1. EASTERN SHIPPING LINES VS.

POEA
G.R. NO. 76633 OCTOBER 18, 1988

Facts:
Vitaliano Saco was Chief Officer of the M/V Eastern Polaris when he was killed in an accident in Tokyo,
Japan on March 15, 1985.

His widow sued for damages under Executive Order No. 797 and Memorandum Circular No. 2 of the
POEA.

The petitioner, as owner of the vessel, argued that the complaint was cognizable not by the POEA but by
the Social Security System and should have been filed against the State Fund Insurance. — Petitioner
urges that he was not an overseas worker but a 'domestic employee; that deceased should be likened to the
employees of the Philippine Air Lines who, although working abroad in its international flights, are not
considered overseas workers; and claims that it never entered into a standard contract (to be adopted by
foreign & domestic shipping companies) under the Memo Circular No. 2.

The POEA nevertheless assumed jurisdiction and after considering the position papers of the parties ruled
in favour of the complainant.

The petitioner also questions the validity of Memorandum Circular No. 2 itself as violative of the
principle of non-delegation of legislative power. It contends that no authority had been given the POEA
to promulgate the said regulation; and even with such authorization, the regulation represents an exercise
of legislative discretion which, under the principle, is not subject to delegation.

The petition is DISMISSED, with costs against the petitioner. The temporary restraining order dated
December 10, 1986 is hereby LIFTED. It is so ordered.

Issue:
1. Whether or not the POEA had jurisdiction over the case as the husband was not an overseas worker.

2. Whether or not the validity of Memorandum Circular No. 2 itself as violative of the principle of non-
delegation of legislative power.

Held:
1. YES

a. Whether the deceased is an overseas worker

Overseas employment is defined as "employment of a worker outside the Philippines, including

employment on board vessels plying international waters, covered by a valid contract.

A contract worker is described as "any person working or who has worked overseas under a valid
employment contract and shall include
4
seamen" or "any person working overseas or who has been employed by another which may be a local
employer, foreign employer, principal or partner under a valid employment contract and shall include
seamen."

These definitions clearly apply to Vitaliano Saco for it is not disputed that he died while under a
contract of employment with the petitioner and alongside the petitioner's vessel, the M/V Eastern Polaris,
while berthed in a foreign country.

b. Question of jurisdiction

The Philippine Overseas Employment Administration (POEA) was created under E.O. 797, promulgated
on May 1, 1982, to promote and monitor the overseas employment of Filipinos and to protect their rights.

Under Section 4(a) of the said executive order, the POEA is vested with "original and exclusive
jurisdiction over all cases, including money claims, involving employee-employer relations arising out of
or by virtue of any law or contract involving Filipino contract workers, including seamen."

These cases, according to the 1985 Rules and Regulations on Overseas Employment issued by the POEA,
include, “claims for death, disability and other benefits” arising out of such employment.
The award of P180,000.00 for death benefits and P12,000.00 for burial expenses was made by the POEA
pursuant to its Memorandum Circular No. 2, which became effective on February 1, 1984. This circular
prescribed a standard contract to be adopted by both foreign and domestic shipping companies in the
hiring of Filipino seamen for overseas employment.

2. NO.

Memorandum Circular No. 2 is an administrative regulation.

The model contract prescribed thereby has been applied in a significant number of the cases without
challenge by the employer. The power of the POEA (and before it the National Seamen Board) in
requiring the model contract is not unlimited as there is a sufficient standard guiding the delegate in the
exercise of the said authority. That standard is discoverable in the executive order itself which, in creating
the Philippine Overseas Employment Administration, mandated it to protect the rights of overseas
Filipino workers to "fair and equitable employment practices."

General Rule: Non-delegation of powers

Exception: It is true that legislative discretion as to the substantive contents of the law cannot be
delegated. What can be delegated is the discretion to determine how the law may be enforced, not what
the law shall be. The ascertainment of the latter subject is a prerogative of the legislature. This prerogative
cannot be abdicated or surrendered by the legislature to the delegate.

