Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-21278

December 27, 1966

FEATI UNIVERSITY, petitioner,

vs.
HON. JOSE S. BAUTISTA, Presiding Judge of the Court of Industrial Relations and FEATI
UNIVERSITY FACULTY CLUB-PAFLU, respondents.
---------------------------------------G.R. No. L-21462

December 27, 1966

FEATI UNIVERSITY, petitioner-appellant,

vs.
FEATI UNIVERSITY FACULTY CLUB-PAFLU, respondent-appellee.
---------------------------------------G.R. No. L-21500

December 27, 1966

FEATI UNIVERSITY, petitioner-appellant,

vs.
FEATI UNIVERSITY FACULTY CLUB-PAFLU, respondent-appellee.
Rafael Dinglasan for petitioner.
Cipriano Cid and Associates for respondents.
ZALDIVAR, J.:
This Court, by resolution, ordered that these three cases be considered together, and the parties
were allowed to file only one brief for the three cases.
On January 14, 1963, the President of the respondent Feati University Faculty Club-PAFLU
hereinafter referred to as Faculty Club wrote a letter to Mrs. Victoria L. Araneta, President of
petitioner Feati University hereinafter referred to as University informing her of the organization
of the Faculty Club into a registered labor union. The Faculty Club is composed of members who are
professors and/or instructors of the University. On January 22, 1963, the President of the Faculty
Club sent another letter containing twenty-six demands that have connection with the employment of
the members of the Faculty Club by the University, and requesting an answer within ten days from
receipt thereof. The President of the University answered the two letters, requesting that she be
given at least thirty days to study thoroughly the different phases of the demands. Meanwhile

counsel for the University, to whom the demands were referred, wrote a letter to the President of the
Faculty Club demanding proof of its majority status and designation as a bargaining representative.
On February 1, 1963, the President of the Faculty Club again wrote the President of the University
rejecting the latter's request for extension of time, and on the same day he filed a notice of strike with
the Bureau of Labor alleging as reason therefor the refusal of the University to bargain collectively.
The parties were called to conferences at the Conciliation Division of the Bureau of Labor but efforts
to conciliate them failed. On February 18, 1963, the members of the Faculty Club declared a strike
and established picket lines in the premises of the University, resulting in the disruption of classes in
the University. Despite further efforts of the officials from the Department of Labor to effect a
settlement of the differences between the management of the University and the striking faculty
members no satisfactory agreement was arrived at. On March 21, 1963, the President of the
Philippines certified to the Court of Industrial Relations the dispute between the management of the
University and the Faculty Club pursuant to the provisions of Section 10 of Republic Act No. 875.
In connection with the dispute between the University and the Faculty Club and certain incidents
related to said dispute, various cases were filed with the Court of Industrial Relations hereinafter
referred to as CIR. The three cases now before this Court stemmed from those cases that were filed
with the CIR.
CASE NO. G.R. NO. L-21278
On May 10, 1963, the University filed before this Court a "petition for certiorari and prohibition with
writ of preliminary injunction", docketed as G.R. No. L-21278, praying: (1) for the issuance of the writ
of preliminary injunction enjoining respondent Judge Jose S. Bautista of the CIR to desist from
proceeding in CIR Cases Nos. 41-IPA, 1183-MC, and V-30; (2) that the proceedings in Cases Nos.
41-IPA and 1183-MC be annulled; (3) that the orders dated March 30, 1963 and April 6, 1963 in
Case No. 41-IPA, the order dated April 6, 1963 in Case No. 1183-MC, and the order dated April 29,
1963 in Case No. V-30, all be annulled; and (4) that the respondent Judge be ordered to dismiss
said cases Nos. 41-IPA, 1183-MC and V-30 of the CIR.
On May 10, 1963, this Court issued a writ of preliminary injunction, upon the University's filing a
bond of P1,000.00, ordering respondent Judge Jose S. Bautista as Presiding Judge of the CIR, until
further order from this Court, "to desist and refrain from further proceeding in the premises (Cases
Nos. 41-IPA, 1183-MC and V-30 of the Court of Industrial Relations)."1 On December 4, 1963, this
Court ordered the injunction bond increased to P100,000.00; but on January 23, 1964, upon a
motion for reconsideration by the University, this Court reduced the bond to P50,000.00.
A brief statement of the three cases CIR Cases 41-IPA, 1183-MC and V-30 involved in the
Case G.R. No. L-21278, is here necessary.
CIR Case No. 41-IPA, relates to the case in connection with the strike staged by the members of the
Faculty Club. As we have stated, the dispute between the University and the Faculty Club was
certified on March 21, 1963 by the President of the Philippines to the CIR. On the strength of the
presidential certification, respondent Judge Bautista set the case for hearing on March 23, 1963.
During the hearing, the Judge endeavored to reconcile the part and it was agreed upon that the
striking faculty members would return to work and the University would readmit them under a status

quo arrangement. On that very same day, however, the University, thru counsel filed a motion to
dismiss the case upon the ground that the CIR has no jurisdiction over the case, because (1) the
Industrial Peace Act is not applicable to the University, it being an educational institution, nor to the
members of the Faculty Club, they being independent contractors; and (2) the presidential
certification is violative of Section 10 of the Industrial Peace Act, as the University is not an industrial
establishment and there was no industrial dispute which could be certified to the CIR. On March 30,
1963 the respondent Judge issued an order denying the motion to dismiss and declaring that the
Industrial Peace Act is applicable to both parties in the case and that the CIR had acquired
jurisdiction over the case by virtue of the presidential certification. In the same order, the respondent
Judge, believing that the dispute could not be decided promptly, ordered the strikers to return
immediately to work and the University to take them back under the last terms and conditions
existing before the dispute arose, as per agreement had during the hearing on March 23, 1963; and
likewise enjoined the University, pending adjudication of the case, from dismissing any employee or
laborer without previous authorization from the CIR. The University filed on April 1, 1963 a motion for
reconsideration of the order of March 30, 1963 by the CIR en banc, and at the same time asking that
the motion for reconsideration be first heard by the CIR en banc. Without the motion for
reconsideration having been acted upon by the CIR en banc, respondent Judge set the case for
hearing on the merits for May 8, 1963. The University moved for the cancellation of said hearing
upon the ground that the court en banc should first hear the motion for reconsideration and resolve
the issues raised therein before the case is heard on the merits. This motion for cancellation of the
hearing was denied. The respondent Judge, however, cancelled the scheduled hearing when
counsel for the University manifested that he would take up before the Supreme Court, by a petition
for certiorari, the matter regarding the actuations of the respondent Judge and the issues raised in
the motion for reconsideration, specially the issue relating to the jurisdiction of the CIR. The order of
March 30, 1963 in Case 41-IPA is one of the orders sought to be annulled in the case, G.R. No. L21278.
Before the above-mentioned order of March 30, 1963 was issued by respondent Judge, the
University had employed professors and/or instructors to take the places of those professors and/or
instructors who had struck. On April 1, 1963, the Faculty Club filed with the CIR in Case 41-IPA a
petition to declare in contempt of court certain parties, alleging that the University refused to accept
back to work the returning strikers, in violation of the return-to-work order of March 30, 1963. The
University filed, on April 5,1963, its opposition to the petition for contempt, denying the allegations of
the Faculty Club and alleging by way of special defense that there was still the motion for
reconsideration of the order of March 30, 1963 which had not yet been acted upon by the CIR en
banc. On April 6, 1963, the respondent Judge issued an order stating that "said replacements are
hereby warned and cautioned, for the time being, not to disturb nor in any manner commit any act
tending to disrupt the effectivity of the order of March 30,1963, pending the final resolution of the
same."2 On April 8, 1963, there placing professors and/or instructors concerned filed, thru counsel, a
motion for reconsideration by the CIR en banc of the order of respondent Judge of April 6, 1963.
This order of April 6, 1963 is one of the orders that are sought to be annulled in case G.R. No. L21278.
CIR Case No. 1183-MC relates to a petition for certification election filed by the Faculty Club on
March 8, 1963 before the CIR, praying that it be certified as the sole and exclusive bargaining
representative of all the employees of the University. The University filed an opposition to the petition

for certification election and at the same time a motion to dismiss said petition, raising the very same
issues raised in Case No. 41-IPA, claiming that the petition did not comply with the rules
promulgated by the CIR; that the Faculty Club is not a legitimate labor union; that the members of
the Faculty Club cannot unionize for collective bargaining purposes; that the terms of the individual
contracts of the professors, instructors, and teachers, who are members of the Faculty Club, would
expire on March 25 or 31, 1963; and that the CIR has no jurisdiction to take cognizance of the
petition because the Industrial Peace Act is not applicable to the members of the Faculty Club nor to
the University. This case was assigned to Judge Baltazar Villanueva of the CIR. Before Judge
Villanueva could act on the motion to dismiss, however, the Faculty Club filed on April 3, 1963 a
motion to withdraw the petition on the ground that the labor dispute (Case No. 41-IPA) had already
been certified by the President to the CIR and the issues raised in Case No. 1183-MC were
absorbed by Case No. 41-IPA. The University opposed the withdrawal, alleging that the issues
raised in Case No. 1183-MC were separate and distinct from the issues raised in Case No. 41-IPA;
that the questions of recognition and majority status in Case No. 1183-MC were not absorbed by
Case No. 41-IPA; and that the CIR could not exercise its power of compulsory arbitration unless the
legal issue regarding the existence of employer-employee relationship was first resolved. The
University prayed that the motion of the Faculty Club to withdraw the petition for certification election
be denied, and that its motion to dismiss the petition be heard. Judge Baltazar Villanueva, finding
that the reasons stated by the Faculty Club in the motion to withdraw were well taken, on April 6,
1963, issued an order granting the withdrawal. The University filed, on April 24, 1963, a motion for
reconsideration of that order of April 6, 1963 by the CIR en banc. This order of April 6, 1963 in Case
No. 1183-MC is one of the orders sought to be annulled in the case, G.R. No. L-21278, now before
Us.
CIR Case No. V-30 relates to a complaint for indirect contempt of court filed against the
administrative officials of the University. The Faculty Club, through the Acting Chief Prosecutor of the
CIR, filed with the CIR a complaint docketed as Case No. V-30, charging President Victoria L.
Araneta, Dean Daniel Salcedo, Executive Vice-President Rodolfo Maslog, and Assistant to the
President Jose Segovia, as officials of the University, with indirect contempt of court, reiterating the
same charges filed in Case No. 41-IPA for alleged violation of the order dated March 30, 1963.
Based on the complaint thus filed by the Acting Chief Prosecutor of the CIR, respondent Judge
Bautista issued on April 29, 1963 an order commanding any officer of the law to arrest the above
named officials of the University so that they may be dealt with in accordance with law, and the same
time fixed the bond for their release at P500.00 each. This order of April 29, 1963 is also one of the
orders sought to be annulled in the case, G.R. No. L-2l278.
The principal allegation of the University in its petition for certiorari and prohibition with preliminary
injunction in Case G.R. No. L-21278, now before Us, is that respondent Judge Jose S. Bautista
acted without, or in excess of, jurisdiction, or with grave abuse of discretion, in taking cognizance of,
and in issuing the questioned orders in, CIR Cases Nos. 41-IPA 1183-MC and V-30. Let it be noted
that when the petition for certiorari and prohibition with preliminary injunction was filed on May 10,
1963 in this case, the questioned order in CIR Cases Nos. 41-IPA, 1183-MC and V-30 were still
pending action by the CIR en banc upon motions for reconsideration filed by the University.
On June 10, 1963, the Faculty Club filed its answer to the petition for certiorari and prohibition with
preliminary injunction, admitting some allegations contained in the petition and denying others, and

alleging special defenses which boil down to the contentions that (1) the CIR had acquired
jurisdiction to take cognizance of Case No. 41-IPA by virtue of the presidential certification, so that it
had jurisdiction to issue the questioned orders in said Case No. 41-IPA; (2) that the Industrial Peace
Act (Republic Act 875) is applicable to the University as an employer and to the members of the
Faculty Club as employees who are affiliated with a duly registered labor union, so that the Court of
Industrial Relations had jurisdiction to take cognizance of Cases Nos. 1183-MC and V-30 and to
issue the questioned orders in those two cases; and (3) that the petition for certiorari and prohibition
with preliminary injunction was prematurely filed because the orders of the CIR sought to be
annulled were still the subjects of pending motions for reconsideration before the CIR en banc when
said petition for certiorari and prohibition with preliminary injunction was filed before this Court.
CASE G.R. NO. L-21462
This case, G.R. No. L-21462, involves also CIR Case No. 1183-MC. As already stated Case No.
1183-MC relates to a petition for certification election filed by the Faculty Club as a labor union,
praying that it be certified as the sole and exclusive bargaining representative of all employees of the
University. This petition was opposed by the University, and at the same time it filed a motion to
dismiss said petition. But before Judge Baltazar Villanueva could act on the petition for certification
election and the motion to dismiss the same, Faculty Club filed a motion to withdraw said petition
upon the ground that the issue raised in Case No. 1183-MC were absorbed by Case No. 41-IPA
which was certified by the President of the Philippines. Judge Baltazar Villanueva, by order April 6,
1963, granted the motion to withdraw. The University filed a motion for reconsideration of that order
of April 6, 1963 by the CIR en banc. That motion for reconsideration was pending action by the
CIR en banc when the petition for certiorari and prohibition with preliminary injunction in Case G.R.
no. L-21278 was filed on May 10, 1963. As earlier stated this Court, in Case G.R. No. L-21278,
issued a writ of preliminary injunction on May 10, 1963, ordering respondent Judge Bautista, until
further order from this Court, to desist and refrain from further proceeding in the premises (Cases
Nos. 41-IPA, 1183-MC and V-30 of the Court of Industrial Relations).
On June 5, 1963, that is, after this Court has issued the writ of preliminary injunction in Case G.R.
No. L-21278, the CIR en banc issued a resolution denying the motion for reconsideration of the
order of April 6, 1963 in Case No. 1183-MC.
On July 8, 1963, the University filed before this Court a petition for certiorari, by way of an appeal
from the resolution of the CIR en banc, dated June 5, 1963, denying the motion for reconsideration
of the order of April 6, 1963 in Case No. 1183-MC. This petition was docketed as G.R. No. L-21462.
In its petition for certiorari, the University alleges (1) that the resolution of the Court of Industrial
Relations of June 5, 1963 was null and void because it was issued in violation of the writ of
preliminary injunction issued in Case G.R. No. L-21278; (2) that the issues of employer-employee
relationship, the alleged status as a labor union, majority representation and designation as
bargaining representative in an appropriate unit of the Faculty Club should have been resolved first
in Case No. 1183-MC prior to the determination of the issues in Case No. 41-IPA and therefore the
motion to withdraw the petition for certification election should not have been granted upon the
ground that the issues in the first case have been absorbed in the second case; and (3) the lower
court acted without or in excess of jurisdiction in taking cognizance of the petition for certification
election and that the same should have been dismissed instead of having been ordered withdrawn.

The University prayed that the proceedings in Case No. 1183-MC and the order of April 6, 1963 and
the resolution of June 5, 1963 issued therein be annulled, and that the CIR be ordered to dismiss
Case No. 1183-MC on the ground of lack of jurisdiction.
The Faculty Club filed its answer, admitting some, and denying other, allegations in the petition
for certiorari; and specially alleging that the lower court's order granting the withdrawal of the petition
for certification election was in accordance with law, and that the resolution of the court en banc on
June 5, 1963 was not a violation of the writ of preliminary injunction issued in Case G.R. No. L21278 because said writ of injunction was issued against Judge Jose S. Bautista and not against the
Court of Industrial Relations, much less against Judge Baltazar Villanueva who was the trial judge of
Case No. 1183-MC.
CASE G.R. NO. L-21500
This case, G.R. No. L-21500, involves also CIR Case No. 41-IPA. As earlier stated, Case No. 41-IPA
relates to the strike staged by the members of the Faculty Club and the dispute was certified by the
President of the Philippines to the CIR. The University filed a motion to dismiss that case upon the
ground that the CIR has no jurisdiction over the case, and on March 30, 1963 Judge Jose S.
Bautista issued an order denying the motion to dismiss and declaring that the Industrial Peace Act is
applicable to both parties in the case and that the CIR had acquired jurisdiction over the case by
virtue of the presidential certification; and in that same order Judge Bautista ordered the strikers to
return to work and the University to take them back under the last terms and conditions existing
before the dispute arose; and enjoined the University from dismissing any employee or laborer
without previous authority from the court. On April 1, 1963, the University filed a motion for
reconsideration of the order of March 30, 1963 by the CIR en banc. That motion for reconsideration
was pending action by the CIR en banc when the petition for certiorari and prohibition with
preliminary injunction in Case G.R. No. L-21278 was filed on May 10, 1963. As we have already
stated, this Court in said case G.R. No. L-21278, issued a writ of preliminary injunction on May 10,
1963 ordering respondent Judge Jose S. Bautista, until further order from this Court, to desist and
refrain from further proceeding in the premises (Cases Nos. 41-IPA, 1183-MC and V-30 of the Court
of Industrial Relations).
On July 2, 1963, the University received a copy of the resolution of the CIR en banc, dated May 7,
1963 but actually received and stamped at the Office of the Clerk of the CIR on June 28, 1963,
denying the motion for reconsideration of the order dated March 30, 1963 in Case No. 41-IPA.
On July 23, 1963, the University filed before this Court a petition for certiorari, by way of an appeal
from the resolution of the Court of Industrial Relations en banc dated May 7, 1963 (but actually
received by said petitioner on July 2, 1963) denying the motion for reconsideration of the order of
March 30, 1963 in Case No. 41-IPA. This petition was docketed as G.R. No. L-21500. In its petition
for certiorari the University alleges (1) that the resolution of the CIR en banc, dated May 7, 1963 but
filed with the Clerk of the CIR on June 28, 1963, in Case No. 41-IPA, is null and void because it was
issued in violation of the writ of preliminary injunction issued by this Court in G.R. No. L-21278; (2)
that the CIR, through its Presiding Judge, had no jurisdiction to take cognizance of Case No. 41-IPA
and the order of March 30, 1963 and the resolution dated May 7, 1963 issued therein are null and
void; (3) that the certification made by the President of the Philippines is not authorized by Section

10 of Republic Act 875, but is violative thereof; (4) that the Faculty Club has no right to unionize or
organize as a labor union for collective bargaining purposes and to be certified as a collective
bargaining agent within the purview of the Industrial Peace Act, and consequently it has no right to
strike and picket on the ground of petitioner's alleged refusal to bargain collectively where such duty
does not exist in law and is not enforceable against an educational institution; and (5) that the returnto-work order of March 30, 1963 is improper and illegal. The petition prayed that the proceedings in
Case No. 41-IPA be annulled, that the order dated March 30, 1963 and the resolution dated May 7,
1963 be revoked, and that the lower court be ordered to dismiss Case 41-IPA on the ground of lack
of jurisdiction.
On September 10, 1963, the Faculty Club, through counsel, filed a motion to dismiss the petition
for certiorari on the ground that the petition being filed by way of an appeal from the orders of the
Court of Industrial Relations denying the motion to dismiss in Case No. 41-IPA, the petition
for certiorari is not proper because the orders appealed from are interlocutory in nature.
This Court, by resolution of September 26, 1963, ordered that these three cases (G.R. Nos. L21278, L-21462 and L-21500) be considered together and the motion to dismiss in Case G.R. No. L21500 be taken up when the cases are decided on the merits after the hearing.
Brushing aside certain technical questions raised by the parties in their pleadings, We proceed to
decide these three cases on the merits of the issues raised.
The University has raised several issues in the present cases, the pivotal one being its claim that the
Court of Industrial Relations has no jurisdiction over the parties and the subject matter in CIR Cases
41-IPA, 1183-MC and V-30, brought before it, upon the ground that Republic Act No. 875 is not
applicable to the University because it is an educational institution and not an industrial
establishment and hence not an "employer" in contemplation of said Act; and neither is Republic Act
No. 875 applicable to the members of the Faculty Club because the latter are independent
contractors and, therefore, not employees within the purview of the said Act.
In support of the contention that being an educational institution it is beyond the scope of Republic
Act No. 875, the University cites cases decided by this Court: Boy Scouts of the Philippines vs.
Juliana Araos, L-10091, Jan. 29, 1958; University of San Agustin vs. CIR, et al., L-12222, May 28,
1958; Cebu Chinese High School vs. Philippine Land-Air-Sea Labor Union, PLASLU, L-12015, April
22, 1959; La Consolacion College, et al. vs. CIR, et al., L-13282, April 22, 1960; University of the
Philippines, et al. vs. CIR, et al., L-15416, April 8, 1960; Far Eastern University vs. CIR, L-17620,
August 31, 1962. We have reviewed these cases, and also related cases subsequent thereto, and
We find that they do not sustain the contention of the University. It is true that this Court has ruled
that certain educational institutions, like the University of Santo Tomas, University of San Agustin, La
Consolacion College, and other juridical entities, like the Boy Scouts of the Philippines and Manila
Sanitarium, are beyond the purview of Republic Act No. 875 in the sense that the Court of Industrial
Relations has no jurisdiction to take cognizance of charges of unfair labor practice filed against
them, but it is nonetheless true that the principal reason of this Court in ruling in those cases that
those institutions are excluded from the operation of Republic Act 875 is that those entities are not
organized, maintained and operated for profit and do not declare dividends to stockholders. The

decision in the case of University of San Agustin vs. Court of Industrial Relations, G.R. No. L-12222,
May 28, 1958, is very pertinent. We quote a portion of the decision:
It appears that the University of San Agustin, petitioner herein, is an educational institution
conducted and managed by a "religious non-stock corporation duly organized and existing
under the laws of the Philippines." It was organized not for profit or gain or division of the
dividends among its stockholders, but solely for religious and educational purposes. It
likewise appears that the Philippine Association of College and University Professors,
respondent herein, is a non-stock association composed of professors and teachers in
different colleges and universities and that since its organization two years ago, the
university has adopted a hostile attitude to its formation and has tried to discriminate, harass
and intimidate its members for which reason the association and the members affected filed
the unfair labor practice complaint which initiated this proceeding. To the complaint of unfair
labor practice, petitioner filed an answer wherein it disputed the jurisdiction of the Court of
Industrial Relations over the controversy on the following grounds:
"(a) That complainants therein being college and/or university professors were not
"industrial" laborers or employees, and the Philippine Association of College and
University Professors being composed of persons engaged in the teaching
profession, is not and cannot be a legitimate labor organization within the meaning of
the laws creating the Court of Industrial Relations and defining its powers and
functions;
"(b) That the University of San Agustin, respondent therein, is not an institution
established for the purpose of gain or division of profits, and consequently, it is not an
"industrial" enterprise and the members of its teaching staff are not engaged in
"industrial" employment (U.S.T. Hospital Employees Association vs. Sto. Tomas
University Hospital, G.R. No. L-6988, 24 May 1954; and San Beda College vs. Court
of Industrial Relations and National Labor Union, G.R. No. L-7649, 29 October 1955;
51 O.G. (Nov. 1955) 5636-5640);
"(c) That, as a necessary consequence, alleged controversy between therein
complainants and respondent is not an "industrial" dispute, and the Court of
Industrial Relations has no jurisdiction, notonly on the parties but also over the
subject matter of the complaint."
The issue now before us is: Since the University of San Agustin is not an institution
established for profit or gain, nor an industrial enterprise, but one established exclusively for
educational purposes, can it be said that its relation with its professors is one of employer
and employee that comes under the jurisdiction of the Court of Industrial Relations? In other
words, do the provisions of the Magna Carta on unfair labor practice apply to the relation
between petitioner and members of respondent association?
The issue is not new. Thus, in the case of Boy Scouts of the Philippines v. Juliana V. Araos,
G.R. No. L-10091, promulgated on January 29, 1958, this Court, speaking thru Mr. Justice
Montemayor, answered the query in the negative in the following wise:

"The main issue involved in the present case is whether or not a charitable institution
or one organized not for profit but for more elevated purposes, charitable,
humanitarian, etc., like the Boy Scouts of the Philippines, is included in the definition
of "employer" contained in Republic Act 875, and whether the employees of said
institution fall under the definition of "employee" also contained in the same Republic
Act. If they are included, then any act which may be considered unfair labor practice,
within the meaning of said Republic Act, would come under the jurisdiction of the
Court of Industrial Relations; but if they do not fall within the scope of said Republic
Act, particularly, its definitions of employer and employee, then the Industrial Court
would have no jurisdiction at all.
xxx

xxx

xxx

"On the basis of the foregoing considerations, there is every reason to believe that
our labor legislation from Commonwealth Act No. 103, creating the Court of Industrial
Relations, down through the Eight-Hour Labor Law, to the Industrial Peace Act, was
intended by the Legislature to apply only to industrial employment and to govern the
relations between employers engaged in industry and occupations for purposes of
profit and gain, and their industrial employees, but not to organizations and entities
which are organized, operated and maintained not for profit or gain, but for elevated
and lofty purposes, such as, charity, social service, education and instruction,
hospital and medical service, the encouragement and promotion of character,
patriotism and kindred virtues in youth of the nation, etc.
"In conclusion, we find and hold that Republic Act No. 875, particularly, that portion
thereof regarding labor disputes and unfair labor practice, does not apply to the Boy
Scouts of the Philippines, and consequently, the Court of Industrial Relations had no
jurisdiction to entertain and decide the action or petition filed by respondent Araos.
Wherefore, the appealed decision and resolution of the CIR are hereby set aside,
with costs against respondent."
There being a close analogy between the relation and facts involved in the two cases, we
cannot but conclude that the Court of Industrial Relations has no jurisdiction to entertain the
complaint for unfair labor practice lodged by respondent association against petitioner and,
therefore, we hereby set aside the order and resolution subject to the present petition, with
costs against respondent association.
The same doctrine was confirmed in the case of University of Santo Tomas v. Hon. Baltazar
Villanueva, et al.,G.R. No. L-13748, October 30, 1959, where this Court ruled that:
In the present case, the record reveals that the petitioner University of Santo Tomas is not an
industry organized for profit but an institution of learning devoted exclusively to the education
of the youth. The Court of First Instance of Manila in its decision in Civil Case No. 28870,
which has long become final and consequently the settled law in the case, found as
established by the evidence adduced by the parties therein (herein petitioner and respondent
labor union) that while the University collects fees from its students, all its income is used for

the improvement and enlargement of the institution. The University declares no dividend, and
the members of the corporation who founded it, as ordained in its articles of incorporation,
receive no material compensation for the time and sacrifice they render to the University and
its students. The respondent union itself in a case before the Industrial Court (Case No. 314MC) has averred that "the University of Santo Tomas, like the San Beda College, is an
educational institution operated not for profit but for the sole purpose of educating young
men." (See Annex "B" to petitioner's motion to dismiss.). It is apparent, therefore, that on the
face of the record the University of Santo Tomas is not a corporation created for profit but an
educational institution and therefore not an industrial or business organization.
In the case of La Consolacion College, et al. vs. CIR, et al., G.R. No. L-13282, April 22, 1960, this
Court repeated the same ruling when it said:
The main issue in this appeal by petitioner is that the industry trial court committed an error
in holding that it has jurisdiction to act in this case even if it involves unfair labor practice
considering that the La Consolacion College is not a business enterprise but an educational
institution not organized for profit.
If the claim that petitioner is an educational institution not operated for profit is true, which
apparently is the case, because the very court a quo found that it has no stockholder, nor
capital . . . then we are of the opinion that the same does not come under the jurisdiction of
the Court of Industrial Relations in view of the ruling in the case of Boy Scouts of the
Philippines v. Juliana V. Araos, G.R. No. L-10091, decided on January 29, 1958.
It is noteworthy that the cases of the University of San Agustin, the University of Santo Tomas, and
La Consolacion College, cited above, all involve charges of unfair labor practice under Republic Act
No. 875, and the uniform rulings of this Court are that the Court of Industrial Relations has no
jurisdiction over the charges because said Act does not apply to educational institutions that are not
operated or maintained for profit and do not declare dividends. On the other hand, in the cases
of Far Eastern University v. CIR, et al., G.R. No. L-17620, August 31, 1962, this Court upheld the
decision of the Court of Industrial Relations finding the Far Eastern University, also an educational
institution, guilty of unfair labor practice. Among the findings of fact in said case was that the Far
Eastern University made profits from the school year 1952-1953 to 1958-1959. In affirming the
decision of the lower court, this Court had thereby ratified the ruling of the Court of Industrial
Relations which applied the Industrial Peace Act to educational institutions that are organized,
operated and maintained for profit.
It is also noteworthy that in the decisions in the cases of the Boy Scouts of the Philippines, the
University of San Agustin, the University of Sto. Tomas, and La Consolacion College, this Court was
not unanimous in the view that the Industrial Peace Act (Republic Act No. 875) is not applicable to
charitable, eleemosynary or non-profit organizations which include educational institutions not
operated for profit. There are members of this Court who hold the view that the Industrial Peace Act
would apply also to non-profit organizations or entities the only exception being the Government,
including any political subdivision or instrumentality thereof, in so far as governmental functions are
concerned. However, in the Far Eastern University case this Court is unanimous in supporting the
view that an educational institution that is operated for profit comes within the scope of the Industrial

Peace Act. We consider it a settled doctrine of this Court, therefore, that the Industrial Peace Act is
applicable to any organization or entity whatever may be its purpose when it was created that
is operated for profit or gain.
Does the University operate as an educational institution for profit? Does it declare dividends for its
stockholders? If it does not, it must be declared beyond the purview of Republic Act No. 875; but if it
does, Republic Act No. 875 must apply to it. The University itself admits that it has declared
dividends.3 The CIR in its order dated March 30, 1963 in CIR Case No. 41-IPA which order was
issued after evidence was heard also found that the University is not for strictly educational
purposes and that "It realizes profits and parts of such earning is distributed as dividends to private
stockholders or individuals (Exh. A and also 1 to 1-F, 2-x 3-x and 4-x)" 4 Under this circumstance, and
in consonance with the rulings in the decisions of this Court, above cited, it is obvious that Republic
Act No. 875 is applicable to herein petitioner Feati University.
But the University claims that it is not an employer within the contemplation of Republic Act No. 875,
because it is not an industrial establishment. At most, it says, it is only a lessee of the services of its
professors and/or instructors pursuant to a contract of services entered into between them. We find
no merit in this claim. Let us clarify who is an "employer" under the Act. Section 2(c) of said Act
provides:
Sec. 2. Definitions.As used in this Act
(c) The term employer include any person acting in the interest of an employer, directly or
indirectly, but shall not include any labor organization (otherwise than when acting as an
employer) or any one acting in the capacity or agent of such labor organization.
It will be noted that in defining the term "employer" the Act uses the word "includes", which it also
used in defining "employee". [Sec. 2 (d)], and "representative" [Sec. 2(h)]; and not the word "means"
which the Act uses in defining the terms "court" [Sec. 2(a)], "labor organization" [Sec. 2(e)],
"legitimate labor organization [Sec. 2(f)], "company union" [Sec. 2(g)], "unfair labor practice" [Sec.
2(i)], "supervisor" [Sec. 2(k)], "strike" [Sec. 2(l)] and "lock-out" [Sec. 2(m)]. A methodical variation in
terminology is manifest. This variation and distinction in terminology and phraseology cannot be
presumed to have been the inconsequential product of an oversight; rather, it must have been the
result of a deliberate and purposeful act, more so when we consider that as legislative records show,
Republic Act No. 875 had been meticulously and painstakingly drafted and deliberated upon. In
using the word "includes" and not "means", Congress did not intend to give a complete definition of
"employer", but rather that such definition should be complementary to what is commonly
understood as employer. Congress intended the term to be understood in a broad meaning because,
firstly, the statutory definition includes not only "a principal employer but also a person acting in the
interest of the employer"; and, secondly, the Act itself specifically enumerated those who are not
included in the term "employer", namely: (1) a labor organization (otherwise than when acting as an
employer), (2) anyone acting in the capacity of officer or agent of such labor organization [Sec. 2(c)],
and (3) the Government and any political subdivision or instrumentality thereof insofar as the right to
strike for the purpose of securing changes or modifications in the terms and conditions of
employment is concerned (Section 11). Among these statutory exemptions, educational institutions
are not included; hence, they can be included in the term "employer". This Court, however, has ruled

that those educational institutions that are not operated for profit are not within the purview of
Republic Act No. 875.5
As stated above, Republic Act No. 875 does not give a comprehensive but only a complementary
definition of the term "employer". The term encompasses those that are in ordinary parlance
"employers." What is commonly meant by "employer"? The term "employer" has been given several
acceptations. The lexical definition is "one who employs; one who uses; one who engages or keeps
in service;" and "to employ" is "to provide work and pay for; to engage one's service; to hire."
(Webster's New Twentieth Century Dictionary, 2nd ed., 1960, p. 595). The Workmen's Compensation
Act defines employer as including "every person or association of persons, incorporated or not,
public or private, and the legal representative of the deceased employer" and "includes the owner or
lessee of a factory or establishment or place of work or any other person who is virtually the owner
or manager of the business carried on in the establishment or place of work but who, for reason that
there is an independent contractor in the same, or for any other reason, is not the direct employer of
laborers employed there." [Sec. 39(a) of Act No. 3428.] The Minimum Wage Law states that
"employer includes any person acting directly or indirectly in the interest of the employer in relation
to an employee and shall include the Government and the government corporations". [Rep. Act No.
602, Sec. 2(b)]. The Social Security Act defines employer as "any person, natural or juridical,
domestic or foreign, who carries in the Philippines any trade, business, industry, undertaking, or
activity of any kind and uses the services of another person who is under his orders as regards the
employment, except the Government and any of its political subdivisions, branches or
instrumentalities, including corporations owned or controlled by the Government." (Rep. Act No.
1161, Sec. 8[c]).
This Court, in the cases of the The Angat River Irrigation System, et al. vs. Angat River Workers'
Union (PLUM), et al., G.R. Nos. L-10934 and L-10944, December 28, 1957, which cases involve
unfair labor practices and hence within the purview of Republic Act No. 875, defined the term
employer as follows:
An employer is one who employs the services of others; one for whom employees work and
who pays their wages or salaries (Black Law Dictionary, 4th ed., p. 618).
An employer includes any person acting in the interest of an employer, directly or indirectly
(Sec. 2-c, Rep. Act 875).
Under none of the above definitions may the University be excluded, especially so if it is considered
that every professor, instructor or teacher in the teaching staff of the University, as per allegation of
the University itself, has a contract with the latter for teaching services, albeit for one semester only.
The University engaged the services of the professors, provided them work, and paid them
compensation or salary for their services. Even if the University may be considered as a lessee of
services under a contract between it and the members of its Faculty, still it is included in the term
"employer". "Running through the word `employ' is the thought that there has been an agreement on
the part of one person to perform a certain service in return for compensation to be paid by an
employer. When you ask how a man is employed, or what is his employment, the thought that he is
under agreement to perform some service or services for another is predominant and paramount."

(Ballentine Law Dictionary, Philippine ed., p. 430, citing Pinkerton National Detective Agency v.
Walker, 157 Ga. 548, 35 A. L. R. 557, 560, 122 S.E. Rep. 202).
To bolster its claim of exception from the application of Republic Act No. 875, the University
contends that it is not state that the employers included in the definition of 2 (c) of the Act. This
contention can not be sustained. In the first place, Sec. 2 (c) of Republic Act No. 875 does not state
that the employers included in the definition of the term "employer" are only and exclusively
"industrial establishments"; on the contrary, as stated above, the term "employer" encompasses all
employers except those specifically excluded by the Act. In the second place, even the Act itself
does not refer exclusively to industrial establishments and does not confine its application thereto.
This is patent inasmuch as several provisions of the Act are applicable to non-industrial workers,
such as Sec. 3, which deals with "employees' right to self-organization"; Sections 4 and 5 which
enumerate unfair labor practices; Section 8 which nullifies private contracts contravening employee's
rights; Section 9 which relates to injunctions in any case involving a labor dispute; Section 11 which
prohibits strikes in the government; Section 12 which provides for the exclusive collective bargaining
representation for labor organizations; Section 14 which deals with the procedure for collective
bargaining; Section 17 which treats of the rights and conditions of membership in labor
organizations; Sections 18, 19, 20 and 21 which provide respectively for the establishment of
conciliation service, compilation of collective bargaining contracts, advisory labor-management
relations; Section 22 which empowers the Secretary of Labor to make a study of labor relations; and
Section 24 which enumerates the rights of labor organizations. (See Dissenting Opinion of Justice
Concepcion in Boy Scouts of the Philippines v. Juliana Araos, G.R. No. L-10091, January 29, 1958.)
This Court, in the case of Boy Scouts of the Philippines v. Araos, supra, had occasion to state that
the Industrial Peace Act "refers only to organizations and entities created and operated for profits,
engaged in a profitable trade, occupation or industry". It cannot be denied that running a university
engages time and attention; that it is an occupation or a business from which the one engaged in it
may derive profit or gain. The University is not an industrial establishment in the sense that an
industrial establishment is one that is engaged in manufacture or trade where raw materials are
changed or fashioned into finished products for use. But for the purposes of the Industrial Peace Act
the University is an industrial establishment because it is operated for profit and it employs persons
who work to earn a living. The term "industry", for the purposes of the application of our labor laws
should be given a broad meaning so as to cover all enterprises which are operated for profit and
which engage the services of persons who work to earn a living.
The word "industry" within State Labor Relations Act controlling labor relations in industry,
cover labor conditions in any field of employment where the objective is earning a livelihood
on the one side and gaining of a profit on the other. Labor Law Sec. 700 et seq. State Labor
Relations Board vs. McChesney, 27 N.Y.S. 2d 866, 868." (Words and Phrases, Permanent
Edition, Vol. 21, 1960 edition p. 510).
The University urges that even if it were an employer, still there would be no employer-employee
relationship between it and the striking members of the Faculty Club because the latter are not
employees within the purview of Sec. 2(d) of Republic Act No. 875 but are independent contractors.
This claim is untenable.

Section 2 (d) of Republic Act No. 875 provides:

(d) The term "employee" shall include any employee and shall not be limited to the employee
of a particular employer unless the act explicitly states otherwise and shall include any
individual whose work has ceased as a consequence of, or in connection with, any current
labor dispute or because of any unfair labor practice and who has not obtained any other
substantially equivalent and regular employment.
This definition is again, like the definition of the term "employer" [Sec. 2(c)], by the use of the term
"include", complementary. It embraces not only those who are usually and ordinarily considered
employees, but also those who have ceased as employees as a consequence of a labor dispute.
The term "employee", furthermore, is not limited to those of a particular employer. As already stated,
this Court in the cases of The Angat River Irrigation System, et al. v. Angat River Workers' Union
(PLUM), et al., supra, has defined the term "employer" as "one who employs the services of others;
one for whom employees work and who pays their wages or salaries. "Correlatively, an employee
must be one who is engaged in the service of another; who performs services for another; who
works for salary or wages. It is admitted by the University that the striking professors and/or
instructors are under contract to teach particular courses and that they are paid for their services.
They are, therefore, employees of the University.
In support of its claim that the members of the Faculty Club are not employees of the University, the
latter cites as authority Francisco's Labor Laws, 2nd ed., p. 3, which states:
While the term "workers" as used in a particular statute, has been regarded as limited to
those performing physical labor, it has been held to embrace stenographers and
bookkeepers. Teachers are not included, however.
It is evident from the above-quoted authority that "teachers" are not to be included among those who
perform "physical labor", but it does not mean that they are not employees. We have checked the
source of the authority, which is 31 Am. Jur., Sec. 3, p. 835, and the latter cites Huntworth v. Tanner,
87 Wash 670, 152 P. 523, Ann Cas 1917 D 676. A reading of the last case confirms Our view.
That teachers are "employees' has been held in a number of cases (Aebli v. Board of Education of
City and County of San Francisco, 145 P. 2d 601, 62 Col. App 2.d 706; Lowe & Campbell Sporting
Goods Co. v. Tangipahoa Parish School Board, La. App., 15 So. 2d 98, 100; Sister Odelia v. Church
of St. Andrew, 263 N. W. 111, 112, 195 Minn. 357, cited in Words and Phrases, Permanent ed., Vol.
14, pp. 806-807). This Court in the Far Eastern University case, supra, considered university
instructors as employees and declared Republic Act No. 875 applicable to them in their employment
relations with their school. The professors and/or instructors of the University neither ceased to be
employees when they struck, for Section 2 of Rep. Act 875 includes among employees any
individual whose work has ceased as consequence of, or in connection with a current labor dispute.
Striking employees maintain their status as employees of the employer. (Western Cartridge Co. v.
NLRB, C.C.A. 7, 139 F2d 855, 858).
The contention of the University that the professors and/or instructors are independent contractors,
because the University does not exercise control over their work, is likewise untenable. This Court

takes judicial notice that a university controls the work of the members of its faculty; that a university
prescribes the courses or subjects that professors teach, and when and where to teach; that the
professors' work is characterized by regularity and continuity for a fixed duration; that professors are
compensated for their services by wages and salaries, rather than by profits; that the professors
and/or instructors cannot substitute others to do their work without the consent of the university; and
that the professors can be laid off if their work is found not satisfactory. All these indicate that the
university has control over their work; and professors are, therefore, employees and not independent
contractors. There are authorities in support of this view.
The principal consideration in determining whether a workman is an employee or an
independent contractor is the right to control the manner of doing the work, and it is not the
actual exercise of the right by interfering with the work, but the right to control, which
constitutes the test. (Amalgamated Roofing Co. v. Travelers' Ins. Co., 133 N.E. 259, 261, 300
Ill. 487, quoted in Words and Phrases, Permanent ed., Vol. 14, p. 576).
Where, under Employers' Liability Act, A was instructed when and where to work . . . he is an
employee, and not a contractor, though paid specified sum per square. (Heine v. Hill, Harris
& Co., 2 La. App. 384, 390, in Words and Phrases, loc, cit.) .
Employees are those who are compensated for their labor or services by wages rather than
by profits. (People vs. Distributors Division, Smoked Fish Workers Union Local No. 20377,
Sup. 7 N. Y. S. 2d 185, 187 in Words and Phrases, loc, cit.)
Services of employee or servant, as distinguished from those of a contractor, are usually
characterized by regularity and continuity of work for a fixed period or one of indefinite
duration, as contrasted with employment to do a single act or a series of isolated acts; by
compensation on a fixed salary rather than one regulated by value or amount of work; . . .
(Underwood v. Commissioner of Internal Revenue, C.C.A., 56 F. 2d 67, 71 in Words and
Phrases, op. cit., p. 579.)
Independent contractors can employ others to work and accomplish contemplated result
without consent of contractee, while "employee" cannot substitute another in his place
without consent of his employer. (Luker Sand & Gravel Co. v. Industrial Commission, 23 P.
2d 225, 82 Utah, 188, in Words and Phrases, Vol. 14, p. 576).
Moreover, even if university professors are considered independent contractors, still they would be
covered by Rep. Act No. 875. In the case of the Boy Scouts of the Philippines v. Juliana
Araos, supra, this Court observed that Republic Act No. 875 was modelled after the Wagner Act, or
the National Labor Relations Act, of the United States, and this Act did not exclude "independent
contractors" from the orbit of "employees". It was in the subsequent legislation the Labor
Management Relation Act (Taft-Harley
Act) that "independent contractors" together with agricultural laborers, individuals in domestic
service of the home, supervisors, and others were excluded. (See Rothenberg on Labor Relations,
1949, pp. 330-331).

It having been shown that the members of the Faculty Club are employees, it follows that they have
a right to unionize in accordance with the provisions of Section 3 of the Magna Carta of Labor
(Republic Act No. 875) which provides as follows:
Sec. 3. Employees' right to self-organization.Employees shall have the right to selforganization and to form, join or assist labor organizations of their own choosing for the
purpose of collective bargaining through representatives of their own choosing and to
engage in concerted activities for the purpose of collective bargaining and other mutual aid
or protection. . . .
We agree with the statement of the lower court, in its order of March 30, 1963 which is sought to be
set aside in the instant case, that the right of employees to self-organization is guaranteed by the
Constitution, that said right would exist even if Republic Act No. 875 is repealed, and that regardless
of whether their employers are engaged in commerce or not. Indeed, it is Our considered view that
the members of the faculty or teaching staff of private universities, colleges, and schools in the
Philippines, regardless of whether the university, college or school is run for profit or not, are
included in the term "employees" as contemplated in Republic Act No. 875 and as such they may
organize themselves pursuant to the above-quoted provision of Section 3 of said Act. Certainly,
professors, instructors or teachers of private educational institutions who teach to earn a living are
entitled to the protection of our labor laws and one such law is Republic Act No. 875.
The contention of the University in the instant case that the members of the Faculty Club can not
unionize and the Faculty Club can not exist as a valid labor organization is, therefore, without merit.
The record shows that the Faculty Club is a duly registered labor organization and this fact is
admitted by counsel for the University.5a
The other issue raised by the University is the validity of the Presidential certification. The University
contends that under Section 10 of Republic Act No. 875 the power of the President of the Philippines
to certify is subject to the following conditions, namely: (1) that here is a labor dispute, and (2) that
said labor dispute exists in an industry that is vital to the national interest. The University maintains
that those conditions do not obtain in the instant case. This contention has also no merit.
We have previously stated that the University is an establishment or enterprise that is included in the
term "industry" and is covered by the provisions of Republic Act No. 875. Now, was there a labor
dispute between the University and the Faculty Club?
Republic Act No. 875 defines a labor dispute as follows:
The term "labor dispute" includes any controversy concerning terms, tenure or conditions of
employment, or concerning the association or representation of persons in negotiating,
fixing, maintaining, changing, or seeking to arrange terms or conditions of employment
regardless of whether the disputants stand in proximate relation of employer and employees.
The test of whether a controversy comes within the definition of "labor dispute" depends on whether
the controversy involves or concerns "terms, tenure or condition of employment" or "representation."
It is admitted by the University, in the instant case, that on January 14, 1963 the President of the

Faculty Club wrote to the President of the University a letter informing the latter of the organization of
the Faculty Club as a labor union, duly registered with the Bureau of Labor Relations; that again on
January 22, 1963 another letter was sent, to which was attached a list of demands consisting of 26
items, and asking the President of the University to answer within ten days from date of receipt
thereof; that the University questioned the right of the Faculty Club to be the exclusive representative
of the majority of the employees and asked proof that the Faculty Club had been designated or
selected as exclusive representative by the vote of the majority of said employees; that on February
1, 1963 the Faculty Club filed with the Bureau of Labor Relations a notice of strike alleging as reason
therefor the refusal of the University to bargain collectively with the representative of the faculty
members; that on February 18, 1963 the members of the Faculty Club went on strike and
established picket lines in the premises of the University, thereby disrupting the schedule of classes;
that on March 1, 1963 the Faculty Club filed Case No. 3666-ULP for unfair labor practice against the
University, but which was later dismissed (on April 2, 1963 after Case 41-IPA was certified to the
CIR); and that on March 7, 1963 a petition for certification election, Case No. 1183-MC, was filed by
the Faculty Club in the CIR.6 All these admitted facts show that the controversy between the
University and the Faculty Club involved terms and conditions of employment, and the question of
representation. Hence, there was a labor dispute between the University and the Faculty Club, as
contemplated by Republic Act No. 875. It having been shown that the University is an institution
operated for profit, that is an employer, and that there is an employer-employee relationship,
between the University and the members of the Faculty Club, and it having been shown that a labor
dispute existed between the University and the Faculty Club, the contention of the University, that
the certification made by the President is not only not authorized by Section 10 of Republic Act 875
but is violative thereof, is groundless.
Section 10 of Republic Act No. 875 provides:
When in the opinion of the President of the Philippines there exists a labor dispute in an
industry indispensable to the national interest and when such labor dispute is certified by the
President to the Court of Industrial Relations, said Court may cause to be issued a
restraining order forbidding the employees to strike or the employer to lockout the
employees, and if no other solution to the dispute is found, the Court may issue an order
fixing the terms and conditions of employment.
This Court had occasion to rule on the application of the above-quoted provision of Section 10 of
Republic Act No. 875. In the case of Pampanga Sugar Development Co. v. CIR, et al., G.R. No. L13178, March 24, 1961, it was held:
It thus appears that when in the opinion of the President a labor dispute exists in an industry
indispensable to national interest and he certifies it to the Court of Industrial Relations the
latter acquires jurisdiction to act thereon in the manner provided by law. Thus the court may
take either of the following courses: it may issue an order forbidding the employees to strike
or the employer to lockout its employees, or, failing in this, it may issue an order fixing the
terms and conditions of employment. It has no other alternative. It can not throw the case out
in the assumption that the certification was erroneous.
xxx

xxx

xxx

. . . The fact, however, is that because of the strike declared by the members of the minority
union which threatens a major industry the President deemed it wise to certify the
controversy to the Court of Industrial Relations for adjudication. This is the power that the
law gives to the President the propriety of its exercise being a matter that only devolves
upon him. The same is not the concern of the industrial court. What matters is that by virtue
of the certification made by the President the case was placed under the jurisdiction of said
court. (Emphasis supplied)
To certify a labor dispute to the CIR is the prerogative of the President under the law, and this Court
will not interfere in, much less curtail, the exercise of that prerogative. The jurisdiction of the CIR in a
certified case is exclusive (Rizal Cement Co., Inc. v. Rizal Cement Workers Union (FFW), et al., G.R.
No. L-12747, July 30, 1960). Once the jurisdiction is acquired pursuant to the presidential
certification, the CIR may exercise its broad powers as provided in Commonwealth Act 103. All
phases of the labor dispute and the employer-employee relationship may be threshed out before the
CIR, and the CIR may issue such order or orders as may be necessary to make effective the
exercise of its jurisdiction. The parties involved in the case may appeal to the Supreme Court from
the order or orders thus issued by the CIR.
And so, in the instant case, when the President took into consideration that the University "has some
18,000 students and employed approximately 500 faculty members", that `the continued disruption
in the operation of the University will necessarily prejudice the thousand of students", and that "the
dispute affects the national interest",7and certified the dispute to the CIR, it is not for the CIR nor this
Court to pass upon the correctness of the reasons of the President in certifying the labor dispute to
the CIR.
The third issue raised by the University refers to the question of the legality of the return-to-work
order (of March 30, 1963 in Case 41-IPA) and the order implementing the same (of April 6, 1963). It
alleges that the orders are illegal upon the grounds: (1) that Republic Act No. 875, supplementing
Commonwealth Act No. 103, has withdrawn from the CIR the power to issue a return-to-work order;
(2) that the only power granted by Section 10 of Republic Act No. 875 to the CIR is to issue an order
forbidding the employees to strike or forbidding the employer to lockout the employees, as the case
may be, before either contingency had become a fait accompli; (3) that the taking in by the
University of replacement professors was valid, and the return-to-work order of March 30, 1963
constituted impairment of the obligation of contracts; and (4) the CIR could not issue said order
without having previously determined the legality or illegality of the strike.
The contention of the University that Republic Act No. 875 has withdrawn the power of the Court of
Industrial Relations to issue a return-to-work order exercised by it under Commonwealth Act No. 103
can not be sustained. When a case is certified by the President to the Court of Industrial Relations,
the case thereby comes under the operation of Commonwealth Act No. 103, and the Court may
exercise the broad powers and jurisdiction granted to it by said Act. Section 10 of Republic Act No.
875 empowers the Court of Industrial Relations to issue an order "fixing the terms of employment."
This clause is broad enough to authorize the Court to order the strikers to return to work and the
employer to readmit them. This Court, in the cases of the Philippine Marine Officers Association vs.
The Court of Industrial Relations, Compania Maritima, et al.; and Compaia Martima, et al. vs.

