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Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
G.R. Nos. 117145-50 & 117447

March 28, 2000

PEOPLE OF THE PHILIPPINES, plaintiff-appellee,


vs.
LEONIDA MERIS y PADILLA, accused-appellant.
KAPUNAN, J.:
This is an appeal from the Joint Decision of the Regional Trial Court of Manila, Branch 1, convicting
accused-appellant Leonida Meris y Padilla of illegal recruitment in large-scale and six counts of
estafa. The dispositive portion of the decision1 reads as follows:
WHEREFORE, this court finds the accused, Leonida Meris y Padilla, GUILTY, beyond
reasonable doubt of six (6) counts of estafa in Criminal Cases Nos. 91-94192 to 91-94197,
and of illegal recruitment in large scale in Criminal Case No. 91-94198 and, as a
consequence thereof, sentences her as follows:
1. In Criminal Case No. 91-94192, to suffer the indeterminate penalty of one (1) year, eight
(8) months and twenty-one (21) days of prision correccional as minimum to five (5) years,
five (5) months and eleven (11) months (sic) of prision correccional as maximum;
2. In Criminal Case No. 91-94193, to suffer the indeterminate penalty of one (1) year, eight
(8) months and twenty-one (21) days of prision correccional as minimum to five (5) years,
five (5) months and eleven (11) days of prision correccional as maximum;
3. In Criminal Case No. 91-94194, to suffer an indeterminate penalty of one (1) year, eight
(8) months and twenty-one (21) days of prision correccional as minimum to five (5) years,
five (5) months and eleven (11) days of prision correccional as maximum;
4. In Criminal Case No. 91-94195, to suffer an indeterminate penalty of one (1) year, eight
(8) months and twenty-one (21) days of prision correccional as minimum to five (5) years,
five (5) months and eleven (11) days of prision correccional as maximum;
5. In Criminal Case No. 91-94196, to suffer an indeterminate penalty of one (1) year, eight
(8) months and twenty-one (21) days of prision correccional as minimum to five (5) years,
five (5) months and eleven (11) days of prison correccional as maximum;
6. In Criminal Case No. 91-94197, to suffer an indeterminate penalty of one (1) year, eight
(8) months and twenty-one (21) days of prision correccional as minimum to five (5) years,
five (5) months and eleven (11) days of prison correccional as maximum;

7. In Criminal Case No. 91-94198, to suffer the penalty of life imprisonment and to pay a fine
of P100,000.00.
Further, the accused shall indemnify the private complainants, Napoleon Ramos, Cristina
Nava, Margarita Nadal, Purita Conseja and Leo delos Santos, the sum of P30,000.00 each
and complainant Merlita Bombarda the amount of P20,000.00 with interest thereon at the
legal rate from the date of institution of these cases, i.e., April 29, 1991, until fully paid.
Costs against the accused in all the above-captioned cases.
SO ORDERED.
The above conviction stemmed from seven informations. The information in Criminal Case No. 9194192 reads:
That on or about and during the period comprised between January 12, 1991 and February
17, 1991, both dates inclusive, prior or subsequent thereto in the City of Manila, Philippines,
the said accused conspiring and confederating with three others whose true names,
identities and present whereabouts are still unknown, helping one another, did then and
there willfully, unlawfully and feloniously defraud NAPOLEON RAMOS y ESPEJO in the
following manner, to wit: the said accused, by means of false manifestations and fraudulent
representation which they made to said NAPOLEON E. RAMOS to the effect that they had
the power and capacity to recruit and employ him as Factory Worker in Hongkong and could
facilitate the processing of the pertinent papers if given the necessary amount to meet the
requirements thereof, and by means of other similar deceits, induced and succeeded in
inducing said NAPOLEON E. RAMOS to give and deliver, as in fact (he) gave and delivered
to said accused the amount of P30,000.00 on the strength of said manifestations and
representations, said accused well knowing that the same were false and fraudulent and
were made solely to obtain the amount of P30,000.00 which amount once in possession,
with intent to defraud he (sic) willfully, unlawfully and feloniously misappropriated, misapplied
and converted to their own personal use and benefit, to the damage and prejudice of said
NAPOLEON E. RAMOS, in the aforesaid amount of P30,000.00, Philippine Currency.
CONTRARY TO LAW.2
The information in Criminal Cases Nos. 91-94193, 91-94194, 91-94195, 91-94196 and 91-94197
likewise charged accused-appellant with Estafa and contain substantially the same allegations as
the above-quoted information, except as to the name of the complainants and the amounts
involved.3
The seventh information in Criminal Case No. 91-94198 charged accused-appellant with illegal
recruitment in large-scale, to wit:
That on or about and during the period comprised between December 21, 1990 and
February 17, 1991, inclusive, in the City of Manila, Philippines, the said accused, conspiring
and confederating together with others still unknown and helping one another, and
representing herself 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 abroad to Leo D. delos Santos, Merlita L. Bombarda, Margarita R. madae (sic),

Purita A. Conceja, Cristina I. Nava and Napoleon E. Ramos, without first securing the
required license or authority from the Dept. of Labor.
Contrary to law.4
Criminal Case No. 91-94198 was originally filed before Branch 45 of the Regional Trial Court of
Manila where, upon arraignment, accused-appellant pleaded not guilty.5 The six other cases were
filed before Branch I of the Regional Trial Court of Manila, where accused-appellant, likewise,
entered a plea of "not guilty" to all the indictments. The cases were eventually consolidated and tried
jointly before Branch I.6
The evidence for the prosecution, as summarized by the trial court, is reproduced herein:
Napoleon Ramos, complainant in Criminal Cases Nos. 91-94192 and 91-94198, testified that
he was at the house of the accused on Estrada Street, Urdaneta, Pangasinan, in the evening
of January 9, 1991, between the hours of 7:00 and 8:00 o'clock. Also in the house were
Nadal, Conseja and Bombarda. The accused told the private complainants that she knew
someone in Manila who could help them secure employment in Hongkong; that if they are
interested she would take them to Manila on January 12, 1991, and that they should be
prepared to make an initial payment of P15,000.00 each, for their placement fees.
On the early morning of January 12, 1991, Ramos, Nadal, Conseja and Bombarda together
with the accused proceeded to Manila by bus. They went directly to a house on Lardizabal
Street, Sampaloc, Manila, where they were served breakfast. After a while, a woman arrived
and was introduced by the accused to the private complainants as Julie Micua. The
complainants were assured by Micua that she could get them overseas employment and
upon payment of their placement fees of P35,000.00 each, they would leave for Hongkong
within one month. Ramos, Nadal, Conseja and Bombarda made a downpayment of
P5,000.00 each to the accused and her husband. The corresponding receipts, however,
which were prepared by the accused, were in the name of and signed by Micua, Exhibits "E1," "L," "H, "D," and "C."
xxx

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On January 14, 1991, Ramos went back to the House in Sampaloc, Manila, and handed to
the accused the sum of P15,000.00. As in the first payment, the accused prepared a receipt
in the name of Micua, who signed the same, Exhibit "E." On January 17, 1991, Ramos paid
the accused an additional sum of P10,000.00 and the latter prepared a receipt in the name
of Micua, who signed it, Exhibit "E-2." After Ramos failed to leave for Hongkong or secure
overseas employment for more than two months since January 1991, he became suspicious
and later realized that he and the other complainants had been hoodwinked.
On April 26, 1991, Ramos and the other five complainants went to Manila and lodged with
the Western Police District Command, Manila, criminal complaints for estafa and illegal
recruitment against the accused, which led to her immediate arrest, Exhibit "A" and "B."
On the other hand, Merlita Bombarda, complainant in Criminal Cases Nos. 91-94196 and 9194198, declared that in 1987, the accused offered to recruit her for overseas employment in
Japan, but she declined the offer, due to her singing engagement in Dagupan. Later, she

worked in Singapore. Upon her return to the Philippine in 1990, she again met the accused
in Urdaneta, Pangasinan. The accused told Bombarda that she knew of an agency recruiting
people for overseas employment as factory workers in Hongkong, in consideration of a
placement fee of P45,000,00.
In the evening of January 9, 1991, she was at the accused's house where she met the other
complainants, Nadal, Ramos, Delos Santos and Conseja. The accused discussed with them
the requirements for their overseas employment such as documentation, payment of
placement fees and their trip to Manila.
On the early morning of January 12, 1991, the complainants and the accused left by bus for
Manila. They were taken by the accused a house on Lardizabal Street, Sampaloc, Manila.
Bombarda was assured by Micua that she would be employed in Hongkong as a factory
worker with a monthly salary of H$4,000.00. She and the other complainants were asked by
Micua to sign blank contracts of employment. After signing the blank contracts, complainants
paid P5,000.00 each of the accused, who prepared the receipts that Micua signed. The
receipt issued to Bombarda was marked as Exhibit "D-2."
On January 17, she paid another P5,000.00 to the accused at the same house in Sampaloc,
Manila, Exhibit "D-1."
On February 17, she again paid P10,000.00 to the accused at the latter's house in Urdaneta,
Pangasinan, Exhibit "D," in the presence of Micua. She was told by the accused that she
(Bombarda) would leave for Hongkong within two months, but she waited in vain. Neither
was her money returned by the accused.
Leo delos Santos, complainant in Criminal Case Nos. 91-94197 and 91-94198, asserted that
he met the accused in Urdaneta, Pangasinan in October 1990. The accused persuaded him
to apply for overseas employment, by telling him that she knew a recruiter who could deploy
workers abroad. He was further advised by the accused to prepare P15,000.00 as initial
payment of his placement fee. On December 21, 1990, January 21 and February 17, 1991,
Delos Santos gave to the accused the respective sums of P8,000.00, P10,000.00 and
P12,000.00, Exhibit "F," "F-2," "F-3," and "F-4." The accused assured De los Santos that he
would leave for Hongkong and work thereat as a factory worker within two months, but his
projected trip never materialized. Neither was his money returned.
1wphi1.nt

When recalled to the witness stand by the prosecution as a witness for Margarita Nadal,
complainant in Criminal Cases Nos. 91-94194 and 91-94198, Napoleon Ramos declared
that Nadal was his neighbor in Urdaneta, Pangasinan; that on January 9, 1991, he was with
Nadal when she applied with the accused a the latter's house in Urdaneta, Pampanga, for
employment abroad; that he was present when Nadal handed to the accused the sum of
P5,000.00 in Sampaloc, Manila, and he saw the accused prepare a receipt therefor that was
signed by Micua, Exhibit "J;" that he was also present when Nadal gave an additional sum of
P10,000.00 to the accused at her residence on Estrada Street, Pangasinan, for which a
receipt was issued by the accused, Exhibit "J-3" that Nadal had gave (sic) to him other
receipts of payments she had made to the accused sums of P5,000 and P10,000.00,
Exhibits "J-1" and "J-2," but he was not present when these two payments were made, and
that Nadal was unable to testify, because she is now abroad.

The prosecution next presented Cristina Nava, complainant in Criminal Cases Nos. 9194193 and 91-94198, who testified that sometime in 1991, the accused went to her (Nava's)
house in San Nicholas, Villasis, Pangasinan, and offered to recruit her for overseas
employment in Hongkong. Nava told the accused that she would consult her husband about
the matter. A few weeks later, the accused again visited Nava and she (accused) succeeded
in convincing the reluctant Nava to accept the offer. The accused told Nava that her
placement fee would be P40,000.00 of which P30,000.00 was to be paid in advance and the
balance of P10,000.00 would be deducted from her salary. On different occasions, Nava
delivered to the accused various amounts totalling P30,000.00 as placement fee, Exhibit "G,"
"G-1," and "G-2." The accused assured Nava that she would leave for and work in Hongkong
within two months, but the promised employment turned out to be a dud. Despite repeated
demands from Nava, the accused has failed and refused to return the latter's money.
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x x x7

Testifying in her own defense, accused-appellant denied the charges of engaging in recruitment
activities and of receiving money from complainants. She described herself as a public school
teacher living in Pangasinan with her four children and unemployed husband. Like the other
complainants, she claimed she was a victim of Julie Micua. She first met Micua on December 17,
1990, at the house of Lina Salcedo in Sampaloc, Manila. Micua was introduced to her as a recruiter
of overseas workers. Interested, she applied for a job abroad. Micua informed her that she would be
a factory worker and showed her a contract. Accused-appellant was required to submit her medical
certificate and passport and to make an advance payment of P5,000.00 as part of the P40,000.00
placement.8
When complainants learned that she had applied for overseas employment, they sought her helping
in going to the agency where she applied. Hence, on January 12, 1991, accused-appellant
accompanied the complainants to see Julie Micua who assured them that they would be leaving for
Hongkong within two or three months. They were also informed that their placement fee would be
P45,000.00. On that day, accused-appellant and complainants gave Julie Micua the amount of
P5,000.00. On February 17, 1991, accused-appellant gave Micua an additional P5,000.00.
According to her, complainants were all given corresponding receipts for their payments. The
receipts were issued and signed by Micua.
Accused-appellant got to know complainant Ramos when she was invited by his wife Marita to a
birthday party at the couple's residence. In that party, they talked about applying for a job abroad and
Marita convinced her husband to apply. It was Ramos who introduced accused-appellant to
complainant Nadal. Ramos convinced Nadal to apply for overseas employment. On the other hand,
accused-appellant's co-teacher, Isabel Valdez, brought complainant Delos Santos to accusedappellant's classroom and sought her assistance in applying for an overseas job through the agency
she was using. With respect to Merlita Bombarda, accused-appellant met her through her cousin
Nadal who also accompanied Merlita to accused-appellant's house to apply. Purita Conceja, who
was also introduced to accused-appellant, sought her help in applying for a job abroad through the
agency she was using. As regards complainant Cristina Nava, accused-appellant met her through
Cristina's husband who was a regular customer of her store. Accused-appellant claims she never
represented herself as having the capacity to deploy workers abroad. She only told them that she
could accompany them to the agency where she also applied.

According to accused-appellant, two months after they were unable to leave for abroad, she and the
complainants had a meeting. They discussed how they could recover their money. On April 26, 1991,
upon Nadal's invitation, she voluntarily joined the complainants in going to Manila. Their main
purpose was to look for Julie Micua. In Manila, they went to Blumentritt where they met Blas Santos,
a police officer whom Ramos knew. Accused-appellant saw Ramos collecting money from his
companions. Afterwards, they proceeded to the United Nations Police Headquarters. Santos
endorsed them to investigator Val Torres, who, in turn, typed the consolidated affidavits of
complainants. The money collected by Ramos was given to the investigator. The complaint filed by
the complainants included accused-appellant as one of the defendants. 9
Lina Salcedo corroborated accused-appellant's testimony. Salcedo testified that she owns the house
on 1333 Lardizabal St., Sampaloc, Manila. Also living there was a house boarder named Paz Alonzo
who had a friend named Julie Micua. Sometime in December 1990, Micua visited Paz at Salcedo's
boarding house when accused-appellant arrived. It was on this occasion that Julie Micua and
accused-appellant met for the first time and they discussed how to get employment in Hongkong.
After Christmas, accused-appellant returned Salcedo's house some companions. Salcedo saw the
members of the group giving money to Julie Micua for which the latter issued corresponding
receipts. It was Julia Micua who did all the explaining. Accused-appellant and her companions
returned to Salcedo's house on two other occasions. According to Salcedo, she was present when
all the transactions took place and she observed that Julie Micua never gave money or any
consideration to accused-appellant. 10 Lina Salcedo's testimony was corroborated on the witness
stand by her sister Violy Constantino. 11
On March 1, 1994, the Regional Trial Court of Manila, Branch I, rendered the decision now on
appeal before this Court. In justifying accused-appellant's conviction, the trial court gave full
credence to the testimonies of the complainants as they were "clear and straightforward" and "reflect
spontaneity and are replete with details, which conform to what appears from the other evidence on
record." It found that the complainants "positively identified the accused as the one who had
persuaded them to apply for overseas employment, accompanied them all the way from Pangasinan
to Manila, [and] personally received from them various sums as placement fees." Further, the trial
court found no improper motive on the part of the complainants, thus:
. . . it is hard to believe that the private complainants, who all reside in Urdaneta,
Pangasinan, would undergo the expense, rigor and inconvenience of a public trial if their
motive is not to bring to justice the person/s who had defrauded them. . . . 12
Accordingly, the trial court held that all the elements of Article 315, Paragraph 2 of the Revised Penal
Code were proven in the cases for estafa. In likewise finding accused-appellant guilty of illegal
recruitment in large scale, the trial court stated:
. . . this court is convinced beyond moral certainty that there was unity of action, purpose and
design between the accused and Julie Micua to recruit the private complainants for overseas
employment in Hongkong without first securing a license or an authority therefor from the
Philippine Overseas and Employment Agency. The accused took a direct and active
participation in the recruitment of the private complainants by referring and persuading them
to apply for deployment abroad, accompanying them all the way from Urdaneta, Pangasinan,
to Manila to refer them to Micua, who presented herself as a recruiter of worker(s) for
overseas employment, personally collecting and receiving from them various amounts for
their placement fees, and preparing the receipts therefor. 13

Hence, this appeal. Accused-appellant raises the following assignment of errors:


I
THE LOWER COURT ERRED IN NOT DISMISSING THIS CASE ON THE GROUND OF
LACK OF JURISDICTION ON ITS PART OVER THE PERSON OF THE ACCUSEDAPPELLANT BY REASON OF THE FACT THAT THE WARRANTLESS ARREST OF THE
ACCUSED-APPELLANT WAS ILLEGAL.
II
THE TRIAL COURT ERRED IN FINDING THAT ACCUSED-APPELLANT RECRUITED THE
PRIVATE COMPLAINANTS FOR DEPLOYMENT AS LAND WORKERS IN HONGKONG.
III
THE LOWER COURT ERRED IN FIND (SIC) THAT ALL THE ESSENTIAL REQUISITES OF
ESTAFA AS DEFINED IN ARTICLE 315, REVISED PENAL CODE, ARE CONCURRENTLY
SATISFIED IN THIS CASE.
We find no valid grounds to reverse accused-appellant's conviction.
Accused-appellant's first assignment of error challenges the trial court's judgment on a jurisdictional
ground. She argues that her arrest without warrant was illegal and, therefore, following the settled
rule that the trial court does not acquire jurisdiction over the person of one who is illegally arrested,
the case should have been dismissed. 14This contention is untenable.
Jurisdiction over the person of the accused is acquired either by arrest or voluntary appearance in
court. The record amply demonstrates that accused-appellant voluntarily appeared in court at her
arraignments, entered a plea of "not guilty" to all the charges against her, and later actively
participated in the trial. Hence, grantingarguendo that accused-appellant's arrest was defective, such
is deemed cured upon her voluntary submission to the jurisdiction of the court. 15 It should be
stressed that the question of legality of an arrest affects only the jurisdiction of the court over the
person of the accused. Consequently, if objections based on this ground are waived, the fact that the
arrest was illegal is not sufficient cause for setting aside an otherwise valid judgment. The
technicality cannot render the subsequent proceedings void and deprive the State of its right to
convict the guilty when all the facts on record point to the culpability of the accused. 16
The second and third assigned errors regarding accused-appellant's culpability for the crimes of
estafa and illegal-recruitment in large scale are closely interrelated, hence, shall be discussed jointly.
These alleged errors boil down to the issue of credibility.
All the complainants are one in saying that accused-appellant made representations that she knew
someone who could help them secure employment in Hongkong. Relying on these representations,
they applied for placement for employment abroad and paid various sums of money therefor.
Unfortunately, accused-appellant failed to comply with her promise of employment or restitute the
amounts she received from them.

For her part, accused-appellant claims that she merely helped complainants find an agency that
could secure for them employment overseas. She acted as a "good samaritan" by facilitating their
quest for a better economic status. She denied receiving the fees paid by complainants and asserts
hat it was Julie Micua who recruited complainants and collected the placement fees for overseas
employment. An examination of the records, however, reveals that accused-appellant is as culpable
as Julie Micua.
As to which of the contending claims should be believed is fundamentally an issue of credibility. Well
settled is the rule that the issue of credibility is the domain of the trial that had observed the
deportment and manner of the witnesses as they testified. The findings of facts of a trial court,
arrived at only after a hearing and evaluation of what can usually be expected to be conflicting
testimonies of witnesses certainly deserve respect by an appellant court. 17 We find no cogent reason
to depart from this time-honored doctrine.
Accused-appellant failed to show that complainants, who were mostly her townmates and some
even her relatives, were ill-motivated in filing the cases against her; hence, their testimonies merit
full faith and credit.
The Court finds unacceptable accused-appellant's claim that the complainants are "barking at the
wrong tree" and that they only turned their ire on her because the alleged real culprit, Julie Micua,
was nowhere to be found. 18Complainants would not run after her if she, too, were really a victim.
The lame defense consisting of accused-appellant's bare denial cannot overcome the prosecution's
positive evidence proving her guilt beyond reasonable doubt. Moreover, compared to accusedappellant's evidence, which is mainly one of denial, the prosecution presented evidence showing her
positive acts of complicity with Julie Micua in recruiting complainants. The accordance of greater
probative value to evidence that is positive in nature than that which is negative in character is a
time-honored principle. Hence, the negative assertions of accused-appellant cannot prevail over the
positive testimony of the complainants. 19
The prosecution undoubtedly proved that accused-appellant, without license or authority, engaged in
recruitment and placement activities. This was done in collaboration with Julie Micua, when they
promised complainants employment in Hongkong. Art. 13, par. (b) of the Labor Code defines
recruitment and placement as "any act of canvassing enlisting, contracting, transporting, utilizing,
hiring or procuring workers, and includes referrals, contract services, promising or advertising for
employment, locally or abroad, whether for profit or not; Providedthat any person or entity which, in
any manner, offers or promises for a fee employment to two or more persons shall be deemed
engaged in recruitment and placement."
In People v. Agustin, 20 therein appellant argued that she could not be convicted of illegal recruitment
because in introducing the complainants to the alleged recruitment recruiters, she merely acted "out
of the goodness of her heart."
In resolving said case, the Court ruled:
Hence, the inevitable query is whether or not appellant Agustin merely introduced
complainants to the Goce couple or her actions went beyond that. The testimonial evidence
hereon show that she indeed further committed acts constitutive of illegal recruitment. All
four prosecution witnesses testified that it was Agustin whom they initially approached
regarding their plans of working overseas. It was from her that they learned about the fees

they had to pay, as well as the papers that they had to submit. It was after they had talked to
her that they met the accused spouses who owned the placement agency.
As such, the Court concluded that appellant that appellant was an employee of the Goce spouses,
as she was actually making referrals to the agency. She was therefore, engaged in recruitment
activities.
The same factual circumstance obtains in this case. Although accused-appellant was not an
employee of the alleged illegal recruiter Julie Micua, the evidence show that she was the one who
approached complainants and prodded them to seek employment abroad. It was through her that
they met Julia Micua. This is clearly an act of referral. Worse, accused-appellant declared that she
was capable of placing them in jobs overseas. Suffice it to say that complainants' recruitment would
not have been consummated were it not for the direct participation of accused-appellant in the
recruitment process.
Art. 18, paragraph (a) of the Labor Code provides that:
Any recruitment activities, including the prohibited practices enumerated under Article 34 of
this Code, to be undertaken by non-licensees or non-holders of authority shall be deemed
illegal and punishable under Article 39 of this Code.
Illegal recruitment is conducted in a large scale if perpetrated against three (3) or more persons
individually or as a group. This crime requires proof that the accused: (1) engaged in the recruitment
and placement of workers defined under Article 13 or in any of the prohibited activities under Article
34 of the Labor Code; (2) does not have a license or authority to lawfully engage in the recruitment
or and placement of workers; and (3) committed the infraction against three or more, persons,
individually or as a group. 21
All there three essential elements are present in the case at bar. As earlier discussed, accusedappellant recruited the six complainants. Further, the Philippine Overseas Employment
Administration certified that neither accused-appellant nor Julie Micua is licensed to recruit workers
for overseas employment. 22
Accused-appellant's contention that she was a mere applicant and eventually a victim like
complainants holds no water. Note should be made of the fact that throughout the trial of the case,
no mention was made that accused-appellant exerted any effort to seek a refund for her money nor
did she file a case against Julie Micua, her alleged victimizer. Her only excuse was that at the time of
the filing of the complaint in Manila, she was confused and the investigating officer would not listen
to her side of the controversy.
Moreover, accused-appellant and her husband's acts of receiving almost all the payments of the
complainants and issuing receipts signed by Julie Micua contradict her claim of being a mere
applicant. There were even times that accused-appellant herself signed the receipts for the
placement fees. 23 Taken as a whole, the evidence shows that accused-appellant conspired and
actively participated in the deceitful plan adopted by her co-accused Julie Micua, Rico Cordova and
her own husband, Renato Meris, to hire without license or authority, gullible and naive applicants for
non-existent overseas jobs.

Likewise, we find that accused-appellant committed the crime of estafa under Article 315, paragraph
2 of the Revised Penal Code. This is committed by any person who defrauds another by using a
fictitious name, or falsely pretends to possess power, influence, qualifications, property, credit,
agency, business or imaginary transactions, or by means of similar deceits executed prior to or
simultaneously with the commission of the fraud. The offended party must have relied on the false
pretense, fraudulent act or fraudulent means of the accused-appellant and as a result thereof, the
offended party suffered damages. 24
1wphi1

Complainants parted with their money upon accused-appellant's prodding and enticement, and on
the false belief that she had the capacity to deploy them abroad. In the end, complainants were
neither able to leave nor get their money back.
A close scrutiny of the appealed decision warrants correction of the penalty imposed in each of the
estafa cases.
The pertinent provision of the Revised Penal Code is as follows:
Art. 315. Swindling (estafa). Any person who shall defraud another by any of the means
mentioned hereinbelow shall be punished by:
1st. The penalty of prision correccional in its maximum period to prision mayor in its
minimum period, if the amount of the fraud is over 12,000 pesos but does not exceed 22,000
pesos; and if such amount exceeds the latter sum, the penalty provided in this paragraph
shall be imposed in its maximum period, adding one year for each additional 10, 000 pesos;
but the total penalty which maybe imposed shall exceed twenty years. In such case, and in
connection with the accessory penalties which may be imposed and for the purpose of the
other provisions of this Code, the penalty shall be termed reclusion mayor or reclusion
temporal, at the case may be;
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In People v. Gabres, 25 where the amount swindled ranged from P40,000 to P50,000, the Court said:
Under the Indeterminate Sentence Law, the maximum term of the penalty shall be "that
which, in view of the attending circumstances, could be properly imposed" under the Revised
Penal Code, and the minimum shall be "within the range of the penalty next lower to that
prescribed" for the offense. The penalty next lower should be based on the penalty
prescribed by the Code for the offense, without first considering any modifying circumstance
attendant to the commission of the crime. The determination of the minimum penalty is left
law to the sound discretion of the court and it can be anywhere within the range of the
penalty next lower without any reference to the period into which it might be subdivided. The
modifying circumstances are considered only in the imposition of the maximum term of the
determinate sentence.
The fact that the amounts involved in the instant case exceed P22,000.00 should not be
considered in the initial determination of the indeterminate penalty; instead, the matter
should be so taken as analogous to modifying circumstances in the imposition of the
maximum term of the full indeterminate sentence. This interpretation of the law accords with
the rule that penal laws should be construed in favor of the accused. Since the penalty

prescribed by law for the estafa charge against accused-appellant is prision


correccionalmaximum to prision mayor minimum, the penalty next lower would be prision
correccional minimum to medium. Thus, the minimum term of the indeterminate sentence
should be anywhere within six (6) months and one (1) day to four (4) years and two (2)
months while the maximum term of the indeterminate sentence should at least be six (6)
years and one (1) day because the amounts involved exceeded P22,000.00 plus an
additional one (1) year for each additional P10,000.00.
Here, the amounts involved are P20,000.00 in Criminal Case No. 91-94196 and P30,000.00 each in
Criminal Cases Nos. 91-94192, 91-94193, 91-94194, 91-94195 and 91-94197. The amounts in
excess of the P22,000.00 as provided for in the first paragraph of Article 315 of the Revised Penal
Code are less than P10,000.00, hence, do not warrant the imposition of an additional one-year
imprisonment. There being no proven modifying circumstances, the correct penalty in each of the six
(6) estafa cases should be the indeterminate penalty ranging from two (2) years and four (4) months
of a prision correccional as minimum to six (6) years and one (1) day ofprision mayor as maximum.
With respect to Criminal Case No. 91-94918, the trial court correctly imposed the penalty of life
imprisonment and fine of P100,000.00.
WHEREFORE, the decision in question is hereby AFFIRMED subject to the modification that in each
of the six (6) estafa cases, the indeterminate sentence that appellant Leonida Meris y Padilla must
serve is two (2) year and four (4) months of prision correccional as minimum to six (6) year and one
(1) day of prision mayor maximum. Costs against appellant.
SO ORDERED.

1wphi1.nt

Davide, Jr., C.J., Puno, Pardo and Ynares-Santiago, JJ., concur.

SPECIAL FIRST DIVISION


[G.R. No. 110524. July 29, 2002]

DOUGLAS
MILLARES
and
ROGELIO
LAGDA, petitioners,
vs. NATIONAL LABOR RELATIONS COMMISSION, TRANSGLOBAL MARITIME AGENCY, INC. and ESSO INTERNATIONAL
SHIPPING CO., LTD. respondents.
RESOLUTION
KAPUNAN, J.:

On March 14, 2000, the Court promulgated its decision in the above-entitled case,
ruling in favor of the petitioners. The dispositive portion reads, as follows:

WHEREFORE, premises considered, the assailed Decision, dated June 1, 1993, of


the National Labor Relations Commission is hereby REVERSED and SET
ASIDE and a new judgment is hereby rendered ordering the private respondents to:
(1) Reinstate petitioners Millares and Lagda to their former positions without loss of
seniority rights, and to pay full backwages computed from the time of illegal dismissal
to the time of actual reinstatement;
(2) Alternatively, if reinstatement is not possible, pay petitioners Millares and Lagda
separation pay equivalent to one months salary for every year of service; and,
(3) Jointly and severally pay petitioners One Hundred Percent (100%) of their total
credited contributions as provided under the Consecutive Enlistment Incentive Plan.
SO ORDERED.

[1]

A motion for reconsideration was consequently filed by the private respondents to


which petitioners filed an Opposition thereto.
[2]

[3]

In a Minute Resolution dated June 28, 2000, the Court resolved to deny the motion
for reconsideration with finality.
[4]

Subsequently, the Filipino Association for Mariners Employment, Inc. (FAME) filed a
Motion for Leave to Intervene and to Admit a Motion for Reconsideration in Intervention.
Private respondents, meanwhile, also filed a Motion for Leave to File a Second
Motion for Reconsideration of our decision.
In both motions, the private respondents and FAME respectively pray in the main
that the Court reconsider its ruling that Filipino seafarers are considered regular
employees within the context of Article 280 of the Labor Code. They claim that the
decision may establish a precedent that will adversely affect the maritime industry.
The Court resolved to set the case for oral arguments to enable the parties to
present their sides.
To recall, the facts of the case are, as follows:

Petitioner Douglas Millares was employed by private respondent ESSO International


Shipping Company LTD. (Esso International, for brevity) through its local manning
agency, private respondent Trans-Global Maritime Agency, Inc. (Trans-Global, for
brevity) on November 16, 1968 as a machinist. In 1975, he was promoted as Chief

Engineer which position he occupied until he opted to retire in 1989. He was then
receiving a monthly salary of US $1,939.00.
On June 13, 1989, petitioner Millares applied for a leave of absence for the period
July 9 to August 7, 1989. In a letter dated June 14, 1989, Michael J. Estaniel,
President of private respondent Trans-Global, approved the request for leave of
absence. On June 21, 1989, petitioner Millares wrote G.S. Hanly, Operations Manager
of Exxon International Co., (now Esso International) through Michael J. Estaniel,
informing him of his intention to avail of the optional retirement plan under the
Consecutive Enlistment Incentive Plan (CEIP) considering that he had already
rendered more than twenty (20) years of continuous service. On July 13, 1989
respondent Esso International, through W.J. Vrints, Employee Relations Manager,
denied petitioner Millares request for optional retirement on the following grounds, to
wit: (1) he was employed on a contractual basis; (2) his contract of enlistment (COE)
did not provide for retirement before the age of sixty (60) years; and (3) he did not
comply with the requirement for claiming benefits under the CEIP, i.e., to submit a
written advice to the company of his intention to terminate his employment within
thirty (30) days from his last disembarkation date.
On August 9, 1989, petitioner Millares requested for an extension of his leave of
absence from August 9 to 24, 1989. On August 19, 1989, Roy C. Palomar, Crewing
Manager, Ship Group A, Trans-global, wrote petitioner Millares advising him that
respondent Esso International has corrected the deficiency in its manpower
requirement specifically in the Chief Engineer rank by promoting a First Assistant
Engineer to this position as a result of (his) previous leave of absence which expired
last August 8, 1989. The adjustment in said rank was required in order to meet
manpower schedules as a result of (his) inability.
On September 26, 1989, respondent Esso International, through H. Regenboog,
Personnel Administrator, advised petitioner Millares that in view of his absence
without leave, which is equivalent to abandonment of his position, he had been
dropped from the roster of crew members effective September 1, 1989.
On the other hand, petitioner Lagda was employed by private respondent Esso
International as wiper/oiler in June 1969. He was promoted as Chief Engineer in
1980, a position he continued to occupy until his last COE expired on April 10,
1989. He was then receiving a monthly salary of US$1,939.00.

On May 16, 1989, petitioner Lagda applied for a leave of absence from June 19, 1989
up to the whole month of August 1989. On June 14, 1989, respondent Trans-Globals
President, Michael J. Estaniel, approved petitioner Lagdas leave of absence from June
22, 1989 to July 20, 1989 and advised him to report for re-assignment on July 21,
1989.
On June 26, 1989, petitioner Lagda wrote a letter to G.S. Stanley, Operations Manager
of respondent Esso International, through respondent Trans-Globals President Michael
J. Estaniel, informing him of his intention to avail of the optional early retirement plan
in view of his twenty (20) years continuous service in the complaint.
On July 13, 1989, respondent Trans-global denied petitioner Lagdas request for
availment of the optional early retirement scheme on the same grounds upon which
petitioner Millares request was denied.
On August 3, 1989, he requested for an extension of his leave of absence up to August
26, 1989 and the same was approved. However, on September 27, 1989, respondent
Esso International, through H. Regenboog, Personnel Administrator, advised
petitioner Lagda that in view of his unavailability for contractual sea service, he had
been dropped from the roster of crew members effective September 1, 1989.
On October 5, 1989, petitioners Millares and Lagda filed a complaint-affidavit,
docketed as POEA (M) 89-10-9671, for illegal dismissal and non-payment of
employee benefits against private respondents Esso International and Trans-Global,
before the POEA.
[5]

On July 17, 1991, the POEA rendered a decision dismissing the complaint for lack
of merit.
On appeal to the NLRC, the decision of the POEA was affirmed on June 1, 1993
with the following disquisition:

The first issue must be decided in the negative. Complainants-appellants, as seamen


and overseas contract workers are not covered by the term regular employment as
defined under Article 280 of the Labor Code. The POEA, which is tasked with
protecting the rights of the Filipino workers for overseas employment to fair and
equitable recruitment and employment practices and to ensure their welfare,
prescribes a standard employment contract for seamen on board ocean-going vessels
for a fixed period but in no case to exceed twelve (12) months (Part 1, Sec. C). This
POEA policy appears to be in consonance with the international maritime

practice. Moreover, the Supreme Court in Brent School, Inc. vs. Zamora, 181 SCRA
702, had held that a fixed term is essential and natural appurtenance of overseas
employment contracts to which the concept of regular employment with all that it
implies is not applicable, Article 280 of the Labor Code notwithstanding. There is,
therefore, no reason to disturb the POEA Administrators finding that complainantsappellants were hired on a contractual basis and for a definite period. Their
employment is thus governed by the contracts they sign each time they are re-hired
and is terminated at the expiration of the contract period.
[6]

Undaunted, the petitioners elevated their case to this Court and successfully
obtained the favorable action, which is now vehemently being assailed.
[7]

At the hearing on November 15, 2000, the Court defined the issues for resolution in
this case, namely:

I. ARE PETITIONERS REGULAR OR CONTRACTUAL EMPLOYEES WHOSE


EMPLOYMENTS ARE TERMINATED EVERYTIME THEIR CONTRACTS OF
EMPLOYMENT EXPIRE?
II. ASSUMING THAT PETITIONERS ARE REGULAR EMPLOYEES, WERE
THEY DISMISSED WITHOUT JUST CAUSE SO AS TO BE ENTITLED TO
REINSTATEMENT AND BACKWAGES, INCLUDING PAYMENT OF 100% OF
THEIR TOTAL CREDITED CONTRIBUTIONS TO THE CONSECUTIVE
ENLISTMENT INCENTIVE PLAN (CEIP)?
III. DOES THE PROVISION OF THE POEA STANDARD CONTRACT FOR
SEAFARERS ON BOARD FOREIGN VESSELS (SEC. C., DURATION OF
CONTRACT) PRECLUDE THE ATTAINMENT BY SEAMEN OF THE STATUS
OF REGULAR EMPLOYEES?
IV. DOES THE DECISION OF THE COURT IN G.R. NO. 110524 CONTRAVENE
INTERNATIONAL MARITIME LAW, ALLEGEDLY PART OF THE LAW OF THE
LAND UNDER SECTION 2, ARTICLE II OF THE CONSTITUTION?
V. DOES THE SAME DECISION OF THE COURT CONSTITUTE A DEPARTURE
FROM ITS RULING IN COYOCA VS. NLRC (G.R. NO. 113658, March 31, 1995)?
[8]

In answer to the private respondents Second Motion for Reconsideration and to


FAMEs Motion for Reconsideration in Intervention, petitioners maintain that they are
regular employees as found by the Court in the March 14, 2000 Decision. Considering
that petitioners performed activities which are usually necessary or desirable in the

usual business or trade of private respondents, they should be considered as regular


employees pursuant to Article 280, Par. 1 of the Labor Code. Other justifications for
this ruling include the fact that petitioners have rendered over twenty (20) years of
service, as admitted by the private respondents; that they were recipients of Merit Pay
which is an express acknowledgment by the private respondents that petitioners are
regular and not just contractual employees; that petitioners were registered under the
Social Security System (SSS).
[9]

[10]

[11]

The petitioners further state that the case of Coyoca v. NLRC which the private
respondents invoke is not applicable to the case at bar as the factual milieu in that case
is not the same. Furthermore, private respondents fear that our judicial pronouncement
will spell the death of the manning industry is far from real. Instead, with the valuable
contribution of the manning industry to our economy, these seafarers are supposed to
be considered as Heroes of the Republic whose rights must be protected. Finally, the
first motion for reconsideration has already been denied with finality by this Court and it
is about time that the Court should write finis to this case.
[12]

[13]

The private respondents, on the other hand, contend that: (a) the ruling holding
petitioners as regular employees was not in accord with the decision in Coyoca v.
NLRC, 243 SCRA 190; (b) Art. 280 is not applicable as what applies is the POEA Rules
and Regulations Governing Overseas Employment; (c) seafarers are not regular
employees based on international maritime practice; (d) grave consequences would
result on the future of seafarers and manning agencies if the ruling is not reconsidered;
(e) there was no dismissal committed; (f) a dismissed seafarer is not entitled to back
wages and reinstatement, that being not allowed under the POEA rules and the Migrant
Workers Act; and, (g) petitioners are not entitled to claim the total amount credited to
their account under the CEIP.
[14]