Two Tests of Valid Delegation of Legislative Power

There are two accepted tests to determine whether or not there is a valid delegation of legislative power,
viz, the completeness test and the sufficient standard test. Under the first test, the law must be complete
in all its terms and conditions when it leaves the legislature such that when it reaches the delegate the only
thing he will have to do is to enforce it. Under the sufficient standard test, there must be adequate
guidelines or stations in the law to map out the boundaries of the delegate’s authority and prevent the
delegation from running riot.
Both tests are intended to prevent a total transference of legislative authority to the delegate, who is not
allowed to step into the shoes of the legislature and exercise a power essentially legislative.

The delegation of legislative power has become the rule and its non-delegation the exception.

Rationale for Delegation of Legislative Power —

The reason is the increasing complexity of the task of government and the growing inability of the
legislature to cope directly with the myriad problems demanding its attention. The growth of society has
ramified its activities and created peculiar and sophisticated problems that the legislature cannot be
expected reasonably to comprehend. Specialization even in legislation has become necessary. To many of
the problems attendant upon present-day undertakings, the legislature may not have the competence to
provide the required direct and efficacious, not to say, specific solutions. These solutions may, however,
be expected from its delegates, who are supposed to be experts in the particular fields assigned to
them.

With this power, administrative bodies may implement the broad policies laid down in a statute by
"filling in' the details which the Congress may not have the opportunity or competence to provide. This
is effected by their promulgation of what are known as supplementary regulations, such as the
implementing rules issued by the Department of Labor on the new Labor Code. These regulations have
the force and effect of law.

2. Manila Hotel Corporation vs. National Labor Relations Commission

Facts:
In May 1988, Marcelo Santos was an overseas worker in Oman. In June 1988, he was recruited by Palace
Hotel in Beijing, China. Due to higher pay and benefits, Santos agreed to the hotel’s job offer and so he
started working there in November 1988. The employment contract between him and Palace Hotel was
however without the intervention of the Philippine Overseas Employment Administration (POEA). In
August 1989, Palace Hotel notified Santos that he will be laid off due to business reverses. In September
1989, he was officially terminated.

In February 1990, Santos filed a complaint for illegal dismissal against Manila Hotel Corporation (MHC)
and Manila Hotel International, Ltd. (MHIL). The Palace Hotel was impleaded but no summons were
served upon it. MHC is a government owned and controlled corporation. It owns 50% of MHIL, a foreign
corporation (Hong Kong). MHIL manages the affair of the Palace Hotel. The labor arbiter who handled
the case ruled in favor of Santos.

The National Labor Relations Commission (NLRC) affirmed the labor arbiter.

Issue:
Whether or not the NLRC has jurisdiction over the case.

Held:
No. The NLRC is a very inconvenient forum for the following reasons:
1. The only link that the Philippines has in this case is the fact that Santos is a Filipino;
2. However, the Palace Hotel and MHIL are foreign corporations – MHC cannot be held liable because
it merely owns 50% of MHIL, it has no direct business in the affairs of the Palace Hotel. The veil of
corporate fiction can’t be pierced because it was not shown that MHC is directly managing the affairs of
MHIL. Hence, they are separate entities.
3. Santos’ contract with the Palace Hotel was not entered into in the Philippines;
4. Santos’ contract was entered into without the intervention of the POEA (had POEA intervened,
NLRC still does not have jurisdiction because it will be the POEA which will hear the case);
5. MHIL and the Palace Hotel are not doing business in the Philippines; their agents/officers are not
residents of the Philippines;

Due to the foregoing, the NLRC cannot possibly determine all the relevant facts pertaining to the case. It
is not competent to determine the facts because the acts complained of happened outside our jurisdiction.
It cannot determine which law is applicable. And in case a judgment is rendered, it cannot be enforced
against the Palace Hotel (in the first place, it was not served any summons).

The Supreme Court emphasized that under the rule of forum non conveniens, a Philippine court or agency
may assume jurisdiction over the case if it chooses to do so provided:
(1) that the Philippine court is one to which the parties may conveniently resort to;
(2) that the Philippine court is in a position to make an intelligent decision as to the law and the facts; and
(3) that the Philippine court has or is likely to have power to enforce its decision.
None of the above conditions are apparent in the case at bar.