Philippine Marine Radio Officers Association and CIR, et al., G.R. Nos. L-10095 and L-10115,
October 31, 1957, declared:
We cannot subscribe to the above contention. We agree with counsel for the Philippine
Radio Officers' Association that upon certification by the President under Section 10 of
Republic Act 875, the case comes under the operation of Commonwealth Act 103, which
enforces compulsory arbitration in cases of labor disputes in industries indispensable to the
national interest when the President certifies the case to the Court of Industrial Relations.
The evident intention of the law is to empower the Court of Industrial Relations to act in such
cases, not only in the manner prescribed under Commonwealth Act 103, but with the same
broad powers and jurisdiction granted by that act. If the Court of Industrial Relations is
granted authority to find a solution to an industrial dispute and such solution consists in the
ordering of employees to return back to work, it cannot be contended that the Court of
Industrial Relations does not have the power or jurisdiction to carry that solution into effect.
And of what use is its power of conciliation and arbitration if it does not have the power and
jurisdiction to carry into effect the solution it has adopted? Lastly, if the said court has the
power to fix the terms and conditions of employment, it certainly can order the return of the
workers with or without backpay as a term or condition of employment.
The foregoing ruling was reiterated by this Court in the case of Hind Sugar Co. v. CIR, et al., G.R.
No. L-13364, July 26, 1960.
When a case is certified to the CIR by the President of the Philippines pursuant to Section 10 of
Republic Act No. 875, the CIR is granted authority to find a solution to the industrial dispute; and the
solution which the CIR has found under the authority of the presidential certification and conformable
thereto cannot be questioned (Radio Operators Association of the Philippines vs. Philippine Marine
Radio Officers Association, et al., L-10112, Nov. 29, 1957, 54 O.G. 3218).
Untenable also is the claim of the University that the CIR cannot issue a return-to-work order after
strike has been declared, it being contended that under Section 10 of Republic Act No. 875 the CIR
can only prevent a strike or a lockout when either of this situation had not yet occurred. But in the
case of Bisaya Land Transportation Co., Inc. vs. Court of Industrial Relations, et al., No. L-10114,
Nov. 26, 1957, 50 O.G. 2518, this Court declared:
There is no reason or ground for the contention that Presidential certification of labor dispute
to the CIR is limited to the prevention of strikes and lockouts. Even after a strike has been
declared where the President believes that public interest demands arbitration and
conciliation, the President may certify the ease for that purpose. The practice has been for
the Court of Industrial Relations to order the strikers to work, pending the determination of
the union demands that impelled the strike. There is nothing in the law to indicate that this
practice is abolished." (Emphasis supplied)
Likewise untenable is the contention of the University that the taking in by it of replacements was
valid and the return-to-work order would be an impairment of its contract with the replacements. As
stated by the CIR in its order of March 30, 1963, it was agreed before the hearing of Case 41-IPA on
March 23, 1963 that the strikers would return to work under the status quo arrangement and the

University would readmit them, and the return-to-work order was a confirmation of that agreement.
This is a declaration of fact by the CIR which we cannot disregard. The faculty members, by striking,
have not abandoned their employment but, rather, they have only ceased from their labor (Keith
Theatre v. Vachon et al., 187 A. 692). The striking faculty members have not lost their right to go
back to their positions, because the declaration of a strike is not a renunciation of their employment
and their employee relationship with the University (Rex Taxicab Co. vs. CIR, et al., 40 O.G., No. 13,
138). The employment of replacements was not authorized by the CIR. At most, that was a
temporary expedient resorted to by the University, which was subject to the power of the CIR to
allow to continue or not. The employment of replacements by the University prior to the issuance of
the order of March 30, 1963 did not vest in the replacements a permanent right to the positions they
held. Neither could such temporary employment bind the University to retain permanently the
replacements.
Striking employees maintained their status as employees of the employer (Western
Castridge Co. v. National Labor Relations Board, C.C.A. 139 F. 2d 855, 858) ; that
employees who took the place of strikers do not displace them as `employees." ' (National
Labor Relations Board v. A. Sartorius & Co., C.C.A. 2, 140 F. 2d 203, 206, 207.)
It is clear from what has been said that the return-to-work order cannot be considered as an
impairment of the contract entered into by petitioner with the replacements. Besides, labor contracts
must yield to the common good and such contracts are subject to the special laws on labor unions,
collective bargaining, strikes and similar subjects (Article 1700, Civil Code).
Likewise unsustainable is the contention of the University that the Court of Industrial Relations could
not issue the return-to-work order without having resolved previously the issue of the legality or
illegality of the strike, citing as authority therefor the case of Philippine Can Company v. Court of
Industrial Relations, G.R. No. L-3021, July 13, 1950. The ruling in said case is not applicable to the
case at bar, the facts and circumstances being very different. The Philippine Can Company case,
unlike the instant case, did not involve the national interest and it was not certified by the President.
In that case the company no longer needed the services of the strikers, nor did it need substitutes for
the strikers, because the company was losing, and it was imperative that it lay off such laborers as
were not necessary for its operation in order to save the company from bankruptcy. This was the
reason of this Court in ruling, in that case, that the legality or illegality of the strike should have been
decided first before the issuance of the return-to-work order. The University, in the case before Us,
does not claim that it no longer needs the services of professors and/or instructors; neither does it
claim that it was imperative for it to lay off the striking professors and instructors because of
impending bankruptcy. On the contrary, it was imperative for the University to hire replacements for
the strikers. Therefore, the ruling in the Philippine Can case that the legality of the strike should be
decided first before the issuance of the return-to-work order does not apply to the case at bar.
Besides, as We have adverted to, the return-to-work order of March 30, 1963, now in question, was
a confirmation of an agreement between the University and the Faculty Club during a prehearing
conference on March 23, 1963.
The University also maintains that there was no more basis for the claim of the members of the
Faculty Club to return to their work, as their individual contracts for teaching had expired on March
25 or 31, 1963, as the case may be, and consequently, there was also no basis for the return-to-

work order of the CIR because the contractual relationships having ceased there were no positions
to which the members of the Faculty Club could return to. This contention is not well taken. This
argument loses sight of the fact that when the professors and instructors struck on February 18,
1963, they continued to be employees of the University for the purposes of the labor controversy
notwithstanding the subsequent termination of their teaching contracts, for Section 2(d) of the
Industrial Peace Act includes among employees "any individual whose work has ceased a
consequence of, or in connection with, any current labor dispute or of any unfair labor practice and
who has not obtained any other substantially equivalent and regular employment."
The question raised by the University was resolved in a similar case in the United States. In the case
of Rapid Roller Co. v. NLRB 126 F. 2d 452, we read:
On May 9, 1939 the striking employees, eighty-four in number, offered to the company to
return to their employment. The company believing it had not committed any unfair labor
practice, refused the employees' offer and claimed the right to employ others to take the
place of the strikers, as it might see fit. This constituted discrimination in the hiring and
tenure of the striking employees. When the employees went out on a strike because of the
unfair labor practice of the company, their status as employees for the purpose of any
controversy growing out of that unfair labor practice was fixed. Sec. 2 (3) of the Act. Phelps
Dodge Corp. v. National Labor Relations Board, 313 U.S. 177, 61 S. Ct. 845, 85. L. ed. 1271,
133 A.L.R. 1217.
For the purpose of such controversy they remained employees of the company. The
company contended that they could not be their employees in any event since the "contract
of their employment expired by its own terms on April 23, 1939."
In this we think the company is mistaken for the reason we have just pointed out, that the
status of the employees on strike became fixed under Sec. 2 (3) of the Act because of the
unfair labor practice of the company which caused the strike.
The University, furthermore, claims that the information for indirect contempt filed against the officers
of the University (Case No. V-30) as well as the order of April 29, 1963 for their arrest were improper,
irregular and illegal because (1) the officers of the University had complied in good faith with the
return-to-work order and in those cases that they did not, it was due to circumstance beyond their
control; (2) the return-to-work order and the order implementing the same were illegal; and (3) even
assuming that the order was legal, the same was not Yet final because there was a motion to
reconsider it.
Again We find no merit in this claim of Petitioner. We have already ruled that the CIR had jurisdiction
to issue the order of March 30, 1963 in CIR Case 41-IPA, and the return-to-work provision of that
order is valid and legal. Necessarily the order of April 6, 1963 implementing that order of March 30,
1963 was also valid and legal.
Section 6 of Commonwealth Act No. 103 empowers the Court of Industrial Relations of any Judge
thereof to punish direct and indirect contempts as provided in Rule 64 (now Rule 71) of the Rules of
Court, under the same procedure and penalties provided therein. Section 3 of Rule 71 enumerates

the acts which would constitute indirect contempt, among which is "disobedience or resistance to
lawful writ, process, order, judgment, or command of a court," and the person guilty thereof can be
punished after a written charge has been filed and the accused has been given an opportunity to be
heard. The last paragraph of said section provides:
But nothing in this section shall be so construed as to prevent the court from issuing process
to bring the accused party into court, or from holding him in custody pending such
proceedings.
The provision authorizes the judge to order the arrest of an alleged contemner (Francisco, et al. v.
Enriquez, L-7058, March 20, 1954, 94 Phil., 603) and this, apparently, is the provision upon which
respondent Judge Bautista relied when he issued the questioned order of arrest.
The contention of petitioner that the order of arrest is illegal is unwarranted. The return-to-work order
allegedly violated was within the court's jurisdiction to issue.
Section 14 of Commonwealth Act No. 103 provides that in cases brought before the Court of
Industrial Relations under Section 4 of the Act (referring to strikes and lockouts) the appeal to the
Supreme Court from any award, order or decision shall not stay the execution of said award, order
or decision sought to be reviewed unless for special reason the court shall order that execution be
stayed. Any award, order or decision that is appealed is necessarily not final. Yet under Section 14 of
Commonwealth Act No. 103 that award, order or decision, even if not yet final, is executory, and the
stay of execution is discretionary with the Court of Industrial Relations. In other words, the Court of
Industrial Relations, in cases involving strikes and lockouts, may compel compliance or obedience of
its award, order or decision even if the award, order or decision is not yet final because it is
appealed, and it follows that any disobedience or non-compliance of the award, order or decision
would constitute contempt against the Court of Industrial Relations which the court may punish as
provided in the Rules of Court. This power of the Court of Industrial Relations to punish for contempt
an act of non-compliance or disobedience of an award, order or decision, even if not yet final, is a
special one and is exercised only in cases involving strikes and lockouts. And there is reason for this
special power of the industrial court because in the exercise of its jurisdiction over cases involving
strikes and lockouts the court has to issue orders or make decisions that are necessary to effect a
prompt solution of the labor dispute that caused the strike or the lockout, or to effect the prompt
creation of a situation that would be most beneficial to the management and the employees, and
also to the public even if the solution may be temporary, pending the final determination of the
case. Otherwise, if the effectiveness of any order, award, or decision of the industrial court in cases
involving strikes and lockouts would be suspended pending appeal then it can happen that the
coercive powers of the industrial court in the settlement of the labor disputes in those cases would
be rendered useless and nugatory.
The University points to Section 6 of Commonwealth Act No. 103 which provides that "Any violation
of any order, award, or decision of the Court of Industrial Relations shall after such order, award or
decision has become final, conclusive and executory constitute contempt of court," and contends
that only the disobedience of orders that are final (meaning one that is not appealed) may be the
subject of contempt proceedings. We believe that there is no inconsistency between the abovequoted provision of Section 6 and the provision of Section 14 of Commonwealth Act No. 103. It will

be noted that Section 6 speaks of order, award or decision that is executory. By the provision of
Section 14 an order, award or decision of the Court of Industrial Relations in cases involving strikes
and lockouts are immediately executory, so that a violation of that order would constitute an indirect
contempt of court.
We believe that the action of the CIR in issuing the order of arrest of April 29, 1963 is also authorized
under Section 19 of Commonwealth Act No. 103 which provides as follows:
SEC. 19. Implied condition in every contract of employment.In every contract of
employment whether verbal or written, it is an implied condition that when any dispute
between the employer and the employee or laborer has been submitted to the Court of
Industrial Relations for settlement or arbitration pursuant to the provisions of this Act . . . and
pending award, or decision by the Court of such dispute . . . the employee or laborer shall
not strike or walk out of his employment when so enjoined by the Court after hearing and
when public interest so requires, and if he has already done so, that he shall forthwith return
to it, upon order of the Court, which shall be issued only after hearing when public interest so
requires or when the dispute cannot, in its opinion, be promptly decided or settled; and if the
employees or laborers fail to return to work, the Court may authorize the employer to accept
other employees or laborers. A condition shall further be implied that while such dispute . . .
is pending, the employer shall refrain from accepting other employees or laborers, unless
with the express authority of the Court, and shall permit the continuation in the service of his
employees or laborers under the last terms and conditions existing before the dispute
arose. . . . A violation by the employer or by the employee or laborer of such an order or the
implied contractual condition set forth in this section shall constitute contempt of the Court of
Industrial Relations and shall be punished by the Court itself in the same manner with the
same penalties as in the case of contempt of a Court of First Instance. . . .
We hold that the CIR acted within its jurisdiction when it ordered the arrest of the officers of the
University upon a complaint for indirect contempt filed by the Acting Special Prosecutor of the CIR in
CIR Case V-30, and that order was valid. Besides those ordered arrested were not yet being
punished for contempt; but, having been charged, they were simply ordered arrested to be brought
before the Judge to be dealt with according to law. Whether they are guilty of the charge or not is yet
to be determined in a proper hearing.
Let it be noted that the order of arrest dated April 29, 1963 in CIR Case V-30 is being questioned in
Case G.R. No. L-21278 before this Court in a special civil action for certiorari. The University did not
appeal from that order. In other words, the only question to be resolved in connection with that order
in CIR Case V-30 is whether the CIR had jurisdiction, or had abused its discretion, in issuing that
order. We hold that the CIR had jurisdiction to issue that order, and neither did it abuse its discretion
when it issued that order.
In Case G.R. No. L-21462 the University appealed from the order of Judge Villanueva of the CIR in
Case No. 1183-MC, dated April 6, 1963, granting the motion of the Faculty Club to withdraw its
petition for certification election, and from the resolution of the CIR en banc, dated June 5, 1963,
denying the motion to reconsider said order of April 6, 1963. The ground of the Faculty Club in
asking for the withdrawal of that petition for certification election was because the issues involved in

that petition were absorbed by the issues in Case 41-IPA. The University opposed the petition for
withdrawal, but at the same time it moved for the dismissal of the petition for certification election.
It is contended by the University before this Court, in G.R. L-21462, that the issues of employeremployee relationship between the University and the Faculty Club, the alleged status of the Faculty
Club as a labor union, its majority representation and designation as bargaining representative in an
appropriate unit of the Faculty Club should have been resolved first in Case No. 1183-MC prior to
the determination of the issues in Case No. 41-IPA, and, therefore, the motion to withdraw the
petition for certification election should not have been granted upon the ground that the issues in the
first case were absorbed in the second case.
We believe that these contentions of the University in Case G.R. No. L-21462 have been sufficiently
covered by the discussion in this decision of the main issues raised in the principal case, which is
Case G.R. No. L-21278. After all, the University wanted CIR Case 1183-MC dismissed, and the
withdrawal of the petition for certification election had in a way produced the situation desired by the
University. After considering the arguments adduced by the University in support of its petition
for certiorari by way of appeal in Case G.R. No. L-21278, We hold that the CIR did not commit any
error when it granted the withdrawal of the petition for certification election in Case No. 1183-MC.
The principal case before the CIR is Case No. 41-IPA and all the questions relating to the labor
disputes between the University and the Faculty Club may be threshed out, and decided, in that
case.
In Case G.R. No. L-21500 the University appealed from the order of the CIR of March 30, 1963,
issued by Judge Bautista, and from the resolution of the CIR en banc promulgated on June 28,
1963, denying the motion for the reconsideration of that order of March 30, 1963, in CIR Case No.
41-IPA. We have already ruled that the CIR has jurisdiction to issue that order of March 30, 1963,
and that order is valid, and We, therefore, hold that the CIR did not err in issuing that order of March
30, 1963 and in issuing the resolution promulgated on June 28, 1963 (although dated May 7, 1963)
denying the motion to reconsider that order of March 30, 1963.
IN VIEW OF THE FOREGOING, the petition for certiorari and prohibition with preliminary injunction
in Case G.R. No. L-21278 is dismissed and the writs prayed for therein are denied. The writ of
preliminary injunction issued in Case G.R. No. L-21278 is dissolved. The orders and resolutions
appealed from, in Cases Nos. L-21462 and L-21500, are affirmed, with costs in these three cases
against the petitioner-appellant Feati University. It is so ordered.
Concepcion, C.J., Dizon, Regala, Makalintal, Bengzon, J.P., Sanchez and Castro, JJ., concur.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 87700 June 13, 1990

SAN MIGUEL CORPORATION EMPLOYEES UNION-PTGWO, DANIEL S.L. BORBON II,

HERMINIA REYES, MARCELA PURIFICACION, ET AL., petitioners,
vs.
HON. JESUS G. BERSAMIRA, IN HIS CAPACITY AS PRESIDING JUDGE OF BRANCH 166,
RTC, PASIG, and SAN MIGUEL CORPORATION, respondents.
Romeo C. Lagman for petitioners.
Jardeleza, Sobrevinas, Diaz, Mayudini & Bodegon for respondents.

MELENCIO-HERRERA, J.:
Respondent Judge of the Regional Trial Court of Pasig, Branch 166, is taken to task by petitioners in
this special civil action for certiorari and Prohibition for having issued the challenged Writ of
Preliminary Injunction on 29 March 1989 in Civil Case No. 57055 of his Court entitled "San Miguel
Corporation vs. SMCEU-PTGWO, et als."
Petitioners' plea is that said Writ was issued without or in excess of jurisdiction and with grave abuse
of discretion, a labor dispute being involved. Private respondent San Miguel Corporation (SanMig.
for short), for its part, defends the Writ on the ground of absence of any employer-employee
relationship between it and the contractual workers employed by the companies Lipercon Services,
Inc. (Lipercon) and D'Rite Service Enterprises (D'Rite), besides the fact that the Union is bereft of
personality to represent said workers for purposes of collective bargaining. The Solicitor General
agrees with the position of SanMig.
The antecedents of the controversy reveal that:
Sometime in 1983 and 1984, SanMig entered into contracts for merchandising services with
Lipercon and D'Rite (Annexes K and I, SanMig's Comment, respectively). These companies are
independent contractors duly licensed by the Department of Labor and Employment (DOLE).
SanMig entered into those contracts to maintain its competitive position and in keeping with the
imperatives of efficiency, business expansion and diversity of its operation. In said contracts, it was
expressly understood and agreed that the workers employed by the contractors were to be paid by
the latter and that none of them were to be deemed employees or agents of SanMig. There was to
be no employer-employee relation between the contractors and/or its workers, on the one hand, and
SanMig on the other.
Petitioner San Miguel Corporation Employees Union-PTWGO (the Union, for brevity) is the duly
authorized representative of the monthly paid rank-and-file employees of SanMig with whom the
latter executed a Collective Bargaining Agreement (CBA) effective 1 July 1986 to 30 June 1989
(Annex A, SanMig's Comment). Section 1 of their CBA specifically provides that "temporary,
probationary, or contract employees and workers are excluded from the bargaining unit and,
therefore, outside the scope of this Agreement."

In a letter, dated 20 November 1988 (Annex C, Petition), the Union advised SanMig that some
Lipercon and D'Rite workers had signed up for union membership and sought the regularization of
their employment with SMC. The Union alleged that this group of employees, while appearing to be
contractual workers supposedly independent contractors, have been continuously working for
SanMig for a period ranging from six (6) months to fifteen (15) years and that their work is neither
casual nor seasonal as they are performing work or activities necessary or desirable in the usual
business or trade of SanMig. Thus, it was contended that there exists a "labor-only" contracting
situation. It was then demanded that the employment status of these workers be regularized.
On 12 January 1989 on the ground that it had failed to receive any favorable response from SanMig,
the Union filed a notice of strike for unfair labor practice, CBA violations, and union busting (Annex
D, Petition).
On 30 January 1989, the Union again filed a second notice of strike for unfair labor practice (Annex
F, Petition).
As in the first notice of strike. Conciliatory meetings were held on the second notice. Subsequently,
the two (2) notices of strike were consolidated and several conciliation conferences were held to
settle the dispute before the National Conciliation and Mediation Board (NCMB) of DOLE (Annex G,
Petition).
Beginning 14 February 1989 until 2 March 1989, series of pickets were staged by Lipercon and
D'Rite workers in various SMC plants and offices.
On 6 March 1989, SMC filed a verified Complaint for Injunction and Damages before respondent
Court to enjoin the Union from:
a. representing and/or acting for and in behalf of the employees of LIPERCON and/or
D'RITE for the purposes of collective bargaining;
b. calling for and holding a strike vote, to compel plaintiff to hire the employees or
workers of LIPERCON and D'RITE;
c. inciting, instigating and/or inducing the employees or workers of LIPERCON and
D'RITE to demonstrate and/or picket at the plants and offices of plaintiff within the
bargaining unit referred to in the CBA,...;
d. staging a strike to compel plaintiff to hire the employees or workers of LIPERCON
and D'RITE;
e. using the employees or workers of LIPERCON AND D'RITE to man the strike area
and/or picket lines and/or barricades which the defendants may set up at the plants
and offices of plaintiff within the bargaining unit referred to in the CBA ...;
f. intimidating, threatening with bodily harm and/or molesting the other employees
and/or contract workers of plaintiff, as well as those persons lawfully transacting

business with plaintiff at the work places within the bargaining unit referred to in the
CBA, ..., to compel plaintiff to hire the employees or workers of LIPERCON and
D'RITE;
g. blocking, preventing, prohibiting, obstructing and/or impeding the free ingress to,
and egress from, the work places within the bargaining unit referred to in the CBA ..,
to compel plaintiff to hire the employees or workers of LIPERCON and D'RITE;
h. preventing and/or disrupting the peaceful and normal operation of plaintiff at the
work places within the bargaining unit referred to in the CBA, Annex 'C' hereof, to
compel plaintiff to hire the employees or workers of LIPERCON and D'RITE. (Annex
H, Petition)
Respondent Court found the Complaint sufficient in form and substance and issued a Temporary
Restraining Order for the purpose of maintaining the status quo, and set the application for Injunction
for hearing.
In the meantime, on 13 March 1989, the Union filed a Motion to Dismiss SanMig's Complaint on the
ground of lack of jurisdiction over the case/nature of the action, which motion was opposed by
SanMig. That Motion was denied by respondent Judge in an Order dated 11 April 1989.
After several hearings on SanMig's application for injunctive relief, where the parties presented both
testimonial and documentary evidence on 25 March 1989, respondent Court issued the questioned
Order (Annex A, Petition) granting the application and enjoining the Union from Committing the acts
complained of, supra. Accordingly, on 29 March 1989, respondent Court issued the corresponding
Writ of Preliminary Injunction after SanMig had posted the required bond of P100,000.00 to answer
for whatever damages petitioners may sustain by reason thereof.
In issuing the Injunction, respondent Court rationalized:
The absence of employer-employee relationship negates the existence of labor
dispute. Verily, this court has jurisdiction to take cognizance of plaintiff's grievance.
The evidence so far presented indicates that plaintiff has contracts for services with
Lipercon and D'Rite. The application and contract for employment of the defendants'
witnesses are either with Lipercon or D'Rite. What could be discerned is that there is
no employer-employee relationship between plaintiff and the contractual workers
employed by Lipercon and D'Rite. This, however, does not mean that a final
determination regarding the question of the existence of employer-employee
relationship has already been made. To finally resolve this dispute, the court must
extensively consider and delve into the manner of selection and engagement of the
putative employee; the mode of payment of wages; the presence or absence of a
power of dismissal; and the Presence or absence of a power to control the putative
employee's conduct. This necessitates a full-blown trial. If the acts complained of are
not restrained, plaintiff would, undoubtedly, suffer irreparable damages. Upon the

other hand, a writ of injunction does not necessarily expose defendants to irreparable
damages.
Evidently, plaintiff has established its right to the relief demanded. (p. 21, Rollo)
Anchored on grave abuse of discretion, petitioners are now before us seeking nullification of the
challenged Writ. On 24 April 1989, we issued a Temporary Restraining Order enjoining the
implementation of the Injunction issued by respondent Court. The Union construed this to mean that
"we can now strike," which it superimposed on the Order and widely circulated to entice the Union
membership to go on strike. Upon being apprised thereof, in a Resolution of 24 May 1989, we
required the parties to "RESTORE the status quo ante declaration of strike" (p. 2,62 Rollo).
In the meantime, however, or on 2 May 1989, the Union went on strike. Apparently, some of the
contractual workers of Lipercon and D'Rite had been laid off. The strike adversely affected thirteen
(13) of the latter's plants and offices.
On 3 May 1989, the National Conciliation and Mediation Board (NCMB) called the parties to
conciliation. The Union stated that it would lift the strike if the thirty (30) Lipercon and D'Rite
employees were recalled, and discussion on their other demands, such as wage distortion and
appointment of coordinators, were made. Effected eventually was a Memorandum of Agreement
between SanMig and the Union that "without prejudice to the outcome of G.R. No. 87700 (this case)
and Civil Case No. 57055 (the case below), the laid-off individuals ... shall be recalled effective 8
May 1989 to their former jobs or equivalent positions under the same terms and conditions prior to
"lay-off" (Annex 15, SanMig Comment). In turn, the Union would immediately lift the pickets and
return to work.
After an exchange of pleadings, this Court, on 12 October 1989, gave due course to the Petition and
required the parties to submit their memoranda simultaneously, the last of which was filed on 9
January 1990.
The focal issue for determination is whether or not respondent Court correctly assumed jurisdiction
over the present controversy and properly issued the Writ of Preliminary Injunction to the resolution
of that question, is the matter of whether, or not the case at bar involves, or is in connection with, or
relates to a labor dispute. An affirmative answer would bring the case within the original and
exclusive jurisdiction of labor tribunals to the exclusion of the regular Courts.
Petitioners take the position that 'it is beyond dispute that the controversy in the court a quo involves
or arose out of a labor dispute and is directly connected or interwoven with the cases pending with
the NCMB-DOLE, and is thus beyond the ambit of the public respondent's jurisdiction. That the acts
complained of (i.e., the mass concerted action of picketing and the reliefs prayed for by the private
respondent) are within the competence of labor tribunals, is beyond question" (pp. 6-7, Petitioners'
Memo).
On the other hand, SanMig denies the existence of any employer-employee relationship and
consequently of any labor dispute between itself and the Union. SanMig submits, in particular, that

"respondent Court is vested with jurisdiction and judicial competence to enjoin the specific type of
strike staged by petitioner union and its officers herein complained of," for the reasons that:
A. The exclusive bargaining representative of an employer unit cannot strike to
compel the employer to hire and thereby create an employment relationship with
contractual workers, especially were the contractual workers were recognized by the
union, under the governing collective bargaining agreement, as excluded from, and
therefore strangers to, the bargaining unit.
B. A strike is a coercive economic weapon granted the bargaining representative only
in the event of a deadlock in a labor dispute over 'wages, hours of work and all other
and of the employment' of the employees in the unit. The union leaders cannot
instigate a strike to compel the employer, especially on the eve of certification
elections, to hire strangers or workers outside the unit, in the hope the latter will help
re-elect them.
C. Civil courts have the jurisdiction to enjoin the above because this specie of strike
does not arise out of a labor dispute, is an abuse of right, and violates the employer's
constitutional liberty to hire or not to hire. (SanMig's Memorandum, pp. 475-476,
Rollo).
We find the Petition of a meritorious character.
A "labor dispute" as defined in Article 212 (1) of the Labor Code includes "any controversy or matter
concerning terms and conditions of employment or the association or representation of persons in
negotiating, fixing, maintaining, changing, or arranging the terms and conditions of employment,
regardless of whether the disputants stand in the proximate relation of employer and employee."
While it is SanMig's submission that no employer-employee relationship exists between itself, on the
one hand, and the contractual workers of Lipercon and D'Rite on the other, a labor dispute can
nevertheless exist "regardless of whether the disputants stand in the proximate relationship of
employer and employee" (Article 212 [1], Labor Code, supra) provided the controversy concerns,
among others, the terms and conditions of employment or a "change" or "arrangement" thereof
(ibid). Put differently, and as defined by law, the existence of a labor dispute is not negative by the
fact that the plaintiffs and defendants do not stand in the proximate relation of employer and
employee.
That a labor dispute, as defined by the law, does exist herein is evident. At bottom, what the Union
seeks is to regularize the status of the employees contracted by Lipercon and D'Rite in effect, that
they be absorbed into the working unit of SanMig. This matter definitely dwells on the working
relationship between said employees vis-a-vis SanMig. Terms, tenure and conditions of their
employment and the arrangement of those terms are thus involved bringing the matter within the
purview of a labor dispute. Further, the Union also seeks to represent those workers, who have
signed up for Union membership, for the purpose of collective bargaining. SanMig, for its part,
resists that Union demand on the ground that there is no employer-employee relationship between it
and those workers and because the demand violates the terms of their CBA. Obvious then is that

representation and association, for the purpose of negotiating the conditions of employment are also
involved. In fact, the injunction sought by SanMig was precisely also to prevent such representation.
Again, the matter of representation falls within the scope of a labor dispute. Neither can it be denied
that the controversy below is directly connected with the labor dispute already taken cognizance of
by the NCMB-DOLE (NCMB-NCR- NS-01- 021-89; NCMB NCR NS-01-093-83).
Whether or not the Union demands are valid; whether or not SanMig's contracts with Lipercon and
D'Rite constitute "labor-only" contracting and, therefore, a regular employer-employee relationship
may, in fact, be said to exist; whether or not the Union can lawfully represent the workers of Lipercon
and D'Rite in their demands against SanMig in the light of the existing CBA; whether or not the
notice of strike was valid and the strike itself legal when it was allegedly instigated to compel the
employer to hire strangers outside the working unit; those are issues the resolution of which call
for the application of labor laws, and SanMig's cause's of action in the Court below are inextricably
linked with those issues.
The precedent in Layno vs. de la Cruz (G.R. No. L-29636, 30 April 1965, 13 SCRA 738) relied upon
by SanMig is not controlling as in that case there was no controversy over terms, tenure or
conditions, of employment or the representation of employees that called for the application of labor
laws. In that case, what the petitioning union demanded was not a change in working terms and
conditions, or the representation of the employees, but that its members be hired as stevedores in
the place of the members of a rival union, which petitioners wanted discharged notwithstanding the
existing contract of the arrastre company with the latter union. Hence, the ruling therein, on the basis
of those facts unique to that case, that such a demand could hardly be considered a labor dispute.
As the case is indisputably linked with a labor dispute, jurisdiction belongs to the labor tribunals. As
explicitly provided for in Article 217 of the Labor Code, prior to its amendment by R.A. No. 6715 on
21 March 1989, since the suit below was instituted on 6 March 1989, Labor Arbiters have original
and exclusive jurisdiction to hear and decide the following cases involving all workers including "1.
unfair labor practice cases; 2. those that workers may file involving wages, hours of work and other
terms and conditions of employment; ... and 5. cases arising from any violation of Article 265 of this
Code, including questions involving the legality of striker and lockouts. ..." Article 217 lays down the
plain command of the law.
The claim of SanMig that the action below is for damages under Articles 19, 20 and 21 of the Civil
Code would not suffice to keep the case within the jurisdictional boundaries of regular Courts. That
claim for damages is interwoven with a labor dispute existing between the parties and would have to
be ventilated before the administrative machinery established for the expeditious settlement of those
disputes. To allow the action filed below to prosper would bring about "split jurisdiction" which is
obnoxious to the orderly administration of justice (Philippine Communications, Electronics and
Electricity Workers Federation vs. Hon. Nolasco, L-24984, 29 July 1968, 24 SCRA 321).
We recognize the proprietary right of SanMig to exercise an inherent management prerogative and
its best business judgment to determine whether it should contract out the performance of some of
its work to independent contractors. However, the rights of all workers to self-organization, collective
bargaining and negotiations, and peaceful concerted activities, including the right to strike in

accordance with law (Section 3, Article XIII, 1987 Constitution) equally call for recognition and
protection. Those contending interests must be placed in proper perspective and equilibrium.
WHEREFORE, the Writ of certiorari is GRANTED and the Orders of respondent Judge of 25 March
1989 and 29 March 1989 are SET ASIDE. The Writ of Prohibition is GRANTED and respondent
Judge is enjoined from taking any further action in Civil Case No. 57055 except for the purpose of
dismissing it. The status quo ante declaration of strike ordered by the Court on 24 May 1989 shall be
observed pending the proceedings in the National Conciliation Mediation Board-Department of Labor
and Employment, docketed as NCMB-NCR-NS-01-02189 and NCMB-NCR-NS-01-093-83. No costs.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 172013

October 2, 2009

PATRICIA HALAGUEA, MA. ANGELITA L. PULIDO, MA. TERESITA P. SANTIAGO, MARIANNE

V. KATINDIG, BERNADETTE A. CABALQUINTO, LORNA B. TUGAS, MARY CHRISTINE A.
VILLARETE, CYNTHIA A. STEHMEIER, ROSE ANNA G. VICTA, NOEMI R. CRESENCIO, and
other flight attendants of PHILIPPINE AIRLINES, Petitioners,
vs.
PHILIPPINE AIRLINES INCORPORATED, Respondent.
DECISION
PERALTA, J.:
Before this Court is a petition for review on certiorari under Rule 45 of the Rules of Court seeking to
annul and set aside the Decision1 and the Resolution2 of the Court of Appeals (CA) in CA-G.R. SP.
No. 86813.
Petitioners were employed as female flight attendants of respondent Philippine Airlines (PAL) on
different dates prior to November 22, 1996. They are members of the Flight Attendants and
Stewards Association of the Philippines (FASAP), a labor organization certified as the sole and
exclusive certified as the sole and exclusive bargaining representative of the flight attendants, flight
stewards and pursers of respondent.
On July 11, 2001, respondent and FASAP entered into a Collective Bargaining
Agreement3 incorporating the terms and conditions of their agreement for the years 2000 to 2005,
hereinafter referred to as PAL-FASAP CBA.
Section 144, Part A of the PAL-FASAP CBA, provides that:

A. For the Cabin Attendants hired before 22 November 1996:

xxxx
3. Compulsory Retirement
Subject to the grooming standards provisions of this Agreement, compulsory retirement shall be fiftyfive (55) for females and sixty (60) for males. x x x.
In a letter dated July 22, 2003,4 petitioners and several female cabin crews manifested that the
aforementioned CBA provision on compulsory retirement is discriminatory, and demanded for an
equal treatment with their male counterparts. This demand was reiterated in a letter 5 by petitioners'
counsel addressed to respondent demanding the removal of gender discrimination provisions in the
coming re-negotiations of the PAL-FASAP CBA.
On July 12, 2004, Robert D. Anduiza, President of FASAP submitted their 2004-2005 CBA
proposals6 and manifested their willingness to commence the collective bargaining negotiations
between the management and the association, at the soonest possible time.
On July 29, 2004, petitioners filed a Special Civil Action for Declaratory Relief with Prayer for the
Issuance of Temporary Restraining Order and Writ of Preliminary Injunction7 with the Regional Trial
Court (RTC) of Makati City, Branch 147, docketed as Civil Case No. 04-886, against respondent for
the invalidity of Section 144, Part A of the PAL-FASAP CBA. The RTC set a hearing on petitioners'
application for a TRO and, thereafter, required the parties to submit their respective memoranda.
On August 9, 2004, the RTC issued an Order8 upholding its jurisdiction over the present case. The
RTC reasoned that:
In the instant case, the thrust of the Petition is Sec. 144 of the subject CBA which is allegedly
discriminatory as it discriminates against female flight attendants, in violation of the Constitution, the
Labor Code, and the CEDAW. The allegations in the Petition do not make out a labor dispute arising
from employer-employee relationship as none is shown to exist. This case is not directed specifically
against respondent arising from any act of the latter, nor does it involve a claim against the
respondent. Rather, this case seeks a declaration of the nullity of the questioned provision of the
CBA, which is within the Court's competence, with the allegations in the Petition constituting the
bases for such relief sought.
The RTC issued a TRO on August 10, 2004,9 enjoining the respondent for implementing Section
144, Part A of the PAL-FASAP CBA.
The respondent filed an omnibus motion10 seeking reconsideration of the order overruling its
objection to the jurisdiction of the RTC the lifting of the TRO. It further prayed that the (1) petitioners'
application for the issuance of a writ of preliminary injunction be denied; and (2) the petition be
dismissed or the proceedings in this case be suspended.

On September 27, 2004, the RTC issued an Order11 directing the issuance of a writ of preliminary
injunction enjoining the respondent or any of its agents and representatives from further
implementing Sec. 144, Part A of the PAL-FASAP CBA pending the resolution of the case.
Aggrieved, respondent, on October 8, 2004, filed a Petition for Certiorari and Prohibition with Prayer
for a Temporary Restraining Order and Writ of Preliminary Injunction12 with the Court of Appeals (CA)
praying that the order of the RTC, which denied its objection to its jurisdiction, be annuled and set
aside for having been issued without and/or with grave abuse of discretion amounting to lack of
jurisdiction.
The CA rendered a Decision, dated August 31, 2005, granting the respondent's petition, and ruled
that:
WHEREFORE, the respondent court is by us declared to have NO JURISDICTION OVER THE
CASE BELOW and, consequently, all the proceedings, orders and processes it has so far issued
therein are ANNULED and SET ASIDE. Respondent court is ordered to DISMISS its Civil Case No.
04-886.
SO ORDERED.
Petitioner filed a motion for reconsideration,13 which was denied by the CA in its Resolution dated
March 7, 2006.
Hence, the instant petition assigning the following error:
THE COURT OF APPEALS' CONCLUSION THAT THE SUBJECT MATTER IS A LABOR DISPUTE
OR GRIEVANCE IS CONTRARY TO LAW AND JURISPRUDENCE.
The main issue in this case is whether the RTC has jurisdiction over the petitioners' action
challenging the legality or constitutionality of the provisions on the compulsory retirement age
contained in the CBA between respondent PAL and FASAP.
Petitioners submit that the RTC has jurisdiction in all civil actions in which the subject of the litigation
is incapable of pecuniary estimation and in all cases not within the exclusive jurisdiction of any court,
tribunal, person or body exercising judicial or quasi-judicial functions. The RTC has the power to
adjudicate all controversies except those expressly witheld from the plenary powers of the court.
Accordingly, it has the power to decide issues of constitutionality or legality of the provisions of
Section 144, Part A of the PAL-FASAP CBA. As the issue involved is constitutional in character, the
labor arbiter or the National Labor Relations Commission (NLRC) has no jurisdiction over the case
and, thus, the petitioners pray that judgment be rendered on the merits declaring Section 144, Part A
of the PAL-FASAP CBA null and void.
Respondent, on the other hand, alleges that the labor tribunals have jurisdiction over the present
case, as the controversy partakes of a labor dispute. The dispute concerns the terms and conditions
of petitioners' employment in PAL, specifically their retirement age. The RTC has no jurisdiction over
the subject matter of petitioners' petition for declaratory relief because the Voluntary Arbitrator or

panel of Voluntary Arbitrators have original and exclusive jurisdiction to hear and decide all
unresolved grievances arising from the interpretation or implementation of the CBA. Regular courts
have no power to set and fix the terms and conditions of employment. Finally, respondent alleged
that petitioners' prayer before this Court to resolve their petition for declaratory relief on the merits is
procedurally improper and baseless.
The petition is meritorious.
Jurisdiction of the court is determined on the basis of the material allegations of the complaint and
the character of the relief prayed for irrespective of whether plaintiff is entitled to such relief. 14
In the case at bar, the allegations in the petition for declaratory relief plainly show that petitioners'
cause of action is the annulment of Section 144, Part A of the PAL-FASAP CBA. The pertinent
portion of the petition recites:
CAUSE OF ACTION
24. Petitioners have the constitutional right to fundamental equality with men under Section
14, Article II, 1987 of the Constitution and, within the specific context of this case, with the
male cabin attendants of Philippine Airlines.
26. Petitioners have the statutory right to equal work and employment opportunities with men
under Article 3, Presidential Decree No. 442, The Labor Code and, within the specific context
of this case, with the male cabin attendants of Philippine Airlines.
27. It is unlawful, even criminal, for an employer to discriminate against women employees
with respect to terms and conditions of employment solely on account of their sex under
Article 135 of the Labor Code as amended by Republic Act No. 6725 or the Act
Strengthening Prohibition on Discrimination Against Women.
28. This discrimination against Petitioners is likewise against the Convention on the
Elimination of All Forms of Discrimination Against Women (hereafter, "CEDAW"), a
multilateral convention that the Philippines ratified in 1981. The Government and its agents,
including our courts, not only must condemn all forms of discrimination against women, but
must also implement measures towards its elimination.
29. This case is a matter of public interest not only because of Philippine Airlines' violation of
the Constitution and existing laws, but also because it highlights the fact that twenty-three
years after the Philippine Senate ratified the CEDAW, discrimination against women
continues.
31. Section 114, Part A of the PAL-FASAP 2000-20005 CBA on compulsory retirement from
service is invidiously discriminatory against and manifestly prejudicial to Petitioners because,
they are compelled to retire at a lower age (fifty-five (55) relative to their male counterparts
(sixty (60).

33. There is no reasonable, much less lawful, basis for Philippine Airlines to distinguish,
differentiate or classify cabin attendants on the basis of sex and thereby arbitrarily set a
lower compulsory retirement age of 55 for Petitioners for the sole reason that they are
women.
37. For being patently unconstitutional and unlawful, Section 114, Part A of the PAL-FASAP
2000-2005 CBA must be declared invalid and stricken down to the extent that it discriminates
against petitioner.
38. Accordingly, consistent with the constitutional and statutory guarantee of equality
between men and women, Petitioners should be adjudged and declared entitled, like their
male counterparts, to work until they are sixty (60) years old.
PRAYER
WHEREFORE, it is most respectfully prayed that the Honorable Court:
c. after trial on the merits:
(I) declare Section 114, Part A of the PAL-FASAP 2000-2005 CBA INVALID, NULL and VOID to the
extent that it discriminates against Petitioners; x x x x
From the petitioners' allegations and relief prayed for in its petition, it is clear that the issue raised is
whether Section 144, Part A of the PAL-FASAP CBA is unlawful and unconstitutional. Here, the
petitioners' primary relief in Civil Case No. 04-886 is the annulment of Section 144, Part A of the
PAL-FASAP CBA, which allegedly discriminates against them for being female flight attendants. The
subject of litigation is incapable of pecuniary estimation, exclusively cognizable by the RTC, pursuant
to Section 19 (1) of Batas Pambansa Blg. 129, as amended. 15 Being an ordinary civil action, the
same is beyond the jurisdiction of labor tribunals.
The said issue cannot be resolved solely by applying the Labor Code. Rather, it requires the
application of the Constitution, labor statutes, law on contracts and the Convention on the
Elimination of All Forms of Discrimination Against Women,16 and the power to apply and interpret the
constitution and CEDAW is within the jurisdiction of trial courts, a court of general jurisdiction.
In Georg Grotjahn GMBH & Co. v. Isnani,17 this Court held that not every dispute between an
employer and employee involves matters that only labor arbiters and the NLRC can resolve in the
exercise of their adjudicatory or quasi-judicial powers. The jurisdiction of labor arbiters and the NLRC
under Article 217 of the Labor Code is limited to disputes arising from an employer-employee
relationship which can only be resolved by reference to the Labor Code, other labor statutes, or their
collective bargaining agreement.
Not every controversy or money claim by an employee against the employer or vice-versa is within
the exclusive jurisdiction of the labor arbiter. Actions between employees and employer where the
employer-employee relationship is merely incidental and the cause of action precedes from a
different source of obligation is within the exclusive jurisdiction of the regular court. 18 Here, the

employer-employee relationship between the parties is merely incidental and the cause of action
ultimately arose from different sources of obligation, i.e., the Constitution and CEDAW.
Thus, where the principal relief sought is to be resolved not by reference to the Labor Code or other
labor relations statute or a collective bargaining agreement but by the general civil law, the
jurisdiction over the dispute belongs to the regular courts of justice and not to the labor arbiter and
the NLRC. In such situations, resolution of the dispute requires expertise, not in labor management
relations nor in wage structures and other terms and conditions of employment, but rather in the
application of the general civil law. Clearly, such claims fall outside the area of competence or
expertise ordinarily ascribed to labor arbiters and the NLRC and the rationale for granting jurisdiction
over such claims to these agencies disappears.19
If We divest the regular courts of jurisdiction over the case, then which tribunal or forum shall
determine the constitutionality or legality of the assailed CBA provision?
This Court holds that the grievance machinery and voluntary arbitrators do not have the power to
determine and settle the issues at hand. They have no jurisdiction and competence to decide
constitutional issues relative to the questioned compulsory retirement age. Their exercise of
jurisdiction is futile, as it is like vesting power to someone who cannot wield it.
In Gonzales v. Climax Mining Ltd.,20 this Court affirmed the jurisdiction of courts over questions on
constitutionality of contracts, as the same involves the exercise of judicial power. The Court said:
Whether the case involves void or voidable contracts is still a judicial question. It may, in some
instances, involve questions of fact especially with regard to the determination of the circumstances
of the execution of the contracts. But the resolution of the validity or voidness of the contracts
remains a legal or judicial question as it requires the exercise of judicial function. It requires the
ascertainment of what laws are applicable to the dispute, the interpretation and application of those
laws, and the rendering of a judgment based thereon. Clearly, the dispute is not a mining conflict. It
is essentially judicial. The complaint was not merely for the determination of rights under the mining
contracts since the very validity of those contracts is put in issue.
In Saura v. Saura, Jr.,21 this Court emphasized the primacy of the regular court's judicial power
enshrined in the Constitution that is true that the trend is towards vesting administrative bodies like
the SEC with the power to adjudicate matters coming under their particular specialization, to insure a
more knowledgeable solution of the problems submitted to them. This would also relieve the regular
courts of a substantial number of cases that would otherwise swell their already clogged
dockets. But as expedient as this policy may be, it should not deprive the courts of justice of
their power to decide ordinary cases in accordance with the general laws that do not require
any particular expertise or training to interpret and apply. Otherwise, the creeping take-over
by the administrative agencies of the judicial power vested in the courts would render the
judiciary virtually impotent in the discharge of the duties assigned to it by the Constitution.
To be sure, in Rivera v. Espiritu,22 after Philippine Airlines (PAL) and PAL Employees Association
(PALEA) entered into an agreement, which includes the provision to suspend the PAL-PALEA CBA
for 10 years, several employees questioned its validity via a petition for certiorari directly to the

Supreme Court. They said that the suspension was unconstitutional and contrary to public policy.
Petitioners submit that the suspension was inordinately long, way beyond the maximum statutory life
of 5 years for a CBA provided for in Article 253-A of the Labor Code. By agreeing to a 10-year
suspension, PALEA, in effect, abdicated the workers' constitutional right to bargain for another CBA
at the mandated time.
In that case, this Court denied the petition for certiorari, ruling that there is available to petitioners a
plain, speedy, and adequate remedy in the ordinary course of law. The Court said that while the
petition was denominated as one for certiorari and prohibition, its object was actually the nullification
of the PAL-PALEA agreement. As such, petitioners' proper remedy is an ordinary civil action for
annulment of contract, an action which properly falls under the jurisdiction of the regional trial courts.
The change in the terms and conditions of employment, should Section 144 of the CBA be held
invalid, is but a necessary and unavoidable consequence of the principal relief sought, i.e.,
nullification of the alleged discriminatory provision in the CBA. Thus, it does not necessarily follow
that a resolution of controversy that would bring about a change in the terms and conditions of
employment is a labor dispute, cognizable by labor tribunals. It is unfair to preclude petitioners from
invoking the trial court's jurisdiction merely because it may eventually result into a change of the
terms and conditions of employment. Along that line, the trial court is not asked to set and fix the
terms and conditions of employment, but is called upon to determine whether CBA is consistent with
the laws.
Although the CBA provides for a procedure for the adjustment of grievances, such referral to the
grievance machinery and thereafter to voluntary arbitration would be inappropriate to the petitioners,
because the union and the management have unanimously agreed to the terms of the CBA and their
interest is unified.
In Pantranco North Express, Inc., v. NLRC,23 this Court held that:
x x x Hence, only disputes involving the union and the company shall be referred to the grievance
machinery or voluntary arbitrators.
In the instant case, both the union and the company are united or have come to an agreement
regarding the dismissal of private respondents. No grievance between them exists which could be
brought to a grievance machinery. The problem or dispute in the present case is between the union
and the company on the one hand and some union and non-union members who were dismissed,
on the other hand. The dispute has to be settled before an impartial body. The grievance machinery
with members designated by the union and the company cannot be expected to be impartial against
the dismissed employees. Due process demands that the dismissed workers grievances be
ventilated before an impartial body. x x x .
Applying the same rationale to the case at bar, it cannot be said that the "dispute" is between the
union and petitioner company because both have previously agreed upon the provision on
"compulsory retirement" as embodied in the CBA. Also, it was only private respondent on his own
who questioned the compulsory retirement. x x x.