Meanwhile, Intervenor Filipino Association of Mariners Employment (FAME) avers


that our decision, if not reconsidered, will have negative consequences in the
employment of Filipino Seafarers overseas which, in turn, might lead to the demise of
the manning industry in the Philippines. As intervenor FAME puts it:

xxx
7.1 Foreign principals will start looking for alternative sources for seafarers to man
their ships. AS reported by the BIMCO/ISF study, there is an expectancy that there
will be an increasing demand for (and supply of) Chinese seafarers, with some
commentators suggesting that this may be a long-term alternative to the
Philippines. Moreover, the political changes within the former Eastern Bloc have
made new sources of supply available to the international market. Intervenors recent
survey among its members shows that 50 Philippine manning companies had already

lost some 6,300 slots to other Asian, East Europe and Chinese competition for the last
two years;
7.2 The Philippine stands to lose an annual foreign income estimated at U.S.
DOLLARS TWO HUNDRED SEVENTY FOUR MILLION FIVE HUNDRED
FORTY NINE THOUSAND (US$ 274,549,000.00) from the manning industry and
another US DOLLARS FOUR BILLION SIX HUNDRED FIFTY MILLION SEVEN
HUNDRED SIX THOUSAND (US$ 4,650,760,000.00) from the land-based sector if
seafarers and equally situated land-based contract workers will be declared regular
employees;
7.3 Some 195,917 (as of 1998) deployed overseas Filipino seafarers will be rendered
jobless should we lose the market;
7.4 Some 360 manning agencies (as of 30 June 2000) whose principals may no longer
be doing business with them will close their shops;
7.5 The contribution to the Overseas Workers Welfare Administration by the sector,
which is USD 25.00 per contract and translates to US DOLLARS FOUR MILLION
(US$ 4,000,000.00)annually, will be drastically reduced. This is not to mention the
processing fees paid to POEA, Philippine Regulatory Commission (PRC), Department
of Foreign Affairs (DFA) and Maritime Industry Authority (MARINA) for the
documentation of these seafarers;
7.6 Worst, some 195,917 (as of 1998) families will suffer socially and economically,
as their breadwinners will be rendered jobless; and
7.7 It will considerably slow down the governments program of employment
generation, considering that, as expected foreign employers will now avoid hiring
Filipino overseas contract workers as they will become regular employees with all its
concomitant effects.
[15]

Significantly, the Office of the Solicitor General, in a departure from its original
position in this case, has now taken the opposite view. It has expressed its
apprehension in sustaining our decision and has called for a re-examination of our
ruling.
[16]

Considering all the arguments presented by the private respondents, the Intervenor
FAME and the OSG, we agree that there is a need to reconsider our position with
respect to the status of seafarers which we considered as regular employees under

Article 280 of the Labor Code. We, therefore, partially grant the second motion for
reconsideration.
In Brent School Inc. v. Zamora, the Supreme Court stated that Article 280 of the
Labor Code does not apply to overseas employment.
[17]

In the light of the foregoing description of the development of the provisions of the
Labor Code bearing on term or fixed-period employment that the question posed in
the opening paragraph of this opinion should now be addressed. Is it then the
legislative intention to outlaw stipulations in employment contracts laying down a
definite period therefor? Are such stipulations in essence contrary to public policy and
should not on this account be accorded legitimacy?
On the other hand, there is the gradual and progressive elimination of references to
term or fixed-period employment in the Labor Code, and the specific statement of the
rule that:
Regular and Casual Employment The provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement of the parties, an employment
shall be deemed to be regular where the employee has been engaged to perform
activities which are usually necessary or desirable in the usual business or trade of the
employer except where the employment has been fixed for a specific project or
undertaking the completion or termination of which has been determined at the time
of the engagement of the employee or where the work or service to be employee is
seasonal in nature and the employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceding
paragraph; provided that, any employee who has rendered at least one year of service,
whether such service is continuous or broken, shall be considered a regular employee
with respect to the activity in which he is employed and his employment shall
continue while such actually exists.
There is, on the other hand, the Civil Code, which has always recognized, and
continues to recognize, the validity and propriety of contracts and obligations with a
fixed or definite period, and imposes no restraints on the freedom of the parties to fix
the duration of a contract, whatever its object, be it specific, goods or services, except
the general admonition against stipulations contrary to law, morals, good customs,
public order or public policy. Under the Civil code, therefore, and as a general
proposition, fixed-term employment contracts are not limited, as they are under the
present Labor Code, to those by natural seasonal or for specific projects with

predetermined dates of completion; they also include those to which the parties by
free choice have assigned a specific date of termination.
Some familiar examples may be cited of employment contract which may be
neither for seasonal work nor for specific projects, but to which a fixed term is an
essential and natural appurtenance:overseas employment contracts, for one, to
which, whatever the nature of the engagement, the concept of regular
employment with all that it implies does not appear ever to have been
applied.Article 280 of the Labor Code notwithstanding also appointments to the
positions of dean, assistant dean, college secretary, principal, and other administrative
offices in educational institutions, which are by practice or tradition rotated among the
faculty members, and where fixed terms are a necessity without which no reasonable
rotation would be possible. Similarly, despite the provisions of Article 280, Policy
Instructions. No. 8 of the Minister of Labor implicitly recognize that certain company
officials may be elected for what would amount to fix periods, at the expiration of
which they would have to stand down, in providing that these officials, xxx may lose
their jobs as president, executive vice-president or vice-president, etc. because the
stockholders or the board of directors for one reason or another did not reelect them.
There can of course be no quarrel with the proposition that where from the
circumstances it is apparent that periods have been imposed to preclude acquisition of
tenurial security by the employee, they should be struck down or disregard as contrary
to public policy, morals, etc. But where no such intent to circumvent the law is shown,
or stated otherwise, where the reason for the law does not exists, e.g., where it is
indeed the employee himself who insists upon a period or where the nature of the
engagement is such that, without being seasonal or for a specific project, a definite
date of termination is a sine qua non, would an agreement fixing a period be
essentially evil or illicit, therefore anathema? Would such an agreement come within
the scope of Article 280 which admittedly was enacted to prevent the circumvention
of the right of the employee to be secured in xxx his employment
As it is evident from even only the three examples already given that Article 280 of
the Labor Code, under a narrow and literal interpretation, not only fails to exhaust the
gamut of employment contracts to which the lack of a fixed period would be an
anomaly, but would also appear to restrict, without reasonable distinctions, the right of
an employee to freely stipulate within his employer the duration of his engagement, it
logically follows that such a literal interpretation should be eschewed or avoided. The
law must be given a reasonable interpretation, to preclude absurdity in its
application. Outlawing the whole concept of term employment and subverting to boot

the principle of freedom of contract to remedy the evil of employers using it as a


means to prevent their employees from obtaining security of tenure is like cutting off
the nose to spite the face or, more relevantly, curing a headache by lopping of the
head.
It is a salutary principle in statutory construction that there exists a valid presumption
that undesirable consequences were never intended by a legislative measure, and that
a construction of which the statute is fairly susceptible is favored, which will avoid all
objectionable, mischievous, indefensible, wrongful, evil, and injurious consequences.
Nothing is better settled than that courts are not to give words a meaning which would
lead to absurd or unreasonable consequences. That is a principle that goes back to In
re Allen decided on October 27, 1902, where it was held that a literal interpretation is
to be rejected if it would be unjust or lead to absurd results. That is a strong argument
against its adoption. The words of Justice Laurel are particularly apt.Thus: the
appellants would lead to an absurdity is another argument for rejecting it.
Xxx We have, here, then a case where the true intent of the law is clear that calls for
the application of the cardinal rule of statutory construction that such intent of spirit
must prevail over the letter thereof, for whatever is within the spirit of a statute is
within the statute, since adherence to the letter would result in absurdity, injustice and
contradictions and would defeat the plain and vital purpose of the statute.
Accordingly, and since the entire purpose behind the development of legislation
culminating in the present Article 280 of the Labor code clearly appears to have
been, as already observed, to prevent circumvention of the employees right to be
secure in his tenure, the clause in said article indiscriminately and completely
ruling out all written or oral agreements conflicting with the concept of regular
employment as defined therein should be construed to refer to the substantive
evil that the Code itself has singled out; agreements entered into precisely to
circumvent security of tenure. It should have no application to instances where a
fixed period of employment was agreed upon knowingly and voluntarily by the
parties, without any force, duress or improper pressure being brought to bear
upon the employee and absent any other circumstances vitiating his consent, or
where it satisfactorily appears that the employer and employee dealt with each
other on more or less equal terms with no moral dominance whatever being
exercised by the former over the latter. Unless thus limited in its purview, the law
would be made to apply to purposes other than those explicitly stated by its framers; it

thus becomes pointless and arbitrary, unjust in its effects and apt to lead to absurd and
unintended consequences.
Again, in Pablo Coyoca v. NLRC, the Court also held that a seafarer is not a
regular employee and is not entitled to separation pay. His employment is governed by
the POEA Standard Employment Contract for Filipino Seamen.
[18]

XXX. In this connection, it is important to note that neither does the POEA standard
employment contract for Filipino seamen provide for such benefits.
As a Filipino seaman, petitioner is governed by the Rules and Regulations
Governing Overseas Employment and the said Rules do not provide for
separation or termination pay. What is embodied in petitioners contract is the
payment of compensation arising from permanent partial disability during the period
of employment. We find that private respondent complied with the terms of contract
when it paid petitioner P42,315.00 which, in our opinion, is a reasonable amount, as
compensation for his illness.
Lastly, petitioner claims that he eventually became a regular employee of private
respondent and thus falls within the purview of Articles 284 and 95 of the Labor
Code. In support of this contention, petitioner cites the case of Worth Shipping
Service, Inc., et al. v. NLRC, et al., wherein we held that the crew members of the
shipping company had attained regular status and thus, were entitled to separation
pay.However, the facts of said case differ from the present. In Worth, we held that the
principal and agent had operational control and management over the MV Orient
Carrier and thus, were the actual employers of their crew members.
From the foregoing cases, it is clear that seafarers are considered contractual
employees. They can not be considered as regular employees under Article 280 of the
Labor Code. Their employment is governed by the contracts they sign everytime they
are rehired and their employment is terminated when the contract expires. Their
employment is contractually fixed for a certain period of time. They fall under the
exception of Article 280 whose employment has been fixed for a specific project or
undertaking the completion or termination of which has been determined at the time of
engagement of the employee or where the work or services to be performed is seasonal
in nature and the employment is for the duration of the season. We need not depart
from the rulings of the Court in the two aforementioned cases which indeed
constitute stare decisis with respect to the employment status of seafarers.
[19]

Petitioners insist that they should be considered regular employees, since they have
rendered services which are usually necessary and desirable to the business of their

employer, and that they have rendered more than twenty(20) years of service. While
this may be true, the Brent case has, however, held that there are certain forms of
employment which also require the performance of usual and desirable functions and
which exceed one year but do not necessarily attain regular employment status under
Article 280. Overseas workers including seafarers fall under this type of employment
which are governed by the mutual agreements of the parties.
[20]

In this jurisdiction and as clearly stated in the Coyoca case, Filipino seamen are
governed by the Rules and Regulations of the POEA. The Standard Employment
Contract governing the employment of All Filipino seamen on Board Ocean-Going
Vessels of the POEA, particularly in Part I, Sec. C specifically provides that the contract
of seamen shall be for a fixed period.And in no case should the contract of seamen be
longer than 12 months. It reads:

Section C. Duration of Contract


The period of employment shall be for a fixed period but in no case to exceed 12
months and shall be stated in the Crew Contract. Any extension of the Contract period
shall be subject to the mutual consent of the parties.
Moreover, it is an accepted maritime industry practice that employment of seafarers
are for a fixed period only. Constrained by the nature of their employment which is quite
peculiar and unique in itself, it is for the mutual interest of both the seafarer and the
employer why the employment status must be contractual only or for a certain period of
time. Seafarers spend most of their time at sea and understandably, they can not stay
for a long and an indefinite period of time at sea. Limited access to shore society
during the employment will have an adverse impact on the seafarer. The national,
cultural and lingual diversity among the crew during the COE is a reality that
necessitates the limitation of its period.
[21]

[22]

Petitioners make much of the fact that they have been continually re-hired or their
contracts renewed before the contracts expired (which has admittedly been going on for
twenty (20) years). By such circumstance they claim to have acquired regular status
with all the rights and benefits appurtenant to it.
Such contention is untenable. Undeniably, this circumstance of continuous re-hiring
was dictated by practical considerations that experienced crew members are more
preferred.Petitioners were only given priority or preference because of their experience
and qualifications but this does not detract the fact that herein petitioners are
contractual employees. They can not be considered regular employees. We quote with
favor the explanation of the NLRC in this wise:

Xxx The reference to permanent and probationary masters and employees in these
papers is a misnomer and does not alter the fact that the contracts for enlistment
between complainants-appellants and respondent-appellee Esso International were for
a definite periods of time, ranging from 8 to 12 months. Although the use of the terms
permanent and probationary is unfortunate, what is really meant is eligible for-rehire. This is the only logical conclusion possible because the parties cannot and should
not violate POEAs requirement that a contract of enlistment shall be for a limited
period only; not exceeding twelve (12)months.
[23]

From all the foregoing, we hereby state that petitioners are not considered regular
or permanent employees under Article 280 of the Labor Code. Petitioners employment
have automatically ceased upon the expiration of their contracts of enlistment
(COE). Since there was no dismissal to speak of, it follows that petitioners are not
entitled to reinstatement or payment of separation pay or backwages, as provided by
law.
With respect to the benefits under the Consecutive Enlistment Incentive Plan
(CEIP), we hold that the petitioners are still entitled to receive 100% of the total amount
credited to him under the CEIP. Considering that we have declared that petitioners are
contractual employees, their compensation and benefits are covered by the contracts
they signed and the CEIP is part and parcel of the contract.
The CEIP was formulated to entice seamen to stay long in the company. As the
name implies, the program serves as an incentive for the employees to renew their
contracts with the same company for as long as their services were needed. For those
who remained loyal to them, they were duly rewarded with this additional remuneration
under the CEIP, if eligible. While this is an act of benevolence on the part of the
employer, it can not, however, be denied that this is part of the benefits accorded to the
employees for services rendered. Such right to the benefits is vested upon them upon
their eligibility to the program.
The CEIP provides that an employee becomes covered under the Plan when he
completes thirty-six (36) months or an equivalent of three (3) years of credited
service with respect to employment after June 30, 1973. Upon eligibility, an amount
shall be credited to his account as it provides, among others:
[24]

III. Distribution of Benefits


A. Retirement, Death and Disability
When the employment of an employee terminates because of his
retirement, death or permanent and total disability, a percentage of the

total amount credited to his account will be distributed to him (or his
eligible survivor(s) in accordance with the following:
Reason for Termination Percentage
a) Attainment of mandatory retire- 100%
ment age of 60.
b) Permanent and total disability, 100%
while under contract, that is
not due to accident or misconduct.
c) Permanent and total disability, 100%
while under contract, that is
due to accident, and not due to
misconduct.
xxx
B. Voluntary Termination
When an employee voluntary terminates his employment with at least 36 months of
credited service without any misconduct on his part, 18 percent of the total amount
credited to his account, plus an additional of one percent for each month (up to a
maximum of 164 months of credited service in excess of 36, will be distributed to him
provided (1) the employee has completed his last Contract of Enlistment and (2)
employee advises the company in writing, within 30 days, from his last
disembarkation date, of his intention to terminate his employment. (To advise the
Company in writing means that the original letter must be sent to the Companys agent
in the Philippines, a copy sent to the Company in New York).
xxx
C. Other Terminations

When the employment of an employee is terminated by the Company for


a reason other than one in A and B above, without any misconduct on his
part, a percentage of the total amount credited to his account will be
distributed to him in accordance with the following.
Credited Service Percentage
36 months 50%
48 75%
60 100%
When the employment of an employee is terminated due to his poorperformance, misconduct, unavailability, etc., or if employee is not offered
re-engagement for similar reasons, no distribution of any portion of
employees account will ever be made to him (or his eligible survivor[s]).
It must be recalled that on June 21, 1989, Millares wrote a letter to his employer
informing his intention to avail of the optional retirement plan under the CEIP
considering that he has rendered more than twenty (20) years of continuous
service. Lagda, likewise, manifested the same intention in a letter dated June 26,
1989. Private respondent, however, denied their requests for benefits under the CEIP
since: (1) the contract of enlistment (COE) did not provide for retirement before 60 years
of age; and that (2) petitioners failed to submit a written notice of their intention to
terminate their employment within thirty (30) days from the last disembarkation date
pursuant to the provision on Voluntary Termination of the CEIP. Petitioners were
eventually dropped from the roster of crew members and on grounds of abandonment
and unavailability for contractual sea service, respectively, they were disqualified from
receiving any benefits under the CEIP.
[25]

In our March 14, 2000 Decision, we, however, found that petitioners Millares and
Lagda were not guilty of abandonment or unavailability for contractual sea service, as
we have stated:

The absence of petitioners was justified by the fact that they secured the approval of
private respondents to take a leave of absence after the termination of their last
contracts of enlistment. Subsequently, petitioners sought for extensions of their
respective leaves of absence. Granting arguendo that their subsequent requests for
extensions were not approved, it cannot be said that petitioners were unavailable or
had abandoned their work when they failed to report back for assignment as they were

still questioning the denial of private respondents of their desire to avail of the
optional early retirement policy, which they believed in good faith to exist.
[26]

Neither can we consider petitioners guilty of poor performance or misconduct since


they were recipients of Merit Pay Awards for their exemplary performances in the
company.
Anent the letters dated June 21, 1989 (for Millares) and June 26, 1989 (for Lagda)
which private respondent considered as belated written notices of termination, we find
such assertion specious. Notwithstanding, we could conveniently consider the
petitioners eligible under Section III-B of the CEIP (Voluntary Termination), but this
would, however, award them only a measly amount of benefits which to our mind, the
petitioners do not rightfully deserve under the facts and circumstances of the case. As
the CEIP provides:

III. Distribution of Benefits


xxx
E. Distribution of Accounts
When an employee terminates under conditions that would qualify for a distribution
of more than one specified in A, B or C above, the largest single amount, only, will be
distributed.
Since petitioners termination of employment under the CEIP do not fall under
Section III-A (Retirement, Death and Disability) or Section III-B (Voluntary Termination),
nor could they be considered under the second paragraph of Section III-C, as earlier
discussed; it follows that their termination falls under the first paragraph of Section III-C
for which they are entitled to 100% of the total amount credited to their accounts. The
private respondents can not now renege on their commitment under the CEIP to reward
deserving and loyal employees as the petitioners in this case.
In taking cognizance of private respondents Second Motion for Reconsideration, the
Court hereby suspends the rules to make them conformable to law and justice and to
subserve an overriding public interest.
IN VIEW OF THE FOREGOING, THE COURT Resolved to Partially
GRANT Private Respondents Second Motion for Reconsideration and Intervenor
FAMES Motion for Reconsideration in Intervention. The Decision of the National Labor
Relations Commission dated June 1, 1993 is hereby REINSTATED with
MODIFICATION. The Private Respondents, Trans-Global Maritime Agency, Inc. and
Esso International Shipping Co.,Ltd. are hereby jointly and severally ORDERED to pay

petitioners One Hundred Percent (100%) of their total credited contributions as provided
under the Consecutive Enlistment Incentive Plan(CEIP).
SO ORDERED.
Davide, Jr., C.J., (Chairman), Puno, and Ynares-Santiago, JJ., concur.
Austria-Martinez, J., no part. Did not participate in the Decision.

FIRST DIVISION

[G.R. No. 160952. August 20, 2004]

MARCIAL GU-MIRO, petitioner, vs. ROLANDO C. ADORABLE and


BERGESEN D.Y. MANILA, respondents.
DECISION
YNARES-SANTIAGO, J.:

Before us is a petition for review on certiorari of the decision of the Court


of Appeals in CA-G.R. SP No. 66131 dated May 29, 2003, which modified the
decision of the National Labor Relations Commission (NLRC) by increasing
the incentive bonus awarded to petitioner from US$594.56 to US$1189.12.
[1]

Petitioner Marcial Gu-Miro was formerly employed as a Radio Officer of


respondent Bergesen D.Y. Philippines, which acted for and in behalf of its
principal Bergesen D.Y. ASA, on board its different vessels. A Certification
dated April 14, 1998 was issued by Bergesen D.Y. Philippines, Inc.s President
and General Manager Rolando C. Adorable showing that petitioner served in
the company on board its vessels starting 1988. The case before us involves
an employment contract signed by petitioner to commence service on board
the M/V HEROS, which stipulated a monthly salary of US$929.00 for a period
of eight (8) months. It also provided for overtime pay of US$495.00 per month
and vacation leave with pay in the amount of US$201.00 per month equivalent
to six and a half days. The contract of employment was signed on March 18,
1996 and petitioner commenced work on April 15, 1996.
[2]

[3]

Record shows that respondent company traditionally gives an incentive


bonus termed as Re-employment Bonus to employees who decide to rejoin
the company after the expiration of their employment contracts. After the
expiration of petitioners contract in December 1996, the same was renewed
by respondent company until September 9, 1997, as stated in the Certification
issued by Bergesen D.Y. Philippines, Inc. In September 1997, petitioners
services were terminated due to the installation of labor saving devices which
made his services redundant. Upon his forced separation from the company,
petitioner requested that he be given the incentive bonus plus the additional
allowances he was entitled to. Respondent company, however, refused to
accede to his request.

Thus, in June 1999 petitioner filed a complaint with the NLRC, Regional
Arbitration Branch of Cebu, for payment of the incentive bonus from April 15,
1996 to September 15, 1997, 10% of the basic wage, unclaimed payment for
incentive bonus from September 1993 to June 1994, non-remittance of
provident fund from July 1992 to June 1994, moral and exemplary damages
as well as attorneys fees. On December 29, 1999, the complaint was
provisionally dismissed by the NLRC due to the failure of petitioner to file the
required position paper. Petitioner re-filed the complaint on March 2, 2000
accordingly.
In a Decision dated June 6, 2000, the Labor Arbiter dismissed the case for
lack of merit, based on the following findings:
[4]

x x x. Incentive bonus or reemployment bonus are benefits not found in the POEA
approved contract. These are benefits which are specifically granted pursuant to an
internal memorandum entitled Employment Conditions for Filipino Seafarers serving
on board vessels of Bergesen D.Y. ASA. As stated in the said internal memorandum,
entitlement to the benefits therein (is) not automatic but (is) subject to some
conditions. As clearly stated in the said memorandum, the reemployment bonus is an
incentive bonus system for reemployment upon signing for a subsequent period. x x x.
In order that a seafarer, like the complainant, be entitled to reemployment/incentive
bonus, he must satisfy all of the following requirements, to wit:
1) He must be employed in a vessel under a principal who is a member of the
reemployment bonus scheme;
2) He must have been an officer of the principal members vessel subject to the
additional conditions stated in page 2 of the aforementioned internal memorandum;
and
3) After serving in a principal-members vessel, he must be reemployed in another or
the same principal-members vessel.
To avail of the benefits under this scheme, seafarers like the complainant has to prove
that he met all the foregoing conditions. It is, thus, his burden to prove that he is
entitled to the said benefit. Complainant, however, miserably failed to adduce
evidence that he met all the foregoing conditions for entitlement to the benefit. He
relied on his unsubstantiated allegation that a certain Captain D. Ramirez received an
incentive bonus even if he did not sign up with the Company. x x x.

xxxxxxxxx
For obvious reasons, complainants claims for moral and exemplary damages as well
as attorneys fees are denied. x x x.
[5]

Petitioner appealed to the NLRC, which set aside the Labor Arbiters
decision and ordered respondents to pay petitioner the amount of US$594.56
in a Decision dated March 5, 2001. The pertinent portion of the NLRCs
decision states:
The Contract of Employment entered into between the complainant and the
respondents specifically set a term of eight (8) months which was supposed to be from
April 15, 1996 up to December 14, 1996. The complainants length of service from
December 15, 1996 to September 9, 1997, or a period of nine (9) months, more or
less, was an extended term of employment. A closer look at the facts shows that the
extended term was even longer than the original term of the contract.
xxxxxxxxx
[W]e construe that the extended term of the contract of employment from December
15, 1996 up to September 9, 1997 was considered as re-employment of the
complainant. And when there was re-employment, it is presumed that all the
conditions set forth by the respondents in their established company written policy
entitled Employment Conditions for Filipino Seafarers Serving Onboard Vessels of
Bergesen D.Y. ASA are deemed complied with. The pertinent portion of the said
company policy states:
2. Re-employment bonus
The company has established an incentive bonus system for re-employment upon
signing for a subsequent period.
The conditions are as follows:
xxxxxxxxx
Radio Officers/Electricians Serving onboard bulk carriers- 8% of basic wage per
month of actual service.

To do otherwise, we would allow the respondent to circumvent its own established


policy to merely extending the original contract of employment.
[6]

Petitioner and respondents filed separate Motions for Reconsideration


which were both denied by the NLRC in its Resolution dated April 24, 2001.
Not satisfied with the monetary award, petitioner filed a petition for review
with the Court of Appeals claiming that there was an error in computing the
amount of the incentive bonus he is entitled to. Petitioner argued that he
should be considered as a regular employee of respondent company and
thus, entitled to backwages or, at the very least, separation pay.
The Court of Appeals, on May 29, 2003, rendered the assailed Decision
where it ruled:
WHEREFORE, the petition is GRANTED. The assailed Decision dated March 5,
2001 is hereby MODIFIED increasing the award of incentive bonus from US$594.56
to US$1189.12.
SO ORDERED.

[7]

In arriving at its decision, the appellate court made the following findings:
It is uncontroverted that the company grants incentive bonus for re-employment upon
signing for a subsequent period. For radio officers onboard bulk carriers, it shall be
8% of the basic wage per month of actual service. In this case, we find nothing in the
record to show that the classification of the vessel to which the petitioner was
deployed is a Gas/LPG Tanker, which would make him entitled to 10% instead of 8%
of the basic wage as incentive bonus. Thus, the public respondent correctly applied the
rate of 8% of the basic wage per month of actual service, the basic wage in this case
being the amount stipulated in the contract of employment, i.e., US$929.00, and does
not include the stipulated rate for overtime pay.
The question now is the application of the provision of the memorandum with respect
to the length of actual service. Record shows that after the expiration of the original
eight-month employment contract on December 15, 1996, the petitioner was in fact
re-employed when his service was extended for another nine (9) months or up to
September 1997. This unquestionably entitled him to the incentive bonus for the 8month period covered by the contract and which was correctly awarded to him by the
public respondent NLRC. However, as to the succeeding period, although it was not

covered by a written contract, it is unrebutted that the petitioner was actually made to
suffer work during that period. Hence, there was a monthly re-employment of the
petitioner for the succeeding 9 months. Conformably, since the incentive bonus is
given for re-employment upon signing for a subsequent period, for purposes of
computing the same, the petitioner is deemed to have been re-employed not only for
the 8 months covered by the contract but also for the succeeding 8 months preceding
the last month when he was terminated. x x x.
xxxxxxxxx
As for the claim for backwages or separation pay, we note that these claims were
neither raised in the petitioners position paper nor in the motion for reconsideration
filed before the NLRC; hence, they can no longer be raised for the first time in this
petition. x x x.
[8]

Hence, the instant petition for certiorari based on the following grounds:
I. THE HONORABLE COURT OF APPEALS ERRED WHEN IT PLACED THE
BURDEN UPON PETITIONER TO PROVE THAT M/V HEROS IS AN LPG/GAS
TANKER.
II. CONSIDERING THAT PETITIONER HAD WORKED FOR BERGESEN D.Y.
PHILIPPINES FOR AND IN BEHALF OF ITS PRINCIPAL BERGESEN D.Y. ASA
FOR TEN (10) LONG YEARS ABOARD ITS DIFFERENT VESSELS, PETITIONER
SHOULD HAVE BEEN CONSIDERED AS A REGULAR EMPLOYEE BY THE
COURT OF APPEALS.
III. THE HONORABLE COURT OF APPEALS LIKEWISE ERRED WHEN IT SAID IN
ITS DECISION THAT PETITIONER FAILED TO RAISE THE ISSUE OF
BACKWAGES
AND
SEPARATION
PAY
IN
THE
MOTION
FOR
RECONSIDERATION FILED WITH THE NLRC.[9]

In this petition, we are called upon to resolve two basic issues: The
first concerns what percentage to use in computing the incentive bonus which
petitioner is entitled to. In the memorandum entitled Employment Conditions
for Filipino Seafarers Serving Onboard Vessels of Bergesen D.Y.
ASA (Employment Conditions Memorandum), Radio Officers are entitled to reemployment bonus equivalent to a certain percentage of their basic wage per
month of actual service. If the employee served onboard a bulk carrier, he is
entitled to 8% of his basic wage per month of actual service. Alternatively, if
service was done onboard a gas carrier tanker, the employee is entitled to
10% of his basic wage per month of actual service.

The NLRC and the Court of Appeals both agree that petitioner failed to
adduce concrete proof to show that M/V HEROS is a Gas/LPG Tanker and not
a bulk carrier. Hence, the Court of Appeals upheld the use of 8% by the NLRC
as multiplier to compute the incentive bonus. Respondent company argues
that petitioner failed to allege the nature of M/V HEROS at the earliest
opportunity, belatedly alleging this information in the Motion for
Reconsideration with the NLRC. Petitioner insists that M/V HEROS is a
Gas/LPG Tanker which entitles him to 10% of his basic wage as incentive
bonus; and that the Court of Appeals erred in ruling that it was petitioners
burden to prove the classification of M/V HEROS.
We rule in petitioners favor. The registration papers, which contain the
vessel classification of M/V HEROS, are the conclusive evidence that
petitioner needs to prove his allegation. However, these are in the custody of
respondent company or its mother company, Bergesen D.Y. ASA.
Interestingly, respondent company never presented the registration papers in
evidence.
We find that respondent companys failure to controvert the allegation,
when it had the opportunity and resources to do so, works in favor of
petitioner. Time and again we have held that should doubts exist between the
evidence presented by the employer and the employee, the scales of justice
must be tilted in favor of the latter. Moreover, the law creates the
presumption that evidence willfully suppressed would be adverse if produced.
[10]

[11]

Consequently, the amount of incentive bonus termed as re-employment


bonus which petitioner is entitled to should be computed as follows:
Salary per month = US$929.00
No. of months of actual service = 16 months
Rate = 10% of basic wage
US$929.00/month x 16 months x 10% = US$1,486.40
The second and third grounds raised in this petition are related, based on
petitioners allegation that he should be considered a regular employee of
respondent company, having been employed onboard the latters different

vessels for the span of 10 years. Hence, petitioner claims that he is entitled to
backwages or at the very least separation pay, invoking our decision
inMillares, et al. v. NLRC where it was held that the repeated re-hiring of a
Chief Engineer of a shipping company for 20 years is sufficient evidence of
the necessity and indispensability of the employees service to the employers
business or trade. Hence, applying the express provision of Article 280 of the
Labor Code, such an employee should be considered as a regular
employee.
[12]

[13]

Petitioners argument is not well-taken. The decision of Millares, et al. v.


NLRC was reconsidered and set aside in a Resolution where it was held:
[14]

[I]t is clear that seafarers are considered contractual employees. They can not be
considered as regular employees under Article 280 of Labor Code. Their employment
is governed by the contracts they sign every time they are rehired and their
employment is terminated when the contract expires. Their employment is
contractually fixed for a certain period of time. They fall under the exception of
Article 280 whose employment has been fixed for a specific project or undertaking
the completion or termination of which has been determined at the time of the
engagement of the employee or where the nature of the work or services to be
performed is seasonal in nature and employment is for the duration of the season.
xxxxxxxxx
Moreover, it is an accepted maritime industry practice that employment of seafarers
(is) for a fixed period only. Constrained by the nature of their employment which is
quite peculiar and unique in itself, it is for the mutual interest of both the seafarer and
the employer why employment status must be contractual only or for a certain period
of time. Seafarers spend most of their time at sea and understandably, they cannot stay
for a long and an indefinite period of time at sea. Limited access to shore society
during the employment will have an adverse impact on the seafarer. The national,
cultural and lingual diversity among the crew during the [Contract of Enlistment] is a
reality that necessitates the limitation of its period.
[15]

Clearly, petitioner cannot be considered as a regular employee


notwithstanding that the work he performs is necessary and desirable in the
business of respondent company. As expounded in the abovementioned Millares Resolution, an exception is made in the situation of

seafarers. The exigencies of their work necessitates that they be employed on


a contractual basis.
Thus, even with the continued re-hiring by respondent company of
petitioner to serve as Radio Officer onboard Bergesens different vessels, this
should be interpreted not as a basis for regularization but rather a series of
contract renewals sanctioned under the doctrine set down by the
second Millares case. If at all, petitioner was preferred because of practical
considerationsnamely, his experience and qualifications. However, this does
not alter the status of his employment from being contractual.
With respect to the claim for backwages and separation pay, it is now wellsettled that the award of backwages and separation pay in lieu of
reinstatement are reliefs that are awarded to an employee who is unjustly
dismissed. In the instant case, petitioner was separated from his
employment due to the termination of an impliedly renewed contract with
respondent company. Hence, there is no illegal or unjust dismissal.
[16]

WHEREFORE, premises considered, the petition is GRANTED IN PART.


The Decision of the Court of Appeals in CA-G.R. SP No. 66131 dated May 29,
2003 is MODIFIED in that the award of incentive bonus is increased from
US$1189.12 to US$1,486.40. Petitioners claim that he be declared a regular
employee and awarded backwages and separation pay is DENIED for lack of
merit.
SO ORDERED.
Davide,
JJ., concur.

Jr.,

C.J.,

(Chairman),

Quisumbing,

Carpio, and Azcuna,

SECOND DIVISION

[G.R. No. 158324. March 14, 2005]

ROBERTO RAVAGO, petitioner, vs. ESSO EASTERN MARINE, LTD.


and TRANS-GLOBAL MARITIME AGENCY, INC., respondents.
DECISION
CALLEJO, SR., J.:

Before us is a petition for review on certiorari under Rule 45 of the 1997


Rules of Court, as amended, of the Decision[1] of the Court of Appeals (CA) as
well as its Resolution in CA-G.R. SP No. 66234 which denied the motion for
reconsideration thereof.
The Factual Antecedents
The Esso Eastern Marine Ltd. (EEM), now the Petroleum Shipping Ltd., is
a foreign company based in Singapore and engaged in maritime commerce. It
is represented in the Philippines by its manning agent and co-respondent
Trans-Global Maritime Agency, Inc. (Trans-Global), a corporation organized
under the Philippine laws.
Roberto Ravago was hired by Trans-Global to work as a seaman on board
various Esso vessels. On February 13, 1970, Ravago commenced his duty as
S/N wiper on board the Esso Bataan under a contract that lasted until
February 10, 1971. Thereafter, he was assigned to work in different Esso
vessels where he was designated diverse tasks, such as oiler, then assistant
engineer. He was employed under a total of 34 separate and unconnected
contracts, each for a fixed period, by three different companies, namely, Esso
Tankers, Inc. (ETI), EEM and Esso International Shipping (Bahamas) Co., Ltd.
(EIS), Singapore Branch. Ravago worked with Esso vessels until August 22,
1992, a period spanning more than 22 years, thus:
CONTRACT
FROM

DURATION
TO

POSITION

VESSEL

COMPANY

13 Feb 70

10 Feb 71

SN/Wiper

Esso Bataan

ETI[2]

07 May 71

27 May 72

Wiper

Esso Yokohama EEM[3]

07 Aug 72

02 Jul 73

Oiler

Esso Kure

EEM

03 Oct 73

30 Jun 74

Oiler

Esso Bangkok

ETI

18 Sep 74

26 July 75

Oiler

Esso Yokohama EEM

23 Oct 75

22 Jun 76

Oiler

Esso Port
Dickson

EEM

10 Sep 76

26 Dec 76

Oiler

Esso Bangkok

ETI

27 Dec 76

29 Apr 77

Temporary Jr.
3AE

Esso Bangkok

ETI

08 Jul 77

15 Mar 78

Jr. 3AE

Esso Bombay

ETI

03 Jun 78

03 Feb 79

Temporary 3AE Esso Hongkong

ETI

04 Apr 79

24 Jun 79

3AE

Esso Orient

EEM

25 Jun 79

16 Jul 79

3AE

Esso Yokohama EEM

17 Jul 79

05 Dec 79

3AE

Esso Orient

EEM

10 Feb 80

25 Oct 80

3AE

Esso Orient

EEM

19 Jan 81

03 Jun 81

3AE

Esso Port
Dickson

EEM

04 Jun 81

11 Sep 81

3AE

Esso Orient

EEM

06 Dec 81

20 Apr 82

3AE

Esso Chawan

EEM

21 Apr 82

01 Aug 82

Temporary 2AE Esso Chawan

EEM*

03 Nov 82

06 Feb 83

2AE

EEM

Esso Jurong

07 Feb 83

10 Jul 83

2AE

Esso Yokohama EEM

31 Aug 83

13 Mar 84

2AE

Esso Tumasik

EEM

04 May 84

08 Jan 85

2AE

Esso Port
Dickson

EEM

13 Mar 85

31 Oct 85

2AE

Esso Castellon

EEM

29 Dec 85

22 Jul 86

2AE

Esso Jurong

EIS[4]

13 Sep 86

09 Jan 87

2AE

Esso Orient

EIS

21 Mar 87

15 Oct 87

2AE

Esso Port
Dickson

EIS

20 Nov 87

18 Dec 87
Temporary

1AE

Esso Chawan

EIS

19 Dec 87

25 Jun 88

2AE

Esso
Melbourne

EIS

04 Aug 88

19 Mar 89

Temporary 1AE Esso Port


Dickson

EIS

20 Mar 89

19 May 89

1AE

Esso Port
Dickson

EIS*

28 Jul 89

17 Feb 90

1AE

Esso
Melbourne

EIS

16 Apr 90

11 Dec 90

1AE

Esso Orient

EIS

09 Feb 91

06 Oct 91

1AE

Esso
Melbourne

EIS

16 Dec 91

22 Aug 92

1AE

Esso Orient

EIS

* Upgraded/Confirmed on regular rank on board. [5]


On August 24, 1992, or shortly after completing his latest contract with
EIS, Ravago was granted a vacation leave with pay from August 23, 1992
until October 28, 1992. Preparatory to his embarkation under a new contract,
he was ordered to report, on September 28, 1992, for a Medical PreEmployment Examination.[6] The Pre-Employment Physical Examination
Record shows that Ravago passed the medical examination conducted by the
O.P. Jacinto Medical Clinic, Inc. on October 6, 1992. [7] He, likewise, attended a
Pre-Departure Orientation Seminar conducted by the Capt. I.P. Estaniel
Training Center, a division of Trans-Global, on October 7, 1992.[8]
On the night of October 12, 1992, a stray bullet hit Ravago on the left leg
while he was waiting for a bus ride in Cubao, Quezon City. He fractured his
left proximal tibia and was hospitalized at the Philippine Orthopedic Hospital.
Ravagos wife, Lolita, informed Trans-Global and EIS of the incident on
October 13, 1992 for purposes of availing medical benefits. As a result of his
injury, Ravagos doctor opined that he would not be able to cope with the job of
a seaman and suggested that he be given a desk job. [9] Ravagos left leg had
become apparently shorter, making him walk with a limp. For this reason, the
company physician, Dr. Virginia G. Manzo, found him to have lost his
dexterity, making him unfit to work once again as a seaman. [10] Citing the
opinion of Ravagos doctor, Dr. Manzo wrote:
Because of his unsteady gait, pronounced limp, and loss of normal dexterity of his leg
and foot, we doubted whether Mr. Ravago can physically tackle the usual activities of
a seaman in the course of his work without any added risk over and above the
ordinary or standard risk inherent to his job. These activities include climbing up and
down the engine room through a long flight of iron stairs with narrow steps which
could be slippery at times due to grease or oil, jumping from an unsteady and floating
motor launch or boat to board or alight a tanker through a flight of steps or climbing
up and down a pilot ladder, wearing of heavy safety shoes, etc.

