions were neither specified nor described therein. In
the absence of any other evidence to substantiate the general
charges hurled against private respondent, these documents, which
comprise petitioner's evidence in chief, contain empty and selfserving statements insufficient to establish just and valid cause for

the dismissal of private respondent [See Euro-Lines, Phils., Inc. v.

NLRC, G.R. No. 75782, December 1, 1987,156 SCRA 78; Ambraque
International Placement and Services v. NLRC, supra].
The Court is aware of the document attached in petitioner's
manifestation and joint reply which is purportedly a xerox copy of a
statement executed on December 13, 1987 in Saudi Arabia by
private respondent claiming that the latter had settled the case
with ZAMEL and had "received all [his] benefits that is salary,
vacation pay, severance pay and all other bonuses before [he] left
the kingdom of Saudi Arabia on 13 Feb. 1984 and hereby indemnify
[ZAMEL] from any claims or liabilities, [he] raised in the Philippine
Courts" [Annex "A" of petitioner's Manifestation with Motion to hold
in Abeyance; Rollo, p. 82. And also Annex "A" of petitioner's Joint
Reply; Rollo, p. 111].
But the veracity of the contents of the document is precisely
disputed by private respondent. He claims that he was made to
sign the above statement against his will and under threat of
deportation [See Telex of private respondent received by the
Supreme Court of the Philippines on January 14,1988; Rollo, p. 83.
And also private respondent's Rejoinder, pp. 1-3; Rollo, pp. 139141].
Petitioner finally contends that inasmuch as clause no. 13 of the
service agreement provided that the law under which the
agreement shall be regulated was the laws of Saudi Arabia [Annex
"D" of Petition, p. 2; Rollo, p. 36], public respondent should have
taken into account the laws of Saudi Arabia and the stricter concept
of morality availing in that jurisdiction for the determination of the
legality of private respondent's dismissal.
This contention is patently erroneous. The provisions of the Labor
Code of the Philippines, its implementing rules and regulations, and
doctrines laid down in jurisprudence dealing with the principle of
due process and the basic right of all Filipino workers to security of
tenure, provide the standard by which the legality of the exercise
by management of its prerogative to dismiss incompetent,
dishonest or recalcitrant employees, is to be determined. Whether
employed locally or overseas, all Filipino workers enjoy the

protective mantle of Philippine labor and social legislation, contract

stipulations to the contrary notwithstanding. This pronouncement is
in keeping with the basic public policy of the State to afford
protection to labor, promote full employment, ensure equal work
opportunities regardless of sex, race or creed, and regulate the
relations between workers and employers. For the State assures the
basic rights of all workers to self-organization, collective bargaining,
security of tenure, and just and humane conditions of work [Article
3 of the Labor Code of the Philippines; See also Section 18, Article II
and Section 3, Article XIII, 1987 Constitution]. This ruling is likewise
rendered imperative by Article 17 of the Civil Code which states
that laws "which have for their object public order, public policy and
good customs shall not be rendered ineffective by laws or
judgments promulgated, or by determination or conventions agreed
upon in a foreign country."
Needless to say, the laws of Saudi Arabia which were, incidentally,
neither pleaded nor proved by petitioner, have absolutely no
bearing whatsoever to the case at bar.
The Court holds, therefore, that the NLRC committed no grave
abuse of discretion amounting to lack or excess of jurisdiction in
upholding the POEA's finding of insufficiency of evidence to prove
termination for just and valid cause.
WHEREFORE, the Court Resolved to DISMISS the instant petition.
SO ORDERED.

G.R. No. 81510 March 14, 1990

HORTENCIA SALAZAR, petitioner,
vs.
HON. TOMAS D. ACHACOSO, in his capacity as Administrator
of the Philippine Overseas Employment Administration, and
FERDIE MARQUEZ, respondents.

05. T: Kailan at saan

naganap and ginawang
panloloko
sa
iyo ng tao/mga taong
inireklamo mo?
S. Sa bahay ni Horty
Salazar.

SARMIENTO, J.:
This concerns the validity of the power of the Secretary of Labor to
issue warrants of arrest and seizure under Article 38 of the Labor
Code, prohibiting illegal recruitment.
The facts are as follows:
xxx xxx xxx
1. On October 21, 1987, Rosalie Tesoro of 177 Tupaz
Street, Leveriza, Pasay City, in a sworn statement
filed with the Philippine Overseas Employment
Administration (POEA for brevity) charged petitioner
Hortencia Salazar, viz:
04. T: Ano ba ang
dahilan at ikaw ngayon
ay
narito
at
nagbibigay ng salaysay.
S: Upang ireklamo sa dahilan ang
aking
PECC
Card
ay
ayaw ibigay sa akin ng dati kong
manager.

Horty
Salazar

615
R.O.
Santos,
Mandaluyong, Mla.

06. T: Paano
naganap
pangyayari?

naman
ang

S. Pagkagaling ko sa
Japan ipinatawag niya
ako.
Kinuha
ang PECC Card ko at
sinabing hahanapan ako
ng
booking sa Japan. Mag 9
month's na ako sa Phils.
ay
hindi pa niya ako napaalis. So lumipat ako ng
ibang
company
pero
ayaw
niyang ibigay and PECC
Card
ko.
2. On November 3, 1987, public respondent Atty.
Ferdinand Marquez to whom said complaint was
assigned, sent to the petitioner the following
telegram:
YOU ARE HEREBY DIRECTED TO
APPEAR BEFORE FERDIE MARQUEZ
POEA ANTI ILLEGAL RECRUITMENT
UNIT 6TH FLR. POEA BLDG. EDSA COR.
ORTIGAS AVE. MANDALUYONG MM ON

NOVEMBER 6, 1987 AT 10 AM RE CASE

FILED AGAINST YOU. FAIL NOT UNDER
PENALTY OF LAW.
4. On the same day, having ascertained that the
petitioner had no license to operate a recruitment
agency, public respondent Administrator Tomas D.
Achacoso issued his challenged CLOSURE AND
SEIZURE ORDER NO. 1205 which reads:
HORTY
No.
615
R.O.
Mandaluyong, Metro Manila

Santos

SALAZAR
St.

Pursuant to the powers vested in me under

Presidential Decree No. 1920 and Executive Order
No. 1022, I hereby order the CLOSURE of your
recruitment agency being operated at No. 615 R.O.
Santos St., Mandaluyong, Metro Manila and the
seizure of the documents and paraphernalia being
used or intended to be used as the means of
committing illegal recruitment, it having verified that
you have
(1) No valid license or authority from
the
Department
of
Labor
and
Employment to recruit and deploy
workers for overseas employment;
(2) Committed/are committing acts
prohibited under Article 34 of the New
Labor Code in relation to Article 38 of
the same code.
This ORDER is without prejudice to
your
criminal
prosecution
under
existing laws.
Done in the City of Manila, this 3th day
of November, 1987.