3. DARIO NACAR, PETITIONER, vs. GALLERY FRAMES AND/OR FELIPE BORDEY, JR.,
RESPONDENTS.
G.R. No. 189871, August 13, 2013

Facts:
On January 24, 1997, Dario Nacar got dismissed by his employer, Gallery Frames. He filed a complaint;
the Labor Arbiter ruled that petitioner was dismissed without just cause. A computation for the separation
pay and back wages were made it amounted to Php 158,919.92. The respondent sought appeal to the
NLRC, CA and Supreme Court, but they were all dismissed, thus the judgment became final on April 17,
2002.

During the execution of the final judgment, the petitioner filed a motion for the re-computation of the
damages. The amount previously computed includes the separation pay and back wages up to the time of
his dismissal. The petitioner argued that the damages should cover the period until the date of final
judgment. A re-computation was made and the damages was increased to 471,320.31. Respondent prayed
for the quashal of such motion on the ground that the judgment made by the SC is already final and the
amount should not be further altered.

Petitioner also filed another motion asking the court to order the respondent to pay the appropriate legal
interest of the damages from the date of final judgment until full payment.

Issues:
1. Whether or not a subsequent correction of the damages awarded during the final judgment of the
Supreme Court violates the rule on immutability of judgments.
2. Whether or not the re-computation made by the Labor Arbiter is correct.
3. Whether or not appropriate interests may be claimed by the petitioner.

Ruling:
1. Whether or not a subsequent correction of the damages awarded during the final judgment of the
Supreme Court violates the rule on immutability of judgments.

The Supreme Court ruled that a correction in the computation of the damages does not violate the rule on
immutability of judgments. The final decision made by the Supreme Court to award the petitioner with
damages with regards to the dismissal without justifiable cause can be divided into two important parts.
One is the finding that an illegal dismissal was indeed made. And the other is the computation of
damages. According to a previous case of Session Delights Ice Cream and Fast Foods v. Court of
Appeals, the Supreme Court held that the second part of the decision - being merely a computation of
what the first part of the decision established and declared - can, by its nature, be re-computed. The re-
computation of the consequences of illegal dismissal upon execution of the decision does not constitute
an alteration or amendment of the final decision being implemented. The illegal dismissal ruling stands;
only the computation of monetary consequences of this dismissal is affected, and this is not a violation of
the principle of immutability of final judgments.

2. Whether or not the re-computation made by the Labor Arbiter is correct.

The Supreme Court believes that the amount of 471,320.31 as damages is correct. According to Article
279 of the Labor Code, reliefs in case of illegal dismissal continue to add up until its full satisfaction.
The original computation clearly includes damages only up to the finality of the labor arbiter's decision.
Therefore, the Supreme Court approves the decision confirming that a re-computation is necessary. The
labor arbiter re-computed the award to include the separation pay and the back wages due up to the
finality of the decision that fully terminated the case on the merits.

3. Whether or not appropriate interests may be claimed by the petitioner.

The Supreme Court ruled that the petitioner shall be entitled to interest. In the case of Eastern Shipping
Lines, Inc. v. Court of Appeals, among the guidelines laid down by the Supreme Court regarding the
manner of computing legal interest is - when the judgment of the court awarding a sum of money
becomes final and executory, the rate of legal interest shall be 12% per annum from such finality until its
satisfaction. In addition to this, the Bangko Sentral ng Pilipinas Monetary Board (BSP-MB), in its
Resolution No. 796 dated May 16, 2013 declared that the rate of interest for the loan or forbearance of
any money, goods or credits and the rate allowed in judgments, in the absence of an express contract as to
such rate of interest, shall be six percent (6%) per annum. Consequently, the twelve percent (12%) per
annum legal interest shall apply until June 30, 2013. Afterwards, the new rate of six percent (6%) per
annum shall be the prevailing rate of interest when applicable.

The respondent was ordered to pay interest of twelve percent (12%) per annum of the total monetary
awards, computed from May 27, 2002 to June 30, 2013 and six percent (6%) per annum from July 1,
2013 until their full satisfaction.

4. SAMEER OVERSEAS PLACEMENT AGENCY, INC. vs. JOY C. CABILES

G.R. No. 170139, August 5, 2014

Topic:
Section 10 of RA 8042 vis-a-vis Section 7 of RA 10022
Facts:
Petitioner, Sameer Overseas Placement Agency, Inc., is a recruitment and placement agency.