Mr. Ravagos doctor replied that, after being informed about the nature of the job, he
believes that Mr. Ravago would not be able to cope with these kinds of activities. In
effect, the Orthopedic doctor said Mr. Ravago is not fit to go back to his work as a
seaman.
We concur with the opinion of the doctor that Mr. Ravago is not fit to go back to his
job as a seaman in view of the risk of physical injury to himself as result of the
deformity and loss of dexterity of his injured leg.
As a seaman, we consider his inability partial permanent. His injury corresponds to
Grade 13 in the Schedule of Disability of the Standard Employment Contract. [11]
Consequently, instead of rehiring Ravago, EIS paid him his Career
Employment Incentive Plan (CEIP)[12] as of March 1, 1993 and his final tax
refund for 1992. After deducting his Social Security System and medical
contributions from November 1992 to February 1993, EIS remitted the net
amount of P162,232.65, following Ravagos execution of a Deed of Quitclaim
and/or Release.[13]
However, on March 22, 1993, Ravago filed a complaint[14] for illegal
dismissal with prayer for reinstatement, backwages, damages and attorneys
fees against Trans-Global and EIS with the Philippine Overseas Employment
Administration Adjudication Office.
In their Answer dated April 14, 1993, respondents denied that Ravago was
dismissed without notice and just cause. Rather, his services were no longer
engaged in view of the disability he suffered which rendered him unfit to work
as a seafarer. This fact was further validated by the company doctor and
Ravagos attending physician. They averred that Ravago was a contractual
employee and was hired under 34 separate contracts by different companies.
In his position paper, Ravago insisted that he was fit to resume pre-injury
activities as evidenced by the certification[15] issued by Dr. Marciano Foronda
M.D., one of his attending physicians at the Philippine Orthopedic Hospital,
that at present, fracture of tibia has completely healed and patient is fit to
resume pre-injury activities anytime.[16] Ravago, likewise, asserted that he was
not a mere contractual employee because the respondents regularly and
continuously rehired him for 23 years and, for his continuous service, was
awarded a CEIP payment upon his termination from employment.
On December 15, 1996, Labor Arbiter Ramon Valentin C. Reyes rendered
a decision in favor of Ravago, the complainant. He ruled that Ravago was a
regular employee because he was engaged to perform activities which were
usually necessary or desirable in the usual trade or business of the employer.

The Labor Arbiter noted that Ravagos services were repeatedly contracted; he
was even given several promotions and was paid a monthly service
experience bonus. This was in keeping with the increasing number of long
term careers established with the respondents. Finally, the Labor Arbiter
resolved that an employer cannot terminate a workers employment on the
ground of disease unless there is a certification by a competent public health
authority that the said disease is of such nature or at such a stage that it
cannot be cured within a period of six months even with proper medical
treatment. He concluded that Ravago was illegally dismissed. The decretal
portion of the Labor Arbiters decision reads:
WHEREFORE, premises considered, judgment is hereby rendered finding the
dismissal illegal and ordering respondents to reinstate complainant to his former
position without loss of seniority rights and other benefits. Further, the respondents
are jointly and severally liable to pay complainant backwages from the time of his
dismissal up to the promulgation of this decision. Such backwages is provisionally
fixed at US$96,285.00 less the P162,285.83 (sic) paid to the complainant as Career
Employment Incentive Plan. And ordering respondents to pay complainant 10% of the
total monetary award as attorneys fees.
All other claims are dismissed for lack of merit.
SO ORDERED.[17]
Aggrieved, the respondents appealed the decision to the National Labor
Relations Commission (NLRC) on July 3, 1997, raising the following grounds:
THE DECISION IS VITIATED BY SERIOUS ERRORS IN THE FINDINGS OF
FACT WHICH, IF NOT CORRECTED, WOULD CAUSE GRAVE OR
IRREPARABLE DAMAGE OR INJURY TO THE RESPONDENTS. THESE
FINDINGS ARE:
(A) THAT COMPLAINANT WAS A REGULAR EMPLOYEE BECAUSE HE WAS
HIRED AND REHIRED IN VARIOUS CAPACITIES ON BOARD ESSO
VESSELS IN A SPAN OF 23 YEARS;
(B) THAT COMPLAINANT WAS A REGULAR EMPLOYEE BECAUSE HE WAS
ENGAGED IN THE SERVICES INDISPENSABLE IN THE OPERATION OF
THE VARIOUS VESSELS OF RESPONDENTS;
(C) THAT COMPLAINANT WAS FIT TO RESUME PRE-INJURY ACTIVITIES AND HIS
FRACTURE COMPLETELY HEALED NOTWITHSTANDING A CONTRARY
MEDICAL OPINION OF COMPLAINANTS OWN PHYSICIAN AND
RESPONDENTS COMPANY PHYSICIAN; AND

(D) THAT COMPLAINANT WAS ILLEGALLY DISMISSED BY RESPONDENTS.[18]

On April 26, 2001, the NLRC rendered a decision affirming that of the
Labor Arbiter. The NLRC based its decision in the case of Millares v. National
Labor Relations Commission,[19]wherein it was held that:
It is, likewise, clear that petitioners had been in the employ of the private respondents
for 20 years. The records reveal that petitioners were repeatedly re-hired by private
respondents even after the expiration of their respective eight-month contracts. Such
repeated re-hiring which continued for 20 years, cannot but be appreciated as
sufficient evidence of the necessity and indispensability of petitioners service to the
private respondents business or trade.
Verily, as petitioners had rendered 20 years of service, performing activities which
were necessary and desirable in the business or trade of private respondents, they are,
by express provision of Article 280 of the Labor Code, considered regular employees.
[20]

The NLRC, likewise, declared that Ravago was illegally dismissed and
that the quitclaim executed by him could not be considered as a waiver of his
right to question the validity of his dismissal and seek reinstatement and other
reliefs. According to the NLRC, such quitclaim is against public policy,
considering the economic disadvantage of the employee and the inevitable
pressure brought about by financial capacity.
The respondents filed a motion for reconsideration of the decision,
claiming that the ruling of the Court in Millares v. NLRC[21] had not yet become
final and executory. However, the NLRC denied the motion.
Thereafter, the respondents filed a petition for certiorari before the CA on
the following grounds: (a) the ruling in Millares v. NLRC had not yet acquired
finality, nor has it become a law of the case or stare decisis because the Court
was still resolving the pending motion for reconsideration; (b) Ravago was not
illegally dismissed because after the expiration of his contract, there was no
obligation on the part of the respondents to rehire him; and (c) the quitclaim
signed by Ravago was voluntarily entered into and represented a reasonable
settlement of the account due him.
On August 29, 2001, the respondents filed an Urgent Application for the
Issuance of a Temporary Restraining Order and Writ of Preliminary Injunction
to enjoin and restrain the Labor Arbiter from enforcing his decision. On
September 5, 2001, the CA issued a Resolution [22] temporarily restraining
NLRC Sheriff Manolito Manuel from enforcing and/or implementing the
decision of the Labor Arbiter as affirmed by the NLRC.

On November 14, 2001, the CA granted the application for preliminary


injunction upon filing by the respondents of a bond in the amount
of P500,000.00. Thus, the respondents filed the surety bond as directed by
the appellate court. Before the approval thereof, however, Ravago filed a
motion to set aside the Resolution dated November 14, 2001, principally
arguing that the instant case was a labor dispute, wherein an injunction is
proscribed under Article 254[23] of the Labor Code of the Philippines.
In their comment on Ravagos motion, the respondents professed that the
case before the CA did not involve a labor dispute within the meaning of
Article 212(l)[24] of the Labor Code of the Philippines, but a money claim
against the employer as a result of termination of employment.
On August 28, 2002, the CA rendered a decision in favor the respondents.
The fallo of the decision reads:
WHEREFORE, the petition is GRANTED. The assailed decisions of the NLRC are
hereby REVERSED and SET ASIDE and the injunctive writ issued on November
14, 2001, is hereby madePERMANENT.
SO ORDERED.[25]
The CA ratiocinated as follows:
The employment, deployment, rights and obligation of Filipino seafarers are
particularly set forth under the rules and regulations governing overseas employment
promulgated by the POEA. Section C, Part I of the Standard Employment Contract
Governing the Employment of All Filipino Seamen on Board Ocean-Going Vessels
emphatically provides the following:
SECTION C. DURATION OF CONTRACT
The period of employment shall be for a fix (sic) period but in no case to exceed 12
months and shall be stated in the Crew Contract. Any extension of the Contract period
shall be subject to the mutual consent of the parties.
It is clear from the foregoing that seafarers are contractual employees whose terms of
employment are fixed for a certain period of time. A fixed term is an essential and
natural appurtenance of seamens employment contracts to which, whatever the nature
of the engagement, the concept of regular employment under Article 280 of the Labor
Code does not find application. The contract entered into by a seafarer with his
employer sets in detail the nature of his job, the amount of his wage and, foremost, the
duration of his employment. Only a satisfactory showing that both parties dealt with

each other on more or less equal terms with no dominance exercised by the employer
over the seafarer is necessary to sustain the validity of the employment contract. In the
absence of duress, as it is in this case, the contract constitutes the law between the
parties.[26]
The CA noted that the employment status of seafarers has been
established with finality by the Courts reconsideration of its decision
in Millares v. National Labor Relations Commission,[27] wherein it was ruled
that seamen are contractual employees. According to the CA, the fact that
Ravago was not rehired upon the completion of his contract did not result in
his illegal dismissal; hence, he was not entitled to reinstatement or payment of
separation pay. The CA, likewise, affirmed the writ of preliminary injunction it
earlier issued, declaring that an injunction is a preservative remedy issued for
the protection of a substantive right or interest, an antidote resorted to only
when there is a pressing necessity to avoid injurious consequences which
cannot be rendered under any standard compensation.
Hence, the present recourse.
Ravago, now the petitioner, has raised the following issues:
I.

[WHETHER OR NOT] THE COURT OF APPLEALS GRAVELY ERRED AND


VIOLATED THE LABOR CODE WHEN IT ISSUED A RESTRAINING ORDER
AND THEREAFTER A WRIT OF PRELIMINARY INJUNCTION IN CA-G.R. SP
NO. 66234.
II.

[WHETHER OR NOT] THE COURT OF APPEALS GRAVELY ERRED, [AND]


BLATANTLY DISREGARDED THE CONSTITUTIONAL MANDATE ON
PROTECTION TO FILIPINO OVERSEAS WORKERS, AND COUNTENANCED
UNWARRANTED DISCRIMINATION WHEN IT RULED THAT PETITIONER
CANNOT BECOME A REGULAR EMPLOYEE.[28]
On the first issue, the petitioner asserts that the CA violated Article 254 of
the Labor Code when it issued a temporary restraining order, and thereafter a
writ of preliminary injunction, to derail the enforcement of the final and
executory judgment of the Labor Arbiter as affirmed by the NLRC. On the
other hand, the respondents contend that the issue has become academic
since the CA had already decided the case on its merits.
The contention of the petitioner does not persuade.

The petitioners reliance on Article 254[29] of the Labor Code is misplaced.


The law proscribes the issuance of injunctive relief only in those cases
involving or growing out of a labor dispute. The case before the NLRC neither
involves nor grows out of a labor dispute. It did not involve the fixing of terms
or conditions of employment or representation of persons with respect thereto.
In fact, the petitioners complaint revolves around the issue of his alleged
dismissal from service and his claim for backwages, damages and attorneys
fees. Moreover, Article 254 of the Labor Code specifically provides that the
NLRC may grant injunctive relief under Article 218 thereof.
Besides, the anti-injunction policy of the Labor Code, basically, is freedom
at the workplace. It is more appropriate in the promotion of the primacy of free
collective bargaining and negotiations, including voluntary arbitration,
mediation and conciliation, as modes of settling labor and industrial disputes.
[30]

Generally, an injunction is a preservative remedy for the protection of a


persons substantive rights or interests. It is not a cause of action in itself but a
mere provisional remedy, an appendage to the main suit. Pressing necessity
requires that it should be resorted to only to avoid injurious consequences
which cannot be remedied under any measure of consideration. The
application of an injunctive writ rests upon the presence of an exigency or of
an exceptional reason before the main case can be regularly heard.
The indispensable conditions for granting such temporary injunctive relief are:
(a) that the complaint alleges facts which appear to be satisfactory to establish
a proper basis for injunction, and (b) that on the entire showing from the
contending parties, the injunction is reasonably necessary to protect the legal
rights of the plaintiff pending the litigation.[31]
It bears stressing that in the present case, the respondents petition
contains facts sufficient to warrant the issuance of an injunction under Article
218, paragraph (e) of the Labor Code of the Philippines. [32] Further,
respondents had already posted a surety bond more than adequate to cover
the judgment award.
On the second issue, the petitioner earnestly urges this Court to reexamine its Resolution dated July 29, 2002 in Millares v. National Labor
Relations Commission[33] and reinstate the doctrine laid down in its original
decision rendered on March 14, 2000, wherein it was initially determined that
a seafarer is a regular employee. The petitioner asserts that the decision of
the CA and, indirectly, that of the Resolution of this Court dated July 29, 2002,
are violative of the constitutional mandate of full protection to labor, [34] whether
local or overseas, because it deprives overseas Filipino workers, such as

seafarers, an opportunity to become regular employees without valid and


serious reasons. The petitioner maintains that the decision is discriminatory
and violates the constitutional provision on equal protection of the laws, in
addition to being partial to and overly protective of foreign employers.
The respondents, on the other hand, asseverate that there is no law or
administrative rule or regulation imposing an obligation to rehire a seafarer
upon the completion of his contract. Their refusal to secure the services of the
petitioner after the expiration of his contract can never be tantamount to a
termination. The respondents aver that the petitioner is not entitled to
backwages, not only because it is without factual justification but also because
it is not warranted under the law. Furthermore, the respondents assert that the
rulings in the Coyoca v. NLRC,[35] and the latest Millares case remain good and
valid precedents that need to be reaffirmed. The respondents cited the ruling
of the Court in Coyoca case where the Court ruled that a Filipino seamans
contract does not provide for separation or termination pay because it is
governed by the Rules and Regulations Governing Overseas Employment.
The contention of the respondents is correct.
In a catena of cases, this Court has consistently ruled that seafarers are
contractual, not regular, employees.
In Brent School, Inc. v. Zamora,[36] the Court ruled that seamen and
overseas contract workers are not covered by the term regular employment as
defined in Article 280 of the Labor Code. The Court said in that case:
The question immediately provoked ... is whether or not a voluntary agreement on a
fixed term or period would be valid where the employee has been engaged to perform
activities which are usually necessary or desirable in the usual business or trade of the
employer. The definition seems non sequitur. From the premise that the duties of an
employee entail activities which are usually necessary or desirable in the usual
business or trade of the employer the conclusion does not necessarily follow that the
employer and employee should be forbidden to stipulate any period of time for the
performance of those activities. There is nothing essentially contradictory between a
definite period of an employment contract and the nature of the employees duties set
down in that contract as being usually necessary or desirable in the usual business or
trade of the employer. The concept of the employees duties as being usually necessary
or desirable in the usual business or trade of the employer is not synonymous with or
identical to employment with a fixed term. Logically, the decisive determinant in term
employment should not be the activities that the employee is called upon to perform,
but the day certain agreed upon by the parties for the commencement and termination
of their employment relationship, a day certain being understood to be that which

must necessarily come, although it may not be known when. Seasonalemployment,


and employment for a particular project are merely instances of employment in
which a period, were not expressly set down, is necessarily implied. [37]
...
Some familiar examples may be cited of employment contracts which may be neither
for seasonal work nor for specific projects, but to which a fixed term is an essential
and natural appurtenance: overseas employment contracts, for one, to which,
whatever the nature of the engagement, the concept of regular employment with all
that it implies does not appear ever to have been applied, Article 280 of the Labor
Code notwithstanding; also appointments to the positions of dean, assistant dean,
college secretary, principal, and other administrative offices in educational
institutions, which are by practice or tradition rotated among the faculty members, and
where fixed terms are a necessity without which no reasonable rotation would be
possible. ... [38]
...
Accordingly, and since the entire purpose behind the development of legislation
culminating in the present Article 280 of the Labor Code clearly appears to have been,
as already observed, to prevent circumvention of the employees right to be secure in
his tenure, the clause in said article indiscriminately and completely ruling out all
written or oral agreements conflicting with the concept of regular employment as
defined therein should be construed to refer to the substantive evil that the Code itself
has singled out: agreements entered into precisely to circumvent security of tenure. It
should have no application to instances where a fixed period of employment was
agreed upon knowingly and voluntarily by the parties, without any force, duress or
improper pressure being brought to bear upon the employee and absent any other
circumstances vitiating his consent, or where it satisfactorily appears that the
employer and employee dealt with each other on more or less equal terms with no
moral dominance whatever being exercised by the former over the latter. Unless, thus,
limited in its purview, the law would be made to apply to purposes other than those
explicitly stated by its framers; it thus becomes pointless and arbitrary, unjust in its
effects and apt to lead to absurd and unintended consequences. [39]
The Court made the same ruling in Coyoca v. National Labor Relations
Commission[40] and declared that a seafarer, not being a regular employee, is
not entitled to separation or termination pay.

Furthermore, petitioners contract did not provide for separation benefits. In this
connection, it is important to note that neither does the POEA standard employment
contract for Filipino seamen provide for such benefits.
As a Filipino seaman, petitioner is governed by the Rules and Regulations Governing
Overseas Employment and the said Rules do not provide for separation or
termination pay. ...
...
Therefore, although petitioner may not be a regular employee of private respondent,
the latter would still have been liable for payment of the benefits had the principal
failed to pay the same. [41]
In the July 29, 2002 Resolution of this Court in Millares v. National Labor
Relations Commission,[42] it reiterated its ruling that seafarers are contractual
employees and, as such, are not covered by Article 280 of the Labor Code of
the Philippines:
From the foregoing cases, it is clear that seafarers are considered contractual
employees. They cannot be considered as regular employees under Article 280 of the
Labor Code. Their employment is governed by the contracts they sign every time they
are rehired and their employment is terminated when the contract expires. Their
employment is contractually fixed for a certain period of time. They fall under
theexception of Article 280 whose employment has been fixed for a specific project or
undertaking the completion or termination of which has been determined at the time
of engagement of the employee or where the work or services to be performed is
seasonal in nature and the employment is for the duration of the season. We need not
depart from the rulings of the Court in the two aforementioned cases which indeed
constitute stare decisis with respect to the employment status of seafarers.
...
... The Standard Employment Contract governing the Employment of All Filipino
Seamen on Board Ocean-Going Vessels of the POEA, particularly in Part I, Sec. C,
specifically provides that the contract of seamen shall be for a fixed period. And in no
case should the contract of seamen be longer than 12 months. It reads:
Section C. Duration of Contract

The period of employment shall be for a fixed period but in no case to exceed 12
months and shall be stated in the Crew Contract. Any extension of the Contract period
shall be subject to the mutual consent of the parties.
Petitioners make much of the fact that they have been continually re-hired or their
contracts renewed before the contracts expired (which has admittedly been going on
for twenty [20] years). By such circumstance they claim to have acquired regular
status with all the rights and benefits appurtenant to it.
Such contention is untenable. Undeniably, this circumstance of continuous re-hiring
was dictated by practical considerations that experienced crew members are more
preferred. Petitioners were only given priority or preference because of their
experience and qualifications but this does not detract the fact that herein petitioners
are contractual employees. They can not be considered regular employees. We quote
with favor the explanation of the NLRC in this wise:
xxx The reference to permanent and probationary masters and employees in these
papers is a misnomer and does not alter the fact that the contracts for enlistment
between complainants-appellants and respondent-appellee Esso International were for
a definite periods of time, ranging from 8 to 12 months. Although the use of the terms
permanent and probationary is unfortunate, what is really meant is eligible for-re-hire.
This is the only logical conclusion possible because the parties cannot and should not
violate POEAs requirement that a contract of enlistment shall be for a limited period
only; not exceeding twelve (12) months.
From all the foregoing, we hereby state that petitioners are not considered regular or
permanent employees under Article 280 of the Labor Code. Petitioners employment
have automatically ceased upon the expiration of their contracts of enlistment
(COE). Since there was no dismissal to speak of, it follows that petitioners are not
entitled to reinstatement or payment of separation pay or backwages, as provided by
law. [43]
The Court ruled that the employment of seafarers for a fixed period is not
discriminatory against seafarers and in favor of foreign employers. As
explained by this Court in its July 29, 2002 Resolution in Millares:
Moreover, it is an accepted maritime industry practice that employment of seafarers
are for a fixed period only. Constrained by the nature of their employment which is
quite peculiar and unique in itself, it is for the mutual interest of both the seafarer and
the employer why the employment status must be contractual only or for a certain
period of time. Seafarers spend most of their time at sea and understandably, they can
not stay for a long and an indefinite period of time at sea. Limited access to shore

society during the employment will have an adverse impact on the seafarer. The
national, cultural and lingual diversity among the crew during the COE is a reality that
necessitates the limitation of its period. [44]
In Pentagon International Shipping, Inc. v. William B. Adelantar,[45] the
Court cited its rulings in Millares and Coyoca and reiterated that a seafarer is
not a regular employee entitled to backwages and separation pay:
Therefore, Adelantar, a seafarer, is not a regular employee as defined in Article 280 of
the Labor Code. Hence, he is not entitled to full backwages and separation pay in lieu
of reinstatement as provided in Article 279 of the Labor Code. As we held in Millares,
Adelantar is a contractual employee whose rights and obligations are governed
primarily by [the] Rules and Regulations of the POEA and, more importantly, by R.A.
8042, or the Migrant Workers and Overseas Filipinos Act of 1995.
The latest ruling of the Court in Marcial Gu-Miro v. Rolando C. Adorable
and Bergesen D.Y. Manila[46] reaffirmed yet again its rulings that a seafarer is
employed only on a contractual basis:
Clearly, petitioner cannot be considered as a regular employee notwithstanding that
the work he performs is necessary and desirable in the business of respondent
company. As expounded in the above-mentioned Millares Resolution, an exception is
made in the situation of seafarers. The exigencies of their work necessitates that they
be employed on a contractual basis.
Thus, even with the continued re-hiring by respondent company of petitioner to serve
as Radio Officer onboard Bergesens different vessels, this should be interpreted not as
a basis for regularization but rather a series of contract renewals sanctioned under the
doctrine set down by the second Millares case. If at all, petitioner was preferred
because of practical considerations namely, his experience and qualifications.
However, this does not alter the status of his employment from being contractual.
The petitioner failed to convince the Court why it should restate its
decision in Millares and reverse its July 29, 2002 Resolution in the same case.
IN LIGHT OF ALL THE FOREGOING, the petition is hereby DENIED. The
assailed Decision dated August 28, 2002 of the Court of Appeals is hereby
AFFIRMED. No pronouncement as to costs.
SO ORDERED.
Puno,
JJ., concur.

(Chairman),

Austria-Martinez,

Tinga, and Chico-Nazario,

THIRD DIVISION
[G.R. No. 138193. March 5, 2003]

OSM SHIPPING PHILIPPINES, INC., petitioner, vs. NATIONAL LABOR


RELATIONS COMMISSION (Third Division) and FERMIN F.
GUERRERO,respondents.
DECISION
PANGANIBAN, J.:

The Rules of Court do not require that all supporting papers and
documents accompanying a petition for certiorari should be duplicate originals
or certified true copies. Furthermore, unilateral decisions to alter the use of a
vessel from overseas service to coastwise shipping will not affect the validity
of an existing employment contract validly executed. Workers should not be
prejudiced by actions done solely by employers without the formers consent
or participation.
The Case
Before us is a Petition for Review on Certiorari under Rule 45 of the Rules
of Court, seeking to set aside the February 11, 1999 and the March 26, 1999
Resolutions of the Court of Appeals (CA) in CA-GR SP No. 50667. The
assailed Resolutions dismissed a Petition filed in the CA, challenging an
adverse ruling of the National Labor Relations Commission (NLRC). The first
Resolution disposed as follows:
[1]

We resolve to OUTRIGHTLY DISMISS the petition.

[2]

The second Resolution denied petitioners Motion for Reconsideration.


[3]

On the other hand, the NLRC Decision disposed in this wise:


WHEREFORE, premises considered, the Decision appealed from is hereby
MODIFIED in that respondents OSM Shipping Phils. Inc. and its principal, Philippine
Carrier Shipping Agency Services Co. are jointly and severally ordered to pay
complainant the sum of ELEVEN THOUSAND THREE HUNDRED FIFTY NINE
and 65/100 [US dollars] (US$11,359.65) or its peso equivalent at the time of payment
representing complainants unpaid salaries, accrued fixed overtime pay, allowance,
vacation leave pay and termination pay.
[4]

The Facts
This case originated from a Complaint filed by Fermin F. Guerrero against
OSM Shipping Philippines, Inc.; and its principal, Philippine Carrier Shipping
Agency Services Co. The Complaint was for illegal dismissal and nonpayment of salaries, overtime pay and vacation pay. The facts are
summarized in the NLRC Decision as follows:
[Private respondent] was hired by [Petitioner] OSM for and in behalf of its principal,
Phil Carrier Shipping Agency Services Co. (PC-SLC) to board its vessel M/V
[Princess] Hoa as a Master Mariner for a contract period of ten (10) months. Under
the said contract, his basic monthly salary is US$1,070.00, US$220.00 allowance,
US$321.00 fixed overtime, US$89 vacation leave pay per month for x x x 44 hours f]
work per week. He boarded the vessel on July 21, 1994 and complied faithfully with
the duties assigned to him.
[Private respondent] alleged that from the start of his work with M/V Princess Hoa, he
was not paid any compensation at all and was forced to disembark the vessel
sometime in January 1995 because he cannot even buy his basic personal necessities.
For almost seven (7) months, i.e. from July 1994 to January 1995, despite the services
he rendered, no compensation or remuneration was ever paid to him. Hence, this case
for illegal dismissal, [non-payment] of salaries, overtime pay and vacation pay.
[Petitioner] OSM, for its part, alleged that on July 26, 1994, Concorde Pacific, an
American company which owns M/V Princess Hoa, then a foreign registered vessel,
appointed x x x Philippine Carrier Shipping Agency Services Co. (PC-SASCO) as

ship manager particularly to negotiate, transact and deal with any third persons,
entities or corporations in the planning of crewing selection or determination of
qualifications of Filipino Seamen. On the same date, [Petitioner] OSM entered into a
Crew Agreement with x x x PC-SASCO for the purpose of processing the documents
of crew members of M/V Princess Hoa. The initial plan of the [s]hip-owner was to use
the vessel in the overseas trade, particularly the East Asian Growth Area. Thereafter,
the contract of [private respondent] was processed before the POEA on September 20,
1994.
OSM alleged further that the shipowner changed its plans on the use of the vessel.
Instead of using it for overseas trade, it decided to use it in the coastwise trade, thus,
the crewmembers hired never left the Philippines and were merely used by the
shipowner in the coastwise trade. Considering that the M/V Princess Hoa was a
foreign registered vessel and could not be used in the coastwise trade, the shipowner
converted the vessel to Philippine registry on September 28, 1994 by way of bareboat
chartering it out to another entity named Philippine Carrier Shipping Lines Co.
(PCSLC). To do this, the shipowner through Conrado V. Tendido had to terminate its
management agreement with x x x PC-SASCO on September 28, 1994 by a letter of
termination dated September 20, 1994. In the same letter of termination, the ship
owner stated that it has bareboat chartered out the vessel to said [PCSLC] and
converted it into Philippine registry. Consequently, x x x PC-SASCO terminated its
crew agreement with OSM in a letter dated December 5, 1994. Because of the
bareboat charter of the vessel to PCSLC and its subsequent conversion to Philippine
registry and use in coastwise trade as well as to the termination of the management
agreement and crew agency agreement, a termination of contract ensued whereby
PCSLC, the bareboat charterer, became the disponent owner/employer of the crew.
As a disponent owner/employer, PCSLC is now responsible for the payment of
complainants wages. x x x.
[5]

Labor Arbiter (LA) Manuel R. Caday rendered a Decision in favor of


Private Respondent Guerrero. Petitioner and its principal, Philippine Carrier
Shipping Agency Services, Co. (PC-SASCO), were ordered to jointly and
severally pay Guerrero his unpaid salaries and allowances, accrued fixed
overtime pay, vacation leave pay and termination pay. The Decision held that
there was a constructive dismissal of private respondent, since he had not
been paid his salary for seven months. It also dismissed petitioners contention
that there was a novation of the employment contract.
[6]

On appeal, the NLRC (Third Division) affirmed the LAs Decision, with a
modification as to the amount of liability. On January 28, 1999, petitioner filed
with the CA a Petition to set aside the NLRC judgment. The petition was
dismissed, because petitioner had allegedly failed to comply with the
requirements of Section 3 of Rule 46 of the Rules of Court. Specifically,
petitioner had attached to its Petition, not a duplicate original or a certified true
copy of the LAs Decision, but a mere machine copy thereof. Further, it had not
indicated the actual address of Private Respondent Fermin F. Guerrero.
[7]

[8]

Hence, this Petition.

[9]

The Issues
In its Memorandum, petitioner raises the following issues for the Courts
consideration:
1. Did not the Court of Appeals err in interpreting and applying the 1997 Rules when
it required as attachment to the Petition for Certiorari the duplicate original of another
Decision which is not-the subject of the said Petition?
2. Did not the Court of Appeals err in interpreting and applying the 1997 Rules when
it disregarded the subsequent compliance made by petitioner?
3. Did not the Court of Appeals err in interpreting and applying the 1997 Rules when
it did not consider the Notice to private respondent Guerrero through his counsel as
Notice to Guerrero himself?
[10]

The foregoing issues all refer to the question of whether, procedurally,


petitioner has complied with Section 3 of Rule 46 of the Rules of Court.
Additionally and in the interest of speedy justice, this Court will also resolve
the substantive issue brought before the CA: did the NLRC commit grave
abuse of discretion in ruling in favor of private respondent?
The Courts Ruling
While petitioner is procedurally correct, the case should nonetheless be
decided on the merits in favor of private respondent.
Procedural Issue:

Compliance with the Rules of Court


Petitioner puts at issue the proper interpretation of Section 3 of Rule 46 of
the Rules of Court. Specifically, was petitioner required to attach a certified
true copy of the LAs Decision to its Petition for Certiorari challenging the
NLRC judgment?
[11]

Section 3 of Rule 46 does not require that all supporting papers and
documents accompanying a petition be duplicate originals or certified true
copies. Even under Rule 65 on certiorari and prohibition, petitions need to be
accompanied only by duplicate originals or certified true copies of
the questioned judgment, order or resolution. Other relevant documents and
pleadings attached to it may be mere machine copies thereof. Numerous
decisions issued by this Court emphasize that in appeals under Rule 45 and
in original civil actions for certiorari under Rule 65 in relation to Rules 46 and
56, what is required to be certified is the copy of the questioned judgment,
final order or resolution. Since the LAs Decision was not the questioned
ruling, it did not have to be certified. What had to be certified was the NLRC
Decision. And indeed it was.
[12]

[13]

As to the alleged missing address of private respondent, the indication by


petitioner that Guerrero could be served with process care of his counsel was
substantial compliance with the Rules.
This Court has held that the sending of pleadings to a party is not
required, provided that the party is represented by counsel. This rule is
founded on considerations of fair play, inasmuch as an attorney of record is
engaged precisely because a party does not feel competent to deal with the
intricacies of law and procedure. Both jurisprudence and the basics of
procedure provide that when a party has appeared through counsel, service
is to be made upon the latter, unless the court specifically orders that it be
upon the party.
[14]

[15]

[16]

[17]

We also note that from the inception of the case at the LAs office, all
pleadings addressed to private respondent had always been sent to his
counsel, Atty. Danilo G. Macalino. Note that private respondent, who was
employed as a seaman, was often out of his home. The service of pleadings
and other court processes upon him personally would have been futile, as he
would not have been around to receive them.

This Court has repeatedly held that while courts should meticulously
observe the Rules, they should not be overly strict about procedural lapses
that do not impair the proper administration of justice. Rather, procedural
rules should be liberally construed to secure the just, speedy and inexpensive
disposition of every action and proceeding.
[18]

[19]

Substantive Issue:
Liability of Petitioner for Unpaid Salaries
It is worthwhile to note that what is involved in this case is the recovery of
unpaid salaries and other monetary benefits. The Court is mindful of the plight
of private respondent and, indeed, of workers in general who are seeking to
recover wages that are being unlawfully withheld from them. Such recovery
should not be needlessly delayed at the expense of their survival. This case is
now on its ninth year since its inception at the LAs office. Its remand to the CA
will only unduly delay its disposition. In the interest of substantial justice, this
Court will decide the case on the merits based upon the records of the case,
particularly those relating to the OSM Shipping Philippines Petition before the
CA.
[20]

On behalf of its principal, PC-SASCO, petitioner does not deny hiring


Private Respondent Guerrero as master mariner. However, it argues that
since he was not deployed overseas, his employment contract became
ineffective, because its object was allegedly absent. Petitioner contends that
using the vessel in coastwise trade and subsequently chartering it to another
principal had the effect of novating the employment contract. We are not
persuaded.
As approved by the Philippine Overseas Employment Agency (POEA),
petitioner was the legitimate manning agent of PC-SASCO. As such, it was
allowed to select, recruit, hire and deploy seamen on board the vessel M/V
Princess Hoa, which was managed by its principal, PC-SASCO. It was in this
capacity that petitioner hired private respondent as master mariner. They then
executed and agreed upon an employment contract.
[21]

[22]

An employment contract, like any other contract, is perfected at the


moment (1) the parties come to agree upon its terms; and (2) concur in the
essential elements thereof: (a) consent of the contracting parties, (b) object

certain which is the subject matter of the contract and (c) cause of the
obligation. Based on the perfected contract, Private Respondent Guerrero
complied with his obligations thereunder and rendered his services on board
the vessel. Contrary to petitioners contention, the contract had an object,
which was the rendition of service by private respondent on board the vessel.
The non-deployment of the ship overseas did not affect the validity of the
perfected employment contract. After all, the decision to use the vessel for
coastwise shipping was made by petitioner only and did not bear the written
conformity of private respondent. A contract cannot be novated by the will of
only one party. The claim of petitioner that it processed the contract of
private respondent with the POEA only after he had started working is also
without merit. Petitioner cannot use its own misfeasance to defeat his claim.
[23]

[24]

Petitioner, as manning agent, is jointly and severally liable with its


principal, PC-SASCO, for private respondents claim. This conclusion is in
accordance with Section 1 of Rule II of the POEA Rules and Regulations.
Joint and solidary liability is meant to assure aggrieved workers of
immediate and sufficient payment of what is due them. The fact that
petitioner and its principal have already terminated their agency agreement
does not relieve the former of its liability. The reason for this ruling was given
by this Court in Catan National Labor Relations Commission, which we
reproduce in part as follows:
[25]

[26]

[27]

[28]

This must be so, because the obligations covenanted in the [manning] agreement
between the local agent and its foreign principal are not coterminus with the term of
such agreement so that if either or both of the parties decide to end the agreement, the
responsibilities of such parties towards the contracted employees under the agreement
do not at all end, but the same extends up to and until the expiration of the,
employment contracts of the employees recruited and employed pursuant to the said
recruitment agreement. Otherwise, this will render nugatory the very purpose for
which the law governing the employment of workers for foreign jobs abroad was
enacted.
[29]

WHEREFORE, the assailed Resolutions are hereby SET ASIDE, and the
September 10, 1998 NLRC Decision REINSTATED and AFFIRMED. Costs
against petitioner.
SO ORDERED.

Puno, (Chairman), Sandoval-Gutierrez, and Carpio-Morales, JJ., concur.


Corona, J., on leave.

Republic of the Philippines


SUPREME COURT
Manila
SECOND DIVISION

G.R. No. 109583 September 5, 1997


TRANS ACTION OVERSEAS CORPORATION, petitioner,
vs.
THE HONORABLE SECRETARY OF LABOR, ROSELLE CASTIGADOR, JOSEFINA MAMON,
JENELYN CASA, PEACHY LANIOG, VERDELINA BELGIRA, ELMA FLORES, RAMONA
LITURCO, GRACE SABANDO, GLORIA PALMA, AVELYN ALVAREZ, CANDELARIA NONO, NITA
BUSTAMANTE, CYNTHIA ARANDILLO, SANDIE AGUILAR, DIGNA PANAGUITON, VERONICA
BAYOGOS, JULIANITA ARANADOR, LEONORA CABALLERO, NANCY BOLIVAR, NIMFA
BUCOL, ZITA GALINDO, ESTELITA BIOCOS, MARJORIE MACATE, RUBY SEPULVIDA,
ROSALIE SONDIA, NORA MAQUILING, PAULINA CORDERO, LENIROSE ABANGAN, SELFA
PALMA, ANTONIA NAVARRO, ELSIE PENARUBIA, IRMA SOBREQUIL, SONY JAMUAT, CLETA
MAYO,respondents.

ROMERO, J.:
The issue presented in the case at bar is whether or not the Secretary of Labor and Employment has
jurisdiction to cancel or revoke the license of a private fee-charging employment agency.
From July 24 to September 9, 1987, petitioner Trans Action Overseas Corporation, a private feecharging employment agency, scoured Iloilo City for possible recruits for alleged job vacancies in
Hongkong. Private respondents sought employment as domestic helpers through petitioner's
employees, Luzviminda Aragon, Ben Hur Domincil and his wife Cecille. The applicants paid
placement fees ranging from P1,000.00 to P14,000.00, but petitioner failed to deploy them. Their
demands for refund proved unavailing; thus, they were constrained to institute complaints against
petitioner for violation of Articles 32 and 34(a) 1 of the Labor Code, as amended.
Petitioner denied having received the amounts allegedly collected from respondents, and averred
that Aragon, whose only duty was to pre-screen and interview applicants, and the spouses Domincil
were not authorized to collect fees from the applicants. Accordingly, it cannot be held liable for the
money claimed by respondents. Petitioner maintains that it even warned respondents not to give any
money to unauthorized individuals.
POEA Regional Extension Unit Coordinator Edgar Somes testified that although he was aware that
petitioner collected fees from respondents, the latter insisted that they be allowed to make the
payments on the assumption that it could hasten their deployment abroad. He added that Mrs.
Honorata Manliclic, a representative of petitioner tasked to oversee the conduct of the interviews,
told him that she was leaving behind presigned receipts to Aragon as she cannot stay in Iloilo City
for the screening of the applicants. Manliclic, however, denied this version and argued that it was
Somes who instructed her to leave the receipts behind as it was perfectly alright to collect fees.
On April 5, 1991, then Labor Undersecretary Nieves R. Confesor rendered the assailed order, the
dispositive portion of which reads:
WHEREFORE, respondents are hereby ordered to pay, jointly and severally, the
following claims:
1. Rosele Castigador P14,000.00
2. Josefina Mamon 3,000.00
3. Jenelyn Casa 3,000.00
4. Peachy Laniog 13,500.00
5. Verdelina Belgira 2,000.00
6. Elma Flores 2,500.00
7. Ramona Liturco 2,500.00

8. Grace Sabando 3,500.00


9. Gloria Palma 1,500.00
10. Avelyn Alvarez 1,500.00
11. Candelaria Nono 1,000.00
12. Nita Bustamante 5,000.00
13. Cynthia Arandillo 1,000.00
14. Sandie Aguilar 3,000.00
15. Digna Panaguiton 2,500.00
16. Veronica Bayogos 2,000.00
17. Sony Jamuat 4,500.00
18. Irma Sobrequil 2,000.00
19. Elsie Penarubia 2,000.00
20. Antonia Navarro 2,000.00
21. Selfa Palma 3,000.00
22. Lenirose Abangan 13,300.00
23. Paulina Cordero 1,400.00
24. Nora Maquiling 2,000.00
25. Rosalie Sondia 2,000.00
26. Ruby Sepulvida 3,500.00
27. Marjorie Macate 1,500.00
28. Estelita Biocos 3,000.00
29. Zita Galindo 3,500.00
30. Nimfa Bucol 1,000.00
31. Nancy Bolivar 2,000.00

32. Leonora Caballero 13,900.00


33. Julianita Aranador 14,000.00
The complaints of Ma. Luz Alingasa, Nimfa Perez, and Cleta Mayo are hereby
dismissed in view of their desistance.
The following complaints are hereby dismissed for failure to appear/prosecute:
1. Jiyasmin Bantillo 6. Edna Salvante
2. Rosa de Luna Senail 7. Thelma Beltiar
3. Elnor Bandojo 8. Cynthia Cepe
4. Teresa Caldeo 9. Rosie Pavillon
5. Virginia Castroverde
The complaints filed by the following are hereby dismissed for lack of evidence:
1. Aleth Palomaria 5. Mary Ann Beboso
2. Emely Padrones 6. Josefina Tejero
3. Marybeth Aparri 7. Bernadita Aprong
4. Lenia Biona 8. Joji Lull
Respondent agency is liable for twenty eight (28) counts of violation of Article 32 and
five (5) counts of Article 34 (a) with a corresponding suspension in the aggregate
period of sixty six (66) months. Considering however, that under the schedule of
penalties, any suspension amounting to a period of 12 months merits the imposition
of the penalty of cancellation, the license of respondent TRANS ACTION
OVERSEAS CORPORATION to participate in the overseas placement and
recruitment of workers is hereby ordered CANCELLED, effective immediately.
SO ORDERED. 2 (Emphasis supplied)
On April 29, 1991, petitioner filed its Motion for Temporary Lifting of Order of Cancellation alleging,
among other things, that to deny it the authority to engage in placement and recruitment activities
would jeopardize not only its contractual relations with its foreign principals, but also the welfare,
interests, and livelihood of recruited workers scheduled to leave for their respective assignments.
Finally, it manifested its willingness to post a bond to insure payment of the claims to be awarded,
should its appeal or motion be denied.
Finding the motion to be well taken, Undersecretary Confesor provisionally lifted the cancellation of
petitioner's license pending resolution of its Motion for Reconsideration filed on May 6, 1991. On

January 30, 1992, however, petitioner's motion for reconsideration was eventually denied for lack of
merit, and the April 5, 1991, order revoking its license was reinstated.
Petitioner contends that Secretary; Confesor acted with grave abuse of discretion in rendering the
assailed orders on alternative grounds, viz.: (1) it is the Philippine Overseas Employment
Administration (POEA) which has the exclusive and original jurisdiction to hear and decide illegal
recruitment cases, including the authority to cancel recruitment licenses, or (2) the cancellation order
based on the 1987 POEA Schedule of Penalties is not valid for non-compliance with the Revised
Administrative Code of 1987 regarding its registration with the U.P. Law Center.
Under Executive Order No. 797 3 (E.O. No. 797) and Executive Order No. 247 (E.O. No. 247), 4 the
POEA was established and mandated to assume the functions of the Overseas Employment
Development Board (OEDB), the National Seamen Board (NSB), and the overseas employment function
of the Bureau of Employment Services (BES). Petitioner theorizes that when POEA absorbed the powers
of these agencies, Article 35 of the Labor Code, as amended, was rendered ineffective.
The power to suspend or cancel any license or authority to recruit employees for overseas
employment is vested upon the Secretary of Labor and Employment. Article 35 of the Labor Code,
as amended, which provides:
Art. 5. Suspension and/or Cancellation of License or Authority The Minister of
Labor shall have the power to suspend or cancel any license or authority to recruit
employees for overseas employment for violation of rules and regulations issued by
the Ministry of Labor, the Overseas Employment Development Board, and the
National Seamen Board, or for violation of the provisions of this and other applicable
laws, General Orders and Letters of Instructions.
In the case of Eastern Assurance and Surety Corp. v. Secretary of
Labor, 5 we held that:
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, 6 "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. 7

The Administrator was also given the power to "order the dismissal of the case of the
suspension of the license or authority of the respondent agency or contractor or
recommend to the Minister the cancellation thereof." 8 (Emphasis supplied)

This power conferred upon the Secretary of Labor and Employment was echoed in People
v. Diaz, 9 viz.:
A non-licensee or non-holder of authority means any person, corporation or entity
which has not been issued a valid license or authority to engage in recruitment and
placement by the Secretary of Labor, or whose license or authority has been
suspended, revoked or cancelled by the POEA or the Secretary. (Emphasis supplied)
In view of the Court's disposition on the matter, we rule that the power to suspend or cancel any
license or authority to recruit employees for overseas employment is concurrently vested with the
POEA and the Secretary of Labor.
As regards petitioner's alternative argument that the non-filing of the 1987 POEA Schedule of
Penalties with the UP Law Center rendered it ineffective and, hence, cannot be utilized as basis for
penalizing them, we agree with Secretary Confesor's explanation, to wit:
On the other hand, the POEA Revised Rules on the Schedule of Penalties was
issued pursuant to Article 34 of the Labor Code, as amended. The same merely
amplified and particularized the various violations of the rules and regulations of the
POEA and clarified and specified the penalties therefore (sic). Indeed, the questioned
schedule of penalties contains only a listing of offenses. It does not prescribe
additional rules and regulations governing overseas employment but only detailed
the administrative sanctions imposable by this Office for some enumerated prohibited
acts.
Under the circumstances, the license of the respondent agency was cancelled on the
authority of Article 35 of the Labor Code, as amended, and not pursuant to the 1987
POEA Revised Rules on Schedule of Penalties. 10
WHEREFORE, in view of the foregoing, the instant petition is hereby DISMISSED. Accordingly, the
decision of the Secretary of Labor dated April 5, 1991, is AFFIRMED. No costs.
SO ORDERED.
Regalado, Puno, Mendoza and Torres, Jr., JJ., concur.