In the same vein, the dispute in the case at bar is not between FASAP and respondent PAL, who
have both previously agreed upon the provision on the compulsory retirement of female flight
attendants as embodied in the CBA. The dispute is between respondent PAL and several female
flight attendants who questioned the provision on compulsory retirement of female flight attendants.
Thus, applying the principle in the aforementioned case cited, referral to the grievance machinery
and voluntary arbitration would not serve the interest of the petitioners.
Besides, a referral of the case to the grievance machinery and to the voluntary arbitrator under the
CBA would be futile because respondent already implemented Section 114, Part A of PAL-FASAP
CBA when several of its female flight attendants reached the compulsory retirement age of 55.
Further, FASAP, in a letter dated July 12, 2004, addressed to PAL, submitted its association's
bargaining proposal for the remaining period of 2004-2005 of the PAL-FASAP CBA, which includes
the renegotiation of the subject Section 144. However, FASAP's attempt to change the questioned
provision was shallow and superficial, to say the least, because it exerted no further efforts to pursue
its proposal. When petitioners in their individual capacities questioned the legality of the compulsory
retirement in the CBA before the trial court, there was no showing that FASAP, as their
representative, endeavored to adjust, settle or negotiate with PAL for the removal of the difference in
compulsory age retirement between its female and male flight attendants, particularly those
employed before November 22, 1996. Without FASAP's active participation on behalf of its female
flight attendants, the utilization of the grievance machinery or voluntary arbitration would be
pointless.
The trial court in this case is not asked to interpret Section 144, Part A of the PAL-FASAP CBA.
Interpretation, as defined in Black's Law Dictionary, is the art of or process of discovering and
ascertaining the meaning of a statute, will, contract, or other written document. 24 The provision
regarding the compulsory retirement of flight attendants is not ambiguous and does not require
interpretation. Neither is there any question regarding the implementation of the subject CBA
provision, because the manner of implementing the same is clear in itself. The only controversy lies
in its intrinsic validity.
Although it is a rule that a contract freely entered between the parties should be respected, since a
contract is the law between the parties, said rule is not absolute.
In Pakistan International Airlines Corporation v. Ople,25 this Court held that:
The principle of party autonomy in contracts is not, however, an absolute principle. The rule in Article
1306, of our Civil Code is that the contracting parties may establish such stipulations as they may
deem convenient, "provided they are not contrary to law, morals, good customs, public order or
public policy." Thus, counter-balancing the principle of autonomy of contracting parties is the equally
general rule that provisions of applicable law, especially provisions relating to matters affected with
public policy, are deemed written into the contract. Put a little differently, the governing principle is
that parties may not contract away applicable provisions of law especially peremptory provisions
dealing with matters heavily impressed with public interest. The law relating to labor and
employment is clearly such an area and parties are not at liberty to insulate themselves and their
relationships from the impact of labor laws and regulations by simply contracting with each other.

Moreover, the relations between capital and labor are not merely contractual. They are so impressed
with public interest that labor contracts must yield to the common good.x x x 26 The supremacy of the
law over contracts is explained by the fact that labor contracts are not ordinary contracts; these are
imbued with public interest and therefore are subject to the police power of the state. 27 It should not
be taken to mean that retirement provisions agreed upon in the CBA are absolutely beyond the
ambit of judicial review and nullification. A CBA, as a labor contract, is not merely contractual in
nature but impressed with public interest. If the retirement provisions in the CBA run contrary to law,
public morals, or public policy, such provisions may very well be voided.28
Finally, the issue in the petition for certiorari brought before the CA by the respondent was the
alleged exercise of grave abuse of discretion of the RTC in taking cognizance of the case for
declaratory relief. When the CA annuled and set aside the RTC's order, petitioners sought relief
before this Court through the instant petition for review under Rule 45. A perusal of the petition
before Us, petitioners pray for the declaration of the alleged discriminatory provision in the CBA
against its female flight attendants.
This Court is not persuaded. The rule is settled that pure questions of fact may not be the proper
subject of an appeal by certiorari under Rule 45 of the Revised Rules of Court. This mode of appeal
is generally limited only to questions of law which must be distinctly set forth in the petition. The
Supreme Court is not a trier of facts.29
The question as to whether said Section 114, Part A of the PAL-FASAP CBA is discriminatory or not
is a question of fact. This would require the presentation and reception of evidence by the parties in
order for the trial court to ascertain the facts of the case and whether said provision violates the
Constitution, statutes and treaties. A full-blown trial is necessary, which jurisdiction to hear the same
is properly lodged with the the RTC. Therefore, a remand of this case to the RTC for the proper
determination of the merits of the petition for declaratory relief is just and proper.
1avvphi1

WHEREFORE, the petition is PARTLY GRANTED. The Decision and Resolution of the Court of
Appeals, dated August 31, 2005 and March 7, 2006, respectively, in CA-G.R. SP. No. 86813
are REVERSED and SET ASIDE. The Regional Trial Court of Makati City, Branch 147 is DIRECTED
to continue the proceedings in Civil Case No. 04-886 with deliberate dispatch.
SO ORDERED.

SECOND DIVISION
G.R. No. 200114, August 24, 2015
SOCIAL SECURITY SYSTEM, Petitioner, v. DEBBIE UBAA, Respondent.
DECISION

DEL CASTILLO, J.:

This Petition for Review on Certiorari1 assails: 1) the July 29, 2011 Decision2 of the
Court of Appeals (CA) denying the Petition for Certiorari in CA-G.R. SP No. 110006
and affirming the March 6, 2007 Order3 of the Regional Trial Court (RTC) of Daet,
Camarines Norte, Branch 39 in Civil Case No. 7304; and 2) the CA's January 10,
2012 Resolution4 denying petitioner's Motion for Reconsideration of the herein
assailed Decision.
Factual Antecedents
On December 26, 2002, respondent Debbie Ubana filed a civil case for damages
against the DBP Service Corporation, petitioner Social Security System (SSS), and
the SSS Retirees Association5before the RTC of Daet, Camarines Norte. The case was
docketed as Civil Case No. 7304 and assigned to RTC Branch 39.
In her Complaint,6 respondent alleged that in July 1995, she applied for employment
with the petitioner. However, after passing the examinations and accomplishing all
the requirements for employment, she was instead referred to DBP Service
Corporation for "transitory employment." She took the pre-employment examination
given by DBP Service Corporation and passed the same. On May 20, 1996, she was
told to report for training to SSS, Naga City branch, for immediate deployment to
SSS Daet branch. On May 28, 1996, she was made to sign a six-month Service
Contract Agreement7 by DBP Service Corporation, appointing her as clerk for
assignment with SSS Daet branch effective May 27, 1996, with a daily wage of only
P171.00. She was assigned as "Frontliner" of the SSS Members Assistance Section
until December 15, 1999. From December 16, 1999 to May 15, 2001, she was
assigned to the Membership Section as Data Encoder. On December 16, 2001, she
was transferred to the SSS Retirees Association as Processor at the Membership
Section until her resignation on August 26, 2002. As Processor, she was paid only
P229.00 daily or P5,038.00 monthly, while a regular SSS Processor receives a
monthly salary of P18,622.00 or P846.45 daily wage. Her May 28, 1996 Service
Contract Agreement with DBP Service Corporation was never renewed, but she was
required to work for SSS continuously under different assignments with a maximum
daily salary of only P229.00; at the same time, she was constantly assured of being
absorbed into the SSS plantilla. Respondent claimed she was qualified for her
position as Processor, having completed required training and passed the SSS
qualifying examination for Computer Operations Course given by the National
Computer Institute, U.P. Diliman from May 16 to June 10, 2001, yet she was not
given the proper salary. Because of the oppressive and prejudicial treatment by SSS,
she was forced to resign on August 26, 2002 as she could no longer stand being
exploited, the agony of dissatisfaction, anxiety, demoralization, and injustice. She
asserted that she dedicated six years of her precious time faithfully serving SSS,
foregoing more satisfying employment elsewhere, yet she was merely exploited and

given empty and false promises; that defendants conspired to exploit her and
violate civil service laws and regulations and Civil Code provisions on Human
Relations, particularly Articles 19, 20, and 21. 8 As a result, she suffered actual losses
by way of unrealized income, moral and exemplary damages, attorney's fees and
litigation expenses.
Respondent prayed for an award of P572,682.67 actual damages representing the
difference between the legal and proper salary she should have received and the
actual salary she received during her six-year stint with petitioner; P300,000.00
moral damages; exemplary damages at the discretion of the court; P20,000.00
attorney's fees and P1,000.00 appearance fees; and other just and equitable relief.
Petitioner and its co-defendants SSS Retirees Association and DBP Service
Corporation filed their respective motions to dismiss, arguing that the subject
matter of the case and respondent's claims arose out of employer-employee
relations, which are beyond the RTC's jurisdiction and properly cognizable by the
National Labor Relations Commission (NLRC).
Respondent opposed the motions to dismiss, arguing that pursuant to civil service
rules and regulations, service contracts such as her Service Contract Agreement
with DBP Service Corporation should cover only a) lump sum work or services such
as janitorial, security or consultancy services, and b) piece work or intermittent jobs
of short duration not exceeding six months on a daily basis. 9She posited that her
service contract involved the performance of sensitive work, and not merely
janitorial, security, consultancy services, or work of intermittent or short duration. In
fact, she was made to work continuously even after the lapse of her 6-month
service contract. Citing Civil Service Commission Memorandum Circular No. 40,
respondent contended that the performance of functions outside of the nature
provided in the appointment and receiving salary way below that received by
regular SSS employees amount to an abuse of rights; and that her cause of action is
anchored on the provisions of the Civil Code on Human Relations.
Ruling of the Regional Trial Court
On October 1, 2003, the RTC issued an Order 10 dismissing respondent's complaint
for lack of jurisdiction, stating that her claim for damages "has a reasonable causal
connection with her employer-employee relations with the defendants" 11 and "is
grounded on the alleged fraudulent and malevolent manner by which the
defendants conspired with each other in exploiting [her], which is a clear case of
unfair labor practice,"12 falling under the jurisdiction of the Labor Arbiter of the
NLRC. Thus, it decreed:cralawlawlibrary
WHEREFORE, premises considered, the aforementioned Motion to Dismiss the
complaint of the herein plaintiff for lack of jurisdiction is hereby GRANTED. The

above-entitled complaint is hereby DISMISSED.

SO ORDERED.13
Respondent moved for reconsideration. On March 6, 2007, the RTC issued another
Order14 granting respondent's motion for reconsideration. The trial court
held:cralawlawlibrary
Section 2(1), Art. K-B, 1987 Constitution, expressly provides that "the civil service
embraces all branches, subdivisions, instrumentalities, and agencies of the
government, including government-owned or controlled corporation[s] with original
charters." Corporations with original charters are those which have been created by
special law[s] and not through the general corporation law. In contrast, labor law
claims against government-owned and controlled corporations without original
charters fall within the jurisdiction of the Department of Labor and Employment and
not the Civil Service Commission. (Light Rail Transit Authority vs. Perfecto Venus,
March 24, 2006.)
Having been created under an original charter, RA No. 1161 as amended by R.A.
8282, otherwise known as the Social Security Act of 1997, the SSS is governed by
the provision[s] of the Civil Service Commission. However, since the SSS denied the
existence of an employer-employee relationship, and the case is one for Damages,
it is not the Civil Service Commission that has jurisdiction to try the case, but the
regular courts.
A perusal of the Complaint filed by the plaintiff against the defendant SSS clearly
shows that the case is one for Damages.
Paragraph 15 of her complaint states, thus:ChanRoblesvirtualLawlibrary
xxx. Likewise, they are contrary to the Civil Code provisions on human relations
which [state], among others, that Every person, must in the exercise of his rights
and in the performance of his duties, act with justice, give everyone his due and
observe honesty and good faith (Article 19) and that Every person who, contrary to
law, willfully or negligently [causes] damages to another, shall indemnify the latter
for the same. (Art. 20)
"Article 19 provides a rule of conduct that is consistent with an orderly and
harmonious relationship between and among men and women It codifies the
concept of what is justice and fair play so that abuse of right by a person will be
prevented. Art. 20 speaks of general sanction for all other provisions of law which
do not especially provide their own sanction. Thus, anyone, who, whether willfully
or negligently, in the exercise of his legal right or duty, causes damage to another,
shall indemnify his or her victim for injuries suffered thereby." (Persons and Family

Relations, Sta. Maria, Melencio, Jr. (2004) pp. 31-32.)

Wherefore, all premises considered, the Motion for Reconsideration is hereby
GRANTED. The case against defendant Social Security System represented by its
President is hereby reinstated in the docket of active civil cases of this court.
SO ORDERED.15 [Italics in the original]
Petitioner moved for reconsideration, but the RTC stood its ground in its June 24,
2009 Order16cralawrednad
Ruling of the Court of Appeals
In a Petition for Certiorari17 filed with the CA and docketed as CA-G.R. SP No.
110006, petitioner sought a reversal of the RTC's June 24, 2009 and March 6, 2007
Orders and the reinstatement of its original October 1, 2003 Order dismissing Civil
Case No. 7304, insisting that the trial court did not have jurisdiction over
respondent's claims for "unrealized salary income" and other damages, which
constitute a labor dispute cognizable only by the labor tribunals. Moreover, it
claimed that the assailed Orders of the trial court were issued with grave abuse of
discretion. It argued that the trial court gravely erred in dismissing the case only as
against its co-defendants DBP Service Corporation and SSS Retirees Association and
maintaining the charge against it, considering that its grounds for seeking dismissal
are similar to those raised by the two. It maintained that DBP Service Corporation
and SSS Retirees Association are legitimate independent job contractors engaged
by it to provide manpower services since 2001, which thus makes respondent an
employee of these two entities and not of SSS; and that since it is not the
respondent's employer, then there is no cause of action against it.
On July 29, 2011, the CA issued the assailed Decision containing the following
pronouncement:cralawlawlibrary
Hence, petitioner seeks recourse before this Court via this Petition
for Certiorarichallenging the RTC Orders. For the resolution of this Court is the sole
issue of:cralawlawlibrary
WHETHER OR NOT THE RTC HAS JURISDICTION TO HEAR AND DECIDE CIVIL CASE
NO. 7304.
The petition is devoid of merits.
The rule is that, the nature of an action and the subject matter thereof, as well as,
which court or agency of the government has jurisdiction over the same, are
determined by the material allegations of the complaint in relation to the law
involved and the character of the reliefs prayed for, whether or not the

complainant/plaintiff is entitled to any or all of such reliefs. A prayer or demand for

relief is not part of the petition of the cause of action; nor does it enlarge the cause
of action stated or change the legal effect of what is alleged. In determining which
body has jurisdiction over a case, the better policy is to consider not only the status
or relationship of the parties but also the nature of the action that is the subject of
their controversy.
A careful perusal of Ubana's Complaint in Civil Case No. 7304 unveils that Ubana's
claim is rooted on the principle of abuse of right laid in the New Civil Code. She was
claiming damages based on the alleged exploitation [perpetrated] by the
defendants depriving her of her rightful income. In asserting that she is entitled to
the damages claimed, [she] invoked not the provisions of the Labor Code or any
other labor laws but the provisions on human relations under the New Civil Code.
Evidently, the determination of the respective rights of the parties herein, and the
ascertainment whether there were abuses of such rights, do not call for the
application of the labor laws but of the New Civil Code. Apropos thereto, the
resolution of the issues raised in the instant complaint does not require the
expertise acquired by labor officials. It is the courts of general jurisdiction, which is
the RTC in this case, which has the authority to hear and decide Civil Case No. 7304.
Not every dispute between an employer and employee involves matters that only
labor arbiters and the NLRC can resolve in the exercise of their adjudicatory or
quasi-judicial powers. Where the claim to the principal relief sought is to be resolved
not by reference to the Labor Code or other labor relations statute or a collective
bargaining agreement but by the general civil law, the jurisdiction over the dispute
belongs to the regular courts of justice and not to the Labor Arbiter and the NLRC. In
such situations, [resolution] of the dispute requires expertise, not in labor
management relations nor in wage structures and other terms and conditions of
employment, but rather in the application of the general civil law. Clearly, such
claims fall outside the area of competence or expertise ordinarily ascribed to Labor
Arbiters and the NLRC and the rationale for granting jurisdiction over such claims to
these agencies disappears.
It is the character of the principal relief sought that appears essential in this
connection. Where such principal relief is to be granted under labor legislation or a
collective bargaining agreement, the case should fall within the jurisdiction of the
Labor Arbiter and the NLRC, even though a claim for damages might be asserted as
an incident to such claim.
The pivotal question is whether the Labor Code has any relevance to the principal
relief sought in the complaint. As pointed out earlier, Ubana did not seek refuge
from the Labor Code in asking for the award of damages. It was the transgression of
Article[s] 19 and 20 of the New Civil Code that she was insisting in wagering this
case. The primary relief sought herein is for moral and exemplary damages for the

abuse of rights. The claims for actual damages for unrealized income are the natural
consequence for abuse of such rights.
While it is true that labor arbiters and the NLRC have jurisdiction to award not only
reliefs provided by labor laws, but also damages governed by the Civil Code, these
reliefs must still be based on an action that has a reasonable causal connection with
the Labor Code, other labor statutes, or collective bargaining agreements. Claims
for damages under paragraph 4 of Article 217 must have a reasonable causal
connection with any of the claims provided for in the article in order to be
cognizable by the labor arbiter. Only if there is such a connection with the other
claims can the claim for damages be considered as arising from employer-employee
relations. In the present case, Ubana's claim for damages is not related to any other
claim under Article 217, other labor statutes, or collective bargaining agreements.
All told, it is ineluctable that it is the regular courts that has [sic] jurisdiction to hear
and decide Civil Case No. 7304. In Tolosa v. NLRC,18 the Supreme Court held that,
"[i]t is not the NLRC but the regular courts that have jurisdiction over action for
damages, in which the employer-employee relations is merely incidental, and in
which the cause of action proceeds from a different source of obligation such as
tort. Since petitioner's claim for damages is predicated on a quasi-delict or tort that
has no reasonable causal connection with any of the claims provided for in Article
217, other labor statutes or collective bargaining agreements, jurisdiction over the
action lies with the regular courts not with the NLRC or the labor arbiters." The same
rule applies in this case.
WHEREFORE, premises considered, the instant petition is DENIED and the Order
dated March 6, 2007 of the Regional Trial Court, Branch 39 of Daet, Camarines Norte
in Civil Case No. 7304 is hereby AFFIRMED.
SO ORDERED.19
Petitioner filed a Motion for Reconsideration, 20 but the CA denied the same in its
January 10, 2012 Resolution.21 Hence, the present Petition.
Issue
Petitioner simply submits that the assailed CA dispositions are contrary to law and
jurisprudence.
Petitioner's Arguments
Praying that the assailed CA dispositions be set aside and that the RTC's October 1,
2003 Order dismissing Civil Case No. 7304 be reinstated, petitioner essentially
maintains in its Petition and Reply22 that respondent's claims arose from and are in

fact centered on her previous employment. It maintains that there is a direct causal
connection between respondent's claims and her employment, which brings the
subject matter within the jurisdiction of the NLRC. Petitioner contends that
respondent's other claims are intimately intertwined with her claim of actual
damages which are cognizable by the NLRC. Moreover, petitioner alleges that its
existing manpower services agreements with DBP Service Corporation and SSS
Retirees Association are legitimate; and that some of respondent's claims may not
be entertained since these pertain to benefits enjoyed by government employees,
not by employees contracted via legitimate manpower service providers. Finally,
petitioner avers that the nature and character of the reliefs prayed for by the
respondent are directly within the jurisdiction not of the courts, but of the labor
tribunals.
Respondent's Arguments
In her Comment,23 respondent maintains that her case is predicated not on labor
laws but on Articles 19 and 20 of the Civil Code for petitioner's act of exploiting her
and enriching itself at her expense by not paying her the correct salary
commensurate to the position she held within SSS. Also, since there is no employeremployee relationship between her and petitioner, as the latter itself admits, then
her case is not cognizable by the Civil Service Commission (CSC) either; that since
the NLRC and the CSC have no jurisdiction over her case, then it is only the regular
courts which can have jurisdiction over her claims. She argues that the CA is correct
in ruling that her case is rooted in the principle of abuse of rights under the Civil
Code; and that the Petition did not properly raise issues of law.
Our Ruling
The Court denies the Petition.
In Home Development Mutual Fund v. Commission on Audit,24 it was held that while
they performed the work of regular government employees, DBP Service
Corporation personnel are not government personnel, but employees of DBP Service
Corporation acting as an independent contractor. Applying the foregoing
pronouncement to the present case, it can be said that during respondent's stint
with petitioner, she never became an SSS employee, as she remained an employee
of DBP Service Corporation and SSS Retirees Association - the two being
independent contractors with legitimate service contracts with SSS.
Indeed, "[i]n legitimate job contracting, no employer-employee relation exists
between the principal and the job contractor's employees. The principal is
responsible to the job contractor's employees only for the proper payment of
wages."25cralawredcralawrednad

In her Complaint, respondent acknowledges that she is not petitioner's employee,

but that precisely she was promised that she would be absorbed into the SSS
plantilla after all her years of service with SSS; and that as SSS Processor, she was
paid only P229.00 daily or P5,038.00 monthly, while a regular SSS Processor
receives a monthly salary of P18,622.00, or P846.45 daily wage. In its pleadings,
petitioner denied the existence of an employer-employee relationship between it
and respondent; in fact, it insists on the validity of its service agreements with DBP
Service Corporation and SSS Retirees Association - meaning that the latter, and not
SSS, are respondent's true employers. Since both parties admit that there is no
employment relation between them, then there is no dispute cognizable by the
NLRC. Thus, respondent's case is premised on the claim that in paying her only
P229.00 daily - or P5,038.00 monthly - as against a monthly salary of P18,622.00, or
P846.45 daily wage, paid to a regular SSS Processor at the time, petitioner exploited
her, treated her unfairly, and unjustly enriched itself at her expense.
For Article 217 of the Labor Code to apply, and in order for the Labor Arbiter to
acquire jurisdiction over a dispute, there must be an employer-employee relation
between the parties thereto.chanrobleslaw
x x x It is well settled in law and jurisprudence that where no employer-employee
relationship exists between the parties and no issue is involved which may be
resolved by reference to the Labor Code, other labor statutes or any collective
bargaining agreement, it is the Regional Trial Court that has jurisdiction, x x x The
action is within the realm of civil law hence jurisdiction over the case belongs to the
regular courts. While the resolution of the issue involves the application of labor
laws, reference to the labor code was only for the determination of the solidary
liability of the petitioner to the respondent where no employer-employee relation
exists. Article 217 of the Labor Code as amended vests upon the labor arbiters
exclusive original jurisdiction only over the following:ChanRoblesvirtualLawlibrary
1. Unfair labor practices;
2. Termination disputes;
3. If accompanied with a claim for reinstatement, those cases that workers may file
involving wages, rates of pay, hours of work and other terms and conditions of
employment;
4. Claims for actual, moral, exemplary and other forms of damages arising from
employer-employee relations;
5. Cases arising from any violation of Article 264 of this Code, including questions
involving legality of strikes and lockouts; and

6. Except claims for Employees Compensation, Social Security, Medicare and

maternity benefits, all other claims, arising from employer- employee relations,
including those of persons in domestic or household service, involving an amount
exceeding five thousand pesos (P5,000.00) regardless of whether accompanied with
a claim for reinstatement.
In all these cases, an employer-employee relationship is an indispensable
jurisdictional requisite x x x.26
Since there is no employer-employee relationship between the parties herein, then
there is no labor dispute cognizable by the Labor Arbiters or the NLRC.
There being no employer-employee relation or any other definite or direct contract
between respondent and petitioner, the latter being responsible to the former only
for the proper payment of wages, respondent is thus justified in filing a case against
petitioner, based on Articles 19 and 20 of the Civil Code, to recover the proper
salary due her as SSS Processor. At first glance, it is indeed unfair and unjust that
as, Processor who has worked with petitioner for six long years, she was paid only
P5,038.00 monthly, or P229.00 daily, while a regular SSS employee with the same
designation and who performs identical functions is paid a monthly salary of
P18,622.00, or P846.45 daily wage. Petitioner may not hide under its service
contracts to deprive respondent of what is justly due her. As a vital government
entity charged with ensuring social security, it should lead in setting the example by
treating everyone with justice and fairness. If it cannot guarantee the security of
those who work for it, it is doubtful that it can even discharge its directive to
promote the social security of its members in line with the fundamental mandate to
promote social justice and to insure the well-being and economic security of the
Filipino people.
In this jurisdiction, the "long honored legal truism of 'equal pay for equal work'" has
been "impregnably institutionalized;" "[p]ersons who work with substantially equal
qualifications, skill, effort and responsibility, under similar conditions, should be paid
similar salaries."27 "That public policy abhors inequality and discrimination is beyond
contention. Our Constitution and laws reflect the policy against these evils. The
Constitution in the Article on Social Justice and Human Rights exhorts Congress to
'give highest priority to the enactment of measures that protect and enhance the
right of all people to human dignity, reduce social, economic, and political
inequalities.' The very broad Article 19 of the Civil Code requires every person, 'in
the exercise of his rights and in the performance of his duties, [to] act with justice,
give everyone his due, and observe honesty and good faith'." 28cralawrednad
WHEREFORE, the Petition is DENIED. The assailed July 29, 2011 Decision and
January 10, 2012 Resolution of the Court of Appeals in CA-G.R. SP No. 110006

are AFFIRMED. The case is ordered remanded with dispatch to the Regional Trial
Court of Daet, Camarines Norte, Branch 39, for continuation of proceedings.
SO ORDERED.chanrobles virtuallawlibrary
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 85197

March 18, 1991

NESTL PHILIPPINES, INC., petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION, EUGENIA C. NUNEZ, LIZA T. VILLANUEVA,
EMMANUEL S. VILLENA, RUDOLPH C. ARMAS, RODOLFO M. KUA and RODOLFO A.
SOLIDUM, respondents.
Siguion Reyna, Montecillo & Ongsiako for petitioner.
Banzuela, Flores, Miralles, Raneses, Sy, Taquio & Associates for private respondents.
GRIO-AQUINO, J.:
This petition for certiorari seeks a review of the resolutions dated May 28, 1988 and September 1,
1988 of the National Labor Relations Commission (NLRC) in Injunction Case No. 1582 granting the
injunction prayed for by the private respondents, to hold in abeyance the cancellation of their car
loans and payments of the monthly amortizations thereon pending the resolution of their complaints
for illegal dismissal.
The private respondents were employed by the petitioner either as sales representatives or medical
representatives. By reason of the nature of their work they were each allowed to avail of the
company's car loan policy. Under that policy, the company advances the purchase price of a car to
be paid back by the employee through monthly deductions from his salary, the company retaining
the ownership of the motor vehicle until it shall have been fully paid for. All of the private respondents
availed of the petitioner's car loan policy.
On September 14, 1987, private respondents Nuez, Villanueva, Villena and Armas were dismissed
from the service for having participated in an illegal strike. On December 26, 1987, respondents Kua
and Solidum were also dismissed for certain irregularities. All the private respondents filed
complaints for illegal dismissal in the Arbitration Branch of the NLRC. The Labor Arbiter dismissed
their complaints and upheld the legality of their dismissal. They appealed to the NLRC where their
appeals are still pending.

In the Notices of Dismissal which they received from Nestl, the private respondents had been
directed to either settle the remaining balance of the cost of their respective cars, or return them to
the company for proper disposition.
As they failed and refused to avail of either option, the company filed in the Regional Trial Court of
Makati a civil suit to recover possession of the cars. The Court issued an Order dated March 7, 1988
directing the Deputy Sheriff to take the motor vehicles into his custody.
The private respondents sought a temporary restraining order in the NLRC to stop the company from
cancelling their car loans and collecting their monthly amortizations pending the final resolution of
their appeals in the illegal dismissal case.
On May 27, 1988, the NLRC en banc, issued a resolution granting their petition for injunction. Its
order reads:
Acting on the Urgent Petition for the Issuance of a Temporary Restraining Order, the
Commission sitting en banc after deliberation, Resolved to hold in abeyance the cancellation
of the petitioners' car loans and the payment of the monthly amortizations thereof pending
resolution of their illegal dismissal cases. (p. 5, Rollo.)
The company filed a motion for reconsideration, but it was denied for tardiness. Hence, this petition
for certiorarialleging that the NLRC acted with grave abuse of discretion amounting to lack of
jurisdiction when it issued a labor injunction without legal basis and in the absence of any labor
dispute related to the same.
The private respondents, in their comment on the petition, alleged that there is a labor dispute
between the petitioner and the private respondents and that their default in paying the amortizations
for their cars was brought about by their illegal dismissal from work by the petitioner as punishment
for their participation in the illegal strike of the Union of Filipro Employees of which they are
members. If they had not participated in the strike, they would not have been dismissed from work
and they would not have defaulted in the payment of their amortizations. Private respondents
admitted their civil obligation to the petitioner.
The Office of the Solicitor General filed a manifestation on June 13, 1989, stating that "after judicious
scrutiny of the records, . . . and in consonance with the applicable law and jurisprudence on the
matter, the Office of the Solicitor General is convinced that it cannot, without violating the law,
sustain the findings of the National Labor Relations Commission in the case at bar. So as not to
prejudice NLRC's case, the OSG deems it best to refrain from filing its Comment, even as it begs
leave of the Honorable Court to be excused from further appearing in behalf of the NLRC in this
particular case" (p. 173, Rollo).
Filing its own comment, the NLRC argued that as the illegal dismissal case is a labor dispute which
is still pending resolution before it, "it is clothed with authority to issue the contested resolutions
because under the law, PD 442, otherwise known as the Labor Code of the Philippines as amended,
it is vested with the authority to resolve labor disputes" (p. 252, Rollo).

The power of the NLRC to issue writs of injunction is found in Article 218 of the Labor Code, which
provides:
Art. 218 Powers of the Commission. The Commission shall have the power and authority:
xxx

xxx

xxx

(e) To enjoin or restrain any actual or threatened commission of any or all prohibited or
unlawful acts or to require the performance of a particular act in any labor dispute which, if
not restrained or performed forthwith, may cause grave or irreparable damage to any party
or render ineffectual any decision in favor of such party: . . . (Emphasis ours.)
That power, as the statute provides, can only be exercised in a labor dispute. Paragraph (1) of Article
212 of the Labor Code defines a labor dispute as follows:
(1) "Labor dispute" includes any controversy or matters concerning terms or conditions of
employment or the association or representation of persons in negotiating, fixing,
maintaining, changing or arranging the terms and conditions of employment, regardless of
whether the disputants stand in the proximate relation of employer and employee.
Nestl's demand for payment of the private respondents' amortizations on their car loans, or, in the
alternative, the return of the cars to the company, is not a labor, but a civil, dispute. It involves
debtor-creditor relations, rather than employee-employer relations.
Petitioner Nestl Philippines, Inc., correctly pointed out that:
The twin directives contained in petitioner's letters to the private respondents to either (1)
settle the remaining balance on the value of their assigned cars under the company car plan
or return the cars to the company for proper disposition; or (2) to pay all outstanding
accountabilities to the company are matters related to the enforcement of a civil obligation
founded on contract. It is not dependent on or related to any labor aspect under which a
labor injunction can be issued. Whether or not the private respondents remain as employees
of the petitioner, there is no escape from their obligation to pay their outstanding
accountabilities to the petitioner; and if they cannot afford it, to return the cars assigned to
them.
As noted, the options given to the private respondents are civil in nature arising from
contractual obligations. There is no labor aspect involved in the enforcement of those
obligations. (p. 7, Rollo.)
The NLRC gravely abused its discretion and exceeded its jurisdiction by issuing the writ of injunction
to stop the company from enforcing the civil obligation of the private respondents under the car loan
agreements and from protecting its interest in the cars which, by the terms of those agreements,
belong to it (the company) until their purchase price shall have been fully paid by the employee. The
terms of the car loan agreements are not in issue in the labor case. The rights and obligations of the

parties under those contracts may be enforced by a separate civil action in the regular courts, not in
the NLRC.
WHEREFORE, the petition for certiorari is granted. The questioned resolution dated May 27, 1988 of
the NLRC in Injunction Case No. 1582 (Annex A) is hereby annulled and set aside. Costs against the
private respondents.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Baguio City
THIRD DIVISION
G.R. No. 162420

April 22, 2008

JAGUAR SECURITY and INVESTIGATION AGENCY, petitioner,

vs.
RODOLFO A. SALES, JAIME L. MORON, MELVIN R. TAMAYO, JESUS B. SILVA, JR., DIONISIO
C. CARANYAGAN, DANETH FETALVERO and DELTA MILLING INDUSTRIES, INC., respondents.
DECISION
AUSTRIA-MARTINEZ, J.:
Assailed in the present Petition for Review on Certiorari is the Court of Appeals (CA) Decision1 dated
October 21, 2002 and Resolution2 dated February 13, 2004, dismissing the petition filed by Jaguar
Security and Investigation Agency (petitioner) and affirming the National Labor Relations
Commission (NLRC) Resolutions dated September 19, 2000 and November 9, 2001.
The facts of the case, as narrated by the CA, are undisputed:
Petitioner Jaguar Security and Investigation Agency ("Jaguar") is a private corporation
engaged in the business of providing security services to its clients, one of whom is Delta
Milling Industries, Inc. ("Delta").
Private respondents Rodolfo Sales, Melvin Tamayo, Dionisio Caranyagan, Jesus Silva, Jr.,
Jaime Moron and Daneth Fetalvero were hired as security guards by Jaguar. They were
assigned at the premises of Delta in Libis, Quezon City. Caranyagan and Tamayo were
terminated by Jaguar on May 26, 1998 and August 21, 1998, respectively. Allegedly their
dismissals were arbitrary and illegal. Sales, Moron, Fetalvero and Silva remained with
Jaguar. All the guard-employees, claim for monetary benefits such as underpayment,
overtime pay, rest day and holiday premium pay, underpaid 13 th month pay, night shift
differential, five days service and incentive leave pay. In addition to these money claims,
Caranyagan and Tamayo argue that they were entitled to separation pay and back wages,

for the time they were illegally dismissed until finality of the decision. Furthermore, all
respondents claim for moral and exemplary damages.
On September 18, 1998, respondent security guards instituted the instant labor case before
the labor arbiter.
xxxx
On May 25, 1999, the labor arbiter rendered a decision in favor of private respondents Sales,
et al., the dispositive portion of which provides:
"WHEREFORE, judgment is hereby rendered dismissing the charges of illegal
dismissal on the part of the complainants MELVIN R. TAMAYO and DIONISIO C.
CARANYAGAN for lack of merit but ordering respondents JAGUAR SECURITY AND
INVESTIGATION AGENCY and DELTA MILLING INDUSTRIES, INC., to jointly and
severally pay all the six complainants, namely: RODOLFO A. SALES, MELVIN R.
TAMAYO, JAIME MORON and DANETH FETALVERO the following money claims
for their services rendered from April 24, 1995 to April 24, 1998:
a) wage differentials
b) overtime pay differentials (4 hours a day)
c) rest day pay
d) holiday pay
e) holiday premium pay
f) 13th month pay differentials
g) five days service incentive leave pay per year subject to the exception earlier
cited.
The Research and Information Unit of this Commission is hereby directed to compute
and quantify the above awards and submit a report thereon within 15 days from
receipt of this decision.
For purposes of any appeal, the appeal bond is tentatively set at P100,000.00.
All other claims are DISMISSED for lack of merit.
SO ORDERED."

On July 1, 1999, petitioner Jaguar filed a partial appeal questioning the failure of public
respondent NLRC to resolve its cross-claim against Delta as the party ultimately liable for
payment of the monetary award to the security guards.
In its Resolution dated September 19, 2000, the NLRC dismissed the appeal, holding that it
was not the proper forum to raise the issue. It went on to say that Jaguar, being the direct
employer of the security guards, is the one principally liable to the employees. Thus, it
directed petitioner to file a separate civil action for recovery of the amount before the regular
court having jurisdiction over the subject matter, for the purpose of proving the liability of
Delta.
Jaguar sought reconsideration of the dismissal, but the Commission denied the same in its
Resolution dated November 9, 2001.3
Petitioner filed a petition for certiorari with the CA, which, in the herein assailed Decision dated
October 21, 20024and Resolution dated February 13, 2004,5 dismissed the petition for lack of merit.
In the present petition, the following error is set forth as a ground for the modification of the assailed
Decision and Resolution:
WITH ALL DUE RESPECT, THE COURT OF APPEALS ERRED IN NOT RESOLVING
PETITIONER'S CROSS-CLAIM AGAINST PRIVATE RESPONDENT DELTA MILLING
INDUSTRIES, INC.6
Petitioner insists that its cross-claim should have been ruled upon in the labor case as the filing of a
cross-claim is allowed under Section 3 of the NLRC Rules of Procedure which provides for the
suppletory application of the Rules of Court. Petitioner argues that the claim arose out of the
transaction or occurrence that is the subject matter of the original action. Petitioner further argues
that as principal, Delta Milling Industries, Inc. (Delta Milling) is liable for the awarded wage increases,
pursuant to Wage Order Nos. NCR-04, NCR-05 and NCR-06; and in line with the ruling in Eagle
Security Agency, Inc. v. National Labor Relations Commission,7 petitioner should be reimbursed of
any payments to be made.
There is no question as regards the respective liabilities of petitioner and Delta Milling. Under
Articles 106, 107 and 109 of the Labor Code, the joint and several liability of the contractor and the
principal is mandated to assure compliance of the provisions therein including the statutory minimum
wage. The contractor, petitioner in this case, is made liable by virtue of his status as direct employer.
On the other hand, Delta Milling, as principal, is made the indirect employer of the contractor's
employees for purposes of paying the employees their wages should the contractor be unable to pay
them. This joint and several liability facilitates, if not guarantees, payment of the workers'
performance of any work, task, job or project, thus giving the workers ample protection as mandated
by the 1987 Constitution.8
However, in the event that petitioner pays his obligation to the guard employees pursuant to the
Decision of the Labor Arbiter, as affirmed by the NLRC and CA, petitioner has the right of
reimbursement from Delta Milling under Article 1217 of the Civil Code, which provides:

Art. 1217. Payment made by one of the solidary debtors extinguishes the obligation. If two or
more solidary debtors offer to pay, the creditor may choose which offer to accept.
He who made the payment may claim from his co-debtors only the share which corresponds
to each, with the interest for the payment already made. If the payment is made before the
debt is due, no interest for the intervening period may be demanded.
xxxx
The question that now arises is whether petitioner may claim reimbursement from Delta Milling
through a cross-claim filed with the labor court.
This question has already been decisively resolved in Lapanday Agricultural Development
Corporation v. Court of Appeals,9 to wit:
We resolve first the issue of jurisdiction. We agree with the respondent that the RTC has
jurisdiction over the subject matter of the present case. It is well-settled in law and
jurisprudence that where no employer-employee relationship exists between the parties and
no issue is involved which may be resolved by reference to the Labor Code, other labor
statutes or any collective bargaining agreement, it is the Regional Trial Court that has
jurisdiction. In its complaint, private respondent is not seeking any relief under the Labor
Code but seeks payment of a sum of money and damages on account of petitioner's alleged
breach of its obligation under their Guard Service Contract. The action is within the realm
of civil law hence jurisdiction over the case belongs to the regular courts. While the
resolution of the issue involves the application of labor laws, reference to the labor
code was only for the determination of the solidary liability of the petitioner to the
respondent where no employer-employee relation exists. Article 217 of the Labor Code
as amended vests upon the labor arbiters exclusive original jurisdiction only over the
following:
1. Unfair labor practices;
2. Termination disputes;
3. If accompanied with a claim for reinstatement, those cases that workers may file
involving wages, rates of pay, hours of work and other terms and conditions of
employment;
4. Claims for actual, moral exemplary and other forms of damages arising from
employer-employee relations;
5. Cases arising from any violation of Article 264 of this Code, including questions
involving legality of strikes and lockouts; and
6. Except claims for Employees Compensation, Social Security, Medicare and
maternity benefits, all other claims, arising from employer-employee relations,

including those of persons in domestic or household service, involving an amount

exceeding five thousand pesos (P5,000.00) regardless of whether accompanied with
a claim for reinstatement.
In all these cases, an employer-employee relationship is an indispensable jurisdictional
requisite; and there is none in this case.10 (Emphasis supplied)
The jurisdiction of labor courts extends only to cases where an employer-employee relationship
exists.
In the present case, there exists no employer-employee relationship between petitioner and Delta
Milling. In its cross-claim, petitioner is not seeking any relief under the Labor Code but merely
reimbursement of the monetary benefits claims awarded and to be paid to the guard employees.
There is no labor dispute involved in the cross-claim against Delta Milling. Rather, the cross-claim
involves a civil dispute between petitioner and Delta Milling. Petitioner's cross-claim is within the
realm of civil law, and jurisdiction over it belongs to the regular courts.
Moreover, the liability of Delta Milling to reimburse petitioner will only arise if and when petitioner
actually pays its employees the adjudged liabilities.11 Payment, which means not only the delivery of
money but also the performance, in any other manner, of the obligation, is the operative fact which
will entitle either of the solidary debtors to seek reimbursement for the share which corresponds to
each of the debtors.12 In this case, it appears that petitioner has yet to pay the guard employees. As
stated in Lapanday:
However, it is not disputed that the private respondent has not actually paid the security
guards the wage increases granted under the Wage Orders in question. Neither is it alleged
that there is an extant claim for such wage adjustments from the security guards concerned,
whose services have already been terminated by the contractor. Accordingly, private
respondent has no cause of action against petitioner to recover the wage increases.
Needless to stress, the increases in wages are intended for the benefit of the laborers and
the contractor may not assert a claim against the principal for salary wage adjustments that it
has not actually paid. Otherwise, as correctly put by the respondent, the contractor would be
unduly enriching itself by recovering wage increases, for its own benefit. 13
Consequently, the CA did not commit any error in dismissing the petition and in affirming the NLRC
Resolutions dated September 19, 2000 and November 9, 2001.
WHEREFORE, the petition is DENIED.
Double costs against petitioner.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION
G.R. No. 195668

June 25, 2014

PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee,

vs.
MA. HARLETA VELASCO y BRIONES, MARICAR B. INOVERO, MARISSA DIALA, and BERNA
M. PAULINO,Accused,
MARICAR B. INOVERO, Accused-Appellant.
DECISION
BERSAMIN, J.:
The several accused in illegal recruitment committed in large scale against whom the State
establishes a conspiracy are each equally criminally and civilly liable. It follows, therefore, that as far
as civil liability is concerned each is solidarily liable to the victims of the illegal recruitment for the
reimbursement of the sums collected from them, regardless of the extent of the participation of the
accused in the illegal recruitment.
The Case
Accused-appellant Maricar B. Inovero seeks the review and reversal of the decision promulgated on
August 26, 2010, whereby the Court of Appeals (CA) affirmed her conviction for illegal recruitment
committed in large scale amounting to economic sabotage under the judgment rendered on January
14, 2008 by the Regional Trial Court (RTC), Branch 133, in Makati City.
1

Antecedents
On March 17, 2004, the Office of the City Prosecutor of Makati City filed in the RTC two
informations charging Inovero, Ma. Harleta Velasco y Briones, Marissa Diala and Berna Paulino with
illegal recruitment as defined and penalized under Section 6 of Republic Act No. 8042 (Migrant
Workers Act of 1995), and 11 informations charging the same accused with estafa as defined and
penalized under Article315, paragraph 2(a) of the Revised Penal Code. Only Inovero was arrested
and prosecuted, the other accused having remained at large.
3

Six cases charging estafa (Criminal Case No. 04-1565, Criminal Case No. 1568, Criminal Case No.
1570, Criminal Case No. 1571 and Criminal Case No. 1572 and Criminal Case No. 1573) and one of
the two charging illegal recruitment (Criminal Case No. 04-1563) were provisionally dismissed
because of the failure of the complainants to prosecute. The seven cases were later permanently
dismissed after the complainants did not revive them within two years, as provided in Section
8, Rule 117 of the Rules of Court.
5

Trial on the merits ensued as to the remaining cases (Criminal Case No. 04-1562, for illegal
recruitment; and Criminal Case No. 04-1564; Criminal Case No. 04-1566; Criminal Case No. 041567; Criminal Case No. 1569 and Criminal Case No. 04-1574, for estafa).
7

The CA recounted the transactions between the complainants and the accused, including Inovero, in
the following manner:

Regarding Criminal Case No. 04-1562, the prosecution presented the five (5) private complainants
as witnesses to prove the crime of Illegal Recruitment, namely: Novesa Baful ("Baful"), Danilo
Brizuela ("Brizuela"), Rosanna Aguirre ("Aguirre"), Annaliza Amoyo ("Amoyo"), and Teresa Marbella
("Marbella"), and Mildred Versoza ("Versoza") from the Philippine Overseas Employment
Administration ("POEA").
Baful testified that on May 20, 2003 she, together with her sister-in-law, went to Harvel International
Talent Management and Promotion ("HARVEL") at Unit 509 Cityland Condominium, Makati City
upon learning that recruitment for caregivers to Japan was on-going there. On said date, she
allegedly met Inovero; Velasco, and Diala, and saw Inovero conducting a briefing on the applicants.
She also testified that Diala, the alleged talent manager, directed her to submit certain documents,
and to pay Two Thousand Five Hundred Pesos (P2,500.00) as training fee, as well as Thirty
Thousand Pesos (P30,000.00) as placement and processing fees. Diala also advised her to undergo
physical examination.
On June 6, 2003, after complying with the aforesaid requirements and after paying Diala the
amounts of Eighteen Thousand Pesos (P18,000.00) and Ten Thousand pesos (P10,000.00), Baful
was promised deployment within two (2) to three (3) months. She likewise testified that Inovero
briefed her and her co-applicants on what to wear on the day of their departure. However, she was
never deployed. Finally, she testified that she found out that HARVEL was not licensed to deploy
workers for overseas employment.
Brizuela, another complainant, testified that he went to HARVELs office in Makati on February 7,
2003 to inquire on the requirements and hiring procedure for a caregiver in Japan. There, Diala told
him the amount required as processing fee and the documents to be submitted. And when he
submitted on March 7, 2003 the required documents and payments, it was, this time, Paulino who
received them. He claimed that he underwent training and medical examination; he likewise
attended an orientation conducted by Inovero at which time, he and his batchmates were advised
what clothes to wear on the day of their departure; he was assured of deployment on the first week
of June 2003, however, on the eve of his supposed "pre-departure orientation seminar," Paulino
texted him that the seminar was cancelled because Inovero, who had the applicants money, did not
show up. He testified that he was not deployed. Neither was his money returned, as promised.
On cross-examination, Brizuela testified that Inovero was the one who conducted the orientation,
and represented to all the applicants that most of the time, she was in the Japanese Embassy
expediting the applicants visa.
Aguirre, the third complainant to testify, alleged that she went to HARVEL on May 22, 2003, to apply
as caregiver in Japan; there, Diala informed her that Inovero was oneof the owners of HARVEL and
Velasco was its President; she paid Thirty Five Thousand Pesos (P35,000.00), and submitted her
documents, receipt of which was acknowledged by Diala; despite her undergoing medical
examination and several training seminars, she was however not deployed to Japan. Worse, she
found out that HARVEL was not licensed to recruit workers.
Amoyo, the fourth complainant, testified that she went to HARVELs office on May 28, 2003 to apply
as caregiver in Japan, and Diala required her to submit certain documents, to undergo training and
medical examination, and to pay Thirty Five Thousand Pesos (P35,000.00) as placement and
processing fees. However, after complying with said requirements, she was never deployed as
promised.
Marbella was the last complainant to testify. She alleged that she applied for the position of janitress
at HARVEL sometime in December 2002; just like the rest of the complainants, she was required to

submit certain documents and to pay a total amount of Twenty Thousand pesos (P20,000.00) as
processing fee; after paying said fee, Diala and Inovero promised her and the other applicants that
they will be deployed in three (3) months or in June 2003; however, the promised deployment never
materialized; she later found out that HARVEL was not even licensed to recruit workers.
[Mildred] Versoza, on the other hand, is a Labor and Employment Officer at the POEA Licensing
Branch. She testified that she prepared a Certification certifying that neither HARVEL nor Inovero
was authorized to recruit workers for overseas employment as per records at their office.
In her defense, Inovero denied the allegations hurled against her. As summarized in the assailed
Decision, she claimed that she is the niece of accused Velasco, the owner of HARVEL, but denied
working there. Explaining her presence in HARVEL, she alleged that she worked for her uncle,
Velascos husband, as an office assistant, hence, for at least two or three times a week, she had to
go to HARVEL on alleged errands for her uncle. She also testified that her alleged errands mainly
consisted of serving food and refreshments during orientations at HARVEL. Inovero likewise denied
receiving any money from the complainants, nor issuing receipts therefor.
8

Judgment of the RTC

On January 14, 2008, the RTC rendered judgment acquitting Inovero of five counts of estafabut
convicting her in Criminal Case No. 04-1562 of illegal recruitment committed in large scale as
defined and penalized by Section 6 and Section 7 of Republic Act No. 8042 (Migrant Workers and
Overseas Filipinos Act of 1995), disposing thusly:
WHEREFORE, judgment is hereby rendered in the aforestated cases as follows:
In Criminal Case No. 04-1562, accused Maricar Inovero is found guilty beyond reasonable doubt of
the crime of Illegal Recruitment in large scale defined and penalized under Sections 6 and 7, II, of
Republic Act No. 8042 otherwise known as the Migrant Workers and Overseas Filipinos Act of
1995, and is hereby sentenced to suffer the penalty of life imprisonment. She is likewise ordered to
pay a fine of Five Hundred Thousand Pesos (P500,000.00).
Criminal Case No. 04-1563 also for illegal recruitment in large scale is hereby ordered dismissed to
its finality for failure of complainants Alvin De Leon, Roderick Acuna, Agosto Vale and Marina
Viernes to revive said case despite the lapse of two years from its provisional dismissal.
Criminal Cases No. 04-1564, 1566, 1567, 1569, 1571 and 1574 are hereby ordered DISMISSED for
failure of the prosecution to adduce sufficient evidence to prove all the elements of the said offense.
Criminal Cases Nos. 1565, 1568, 1570, 1572 and 1573 also for estafa [are] hereby ordered
dismissed to its finality for failure of complainants Agosto Vale, Alvin De Leon, Roselyn Saruyda,
Roderick Acuna and Marina Viernes to revive said cases despite the lapse of two (2) years from its
provisional dismissal.
Considering that the accused is a detention prisoner, she shall be credited in the service of her
sentence with the full time during which she has undergone preventive imprisonment if she agrees
voluntarily to abide by the same disciplinary rules imposed upon convicted prisoners, otherwise, with
four-fifths thereof.

