G.R. No.

187730

June 29, 2010

PEOPLE OF THE PHILIPPINES, Petitioner, vs. RODOLFO GALLO y GADOT, Accused-Appellant,

FIDES PACARDO y JUNGCO and PILAR MANTA y DUNGO, Accused.
DECISION
VELASCO, JR., J.:
The Case
1

This is an appeal from the Decision dated December 24, 2008 of the Court of Appeals (CA) in CA-G.R.
CR-H.C. No. 02764 entitled People of the Philippines v. Rodolfo Gallo y Gadot (accused-appellant),
2
Fides Pacardo y Jungco and Pilar Manta y Dungo (accused), which affirmed the Decision dated March
15, 2007 of the Regional Trial Court (RTC), Branch 30 in Manila which convicted the accused-appellant
Rodolfo Gallo y Gadot ("accused-appellant") of syndicated illegal recruitment in Criminal Case No. 02206293 and estafa in Criminal Case No. 02-206297.
The Facts
Originally, accused-appellant Gallo and accused Fides Pacardo ("Pacardo") and Pilar Manta ("Manta"),
together with Mardeolyn Martir ("Mardeolyn") and nine (9) others, were charged with syndicated illegal
recruitment and eighteen (18) counts of estafa committed against eighteen complainants, including
Edgardo V. Dela Caza ("Dela Caza"), Sandy Guantero ("Guantero") and Danilo Sare ("Sare"). The
cases were respectively docketed as Criminal Case Nos. 02-2062936 to 02-206311. However, records
reveal that only Criminal Case No. 02-206293, which was filed against accused-appellant Gallo,
Pacardo and Manta for syndicated illegal recruitment, and Criminal Case Nos. 02-206297, 02-206300
and 02-206308, which were filed against accused-appellant Gallo, Pacardo and Manta for estafa,
proceeded to trial due to the fact that the rest of the accused remained at large. Further, the other
cases, Criminal Case Nos. 02-206294 to 02-206296, 02-206298 to 02-206299, 02-206301 to 02206307 and 02-206309 to 02-206311 were likewise provisionally dismissed upon motion of Pacardo,
Manta and accused-appellant for failure of the respective complainants in said cases to appear and
testify during trial.
It should also be noted that after trial, Pacardo and Manta were acquitted in Criminal Case Nos. 02206293, 02-206297, 02-206300 and 02-206308 for insufficiency of evidence. Likewise, accusedappellant Gallo was similarly acquitted in Criminal Case Nos. 02-206300, the case filed by Guantero,
and 02-206308, the case filed by Sare. However, accused-appellant was found guilty beyond
reasonable doubt in Criminal Case Nos. 02-206293 and 02-206297, both filed by Dela Caza, for
syndicated illegal recruitment and estafa, respectively.
Thus, the present appeal concerns solely accused-appellants conviction for syndicated illegal
recruitment in Criminal Case No. 02-206293 and for estafa in Criminal Case No. 02-206297.
In Criminal Case No. 02-206293, the information charges the accused-appellant, together with the
others, as follows:
The undersigned accuses MARDEOLYN MARTIR, ISMAEL GALANZA, NELMAR MARTIR,
MARCELINO MARTIR, NORMAN MARTIR, NELSON MARTIR, MA. CECILIA M. RAMOS, LULU
MENDANES, FIDES PACARDO y JUNGCO, RODOLFO GALLO y GADOT, PILAR MANTA y DUNGO,
ELEONOR PANUNCIO and YEO SIN UNG of a violation of Section 6(a), (l) and (m) of Republic Act
8042, otherwise known as the Migrant Workers and Overseas Filipino Workers Act of 1995, committed
by a syndicate and in large scale, as follows:
That in or about and during the period comprised between November 2000 and December, 2001,
inclusive, in the City of Manila, Philippines, the said accused conspiring and confederating together and
helping with one another, representing themselves to have the capacity to contract, enlist and transport
Filipino workers for employment abroad, did then and there willfully and unlawfully, for a fee, recruit and
promise employment/job placement abroad to FERDINAND ASISTIN, ENTICE BRENDO, REYMOND
G. CENA, EDGARDO V. DELA CAZA, RAYMUND EDAYA, SANDY O. GUANTENO, RENATO V.
HUFALAR, ELENA JUBICO, LUPO A. MANALO, ALMA V. MENOR, ROGELIO S. MORON, FEDILA G.
NAIPA, OSCAR RAMIREZ, MARISOL L. SABALDAN, DANILO SARE, MARY BETH SARDON,
JOHNNY SOLATORIO and JOEL TINIO in Korea as factory workers and charge or accept directly or
indirectly from said FERDINAND ASISTIN the amount of P45,000.00; ENTICE BRENDO P35,000.00;
REYMOND G. CENA P30,000.00; EDGARDO V. DELA CAZA P45,000.00; RAYMUND EDAYA
P100,000.00; SANDY O. GUANTENO P35,000.00; RENATO V. HUFALAR P70,000.00; ELENA
JUBICO P30,000.00; LUPO A. MANALO P75,000.00; ALMA V. MENOR P45,000.00; ROGELIO
S. MORON P70,000.00; FEDILA G. NAIPA P45,000.00; OSCAR RAMIREZ P45,000.00;
MARISOL L. SABALDAN P75,000.00; DANILO SARE P100,000.00; MARY BETH SARDON
P25,000.00; JOHNNY SOLATORIO P35,000.00; and JOEL TINIO P120,000.00 as placement fees
in connection with their overseas employment, which amounts are in excess of or greater than those
specified in the schedule of allowable fees prescribed by the POEA Board Resolution No. 02, Series
1998, and without valid reasons and without the fault of the said complainants failed to actually deploy
them and failed to reimburse the expenses incurred by the said complainants in connection with their
3
documentation and processing for purposes of their deployment. (Emphasis supplied)

In Criminal Case No. 02-206297, the information reads:

That on or about May 28, 2001, in the City of Manila, Philippines, the said accused conspiring and
confederating together and helping with [sic] one another, did then and there willfully, unlawfully and
feloniously defraud EDGARDO V. DELA CAZA, in the following manner, to wit: the said accused by
means of false manifestations and fraudulent representations which they made to the latter, prior to and
even simultaneous with the commission of the fraud, to the effect that they had the power and capacity
to recruit and employ said EDGARDO V. DELA CAZA in Korea as factory worker and could facilitate the
processing of the pertinent papers if given the necessary amount to meet the requirements thereof;
induced and succeeded in inducing said EDGARDO V. DELA CAZA to give and deliver, as in fact, he
gave and delivered to said accused the amount of P45,000.00 on the strength of said manifestations
and representations, said accused well knowing that the same were false and untrue and were made
[solely] for the purpose of obtaining, as in fact they did obtain the said amount of P45,000.00 which
amount once in their possession, with intent to defraud said [EDGARDO] V. DELA CAZA, they willfully,
unlawfully and feloniously misappropriated, misapplied and converted the said amount of P45,000.00 to
their own personal use and benefit, to the damage and prejudice of the said EDGARDO V. DELA CAZA
in the aforesaid amount of P45,000.00, Philippine currency.
4

CONTRARY TO LAW.

When arraigned on January 19, 2004, accused-appellant Gallo entered a plea of not guilty to all
charges.
On March 3, 2004, the pre-trial was terminated and trial ensued, thereafter.
During the trial, the prosecution presented as their witnesses, Armando Albines Roa, the Philippine
Overseas Employment Administration (POEA) representative and private complainants Dela Caza,
Guanteno and Sare. On the other hand, the defense presented as its witnesses, accused-appellant
Gallo, Pacardo and Manta.
Version of the Prosecution
On May 22, 2001, Dela Caza was introduced by Eleanor Panuncio to accused-appellant Gallo,
Pacardo, Manta, Mardeolyn, Lulu Mendanes, Yeo Sin Ung and another Korean national at the office of
MPM International Recruitment and Promotion Agency ("MPM Agency") located in Malate, Manila.
Dela Caza was told that Mardeolyn was the President of MPM Agency, while Nelmar Martir was one of
the incorporators. Also, that Marcelino Martir, Norman Martir, Nelson Martir and Ma. Cecilia Ramos
were its board members. Lulu Mendanes acted as the cashier and accountant, while Pacardo acted as
the agencys employee who was in charge of the records of the applicants. Manta, on the other hand,
was also an employee who was tasked to deliver documents to the Korean embassy.
Accused-appellant Gallo then introduced himself as a relative of Mardeolyn and informed Dela Caza
that the agency was able to send many workers abroad. Together with Pacardo and Manta, he also told
Dela Caza about the placement fee of One Hundred Fifty Thousand Pesos (PhP 150,000) with a down
payment of Forty-Five Thousand Pesos (PhP 45,000) and the balance to be paid through salary
deduction.
Dela Caza, together with the other applicants, were briefed by Mardeolyn about the processing of their
application papers for job placement in Korea as a factory worker and their possible salary. Accused
Yeo Sin Ung also gave a briefing about the business and what to expect from the company and the
salary.
With accused-appellants assurance that many workers have been sent abroad, as well as the
presence of the two (2) Korean nationals and upon being shown the visas procured for the deployed
workers, Dela Caza was convinced to part with his money. Thus, on May 29, 2001, he paid Forty-Five
Thousand Pesos (PhP 45,000) to MPM Agency through accused-appellant Gallo who, while in the
presence of Pacardo, Manta and Mardeolyn, issued and signed Official Receipt No. 401.
Two (2) weeks after paying MPM Agency, Dela Caza went back to the agencys office in Malate, Manila
only to discover that the office had moved to a new location at Batangas Street, Brgy. San Isidro,
Makati. He proceeded to the new address and found out that the agency was renamed to New Filipino
Manpower Development & Services, Inc. ("New Filipino"). At the new office, he talked to Pacardo,
Manta, Mardeolyn, Lulu Mendanes and accused-appellant Gallo. He was informed that the transfer was
done for easy accessibility to clients and for the purpose of changing the name of the agency.
Dela Caza decided to withdraw his application and recover the amount he paid but Mardeolyn,
Pacardo, Manta and Lulu Mendanes talked him out from pursuing his decision. On the other hand,
accused-appellant Gallo even denied any knowledge about the money.
After two (2) more months of waiting in vain to be deployed, Dela Caza and the other applicants
decided to take action. The first attempt was unsuccessful because the agency again moved to another
place. However, with the help of the Office of Ambassador Seeres and the Western Police District,
they were able to locate the new address at 500 Prudential Building, Carriedo, Manila. The agency
explained that it had to move in order to separate those who are applying as entertainers from those
applying as factory workers. Accused-appellant Gallo, together with Pacardo and Manta, were then
arrested.

The testimony of prosecution witness Armando Albines Roa, a POEA employee, was dispensed with
after the prosecution and defense stipulated and admitted to the existence of the following documents:
1. Certification issued by Felicitas Q. Bay, Director II, Licensing Branch of the POEA to the effect
that "New Filipino Manpower Development & Services, Inc., with office address at 1256
Batangas St., Brgy. San Isidro, Makati City, was a licensed landbased agency whose license
expired on December 10, 2001 and was delisted from the roster of licensed agencies on
December 14, 2001." It further certified that "Fides J. Pacardo was the agencys Recruitment
Officer";
2. Certification issued by Felicitas Q. Bay of the POEA to the effect that MPM International
Recruitment and Promotion is not licensed by the POEA to recruit workers for overseas
employment;
3. Certified copy of POEA Memorandum Circular No. 14, Series of 1999 regarding placement
fee ceiling for landbased workers.
4. Certified copy of POEA Memorandum Circular No. 09, Series of 1998 on the placement fee
ceiling for Taiwan and Korean markets, and
5. Certified copy of POEA Governing Board Resolution No. 02, series of 1998.