Republic of the Philippines


SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 77279 April 15, 1988
MANUELA S. CATAN/M.S. CATAN PLACEMENT AGENCY, petitioners,
vs.

THE NATIONAL LABOR RELATIONS COMMISSION, PHILIPPINE OVERSEAS EMPLOYMENT


ADMINISTRATION and FRANCISCO D. REYES, respondents.
Demetria Reyes, Merris & Associates for petitioners.
The Solicitor General for public respondents.
Bayani G. Diwa for private respondent.

CORTES, J.:
Petitioner, in this special civil action for certiorari, alleges grave abuse of discretion on the part of the
National Labor Relations Commission in an effort to nullify the latters resolution and thus free
petitioner from liability for the disability suffered by a Filipino worker it recruited to work in Saudi
Arabia. This Court, however, is not persuaded that such an abuse of discretion was committed. This
petition must fail.
The facts of the case are quite simple.
Petitioner, a duly licensed recruitment agency, as agent of Ali and Fahd Shabokshi Group, a Saudi
Arabian firm, recruited private respondent to work in Saudi Arabia as a steelman.
The term of the contract was for one year, from May 15,1981 to May 14, 1982. However, the contract
provided for its automatic renewal:
FIFTH: The validity of this Contract is for ONE YEAR commencing from the date the
SECOND PARTY assumes hill port. This Contract is renewable automatically if
neither of the PARTIES notifies the other PARTY of his wishes to terminate the
Contract by at least ONE MONTH prior to the expiration of the contractual period.
[Petition, pp. 6-7; Rollo, pp. 7-8].
The contract was automatically renewed when private respondent was not repatriated by his Saudi
employer but instead was assigned to work as a crusher plant operator. On March 30, 1983, while
he was working as a crusher plant operator, private respondent's right ankle was crushed under the
machine he was operating.
On May 15, 1983, after the expiration of the renewed term, private respondent returned to the
Philippines. His ankle was operated on at the Sta. Mesa Heights Medical Center for which he
incurred expenses.
On September 9, 1983, he returned to Saudi Arabia to resume his work. On May 15,1984, he was
repatriated.
Upon his return, he had his ankle treated for which he incurred further expenses.

On the basis of the provision in the employment contract that the employer shall compensate the
employee if he is injured or permanently disabled in the course of employment, private respondent
filed a claim, docketed as POEA Case No. 84-09847, against petitioner with respondent Philippine
Overseas Employment Administration. On April 10, 1986, the POEA rendered judgment in favor of
private respondent, the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered in favor of the complainant and against
the respondent, ordering the latter to pay to the complainant:
1. SEVEN THOUSAND NINE HUNDRED EIGHTY-FIVE PESOS and 60/100
(P7,985.60), Philippine currency, representing disability benefits;
2. TWENTY-FIVE THOUSAND NINETY-SIX Philippine pesos and 20/100 (29,096.20)
representing reimbursement for medical expenses;
3. Ten percent (10%) of the abovementioned amounts as and for attorney's fees.
[NLRC Resolution, p. 1; Rollo, p. 16].
On appeal, respondent NLRC affirmed the decision of the POEA in a resolution dated December 12,
1986.
Not satisfied with the resolution of the POEA, petitioner instituted the instant special civil action for
certiorari, alleging grave abuse of discretion on the part of the NLRC.
1. Petitioner claims that the NLRC gravely abused its discretion when it ruled that petitioner was
liable to private respondent for disability benefits since at the time he was injured his original
employment contract, which petitioner facilitated, had already expired. Further, petitioner disclaims
liability on the ground that its agency agreement with the Saudi principal had already expired when
the injury was sustained.
There is no merit in petitioner's contention.
Private respondents contract of employment can not be said to have expired on May 14, 1982 as it
was automatically renewed since no notice of its termination was given by either or both of the
parties at least a month before its expiration, as so provided in the contract itself. Therefore, private
respondent's injury was sustained during the lifetime of the contract.
A private employment agency may be sued jointly and solidarily with its foreign principal for
violations of the recruitment agreement and the contracts of employment:
Sec. 10. Requirement before recruitment. Before recruiting any worker, the private
employment agency shall submit to the Bureau the following documents:
(a) A formal appointment or agency contract executed by a foreign-based employer
in favor of the license holder to recruit and hire personnel for the former ...
xxx xxx xxx

2. Power of the agency to sue and be sued jointly and solidarily with
the principal or foreign-based employer for any of the violations of the
recruitment agreement and the contracts of employment. [Section
10(a) (2) Rule V, Book I, Rules to Implement the Labor Code].
Thus, in the recent case of Ambraque International Placement & Services v. NLRC [G.R. No. 77970,
January 28,1988], the Court ruled that a recruitment agency was solidarily liable for the unpaid
salaries of a worker it recruited for employment in Saudi Arabia.
Even if indeed petitioner and the Saudi principal had already severed their agency agreement at the
time private respondent was injured, petitioner may still be sued for a violation of the employment
contract because no notice of the agency agreement's termination was given to the private
respondent:
Art 1921. If the agency has been entrusted for the purpose of contra with specified
persons, its revocation shall not prejudice the latter if they were not given notice
thereof. [Civil Code].
In this connection the NLRC elaborated:
Suffice it to state that albeit local respondent M. S. Catan Agency was at the time of
complainant's accident resulting in his permanent partial disability was (sic) no longer
the accredited agent of its foreign principal, foreign respondent herein, yet its
responsibility over the proper implementation of complainant's employment/service
contract and the welfare of complainant himself in the foreign job site, still existed,
the contract of employment in question not having expired yet. This must be so,
because the obligations covenanted in the recruitment agreement entered into by
and between the local agent and its foreign principal are not coterminus with the
term of such agreement so that if either or both of the parties decide to end the
agreement, the responsibilities of such parties towards the contracted employees
under the agreement do not at all end, but the same extends up to and until the
expiration of the employment contracts of the employees recruited and employed
pursuant to the said recruitment agreement. Otherwise, this will render nugatory the
very purpose for which the law governing the employment of workers for foreign jobs
abroad was enacted. [NLRC Resolution, p. 4; Rollo, p. 18]. (Emphasis supplied).
2. Petitioner contends that even if it is liable for disability benefits, the NLRC gravely abused its
discretion when it affirmed the award of medical expenses when the said expenses were the
consequence of private respondent's negligence in returning to work in Saudi Arabia when he knew
that he was not yet medically fit to do so.
Again, there is no merit in this contention.
No evidence was introduced to prove that private respondent was not medically fit to work when he
returned to Saudi Arabia. Exhibit "B", a certificate issued by Dr. Shafquat Niazi, the camp doctor, on
November 1, 1983, merely stated that private respondent was "unable to walk properly, moreover he
is still complaining [of] pain during walking and different lower limbs movement" [Annex "B", Reply;
Rollo, p. 51]. Nowhere does it say that he was not medically fit to work.

Further, since petitioner even assisted private respondent in returning to work in Saudi Arabia by
purchasing his ticket for him [Exhibit "E"; Annex "A", Reply to Respondents' Comments], it is as if
petitioner had certified his fitness to work. Thus, the NLRC found:
Furthermore, it has remained unrefuted by respondent that complainant's
subsequent departure or return to Saudi Arabia on September 9, 1983 was with the
full knowledge, consent and assistance of the former. As shown in Exhibit "E" of the
record, it was respondent who facilitated the travel papers of complainant. [NLRC
Resolution, p. 5; Rollo, p. 19].
WHEREFORE, in view of the foregoing, the petition is DISMISSED for lack of merit, with costs
against petitioner.
SO ORDERED.
Fernan, (Chairman), Gutierrez, Jr., Feliciano and Bidin, JJ., concur.

Republic of the Philippines


SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 78085 October 16, 1989
ROYAL CROWN INTERNATIONALE, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSI0N and VIRGILIO P. NACIONALES, respondents.
Ceferino Padua Law Office for petitioner.
Acosta & Rico Law Offices for private respondent.

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

WHEREFORE, judgment is hereby rendered in favor of the complainant and against


respondents, ordering the latter to pay, jointly and severally, to complainant the
following amounts:
1. TWO THOUSAND SIX HUNDRED FORTY US DOLLARS (US$2,640.00) or its
equivalent in Philippine currency at the time of payment, representing the salaries
corresponding to the unexpired portion of complainant's contract;
2. SIX HUNDRED US DOLLARS (US$ 600.00) less partial payment of FIVE
HUNDRED FIFTY-EIGHT SAUDI RIYALS (SR558), or its equivalent in Philippine
currency at the time of actual payment, representing the unpaid balance of
complainant's vacation pay;
3. THREE HUNDRED FIFTY US DOLLARS (US$350.00) or its equivalent in
Philippine currency at the time of actual payment representing reimbursement of
salary deductions for return travel fund;
4. Ten percent (10%) of the above-stated amounts, as and for attorney's fees.
Complainant's claim for legal and transportation expenses are hereby DISMISSED
for lack of merit.
SO ORDERED.
[POEA Decision, p. 5; Rollo, p. 34.]
On July 18, 1986, petitioner filed thru its new counsel a motion for reconsideration which was treated
as an appeal to the NLRC by the POEA. Petitioner alleged that the POEA erred in holding it
solidarity liable for ZAMEL's violation of private respondent's service agreement even if it was not a
party to the agreement.
In a resolution promulgated on December 11, 1986, the NLRC affirmed the POEA decision, holding
that, as a duly licensed private employment agency, petitioner is jointly and severally liable with its
foreign principal ZAMEL for all claims and liabilities which may arise in connection with the
implementation of the employment contract or service agreement [NLRC Decision, pp. 3-4; Rollo,
pp. 26-27].
On March 30, 1987, the NLRC denied for lack of merit petitioner's motion for reconsideration.
Hence, petitioner filed the present petition captioned as "Petition for Review".
At this point, it is not amiss to note that the filing of a "Petition for Review" under Rule 45 of the
Rules of Court is not the proper means by which NLRC decisions are appealed to the Supreme
Court. It is only through a petition for certiorari under Rule 65 that NLRC decisions may be reviewed
and nullified on the grounds of lack of jurisdiction or grave abuse of discretion amounting to lack or
excess of jurisdiction. Nevertheless, in the interest of justice, this Court opted to treat the instant
petition as if it were a petition for certiorari. Thus, after the filing of respondents' comments,

petitioner's joint reply thereto, and respondents' rejoinders, the Court resolved to consider the issues
joined and the case submitted for decision.
The case at bar involves two principal issues, to wit:
I. Whether or not petitioner as a private employment agency may be held jointly and
severally liable with the foreign-based employer for any claim which may arise in
connection with the implementation of the employment contracts of the employees
recruited and deployed abroad;
II. Whether or not sufficient evidence was presented by petitioner to establish the
termination of private respondent's employment for just and valid cause.
I.
Petitioner contends that there is no provision in the Labor Code, or the omnibus rules implementing
the same, which either provides for the "third-party liability" of an employment agency or recruiting
entity for violations of an employment agreement performed abroad, or designates it as the agent of
the foreign-based employer for purposes of enforcing against the latter claims arising out of an
employment agreement. Therefore, petitioner concludes, it cannot be held jointly and severally liable
with ZAMEL for violations, if any, of private respondent's service agreement.
Petitioner's conclusion is erroneous. Petitioner conveniently overlooks the fact that it had voluntarily
assumed solidary liability under the various contractual undertakings it submitted to the Bureau of
Employment Services. In applying for its license to operate a private employment agency for
overseas recruitment and placement, petitioner was required to submit, among others, a document
or verified undertaking whereby it assumed all responsibilities for the proper use of its license
and the implementation of the contracts of employment with the workers it recruited and deployed for
overseas employment [Section 2(e), Rule V, Book 1, Rules to Implement the Labor Code (1976)]. It
was also required to file with the Bureau a formal appointment or agency contract executed by the
foreign-based employer in its favor to recruit and hire personnel for the former, which contained a
provision empowering it to sue and be sued jointly and solidarily with the foreign principal for any of
the violations of the recruitment agreement and the contracts of employment [Section 10 (a) (2),
Rule V, Book I of the Rules to Implement the Labor Code (1976)]. Petitioner was required as well to
post such cash and surety bonds as determined by the Secretary of Labor to guarantee compliance
with prescribed recruitment procedures, rules and regulations, and terms and conditions of
employment as appropriate [Section 1 of Pres. Dec. 1412 (1978) amending Article 31 of the Labor
Code].
These contractual undertakings constitute the legal basis for holding petitioner, and other private
employment or recruitment agencies, liable jointly and severally with its principal, the foreign-based
employer, for all claims filed by recruited workers which may arise in connection with the
implementation of the service agreements or employment contracts [See Ambraque International
Placement and Services v. NLRC, G.R. No. 77970, January 28, 1988, 157 SCRA 431; Catan v.
NLRC, G.R. No. 77279, April 15, 1988, 160 SCRA 691; Alga Moher International Placement
Services v. Atienza, G.R. No. 74610, September 30, 1988].
In a belated attempt to bolster its position, petitioner contends in its joint reply that the omnibus rules
implementing the Labor Code are invalid for not having been published in the Official Gazette

pursuant to the Court's pronouncements in the cases of Tanada v. Tuvera [G.R. No. 63915, April 25,
1985, 136 SCRA 27; December 29, 1986, 146 SCRA 446]. Petitioner further contends that the 1985
POEA Rules and Regulations, in particular Section 1, Rule I of Book VII ** quoted in the NLRC decision, should
not have been retroactively applied to the case at bar.

But these contentions are irrelevant to the issues at bar. They proceed from a misapprehension of
the legal basis of petitioner's liabilities as a duly licensed private employment agency. It bears
repeating that the basis for holding petitioner jointly and severally liable with the foreign-based
employer ZAMEL is the contractual undertakings described above which it had submitted to the
Bureau of Employment Services. The sections of the omnibus rules implementing the Labor Code
cited by this Court merely enumerate the various documents or undertakings which were submitted
by petitioner as applicant for the license to operate a private employment agency for overseas
recruitment and placement. These sections do not create the obligations and liabilities of a private
employment agency to an employee it had recruited and deployed for work overseas. It must be
emphasized again that petitioner assumed the obligations and liabilities of a private employment
agency by contract. Thus, whether or not the omnibus rules are effective in accordance with Tanada
v. Tuvera is an issue the resolution of which does not at all render nugatory the binding effect upon
petitioner of its own contractual undertakings.
The Court, consequently, finds it unnecessary to pass upon both the implications of Tanada v.
Tuvera on the omnibus rules implementing the Labor Code as well as the applicability of the 1985
POEA Rules and Regulations.
Petitioner further argues that it cannot be held solidarily liable with ZAMEL since public respondent
had not acquired jurisdiction over ZAMEL through extra-territorial service of summons as mandated
by Section 17, Rule 14 of the Rules of Court.
This argument is untenable. It is well-settled that service upon any agent of a foreign corporation,
whether or not engaged in business in the Philippines, constitutes personal service upon that
corporation, and accordingly, judgment may be rendered against said foreign corporation [Facilities
Management Corporation v. De la Osa, G.R. No. L-38649, March 26, 1979, 89 SCRA 131]. In the
case at bar, it cannot be denied that petitioner is an agent of ZAMEL. The service agreement was
executed in the Philippines between private respondent and Milagros G. Fausto, the General
Manager of petitioner, for and in behalf of ZAMEL [Annex "D" of Petition, p. 3; Rollo, p. 37].
Moreover, one of the documents presented by petitioner as evidence, i.e., the counter-affidavit of its
General Manager Ms. Fausto, contains an admission that it is the representative and agent of
ZAMEL [SeeParagraph No. 1 of Annex "H" of Petition; Rollo. p. 43].
Considering the foregoing, the Court holds that the NLRC committed no grave abuse of discretion
amounting to lack or excess of jurisdiction in declaring petitioner jointly and severally liable with its
foreign principal ZAMEL for all claims which have arisen in connection with the implementation of
private respondent's employment contract.
II.
Petitioner asserts that the NLRC failed to consider the overwhelming evidence it had presented
before the POEA which establishes the fact that private respondent was terminated for just and valid
cause in accordance with his service agreement with ZAMEL.

This assertion is without merit. The NLRC upheld the POEA finding that petitioner's evidence was
insufficient to prove termination from employment for just and valid cause. And a careful study of the
evidence thus far presented by petitioner reveals to this Court that there is legal basis for public
respondent's conclusion.
It must be borne in mind that the basic principle in termination cases is that the burden of proof rests
upon the employer to show that the dismissal is for just and valid cause, and failure to do so would
necessarily mean that the dismissal was not justified and, therefore, was illegal [Polymedic General
Hospital v. NLRC, G.R. No. 64190, January 31, 1985,134 SCRA 420; and also Article 277 of the
Labor Code]. And where the termination cases involve a Filipino worker recruited and deployed for
overseas employment, the burden naturally devolves upon both the foreign-based employer and the
employment agency or recruitment entity which recruited the worker, for the latter is not only the
agent of the former, but is also solidarily liable with its foreign principal for any claims or liabilities
arising from the dismissal of the worker.
In the case at bar, petitioner had indeed failed to discharge the burden of proving that private
respondent was terminated from employment for just and valid cause. Petitioner's evidence
consisted only of the following documents:
(1) A letter dated May l5, 1984 allegedly written by an official of ZAMEL, stating that a
periodic evaluation of the entire staff was conducted; that the personnel concerned
were given a chance to improve; that complainant's performance was found below
par; and that on February 13,1984, at about 8:30 AM, complainant was caught on the
way out of the office to look for another job during office hours without the permission
of his supervisor;
(2) A telex message allegedly sent by employees of ZAMEL, stating that they have
not experienced maltreatment, and that the working conditions (in ZAMEL) are good;
(3) The signatures of fifteen (15) persons who allegedly sent the telex message;
(4) A receipt dated February 16, 1984 signed by complainant, stating that he was
paid SR915 representing his salary and SR558, representing vacation pay for the
month of February 1984;
(5) The counter-affidavit of Milagros G. Fausto, the General Manager of Royal
Crown, stating that complainant was dismissed because of poor performance, acts of
dishonesty and misconduct, and denying complainant's claim that his salary and
leave pay were not paid, and that he was maltreated [See POEA Decision, p. 3;
Rollo, p. 32, See also Annexes "E", "F", "F-1 ", "G" and "H" of Petition; Rollo, pp. 3843].
Certainly, the telex message supposedly sent by the employees of ZAMEL is not relevant in the
determination of the legality of private respondent's dismissal. On the other hand, the receipt signed
by private respondent does not prove payment to him of the salary and vacation pay corresponding
to the unexpired portion of his contract.
More importantly, except for its allegation that private respondent was caught on February 13,1984
on his way out of the office compound without permission, petitioner had failed to allege and to prove

with particularity its charges against private respondent. The letter dated May 15, 1984 allegedly
written by the Actg. Project Architect and the counter-affidavit of petitoner's General Manager merely
stated that the grounds for the employee's dismissal were his unsatisfactory performance and
various acts of dishonesty, insubordination and misconduct. But the particular acts which would
indicate private respondent's incompetence or constitute the above infractions were neither specified
nor described therein. In the absence of any other evidence to substantiate the general charges
hurled against private respondent, these documents, which comprise petitioner's evidence in chief,
contain empty and self-serving statements insufficient to establish just and valid cause for the
dismissal of private respondent [See Euro-Lines, Phils., Inc. v. NLRC, G.R. No. 75782, December 1,
1987,156 SCRA 78; Ambraque International Placement and Services v. NLRC, supra].
The Court is aware of the document attached in petitioner's manifestation and joint reply which is
purportedly a xerox copy of a statement executed on December 13, 1987 in Saudi Arabia by private
respondent claiming that the latter had settled the case with ZAMEL and had "received all [his]
benefits that is salary, vacation pay, severance pay and all other bonuses before [he] left the
kingdom of Saudi Arabia on 13 Feb. 1984 and hereby indemnify [ZAMEL] from any claims or
liabilities, [he] raised in the Philippine Courts" [Annex "A" of petitioner's Manifestation with Motion to
hold in Abeyance; Rollo, p. 82. And also Annex "A" of petitioner's Joint Reply; Rollo, p. 111].
But the veracity of the contents of the document is precisely disputed by private respondent. He
claims that he was made to sign the above statement against his will and under threat of deportation
[See Telex of private respondent received by the Supreme Court of the Philippines on January
14,1988; Rollo, p. 83. And also private respondent's Rejoinder, pp. 1-3; Rollo, pp. 139-141].
Petitioner finally contends that inasmuch as clause no. 13 of the service agreement provided that the
law under which the agreement shall be regulated was the laws of Saudi Arabia [Annex "D" of
Petition, p. 2; Rollo, p. 36], public respondent should have taken into account the laws of Saudi
Arabia and the stricter concept of morality availing in that jurisdiction for the determination of the
legality of private respondent's dismissal.
This contention is patently erroneous. The provisions of the Labor Code of the Philippines, its
implementing rules and regulations, and doctrines laid down in jurisprudence dealing with the
principle of due process and the basic right of all Filipino workers to security of tenure, provide the
standard by which the legality of the exercise by management of its prerogative to dismiss
incompetent, dishonest or recalcitrant employees, is to be determined. Whether employed locally or
overseas, all Filipino workers enjoy the protective mantle of Philippine labor and social legislation,
contract stipulations to the contrary notwithstanding. This pronouncement is in keeping with the
basic public policy of the State to afford protection to labor, promote full employment, ensure equal
work opportunities regardless of sex, race or creed, and regulate the relations between workers and
employers. For the State assures the basic rights of all workers to self-organization, collective
bargaining, security of tenure, and just and humane conditions of work [Article 3 of the Labor Code
of the Philippines; See also Section 18, Article II and Section 3, Article XIII, 1987 Constitution]. This
ruling is likewise rendered imperative by Article 17 of the Civil Code which states that laws "which
have for their object public order, public policy and good customs shall not be rendered ineffective by
laws or judgments promulgated, or by determination or conventions agreed upon in a foreign
country."
Needless to say, the laws of Saudi Arabia which were, incidentally, neither pleaded nor proved by
petitioner, have absolutely no bearing whatsoever to the case at bar.

The Court holds, therefore, that the NLRC committed no grave abuse of discretion amounting to lack
or excess of jurisdiction in upholding the POEA's finding of insufficiency of evidence to prove
termination for just and valid cause.
WHEREFORE, the Court Resolved to DISMISS the instant petition.
SO ORDERED.
Fernan, C.J., Feliciano and Bidin, JJ., concur
Gutierrez, Jr., J., is on leave.

FIRST DIVISION
[G.R. Nos. 115150-55. September 27, 1996]

PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs. REYDANTE


CALONZO Y AMBROSIO, accused-appellant.
DECISION
BELLOSILLO, J.:
REYDANTE CALONZO Y AMBROSIO was charged with Illegal Recruitment in
Large Scale and five (5) counts of Estafa by Bernardo Miranda, Danilo de los
Reyes, Elmer Clamor,Belarmino Torregrosa and Hazel de Paula. On 5 April 1994 the
Regional Trial Court of Pasig found the accused guilty as charged and sentenced -

1. In Criminal Case No. 98850 for Estafa, to suffer an indeterminate prison term of
eleven (11) years, eleven (11) months and eleven (11) days of prision mayor to fifteen
(15) years, eight (8) months and twenty-one (21) days of reclusion temporal, to
reimburse the complainant-victim Bernardo Miranda in the amount of P120,000.00
and to pay the costs.
2. In Criminal Case No. 98851 for Estafa, to suffer an indeterminate prison term of
eleven (11) years, eleven (11) months and eleven (11) days of prision mayor to fifteen
(15) years, eight (8) months and twenty-

one (21) days of reclusion temporal, to reimburse the complainant-victim Danilo de


los Reyes in the amount of P120,000.00 and to pay the costs.
3. In Criminal Case No. 98852 for Estafa, to suffer an indeterminate prison term of
eleven (11) years, eleven (11) months and eleven (11) days of prision mayor to fifteen
(15) years, eight (8) months and twenty-one (21) days of reclusion temporal, to
reimburse the complainant-victim Elmer Clamor in the amount of P120,000.00 and to
pay the costs.
4. In Criminal Case No. 98853 for Estafa, to suffer an indeterminate prison term of
nine (9) years, eleven (11) months and eleven (11) days of prision mayor to thirteen
(13) years, eight (8) months and twenty-one (21) days of reclusion temporal, to
reimburse the complainant-victim Belarmino Torregrosa in the amount
of P100,000.00 and to pay the costs.
5. In Criminal Case No. 98854 for Estafa, to suffer an indeterminate prison term of
eleven (11) years, eleven (11) months and eleven (11) days of prision mayor to fifteen
(15) years, eight (8) months and twenty-one (21) days of reclusion temporal, to
reimburse the complainant-victim Hazel de Paula in the amount of P120,000.00 and to
pay the costs.
6. In Criminal Case No. 98855 for Illegal Recruitment (Large Scale), to suffer the
penalty of life imprisonment, to pay a fine of One Hundred Thousand Pesos
(P100,000.00) and to pay the costs.
In the successive service of his sentences, the accused shall be credited in full with the
period of his preventive imprisonment.
The above terms shall also be subject to the application of the Three-Fold Rule. [1]
Accused-appellant in this appeal assails his conviction by the trial court. He claims
that the court below erred in disregarding the testimony of Nenita Mercado, an
employee of the Philippine Overseas Employment Administration (POEA), who
categorically stated that their records indicated that Calonzo never processed
complainants' applications for employment abroad. He concludes from that fact alone
that he cannot be deemed to have engaged in the recruitment of workers for
employment abroad.
As regards the estafa cases, accused-appellant contends that the court a quo erred
in giving credence to the testimonies of prosecution witnesses considering that the

amounts claimed to have been collected by him did not correspond to the amounts
indicated in the receipts presented by the complaining witnesses.
The antecedents: Sometime in February 1992 Danilo de los Reyes and his brotherin-law Belarmino Torregrosa met Reydante Calonzo in the house of Loreta Castaeda
at No. 10 P. Burgos Street, Pasig, Metro Manila. In that meeting Calonzo lost no time in
informing them that he could provide them employment abroad, particularly Italy, for a
fee. Calonzo was so glib and persuasive that De los Reyes and Torregrosa were quickly
convinced to cast their lot with him. Upon returning home they took stock of their assets
and resources and came up with the figures sufficient for the processing of their
applications for employment abroad. Two months after their initial meeting, or on 13
April 1992, De los Reyes gave Calonzo P50,000.00. He also pledged the Ford Fiera of
his brother-in-law to Calonzo for P70,000.00 in order to come up with the P120,000.00
processing fee imposed by Calonzo. The latter then informed De los Reyes of his
"scheduled" departure for Italy on 29 April 1992. However, despite the lapse of the
period, De los Reyes and Torregrosa remained in the Philippines although their recruiter
reiterated his promise to send them to Italy.
On 1 May 1992, instead of sending them to Italy, they were billeted at Aloha Hotel
along Roxas Boulevard. The following day, or on 2 May 1992, they boarded a plane that
was supposed to take them to Italy. But Calonzo had another destination in
mind. They landed in Bangkok instead where their visas for Italy, according to Calonzo,
would be processed. They stayed at P.S. Guest Hotel for one and a half months. While
in Bangkok the accused again collected money from them purportedly to defray the
expenses for their visas. They also incurred expenses for food and accommodation,
and for overstaying, De los Reyes had to pay 2800 bahts to the immigration authorities
only to discover to their utter dismay that Calonzo had already returned to
the Philippines.
In their helplessness in a foreign land they sought the help of Loreta Castaeda by
calling her up in Manila. Castaeda promptly fetched them from Bangkok and brought
them back to thePhilippines. The day following their arrival they went to the office of
Calonzo on Padre Faura. Despite their frustrations in Bangkok Calonzo still insisted that
he would send them to Italy as he promised. In their naivet which was no match to the
unmitigated audacity of Calonzo, De los Reyes and Torregrosa still clung to the
promises of Calonzo hoping against hope that the latter would still fulfill them. However
the promises remained unfulfilled so they looked again for Calonzo. But this time their
quarry had already absconded.
They verified from the POEA whether Calonzo or his R. A. C. Business Agency was
duly authorized and licensed to recruit people for employment abroad. The POEA
certified that R. A. C. Business Agency was not licensed to recruit workers for overseas
employment.

Torregrosa substantiated the above account. He testified that he gave Calonzo a


total
of P100,000.00. On
cross-examination however
he stated that he gave such amount on 27 April 1992 and not on 13 April 1992 as
testified to by De los Reyes. But the date appearing on the receipt marked Exhibit A is
13 April 1992. Torregrosa also claimed that while in Bangkok he gave Calonzo an
additional amount of US$100.00.
On her part, Hazel de Paula testified that she first met appellant and the other
complainants at the house of Loreta Castaeda at No. 10 P. Burgos Street, Pasig, Metro
Manila.Convinced that she would eventually be employed in Italy as a domestic helper
she gave Calonzo P120,000.00. Unlike the other complaining witnesses, she was not
able to fly to Bangkok on 2 May 1992 as her passport was not yet available. She left
only on 6 May 1992 where she was met by Calonzo at the airport and brought to
the P.S. Guest Hotel where her companions who had arrived earlier were already
billeted. She said that while in Bangkok Calonzo asked money again from her.
Elmer Clamor, a 28-year old resident of Gen. Trias, Cavite, was similarly situated
with Hazel de Paula. Clamor narrated that he gave Calonzo P120,000.00 for the
latter's commitment to send him to Italy, and in fact while in Bangkok he gave Calonzo
US$250.00 more.
Bernardo Miranda, a construction worker from Talisay, Batangas, was another
victim of Calonzo. Lured by the latter's assurances that he would be sent to Italy, he
gave Calonzo a total of P120,000.00 for the processing of his application for work in
Italy. But, like all the rest of them, Miranda only reached Bangkok. The promised job, his
hard-earned money and Calonzo himself eventually disappeared.
Senior Labor Employment Officer Nenita Mercado of the POEA confirmed that
neither Reydante Calonzo nor his R. A. C. Business Agency was authorized to recruit
workers for employment abroad.
Reydante Calonzo tells us his own story. He admits being engaged in the
consultancy business through his R. A. C. Business Agency but denies any involvement
in recruitment activities. He admits knowing Loreta Castaeda and Leticia Solis as the
two have sought his assistance regarding their real estate business. He denies knowing
the complaining witnesses except Danilo de los Reyes and Belarmino Torregrosa who
once visited him in his office. While he disclaims the receipts presented by the
prosecution as official receipts of his R. A. C. Business Agency he admits that
the signatures thereon were similar to his.
We frustrate the expectations of the accused. Article 13, par. (b), of the Labor Code
defines recruitment and placement as -

(A)ny act of canvassing, enlisting, contracting, transporting, utilizing, hiring or


procuring workers, and includes referrals, contract services, promising or advertising
for employment, locally or abroad, whether for profit or not; Provided, that any person
or entity which, in any manner, offers or promises for a fee employment to two or
more persons shall be deemed engaged in recruitment and placement.
Illegal recruitment is specifically defined in Art. 38 of the Code thus -

(a) Any recruitment activities, including the prohibited practices enumerated under
Article 34 of this Code, to be undertaken by non-licensees or non-holders of authority
shall be deemed illegal and punishable under Article 39 of this Code x x x x
(b) Illegal recruitment when committed by a syndicate or in large scale shall be
considered an offense involving economic sabotage and shall be penalized in
accordance with Article 39 hereof.
Illegal recruitment is deemed committed by a syndicate if carried out by a group of
three (3) or more persons conspiring and/or confederating with one another in
carrying out any unlawful or illegaltransaction, enterprise or scheme defined under the
first paragraph hereof. Illegal recruitment is deemed committed in large scale if
committed against three (3) or more persons individually or as a group.
All the five (5) complaining witnesses met each other for the first time at the house
of Loreta Castaeda. They were not in any way acquainted with one another prior to that
meeting save for Danilo de los Reyes and his brother-in-law Belarmino
Torregrosa. They all came from different places, yet, they were all united in pointing to
the Calonzo as the person who enticed them to apply for employment abroad. Of
course, Calonzo could not explain what motivated the complaining witnesses to file
these cases against him. The most that Calonzo could do on the witness stand was to
deny all the charges against him. Alas, his denial is at most lame and cannot prevail
over the positive assertions of the complaining witnesses. In People v. Villafuerte[2] we
ruled -

x x x The absence of evidence as to an improper motive actuating the principal


witnesses of the prosecution strongly tends to sustain no improper motive existed and
their testimony is worthy of full faith and credit. Accused-appellant's denial cannot
prevail over the positive assertions of complainants who had no motive to testify
falsely against her except to tell the truth.
Illegal recruitment in large scale is committed when a person "(a) undertakes any
recruitment activity defined under Article 13(b) or any prohibited practice enumerated

under Article 34 of the Labor Code; (b) does not have a license or authority to lawfully
engage
in
the
recruitment and placement of workers; and (c) commits the same
against three or more persons,individually or as a group."[3] The
testimony
of
complainants
evidently
showed
that
Calonzo
was
engaged
in recruitment activities in large scale. Firstly, he deluded complainants into believing
that jobs awaited them in Italy by distinctly impressing upon them that he had the facility
to send them for work abroad. He even showed them his passport to lend credence to
his claim. To top it all, he brought them to Bangkok and not to
Italy. Neither did he have any arrangements in Bangkok for the transfer of his recruits to
Italy. Secondly, POEA likewise certified that neither Calonzo nor R. A. C. Business
Agency was licensed to recruit workers for employment abroad. Appellant admitted this
fact himself. Thirdly, appellant recruited five (5) workers thus making the crime illegal
recruitment in large scale constituting economic sabotage.
In his attempt to exculpate himself, although belatedly, Calonzo denies having
received money from the complainants. But as against their positive testimonies, this
denial of appellant is worthless and at most self-serving. All the complaining witnesses
testified that they gave their money to Calonzo through Loreta Castaeda who in turn
gave the amounts to Calonzo in their presence. In support thereof complainants even
presented receipts issued by the R. A. C. Business Agency with Calonzo's signature
affixed thereon. Nobody corroborated Calonzo's denial.Even Loreta who could have
confirmed such denial testified that all the amounts given by the complainants were
turned over by her to Calonzo. The attempt of the defense at reinforcing such denial
proved futile when it presented Carmeo Alix to testify that appellant owned another
import-export business as it had no relevance to his defense.
As regards the conviction of Calonzo for estafa on five (5) counts we ruled
in People v. Turda[4] that recruitment of persons for overseas employment without the
necessary recruiting permit or authority from the POEA constitutes illegal
recruitment; however, where some other crimes or felonies are committed in the
process, conviction under the Labor Code does notpreclude punishment under other
statutes. In People v. Romero[5] we said that the elements of estafa were: (a) that the
accused defrauded another by abuse of confidence or by means of deceit, and (b) that
damage or prejudice capable of pecuniary estimation is caused to the offended party or
third person. Corollarily, Art. 315 of the Revised Penal Code provides for its penalty thus
-

1st. The penalty of prision correccional in its maximum period to prision mayor in its
minimum period, if the amount of the fraud is over P12,000 but does not
exceed P22,000, and if such amount exceeds the latter sum, the penalty provided in
this paragraph shall be imposed in its maximum period, adding one year for each
additional P10,000; but the total penalty which may be imposed shall not exceed
twenty years. In such a case, and in connection with the accessory penalties which

may be imposed and for the purpose of the other provisions of this Code, the penalty
shall be termed prision mayor or reclusion temporal, as the case may be.
In the case before us, we are convinced that Calonzo defrauded complainants
through deceit. They were obviously misled into believing that he could provide them
employment in Italy.As a result, the five (5) complainants who desperately wanted to
augment their income and improve their lot parted with their hard-earned money. In
Crim. Cases Nos. 98850, 98851, 98852 and 98854 the amount defrauded of each
complainant was P120,000.00. In consonance with Art. 315 of the Revised Penal Code,
the imposable penalty is prision correccional in its maximum period to prision mayor in
its minimum period the range of which is four (4) years, two (2) months and one (1)
day, to five (5) years, five (5) months and ten (10) days as minimum, while the medium
period is from five (5) years, five (5) months and eleven (11) days, to six (6) years, eight
(8) months and twenty (20) days, and the maximum is six (6) years, eight (8) months
and twenty-one (21) days, to eight (8) years. Since the amount of P120,000.00 was
defrauded
in each case, the maximum penalty should be taken from the
maximum
period of the penalty prescribed, plus one (1) year for every P10,000.00 in excess
of P22,000.00 which, in these four (4) cases is equivalent to nine (9) additional
years. Hence, the maximum imposable penalty should be fifteen (15) years, eight (8)
months and twenty-one (21) days, to seventeen (17) years of reclusion
temporal medium. Applying the Indeterminate Sentence Law, the minimum penalty shall
be within the range of the penalty next lower in degree to that prescribed in the
Code, i.e., prision correccional minimum to prision correccional medium in any of its
periods. Prision correccional minimum to prision correccional medium ranges from six
(6) months and one (1) day, to four (4) years and two (2) months. Clearly, the penalty
imposed by the court below in each of the aforesaid cases, which is eleven (11) years,
eleven (11) months and eleven (11) days of prision mayor medium, to fifteen (15) years,
eight (8) months and twenty-one (21) days of reclusion temporal medium, is properly
within the range of the imposable penalty.
The same principle would apply to Crim. Case No. 98853 where the amount
defrauded was P100,000.00. The trial court therefore correctly imposed the penalty of
nine (9) years, eleven (11) months and eleven (11) days of prision mayor medium, to
thirteen (13) years, eight (8) months and twenty-one (21) days of reclusion
temporal minimum, which is properly within the range of the imposable penalty.
WHEREFORE,
the
judgment
of
the
court a
quo finding accusedappellant REYDANTE CALONZO Y AMBROSIO guilty of Illegal
Recruitment in Large
Scale in Crim. Case No. 98855 (G.R. No. 115155), and of Estafa in Crim. Case No.
98850 (G.R. No. 115150), Crim. Case No. 98851 (G.R. No. 115151), Crim. Case No.
98852 (G.R. No. 115152), Crim. Case No. 98853 (G.R. No. 115153) and Crim. Case
No. 98854 (G.R. No. 115154) as well as the corresponding penalties imposed by the
court a quo is AFFIRMED, with costs against accused-appellant.