5. On January 26, 1988 POEA Director on Licensing

and Regulation Atty. Estelita B. Espiritu issued an
office order designating respondents Atty. Marquez,
Atty. Jovencio Abara and Atty. Ernesto Vistro as
members of a team tasked to implement Closure and
Seizure Order No. 1205. Doing so, the group assisted
by Mandaluyong policemen and mediamen Lito
Castillo of the People's Journal and Ernie Baluyot of
News Today proceeded to the residence of the
petitioner at 615 R.O. Santos St., Mandaluyong,
Metro Manila. There it was found that petitioner was
operating Hannalie Dance Studio. Before entering the
place, the team served said Closure and Seizure
order on a certain Mrs. Flora Salazar who voluntarily
allowed them entry into the premises. Mrs. Flora
Salazar informed the team that Hannalie Dance
Studio was accredited with Moreman Development
(Phil.). However, when required to show credentials,
she was unable to produce any. Inside the studio, the
team chanced upon twelve talent performers
practicing a dance number and saw about twenty
more waiting outside, The team confiscated assorted
costumes which were duly receipted for by Mrs.
Asuncion Maguelan and witnessed by Mrs. Flora
Salazar.
6. On January 28, 1988, petitioner filed with POEA the
following letter:
Gentlemen:
On behalf of Ms. Horty Salazar of 615 R.O. Santos,
Mandaluyong, Metro Manila, we respectfully request
that the personal properties seized at her residence
last January 26, 1988 be immediately returned on the
ground that said seizure was contrary to law and
against the will of the owner thereof. Among our
reasons are the following:

1. Our client has not been given any

prior notice or hearing, hence the
Closure and Seizure Order No. 1205
dated November 3, 1987 violates "due
process of law" guaranteed under Sec.
1, Art. III, of the Philippine Constitution.
2. Your acts also violate Sec. 2, Art. III
of the Philippine Constitution which
guarantees right of the people "to be
secure in their persons, houses,
papers,
and
effects
against
unreasonable searches and seizures of
whatever nature and for any purpose."
3. The premises invaded by your Mr.
Ferdi Marquez and five (5) others
(including 2 policemen) are the private
residence of the Salazar family, and
the entry, search as well as the seizure
of the personal properties belonging to
our client were without her consent
and were done with unreasonable
force and intimidation, together with
grave abuse of the color of authority,
and constitute robbery and violation of
domicile under Arts. 293 and 128 of
the Revised Penal Code.
Unless said personal properties worth
around
TEN
THOUSAND
PESOS
(P10,000.00) in all (and which were
already due for shipment to Japan) are
returned within twenty-four (24) hours
from your receipt hereof, we shall feel
free to take all legal action, civil and
criminal, to protect our client's
interests.

We trust that you will give due

attention to these important matters.
7. On February 2, 1988, before POEA could answer
the letter, petitioner filed the instant petition; on
even date, POEA filed a criminal complaint against
her with the Pasig Provincial Fiscal, docketed as IS88-836. 1
On February 2, 1988, the petitioner filed this suit for prohibition.
Although the acts sought to be barred are alreadyfait accompli,
thereby making prohibition too late, we consider the petition as one
for certiorari in view of the grave public interest involved.
The Court finds that a lone issue confronts it: May the Philippine
Overseas Employment Administration (or the Secretary of Labor)
validly issue warrants of search and seizure (or arrest) under Article
38 of the Labor Code? It is also an issue squarely raised by the
petitioner for the Court's resolution.
Under the new Constitution, which states:
. . . no search warrant or warrant of arrest shall issue
except upon probable cause to be determined
personally by the judge after examination under oath
or affirmation of the complainant and the witnesses
he may produce, and particularly describing the
place to be searched and the persons or things to be
seized. 2
it is only a judge who may issue warrants of search and arrest. 3 In
one case, it was declared that mayors may not exercise this power:
xxx xxx xxx
But it must be emphasized here and now that what
has just been described is the state of the law as it
was in September, 1985. The law has since been
altered. No longer does the mayor have at this time
the power to conduct preliminary investigations,

much less issue orders of arrest. Section 143 of the

Local Government Code, conferring this power on the
mayor has been abrogated, rendered functus
officio by the 1987 Constitution which took effect on
February 2, 1987, the date of its ratification by the
Filipino people. Section 2, Article III of the 1987
Constitution pertinently provides that "no search
warrant or warrant of arrest shall issue except upon
probable cause to be determined personally by the
judge after examination under oath or affirmation of
the complainant and the witnesses he may produce,
and particularly describing the place to be searched
and the person or things to be seized." The
constitutional
proscription
has
thereby
been
manifested that thenceforth, the function of
determining probable cause and issuing, on the basis
thereof, warrants of arrest or search warrants, may
be validly exercised only by judges, this being
evidenced by the elimination in the present
Constitution of the phrase, "such other responsible
officer as may be authorized by law" found in the
counterpart provision of said 1973 Constitution, who,
aside from judges, might conduct preliminary
investigations and issue warrants of arrest or search
warrants. 4
Neither may it be done by a mere prosecuting body:
We agree that the Presidential Anti-Dollar Salting
Task Force exercises, or was meant to exercise,
prosecutorial powers, and on that ground, it cannot
be said to be a neutral and detached "judge" to
determine the existence of probable cause for
purposes of arrest or search. Unlike a magistrate, a
prosecutor is naturally interested in the success of
his case. Although his office "is to see that justice is
done and not necessarily to secure the conviction of
the person accused," he stands, invariably, as the
accused's adversary and his accuser. To permit him
to issue search warrants and indeed, warrants of

arrest, is to make him both judge and jury in his own

right, when he is neither. That makes, to our mind
and to that extent, Presidential Decree No. 1936 as
amended by Presidential Decree No. 2002,
unconstitutional. 5
Section 38, paragraph (c), of the Labor Code, as now written, was
entered as an amendment by Presidential Decrees Nos. 1920 and
2018 of the late President Ferdinand Marcos, to Presidential Decree
No. 1693, in the exercise of his legislative powers under
Amendment No. 6 of the 1973 Constitution. Under the latter, the
then Minister of Labor merely exercised recommendatory powers:
(c) The Minister of Labor or his duly authorized
representative shall have the power to recommend
the arrest and detention of any person engaged in
illegal recruitment. 6
On May 1, 1984, Mr. Marcos promulgated Presidential Decree No.
1920, with the avowed purpose of giving more teeth to the
campaign against illegal recruitment. The Decree gave the Minister
of Labor arrest and closure powers:
(b) The Minister of Labor and Employment shall have
the power to cause the arrest and detention of such
non-licensee or non-holder of authority if after proper
investigation it is determined that his activities
constitute a danger to national security and public
order or will lead to further exploitation of jobseekers. The Minister shall order the closure of
companies, establishment and entities found to be
engaged in the recruitment of workers for overseas
employment, without having been licensed or
authorized to do so. 7
On January 26, 1986, he, Mr. Marcos, promulgated Presidential
Decree No. 2018, giving the Labor Minister search and seizure
powers as well:

(c) The Minister of Labor and Employment or his duly

authorized representatives shall have the power to
cause the arrest and detention of such non-licensee
or non-holder of authority if after investigation it is
determined that his activities constitute a danger to
national security and public order or will lead to
further exploitation of job-seekers. The Minister shall
order the search of the office or premises and seizure
of documents, paraphernalia, properties and other
implements used in illegal recruitment activities and
the closure of companies, establishment and entities
found to be engaged in the recruitment of workers
for overseas employment, without having been
licensed or authorized to do so.8
The above has now been etched as Article 38, paragraph (c) of the
Labor Code.
The decrees in question, it is well to note, stand as the dying
vestiges of authoritarian rule in its twilight moments.
We reiterate that the Secretary of Labor, not being a judge, may no
longer issue search or arrest warrants. Hence, the authorities must
go through the judicial process. To that extent, we declare Article
38, paragraph (c), of the Labor Code, unconstitutional and of no
force and effect.
The Solicitor General's reliance on the case of Morano v. Vivo 9 is
not well-taken. Vivo involved a deportation case, governed by
Section 69 of the defunct Revised Administrative Code and by
Section 37 of the Immigration Law. We have ruled that in
deportation cases, an arrest (of an undesirable alien) ordered by
the President or his duly authorized representatives, in order to
carry out a final decision of deportation is valid. 10 It is valid,
however, because of the recognized supremacy of the Executive in
matters involving foreign affairs. We have held: 11