Version of the Defense

For his defense, accused-appellant denied having any part in the recruitment of Dela Caza. In fact, he
testified that he also applied with MPM Agency for deployment to Korea as a factory worker. According
to him, he gave his application directly with Mardeolyn because she was his town mate and he was
allowed to pay only Ten Thousand Pesos (PhP 10,000) as processing fee. Further, in order to facilitate
the processing of his papers, he agreed to perform some tasks for the agency, such as taking
photographs of the visa and passport of applicants, running errands and performing such other tasks
assigned to him, without salary except for some allowance. He said that he only saw Dela Caza one or
twice at the agencys office when he applied for work abroad. Lastly, that he was also promised
deployment abroad but it never materialized.
Ruling of the Trial Court
On March 15, 2007, the RTC rendered its Decision convicting the accused of syndicated illegal
recruitment and estafa. The dispositive portion reads:
WHEREFORE, judgment is hereby rendered as follows:
I. Accused FIDES PACARDO y JUNGO and PILAR MANTA y DUNGO are hereby ACQUITTED
of the crimes charged in Criminal Cases Nos. 02-206293, 02-206297, 02-206300 and 02206308;
II. Accused RODOLFO GALLO y GADOT is found guilty beyond reasonable doubt in Criminal
Case No. 02-206293 of the crime of Illegal Recruitment committed by a syndicate and is hereby
sentenced to suffer the penalty of life imprisonment and to pay a fine of ONE MILLION
(Php1,000,000.00) PESOS. He is also ordered to indemnify EDGARDO DELA CAZA of the sum
of FORTY-FIVE THOUSAND (Php45,000.00) PESOS with legal interest from the filing of the
information on September 18, 2002 until fully paid.
III. Accused RODOLFO GALLO y GADOT in Criminal Case No. 02-206297 is likewise found
guilty and is hereby sentenced to suffer the indeterminate penalty of FOUR (4) years of prision
correccional as minimum to NINE (9) years of prision mayor as maximum.
IV. Accused RODOLFO GALLO y GADOT is hereby ACQUITTED of the crime charged in
Criminal Cases Nos. 02-206300 and 02-206308.
Let alias warrants for the arrest of the other accused be issued anew in all the criminal cases. Pending
their arrest, the cases are sent to the archives.
The immediate release of accused Fides Pacardo and Pilar Manta is hereby ordered unless detained
for other lawful cause or charge.
5

SO ORDERED.

Ruling of the Appellate Court

On appeal, the CA, in its Decision dated December 24, 2008, disposed of the case as follows:
WHEREFORE, the appealed Decision of the Regional Trial Court of Manila, Branch 30, in Criminal
Cases Nos. 02-206293 and 02-206297, dated March 15, 2007, is AFFIRMED with the MODIFICATION
that in Criminal Case No. 02-206297, for estafa, appellant is sentenced to four (4) years of prision
correccional to ten (10) years of prision mayor.
6

SO ORDERED.

The CA held the totality of the prosecutions evidence showed that the accused-appellant, together with
others, engaged in the recruitment of Dela Caza. His actions and representations to Dela Caza can
hardly be construed as the actions of a mere errand boy.
As determined by the appellate court, the offense is considered economic sabotage having been
committed by more than three (3) persons, namely, accused-appellant Gallo, Mardeolyn, Eleonor
Panuncio and Yeo Sin Ung. More importantly, a personal found guilty of illegal recruitment may also be
7
convicted of estafa. The same evidence proving accused-appellants commission of the crime of illegal
recruitment in large scale also establishes his liability for estafa under paragragh 2(a) of Article 315 of
the Revised Penal Code (RPC).
On January 15, 2009, the accused-appellant filed a timely appeal before this Court.
The Issues
Accused-appellant interposes in the present appeal the following assignment of errors:
I
The court a quo gravely erred in finding the accused-appellant guilty of illegal recruitment
committed by a syndicate despite the failure of the prosecution to prove the same beyond
reasonable doubt.
II
The court a quo gravely erred in finding the accused-appellant guilty of estafa despite the failure
of the prosecution to prove the same beyond reasonable doubt.
Our Ruling
The appeal has no merit.
Evidence supports conviction of the crime of Syndicated Illegal Recruitment
Accused-appellant avers that he cannot be held criminally liable for illegal recruitment because he was
neither an officer nor an employee of the recruitment agency. He alleges that the trial court erred in
adopting the asseveration of the private complainant that he was indeed an employee because such
was not duly supported by competent evidence. According to him, even assuming that he was an
employee, such cannot warrant his outright conviction sans evidence that he acted in conspiracy with
the officers of the agency.
We disagree.
To commit syndicated illegal recruitment, three elements must be established: (1) the offender
undertakes either any activity within the meaning of "recruitment and placement" defined under Article
13(b), or any of the prohibited practices enumerated under Art. 34 of the Labor Code; (2) he has no
valid license or authority required by law to enable one to lawfully engage in recruitment and placement
8
of workers; and (3) the illegal recruitment is committed by a group of three (3) or more persons
9
conspiring or confederating with one another. When illegal recruitment is committed by a syndicate or
in large scale, i.e., if it is committed against three (3) or more persons individually or as a group, it is
10
considered an offense involving economic sabotage.
Under Art. 13(b) of the Labor Code, "recruitment and placement" refers to "any act of canvassing,
enlisting, contracting, transporting, utilizing, hiring or procuring workers, and includes referrals, contract
services, promising or advertising for employment, locally or abroad, whether for profit or not".
After a thorough review of the records, we believe that the prosecution was able to establish the
elements of the offense sufficiently. The evidence readily reveals that MPM Agency was never licensed
by the POEA to recruit workers for overseas employment.
Even with a license, however, illegal recruitment could still be committed under Section 6 of Republic
Act No. 8042 ("R.A. 8042"), otherwise known as the Migrants and Overseas Filipinos Act of 1995, viz:
Sec. 6. Definition. For purposes of this Act, illegal recruitment shall mean any act of canvassing,
enlisting, contracting, transporting, utilizing, hiring, or procuring workers and includes referring, contract
services, promising or advertising for employment abroad, whether for profit or not, when undertaken by
a non-licensee or non-holder of authority contemplated under Article 13(f) of Presidential Decree No.
442, as amended, otherwise known as the Labor Code of the Philippines: Provided, That any such nonlicensee or non-holder who, in any manner, offers or promises for a fee employment abroad to two or
more persons shall be deemed so engaged. It shall, likewise, include the following act, whether
committed by any person, whether a non-licensee, non-holder, licensee or holder of authority:

(a) To charge or accept directly or indirectly any amount greater than that specified in the schedule of
allowable fees prescribed by the Secretary of Labor and Employment, or to make a worker pay any
amount greater than that actually received by him as a loan or advance;
xxxx
(l) Failure to actually deploy without valid reason as determined by the Department of Labor and
Employment; and
(m) Failure to reimburse expenses incurred by the worker in connection with his documentation and
processing for purposes of deployment and processing for purposes of deployment, in cases where the
deployment does not actually take place without the workers fault. Illegal recruitment when committed
by a syndicate or in large scale shall be considered an offense involving economic sabotage.
Illegal recruitment is deemed committed by a syndicate if carried out by a group of three (3) or more
persons conspiring or confederating with one another. It is deemed committed in large scale if
committed against three (3) or more persons individually or as a group.
The persons criminally liable for the above offenses are the principals, accomplices and accessories. In
case of juridical persons, the officers having control, management or direction of their business shall be
liable.
In the instant case, accused-appellant committed the acts enumerated in Sec. 6 of R.A. 8042.
Testimonial evidence presented by the prosecution clearly shows that, in consideration of a promise of
foreign employment, accused-appellant received the amount of Php 45,000.00 from Dela Caza. When
accused-appellant made misrepresentations concerning the agencys purported power and authority to
recruit for overseas employment, and in the process, collected money in the guise of placement fees,
11
the former clearly committed acts constitutive of illegal recruitment. Such acts were accurately
described in the testimony of prosecution witness, Dela Caza, to wit:
PROS. MAGABLIN
Q: How about this Rodolfo Gallo?
A: He was the one who received my money.
Q: Aside from receiving your money, was there any other representations or acts made by
Rodolfo Gallo?
A: He introduced himself to me as relative of Mardeolyn Martir and he even intimated to me that
their agency has sent so many workers abroad.
xxxx
PROS. MAGABLIN
Q: Mr. Witness, as you claimed you tried to withdraw your application at the agency. Was there
any instance that you were able to talk to Fides Pacardo, Rodolfo Gallo and Pilar Manta?
A: Yes, maam.
Q: What was the conversation that transpired among you before you demanded the return of
your money and documents?
A: When I tried to withdraw my application as well as my money, Mr. Gallo told me "I know
nothing about your money" while Pilar Manta and Fides Pacardo told me, why should I withdraw
my application and my money when I was about to be [deployed] or I was about to leave.
xxxx
Q: And what transpired at that office after this Panuncio introduced you to those persons whom
you just mentioned?
A: The three of them including Rodolfo Gallo told me that the placement fee in that agency is
Php 150,000.00 and then I should deposit the amount of Php 45,000.00. After I have deposited
said amount, I would just wait for few days
xxxx
Q: They were the one (sic) who told you that you have to pay Php 45,000.00 for deposit only?
A: Yes, maam, I was told by them to deposit Php 45,000.00 and then I would pay the remaining
balance of Php105,000.00, payment of it would be through salary deduction.
Q: That is for what Mr. Witness again?
A: For placement fee.
Q: Now did you believe to (sic) them?
A: Yes, maam.
Q: Why, why did you believe?
A: Because of the presence of the two Korean nationals and they keep on telling me that they
have sent abroad several workers and they even showed visas of the records that they have
already deployed abroad.

Q: Aside from that, was there any other representations which have been made upon you or
make you believe that they can deploy you?
A: At first I was adamant but they told me "If you do not want to believe us, then we could do
nothing." But once they showed me the [visas] of the people whom they have deployed abroad,
that was the time I believe them.
Q: So after believing on the representations, what did you do next Mr. Witness?
A: That was the time that I decided to give the money.
xxxx
PROS. MAGABLIN
Q: Do you have proof that you gave the money?
A: Yes, maam.
Q: Where is your proof that you gave the money?
A: I have it here.
PROS. MAGABLIN:
Witness is producing to this court a Receipt dated May 28, 2001 in the amount of Php45,000.00
which for purposes of record Your Honor, may I request that the same be marked in the
evidence as our Exhibit "F".
xxxx
PROS. MAGABLIN
Q: There appears a signature appearing at the left bottom portion of this receipt. Do you know
whose signature is this?
A: Yes, maam, signature of Rodolfo Gallo.
PROS. MAGABLIN
Q: Why do you say that that is his signature?
A: Rodolfo Gallos signature Your Honor because he was the one who received the money and
he was the one who filled up this O.R. and while he was doing it, he was flanked by Fides
Pacardo, Pilar Manta and Mardeolyn Martir.
xxxx
Q: So it was Gallo who received your money?
A: Yes, maam.
PROS. MAGABLIN
Q: And after that, what did this Gallo do after he received your money?
A: They told me maam just to call up and make a follow up with our agency.
xxxx
Q: Now Mr. Witness, after you gave your money to the accused, what happened with the
application, with the promise of employment that he promised?
A: Two (2) weeks after giving them the money, they moved to a new office in Makati, Brgy. San
Isidro.
xxxx
Q: And were they able to deploy you as promised by them?
12

A: No, maam, they were not able to send us abroad.