Meanwhile, considering that the accused Ma. Harleta B. Velasco, Marissa Diala and Berna Paulino
are still at large, let alias warrants of arrest be issued against them. In the meantime, let the cases
filed against them be archived, which shall be revived upon their apprehension.
SO ORDERED.

Decision of the CA
Inovero appealed, contending that:
THE TRIAL COURT GRAVELY ERRED IN FINDING ACCUSEDAPPELLANT GUILTY OF THE
CRIME CHARGED DESPITE THE PROSECUTIONS FAILURE TO ESTABLISH [HER] GUILT
BEYOND REASONABLE DOUBT.
10

On August 26, 2010, the CA affirmed the conviction, viz:

WHEREFORE, the instant appeal is DISMISSED. The January 14, 2008 Decision of the RTC is
AFFIRMED.
SO ORDERED.

11

Issue
In this appeal, Inovero insists that the CA erred in affirming her conviction by the RTC because she
had not been an employee of Harvel at any time; that she could be faulted only for her association
with the supposed illegal recruiters; that in all stages of the complainants recruitment for overseas
employment by Harvel, they had transacted only and directly with Diala; and that the certification
from the POEA to the effect she was not a licensed recruiter was not a positive proof that she
engaged in illegal recruitment.
Ruling of the Court
The appeal lacks merit.
In its assailed decision, the CA affirmed the entire findings of fact of the RTC, stating:
The essential elements of illegal recruitment committed in large scale are: (1) that the accused
engaged in acts of recruitment and placement of workers as defined under Article 13(b) of the Labor
Code, or in any prohibited activities under Article 34 of the same Code; (2) that the accused had not
complied with the guidelines issued by the Secretary of Labor and Employment with respect to the
requirement to secure a license or authority to recruit and deploy workers; and (3) that the accused
committed the unlawful acts against 3 or more persons. In simplest terms, illegal recruitment is
committed by persons who, without authority from the government, give the impression that they
have the power to send workers abroad for employment purposes. In Our view, despite Inoveros
protestations that she did not commit illegal recruitment, the following circumstances contrarily
convince Us that she was into illegal recruitment.
First, private complainants Baful and Brizuela commonly testified that Inovero was the one who
conducted orientations/briefings on them; informed them, among others, on how much their salary
would be as caregivers in Japan; and what to wear when they finally will be deployed. Second, when
Diala introduced her (Inovero) to private complainant Amoyo as one of the owners of HARVEL,

Inovero did not bother to correct said representation. Inoveros silence is clearly an implied
acquiescence to said representation.
Third, Inovero, while conducting orientation on private complainant Brizuela, represented herself as
the one expediting the release of applicants working visa for Japan.
Fourth, in a Certification issued and attested to by POEAs Versoza Inovero had no license nor
authority to recruit for overseas employment.
Based on the foregoing, there is therefore no doubt that the RTC correctly found that Inovero
committed illegal recruitment in large scale by giving private complainants the impression that she
can send them abroad for employment purposes, despite the fact that she had no license or
authority to do so.
12

It is basic that the Court, not being a trier of facts, must of necessity rely on the findings of fact by the
trial court which are conclusive and binding once affirmed by the CA on intermediate review. The
bindingness of the trial courts factual findings is by virtue of its direct access to the evidence. The
direct access affords the trial court the unique advantage to observe the witnesses demeanor while
testifying, and the personal opportunity to test the accuracy and reliability of their recollections of
past events, both of which are very decisive in a litigation like this criminal prosecution for the
serious crime of illegal recruitment committed in large scale where the parties have disagreed on the
material facts. The Court leaves its confined precinct of dealing only with legal issues in order to deal
with factual ones only when the appellant persuasively demonstrates a clear error in the appreciation
of the evidence by both the trial and the appellate courts. This demonstration was not done herein by
the appellant. Hence, the Court upholds the CAs affirmance of the factual findings by the trial court.
All that Inoveros appeal has offered was her denial of complicity in the illegal recruitment of the
complainants. But the complainants credibly described and affirmed her specific acts during the
commission of the crime of illegal recruitment. Their positive assertions were far trustworthier than
her mere denial.
Denial, essentially a negation of a fact, does not prevail over an affirmative assertion of the
fact. Thus, courts both trial and appellate have generally viewed the defense of denial in
criminal cases with considerable caution, if not with outright rejection. Such judicial attitude comes
from the recognition that denial is inherently weak and unreliable by virtue of its being an excuse too
easy and too convenient for the guilty to make. To be worthy of consideration at all, denial should be
substantiated by clear and convincing evidence. The accused cannot solely rely on her negative and
self-serving negations, for denial carries no weight in law and has no greater evidentiary value than
the testimony of credible witnesses who testify on affirmative matters. It is no different here.
1wphi1

13

We concur with the RTC and the CA that Inovero was criminally liable for the illegal recruitment
charged against her. Strong and positive evidence demonstrated beyond reasonable doubt her
having conspired with her co-accused in the recruitment of the complainants. The decision of the CA
amply recounted her overt part in the conspiracy. Under the law, there is a conspiracy when two or
more persons come to an agreement concerning the commission of a felony, and decide to commit
it.
14

The complainants paid varying sums for placement, training and processing fees, respectively as
follows: (a) Baful P28,500.00; (b) Brizuela P38,600.00; (c) Aguirre P38,600.00; (d) Amoyo
P39,000.00; and (e) Marbella P20,250.00. However, the RTC and the CA did not adjudicate
Inoveros personal liability for them in their judgments. Their omission needs to be corrected,
notwithstanding that the complainants did not appeal, for not doing so would be patently unjust and

contrary to law. The Court, being the ultimate reviewing tribunal, has not only the authority but also
the duty to correct at any time a matter of law and justice. It is, indeed, a basic tenet of our criminal
law that every person criminally liable is also civilly liable. Civil liability includes restitution,
reparation of the damage caused, and indemnification for consequential damages. To enforce the
civil liability, the Rules of Court has deemed to be instituted with the criminal action the civil action for
the recovery of civil liability arising from the offense charged unless the offended party waives the
civil action, or reserves the right to institute the civil action separately, or institutes the civil action
prior to the criminal action. Considering that the crime of illegal recruitment, when it involves the
transfer of funds from the victims to the accused, is inherently in fraud of the former, civil liability
should include the return of the amounts paid as placement, training and processing fees. Hence,
Inovero and her co-accused were liable to indemnify the complainants for all the sums paid.
15

16

17

18

That the civil liability should be made part of the judgment by the RTC and the CA was not
disputable. The Court pointed out in Bacolod v. People that it was "imperative that the courts
prescribe the proper penalties when convicting the accused, and determine the civil liability to be
imposed on the accused, unless there has been a reservation of the action to recover civil liability or
a waiver of its recovery," because:
19

It is not amiss to stress that both the RTC and the CA disregarded their express mandate under
Section 2, Rule 120 of the Rules of Court to have the judgment, if it was of conviction, state: "(1) the
legal qualification of the offense constituted by the acts committed by the accused and the
aggravating or mitigating circumstances which attended its commission; (2) the participation of the
accused in the offense, whether as principal, accomplice, or accessory after the fact; (3) the penalty
imposed upon the accused; and (4) the civil liability or damages caused by his wrongful act or
omission to be recovered from the accused by the offended party, if there is any, unless the
enforcement of the civil liability by a separate civil action has been reserved or waived." Their
disregard compels us to act as we now do lest the Court be unreasonably seen as tolerant of their
omission. That the Spouses Cogtas did not themselves seek the correction of the omission by an
appeal is no hindrance to this action because the Court, as the final reviewing tribunal, has not only
the authority but also the duty to correct at any time a matter of law and justice.
We also pointedly remind all trial and appellate courts to avoid omitting reliefs that the parties are
properly entitled to by law or in equity under the established facts. Their judgments will not be worthy
of the name unless they thereby fully determine the rights and obligations of the litigants. It cannot
be otherwise, for only by a full determination of such rights and obligations would they be true to the
judicial office of administering justice and equity for all. Courts should then be alert and cautious in
their rendition of judgments of conviction in criminal cases. They should prescribe the legal
penalties, which is what the Constitution and the law require and expect them to do. Their
prescription of the wrong penalties will be invalid and ineffectual for being done without jurisdiction or
in manifest grave abuse of discretion amounting to lack of jurisdiction. They should also determine
and set the civil liability ex delicto of the accused, in order to do justice to the complaining victims
who are always entitled to them. The Rules of Court mandates them to do so unless the
enforcement of the civil liability by separate actions has been reserved or waived.
20

What was the extent of Inoveros civil liability?

The nature of the obligation of the co-conspirators in the commission of the crime requires solidarity,
and each debtor may be compelled to pay the entire obligation. As a co-conspirator, then, Inoveros
civil liability was similar to that of a joint tortfeasor under the rules of the civil law. Joint tortfeasors
are those who command, instigate, promote, encourage, advise, countenance, cooperate in, aid or
abet the commission of a tort, or who approve of it after it is done, if done for their benefit. They are
also referred to as those who act together in committing wrong or whose acts, if independent of each
21

22

other, unite in causing a single injury. Under Article 2194 of the Civil Code, joint tortfeasors are
solidarily liable for the resulting damage. In other words, joint tortfeasors are each liable as
principals, to the same extent and in the same manner as if they had performed the wrongful act
themselves. As regards the extent of their respective liabilities, the Court expressed in Far Eastern
Shipping Company v. Court of Appeals:
23

24

x x x. Where several causes producing an injury are concurrent and each is an efficient cause
without which the injury would not have happened, the injury may be attributed to all or any of the
causes and recovery may be had against any or all of the responsible persons although under the
circumstances of the case, it may appear that one of them was more culpable, and that the duty
owed by them to the injured person was not same. No actors negligence ceases to be a proximate
cause merely because it does not exceed the negligence of other acts. Each wrongdoer is
responsible for the entire result and is liable as though his acts were the sole cause of the injury.
There is no contribution between joint tort-feasors whose liability is solidary since both of them are
liable for the total damage. Where the concurrent or successive negligent acts or omissions of two or
more persons, although acting independently, are in combination the direct and proximate cause of a
single injury to a third person, it is impossible to determine in what proportion each contributed to the
injury and either of them is responsible for the whole injury. x x x
It would not be an excuse for any of the joint tortfeasors to assert that her individual participation in
the wrong was insignificant as compared to those of the others. Joint tortfeasors are not liable pro
rata. The damages cannot be apportioned among them, except by themselves. They cannot insist
upon an apportionment, for the purpose of each paying an aliquot part. They are jointly and severally
liable for the whole amount. Hence, Inoveros liability towards the victims of their illegal recruitment
was solidary, regardless of whether she actually received the amounts paid or not, and
notwithstanding that her co-accused, having escaped arrest until now, have remained untried.
25

26

Under Article 2211 of the Civil Code, interest as part of the damages may be adjudicated in criminal
proceedings in the discretion of the court. The Court believes and holds that such liability for interest
attached to Inovero as a measure of fairness to the complainants. Thus, Inovero should pay interest
of 6% per annum on the sums paid by the complainants to be reckoned from the finality of this
judgment until full payment.
27

WHEREFORE, the Court AFFIRMS the decision promulgated on August 26, 2010, subject to the
MODIFICATION that appellant Maricar B. Inovero is ordered to pay by way of actual damages to
each of the complainants the amounts paid by them for placement, training and processing fees,
respectively as follows:
(a) Noveza Baful - P28,500.00;
(b) Danilo Brizuela - P38,600.00;
(c) Rosanna Aguirre - P38,600.00;
(d) Annaliza Amoyo - P39,000.00; and
(e) Teresa Marbella - P20,250.00.
plus interest on such amounts at the rate of six percent (6%) per annum from the finality of this
judgment until fully paid.

Inovero shall further pay the costs of suit.

SO ORDERED.
Republic of the Philippines
SUPREME COURT
Baguio City
SECOND DIVISION
G.R. No. 198012

April 22, 2015

PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee,

vs.
ANGEL MATEO y JACINTO AND VICENTA LAPIZ y MEDINA, Accused-Appellants.
DECISION
DEL CASTILLO, J.:
This is an appeal from the February 17, 2011 Decision of the Court of Appeals (CA) in CA-G.R. CR
HC No. 02366, which denied the appeal brought therewith and affirmed the May 31, 2006
Decision of the Regional Trial Court (RTC) of Manila Branch 40 in Criminal Cases Nos. 99176598
and 99-176599 to 603. The RTC convicted Angel Mateo y Jacinto (Mateo) and Vicenta Lapiz y
Medina (Lapiz) a.k.a. ''Vicky Mateo" (appellants) of the crime of illegal recruitment in large scale
under Republic Act No. 8042 (RA 8042), otherwise known as the Migrant Workers and Overseas
Filipinos Act of 1995, and of five counts of estafa.
1

Factual Antecedents
Sometime during the period from January to March 1998, the five private complainants, namely, Abel
E. Balane (Abel), Emilio A. Cariaga (Emilio), Victorio D. Flordeliza (Victorio), Manuel Oledan
(Manuel) and Virgilio N. Concepcion (Virgilio), met appellants on separate occasions at Plaza
Ferguzon, Malate, Manila to apply for overseas employment. Appellant Mateo, representing himself
to have a tie-up with some Japanese firms, promised them employment in Japan as conversion
mechanics, welders, or fitters for a fee. Appellants also promised that they could facilitate private
complainants employment as direct hires and assured their departure within three weeks. However,
after the private complainants paid the required fees ranging from P18,555.00 to P25,000.00,
appellants failed to secure any overseas employment for them. Appellants likewise failed to return
private complainants money. This prompted Manuel to go to the Philippine Overseas Employment
Administration (POEA) where he was issued a Certification stating that appellants are not licensed
to recruit applicants for overseas employment. Thereupon, the private complainants filed their
Complaint and executed their respective affidavits with the National Bureau of Investigation (NBI).
The NBI referred the charges to the Department of Justice which subsequently found probable
cause against appellants for large scale illegal recruitment and estafa and accordingly filed the
corresponding Informations for the same before the RTC of Manila.
3

For their defense, appellants proffered denials. Mateo claimed that he is a legitimate car importer
and not a recruiter. Lapiz, on the other hand, denied knowing any of the private complainants whom
she claimed to have met for the first time at the Prosecutors Office.
Ruling of the Regional Trial Court
The RTC disposed of the cases in its Decision rendered on May 31, 2006 as follows:
WHEREFORE, in Criminal Case No. 99-176598 for Illegal Recruitment, this Court finds both
accused ANGEL MATEO y JACINTO and VICENTA LAPIZ y MADINA a.k.a. "VICKY MATEO"
GUILTY beyond reasonable doubt of illegal recruitment in large scale and hereby sentences each of
them to life imprisonment and to pay P500,000.00 fine each as well as to indemnify private
complainants (1) Manuel Oledan the sum of P25,000.00, and (2) Emilio A. Cariaga, (3) Abel E.
Balane, (4) Virgilio N. Concepcion and (5) Victorio D. Flordeliza the sum of P18,555.00 each.
6

This Court finds both accused also GUILTY beyond reasonable doubt in Criminal Cases Nos. 99176599,99-176600, 99-176601,99-176602 and 99-176603 for five (5) counts of Estafa and each
accused is hereby sentenced in each case to an indeterminate penalty of from four (4) years and
two (2) months of prision correccional, as minimum, to six (6) years, eight (8) months and twenty one
(21) days of prision mayor, as maximum.
The [Philippine] Overseas and Employment Administration (POEA) shall be furnished with certified
copy of this Decision.
SO ORDERED.

Ruling of the Court of Appeals

In their appeal before the CA, appellants essentially claimed that the prosecution failed to prove the
elements of the crimes for which they were charged. They contended that Abel has not shown any
receipt to prove that they received money from him; that there is likewise no proof that Virgilio
borrowed money from a friend of his aunt which money he, in turn, gave to them; that the testimony
of Emilio that appellants were holding office inside the van of Abel cannot be easily accepted; and
that their transactions with Manuel and Victorio were limited to the processing of their travel
documents.
The CA, however, denied appellants appeal in its Decision dated February 17, 2011, viz:
WHEREFORE, premises considered, the instant appeal is hereby DENIED for lack of merit.
Accordingly, the assailed Decision of the Regional Trial Court of Manila, Branch 40, dated May 31,
2006 is AFFIRMED.
8

SO ORDERED.

Hence, the present appeal.

Per Resolution dated September 19, 2011, the Court required both parties to file their respective
supplemental briefs. Appellants filed their Supplemental Brief, while appellee People of the
10

11

Philippines, through the Office of the Solicitor General, opted not to file any and just adopted the
appellees brief it filed before the CA.
12

The Courts Ruling

The appeal utterly lacks merit.
The offense of illegal recruitment in large scale has the following elements: (1) the person charged
undertook any recruitment activity as defined under Section 6 of RA 8042; (2) accused did not have
the license or the authority to lawfully engage in the recruitment of workers; and, (3) accused
committed the same against three or more persons individually or as a group. These elements are
obtaining in this case. First, the RTC found appellants to have undertaken a recruitment activity
when they promised private complainants employment in Japan for a fee. This factual finding was
affirmed by the CA. "The time-tested doctrine is that the matter of assigning values to declarations
on the witness stand is best and most competently performed by the trial judge." And when his
findings have been affirmed by the Court of Appeals, these are generally binding and conclusive
upon the Supreme Court. Second, the Certification issued by the POEA unmistakably reveals that
appellants neither have a license nor authority to recruit workers for overseas employment. Notably,
appellants never assailed this Certification. Third, it was established that there were five
complainants. Clearly, the existence of the offense of illegal recruitment in large scale was duly
proved by the prosecution.
13

14

15

Appellants argument that there was no proof that they received money from the private
complainants deserves no credence. Suffice it to say that money is not material to a prosecution for
illegal recruitment considering that the definition of "illegal recruitment" under the law includes the
phrase "whether for profit or not." Besides, even if there is no receipt for the money given by the
private complainants to appellants, the formers respective testimonies and affidavits clearly narrate
the latters involvement in the prohibited recruitment.
1wphi1

16

Anent the charge for estafa, "[w]ell-settled is the rule that a person convicted for illegal recruitment
under the [law] may, for the same acts, be separately convicted for estafa under Article 315, par. 2(a)
of the [Revised Penal Code]. The elements of estafa are: (1) the accused defrauded another by
abuse of confidence or by means of deceit; and (2) the offended party or a third party suffered
damage or prejudice capable of pecuniary estimation." All these elements are likewise present in
this case. As aptly held by the CA:
17

Here, the appellants Mateo and Lapiz committed deceit against the private complainants by making
it appear as though they had the authority and resources to send them to Japan for employment;
that there were available jobs for them in Japan for which they would be hired although, in truth,
there were none; and, that by reason or on the strength of such assurance, the private complainants
parted with their money in payment of the placement fee, documentation and hotel accommodations.
All these representations were actually false and fraudulent and thus, the apellants must be made
liable under par2(a), Art. 315 of the Revised Penal Code.
18

With this ratiocination, Lapiz's defense of not knowing any of the complainants must necessarily fail.
As noted by the RTC and the CA, she was present in all of the transactions, serving as runner of

Mateo and was even the one keeping the money entrusted by the private complainants to
appellants. She would also often pacify the private complainants' uneasiness about the absence of
receipts for each of the amounts given and repeatedly assure them they would be deployed to
Japan. In short, she was an indispensable participant and effective collaborator of Mateo in the
illegal recruitment of the private complaintants.
In view of the foregoing, the Court sustains the lower courts' conviction of appellants for the crimes
charged.
It must be noted, however, that both the RTC and the CA failed to award interest on the money
judgment in Criminal Case No. 99-176598 for Illegal Recruitment in. Large Scale. Following
prevailing jurisprudence, the Court, therefore, imposes interest at the rate of 6% per annum on each
of the amounts awarded from the date of finality of this Decision until fully paid. WHEREFORE, the
appeal is DISMISSED. The Decision dated February 17, 2011 of the Court of Appeals in CA-G.R.
CR-H.C. No. 02366 is AFFIRMED with the MODIFICATION that the amounts ordered restituted in
Criminal Case No. 99-176598 shall each earn an interest of 6% per annum from the finality of this
Decision until fully paid.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 187730

June 29, 2010

PEOPLE OF THE PHILIPPINES, Petitioner,

vs.
RODOLFO GALLO y GADOT, Accused-Appellant,
FIDES PACARDO y JUNGCO and PILAR MANTA y DUNGO, Accused.
DECISION
VELASCO, JR., J.:
The Case
This is an appeal from the Decision1 dated December 24, 2008 of the Court of Appeals (CA) in CAG.R. CR-H.C. No. 02764 entitled People of the Philippines v. Rodolfo Gallo y Gadot (accusedappellant), Fides Pacardo y Jungco and Pilar Manta y Dungo (accused), which affirmed the
Decision2 dated March 15, 2007 of the Regional Trial Court (RTC), Branch 30 in Manila which
convicted the accused-appellant Rodolfo Gallo y Gadot ("accused-appellant") of syndicated illegal
recruitment in Criminal Case No. 02-206293 and estafa in Criminal Case No. 02-206297.

The Facts
Originally, accused-appellant Gallo and accused Fides Pacardo ("Pacardo") and Pilar Manta
("Manta"), together with Mardeolyn Martir ("Mardeolyn") and nine (9) others, were charged with
syndicated illegal recruitment and eighteen (18) counts of estafa committed against eighteen
complainants, including Edgardo V. Dela Caza ("Dela Caza"), Sandy Guantero ("Guantero") and
Danilo Sare ("Sare"). The cases were respectively docketed as Criminal Case Nos. 02-2062936 to
02-206311. However, records reveal that only Criminal Case No. 02-206293, which was filed against
accused-appellant Gallo, Pacardo and Manta for syndicated illegal recruitment, and Criminal Case
Nos. 02-206297, 02-206300 and 02-206308, which were filed against accused-appellant Gallo,
Pacardo and Manta for estafa, proceeded to trial due to the fact that the rest of the accused
remained at large. Further, the other cases, Criminal Case Nos. 02-206294 to 02-206296, 02206298 to 02-206299, 02-206301 to 02-206307 and 02-206309 to 02-206311 were likewise
provisionally dismissed upon motion of Pacardo, Manta and accused-appellant for failure of the
respective complainants in said cases to appear and testify during trial.
It should also be noted that after trial, Pacardo and Manta were acquitted in Criminal Case Nos. 02206293, 02-206297, 02-206300 and 02-206308 for insufficiency of evidence. Likewise, accusedappellant Gallo was similarly acquitted in Criminal Case Nos. 02-206300, the case filed by Guantero,
and 02-206308, the case filed by Sare. However, accused-appellant was found guilty beyond
reasonable doubt in Criminal Case Nos. 02-206293 and 02-206297, both filed by Dela Caza, for
syndicated illegal recruitment and estafa, respectively.
Thus, the present appeal concerns solely accused-appellants conviction for syndicated illegal
recruitment in Criminal Case No. 02-206293 and for estafa in Criminal Case No. 02-206297.
In Criminal Case No. 02-206293, the information charges the accused-appellant, together with the
others, as follows:
The undersigned accuses MARDEOLYN MARTIR, ISMAEL GALANZA, NELMAR MARTIR,
MARCELINO MARTIR, NORMAN MARTIR, NELSON MARTIR, MA. CECILIA M. RAMOS, LULU
MENDANES, FIDES PACARDO y JUNGCO, RODOLFO GALLO y GADOT, PILAR MANTA y
DUNGO, ELEONOR PANUNCIO and YEO SIN UNG of a violation of Section 6(a), (l) and (m) of
Republic Act 8042, otherwise known as the Migrant Workers and Overseas Filipino Workers Act of
1995, committed by a syndicate and in large scale, as follows:
That in or about and during the period comprised between November 2000 and December, 2001,
inclusive, in the City of Manila, Philippines, the said accused conspiring and confederating together
and helping with one another, representing themselves to have the capacity to contract, enlist and
transport Filipino workers for employment abroad, did then and there willfully and unlawfully, for a
fee, recruit and promise employment/job placement abroad to FERDINAND ASISTIN, ENTICE
BRENDO, REYMOND G. CENA, EDGARDO V. DELA CAZA, RAYMUND EDAYA, SANDY O.
GUANTENO, RENATO V. HUFALAR, ELENA JUBICO, LUPO A. MANALO, ALMA V. MENOR,
ROGELIO S. MORON, FEDILA G. NAIPA, OSCAR RAMIREZ, MARISOL L. SABALDAN, DANILO
SARE, MARY BETH SARDON, JOHNNY SOLATORIO and JOEL TINIO in Korea as factory workers
and charge or accept directly or indirectly from said FERDINAND ASISTIN the amount of

P45,000.00; ENTICE BRENDO P35,000.00; REYMOND G. CENA P30,000.00; EDGARDO V.

DELA CAZA P45,000.00; RAYMUND EDAYA P100,000.00; SANDY O. GUANTENO
P35,000.00; RENATO V. HUFALAR P70,000.00; ELENA JUBICO P30,000.00; LUPO A.
MANALO P75,000.00; ALMA V. MENOR P45,000.00; ROGELIO S. MORON P70,000.00;
FEDILA G. NAIPA P45,000.00; OSCAR RAMIREZ P45,000.00; MARISOL L. SABALDAN
P75,000.00; DANILO SARE P100,000.00; MARY BETH SARDON P25,000.00; JOHNNY
SOLATORIO P35,000.00; and JOEL TINIO P120,000.00 as placement fees in connection with
their overseas employment, which amounts are in excess of or greater than those specified in the
schedule of allowable fees prescribed by the POEA Board Resolution No. 02, Series 1998, and
without valid reasons and without the fault of the said complainants failed to actually deploy them
and failed to reimburse the expenses incurred by the said complainants in connection with their
documentation and processing for purposes of their deployment. 3 (Emphasis supplied)
In Criminal Case No. 02-206297, the information reads:
That on or about May 28, 2001, in the City of Manila, Philippines, the said accused conspiring and
confederating together and helping with [sic] one another, did then and there willfully, unlawfully and
feloniously defraud EDGARDO V. DELA CAZA, in the following manner, to wit: the said accused by
means of false manifestations and fraudulent representations which they made to the latter, prior to
and even simultaneous with the commission of the fraud, to the effect that they had the power and
capacity to recruit and employ said EDGARDO V. DELA CAZA in Korea as factory worker and could
facilitate the processing of the pertinent papers if given the necessary amount to meet the
requirements thereof; induced and succeeded in inducing said EDGARDO V. DELA CAZA to give
and deliver, as in fact, he gave and delivered to said accused the amount of P45,000.00 on the
strength of said manifestations and representations, said accused well knowing that the same were
false and untrue and were made [solely] for the purpose of obtaining, as in fact they did obtain the
said amount of P45,000.00 which amount once in their possession, with intent to defraud said
[EDGARDO] V. DELA CAZA, they willfully, unlawfully and feloniously misappropriated, misapplied
and converted the said amount of P45,000.00 to their own personal use and benefit, to the damage
and prejudice of the said EDGARDO V. DELA CAZA in the aforesaid amount of P45,000.00,
Philippine currency.
CONTRARY TO LAW.4
When arraigned on January 19, 2004, accused-appellant Gallo entered a plea of not guilty to all
charges.
On March 3, 2004, the pre-trial was terminated and trial ensued, thereafter.
During the trial, the prosecution presented as their witnesses, Armando Albines Roa, the Philippine
Overseas Employment Administration (POEA) representative and private complainants Dela Caza,
Guanteno and Sare. On the other hand, the defense presented as its witnesses, accused-appellant
Gallo, Pacardo and Manta.
Version of the Prosecution

On May 22, 2001, Dela Caza was introduced by Eleanor Panuncio to accused-appellant Gallo,
Pacardo, Manta, Mardeolyn, Lulu Mendanes, Yeo Sin Ung and another Korean national at the office
of MPM International Recruitment and Promotion Agency ("MPM Agency") located in Malate, Manila.
Dela Caza was told that Mardeolyn was the President of MPM Agency, while Nelmar Martir was one
of the incorporators. Also, that Marcelino Martir, Norman Martir, Nelson Martir and Ma. Cecilia
Ramos were its board members. Lulu Mendanes acted as the cashier and accountant, while
Pacardo acted as the agencys employee who was in charge of the records of the applicants. Manta,
on the other hand, was also an employee who was tasked to deliver documents to the Korean
embassy.
Accused-appellant Gallo then introduced himself as a relative of Mardeolyn and informed Dela Caza
that the agency was able to send many workers abroad. Together with Pacardo and Manta, he also
told Dela Caza about the placement fee of One Hundred Fifty Thousand Pesos (PhP 150,000) with a
down payment of Forty-Five Thousand Pesos (PhP 45,000) and the balance to be paid through
salary deduction.
Dela Caza, together with the other applicants, were briefed by Mardeolyn about the processing of
their application papers for job placement in Korea as a factory worker and their possible salary.
Accused Yeo Sin Ung also gave a briefing about the business and what to expect from the company
and the salary.
With accused-appellants assurance that many workers have been sent abroad, as well as the
presence of the two (2) Korean nationals and upon being shown the visas procured for the deployed
workers, Dela Caza was convinced to part with his money. Thus, on May 29, 2001, he paid FortyFive Thousand Pesos (PhP 45,000) to MPM Agency through accused-appellant Gallo who, while in
the presence of Pacardo, Manta and Mardeolyn, issued and signed Official Receipt No. 401.
Two (2) weeks after paying MPM Agency, Dela Caza went back to the agencys office in Malate,
Manila only to discover that the office had moved to a new location at Batangas Street, Brgy. San
Isidro, Makati. He proceeded to the new address and found out that the agency was renamed to
New Filipino Manpower Development & Services, Inc. ("New Filipino"). At the new office, he talked to
Pacardo, Manta, Mardeolyn, Lulu Mendanes and accused-appellant Gallo. He was informed that the
transfer was done for easy accessibility to clients and for the purpose of changing the name of the
agency.
Dela Caza decided to withdraw his application and recover the amount he paid but Mardeolyn,
Pacardo, Manta and Lulu Mendanes talked him out from pursuing his decision. On the other hand,
accused-appellant Gallo even denied any knowledge about the money.
After two (2) more months of waiting in vain to be deployed, Dela Caza and the other applicants
decided to take action. The first attempt was unsuccessful because the agency again moved to
another place. However, with the help of the Office of Ambassador Seeres and the Western Police
District, they were able to locate the new address at 500 Prudential Building, Carriedo, Manila. The
agency explained that it had to move in order to separate those who are applying as entertainers

from those applying as factory workers. Accused-appellant Gallo, together with Pacardo and Manta,
were then arrested.
The testimony of prosecution witness Armando Albines Roa, a POEA employee, was dispensed with
after the prosecution and defense stipulated and admitted to the existence of the following
documents:
1. Certification issued by Felicitas Q. Bay, Director II, Licensing Branch of the POEA to the
effect that "New Filipino Manpower Development & Services, Inc., with office address at
1256 Batangas St., Brgy. San Isidro, Makati City, was a licensed landbased agency whose
license expired on December 10, 2001 and was delisted from the roster of licensed agencies
on December 14, 2001." It further certified that "Fides J. Pacardo was the agencys
Recruitment Officer";
2. Certification issued by Felicitas Q. Bay of the POEA to the effect that MPM International
Recruitment and Promotion is not licensed by the POEA to recruit workers for overseas
employment;
3. Certified copy of POEA Memorandum Circular No. 14, Series of 1999 regarding placement
fee ceiling for landbased workers.
4. Certified copy of POEA Memorandum Circular No. 09, Series of 1998 on the placement
fee ceiling for Taiwan and Korean markets, and
5. Certified copy of POEA Governing Board Resolution No. 02, series of 1998.
Version of the Defense
For his defense, accused-appellant denied having any part in the recruitment of Dela Caza. In fact,
he testified that he also applied with MPM Agency for deployment to Korea as a factory worker.
According to him, he gave his application directly with Mardeolyn because she was his town mate
and he was allowed to pay only Ten Thousand Pesos (PhP 10,000) as processing fee. Further, in
order to facilitate the processing of his papers, he agreed to perform some tasks for the agency,
such as taking photographs of the visa and passport of applicants, running errands and performing
such other tasks assigned to him, without salary except for some allowance. He said that he only
saw Dela Caza one or twice at the agencys office when he applied for work abroad. Lastly, that he
was also promised deployment abroad but it never materialized.
Ruling of the Trial Court
On March 15, 2007, the RTC rendered its Decision convicting the accused of syndicated illegal
recruitment and estafa. The dispositive portion reads:
WHEREFORE, judgment is hereby rendered as follows:

I. Accused FIDES PACARDO y JUNGO and PILAR MANTA y DUNGO are hereby
ACQUITTED of the crimes charged in Criminal Cases Nos. 02-206293, 02-206297, 02206300 and 02-206308;
II. Accused RODOLFO GALLO y GADOT is found guilty beyond reasonable doubt in
Criminal Case No. 02-206293 of the crime of Illegal Recruitment committed by a syndicate
and is hereby sentenced to suffer the penalty of life imprisonment and to pay a fine of ONE
MILLION (Php1,000,000.00) PESOS. He is also ordered to indemnify EDGARDO DELA
CAZA of the sum of FORTY-FIVE THOUSAND (Php45,000.00) PESOS with legal interest
from the filing of the information on September 18, 2002 until fully paid.
III. Accused RODOLFO GALLO y GADOT in Criminal Case No. 02-206297 is likewise found
guilty and is hereby sentenced to suffer the indeterminate penalty of FOUR (4) years of
prision correccional as minimum to NINE (9) years of prision mayor as maximum.
IV. Accused RODOLFO GALLO y GADOT is hereby ACQUITTED of the crime charged in
Criminal Cases Nos. 02-206300 and 02-206308.
Let alias warrants for the arrest of the other accused be issued anew in all the criminal cases.
Pending their arrest, the cases are sent to the archives.
The immediate release of accused Fides Pacardo and Pilar Manta is hereby ordered unless
detained for other lawful cause or charge.
SO ORDERED.5
Ruling of the Appellate Court
On appeal, the CA, in its Decision dated December 24, 2008, disposed of the case as follows:
WHEREFORE, the appealed Decision of the Regional Trial Court of Manila, Branch 30, in Criminal
Cases Nos. 02-206293 and 02-206297, dated March 15, 2007, is AFFIRMED with the
MODIFICATION that in Criminal Case No. 02-206297, for estafa, appellant is sentenced to four (4)
years of prision correccional to ten (10) years of prision mayor.
SO ORDERED.6
The CA held the totality of the prosecutions evidence showed that the accused-appellant, together
with others, engaged in the recruitment of Dela Caza. His actions and representations to Dela Caza
can hardly be construed as the actions of a mere errand boy.
As determined by the appellate court, the offense is considered economic sabotage having been
committed by more than three (3) persons, namely, accused-appellant Gallo, Mardeolyn, Eleonor
Panuncio and Yeo Sin Ung. More importantly, a personal found guilty of illegal recruitment may also
be convicted of estafa.7 The same evidence proving accused-appellants commission of the crime of

illegal recruitment in large scale also establishes his liability for estafa under paragragh 2(a) of Article
315 of the Revised Penal Code (RPC).
On January 15, 2009, the accused-appellant filed a timely appeal before this Court.
The Issues
Accused-appellant interposes in the present appeal the following assignment of errors:
I
The court a quo gravely erred in finding the accused-appellant guilty of illegal recruitment
committed by a syndicate despite the failure of the prosecution to prove the same beyond
reasonable doubt.
II
The court a quo gravely erred in finding the accused-appellant guilty of estafa despite the
failure of the prosecution to prove the same beyond reasonable doubt.
Our Ruling
The appeal has no merit.
Evidence supports conviction of the crime of Syndicated Illegal Recruitment
Accused-appellant avers that he cannot be held criminally liable for illegal recruitment because he
was neither an officer nor an employee of the recruitment agency. He alleges that the trial court
erred in adopting the asseveration of the private complainant that he was indeed an employee
because such was not duly supported by competent evidence. According to him, even assuming that
he was an employee, such cannot warrant his outright conviction sans evidence that he acted in
conspiracy with the officers of the agency.
We disagree.
To commit syndicated illegal recruitment, three elements must be established: (1) the offender
undertakes either any activity within the meaning of "recruitment and placement" defined under
Article 13(b), or any of the prohibited practices enumerated under Art. 34 of the Labor Code; (2) he
has no valid license or authority required by law to enable one to lawfully engage in recruitment and
placement of workers;8 and (3) the illegal recruitment is committed by a group of three (3) or more
persons conspiring or confederating with one another.9 When illegal recruitment is committed by a
syndicate or in large scale, i.e., if it is committed against three (3) or more persons individually or as
a group, it is considered an offense involving economic sabotage.10
Under Art. 13(b) of the Labor Code, "recruitment and placement" refers to "any act of canvassing,
enlisting, contracting, transporting, utilizing, hiring or procuring workers, and includes referrals,

contract services, promising or advertising for employment, locally or abroad, whether for profit or
not".
After a thorough review of the records, we believe that the prosecution was able to establish the
elements of the offense sufficiently. The evidence readily reveals that MPM Agency was never
licensed by the POEA to recruit workers for overseas employment.
Even with a license, however, illegal recruitment could still be committed under Section 6 of Republic
Act No. 8042 ("R.A. 8042"), otherwise known as the Migrants and Overseas Filipinos Act of 1995,
viz:
Sec. 6. Definition. For purposes of this Act, illegal recruitment shall mean any act of canvassing,
enlisting, contracting, transporting, utilizing, hiring, or procuring workers and includes referring,
contract services, promising or advertising for employment abroad, whether for profit or not, when
undertaken by a non-licensee or non-holder of authority contemplated under Article 13(f) of
Presidential Decree No. 442, as amended, otherwise known as the Labor Code of the Philippines:
Provided, That any such non-licensee or non-holder who, in any manner, offers or promises for a fee
employment abroad to two or more persons shall be deemed so engaged. It shall, likewise, include
the following act, whether committed by any person, whether a non-licensee, non-holder, 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 and Employment, or to make a worker pay
any amount greater than that actually received by him as a loan or advance;
xxxx
(l) Failure to actually deploy without valid reason as determined by the Department of Labor and
Employment; and
(m) Failure to reimburse expenses incurred by the worker in connection with his documentation and
processing for purposes of deployment and processing for purposes of deployment, in cases where
the deployment does not actually take place without the workers fault. Illegal recruitment when
committed by a syndicate or in large scale shall be considered an offense involving economic
sabotage.
Illegal recruitment is deemed committed by a syndicate if carried out by a group of three (3) or more
persons conspiring or confederating with one another. It is deemed committed in large scale if
committed against three (3) or more persons individually or as a group.
The persons criminally liable for the above offenses are the principals, accomplices and accessories.
In case of juridical persons, the officers having control, management or direction of their business
shall be liable.
In the instant case, accused-appellant committed the acts enumerated in Sec. 6 of R.A. 8042.
Testimonial evidence presented by the prosecution clearly shows that, in consideration of a promise

of foreign employment, accused-appellant received the amount of Php 45,000.00 from Dela Caza.
When accused-appellant made misrepresentations concerning the agencys purported power and
authority to recruit for overseas employment, and in the process, collected money in the guise of
placement fees, the former clearly committed acts constitutive of illegal recruitment. 11 Such acts were
accurately described in the testimony of prosecution witness, Dela Caza, to wit:
PROS. MAGABLIN
Q: How about this Rodolfo Gallo?
A: He was the one who received my money.
Q: Aside from receiving your money, was there any other representations or acts made by
Rodolfo Gallo?
A: He introduced himself to me as relative of Mardeolyn Martir and he even intimated to me
that their agency has sent so many workers abroad.
xxxx
PROS. MAGABLIN
Q: Mr. Witness, as you claimed you tried to withdraw your application at the agency. Was
there any instance that you were able to talk to Fides Pacardo, Rodolfo Gallo and Pilar
Manta?
A: Yes, maam.
Q: What was the conversation that transpired among you before you demanded the return of
your money and documents?
A: When I tried to withdraw my application as well as my money, Mr. Gallo told me "I know
nothing about your money" while Pilar Manta and Fides Pacardo told me, why should I
withdraw my application and my money when I was about to be [deployed] or I was about to
leave.
xxxx
Q: And what transpired at that office after this Panuncio introduced you to those persons
whom you just mentioned?
A: The three of them including Rodolfo Gallo told me that the placement fee in that agency is
Php 150,000.00 and then I should deposit the amount of Php 45,000.00. After I have
deposited said amount, I would just wait for few days
xxxx

Q: They were the one (sic) who told you that you have to pay Php 45,000.00 for deposit
only?
A: Yes, maam, I was told by them to deposit Php 45,000.00 and then I would pay the
remaining balance of Php105,000.00, payment of it would be through salary deduction.
Q: That is for what Mr. Witness again?
A: For placement fee.
Q: Now did you believe to (sic) them?
A: Yes, maam.
Q: Why, why did you believe?
A: Because of the presence of the two Korean nationals and they keep on telling me that
they have sent abroad several workers and they even showed visas of the records that they
have already deployed abroad.
Q: Aside from that, was there any other representations which have been made upon you or
make you believe that they can deploy you?
A: At first I was adamant but they told me "If you do not want to believe us, then we could do
nothing." But once they showed me the [visas] of the people whom they have deployed
abroad, that was the time I believe them.
Q: So after believing on the representations, what did you do next Mr. Witness?
A: That was the time that I decided to give the money.
xxxx
PROS. MAGABLIN
Q: Do you have proof that you gave the money?
A: Yes, maam.
Q: Where is your proof that you gave the money?
A: I have it here.
PROS. MAGABLIN:

Witness is producing to this court a Receipt dated May 28, 2001 in the amount of
Php45,000.00 which for purposes of record Your Honor, may I request that the same be
marked in the evidence as our Exhibit "F".
xxxx
PROS. MAGABLIN
Q: There appears a signature appearing at the left bottom portion of this receipt. Do you
know whose signature is this?
A: Yes, maam, signature of Rodolfo Gallo.
PROS. MAGABLIN
Q: Why do you say that that is his signature?
A: Rodolfo Gallos signature Your Honor because he was the one who received the money
and he was the one who filled up this O.R. and while he was doing it, he was flanked by
Fides Pacardo, Pilar Manta and Mardeolyn Martir.
xxxx
Q: So it was Gallo who received your money?
A: Yes, maam.
PROS. MAGABLIN
Q: And after that, what did this Gallo do after he received your money?
A: They told me maam just to call up and make a follow up with our agency.
xxxx
Q: Now Mr. Witness, after you gave your money to the accused, what happened with the
application, with the promise of employment that he promised?
A: Two (2) weeks after giving them the money, they moved to a new office in Makati, Brgy.
San Isidro.
xxxx
Q: And were they able to deploy you as promised by them?
A: No, maam, they were not able to send us abroad.12

Essentially, Dela Caza appeared very firm and consistent in positively identifying accused-appellant
as one of those who induced him and the other applicants to part with their money. His testimony
showed that accused-appellant made false misrepresentations and promises in assuring them that
after they paid the placement fee, jobs in Korea as factory workers were waiting for them and that
they would be deployed soon. In fact, Dela Caza personally talked to accused-appellant and gave
him the money and saw him sign and issue an official receipt as proof of his payment. Without a
doubt, accused-appellants actions constituted illegal recruitment.
Additionally, accused-appellant cannot argue that the trial court erred in finding that he was indeed
an employee of the recruitment agency. On the contrary, his active participation in the illegal
recruitment is unmistakable. The fact that he was the one who issued and signed the official receipt
belies his profession of innocence.
This Court likewise finds the existence of a conspiracy between the accused-appellant and the other
persons in the agency who are currently at large, resulting in the commission of the crime of
syndicated illegal recruitment.
In this case, it cannot be denied that the accused-appellent together with Mardeolyn and the rest of
the officers and employees of MPM Agency participated in a network of deception. Verily, the active
involvement of each in the recruitment scam was directed at one single purpose to divest
complainants with their money on the pretext of guaranteed employment abroad. The prosecution
evidence shows that complainants were briefed by Mardeolyn about the processing of their papers
for a possible job opportunity in Korea, as well as their possible salary. Likewise, Yeo Sin Ung, a
Korean national, gave a briefing about the business and what to expect from the company. Then,
here comes accused-appellant who introduced himself as Mardeolyns relative and specifically told
Dela Caza of the fact that the agency was able to send many workers abroad. Dela Caza was even
showed several workers visas who were already allegedly deployed abroad. Later on, accusedappellant signed and issued an official receipt acknowledging the down payment of Dela Caza.
Without a doubt, the nature and extent of the actions of accused-appellant, as well as with the other
persons in MPM Agency clearly show unity of action towards a common undertaking. Hence,
conspiracy is evidently present.
In People v. Gamboa,13 this Court discussed the nature of conspiracy in the context of illegal
recruitment, viz:
Conspiracy to defraud aspiring overseas contract workers was evident from the acts of the
malefactors whose conduct before, during and after the commission of the crime clearly indicated
that they were one in purpose and united in its execution. Direct proof of previous agreement to
commit a crime is not necessary as it may be deduced from the mode and manner in which the
offense was perpetrated or inferred from the acts of the accused pointing to a joint purpose and
design, concerted action and community of interest. As such, all the accused, including accusedappellant, are equally guilty of the crime of illegal recruitment since in a conspiracy the act of one is
the act of all.