The State has the inherent power to deport

undesirable aliens (Chuoco Tiaco vs. Forbes, 228 U.S.
549, 57 L. Ed. 960, 40 Phil. 1122, 1125). That power
may be exercised by the Chief Executive "when he
deems such action necessary for the peace and
domestic tranquility of the nation." Justice Johnson's
opinion is that when the Chief Executive finds that
there are aliens whose continued presence in the
country is injurious to the public interest, "he may,
even in the absence of express law, deport them".
(Forbes vs. Chuoco Tiaco and Crossfield, 16 Phil. 534,
568, 569; In re McCulloch Dick, 38 Phil. 41).
The right of a country to expel or deport aliens
because their continued presence is detrimental to
public welfare is absolute and unqualified (Tiu Chun
Hai and Go Tam vs. Commissioner of Immigration and
the Director of NBI, 104 Phil. 949, 956). 12
The power of the President to order the arrest of aliens for
deportation is, obviously, exceptional. It (the power to order
arrests) can not be made to extend to other cases, like the one at
bar. Under the Constitution, it is the sole domain of the courts.
Moreover, the search and seizure order in question, assuming, ex
gratia argumenti, that it was validly issued, is clearly in the nature
of a general warrant:
Pursuant to the powers vested in me under
Presidential Decree No. 1920 and Executive Order
No. 1022, I hereby order the CLOSURE of your
recruitment agency being operated at No. 615 R.O.
Santos St., Mandaluyong, Metro Manila and the
seizure of the documents and paraphernalia being
used or intended to be used as the means of
committing illegal recruitment, it having verified that
you have

xxx xxx xxx

(1) No valid license or authority from
the
Department
of
Labor
and

Employment to recruit and deploy

workers for overseas employment;
(2) Committed/are committing acts
prohibited under Article 34 of the New
Labor Code in relation to Article 38 of
the same code.
This ORDER is without prejudice to your criminal
prosecution under existing laws. 13
We have held that a warrant must identify clearly the things to be
seized, otherwise, it is null and void, thus:

2) Subversive documents, pamphlets,

leaflets, books, and other publications
to promote the objectives and
purposes
of
the
subversive
organizations known as Movement for
Free Philippines, Light-a-Fire Movement
and April 6 Movement; and
3) Motor vehicles used in the
distribution/circulation of the "WE
FORUM"
and
other
subversive
materials and propaganda, more
particularly,
1) Toyota-Corolla, colored yellow with
Plate No. NKA 892;

xxx xxx xxx

Another factor which makes the search warrants
under consideration constitutionally objectionable is
that they are in the nature of general warrants. The
search warrants describe the articles sought to be
seized in this wise:
1)
All
printing
equipment,
paraphernalia,
paper,
ink,
photo
equipment,
typewriters,
cabinets,
tables,
communications/
recording
equipment, tape recorders, dictaphone
and the like used and/or connected in
the printing of the "WE FORUM"
newspaper
and
any
and
all
documents/communications,
letters
and facsimile of prints related to the
"WE FORUM" newspaper.

2) DATSUN, pick-up colored white with

Plate No. NKV 969;
3) A delivery truck with Plate No. NBS
542;
4) TOYOTA-TAMARAW, colored white
with Plate No. PBP 665; and
5) TOYOTA Hi-Lux, pick-up truck with
Plate No. NGV 472 with marking
"Bagong Silang."
In Stanford v. State of Texas, the search warrant
which authorized the search for "books, records,
pamphlets, cards, receipts, lists, memoranda,
pictures, recordings and other written instruments
concerning the Communist Parties of Texas, and the
operations of the Community Party in Texas," was
declared void by the U.S. Supreme Court for being
too general. In like manner, directions to "seize any
evidence in connection with the violation of SDC 133703 or otherwise" have been held too general, and

that portion of a search warrant which authorized the

seizure of any "paraphernalia which could be used to
violate Sec. 54-197 of the Connecticut General
Statutes (the statute dealing with the crime of
conspiracy)" was held to be a general warrant, and
therefore invalid. The description of the articles
sought to be seized under the search warrants in
question cannot be characterized differently.
In the Stanford case, the U.S. Supreme court calls to
mind a notable chapter in English history; the era of
disaccord between the Tudor Government and the
English Press, when "Officers of the Crown were
given roving commissions to search where they
pleased in order to suppress and destroy the
literature of dissent both Catholic and Puritan."
Reference herein to such historical episode would not
be relevant for it is not the policy of our government
to suppress any newspaper or publication that
speaks with "the voice of non-conformity" but poses
no clear and imminent danger to state security.14
For the guidance of the bench and the bar, we reaffirm the
following principles:
1. Under Article III, Section 2, of the l987
Constitution, it is only judges, and no other, who may
issue warrants of arrest and search:
2. The exception is in cases of deportation of illegal
and undesirable aliens, whom the President or the
Commissioner of Immigration may order arrested,
following a final order of deportation, for the purpose
of deportation.
WHEREFORE, the petition is GRANTED. Article 38, paragraph (c) of
the Labor Code is declared UNCONSTITUTIONAL and null and void.
The respondents are ORDERED to return all materials seized as a
result of the implementation of Search and Seizure Order No. 1205.
No costs. SO ORDERED.

G.R. Nos. 124443-46

June 6, 2002

PEOPLE OF THE PHILIPPINES, plaintiff-appellee,

vs.
NIMFA REMULLO, accused-appellant.
QUISUMBING, J.:
On appeal is the decision1 of the Regional Trial Court, Makati City,
Branch 132, in Criminal Cases Nos. 95-653 to 95-656, convicting
appellant Nimfa Remullo and sentencing her to suffer the following
penalties: (1) in Criminal Case No. 95-653, involving illegal
recruitment on a large scale, life imprisonment and the payment of
a P100,000 fine, (2) for each case of estafa in Criminal Cases Nos.
95-654 to 95-656, two years, four months, and one day ofprision
correccional to six years and one day of prision mayor, and to
indemnify the private complainants P15,000 each, and (3) to pay
the costs.
In Criminal Case No. 95-653, appellant was indicted in an
information that reads:
That in or about and during the months from March to May
1993, in the Municipality of Makati, Metro Manila,
Philippines, a place within the jurisdiction of this Honorable
Court, the above named accused, falsely representing
herself to have the capacity and power to contract, enlist
and recruit workers for job/placement abroad, did then and
there willfully, unlawfully and feloniously collect for a fee,
recruit and promise employment job placement abroad to
the complainants, ROSARIO CADACIO, JENELYN QUINSAAT
and HONORINA MEJIA, without first securing the required
license or authority from the Department of Labor and
Employment, thus committing illegal recruitment in large
scale in violation of [Article 38(2) in relation to Article 39 (b)
of the Labor Code].2
In Criminal Case No. 95-654, the allegations in the information
read:

That in or about and during the months from March to May

1993 in the Municipality of Makati, Metro Manila, Philippines,
a place within the jurisdiction of this Honorable Court, the
above named accused, by means of false pretenses and
fraudulent representation made prior to or simultaneously
with the commission of the fraud, with intent to defraud the
complainant JENELYN QUINSAAT to the effect that she would
send her abroad for the purpose of employment and would
need certain amount for the expenses in the processing of
papers thereof, which representations the accused well
knew was (sic) false and fraudulent and was only made by
her to induce said complainant to give and pay, as in fact
the latter gave and paid to her the amount of P15,000.00
which the accused once in possession of the said amount,
did then and there willfully, unlawfully and feloniously
appropriate and convert to her own personal use and
benefit, to the damage and prejudice of the complainant
JENELYN QUINSAAT in the aforementioned amount of
P15,000.00.3
Except for the name of the private complainants, the informations
in Criminal Cases Nos. 95-655 and 95-656 read substantially the
same as that for Criminal Case No. 95-654. 4 Instead of Jenelyn
Quinsaat, the alleged victims ofestafa were Rosario Cadacio and
Honorina Mejia, respectively.
Upon her arraignment, appellant pleaded not guilty to all the
charges against her.5 Trial ensued thereafter.
The prosecution presented as its witnesses private complainants
Honorina Mejia, Rosario Cadacio, and Jenelyn Quinsaat; Corazon
Aquino of the licensing department of the Philippine Overseas
Employment Administration (POEA); and Evelyn Landrito, vice
president and general manager of Jamila and Co., Inc., appellants
employer.
Private complainants JENELYN QUINSAAT, ROSARIO CADACIO, and
HONORINA MEJIA testified on essentially the same facts. They
averred that they went to appellants house sometime in March
1993, where appellant told them she was recruiting factory workers

for Malaysia. Appellant told them to fill up application forms and to

go to the office of Jamila and Co., the recruitment agency where
appellant worked. Appellant also required each applicant to submit
a passport, pictures, and clearance from the National Bureau of
Investigation (NBI); and then to undergo a medical examination.
Appellant told them the placement fee was P15,000 for each
applicant, which private complainants gave her. Part of the fee was
paid in appellants house and part was paid at the Jamila office.
Appellant did not issue receipts for any of the payments.
At the Jamila office, private complainants met a certain Steven
Mah, the alleged broker from the company in Malaysia that was
interested in hiring the women. Mah was supposed to interview
private complainants but instead just looked at them and told them
they were fit to work.
Private complainants were supposed to leave for Malaysia on June
6, 1993. On May 28, 1993, private complainant Quinsaat testified
that she and the others met with appellant at the Philippine
General Hospital where appellant showed them their plane tickets.
Appellant also told them to fill up departure cards by checking the
word "holiday" thereon.
At the airport on June 6, 1993, an immigration officer told private
complainants they lacked a requirement imposed by the Philippine
Overseas Employment Administration (POEA).6 Their passports
were cancelled and their boarding passes marked "offloaded".
Private complainant Mejia testified that appellant told them they
were not able to leave because their visas were for tourists only. 7
Appellant told private complainants they would be able to leave on
June 20, 1993 but this, too, did not push through.
Private complainant Mejia inquired from Jamila and Co. regarding
their application papers. In response, Evelyn Landrito, vice
president and general manager to Jamila, denied any knowledge of
such papers. Landrito told Mejia that appellant did not submit any
document to Jamila. She further certified that appellant was not
authorized to receive payments on behalf of Jamila.8

EVELYN LANDRITO testified that appellant was a marketing

consultant for Jamila.9 As such, her work was limited to securing job
orders for the company through contacts abroad. According to
Landrito, appellant went on absence without leave in late 1993.

pointed out that she helped private complainants fax a letter to

Steven Mah in Singapore asking for the return of their money. 21 She
also accompanied them to Batangas where Lani Platon was
supposed to be residing.22

Landrito did not know the private complainants. She stated that
Jamila did not have job orders accredited by the POEA for
Malaysia.10 She knew of a Steven Mah who represented Manifield
Enterprise but the agreement with that company did not push
through and POEA did not accredit Manifield.11

On cross-examination, appellant insisted that her job at Jamila was

not limited to finding prospective employers abroad. She said that
her duties included those assigned by Virginia Castro, Jamilas
deputy manager, among them entertaining job applicants. 23 She
said that it was actually Castro who told Mah to interview private
complainants at the Jamila office. 24 Mah went to Jamila sometime
on May 24, 1993 to deliver documents regarding job openings in
Singapore and Malaysia.25 On that same day, private complainants
happened to be at the Jamila office.26

CELYNIA CUYA testified that she was a clerk at the Jamila office,
responsible for processing documents for submission to the POEA.
She also assisted in interviewing job applicants. She narrated that
Amado Pancha, one of the witnesses for the defense who claimed
that he applied for a job abroad through Jamila, never applied at
Jamila based on their records. She presented in court a certification
to this effect, signed by Evelyn Landrito.12
In her defense, appellant NIMFA REMULLO denied having recruited
private complainants and receiving any money from them.
According to her testimony, she met private complainants
sometime in March 1993 at the Jamila office where she was a
marketing consultant. They asked for her help in obtaining jobs
abroad, so she had them fill up bio-data forms and told them to
wait for job openings.13 She alleged that Jamila had an agreement
with Wearness Electronics, based in Malaysia, concerning the
recruitment of workers for Wearness.14 Private complainants were
supposed to have been recruited for Wearness.15
Appellant explained that Steven Mah was the owner of
Manifield16 Enterprise,17 a recruitment agency. Appellant said that
Mah "went to Malaysia to look for job opening and he was able to
find this company, Wearness Electronics."18
Appellant insisted that private complainants did not hand their
placement fees to her but to Steven Mah and to a certain Lani
Platon.19 She presented in evidence photocopies of receipts
allegedly signed by Platon.20 She said private complainants sought
her assistance after they were unable to leave for abroad. She

Appellant also claimed that private complainants later transacted

business with Mah without the knowledge of Jamila. According to
her, Lani Platon told her that private complainants were supposed
to leave on June 6, 1993.
Also for the defense, witness AMADO PANCHA testified that he
came to know appellant when he was applying for a job abroad
through Jamila. He claimed that he was at the Jamila office on May
30, 1993 and saw some people, presumably private complainants,
inside appellants office.27 He met Lani Platon and asked her what
she was doing at Jamila. Platon allegedly replied that she was
recruiting female workers for jobs abroad. She introduced Pancha to
her Singaporean companion, Steven Mah. 28 Thereafter, according to
Pancha, private complainants gave Platon an envelope containing
money that Platon put inside her bag. Private complainants then
handed Platon a piece of bond paper with something typewritten
on it, which the latter signed.29 Appellant signed on the same piece
of paper.
In a decision dated December 11, 1995, the trial court found
appellant guilty as charged, thus:
WHEREFORE, judgment is rendered as follows:

1. In Criminal Case No. 95-653, the accused is sentenced to

life imprisonment and to pay a fine of P100,000.00 and the
costs;