Essentially, Dela Caza appeared very firm and consistent in positively identifying accused-appellant as
one of those who induced him and the other applicants to part with their money. His testimony showed
that accused-appellant made false misrepresentations and promises in assuring them that after they
paid the placement fee, jobs in Korea as factory workers were waiting for them and that they would be
deployed soon. In fact, Dela Caza personally talked to accused-appellant and gave him the money and
saw him sign and issue an official receipt as proof of his payment. Without a doubt, accused-appellants
actions constituted illegal recruitment.
Additionally, accused-appellant cannot argue that the trial court erred in finding that he was indeed an
employee of the recruitment agency. On the contrary, his active participation in the illegal recruitment is
unmistakable. The fact that he was the one who issued and signed the official receipt belies his
profession of innocence.
This Court likewise finds the existence of a conspiracy between the accused-appellant and the other
persons in the agency who are currently at large, resulting in the commission of the crime of syndicated
illegal recruitment.
In this case, it cannot be denied that the accused-appellent together with Mardeolyn and the rest of the

officers and employees of MPM Agency participated in a network of deception. Verily, the active
involvement of each in the recruitment scam was directed at one single purpose to divest
complainants with their money on the pretext of guaranteed employment abroad. The prosecution
evidence shows that complainants were briefed by Mardeolyn about the processing of their papers for a
possible job opportunity in Korea, as well as their possible salary. Likewise, Yeo Sin Ung, a Korean
national, gave a briefing about the business and what to expect from the company. Then, here comes
accused-appellant who introduced himself as Mardeolyns relative and specifically told Dela Caza of the
fact that the agency was able to send many workers abroad. Dela Caza was even showed several
workers visas who were already allegedly deployed abroad. Later on, accused-appellant signed and
issued an official receipt acknowledging the down payment of Dela Caza. Without a doubt, the nature
and extent of the actions of accused-appellant, as well as with the other persons in MPM Agency
clearly show unity of action towards a common undertaking. Hence, conspiracy is evidently present.
13

In People v. Gamboa,
recruitment, viz:

this Court discussed the nature of conspiracy in the context of illegal

Conspiracy to defraud aspiring overseas contract workers was evident from the acts of the malefactors
whose conduct before, during and after the commission of the crime clearly indicated that they were
one in purpose and united in its execution. Direct proof of previous agreement to commit a crime is not
necessary as it may be deduced from the mode and manner in which the offense was perpetrated or
inferred from the acts of the accused pointing to a joint purpose and design, concerted action and
community of interest. As such, all the accused, including accused-appellant, are equally guilty of the
crime of illegal recruitment since in a conspiracy the act of one is the act of all.
To reiterate, in establishing conspiracy, it is not essential that there be actual proof that all the
conspirators took a direct part in every act. It is sufficient that they acted in concert pursuant to the
14
same objective.
Estafa
The prosecution likewise established that accused-appellant is guilty of the crime of estafa as defined
under Article 315 paragraph 2(a) of the Revised Penal Code, viz:
Art. 315. Swindling (estafa). Any person who shall defraud another by any means mentioned
hereinbelow
xxxx
2. By means of any of the following false pretenses or fraudulent acts executed prior to or
simultaneously with the commission of the fraud:
(a) By using fictitious name, or falsely pretending to possess power, influence, qualifications, property,
credit, agency, business or imaginary transactions; or by means of other similar deceits.
The elements of estafa in general are: (1) that the accused defrauded another (a) by abuse of
confidence, or (b) by means of deceit; and (2) that damage or prejudice capable of pecuniary estimation
15
is caused to the offended party or third person. Deceit is the false representation of a matter of fact,
whether by words or conduct, by false or misleading allegations, or by concealment of that which
should have been disclosed; and which deceives or is intended to deceive another so that he shall act
upon it, to his legal injury.
All these elements are present in the instant case: the accused-appellant, together with the other
accused at large, deceived the complainants into believing that the agency had the power and
capability to send them abroad for employment; that there were available jobs for them in Korea as
factory workers; that by reason or on the strength of such assurance, the complainants parted with their
money in payment of the placement fees; that after receiving the money, accused-appellant and his coaccused went into hiding by changing their office locations without informing complainants; and that
complainants were never deployed abroad. As all these representations of the accused-appellant
proved false, paragraph 2(a), Article 315 of the Revised Penal Code is thus applicable.1avvphi1
Defense of Denial Cannot Prevail over Positive Identification
Indubitably, accused-appellants denial of the crimes charged crumbles in the face of the positive
identification made by Dela Caza and his co-complainants as one of the perpetrators of the crimes
16
charged. As enunciated by this Court in People v. Abolidor, "[p]ositive identification where categorical
and consistent and not attended by any showing of ill motive on the part of the eyewitnesses on the
matter prevails over alibi and denial."
The defense has miserably failed to show any evidence of ill motive on the part of the prosecution
witnesses as to falsely testify against him.
Therefore, between the categorical statements of the prosecution witnesses, on the one hand, and bare
17
denials of the accused, on the other hand, the former must prevail.
Moreover, this Court accords the trial courts findings with the probative weight it deserves in the
absence of any compelling reason to discredit the same. It is a fundamental judicial dictum that the
findings of fact of the trial court are not disturbed on appeal except when it overlooked, misunderstood

or misapplied some facts or circumstances of weight and substance that would have materially affected
the outcome of the case. We find that the trial court did not err in convicting the accused-appellant.
WHEREFORE, the appeal is DENIED for failure to sufficiently show reversible error in the assailed
decision. The Decision dated December 24, 2008 of the CA in CA-G.R. CR-H.C. No. 02764 is
AFFIRMED.
No costs.
SO ORDERED.

G.R. No. 179532

May 30, 2011

CLAUDIO S. YAP vs. THENAMARIS SHIP'S MANAGEMENT and INTERMARE MARITIME

AGENCIES, INC.
DECISION
NACHURA, J.:
1

Before this Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Civil Procedure,
2
seeking the reversal of the Court of Appeals (CA) Decision dated February 28, 2007, which affirmed
3
with modification the National Labor Relations Commission (NLRC) resolution dated April 20, 2005.
The undisputed facts, as found by the CA, are as follows:
[Petitioner] Claudio S. Yap was employed as electrician of the vessel, M/T SEASCOUT on 14 August
2001 by Intermare Maritime Agencies, Inc. in behalf of its principal, Vulture Shipping Limited. The
contract of employment entered into by Yap and Capt. Francisco B. Adviento, the General Manager of
Intermare, was for a duration of 12 months. On 23 August 2001, Yap boarded M/T SEASCOUT and
commenced his job as electrician. However, on or about 08 November 2001, the vessel was sold. The
Philippine Overseas Employment Administration (POEA) was informed about the sale on 06 December
2001 in a letter signed by Capt. Adviento. Yap, along with the other crewmembers, was informed by the
Master of their vessel that the same was sold and will be scrapped. They were also informed about the
Advisory sent by Capt. Constatinou, which states, among others:
" PLEASE ASK YR OFFICERS AND RATINGS IF THEY WISH TO BE TRANSFERRED TO OTHER
VESSELS AFTER VESSEL S DELIVERY (GREEK VIA ATHENS-PHILIPINOS VIA MANILA
FOR CREW NOT WISH TRANSFER TO DECLARE THEIR PROSPECTED TIME FOR
REEMBARKATION IN ORDER TO SCHEDULE THEM ACCLY"
Yap received his seniority bonus, vacation bonus, extra bonus along with the scrapping bonus.
However, with respect to the payment of his wage, he refused to accept the payment of one-month
basic wage. He insisted that he was entitled to the payment of the unexpired portion of his contract
since he was illegally dismissed from employment. He alleged that he opted for immediate transfer but
none was made.
[Respondents], for their part, contended that Yap was not illegally dismissed. They alleged that
following the sale of the M/T SEASCOUT, Yap signed off from the vessel on 10 November 2001 and
was paid his wages corresponding to the months he worked or until 10 November 2001 plus his
seniority bonus, vacation bonus and extra bonus. They further alleged that Yaps employment contract
was validly terminated due to the sale of the vessel and no arrangement was made for Yaps transfer to
4
Thenamaris other vessels.
Thus, Claudio S. Yap (petitioner) filed a complaint for Illegal Dismissal with Damages and Attorneys
Fees before the Labor Arbiter (LA). Petitioner claimed that he was entitled to the salaries corresponding
to the unexpired portion of his contract. Subsequently, he filed an amended complaint, impleading
Captain Francisco Adviento of respondents Intermare Maritime Agencies, Inc. (Intermare) and
Thenamaris Ships Management (respondents), together with C.J. Martionos, Interseas Trading and

Financing Corporation, and Vulture Shipping Limited/Stejo Shipping Limited.

5

On July 26, 2004, the LA rendered a decision in favor of petitioner, finding the latter to have been
constructively and illegally dismissed by respondents. Moreover, the LA found that respondents acted in
bad faith when they assured petitioner of re-embarkation and required him to produce an electrician
certificate during the period of his contract, but actually he was not able to board one despite of
respondents numerous vessels. Petitioner made several follow-ups for his re-embarkation but
respondents failed to heed his plea; thus, petitioner was forced to litigate in order to vindicate his rights.
Lastly, the LA opined that since the unexpired portion of petitioners contract was less than one year,
petitioner was entitled to his salaries for the unexpired portion of his contract for a period of nine
months. The LA disposed, as follows:
WHEREFORE, in view of the foregoing, a decision is hereby rendered declaring complainant to have
been constructively dismissed. Accordingly, respondents Intermare Maritime Agency Incorporated,
Thenamaris Ships Mgt., and Vulture Shipping Limited are ordered to pay jointly and severally
complainant Claudio S. Yap the sum of $12,870.00 or its peso equivalent at the time of payment. In
addition, moral damages of ONE HUNDRED THOUSAND PESOS (P100,000.00) and exemplary
damages of FIFTY THOUSAND PESOS (P50,000.00) are awarded plus ten percent (10%) of the total
award as attorneys fees.
Other money claims are DISMISSED for lack of merit.
6

SO ORDERED.

Aggrieved, respondents sought recourse from the NLRC.

7

In its decision dated January 14, 2005, the NLRC affirmed the LAs findings that petitioner was indeed
constructively and illegally dismissed; that respondents bad faith was evident on their wilful failure to
transfer petitioner to another vessel; and that the award of attorneys fees was warranted. However, the
NLRC held that instead of an award of salaries corresponding to nine months, petitioner was only
8
9
entitled to salaries for three months as provided under Section 10 of Republic Act (R.A.) No. 8042, as
enunciated in our ruling in Marsaman Manning Agency, Inc. v. National Labor Relations
10
Commission. Hence, the NLRC ruled in this wise:
WHEREFORE, premises considered, the decision of the Labor Arbiter finding the termination of
complainant illegal is hereby AFFIRMED with a MODIFICATION. Complainant[s] salary for the
unexpired portion of his contract should only be limited to three (3) months basic salary.
Respondents Intermare Maritime Agency, Inc.[,] Vulture Shipping Limited and Thenamaris Ship
Management are hereby ordered to jointly and severally pay complainant, the following:
1. Three (3) months basic salary US$4,290.00 or its peso equivalent at the time of actual
payment.
2. Moral damages P100,000.00
3. Exemplary damages P50,000.00
4. Attorneys fees equivalent to 10% of the total monetary award.
11

SO ORDERED.