To reiterate, in establishing conspiracy, it is not essential that there be actual proof that all the
conspirators took a direct part in every act. It is sufficient that they acted in concert pursuant to the
same objective.14
Estafa
The prosecution likewise established that accused-appellant is guilty of the crime of estafa as
defined under Article 315 paragraph 2(a) of the Revised Penal Code, viz:
Art. 315. Swindling (estafa). Any person who shall defraud another by any means mentioned
hereinbelow
xxxx
2. By means of any of the following false pretenses or fraudulent acts executed prior to or
simultaneously with the commission of the fraud:
(a) By using fictitious name, or falsely pretending to possess power, influence, qualifications,
property, credit, agency, business or imaginary transactions; or by means of other similar deceits.
The elements of estafa in general are: (1) that the accused defrauded another (a) by abuse of
confidence, or (b) by means of deceit; and (2) that damage or prejudice capable of pecuniary
estimation is caused to the offended party or third person.15 Deceit is the false representation of a
matter of fact, whether by words or conduct, by false or misleading allegations, or by concealment of
that which should have been disclosed; and which deceives or is intended to deceive another so that
he shall act upon it, to his legal injury.
All these elements are present in the instant case: the accused-appellant, together with the other
accused at large, deceived the complainants into believing that the agency had the power and
capability to send them abroad for employment; that there were available jobs for them in Korea as
factory workers; that by reason or on the strength of such assurance, the complainants parted with
their money in payment of the placement fees; that after receiving the money, accused-appellant and
his co-accused went into hiding by changing their office locations without informing complainants;
and that complainants were never deployed abroad. As all these representations of the accusedappellant proved false, paragraph 2(a), Article 315 of the Revised Penal Code is thus applicable.
1avvphi1

Defense of Denial Cannot Prevail over Positive Identification

Indubitably, accused-appellants denial of the crimes charged crumbles in the face of the positive
identification made by Dela Caza and his co-complainants as one of the perpetrators of the crimes
charged. As enunciated by this Court in People v. Abolidor,16 "[p]ositive identification where
categorical and consistent and not attended by any showing of ill motive on the part of the
eyewitnesses on the matter prevails over alibi and denial."
The defense has miserably failed to show any evidence of ill motive on the part of the prosecution
witnesses as to falsely testify against him.

Therefore, between the categorical statements of the prosecution witnesses, on the one hand, and
bare denials of the accused, on the other hand, the former must prevail. 17
Moreover, this Court accords the trial courts findings with the probative weight it deserves in the
absence of any compelling reason to discredit the same. It is a fundamental judicial dictum that the
findings of fact of the trial court are not disturbed on appeal except when it overlooked,
misunderstood or misapplied some facts or circumstances of weight and substance that would have
materially affected the outcome of the case. We find that the trial court did not err in convicting the
accused-appellant.
WHEREFORE, the appeal is DENIED for failure to sufficiently show reversible error in the assailed
decision. The Decision dated December 24, 2008 of the CA in CA-G.R. CR-H.C. No. 02764 is
AFFIRMED.
No costs.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
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.
Gutierrez & Alo Law Offices for petitioner.

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.
05. T: Kailan at saan naganap and ginawang
panloloko sa
iyo ng tao/mga taong inireklamo mo?
S. Sa bahay ni Horty Salazar.
06. T: Paano naman naganap ang pangyayari?
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 napa-alis. 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 SALAZAR
No. 615 R.O. Santos St.
Mandaluyong, Metro Manila
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 IS-88-836. 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,
renderedfunctus 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 job-seekers. 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 nonholder 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 jobseekers. 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
xxx xxx xxx
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
(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:
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) 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;
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 13-3703 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.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. 167614

March 24, 2009

ANTONIO M. SERRANO, Petitioner,

vs.
Gallant MARITIME SERVICES, INC. and MARLOW NAVIGATION CO., INC., Respondents.
DECISION
AUSTRIA-MARTINEZ, J.:
For decades, the toil of solitary migrants has helped lift entire families and communities out of
poverty. Their earnings have built houses, provided health care, equipped schools and planted the
seeds of businesses. They have woven together the world by transmitting ideas and knowledge from
country to country. They have provided the dynamic human link between cultures, societies and
economies. Yet, only recently have we begun to understand not only how much international
migration impacts development, but how smart public policies can magnify this effect.
United Nations Secretary-General Ban Ki-Moon
Global Forum on Migration and Development
Brussels, July 10, 20071
For Antonio Serrano (petitioner), a Filipino seafarer, the last clause in the 5th paragraph of Section
10, Republic Act (R.A.) No. 8042,2 to wit:
Sec. 10. Money Claims. - x x x In case of termination of overseas employment without just, valid or
authorized cause as defined by law or contract, the workers shall be entitled to the full
reimbursement of his placement fee with interest of twelve percent (12%) per annum, plus his
salaries for the unexpired portion of his employment contract or for three (3) months for every
year of the unexpired term, whichever is less.
x x x x (Emphasis and underscoring supplied)

does not magnify the contributions of overseas Filipino workers (OFWs) to national development, but
exacerbates the hardships borne by them by unduly limiting their entitlement in case of illegal
dismissal to their lump-sum salary either for the unexpired portion of their employment contract "or
for three months for every year of the unexpired term, whichever is less" (subject clause). Petitioner
claims that the last clause violates the OFWs' constitutional rights in that it impairs the terms of their
contract, deprives them of equal protection and denies them due process.
By way of Petition for Review under Rule 45 of the Rules of Court, petitioner assails the December
8, 2004 Decision3 and April 1, 2005 Resolution4 of the Court of Appeals (CA), which applied the
subject clause, entreating this Court to declare the subject clause unconstitutional.
Petitioner was hired by Gallant Maritime Services, Inc. and Marlow Navigation Co., Ltd.
(respondents) under a Philippine Overseas Employment Administration (POEA)-approved Contract
of Employment with the following terms and conditions:
Duration of contract

12 months

Position

Chief Officer

Basic monthly salary

US$1,400.00

Hours of work

48.0 hours per week

Overtime

US$700.00 per month

Vacation leave with pay

7.00 days per month5

On March 19, 1998, the date of his departure, petitioner was constrained to accept a downgraded
employment contract for the position of Second Officer with a monthly salary of US$1,000.00, upon
the assurance and representation of respondents that he would be made Chief Officer by the end of
April 1998.6
Respondents did not deliver on their promise to make petitioner Chief Officer.7 Hence, petitioner
refused to stay on as Second Officer and was repatriated to the Philippines on May 26, 1998. 8
Petitioner's employment contract was for a period of 12 months or from March 19, 1998 up to March
19, 1999, but at the time of his repatriation on May 26, 1998, he had served only two (2) months and
seven (7) days of his contract, leaving an unexpired portion of nine (9) months and twenty-three (23)
days.
Petitioner filed with the Labor Arbiter (LA) a Complaint 9 against respondents for constructive
dismissal and for payment of his money claims in the total amount of US$26,442.73, broken down
as follows:
May
27/31,
1998
(5
days)
incl.
Leave
pay

US$ 413.90

June
01/30,
1998

2,590.00

July
01/31,
1998

2,590.00

August 2,590.00
01/31,
1998
Sept.
01/30,
1998

2,590.00

Oct.
01/31,
1998

2,590.00

Nov.
01/30,
1998

2,590.00

Dec.
01/31,
1998

2,590.00

Jan.
01/31,
1999

2,590.00

Feb.
01/28,
1999

2,590.00

Mar.
1/19,
1999
(19
days)
incl.
leave
pay

1,640.00

-------------------------------------------------------------------------------25,382.23
Amoun
t
adjuste
d to
chief
mate's
salary

(March 1,060.5010
19/31,
1998
to April
1/30,
1998)
+
--------------------------------------------------------------------------------------------TOTAL US$ 26,442.7311
CLAIM
as well as moral and exemplary damages and attorney's fees.
The LA rendered a Decision dated July 15, 1999, declaring the dismissal of petitioner illegal
and awarding him monetary benefits, to wit:
WHEREFORE, premises considered, judgment is hereby rendered declaring that the
dismissal of the complainant (petitioner) by the respondents in the above-entitled case was
illegal and the respondents are hereby ordered to pay the complainant [petitioner], jointly and
severally, in Philippine Currency, based on the rate of exchange prevailing at the time of
payment, the amount of EIGHT THOUSAND SEVEN HUNDRED SEVENTY U.S. DOLLARS
(US $8,770.00), representing the complainants salary for three (3) months of the
unexpired portion of the aforesaid contract of employment.
1avvphi1

The respondents are likewise ordered to pay the complainant [petitioner], jointly and
severally, in Philippine Currency, based on the rate of exchange prevailing at the time of
payment, the amount of FORTY FIVE U.S. DOLLARS (US$ 45.00), 12 representing the
complainants claim for a salary differential. In addition, the respondents are hereby ordered
to pay the complainant, jointly and severally, in Philippine Currency, at the exchange rate
prevailing at the time of payment, the complainants (petitioner's) claim for attorneys fees
equivalent to ten percent (10%) of the total amount awarded to the aforesaid employee
under this Decision.
The claims of the complainant for moral and exemplary damages are hereby DISMISSED for
lack of merit.
All other claims are hereby DISMISSED.
SO ORDERED.13 (Emphasis supplied)
In awarding petitioner a lump-sum salary of US$8,770.00, the LA based his computation on
the salary period of three months only -- rather than the entire unexpired portion of nine
months and 23 days of petitioner's employment contract - applying the subject clause.
However, the LA applied the salary rate of US$2,590.00, consisting of petitioner's "[b]asic
salary, US$1,400.00/month + US$700.00/month, fixed overtime pay, + US$490.00/month,
vacation leave pay = US$2,590.00/compensation per month." 14
Respondents appealed15 to the National Labor Relations Commission (NLRC) to question the
finding of the LA that petitioner was illegally dismissed.

Petitioner also appealed16 to the NLRC on the sole issue that the LA erred in not applying the
ruling of the Court in Triple Integrated Services, Inc. v. National Labor Relations
Commission17 that in case of illegal dismissal, OFWs are entitled to their salaries for the
unexpired portion of their contracts.18
In a Decision dated June 15, 2000, the NLRC modified the LA Decision, to wit:
WHEREFORE, the Decision dated 15 July 1999 is MODIFIED. Respondents are hereby
ordered to pay complainant, jointly and severally, in Philippine currency, at the prevailing rate
of exchange at the time of payment the following:
1. Three (3) months salary
$1,400 x 3
2. Salary differential

US$4,200.00
45.00

US$4,245.00
3. 10% Attorneys fees

424.50
TOTAL

The other findings are affirmed.

SO ORDERED.19
The NLRC corrected the LA's computation of the lump-sum salary awarded to petitioner by reducing
the applicable salary rate from US$2,590.00 to US$1,400.00 because R.A. No. 8042 "does not
provide for the award of overtime pay, which should be proven to have been actually performed, and
for vacation leave pay."20
Petitioner filed a Motion for Partial Reconsideration, but this time he questioned the constitutionality
of the subject clause.21 The NLRC denied the motion.22
Petitioner filed a Petition for Certiorari23 with the CA, reiterating the constitutional challenge against
the subject clause.24 After initially dismissing the petition on a technicality, the CA eventually gave
due course to it, as directed by this Court in its Resolution dated August 7, 2003 which granted the
petition for certiorari, docketed as G.R. No. 151833, filed by petitioner.
In a Decision dated December 8, 2004, the CA affirmed the NLRC ruling on the reduction of the
applicable salary rate; however, the CA skirted the constitutional issue raised by petitioner.25
His Motion for Reconsideration26 having been denied by the CA,27 petitioner brings his cause to this
Court on the following grounds:
I
The Court of Appeals and the labor tribunals have decided the case in a way not in accord with
applicable decision of the Supreme Court involving similar issue of granting unto the migrant worker
back wages equal to the unexpired portion of his contract of employment instead of limiting it to
three (3) months

US$4,669.50

II
In the alternative that the Court of Appeals and the Labor Tribunals were merely applying their
interpretation of Section 10 of Republic Act No. 8042, it is submitted that the Court of Appeals
gravely erred in law when it failed to discharge its judicial duty to decide questions of substance not
theretofore determined by the Honorable Supreme Court, particularly, the constitutional issues
raised by the petitioner on the constitutionality of said law, which unreasonably, unfairly and
arbitrarily limits payment of the award for back wages of overseas workers to three (3) months.
III
Even without considering the constitutional limitations [of] Sec. 10 of Republic Act No. 8042, the
Court of Appeals gravely erred in law in excluding from petitioners award the overtime pay and
vacation pay provided in his contract since under the contract they form part of his salary.28
On February 26, 2008, petitioner wrote the Court to withdraw his petition as he is already old and
sickly, and he intends to make use of the monetary award for his medical treatment and
medication.29 Required to comment, counsel for petitioner filed a motion, urging the court to allow
partial execution of the undisputed monetary award and, at the same time, praying that the
constitutional question be resolved.30
Considering that the parties have filed their respective memoranda, the Court now takes up the full
merit of the petition mindful of the extreme importance of the constitutional question raised therein.
On the first and second issues
The unanimous finding of the LA, NLRC and CA that the dismissal of petitioner was illegal is not
disputed. Likewise not disputed is the salary differential of US$45.00 awarded to petitioner in all
three fora. What remains disputed is only the computation of the lump-sum salary to be awarded to
petitioner by reason of his illegal dismissal.
Applying the subject clause, the NLRC and the CA computed the lump-sum salary of petitioner at the
monthly rate of US$1,400.00 covering the period of three months out of the unexpired portion of nine
months and 23 days of his employment contract or a total of US$4,200.00.
Impugning the constitutionality of the subject clause, petitioner contends that, in addition to the
US$4,200.00 awarded by the NLRC and the CA, he is entitled to US$21,182.23 more or a total of
US$25,382.23, equivalent to his salaries for the entire nine months and 23 days left of his
employment contract, computed at the monthly rate of US$2,590.00.31
The Arguments of Petitioner
Petitioner contends that the subject clause is unconstitutional because it unduly impairs the freedom
of OFWs to negotiate for and stipulate in their overseas employment contracts a determinate
employment period and a fixed salary package.32 It also impinges on the equal protection clause, for
it treats OFWs differently from local Filipino workers (local workers) by putting a cap on the amount
of lump-sum salary to which OFWs are entitled in case of illegal dismissal, while setting no limit to
the same monetary award for local workers when their dismissal is declared illegal; that the
disparate treatment is not reasonable as there is no substantial distinction between the two
groups;33 and that it defeats Section 18,34 Article II of the Constitution which guarantees the
protection of the rights and welfare of all Filipino workers, whether deployed locally or overseas. 35

Moreover, petitioner argues that the decisions of the CA and the labor tribunals are not in line with
existing jurisprudence on the issue of money claims of illegally dismissed OFWs. Though there are
conflicting rulings on this, petitioner urges the Court to sort them out for the guidance of affected
OFWs.36
Petitioner further underscores that the insertion of the subject clause into R.A. No. 8042 serves no
other purpose but to benefit local placement agencies. He marks the statement made by the Solicitor
General in his Memorandum, viz.:
Often, placement agencies, their liability being solidary, shoulder the payment of money claims in the
event that jurisdiction over the foreign employer is not acquired by the court or if the foreign
employer reneges on its obligation. Hence, placement agencies that are in good faith and which
fulfill their obligations are unnecessarily penalized for the acts of the foreign employer. To protect
them and to promote their continued helpful contribution in deploying Filipino migrant workers,
liability for money claims was reduced under Section 10 of R.A. No. 8042. 37 (Emphasis supplied)
Petitioner argues that in mitigating the solidary liability of placement agencies, the subject clause
sacrifices the well-being of OFWs. Not only that, the provision makes foreign employers better off
than local employers because in cases involving the illegal dismissal of employees, foreign
employers are liable for salaries covering a maximum of only three months of the unexpired
employment contract while local employers are liable for the full lump-sum salaries of their
employees. As petitioner puts it:
In terms of practical application, the local employers are not limited to the amount of backwages they
have to give their employees they have illegally dismissed, following well-entrenched and
unequivocal jurisprudence on the matter. On the other hand, foreign employers will only be limited to
giving the illegally dismissed migrant workers the maximum of three (3) months unpaid salaries
notwithstanding the unexpired term of the contract that can be more than three (3) months. 38
Lastly, petitioner claims that the subject clause violates the due process clause, for it deprives him of
the salaries and other emoluments he is entitled to under his fixed-period employment contract. 39
The Arguments of Respondents
In their Comment and Memorandum, respondents contend that the constitutional issue should not
be entertained, for this was belatedly interposed by petitioner in his appeal before the CA, and not at
the earliest opportunity, which was when he filed an appeal before the NLRC. 40
The Arguments of the Solicitor General
The Solicitor General (OSG)41 points out that as R.A. No. 8042 took effect on July 15, 1995, its
provisions could not have impaired petitioner's 1998 employment contract. Rather, R.A. No. 8042
having preceded petitioner's contract, the provisions thereof are deemed part of the minimum terms
of petitioner's employment, especially on the matter of money claims, as this was not stipulated upon
by the parties.42
Moreover, the OSG emphasizes that OFWs and local workers differ in terms of the nature of their
employment, such that their rights to monetary benefits must necessarily be treated differently. The
OSG enumerates the essential elements that distinguish OFWs from local workers: first, while local
workers perform their jobs within Philippine territory, OFWs perform their jobs for foreign employers,
over whom it is difficult for our courts to acquire jurisdiction, or against whom it is almost impossible

to enforce judgment; and second, as held in Coyoca v. National Labor Relations Commission 43 and
Millares v. National Labor Relations Commission,44 OFWs are contractual employees who can never
acquire regular employment status, unlike local workers who are or can become regular employees.
Hence, the OSG posits that there are rights and privileges exclusive to local workers, but not
available to OFWs; that these peculiarities make for a reasonable and valid basis for the
differentiated treatment under the subject clause of the money claims of OFWs who are illegally
dismissed. Thus, the provision does not violate the equal protection clause nor Section 18, Article II
of the Constitution.45
Lastly, the OSG defends the rationale behind the subject clause as a police power measure adopted
to mitigate the solidary liability of placement agencies for this "redounds to the benefit of the migrant
workers whose welfare the government seeks to promote. The survival of legitimate placement
agencies helps [assure] the government that migrant workers are properly deployed and are
employed under decent and humane conditions."46
The Court's Ruling
The Court sustains petitioner on the first and second issues.
When the Court is called upon to exercise its power of judicial review of the acts of its co-equals,
such as the Congress, it does so only when these conditions obtain: (1) that there is an actual case
or controversy involving a conflict of rights susceptible of judicial determination; 47 (2) that the
constitutional question is raised by a proper party48 and at the earliest opportunity;49 and (3) that the
constitutional question is the very lis mota of the case, 50otherwise the Court will dismiss the case or
decide the same on some other ground.51
Without a doubt, there exists in this case an actual controversy directly involving petitioner who is
personally aggrieved that the labor tribunals and the CA computed his monetary award based on the
salary period of three months only as provided under the subject clause.
The constitutional challenge is also timely. It should be borne in mind that the requirement that a
constitutional issue be raised at the earliest opportunity entails the interposition of the issue in the
pleadings before a competent court, such that, if the issue is not raised in the pleadings before that
competent court, it cannot be considered at the trial and, if not considered in the trial, it cannot be
considered on appeal.52 Records disclose that the issue on the constitutionality of the subject clause
was first raised, not in petitioner's appeal with the NLRC, but in his Motion for Partial
Reconsideration with said labor tribunal,53 and reiterated in his Petition for Certiorari before the
CA.54 Nonetheless, the issue is deemed seasonably raised because it is not the NLRC but the CA
which has the competence to resolve the constitutional issue. The NLRC is a labor tribunal that
merely performs a quasi-judicial function its function in the present case is limited to determining
questions of fact to which the legislative policy of R.A. No. 8042 is to be applied and to resolving
such questions in accordance with the standards laid down by the law itself; 55 thus, its foremost
function is to administer and enforce R.A. No. 8042, and not to inquire into the validity of its
provisions. The CA, on the other hand, is vested with the power of judicial review or the power to
declare unconstitutional a law or a provision thereof, such as the subject clause. 56Petitioner's
interposition of the constitutional issue before the CA was undoubtedly seasonable. The CA was
therefore remiss in failing to take up the issue in its decision.
The third condition that the constitutional issue be critical to the resolution of the case likewise
obtains because the monetary claim of petitioner to his lump-sum salary for the entire unexpired
portion of his 12-month employment contract, and not just for a period of three months, strikes at the
very core of the subject clause.

Thus, the stage is all set for the determination of the constitutionality of the subject clause.
Does the subject clause violate Section 10,
Article III of the Constitution on non-impairment
of contracts?
The answer is in the negative.
Petitioner's claim that the subject clause unduly interferes with the stipulations in his contract on the
term of his employment and the fixed salary package he will receive57 is not tenable.
Section 10, Article III of the Constitution provides:
No law impairing the obligation of contracts shall be passed.
The prohibition is aligned with the general principle that laws newly enacted have only a prospective
operation,58and cannot affect acts or contracts already perfected; 59 however, as to laws already in
existence, their provisions are read into contracts and deemed a part thereof. 60 Thus, the nonimpairment clause under Section 10, Article II is limited in application to laws about to be enacted
that would in any way derogate from existing acts or contracts by enlarging, abridging or in any
manner changing the intention of the parties thereto.
As aptly observed by the OSG, the enactment of R.A. No. 8042 in 1995 preceded the execution of
the employment contract between petitioner and respondents in 1998. Hence, it cannot be argued
that R.A. No. 8042, particularly the subject clause, impaired the employment contract of the parties.
Rather, when the parties executed their 1998 employment contract, they were deemed to have
incorporated into it all the provisions of R.A. No. 8042.
But even if the Court were to disregard the timeline, the subject clause may not be declared
unconstitutional on the ground that it impinges on the impairment clause, for the law was enacted in
the exercise of the police power of the State to regulate a business, profession or calling, particularly
the recruitment and deployment of OFWs, with the noble end in view of ensuring respect for the
dignity and well-being of OFWs wherever they may be employed.61 Police power legislations adopted
by the State to promote the health, morals, peace, education, good order, safety, and general
welfare of the people are generally applicable not only to future contracts but even to those already
in existence, for all private contracts must yield to the superior and legitimate measures taken by the
State to promote public welfare.62
Does the subject clause violate Section 1,
Article III of the Constitution, and Section 18,
Article II and Section 3, Article XIII on labor
as a protected sector?
The answer is in the affirmative.
Section 1, Article III of the Constitution guarantees:
No person shall be deprived of life, liberty, or property without due process of law nor shall any
person be denied the equal protection of the law.

Section 18,63 Article II and Section 3,64 Article XIII accord all members of the labor sector, without
distinction as to place of deployment, full protection of their rights and welfare.
To Filipino workers, the rights guaranteed under the foregoing constitutional provisions translate to
economic security and parity: all monetary benefits should be equally enjoyed by workers of similar
category, while all monetary obligations should be borne by them in equal degree; none should be
denied the protection of the laws which is enjoyed by, or spared the burden imposed on, others in
like circumstances.65
Such rights are not absolute but subject to the inherent power of Congress to incorporate, when it
sees fit, a system of classification into its legislation; however, to be valid, the classification must
comply with these requirements: 1) it is based on substantial distinctions; 2) it is germane to the
purposes of the law; 3) it is not limited to existing conditions only; and 4) it applies equally to all
members of the class.66
There are three levels of scrutiny at which the Court reviews the constitutionality of a classification
embodied in a law: a) the deferential or rational basis scrutiny in which the challenged classification
needs only be shown to be rationally related to serving a legitimate state interest; 67 b) the middle-tier
or intermediate scrutiny in which the government must show that the challenged classification serves
an important state interest and that the classification is at least substantially related to serving that
interest;68 and c) strict judicial scrutiny69 in which a legislative classification which impermissibly
interferes with the exercise of a fundamental right70 or operates to the peculiar disadvantage of a
suspect class71 is presumed unconstitutional, and the burden is upon the government to prove that
the classification is necessary to achieve a compelling state interest and that it is the least
restrictive means to protect such interest.72
Under American jurisprudence, strict judicial scrutiny is triggered by suspect classifications 73 based
on race74 or gender75 but not when the classification is drawn along income categories. 76
It is different in the Philippine setting. In Central Bank (now Bangko Sentral ng Pilipinas) Employee
Association, Inc. v. Bangko Sentral ng Pilipinas,77 the constitutionality of a provision in the charter of
the Bangko Sentral ng Pilipinas (BSP), a government financial institution (GFI), was challenged for
maintaining its rank-and-file employees under the Salary Standardization Law (SSL), even when the
rank-and-file employees of other GFIs had been exempted from the SSL by their respective charters.
Finding that the disputed provision contained a suspect classification based on salary grade, the
Court deliberately employed the standard of strict judicial scrutiny in its review of the constitutionality
of said provision. More significantly, it was in this case that the Court revealed the broad outlines of
its judicial philosophy, to wit:
Congress retains its wide discretion in providing for a valid classification, and its policies should be
accorded recognition and respect by the courts of justice except when they run afoul of the
Constitution. The deference stops where the classification violates a fundamental right,
or prejudices persons accorded special protection by the Constitution. When these violations
arise, this Court must discharge its primary role as the vanguard of constitutional guaranties, and
require a stricter and more exacting adherence to constitutional limitations. Rational basis should not
suffice.
Admittedly, the view that prejudice to persons accorded special protection by the Constitution
requires a stricter judicial scrutiny finds no support in American or English jurisprudence.
Nevertheless, these foreign decisions and authorities are not per se controlling in this jurisdiction. At
best, they are persuasive and have been used to support many of our decisions. We should not
place undue and fawning reliance upon them and regard them as indispensable mental crutches

without which we cannot come to our own decisions through the employment of our own
endowments. We live in a different ambience and must decide our own problems in the light of our
own interests and needs, and of our qualities and even idiosyncrasies as a people, and always with
our own concept of law and justice. Our laws must be construed in accordance with the intention of
our own lawmakers and such intent may be deduced from the language of each law and the context
of other local legislation related thereto. More importantly, they must be construed to serve our own
public interest which is the be-all and the end-all of all our laws. And it need not be stressed that our
public interest is distinct and different from others.
xxxx
Further, the quest for a better and more "equal" world calls for the use of equal protection as a tool of
effective judicial intervention.
Equality is one ideal which cries out for bold attention and action in the Constitution. The Preamble
proclaims "equality" as an ideal precisely in protest against crushing inequities in Philippine society.
The command to promote social justice in Article II, Section 10, in "all phases of national
development," further explicitated in Article XIII, are clear commands to the State to take affirmative
action in the direction of greater equality. x x x [T]here is thus in the Philippine Constitution no lack of
doctrinal support for a more vigorous state effort towards achieving a reasonable measure of
equality.
Our present Constitution has gone further in guaranteeing vital social and economic rights to
marginalized groups of society, including labor. Under the policy of social justice, the law bends over
backward to accommodate the interests of the working class on the humane justification that those
with less privilege in life should have more in law. And the obligation to afford protection to labor is
incumbent not only on the legislative and executive branches but also on the judiciary to translate
this pledge into a living reality. Social justice calls for the humanization of laws and the equalization
of social and economic forces by the State so that justice in its rational and objectively secular
conception may at least be approximated.
xxxx
Under most circumstances, the Court will exercise judicial restraint in deciding questions of
constitutionality, recognizing the broad discretion given to Congress in exercising its legislative
power. Judicial scrutiny would be based on the "rational basis" test, and the legislative discretion
would be given deferential treatment.
But if the challenge to the statute is premised on the denial of a fundamental right, or the
perpetuation of prejudice against persons favored by the Constitution with special
protection, judicial scrutiny ought to be more strict. A weak and watered down view would call
for the abdication of this Courts solemn duty to strike down any law repugnant to the Constitution
and the rights it enshrines. This is true whether the actor committing the unconstitutional act is a
private person or the government itself or one of its instrumentalities. Oppressive acts will be struck
down regardless of the character or nature of the actor.
xxxx
In the case at bar, the challenged proviso operates on the basis of the salary grade or officeremployee status. It is akin to a distinction based on economic class and status, with the higher
grades as recipients of a benefit specifically withheld from the lower grades. Officers of the BSP now
receive higher compensation packages that are competitive with the industry, while the poorer, low-

salaried employees are limited to the rates prescribed by the SSL. The implications are quite
disturbing: BSP rank-and-file employees are paid the strictly regimented rates of the SSL while
employees higher in rank - possessing higher and better education and opportunities for career
advancement - are given higher compensation packages to entice them to stay. Considering that
majority, if not all, the rank-and-file employees consist of people whose status and rank in life are
less and limited, especially in terms of job marketability, it is they - and not the officers - who have
the real economic and financial need for the adjustment . This is in accord with the policy of the
Constitution "to free the people from poverty, provide adequate social services, extend to them a
decent standard of living, and improve the quality of life for all." Any act of Congress that runs
counter to this constitutional desideratum deserves strict scrutiny by this Court before it can pass
muster. (Emphasis supplied)
Imbued with the same sense of "obligation to afford protection to labor," the Court in the present
case also employs the standard of strict judicial scrutiny, for it perceives in the subject clause a
suspect classification prejudicial to OFWs.
Upon cursory reading, the subject clause appears facially neutral, for it applies to all OFWs.
However, a closer examination reveals that the subject clause has a discriminatory intent against,
and an invidious impact on, OFWs at two levels:
First, OFWs with employment contracts of less than one year vis--vis OFWs with
employment contracts of one year or more;
Second, among OFWs with employment contracts of more than one year; and
Third, OFWs vis--vis local workers with fixed-period employment;
OFWs with employment contracts of less than one year vis--vis OFWs with employment
contracts of one year or more
As pointed out by petitioner,78 it was in Marsaman Manning Agency, Inc. v. National Labor Relations
Commission79 (Second Division, 1999) that the Court laid down the following rules on the application
of the periods prescribed under Section 10(5) of R.A. No. 804, to wit:
A plain reading of Sec. 10 clearly reveals that the choice of which amount to award an
illegally dismissed overseas contract worker, i.e., whether his salaries for the unexpired
portion of his employment contract or three (3) months salary for every year of the
unexpired term, whichever is less, comes into play only when the employment contract
concerned has a term of at least one (1) year or more. This is evident from the words "for
every year of the unexpired term" which follows the words "salaries x x x for three
months." To follow petitioners thinking that private respondent is entitled to three (3) months salary
only simply because it is the lesser amount is to completely disregard and overlook some words
used in the statute while giving effect to some. This is contrary to the well-established rule in legal
hermeneutics that in interpreting a statute, care should be taken that every part or word thereof be
given effect since the law-making body is presumed to know the meaning of the words employed in
the statue and to have used them advisedly. Ut res magis valeat quam pereat. 80 (Emphasis supplied)
In Marsaman, the OFW involved was illegally dismissed two months into his 10-month contract, but
was awarded his salaries for the remaining 8 months and 6 days of his contract.

Prior to Marsaman, however, there were two cases in which the Court made conflicting rulings on
Section 10(5). One was Asian Center for Career and Employment System and Services v. National
Labor Relations Commission(Second Division, October 1998),81 which involved an OFW who was
awarded a two-year employment contract,but was dismissed after working for one year and two
months. The LA declared his dismissal illegal and awarded him SR13,600.00 as lump-sum salary
covering eight months, the unexpired portion of his contract. On appeal, the Court reduced the
award to SR3,600.00 equivalent to his three months salary, this being the lesser value, to wit:
Under Section 10 of R.A. No. 8042, a worker dismissed from overseas employment without just,
valid or authorized cause is entitled to his salary for the unexpired portion of his employment
contract or for three (3) months for every year of the unexpired term, whichever is less.
In the case at bar, the unexpired portion of private respondents employment contract is eight (8)
months. Private respondent should therefore be paid his basic salary corresponding to three (3)
months or a total of SR3,600.82
Another was Triple-Eight Integrated Services, Inc. v. National Labor Relations Commission (Third
Division, December 1998),83 which involved an OFW (therein respondent Erlinda Osdana) who was
originally granted a 12-month contract, which was deemed renewed for another 12 months. After
serving for one year and seven-and-a-half months, respondent Osdana was illegally dismissed, and
the Court awarded her salaries for the entire unexpired portion of four and one-half months of her
contract.
The Marsaman interpretation of Section 10(5) has since been adopted in the following cases:
Case Title

Contract
Period

Period of
Service

Unexpired
Period

Period Applied in
the Computation
of the Monetary
Award

Skippers v.
Maguad84

6 months

2 months

4 months

4 months

Bahia Shipping
v. Reynaldo
Chua 85

9 months

8 months

4 months

4 months

Centennial
Transmarine v.
dela Cruz l86

9 months

4 months

5 months

5 months

Talidano v.
Falcon87

12 months

3 months

9 months

3 months

Univan v. CA 88

12 months

3 months

9 months

3 months

Oriental v. CA 89

12 months

more than 2
months

10 months

3 months

PCL v. NLRC90

12 months

more than 2
months

more or less 9
months

3 months

Olarte v.
Nayona91

12 months

21 days

11 months and 9
days

3 months

JSS v.Ferrer92

12 months

16 days

11 months and
24 days

3 months

9 months and
7 days

2 months and 23
days

2 months and 23
days

Pentagon v.
Adelantar93

12 months

Phil. Employ v.
Paramio, et
al.94

12 months

10 months

2 months

Unexpired portion

Flourish
Maritime v.
Almanzor 95

2 years

26 days

23 months and 4
days

6 months or 3
months for each
year of contract

Athenna
Manpower v.
Villanos 96

1 year, 10
months and
28 days

1 month

1 year, 9 months
and 28 days

6 months or 3
months for each
year of contract

As the foregoing matrix readily shows, the subject clause classifies OFWs into two categories. The
first category includes OFWs with fixed-period employment contracts of less than one year; in case
of illegal dismissal, they are entitled to their salaries for the entire unexpired portion of their contract.
The second category consists of OFWs with fixed-period employment contracts of one year or more;
in case of illegal dismissal, they are entitled to monetary award equivalent to only 3 months of the
unexpired portion of their contracts.
The disparity in the treatment of these two groups cannot be discounted. In Skippers, the respondent
OFW worked for only 2 months out of his 6-month contract, but was awarded his salaries for the
remaining 4 months. In contrast, the respondent OFWs in Oriental and PCL who had also worked for
about 2 months out of their 12-month contracts were awarded their salaries for only 3 months of the
unexpired portion of their contracts. Even the OFWs involved in Talidano and Univan who
had worked for a longer period of 3 months out of their 12-month contracts before being illegally
dismissed were awarded their salaries for only 3 months.
To illustrate the disparity even more vividly, the Court assumes a hypothetical OFW-A with an
employment contract of 10 months at a monthly salary rate of US$1,000.00 and a hypothetical
OFW-B with an employment contract of 15 months with the same monthly salary rate of
US$1,000.00. Both commenced work on the same day and under the same employer, and were
illegally dismissed after one month of work. Under the subject clause, OFW-A will be entitled to
US$9,000.00, equivalent to his salaries for the remaining 9 months of his contract, whereas OFW-B
will be entitled to only US$3,000.00, equivalent to his salaries for 3 months of the unexpired portion
of his contract, instead of US$14,000.00 for the unexpired portion of 14 months of his contract, as
the US$3,000.00 is the lesser amount.
The disparity becomes more aggravating when the Court takes into account jurisprudence
that, prior to the effectivity of R.A. No. 8042 on July 14, 1995,97 illegally dismissed OFWs, no
matter how long the period of their employment contracts, were entitled to their salaries for the entire
unexpired portions of their contracts. The matrix below speaks for itself:

Case Title

Contract
Period

Period of
Service

Unexpired
Period

Period Applied in the

Computation of the
Monetary Award

ATCI v. CA, et
al.98

2 years

2 months

22 months

22 months

Phil. Integrated
v. NLRC99

2 years

7 days

23 months
and 23 days

23 months and 23
days

JGB v. NLC100

2 years

9 months

15 months

15 months

Agoy v.
NLRC101

2 years

2 months

22 months

22 months

EDI v. NLRC,
et al.102

2 years

5 months

19 months

19 months

Barros v.
NLRC, et al.103

12 months

4 months

8 months

8 months

Philippine
Transmarine v.
Carilla104

12 months

6 months
and 22 days

5 months and
18 days

5 months and 18 days

It is plain that prior to R.A. No. 8042, all OFWs, regardless of contract periods or the unexpired
portions thereof, were treated alike in terms of the computation of their monetary benefits in case of
illegal dismissal. Their claims were subjected to a uniform rule of computation: their basic salaries
multiplied by the entire unexpired portion of their employment contracts.
The enactment of the subject clause in R.A. No. 8042 introduced a differentiated rule of computation
of the money claims of illegally dismissed OFWs based on their employment periods, in the
process singling out one category whose contracts have an unexpired portion of one year or more
and subjecting them to the peculiar disadvantage of having their monetary awards limited to their
salaries for 3 months or for the unexpired portion thereof, whichever is less, but all the while sparing
the other category from such prejudice, simply because the latter's unexpired contracts fall short of
one year.
Among OFWs With Employment Contracts of More Than One Year
Upon closer examination of the terminology employed in the subject clause, the Court now has
misgivings on the accuracy of the Marsaman interpretation.
The Court notes that the subject clause "or for three (3) months for every year of the unexpired
term, whichever is less" contains the qualifying phrases "every year" and "unexpired term." By its
ordinary meaning, the word "term" means a limited or definite extent of time. 105 Corollarily, that "every
year" is but part of an "unexpired term" is significant in many ways: first, the unexpired term must be
at least one year, for if it were any shorter, there would be no occasion for such unexpired term to be
measured by every year; and second, the original term must be more than one year, for otherwise,
whatever would be the unexpired term thereof will not reach even a year. Consequently, the more
decisive factor in the determination of when the subject clause "for three (3) months for every year of
the unexpired term, whichever is less" shall apply is not the length of the original contract period as

held in Marsaman,106 but the length of the unexpired portion of the contract period -- the subject
clause applies in cases when the unexpired portion of the contract period is at least one year, which
arithmetically requires that the original contract period be more than one year.
Viewed in that light, the subject clause creates a sub-layer of discrimination among OFWs whose
contract periods are for more than one year: those who are illegally dismissed with less than one
year left in their contracts shall be entitled to their salaries for the entire unexpired portion thereof,
while those who are illegally dismissed with one year or more remaining in their contracts shall be
covered by the subject clause, and their monetary benefits limited to their salaries for three months
only.
To concretely illustrate the application of the foregoing interpretation of the subject clause, the Court
assumes hypothetical OFW-C and OFW-D, who each have a 24-month contract at a salary rate of
US$1,000.00 per month. OFW-C is illegally dismissed on the 12th month, and OFW-D, on the 13th
month. Considering that there is at least 12 months remaining in the contract period of OFW-C, the
subject clause applies to the computation of the latter's monetary benefits. Thus, OFW-C will be
entitled, not to US$12,000,00 or the latter's total salaries for the 12 months unexpired portion of the
contract, but to the lesser amount of US$3,000.00 or the latter's salaries for 3 months out of the 12month unexpired term of the contract. On the other hand, OFW-D is spared from the effects of the
subject clause, for there are only 11 months left in the latter's contract period. Thus, OFW-D will be
entitled to US$11,000.00, which is equivalent to his/her total salaries for the entire 11-month
unexpired portion.
OFWs vis--vis Local Workers
With Fixed-Period Employment
As discussed earlier, prior to R.A. No. 8042, a uniform system of computation of the monetary
awards of illegally dismissed OFWs was in place. This uniform system was applicable even to local
workers with fixed-term employment.107
The earliest rule prescribing a uniform system of computation was actually Article 299 of the Code of
Commerce (1888),108 to wit:
Article 299. If the contracts between the merchants and their shop clerks and employees should
have been made of a fixed period, none of the contracting parties, without the consent of the other,
may withdraw from the fulfillment of said contract until the termination of the period agreed upon.
Persons violating this clause shall be subject to indemnify the loss and damage suffered, with the
exception of the provisions contained in the following articles.
In Reyes v. The Compaia Maritima,109 the Court applied the foregoing provision to determine the
liability of a shipping company for the illegal discharge of its managers prior to the expiration of their
fixed-term employment. The Court therein held the shipping company liable for the salaries of its
managers for the remainder of their fixed-term employment.
There is a more specific rule as far as seafarers are concerned: Article 605 of the Code of
Commerce which provides:
Article 605. If the contracts of the captain and members of the crew with the agent should be for a
definite period or voyage, they cannot be discharged until the fulfillment of their contracts, except for

reasons of insubordination in serious matters, robbery, theft, habitual drunkenness, and damage
caused to the vessel or to its cargo by malice or manifest or proven negligence.
Article 605 was applied to Madrigal Shipping Company, Inc. v. Ogilvie, 110 in
which the Court held the shipping company liable for the salaries and subsistence allowance of its
illegally dismissed employees for the entire unexpired portion of their employment contracts.
While Article 605 has remained good law up to the present,111 Article 299 of the Code of Commerce
was replaced by Art. 1586 of the Civil Code of 1889, to wit:
Article 1586. Field hands, mechanics, artisans, and other laborers hired for a certain time and for a
certain work cannot leave or be dismissed without sufficient cause, before the fulfillment of the
contract. (Emphasis supplied.)
Citing Manresa, the Court in Lemoine v. Alkan112 read the disjunctive "or" in Article 1586 as a
conjunctive "and" so as to apply the provision to local workers who are employed for a time certain
although for no particular skill. This interpretation of Article 1586 was reiterated in Garcia Palomar v.
Hotel de France Company.113 And in both Lemoine and Palomar, the Court adopted the general
principle that in actions for wrongful discharge founded on Article 1586, local workers are entitled to
recover damages to the extent of the amount stipulated to be paid to them by the terms of their
contract. On the computation of the amount of such damages, the Court in Aldaz v. Gay 114 held:
The doctrine is well-established in American jurisprudence, and nothing has been brought to our
attention to the contrary under Spanish jurisprudence, that when an employee is wrongfully
discharged it is his duty to seek other employment of the same kind in the same community, for the
purpose of reducing the damages resulting from such wrongful discharge. However, while this is the
general rule, the burden of showing that he failed to make an effort to secure other employment of a
like nature, and that other employment of a like nature was obtainable, is upon the defendant. When
an employee is wrongfully discharged under a contract of employment his prima facie damage is the
amount which he would be entitled to had he continued in such employment until the termination of
the period. (Howard vs. Daly, 61 N. Y., 362; Allen vs. Whitlark, 99 Mich., 492; Farrell vs. School
District No. 2, 98 Mich., 43.)115 (Emphasis supplied)
On August 30, 1950, the New Civil Code took effect with new provisions on fixed-term employment:
Section 2 (Obligations with a Period), Chapter 3, Title I, and Sections 2 (Contract of Labor) and 3
(Contract for a Piece of Work), Chapter 3, Title VIII, Book IV.116 Much like Article 1586 of the Civil
Code of 1889, the new provisions of the Civil Code do not expressly provide for the remedies
available to a fixed-term worker who is illegally discharged. However, it is noted that in Mackay
Radio & Telegraph Co., Inc. v. Rich,117 the Court carried over the principles on the payment of
damages underlying Article 1586 of the Civil Code of 1889 and applied the same to a case involving
the illegal discharge of a local worker whose fixed-period employment contract was entered into in
1952, when the new Civil Code was already in effect.118
More significantly, the same principles were applied to cases involving overseas Filipino workers
whose fixed-term employment contracts were illegally terminated, such as in First Asian Trans &
Shipping Agency, Inc. v. Ople,119involving seafarers who were illegally discharged. In Teknika Skills
and Trade Services, Inc. v. National Labor Relations Commission,120 an OFW who was illegally
dismissed prior to the expiration of her fixed-period employment contract as a baby sitter, was
awarded salaries corresponding to the unexpired portion of her contract. The Court arrived at the
same ruling in Anderson v. National Labor Relations Commission, 121 which involved a foreman hired
in 1988 in Saudi Arabia for a fixed term of two years, but who was illegally dismissed after only nine

months on the job -- the Court awarded him salaries corresponding to 15 months, the unexpired
portion of his contract. In Asia World Recruitment, Inc. v. National Labor Relations Commission, 122 a
Filipino working as a security officer in 1989 in Angola was awarded his salaries for the remaining
period of his 12-month contract after he was wrongfully discharged. Finally, in Vinta Maritime Co.,
Inc. v. National Labor Relations Commission,123 an OFW whose 12-month contract was illegally cut
short in the second month was declared entitled to his salaries for the remaining 10 months of his
contract.
In sum, prior to R.A. No. 8042, OFWs and local workers with fixed-term employment who were
illegally discharged were treated alike in terms of the computation of their money claims: they were
uniformly entitled to their salaries for the entire unexpired portions of their contracts. But with the
enactment of R.A. No. 8042, specifically the adoption of the subject clause, illegally dismissed
OFWs with an unexpired portion of one year or more in their employment contract have since been
differently treated in that their money claims are subject to a 3-month cap, whereas no such
limitation is imposed on local workers with fixed-term employment.
The Court concludes that the subject clause contains a suspect classification in that, in the
computation of the monetary benefits of fixed-term employees who are illegally discharged, it
imposes a 3-month cap on the claim of OFWs with an unexpired portion of one year or more
in their contracts, but none on the claims of other OFWs or local workers with fixed-term
employment. The subject clause singles out one classification of OFWs and burdens it with a
peculiar disadvantage.
There being a suspect classification involving a vulnerable sector protected by the Constitution, the
Court now subjects the classification to a strict judicial scrutiny, and determines whether it serves a
compelling state interest through the least restrictive means.
What constitutes compelling state interest is measured by the scale of rights and powers arrayed in
the Constitution and calibrated by history.124 It is akin to the paramount interest of the state125 for
which some individual liberties must give way, such as the public interest in safeguarding health or
maintaining medical standards,126 or in maintaining access to information on matters of public
concern.127
In the present case, the Court dug deep into the records but found no compelling state interest that
the subject clause may possibly serve.
The OSG defends the subject clause as a police power measure "designed to protect the
employment of Filipino seafarers overseas x x x. By limiting the liability to three months [sic], Filipino
seafarers have better chance of getting hired by foreign employers." The limitation also protects the
interest of local placement agencies, which otherwise may be made to shoulder millions of pesos in
"termination pay."128
The OSG explained further:
Often, placement agencies, their liability being solidary, shoulder the payment of money claims in the
event that jurisdiction over the foreign employer is not acquired by the court or if the foreign
employer reneges on its obligation. Hence, placement agencies that are in good faith and which
fulfill their obligations are unnecessarily penalized for the acts of the foreign employer. To protect
them and to promote their continued helpful contribution in deploying Filipino migrant workers,
liability for money are reduced under Section 10 of RA 8042.