In the service of the various prison terms herein imposed upon accusedappellant, the provisions of Art. 70 of the Revised Penal Code shall be observed.
SO ORDERED.
Padilla, (Chairman), Vitug, Kapunan, and Hermosisima, Jr., JJ., concur.

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.
Fernan, C.J., Narvasa, Melencio-Herrera, Gutierrez, Jr., Cruz, Paras, Feliciano, Gancayco, Padilla,
Bidin, Cortes, Grio-Aquino, Medialdea and Regalado, JJ., concur.

FIRST DIVISION
[G.R. No. 132376. April 11, 2002]

PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs. SAMINA ANGELES


y CALMA, accused-appellant.
DECISION
YNARES-SANTIAGO, J.:

Accused-appellant Samina Angeles y Calma was charged with four (4) counts of
estafa and one (1) count of illegal recruitment in the following informations: [1]
Criminal Case No. 94-140585 (Estafa)
That on or about September 8, 1994 in the City of Manila, Philippines, the said
accused did then and there willfully, unlawfully and feloniously defraud MARIA
TOLOSA DE SARDEA Y TABLADA in the following manner to wit: the said
accused, by means of false manifestations and fraudulent representations which she
made to said Maria Tolosa de Sardea y Tablada to the effect that she had the power
and capacity to recruit and employ her as domestic helper in Paris, France, and could
facilitate the processing of the pertinent papers if given the necessary amount to meet
the requirements thereof, and by means of other similar deceits, induced and
succeeded in inducing said Maria Tolosa de Sardea y Tablada to give and deliver, as in
fact she gave and delivered to said accused the amount of P107,000.00 on the strength

of said manifestations and representations, accused well knowing that the same were
false and fraudulent and were made solely, to obtain, as in fact she did obtain the
amount of P107,000.00 which amount once in her possession, with intent to defraud,
willfully, unlawfully and feloniously misappropriated, misapplied and converted the
same to her own personal use and benefit to the damage and prejudice of said Maria
Tolosa de Sardea y Tablada in the aforesaid sum of P107,000.00 Philippine Currency.
Criminal Case No. 94-140486 (Estafa)
That on or about September 8, 1994 in the City of Manila, Philippines, the said
accused did then and there willfully, unlawfully and feloniously defraud
MARCELIANO T. TOLOSA in the following manner, to wit: the said accused, by
means of false manifestations and fraudulent representations which she made to said
MARCELIANO T. TOLOSA to the effect that she had the power and capacity to
recruit and employ him as contract worker in Paris, France and could facilitate the
processing of the pertinent papers if given the necessary amount to meet the
requirements thereof, and by means of other similar deceits, induced and succeeded in
inducing said Marceliano T. Tolosa accused well knowing that the same were false
and fraudulent and were made solely, to obtain, as in fact she did obtain the amount of
P190,000.00 which amount once in their possession, with intent to defraud, willfully,
unlawfully and feloniously misappropriated, misapplied and converted the same to her
own personal use and benefit, to the damage and prejudice of said Marceliano T.
Tolosa in the aforesaid sum of P190,000.00, Philippine Currency.
Criminal Case No. 94-140487 (Estafa)
That on or about September 9, 1994 in the City of Manila, Philippines, the said
accused did then and there willfully, unlawfully and feloniously defraud PRECILA P.
OLPINDO in the following manner to wit: the said accused, by means of false
manifestations and fraudulent representations which she made to said Precila P.
Olpindo to the effect that she had the power and capacity to recruit and employ her as
contract worker in Canada and could facilitate the processing of the pertinent papers if
given the necessary amount to meet the requirements thereof, and by means of other
similar deceits, induced and succeeded in inducing said Precila P. Olpindo to give and
deliver, as in fact she delivered to said accused the amount of $2,550.00 on the
strength of said manifestations and representations, said Precila P. Olpindo accused
well knowing that the same were false and fraudulent and were made solely, to obtain,
as in fact she did obtain the amount of $2,550.00 which amount once in her
possession, with intent to defraud, willfully, unlawfully and feloniously

misappropriated, misapplied and converted the same to her own personal use and
benefit, to the damage and prejudice of said Precila P. Olpindo in the aforesaid sum of
$2,550.00 or its equivalent in Philippine Currency of P61,200.00.
Criminal Case No. 94-140488 (Estafa)
That on or about the first week of September 1994 in the City of Manila, Philippines,
the said accused, did then and there willfully, unlawfully and feloniously defraud
VILMA S. BRINA in the following manner to wit: the said accused, by means of false
manifestations and fraudulent representations which she made to said Vilma S. Brina
to the effect that she had the power and capacity to recruit and employ her as contract
worker in Canada and could facilitate the processing of the pertinent papers if given
the necessary amount to meet the requirements thereof, and by means of other similar
deceits, induced and succeeded in inducing said Vilma S. Brina to give and deliver, as
in fact she gave and delivered to said accused the amount of $2,550.00 on the strength
of said manifestations and representations, accused well knowing that the same were
false and fraudulent and were made solely, to obtain, as in fact she did obtain the
amount of $2,550.00 which amount once in her possession, with intent to defraud,
willfully, unlawfully and feloniously misappropriated, misapplied and converted the
same to her own personal use and benefit, to the damage and prejudice of said Vilma
S. Brina in the aforesaid sum of $2,550.00 or its equivalent in Philippine Currency of
P61,200.00.
Criminal Case No. 94-140489 (Illegal Recruitment)
The undersigned accuses SAMINA ANGELES y CALMA of violation of Art. 38 (a)
Pres. Decree No. 1412 amending certain provisions of Book 1, Pres. Decree No. 442
otherwise known as the New Labor Code of the Philippines in relation to Article 13
(b) and (c) of said Code, as further amended in a large scale, as follows:
That sometime during the month of September 1994 in the City of Manila,
Philippines, the said accused, representing herself 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 the following persons:
1. Marceliano T. Tolosa
2. Precila P. Olpindo

3. Vilma S. Brina
4. Maria Tolosa de Sardea y Tablada
Without first having secured the required license or authority from the Department of
Labor and Employment.
The five (5) cases were consolidated and tried jointly by the Regional Trial Court
of Manila, Branch 50.
Maria Tolosa Sardea was working in Saudi Arabia when she received a call from
her sister, Priscilla Agoncillo, who was in Paris, France. Priscilla advised Maria to
return to the Philippines and await the arrival of her friend, accused-appellant Samina
Angeles, who will assist in processing her travel and employment documents to Paris,
France. Heeding her sisters advice, Maria immediately returned to the Philippines.
Marceliano Tolosa who at that time was in the Philippines likewise received
instructions from his sister Priscilla to meet accused-appellant who will also assist in
the processing of his documents for Paris, France.
Maria and Marceliano eventually met accused-appellant in September 1994 at
Expert Travel Agency on Mabini Street, Manila. During their meeting, accusedappellant asked if they had the money required for the processing of their
documents. On September 8, 1994, Maria gave P107,000.00 to accused-appellant at
Expert Travel Agency. Subsequently, she gave another P46,000.00 and US$1,500.00
as additional payments to accused-appellant.
Marceliano, on the other hand, initially gave P100,000.00 to accused-appellant but
on September 28, 1994, he gave an additional P46,000.00 and US$1,500.00 to
accused-appellant at the United Coconut Planters Bank in Makati.
Analyn Olpindo met accused-appellant in Belgium. At that time, Analyn was
working in Canada but she went to Belgium to visit her in-laws. After meeting
accused-appellant, Analyn Olpindo called up her sister, Precila Olpindo, in the
Philippines and told her to meet accused-appellant upon the latters arrival in the
Philippines because accused-appellant can help process her documents for
employment in Canada.

Precila Olpindo eventually met accused-appellant at the Expert Travel Agency on


September 7, 1994. Accused-appellant asked for the amount of $4,500.00, but Precila
was only able to give $2,500.00.
No evidence was adduced in relation to the complaint of Vilma Brina since she
did not testify in court.
Accused-appellant told Precila Olpindo and Vilma Brina that it was easier to
complete the processing of their papers if they start from Jakarta, Indonesia rather
than from Manila. Thus, on September 23, 1994, Precila Olpindo, Vilma Brina and
accused-appellant flew to Jakarta, Indonesia. However, accused-appellant returned to
the Philippines after two days, leaving behind Precila and Vilma. They waited for
accused-appellant in Jakarta but the latter never returned. Precila and Vilma
eventually came home to the Philippines on November 25, 1994.
When she arrived in the Philippines, Precila tried to get in touch with accusedappellant at the Expert Travel Agency, but she could not reach her. Meanwhile, Maria
and Marceliano Tolosa also began looking for accused-appellant after she disappeared
with their money.
Elisa Campanianos of the Philippine Overseas Employment Agency presented a
certification to the effect that accused-appellant was not duly licensed to recruit
workers here and abroad.
In her defense, accused-appellant averred that, contrary to the prosecutions
allegations, she never represented to the complainants that she can provide them with
work abroad. She insisted that she was a marketing consultant and an international
trade fair organizer. In June 1994, she went to Paris, France to organize a trade
fair. There she met Priscilla Agoncillo, a domestic helper, and they became
friends.Priscilla asked her to assist her siblings, Maria and Marceliano, particularly in
the processing of their travel documents for France. Accused-appellant told Priscilla
that she can only help in the processing of travel documents and nothing more. It was
Priscilla who promised employment to Maria and Marceliano. She received money
from complainants not in the form of placement fees but for the cost of tickets, hotel
accommodations and other travel requirements.
According to accused-appellant, she met Analyn Olpindo in Belgium while she
was organizing a trade fair. They also became friends and it was Analyn who asked
her to help Precila. Just like in the case of Maria and Marceliano, accused-appellant

explained that her assistance shall only entail the processing of Precilas travel
documents to Canada.
After trial on the merits, the trial court found accused-appellant guilty of illegal
recruitment and four (4) counts of estafa and correspondingly sentenced her as
follows:
WHEREFORE, in view of the aforementioned premises the accused SAMINA
ANGELES is hereby declared:
In Criminal Case No. 94-140489 for the crime of Illegal Recruitment, GUILTY (Art.
38 Labor Code) and is hereby sentenced to suffer the penalty of life imprisonment and
a fine of One Hundred Thousand Pesos (P100,000.00).
In Criminal Case No. 94-140485 for the crime of Estafa the accused is hereby
declared GUILTY and is hereby sentenced to suffer the penalty of from twelve (12)
years and one (1) day to twenty (20) years. In addition the accused is ordered to
reimburse the amount of One hundred seven thousand pesos (P107,000.00) to
complainant Maria Tolosa de Sardea. With costs.
In Criminal Case No. 94-140486 for the crime of Estafa the accused is hereby
declared GUILTY and is hereby sentenced to suffer the penalty of from twelve (12)
years and one (1) day to twenty (20) years. In addition the accused is ordered to
reimburse the amount of One hundred ninety thousand pesos (P190,000.00) to
complainant Marceliano T. Tolosa. With costs.
In Criminal Case No. 94-140487 for the crime of Estafa the accused is hereby
declared GUILTY and is hereby sentenced to suffer the penalty of from twelve (12)
years and one (1) day to twenty (20) years. In addition the accused is ordered to
reimburse the amount of Two thousand five hundred fifty dollars (US$2,550.00) or its
equivalent in Philippine currency of Sixty one thousand two hundred pesos
(P61,200.00), to complainant Precila P. Olpindo. With Costs.
In Criminal Case No. 94-140488 for the crime of Estafa the accused is hereby
declared GUILTY and is hereby sentenced to suffer the penalty of from twelve (12)
years and one (1) day to twenty (20) years. In addition the accused is ordered to
reimburse the amount of Two thousand five hundred fifty dollars (US$2,550.00) or its
equivalent in Philippine Currency of Sixty one thousand two hundred pesos
(P61,200.00) to complainant Vilma S. Brina. With costs.[2]

Accused-appellant is now before us on appeal, arguing that the prosecution failed


to prove her guilt for estafa and illegal recruitment by proof beyond reasonable doubt.
Accused-appellant points out that not one of the complainants testified on what
kind of jobs were promised to them, how much they would receive as salaries, the
length of their employment and even the names of their employers, which are basic
subjects a prospective employee would first determine.
In sum, accused-appellant posits that the prosecution did not present a single
evidence to prove that she promised or offered any of the complainants jobs
abroad. Illegal recruitment is committed when two (2) elements concur: 1) that the
offender has no valid license or authority required by law to enable one to lawfully
engage in recruitment and placement of workers; and 2) that the offender undertakes
either any activity within the meaning of recruitment and placement defined under
Article 13(b), or any prohibited practices enumerated under Article 34. [3]
Article 13(b), of the Labor Code provides, thus:
(b) Recruitment and placement refers to any act of canvassing, enlisting, contracting,
transporting, utilizing, hiring or procuring workers, and includes referrals, contract
services, promising or advertising for employment locally or abroad, whether for
profit or not: Provided, that any person or entity which, in any manner, offers or
promises for a fee employment to two or more persons shall be deemed engaged in
recruitment and placement.
To prove illegal recruitment, it must be shown that the accused-appellant gave
complainants the distinct impression that he had the power or ability to send
complainants abroad for work such that the latter were convinced to part with their
money in order to be employed.[4] To be engaged in the practice of recruitment and
placement, it is plain that there must at least be a promise or offer of an employment
from the person posing as a recruiter whether locally or abroad.
In the case at bar, accused-appellant alleges that she never promised nor offered
any job to the complainants.
We agree.
A perusal of the records reveals that not one of the complainants testified that
accused-appellant lured them to part with their hard-earned money with promises of
jobs abroad. On the contrary, they were all consistent in saying that their relatives

abroad were the ones who contacted them and urged them to meet accused-appellant
who would assist them in processing their travel documents. Accused-appellant did
not have to make promises of employment abroad as these were already done by
complainants relatives. Thus, in the cross-examination of Maria Tolosa de Cardena:
Atty. Dinglasan:
Q: And you would likewise agree that Priscilla informed you that she can find an employment for you
once you entered Paris, is that correct?
A: Yes, because according to her that is what Samina Angeles said to her.
Q: But during that time you would agree that you do not know personally or met in person Samina
Angeles?
A: Not yet sir.
Q: In fact, even when you arrived in the Philippines, and actually met in person Samina Angeles, you
did not know who is Samina Angeles and what her business was then that time?
A: I recognized because my sister sent me a picture of Samina Angeles.
Q: So, it is clear that when you met Samina Angeles sometime on September 8, 1994, you were
already decided to go to Paris because you were then relying on the instruction from the advice of
Priscilla?
A: Yes, sir.
Q: And that was the reason why you even terminated your employment contract in Saudi?
A: Yes, sir.[5]

Precila Olpindo, on cross-examination, admitted thus:


Q: You would like to confirm that before you and Samina met in the Philippines sometime in
September of 1995, you were already decided to leave for Canada as per advice of your sister?
A: Yes, sir.
Q: And you likewise agree madam witness that even before you met the accused sometime in
September of 1995, you were already directed and informed by your sister Ana as to how much
and she will pay the accused Samina for the facilitation of your travel in going to Canada, is that
correct?
A: Yes, sir.[6]

In the cross-examination of Marceliano Tolosa, thus:


Q: Now, would you agree that your sister is working in Paris?
A: Yes, sir.
Q: And for how many years working in Paris?
A: Almost 5 years.
Q: And how much was she earning or receiving in Paris, France?
A: P20,000.00 or more, sir.
Q: And it was for this reason she advised your sister then in Saudi Arabia and you to also go to Paris
because she will be receiving more in Paris, correct?
A: She said when we follow to her office, sir.
Q: So what your sister told you if youre also interested to go to Paris you can avail of the help of
Samina Angeles, so you can also leave for Paris and join her, is that correct?
A: Yes, sir.
Q: And that was the reason why your sister wrote you a letter and gave instruction to go to accused
sometime on September, 1994, is that correct?
A: Yes, sir.
Q: Now you would agree with me Mr. Witness prior to that date September 8, 1994 you dont know
personally the person of Samina Angeles and do not know anything about the nature of her
business or personal circumstances, is that correct?
A: Yes, sir.[7]

Plainly, there is no testimony that accused-appellant offered complainants jobs


abroad. Hence, accused-appellant Samina Angeles cannot be lawfully convicted of
illegal recruitment.
Anent the four charges of estafa, Samina Angeles argues that the element of deceit
consisting in the false statement or fraudulent representation of the accused made
prior to or simultaneously with the delivery of the sums of money is lacking in the
instant case. She claims that she never deceived complainants into believing that she
had the authority and capability to send them abroad for employment.

We are not persuaded.


Under Article 315, paragraph 2(a) of the Revised Penal Code, the elements of
estafa are: (1) the accused has defrauded another by abuse of confidence or by means
of deceit and (2) damage or prejudice capable of pecuniary estimation is caused to the
offended party or third person. Clearly, these elements are present in this case. [8]
Although Samina Angeles did not deceive complainants into believing that she
could find employment for them abroad, nonetheless, she made them believe that she
was processing their travel documents for France and Canada. They parted with their
money believing that Samina Angeles would use it to pay for their plane tickets, hotel
accommodations and other travel requirements. Upon receiving various amounts from
complainants, Samina Angeles used it for other purposes and then conveniently
disappeared.
Complainants trusted Samina Angeles because she was referred to them by their
own relatives. She abused their confidence when she led them to believe that she can
process their travel documents abroad, thus inducing them to part with their
money. When they demanded from Samina their travel documents, she failed to
produce them. Likewise, she failed to return the amounts entrusted to her.
Clearly, Samina Angeles defrauded complainants by falsely pretending to possess
the power and capacity to process their travel documents.
Article 315 of the Revised Penal Code imposes the penalty of prision
correccional in its maximum period to prision mayor in its minimum period, if the
amount of the fraud is over P12,000.00 but does not exceed P22,000.00; if the amount
exceeds P22,000.00, the penalty provided shall be imposed in its maximum period,
adding one year for each additional P10,000.00. However, the total penalty which
may be imposed shall not exceed twenty years. [9]
In People v. Ordono,[10] it was held:
Under the Indeterminate Sentence Law, the maximum term of the penalty shall be that
which, in view of the attending circumstances, could be properly imposed under the
Revised Penal Code, and the minimum shall be within the range of the penalty next
lower to that prescribed for the offense. The penalty next lower should be based on the
penalty prescribed by the Code for the offense, without first considering any
modifying circumstance attendant to the commission of the crime. The determination
of the minimum penalty is left by law to the sound discretion of the court and it can be

anywhere within the range of the penalty next lower without any reference to the
periods into which it might be subdivided. The modifying circumstances are
considered only in the imposition of the maximum term of the indeterminate sentence.
Thus, in Criminal Case No. 94-140485, Maria Tolosa testified that she gave
P107,000.00, P46,000.00 and US$1,500.00 to Samina Angeles. The Information,
however, alleged that Maria gave only P107,000.00. Samina Angeles could therefore
be held accountable for only that amount.
In Criminal Case No. 94-140486, Marceliano testified that he gave P100,000.00,
P46,000.00 and US$1,500.00 to Samina Angeles. The Information however alleged
that Marceliano gave only a total of P190,000.00; hence that is the only amount that
Samina Angeles could be held accountable for.
In Criminal Case No. 94-140487, Precila testified that she gave US$2,550.00 to
Samina Angeles. The Information alleged that the equivalent amount thereof in
Philippine Currency is P61,200.00. Samina Angeles is therefore criminally liable for
P61,200.00.
Complainant Vilma Brina did not appear in court to testify. Thus, the damage in
the amount of $2,550.00 alleged in Criminal Case No. 94-140488 was not proved.
WHEREFORE, in view of the foregoing, the appealed Decision is MODIFIED
as follows:
(1) In Criminal Case No. 94-140485, accused-appellant Samina Angeles is found
GUILTY beyond reasonable doubt of the crime of Estafa and sentenced to suffer a
prison term of four (4) years and two (2) months of prision correccional, as minimum,
to sixteen (16) years of reclusion temporal, as maximum, and is ORDERED to
indemnify Maria Sardea the amount of P107,000.00.
(2) In Criminal Case No. 94-140486, accused-appellant Samina Angeles is found
GUILTY beyond reasonable doubt of the crime of Estafa and sentenced to suffer a
prison term of four (4) years and two (2) months of prision correccional, as minimum,
to twenty (20) years of reclusion temporal, as maximum, and is ORDERED to
indemnify Marceliano Tolosa the amount of P190,000.00.
(3) In Criminal Case No. 94-140487, accused-appellant Samina Angeles is found
GUILTY beyond reasonable doubt of the crime of Estafa and sentenced to suffer a
prision term of four (4) years and two (2) months of prision correccional, as

minimum, to eleven (11) years of prision mayor, as maximum, and is ORDERED to


indemnify Precila Olpindo the amount of P61,200.00.
(4) In Criminal Case No. 94-140488 for Estafa, accused-appellant Samina Angeles is
ACQUITTED for failure of the prosecution to prove her guilt beyond reasonable
doubt.
(5) In Criminal Case No. 94-140489 for Illegal Recruitment, accused-appellant
Samina Angeles is ACQUITTED for failure of the prosecution to prove her guilt
beyond reasonable doubt.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Puno, Kapunan, and Austria-Martinez, JJ., concur.

Republic of the Philippines


SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 93666

April 22, 1991

GENERAL MILLING CORPORATION and EARL TIMOTHY CONE, petitioners,


vs.
HON. RUBEN D. TORRES, in his capacity as Secretary of Labor and Employment, HON.
BIENVENIDO E. LAGUESMA, in his capacity as Acting Secretary of Labor and Employment,
and BASKETBALL COACHES ASSOCIATION OF THE PHILIPPINES, respondents.
Sobrevinas, Diaz, Hayudini & Bodegon Law Office for petitioners.
Rodrigo, Cuevas & De Borja for respondent BCAP.

RESOLUTION
FELICIANO, J.:
On 1 May 1989, the National Capital Region of the Department of Labor and Employment issued
Alien Employment Permit No. M-0689-3-535 in favor of petitioner Earl Timothy Cone, a United
States citizen, as sports consultant and assistant coach for petitioner General Milling Corporation
("GMC").
On 27 December 1989, petitioners GMC and Cone entered into a contract of employment whereby
the latter undertook to coach GMC's basketball team.
On 15 January 1990, the Board of Special Inquiry of the Commission on Immigration and
Deportation approved petitioner Cone's application for a change of admission status from temporary
visitor to pre-arranged employee.
On 9 February 1990, petitioner GMC requested renewal of petitioner Cone's alien employment
permit. GMC also requested that it be allowed to employ Cone as full-fledged coach. The DOLE
Regional Director, Luna Piezas, granted the request on 15 February 1990.
On 18 February 1990, Alien Employment Permit No. M-02903-881, valid until 25 December 1990,
was issued.
Private respondent Basketball Coaches Association of the Philippines ("BCAP") appealed the
issuance of said alien employment permit to the respondent Secretary of Labor who, on 23 April
1990, issued a decision ordering cancellation of petitioner Cone's employment permit on the ground
that there was no showing that there is no person in the Philippines who is competent, able and
willing to perform the services required nor that the hiring of petitioner Cone would redound to the
national interest.
Petitioner GMC filed a Motion for Reconsideration and two (2) Supplemental Motions for
Reconsideration but said Motions were denied by Acting Secretary of Labor Bienvenido E.
Laguesma in an Order dated 8 June 1990.
Petitioners are now before the Court on a Petition for Certiorari, dated 14 June 1990, alleging that:
1. respondent Secretary of Labor gravely abused his discretion when he revoked petitioner
Cone's alien employment permit; and
2. Section 6 (c), Rule XIV, Book I of the Omnibus Rules Implementing the Labor Code is null
and void as it is in violation of the enabling law as the Labor Code does not empower
respondent Secretary to determine if the employment of an alien would redound to national
interest.
Deliberating on the present Petition for Certiorari, the Court considers that petitioners have failed to
show any grave abuse of discretion or any act without or in excess of jurisdiction on the part of
respondent Secretary of Labor in rendering his decision, dated 23 April 1990, revoking petitioner
Cone's Alien Employment Permit.

The alleged failure to notify petitioners of the appeal filed by private respondent BCAP was cured
when petitioners were allowed to file their Motion for Reconsideration before respondent Secretary
of Labor.
1

Petitioner GMC's claim that hiring of a foreign coach is an employer's prerogative has no legal basis
at all. Under Article 40 of the Labor Code, an employer seeking employment of an alien must first
obtain an employment permit from the Department of Labor. Petitioner GMC's right to choose whom
to employ is, of course, limited by the statutory requirement of an alien employment permit.
Petitioners will not find solace in the equal protection clause of the Constitution. As pointed out by
the Solicitor-General, no comparison can be made between petitioner Cone and Mr. Norman Black
as the latter is "a long time resident of the country," and thus, not subject to the provisions of Article
40 of the Labor Code which apply only to "non-resident aliens." In any case, the term "non-resident
alien" and its obverse "resident alien," here must be given their technical connotation under our law
on immigration.
Neither can petitioners validly claim that implementation of respondent Secretary's decision would
amount to an impairment of the obligations of contracts. The provisions of the Labor Code and its
Implementing Rules and Regulations requiring alien employment permits were in existence long
before petitioners entered into their contract of employment. It is firmly settled that provisions of
applicable laws, especially provisions relating to matters affected with public policy, are deemed
written into contracts. Private parties cannot constitutionally contract away the otherwise applicable
provisions of law.
2

Petitioners' contention that respondent Secretary of Labor should have deferred to the findings of
Commission on Immigration and Deportation as to the necessity of employing petitioner Cone, is,
again, bereft of legal basis. The Labor Code itself specifically empowers respondent Secretary to
make a determination as to the availability of the services of a "person in the Philippines who is
competent, able and willing at the time of application to perform the services for which an alien is
desired."
3

In short, the Department of Labor is the agency vested with jurisdiction to determine the question of
availability of local workers. The constitutional validity of legal provisions granting such jurisdiction
and authority and requiring proof of non-availability of local nationals able to carry out the duties of
the position involved, cannot be seriously questioned.
Petitioners apparently also question the validity of the Implementing Rules and Regulations,
specifically Section 6 (c), Rule XIV, Book I of the Implementing Rules, as imposing a condition not
found in the Labor Code itself. Section 6 (c), Rule XIV, Book I of the Implementing Rules, provides
as follows:
Section 6. Issuance of Employment Permit the Secretary of Labor may issue an
employment permit to the applicant based on:
a) Compliance by the applicant and his employer with the requirements of Section 2 hereof;
b) Report of the Bureau Director as to the availability or non-availability of any person in the
Philippines who is competent and willing to do the job for which the services of the applicant
are desired.

(c) His assessment as to whether or not the employment of the applicant will redound to the
national interest;
(d) Admissibility of the alien as certified by the Commission on Immigration and Deportation;
(e) The recommendation of the Board of Investments or other appropriate government
agencies if the applicant will be employed in preferred areas of investments or in accordance
with the imperative of economic development;
xxx

xxx

xxx

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

xxx

xxx

c) To facilitate a free choice of available employment by persons seeking work in conformity


with the national interest;

d) To facilitate and regulate the movement of workers in conformity with the national interest;
e) To regulate the employment of aliens, including the establishment of a registration and/or
work permit system;
xxx

xxx

xxx

Thus, we find petitioners' arguments on the above points of constitutional law too insubstantial to
require further consideration.
1avvphi1

Petitioners have very recently manifested to this Court that public respondent Secretary of Labor has
reversed his earlier decision and has issued an Employment Permit to petitioner Cone. Petitioners
seek to withdraw their Petition for Certiorari on the ground that it has become moot and academic.
While ordinarily this Court would dismiss a petition that clearly appears to have become moot and
academic, the circumstances of this case and the nature of the questions raised by petitioners are
such that we do not feel justified in leaving those questions unanswered.
4

Moreover, assuming that an alien employment permit has in fact been issued to petitioner Cone, the
basis of the reversal by the Secretary of Labor of his earlier decision does not appear in the record.
If such reversal is based on some view of constitutional law or labor law different from those here set
out, then such employment permit, if one has been issued, would appear open to serious legal
objections.
ACCORDINGLY, the Court Resolved to DISMISS the Petition for certiorari for lack of merit. Costs
against petitioners.
Fernan, C.J., Bidin and Davide, Jr., JJ., concur.
Gutierrez, Jr., J., in the result.

Republic of the Philippines


SUPREME COURT
Manila
FIRST DIVISION

G.R. No. 114337 September 29, 1995


NITTO ENTERPRISES, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and ROBERTO CAPILI, respondents.

KAPUNAN, J.:
This petition for certiorari under Rule 65 of the Rules of Court seeking to annul the
decision 1 rendered by public respondent National Labor Relations Commission, which reversed the
decision of the Labor Arbiter.
Briefly, the facts of the case are as follows:
Petitioner Nitto Enterprises, a company engaged in the sale of glass and aluminum products, hired
Roberto Capili sometime in May 1990 as an apprentice machinist, molder and core maker as
evidenced by an apprenticeship agreement 2 for a period of six (6) months from May 28, 1990 to
November 28, 1990 with a daily wage rate of P66.75 which was 75% of the applicable minimum wage.
At around 1:00 p.m. of August 2, 1990, Roberto Capili who was handling a piece of glass which he
was working on, accidentally hit and injured the leg of an office secretary who was treated at a
nearby hospital.
Later that same day, after office hours, private respondent entered a workshop within the office
premises which was not his work station. There, he operated one of the power press machines
without authority and in the process injured his left thumb. Petitioner spent the amount of P1,023.04
to cover the medication of private respondent.
The following day, Roberto Capili was asked to resign in a letter 3 which reads:
August
2, 1990
Wala siyang tanggap ng utos mula sa superbisor at wala siyang experiensa kung
papaano gamitin and "TOOL" sa pagbuhat ng salamin, sarili niyang desisyon ang
paggamit ng tool at may disgrasya at nadamay pa ang isang sekretarya ng
kompanya.
Sa araw ding ito limang (5) minute ang nakakalipas mula alas-singko ng hapon siya
ay pumasok sa shop na hindi naman sakop ng kanyang trabaho. Pinakialaman at
kinalikot ang makina at nadisgrasya niya ang kanyang sariling kamay.
Nakagastos ang kompanya ng mga sumusunod:
Emergency and doctor fee P715.00
Medecines (sic) and others 317.04
Bibigyan siya ng kompanya ng Siyam na araw na libreng sahod hanggang
matanggal ang tahi ng kanyang kamay.
Tatanggapin niya ang sahod niyang anim na araw, mula ika-30 ng Hulyo at ika-4 ng
Agosto, 1990.

Ang kompanya ang magbabayad ng lahat ng gastos pagtanggal ng tahi ng kanyang


kamay, pagkatapos ng siyam na araw mula ika-2 ng Agosto.
Sa lahat ng nakasulat sa itaas, hinihingi ng kompanya ang kanyang resignasyon,
kasama ng kanyang comfirmasyon at pag-ayon na ang lahat sa itaas ay totoo.

Naiintindihan ko ang lahat ng nakasulat sa itaas, at ang lahat ng ito ay aking


pagkakasala sa hindi pagsunod sa alintuntunin ng kompanya.
(Sgd.) Roberto
Capili
Roberto Capili
On August 3, 1990 private respondent executed a Quitclaim and Release in favor of petitioner for
and in consideration of the sum of P1,912.79. 4
Three days after, or on August 6, 1990, private respondent formally filed before the NLRC Arbitration
Branch, National Capital Region a complaint for illegal dismissal and payment of other monetary
benefits.
On October 9, 1991, the Labor Arbiter rendered his decision finding the termination of private
respondent as valid and dismissing the money claim for lack of merit. The dispositive portion of the
ruling reads:
WHEREFORE, premises considered, the termination is valid and for cause, and the
money claims dismissed for lack of merit.
The respondent however is ordered to pay the complainant the amount of P500.00
as financial assistance.
SO ORDERED. 5
Labor Arbiter Patricio P. Libo-on gave two reasons for ruling that the dismissal of Roberto Capilian
was valid. First, private respondent who was hired as an apprentice violated the terms of their
agreement when he acted with gross negligence resulting in the injury not only to himself but also to
his fellow worker. Second, private respondent had shown that "he does not have the proper attitude
in employment particularly the handling of machines without authority and proper training. 6
On July 26, 1993, the National Labor Relations Commission issued an order reversing the decision
of the Labor Arbiter, the dispositive portion of which reads:
WHEREFORE, the appealed decision is hereby set aside. The respondent is hereby
directed to reinstate complainant to his work last performed with backwages
computed from the time his wages were withheld up to the time he is actually
reinstated. The Arbiter of origin is hereby directed to further hear complainant's
money claims and to dispose them on the basis of law and evidence obtaining.

SO ORDERED. 7
The NLRC declared that private respondent was a regular employee of petitioner by
ruling thus:

As correctly pointed out by the complainant, we cannot understand how an


apprenticeship agreement filed with the Department of Labor only on June 7, 1990
could be validly used by the Labor Arbiter as basis to conclude that the complainant
was hired by respondent as a plain "apprentice" on May 28, 1990. Clearly, therefore,
the complainant was respondent's regular employee under Article 280 of the Labor
Code, as early as May 28,1990, who thus enjoyed the security of tenure guaranteed
in Section 3, Article XIII of our 1987 Constitution.
The complainant being for illegal dismissal (among others) it then behooves upon
respondent, pursuant to Art. 227(b) and as ruled in Edwin Gesulgon vs. NLRC, et al.
(G.R. No. 90349, March 5, 1993, 3rd Div., Feliciano, J.) to prove that the dismissal of
complainant was for a valid cause. Absent such proof, we cannot but rule that the
complainant was illegally dismissed. 8
On January 28, 1994, Labor Arbiter Libo-on called for a conference at which only private
respondent's representative was present.
On April 22, 1994, a Writ of Execution was issued, which reads:
NOW, THEREFORE, finding merit in [private respondent's] Motion for Issuance of
the Writ, you are hereby commanded to proceed to the premises of [petitioner] Nitto
Enterprises and Jovy Foster located at No. l 74 Araneta Avenue, Portero, Malabon,
Metro Manila or at any other places where their properties are located and effect the
reinstatement of herein [private respondent] to his work last performed or at the
option of the respondent by payroll reinstatement.
You are also to collect the amount of P122,690.85 representing his backwages as
called for in the dispositive portion, and turn over such amount to this Office for
proper disposition.
Petitioner filed a motion for reconsideration but the same was denied.
Hence, the instant petition for certiorari.
The issues raised before us are the following:
I
WHETHER OR NOT PUBLIC RESPONDENT NLRC COMMITTED GRAVE ABUSE
OF DISCRETION IN HOLDING THAT PRIVATE RESPONDENT WAS NOT AN
APPRENTICE.
II

WHETHER OR NOT PUBLIC RESPONDENT NLRC COMMITTED GRAVE ABUSE


OF DISCRETION IN HOLDING THAT PETITIONER HAD NOT ADEQUATELY
PROVEN THE EXISTENCE OF A VALID CAUSE IN TERMINATING THE SERVICE
OF PRIVATE RESPONDENT.
We find no merit in the petition.
Petitioner assails the NLRC's finding that private respondent Roberto Capili cannot plainly be
considered an apprentice since no apprenticeship program had yet been filed and approved at the
time the agreement was executed.
Petitioner further insists that the mere signing of the apprenticeship agreement already established
an employer-apprentice relationship.
Petitioner's argument is erroneous.
The law is clear on this matter. Article 61 of the Labor Code provides:
Contents of apprenticeship agreement. Apprenticeship agreements, including the
main rates of apprentices, shall conform to the rules issued by the Minister of Labor
and Employment. The period of apprenticeship shall not exceed six months.
Apprenticeship agreements providing for wage rates below the legal minimum wage,
which in no case shall start below 75% per cent of the applicable minimum wage,
may be entered into only in accordance with apprenticeship program duly approved
by the Minister of Labor and Employment. The Ministry shall develop standard model
programs of apprenticeship. (emphasis supplied)
In the case at bench, the apprenticeship agreement between petitioner and private respondent was
executed on May 28, 1990 allegedly employing the latter as an apprentice in the trade of "care
maker/molder." On the same date, an apprenticeship program was prepared by petitioner and
submitted to the Department of Labor and Employment. However, the apprenticeship Agreement
was filed only on June 7, 1990. Notwithstanding the absence of approval by the Department of Labor
and Employment, the apprenticeship agreement was enforced the day it was signed.
Based on the evidence before us, petitioner did not comply with the requirements of the law. It is
mandated that apprenticeship agreements entered into by the employer and apprentice shall be
entered only in accordance with the apprenticeship program duly approved by the Minister of Labor
and Employment.
Prior approval by the Department of Labor and Employment of the proposed apprenticeship program
is, therefore, a condition sine quo non before an apprenticeship agreement can be validly entered
into.
The act of filing the proposed apprenticeship program with the Department of Labor and
Employment is a preliminary step towards its final approval and does not instantaneously give rise to
an employer-apprentice relationship.