12

Respondents filed a Motion for Partial Reconsideration, praying for the reversal and setting aside of
the NLRC decision, and that a new one be rendered dismissing the complaint. Petitioner, on the other
13
hand, filed his own Motion for Partial Reconsideration, praying that he be paid the nine (9)-month
basic salary, as awarded by the LA.
14

On April 20, 2005, a resolution was rendered by the NLRC, affirming the findings of Illegal Dismissal
and respondents failure to transfer petitioner to another vessel. However, finding merit in petitioners
arguments, the NLRC reversed its earlier Decision, holding that "there can be no choice to grant only
three (3) months salary for every year of the unexpired term because there is no full year of unexpired
term which this can be applied." Hence
WHEREFORE, premises considered, complainants Motion for Partial Reconsideration is hereby
granted. The award of three (3) months basic salary in the sum of US$4,290.00 is hereby modified in
that complainant is entitled to his salary for the unexpired portion of employment contract in the sum of
US$12,870.00 or its peso equivalent at the time of actual payment.
All aspect of our January 14, 2005 Decision STANDS.
15

SO ORDERED.

Respondents filed a Motion for Reconsideration, which the NLRC denied.

16

Undaunted, respondents filed a petition for certiorari under Rule 65 of the Rules of Civil Procedure
before the CA. On February 28, 2007, the CA affirmed the findings and ruling of the LA and the NLRC
that petitioner was constructively and illegally dismissed. The CA held that respondents failed to show
that the NLRC acted without statutory authority and that its findings were not supported by law,
jurisprudence, and evidence on record. Likewise, the CA affirmed the lower agencies findings that the

advisory of Captain Constantinou, taken together with the other documents and additional requirements
imposed on petitioner, only meant that the latter should have been re-embarked. In the same token, the
CA upheld the lower agencies unanimous finding of bad faith, warranting the imposition of moral and
exemplary damages and attorneys fees. However, the CA ruled that the NLRC erred in sustaining the
LAs interpretation of Section 10 of R.A. No. 8042. In this regard, the CA relied on the clause "or for
three months for every year of the unexpired term, whichever is less" provided in the 5th paragraph of
Section 10 of R.A. No. 8042 and held:
In the present case, the employment contract concerned has a term of one year or 12 months which
commenced on August 14, 2001. However, it was preterminated without a valid cause. [Petitioner] was
paid his wages for the corresponding months he worked until the 10th of November. Pursuant to the
provisions of Sec. 10, [R.A. No.] 8042, therefore, the option of "three months for every year of the
17
unexpired term" is applicable.
Thus, the CA provided, to wit:
WHEREFORE, premises considered, this Petition for Certiorari is DENIED. The Decision dated January
14, 2005, and Resolutions, dated April 20, 2005 and July 29, 2005, respectively, of public respondent
National Labor Relations Commission-Fourth Division, Cebu City, in NLRC No. V-000038-04 (RAB VIII
(OFW)-04-01-0006) are hereby AFFIRMED with the MODIFICATION that private respondent is entitled
to three (3) months of basic salary computed at US$4,290.00 or its peso equivalent at the time of actual
payment.
18

Costs against Petitioners.

Both parties filed their respective motions for reconsideration, which the CA, however, denied in its
19
Resolution dated August 30, 2007.
Unyielding, petitioner filed this petition, raising the following issues:
1) Whether or not Section 10 of R.A. [No.] 8042, to the extent that it affords an illegally
dismissed migrant worker the lesser benefit of "salaries for [the] unexpired portion of his
employment contract or for three (3) months for every year of the unexpired term, whichever is
less" is constitutional; and
2) Assuming that it is, whether or not the Court of Appeals gravely erred in granting petitioner
only three (3) months backwages when his unexpired term of 9 months is far short of the "every
20
year of the unexpired term" threshold.
In the meantime, while this case was pending before this Court, we declared as unconstitutional the
clause "or for three months for every year of the unexpired term, whichever is less" provided in the 5th
21
paragraph of Section 10 of R.A. No. 8042 in the case of Serrano v. Gallant Maritime Services, Inc. on
March 24, 2009.
Apparently, unaware of our ruling in Serrano, petitioner claims that the 5th paragraph of Section 10,
22
23
R.A. No. 8042, is violative of Section 1, Article III and Section 3, Article XIII of the Constitution to the
extent that it gives an erring employer the option to pay an illegally dismissed migrant worker only three
months for every year of the unexpired term of his contract; that said provision of law has long been a
source of abuse by callous employers against migrant workers; and that said provision violates the
equal protection clause under the Constitution because, while illegally dismissed local workers are
guaranteed under the Labor Code of reinstatement with full backwages computed from the time
compensation was withheld from them up to their actual reinstatement, migrant workers, by virtue of
Section 10 of R.A. No. 8042, have to waive nine months of their collectible backwages every time they
have a year of unexpired term of contract to reckon with. Finally, petitioner posits that, assuming said
provision of law is constitutional, the CA gravely abused its discretion when it reduced petitioners
backwages from nine months to three months as his nine-month unexpired term cannot accommodate
24
the lesser relief of three months for every year of the unexpired term.
On the other hand, respondents, aware of our ruling in Serrano, aver that our pronouncement of
unconstitutionality of the clause "or for three months for every year of the unexpired term, whichever is
less" provided in the 5th paragraph of Section 10 of R.A. No. 8042 in Serrano should not apply in this
case because Section 10 of R.A. No. 8042 is a substantive law that deals with the rights and obligations
of the parties in case of Illegal Dismissal of a migrant worker and is not merely procedural in character.
Thus, pursuant to the Civil Code, there should be no retroactive application of the law in this case.
Moreover, respondents asseverate that petitioners tanker allowance of US$130.00 should not be
included in the computation of the award as petitioners basic salary, as provided under his contract,
was only US$1,300.00. Respondents submit that the CA erred in its computation since it included the
said tanker allowance. Respondents opine that petitioner should be entitled only to US$3,900.00 and
not to US$4,290.00, as granted by the CA. Invoking Serrano, respondents claim that the tanker
allowance should be excluded from the definition of the term "salary." Also, respondents manifest that
the full sum of P878,914.47 in Intermares bank account was garnished and subsequently withdrawn
and deposited with the NLRC Cashier of Tacloban City on February 14, 2007. On February 16, 2007,
while this case was pending before the CA, the LA issued an Order releasing the amount
of P781,870.03 to petitioner as his award, together with the sum of P86,744.44 to petitioners former

lawyer as attorneys fees, and the amount of P3,570.00 as execution and deposit fees. Thus,
respondents pray that the instant petition be denied and that petitioner be directed to return to
25
Intermare the sum of US$8,970.00 or its peso equivalent.
On this note, petitioner counters that this new issue as to the inclusion of the tanker allowance in the
computation of the award was not raised by respondents before the LA, the NLRC and the CA, nor was
it raised in respondents pleadings other than in their Memorandum before this Court, which should not
26
be allowed under the circumstances.
The petition is impressed with merit.
Prefatorily, it bears emphasis that the unanimous finding of the LA, the NLRC and the CA that the
dismissal of petitioner was illegal is not disputed. Likewise not disputed is the tribunals unanimous
finding of bad faith on the part of respondents, thus, warranting the award of moral and exemplary
damages and attorneys fees. What remains in issue, therefore, is the constitutionality of the 5th
paragraph of Section 10 of R.A. No. 8042 and, necessarily, the proper computation of the lump-sum
salary to be awarded to petitioner by reason of his illegal dismissal.
Verily, we have already declared in Serrano that the clause "or for three months for every year of the
unexpired term, whichever is less" provided in the 5th paragraph of Section 10 of R.A. No. 8042 is
unconstitutional for being violative of the rights of Overseas Filipino Workers (OFWs) to equal protection
of the laws. In an exhaustive discussion of the intricacies and ramifications of the said clause, this
Court, in Serrano, pertinently held:
The Court concludes that the subject clause contains a suspect classification in that, in the computation
of the monetary benefits of fixed-term employees who are illegally discharged, it imposes a 3-month
cap on the claim of OFWs with an unexpired portion of one year or more in their contracts, but none on
the claims of other OFWs or local workers with fixed-term employment. The subject clause singles out
27
one classification of OFWs and burdens it with a peculiar disadvantage.
Moreover, this Court held therein that the subject clause does not state or imply any definitive
governmental purpose; hence, the same violates not just therein petitioners right to equal protection,
but also his right to substantive due process under Section 1, Article III of the
28
Constitution. Consequently, petitioner therein was accorded his salaries for the entire unexpired
period of nine months and 23 days of his employment contract, pursuant to law and jurisprudence prior
to the enactment of R.A. No. 8042.
We have already spoken. Thus, this case should not be different from Serrano.
As a general rule, an unconstitutional act 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 general rule is
supported by Article 7 of the Civil Code, which provides:
Art. 7. Laws are repealed only by subsequent ones, and their violation or non-observance shall not be
excused by disuse or custom or practice to the contrary.
The doctrine of operative fact serves as an exception to the aforementioned general rule. In Planters
29
Products, Inc. v. Fertiphil Corporation, we held:
The doctrine of operative fact, as an exception to the general rule, only applies as a matter of equity
and fair play. It nullifies the effects of an unconstitutional law by recognizing that the existence of a
statute prior to a determination of unconstitutionality is an operative fact and may have consequences
which cannot always be ignored. The past cannot always be erased by a new judicial declaration.
The doctrine is applicable when a declaration of unconstitutionality will impose an undue burden on
those who have relied on the invalid law. Thus, it was applied to a criminal case when a declaration of
unconstitutionality would put the accused in double jeopardy or would put in limbo the acts done by a
30
municipality in reliance upon a law creating it.
Following Serrano, we hold that this case should not be included in the aforementioned exception. After
all, it was not the fault of petitioner that he lost his job due to an act of illegal dismissal committed by
respondents. To rule otherwise would be iniquitous to petitioner and other OFWs, and would, in effect,
send a wrong signal that principals/employers and recruitment/manning agencies may violate an OFWs
security of tenure which an employment contract embodies and actually profit from such violation based
on an unconstitutional provision of law.
In the same vein, we cannot subscribe to respondents postulation that the tanker allowance of
US$130.00 should not be included in the computation of the lump-sum salary to be awarded to
petitioner.
First. It is only at this late stage, more particularly in their Memorandum, that respondents are raising
this issue. It was not raised before the LA, the NLRC, and the CA. They did not even assail the award
accorded by the CA, which computed the lump-sum salary of petitioner at the basic salary of
US$1,430.00, and which clearly included the US$130.00 tanker allowance. Hence, fair play, justice, and
due process dictate that this Court cannot now, for the first time on appeal, pass upon this question.
Matters not taken up below cannot be raised for the first time on appeal. They must be raised
seasonably in the proceedings before the lower tribunals. Questions raised on appeal must be within

the issues framed by the parties; consequently, issues not raised before the lower tribunals cannot be
31
raised for the first time on appeal. 1avvphi1
Second. Respondents invocation of Serrano is unavailing. Indeed, we made the following
pronouncements in Serrano, to wit:
The word salaries in Section 10(5) does not include overtime and leave pay. For seafarers like
petitioner, DOLE Department Order No. 33, series 1996, provides a Standard Employment Contract of
Seafarers, in which salary is understood as the basic wage, exclusive of overtime, leave pay and other
bonuses; whereas overtime pay is compensation for all work "performed" in excess of the regular eight
hours, and holiday pay is compensation for any work "performed" on designated rest days and
32
holidays.
A close perusal of the contract reveals that the tanker allowance of US$130.00 was not categorized as
a bonus but was rather encapsulated in the basic salary clause, hence, forming part of the basic salary
of petitioner. Respondents themselves in their petition for certiorari before the CA averred that
petitioners basic salary, pursuant to the contract, was "US$1,300.00 + US$130.00 tanker
33
allowance." If respondents intended it differently, the contract per se should have indicated that said
allowance does not form part of the basic salary or, simply, the contract should have separated it from
the basic salary clause.
A final note.
34