This measure redounds to the benefit of the migrant workers whose welfare the government seeks
to promote. The survival of legitimate placement agencies helps [assure] the government that
migrant workers are properly deployed and are employed under decent and humane
conditions.129 (Emphasis supplied)
However, nowhere in the Comment or Memorandum does the OSG cite the source of its perception
of the state interest sought to be served by the subject clause.
The OSG locates the purpose of R.A. No. 8042 in the speech of Rep. Bonifacio Gallego in
sponsorship of House Bill No. 14314 (HB 14314), from which the law originated; 130 but the speech
makes no reference to the underlying reason for the adoption of the subject clause. That is only
natural for none of the 29 provisions in HB 14314 resembles the subject clause.
On the other hand, Senate Bill No. 2077 (SB 2077) contains a provision on money claims, to wit:
Sec. 10. Money Claims. - Notwithstanding any provision of law to the contrary, the Labor Arbiters of
the National Labor Relations Commission (NLRC) shall have the original and exclusive jurisdiction to
hear and decide, within ninety (90) calendar days after the filing of the complaint, the claims arising
out of an employer-employee relationship or by virtue of the complaint, the claim arising out of an
employer-employee relationship or by virtue of any law or contract involving Filipino workers for
overseas employment including claims for actual, moral, exemplary and other forms of damages.
The liability of the principal and the recruitment/placement agency or any and all claims under this
Section shall be joint and several.
Any compromise/amicable settlement or voluntary agreement on any money claims exclusive of
damages under this Section shall not be less than fifty percent (50%) of such money
claims: Provided, That any installment payments, if applicable, to satisfy any such compromise or
voluntary settlement shall not be more than two (2) months. Any compromise/voluntary agreement in
violation of this paragraph shall be null and void.
Non-compliance with the mandatory period for resolutions of cases provided under this Section shall
subject the responsible officials to any or all of the following penalties:
(1) The salary of any such official who fails to render his decision or resolution within the
prescribed period shall be, or caused to be, withheld until the said official complies therewith;
(2) Suspension for not more than ninety (90) days; or
(3) Dismissal from the service with disqualification to hold any appointive public office for five
(5) years.
Provided, however, That the penalties herein provided shall be without prejudice to any liability which
any such official may have incurred under other existing laws or rules and regulations as a
consequence of violating the provisions of this paragraph.
But significantly, Section 10 of SB 2077 does not provide for any rule on the computation of money
claims.
A rule on the computation of money claims containing the subject clause was inserted and
eventually adopted as the 5th paragraph of Section 10 of R.A. No. 8042. The Court examined the

rationale of the subject clause in the transcripts of the "Bicameral Conference Committee
(Conference Committee) Meetings on the Magna Carta on OCWs (Disagreeing Provisions of Senate
Bill No. 2077 and House Bill No. 14314)." However, the Court finds no discernible state interest, let
alone a compelling one, that is sought to be protected or advanced by the adoption of the subject
clause.
In fine, the Government has failed to discharge its burden of proving the existence of a compelling
state interest that would justify the perpetuation of the discrimination against OFWs under the
subject clause.
Assuming that, as advanced by the OSG, the purpose of the subject clause is to protect the
employment of OFWs by mitigating the solidary liability of placement agencies, such callous and
cavalier rationale will have to be rejected. There can never be a justification for any form of
government action that alleviates the burden of one sector, but imposes the same burden on another
sector, especially when the favored sector is composed of private businesses such as placement
agencies, while the disadvantaged sector is composed of OFWs whose protection no less than the
Constitution commands. The idea that private business interest can be elevated to the level of a
compelling state interest is odious.
Moreover, even if the purpose of the subject clause is to lessen the solidary liability of placement
agencies vis-a-vis their foreign principals, there are mechanisms already in place that can be
employed to achieve that purpose without infringing on the constitutional rights of OFWs.
The POEA Rules and Regulations Governing the Recruitment and Employment of Land-Based
Overseas Workers, dated February 4, 2002, imposes administrative disciplinary measures on erring
foreign employers who default on their contractual obligations to migrant workers and/or their
Philippine agents. These disciplinary measures range from temporary disqualification to preventive
suspension. The POEA Rules and Regulations Governing the Recruitment and Employment of
Seafarers, dated May 23, 2003, contains similar administrative disciplinary measures against erring
foreign employers.
Resort to these administrative measures is undoubtedly the less restrictive means of aiding local
placement agencies in enforcing the solidary liability of their foreign principals.
Thus, the subject clause in the 5th paragraph of Section 10 of R.A. No. 8042 is violative of the right
of petitioner and other OFWs to equal protection.
1avvphi1

Further, there would be certain misgivings if one is to approach the declaration of the
unconstitutionality of the subject clause from the lone perspective that the clause directly violates
state policy on labor under Section 3,131Article XIII of the Constitution.
While all the provisions of the 1987 Constitution are presumed self-executing, 132 there are some
which this Court has declared not judicially enforceable, Article XIII being one,133 particularly
Section 3 thereof, the nature of which, this Court, in Agabon v. National Labor Relations
Commission,134 has described to be not self-actuating:
Thus, the constitutional mandates of protection to labor and security of tenure may be deemed as
self-executing in the sense that these are automatically acknowledged and observed without need
for any enabling legislation. However, to declare that the constitutional provisions are enough to
guarantee the full exercise of the rights embodied therein, and the realization of ideals therein
expressed, would be impractical, if not unrealistic. The espousal of such view presents the
dangerous tendency of being overbroad and exaggerated. The guarantees of "full protection to

labor" and "security of tenure", when examined in isolation, are facially unqualified, and the broadest
interpretation possible suggests a blanket shield in favor of labor against any form of removal
regardless of circumstance. This interpretation implies an unimpeachable right to continued
employment-a utopian notion, doubtless-but still hardly within the contemplation of the framers.
Subsequent legislation is still needed to define the parameters of these guaranteed rights to ensure
the protection and promotion, not only the rights of the labor sector, but of the employers' as well.
Without specific and pertinent legislation, judicial bodies will be at a loss, formulating their own
conclusion to approximate at least the aims of the Constitution.
Ultimately, therefore, Section 3 of Article XIII cannot, on its own, be a source of a positive
enforceable right to stave off the dismissal of an employee for just cause owing to the failure to
serve proper notice or hearing. As manifested by several framers of the 1987 Constitution, the
provisions on social justice require legislative enactments for their enforceability.135 (Emphasis
added)
Thus, Section 3, Article XIII cannot be treated as a principal source of direct enforceable rights, for
the violation of which the questioned clause may be declared unconstitutional. It may unwittingly risk
opening the floodgates of litigation to every worker or union over every conceivable violation of so
broad a concept as social justice for labor.
It must be stressed that Section 3, Article XIII does not directly bestow on the working class any
actual enforceable right, but merely clothes it with the status of a sector for whom the Constitution
urges protection through executive or legislative action and judicial recognition. Its utility is best
limited to being an impetus not just for the executive and legislative departments, but for the judiciary
as well, to protect the welfare of the working class. And it was in fact consistent with that
constitutional agenda that the Court in Central Bank (now Bangko Sentral ng Pilipinas) Employee
Association, Inc. v. Bangko Sentral ng Pilipinas, penned by then Associate Justice now Chief Justice
Reynato S. Puno, formulated the judicial precept that when the challenge to a statute is premised on
the perpetuation of prejudice against persons favored by the Constitution with special protection -such as the working class or a section thereof -- the Court may recognize the existence of a suspect
classification and subject the same to strict judicial scrutiny.
The view that the concepts of suspect classification and strict judicial scrutiny formulated in Central
Bank Employee Association exaggerate the significance of Section 3, Article XIII is a groundless
apprehension. Central Bank applied Article XIII in conjunction with the equal protection clause.
Article XIII, by itself, without the application of the equal protection clause, has no life or force of its
own as elucidated in Agabon.
Along the same line of reasoning, the Court further holds that the subject clause violates petitioner's
right to substantive due process, for it deprives him of property, consisting of monetary benefits,
without any existing valid governmental purpose. 136
The argument of the Solicitor General, that the actual purpose of the subject clause of limiting the
entitlement of OFWs to their three-month salary in case of illegal dismissal, is to give them a better
chance of getting hired by foreign employers. This is plain speculation. As earlier discussed, there is
nothing in the text of the law or the records of the deliberations leading to its enactment or the
pleadings of respondent that would indicate that there is an existing governmental purpose for the
subject clause, or even just a pretext of one.
The subject clause does not state or imply any definitive governmental purpose; and it is for that
precise reason that the clause violates not just petitioner's right to equal protection, but also her right
to substantive due process under Section 1,137 Article III of the Constitution.

The subject clause being unconstitutional, petitioner is entitled to his salaries for the entire unexpired
period of nine months and 23 days of his employment contract, pursuant to law and jurisprudence
prior to the enactment of R.A. No. 8042.
On the Third Issue
Petitioner contends that his overtime and leave pay should form part of the salary basis in the
computation of his monetary award, because these are fixed benefits that have been stipulated into
his contract.
Petitioner is mistaken.
The word salaries in Section 10(5) does not include overtime and leave pay. For seafarers like
petitioner, DOLE Department Order No. 33, series 1996, provides a Standard Employment Contract
of Seafarers, in which salary is understood as the basic wage, exclusive of overtime, leave pay and
other bonuses; whereas overtime pay is compensation for all work "performed" in excess of the
regular eight hours, and holiday pay is compensation for any work "performed" on designated rest
days and holidays.
By the foregoing definition alone, there is no basis for the automatic inclusion of overtime and
holiday pay in the computation of petitioner's monetary award, unless there is evidence that he
performed work during those periods. As the Court held in Centennial Transmarine, Inc. v. Dela
Cruz,138
However, the payment of overtime pay and leave pay should be disallowed in light of our ruling in
Cagampan v. National Labor Relations Commission, to wit:
The rendition of overtime work and the submission of sufficient proof that said was actually
performed are conditions to be satisfied before a seaman could be entitled to overtime pay which
should be computed on the basis of 30% of the basic monthly salary. In short, the contract provision
guarantees the right to overtime pay but the entitlement to such benefit must first be established.
In the same vein, the claim for the day's leave pay for the unexpired portion of the contract is
unwarranted since the same is given during the actual service of the seamen.
WHEREFORE, the Court GRANTS the Petition. The subject clause "or for three months for every
year of the unexpired term, whichever is less" in the 5th paragraph of Section 10 of Republic Act No.
8042 is DECLAREDUNCONSTITUTIONAL; and the December 8, 2004 Decision and April 1, 2005
Resolution of the Court of Appeals are MODIFIED to the effect that petitioner is AWARDED his
salaries for the entire unexpired portion of his employment contract consisting of nine months and 23
days computed at the rate of US$1,400.00 per month.
No costs.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC

G.R. No. 170139

August 5, 2014

SAMEER OVERSEAS PLACEMENT AGENCY, INC., Petitioner,

vs.
JOY C. CABILES, Respondent.
DECISION
LEONEN, J.:
This case involves an overseas Filipino worker with shattered dreams. It is our duty, given the facts
and the law, to approximate justice for her.
We are asked to decide a petition for review on certiorari assailing the Court of Appeals
decision dated June 27, 2005. This decision partially affirmed the National Labor
RelationsCommissions resolution dated March 31, 2004, declaring respondents dismissal illegal,
directing petitioner to pay respondents three-month salary equivalent to New Taiwan Dollar (NT$)
46,080.00, and ordering it to reimburse the NT$3,000.00 withheld from respondent, and pay her
NT$300.00 attorneys fees.
1

Petitioner, Sameer Overseas Placement Agency, Inc., is a recruitment and placement

agency. Responding to an ad it published, respondent, Joy C. Cabiles, submitted her application for
a quality control job in Taiwan.
5

Joys application was accepted. Joy was later asked to sign a oneyear employment contract for a
monthly salary of NT$15,360.00. She alleged that Sameer Overseas Agency required her to pay a
placement fee of P70,000.00 when she signed the employment contract.
7

Joy was deployed to work for TaiwanWacoal, Co. Ltd. (Wacoal) on June 26, 1997. She alleged that
in her employment contract, she agreed to work as quality control for one year. In Taiwan, she was
asked to work as a cutter.
10

11

12

Sameer Overseas Placement Agencyclaims that on July 14, 1997, a certain Mr. Huwang from
Wacoal informedJoy, without prior notice, that she was terminated and that "she should immediately
report to their office to get her salary and passport." She was asked to "prepare for immediate
repatriation."
13

14

Joy claims that she was told that from June 26 to July 14, 1997, she only earned a total of
NT$9,000. According to her, Wacoal deducted NT$3,000 to cover her plane ticket to Manila.
15

16

On October 15, 1997, Joy filed a complaint with the National Labor Relations Commission against
petitioner and Wacoal. She claimed that she was illegally dismissed. She asked for the return of her
placement fee, the withheld amount for repatriation costs, payment of her salary for 23 months as
well as moral and exemplary damages. She identified Wacoal as Sameer Overseas Placement
Agencys foreign principal.
17

18

19

20

Sameer Overseas Placement Agency alleged that respondent's termination was due to her
inefficiency, negligence in her duties, and her "failure to comply with the work requirements [of] her
foreign [employer]." The agency also claimed that it did not ask for a placement fee
of P70,000.00. As evidence, it showedOfficial Receipt No. 14860 dated June 10, 1997, bearing the
amount of P20,360.00. Petitioner added that Wacoal's accreditation with petitioner had already
21

22

23

been transferred to the Pacific Manpower & Management Services, Inc. (Pacific) as of August 6,
1997. Thus, petitioner asserts that it was already substituted by Pacific Manpower.
24

25

Pacific Manpower moved for the dismissal of petitioners claims against it. It alleged that there was
no employer-employee relationship between them. Therefore, the claims against it were outside the
jurisdiction of the Labor Arbiter. Pacific Manpower argued that the employment contract should first
be presented so that the employers contractual obligations might be identified. It further denied that
it assumed liability for petitioners illegal acts.
26

27

28

29

30

On July 29, 1998, the Labor Arbiter dismissed Joys complaint. Acting Executive Labor Arbiter
Pedro C.Ramos ruled that her complaint was based on mereallegations. The Labor Arbiter found
that there was no excess payment of placement fees, based on the official receipt presented by
petitioner. The Labor Arbiter found unnecessary a discussion on petitioners transfer of obligations
to Pacific and considered the matter immaterial in view of the dismissal of respondents complaint.
31

32

33

34

35

Joy appealed to the National Labor Relations Commission.

36

In a resolution dated March 31, 2004, the National Labor Relations Commission declared that Joy
was illegally dismissed. It reiterated the doctrine that the burden of proof to show that the dismissal
was based on a just or valid cause belongs to the employer. It found that Sameer Overseas
Placement Agency failed to prove that there were just causes for termination. There was no
sufficient proofto show that respondent was inefficient in her work and that she failed to comply with
company requirements. Furthermore, procedural dueprocess was not observed in terminating
respondent.
37

38

39

40

41

42

The National Labor Relations Commission did not rule on the issue of reimbursement of placement
fees for lack of jurisdiction. It refused to entertain the issue of the alleged transfer of obligations to
Pacific. It did not acquire jurisdiction over that issue because Sameer Overseas Placement Agency
failed to appeal the Labor Arbiters decision not to rule on the matter.
43

44

45

The National Labor Relations Commission awarded respondent only three (3) months worth of
salaryin the amount of NT$46,080, the reimbursement of the NT$3,000 withheld from her, and
attorneys fees of NT$300.
46

The Commission denied the agencys motion for reconsideration dated May 12, 2004 through a
resolution dated July 2, 2004.
47

48

Aggrieved by the ruling, Sameer Overseas Placement Agency caused the filing of a petition for
certiorari with the Court of Appeals assailing the National Labor Relations Commissions resolutions
dated March 31, 2004 and July 2, 2004.
49

The Court of Appeals affirmed the decision of the National Labor Relations Commission with
respect to the finding of illegal dismissal, Joys entitlement to the equivalent of three months worth of
salary, reimbursement of withheld repatriation expense, and attorneys fees. The Court of Appeals
remanded the case to the National Labor Relations Commission to address the validity of petitioner's
allegations against Pacific. The Court of Appeals held, thus: Although the public respondent found
the dismissal of the complainant-respondent illegal, we should point out that the NLRC merely
awarded her three (3) months backwages or the amount of NT$46,080.00, which was based upon
its finding that she was dismissed without due process, a finding that we uphold, given petitioners
lack of worthwhile discussion upon the same in the proceedings below or before us. Likewise we
sustain NLRCs finding in regard to the reimbursement of her fare, which is squarely based on the
law; as well as the award of attorneys fees.
50

51

52

But we do find it necessary to remand the instant case to the public respondent for further
proceedings, for the purpose of addressing the validity or propriety of petitioners third-party
complaint against the transferee agent or the Pacific Manpower & Management Services, Inc. and
Lea G. Manabat. We should emphasize that as far as the decision of the NLRC on the claims of Joy
Cabiles, is concerned, the same is hereby affirmed with finality, and we hold petitioner liable thereon,
but without prejudice to further hearings on its third party complaint against Pacific for
reimbursement.
WHEREFORE, premises considered, the assailed Resolutions are hereby partly AFFIRMED in
accordance with the foregoing discussion, but subject to the caveat embodied inthe last sentence.
No costs.
SO ORDERED.

53

Dissatisfied, Sameer Overseas Placement Agency filed this petition.

54

We are asked to determine whether the Court of Appeals erred when it affirmed the ruling of the
National Labor Relations Commission finding respondent illegally dismissed and awarding her three
months worth of salary, the reimbursement of the cost ofher repatriation, and attorneys fees despite
the alleged existence of just causes of termination.
Petitioner reiterates that there was just cause for termination because there was a finding of Wacoal
that respondent was inefficient in her work.
55

Therefore, it claims that respondents dismissal was valid.

56

Petitioner also reiterates that since Wacoals accreditation was validly transferred to Pacific at the
time respondent filed her complaint, it should be Pacific that should now assume responsibility for
Wacoals contractual obligations to the workers originally recruited by petitioner.
57

Sameer Overseas Placement Agencyspetition is without merit. We find for respondent.

I
Sameer Overseas Placement Agency failed to show that there was just cause for causing Joys
dismissal. The employer, Wacoal, also failed to accord her due process of law.
Indeed, employers have the prerogative to impose productivity and quality standards at work. They
may also impose reasonable rules to ensure that the employees comply with these
standards. Failure to comply may be a just cause for their dismissal. Certainly, employers cannot
be compelled to retain the services of anemployee who is guilty of acts that are inimical to the
interest of the employer. While the law acknowledges the plight and vulnerability of workers, it does
not "authorize the oppression or self-destruction of the employer." Management prerogative is
recognized in law and in our jurisprudence.
58

59

60

61

62

This prerogative, however, should not be abused. It is "tempered with the employees right to
security of tenure." Workers are entitled to substantive and procedural due process before
termination. They may not be removed from employment without a validor just cause as determined
by law and without going through the proper procedure.
63

Security of tenure for labor is guaranteed by our Constitution.

64

Employees are not stripped of their security of tenure when they move to work in a different
jurisdiction. With respect to the rights of overseas Filipino workers, we follow the principle of lex loci
contractus.Thus, in Triple Eight Integrated Services, Inc. v. NLRC, this court noted:
65

Petitioner likewise attempts to sidestep the medical certificate requirement by contending that since
Osdana was working in Saudi Arabia, her employment was subject to the laws of the host country.
Apparently, petitioner hopes tomake it appear that the labor laws of Saudi Arabia do not require any
certification by a competent public health authority in the dismissal of employees due to illness.
Again, petitioners argument is without merit.
First, established is the rule that lex loci contractus (the law of the place where the contract is made)
governs in this jurisdiction. There is no question that the contract of employment in this case was
perfected here in the Philippines. Therefore, the Labor Code, its implementing rules and regulations,
and other laws affecting labor apply in this case.Furthermore, settled is the rule that the courts of the
forum will not enforce any foreign claim obnoxious to the forums public policy. Herein the
Philippines, employment agreements are more than contractual in nature. The Constitution itself, in
Article XIII, Section 3, guarantees the special protection of workers, to wit:
The State shall afford full protection to labor, local and overseas, organized and unorganized, and
promote full employment and equality of employment opportunities for all.
It shall guarantee the rights of all workers to selforganization, collective bargaining and negotiations,
and peaceful concerted activities, including the right to strike in accordance with law. They shall be
entitled to security of tenure, humane conditions of work, and a living wage. Theyshall also
participate in policy and decision-making processes affecting their rights and benefits as may be
provided by law.
....
This public policy should be borne in mind in this case because to allow foreign employers to
determine for and by themselves whether an overseas contract worker may be dismissed on the
ground of illness would encourage illegal or arbitrary pretermination of employment
contracts. (Emphasis supplied, citation omitted)
66

Even with respect to fundamental procedural rights, this court emphasized in PCL Shipping
Philippines, Inc. v. NLRC, to wit:
67

Petitioners admit that they did notinform private respondent in writing of the charges against him and
that they failed to conduct a formal investigation to give him opportunity to air his side. However,
petitioners contend that the twin requirements ofnotice and hearing applies strictly only when the
employment is within the Philippines and that these need not be strictly observed in cases of
international maritime or overseas employment.
The Court does not agree. The provisions of the Constitution as well as the Labor Code which afford
protection to labor apply to Filipino employees whether working within the Philippines or abroad.
Moreover, the principle of lex loci contractus (the law of the place where the contract is made)
governs in this jurisdiction. In the present case, it is not disputed that the Contract of Employment
entered into by and between petitioners and private respondent was executed here in the Philippines
with the approval of the Philippine Overseas Employment Administration (POEA). Hence, the Labor

Code together with its implementing rules and regulations and other laws affecting labor apply in this
case. (Emphasis supplied, citations omitted)
68

By our laws, overseas Filipino workers (OFWs) may only be terminated for a just or authorized
cause and after compliance with procedural due process requirements.
Article 282 of the Labor Code enumerates the just causes of termination by the employer. Thus:
Art. 282. Termination by employer. An employer may terminate an employment for any of the
following causes:
(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his
employer or representative in connection with his work;
(b) Gross and habitual neglect by the employee of his duties;
(c) Fraud or willful breach by the employee of the trust reposed in him by his employer or
duly authorized representative;
(d) Commission of a crime or offense by the employee against the person of his employer or
any immediate member of his family or his duly authorized representatives; and
(e) Other causes analogous to the foregoing.
Petitioners allegation that respondentwas inefficient in her work and negligent in her duties may,
therefore, constitute a just cause for termination under Article 282(b), but only if petitioner was able
to prove it.
69

The burden of proving that there is just cause for termination is on the employer. "The employer
must affirmatively show rationally adequate evidence that the dismissal was for a justifiable
cause." Failure to show that there was valid or just cause for termination would necessarily mean
that the dismissal was illegal.
70

71

To show that dismissal resulting from inefficiency in work is valid, it must be shown that: 1) the
employer has set standards of conduct and workmanship against which the employee will be judged;
2) the standards of conduct and workmanship must have been communicated tothe employee; and
3) the communication was made at a reasonable time prior to the employees performance
assessment.
This is similar to the law and jurisprudence on probationary employees, which allow termination
ofthe employee only when there is "just cause or when [the probationary employee] fails to qualify as
a regular employee in accordance with reasonable standards made known by the employer to the
employee at the time of his [or her] engagement."
72

However, we do not see why the application of that ruling should be limited to probationary
employment. That rule is basic to the idea of security of tenure and due process, which are
guaranteed to all employees, whether their employment is probationary or regular.
The pre-determined standards that the employer sets are the bases for determining the probationary
employees fitness, propriety, efficiency, and qualifications as a regular employee. Due process
requires that the probationary employee be informed of such standards at the time of his or her

engagement so he or she can adjusthis or her character or workmanship accordingly. Proper

adjustment to fit the standards upon which the employees qualifications will be evaluated will
increase ones chances of being positively assessed for regularization by his or her employer.
Assessing an employees work performance does not stop after regularization. The employer, on a
regular basis, determines if an employee is still qualified and efficient, based on work standards.
Based on that determination, and after complying with the due process requirements of notice and
hearing, the employer may exercise its management prerogative of terminating the employee found
unqualified.
The regular employee must constantlyattempt to prove to his or her employer that he or she meets
all the standards for employment. This time, however, the standards to be met are set for the
purpose of retaining employment or promotion. The employee cannot be expected to meet any
standard of character or workmanship if such standards were not communicated to him or her.
Courts should remain vigilant on allegations of the employers failure to communicatework standards
that would govern ones employment "if [these are] to discharge in good faith [their] duty to
adjudicate."
73

In this case, petitioner merely alleged that respondent failed to comply with her foreign employers
work requirements and was inefficient in her work. No evidence was shown to support such
allegations. Petitioner did not even bother to specify what requirements were not met, what
efficiency standards were violated, or what particular acts of respondent constituted inefficiency.
74

There was also no showing that respondent was sufficiently informed of the standards against which
her work efficiency and performance were judged. The parties conflict as to the position held by
respondent showed that even the matter as basic as the job title was not clear.
The bare allegations of petitioner are not sufficient to support a claim that there is just cause for
termination. There is no proof that respondent was legally terminated.
Petitioner failed to comply with
the due process requirements
Respondents dismissal less than one year from hiring and her repatriation on the same day show
not onlyfailure on the partof petitioner to comply with the requirement of the existence of just cause
for termination. They patently show that the employersdid not comply with the due process
requirement.
A valid dismissal requires both a valid cause and adherence to the valid procedure of
dismissal. The employer is required to give the charged employee at least two written notices
before termination. One of the written notices must inform the employee of the particular acts that
may cause his or her dismissal. The other notice must "[inform] the employee of the employers
decision." Aside from the notice requirement, the employee must also be given "an opportunity to
be heard."
75

76

77

78

79

Petitioner failed to comply with the twin notices and hearing requirements. Respondent started
working on June 26, 1997. She was told that she was terminated on July 14, 1997 effective on the
same day and barely a month from her first workday. She was also repatriated on the same day that
she was informed of her termination. The abruptness of the termination negated any finding that she
was properly notified and given the opportunity to be heard. Her constitutional right to due process of
law was violated.

II
Respondent Joy Cabiles, having been illegally dismissed, is entitled to her salary for the unexpired
portion ofthe employment contract that was violated together with attorneys fees and reimbursement
of amounts withheld from her salary.
Section 10 of Republic Act No. 8042,otherwise known as the Migrant Workers and Overseas
Filipinos Act of1995, states thatoverseas workers who were terminated without just, valid, or
authorized cause "shall be entitled to the full reimbursement of his placement fee with interest of
twelve (12%) per annum, plus his salaries for the unexpired portion of his employment contract or for
three (3) months for every year of the unexpired term, whichever is less."
Sec. 10. MONEY CLAIMS. Notwithstanding any provision of law to the contrary, the Labor Arbiters
of the National Labor Relations Commission (NLRC) shall have the original and exclusive jurisdiction
to hear and decide, within ninety (90) calendar days after filing of the complaint, the claims arising
out of an employer-employee relationship or by virtue of any law or contract involving Filipino
workers for overseas deployment including claims for actual, moral, exemplary and other forms of
damages.
The liability of the principal/employer and the recruitment/placement agency for any and all claims
under this section shall be joint and several. This provisions [sic] shall be incorporated in the contract
for overseas employment and shall be a condition precedent for its approval. The performance bond
to be filed by the recruitment/placementagency, as provided by law, shall be answerable for all
money claims or damages that may be awarded to the workers. If the recruitment/placement agency
is a juridical being, the corporate officers and directors and partners as the case may be, shall
themselves be jointly and solidarily liable with the corporation orpartnership for the aforesaid claims
and damages.
Such liabilities shall continue during the entire period or duration of the employment contract and
shall not be affected by any substitution, amendment or modification made locally or in a foreign
country of the said contract.
Any compromise/amicable settlement or voluntary agreement on money claims inclusive of
damages under this section shall be paid within four (4) months from the approval of the settlement
by the appropriate authority.
In case of termination of overseas employment without just, valid or authorized cause as defined by
law or contract, the workers shall be entitled to the full reimbursement of his placement fee with
interest of twelve (12%) per annum, plus his salaries for the unexpired portion of his employment
contract or for three (3) months for every year of the unexpired term, whichever is less.
....
(Emphasis supplied)
Section 15 of Republic Act No. 8042 states that "repatriation of the worker and the transport of his [or
her] personal belongings shall be the primary responsibility of the agency which recruited or
deployed the worker overseas." The exception is when "termination of employment is due solely to
the fault of the worker," which as we have established, is not the case. It reads: SEC. 15.
REPATRIATION OF WORKERS; EMERGENCY REPATRIATION FUND. The repatriation of the
worker and the transport of his personal belongings shall be the primary responsibility of the agency
80

which recruited or deployed the worker overseas. All costs attendant to repatriation shall be borne by
or charged to the agency concerned and/or its principal. Likewise, the repatriation of remains and
transport of the personal belongings of a deceased worker and all costs attendant thereto shall be
borne by the principal and/or local agency. However, in cases where the termination of employment
is due solely to the fault of the worker, the principal/employer or agency shall not in any manner be
responsible for the repatriation of the former and/or his belongings.
....
The Labor Code also entitles the employee to 10% of the amount of withheld wages as attorneys
feeswhen the withholding is unlawful.
81

The Court of Appeals affirmedthe National Labor Relations Commissions decision to award
respondent NT$46,080.00 or the threemonth equivalent of her salary, attorneys fees of NT$300.00,
and the reimbursement of the withheld NT$3,000.00 salary, which answered for her repatriation.
We uphold the finding that respondent is entitled to all of these awards. The award of the threemonth equivalent of respondents salary should, however, be increased to the amount equivalent to
the unexpired term of the employment contract.
In Serrano v. Gallant Maritime Services, Inc. and Marlow Navigation Co., Inc., this court ruled that
the clause "or for three (3) months for every year of the unexpired term, whichever is less" is
unconstitutional for violating the equal protection clause and substantive due process.
82

83

84

A statute or provision which was declared unconstitutional is not a law. It "confers no rights; it
imposes no duties; it affords no protection; it creates no office; it is inoperative as if it has not been
passed at all."
85

We are aware that the clause "or for three (3) months for every year of the unexpired term,
whichever is less"was reinstated in Republic Act No. 8042 upon promulgation of Republic Act No.
10022 in 2010. Section 7 of Republic Act No. 10022 provides:
Section 7.Section 10 of Republic Act No. 8042, as amended, is hereby amended to read as follows:
SEC. 10. Money Claims. Notwithstanding any provision of law to the contrary, the Labor Arbiters of
the National Labor Relations Commission (NLRC) shall have the original and exclusive jurisdiction to
hear and decide, within ninety (90) calendar days after the filing of the complaint, the claims arising
out of an employer-employee relationship or by virtue of any law or contract involving Filipino
workers for overseas deployment including claims for actual, moral, exemplary and other forms of
damage. Consistent with this mandate, the NLRC shall endeavor to update and keep abreast with
the developments in the global services industry.
The liability of the principal/employer and the recruitment/placement agency for any and all claims
under this section shall be joint and several. This provision shall be incorporated in the contract for
overseas employment and shall be a condition precedent for its approval. The performance bond to
de [sic] filed by the recruitment/placement agency, as provided by law, shall be answerable for all
money claims or damages that may be awarded to the workers. If the recruitment/placement agency
is a juridical being, the corporate officers and directors and partners as the case may be, shall
themselves be jointly and solidarily liable with the corporation or partnership for the aforesaid claims
and damages.

Such liabilities shall continue during the entire period or duration of the employment contract and
shall not be affected by any substitution, amendment or modification made locally or in a foreign
country of the said contract.
Any compromise/amicable settlement or voluntary agreement on money claims inclusive of
damages under this section shall be paid within thirty (30) days from approval of the settlement by
the appropriate authority.
In case of termination of overseas employment without just, valid or authorized cause as defined by
law or contract, or any unauthorized deductions from the migrant workers salary, the worker shall be
entitled to the full reimbursement if [sic] his placement fee and the deductions made with interest at
twelve percent (12%) per annum, plus his salaries for the unexpired portion of his employment
contract or for three (3) months for every year of the unexpired term, whichever is less.
In case of a final and executory judgement against a foreign employer/principal, it shall be
automatically disqualified, without further proceedings, from participating in the Philippine Overseas
Employment Program and from recruiting and hiring Filipino workers until and unless it fully satisfies
the judgement award.
Noncompliance with the mandatory periods for resolutions of case providedunder this section shall
subject the responsible officials to any or all of the following penalties:
(a) The salary of any such official who fails to render his decision or resolution within the
prescribed period shall be, or caused to be, withheld until the said official complies therewith;
(b) Suspension for not more than ninety (90) days; or
(c) Dismissal from the service with disqualification to hold any appointive public office for five
(5) years.
Provided, however,That the penalties herein provided shall be without prejudice to any liability which
any such official may have incured [sic] under other existing laws or rules and regulations as a
consequence of violating the provisions of this paragraph. (Emphasis supplied)
Republic Act No. 10022 was promulgated on March 8, 2010. This means that the reinstatement of
the clause in Republic Act No. 8042 was not yet in effect at the time of respondents termination from
work in 1997. Republic Act No. 8042 before it was amended byRepublic Act No. 10022 governs this
case.
86

When a law is passed, this court awaits an actual case that clearly raises adversarial positions in
their proper context before considering a prayer to declare it as unconstitutional.
However, we are confronted with a unique situation. The law passed incorporates the exact clause
already declared as unconstitutional, without any perceived substantial change in the circumstances.
This may cause confusion on the part of the National Labor Relations Commission and the Court of
Appeals.At minimum, the existence of Republic Act No. 10022 may delay the execution of the
judgment in this case, further frustrating remedies to assuage the wrong done to petitioner.
Hence, there is a necessity to decide this constitutional issue.

Moreover, this court is possessed with the constitutional duty to "[p]romulgate rules concerning the
protection and enforcement of constitutional rights." When cases become mootand academic, we
do not hesitate to provide for guidance to bench and bar in situations where the same violations are
capable of repetition but will evade review. This is analogous to cases where there are millions of
Filipinos working abroad who are bound to suffer from the lack of protection because of the
restoration of an identical clause in a provision previously declared as unconstitutional.
87

In the hierarchy of laws, the Constitution is supreme. No branch or office of the government may
exercise its powers in any manner inconsistent with the Constitution, regardless of the existence of
any law that supports such exercise. The Constitution cannot be trumped by any other law. All laws
must be read in light of the Constitution. Any law that is inconsistent with it is a nullity.
Thus, when a law or a provision of law is null because it is inconsistent with the Constitution,the
nullity cannot be cured by reincorporation or reenactment of the same or a similar law or provision. A
law or provision of law that was already declared unconstitutional remains as such unless
circumstances have sochanged as to warrant a reverse conclusion.
We are not convinced by the pleadings submitted by the parties that the situation has so changed so
as to cause us to reverse binding precedent.
Likewise, there are special reasons of judicial efficiency and economy that attend to these cases.
The new law puts our overseas workers in the same vulnerable position as they were prior to
Serrano. Failure to reiterate the very ratio decidendi of that case will result in the same untold
economic hardships that our reading of the Constitution intended to avoid. Obviously, we cannot
countenance added expenses for further litigation thatwill reduce their hardearned wages as well as
add to the indignity of having been deprived of the protection of our laws simply because our
precedents have not been followed. There is no constitutional doctrine that causes injustice in the
face of empty procedural niceties. Constitutional interpretation is complex, but it is never
unreasonable.
Thus, in a resolution dated October 22, 2013, we ordered the parties and the Office of the Solicitor
General to comment on the constitutionality of the reinstated clause in Republic Act No. 10022.
88

In its comment, petitioner argued that the clause was constitutional. The legislators intended a
balance between the employers and the employees rights by not unduly burdening the local
recruitment agency. Petitioner is also of the view that the clause was already declared as
constitutional in Serrano.
89

90

91

92

The Office of the Solicitor General also argued that the clause was valid and
constitutional. However, since the parties never raised the issue of the constitutionality of the clause
asreinstated in Republic Act No. 10022, its contention is that it is beyond judicial review.
93

94

On the other hand, respondentargued that the clause was unconstitutional because it infringed on
workers right to contract.
95

We observe that the reinstated clause, this time as provided in Republic Act. No. 10022, violates the
constitutional rights to equal protection and due process. Petitioner as well as the Solicitor General
have failed to show any compelling changein the circumstances that would warrant us to revisit the
precedent.
96

We reiterate our finding in Serrano v. Gallant Maritime that limiting wages that should be recovered
by anillegally dismissed overseas worker to three months is both a violation of due process and the
equal protection clauses of the Constitution.
Equal protection of the law is a guarantee that persons under like circumstances and falling within
the same class are treated alike, in terms of "privileges conferred and liabilities enforced." It is a
guarantee against "undue favor and individual or class privilege, as well as hostile discrimination or
the oppression of inequality."
97

98

In creating laws, the legislature has the power "to make distinctions and classifications."
In exercising such power, it has a wide discretion.

99

100

The equal protection clause does not infringe on this legislative power. A law is void on this basis,
only if classifications are made arbitrarily. There is no violation of the equal protection clause if the
law applies equally to persons within the same class and if there are reasonable grounds for
distinguishing between those falling within the class and those who do not fall within the class. A
law that does not violate the equal protection clause prescribesa reasonable classification.
101

102

103

104

A reasonable classification "(1) must rest on substantial distinctions; (2) must be germane to the
purposes of the law; (3) must not be limited to existing conditions only; and (4) must apply equally to
all members of the same class."
105

The reinstated clause does not satisfy the requirement of reasonable classification.
In Serrano, we identified the classifications made by the reinstated clause. It distinguished between
fixed-period overseas workers and fixedperiod local workers. It also distinguished between
overseas workers with employment contracts of less than one year and overseas workers with
employment contracts of at least one year. Within the class of overseas workers with at least oneyear employment contracts, there was a distinction between those with at least a year left in their
contracts and those with less than a year left in their contracts when they were illegally dismissed.
106

107

108

The Congress classification may be subjected to judicial review. In Serrano, there is a "legislative
classification which impermissibly interferes with the exercise of a fundamental right or operates to
the peculiar disadvantage of a suspect class."
109

Under the Constitution, labor is afforded special protection. Thus, this court in Serrano, "[i]mbued
with the same sense of obligation to afford protection to labor, . . . employ[ed] the standard of strict
judicial scrutiny, for it perceive[d] in the subject clause a suspect classification prejudicial to OFWs."
110

111

We also noted in Serranothat before the passage of Republic Act No. 8042, the money claims of
illegally terminated overseas and local workers with fixed-term employment werecomputed in the
same manner. Their money claims were computed based onthe "unexpired portions of their
contracts." The adoption of the reinstated clause in Republic Act No. 8042 subjected the money
claims of illegally dismissed overseas workers with an unexpired term of at least a year to a cap of
three months worth of their salary. There was no such limitation on the money claims of illegally
terminated local workers with fixed-term employment.
112

113

114

115

We observed that illegally dismissed overseas workers whose employment contracts had a term of
less than one year were granted the amount equivalent to the unexpired portion of their employment
contracts. Meanwhile, illegally dismissed overseas workers with employment terms of at least a
116

year were granted a cap equivalent to three months of their salary for the unexpired portions of their
contracts.
117

Observing the terminologies used inthe clause, we also found that "the subject clause creates a sublayer of discrimination among OFWs whose contract periods are for more than one year: those who
are illegally dismissed with less than one year left in their contracts shall be entitled to their salaries
for the entire unexpired portion thereof, while those who are illegally dismissed with one year or
more remaining in their contracts shall be covered by the reinstated clause, and their monetary
benefits limited to their salaries for three months only."
118

We do not need strict scrutiny to conclude that these classifications do not rest on any real or
substantial distinctions that would justify different treatments in terms of the computation of money
claims resulting from illegal termination.
Overseas workers regardless of their classifications are entitled to security of tenure, at least for the
period agreed upon in their contracts. This means that they cannot be dismissed before the end of
their contract terms without due process. If they were illegally dismissed, the workers right to
security of tenure is violated.
The rights violated when, say, a fixed-period local worker is illegally terminated are neither greater
than norless than the rights violated when a fixed-period overseas worker is illegally terminated. It is
state policy to protect the rights of workers withoutqualification as to the place of employment. In
both cases, the workers are deprived of their expected salary, which they could have earned had
they not been illegally dismissed. For both workers, this deprivation translates to economic insecurity
and disparity. The same is true for the distinctions between overseas workers with an employment
contract of less than one year and overseas workers with at least one year of employment contract,
and between overseas workers with at least a year left in their contracts and overseas workers with
less than a year left in their contracts when they were illegally dismissed.
119

120

For this reason, we cannot subscribe to the argument that "[overseas workers] are contractual
employeeswho can never acquire regular employment status, unlike local workers" because it
already justifies differentiated treatment in terms ofthe computation of money claims.
121

122

Likewise, the jurisdictional and enforcement issues on overseas workers money claims do not justify
a differentiated treatment in the computation of their money claims. If anything, these issues justify
an equal, if not greater protection and assistance to overseas workers who generally are more prone
to exploitation given their physical distance from our government.
123

We also find that the classificationsare not relevant to the purpose of the law, which is to "establish a
higher standard of protection and promotion of the welfare of migrant workers, their families and
overseas Filipinos in distress, and for other purposes." Further, we find specious the argument that
reducing the liability of placement agencies "redounds to the benefit of the [overseas] workers."
124

125

Putting a cap on the money claims of certain overseas workers does not increase the standard of
protection afforded to them. On the other hand, foreign employers are more incentivizedby the
reinstated clause to enter into contracts of at least a year because it gives them more flexibility to
violate our overseas workers rights. Their liability for arbitrarily terminating overseas workers is
decreased at the expense of the workers whose rights they violated. Meanwhile, these overseas
workers who are impressed with an expectation of a stable job overseas for the longer contract
period disregard other opportunities only to be terminated earlier. They are left with claims that are
less than what others in the same situation would receive. The reinstated clause, therefore, creates

a situation where the law meant to protect them makes violation of rights easier and simply benign to
the violator.
As Justice Brion said in his concurring opinion in Serrano:
Section 10 of R.A. No. 8042 affects these well-laid rules and measures, and in fact provides a
hidden twist affecting the principal/employers liability. While intended as an incentive accruing to
recruitment/manning agencies, the law, as worded, simply limits the OFWs recovery in
wrongfuldismissal situations. Thus, it redounds to the benefit of whoever may be liable, including the
principal/employer the direct employer primarily liable for the wrongful dismissal. In this sense,
Section 10 read as a grant of incentives to recruitment/manning agencies oversteps what it aims
to do by effectively limiting what is otherwise the full liability of the foreign principals/employers.
Section 10, in short, really operates to benefit the wrong party and allows that party, without
justifiable reason, to mitigate its liability for wrongful dismissals. Because of this hidden twist, the
limitation ofliability under Section 10 cannot be an "appropriate" incentive, to borrow the term that
R.A. No. 8042 itself uses to describe the incentive it envisions under its purpose clause.
What worsens the situation is the chosen mode of granting the incentive: instead of a grant that, to
encourage greater efforts at recruitment, is directly related to extra efforts undertaken, the law simply
limits their liability for the wrongful dismissals of already deployed OFWs. This is effectively a legallyimposed partial condonation of their liability to OFWs, justified solely by the laws intent to encourage
greater deployment efforts. Thus, the incentive,from a more practical and realistic view, is really part
of a scheme to sell Filipino overseas labor at a bargain for purposes solely of attracting the
market. . . .
The so-called incentive is rendered particularly odious by its effect on the OFWs the benefits
accruing to the recruitment/manning agencies and their principals are takenfrom the pockets of the
OFWs to whom the full salaries for the unexpired portion of the contract rightfully belong. Thus, the
principals/employers and the recruitment/manning agencies even profit from their violation of the
security of tenure that an employment contract embodies. Conversely, lesser protection is afforded
the OFW, not only because of the lessened recovery afforded him or her by operation of law, but
also because this same lessened recovery renders a wrongful dismissal easier and less onerous to
undertake; the lesser cost of dismissing a Filipino will always bea consideration a foreign employer
will take into account in termination of employment decisions. . . .
126

Further, "[t]here can never be a justification for any form of government action that alleviates the
burden of one sector, but imposes the same burden on another sector, especially when the favored
sector is composed of private businesses suchas placement agencies, while the disadvantaged
sector is composed ofOFWs whose protection no less than the Constitution commands. The idea
thatprivate business interest can be elevated to the level of a compelling state interest is odious."
127

Along the same line, we held that the reinstated clause violates due process rights. It is arbitrary as it
deprives overseas workers of their monetary claims without any discernable valid purpose.
128

Respondent Joy Cabiles is entitled to her salary for the unexpired portion of her contract, in
accordance with Section 10 of Republic Act No. 8042. The award of the three-month equivalence of
respondents salary must be modified accordingly. Since she started working on June 26, 1997 and
was terminated on July 14, 1997, respondent is entitled to her salary from July 15, 1997 to June 25,
1998. "To rule otherwise would be iniquitous to petitioner and other OFWs, and would,in effect, send
a wrong signal that principals/employers and recruitment/manning agencies may violate an OFWs
security of tenure which an employment contract embodies and actually profit from such violation
based on an unconstitutional provision of law."
129

III
On the interest rate, the Bangko Sentral ng Pilipinas Circular No. 799 of June 21, 2013, which
revised the interest rate for loan or forbearance from 12% to 6% in the absence of stipulation,applies
in this case. The pertinent portions of Circular No. 799, Series of 2013, read: The Monetary Board, in
its Resolution No. 796 dated 16 May 2013, approved the following revisions governing the rate of
interest in the absence of stipulation in loan contracts, thereby amending Section 2 of Circular No.
905, Series of 1982:
Section 1. The rate of interest for the loan or forbearance of any money, goods or credits and the
rate allowed in judgments, in the absence of an express contract as to such rateof interest, shall be
six percent (6%) per annum.
Section 2. In view of the above, Subsection X305.1 of the Manual of Regulations for Banks and
Sections 4305Q.1, 4305S.3 and 4303P.1 of the Manual of Regulations for Non-Bank Financial
Institutions are hereby amended accordingly.
This Circular shall take effect on 1 July 2013.
Through the able ponencia of Justice Diosdado Peralta, we laid down the guidelines in computing
legal interest in Nacar v. Gallery Frames:
130

II. With regard particularly to an award of interest in the concept of actual and compensatory
damages, the rate of interest, as well as the accrual thereof, is imposed, as follows:
1. When the obligation is breached, and it consists in the payment of a sum of money, i.e., a
loan or forbearance of money, the interest due should be that which may have been
stipulated in writing. Furthermore, the interest due shall itself earn legal interest from the time
it is judicially demanded. In the absence of stipulation, the rate of interest shall be 6% per
annum to be computed from default, i.e., from judicial or extrajudicial demand under and
subject to the provisions of Article 1169 of the Civil Code.
2. When an obligation, not constituting a loan or forbearance of money, is breached, an
interest on the amount of damages awarded may be imposed at the discretion of the court at
the rate of 6% per annum. No interest, however, shall be adjudged on unliquidated claims or
damages, except when or until the demand can be established with reasonable certainty.
Accordingly, where the demand is established with reasonable certainty, the interest shall
begin to run from the time the claim is made judicially or extrajudicially (Art. 1169, Civil
Code), but when such certainty cannot be so reasonably established at the time the demand
is made, the interest shall begin to run only from the date the judgment of the court is made
(at which time the quantification of damages may be deemed to have been reasonably
ascertained). The actual base for the computation of legal interest shall, in any case, be on
the amount finally adjudged. 3. When the judgment of the court awarding a sum of money
becomes final and executory, the rate of legal interest, whether the case falls under
paragraph 1 or paragraph 2, above, shall be 6% per annum from such finality until its
satisfaction, this interim period being deemed to be by then an equivalent to a forbearance of
credit.
And, in addition to the above, judgments that have become final and executory prior to July 1, 2013,
shall not be disturbed and shall continue to be implemented applying the rate of interest fixed
therein.
131

Circular No. 799 is applicable only in loans and forbearance of money, goods, or credits, and in
judgments when there is no stipulation on the applicable interest rate. Further, it is only applicable if
the judgment did not become final and executory before July 1, 2013.
132

We add that Circular No. 799 is not applicable when there is a law that states otherwise. While the
Bangko Sentral ng Pilipinas has the power to set or limit interest rates, these interest rates do not
apply when the law provides that a different interest rate shall be applied. "[A] Central Bank Circular
cannot repeal a law. Only a law can repeal another law."
133

134

For example, Section 10 of Republic Act No. 8042 provides that unlawfully terminated overseas
workers are entitled to the reimbursement of his or her placement fee with an interest of 12% per
annum. Since Bangko Sentral ng Pilipinas circulars cannotrepeal Republic Act No. 8042, the
issuance of Circular No. 799 does not have the effect of changing the interest on awards for
reimbursement of placement fees from 12% to 6%. This is despite Section 1 of Circular No. 799,
which provides that the 6% interest rate applies even to judgments.
Moreover, laws are deemed incorporated in contracts. "The contracting parties need not repeat
them. They do not even have to be referred to. Every contract, thus, contains not only what has
been explicitly stipulated, but the statutory provisions that have any bearing on the matter." There
is, therefore, an implied stipulation in contracts between the placement agency and the
overseasworker that in case the overseas worker is adjudged as entitled to reimbursement of his or
her placement fees, the amount shall be subject to a 12% interest per annum. This implied
stipulation has the effect of removing awards for reimbursement of placement fees from Circular No.
799s coverage.
135

The same cannot be said for awardsof salary for the unexpired portion of the employment contract
under Republic Act No. 8042. These awards are covered by Circular No. 799 because the law does
not provide for a specific interest rate that should apply.
In sum, if judgment did not become final and executory before July 1, 2013 and there was no
stipulation in the contract providing for a different interest rate, other money claims under Section 10
of Republic Act No. 8042 shall be subject to the 6% interest per annum in accordance with Circular
No. 799.
This means that respondent is also entitled to an interest of 6% per annum on her money claims
from the finality of this judgment.
IV
Finally, we clarify the liabilities ofWacoal as principal and petitioner as the employment agency that
facilitated respondents overseas employment.
Section 10 of the Migrant Workers and Overseas Filipinos Act of 1995 provides that the foreign
employer and the local employment agency are jointly and severally liable for money claims
including claims arising out of an employer-employee relationship and/or damages. This section also
provides that the performance bond filed by the local agency shall be answerable for such money
claims or damages if they were awarded to the employee.
This provision is in line with the states policy of affording protection to labor and alleviating workers
plight.
136

In overseas employment, the filing of money claims against the foreign employer is attended by
practical and legal complications. The distance of the foreign employer alonemakes it difficult for an
overseas worker to reach it and make it liable for violations of the Labor Code. There are also
possible conflict of laws, jurisdictional issues, and procedural rules that may be raised to frustrate an
overseas workersattempt to advance his or her claims.
1wphi1

It may be argued, for instance, that the foreign employer must be impleaded in the complaint as an
indispensable party without which no final determination can be had of an action.
137

The provision on joint and several liability in the Migrant Workers and Overseas Filipinos Act of 1995
assures overseas workers that their rights will not be frustrated with these complications. The
fundamental effect of joint and several liability is that "each of the debtors is liable for the entire
obligation." A final determination may, therefore, be achieved even if only oneof the joint and
several debtors are impleaded in an action. Hence, in the case of overseas employment, either the
local agency or the foreign employer may be sued for all claims arising from the foreign employers
labor law violations. This way, the overseas workers are assured that someone the foreign
employers local agent may be made to answer for violationsthat the foreign employer may have
committed.
138

The Migrant Workers and Overseas Filipinos Act of 1995 ensures that overseas workers have
recourse in law despite the circumstances of their employment. By providing that the liability of the
foreign employer may be "enforced to the full extent" against the local agent,the overseas worker is
assured of immediate and sufficientpayment of what is due them.
139

140

Corollary to the assurance of immediate recourse in law, the provision on joint and several liability in
the Migrant Workers and Overseas Filipinos Act of 1995 shifts the burden of going after the foreign
employer from the overseas worker to the local employment agency. However, it must be
emphasized that the local agency that is held to answer for the overseas workers money claims is
not leftwithout remedy. The law does not preclude it from going after the foreign employer for
reimbursement of whatever payment it has made to the employee to answer for the money claims
against the foreign employer.
A further implication of making localagencies jointly and severally liable with the foreign employer is
thatan additional layer of protection is afforded to overseas workers. Local agencies, which are
businesses by nature, are inoculated with interest in being always on the lookout against foreign
employers that tend to violate labor law. Lest they risk their reputation or finances, local
agenciesmust already have mechanisms for guarding against unscrupulous foreign employers even
at the level prior to overseas employment applications.
With the present state of the pleadings, it is not possible to determine whether there was indeed a
transfer of obligations from petitioner to Pacific. This should not be an obstacle for the respondent
overseas worker to proceed with the enforcement of this judgment. Petitioner is possessed with the
resources to determine the proper legal remedies to enforce its rights against Pacific, if any.
V
Many times, this court has spoken on what Filipinos may encounter as they travel into the farthest
and mostdifficult reaches of our planet to provide for their families. In Prieto v. NLRC:
141

The Court is not unaware of the many abuses suffered by our overseas workers in the foreign land
where they have ventured, usually with heavy hearts, in pursuit of a more fulfilling future. Breach of
contract, maltreatment, rape, insufficient nourishment, sub-human lodgings, insults and other forms

of debasement, are only a few of the inhumane acts towhich they are subjected by their foreign
employers, who probably feel they can do as they please in their own country. Whilethese workers
may indeed have relatively little defense against exploitation while they are abroad, that
disadvantage must not continue to burden them when they return to their own territory to voice their
muted complaint. There is no reason why, in their very own land, the protection of our own laws
cannot be extended to them in full measure for the redress of their grievances.
142

But it seems that we have not said enough.