Article 57 of the Labor Code provides that the State aims to "establish a national apprenticeship
program through the participation of employers, workers and government and non-government
agencies" and "to establish apprenticeship standards for the protection of apprentices." To translate
such objectives into existence, prior approval of the DOLE to any apprenticeship program has to be
secured as a condition sine qua non before any such apprenticeship agreement can be fully
enforced. The role of the DOLE in apprenticeship programs and agreements cannot be debased.
Hence, since the apprenticeship agreement between petitioner and private respondent has no force
and effect in the absence of a valid apprenticeship program duly approved by the DOLE, private
respondent's assertion that he was hired not as an apprentice but as a delivery boy ("kargador" or
"pahinante") deserves credence. He should rightly be considered as a regular employee of petitioner
as defined by Article 280 of the Labor Code:
Art. 280. Regular and Casual Employment. The provisions of written agreement to
the contrary notwithstanding and regardless of the oral agreement of the parties, an
employment shall be deemed to be regular where the employee has been engaged
to perform activities which are usually necessary or desirable in the usual business
or trade of the employer, except where the employment has been fixed for a specific
project or undertaking the completion or termination of which has been determined at
the time of the engagement of the employee or where the work or services to be
performed is seasonal in nature and the employment is for the duration of the
season.
An employment shall be deemed to be casual if it is not covered by the preceding
paragraph:Provided, That, any employee who has rendered at least one year of
service, whether such service is continuous or broken, shall be considered a regular
employee with respect to the activity in which he is employed and his employment
shall continue while such activity exists. (Emphasis supplied)
and pursuant to the constitutional mandate to "protect the rights of workers and promote their
welfare." 9
Petitioner further argues that, there is a valid cause for the dismissal of private respondent.
There is an abundance of cases wherein the Court ruled that the twin requirements of due process,
substantive and procedural, must be complied with, before valid dismissal exists. 10 Without which, the
dismissal becomes void.
The twin requirements of notice and hearing constitute the essential elements of due process. This
simply means that the employer shall afford the worker ample opportunity to be heard and to defend
himself with the assistance of his representative, if he so desires.
Ample opportunity connotes every kind of assistance that management must accord the employee to
enable him to prepare adequately for his defense including legal representation. 11
As held in the case of Pepsi-Cola Bottling Co., Inc. v. NLRC: 12
The law requires that the employer must furnish the worker sought to be dismissed
with two (2) written notices before termination of employee can be legally effected:

(1) notice which apprises the employee of the particular acts or omissions for which
his dismissal is sought; and (2) the subsequent notice which informs the employee of
the employer's decision to dismiss him (Sec. 13, BP 130; Sec. 2-6 Rule XIV, Book V,
Rules and Regulations Implementing the Labor Code as amended). Failure to
comply with the requirements taints the dismissal with illegality. This procedure is
mandatory, in the absence of which, any judgment reached by management is void
and in existent (Tingson, Jr. vs. NLRC, 185 SCRA 498 [1990]; National Service Corp.
vs. NLRC, 168 SCRA 122; Ruffy vs. NLRC. 182 SCRA 365 [1990]).
The fact is private respondent filed a case of illegal dismissal with the Labor Arbiter only three days
after he was made to sign a Quitclaim, a clear indication that such resignation was not voluntary and
deliberate.
Private respondent averred that he was actually employed by petitioner as a delivery boy ("kargador"
or "pahinante").
He further asserted that petitioner "strong-armed" him into signing the aforementioned resignation
letter and quitclaim without explaining to him the contents thereof. Petitioner made it clear to him that
anyway, he did not have a choice. 13
Petitioner cannot disguise the summary dismissal of private respondent by orchestrating the latter's
alleged resignation and subsequent execution of a Quitclaim and Release. A judicious examination
of both events belies any spontaneity on private respondent's part.
WHEREFORE, finding no abuse of discretion committed by public respondent National Labor
Relations Commission, the appealed decision is hereby AFFIRMED.
SO ORDERED.
Padilla, Davide, Jr., Bellosillo and Hermosisima, Jr., JJ., concur.

THIRD DIVISION

[G.R. No. 122917. July 12, 1999]

MARITES BERNARDO, ELVIRA GO DIAMANTE, REBECCA E. DAVID,


DAVID P. PASCUAL, RAQUEL ESTILLER, ALBERT HALLARE,
EDMUND M. CORTEZ, JOSELITO O. AGDON GEORGE P.
LIGUTAN JR., CELSO M. YAZAR, ALEX G. CORPUZ, RONALD M.
DELFIN, ROWENA M. TABAQUERO, CORAZON C. DELOS
REYES, ROBERT G. NOORA, MILAGROS O. LEQUIGAN,
ADRIANA F. TATLONGHARI, IKE CABANDUCOS, COCOY
NOBELLO, DORENDA CANTIMBUHAN, ROBERT MARCELO,
LILIBETH Q. MARMOLEJO, JOSE E. SALES, ISABEL
MAMAUAG, VIOLETA G. MONTES, ALBINO TECSON, MELODY
V. GRUELA, BERNADETH D. AGERO, CYNTHIA DE VERA, LANI
R. CORTEZ, MA. ISABEL B. CONCEPCION, DINDO VALERIO,
ZENAIDA MATA, ARIEL DEL PILAR, MARGARET CECILIA
CANOZA, THELMA SEBASTIAN, MA. JEANETTE CERVANTES,
JEANNIE RAMIL, ROZAIDA PASCUAL, PINKY BALOLOA,
ELIZABETH VENTURA, GRACE S. PARDO & RICO
TIMOSA, petitioners vs.
NATIONAL
LABOR
RELATIONS
COMMISSION
&
FAR
EAST
BANK
AND
TRUST
COMPANY, respondents.
DECISION
PANGANIBAN, J.:

The Magna Carta for Disabled Persons mandates that qualified disabled persons be granted
the same terms and conditions of employment as qualified able-bodied employees. Once they
have attained the status of regular workers, they should be accorded all the benefits granted by
law, notwithstanding written or verbal contracts to the contrary. This treatment is rooted not
merely on charity or accommodation, but on justice for all.
The Case

Challenged in the Petition for Certiorari[1] before us is the June 20, 1995 Decision [2] of the
National Labor Relations Commission (NLRC),[3] which affirmed the August, 22 1994 ruling of
Labor Arbiter Cornelio L. Linsangan. The labor arbiters Decision disposed as follows:[4]

WHEREFORE, judgment is hereby rendered dismissing the above-mentioned


complaint for lack of merit.

Also assailed is the August 4, 1995 Resolution [5] of the NLRC, which denied the Motion for
Reconsideration.

The Facts

The facts were summarized by the NLRC in this wise: [6]


Complainants numbering 43 (p. 176, Records) are deaf-mutes who were hired on
various periods from 1988 to 1993 by respondent Far East Bank and Trust Co. as
Money Sorters and Counters through a uniformly worded agreement called
Employment Contract for Handicapped Workers. (pp. 68 & 69, Records) The full text
of said agreement is quoted below:
EMPLOYMENT CONTRACT FOR HANDICAPPED WORKERS
This Contract, entered into by and between:
FAR EAST BANK AND TRUST COMPANY, a universal banking corporation duly
organized and existing under and by virtue of the laws of the Philippines, with
business address at FEBTC Building, Muralla, Intramuros, Manila, represented herein
by its Assistant Vice President, MR. FLORENDO G. MARANAN, (hereinafter
referred to as the BANK);
- and ________________, ________________ years old, of legal age, _____________, and
residing at __________________ (hereinafter referred to as the (EMPLOYEE).
WITNESSETH: That
WHEREAS, the BANK, cognizant of its social responsibility, realizes that there is a
need to provide disabled and handicapped persons gainful employment and
opportunities to realize their potentials, uplift their socio-economic well being and
welfare and make them productive, self-reliant and useful citizens to enable them to
fully integrate in the mainstream of society;
WHEREAS, there are certain positions in the BANK which may be filled-up by
disabled and handicapped persons, particularly deaf-mutes, and the BANK ha[s] been
approached by some civic-minded citizens and authorized government agencies
[regarding] the possibility of hiring handicapped workers for these positions;

WHEREAS, the EMPLOYEE is one of those handicapped workers who [were]


recommended for possible employment with the BANK;
NOW, THEREFORE, for and in consideration of the foregoing premises and in
compliance with Article 80 of the Labor Code of the Philippines as amended, the
BANK and the EMPLOYEE have entered into this Employment Contract as follows:
1. The BANK agrees to employ and train the EMPLOYEE, and the EMPLOYEE
agrees to diligently and faithfully work with the BANK,
as Money Sorter and Counter.
2. The EMPLOYEE shall perform among others, the following duties and
responsibilities:
i Sort out bills according to color;
ii. Count each denomination per hundred, either manually or with the aid of a
counting machine;
iii. Wrap and label bills per hundred;
iv. Put the wrapped bills into bundles; and
v. Submit bundled bills to the bank teller for verification.
3. The EMPLOYEE shall undergo a training period of one (1) month, after which the
BANK shall determine whether or not he/she should be allowed to finish the
remaining term of this Contract.
4. The EMPLOYEE shall be entitled to an initial compensation of P118.00 per day,
subject to adjustment in the sole judgment of the BANK, payable every 15 and end of
the month.
th

5. The regular work schedule of the EMPLOYEE shall be five (5) days per week,
from Mondays thru Fridays, at eight (8) hours a day. The EMPLOYEE may be
required to perform overtime work as circumstance may warrant, for which overtime
work he/she [shall] be paid an additional compensation of 125% of his daily rate if
performed during ordinary days and 130% if performed during Saturday or [a] rest
day.
6. The EMPLOYEE shall likewise be entitled to the following benefits:
i. Proportionate 13 month pay based on his basic daily wage.
th

ii. Five (5) days incentive leave.


iii. SSS premium payment.
7. The EMPLOYEE binds himself/herself to abide [by] and comply with all the
BANK Rules and Regulations and Policies, and to conduct himself/herself in a
manner expected of all employees of the BANK.
8. The EMPLOYEE acknowledges the fact that he/she had been employed under a
special employment program of the BANK, for which reason the standard hiring
requirements of the BANK were not applied in his/her case. Consequently, the
EMPLOYEE acknowledges and accepts the fact that the terms and conditions of the
employment generally observed by the BANK with respect to the BANKs regular
employee are not applicable to the EMPLOYEE, and that therefore, the terms and
conditions of the EMPLOYEEs employment with the BANK shall be governed solely
and exclusively by this Contract and by the applicable rules and regulations that the
Department of Labor and Employment may issue in connection with the employment
of disabled and handicapped workers. More specifically, the EMPLOYEE hereby
acknowledges that the provisions of Book Six of the Labor Code of the Philippines as
amended, particularly on regulation of employment and separation pay are not
applicable to him/her.
9. The Employment Contract shall be for a period of six (6) months or from ____ to
____ unless earlier terminated by the BANK for any just or reasonable cause. Any
continuation or extension of this Contract shall be in writing and therefore this
Contract will automatically expire at the end of its terms unless renewed in writing by
the BANK.
IN WITNESS WHEREOF, the parties, have hereunto affixed their signature[s] this
____ day of _________________, ____________ at Intramuros, Manila, Philippines.
In 1988, two (2) deaf-mutes were hired under this Agreement; in 1989 another two
(2); in 1990, nineteen (19); in 1991 six (6); in 1992, six (6) and in 1993, twenty-one
(21). Their employment[s] were renewed every six months such that by the time this
case arose, there were fifty-six (56) deaf-mutes who were employed by respondent
under the said employment agreement. The last one was Thelma Malindoy who was
employed in 1992 and whose contract expired on July 1993.
xxxxxxxxx

Disclaiming that complainants were regular employees, respondent Far East Bank and
Trust Company maintained that complainants who are a special class of workers the

hearing impaired employees were hired temporarily under [a] special employment
arrangement which was a result of overtures made by some civic and political
personalities to the respondent Bank; that complainant[s] were hired due to pakiusap
which must be considered in the light of the context of the respondent Banks
corporate philosophy as well as its career and working environment which is to
maintain and strengthen a corps of professionals trained and qualified officers and
regular employees who are baccalaureate degree holders from excellent schools which
is an unbending policy in the hiring of regular employees; that in addition to this,
training continues so that the regular employee grows in the corporate ladder; that the
idea of hiring handicapped workers was acceptable to them only on a special
arrangement basis; that it adopted the special program to help tide over a group of
handicapped workers such as deaf-mutes like the complainants who could do manual
work for the respondent Bank; that the task of counting and sorting of bills which was
being performed by tellers could be assigned to deaf-mutes; that the counting and
sorting of money are tellering works which were always logically and naturally part
and parcel of the tellers normal functions; that from the beginning there have been no
separate items in the respondent Bank plantilla for sorters or counters; that the tellers
themselves already did the sorting and counting chore as a regular feature and integral
part of their duties (p. 97, Records); that through the pakiusap of Arturo Borjal, the
tellers were relieved of this task of counting and sorting bills in favor of deaf-mutes
without creating new positions as there is no position either in the respondent or in
any other bank in the Philippines which deals with purely counting and sorting of bills
in banking operations.
Petitioners specified when each of them was hired and dismissed, viz:[7]

NAME OF PETITIONER WORKPLACE Date Hired Date Dismissed


1. MARITES BERNARDO Intramuros 12 NOV 90 17 NOV 93
2. ELVIRA GO DIAMANTE Intramuros 24 JAN 90 11 JAN 94
3. REBECCA E. DAVID Intramuros 16 APR 90 23 OCT 93
4. DAVID P. PASCUAL Bel-Air 15 OCT 88 21 NOV 94
5. RAQUEL ESTILLER Intramuros 2 JUL 92 4 JAN 94
6. ALBERT HALLARE West 4 JAN 91 9 JAN 94
7. EDMUND M. CORTEZ Bel-Air 15 JAN 91 3 DEC 93

8. JOSELITO O. AGDON Intramuros 5 NOV 90 17 NOV 93


9. GEORGE P. LIGUTAN, JR. Intramuros 6 SEPT 89 19 JAN 94
10. CELSO M. YAZAR Intramuros 8 FEB 93 8 AUG 93
11. ALEX G. CORPUZ Intramuros 15 FEB 93 15 AUG 93
12. RONALD M. DELFIN Intramuros 22 FEB 93 22 AUG 93
13. ROWENA M. TABAQUERO Intramuros 22 FEB 93 22 AUG 93
14. CORAZON C. DELOS REYES Intramuros 8 FEB 93 8 AUG 93
15. ROBERT G. NOORA Intramuros 15 FEB 93 15 AUG 93
16. MILAGROS O. LEQUIGAN Intramuros 1 FEB 93 1 AUG 93
17. ADRIANA F. TATLONGHARI Intramuros 22 JAN 93 22 JUL 93
18. IKE CABANDUCOS Intramuros 24 FEB 93 24 AUG 93
19. COCOY NOBELLO Intramuros 22 FEB 93 22 AUG 93
20. DORENDA CATIMBUHAN Intramuros 15 FEB 93 15 AUG 93
21. ROBERT MARCELO West 31 JUL 93[8] 1 AUG 93
22. LILIBETH Q. MARMOLEJO West 15 JUN 90 21 NOV 93
23. JOSE E. SALES West 6 AUG 92 12 OCT 93
24. ISABEL MAMAUAG West 8 MAY 92 10 NOV 93
25. VIOLETA G. MONTES Intramuros 2 FEB 90 15 JAN 94
26. ALBINO TECSON Intramuros 7 NOV 91 10 NOV 93
27. MELODY V. GRUELA West 28 OCT 91 3 NOV 93
28. BERNADETH D. AGERO West 19 DEC 90 27 DEC 93
29. CYNTHIA DE VERA Bel-Air 26 JUN 90 3 DEC 93

30. LANI R. CORTEZ Bel-Air 15 OCT 88 10 DEC 93


31. MA. ISABEL B. CONCEPCION West 6 SEPT 90 6 FEB 94
32. DINDO VALERIO Intramuros 30 MAY 93 30 NOV 93
33. ZENAIDA MATA Intramuros 10 FEB 93 10 AUG 93
34. ARIEL DEL PILAR Intramuros 24 FEB 93 24 AUG 93
35. MARGARET CECILIA CANOZA Intramuros 27 JUL 90 4 FEB 94
36. THELMA SEBASTIAN Intramuros 12 NOV 90 17 NOV 93
37. MA. JEANETTE CERVANTES West 6 JUN 92 7 DEC 93
38. JEANNIE RAMIL Intramuros 23 APR 90 12 OCT 93
39. ROZAIDA PASCUAL Bel-Air 20 APR 89 29 OCT 93
40. PINKY BALOLOA West 3 JUN 91 2 DEC 93
41. ELIZABETH VENTURA West 12 MAR 90 FEB 94 [SIC]
42. GRACE S. PARDO West 4 APR 90 13 MAR 94
43. RICO TIMOSA Intramuros 28 APR 93 28 OCT 93
As earlier noted, the labor arbiter and, on appeal, the NLRC ruled against herein
petitioners. Hence, this recourse to this Court.[9]
The Ruling of the NLRC

In affirming the ruling of the labor arbiter that herein petitioners could not be deemed
regular employees under Article 280 of the Labor Code, as amended, Respondent Commission
ratiocinated as follows:

We agree that Art. 280 is not controlling herein. We give due credence to the
conclusion that complainants were hired as an accommodation to [the]
recommendation of civic oriented personalities whose employment[s] were covered
by xxx Employment Contract[s] with special provisions on duration of contract as

specified under Art. 80. Hence, as correctly held by the Labor Arbiter a quo, the terms
of the contract shall be the law between the parties. [10]
The NLRC also declared that the Magna Carta for Disabled Persons was not applicable,
considering the prevailing circumstances/milieu of the case.
Issues

In their Memorandum, petitioners cite the following grounds in support of their cause:

I. The Honorable Commission committed grave abuse of discretion in holding that the
petitioners - money sorters and counters working in a bank - were not regular
employees.
II. The Honorable Commission committed grave abuse of discretion in holding that
the employment contracts signed and renewed by the petitioners - which provide for a
period of six (6) months - were valid.
III. The Honorable Commission committed grave abuse of discretion in not applying
the provisions of the Magna Carta for the Disabled (Republic Act No. 7277), on
proscription against discrimination against disabled persons. [11]
In the main, the Court will resolve whether petitioners have become regular employees.
This Courts Ruling

The petition is meritorious. However, only the employees, who worked for more than six
months and whose contracts were renewed are deemed regular. Hence, their dismissal from
employment was illegal.
Preliminary Matter: Propriety of Certiorari

Respondent Far East Bank and Trust Company argues that a review of the findings of facts
of the NLRC is not allowed in a petition for certiorari. Specifically, it maintains that the Court
cannot pass upon the findings of public respondents that petitioners were not regular employees.
True, the Court, as a rule, does not review the factual findings of public respondents in
a certiorari proceeding. In resolving whether the petitioners have become regular employees, we
shall not change the facts found by the public respondent. Our task is merely to determine
whether the NLRC committed grave abuse of discretion in applying the law to the established
facts, as above-quoted from the assailed Decision.

Main Issue: Are Petitioners Regular Employees?

Petitioners maintain that they should be considered regular employees, because their task as
money sorters and counters was necessary and desirable to the business of respondent
bank. They further allege that their contracts served merely to preclude the application of Article
280 and to bar them from becoming regular employees.
Private respondent, on the other hand, submits that petitioners were hired only as special
workers and should not in any way be considered as part of the regular complement of the Bank.
[12]
Rather, they were special workers under Article 80 of the Labor Code. Private respondent
contends that it never solicited the services of petitioners, whose employment was merely an
accommodation in response to the requests of government officials and civic-minded
citizens. They were told from the start, with the assistance of government representatives, that
they could not become regular employees because there were no plantilla positions for money
sorters, whose task used to be performed by tellers. Their contracts were renewed several times,
not because of need but merely for humanitarian reasons. Respondent submits that as of the
present, the special position that was created for the petitioners no longer exist[s] in private
respondent [bank], after the latter had decided not to renew anymore their special employment
contracts.
At the outset, let it be known that this Court appreciates the nobility of private respondents
effort to provide employment to physically impaired individuals and to make them more
productive members of society. However, we cannot allow it to elude the legal consequences of
that effort, simply because it now deems their employment irrelevant. The facts, viewed in light
of the Labor Code and the Magna Carta for Disabled Persons, indubitably show that the
petitioners, except sixteen of them, should be deemed regular employees. As such, they have
acquired legal rights that this Court is duty-bound to protect and uphold, not as a matter of
compassion but as a consequence of law and justice.
The uniform employment contracts of the petitioners stipulated that they shall be trained for
a period of one month, after which the employer shall determine whether or not they should be
allowed to finish the 6-month term of the contract. Furthermore, the employer may terminate the
contract at any time for a just and reasonable cause. Unless renewed in writing by the employer,
the contract shall automatically expire at the end of the term.
According to private respondent, the employment contracts were prepared in accordance
with Article 80 of the Labor Code, which provides:

ART. 80. Employment agreement. Any employer who employs handicapped workers
shall enter into an employment agreement with them, which agreement shall include:
(a) The names and addresses of the handicapped workers to be employed;
(b) The rate to be paid the handicapped workers which shall be not less than seventy
five (75%) per cent of the applicable legal minimum wage;
(c) The duration of employment period; and

(d) The work to be performed by handicapped workers.


The employment agreement shall be subject to inspection by the Secretary of Labor or
his duly authorized representatives.
The stipulations in the employment contracts indubitably conform with the aforecited
provision. Succeeding events and the enactment of RA No. 7277 (the Magna Carta for Disabled
Persons),[13]however, justify the application of Article 280 of the Labor Code.
Respondent bank entered into the aforesaid contract with a total of 56 handicapped workers
and renewed the contracts of 37 of them. In fact, two of them worked from 1988 to 1993. Verily,
the renewal of the contracts of the handicapped workers and the hiring of others lead to the
conclusion that their tasks were beneficial and necessary to the bank. More important, these facts
show that they were qualified to perform the responsibilities of their positions. In other words,
their disability did not render them unqualified or unfit for the tasks assigned to them.
In this light, the Magna Carta for Disabled Persons mandates that a qualified disabled
employee should be given the same terms and conditions of employment as a qualified ablebodied person. Section 5 of the Magna Carta provides:

Section 5. Equal Opportunity for Employment.No disabled person shall be denied


access to opportunities for suitable employment. A qualified disabled employee shall
be subject to the same terms and conditions of employment and the same
compensation, privileges, benefits, fringe benefits, incentives or allowances as a
qualified able bodied person.
The fact that the employees were qualified disabled persons necessarily removes the
employment contracts from the ambit of Article 80. Since the Magna Carta accords them the
rights of qualified able-bodied persons, they are thus covered by Article 280 of the Labor Code,
which provides:

ART. 280. Regular and Casual Employment. -- The provisions of written agreement to
the contrary notwithstanding and regardless of the oral agreement of the parties, an
employment shall be deemed to be regular where the employee has been engaged to
perform activities which are usually necessary or desirable in the usual business or
trade of the employer, except where the employment has been fixed for a specific
project or undertaking the completion or termination of which has been determined at
the time of the engagement of the employee or where the work or services to be
performed is seasonal in nature and the employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceding
paragraph: Provided, That, any employee who has rendered at least one year of
service, whether such service is continuous or broken, shall be considered as regular
employee with respect to the activity in which he is employed and his employment
shall continue while such activity exists.

The test of whether an employee is regular was laid down in De Leon v. NLRC,[14] in which
this Court held:

The primary standard, therefore, of determining regular employment is the reasonable


connection between the particular activity performed by the employee in relation to
the usual trade or business of the employer. The test is whether the former is usually
necessary or desirable in the usual business or trade of the employer. The connection
can be determined by considering the nature of the work performed and its relation to
the scheme of the particular business or trade in its entirety. Also if the employee has
been performing the job for at least one year, even if the performance is not
continuous and merely intermittent, the law deems repeated and continuing need for
its performance as sufficient evidence of the necessity if not indispensability of that
activity to the business. Hence, the employment is considered regular, but only with
respect to such activity, and while such activity exists.
Without a doubt, the task of counting and sorting bills is necessary and desirable to the
business of respondent bank. With the exception of sixteen of them, petitioners performed these
tasks for more than six months. Thus, the following twenty-seven petitioners should be deemed
regular employees: Marites Bernardo, Elvira Go Diamante, Rebecca E. David, David P. Pascual,
Raquel Estiller, Albert Hallare, Edmund M. Cortez, Joselito O. Agdon, George P. Ligutan Jr.,
Lilibeth Q. Marmolejo, Jose E. Sales, Isabel Mamauag, Violeta G. Montes, Albino Tecson,
Melody V. Gruela, Bernadeth D. Agero, Cynthia de Vera, Lani R. Cortez, Ma. Isabel B.
Concepcion, Margaret Cecilia Canoza, Thelma Sebastian, Ma. Jeanette Cervantes, Jeannie
Ramil, Rozaida Pascual, Pinky Baloloa, Elizabeth Ventura and Grace S. Pardo.
As held by the Court, Articles 280 and 281 of the Labor Code put an end to the pernicious
practice of making permanent casuals of our lowly employees by the simple expedient of
extending to them probationary appointments, ad infinitum.[15] The contract signed by petitioners
is akin to a probationary employment, during which the bank determined the employees fitness
for the job. When the bank renewed the contract after the lapse of the six-month probationary
period, the employees thereby became regular employees.[16] No employer is allowed to
determine indefinitely the fitness of its employees.
As regular employees, the twenty-seven petitioners are entitled to security of tenure; that is,
their services may be terminated only for a just or authorized cause. Because respondent failed to
show such cause,[17] these twenty-seven petitioners are deemed illegally dismissed and therefore
entitled to back wages and reinstatement without loss of seniority rights and other privileges.
[18]
Considering the allegation of respondent that the job of money sorting is no longer available
because it has been assigned back to the tellers to whom it originally belonged, [19] petitioners are
hereby awarded separation pay in lieu of reinstatement.[20]
Because the other sixteen worked only for six months, they are not deemed regular
employees and hence not entitled to the same benefits.
Applicability of the Brent Ruling

Respondent bank, citing Brent School v. Zamora[21] in which the Court upheld the validity of
an employment contract with a fixed term, argues that the parties entered into the contract on
equal footing. It adds that the petitioners had in fact an advantage, because they were backed by
then DSWD Secretary Mita Pardo de Tavera and Representative Arturo Borjal.
We are not persuaded. The term limit in the contract was premised on the fact that the
petitioners were disabled, and that the bank had to determine their fitness for the
position. Indeed, its validity is based on Article 80 of the Labor Code. But as noted earlier,
petitioners proved themselves to be qualified disabled persons who, under the Magna Carta for
Disabled Persons, are entitled to terms and conditions of employment enjoyed by qualified ablebodied individuals; hence, Article 80 does not apply because petitioners are qualified for their
positions. The validation of the limit imposed on their contracts, imposed by reason of their
disability, was a glaring instance of the very mischief sought to be addressed by the new law.
Moreover, it must be emphasized that a contract of employment is impressed with public
interest.[22] Provisions of applicable statutes are deemed written into the contract, and the 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.[23] Clearly, the agreement of the parties
regarding the period of employment cannot prevail over the provisions of the Magna Carta for
Disabled Persons, which mandate that petitioners must be treated as qualified able-bodied
employees.
Respondents reason for terminating the employment of petitioners is instructive. Because
the Bangko Sentral ng Pilipinas (BSP) required that cash in the bank be turned over to the BSP
during business hours from 8:00 a.m. to 5:00 p.m., respondent resorted to nighttime sorting and
counting of money. Thus, it reasons that this task could not be done by deaf mutes because of
their physical limitations as it is very risky for them to travel at night. [24] We find no basis for this
argument. Travelling at night involves risks to handicapped and able-bodied persons alike. This
excuse cannot justify the termination of their employment.
Other Grounds Cited by Respondent

Respondent argues that petitioners were merely accommodated employees. This fact does
not change the nature of their employment. As earlier noted, an employee is regular because of
the nature of work and the length of service, not because of the mode or even the reason for
hiring them.
Equally unavailing are private respondents arguments that it did not go out of its way to
recruit petitioners, and that its plantilla did not contain their positions. In L. T. Datu v. NLRC,
[25]
the Court held that the determination of whether employment is casual or regular does not
depend on the will or word of the employer, and the procedure of hiring x x x but on the nature
of the activities performed by the employee, and to some extent, the length of performance and
its continued existence.
Private respondent argues that the petitioners were informed from the start that they could
not become regular employees. In fact, the bank adds, they agreed with the stipulation in the
contract regarding this point. Still, we are not persuaded. The well-settled rule is that the

character of employment is determined not by stipulations in the contract, but by the nature of
the work performed.[26] Otherwise, no employee can become regular by the simple expedient of
incorporating this condition in the contract of employment.
In this light, we iterate our ruling in Romares v. NLRC:[27]

Article 280 was emplaced in our statute books to prevent the circumvention of the
employees right to be secure in his tenure by indiscriminately and completely ruling
out all written and oral agreements inconsistent with the concept of regular
employment defined therein. Where an employee has been engaged to perform
activities which are usually necessary or desirable in the usual business of the
employer, such employee is deemed a regular employee and is entitled to security of
tenure notwithstanding the contrary provisions of his contract of employment.
xxxxxxxxx

At this juncture, the leading case of Brent School, Inc. v. Zamora proves
instructive. As reaffirmed in subsequent cases, this Court has upheld the legality of
fixed-term employment. It ruled that the decisive determinant in term employment
should not be the activities that the employee is called upon to perform but the day
certain agreed upon the parties for the commencement and termination of their
employment relationship. But this Court went on to say that where from the
circumstances it is apparent that the periods have been imposed to preclude
acquisition of tenurial security by the employee, they should be struck down or
disregarded as contrary to public policy and morals.
In rendering this Decision, the Court emphasizes not only the constitutional bias in favor of
the working class, but also the concern of the State for the plight of the disabled. The noble
objectives of Magna Carta for Disabled Persons are not based merely on charity or
accommodation, but on justice and the equal treatment of qualified persons, disabled or not. In
the present case, the handicap of petitioners (deaf-mutes) is not a hindrance to their work. The
eloquent proof of this statement is the repeated renewal of their employment contracts. Why then
should they be dismissed, simply because they are physically impaired? The Court believes, that,
after showing their fitness for the work assigned to them, they should be treated and granted the
same rights like any other regular employees.
In this light, we note the Office of the Solicitor Generals prayer joining the petitioners cause.
[28]

WHEREFORE, premises considered, the Petition is hereby GRANTED. The June 20, 1995
Decision
and
the
August
4,
1995
Resolution
of
the
NLRC
are REVERSED and SET ASIDE. Respondent Far East Bank and Trust Company is
hereby ORDERED to pay back wages and separation pay to each of the following twenty-seven
(27) petitioners, namely, Marites Bernardo, Elvira Go Diamante, Rebecca E. David, David P.
Pascual, Raquel Estiller, Albert Hallare, Edmund M. Cortez, Joselito O. Agdon, George P.
Ligutan Jr., Lilibeth Q. Marmolejo, Jose E. Sales, Isabel Mamauag, Violeta G. Montes, Albino

Tecson, Melody V. Gruela, Bernadeth D. Agero, Cynthia de Vera, Lani R. Cortez, Ma. Isabel B.
Concepcion, Margaret Cecilia Canoza, Thelma Sebastian, Ma. Jeanette Cervantes, Jeannie
Ramil, Rozaida Pascual, Pinky Baloloa, Elizabeth Ventura and Grace S. Pardo. The NLRC is
hereby directed to compute the exact amount due each of said employees, pursuant to existing
laws and regulations, within fifteen days from the finality of this Decision. No costs.
SO ORDERED.
Romero, (Chairman), Vitug, Purisima, and Gonzaga-Reyes, JJ., concur.

Republic of the Philippines


SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-48645 January 7, 1987
"BROTHERHOOD" LABOR UNITY MOVEMENT OF THE PHILIPPINES, ANTONIO
CASBADILLO, PROSPERO TABLADA, ERNESTO BENGSON, PATRICIO SERRANO, ANTONIO
B. BOBIAS, VIRGILIO ECHAS, DOMINGO PARINAS, NORBERTO GALANG, JUANITO
NAVARRO, NESTORIO MARCELLANA, TEOFILO B. CACATIAN, RUFO L. EGUIA, CARLOS

SUMOYAN, LAMBERTO RONQUILLO, ANGELITO AMANCIO, DANILO B. MATIAR, ET


AL., petitioners,
vs.
HON. RONALDO B. ZAMORA, PRESIDENTIAL ASSISTANT FOR LEGAL AFFAIRS, OFFICE OF
THE PRESIDENT, HON. AMADO G. INCIONG, UNDERSECRETARY OF LABOR, SAN MIGUEL
CORPORATION, GENARO OLIVES, ENRIQUE CAMAHORT, FEDERICO OATE, ERNESTO
VILLANUEVA, ANTONIO BOCALING and GODOFREDO CUETO, respondents.
Armando V. Ampil for petitioners.
Siguion Reyna, Montecillo and Ongsiako Law Office for private respondents.

GUTIERREZ, JR., J.:


The elemental question in labor law of whether or not an employer-employee relationship exists
between petitioners-members of the "Brotherhood Labor Unit Movement of the Philippines" (BLUM)
and respondent San Miguel Corporation, is the main issue in this petition. The disputed decision of
public respondent Ronaldo Zamora, Presidential Assistant for legal Affairs, contains a brief summary
of the facts involved:
1. The records disclose that on July 11, 1969, BLUM filed a complaint with the now
defunct Court of Industrial Relations, charging San Miguel Corporation, and the
following officers: Enrique Camahort, Federico Ofiate Feliciano Arceo, Melencio
Eugenia Jr., Ernesto Villanueva, Antonio Bocaling and Godofredo Cueto of unfair
labor practice as set forth in Section 4 (a), sub-sections (1) and (4) of Republic Act
No. 875 and of Legal dismissal. It was alleged that respondents ordered the
individual complainants to disaffiliate from the complainant union; and that
management dismissed the individual complainants when they insisted on their union
membership.
On their part, respondents moved for the dismissal of the complaint on the grounds
that the complainants are not and have never been employees of respondent
company but employees of the independent contractor; that respondent company
has never had control over the means and methods followed by the independent
contractor who enjoyed full authority to hire and control said employees; and that the
individual complainants are barred by estoppel from asserting that they are
employees of respondent company.
While pending with the Court of Industrial Relations CIR pleadings and testimonial
and documentary evidences were duly presented, although the actual hearing was
delayed by several postponements. The dispute was taken over by the National
Labor Relations Commission (NLRC) with the decreed abolition of the CIR and the
hearing of the case intransferably commenced on September 8, 1975.
On February 9, 1976, Labor Arbiter Nestor C. Lim found for complainants which was
concurred in by the NLRC in a decision dated June 28, 1976. The amount of

backwages awarded, however, was reduced by NLRC to the equivalent of one (1)
year salary.
On appeal, the Secretary in a decision dated June 1, 1977, set aside the NLRC
ruling, stressing the absence of an employer-mployee relationship as borne out by
the records of the case. ...
The petitioners strongly argue that there exists an employer-employee relationship between them
and the respondent company and that they were dismissed for unionism, an act constituting unfair
labor practice "for which respondents must be made to answer."
Unrebutted evidence and testimony on record establish that the petitioners are workers who have
been employed at the San Miguel Parola Glass Factory since 1961, averaging about seven (7) years
of service at the time of their termination. They worked as "cargadores" or "pahinante" at the SMC
Plant loading, unloading, piling or palleting empty bottles and woosen shells to and from company
trucks and warehouses. At times, they accompanied the company trucks on their delivery routes.
The petitioners first reported for work to Superintendent-in-Charge Camahort. They were issued gate
passes signed by Camahort and were provided by the respondent company with the tools,
equipment and paraphernalia used in the loading, unloading, piling and hauling operation.
Job orders emanated from Camahort. The orders are then transmitted to an assistant-officer-incharge. In turn, the assistant informs the warehousemen and checkers regarding the same. The
latter, thereafter, relays said orders to the capatazes or group leaders who then give orders to the
workers as to where, when and what to load, unload, pile, pallet or clean.
Work in the glass factory was neither regular nor continuous, depending wholly on the volume of
bottles manufactured to be loaded and unloaded, as well as the business activity of the company.
Work did not necessarily mean a full eight (8) hour day for the petitioners. However, work,at times,
exceeded the eight (8) hour day and necessitated work on Sundays and holidays. For this, they
were neither paid overtime nor compensation for work on Sundays and holidays.
Petitioners were paid every ten (10) days on a piece rate basis, that is, according to the number of
cartons and wooden shells they were able to load, unload, or pile. The group leader notes down the
number or volume of work that each individual worker has accomplished. This is then made the
basis of a report or statement which is compared with the notes of the checker and warehousemen
as to whether or not they tally. Final approval of report is by officer-in-charge Camahort. The pay
check is given to the group leaders for encashment, distribution, and payment to the petitioners in
accordance with payrolls prepared by said leaders. From the total earnings of the group, the group
leader gets a participation or share of ten (10%) percent plus an additional amount from the earnings
of each individual.
The petitioners worked exclusive at the SMC plant, never having been assigned to other companies
or departments of SMC plant, even when the volume of work was at its minimum. When any of the
glass furnaces suffered a breakdown, making a shutdown necessary, the petitioners work was
temporarily suspended. Thereafter, the petitioners would return to work at the glass plant.
Sometime in January, 1969, the petitioner workers numbering one hundred and forty (140)
organized and affiliated themselves with the petitioner union and engaged in union activities.