We ought to be reminded of the plight and sacrifices of our OFWs. In Olarte v. Nayona, this Court held
that:
Our overseas workers belong to a disadvantaged class. Most of them come from the poorest sector of
our society. Their profile shows they live in suffocating slums, trapped in an environment of crimes.
Hardly literate and in ill health, their only hope lies in jobs they find with difficulty in our country. Their
unfortunate circumstance makes them easy prey to avaricious employers. They will climb mountains,
cross the seas, endure slave treatment in foreign lands just to survive. Out of despondence, they will
work under sub-human conditions and accept salaries below the minimum. The least we can do is to
protect them with our laws.
WHEREFORE, the Petition is GRANTED. The Court of Appeals Decision dated February 28, 2007 and
Resolution dated August 30, 2007 are hereby MODIFIED to the effect that petitioner is AWARDED his
salaries for the entire unexpired portion of his employment contract consisting of nine months computed
at the rate of US$1,430.00 per month. All other awards are hereby AFFIRMED. No costs.
SO ORDERED.

G.R. No. 167639

April 19, 2006

REPUBLIC OF THE PHILIPPINES, represented by the ADMINISTRATOR OF THE PHILIPPINE

OVERSEAS EMPLOYMENT ADMINISTRATION (POEA), vs PRINCIPALIA MANAGEMENT AND

PERSONNEL CONSULTANTS, INCORPORATED
DECISION
YNARES-SANTIAGO, J.:
1

Petitioner assails the September 20, 2004 Resolution of the Court of Appeals in CA-G.R. SP No.
86170, dismissing outright the petition for certiorari for failure to attach copies of all relevant pleadings
2
and transcripts of the hearings, as well as the March 29, 2005 Resolution denying the motion for
reconsideration.
This case stemmed from two separate complaints filed before the Philippine Overseas Employment
Administration (POEA) against Principalia Management and Personnel Consultants, Incorporated
(Principalia) for violation of the 2002 POEA Rules and Regulations. The first complaint dated July 16,
2003 filed by Ruth Yasmin Concha (Concha) was docketed as POEA Case No. RV 03-07-1497. The
second complaint dated October 14, 2003 filed by Rafael E. Baldoza (Baldoza) was docketed as POEA
Case No. RV 03-07-1453.
In the first complaint, Concha alleged that in August 2002, she applied with Principalia for placement
and employment as caregiver or physical therapist in the USA or Canada. Despite paying P20,000.00
out of the P150,000.00 fee required by Principalia which was not properly receipted, Principalia failed to
3
deploy Concha for employment abroad.
4

In its March 15, 2004 Order, the Adjudication Office of the POEA found Principalia liable for violations
of the 2002 POEA Rules and Regulations, particularly for collecting a fee from the applicant before
employment was obtained; for non-issuance of official receipt; and for misrepresenting that it was able
to secure employment for Concha. For these infractions, Principalias license was ordered suspended
for 12 months or in lieu thereof, Pricipalia is ordered to pay a fine of P120,000.00 and to refund
Conchas placement fee of P20,000.00.
5

Baldoza initiated the second complaint on October 14, 2003 alleging that Principalia assured him of
employment in Doha, Qatar as a machine operator with a monthly salary of $450.00. After paying
P20,000.00 as placement fee, he departed for Doha, Qatar on May 31, 2003 but when he arrived at the
jobsite, he was made to work as welder, a job which he had no skills. He insisted that he was hired as
machine operator but the alternative position offered to him was that of helper, which he refused. Thus,
he was repatriated on July 5, 2003.
On November 12, 2003, Baldoza and Principalia entered into a compromise agreement with quitclaim
and release whereby the latter agreed to redeploy Baldoza for employment abroad. Principalia,
6
however, failed to deploy Baldoza as agreed hence, in an Order dated April 29, 2004, the POEA
suspended Principalias documentary processing.
7

Principalia moved for reconsideration which the POEA granted on June 25, 2004. The latter lifted its
order suspending the documentary processing by Principalia after noting that it exerted efforts to obtain
overseas employment for Baldoza within the period stipulated in the settlement agreement but due to
Baldozas lack of qualification, his application was declined by its foreign principal.
Meanwhile, on June 14, 2004, or before the promulgation of POEAs order lifting the suspension,
8
Principalia filed a Complaint (Complaint) against Rosalinda D. Baldoz in her capacity as Administrator
of POEA and Atty. Jovencio R. Abara in his capacity as POEA Conciliator, before the Regional Trial
Court (RTC) of Mandaluyong City for "Annulment of Order for Suspension of Documentation
Processing with Damages and Application for Issuance of a Temporary Restraining Order and/or Writ of
Preliminary Injunction, and a Writ of Preliminary Mandatory Injunction." Principalia claimed that the
suspension of its documentary processing would ruin its reputation and goodwill and would cause the
loss of its applicants, employers and principals. Thus, a writ of preliminary injunction and a writ of
mandatory injunction must be issued to prevent serious and irreparable damage to it.
9

On June 14, 2004, Judge Paulita B. Acosta-Villarante of the RTC of Mandaluyong City, Branch 211,
granted a 72-hour restraining order enjoining Administrator Baldoz and Atty. Abara to refrain from
10
imposing the suspension orders before the matter can be heard in full. On June 17, 2004, Judge
Rizalina T. Capco-Umali, RTC of Mandaluyong City, Branch 212, held thus:
WHEREFORE, in order to preserve status quo ANTE, the prayer for a Temporary Restraining Order is
hereby GRANTED enjoining the defendant[s] ROSALINDA D. BALDOZ and ATTY. JOVENCIO ABARA,
other officers of Philippine Overseas Employment Administration, their subordinates, agents,
representatives and all other persons acting for and in their behalf, for (sic) implementing the Orders of
Suspension under VC No. LRD 03-100-95 and POEA Case No. RV-03-07-1497.
Let the hearing on Preliminary Injunction and Preliminary Mandatory Injunction be set on June 22, 2004
at 1:30 oclock in the afternoon.1avvphil.net
11

SO ORDERED.

After the hearing on the preliminary injunction, Administrator Baldoz and Atty. Abara submitted their
12
13
Memorandum (Memorandum). In an Order dated July 2, 2004, the trial court held that the issue on

the application for preliminary mandatory injunction has become moot because POEA had already
released the renewal of license of Principalia. However, on the issue against the implementation of the
order of suspension, the trial court resolved, to wit:
Accordingly, the only issue left for the resolution of this Court is whether or not a Writ of Preliminary
Prohibitory Injunction will lie against the immediate implementation of the Order of Suspension of
License of the Plaintiff dated March 15, 2004 under POEA case No. RV-03-07-1497, issued by the
POEA Administrator Rosalinda D. Baldoz.
In support of its Application for a Writ of Preliminary Prohibitory Injunction, Plaintiff presented evidence
to prove the following:
(1) that it has a license,
(2) that the said license was renewed,
(3) the existence of the two (2) suspension orders subject of this case;
(4) the irreparable damages to the Plaintiff.
The defendants on the other hand did not present evidence to controvert the evidence of the
plaintiff. Instead, defendants submitted a Memorandum.
Upon a careful evaluation and assessment of the evidence by the plaintiff and their respective
memoranda of the parties, this Court finds the need to issue the Writ of Preliminary Prohibitory
Injunction prayed for by the plaintiff.
It bears stressing that the Order of Suspension dated March 15, 2004 is still pending appeal
before the Office of the Secretary of Labor and Employment.
It is likewise significant to point out that the said Order dated March 15, 2004 does not categorically
state that the suspension of Plaintiffs License is immediately executory contrary to the contention of the
defendants.1avvphil.net
Counsel for POEA argued that the basis for the immediate implementation thereof is Section 5, Rule V,
Part VI of the 2002 POEA Rules and Regulation, which is quoted hereunder, as follows:
"Section 5. Stay of Execution. The decision of the Administration shall be stayed during the pendency of
the appeal; Provided that where the penalty imposed carried the maximum penalty of twelve (12)
months suspension o[r] cancellation of license, the decision shall be immediately executory despite
pendency of the appeal."
The Order dated March 15, 2004 decreed Plaintiff as having violated Section 2 (a) (d) and (e) of Rule I,
Part VI of the POEA Rules and Regulations and the Plaintiffs was imposed the penalty of twelve (12)
months suspension of license (or in lieu, to pay fine of P120,000, it being it[s] first offense).
Violation of Section 2 (a) (d) and (e) Rule I, Part VI of POEA Rules and Regulations imposes a penalty
of two (2) months to six (6) months suspension of license for the FIRST offender (sic). And in the
absence of mitigating or aggravating circumstance, the medium range of the imposable penalty which is
four (4) months shall be meted out. Being a first offender, the plaintiff was imposed suspension of
license for four (4) months for each violation or an aggregate period of suspension for twelve (12)
months for the three (3) violations.
It was not however made clear in the Order of Suspension dated March 15, 2004 that the
Plaintiffs case falls under the EXCEPTION under Section 5 Rule V, Part VI of the 2002 POEA
Rules and Regulation, warranting the immediate implementation thereof even if an appeal is
pending with the POEA.
The Plaintiff had established that even if it has been granted a renewal license, but if the same is
suspended under the March 15, 2004 Order in POEA case No. RV-03-07-1497, it could not use the
license to do business. As earlier mentioned, the said Order is still pending appeal.
In the meantime that the appeal has not been resolved, Plaintiffs clients/principals will have to
look for other agencies here and abroad, to supply their needs for employees and workers. The
end result would be a tremendous loss and even closure of its business. More importantly,
Plaintiffs reputation would be tarnished and it would be difficult, if not impossible for it to
regain its existing clientele if the immediate implementation of the suspension of its license
continues.
The defendants and even the POEA, upon the other hand, will not suffer any damage, if the immediate
implementation of the suspension of plaintiffs license as decreed in the March 15, 2004 Order, is
enjoined.
WHEREFORE, as prayed for by the Plaintiff, the application for the issuance of the Writ of Preliminary
Prohibitory Injunction is hereby GRANTED, upon posting of a bond in the amount of FIVE HUNDRED
THOUSAND PESOS (Php 500,000.00), enjoining and restraining the Defendants ROSALINDA D.
BALDOZ and Atty. Jovencio Abarra (sic), other officers of the POEA, their subordinates, agents,
representative, and all other persons acting for and in their behalf, from immediately implementing the
Order of Suspension dated March 15, 2004 under POEA Case No. RV-03-07-1497.
The Writ of Preliminary Prohibitory Injunction shall be in full force and effect immediately upon receipt
thereof and to be carried out on subsequent days thereafter pending the termination of this case and/or

thereof and to be carried out on subsequent days thereafter pending the termination of this case and/or
14
unless a contrary Order is issued by this court. (Emphasis supplied)
The trial court stressed that it issued the injunctive writ because the order of suspension dated March
15, 2004 is still pending appeal before the Office of the Secretary of Labor and Employment; that there
is a possibility that Principalia will suffer tremendous losses and even closure of business pending
appeal; that POEA will not suffer any damage if the immediate implementation of the suspension of
Principalia is enjoined; that the order does not categorically state that the suspension of the license is
immediately executory.
15