IN GIVING PROBATIVE VALUE [TO] THE TESTIMONY OF

WITNESS EVELYN LANDRITO.
IV

2. In Criminal Case No. 95-654, she is sentenced to suffer

imprisonment from two (2) years, four (4) months and one
(1) day of prision correcional to six (6) years and one (1) day
of prision mayor; to indemnify Jenelyn Quinsaat the sum of
P15,000.00, and to pay the costs;
3. In Criminal Case No. 95-655, she is sentenced to suffer
imprisonment from two (2) years, four (4) months and one
(1) day of prision correccional to six (6) years and one (1)
day of prision mayor; to indemnify Rosario Cadacio the sum
of P15,000.00, and to pay the costs;
4. In Criminal Case No. 95-656, she is sentenced to suffer
imprisonment from two (2) years, four (4) months and one
(1) day of prision correccional to six (6) years and one (1)
day of prision mayor; to indemnify Honorina Mejia the sum
of P15,000.00; and to pay the costs.
SO ORDERED.30
Hence, this appeal. Appellant contends that the trial court erred:

IN FINDING THE APPELLANT GUILTY BEYOND REASONABLE

DOUBT OF THE CRIMES CHARGED.31
Essentially, appellant is assailing the credibility of the witnesses
presented by the prosecution, while shifting by way of her defense
the onus of illegal recruitment and estafa to third parties in order to
create a reasonable doubt.
Time and again, however, the trial courts assessment concerning
the credibility of witnesses and their testimony has been sustained
and accorded great weight by appellate courts, because of the trial
courts vantage position to observe firsthand the witnesses
demeanor and deportment in the course of their testimony under
oath. The exception is when the trial court has overlooked or
misapprehended certain facts or circumstances that, if considered,
would alter the result of the case.32
In this case, we find no exceptional facts or circumstances, hence
no reason to deviate from the general rule. The trial courts findings
and conclusions are duly supported by the evidence on record, thus
there is no sufficient reason to disturb them.

I
IN NOT FINDING THAT EXHIBITS "3", "4" AND "16" ARE
CREDIBLE
AND
COMPETENT
PROOFS
THAT
THE
COMPLAINANTS TRANSACTED WITH AND GAVE THEIR
MONEY TO LANI PLATON AND STEVEN MAH IN CONNECTION
WITH THEIR APPLICATIONS FOR OVERSEAS EMPLOYMENT.
II
IN NOT FINDING THAT THE
COMPLAINANTS ARE NOT CREDIBLE.

VERSIONS

OF

THE

In Criminal Case No. 95-653, appellant was charged with illegal

recruitment in large scale. For such a charge to prosper, the
following elements must concur: (1) the accused was engaged in
recruitment activity defined under Article 13 (b), or any prohibited
practice under Article 34 of the Labor Code; (2) he or she lacks the
requisite license or authority to lawfully engage in the recruitment
and placement of workers; and (3) he or she committed such acts
against three or more persons, individually or as a group.33
Article 13 (b) of the Labor Code provides:
ART. 13. Definitions. -- xxx

III

(b) "Recruitment and placement" refers to any act of

canvassing, enlisting, contracting, transporting, utilizing,
hiring or procuring workers, and includes referrals, contact
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.
We are convinced that private complainants, the main witnesses for
the prosecution, were enticed by appellant to apply for jobs abroad.
The three private complainants filled up application forms at
appellants house, and each paid appellant the amount of P15,000
as placement fee. However, she acted without license or lawful
authority to conduct recruitment of workers for overseas
placement. The POEAs licensing branch issued a certification
stating that appellant, in her personal capacity, was not authorized
to engage in recruitment activities. 34 Evelyn Landrito, general
manager of the placement agency where appellant used to work,
denied that the scope of appellants work included recruiting
workers and receiving placement fees. Such lack of authority to
recruit is also apparent from a reading of the job description of a
marketing consultant,35 the post that appellant occupied at Jamila
and Co.
In the face of evidence pointing to her wrongdoing, appellant only
offers denials, while pointing to an alleged ill motive on the part of
private complainants that prompted them to testify against her.
According to appellant, private complainants failed to find the
responsible parties, namely Steven Mah and his companion Lani
Platon, and so are now going after her.
Appellants arguments fail to persuade us of her innocence. The
defense of denial is intrinsically weak, a self-serving negative
evidence that cannot prevail over the testimony of credible
witnesses who testified on affirmative matters.36
In People vs. Hernandez, we held:

For appellant to say that she was merely chosen as a

scapegoat for appellees misfortune, having failed to bring
the alleged real recruiter to justice, does not appear wellfounded. It is but a hasty generalization of no probative
significance. Without credible evidence proffered by the
defense, bad faith or ulterior motive could not be imputed
on the part of the appellees in pointing to the accused as
the illegal recruiter who victimized them. When there is no
showing that the principal witnesses for the prosecution
were actuated by improper motive, the presumption is that
the witnesses were not so actuated and their testimonies
are thus entitled to full faith and credit.37
Further, appellant faults the trial court for not finding the receipts
and fax message she presented in evidence as competent and
credible proofs of the alleged transaction between private
complainants and Steven Mah and Lani Platon. Appellant insists
that it was Lani Platon, not her, who received private complainants
placement fees. According to her, Platon even issued receipts to
prove that she had taken the money. But mere insistence on her
part that Platon was the culprit could not defeat positive
testimonies of complainants to the contrary.
Indeed, it would have been easy for private complainants to pin
down Platon if she were the one who received the money and
issued the corresponding receipts. Private complainants would have
had the receipts to prove their claim. But why would private
complainants not go after Platon if they had evidence to prove that
she took their money? If appellants assertions were true, there
would have been no rhyme nor reason for private complainants to
file a case against appellant and go through the rigors and
expenses of a court trial if somebody else caused them harm. We
note that the natural tendency of one who has been wronged is to
seek redress from the person who caused the harm or injury, not
from anyone else.
Defense witness Amado Pancha attempted to corroborate
appellants testimony that private complainants handed their
money to Lani Platon and not to appellant. However, Pancha did not
specifically identify the persons whom he allegedly saw handing

Platon an envelope containing money. He only said that there were

visitors inside appellants office, that they were "four girls", 38 and
that he would be able to identify them if he sees them again.
However, he was not asked to identify the alleged four girls nor the
private complainants in any way. His testimony is patently
incomplete, with hardly any probative value.
Anent appellants conviction for estafa in Criminal Cases Nos. 95654 to 95-656, we find no error committed by the trial court. Their
conviction and sentence are fully supported by the evidence on
record. For charges of estafa to prosper, the following elements
must be present: (1) that the accused defrauded another by abuse
of confidence or by means of deceit, and (2) that damage or
prejudice capable of pecuniary estimation is caused to the offended
party or third person.39 In this case, appellant clearly defrauded
private complainants by deceiving them into believing that she had
the power and authority to send them on jobs abroad. By virtue of
appellants false representations, private complainants each parted
with their hard-earned money. Each complainant paid P15,000 as
recruitment fee to appellant, who then appropriated the money for
her own use and benefit, but failed utterly to provide overseas job
placements to the complainants. In a classic rigmarole,
complainants were provided defective visas, brought to the airport
with their passports and tickets, only to be offloaded that day, but
with promises to be booked in a plane flight on another day. The
recruits wait in vain for weeks, months, even years, only to realize
they were gypped, as no jobs await them abroad. No clearer cases
of estafa could be imagined than those for which appellant should
be held criminally responsible.
WHEREFORE, the appealed decision of the Regional Trial Court,
Makati City, Branch 132, is hereby AFFIRMED. In Criminal Case No.
95-653, for illegal recruitment in large scale, appellant NIMFA
REMULLO is found guilty and sentenced to life imprisonment and to
pay a fine of P100,000; and in Criminal Cases Nos. 95-654, 95-655
and 95-656 for estafa, she is declared guilty sentenced in each
case to two (2) years, four (4) months and one (1) day ofprision
correccional to six (6) years and one (1) one day of prision mayor,
and to pay by way of restitution P15,000 to each of the private