Believing themselves entitled to overtime and holiday pay, the petitioners pressed management,
airing other grievances such as being paid below the minimum wage law, inhuman treatment, being
forced to borrow at usurious rates of interest and to buy raffle tickets, coerced by withholding their
salaries, and salary deductions made without their consent. However, their gripes and grievances
were not heeded by the respondents.
On February 6, 1969, the petitioner union filed a notice of strike with the Bureau of Labor Relations
in connection with the dismissal of some of its members who were allegedly castigated for their
union membership and warned that should they persist in continuing with their union activities they
would be dismissed from their jobs. Several conciliation conferences were scheduled in order to
thresh out their differences, On February 12, 1969, union member Rogelio Dipad was dismissed
from work. At the scheduled conference on February 19, 1969, the complainant union through its
officers headed by National President Artemio Portugal Sr., presented a letter to the respondent
company containing proposals and/or labor demands together with a request for recognition and
collective bargaining.
San Miguel refused to bargain with the petitioner union alleging that the workers are not their
employees.
On February 20, 1969, all the petitioners were dismissed from their jobs and, thereafter, denied
entrance to respondent company's glass factory despite their regularly reporting for work. A
complaint for illegal dismissal and unfair labor practice was filed by the petitioners.
The case reaches us now with the same issues to be resolved as when it had begun.
The question of whether an employer-employee relationship exists in a certain situation continues to
bedevil the courts. Some businessmen try to avoid the bringing about of an employer-employee
relationship in their enterprises because that judicial relation spawns obligations connected with
workmen's compensation, social security, medicare, minimum wage, termination pay, and unionism.
(Mafinco Trading Corporation v. Ople, 70 SCRA 139).
In determining the existence of an employer-employee relationship, the elements that are generally
considered are the following: (a) the selection and engagement of the employee; (b) the payment of
wages; (c) the power of dismissal; and (d) the employer's power to control the employee with respect
to the means and methods by which the work is to be accomplished. It. is the called "control test"
that is the most important element (Investment Planning Corp. of the Phils. v. The Social Security
System, 21 SCRA 924; Mafinco Trading Corp. v. Ople, supra,and Rosario Brothers, Inc. v. Ople, 131
SCRA 72).
Applying the above criteria, the evidence strongly indicates the existence of an employer-employee
relationship between petitioner workers and respondent San Miguel Corporation. The respondent
asserts that the petitioners are employees of the Guaranteed Labor Contractor, an independent
labor contracting firm.
The facts and evidence on record negate respondent SMC's claim.
The existence of an independent contractor relationship is generally established by the following
criteria: "whether or not the contractor is carrying on an independent business; the nature and extent
of the work; the skill required; the term and duration of the relationship; the right to assign the

performance of a specified piece of work; the control and supervision of the work to another; the
employer's power with respect to the hiring, firing and payment of the contractor's workers; the
control of the premises; the duty to supply the premises tools, appliances, materials and labor; and
the mode, manner and terms of payment" (56 CJS Master and Servant, Sec. 3(2), 46; See also 27
AM. Jur. Independent Contractor, Sec. 5, 485 and Annex 75 ALR 7260727)
None of the above criteria exists in the case at bar.
Highly unusual and suspect is the absence of a written contract to specify the performance of a
specified piece of work, the nature and extent of the work and the term and duration of the
relationship. The records fail to show that a large commercial outfit, such as the San Miguel
Corporation, entered into mere oral agreements of employment or labor contracting where the same
would involve considerable expenses and dealings with a large number of workers over a long
period of time. Despite respondent company's allegations not an iota of evidence was offered to
prove the same or its particulars. Such failure makes respondent SMC's stand subject to serious
doubts.
Uncontroverted is the fact that for an average of seven (7) years, each of the petitioners had worked
continuously and exclusively for the respondent company's shipping and warehousing department.
Considering the length of time that the petitioners have worked with the respondent company, there
is justification to conclude that they were engaged to perform activities necessary or desirable in the
usual business or trade of the respondent, and the petitioners are, therefore regular employees (Phil.
Fishing Boat Officers and Engineers Union v. Court of Industrial Relations, 112 SCRA 159 and RJL
Martinez Fishing Corporation v. National Labor Relations Commission, 127 SCRA 454).
As we have found in RJL Martinez Fishing Corporation v. National Labor Relations Commission
(supra):
... [T]he employer-employee relationship between the parties herein is not
coterminous with each loading and unloading job. As earlier shown, respondents are
engaged in the business of fishing. For this purpose, they have a fleet of fishing
vessels. Under this situation, respondents' activity of catching fish is a continuous
process and could hardly be considered as seasonal in nature. So that the activities
performed by herein complainants, i.e. unloading the catch of tuna fish from
respondents' vessels and then loading the same to refrigerated vans, are necessary
or desirable in the business of respondents. This circumstance makes the
employment of complainants a regular one, in the sense that it does not depend on
any specific project or seasonable activity. (NLRC Decision, p. 94, Rollo).
lwphl@it

so as it with petitioners in the case at bar. In fact, despite past shutdowns of the glass plant for
repairs, the petitioners, thereafter, promptly returned to their jobs, never having been replaced, or
assigned elsewhere until the present controversy arose. The term of the petitioners' employment
appears indefinite. The continuity and habituality of petitioners' work bolsters their claim of employee
status vis-a-vis respondent company,
Even under the assumption that a contract of employment had indeed been executed between
respondent SMC and the alleged labor contractor, respondent's case will, nevertheless, fail.
Section 8, Rule VIII, Book III of the Implementing Rules of the Labor Code provides:

Job contracting. There is job contracting permissible under the Code if the
following conditions are met:
(1) The contractor carries on an independent business and undertakes the contract
work on his own account under his own responsibility according to his own manner
and method, free from the control and direction of his employer or principal in all
matters connected with the performance of the work except as to the results thereof;
and
(2) The contractor has substantial capital or investment in the form of tools,
equipment, machineries, work premises, and other materials which are necessary in
the conduct of his business.
We find that Guaranteed and Reliable Labor contractors have neither substantial capital nor
investment to qualify as an independent contractor under the law. The premises, tools, equipment
and paraphernalia used by the petitioners in their jobs are admittedly all supplied by respondent
company. It is only the manpower or labor force which the alleged contractors supply, suggesting the
existence of a "labor only" contracting scheme prohibited by law (Article 106, 109 of the Labor Code;
Section 9(b), Rule VIII, Book III, Implementing Rules and Regulations of the Labor Code). In fact,
even the alleged contractor's office, which consists of a space at respondent company's warehouse,
table, chair, typewriter and cabinet, are provided for by respondent SMC. It is therefore clear that the
alleged contractors have no capital outlay involved in the conduct of its business, in the maintenance
thereof or in the payment of its workers' salaries.
The payment of the workers' wages is a critical factor in determining the actuality of an employeremployee relationship whether between respondent company and petitioners or between the alleged
independent contractor and petitioners. It is important to emphasize that in a truly independent
contractor-contractee relationship, the fees are paid directly to the manpower agency in lump sum
without indicating or implying that the basis of such lump sum is the salary per worker multiplied by
the number of workers assigned to the company. This is the rule in Social Security System v. Court
of Appeals (39 SCRA 629, 635).
The alleged independent contractors in the case at bar were paid a lump sum representing only the
salaries the workers were entitled to, arrived at by adding the salaries of each worker which depend
on the volume of work they. had accomplished individually. These are based on payrolls, reports or
statements prepared by the workers' group leader, warehousemen and checkers, where they note
down the number of cartons, wooden shells and bottles each worker was able to load, unload, pile or
pallet and see whether they tally. The amount paid by respondent company to the alleged
independent contractor considers no business expenses or capital outlay of the latter. Nor is the
profit or gain of the alleged contractor in the conduct of its business provided for as an amount over
and above the workers' wages. Instead, the alleged contractor receives a percentage from the total
earnings of all the workers plus an additional amount corresponding to a percentage of the earnings
of each individual worker, which, perhaps, accounts for the petitioners' charge of unauthorized
deductions from their salaries by the respondents.
Anent the argument that the petitioners are not employees as they worked on piece basis, we
merely have to cite our rulings in Dy Keh Beng v. International Labor and Marine Union of the
Philippines (90 SCRA 161), as follows:

"[C]ircumstances must be construed to determine indeed if payment by the piece is


just a method of compensation and does not define the essence of the relation. Units
of time . . . and units of work are in establishments like respondent (sic) just
yardsticks whereby to determine rate of compensation, to be applied whenever
agreed upon. We cannot construe payment by the piece where work is done in such
an establishment so as to put the worker completely at liberty to turn him out and
take in another at pleasure."
Article 106 of the Labor Code provides the legal effect of a labor only contracting scheme, to wit:
... the person or intermediary shall be considered merely as an agent of the employer
who shall be responsible to the workers in the same manner and extent as if the
latter were directly employed by him.
Firmly establishing respondent SMC's role as employer is the control exercised by it over the
petitioners that is, control in the means and methods/manner by which petitioners are to go about
their work, as well as in disciplinary measures imposed by it.
Because of the nature of the petitioners' work as cargadores or pahinantes, supervision as to the
means and manner of performing the same is practically nil. For, how many ways are there to load
and unload bottles and wooden shells? The mere concern of both respondent SMC and the alleged
contractor is that the job of having the bottles and wooden shells brought to and from the warehouse
be done. More evident and pronounced is respondent company's right to control in the discipline of
petitioners. Documentary evidence presented by the petitioners establish respondent SMC's right to
impose disciplinary measures for violations or infractions of its rules and regulations as well as its
right to recommend transfers and dismissals of the piece workers. The inter-office memoranda
submitted in evidence prove the company's control over the petitioners. That respondent SMC has
the power to recommend penalties or dismissal of the piece workers, even as to Abner Bungay who
is alleged by SMC to be a representative of the alleged labor contractor, is the strongest indication of
respondent company's right of control over the petitioners as direct employer. There is no evidence
to show that the alleged labor contractor had such right of control or much less had been there to
supervise or deal with the petitioners.
The petitioners were dismissed allegedly because of the shutdown of the glass manufacturing plant.
Respondent company would have us believe that this was a case of retrenchment due to the closure
or cessation of operations of the establishment or undertaking. But such is not the case here. The
respondent's shutdown was merely temporary, one of its furnaces needing repair. Operations
continued after such repairs, but the petitioners had already been refused entry to the premises and
dismissed from respondent's service. New workers manned their positions. It is apparent that the
closure of respondent's warehouse was merely a ploy to get rid of the petitioners, who were then
agitating the respondent company for benefits, reforms and collective bargaining as a union. There
is no showing that petitioners had been remiss in their obligations and inefficient in their jobs to
warrant their separation.
As to the charge of unfair labor practice because of SMC's refusal to bargain with the petitioners, it is
clear that the respondent company had an existing collective bargaining agreement with the IBM
union which is the recognized collective bargaining representative at the respondent's glass plant.

There being a recognized bargaining representative of all employees at the company's glass plant,
the petitioners cannot merely form a union and demand bargaining. The Labor Code provides the
proper procedure for the recognition of unions as sole bargaining representatives. This must be
followed.
WHEREFORE, IN VIEW OF THE FOREGOING, the petition is GRANTED. The San Miguel
Corporation is hereby ordered to REINSTATE petitioners, with three (3) years backwages. However,
where reinstatement is no longer possible, the respondent SMC is ordered to pay the petitioners
separation pay equivalent to one (1) month pay for every year of service.
SO ORDERED.
Feria (Chairman), Fernan, Alampay and Paras, JJ., concur.

Republic of the Philippines


SUPREME COURT
Manila
EN BANC

G.R. Nos. L-26890-92 May 29, 1970


NWSA CONSOLIDATED UNIONS, petitioner,
vs.
NATIONAL WATERWORKS AND SEWERAGE AUTHORITY, respondent, JESUS CENTENO, ET
AL., intervenors. Cipriano Cid & Associates for petitioner.
The Government Corporate Counsel for respondent.
Jesus Centeno in his own behalf and for other intervenors.

REYES, J.B.L., J.:


Review of an order, dated 18 July 1966, ordering the payment of attorney's fees, in Case No. 19-IPA
of the Court of Industrial Relations, and of its resolution en banc dated 22 September 1966, denying
reconsideration.
Upon certification in 1957 by the President of the Philippines of the existence of a labor dispute, the
case above-mentioned was filed by herein petitioner NWSA Consolidated Unions against herein
respondent National Waterworks and Sewerage Authority demanding implementation of the 40-Hour
Week Law (Republic Act No. 1880), and alleging violations of the collective bargaining agreement,
dated 28 December 1956, concerning "distress pay"; minimum wage of P5.25; promotional
appointments and filling of vacancies of newly created positions; additional compensation for night
work; wage increases to some laborers, and employees; and strike duration pay. After hearing, the
Court of Industrial Relations rendered judgment on 16 January 1961 for the petitioner, which, on
appeal, was affirmed, with some modifications, by the Supreme Court in NAWASA vs. NWSA
Consolidated Unions, L-18938, 31 August 1964, 11 SCRA 766.
The modified judgment was not implemented due, according to the respondent, to the huge outlay
involved, which was about five (5) million pesos. Thus, the petitioner union again went on strike.
Once more the dispute was certified by the President of the Philippines and the case was docketed
as Case No. 66-IPA in the Court of Industrial Relations. In accordance with a partial decision of the

court, based on an agreement of the parties that included the implementation of the decision in Case
No. 19-IPA (Annex "I" to Petition), respondent NAWASA appropriated P300,000.00 in compliance
therewith. Two lawyers of the petitioner union, Attys. Cipriano Cid and Israel Bocobo, who had
participated in both Cases Nos. 19-IPA and 66-IPA, moved for the payment of their attorney's fees.
On agreement of the parties, their fees were fixed and ordered paid by the court. A third lawyer, Atty.
Atanacio Pacis, who did not appear in Case No. 66-IPA but was a counsel for the union in Case No.
19-IPA as member of the Cid Law firm, from which he later separated, also moved for his fees. His
motion was granted in the appealed order of 18 July 1966, issued "pursuant, to the order of 27
November 1964," and allowing payment of attorney's fees to Atty. Atanacio E. Pacis "the sum of
P18,000.00 corresponding to his 6% Attorney's fee on the P300,000.00 appropriated for payment to
workers under the Decision in this case." The 1964 order stated the factual background, on the
matter of attorney's fees, as follows:
Records further show that there exists a contract for professional services entered
into, by and between the Consolidated Unions in the NWSA and Cipriano Cid and
Associates, providing for a twenty per cent (20%) attorney's fee for the latter, for any
and all sums that may be collected by the unions, in this case, or five (5%) of
which shall be given to the general fund of the union.
On 28 July 1961, while the case is still pending motion for reconsideration, an order
was issued by the trial judge the dispositive portion of which reads as follows:
'WHEREFORE, the claim of Attys. Cipriano Cid and Atanacio E.
Pacis of Twenty Per centum (20%) attorney's fee is hereby approved
and shall be noted as lien upon the amount of money that may be
due and payable to the employees involved in the above-entitled
case.'
Three days thereafter, on 21 September 1961, the petitioner union passed a
resolution disauthorizing Atanacio E. Pacis, from handling this case, as a
consequence of his Pacis separation from the law firm of 'Cipriano Cid and
Associates.'
After the separation of Atty. Pacis from the law firm, Atty. Israel Bocobo another
associate took over the prosecution of the case, when the resolution of the Court en
banc was appealed by respondent to the Supreme Court.
It is, therefore, clear that the successful prosecution of the case has to be credited to
Atty. Cipriano Cid, as Chief Counsel and to Attys. Atanacio E. Pacis and Israel
Bocobo as associates.
Briefly, the participations of Attys. Cid, Pacis and Bocobo in the prosecution of this
case may be given as follows. Atty. Cipriano Cid as chief counsel prepared the basic
pleadings. (See Manifestations, dated 5 December 1957) He headed the union panel
during the negotiation and he appeared on trial during the initial stage of the
proceedings. Atty. Atanacio E. Pacis, on the other hand actively handled the
prosecution of the case during the trial on the merits. He was the one who filed the
opposition to the motion for reconsideration filed by the respondent against the
decisions of the trial judge. And finally, when the resolution of the Court en

banc affirming the decisions of the trial judge, was appealed by respondent to the
Supreme Court, Atty Israel Bocobo, handled the appeal. ....
..., this Court is constrained to modify the order of the trial judge dated 26 July 1961,
under its power granted under Section 17 Commonwealth Act 103. The previous
award (20%) is hereby increased to twenty three percent (23%) to be distributed as
follows:
Atty. Cipriano Cid ..................................... 6%
Atty. Atanacio E. Pacis ............................ 6%
Atty. Israel Bocobo ................................... 6%
NWSA Consolidated Unions .................. 5%
T o t a l ......................................................... 23%
Let these amounts therefore be segregated by respondent company from the awards
thus granted under this case, and delivered to the persons and/or entity mentioned
herein. (Annex "H" to Petition.)
This 1964 pronouncement was in effect a violation of the contract between the NWSA Consolidated
Unions with their counsel, that provided only for 20% attorneys fees, of which 5 per cent was to go to
the general fund of the Unions, as recognized in the order of 28 July 1961, and does not appear to
have taken into consideration the circumstances that determine the fees of counsel (Rule 138,
section 24) to avoid exploitation of laborers (See Meralco Workers' Union vs. CIR, L-24505, 15 May
1970); but as said order of 27 November 1964 was never appealed or reconsidered, it became final
and unalterable. Nevertheless, the Unions appealed the order of 18 July 1966 ordering the payment
of Atty. Pacis' share of P18,000.00 (being 6% of the P300,000.00 appropriated by the employer
NWSA in partial satisfaction of the workers' claims). This appeal is grounded on the allegation that
the action of NWSA was made by virtue of a partial decision in CIR Case No. 66-IPA, and, as Atty.
Pacis admittedly had no intervention in said case, and only acted as counsel in the previous Case
No. 16-IPA, the appealed order in effect deprived the Unions of property without due process of law.
We find no merit in the contention of appellant Unions. It is true that the employer appropriated the
money pursuant to an agreement reached upon conciliation of the parties by the CIR in Case 66IPA. But the conciliated stipulation makes it very clear that the appropriation was made to satisfy the
Union claims under the Supreme Court's 1964 decision, in Case G.R. No. L-18938, that preceded
CIR Case No. 66-IPA. As embodied in the partial decision of 9 March 1966, the conciliated
agreement explicitly provided as follows:
4. As to Item IV: 'The NWSA agrees to implement immediately all courts decision
pertaining to NWSA workers specifically G.R. No. L-18938, (CIR 19-IPA, 19-IPA(1) &
(2), 27-IPA, 45-IPA and 52-IPA, more particularly relative to the following matters:
(1) 25% additional compensation for services rendered on Sundays & Holidays;
(2) 25% additional compensation for distress pay;
(3) Wage differential for those employees whose salaries were diminished in
connection with the implementation of the 40-hour-5-day-a-week-law per CIR Case

19-IPA (1) (Re-7/5 wrong computation);' the parties agreed to the same, with the
modification that the obligations roughly estimated as P800,000.00 will be paid in this
manner: P300,000.00 would be paid at the end of March, 1966 and the balance of
P500,000.00 would be paid on three (3) equal installments on quarterly basis, and
that the current obligations are to be met accordingly.
xxx xxx xxx
It will be seen that the paragraph transcribed makes no reference to the "implementation" of Case
No. 66-IPA, but explicitly refers to the award in Case No. 16-IPA. And this is logical, since Case No.
66-IPA had not yet been fully decided, and was still under consideration by the labor court. Hence, it
is just that Atty. Pacis should share in the 23% counsel fees corresponding to the amounts
appropriated by the NWSA under Item IV above-mentioned of the collective bargaining agreement
since these were the claims adjudicated in the case wherein he acted as one of the attorneys. No
error was, therefore, committed in the appealed order of 18 July 1966.
IN VIEW THEREOF, the appealed order is affirmed, with costs against appellants.
Concepcion, C.J., Dizon, Makalintal, Zaldivar, Fernando, Teehankee, Barredo and Villamor JJ.,
concur.
Castro, J., is on leave.

Republic of the Philippines


SUPREME COURT
Manila
SECOND DIVISION

G.R. No. 101761. March 24, 1993.


NATIONAL SUGAR REFINERIES CORPORATION, petitioner, vs. NATIONAL LABOR RELATIONS
COMMISSION and NBSR SUPERVISORY UNION, (PACIWU) TUCP, respondents.
Jose Mario C. Bunag for petitioner.
The Solicitor General and the Chief Legal Officer, NLRC, for public respondent.
Zoilo V. de la Cruz for private respondent.
DECISION
REGALADO, J p:
The main issue presented for resolution in this original petition for certiorari is whether supervisory
employees, as defined in Article 212 (m), Book V of the Labor Code, should be considered as
officers or members of the managerial staff under Article 82, Book III of the same Code, and hence
are not entitled to overtime rest day and holiday pay.
Petitioner National Sugar Refineries Corporation (NASUREFCO), a corporation which is fully owned
and controlled by the Government, operates three (3) sugar refineries located at Bukidnon, Iloilo and
Batangas. The Batangas refinery was privatized on April 11, 1992 pursuant to Proclamation No. 50.
1 Private respondent union represents the former supervisors of the NASUREFCO Batangas Sugar
Refinery, namely, the Technical Assistant to the Refinery Operations Manager, Shift Sugar

Warehouse Supervisor, Senior Financial/Budget Analyst, General Accountant, Cost Accountant,


Sugar Accountant, Junior Financial/Budget Analyst, Shift Boiler Supervisor,, Shift Operations
Chemist, Shift Electrical Supervisor, General Services Supervisor, Instrumentation Supervisor,
Community Development Officer, Employment and Training Supervisor, Assistant Safety and
Security Officer, Head and Personnel Services, Head Nurse, Property Warehouse Supervisor, Head
of Inventory Control Section, Shift Process Supervisor, Day Maintenance Supervisor and Motorpool
Supervisor.
On June 1, 1988, petitioner implemented a Job Evaluation (JE) Program affecting all employees,
from rank-and-file to department heads. The JE Program was designed to rationalized the duties
and functions of all positions, reestablish levels of responsibility, and recognize both wage and
operational structures. Jobs were ranked according to effort, responsibility, training and working
conditions and relative worth of the job. As a result, all positions were re-evaluated, and all
employees including the members of respondent union were granted salary adjustments and
increases in benefits commensurate to their actual duties and functions.
We glean from the records that for about ten years prior to the JE Program, the members of
respondent union were treated in the same manner as rank-and file employees. As such, they used
to be paid overtime, rest day and holiday pay pursuant to the provisions of Articles 87, 93 and 94 of
the Labor Code as amended. With the implementation of the JE Program, the following adjustments
were made: (1) the members of respondent union were re-classified under levels S-5 to S-8 which
are considered managerial staff for purposes of compensation and benefits; (2) there was an
increase in basic pay of the average of 50% of their basic pay prior to the JE Program, with the
union members now enjoying a wide gap (P1,269.00 per month) in basic pay compared to the
highest paid rank-and-file employee; (3) longevity pay was increased on top of alignment
adjustments; (4) they were entitled to increased company COLA of P225.00 per month; (5) there
was a grant of P100.00 allowance for rest day/holiday work.
On May 11, 1990, petitioner NASUREFCO recognized herein respondent union, which was
organized pursuant to Republic Act NO. 6715 allowing supervisory employees to form their own
unions, as the bargaining representative of all the supervisory employees at the NASUREFCO
Batangas Sugar Refinery.
Two years after the implementation of the JE Program, specifically on June 20, 1990, the members
of herein respondent union filed a complainant with the executive labor arbiter for non-payment of
overtime, rest day and holiday pay allegedly in violation of Article 100 of the Labor Code.
On January 7, 1991, Executive Labor Arbiter Antonio C. Pido rendered a decision 2 disposing as
follows:
"WHEREFORE, premises considered, respondent National Sugar refineries Corporation is hereby
directed to
1. pay the individual members of complainant union the usual overtime pay, rest day pay and holiday
pay enjoyed by them instead of the P100.00 special allowance which was implemented on June 11,
1988; and
2. pay the individual members of complainant union the difference in money value between the
P100.00 special allowance and the overtime pay, rest day pay and holiday pay that they ought to
have received from June 1, 1988.
All other claims are hereby dismissed for lack of merit.

SO ORDERED."
In finding for the members therein respondent union, the labor ruled that the along span of time
during which the benefits were being paid to the supervisors has accused the payment thereof to
ripen into contractual obligation; at the complainants cannot be estopped from questioning the
validity of the new compensation package despite the fact that they have been receiving the benefits
therefrom, considering that respondent union was formed only a year after the implementation of the
Job Evaluation Program, hence there was no way for the individual supervisors to express their
collective response thereto prior to the formation of the union; and the comparative computations
presented by the private respondent union showed that the P100.00 special allowance given
NASUREFCO fell short of what the supervisors ought to receive had the overtime pay rest day pay
and holiday pay not been discontinued, which arrangement, therefore, amounted to a diminution of
benefits.
On appeal, in a decision promulgated on July 19, 1991 by its Third Division, respondent National
Labor Relations Commission (NLRC) affirmed the decision of the labor arbiter on the ground that the
members of respondent union are not managerial employees, as defined under Article 212 (m) of the
Labor Code and, therefore, they are entitled to overtime, rest day and holiday pay. Respondent
NLRC declared that these supervisory employees are merely exercising recommendatory powers
subject to the evaluation, review and final action by their department heads; their responsibilities do
not require the exercise of discretion and independent judgment; they do not participate in the
formulation of management policies nor in the hiring or firing of employees; and their main function is
to carry out the ready policies and plans of the corporation. 3 Reconsideration of said decision was
denied in a resolution of public respondent dated August 30, 1991. 4
Hence this petition for certiorari, with petitioner NASUREFCO asseverating that public respondent
commission committed a grave abuse of discretion in refusing to recognized the fact that the
members of respondent union are members of the managerial staff who are not entitled to overtime,
rest day and holiday pay; and in making petitioner assume the "double burden" of giving the benefits
due to rank-and-file employees together with those due to supervisors under the JE Program.
We find creditable merit in the petition and that the extraordinary writ of certiorari shall accordingly
issue.
The primordial issue to be resolved herein is whether the members of respondent union are entitled
to overtime, rest day and holiday pay. Before this can be resolved, however it must of necessity be
ascertained first whether or not the union members, as supervisory employees, are to be considered
as officers or members of the managerial staff who are exempt from the coverage of Article 82 of the
Labor Code.
It is not disputed that the members of respondent union are supervisory employees, as defined
employees, as defined under Article 212(m), Book V of the Labor Code on Labor Relations, which
reads:
"(m) 'Managerial employee' is one who is vested with powers or prerogatives to lay down and
execute management policies and/or to hire, transfer, suspend, lay-off, recall, discharged, assign or
discipline employees. Supervisory employees are those who, in the interest of the employer
effectively recommend such managerial actions if the exercise of such authority is not merely
routinary or clerical in nature but requires the use of independent judgment. All employees not falling
within any of those above definitions are considered rank-and-file employees of this Book."

Respondent NLRC, in holding that the union members are entitled to overtime, rest day and holiday
pay, and in ruling that the latter are not managerial employees, adopted the definition stated in the
aforequoted statutory provision.
Petitioner, however, avers that for purposes of determining whether or not the members of
respondent union are entitled to overtime, rest day and holiday pay, said employees should be
considered as "officers or members of the managerial staff" as defined under Article 82, Book III of
the Labor Code on "Working Conditions and Rest Periods" and amplified in Section 2, Rule I, Book
III of the Rules to Implement the Labor Code, to wit:
"Art. 82 Coverage. The provisions of this title shall apply to employees in all establishments and
undertakings whether for profit or not, but not to government employees, managerial employees,
field personnel, members of the family of the employer who are dependent on him for support,
domestic helpers, persons in the personal service of another, and workers who are paid by results
as determined by the Secretary of Labor in Appropriate regulations.
"As used herein, 'managerial employees' refer to those whose primary duty consists of the
management of the establishment in which they are employed or of a department or subdivision
thereof, and to other officers or members of the managerial staff." (Emphasis supplied.)
xxx xxx xxx
'Sec. 2. Exemption. The provisions of this rule shall not apply to the following persons if they
qualify for exemption under the condition set forth herein:
xxx xxx xxx
(b) Managerial employees, if they meet all of the following conditions, namely:
(1) Their primary duty consists of the management of the establishment in which they are employed
or of a department or subdivision thereof:
(2) They customarily and regularly direct the work of two or more employees therein:
(3) They have the authority to hire or fire other employees of lower rank; or their suggestions and
recommendations as to the hiring and firing and as to the promotion or any other change of status of
other employees are given particular weight.
(c) Officers or members of a managerial staff if they perform the following duties and responsibilities:
(1) The primary duty consists of the performance of work directly related to management policies of
their employer;
(2) Customarily and regularly exercise discretion and independent judgment;
(3) (i) Regularly and directly assist a proprietor or a managerial employee whose primary duty
consists of the management of the establishment in which he is employed or subdivision thereof; or
(ii) execute under general supervision work along specialized or technical lines requiring special
training, experience, or knowledge; or (iii) execute under general supervision special assignments
and tasks; and

(4) Who do not devote more 20 percent of their hours worked in a work-week to activities which are
not directly and closely related to the performance of the work described in paragraphs (1), (2), and
above."
It is the submission of petitioner that while the members of respondent union, as supervisors, may
not be occupying managerial positions, they are clearly officers or members of the managerial staff
because they meet all the conditions prescribed by law and, hence, they are not entitled to overtime,
rest day and supervisory employees under Article 212 (m) should be made to apply only to the
provisions on Labor Relations, while the right of said employees to the questioned benefits should
be considered in the light of the meaning of a managerial employee and of the officers or members
of the managerial staff, as contemplated under Article 82 of the Code and Section 2, Rule I Book III
of the implementing rules. In other words, for purposes of forming and joining unions, certification
elections, collective bargaining, and so forth, the union members are supervisory employees. In
terms of working conditions and rest periods and entitlement to the questioned benefits, however,
they are officers or members of the managerial staff, hence they are not entitled thereto.
While the Constitution is committed to the policy of social justice and the protection of the working
class, it should not be supposed that every labor dispute will be automatically decided in favor of
labor. Management also has its own rights which, as such, are entitled to respect and enforcement in
the interest of simple fair play. Out of its concern for those with less privileges in life, this Court has
inclined more often than not toward the worker and upheld his cause in his conflicts with the
employer. Such favoritism, however, has not blinded us to the rule that justice is in every case for the
deserving, to be dispensed in the light of the established facts and the applicable law and doctrine. 5
This is one such case where we are inclined to tip the scales of justice in favor of the employer.
The question whether a given employee is exempt from the benefits of the law is a factual one
dependent on the circumstances of the particular case, In determining whether an employee is
within the terms of the statutes, the criterion is the character of the work performed, rather than the
title of the employee's position. 6
Consequently, while generally this Court is not supposed to review the factual findings of respondent
commission, substantial justice and the peculiar circumstances obtaining herein mandate a deviation
from the rule.
A cursory perusal of the Job Value Contribution Statements 7 of the union members will readily show
that these supervisory employees are under the direct supervision of their respective department
superintendents and that generally they assist the latter in planning, organizing, staffing, directing,
controlling communicating and in making decisions in attaining the company's set goals and
objectives. These supervisory employees are likewise responsible for the effective and efficient
operation of their respective departments. More specifically, their duties and functions include,
among others, the following operations whereby the employee:
1) assists the department superintendent in the following:
a) planning of systems and procedures relative to department activities;
b) organizing and scheduling of work activities of the department, which includes employee shifting
scheduled and manning complement;
c) decision making by providing relevant information data and other inputs;

d) attaining the company's set goals and objectives by giving his full support;
e) selecting the appropriate man to handle the job in the department; and
f) preparing annual departmental budget;
2) observes, follows and implements company policies at all times and recommends disciplinary
action on erring subordinates;
3) trains and guides subordinates on how to assume responsibilities and become more productive;
4) conducts semi-annual performance evaluation of his subordinates and recommends necessary
action for their development/advancement;
5) represents the superintendent or the department when appointed and authorized by the former;
6) coordinates and communicates with other inter and intra department supervisors when necessary;
7) recommends disciplinary actions/promotions;
8) recommends measures to improve work methods, equipment performance, quality of service and
working conditions;
9) sees to it that safety rules and regulations and procedure and are implemented and followed by all
NASUREFCO employees, recommends revisions or modifications to said rules when deemed
necessary, and initiates and prepares reports for any observed abnormality within the refinery;
10) supervises the activities of all personnel under him and goes to it that instructions to
subordinates are properly implemented; and
11) performs other related tasks as may be assigned by his immediate superior.
From the foregoing, it is apparent that the members of respondent union discharge duties and
responsibilities which ineluctably qualify them as officers or members of the managerial staff, as
defined in Section 2, Rule I Book III of the aforestated Rules to Implement the Labor Code, viz.: (1)
their primary duty consists of the performance of work directly related to management policies of
their employer; (2) they customarily and regularly exercise discretion and independent judgment; (3)
they regularly and directly assist the managerial employee whose primary duty consist of the
management of a department of the establishment in which they are employed (4) they execute,
under general supervision, work along specialized or technical lines requiring special training,
experience, or knowledge; (5) they execute, under general supervision, special assignments and
tasks; and (6) they do not devote more than 20% of their hours worked in a work-week to activities
which are not directly and clearly related to the performance of their work hereinbefore described.
Under the facts obtaining in this case, we are constrained to agree with petitioner that the union
members should be considered as officers and members of the managerial staff and are, therefore,
exempt from the coverage of Article 82. Perforce, they are not entitled to overtime, rest day and
holiday.
The distinction made by respondent NLRC on the basis of whether or not the union members are
managerial employees, to determine the latter's entitlement to the questioned benefits, is misplaced

and inappropriate. It is admitted that these union members are supervisory employees and this is
one instance where the nomenclatures or titles of their jobs conform with the nature of their
functions. Hence, to distinguish them from a managerial employee, as defined either under Articles
82 or 212 (m) of the Labor Code, is puerile and in efficacious. The controversy actually involved here
seeks a determination of whether or not these supervisory employees ought to be considered as
officers or members of the managerial staff. The distinction, therefore, should have been made along
that line and its corresponding conceptual criteria.
II. We likewise no not subscribe to the finding of the labor arbiter that the payment of the questioned
benefits to the union members has ripened into a contractual obligation.
A. Prior to the JE Program, the union members, while being supervisors, received benefits similar to
the rank-and-file employees such as overtime, rest day and holiday pay, simply because they were
treated in the same manner as rank-and-file employees, and their basic pay was nearly on the same
level as those of the latter, aside from the fact that their specific functions and duties then as
supervisors had not been properly defined and delineated from those of the rank-and-file. Such fact
is apparent from the clarification made by petitioner in its motion for reconsideration 8 filed with
respondent commission in NLRC Case No. CA No. I-000058, dated August 16, 1991, wherein, it
lucidly explained:
"But, complainants no longer occupy the same positions they held before the JE Program. Those
positions formerly classified as 'supervisory' and found after the JE Program to be rank-and-file were
classified correctly and continue to receive overtime, holiday and restday pay. As to them, the
practice subsists.
"However, those whose duties confirmed them to be supervisory, were re-evaluated, their duties redefined and in most cases their organizational positions re-designated to confirm their superior rank
and duties. Thus, after the JE program, complainants cannot be said to occupy the same positions."
9
It bears mention that this positional submission was never refuted nor controverted by respondent
union in any of its pleadings filed before herein public respondent or with this Court. Hence, it can be
safely concluded therefrom that the members of respondent union were paid the questioned benefits
for the reason that, at that time, they were rightfully entitled thereto. Prior to the JE Program, they
could not be categorically classified as members or officers of the managerial staff considering that
they were then treated merely on the same level as rank-and-file. Consequently, the payment
thereof could not be construed as constitutive of voluntary employer practice, which cannot be now
be unilaterally withdrawn by petitioner. To be considered as such, it should have been practiced over
a long period of time, and must be shown to have been consistent and deliberate. 10
The test or rationale of this rule on long practice requires an indubitable showing that the employer
agreed to continue giving the benefits knowingly fully well that said employees are not covered by
the law requiring payment thereof. 11 In the case at bar, respondent union failed to sufficiently
establish that petitioner has been motivated or is wont to give these benefits out of pure generosity.
B. It remains undisputed that the implementation of the JE Program, the members of private
respondent union were re-classified under levels S-5 S-8 which were considered under the program
as managerial staff purposes of compensation and benefits, that they occupied re-evaluated
positions, and that their basic pay was increased by an average of 50% of their basic salary prior to
the JE Program. In other words, after the JE Program there was an ascent in position, rank and
salary. This in essence is a promotion which is defined as the advancement from one position to

another with an increase in duties and responsibilities as authorized by law, and usually
accompanied by an increase in salary. 12
Quintessentially, with the promotion of the union members, they are no longer entitled to the benefits
which attach and pertain exclusively to their positions. Entitlement to the benefits provided for by law
requires prior compliance with the conditions set forth therein. With the promotion of the members of
respondent union, they occupied positions which no longer met the requirements imposed by law.
Their assumption of these positions removed them from the coverage of the law, ergo, their
exemption therefrom.
As correctly pointed out by petitioner, if the union members really wanted to continue receiving the
benefits which attach to their former positions, there was nothing to prevent them from refusing to
accept their promotions and their corresponding benefits. As the sating goes by, they cannot have
their cake and eat it too or, as petitioner suggests, they could not, as a simple matter of law and
fairness, get the best of both worlds at the expense of NASUREFCO.
Promotion of its employees is one of the jurisprudentially-recognized exclusive prerogatives of
management, provided it is done in good faith. In the case at bar, private respondent union has
miserably failed to convince this Court that the petitioner acted implementing the JE Program. There
is no showing that the JE Program was intended to circumvent the law and deprive the members of
respondent union of the benefits they used to receive.
Not so long ago, on this particular score, we had the occasion to hold that:
". . . it is the prerogative of the management to regulate, according to its discretion and judgment, all
aspects of employment. This flows from the established rule that labor law does not authorize the
substitution of the judgment of the employer in the conduct of its business. Such management
prerogative may be availed of without fear of any liability so long as it is exercised in good faith for
the advancement of the employer's interest and not for the purpose of defeating on circumventing
the rights of employees under special laws or valid agreement and are not exercised in a malicious,
harsh, oppressive, vindictive or wanton manner or out of malice or spite." 13
WHEREFORE, the impugned decision and resolution of respondent National Labor Relations
Commission promulgated on July 19, 1991 and August 30, 1991, respectively, are hereby
ANNULLED and SET ASIDE for having been rendered and adopted with grave abuse of discretion,
and the basic complaint of private respondent union is DISMISSED.
Narvasa, C . J ., Padilla, Nocon and Campos, Jr., JJ., concur

Republic of the Philippines


SUPREME COURT
Manila
EN BANC
G.R. No. L-18353

July 31, 1963

SAN MIGUEL BREWERY, INC., petitioner,


vs.
DEMOCRATIC LABOR ORGANIZATION, ET AL., respondents.
Paredes, Poblador, Cruz and Nazareno for petitioner.
Delfin N. Mercader for respondents.
BAUTISTA ANGELO, J.:
On January 27, 1955, the Democratic Labor Association filed complaint against the San Miguel
Brewery, Inc. embodying 12 demands for the betterment of the conditions of employment of its
members. The company filed its answer to the complaint specifically denying its material averments
and answering the demands point by point. The company asked for the dismissal of the complaint.
At the hearing held sometime in September, 1955, the union manifested its desire to confine its
claim to its demands for overtime, night-shift differential pay, and attorney's fees, although it was
allowed to present evidence on service rendered during Sundays and holidays, or on its claim for
additional separation pay and sick and vacation leave compensation.
1wph1.t

After the case had been submitted for decision, Presiding Judge Jose S. Bautista, who was
commissioned to receive the evidence, rendered decision expressing his disposition with regard to
the points embodied in the complaint on which evidence was presented. Specifically, the disposition
insofar as those points covered by this petition for review are concerned, is as follows:
1. With regard to overtime compensation, Judge Bautista held that the provisions of the
Eight-Hour Labor Law apply to the employees concerned for those working in the field or

engaged in the sale of the company's products outside its premises and consequently they
should be paid the extra compensation accorded them by said law in addition to the monthly
salary and commission earned by them, regardless of the meal allowance given to
employees who work up to late at night.
2. As to employees who work at night, Judge Bautista decreed that they be paid their
corresponding salary differentials for work done at night prior to January 1, 1949 with the
present qualification: 25% on the basis of their salary to those who work from 6:00 to 12:00
p.m., and 75% to those who work from 12:01 to 6:00 in the morning.
3. With regard to work done during Sundays and holidays, Judge Bautista also decreed that
the employees concerned be paid an additional compensation of 25% as provided for in
Commonwealth Act No. 444 even if they had been paid a compensation on monthly salary
basis.
The demands for the application of the Minimum Wage Law to workers paid on "pakiao" basis,
payment of accumulated vacation and sick leave and attorney's fees, as well as the award of
additional separation pay, were either dismissed, denied, or set aside.
Its motion for reconsideration having been denied by the industrial court en banc, which affirmed the
decision of the court a quo with few exceptions, the San Miguel Brewery, Inc. interposed the present
petition for review.
Anent the finding of the court a quo, as affirmed by the Court of Industrial Relations, to the effect that
outside or field sales personnel are entitled to the benefits of the Eight-Hour Labor Law, the pertinent
facts are as follows:
After the morning roll call, the employees leave the plant of the company to go on their respective
sales routes either at 7:00 a.m. for soft drinks trucks, or 8:00 a.m. for beer trucks. They do not have
a daily time record. The company never require them to start their work as outside sales personnel
earlier than the above schedule.
The sales routes are so planned that they can be completed within 8 hours at most, or that the
employees could make their sales on their routes within such number of hours variable in the sense
that sometimes they can be completed in less than 8 hours, sometimes 6 to 7 hours, or more. The
moment these outside or field employees leave the plant and while in their sales routes they are on
their own, and often times when the sales are completed, or when making short trip deliveries only,
they go back to the plant, load again, and make another round of sales. These employees receive
monthly salaries and sales commissions in variable amounts. The amount of compensation they
receive is uncertain depending upon their individual efforts or industry. Besides the monthly salary,
they are paid sales commission that range from P30, P40, sometimes P60, P70, to sometimes P90,
P100 and P109 a month, at the rate of P0.01 to P0.01- per case.
It is contended that since the employees concerned are paid a commission on the sales they make
outside of the required 8 hours besides the fixed salary that is paid to them, the Court of Industrial
Relations erred in ordering that they be paid an overtime compensation as required by the EightHour Labor Law for the reason that the commission they are paid already takes the place of such
overtime compensation. Indeed, it is claimed, overtime compensation is an additional pay for work or
services rendered in excess of 8 hours a day by an employee, and if the employee is already given

extra compensation for labor performed in excess of 8 hours a day, he is not covered by the law. His
situation, the company contends, can be likened to an employee who is paid on piece-work,
"pakiao", or commission basis, which is expressly excluded from the operation of the Eight-Hour
Labor Law.1
We are in accord with this view, for in our opinion the Eight-Hour Labor Law only has application
where an employee or laborer is paid on a monthly or daily basis, or is paid a monthly or daily
compensation, in which case, if he is made to work beyond the requisite period of 8 hours, he should
be paid the additional compensation prescribed by law. This law has no application when the
employee or laborer is paid on a piece-work, "pakiao", or commission basis, regardless of the time
employed. The philosophy behind this exemption is that his earnings in the form of commission
based on the gross receipts of the day. His participation depends upon his industry so that the more
hours he employs in the work the greater are his gross returns and the higher his commission. This
philosophy is better explained in Jewel Tea Co. v. Williams, C.C.A. Okla., 118 F. 2d 202, as follows:
The reasons for excluding an outside salesman are fairly apparent. Such salesman, to a
greater extent, works individually. There are no restrictions respecting the time he shall work
and he can earn as much or as little, within the range of his ability, as his ambition dictates.
In lieu of overtime he ordinarily receives commissions as extra compensation. He works
away from his employer's place of business, is not subject to the personal supervision of his
employer, and his employer has no way of knowing the number of hours he works per day.
True it is that the employees concerned are paid a fixed salary for their month of service, such as
Benjamin Sevilla, a salesman, P215; Mariano Ruedas, a truck driver, P155; Alberto Alpaza and
Alejandro Empleo, truck helpers, P125 each, and sometimes they work in excess of the required 8hour period of work, but for their extra work they are paid a commission which is in lieu of the extra
compensation to which they are entitled. The record shows that these employees during the period
of their employment were paid sales commission ranging from P30, P40, sometimes P60, P70, to
sometimes P90, P100 and P109 a month depending on the volume of their sales and their rate of
commission per case. And so, insofar is the extra work they perform, they can be considered as
employees paid on piece work, "pakiao", or commission basis. The Department of Labor, called
upon to implement, the Eight-Hour Labor Law, is of this opinion when on December 9, 1957 it made
the ruling on a query submitted to it, thru the Director of the Bureau of Labor Standards, to the effect
that field sales personnel receiving regular monthly salaries, plus commission, are not subject to the
Eight-Hour Labor Law. Thus, on this point, said official stated:
. . . Moreover, when a fieldman receives a regular monthly salary plus commission on
percentage basis of his sales, it is also the established policy of the Office to consider his
commission as payment for the extra time he renders in excess of eight hours, thereby
classifying him as if he were on piecework basis, and therefore, technically speaking, he is
not subject to the Eight-Hour Labor Law.
We are, therefore, of the opinion that the industrial court erred in holding that the Eight-Hour Labor
Law applies to the employees composing the outside service force and in ordering that they be paid
the corresponding additional compensation.
With regard to the claim for night salary differentials, the industrial court found that claimants Magno
Johnson and Jose Sanchez worked with the respondent company during the period specified by
them in their testimony and that watchmen Zoilo Illiga, Inocentes Prescillas and Daniel Cayuca

rendered night duties once every three weeks continuously during the period of the employment and
that they were never given any additional compensation aside from their monthly regular salaries.
The court found that the company started paying night differentials only in January, 1949 but never
before that time. And so it ordered that the employees concerned be paid 25% additional
compensation for those who worked from 6:00 to 12:00 p.m. and 75% additional compensation for
those who worked from 12:01 to 6: 00 in the morning. It is now contended that this ruling is
erroneous because an award for night shift differentials cannot be given retroactive effect but can
only be entertained from the date of demand which was on January 27, 1953, citing in support
thereof our ruling in Earnshaws Docks & Honolulu Iron Works v. The Court of Industrial Relations, et
al., L-8896, January 25, 1957.
This ruling, however, has no application here for it appears that before the filing of the petition
concerning this claim a similar one had already been filed long ago which had been the subject of
negotiations between the union and the company which culminated in a strike in 1952.
Unfortunately, however, the strike fizzled out and the strikers were ordered to return to work with the
understanding that the claim for night salary differentials should be settled in court. It is perhaps for
this reason that the court a quo granted this claim in spite of the objection of the company to the
contrary.
The remaining point to be determined refers to the claim for pay for Sundays and holidays for
service performed by some claimants who were watchmen or security guards. It is contended that
these employees are not entitled to extra pay for work done during these days because they are
paid on a monthly basis and are given one day off which may take the place of the work they may
perform either on Sunday or any holiday.
We disagree with this claim because it runs counter to law. Section 4 of Commonwealth Act No. 444
expressly provides that no person, firm or corporation may compel an employee or laborer to work
during Sundays and legal holidays unless he is paid an additional sum of 25% of his regular
compensation. This proviso is mandatory, regardless of the nature of compensation. The only
exception is with regard to public utilities who perform some public service.
WHEREFORE, the decision of the industrial court is hereby modified as follows: the award with
regard to extra work performed by those employed in the outside or field sales force is set aside. The
rest of the decision insofar as work performed on Sundays and holidays covering watchmen and
security guards, as well as the award for night salary differentials, is affirmed. No costs.
Bengzon, C.J., Labrador, Concepcion, Reyes, J.B.L., Barrera, Paredes, Dizon, Regala and
Makalintal, JJ., concur.
Padilla, J., took no part.
Footnotes
1

Section 2, Commonwealth Act No. 444; Lara v. Del Rosario, L-6339, April 20, 1954.