POEA appealed to the Court of Appeals which was dismissed outright for failure of POEA to attach
copies of its Memorandum dated June 30, 2004, as well as the transcripts of the hearings conducted on
June 22, 2004 and June 29, 2004 as required under Section 3 of Rule 46 of the Rules of Court. POEAs
16
motion for reconsideration was denied hence, this petition on the following grounds:
I
SECTION 1, RULE 65 OF THE REVISED RULES OF COURT REQUIRES ONLY THAT THE
PETITION SHOULD BE ACCOMPANIED BY CERTIFIED TRUE COPIES OF THE JUDGMENT,
ORDER OR RESOLUTION SUBJECT THEREOF AND OTHER DOCUMENTS RELEVANT AND
PERTINENT THERETO. PETITIONER ATTACHED ALL THE DOCUMENTS PERTINENT TO THE
PETITION FILED WITH THE COURT OF APPEALS.
II
THE REGIONAL TRIAL COURT GRAVELY ABUSED ITS DISCRETION WHEN IT GRANTED
RESPONDENT PRICIPALIAS APPLICATION FOR A WRIT OF PRELIMINARY INJUNCTION
DESPITE THE ABSENCE OF A CLEAR AND CONVINCING RIGHT TO THE RELIEF DEMANDED.
III
THE REGIONAL TRIAL COURT COMMITTED GRAVE ABUSE OF DISCRETION WHEN IT GRANTED
RESPONDENT PRINCIPALIAS APPLICATION DESPITE THE ABSENCE OF PROOF OF
IRREPARABLE DAMAGE AS REQUIRED UNDER THE RULES OF COURT.
IV
THE INJUNCTIVE WRIT ISSUED BY THE REGIONAL TRIAL COURT DOES NOT LIE TO ENJOIN AN
ACCOMPLISHED ACT.
V
THE ISSUANCE OF AN INJUNCTIVE WRIT BY THE REGIONAL TRIAL COURT IS TANTAMOUNT TO
17
THE REVERSAL OF THE PRESUMPTION OF REGULARITY OF AN OFFICIAL ACT.
The core issues for resolution are as follows: (1) whether the Court of Appeals erred in dismissing the
Petition for Certiorari based on purely technical grounds; and (2) whether the trial court erred in issuing
the writ of preliminary injunction.
POEA avers that the Court of Appeals Resolution dismissing outright the petition for certiorari is not
valid because the documents attached to the petition substantially informed the Court of Appeals that
the trial court gravely abused its discretion in granting the preliminary injunction. Thus, the attached
documents were sufficient to render an independent assessment of its improvident issuance.
We disagree.
The Court of Appeals dismissed the petition for certiorari due to POEAs failure to comply with Section
3, Rule 46 and Section 1, Rule 65 of the Rules of Court which read as follows:
RULE 46
SEC. 3. Contents and filing of petition; effect of non-compliance with requirements. - The petition shall
contain the full names and actual addresses of all the petitioners and respondents, a concise statement
of the matters involved, the factual background of the case, and the grounds relied upon for the relief
prayed for.
In actions filed under Rule 65, the petition shall further indicate the material dates showing when notice
of the judgment or final order or resolution subject thereof was received, when a motion for new trial or
reconsideration, if any, was filed and when notice of the denial thereof was received.
It shall be filed in seven (7) clearly legible copies together with proof of service thereof on the
respondent with the original copy intended for the court indicated as such by the petitioner, and shall
be accompanied by a clearly legible duplicate original or certified true copy of the judgment,
order, resolution, or ruling subject thereof, such material portions of the record as are referred
to therein, and other documents relevant or pertinent thereto. The certification shall be
accomplished by the proper clerk of court or by his duly authorized representative, or by the proper
officer of the court, tribunal, agency or office involved or by his duly authorized representative. The
other requisite number of copies of the petition shall be accompanied by clearly legible plain copies of
all documents attached to the original.

xxxx
The failure of the petitioner to comply with any of the foregoing requirements shall be sufficient
ground for the dismissal of the petition. (Emphasis supplied)
RULE 65
SECTION. 1. Petition for certiorari. When any tribunal, board or officer exercising judicial or quasijudicial functions has acted without or in excess of its or his jurisdiction, or with grave abuse of
discretion amounting to lack or excess of jurisdiction, and there is no appeal, nor any plain, speedy, and
adequate remedy in the ordinary course of law, a person aggrieved thereby may file a verified petition in
the proper court, alleging the facts with certainty and praying that judgment be rendered annulling or
modifying the proceedings of such tribunal, board or officer, and granting such incidental reliefs as law
and justice may require.
The petition shall be accompanied by a certified true copy of the judgment, order or resolution
subject thereof, copies of all pleadings and documents relevant and pertinent thereto, and a
sworn certification of non-forum shopping as provided in the third paragraph of Section 3, Rule 46.
In the case at bar, the Court of Appeals dismissed the petition for certiorari due to POEAs failure to
attach the following relevant documents: (1) the Memorandum filed by POEA in the trial court to oppose
the Complaint; and (2) the transcripts of stenographic notes (TSN) of the hearings conducted by the
trial court on June 22, 2004 and June 29, 2004. In its motion for reconsideration dated October 13,
18
19
2004, POEA only attached the TSN dated June 30, 2004, with the explanation that the trial court did
not furnish it with copies of the other hearings. However, we note that POEA still failed to attach a copy
of the Memorandum which the Court of Appeals deemed essential in its determination of the propriety
of the trial courts issuance of the writ of preliminary prohibitory injunction.
The allowance of the petition on the ground of substantial compliance with the Rules is not a novel
20
occurrence in our jurisdiction. Indeed, if we apply the Rules strictly, we cannot fault the Court of
21
Appeals for dismissing the petition because the POEA did not demonstrate willingness to comply with
the requirements set by the rules and to submit the necessary documents which the Court of Appeals
need to have a proper perspective of the case.
POEA avers that the trial court gravely abused its discretion in granting the writ of preliminary
prohibitory injunction when the requirements to issue the same have not been met. It asserts that
Principalia had no clear and convincing right to the relief demanded as it had no proof of irreparable
damage as required under the Rules of Court.
We do not agree.
The trial court did not decree that the POEA, as the granting authority of Principalias license to recruit,
is not allowed to determine Principalias compliance with the conditions for the grant, as POEA would
have us believe. For all intents and purposes, POEA can determine whether the licensee has complied
with the requirements. In this instance, the trial court observed that the Order of Suspension dated
March 15, 2004 was pending appeal with the Secretary of the Department of Labor and Employment
(DOLE). Thus, until such time that the appeal is resolved with finality by the DOLE, Principalia has a
clear and convincing right to operate as a recruitment agency.
Furthermore, irreparable damage was duly proven by Principalia. Suspension of its license is not easily
quantifiable nor is it susceptible to simple mathematical computation, as alleged by POEA. The trial
court in its Order stated, thus:
In the meantime that the appeal has not been resolved, Plaintiffs clients/principals will have to look for
other agencies here and abroad, to supply their needs for employees and workers. The end result
would be a tremendous loss and even closure of its business. More importantly, Plaintiffs reputation
would be tarnished and it would be difficult, if not impossible for it to regain its existing clientele if the
22
immediate implementation of the suspension of its license continues.
If the injunctive writ was not granted, Principalia would have been labeled as an untrustworthy
recruitment agency before there could be any final adjudication of its case by the DOLE. It would have
lost both its employer-clients and its prospective Filipino-applicants. Loss of the former due to a
tarnished reputation is not quantifiable.
Moreover, POEA would have no authority to exercise its regulatory functions over Principalia because
the matter had already been brought to the jurisdiction of the DOLE. Principalia has been granted the
license to recruit and process documents for Filipinos interested to work abroad. Thus, POEAs action
of suspending Principalias license before final adjudication by the DOLE would be premature and
would amount to a violation of the latters right to recruit and deploy workers.
Finally, the presumption of regular performance of duty by the POEA under Section 3 (m), Rule 131 of
the Rules of Court, finds no application in the case at bar, as it applies only where a duty is imposed on
an official to act in a certain way, and assumes that the law tells him what his duties are. Therefore the
presumption that an officer will discharge his duties according to law does not apply where his duties
23
are not specified by law and he is given unlimited discretion. The issue threshed out before the trial
court was whether the order of suspension should be implemented pending appeal. It did not correct a
ministerial duty of the POEA. As such, the presumption on the regularity of performance of duty does

not apply.
WHEREFORE, in light of the foregoing, the petition is DENIED for lack of merit.
SO ORDERED.

G.R. No. 156029

November 14, 2008
SANTOSA B. DATUMAN vs. FIRST COSMOPOLITAN
MANPOWER AND PROMOTION SERVICES, INC.
DECISION
LEONARDO-DE CASTRO, J.:
Before us is a petition for review on certiorari under Rule 45 of
the 1997 Rules of Civil Procedure, as amended, assailing the
Court of Appeals (CA) Decision dated August 7, 2002, in CAG.R. SP No. 59825, setting aside the Decision of the National
Labor Relations Commission (NLRC).
The facts are as follows:
Sometime in 1989, respondent First Cosmopolitan Manpower
& Promotion Services, Inc. recruited petitioner Santosa B.
Datuman to work abroad under the following terms and
conditions:
1

Site of employment

- Bahrain

Employees Classification/Position/Grade - Saleslady

Basic Monthly Salary

- US$370.00

Duration of Contract

- One (1) year

Foreign Employer

- Mohammed Sharif Abbas Ghulam Hussain2

On April 17, 1989, petitioner was deployed to Bahrain after

paying the required placement fee. However, her employer
Mohammed Hussain took her passport when she arrived there;
and instead of working as a saleslady, she was forced to work
as a domestic helper with a salary of Forty Bahrain Dinar
(BD40.00), equivalent only to One Hundred US Dollars
(US$100.00). This was contrary to the agreed salary of
US$370.00 indicated in her Contract of Employment signed in
the Philippines and approved by the Philippine Overseas
Employment Administration (POEA).
On September 1, 1989, her employer compelled her to sign
3

another contract, transferring her to another employer as

housemaid with a salary of BD40.00 for the duration of two (2)
years. She pleaded with him to give her a release paper and to
return her passport but her pleas were unheeded. Left with no
choice, she continued working against her will. Worse, she
even worked without compensation from September 1991 to
April 1993 because of her employer's continued failure and
refusal to pay her salary despite demand. In May 1993, she
was able to finally return to the Philippines through the help of
the Bahrain Passport and Immigration Department.
In May 1995, petitioner filed a complaint before the POEA
Adjudication Office against respondent for underpayment and
nonpayment of salary, vacation leave pay and refund of her
plane fare, docketed as Case No. POEA ADJ. (L) 95-051586. While the case was pending, she filed the instant case
before the NLRC for underpayment of salary for a period of
one year and six months, nonpayment of vacation pay and
reimbursement of return airfare.
When the parties failed to arrive at an amicable settlement
before the Labor Arbiter, they were required to file their
respective position papers, subsequent pleadings and
documentary exhibits.
In its Position Paper, respondent countered that petitioner
actually agreed to work in Bahrain as a housemaid for one (1)
year because it was the only position available then. However,
since such position was not yet allowed by the POEA at that
time, they mutually agreed to submit the contract to the POEA
indicating petitioner's position as saleslady. Respondent added
that it was actually petitioner herself who violated the terms of
their contract when she allegedly transferred to another
4

employer without respondent's knowledge and approval. Lastly,

respondent raised the defense of prescription of cause of
action since the claim was filed beyond the three (3)-year
period from the time the right accrued, reckoned from either
1990 or 1991.
On April 29, 1998, Labor Arbiter Jovencio Mayor, Jr. rendered
a Decision finding respondent liable for violating the terms of
the Employment Contract and ordering it to pay petitioner: (a)
the amount of US$4,050.00, or its equivalent rate prevailing at
the time of payment, representing her salary differentials for
fifteen (15) months; and, (b) the amount of BD 180.00 or its
equivalent rate prevailing at the time of payment, representing
8

the refund of plane ticket, thus:

From the foregoing factual backdrop, the only crucial issue
for us to resolve in this case is whether or not complainant
is entitled to her monetary claims.
xxx
In the instant case, from the facts and circumstances laid
down, it is thus self-evident that the relationship of the
complainant and respondent agency is governed by the
Contract of Employment, the basic terms a covenants of
which provided for the position of saleslady, monthly
compensation of US$370.00 and duration of contract for
one (1) year. As it is, when the parties - complainant and
respondent Agency - signed and executed the POEA approved Contract of Employment, this agreement is the
law that governs them. Thus, when respondent agency
deviated from the terms of the contract by assigning the
position of a housemaid to complainant instead of a
saleslady as agreed upon in the POEA-approved Contract
of Employment, respondent Agency committed a breach of
said Employment Contract. Worthy of mention is the fact
that respondent agency in their Position Paper
paragraph 2, Brief Statement of the Facts and of the
Case - admitted that it had entered into an illegal
contract with complainant by proposing the position
of a housemaid which said position was then not
allowed by the POEA, by making it appear in the
Employment Contract that the position being applied
for is the position of a saleslady. As it is, we find
indubitably clear that the foreign employer had took
advantage to the herein hopeless complainant and

because of this ordeal, the same obviously rendered

complainant's continuous employment unreasonable
if not downright impossible. The facts and surrounding
circumstances of her ordeal was convincingly laid down by
the complainant in her Position Paper, from which we find
no flaws material enough to disregard the same.
Complainant had clearly made out her case and no
amount of persuasion can convince us to tilt the scales of
justice in favor of respondents whose defense was
anchored solely on the flimsy allegations that for a period
of more than five (5) years - from 1989 until 1995 - nothing
was heard from her or from her relatives, presuming then
that complainant had no problem with her employment
abroad. We also find that the pleadings and the annexes
filed by the parties reveal a total lapse on the part of
respondent First Cosmopolitan Manpower and Promotions
- their failure to support with substantial evidence their
contention that complainant transferred from one employer
to another without knowledge and approval of respondent
agency in contravention of the terms of the POEA
approved Employment Contract. Obviously, respondent
Agency anchored its disquisition on the alleged "contracts"
signed by the complainant that she agreed with the terms
of said contracts - one (1) year duration only and as a
housemaid - to support its contention that complainant
violated the contract agreement by transferring from one
employer to another on her own volition without the
knowledge and consent of respondent agency. To us, this
posture of respondent agency is unavailing. These
"documents" are self-serving. We could not but rule that
the same were fabricated to tailor-fit their defense that
complainant was guilty of violating the terms of the
Employment Contract. Consequently, we could not avoid
the inference of a more logical conclusion that complainant
was forced against her will to continue with her
employment notwithstanding the fact that it was in violation
of the original Employment Contract including the illegal
withholding of her passport.
With the foregoing, we find and so rule that respondent
Agency failed to discharge the burden of proving with
substantial evidence that complainant violated the terms of
the Employment Contract, thus negating respondent

Agency's liability for complainant's money claims. All the

more, the record is bereft of any evidence to show that
complainant Datuman is either not entitled to her wage
differentials or have already received the same from
respondent. As such, we are perforce constrained to grant
complainant's prayer for payment of salary differentials
computed as follows:
January 1992 April 1993 (15 months)
US$370.00 agreed salary
US$100.00 actual paid salary
US$270.00 balance
US$270.00 x 15 months = US$4050.00
We are also inclined to grant complainant's entitlement to
a refund of her plane ticket in the amount of BD 180
Bahrain Dinar or the equivalent in Philippine Currency at
the rate of exchange prevailing at the time of payment.
Anent complainant's claim for vacation leave pay and
overtime pay, we cannot, however, grant the same for
failure on the part of complainant to prove with particularity
the months that she was not granted vacation leave and
the day wherein she did render overtime work.
Also, we could not grant complainant's prayer for award of
damages and attorney's fees for lack of factual and legal
basis.
WHEREFORE, premises considered, judgment is hereby
rendered, finding respondent Agency liable for violating
the term of Employment Contract and respondent First
Cosmopolitan Manpower and Promotions is hereby
ordered:
To pay complainant the amount of US$ FOUR
THOUSAND AND FIFTY (US$4,050.00), or its equivalent
rate prevailing at the time of payment, representing her
salary differentials for fifteen (15) months;
To pay complainant the amount of BD 180.00 or its
equivalent rate prevailing at the time of payment,
representing the refund of plane ticket;
All other claims are hereby dismissed for lack of merit.
SO ORDERED. (emphasis supplied)
On appeal, the NLRC, Second Division, issued a
9

Decision affirming with modification the Decision of Labor

Arbiter Mayor, Jr., by reducing the award of salary differentials
from US$4,050.00 to US$2,970.00 ratiocinating as follows:
Accordingly, we find that the claims for salary differentials
accruing earlier than April of 1993 had indeed prescribed.
This is so as complainant had filed her complaint on May
31, 1995 when she arrived from the jobsite in April 1993.
Since the cause of action for salary differential accrues at
the time when it falls due, it is clear that only the claims for
the months of May 1993 to April 1994 have not yet
prescribed. With an approved salary rate of US$370.00
vis--vis the amount of salary received which was
10

$100.00, complainant is entitled to the salary differential

for the said period in the amount of $2,970.00.
xxx
WHEREFORE, premises considered, judgment is hereby
rendered MODIFYING the assailed Decision by reducing
the award of salary differentials to $2,970.00 to the
complainant.
The rest of the disposition is AFFIRMED.
SO ORDERED.
On July 21, 2000, respondent elevated the matter to the CA
through a petition for certiorari under Rule 65.
On August 2, 2000, the CA dismissed the petition for being
insufficient in form pursuant to the last paragraph of Section 3,
Rule 42 of the 1997 Rules of Civil Procedure, as amended.
On October 20, 2000, however, the CA reinstated the petition
upon respondent's motion for reconsideration.
On August 7, 2002, the CA issued the assailed
Decision granting the petition and reversing the NLRC and the
Labor Arbiter, thus:
Under Section 1 (f), Rule II, Book II of the 1991 POEA
Rules and Regulations, the local agency shall assume
joint and solidary liability with the employer for all claims
and liabilities which may arise in connection with the
implementation of the contract, including but not limited to
payment of wages, health and disability compensation and
repatriation.
Respondent Commission was correct in declaring that
11

12

13

14

15

claims of private respondent "for salary differentials

accruing earlier than April of 1993 had indeed prescribed."
It must be noted that petitioner company is privy only to
the first contract. Granting arguendo that its liability
extends to the acts of its foreign principal, the Towering
Recruiting Services, which appears to have a hand in the
execution of the second contract, it is Our considered
opinion that the same would, at the most, extend only up
to the expiration of the second contract or until 01
September 1991. Clearly, the money claims subject of the
complaint filed in 1995 had prescribed.
However, this Court declares respondent Commission as
not only having abused its discretion, but as being without
jurisdiction at all, in declaring private respondent entitled to
salary differentials. After decreeing the money claims
accruing before April 1993 as having prescribed, it has no
more jurisdiction to hold petitioner company for salary
differentials after that period. To reiterate, the local agency
shall assume joint and solidary liability with the employer
for all claims and liabilities which may arise in connection
with the implementation of the contract. Which contract?
Upon a judicious consideration, we so hold that it is only in
connection with thefirst contract. The provisions in number
2, Section 10 (a), Rule V, Book I of the Omnibus Rules
Implementing the Labor Code Section 1 (f), Rule II, Book II
of the 1991 POEA Rules and Regulations were not made
to make the local agency a perpetual insurer against all
untoward acts that may be done by the foreign principal or
the direct employer abroad. It is only as regards the
principal contract to which it is privy shall its liability
extend. In Catan v. National Labor Relations Commission,
160 SCRA 691 (1988), it was held that the responsibilities
of the local agent and the foreign principal towards the
contracted employees under the recruitment agreement
extends up to and until the expiration of the employment
contracts of the employees recruited and employed
pursuant to the said recruitment agreement.
xxx
Foregoing considered, the assailed Decision dated 24
February 2000 and the Resolution dated 23 June 2000 of
respondent Commission in NLRC NCR CA 016354-98 are

hereby SET ASIDE.

SO ORDERED.
Petitioner's Motion for Reconsideration thereon was denied in
the assailed Resolution dated November 14, 2002.
Hence, the present petition based on the following grounds:
I.
THE HONORABLE COURT OF APPEALS COMMITTED
A REVERSIBLE ERROR WHEN IT ABANDONED THE
FACTUAL FINDINGS OF THE LABOR ARBITER AS
AFFIRMED BY THE NATIONAL LABOR RELATIONS
COMMISSION.
II.
THE HONORABLE COURT OF APPEALS PATENTLY
ERRED IN HOLDING THAT THE RESPONDENT
AGENCY IS ONLY A [sic] PRIVY AND LIABLE TO THE
PRINCIPAL CONTRACT.
III.
THE HONORABLE COURT OF APPEALS GRAVELY
ERRED IN HOLDING THAT THE CAUSE OF ACTION OF
THE PETITIONER ALREADY PRESCRIBED.
The respondent counters in its Comment that the CA is correct
in ruling that it is not liable for the monetary claims of petitioner
as the claim had already prescribed and had no factual basis.
Simply put, the issues boil down to whether the CA erred in not
holding respondent liable for petitioner's money claims
pursuant to their Contract of Employment.
We grant the petition.
On whether respondent is solidarily liable for petitioner's
monetary claims
Section 1 of Rule II of the POEA Rules and Regulations states
that:
Section 1. Requirements for Issuance of License. - Every
applicant for license to operate a private employment
agency or manning agency shall submit a written
application together with the following requirements:
xxx
f. A verified undertaking stating that the applicant:
xxx
16