We face a diaspora of Filipinos. Their travails and their heroism can be told a million times over;
each of their stories as real as any other. Overseas Filipino workers brave alien cultures and the
heartbreak of families left behind daily. They would count the minutes, hours, days, months, and
years yearning to see their sons and daughters. We all know of the joy and sadness when they
come home to see them all grown up and, being so, they remember what their work has cost them.
Twitter accounts, Facetime, and many other gadgets and online applications will never substitute for
their lost physical presence.
Unknown to them, they keep our economy afloat through the ebb and flow of political and economic
crises. They are our true diplomats, they who show the world the resilience, patience, and creativity
of our people. Indeed, we are a people who contribute much to the provision of material creations of
this world.
This government loses its soul if we fail to ensure decent treatment for all Filipinos. We default by
limiting the contractual wages that should be paid to our workers when their contracts are breached
by the foreign employers. While we sit, this court will ensure that our laws will reward our overseas
workers with what they deserve: their dignity.
Inevitably, their dignity is ours as weil.
WHEREFORE, the petition is DENIED. The decision of the Court of Appeals is AFFIRMED with
modification. Petitioner Sameer Overseas Placement Agency is ORDERED to pay respondent Joy
C. Cabiles the amount equivalent to her salary for the unexpired portion of her employment contract
at an interest of 6% per annum from the finality of this judgment. Petitioner is also ORDERED to
reimburse respondent the withheld NT$3,000.00 salary and pay respondent attorney's fees of
NT$300.00 at an interest of 6% per annum from the finality of this judgment.
The clause, "or for three (3) months for every year of the unexpired term, whichever is less" in
Section 7 of Republic Act No. 10022 amending Section 10 of Republic Act No. 8042 is declared
unconstitutional and, therefore, null and void.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION

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.
Tanjuatco, Oreta, Tanjuatco, Berenguer & San Vicente for petitioner.

NARVASA, J.:
In connection with the application with the Philippine Overseas Employment Administration (POEA)
of J & B Manpower Specialist, Inc. for a license to engage in business as a recruitment agency, a
surety bond was filed on January 2, 1985 by the applicant and the Eastern Assurance and Surety
Corporation, herein petitioner, in virtue of which they both held themselves
. . . firmly bound unto (said) Philippine Overseas Employment Administration, Ministry
of Labor in the penal sum of PESOS ONE HUNDRED FIFTY THOUSAND ONLY . . .
(Pl50,000.00) for the payment of which will and truly to be made, . . . (they bound
themselves, their) heirs, executors, administrators, successors and assigns, jointly
and severally . .
The bond stipulated that:
a) it was "conditioned upon the true and faithful performance and observance of the . . . principal (J
& B Manpower Specialist, Inc.) of its duties and obligations in accordance with all the rules and
regulations promulgated by the Ministry of Labor Philippine Overseas Employment Administration
and with the terms and conditions stipulated in the License;
b) the liability of the . . . Surety (petitioner) shall in no case exceed the sum of PESOS ONE
HUNDRED FIFTY THOUSAND (P150,000.00) ONLY, PHILIPPINE CURRENCY; 1
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:

From June 1983 to December 1985 . . . thirty three (33) . . . (persons) applied for
overseas employment with . . . (J & B). In consideration of promised deployment,

complainants paid respondent various amounts for various fees. Most of' the receipts
issued were sighed by Mrs. Baby Bundalian, Executive Vice-President of . . . (J & B).
Because of non-deployment . . . (the applicants) filed separate complaints with the
Licensing and Regulation Office of POEA against . . . (J & B) for violation of Articles
32 and 34 (a) of the Labor Code between the months of April to October 1985.
Despite summons/notices of hearing,, . . . (J & B) failed to file Answer nor appear in
the hearings conducted.
In its separate Answer, . . . EASCO essentially disclaimed liability on the ground that
the claims were not expressly covered by the bond, that POEA had no jurisdiction to
order forfeiture of the bond, that some of the claims were paid beyond or prior to the
period of effectivity of the bond.
On September 8, 1986, the POEA Administrator issued the Order in favor of
complainants ruling thus:
After careful evaluation, we find that the receipts and testimonies of
complainants, in the absence of controverting evidence substantially
establish that respondent charged and collected fees from them in
amounts exceeding what is prescribed by this Administration.
Complainants' non-deployment strongly indicates that there was no
employment obtained for them. Hence, violation of Articles 32 and 34
(a) of the Labor Code, as amended, is established against
respondent. The claims of complainants having arose (arisen) out of
acts of the principal covered under the surety (bond), the respondent
surety is equally liable therefor.
Except for complainants Ramos, Samson, de Leon and Rizada, whose claims were
transacted prior to the effectivity of the bond, . . . EASCO was declared jointly and
severally liable with . . . (J & B) to twenty-nine (29) complainants.
(The dispositive portion of the POEA Administrator's Order also contained the
following statement and direction, viz.:
Respondent was suspended on May 23, 1985, June 26, 1985 and
January 17, 1986 all for illegal exaction. Considering its track record
of illegal exaction activities and considering further the gross violation
of recruitment rules and regulations established against it in the
instant cases, and the expiration of its license on February 15, 1985,
it is hereby forever banned from participation in the overseas
employment program. It is ordered to cease and desist from further
engaging in recruitment activities otherwise it shall be prosecuted for
illegal recruitment.')

(J & B filed a motion for reconsideration). On December 19, 1986, the then deputy
Minister of Labor and Employment denied the . . . Motion for Reconsideration for lack
of merit and affirmed the findings in the Order of the POEA Administrator finding no
reversible error therein.
On appeal by EASCO J & B having as aforestated taken no part in the proceeding despite due
service of summons the judgment was modified by the Secretary of Labor, by Order dated July 1,
1987, disposing as follows: 4
WHEREFORE, in view of the foregoing, the Resolution of the then Deputy Minister of
Labor dated December 19, 1986 affirming the Order of the POEA Administrator dated
September 8, 1986 is hereby MODIFIED. Respondent J & B Manpower Specialist is
directed to refund all thirty-three (33) complainants as listed in the Order of
September 8, 1986 in the amounts listed thereto with the modification that
complainants Lucena Cabasal and Felix Rivero are both entitled only to P15,980 and
not P15,980 each. Respondent Eastern Assurance and Surety Corporation is hereby
found jointly and severally liable with respondent J & B Manpower Specialist to
refund nineteen (19) complainants in the modified amounts . . . (particularly
specified).
The other findings in the Order of the POEA Administrator dated September 8, 1986
affirmed in the Resolution of the then Deputy Minister . . . are also hereby
AFFIRMED. This Order is FINAL. No further Motion for Reconsideration hereof shall
be entertained.
It is noteworthy that EASCO's liability for the refund, jointly and severally with its principal, was
limited to 19 named complainants (in contrast to verdicts of the POEA and the Deputy Minister which
both ordered payment to no less than 33 complainants) and was correspondingly reduced from
P308,751.75 and US $ 400.00 5 to the aggregate amount of P 140,817.75. 6
The special civil action of certiorari at bar was thereafter instituted by EASCO 7 praying for the
nullification of the POEA Administrator's Order of September 8, 1986, the Resolution of the Deputy
Minister of Labor of' December 19, 1986, and the Order of the Secretary of Labor of July 1, 1987, It
theorizes that:
1) the POEA had no jurisdiction over the claims for refund filed by non-employees;
2) neither did the Secretary of Labor have jurisdiction of the claims;
3) assuming they had jurisdiction, both the POEA and Secretary of Labor also
committed legal errors and acted with grave abuse of discretion when they ruled that
petitioner is liable on the claims.
EASCO contends that the POEA had no "adjudicatory jurisdiction" over the monetary claims in
question because the same "did not arise from employer-employee relations." Invoked in support of
the argument is Section 4 (a) of EO 797 providing in part 8 that the POEA has

. . . original and exclusive jurisdiction over all cases, including money

claims, involving employer-employee relations arising out of or by virtue of any law or
contract involving Filipino workers for overseas employment including seamen . . .
The complaints are however for violation of Articles 32 and 34 a) of the Labor Code. Article
32 and paragraph (a) of Article 34 read as follows:
Art. 32. Fees to be paid by workers.Any person applying with a private feecharging 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.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. 152642

November 13, 2012

HON. PATRICIA A. STO.TOMAS, ROSALINDA BALDOZ and LUCITA LAZO, Petitioners,

vs.
REY SALAC, WILLIE D. ESPIRITU, MARIO MONTENEGRO, DODGIE BELONIO, LOLIT
SALINEL and BUDDY BONNEVIE, Respondents.
x-----------------------x
G.R. No. 152710
HON. PATRICIA A. STO. TOMAS, in her capacity as Secretary of Department of Labor and
Employment (DOLE), HON. ROSALINDA D. BALDOZ, in her capacity as Administrator,
Philippine Overseas Employment Administration (POEA), and the PHILIPPINE OVERSEAS
EMPLOYMENT ADMINISTRATION GOVERNING BOARD, Petitioners,
vs.
HON. JOSE G. PANEDA, in his capacity as the Presiding Judge of Branch 220, Quezon City,
ASIAN RECRUITMENT COUNCIL PHILIPPINE CHAPTER, INC. (ARCOPHIL), for itself and in
behalf of its members: WORLDCARE PHILIPPINES SERVIZO INTERNATIONALE, INC.,
STEADFAST INTERNATIONAL RECRUITMENT CORP., VERDANT MANPOWER MOBILIZATION
CORP., BRENT OVERSEAS PERSONNEL, INC., ARL MANPOWER SERVICES, INC., DAHLZEN
INTERNATIONAL SERVICES, INC., INTERWORLD PLACEMENT CENTER, INC., LAKAS TAO
CONTRACT SERVICES LTD. CO., SSC MULTI-SERVICES, DMJ INTERNATIONAL, and MIP

INTERNATIONAL MANPOWER SERVICES, represented by its proprietress, MARCELINA I.

PAGSIBIGAN, Respondents.
x-----------------------x
G.R. No. 167590
REPUBLIC OF THE PHILIPPINES, represented by the HONORABLE EXECUTIVE SECRETARY,
the HONORABLE SECRETARY OF LABOR AND EMPLOYMENT (DOLE), the PHILIPPINE
OVERSEAS EMPLOYMENT ADMINISTRATION (POEA), the OVERSEAS WORKERS WELFARE
ADMINISTRATION (OWWA), the LABOR ARBITERS OF THE NATIONAL LABOR RELATIONS
COMMISSION (NLRC), the HONORABLE SECRETARY OF JUSTICE, the HONORABLE
SECRETARY OF FOREIGN AFFAIRS and the COMMISSION ON AUDIT (COA), Petitioners,
vs.
PHILIPPINE ASSOCIATION OF SERVICE EXPORTERS, INC. (P ASEI), Respondent.
x-----------------------x
G.R. Nos. 182978-79
BECMEN SERVICE EXPORTER AND PROMOTION, INC., Petitioner,
vs.
SPOUSES SIMPLICIO AND MILA CUARESMA (for and in behalf of daughter, Jasmin G.
Cuaresma), WHITE FALCON SERVICES, INC., and JAIME ORTIZ (President of White Falcon
Services, Inc.), Respondents.
x-----------------------x
G.R. Nos. 184298-99
SPOUSES SIMPLICIO AND MILA CUARESMA (for and in behalf of deceased daughter, Jasmin
G. Cuaresma), Petitioners,
vs.
WHITE FALCON SERVICES, INC. and BECMEN SERVICES EXPORTER AND PROMOTION,
INC., Respondents.
DECISION
ABAD, J.:
These consolidated cases pertain to the constitutionality of certain provisions of Republic Act 8042,
otherwise known as the Migrant Workers and Overseas Filipinos Act of 1995.
The Facts and the Case

On June 7, 1995 Congress enacted Republic Act (R.A.) 8042 or the Migrant Workers and Overseas
Filipinos Act of 1995 that, for among other purposes, sets the Governments policies on overseas
employment and establishes a higher standard of protection and promotion of the welfare of migrant
workers, their families, and overseas Filipinos in distress.
G.R. 152642 and G.R. 152710
(Constitutionality of Sections 29 and 30, R.A. 8042)
Sections 29 and 30 of the Act1 commanded the Department of Labor and Employment (DOLE) to
begin deregulating within one year of its passage the business of handling the recruitment and
migration of overseas Filipino workers and phase out within five years the regulatory functions of the
Philippine Overseas Employment Administration (POEA).
On January 8, 2002 respondents Rey Salac, Willie D. Espiritu, Mario Montenegro, Dodgie Belonio,
Lolit Salinel, and Buddy Bonnevie (Salac, et al.) filed a petition for certiorari, prohibition and
mandamus with application for temporary restraining order (TRO) and preliminary injunction against
petitioners, the DOLE Secretary, the POEA Administrator, and the Technical Education and Skills
Development Authority (TESDA) Secretary-General before the Regional Trial Court (RTC) of Quezon
City, Branch 96.2
Salac, et al. sought to: 1) nullify DOLE Department Order 10 (DOLE DO 10) and POEA
Memorandum Circular 15 (POEA MC 15); 2) prohibit the DOLE, POEA, and TESDA from
implementing the same and from further issuing rules and regulations that would regulate the
recruitment and placement of overseas Filipino workers (OFWs); and 3) also enjoin them to comply
with the policy of deregulation mandated under Sections 29 and 30 of Republic Act 8042.
On March 20, 2002 the Quezon City RTC granted Salac, et al.s petition and ordered the
government agencies mentioned to deregulate the recruitment and placement of OFWs.3 The RTC
also annulled DOLE DO 10, POEA MC 15, and all other orders, circulars and issuances that are
inconsistent with the policy of deregulation under R.A. 8042.
Prompted by the RTCs above actions, the government officials concerned filed the present petition
in G.R. 152642 seeking to annul the RTCs decision and have the same enjoined pending action on
the petition.
On April 17, 2002 the Philippine Association of Service Exporters, Inc. intervened in the case before
the Court, claiming that the RTC March 20, 2002 Decision gravely affected them since it paralyzed
the deployment abroad of OFWs and performing artists. The Confederated Association of Licensed
Entertainment Agencies, Incorporated (CALEA) intervened for the same purpose. 4
On May 23, 2002 the Court5 issued a TRO in the case, enjoining the Quezon City RTC, Branch 96,
from enforcing its decision.
In a parallel case, on February 12, 2002 respondents Asian Recruitment Council Philippine Chapter,
Inc. and others (Arcophil, et al.) filed a petition for certiorari and prohibition with application for TRO

and preliminary injunction against the DOLE Secretary, the POEA Administrator, and the TESDA
Director-General,6 before the RTC of Quezon City, Branch 220, to enjoin the latter from implementing
the 2002 Rules and Regulations Governing the Recruitment and Employment of Overseas Workers
and to cease and desist from issuing other orders, circulars, and policies that tend to regulate the
recruitment and placement of OFWs in violation of the policy of deregulation provided in Sections 29
and 30 of R.A. 8042.
On March 12, 2002 the Quezon City RTC rendered an Order, granting the petition and enjoining the
government agencies involved from exercising regulatory functions over the recruitment and
placement of OFWs. This prompted the DOLE Secretary, the POEA Administrator, and the TESDA
Director-General to file the present action in G.R. 152710. As in G.R. 152642, the Court issued on
May 23, 2002 a TRO enjoining the Quezon City RTC, Branch 220 from enforcing its decision.
On December 4, 2008, however, the Republic informed7 the Court that on April 10, 2007 former
President Gloria Macapagal-Arroyo signed into law R.A. 9422 8 which expressly repealed Sections 29
and 30 of R.A. 8042 and adopted the policy of close government regulation of the recruitment and
deployment of OFWs. R.A. 9422 pertinently provides:
xxxx
SEC. 1. Section 23, paragraph (b.1) of Republic Act No. 8042, otherwise known as the "Migrant
Workers and Overseas Filipinos Act of 1995" is hereby amended to read as follows:
(b.1) Philippine Overseas Employment Administration The Administration shall regulate private
sector participation in the recruitment and overseas placement of workers by setting up a licensing
and registration system. It shall also formulate and implement, in coordination with appropriate
entities concerned, when necessary, a system for promoting and monitoring the overseas
employment of Filipino workers taking into consideration their welfare and the domestic manpower
requirements.
In addition to its powers and functions, the administration shall inform migrant workers not only of
their rights as workers but also of their rights as human beings, instruct and guide the workers how
to assert their rights and provide the available mechanism to redress violation of their rights.
In the recruitment and placement of workers to service the requirements for trained and competent
Filipino workers of foreign governments and their instrumentalities, and such other employers as
public interests may require, the administration shall deploy only to countries where the Philippines
has concluded bilateral labor agreements or arrangements: Provided, That such countries shall
guarantee to protect the rights of Filipino migrant workers; and: Provided, further, That such
countries shall observe and/or comply with the international laws and standards for migrant workers.
SEC. 2. Section 29 of the same law is hereby repealed.
SEC. 3. Section 30 of the same law is also hereby repealed.
xxxx

On August 20, 2009 respondents Salac, et al. told the Court in G.R. 152642 that they agree 9 with the
Republics view that the repeal of Sections 29 and 30 of R.A. 8042 renders the issues they raised by
their action moot and academic. The Court has no reason to disagree. Consequently, the two cases,
G.R. 152642 and 152710, should be dismissed for being moot and academic.
G.R. 167590
(Constitutionality of Sections 6, 7, and 9 of R.A. 8042)
On August 21, 1995 respondent Philippine Association of Service Exporters, Inc. (PASEI) filed a
petition for declaratory relief and prohibition with prayer for issuance of TRO and writ of preliminary
injunction before the RTC of Manila, seeking to annul Sections 6, 7, and 9 of R.A. 8042 for being
unconstitutional. (PASEI also sought to annul a portion of Section 10 but the Court will take up this
point later together with a related case.)
Section 6 defines the crime of "illegal recruitment" and enumerates the acts constituting the same.
Section 7 provides the penalties for prohibited acts. Thus:
SEC. 6. Definition. For purposes of this Act, illegal recruitment shall mean any act of canvassing,
enlisting, contracting, transporting, utilizing, hiring, procuring workers and includes referring, contract
services, promising or advertising for employment abroad, whether for profit or not, when undertaken
by a non-license or non-holder of authority contemplated under Article 13(f) of Presidential Decree
No. 442, as amended, otherwise known as the Labor Code of the Philippines: Provided, That such
non-license or non-holder, who, in any manner, offers or promises for a fee employment abroad to
two or more persons shall be deemed so engaged. It shall likewise include the following acts,
whether committed by any person, whether a non-licensee, non-holder, licensee or holder of
authority:
xxxx
SEC. 7. Penalties.
(a) Any person found guilty of illegal recruitment shall suffer the penalty of imprisonment of
not less than six (6) years and one (1) day but not more than twelve (12) years and a fine not
less than two hundred thousand pesos (P200,000.00) nor more than five hundred thousand
pesos (P500,000.00).
(b) The penalty of life imprisonment and a fine of not less than five hundred thousand pesos
(P500,000.00) nor more than one million pesos (P1,000,000.00) shall be imposed if illegal
recruitment constitutes economic sabotage as defined herein.
Provided, however, That the maximum penalty shall be imposed if the person illegally recruited is
less than eighteen (18) years of age or committed by a non-licensee or non-holder of authority.10

Finally, Section 9 of R.A. 8042 allowed the filing of criminal actions arising from "illegal recruitment"
before the RTC of the province or city where the offense was committed or where the offended party
actually resides at the time of the commission of the offense.
The RTC of Manila declared Section 6 unconstitutional after hearing on the ground that its definition
of "illegal recruitment" is vague as it fails to distinguish between licensed and non-licensed
recruiters11 and for that reason gives undue advantage to the non-licensed recruiters in violation of
the right to equal protection of those that operate with government licenses or authorities.
But "illegal recruitment" as defined in Section 6 is clear and unambiguous and, contrary to the RTCs
finding, actually makes a distinction between licensed and non-licensed recruiters. By its terms,
persons who engage in "canvassing, enlisting, contracting, transporting, utilizing, hiring, or procuring
workers" without the appropriate government license or authority are guilty of illegal recruitment
whether or not they commit the wrongful acts enumerated in that section. On the other hand,
recruiters who engage in the canvassing, enlisting, etc. of OFWs, although with the appropriate
government license or authority, are guilty of illegal recruitment only if they commit any of the
wrongful acts enumerated in Section 6.
The Manila RTC also declared Section 7 unconstitutional on the ground that its sweeping application
of the penalties failed to make any distinction as to the seriousness of the act committed for the
application of the penalty imposed on such violation. As an example, said the trial court, the mere
failure to render a report under Section 6(h) or obstructing the inspection by the Labor Department
under Section 6(g) are penalized by imprisonment for six years and one day and a minimum fine
of P200,000.00 but which could unreasonably go even as high as life imprisonment if committed by
at least three persons.
Apparently, the Manila RTC did not agree that the law can impose such grave penalties upon what it
believed were specific acts that were not as condemnable as the others in the lists. But, in fixing
uniform penalties for each of the enumerated acts under Section 6, Congress was within its
prerogative to determine what individual acts are equally reprehensible, consistent with the State
policy of according full protection to labor, and deserving of the same penalties. It is not within the
power of the Court to question the wisdom of this kind of choice. Notably, this legislative policy has
been further stressed in July 2010 with the enactment of R.A. 10022 12 which increased even more
the duration of the penalties of imprisonment and the amounts of fine for the commission of the acts
listed under Section 7.
Obviously, in fixing such tough penalties, the law considered the unsettling fact that OFWs must
work outside the countrys borders and beyond its immediate protection. The law must, therefore,
make an effort to somehow protect them from conscienceless individuals within its jurisdiction who,
fueled by greed, are willing to ship them out without clear assurance that their contracted principals
would treat such OFWs fairly and humanely.
As the Court held in People v. Ventura,13 the State under its police power "may prescribe such
regulations as in its judgment will secure or tend to secure the general welfare of the people, to
protect them against the consequence of ignorance and incapacity as well as of deception and

fraud." Police power is "that inherent and plenary power of the State which enables it to prohibit all
things hurtful to the comfort, safety, and welfare of society."14
The Manila RTC also invalidated Section 9 of R.A. 8042 on the ground that allowing the offended
parties to file the criminal case in their place of residence would negate the general rule on venue of
criminal cases which is the place where the crime or any of its essential elements were committed.
Venue, said the RTC, is jurisdictional in penal laws and, allowing the filing of criminal actions at the
place of residence of the offended parties violates their right to due process. Section 9 provides:
SEC. 9. Venue. A criminal action arising from illegal recruitment as defined herein shall be filed
with the Regional Trial Court of the province or city where the offense was committed or where the
offended party actually resides at the time of the commission of the offense: Provided, That the court
where the criminal action is first filed shall acquire jurisdiction to the exclusion of other courts:
Provided, however, That the aforestated provisions shall also apply to those criminal actions that
have already been filed in court at the time of the effectivity of this Act.
But there is nothing arbitrary or unconstitutional in Congress fixing an alternative venue for violations
of Section 6 of R.A. 8042 that differs from the venue established by the Rules on Criminal
Procedure. Indeed, Section 15(a), Rule 110 of the latter Rules allows exceptions provided by laws.
Thus:
SEC. 15. Place where action is to be instituted. (a) Subject to existing laws, the criminal action
shall be instituted and tried in the court of the municipality or territory where the offense was
committed or where any of its essential ingredients occurred. (Emphasis supplied)
xxxx
Section 9 of R.A. 8042, as an exception to the rule on venue of criminal actions is, consistent with
that laws declared policy15 of providing a criminal justice system that protects and serves the best
interests of the victims of illegal recruitment.
G.R. 167590, G.R. 182978-79,16 and G.R. 184298-9917
(Constitutionality of Section 10, last sentence of 2nd paragraph)
G.R. 182978-79 and G.R. 184298-99 are consolidated cases. Respondent spouses Simplicio and
Mila Cuaresma (the Cuaresmas) filed a claim for death and insurance benefits and damages against
petitioners Becmen Service Exporter and Promotion, Inc. (Becmen) and White Falcon Services, Inc.
(White Falcon) for the death of their daughter Jasmin Cuaresma while working as staff nurse in
Riyadh, Saudi Arabia.
The Labor Arbiter (LA) dismissed the claim on the ground that the Cuaresmas had already received
insurance benefits arising from their daughters death from the Overseas Workers Welfare
Administration (OWWA). The LA also gave due credence to the findings of the Saudi Arabian
authorities that Jasmin committed suicide.

On appeal, however, the National Labor Relations Commission (NLRC) found Becmen and White
Falcon jointly and severally liable for Jasmins death and ordered them to pay the Cuaresmas the
amount of US$113,000.00 as actual damages. The NLRC relied on the Cabanatuan City Health
Offices autopsy finding that Jasmin died of criminal violence and rape.
Becmen and White Falcon appealed the NLRC Decision to the Court of Appeals (CA). 18 On June 28,
2006 the CA held Becmen and White Falcon jointly and severally liable with their Saudi Arabian
employer for actual damages, with Becmen having a right of reimbursement from White Falcon.
Becmen and White Falcon appealed the CA Decision to this Court.
On April 7, 2009 the Court found Jasmins death not work-related or work-connected since her rape
and death did not occur while she was on duty at the hospital or doing acts incidental to her
employment. The Court deleted the award of actual damages but ruled that Becmens corporate
directors and officers are solidarily liable with their company for its failure to investigate the true
nature of her death. Becmen and White Falcon abandoned their legal, moral, and social duty to
assist the Cuaresmas in obtaining justice for their daughter. Consequently, the Court held the foreign
employer Rajab and Silsilah, White Falcon, Becmen, and the latters corporate directors and officers
jointly and severally liable to the Cuaresmas for: 1) P2,500,000.00 as moral damages; 2)
P2,500,000.00 as exemplary damages; 3) attorneys fees of 10% of the total monetary award; and 4)
cost of suit.
On July 16, 2009 the corporate directors and officers of Becmen, namely, Eufrocina Gumabay, Elvira
Taguiam, Lourdes Bonifacio and Eddie De Guzman (Gumabay, et al.) filed a motion for leave to
Intervene. They questioned the constitutionality of the last sentence of the second paragraph of
Section 10, R.A. 8042 which holds the corporate directors, officers and partners jointly and solidarily
liable with their company for money claims filed by OFWs against their employers and the
recruitment firms. On September 9, 2009 the Court allowed the intervention and admitted Gumabay,
et al.s motion for reconsideration.
The key issue that Gumabay, et al. present is whether or not the 2nd paragraph of Section 10, R.A.
8042, which holds the corporate directors, officers, and partners of recruitment and placement
agencies jointly and solidarily liable for money claims and damages that may be adjudged against
the latter agencies, is unconstitutional.
In G.R. 167590 (the PASEI case), the Quezon City RTC held as unconstitutional the last sentence of
the 2nd paragraph of Section 10 of R.A. 8042. It pointed out that, absent sufficient proof that the
corporate officers and directors of the erring company had knowledge of and allowed the illegal
recruitment, making them automatically liable would violate their right to due process of law.
The pertinent portion of Section 10 provides:
SEC. 10. Money Claims. x x x
The liability of the principal/employer and the recruitment/placement agency for any and all claims
under this section shall be joint and several. This provision shall be incorporated in the contract for
overseas employment and shall be a condition precedent for its approval. The performance bond to

be filed by the recruitment/placement agency, as provided by law, shall be answerable for all money
claims or damages that may be awarded to the workers. If the recruitment/placement agency is a
juridical being, the corporate officers and directors and partners as the case may be, shall
themselves be jointly and solidarily liable with the corporation or partnership for the aforesaid claims
and damages. (Emphasis supplied)
But the Court has already held, pending adjudication of this case, that the liability of corporate
directors and officers is not automatic. To make them jointly and solidarily liable with their company,
there must be a finding that they were remiss in directing the affairs of that company, such as
sponsoring or tolerating the conduct of illegal activities.19 In the case of Becmen and White
Falcon,20 while there is evidence that these companies were at fault in not investigating the cause of
Jasmins death, there is no mention of any evidence in the case against them that intervenors
Gumabay, et al., Becmens corporate officers and directors, were personally involved in their
companys particular actions or omissions in Jasmins case.
As a final note, R.A. 8042 is a police power measure intended to regulate the recruitment and
deployment of OFWs. It aims to curb, if not eliminate, the injustices and abuses suffered by
numerous OFWs seeking to work abroad. The rule is settled that every statute has in its favor the
presumption of constitutionality. The Court cannot inquire into the wisdom or expediency of the laws
enacted by the Legislative Department. Hence, in the absence of a clear and unmistakable case that
the statute is unconstitutional, the Court must uphold its validity.
WHEREFORE, in G.R. 152642 and 152710, the Court DISMISSES the petitions for having become
moot and academic.
1wphi1

In G.R. 167590, the Court SETS ASIDE the Decision of the Regional Trial Court ofManila dated
December 8, 2004 and DECLARES Sections 6, 7, and 9 of Republic Act 8042 valid and
constitutional.
In G.R. 182978-79 and G.R. 184298-99 as well as in G.R. 167590, the Court HOLDS the last
sentence of the second paragraph of Section 10 of Republic Act 8042 valid and constitutional. The
Court, however, RECONSIDERS and SETS ASIDE the portion of its Decision in G.R. 182978-79
and G.R. 184298-99 that held intervenors Eufrocina Gumabay, Elvira Taguiam, Lourdes Bonifacio,
and Eddie De Guzman jointly and solidarily liable with respondent Becmen Services Exporter and
Promotion, Inc. to spouses Simplicia and Mila Cuaresma for lack of a finding in those cases that
such intervenors had a part in the act or omission imputed to their corporation.
SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION

G.R. No. 156029

November 14, 2008

SANTOSA B. DATUMAN, petitioner,

vs.
FIRST COSMOPOLITAN MANPOWER AND PROMOTION SERVICES,
INC., respondent.
DECISION
LEONARDO-DE CASTRO, J.:
Before us is a petition for review on certiorari under Rule 45 of the 1997 Rules
of Civil Procedure, as amended, assailing the Court of Appeals (CA)
Decision1 dated August 7, 2002, in CA-G.R. SP No. 59825, setting aside the
Decision of the National Labor Relations Commission (NLRC).
The facts are as follows:
Sometime in 1989, respondent First Cosmopolitan Manpower & Promotion
Services, Inc. recruited petitioner Santosa B. Datuman to work abroad under
the following terms and conditions:

Site of employment

- Bahrain

Employees Classification/Position/Grade

- Saleslady

Basic Monthly Salary

- US$370.00

Duration of Contract

- One (1) year

Foreign Employer

- Mohammed Sharif Abbas Ghulam Hussain2

On April 17, 1989, petitioner was deployed to Bahrain after paying the
required placement fee. However, her employer Mohammed Hussain took her

passport when she arrived there; and instead of working as a saleslady, she
was forced to work as a domestic helper with a salary of Forty Bahrain Dinar
(BD40.00), equivalent only to One Hundred US Dollars (US$100.00). This was
contrary to the agreed salary of US$370.00 indicated in her Contract of
Employment signed in the Philippines and approved by the Philippine
Overseas Employment Administration (POEA).3
On September 1, 1989, her employer compelled her to sign another contract,
transferring her to another employer as housemaid with a salary of BD40.00
for the duration of two (2) years.4 She pleaded with him to give her a release
paper and to return her passport but her pleas were unheeded. Left with no
choice, she continued working against her will. Worse, she even worked
without compensation from September 1991 to April 1993 because of her
employer's continued failure and refusal to pay her salary despite demand. In
May 1993, she was able to finally return to the Philippines through the help of
the Bahrain Passport and Immigration Department.5
In May 1995, petitioner filed a complaint before the POEA Adjudication Office
against respondent for underpayment and nonpayment of salary, vacation
leave pay and refund of her plane fare, docketed as Case No. POEA ADJ. (L)
95-05-1586.6 While the case was pending, she filed the instant case before
the NLRC for underpayment of salary for a period of one year and six months,
nonpayment of vacation pay and reimbursement of return airfare.
When the parties failed to arrive at an amicable settlement before the Labor
Arbiter, they were required to file their respective position papers, subsequent
pleadings and documentary exhibits.
In its Position Paper,7 respondent countered that petitioner actually agreed to
work in Bahrain as a housemaid for one (1) year because it was the only
position available then. However, since such position was not yet allowed by
the POEA at that time, they mutually agreed to submit the contract to the
POEA indicating petitioner's position as saleslady. Respondent added that it
was actually petitioner herself who violated the terms of their contract when
she allegedly transferred to another employer without respondent's knowledge
and approval. Lastly, respondent raised the defense of prescription of cause
of action since the claim was filed beyond the three (3)-year period from the
time the right accrued, reckoned from either 1990 or 1991.8
On April 29, 1998, Labor Arbiter Jovencio Mayor, Jr. rendered a Decision
finding respondent liable for violating the terms of the Employment Contract
and ordering it to pay petitioner: (a) the amount of US$4,050.00, or its

equivalent rate prevailing at the time of payment, representing her salary

differentials for fifteen (15) months; and, (b) the amount of BD 180.00 or its
equivalent rate prevailing at the time of payment, representing the refund of
plane ticket, thus:
From the foregoing factual backdrop, the only crucial issue for us to
resolve in this case is whether or not complainant is entitled to her
monetary claims.
xxx
In the instant case, from the facts and circumstances laid down, it is
thus self-evident that the relationship of the complainant and respondent
agency is governed by the Contract of Employment, the basic terms a
covenants of which provided for the position of saleslady, monthly
compensation of US$370.00 and duration of contract for one (1) year.
As it is, when the parties - complainant and respondent Agency - signed
and executed the POEA - approved Contract of Employment, this
agreement is the law that governs them. Thus, when respondent agency
deviated from the terms of the contract by assigning the position of a
housemaid to complainant instead of a saleslady as agreed upon in the
POEA-approved Contract of Employment, respondent Agency
committed a breach of said Employment Contract. Worthy of mention
is the fact that respondent agency in their Position Paper
paragraph 2, Brief Statement of the Facts and of the Case admitted that it had entered into an illegal contract with
complainant by proposing the position of a housemaid which said
position was then not allowed by the POEA, by making it appear in
the Employment Contract that the position being applied for is the
position of a saleslady. As it is, we find indubitably clear that the
foreign employer had took advantage to the herein hopeless
complainant and because of this ordeal, the same obviously
rendered complainant's continuous employment unreasonable if
not downright impossible. The facts and surrounding circumstances
of her ordeal was convincingly laid down by the complainant in her
Position Paper, from which we find no flaws material enough to
disregard the same. Complainant had clearly made out her case and no
amount of persuasion can convince us to tilt the scales of justice in
favor of respondents whose defense was anchored solely on the flimsy
allegations that for a period of more than five (5) years - from 1989 until
1995 - nothing was heard from her or from her relatives, presuming then

that complainant had no problem with her employment abroad. We also

find that the pleadings and the annexes filed by the parties reveal a total
lapse on the part of respondent First Cosmopolitan Manpower and
Promotions - their failure to support with substantial evidence their
contention that complainant transferred from one employer to another
without knowledge and approval of respondent agency in contravention
of the terms of the POEA approved Employment Contract. Obviously,
respondent Agency anchored its disquisition on the alleged "contracts"
signed by the complainant that she agreed with the terms of said
contracts - one (1) year duration only and as a housemaid - to support
its contention that complainant violated the contract agreement by
transferring from one employer to another on her own volition without
the knowledge and consent of respondent agency. To us, this posture of
respondent agency is unavailing. These "documents" are self-serving.
We could not but rule that the same were fabricated to tailor-fit their
defense that complainant was guilty of violating the terms of the
Employment Contract. Consequently, we could not avoid the inference
of a more logical conclusion that complainant was forced against her will
to continue with her employment notwithstanding the fact that it was in
violation of the original Employment Contract including the illegal
withholding of her passport.
With the foregoing, we find and so rule that respondent Agency failed to
discharge the burden of proving with substantial evidence that
complainant violated the terms of the Employment Contract, thus
negating respondent Agency's liability for complainant's money claims.
All the more, the record is bereft of any evidence to show that
complainant Datuman is either not entitled to her wage differentials or
have already received the same from respondent. As such, we are
perforce constrained to grant complainant's prayer for payment of salary
differentials computed as follows:
January 1992 April 1993 (15 months)
US$370.00 agreed salary
US$100.00 actual paid salary
US$270.00 balance
US$270.00 x 15 months = US$4050.00

We are also inclined to grant complainant's entitlement to a refund of

her plane ticket in the amount of BD 180 Bahrain Dinar or the equivalent
in Philippine Currency at the rate of exchange prevailing at the time of
payment.
Anent complainant's claim for vacation leave pay and overtime pay, we
cannot, however, grant the same for failure on the part of complainant to
prove with particularity the months that she was not granted vacation
leave and the day wherein she did render overtime work.
Also, we could not grant complainant's prayer for award of damages
and attorney's fees for lack of factual and legal basis.
WHEREFORE, premises considered, judgment is hereby rendered,
finding respondent Agency liable for violating the term of Employment
Contract and respondent First Cosmopolitan Manpower and Promotions
is hereby ordered:
To pay complainant the amount of US$ FOUR THOUSAND AND FIFTY
(US$4,050.00), or its equivalent rate prevailing at the time of payment,
representing her salary differentials for fifteen (15) months;
To pay complainant the amount of BD 180.00 or its equivalent rate
prevailing at the time of payment, representing the refund of plane
ticket;
All other claims are hereby dismissed for lack of merit.
SO ORDERED.9 (emphasis supplied)
On appeal, the NLRC, Second Division, issued a Decision10 affirming with
modification the Decision of Labor Arbiter Mayor, Jr., by reducing the award of
salary differentials from US$4,050.00 to US$2,970.00 ratiocinating as follows:
Accordingly, we find that the claims for salary differentials accruing
earlier than April of 1993 had indeed prescribed. This is so as
complainant had filed her complaint on May 31, 1995 when she arrived
from the jobsite in April 1993. Since the cause of action for salary
differential accrues at the time when it falls due, it is clear that only the
claims for the months of May 1993 to April 1994 have not yet
prescribed. With an approved salary rate of US$370.00 vis--vis the

amount of salary received which was $100.00, complainant is entitled to

the salary differential for the said period in the amount of $2,970.00.
xxx
WHEREFORE, premises considered, judgment is hereby rendered
MODIFYING the assailed Decision by reducing the award of salary
differentials to $2,970.00 to the complainant.
The rest of the disposition is AFFIRMED.
SO ORDERED.11
On July 21, 2000, respondent elevated the matter to the CA through a petition
for certiorari under Rule 65.
On August 2, 2000,12 the CA dismissed the petition for being insufficient in
form pursuant to the last paragraph of Section 3, Rule 42 of the 1997 Rules of
Civil Procedure, as amended.
On October 20, 2000,13 however, the CA reinstated the petition upon
respondent's motion for reconsideration.14
On August 7, 2002, the CA issued the assailed Decision15 granting the petition
and reversing the NLRC and the Labor Arbiter, thus:
Under Section 1 (f), Rule II, Book II of the 1991 POEA Rules and
Regulations, the local agency shall assume joint and solidary liability
with the employer for all claims and liabilities which may arise in
connection with the implementation of the contract, including but not
limited to payment of wages, health and disability compensation and
repatriation.
Respondent Commission was correct in declaring that claims of private
respondent "for salary differentials accruing earlier than April of 1993
had indeed prescribed." It must be noted that petitioner company is
privy only to the first contract. Granting arguendo that its liability extends
to the acts of its foreign principal, the Towering Recruiting Services,
which appears to have a hand in the execution of the second contract, it
is Our considered opinion that the same would, at the most, extend only
up to the expiration of the second contract or until 01 September 1991.

Clearly, the money claims subject of the complaint filed in 1995 had
prescribed.
However, this Court declares respondent Commission as not only
having abused its discretion, but as being without jurisdiction at all, in
declaring private respondent entitled to salary differentials. After
decreeing the money claims accruing before April 1993 as having
prescribed, it has no more jurisdiction to hold petitioner company for
salary differentials after that period. To reiterate, the local agency shall
assume joint and solidary liability with the employer for all claims and
liabilities which may arise in connection with the implementation of the
contract. Which contract? Upon a judicious consideration, we so hold
that it is only in connection with the first contract. The provisions in
number 2, Section 10 (a), Rule V, Book I of the Omnibus Rules
Implementing the Labor Code Section 1 (f), Rule II, Book II of the 1991
POEA Rules and Regulations were not made to make the local agency
a perpetual insurer against all untoward acts that may be done by the
foreign principal or the direct employer abroad. It is only as regards the
principal contract to which it is privy shall its liability extend. In Catan v.
National Labor Relations Commission, 160 SCRA 691 (1988), it was
held that the responsibilities of the local agent and the foreign principal
towards the contracted employees under the recruitment agreement
extends up to and until the expiration of the employment contracts of the
employees recruited and employed pursuant to the said recruitment
agreement.
xxx
Foregoing considered, the assailed Decision dated 24 February 2000
and the Resolution dated 23 June 2000 of respondent Commission in
NLRC NCR CA 016354-98 are hereby SET ASIDE.
SO ORDERED.16
Petitioner's Motion for Reconsideration17 thereon was denied in the assailed
Resolution18 dated November 14, 2002.
Hence, the present petition based on the following grounds:
I.

THE HONORABLE COURT OF APPEALS COMMITTED A

REVERSIBLE ERROR WHEN IT ABANDONED THE FACTUAL
FINDINGS OF THE LABOR ARBITER AS AFFIRMED BY THE
NATIONAL LABOR RELATIONS COMMISSION.
II.
THE HONORABLE COURT OF APPEALS PATENTLY ERRED IN
HOLDING THAT THE RESPONDENT AGENCY IS ONLY A [sic] PRIVY
AND LIABLE TO THE PRINCIPAL CONTRACT.
III.
THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN
HOLDING THAT THE CAUSE OF ACTION OF THE PETITIONER
ALREADY PRESCRIBED.
The respondent counters in its Comment that the CA is correct in ruling that it
is not liable for the monetary claims of petitioner as the claim had already
prescribed and had no factual basis.
Simply put, the issues boil down to whether the CA erred in not holding
respondent liable for petitioner's money claims pursuant to their Contract of
Employment.
We grant the petition.
On whether respondent is solidarily liable for petitioner's monetary
claims
Section 1 of Rule II of the POEA Rules and Regulations states that:
Section 1. Requirements for Issuance of License. - Every applicant for
license to operate a private employment agency or manning agency
shall submit a written application together with the following
requirements:
xxx
f. A verified undertaking stating that the applicant:
xxx

(3) Shall assume joint and solidary liability with the employer for all
claims and liabilities which may arise in connection with the
implementation of the contract; including but not limited to payment of
wages, death and disability compensation and repatriation. (emphasis
supplied)
The above provisions are clear that the private employment agency shall
assume joint and solidary liability with the employer.19 This Court has, time
and again, ruled that private employment agencies are held jointly and
severally liable with the foreign-based employer for any violation of the
recruitment agreement or contract of employment.20 This joint and solidary
liability imposed by law against recruitment agencies and foreign employers is
meant to assure the aggrieved worker of immediate and sufficient payment of
what is due him.21 This is in line with the policy of the state to protect and
alleviate the plight of the working class.
In the assailed Decision, the CA disregarded the aforecited provision of the
law and the policy of the state when it reversed the findings of the NLRC and
the Labor Arbiter. As the agency which recruited petitioner, respondent is
jointly and solidarily liable with the latter's principal employer abroad for her
(petitioner's) money claims. Respondent cannot, therefore, exempt itself from
all the claims and liabilities arising from the implementation of their POEAapproved Contract of Employment.
We cannot agree with the view of the CA that the solidary liability of
respondent extends only to the first contract (i.e. the original, POEA-approved
contract which had a term of until April 1990). The signing of the "substitute"
contracts with the foreign employer/principal before the expiration of the
POEA-approved contract and any continuation of petitioner's employment
beyond the original one-year term, against the will of petitioner, are continuing
breaches of the original POEA-approved contract. To accept the CA's
reasoning will open the floodgates to even more abuse of our overseas
workers at the hands of their foreign employers and local recruiters, since the
recruitment agency could easily escape its mandated solidary liability for
breaches of the POEA-approved contract by colluding with their foreign
principals in substituting the approved contract with another upon the worker's
arrival in the country of employment. Such outcome is certainly contrary to the
State's policy of extending protection and support to our overseas workers. To
be sure, Republic Act No. 8042 explicitly prohibits the substitution or alteration
to the prejudice of the worker of employment contracts already approved and
verified by the Department of Labor and Employment (DOLE) from the time of

actual signing thereof by the parties up to and including the period of the
expiration of the same without the approval of the DOLE.22
Respondent's contention that it was petitioner herself who violated their
Contract of Employment when she signed another contract in Bahrain
deserves scant consideration. It is the finding of both the Labor Arbiter and the
NLRC - which, significantly, the CA did not disturb - that petitioner was forced
to work long after the term of her original POEA-approved contract, through
the illegal acts of the foreign employer.
In Placewell International Services Corporation v. Camote,23 we held that the
subsequently executed side agreement of an overseas contract worker with
her foreign employer which reduced his salary below the amount approved by
the POEA is void because it is against our existing laws, morals and public
policy. The said side agreement cannot supersede the terms of the standard
employment contract approved by the POEA.
Hence, in the present case, the diminution in the salary of petitioner from
US$370.00 to US$100 (BD 40.00) per month is void for violating the POEAapproved contract which set the minimum standards, terms, and conditions of
her employment. Consequently, the solidary liability of respondent with
petitioner's foreign employer for petitioner's money claims continues although
she was forced to sign another contract in Bahrain. It is the terms of the
original POEA-approved employment contract that shall govern the
relationship of petitioner with the respondent recruitment agency and the
foreign employer. We agree with the Labor Arbiter and the NLRC that the
precepts of justice and fairness dictate that petitioner must be compensated
for all months worked regardless of the supposed termination of the original
contract in April 1990. It is undisputed that petitioner was compelled to render
service until April 1993 and for the entire period that she worked for the
foreign employer or his unilaterally appointed successor, she should have
been paid US$370/month for every month worked in accordance with her
original contract.
Respondent cannot disclaim liability for the acts of the foreign employer which
forced petitioner to remain employed in violation of our laws and under the
most oppressive conditions on the allegation that it purportedly had no
knowledge of, or participation in, the contract unwillingly signed by petitioner
abroad. We cannot give credence to this claim considering that respondent by
its own allegations knew from the outset that the contract submitted to the
POEA for approval was not to be the "real" contract. Respondent blithely
admitted to submitting to the POEA a contract stating that the position to be

filled by petitioner is that of "Saleslady" although she was to be employed as a

domestic helper since the latter position was not approved for deployment by
the POEA at that time. Respondent's evident bad faith
and admitted circumvention of the laws and regulations on migrant workers
belie its protestations of innocence and put petitioner in a position where she
could be exploited and taken advantage of overseas, as what indeed
happened to her in this case.
We look upon with great disfavor the unsubstantiated actuations of innocence
or ignorance on the part of local recruitment agencies of acts of their foreign
principals, as if the agencies' responsibility ends with the deployment of the
worker. In the light of the recruitment agency's legally mandated joint and
several liability with the foreign employer for all claims in connection with
the implementation of the contract, it is the recruitment agency's
responsibility to ensure that the terms and conditions of the employment
contract, as approved by the POEA, are faithfully complied with and
implemented properly by its foreign client/principal. Indeed, it is in its best
interest to do so to avoid being haled to the courts or labor tribunals and
defend itself from suits for acts of its foreign principal.
On whether petitioner's claims for underpaid salaries have prescribed
It should be recalled that the Labor Arbiter and the NLRC similarly found that
petitioner is entitled to underpaid salaries, albeit they differed in the number of
months for which salary differentials should be paid. The CA, on the other
hand, held that all of petitioner's monetary claims have prescribed pursuant to
Article 291 of the Labor Code which provides that:
Art. 291. Money Claims. - All money claims arising from employeremployee relations accruing during the effectivity of this Code shall be
filed within three years from the time that cause of action accrued;
otherwise, they shall be forever barred. (emphasis supplied)
We do not agree with the CA when it held that the cause of action of petitioner
had already prescribed as the three-year prescriptive period should be
reckoned from September 1, 1989 when petitioner was forced to sign another
contract against her will. As stated in the complaint, one of petitioner's causes
of action was for underpayment of salaries. The NLRC correctly ruled the right
to claim unpaid salaries (or in this case, unpaid salary differentials) accrue as
they fall due.24 Thus, petitioner's cause of action to claim salary differential for
October 1989 only accrued after she had rendered service for that month (or

at the end of October 1989). Her right to claim salary differential for November
1989 only accrued at the end of November 1989, and so on and so forth.
Both the Labor Arbiter and the NLRC found that petitioner was forced to work
until April 1993. Interestingly, the CA did not disturb this finding but held only
that the extent of respondent's liability was limited to the term under the
original contract or, at most, to the term of the subsequent contract entered
into with the participation of respondent's foreign principal, i.e. 1991. We have
discussed previously the reasons why (a) the CA's theory of limited liability on
the part of respondent is untenable and (b) the petitioner has a right to be
compensated for all months she, in fact, was forced to work. To determine for
which months petitioner's right to claim salary differentials has not prescribed,
we must count three years prior to the filing of the complaint on May 31, 1995.
Thus, only claims accruing prior to May 31, 1992 have prescribed when the
complaint was filed on May 31, 1995. Petitioner is entitled to her claims for
salary differentials for the period May 31, 1992 to April 1993, or approximately
eleven (11) months.25
We find that the NLRC correctly computed the salary differential due to
petitioner at US$2,970.00 (US$370.00 as approved salary rate - US$100.00
as salary received = US$290 as underpaid salary per month x 11 months).
However, it should be for the period May 31, 1992 to April 1993 and not May
1993 to April 1994 as erroneously stated in the NLRC's Decision.
A final note
This Court reminds local recruitment agencies that it is their bounden duty to
guarantee our overseas workers that they are being recruited for bona
fide jobs with bona fide employers. Local agencies should never allow
themselves to be instruments of exploitation or oppression of their compatriots
at the hands of foreign employers. Indeed, being the ones who profit most
from the exodus of Filipino workers to find greener pastures abroad, recruiters
should be first to ensure the welfare of the very people that keep their industry
alive.
WHEREFORE, the petition is GRANTED. The assailed Decision of the Court
of Appeals dated August 7, 2002 and Resolution dated November 14, 2002 in
CA-G.R. SP No. 59825 are REVERSED AND SET ASIDE. The Decision of
the National Labor Relations Commission dated February 24, 2000
is REINSTATED with a qualification with respect to the award of salary
differentials, which should be granted for the period May 31, 1992 to April
1993 and not May 1993 to April 1994.

SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 197303

June 4, 2014

APQ SHIPMANAGEMENT CO., LTD., and APQ CREW MANAGEMENT USA, INC., Petitioners,
vs.
ANGELITO L. CASEAS, Respondent.
DECISION
MENDOZA, J.:
This petition for review on certiorari under Rule 45 of the Rules of Court seeks to review, reverse and
set aside the January 24, 2011 Decision and the June 1, 2011 Resolution of the Court of Appeals
(CA). in CA-GR. SP No. 112997, which annulled and set aside the October 14, 2009 Decision of the
National Labor Relations Commission (NLRCJ in NLRC LAC No. 04-000220-09, where respondent
Angelito L. Caseas (Caseas) was seeking disability and other benefits against petitioner APQ
Shipmanagement Co., Ltd. (APQ) and petitioner-principal APQ Crew Management USA, Inc. (Crew
Management).
1

It appears from the records that in June 2004, Casenas was hired by APQ, acting for and in behalf of
its principal, Crew Management, as Chief Mate for vessel MV Perseverance for a period of eight (8)
months starting from June 16, 2004 to February 16, 2005,with a basic monthly salary of US$840.00,
for forty-eight (48) hours a week, with US$329.00 as overtime pay.
In his Position Paper, Casenas further alleged that on June 16, 2004, he left Manila to join his
assigned vessel in Miami, Florida, USA, though the vessel could not leave the Florida port because
of its incomplete documents for operation; that consequently, he was transferred to another vessel,
MV HAITIEN PRIDE, which was in Haiti, although again because of incomplete documents, the
vessel could not leave the port and remained at Cap Haitien; that together with the rest of the
vessel's officers and crew, he was left to fend for himself; that they were not provided food and water
and had to fish for their own food and were not paid their salaries; that he suffered extreme stress
and anxiety because of the uncertainty of the situation; that his employment contract was extended
by APQ from the original eight (8) months to twenty-six (26) months; that the vessel eventually left
for Bahamas; that he felt he became weaker and got tired easily; that despite his unpaid wages and
weakened condition, he performed his duties as Chief Mate diligently; that in August 2006, he began
to suffer shortness of breath, headache and chest pains; that he was then brought to the Grand
Bahamas Health Services and was diagnosed with hypertension and was given medicines; that he
was then repatriated due to his condition and he arrived in the Philippines on August 30, 2006; that
within three (3) days thereafter, he reported to APQ for post-employment medical examination where
4

the company-designated physician later diagnosed him with Ischemic Heart Disease; that a certain
Dr. Ariel G. Domingo likewise examined him, confirming and certifying that he was suffering from
Essential Hypertension and Ischemic Heart Disease; that he was declared "unfit for sea service";
that as a result, he was not able to work for more than 120 days from his repatriation; that another
medical examination was conducted by Dr. Lina R. Cero, showing that he was suffering from
Essential Hypertension with Cariomegally Ischemic Heart Disease and Indirect Inguinal Hernia
Right; that he was then advised to take his maintenance medications for life; that APQ refused to
provide him further medical attention, thus, he incurred medical expenses in the amount of 6,390.00
by November 2006; that he demanded payment of permanent total disability benefits, sickness
allowance and medical expenses to which he was entitled under the POEA Standard Employment
Contract (POEA-SEC), but APQ refused to pay; that he, together with other crew members, sent a
series of letters and e-mails to the representatives of the shipowners regarding their unpaid wages,
but despite efforts, APQ still refused to pay their salaries; that demands for payment were also made
to the president of APQ, but the same were refused; and that ultimately, he was compelled to seek
redress and filed a complaint for permanent total disability benefits, reimbursement of medical
expenses, sickness allowance, non-payment of salaries representing the extended portion of the
employment contract, damages, and attorney's fees.
APQ, on the other hand, alleged in its Position Paper that upon expiration of the contract, Caseas
refused to return to the Philippines until he finally did on August 30, 2006; that thereafter, Caseas
demanded payment of his wages, overtime and vacation pay for the alleged extended portion of the
contract; that it could not be held liable for claims pertaining to the extended portion of the contract
for it did not consent to it; that, in fact, as early as January 2005, it had been making arrangements,
through American Airlines/American Eagle, for Caseas repatriation at the end of his contract in
February 2005; that Caseas was fully paid of his wages and other benefits for the duration of his 8month contract; and that Caseas suffered illness after the expiration of the contract, hence, it could
not be made liable to pay him any benefits for his injury/illness.
5

Caseas, however, disputed the position of APQ, claiming that his contract of employment was duly
extended. He denied that APQ had been making arrangements for his repatriation as early as
January 2005. To prove that his contract was extended, he submitted the following documents:
8

1. Deck Logbook, dated 14 August 2006;

2. Report of Mr. Steve Mastroropolous, dated 16 May 2006;
3. Letter, dated 24 April 2006 of Mr. Alex P. Quillope, President of the respondent APQ to
OWWA, admitting that there was no food and water for the crew of MV "HAITIEN PRIDE."

APQ countered that the abovementioned documents did not prove mutual consent of the parties as
provided in Caseas employment contract. His contract expired on August 1, 2005 and, thus, he
had no legal basis to claim any salary after the said period. Caseas became ill in August 2006 or
more than one (1) year after the expiration of his employment contract.
10

11

Labor Arbiter Decision

On November 20, 2008, the Labor Arbiter (LA)rendered the Decision dismissing Caseas'
complaint. He was of the view that the employment contract was not extended pursuant to the terms
and conditions of the contract. Caseas failed to prove mutual consent of the parties to the
extension of the contract. He rendered services on MV Haitien Pride from August 1, 2005 to April 30,
2006, after the expiration of his contract with APQ on board the vessel MV Perseverance on
February 15, 2005.
12

The LA pointed out that the illness/disease suffered by Caseas was sustained while serving on
board MVCap Haitien Pride, which was outside the period of his contractual employment. Thus,
Caseas' claims could not be awarded.
NLRC Resolution
On June 22, 2009, the NLRC resolved the appeal by reversing and setting aside the LA decision.
Based on the records, it found that the employment contract was extended. The illness, Essential
Hypertension, suffered by Caseas was a compensable disease under Section 32-A, No. 20 of the
POEA-SEC. Hence, NLRC ruled that Caseas was entitled to his claims because the illness was
sustained within the duration of his employment contract.
On October 14, 2009, the NLRC, acting on the motion for reconsideration filed by APQ, reconsidered
and set aside the June 22, 2009 NLRC Resolution. It explained that the documentary evidence
presented only proved the extension of contract but not the consent given to it by APQ. Caseas
failed to present the new contract duly signed by APQ or Crew Management, or any proof that they
consented to the extension. The NLRC explained that Caseas directly dealt with the shipowner to
the exclusion of APQ and Crew Management, hence, his recourse was against the shipowner. Thus,
APQ could not be held liable for the unpaid salaries, as well as the permanent disability benefits,
because these were claims that accrued after the expiration of the employment contract.
Caseas moved for a reconsideration, but the NLRC denied his motion in its Resolution, dated
November 27, 2009.
CA Decision
Caseas filed a petition for certiorari under Rule 65 before the CA, assailing the October 14, 2009
decision and the November 27, 2009 resolution of the NLRC. On January 24, 2011, the CA granted
the petition and nullified and set aside the questioned NLRC decision and resolution.
The CA reinstated the earlier June 22, 2009 NLRC Resolution. In so ruling, the CA cited the case of
Place well International Services Corporation v. Camote, where it was written:
13

xxx a subsequently executed side agreement of an overseas contract worker with the foreign
employer is void, simply because it is against our existing laws, morals and public policy. The
subsequent agreement cannot supersede the terms of the standard employment contract approved
by the POEA. Assuming arguendo that petitioner entered into an agreement with the foreign
principal for an extension of his contract of employment, sans approval by the POEA, the contract
that governs petitioner's employment is still the POEA-SEC until his repatriation. As far as Philippine

law is concerned, petitioner's contract of employment with respondents was concluded only at the
time of his repatriation on August 30, 2006.
Further, the CA explained that a declaration from the company designated physician as to the fitness
or unfitness of a seafarer to continue his sea-duties is sanctioned by Section 20(B)(3) of the POEASEC. There being no declaration made by the company-designated physician within the 120-day
period as to the fitness of Caseas, the CA opined that he was undoubtedly entitled to disability
benefits.
APQ filed a motion for reconsideration, while Caseas filed his Comment/Opposition. On June 1,
2011, the CA denied the motion for lack of merit.
Hence, this petition.
GROUNDS
THE HONORABLE COURT OF APPEALS ERRED IN REVERSING AND SETTING ASIDE THE
DECISION AND RESOLUTION OF THE NLRC DATED 14 OCTOBER 2009 AND 27 NOVEMBER
2009, AND REINSTATING THE NLRCS RESOLUTION DATED 22 JUNE 2009, CONSIDERING
THAT:
A. PRIVATE RESPONDENTS CONTRACT OF EMPLOYMENT WAS NEVER EXTENDED
BY THE COMPANY NOR BY THE PRINCIPAL
B. PRIVATE RESPONDENTS CLAIM FOR DISABILITY BENEFITS, SICKNESS
ALLOWANCE AND UNPAID WAGES ALL ACCRUED AFTER THE EXPIRATION OF THE
CONTRACT OF EMPLOYMENT
14

The pivotal issue for resolution is whether or not the employment contract of Caseas was extended
with the consent of APQ/Crew Management.
The Court rules in the affirmative.
At the outset, it is to be emphasized that the Court is not a trier of facts and, thus, its jurisdiction is
limited only to reviewing errors of law. The rule, however, admits of certain exceptions, one of which
is where the findings of fact of the lower tribunals and the appellate court are contradictory. Such is
the case here. Thus, the Court is constrained to review and resolve the factual issue in order to
settle the controversy.
Employment contracts of seafarers on board foreign ocean-going vessels are not ordinary contracts.
They are regulated and an imprimatur by the State is necessary. While the seafarer and his
employer are governed by their mutual agreement, the POEA Rules and Regulations require that the
POEA-SEC be integrated in every seafarers contract. In this case, there is no dispute that
Caseas employment contract was duly approved by the POEA and that it incorporated the
provisions of the POEA-SEC.
15

As earlier stated, the controversy started when Caseas claimed sickness and disability benefits as
well as unpaid wages from the petitioners upon his return to the Philippines. The petitioners, on the
other hand, refused to pay, arguing that Caseas sickness was contracted after his employment
contract expired.
Regarding the issue of extension and its corresponding consequences, two cases were cited by the
parties in their pleadings. The first was Sunace International Management Services, Inc. v.
NLRC (Sunace)and the second was Placewell International Services Corporation v.
Camote (Placewell).
16

17

In Sunace, the Court ruled that the theory of imputed knowledge ascribed the knowledge of the
agent to the principal, not the other way around. The knowledge of the principal-foreign employer
could not, therefore, be imputed to its agent. As there was no substantial proof that Sunace knew of,
and consented to be bound under, the 2-year employment contract extension, it could not be said to
be privy thereto. As such, it and its owner were not held solidarily liable for any of the complainants
claims arising from the 2-year employment extension.
18

In Placewell, the Court concluded that the original POEA-approved employment contract subsisted
and, thus, the solidary liability of the agent with the principal continued. It ruled that:
R.A. No. 8042 explicitly prohibits the substitution or alteration to the prejudice of the worker, of
employment contracts already approved and verified by the Department of Labor and Employment
(DOLE) from the time of actual signing thereof by the parties up to and including the period of the
expiration of the same without the approval of the DOLE. Thus, we held in Chavez v. BontoPerez, that the subsequently executed side agreement of an overseas contract worker with her
foreign employer which reduced her salary below the amount approved by the POEA is void
because it is against our existing laws, morals and public policy. The said side agreement cannot
supersede her standard employment contract approved by the POEA.
19

xxx
Moreover, we find that there was no proper dismissal of respondent by SAAD; the "termination" of
respondent was clearly a ploy to pressure him to agree to a lower wage rate for continued
employment. Thus, the original POEA-approved employment contract of respondent subsists
despite the so-called new agreement with SAAD. Consequently, the solidary liability of petitioner with
SAAD for respondents money claims continues in accordance with Section 10 of R.A. 8042.
20

APQs primary argument revolves around the fact of expiration of Caseas employment contract,
which it claims was not extended as it was without its consent. While the contract stated that any
extension must be made by mutual consent of the parties, it, however, incorporated Department
Order (DO)No. 4 and Memorandum Circular No. 09, both series of 2000, which provided for the
Standard Terms and Conditions Governing the Employment of Filipino Seafarers on Board Ocean
Going Vessels. Sections 2 and 18 thereof provide:
SECTION 2. COMMENCEMENT/ DURATION OF CONTRACT

A. The Employment contract between the employer and the seafarer shall commence upon
actual departure of the seafarer from the airport or seaport in the point of hire and with a
POEA approved contract. It shall be effective until the seafarers date of arrival at the point of
hire upon termination of his employment pursuant to Section 18 of this Contract.
B. The period of employment shall be for a period mutually agreed upon by the seafarer and
the employer but not to exceed 12 months. Any extension of the contract shall be subject to
the mutual consent of both parties.
xxx
SECTION 18. TERMINATION OF EMPLOYMENT
A. The employment of the seafarer shall cease when the seafarer completes his period of
contractual service aboard the vessel, signs off from the vessel and arrives at the point of
hire.
B. The employment of the seafareris also terminated when the seafarer arrives at the point of
hire for any of the following reasons:
1. When the seafarer signs off and is disembarked for medical reasons pursuant to
Section 20 (B)[5] of this Contract.
xxx
[Emphases supplied]
It is to be observed that both provisions require the seafarer to arrive at the point of hire as it
signifies the completion of the employment contract, and not merely its expiration. Similarly, a
seafarers employment contract is terminated even before the contract expires as soon as he arrives
at the point of hire and signs off for medical reasons, due to shipwreck, voluntary resignation or for
other just causes. In a nutshell, there are three (3) requirements necessary for the complete
termination of the employment contract: 1]termination due to expiration or other reasons/causes;
2]signing off from the vessel; and 3]arrival at the point of hire. In this case, there was no clear
showing that Caseas signed off from the vessel upon the expiration of his employment contract,
which was in February or April 2005. He did not arrive either in Manila, his point of hire, because he
was still on board the vessel MV Haitien Pride on the supposed date of expiration of his contract. It
was only on August 14, 2006 that he signed off from MV Haitien Pride and arrived in Manila on
August 30, 2006.
21

In Interorient Maritime Enterprises, Inc. v. NLRC, the Court held that the obligations and liabilities of
the local agency and its foreign principal do not end upon the expiration of the contracted period as
they were duty bound to repatriate the seaman to the point of hire to effectively terminate the
contract of employment.
22

23

APQ avers that Caseas transferred from MV Perseverance to MV Haitien Pride, which was not the
ship specifically mentioned in his contract. Section 15 of the POEA-SEC guides the Court on this. It
reads:
Section 15. Transfer Clause The seafarer agrees to be transferred at any port to any vessel owned
or operated, manned or managed by the same employer, provided it is accredited to the same
manning agent and provided further that the position of the seafarer and the rate of his wages and
terms of services are in no way inferior and the total period of employment shall not exceed that
originally agreed upon.
Any form of transfer shall be documented and made available when necessary.
APQ did not argue that MV Haitien Pride was not operated or managed by Crew Management. It did
not claim either that said vessel was not accredited by it. The logical conclusion, therefore, is that
MV Haitien Pride was operated/managed by Crew Management and accredited by APQ.
Thus, Caseas transfer should have been documented and made part of its records for future
purposes, but no documentation has been shown.
Even assuming arguendo that MV Haitien Pride was not related in any way with either Crew
Management or APQ, it is with more reason that the transfer should have been properly documented
pursuant to the above provision because it necessitated the termination of his employment contract
and his repatriation to the Philippines, pursuant to Section 26(A) of the POEA-SEC. The said
provision specifically provides that:
Section 26. Change of Principal.
A. When there is change of principal of the vessel necessitating the termination of
employment of the seafarer before the date indicated in the Contract, the seafarer shall be
entitled to earned wages, repatriation at employers expense and one month basic pay as
termination pay.
B. If by mutual agreement, the seafarer continues his service on board the same vessel,
such service shall be treated as a new contract. The seafarer shall be entitled to earned
wages only.
C. In case arrangement has been made for the seafarer to join another vessel to complete
his contract, the seafarer shall be entitled to basic wage until the date joining the other
vessel.
Meanwhile, Caseas claimed that his transfer was due to the fact that MV Perseverance could not
leave port because of incomplete documents for its operation. This was not disputed. To the mind of
the Court, having incomplete documents for the vessels operation renders it unseaworthy. While
seaworthiness is commonly equated with the physical aspect and condition of the vessel for voyage
as its ability to withstand the rigors of the sea, it must not be forgotten that a vessel should be armed
with the necessary documents required by the maritime rules and regulations, both local and

international. It has been written that vessel seaworthiness further extends to cover the documents
required to ensure that the vessel can enter and leave ports without problems.
24

Accordingly, Caseas contract should have been terminated and he should have been repatriated to
the Philippines because a seafarer cannot be forced to sail with an unseaworthy vessel, pursuant to
Section 24 of the POEA-SEC. There was, however, no showing that his contract was terminated by
reason of such transfer. It is necessary to reiterate that MV Haitien Pride appears to be manned by,
and accredited with, the same principal/ agency. His joining the said vessel could only mean that it
was for the purpose of completing his contract as the transfer was made well within the period of his
employment contract on board MV Perseverance.
25

APQ further claims that that there was an agreement between Caseas and the shipowner, but there
was no concrete proof adduced to show that indeed a new agreement for the extension of the
contract was ever made. Granting that a new agreement for the extension was made, the acts of
APQ and Crew Management proved that there was implied consent to the extension.
APQ attempts to impress upon the Court that Caseas contract already expired and that he had a
new employer during the alleged extension of the contract by relying on the December 16, 2005
Letter of the POEA. APQ alleged in its Memorandum that:
26

In a letter dated 16 December 2005 letter, the POEA confirmed that the Contract expired on April
2005 but he was not allowed repatriation by the owner of the Vessel, his new employer [See Annex
"6" of Comment attached as Annex "z" of this Petition.] A perusal of the said letter, however,
discloses that nowhere was it stated that Caseas was allowed repatriation by the owner of the
vessel, his new employer. What was clearly stated therein was that Caseas was not allowed
repatriation by his employer for some reason. Insofar as Philippine law is concerned, the employer
referred to in the said letter remains to be the foreign principal/manning agency as stated in the
POEA-approved employment contract.
Finally, there was no showing as to why Caseas was not repatriated to the Philippines upon the
expiration of his contract. It was expressly provided therein that the contract was for eight (8)
months, plus or minus two (2) months, that is, until February 2005 or at most, April 2005.
On its claim of lack of consent, APQ insists that as proof of its intention not to extend Caseas
contract, it already arranged his plane ticket as early as January & February 2005, in anticipation of
the expiration of the contract, attaching the e-mail copy of the American Airlines E-ticket &
Itinerary.
Again, a scrutiny of the records reveals otherwise. The e-mail and eticket consistently relied upon by
the petitioners clearly showed that the eticket was issued on January 18, 2006, which flight was
scheduled on January 23 (Monday) bound for Miami and January 25 (Wednesday) bound for Manila.
There were two (2) other e-tickets arranged for Caseas which showed a flight schedule on
February 8 (Wednesday) and February 15 (Wednesday), both bound for Manila from Miami. These
e-mails and etickets were sent by Crew Management to APQ viafax. Crew Management also
executed the letter, dated February 24, 2006, addressed to DOLEOWWA in response to the report
27

of the wife of Caseas to DOLE regarding his repatriation. Crew Management stated in said letter,
copy furnished APQ, that it had already issued an air ticket to Caseas, but he failed to claim it. The
same letter assured the DOLE-OWWA of its arranging the payment of wages and repatriation of the
crew members on-board MV Haitien Pride, as well as its arranging another plane ticket for Caseas,
if necessary. Thus, these communications reveal that APQ had actual knowledge that Caseas
continued working on board the said vessel after February/April 2005. Despite such knowledge, APQ
neither posed any objection to the extension of the contract nor make any effort to protect itself from
any responsibility that might arise from the extension, if it did not indeed intend to extend the
employment contract. Tokeep on notifying a person/party who was not anymore privy to any contract
at all makes no sense. Also, APQ sent OWWA another letter, dated April 24, 2006, giving
information on the status of MV Haitien Pride. The same letter confirmed that APQ and Crew
Management had constant communication with each other regarding the said vessel and its crew.
Alex P. Quillope, APQs President, even stated in the same letter that:
28

Soon as I receive any information from them, I will at once inform your good office as I have then
already prepared my travel again to Miami, Florida once MV Haitien Pride be on her sailing to
Miami.
29

APQ cannot now feign ignorance of any extension of the contract and claim that it did not consent to
it. As it had knowledge of the extended contract, APQ is solidarily liable with Crew Management for
Caseas claims. Caseas is, therefore, entitled to the unpaid wages during the extended portion of
his contract.
1wphi1

As to his claim for medical and other benefits, there is no dispute that the symptoms of Caseas
illness began to manifest during the term of his employment contract. The fact that the
manifestations of the illness only came about in August 2006 will not bar a conclusion that he
contracted the ailment while the contract was subsisting. The overall state and condition that he was
exposed to over time was the very cause of his illness. Thus, the CA was correct in reinstating the
NLRC resolution awarding sickness allowance as well as disability benefits in favor of Caseas.
Section 20(B)(3) of the 2000 POEA Standard Terms and Conditions Governing the Employment of
Filipino Seafarers on Board Ocean Going Vessels provides:
B. COMPENSATION AND BENEFITS FOR INJURY OR ILLNESS
xxx
3. Upon sign-off from the vessel for medical treatment, the seafarer is entitled to sickness allowance
equivalent to his basic wage until he is declared fit to work or the degree of permanent disability has
been assessed by the company-designated physician but in no case shall this period exceed one
hundred twenty (120) days.
For this purpose, the seafarer shall submit himself to a post employment medical examination by a
company-designated physician within three working days upon his return except when he is
physically incapacitated to do so, in which case, a written notice to the agency within the same
period is deemed as compliance. Failure of the seafarer to comply with the mandatory reporting
requirement shall result in his forfeiture of the right to claim the above benefits. If a doctor appointed

by the seafarer disagrees with the assessment, a third doctor may be agreed jointly between the
Employer and the seafarer. The third doctors decision shall be final and binding on both parties.
xxx
In Magsaysay Maritime Corporation vs. NLRC, citing Vergara vs. Hammonia Maritime Services,
Inc., the Court reiterated that the seafarer, upon sign-off from his vessel, must report to the
company-designated physician within three (3) days from arrival for diagnosis and treatment. For the
duration of the treatment but in no case to exceed 120 days, the seaman is on temporary total
disability as he is totally unable to work. He receives his basic wage during this period until he is
declared fit to work or his temporary disability is acknowledged by the company to be permanent,
either partially or totally, as his condition is defined under the POEA-SEC and by applicable
Philippine laws. If the 120 days initial period is exceeded and no such declaration is made because
the seafarer requires further medical attention, then the temporary total disability period may be
extended up to a maximum of 240 days, subject to the right of the employer to declare within this
period that a partial or total disability already exists. The seaman may, of course, also be declared fit
to work at any time such declaration is justi1ied by his medical condition.
30

31

32

In this case, Casenas immediately reported to APQ for the required post-employment medical
examination upon his return to the Philippines. He was referred to the company-designated
physician, who diagnosed him to be suffering from lschemic Heart Disease, which was a
manifestation of organ damage. Caseas likewise consulted two (2) other physicians who certified
him to be suffering from Essential Hypertension aside from Ischemic Heart Disease. From the time
of Caseas' diagnosis by the company-designated physician, he was under the state of temporary
total disability, which lasted for at least 120 days as provided by law. Such period could be extended
up to 240 days, if further medical attention was required.
33

34

There was, however, no showing of any justification to extend said period. As the law requires, within
120 days from the time he was diagnosed of his illness, the company-designated physician must
make a declaration as to the fitness or unfitness of Caseas As correctly observed by the CA,
however, the 120 day period lapsed without such a declaration being made. Caseas is now
deemed to be in a state of permanent total disability and, thus, clearly entitled to the total disability
benefits provided by law.
35

WHEREFORE, the petition is DENIED.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 197005

June 4, 2014

PRINCESS JOY PLACEMENT AND GENERAL SERVICES, INC., Petitioner,

vs.
GERMAN A. BINALLA, Respondent.
RESOLUTION
BRION, J.:
We resolve the motion for reconsideration of the Court's Resolution dated August 8, 2011 denying
the petition for review on certiorari filed by Princess Joy Placement and General Services, Inc.
(Princess Joy) for failure to sufficiently show any reversible error in the decision dated May 6, 2010
and resolution dated May 23, 2011 of the Court of Appeals in CA-G.R. SP No. 102285.
1

The Antecedents
On August 9, 2004, respondent German A. Binalla filed a complaint against local manning agent
CBM Business Management and Manpower Services (CBM)and/or Princess Joy/Al Adwani General
Hospital (Al Adwani) for various money claims arising from his employment with Al Adwani, in Taif,
Saudi Arabia from April 19, 2002 to April 28, 2004.
6

Binalla, a registered nurse, alleged that in April 2002, he applied for employment with Princess Joy
who referred him to Reginaldo Paguio and Cynthia Latea for processing of his papers. After
completing his documentary requirements, he was toldthat he would be deployed to Al Adwani. On
April 12, 2002, he signed a four-year contract with Al Adwani as staff nurse. He paid
Latea P4,500.00 and Paguio, P3,000.00, although no receipts were issued to him. Later, he was
given a telegram notifying him of his departure on April 19, 2002.
7

Binalla further alleged that on the day of his departure, Paguio met him at the airport and gave him a
copy of his employment contract, plane ticket, passport, a copy of his Overseas Employment
Certificate from the Philippine Overseas Employment Administration (POEA) and other documents. It
was only after boarding his Saudi Arabia Airlines plane that he examined his papers and discovered
that CBM was his deploying agency. Under the contract certified by the POEA, his salary was
supposed to be US$550.00 for twenty-four (24) months or for two years.
8

Binalla also saw that under the four-year contract he signed, his monthly salary was only 1,500
Saudi Riyals (SR) equivalent to $400. Left with no choice as he was then already bound for Saudi
Arabia, he worked under his contract for only two years and returned to the Philippines in April 2004
after posting a bond of SR 3,000.00, supposedly to guarantee that he would come back to finish his
contract.
Upon his return to the Philippines, Binalla verified his employment contract with the POEA. He
learned that the POEA indeed certified a different contract for him, with CBM as his recruiting or
deploying agency. He disowned the contract, claiming that his supposed signature appearing in the
document was a forgery. Out of frustration, he opted not to return to Saudi Arabia to complete his
four-year contract.
Binalla argued before the labor arbiter that he was "re-processed" an arrangement where Princess
Joy recruited and deployed him, but made it appear that it was undertaken by CBM under a different
contract submitted to and certified by the POEA. He complained that he was made to work under an
inferior contract and that Al Adwani itself violated the terms of his four-year contract as follows: (1)
withholding his initial salary of SR1,500 purportedly as a bond to ensure the completion of the

contract; (2) deducting SR 250 from his salary for six months as reimbursement for his placement
fee of SR1,500; (3) non-payment of his overtime pay for his two years work; (4) refusal to allow him
to avail of his 15-day vacation leave and 15-day sick leave equivalent to one months salary; (5)
deduction of SR 50 a month (total of SR 1,200) for board and lodging and food allowance which
were supposed to be free; and (6) requiring him to post a bond equivalent to three months salary to
guarantee that he would return (to complete his contract) when he applied for a vacation leave after
two years of work.
Despite the service of summons to Princess Joy and CBM, it was only Princess Joy which made
submissions to the labor arbiter. It denied that it recruited and deployed Binalla for overseas
employment, repudiating the involvement of Paguio and Lateo in Binallas engagement by Al
Adwani. It claimed that the two were not among its officers, employees and representatives
registered with the POEA. It alleged that it was not Al Adwanis Philippine agent, but CBM. It likewise
denied that it participated in the four-year contract presented in evidence by Binalla, claiming that it
was not even an employment contract as it was only Binalla who signed it; neither did it "re-process"
him. If at all, it argued, the "repro-scheme" committed by Paguio and Lateo constituted a prohibited
recruitment practice outside the labor arbiters jurisdiction.
The Compulsory Arbitration Rulings
In his decision dated October 28, 2005, Labor Arbiter (LA) Fructuoso T. Aurellano of the National
Labor Relations Commissions Regional Arbitration Branch No. V found merit in the complaint. LA
Aurellano considered the complaint a money claim and therefore within his jurisdiction under the
law. LA Aurellano found that Princess Joy and CBM jointly undertook Binallas recruitment and
deployment in Saudi Arabia through "reprocessing." He found credible Binallas contention that
Paguio and Lateo, who processed his papers, were working for Princess Joy, taking special note of
the "ticket/telegram/advise" (with mention of "Princess Joy" and "Regie" [Paguio]),handed by
Paguio to Binalla.
9

10

11

LA Aurellano declared CBM and Princess Joy jointly and severally liable to pay Binalla (1)
US$3,500.00 in salary differentials for two years; (2) SR 1,500.00 or $400.00 representing six
months salary deduction as bond to ensure completion of Binallas four-year contract; (3) $9,900.00
in overtime pay; (4) $550 in vacation leave and sick leave credits; (5) SR 1,200 in reimbursement of
monthly deductions for board and lodging; (6) SR 3,000.00 in reimbursement of the vacation bond;
(7) P500,000.00 in moral damages; (8) P500,000.00 in exemplary damages; and (9) 10 % in
attorneys fees.
12

Princess Joy appealed the LAsruling by filing with the NLRC a Notice of Appeal, a Memorandum of
Appeal, and a Motion to Reduce and Fix Bond, all dated November 24, 2005, accompanied by a
surety bond of P250,000.00 for LA Aurellanos monetary award of P800,875.00, exclusive of
damages. Binalla opposed the motion, contending that the appeal was made in violation of the
NLRC rules.
13

14

15

On May 12, 2006, the NLRC issued an order allowing Princess Joy to post the balance of the
appeal bond to make it equal to P800,875.00. Binalla moved for reconsideration and opposed the
posting of the additional bond. Through a Compliance dated July 21, 2006, Princess Joy posted
with the NLRC the required additional bond of P550,875.00. The NLRC then acted on the appeal
and issued a resolution dated July 27, 2007 reversing LA Aurellanos decision.
16

17

18

The NLRC ruled that the facts and evidence of the case do not establish "reprocessing" as the
means for Binallas deployment to Saudi Arabia. It declared that, on the contrary, substantial
evidence existed pointing to CBMs sole liability as the recruiting and deploying agent of Binalla. It

refused to give credit to the ticket telegram/advice Binalla submitted in evidence to establish
Princess Joys liability as it was merely an unsigned and unauthenticated printout with no indication
of its source, purpose, or the entity to whom it is addressed.
In the matter of CBMs liability, the NLRC stressed that while the agency waived its right to present
evidence for its non-appearance, it can be held liable together with Al Adwani only for causes of
action raised in the complaint and were duly proven. It pointed out that the complaint (the standard
form) filed by Binalla mentioned only non-payment of salaries, overtime pay, vacation/sick leave pay
and refund of alleged salary deductions, including placement fee, plus attorneys fees. The NLRC
thus deleted the award to Binalla of salary differentials, food allowance, and moral and exemplary
damages. Accordingly, it awarded Binalla $2,200.00 in unpaid salaries for four months; $550.00 for
unused vacation and sick leave credits, plus 10% attorneys fees.
Binalla moved for reconsideration, but the NLRC denied the motion, prompting him to seek relief
from the CA through a petition for certiorari under Rule 65 of the Rules of Court. He charged the
NLRC of grave abuse of discretion in (1) entertaining Princess Joys appeal despite its failure to post
an appeal bond within the ten-day appeal period; and (2) not appreciating the "reprocessing
scheme" employed by Princess Joy in his deployment to Al Adwani.
19

The CA Decision
In its decision of May 6, 2010, the CA granted the petition and set aside the NLRC rulings. It found
that the NLRC committed grave abuse of discretion when it decided the appeal on the merits despite
Princess Joys failure "to comply with the essential requirement to perfect an appeal." It emphasized
that under the law (Article 223 of the Labor Code) and the NLRC rules (Rule VI, Section 6 of the
NLRC 2005 Revised Rules of Procedure), in case of a judgment involving a monetary award, an
appeal by the employer may be perfected only upon the posting of a cash or surety bond equivalent
in amount to the monetary award, exclusive of damages and attorneys fees, within the ten-day
appeal period.
20

21

The CA found the P250,000.00 posted by Princess Joy insufficient in relation to the monetary award
of P800,875.00. While it acknowledged that Princess Joy moved for a reduction of the bond, it
stressed that the employer must post the bond within the 10-day period for appeal inasmuch as the
motion does not stop the running of the reglementary period; otherwise, the appeal is not deemed
perfected. It noted that the NLRC did not act on Princess Joys motion to reduce and fix bond within
the 10-day period. There being no perfected appeal, it opined, the labor arbiters judgment had
become final and executory.
Princess Joy moved for reconsideration, but the CA denied the motion; thus the petition.
The Petition
Princess Joy prays for the reversal of the CA decision on the ground that the appellate court
committed a serious reversible error in ruling that it failed to perfect its appeal. It argued that it
complied with the requirements of the NLRC rules for perfection of the appeal, including the filing of
a motion to reduce bond and the posting of a reasonable amount (P250,000.00) in relation to the
monetary award.
Princess Joy maintains that when the NLRC required the posting of an additional bond in its order of
May 12, 2006, within ten days from receipt of the order, it timely posted the additional bond
of P550,875.00 with supporting documents, thus completing the required bond. It took exception to
the CAs opinion that the granting of the motion to reduce bond, as well as the posting of the
22

additional bond set by the NLRC, must be made within the ten-day period. It regarded the CA
opinion incorrect, pointing out that this Court had recognized situations where the bond has been
validly posted after the ten-day period.
23

On the merits of the case, Princess Joy insisted that the NLRC correctly ruled that it should be
dropped as a party respondent and absolved of liability in the case considering that Binallas alleged
"re-processing" had not been proven. It argued that the individuals he mentioned as having recruited
and facilitated his employment abroad were not its employees or agents; also, evidence showed that
it was CBM who deployed Binalla to Saudi Arabia.
Further, Princess Joy maintains that even assuming that it is liable, its liability to Binalla should be
limited only to validly substantiated claims under the two-year POEA-approved contract. If the claims
were under the four-year contract, there is no showing that it was the contract that had been
implemented in the jobsite; furthermore, it was not a party to this four-year contract. Lastly, it took
exception to the exorbitant award of damages to Binalla P500,000.00 each for moral and
exemplary damages.
The Courts Action on the Petition and Related Incidents
In a Resolution dated August 8, 2011, the Court denied the petition for failure to sufficiently show
any reversible error in the assailed judgment of the CA. This prompted Princess Joy to move for
reconsideration based on the same arguments in support of the petition. The Court then required
Binalla to comment on the motion for reconsideration.
24

25

26

Binallas Comment
In his Comment filed without the assistance of counsel, Binalla stands firm on his position that
Princess Joys appeal to the NLRC was not perfected as it failed to post a bond equivalent in amount
to the labor arbiters award within the ten-day appeal period.
27

On the merits of the case, Binalla takes exception to the claim that Princess Joy has been a "victim
of gross and manifest injustice." He submits that on the contrary, he was a victim to the kind of
injustice Princess Joy speaks about. He reiterates his deep misgivings over what happened to his
employment in Saudi Arabia where he was made to work with a monthly salary of US$400, which to
his knowledge was for four years, only to find out that he was entitled to $550 and just for two years.
He laments that not only was he made to work under a contract inferior to that certified by the POEA;
his employer even violated the contract in terms of withholding or non-payment of employee benefits
due him. He thus entreats the Court to deny Princess Joys motion for reconsideration.
28

The Courts Ruling

We partially grant the motion for reconsideration.
The appeal bond issue
The NLRC committed no grave abuse of discretion in taking cognizance of and acting on Princess
Joys motion to reduce the appeal bond as it is allowed under Rule VI, Section 6 of the NLRC 2005
Revised Rules of Procedure, and the motion was filed within the ten-day appeal period, together
with the notice of appeal and the memorandum of appeal. Also, the motion was accompanied by a
surety bond of P250,000.00, an indication of a genuine effort on the part of the agency to comply
with the bond requirement.
29

Compared with LA Aurellanos award of P800,875.00 to Binalla, we find the initial bond posted by
Princess Joy reasonable, considering that it is questioning the unusually large amount of the
awarded damages. Significantly, the agency posted an additional bond as required by the NLRC in
its May 12, 2006 order, thus, bringing the amount equal to the labor arbiters monetary award. We
take this occasion to impress upon the parties that the Court takes a liberal approach on the appeal
bond requirement in "the broader interest of justice and with the desired objective of deciding cases
on the merits." In Intertranz Container Lines, Inc. v. Bautista, the Court reiterated its call for a
liberal application of the law and the rules on the appeal bond requirement "with an eye on the
interest of substantial justice and the merits of the case."
30

31

32

33

In this light, the CA committed a reversible error in imputing grave abuse of discretion on the NLRC
for acting on the motion to reduce bond even beyond the ten-day appeal period.
The merits of the case
We now proceed to the substantive aspect of the case which the CA did not pass upon in light of its
ruling that the NLRC had lost jurisdiction over the labor dispute for Princess Joys failure to perfect its
appeal. The CA thus was unable to determine whether the NLRC ruling on the merits was tainted
with grave abuse of discretion. Under this situation, do we now remand the case to the CA for a
review of the NLRCs disposition of the merits of the case or conduct the review ourselves,
considering that the case is already almost a decade old counted from the filing of the complaint?
34

In the course of determining the presence of grave abuse of discretion a recourse the CA failed to
undertake we believe we can and now should rule on the merits to lay the issues posed finally to
rest. Incidentally, in Metro Eye Security, Inc. v. Salsona, we emphasized that a remand should be
avoided if the ends of justice would not be served. In Intertranz Container Lines, Inc. v. Bautista, we
expressed the same concern over a more than five-year old illegal dismissal case. As matters now
stand, a remand would definitely be a disservice to the ends of justice as it would only prolong the
disposition of the case. Significantly, we note that Princess Joy filed a Comment on Binallas petition
for certiorari before the CA. Thus, the issues have been joined and are ready for adjudication and
should forthwith be resolved in the interest of speedy justice.
35

36

37

38

39

Is Princess Joy liable under the complaint?

After an examination of the facts, we find, contrary to the NLRC ruling, substantial evidence showing
that Binalla was employed by Al Adwani in Saudi Arabia through a fraudulent scheme or
arrangement, called "reprocessing" or otherwise, participated in by Princess Joy and CBM, as well
as by Paguio and Lateo (who worked on the processing and documentation of Binallas deployment
papers to Al Adwani). Although the scheme enabled Binalla to be employed overseas, his two-year
employment was marred from the start by violations of the law on overseas employment.
First. Binalla was a victim of contract substitution. He worked under an employment contract whose
terms were inferior to the terms certified by the POEA. Under the four-year contract he signed and
implemented by his employer, Al Adwani, he was paid only SR1500.00 or US$400 a month;
whereas, under the POEA- certified two-year contract, he was to be paid $550.00. The POEAcertified contract for all intents and purposes and despite his claim that his signature on the
certified contract was forged was the contract that governed Binallas employment with Al Adwani
as it was the contract that the Philippine government officially recognized and which formed the
basis of his deployment to Saudi Arabia. Clearly, the four-year contract signed by Binalla substituted
for the POEA-certified contract.

Under Article 34 (i) of the Labor Code on prohibited practices, "it shall be unlawful for any individual,
entity, licensee, or holder of authority to substitute or alter employment contracts approved and
verified by the Department of Labor and Employment from the time of actual signing thereof by the
parties up to and including the periods of expiration of the same without the approval of the
Secretary of Labor." Further, contract substitution constitutes "illegal recruitment" under Article 38 (I)
of the Code.
Under the circumstances, Princess Joy is as liable as CBM and Al Adwani for the contract
substitution, no matter how it tries to avoid liability by disclaiming any participation in the recruitment
and deployment of Binalla to Al Adwani. Before the laborarbiter, Princess Joy claimed that Paguio
and Lateo werenot its employees/representatives or that the principal piece of evidence relied upon
by the labor arbiter, the "ticket/telegram/advise (sic)" handed to Binallaby Paguio had no probative
value as it was merely an unsigned and unauthenticated printout or that the four-year employment
contract was signed only by Binalla and there was no showing that it was the contract implemented
by Al Adwani.
40

Princess Joys protestations fail to convince us. We believe, as the labor arbiter did, that the ticket
telegram/advice is proof enough that Princess Joy recruited Binalla. We quote with approval LA
Aurellanos observation on the matter:
In the instant case, however, it was fortunate that the complainant was able to hold onto the ticket
telegram/advise handed to him by Reginaldo Paguio. Clearly shown thereat, it carried the names
"PRINCESS JOY" and "REGIE." It would not be an unreasonable [presumption] that indeed xxx
Princess Joy recruited complainant and that the latter had been transacting with Reginaldo Paguio
(REGIE).
41

The same thing is true with the four-year contract Binalla signed. Again, we quote LA Aurellanos
observation on why Princess Joys participation was not indicated in the contract:
We are prepared to accept the postulation that in order to evade possible liability by way of
"reprocessing scheme," the recruiting or referring agency would as much as possible avoid any
documents that would show that it recruited the referred overseas contract worker to another agency
for deployment. Thus, the employment contract signed by the overseas contract worker and other
documents related to [the] departure would not naturally bear any reference to the referring agency.
42

Significantly, there is evidence on record that belied Princess Joys submission that it was not an
agent of Al Adwani. We refer to a nine-page Annex "A" to Binallas motion for reconsideration with
the NLRC, showing that Princess Joy entered into recruitment contracts, hired and placed Filipino
workers for Al Adwani, through Glenda Chua, Princess Joys President, Reginaldo Paguio and
Cynthia Lateo in 2003 to 2004 which covered the period when Binalla was working for Al Adwani. We
consider this evidence relevanteven if it was submitted only on motion for reconsideration with the
NLRC-- as it supports LA Aurellanos conclusion that Princess Joy was involved in Binallas
recruitment and deployment to Al Adwani. In Clarion Printing House, Inc., et al. v. NLRC, we
reiterated the settled rule that the NLRC is not precluded from receiving evidence on appeal as
technical rules of evidence are not binding in labor cases. In an earlier case, we allowed the
submission of additional evidence in support of the employees appeal as it did not prejudice the
employer since it could submit counter evidence.
43

44

45

46

In these lights, we find that the NLRC gravely abused its discretion in ignoring the presence of
substantial evidence in the records indicating that Princess Joy is as responsible and, therefore, as
liable as CBM in Binallas fraudulent deployment to Saudi Arabia.

Second. The substitution of Binallas contract imposed upon him terms and conditions of
employment inferior to those provided in the POEA certified contract, especially in relation to his
monthly salary and the term of his contract. This should be rectified. There were also Binallas claims
of non-payment or withholding of contractual employee benefits by Al Adwani and imposition of
unreasonable financial burden or obligations in the course of his two-year employment. These
claims, it bears stressing, had not been disproved by Princess Joy, CBM or Al Adwani. The claims
should be satisfied. We thus find that, except for the award of damages, all the other items awarded
by LA Aurellano are in order. He, however, omitted the reimbursement of Binallas placement fee.
This must also be rectified.
The award of moral and exemplary damages/attorneys fees
We find the award to Binalla of P500,000.00 in moral damages and P500,000.00 in exemplary
damages excessive. While Princess Joy, CBM and Al Adwani were complicit in the substitution of
Binallas employment contract which resulted in the violation of his rights as an overseas Filipino
worker, the award of damages is unusually high, an award that even this Court "does not mete out in
labor cases" as we said in the Intertranz case. Under the circumstances, we deem an award
of P50,000.00 in moral damages and P50,000.00 in exemplary damages to Binalla to be
appropriate.
47

We affirm the award of attorneys fees to Binalla as he was forced to litigate to vindicate and protect
his rights.
WHEREFORE, premised considered, we grant the petition in part. We SET ASIDE the CA rulings
and MODIFY the resolution of the National Labor Relations Commission dated July 27, 2007.
Accordingly, petitioners Princess Joy Placement and General Services and CBM Business
Management and Manpower Services are hereby ordered to pay, jointly and severally, German A.
Binalla, the following:
1. US$ 3,600.00 or its Philippine peso equivalent in salary differentials for two (2) years
based on the difference between his salary under the four-year contract he signed and his
salary under the two-year standard employment contract certified by the POEA;
2. SR 1,500 or its Philippine peso equivalent in reimbursement of salary deduction for six (6)
months representing the bond to guarantee the completion of his four-year contract;
3. US$9,900.00 or its Philippine peso equivalent in overtime pay for two years overtime work
at four (4) hours/shift at 150% for regular working hours in accordance with the POEAcertified contract;
4. US$550.00 or its Philippine peso equivalent in unused vacation and sick leave credits;
5. SRl,200 or its Philippine peso equivalent in reimbursement of monthly deductions for
board and lodging;
6. SR 3,000.00 or its Philippine peso equivalent in reimbursement of vacation leave bond;
7. SR 1,500.00 or its Philippines peso equivalent in reimbursement of placement fee;
8. P.50,000.00 in moral damages;

9. P.50,000.00 in exemplary damages; and

10. Ten percent (10%) attorney's fees.
SO ORDERED.