complainants, Jenelyn Quinsaat, Rosario Cadacio and Honorina

Mejia, together with the costs. SO ORDERED.
G.R. No. L-79436-50 January 17, 1990
EASTERN ASSURANCE & SURETY CORPORATION, petitioner,
vs.
SECRETARY OF LABOR, PHILIPPINE OVERSEAS EMPLOYMENT
ADMINISTRATION, ELVIRA VENTURA, ESTER TRANGUILLAN,
et al., respondents.
NARVASA, J.:
In connection with the application with the Philippine Overseas
Employment Administration (POEA) of J & B Manpower Specialist,
Inc. for a license to engage in business as a recruitment agency, a
surety bond was filed on January 2, 1985 by the applicant and the
Eastern Assurance and Surety Corporation, herein petitioner, in
virtue of which they both held themselves
. . . firmly bound unto (said) Philippine Overseas
Employment Administration, Ministry of Labor in the
penal sum of PESOS ONE HUNDRED FIFTY
THOUSAND ONLY . . . (Pl50,000.00) for the payment
of which will and truly to be made, . . . (they bound
themselves, their) heirs, executors, administrators,
successors and assigns, jointly and severally . .
The bond stipulated that:
a) it was "conditioned upon the true and faithful performance and
observance of the . . . principal (J & B Manpower Specialist, Inc.) of
its duties and obligations in accordance with all the rules and
regulations promulgated by the Ministry of Labor Philippine
Overseas Employment Administration and with the terms and
conditions stipulated in the License;
b) the liability of the . . . Surety (petitioner) shall in no case exceed
the sum of PESOS ONE HUNDRED FIFTY THOUSAND (P150,000.00)
ONLY, PHILIPPINE CURRENCY; 1

c) notice to the Principal is also a notice to the Surety; and

d) LIABILITY of the surety . . . shall expire on JANUARY 02, 1986 and
this bond shall be automatically cancelled ten (10) days after its
expiration and the surety shall not be liable for any claim not
discovered and presented to it in writing within said period of . . .
from expiration and the obligee hereby expressly waives the rights
to file any court action against the Surety after termination of said
period of . . . . above cited. 2
As narrated by respondent Secretary of Labor, the facts are as
follows: 3
From June 1983 to December 1985 . . . thirty three
(33) . . . (persons) applied for overseas employment
with . . . (J & B). In consideration of promised
deployment, complainants paid respondent various
amounts for various fees. Most of' the receipts issued
were sighed by Mrs. Baby Bundalian, Executive VicePresident of . . . (J & B).
Because of non-deployment . . . (the applicants) filed
separate complaints with the Licensing and
Regulation Office of POEA against . . . (J & B) for
violation of Articles 32 and 34 (a) of the Labor Code
between the months of April to October 1985.
Despite summons/notices of hearing,, . . . (J & B)
failed to file Answer nor appear in the hearings
conducted.
In its separate Answer, . . . EASCO essentially
disclaimed liability on the ground that the claims
were not expressly covered by the bond, that POEA
had no jurisdiction to order forfeiture of the bond,
that some of the claims were paid beyond or prior to
the period of effectivity of the bond.
On September 8, 1986, the POEA Administrator
issued the Order in favor of complainants ruling thus:

After careful evaluation, we find that

the receipts and testimonies of
complainants, in the absence of
controverting evidence substantially
establish that respondent charged and
collected fees from them in amounts
exceeding what is prescribed by this
Administration. Complainants' nondeployment strongly indicates that
there was no employment obtained for
them. Hence, violation of Articles 32
and 34 (a) of the Labor Code, as
amended,
is
established
against
respondent.
The
claims
of
complainants having arose (arisen) out
of acts of the principal covered under
the surety (bond), the respondent
surety is equally liable therefor.
Except for complainants Ramos, Samson, de Leon
and Rizada, whose claims were transacted prior to
the effectivity of the bond, . . . EASCO was declared
jointly and severally liable with . . . (J & B) to twentynine (29) complainants.
(The dispositive portion of the POEA Administrator's
Order also contained the following statement and
direction, viz.:
Respondent was suspended on May
23, 1985, June 26, 1985 and January
17, 1986 all for illegal exaction.
Considering its track record of illegal
exaction activities and considering
further
the
gross
violation
of
recruitment rules and regulations
established against it in the instant
cases, and the expiration of its license
on February 15, 1985, it is hereby
forever banned from participation in

the overseas employment program. It

is ordered to cease and desist from
further
engaging
in
recruitment
activities
otherwise
it
shall
be
prosecuted for illegal recruitment.')
(J & B filed a motion for reconsideration). On
December 19, 1986, the then deputy Minister of
Labor and Employment denied the . . . Motion for
Reconsideration for lack of merit and affirmed the
findings in the Order of the POEA Administrator
finding no reversible error therein.
On appeal by EASCO J & B having as aforestated taken no part in
the proceeding despite due service of summons the judgment
was modified by the Secretary of Labor, by Order dated July 1,
1987, disposing as follows: 4
WHEREFORE, in view of the foregoing, the Resolution
of the then Deputy Minister of Labor dated December
19, 1986 affirming the Order of the POEA
Administrator dated September 8, 1986 is hereby
MODIFIED. Respondent J & B Manpower Specialist is
directed to refund all thirty-three (33) complainants
as listed in the Order of September 8, 1986 in the
amounts listed thereto with the modification that
complainants Lucena Cabasal and Felix Rivero are
both entitled only to P15,980 and not P15,980
each. Respondent Eastern Assurance and Surety
Corporation is hereby found jointly and severally
liable with respondent J & B Manpower Specialist to
refund nineteen (19) complainants in the modified
amounts . . . (particularly specified).
The other findings in the Order of the POEA
Administrator dated September 8, 1986 affirmed in
the Resolution of the then Deputy Minister . . . are
also hereby AFFIRMED. This Order is FINAL. No
further Motion for Reconsideration hereof shall be
entertained.

It is noteworthy that EASCO's liability for the refund, jointly and

severally with its principal, was limited to 19 named complainants
(in contrast to verdicts of the POEA and the Deputy Minister which
both ordered payment to no less than 33 complainants) and was
correspondingly reduced from P308,751.75 and US $ 400.00 5 to
the aggregate amount of P 140,817.75. 6
The special civil action of certiorari at bar was thereafter instituted
by EASCO 7 praying for the nullification of the POEA Administrator's
Order of September 8, 1986, the Resolution of the Deputy Minister
of Labor of' December 19, 1986, and the Order of the Secretary of
Labor of July 1, 1987, It theorizes that:
1) the POEA had no jurisdiction over the claims for
refund filed by non-employees;
2) neither did the Secretary of Labor have jurisdiction
of the claims;
3) assuming they had jurisdiction, both the POEA and
Secretary of Labor also committed legal errors and
acted with grave abuse of discretion when they ruled
that petitioner is liable on the claims.
EASCO contends that the POEA had no "adjudicatory jurisdiction"
over the monetary claims in question because the same "did not
arise from employer-employee relations." Invoked in support of the
argument is Section 4 (a) of EO 797 providing in part 8 that the
POEA has
. . . original and exclusive jurisdiction over all cases,
including
money
claims, involving
employeremployee relations arising out of or by virtue of any
law or contract involving Filipino workers for overseas
employment including seamen . . .
The complaints are however for violation of Articles 32 and
34 a) of the Labor Code. Article 32 and paragraph (a) of
Article 34 read as follows:

Art. 32. Fees to be paid by workers.Any person

applying with a private fee-charging employment
agency for employment assistance shall not be
charged any fee until he has obtained employment
through its efforts or has actually commenced
employment. Such fee shall be always covered with
the approved receipt clearly showing the amount
paid. The Secretary of Labor shall promulgate a
schedule of allowable fees.
Art. 34. Prohibited practices.It shall be unlawful for
any individual, entity, licensee, or holder of authority:
a) To charge or accept, directly or indirectly, any
amount greater than that specified in the schedule of
allowable fees prescribed by the Secretary of Labor,
or to make a worker pay any amount greater than
actually received by him as a loan or advance; . . .
The penalties of suspension and cancellation of license or authority
are prescribed for violations of the above quoted provisions, among
others. And the Secretary of Labor has the power under Section 35
of the law to apply these sanctions, as well as the authority,
conferred by Section 36, not only, to "restrict and regulate the
recruitment and placement activities of all agencies," but also to
"promulgate rules and regulations to carry out the objectives and
implement the provisions" governing said activities. Pursuant to
this rule-making power thus granted, the Secretary of Labor gave
the POEA 9 "on its own initiative or upon filing of a complaint or
report or upon request for investigation by any aggrieved
person, . . . (authority to) conduct the necessary proceedings for
the suspension or cancellation of the license or authority of any
agency or entity" for certain enumerated offenses including
1) the imposition or acceptance, directly or indirectly, of any
amount of money, goods or services, or any fee or bond in excess
of what is prescribed by the Administration, and
2) any other violation of pertinent provisions of the Labor Code and
other relevant laws, rules and regulations. 10

The Administrator was also given the power to "order the

dismissal of the case or the suspension of the license or
authority of the respondent agency or contractor or
recommend to the Minister the cancellation thereof." 11
Implicit in these powers is the award of appropriate relief to the
victims of the offenses committed by the respondent agency or
contractor, specially the refund or reimbursement of such fees as
may have been fraudulently or otherwise illegally collected, or such
money, goods or services imposed and accepted in excess of what
is licitly prescribed. It would be illogical and absurd to limit the
sanction on an offending recruitment agency or contractor to
suspension or cancellation of its license, without the concomitant
obligation to repair the injury caused to its victims. It would result
either in rewarding unlawful acts, as it would leave the victims
without recourse, or in compelling the latter to litigate in another
forum, giving rise to that multiplicity of actions or proceedings
which the law abhors.
Even more untenable is EASCO's next argument that the recruiter
and its victims are in pari delicto the former for having required
payment, and the latter for having voluntarily paid, "prohibited
recruitment fees" and therefore, said victims are barred from
obtaining relief. The sophistical, if not callous, character of the
argument is evident upon the most cursory reading thereof; it
merits no consideration whatever.
The Court is intrigued by EASCO's reiteration of its argument that it
should not be held liable for claims which accrued prior to or after
the effectivity of its bond, considering that the respondent
Secretary had conceded the validity of part of said argument, at
least. The Secretary ruled that EASCO's "contention that it should
not be held liable for claims/payments made to respondent agency
before the effectivity of the surety bond on January 2, 1985 is well
taken." According to the Secretary: 12
. . . A close examination of the records reveal(s) that
respondent EASCO is not jointly and severally liable
with respondent agency to refund complainants
Lucena Cabasal, Felix Rivero, Romulo del Rosario,

Rogelio Banzuela, Josefina Ogatis, Francisco Sorato,

Sonny Quiazon, Josefina Dictado, Mario del Guzman
and Rogelio Mercado (10 in all). These complainants
paid respondent agency in 1984, or before the
effectivity of the bond on January 2, 1985 as
evidence by the reciept and their testimonies.
The related argument, that it is also not liable for claims filed after
the expiry (on January 2, 1986) of the period stipulated in the
surety bond for the filing of claims against the bond, must however
be rejected, as the Secretary did. The Court discerns no grave
abuse of discretion in the Secretary's statement of his reasons for
doing so, to wit:
. . . While it may be true that respondent EASCO
received notice of their claims after the ten (10) day
expiration period from cancellation or after January
12, 1986 as provided in the surety bond, records
show that . . . EASCO's principal, respondent agency,
was notified/ summoned prior to the expiration
period or before January 12, 1986. Respondent
agency received summons on July 24, 1985 with
respect to claims of complainants Penarroyo, dela
Cruz and Canti. It also received summons on
November 26, 1985 with respect to Giovanni
Garbillons' claim. Respondent agency was likewise
considered constructively notified of the claims of
complainants Calayag, Danuco Domingo and
Campena on October 6, 1985. In this connection, it
may be stressed that the surety bond provides that
notice to the principal is notice to the surety. Besides,
it has been held that the contract of a compensated
surety like respondent EASCO is to be interpreted
liberally in the interest of the promises and
beneficiaries rather than strictly in favor of the surety
(Acoustics Inc. v. American Surety, 74 Nev-6, 320
P2d. 626, 74 Am. Jur. 2d).
So, too, EASCO's claim that it had not been properly served with
summons as regards a few of the complaints must be rejected, the

issue being factual, and the Court having been cited to no grave
error invalidating the respondent Secretary's conclusion that
summons had indeed been duly served.
Finally, EASCO's half-hearted argument that its liability should be
limited to the maximum amount set in its surety bond, i.e.,
P150,000.00, is palpably without merit, since the aggregate liability
imposed on it, P140,817.75, supra, does not in fact exceed that
limit.
WHEREFORE, the petition is DISMISSED for lack of merit, and this
decision is declared to be immediately executory. Costs against
petitioner.
SO ORDERED.

HON. RUBEN D. TORRES, in his capacity as Secretary of

Labor and Employment, HON. BIENVENIDO E. LAGUESMA, in
his capacity as Acting Secretary of Labor and Employment,
and
BASKETBALL
COACHES
ASSOCIATION
OF
THE
PHILIPPINES, respondents.
RESOLUTION
FELICIANO, J.:
On 1 May 1989, the National Capital Region of the Department of
Labor and Employment issued Alien Employment Permit No. M0689-3-535 in favor of petitioner Earl Timothy Cone, a United
States citizen, as sports consultant and assistant coach for
petitioner General Milling Corporation ("GMC").
On 27 December 1989, petitioners GMC and Cone entered into a
contract of employment whereby the latter undertook to coach
GMC's basketball team.
On 15 January 1990, the Board of Special Inquiry of the Commission
on Immigration and Deportation approved petitioner Cone's
application for a change of admission status from temporary visitor
to pre-arranged employee.
On 9 February
petitioner Cone's
that it be allowed
Regional Director,
1990.

1990, petitioner GMC requested renewal of

alien employment permit. GMC also requested
to employ Cone as full-fledged coach. The DOLE
Luna Piezas, granted the request on 15 February

On 18 February 1990, Alien Employment Permit No. M-02903-881,

valid until 25 December 1990, was issued.
G.R. No. 93666 April 22, 1991
GENERAL MILLING
CONE, petitioners,
vs.