Republic of the Philippines


SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 78210 February 28, 1989
TEOFILO ARICA, DANILO BERNABE, MELQUIADES DOHINO, ABONDIO OMERTA, GIL
TANGIHAN, SAMUEL LABAJO, NESTOR NORBE, RODOLFO CONCEPCION, RICARDO RICHA,
RODOLFO NENO, ALBERTO BALATRO, BENJAMIN JUMAMOY, FERMIN DAAROL, JOVENAL
ENRIQUEZ, OSCAR BASAL, RAMON ACENA, JAIME BUGTAY, and 561 OTHERS, HEREIN
REPRESENTED BY KORONADO B. APUZEN, petitioners
vs.
NATIONAL LABOR RELATIONS COMMISSION, HONORABLE FRANKLIN DRILON,
HONORABLE CONRADO B. MAGLAYA, HONORABLE ROSARIO B. ENCARNACION, and
STANDARD (PHILIPPINES) FRUIT CORPORATION, respondents.
Koronado B. Apuzen and Jose C. Espinas for petitioners.
The Solicitor General for public respondent.
Dominguez & Paderna Law Offices Co. for private respondent.

PARAS, J.:

This is a petition for review on certiorari of the decision of the National Labor Relations Commission
dated December 12, 1986 in NLRC Case No. 2327 MC-XI-84 entitled Teofilo Arica et al. vs.
Standard (Phil.) Fruits Corporation (STANFILCO) which affirmed the decision of Labor Arbiter Pedro
C. Ramos, NLRC, Special Task Force, Regional Arbitration Branch No. XI, Davao City dismissing the
claim of petitioners.
This case stemmed from a complaint filed on April 9, 1984 against private respondent Stanfilco for
assembly time, moral damages and attorney's fees, with the aforementioned Regional Arbitration
Branch No. XI, Davao City.
After the submission by the parties of their respective position papers (Annex "C", pp. 30-40; Annex
"D", Rollo, pp. 41-50), Labor Arbiter Pedro C. Ramos rendered a decision dated October 9, 1985
(Annex 'E', Rollo, pp. 51-58) in favor of private respondent STANFILCO, holding that:
Given these facts and circumstances, we cannot but agree with respondent that the
pronouncement in that earlier case, i.e. the thirty-minute assembly time long
practiced cannot be considered waiting time or work time and, therefore, not
compensable, has become the law of the case which can no longer be disturbed
without doing violence to the time- honored principle of res-judicata.
WHEREFORE, in view of the foregoing considerations, the instant complaint should
therefore be, as it is hereby, DISMISSED.
SO ORDERED. (Rollo, p. 58)
On December 12, 1986, after considering the appeal memorandum of complainant and the
opposition of respondents, the First Division of public respondent NLRC composed of Acting
Presiding Commissioner Franklin Drilon, Commissioner Conrado Maglaya, Commissioner Rosario
D. Encarnacion as Members, promulgated its Resolution, upholding the Labor Arbiters' decision. The
Resolution's dispositive portion reads:
'Surely, the customary functions referred to in the above- quoted provision of the
agreement includes the long-standing practice and institutionalized noncompensable assembly time. This, in effect, estopped complainants from pursuing
this case.
The Commission cannot ignore these hard facts, and we are constrained to uphold
the dismissal and closure of the case.
WHEREFORE, let the appeal be, as it is hereby dismissed, for lack of merit.
SO ORDERED. (Annex "H", Rollo, pp. 86-89).
On January 15, 1987, petitioners filed a Motion for Reconsideration which was opposed by private
respondent (Annex "I", Rollo, pp. 90-91; Annex J Rollo, pp. 92-96).
Public respondent NLRC, on January 30, 1987, issued a resolution denying for lack of merit
petitioners' motion for reconsideration (Annex "K", Rollo, p. 97).

Hence this petition for review on certiorari filed on May 7, 1987.


The Court in the resolution of May 4, 1988 gave due course to this petition.
Petitioners assign the following issues:
1) Whether or not the 30-minute activity of the petitioners before the scheduled
working time is compensable under the Labor Code.
2) Whether or not res judicata applies when the facts obtaining in the prior case and
in the case at bar are significantly different from each other in that there is merit in
the case at bar.
3) Whether or not there is finality in the decision of Secretary Ople in view of the
compromise agreement novating it and the withdrawal of the appeal.
4) Whether or not estoppel and laches lie in decisions for the enforcement of labor
standards (Rollo, p. 10).
Petitioners contend that the preliminary activities as workers of respondents STANFILCO in the
assembly area is compensable as working time (from 5:30 to 6:00 o'clock in the morning) since
these preliminary activities are necessarily and primarily for private respondent's benefit.
These preliminary activities of the workers are as follows:
(a) First there is the roll call. This is followed by getting their individual work
assignments from the foreman.
(b) Thereafter, they are individually required to accomplish the Laborer's Daily
Accomplishment Report during which they are often made to explain about their
reported accomplishment the following day.
(c) Then they go to the stockroom to get the working materials, tools and equipment.
(d) Lastly, they travel to the field bringing with them their tools, equipment and
materials.
All these activities take 30 minutes to accomplish (Rollo, Petition, p. 11).
Contrary to this contention, respondent avers that the instant complaint is not new, the very same
claim having been brought against herein respondent by the same group of rank and file employees
in the case of Associated Labor Union and Standard Fruit Corporation, NLRC Case No. 26-LS-XI-76
which was filed way back April 27, 1976 when ALU was the bargaining agent of respondent's rank
and file workers. The said case involved a claim for "waiting time", as the complainants purportedly
were required to assemble at a designated area at least 30 minutes prior to the start of their
scheduled working hours "to ascertain the work force available for the day by means of a roll call, for
the purpose of assignment or reassignment of employees to such areas in the plantation where they
are most needed." (Rollo, pp. 64- 65)

Noteworthy is the decision of the Minister of Labor, on May 12, 1978 in the aforecited case
(Associated Labor Union vs. Standard (Phil.) Fruit Corporation, NLRC Case No. 26-LS-XI-76 where
significant findings of facts and conclusions had already been made on the matter.
The Minister of Labor held:
The thirty (30)-minute assembly time long practiced and institutionalized by mutual
consent of the parties under Article IV, Section 3, of the Collective Bargaining
Agreement cannot be considered as waiting time within the purview of Section 5,
Rule I, Book III of the Rules and Regulations Implementing the Labor Code. ...
Furthermore, the thirty (30)-minute assembly is a deeply- rooted, routinary practice of
the employees, and the proceedings attendant thereto are not infected with
complexities as to deprive the workers the time to attend to other personal pursuits.
They are not new employees as to require the company to deliver long briefings
regarding their respective work assignments. Their houses are situated right on the
area where the farm are located, such that after the roll call, which does not
necessarily require the personal presence, they can go back to their houses to attend
to some chores. In short, they are not subject to the absolute control of the company
during this period, otherwise, their failure to report in the assembly time would justify
the company to impose disciplinary measures. The CBA does not contain any
provision to this effect; the record is also bare of any proof on this point. This,
therefore, demonstrates the indubitable fact that the thirty (30)-minute assembly time
was not primarily intended for the interests of the employer, but ultimately for the
employees to indicate their availability or non-availability for work during every
working day. (Annex "E", Rollo, p. 57).
Accordingly, the issues are reduced to the sole question as to whether public respondent National
Labor Relations Commission committed a grave abuse of discretion in its resolution of December
17, 1986.
The facts on which this decision was predicated continue to be the facts of the case in this
questioned resolution of the National Labor Relations Commission.
It is clear that herein petitioners are merely reiterating the very same claim which they filed through
the ALU and which records show had already long been considered terminated and closed by this
Court in G.R. No. L-48510. Therefore, the NLRC can not be faulted for ruling that petitioners' claim is
already barred by res-judicata.
Be that as it may, petitioners' claim that there was a change in the factual scenario which are
"substantial changes in the facts" makes respondent firm now liable for the same claim they earlier
filed against respondent which was dismissed. It is thus axiomatic that the non-compensability of the
claim having been earlier established, constitute the controlling legal rule or decision between the
parties and remains to be the law of the case making this petition without merit.
As aptly observed by the Solicitor General that this petition is "clearly violative of the familiar
principle of res judicata. There will be no end to this controversy if the light of the Minister of Labor's
decision dated May 12, 1979 that had long acquired the character of finality and which already

resolved that petitioners' thirty (30)-minute assembly time is not compensable, the same issue can
be re-litigated again." (Rollo, p. 183)
This Court has held:
In this connection account should be taken of the cognate principle that res
judicata operates to bar not only the relitigation in a subsequent action of the issues
squarely raised, passed upon and adjudicated in the first suit, but also the ventilation
in said subsequent suit of any other issue which could have been raised in the first
but was not. The law provides that 'the judgment or order is, with respect to the
matter directly adjudged or as to any other matter that could have been raised in
relation thereto, conclusive between the parties and their successors in interest by
title subsequent to the commencement of the action .. litigating for the same thing
and in the same capacity.' So, even if new causes of action are asserted in the
second action (e.g. fraud, deceit, undue machinations in connection with their
execution of the convenio de transaccion), this would not preclude the operation of
the doctrine of res judicata. Those issues are also barred, even if not passed upon in
the first. They could have been, but were not, there raised. (Vda. de Buncio v. Estate
of the late Anita de Leon, 156 SCRA 352 [1987]).
Moreover, as a rule, the findings of facts of quasi-judicial agencies which have acquired expertise
because their jurisdiction is confined to specific matters are accorded not only respect but at times
even finality if such findings are supported by substantial evidence (Special Events & Central
Shipping Office Workers Union v. San Miguel Corporation, 122 SCRA 557 [1983]; Dangan v. NLRC,
127 SCRA 706 [1984]; Phil. Labor Alliance Council v. Bureau of Labor Relations, 75 SCRA 162
[1977]; Mamerto v. Inciong, 118 SCRA 265 (1982]; National Federation of Labor Union (NAFLU) v.
Ople, 143 SCRA 124 [1986]; Edi-Staff Builders International, Inc. v. Leogardo, Jr., 152 SCRA 453
[1987]; Asiaworld Publishing House, Inc. v. Ople, 152 SCRA 219 [1987]).
The records show that the Labor Arbiters' decision dated October 9, 1985 (Annex "E", Petition)
pointed out in detail the basis of his findings and conclusions, and no cogent reason can be found to
disturb these findings nor of those of the National Labor Relations Commission which affirmed the
same.
PREMISES CONSIDERED, the petition is DISMISSED for lack of merit and the decision of the
National Labor Relations Commission is AFFIRMED.
SO ORDERED.
Melencio-Herrera (Chairperson), Padilla and Regalado, JJ., concur.

Separate Opinions

SARMIENTO, J., Dissenting:


It is my opinion that res judicata is not a bar.
The decision penned by then Minister Blas Ople in ALU v. STANFILCO (NLRC Case No. 26-LS-XI76) relied upon by the respondents as basis for claims of res judicata, is not, to my mind, a
controlling precedent. In that case, it was held that the thirty-minute "waiting time" complained of was
a mere "assembly time" and not a waiting time as the term is known in law, and hence, a
compensable hour of work. Thus:
The thirty (30)-minute assembly time long practiced and institutionalized by mutual
consent of the parties under Article IV, Section 3, of the Collective Bargaining
Agreement cannot be considered as 'waiting time' within the purview of Section 5,
Rule 1, Book III of the Rules and Regulations Implementing the Labor Code. ...
Furthermore, the thirty (30)-minute assembly is a deeply- rooted, routinary practice of
the employees, and the proceedings attendant thereto are not infected with
complexities as to deprive the workers the time to attend to other personal pursuits.
They are not new employees as to require the company to deliver long briefings
regarding their respective work assignments. Their houses are situated right on the
area where the farms are located, such that after the roll call, which does not
necessarily require the personal presence, they can go back to their houses to attend
to some chores.
In short, they are not subject to the absolute control of the company during this
period, otherwise, their failure to report in the assembly time would justify the
company to impose disciplinary measures. The CBA does not contain any provision
to this effect; the record is also bare of any proof on this point. This, therefore,
demonstrates the indubitable fact that the thirty (30)-minute assembly time was not
primarily intended for the interests of the employer, but ultimately for the employees
to indicate their availability or non-availability for work during every working day.
(Decision, 6.)
Precisely, it is the petitioners' contention that the assembly time in question had since undergone
dramatic changes, thus:
(a) First there is the roll call. This is followed by getting their individual work
assignments from the foreman.
(b) Thereafter,they are individually required to accomplish the Laborer's Daily
Accomplishment Report during which they are often made to explain about their
reported accomplishment the following day.
(c) Then they go to the stockroom to get the working materials, tools and equipment.
(d) Lastly, they travel to the field bringing with them their tools, equipment and
materials. (Supra, 4-5.)

The petitioners have vehemently maintained that in view thereof, the instant case should be
distinguished from the first case. And I do not believe that the respondents have successfully
rebutted these allegations. The Solicitor General relies solely on the decision of then Minister Ople,
the decision the petitioners precisely reject in view of the changes in the conditions of the parties.
The private respondent on the other hand insists that these practices were the same practices taken
into account in ALU v. STANFILCO. If this were so, the Ople decision was silent thereon.
It is evident that the Ople decision was predicated on the absence of any insinuation of
obligatoriness in the course or after the assembly activities on the part of the employees.(" . . [T]hey
are not subject to the absolute control of the company during this period, otherwise, their failure to
report in the assembly time would justify the company to impose disciplinary measures;" supra, 6.)
As indicated, however, by the petitioners, things had since changed, and remarkably so, and the
latter had since been placed under a number of restrictions. My considered opinion is that the thirtyminute assembly time had become, in truth and fact, a "waiting time" as contemplated by the Labor
Code.
I vote, then, to grant the petition.

Separate Opinions
SARMIENTO, J., Dissenting:
It is my opinion that res judicata is not a bar.
The decision penned by then Minister Blas Ople in ALU v. STANFILCO (NLRC Case No. 26-LS-XI76) relied upon by the respondents as basis for claims of res judicata, is not, to my mind, a
controlling precedent. In that case, it was held that the thirty-minute "waiting time" complained of was
a mere "assembly time" and not a waiting time as the term is known in law, and hence, a
compensable hour of work. Thus:
The thirty (30)-minute assembly time long practiced and institutionalized by mutual
consent of the parties under Article IV, Section 3, of the Collective Bargaining
Agreement cannot be considered as 'waiting time' within the purview of Section 5,
Rule 1, Book III of the Rules and Regulations Implementing the Labor Code. ...
Furthermore, the thirty (30)-minute assembly is a deeply- rooted, routinary practice of
the employees, and the proceedings attendant thereto are not infected with
complexities as to deprive the workers the time to attend to other personal pursuits.
They are not new employees as to require the company to deliver long briefings
regarding their respective work assignments. Their houses are situated right on the
area where the farms are located, such that after the roll call, which does not
necessarily require the personal presence, they can go back to their houses to attend
to some chores.

In short, they are not subject to the absolute control of the company during this
period, otherwise, their failure to report in the assembly time would justify the
company to impose disciplinary measures. The CBA does not contain any provision
to this effect; the record is also bare of any proof on this point. This, therefore,
demonstrates the indubitable fact that the thirty (30)-minute assembly time was not
primarily intended for the interests of the employer, but ultimately for the employees
to indicate their availability or non-availability for work during every working day.
(Decision, 6.)
Precisely, it is the petitioners' contention that the assembly time in question had since undergone
dramatic changes, thus:
(a) First there is the roll call. This is followed by getting their individual work
assignments from the foreman.
(b) Thereafter,they are individually required to accomplish the Laborer's Daily
Accomplishment Report during which they are often made to explain about their
reported accomplishment the following day.
(c) Then they go to the stockroom to get the working materials, tools and equipment.
(d) Lastly, they travel to the field bringing with them their tools, equipment and
materials. (Supra, 4-5.)
The petitioners have vehemently maintained that in view thereof, the instant case should be
distinguished from the first case. And I do not believe that the respondents have successfully
rebutted these allegations. The Solicitor General relies solely on the decision of then Minister Ople,
the decision the petitioners precisely reject in view of the changes in the conditions of the parties.
The private respondent on the other hand insists that these practices were the same practices taken
into account in ALU v. STANFILCO. If this were so, the Ople decision was silent thereon.
It is evident that the Ople decision was predicated on the absence of any insinuation of
obligatoriness in the course or after the assembly activities on the part of the employees.(" . . [T]hey
are not subject to the absolute control of the company during this period, otherwise, their failure to
report in the assembly time would justify the company to impose disciplinary measures;" supra, 6.)
As indicated, however, by the petitioners, things had since changed, and remarkably so, and the
latter had since been placed under a number of restrictions. My considered opinion is that the thirtyminute assembly time had become, in truth and fact, a "waiting time" as contemplated by the Labor
Code.
I vote, then, to grant the petition.

SECOND DIVISION
[G.R. No. 109977. September 5, 1997]

UNIVERSITY OF PANGASINAN, petitioner, vs. HONORABLE MA.


NIEVES R. CONFESOR, in her official capacity as the Secretary
of Department of Labor and Employment, and UNIVERSITY OF
PANGASINAN FACULTY UNION, respondents.
DECISION
ROMERO, J.:

In this petition for certiorari, the Order of then Secretary of Labor Ruben Torres
dated October 10, 1991 affirming the monetary claims awarded to herein private
respondent faculty union, as well as the resolutions dated February 17, 1992 and April
20, 1993, denying petitioners motions for reconsideration for lack of merit thereof, are
assailed for having been issued with grave abuse of discretion.
On August 7, 1986, the University of Pangasinan Faculty Union (Union) presented
its demands and grievances to the University of Pangasinan (UPang), herein petitioner,
with a notice that the Union will go on strike if said demands are not met within thirty
days.
Conciliation and mediation proceedings proved futile in resolving their dispute.
On September 15, 1986, the Union went on strike. Two days later, UPang
questioned the legality of the strike before the Ministry of Labor and Employment (now
the Department of Labor and Employment or DOLE) and prayed that the dispute be
certified to the National Labor Relations Commission (NLRC) and a Return to Work
Order be issued. Accordingly, then Minister of Labor Augusto S. Sanchez issued the
Return-to-Work Order on September 18, 1986.
After the Regional Office of the Department of Labor and Employment conducted
hearings and received evidence for the parties, the Regional Director recommended
that the Unions claims for salary differentials for school years (SYs) 1974-1981 be

dismissed on the ground of prescription and that the salary differential claims for SY
1982-1983 to SY 1987-1988 in the total amount of P36,444,018.29 be chargeable
against the 60% incremental proceeds of tuition fee increases.
[1]

On October 5, 1989, the Secretary of Labor rendered a decision adopting the


recommendations of the Regional Director as stated above ordering, however, a
recomputation of the salary differentials due. The dispositive portion of this decision
reads as follows:

WHEREFORE, except for the modifications stated above, the findings of facts and
recommendations of the Regional Director below is (sic) hereby adopted as our own.
The following claims are dismissed:
1. Non-satisfaction of the judgment of the Supreme Court in the case G.R. No. 63122
concerning claims for salary differential under P.D. 451 and ECOLA for SY 19811982; and
2. Claims for salary differential pursuant to P.D. 451 and alleged erroneous
computation of 13th month pay for the SY 1974-1975 up to 1980-1981.
The School is directed to restore the mode of computation of the salaries of faculty
members to the usual monthly basis effective school year 1989-1990.
The Regional Director below is directed to recompute and to submit the outcome
thereof to this office within fifteen (15) days from receipt of this Decision, the claims
for salary differential under P.D. 451 and the alleged erroneous computation of the
13th month pay for the periods beginning SY 1982-1983 up to 1987-1988 in the light
of the decision of the Supreme Court that increases in wages and allowances either
granted in compliance with law, collective bargaining agreement or unilaterally by the
employer shall be considered compliance with P.D. 451 and chargeable to the 60%
share of the employees of the incremental proceeds from any tuition fee increases.
The School is directed to pay the complainants their COLAs during the semestral
breaks of the school years 1982-1983; 1983-1984; and 1984-1985; chargeable against
the 60% share of the employees in the incremental proceeds of the tuition pay
increases.
SO ORDERED. (Emphasis supplied.)
[2]

On November 2 and 21, 1989, on account of the Order for recomputation, a team of
Labor Employment Officers supervised the actual verification and examination of the
records and found deficiencies in the amount of P1,485,915.80.
On September 28, 1990, the Regional Director submitted another recomputation in
the aggregate amount of P4,705,819.34 ordering UPang to pay its 242 employees
deficiencies due as salary differentials under P.D. 451 and 13th month pay beginning
SYs 1982 up to 1988 and COLAs for semestral breaks for SY 1982 up to 1985.
The third and final recomputation totalling P6,840,700.15 was presented on June
25, 1991 based on the following assumptions:
[3]

1) The share of the employees in the 60% incremental proceeds in tuition fee
increases have been integrated into their wages from SY 1974-75, it being the mandate
and effectivity of P.D. 451;
2) The unpaid ECOLA during semestral breaks from SY 1982-83 up to 1985-86 have
been computed by multiplying the number of unpaid days with the applicable ECOLA
per day;
3) That the monthly rates of the covered employees from SY 1974-75 up to 1987-88
have been determined per directive of the Secretary in his Order dated October 5,
1989 and subsequently used in the computation; and
4) That the total computed deficiencies due to the employees amount to Six Million
Eight Hundred Forty Thousand Seven Hundred and 15/100 pesos
(P6,840,700.15). The breakdown of the individual shares of the employees is hereto
attached.
Based on this last recomputed amount, former Labor Secretary Ruben D. Torres
issued the disputed Order on October 10, 1991, the dispositive portion of which reads:

WHEREFORE, the petitioner University of Pangasinan is hereby ordered to pay the


amount of SIX MILLION EIGHT HUNDRED FORTY THOUSAND SEVEN
HUNDRED PESOS 15/100 (P6,840,700.15), chargeable against the 60% share of the
employees from the tuition increases, to the 242 employees listed in pages 375 to 378
of the record of this case, within ten (10) days from receipt hereof. Let the entire
records of this case be remanded to the Regional Office for immediate enforcement of
this Decision.
SO ORDERED.

[4]

Petitioners first and second motions for reconsideration were denied on February
17, 1992 and April 20, 1993, respectively. Hence, the instant petition for certiorari.
[5]

[6]

Petitioner argues that the Secretary of Labor committed grave abuse of discretion in
concurring with the recomputation made by the Regional Director because the same is
grounded upon a misapprehension of the laws (Presidential Decreee No. 451 and Batas
Pambansa Blg. 232) involved. In particular, the entire 60% incremental proceeds of the
tuition fee increases should not be distributed as salary increases alone. Further, it
claims that even assuming arguendo that the 60% incremental proceeds were
distributed as salary increases integrable into the basic salary of the employees, to
grant the increases retroactively from SY 1974-1975 would violate the rule on
prescription of money claims under the Labor Code.
The Union, on the other hand, asserts that under P.D. No. 451, allowances and
fringe benefits should be taken from sources other than the 60% incremental proceeds
of tuition fee increases which should be spent exclusively for salary increases.
We find merit in this petition.
The old rule with respect to the utilization of tuition fee increases for salary increases is
established in Presidential Decree No. 451, the law authorizing the Secretary of
Education and Culture to regulate the imposition of tuition and other school fees. [7] Rule V,
Section 1 of the Implementing Rules and Regulations issued pursuant to his authority
under P.D. No. 451 states that at least sixty percent of the total incremental proceeds
from the increase in tuition fee and/ or other school charges shall be applied toward an
equitable increase in the emoluments and other benefits for members of the faculty,
including the staff and administrative employees of the school concerned. In the 1982
case of University of the East v. U.E. Faculty Association,[8] the Court explained:

(T)here are only two purposes to which the incremental proceeds from increase of
tuition fees authorized by the Ministry of Education and Culture may be dedicated or
devoted, namely: (1) increase in salaries or wages of the members of the faculty and
all other employees of the school concerned and (2) institutional development, student
assistance and extensions of services, and return of investments; provided the latter
shall not exceed twelve (12%) per centum of the incremental proceeds.
The authority given to the Secretary of Education and Culture was interpreted by
the Court to mean that the sixty (60%) percent incremental proceeds from the tuition
increase are to be devoted entirely to wage or salary increases and not for allowances
and benefits. To spend said incremental proceeds for these benefits would mean a
reduction of the salary increasewhich is intended to help the teachers and staff workers
support themselves and their families in these difficult economic times.
[9]

On September 11, 1982, Batas Pambansa Blg. 232, or the Education Act of 1982,
took effect. Section 42 thereof provides:

SEC. 42. Tuition and Other School Fees. - Each private school shall determine its rate
of tuition and other school fees or charges. The rates and charges adopted by schools
pursuant to this provision shall be collectible, and their application or use
authorized, subject to rules and regulations promulgated by the Ministry of
Education, Culture and Sports. (Emphasis added.)
[10]

In the consolidated cases of Cebu Institute of Technology v. Hon. Blas Ople, et al.,
Divine Word College of Legaspi v. Hon. Deputy Minister Vicente Leogardo, Jr., et al.,
Far Eastern University Employees Labor Union v. Far Eastern University, et al.,
Gregorio T. Fabros, et al. v. Hon. Augusto Sanchez, et al., Ricardo Valmonte, et al. v.
Hon. Augusto Sanchez, the Court ruled:
[11]

With the repeal of Pres. Decree No. 451 by B.P Blg. 232, the allocation of the
proceeds of any authorized tuition fee increase must be governed by specific rules and
regulations issued by the Minister (now Secretary) of Education pursuant to his
broadened rule making authority under Section 42 of the law.
xxx xxx xxx

The guidelines and regulations on tuition and other school fees issued after enactment
of BP Blg. 232 consistently permit the charging of allowances and other benefits
against the 60% incremental proceeds.Such was the tenor in the MECs Order No. 23,
s. 1983; MECs Order No. 15, s. 1984; MECs Order No. 25, s. 1985; MECs Order No.
22, s. 1986; and DECs Order No. 37, s. 1987. The pertinent portion of the latest order
reads thus:
`In any case of increase at least sixty percent (60%) of the incremental proceeds
should be allocated for increases in or provisions for salaries or wages, allowances
and fringe benefits of Faculty and other staff, including accruals to cost of living
allowance, 13th month pay, social security, medicare and retirement contribution and
increases as may be provided in mandated wage orders, collective bargaining
agreements or voluntary employer practices. (Underscoring supplied.)
From the foregoing, it is clear that the rule has since been changed as to allow the
benefits and allowances named above to be charged to the sixty percent incremental
proceeds of the tuition fee increases. Thus, petitioners proposition that the 60%
incremental proceeds of tuition fee increases should not be used for salary increases
alone but should also be spent for benefits and allowances granted to its teaching and

administrative staff, finds adequate legal basis and should be upheld. In failing to
consider this new rule concerning the application of the sixty percent incremental
proceeds of fee increases, herein respondent Secretary of Labor committed grave
abuse of discretion.
As regards the second issue that the claims for salary differentials for SYs 19741975 to 1980-1981 had already prescribed, we rule in favor of petitioner.
The claim for said salary differentials were made in September 1986 and, therefore,
beyond the three-year period allowed by law. Article 291 of the Labor Code, as
amended, provides that all money claims arising from employer-employee relations
accruing during the effectivity of this Code shall be filed within three (3) years from the
time the cause of action accrued; otherwise they shall be forever barred. A case in point
is Cebu Institute of Technology v. Ople, where the Court held:
[12]

There is no doubt that the three-year period within which to file actions involving
money claims arising out of an employer-employee relationship fixed by Article 292
(now Art. 291) of Pres. Dec. No. 442 (Labor Code), as amended, equally applies to
claims for the incremental proceeds arising from tuition fee increases under Pres. Dec.
No. 451. The claims which gave rise to all these cases are clearly money claims
arising from an employer-employee relationship and thus falls under the coverage of
Article 292 of the Labor Code. (Underscoring supplied).
Consequently, the Secretary of Labor acted with grave abuse of discretion in
adopting the recommended computation of the Regional Director which we find
erroneous for incorporating the period from SYs 1974-1975 to 1980-1981.
WHEREFORE, in view of the foregoing, the instant petition is hereby
GRANTED. ACCORDINGLY, the decision of the Secretary of Labor is hereby
MODIFIED by excluding the claims covering SYs 1974 to 1981 on the ground of
prescription. Whatever benefits and allowances may be found legally and justly due to
the respondents shall be charged to the sixty percent incremental proceeds of the
tuition fee increases. For this purpose, the case is hereby remanded to the Regional
Director for immediate recomputation of said claims in accordance with the foregoing
modifications.
SO ORDERED.
Regalado, (Chairman), Puno, Mendoza, and Torres, Jr., JJ., concur.

FIRST DIVISION
[G.R. No. 119205. April 15, 1998]

SIME DARBY PILIPINAS, INC., petitioner, vs. NATIONAL LABOR


RELATIONS COMMISSION (2ND DIVISION) and SIME DARBY
SALARIED
EMPLOYEES
ASSOCIATION
(ALUTUCP), respondents.
DECISION
BELLOSILLO, J.:

Is the act of management in revising the work schedule of its employees and
discarding their paid lunch break constitutive of unfair labor practice?

Sime Darby Pilipinas, Inc., petitioner, is engaged in the manufacture of automotive


tires, tubes and other rubber products. Sime Darby Salaried Employees Association
(ALU-TUCP), private respondent, is an association of monthly salaried employees of
petitioner at its Marikina factory. Prior to the present controversy, all company factory
workers in Marikina including members of private respondent union worked from 7:45
a.m. to 3:45 p.m. with a 30 minute paid on call lunch break.
On 14 August 1992 petitioner issued a memorandum to all factory-based
employees advising all its monthly salaried employees in its Marikina Tire Plant, except
those in the Warehouse and Quality Assurance Department working on shifts, a change
in work schedule effective 14 September 1992 thus

TO: ALL FACTORY-BASED EMPLOYEES


RE: NEW WORK SCHEDULE
Effective Monday, September 14, 1992, the new work schedule factory
office will be as follows:
7:45 A.M. 4:45 P.M. (Monday to Friday)
7:45 A.M. 11:45 P.M. (Saturday).
Coffee break time will be ten minutes only anytime between:
9:30 A.M. 10:30 A.M. and
2:30 P.M. 3:30 P.M.
Lunch break will be between:
12:00 NN 1:00 P.M. (Monday to Friday).
Excluded from the above schedule are the Warehouse and QA
employees who are on shifting. Their work and break time schedules
will be maintained as it is now.[1]
Since private respondent felt affected adversely by the change in the work schedule
and discontinuance of the 30-minute paid on call lunch break, it filed on behalf of its
members a complaint with the Labor Arbiter for unfair labor practice, discrimination and
evasion of liability pursuant to the resolution of this Court in Sime Darby International
Tire Co., Inc. v. NLRC. [2]However, the Labor Arbiter dismissed the complaint on the

ground that the change in the work schedule and the elimination of the 30-minute paid
lunch break of the factory workers constituted a valid exercise of management
prerogative and that the new work schedule, break time and one-hour lunch break did
not have the effect of diminishing the benefits granted to factory workers as the working
time did not exceed eight (8) hours.
The Labor Arbiter further held that the factory workers would be justly enriched if
they continued to be paid during their lunch break even if they were no longer on call or
required to work during the break. He also ruled that the decision in the earlier Sime
Darby case[3] was not applicable to the instant case because the former involved
discrimination of certain employees who were not paid for their 30-minute lunch break
while the rest of the factory workers were paid; hence, this Court ordered that the
discriminated employees be similarly paid the additional compensation for their lunch
break.
Private respondent appealed to respondent National Labor Relations Commission
(NLRC) which sustained the Labor Arbiter and dismissed the appeal. [4] However, upon
motion for reconsideration by private respondent, the NLRC, this time with two (2) new
commissioners replacing those who earlier retired, reversed its arlier decision of 20 April
1994 as well as the decision of the Labor Arbiter. [5] The NLRC considered the decision of
this Court in the Sime Darby case of 1990 as the law of the case wherein petitioner was
ordered to pay the money value of these covered employees deprived of lunch and/or
working time breaks. The public respondent declared that the new work schedule
deprived the employees of the benefits of time-honored company practice of providing
its employees a 30-minute paid lunch break resulting in an unjust diminution of
company privileges prohibited by Art. 100 of the Labor Code, as amended. Hence, this
petition alleging that public respondent committed grave abuse of discretion amounting
to lack or excess of jurisdiction: (a) in ruling that petitioner committed unfair labor
practice in the implementation of the change in the work schedule of its employees from
7:45 a.m. 3:45 p.m. to 7:45 a.m. 4:45 p.m. with one-hour lunch break from 12:00 nn to
1:00 p.m.; (b) in holding that there was diminution of benefits when the 30-minute paid
lunch break was eliminated; (c) in failing to consider that in the earlier Sime Darby case
affirming the decision of the NLRC, petitioner was authorized to discontinue the practice
of having a 30-minute paid lunch break should it decide to do so; and (d) in ignoring
petitioners inherent management prerogative of determining and fixing the work
schedule of its employees which is expressly recognized in the collective bargaining
agreement between petitioner and private respondent.
The Office of the Solicitor General filed in lieu of comment a manifestation and
motion recommending that the petition be granted, alleging that the 14 August 1992
memorandum which contained the new work schedule was not discriminatory of the
union members nor did it constitute unfair labor practice on the part of petitioner.

We agree, hence, we sustain petitioner. The right to fix the work schedules of the
employees rests principally on their employer. In the instant case petitioner, as the
employer, cites as reason for the adjustment the efficient conduct of its business
operations and its improved production.[6] It rationalizes that while the old work schedule
included a 30-minute paid lunch break, the employees could be called upon to do jobs
during that period as they were on call. Even if denominated as lunch break, this period
could very well be considered as working time because the factory employees were
required to work if necessary and were paid accordingly for working. With the new work
schedule, the employees are now given a one-hour lunch break without any interruption
from their employer. For a full one-hour undisturbed lunch break, the employees can
freely and effectively use this hour not only for eating but also for their rest and comfort
which are conducive to more efficiency and better performance in their work. Since the
employees are no longer required to work during this one-hour lunch break, there is no
more need for them to be compensated for this period. We agree with the Labor Arbiter
that the new work schedule fully complies with the daily work period of eight (8) hours
without violating the Labor Code. [7] Besides, the new schedule applies to all employees
in the factory similarly situated whether they are union members or not. [8]
Consequently, it was grave abuse of discretion for public respondent to equate the
earlier Sime Darby case[9] with the facts obtaining in this case. That ruling in the former
case is not applicable here. The issue in that case involved the matter of granting lunch
breaks to certain employees while depriving the other employees of such breaks. This
Court affirmed in that case the NLRCs finding that such act of management was
discriminatory and constituted unfair labor practice.
The case before us does not pertain to any controversy involving discrimination of
employees but only the issue of whether the change of work schedule, which
management deems necessary to increase production, constitutes unfair labor
practice. As shown by the records, the change effected by management with regard to
working time is made to apply to all factory employees engaged in the same line of work
whether or not they are members of private respondent union. Hence, it cannot be said
that the new scheme adopted by management prejudices the right of private respondent
to self-organization.
Every business enterprise endeavors to increase its profits. In the process, it may
devise means to attain that goal. Even as the law is solicitous of the welfare of the
employees, it must also protect the right of an employer to exercise what are clearly
management prerogatives.[10] Thus, management is free to regulate, according to its
own discretion and judgment, all aspects of employment, including hiring, work
assignments, working methods, time, place and manner of work, processes to be
followed, supervision of workers, working regulations, transfer of employees, work
supervision, lay off of workers and discipline, dismissal and recall of workers. [11] Further,
management retains the prerogative, whenever exigencies of the service so require, to

change the working hours of its employees. So long as such prerogative is exercised in
good faith for the advancement of the employers interest and not for the purpose of
defeating or circumventing the rights of the employees under special laws or under valid
agreements, this Court will uphold such exercise. [12]
While the Constitution is committed to the policy of social justice and the protection
of the working class, it should not be supposed that every dispute will be automatically
decided in favor of labor. Management also has right which, as such, are entitled to
respect and enforcement in the interest of simple fair play. Although this Court has
inclined more often than not toward the worker and has upheld his cause in his conflicts
with the employer, such as favoritism has not blinded the Court to the rule that justice is
in every case for the deserving, to be dispensed in the light of the established facts and
the applicable law and doctrine.[13]
WHEREFORE, the Petition is GRANTED. The Resolution of the National Labor
Relations Commission dated 29 November 1994 is SET ASIDE and the decision of the
Labor Arbiter dated 26 November 1993 dismissing the complaint against petitioner for
unfair labor practice is AFFIRMED.
SO ORDERED.
Davide, Jr., (Chairman), Vitug, Panganiban, and Quisumbing, JJ., concur.