Respondent Joy Cabiles was hired thus signed a one-year employment contract for a monthly salary of
NT$15,360.00. Joy was deployed to work for Taiwan Wacoal, Co. Ltd. (Wacoal) on June 26, 1997. She
alleged that in her employment contract, she agreed to work as quality control for one year. In Taiwan,
she was asked to work as a cutter.

Sameer claims that on July 14, 1997, a certain Mr. Huwang from Wacoal informed Joy, without prior
notice, that she was terminated and that “she should immediately report to their office to get her salary
and passport.” She was asked to “prepare for immediate repatriation.” Joy claims that she was told that
from June 26 to July 14, 1997, she only earned a total of NT$9,000.15 According to her, Wacoal
deducted NT$3,000 to cover her plane ticket to Manila.

On October 15, 1997, Joy filed a complaint for illegal dismissal with the NLRC against petitioner and
Wacoal.

LA dismissed the complaint.

NLRC reversed LA’s decision.

CA affirmed the ruling of the National Labor Relations Commission finding respondent illegally
dismissed and awarding her three months’ worth of salary, the reimbursement of the cost of her
repatriation, and attorney’s fees

Issue:
Whether or not Cabiles was entitled to the unexpired portion of her salary due to illegal dismissal.

Held:
YES. The Court held that the award of the three-month equivalent of respondent’s salary should be
increased to the amount equivalent to the unexpired term of the employment contract.

In Serrano v. Gallant Maritime Services, Inc. and Marlow Navigation Co., Inc., this court ruled that the
clause “or for three (3) months for every year of the unexpired term, whichever is less” is
unconstitutional for violating the equal protection clause and substantive due process.

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

The Court said that they are aware that the clause “or for three (3) months for every year of the unexpired
term, whichever is less” was reinstated in Republic Act No. 8042 upon promulgation of Republic Act No.
10022 in 2010.
Ruling on the constitutional issue

In the hierarchy of laws, the Constitution is supreme. No branch or office of the government may exercise
its powers in any manner inconsistent with the Constitution, regardless of the existence of any law that
supports such exercise. The Constitution cannot be trumped by any other law. All laws must be read in
light of the Constitution. Any law that is inconsistent with it is a nullity.

Thus, when a law or a provision of law is null because it is inconsistent with the Constitution, the nullity
cannot be cured by reincorporation or reenactment of the same or a similar law or provision. A law
or provision of law that was already declared unconstitutional remains as such unless circumstances have
so changed as to warrant a reverse conclusion.

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

The Court declared, once again, the clause, “or for three (3) months for every year of the unexpired
term, whichever is less” in Section 7 of Republic Act No. 10022 amending Section 10 of Republic Act
No. 8042 is declared unconstitutional and, therefore, null and void.

5. Serrano vs. Gallant Maritime Services

G.R. No. 167614 March 24, 2009
Topic:
Non-impairment of Contract Clause, OFW Employment Contract

Facts:
For Antonio Serrano, a Filipino seafarer, the last clause in the 5th paragraph of Section 10, Republic Act
(R.A.) No. 8042, does not magnify the contributions of OFWs to national development, but exacerbates
the hardships borne by them by unduly limiting their entitlement in case of illegal dismissal to their lump-
sum salary either for the unexpired portion of their employment contract “or for three months for every
year of the unexpired term, whichever is less” (subject clause). Petitioner claims that the last clause
violates the OFWs’ constitutional rights in that it impairs the terms of their contract, deprives them of
equal protection and denies them due process.

Issue:
Does the 5th paragraph of Section 10, RA 8042 violate the non-impairment of contract clause of the
Constitution?

Ruling:
NO. The prohibition is aligned with the general principle that laws newly enacted have only a prospective
operation, and cannot affect acts or contracts already perfected; however, as to laws already in existence,
their provisions are read into contracts and deemed a part thereof.

Thus, the non-impairment clause under Section 10, Article II is limited in application to laws about to be
enacted that would in any way derogate from existing acts or contracts by enlarging, abridging or in any
manner changing the intention of the parties thereto.

As aptly observed by the OSG, the enactment of R.A. No. 8042 in 1995 preceded the execution of the
employment contract between petitioner and respondents in 1998. Hence, it cannot be argued that R.A.
No. 8042, particularly the subject clause, impaired the employment contract of the parties. Rather, when
the parties executed their 1998 employment contract, they were deemed to have incorporated into it all
the provisions of R.A. No. 8042.