CORPORATION

and

EARL

TIMOTHY

Private respondent Basketball Coaches Association of the

Philippines ("BCAP") appealed the issuance of said alien
employment permit to the respondent Secretary of Labor who, on
23 April 1990, issued a decision ordering cancellation of petitioner
Cone's employment permit on the ground that there was no
showing that there is no person in the Philippines who is

competent, able and willing to perform the services required nor

that the hiring of petitioner Cone would redound to the national
interest.
Petitioner GMC filed a Motion for Reconsideration and two (2)
Supplemental Motions for Reconsideration but said Motions were
denied by Acting Secretary of Labor Bienvenido E. Laguesma in an
Order dated 8 June 1990.
Petitioners are now before the Court on a Petition for Certiorari,
dated 14 June 1990, alleging that:
1. respondent Secretary of Labor gravely abused his
discretion when he revoked petitioner Cone's alien
employment permit; and
2. Section 6 (c), Rule XIV, Book I of the Omnibus
Rules Implementing the Labor Code is null and void
as it is in violation of the enabling law as the Labor
Code does not empower respondent Secretary to
determine if the employment of an alien would
redound to national interest.
Deliberating on the present Petition for Certiorari, the Court
considers that petitioners have failed to show any grave abuse of
discretion or any act without or in excess of jurisdiction on the part
of respondent Secretary of Labor in rendering his decision, dated
23 April 1990, revoking petitioner Cone's Alien Employment Permit.
The alleged failure to notify petitioners of the appeal filed by
private respondent BCAP was cured when petitioners were allowed
to file their Motion for Reconsideration before respondent Secretary
of Labor. 1
Petitioner GMC's claim that hiring of a foreign coach is an
employer's prerogative has no legal basis at all. Under Article 40 of
the Labor Code, an employer seeking employment of an alien must
first obtain an employment permit from the Department of Labor.
Petitioner GMC's right to choose whom to employ is, of course,

limited by the statutory requirement of an alien employment

permit.
Petitioners will not find solace in the equal protection clause of the
Constitution. As pointed out by the Solicitor-General, no comparison
can be made between petitioner Cone and Mr. Norman Black as the
latter is "a long time resident of the country," and thus, not subject
to the provisions of Article 40 of the Labor Code which apply only to
"non-resident aliens." In any case, the term "non-resident alien"
and its obverse "resident alien," here must be given their technical
connotation under our law on immigration.
Neither can petitioners validly claim that implementation of
respondent Secretary's decision would amount to an impairment of
the obligations of contracts. The provisions of the Labor Code and
its Implementing Rules and Regulations requiring alien employment
permits were in existence long before petitioners entered into their
contract of employment. It is firmly settled that provisions of
applicable laws, especially provisions relating to matters affected
with public policy, are deemed written into contracts. 2 Private
parties cannot constitutionally contract away the otherwise
applicable provisions of law.
Petitioners' contention that respondent Secretary of Labor should
have deferred to the findings of Commission on Immigration and
Deportation as to the necessity of employing petitioner Cone, is,
again, bereft of legal basis. The Labor Code itself specifically
empowers respondent Secretary to make a determination as to the
availability of the services of a "person in the Philippines who is
competent, able and willing at the time of application to perform
the services for which an alien is desired." 3 In short, the
Department of Labor is the agency vested with jurisdiction to
determine the question of availability of local workers. The
constitutional validity of legal provisions granting such jurisdiction
and authority and requiring proof of non-availability of local
nationals able to carry out the duties of the position involved,
cannot be seriously questioned.
Petitioners apparently also question the validity of the
Implementing Rules and Regulations, specifically Section 6 (c), Rule

XIV, Book I of the Implementing Rules, as imposing a condition not

found in the Labor Code itself. Section 6 (c), Rule XIV, Book I of the
Implementing Rules, provides as follows:
Section 6. Issuance of Employment Permit the
Secretary of Labor may issue an employment permit
to the applicant based on:
a) Compliance by the applicant and his employer
with the requirements of Section 2 hereof;
b) Report of the Bureau Director as to the availability
or non-availability of any person in the Philippines
who is competent and willing to do the job for which
the services of the applicant are desired.
(c) His assessment as to whether or not the
employment of the applicant will redound to the
national interest;
(d) Admissibility of the alien as certified by the
Commission on Immigration and Deportation;
(e) The recommendation of the Board of Investments
or other appropriate government agencies if the
applicant will be employed in preferred areas of
investments or in accordance with the imperative of
economic development;
xxx xxx xxx
(Emphasis supplied)
Article 40 of the Labor Code reads as follows:

Art. 40. Employment per unit of non-resident aliens.

Any alien seeking admission to the Philippines for
employment purposes and any domestic or foreign
employer who desires to engage an alien for
employment in the Philippines shall obtain an
employment permit from the Department of Labor.
The employment permit may be issued to a nonresident alien or to the applicant employer after a
determination of the non-availability of a person in
the Philippines who is competent, able and willing at
the time of application to perform the services for
which the alien is desired.
For an enterprise registered in preferred areas of
investments, said employment permit may be issued
upon recommendation of the government agency
charged with the supervision of said registered
enterprise. (Emphasis supplied)
Petitioners apparently suggest that the Secretary of Labor is
not authorized to take into account the question of whether
or not employment of an alien applicant would "redound to
the national interest" because Article 40 does not explicitly
refer to such assessment. This argument (which seems
impliedly to concede that the relationship of basketball
coaching and the national interest is tenuous and unreal) is
not persuasive. In the first place, the second paragraph of
Article 40 says: "[t]he employment permit may be issued to
a non-resident alien or to the applicant employer after a
determination of the non-availability of a person in the
Philippines who is competent, able and willing at the time of
application to perform the services for which the alien is
desired." The permissive language employed in the Labor
Code indicates that the authority granted involves the
exercise of discretion on the part of the issuing authority. In
the second place, Article 12 of the Labor Code sets forth a
statement of objectives that the Secretary of Labor should,
and indeed must, take into account in exercising his
authority and jurisdiction granted by the Labor Code,

Art. 12. Statement of Objectives. It is the policy of

the State:
a) To promote and maintain a state of full
employment through improved manpower training,
allocation and utilization;
xxx xxx xxx
c) To facilitate a free choice of available employment
by persons seeking work in conformity with the
national interest;
d) To facilitate and regulate the movement of workers
in conformity with the national interest;
e) To regulate the employment of aliens, including
the establishment of a registration and/or work
permit system;
xxx xxx xxx
Thus, we find petitioners' arguments on the above points of
constitutional law too insubstantial to require further consideration.

Petitioners have very recently manifested to this Court that public

respondent Secretary of Labor has reversed his earlier decision and
has issued an Employment Permit to petitioner Cone. Petitioners
seek to withdraw their Petition for Certiorari on the ground that it
has become moot and academic.
While ordinarily this Court would dismiss a petition that clearly
appears to have become moot and academic, the circumstances of
this case and the nature of the questions raised by petitioners are
such that we do not feel justified in leaving those questions
unanswered. 4 Moreover, assuming that an alien employment
permit has in fact been issued to petitioner Cone, the basis of the
reversal by the Secretary of Labor of his earlier decision does not
appear in the record. If such reversal is based on some view of
constitutional law or labor law different from those here set out,
then such employment permit, if one has been issued, would
appear open to serious legal objections.
ACCORDINGLY, the Court Resolved to DISMISS the
for certiorari for lack of merit. Costs against petitioners.

Petition