17

18

(3) Shall assume joint and solidary liability with the

employer for all claims and liabilities which may arise
in connection with the implementation of the contract;
including but not limited to payment of wages, death and
disability compensation and repatriation. (emphasis
supplied)
The above provisions are clear that the private employment
agency shall assume joint and solidary liability with the
employer. This Court has, time and again, ruled that private
employment agencies are held jointly and severally liable with
the foreign-based employer for any violation of the recruitment
agreement or contract of employment. This joint and solidary
liability imposed by law against recruitment agencies and
foreign employers is meant to assure the aggrieved worker
ofimmediate and sufficient payment of what is due him. This is
in line with the policy of the state to protect and alleviate the
plight of the working class.
In the assailed Decision, the CA disregarded the aforecited
provision of the law and the policy of the state when it reversed
the findings of the NLRC and the Labor Arbiter. As the agency
which recruited petitioner, respondent is jointly and solidarily
liable with the latter's principal employer abroad for her
(petitioner's) money claims. Respondent cannot, therefore,
exempt itself from all the claims and liabilities arising from the
implementation of their POEA-approved Contract of
Employment.
We cannot agree with the view of the CA that the solidary
liability of respondent extends only to the first contract (i.e. the
original, POEA-approved contract which had a term of until
April 1990). The signing of the "substitute" contracts with the
foreign employer/principal before the expiration of the POEAapproved contract and any continuation of petitioner's
employment beyond the original one-year term, against the will
of petitioner, are continuing breaches of the original POEAapproved contract. To accept the CA's reasoning will open the
floodgates to even more abuse of our overseas workers at the
hands of their foreign employers and local recruiters, since the
recruitment agency could easily escape its mandated solidary
liability for breaches of the POEA-approved contract by
colluding with their foreign principals in substituting the
approved contract with another upon the worker's arrival in the
country of employment. Such outcome is certainly contrary to
19

20

21

the State's policy of extending protection and support to our

overseas workers. To be sure, Republic Act No. 8042 explicitly
prohibits the substitution or alteration to the prejudice of the
worker of employment contracts already approved and verified
by the Department of Labor and Employment (DOLE) from the
time of actual signing thereof by the parties up to and including
the period of the expiration of the same without the approval of
the DOLE.
Respondent's contention that it was petitioner herself who
violated their Contract of Employment when she signed
another contract in Bahrain deserves scant consideration. It is
the finding of both the Labor Arbiter and the NLRC - which,
significantly, the CA did not disturb - that petitioner was forced
to work long after the term of her original POEA-approved
contract, through the illegal acts of the foreign employer.
22

In Placewell International Services Corporation v. Camote, we

held that the subsequently executed side agreement of an
overseas contract worker with her foreign employer which
reduced his salary below the amount approved by the POEA is
void because it is against our existing laws, morals and public
policy. The said side agreement cannot supersede the terms of
the standard employment contract approved by the POEA.
Hence, in the present case, the diminution in the salary of
petitioner from US$370.00 to US$100 (BD 40.00) per month is
void for violating the POEA-approved contract which set the
minimum standards, terms, and conditions of her employment.
Consequently, the solidary liability of respondent with
petitioner's foreign employer for petitioner's money claims
continues although she was forced to sign another contract in
Bahrain. It is the terms of the original POEA-approved
employment contract that shall govern the relationship of
petitioner with the respondent recruitment agency and the
foreign employer. We agree with the Labor Arbiter and the
NLRC that the precepts of justice and fairness dictate that
petitioner must be compensated for all months worked
regardless of the supposed termination of the original contract
in April 1990. It is undisputed that petitioner was compelled to
render service until April 1993 and for the entire period that she
worked for the foreign employer or his unilaterally appointed
successor, she should have been paid US$370/month for
every month worked in accordance with her original contract.
Respondent cannot disclaim liability for the acts of the foreign
23

employer which forced petitioner to remain employed in

violation of our laws and under the most oppressive conditions
on the allegation that it purportedly had no knowledge of, or
participation in, the contract unwillingly signed by petitioner
abroad. We cannot give credence to this claim considering that
respondent by its own allegations knew from the outset that the
contract submitted to the POEA for approval was not to be the
"real" contract. Respondent blithely admitted to submitting to
the POEA a contract stating that the position to be filled by
petitioner is that of "Saleslady" although she was to be
employed as a domestic helper since the latter position was
not approved for deployment by the POEA at that time.
Respondent's evident bad faith and admitted circumvention of
the laws and regulations on migrant workers belie its
protestations of innocence and put petitioner in a position
where she could be exploited and taken advantage of
overseas, as what indeed happened to her in this case.
We look upon with great disfavor the unsubstantiated
actuations of innocence or ignorance on the part of local
recruitment agencies of acts of their foreign principals, as if the
agencies' responsibility ends with the deployment of the
worker. In the light of the recruitment agency's legally
mandated joint and several liability with the foreign employer
for all claims in connection with the implementation of the
contract, it is the recruitment agency's responsibility to ensure
that the terms and conditions of the employment contract, as
approved by the POEA, are faithfully complied with and
implemented properly by its foreign client/principal. Indeed, it is
in its best interest to do so to avoid being haled to the courts or
labor tribunals and defend itself from suits for acts of its foreign
principal.
On whether petitioner's claims for underpaid salaries have
prescribed
It should be recalled that the Labor Arbiter and the NLRC
similarly found that petitioner is entitled to underpaid salaries,
albeit they differed in the number of months for which salary
differentials should be paid. The CA, on the other hand, held
that all of petitioner's monetary claims have prescribed
pursuant to Article 291 of the Labor Code which provides that:
Art. 291. Money Claims. - All money claims arising from
employer-employee relations accruing during the effectivity

of this Code shall be filed within three years from the time
that cause of action accrued; otherwise, they shall be
forever barred. (emphasis supplied)
We do not agree with the CA when it held that the cause of
action of petitioner had already prescribed as the three-year
prescriptive period should be reckoned from September 1,
1989 when petitioner was forced to sign another contract
against her will. As stated in the complaint, one of petitioner's
causes of action was for underpayment of salaries. The NLRC
correctly ruled the right to claim unpaid salaries (or in this case,
unpaid salary differentials) accrue as they fall due. Thus,
petitioner's cause of action to claim salary differential for
October 1989 only accrued after she had rendered service for
that month (or at the end of October 1989). Her right to claim
salary differential for November 1989 only accrued at the end
of November 1989, and so on and so forth.
Both the Labor Arbiter and the NLRC found that petitioner was
forced to work until April 1993. Interestingly, the CA did not
disturb this finding but held only that the extent of respondent's
liability was limited to the term under the original contract or, at
most, to the term of the subsequent contract entered into with
the participation of respondent's foreign principal, i.e. 1991. We
have discussed previously the reasons why (a) the CA's theory
of limited liability on the part of respondent is untenable and (b)
the petitioner has a right to be compensated for all months she,
in fact, was forced to work. To determine for which months
petitioner's right to claim salary differentials has not prescribed,
we must count three years prior to the filing of the complaint on
May 31, 1995. Thus, only claims accruing prior to May 31,
1992 have prescribed when the complaint was filed on May 31,
1995. Petitioner is entitled to her claims for salary differentials
for the period May 31, 1992 to April 1993, or approximately
eleven (11) months.
We find that the NLRC correctly computed the salary
differential due to petitioner at US$2,970.00 (US$370.00 as
approved salary rate - US$100.00 as salary received =
US$290 as underpaid salary per month x 11 months).
However, it should be for the period May 31, 1992 to April 1993
and not May 1993 to April 1994 as erroneously stated in the
NLRC's Decision.
A final note
This Court reminds local recruitment agencies that it is their
24

25

bounden duty to guarantee our overseas workers that they are

being recruited for bona fide jobs with bona fide employers.
Local agencies should never allow themselves to be
instruments of exploitation or oppression of their compatriots at
the hands of foreign employers. Indeed, being the ones who
profit most from the exodus of Filipino workers to find greener
pastures abroad, recruiters should be first to ensure the
welfare of the very people that keep their industry alive.
WHEREFORE, the petition is GRANTED. The assailed
Decision of the Court of Appeals dated August 7, 2002 and
Resolution dated November 14, 2002 in CA-G.R. SP No.
59825 are REVERSED AND SET ASIDE. The Decision of the
National Labor Relations Commission dated February 24, 2000
is REINSTATED with a qualification with respect to the award
of salary differentials, which should be granted for the period
May 31, 1992 to April 1993 and not May 1993 to April 1994.
SO ORDERED.

G.R. No. 177498

January 18, 2012

STOLT-NIELSEN TRANSPORTATION GROUP, INC. AND CHUNG GAI SHIP MANAGEMENT vs.
SULPECIO MEDEQUILLO, JR.
DECISION
PEREZ, J.:
1

Before the Court is a Petition for Review on Certiorari of the Decision of the First Division of the Court
of Appeals in CA-G.R. SP No. 91632 dated 31 January 2007, denying the petition for certiorari filed by
Stolt-Nielsen Transportation Group, Inc. and Chung Gai Ship Management (petitioners) and affirming
the Resolution of the National Labor Relations Commission (NLRC). The dispositive portion of the
assailed decision reads:
WHEREFORE, the petition is hereby DENIED. Accordingly, the assailed Decision promulgated on
3
February 28, 2003 and the Resolution dated July 27, 2005 are AFFIRMED.
The facts as gathered by this Court follow:
On 6 March 1995, Sulpecio Madequillo (respondent) filed a complaint before the Adjudication Office of
the Philippine Overseas Employment Administration (POEA) against the petitioners for illegal dismissal
under a first contract and for failure to deploy under a second contract. In his complaint4
affidavit, respondent alleged that:

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

behalf of its principal Chung-Gai Ship Management of Panama as Third Assistant Engineer on
board the vessel "Stolt Aspiration" for a period of nine (9) months;

2. He would be paid with a monthly basic salary of $808.00 and a fixed overtime pay of $404.00 or a
total of $1,212.00 per month during the employment period commencing on 6 November 1991;

3. On 8 November 1991, he joined the vessel MV "Stolt Aspiration";

4. On February 1992 or for nearly three (3) months of rendering service and while the vessel was at

Batangas, he was ordered by the ships master to disembark the vessel and repatriated back to
Manila for no reason or explanation;

5. Upon his return to Manila, he immediately proceeded to the petitioners office where he was
transferred employment with another vessel named MV "Stolt Pride" under the same terms and
conditions of the First Contract;

6. On 23 April 1992, the Second Contract was noted and approved by the POEA;
7. The POEA, without knowledge that he was not deployed with the vessel, certified the Second
Employment Contract on 18 September 1992.

8. Despite the commencement of the Second Contract on 21 April 1992, petitioners failed to deploy
him with the vessel MV "Stolt Pride";

9. He made a follow-up with the petitioner but the same refused to comply with the Second
Employment Contract.

10. On 22 December 1994, he demanded for his passport, seamans book and other employment
documents. However, he was only allowed to claim the said documents in exchange of his
signing a document;

11. He was constrained to sign the document involuntarily because without these documents, he
could not seek employment from other agencies.
He prayed for actual, moral and exemplary damages as well as attorneys fees for his illegal dismissal
and in view of the Petitioners bad faith in not complying with the Second Contract.
The case was transferred to the Labor Arbiter of the DOLE upon the effectivity of the Migrant Workers
and Overseas Filipinos Act of 1995.
The parties were required to submit their respective position papers before the Labor Arbiter. However,
5

petitioners failed to submit their respective pleadings despite the opportunity given to them.
6

On 21 July 2000, Labor Arbiter Vicente R. Layawen rendered a judgment finding that the respondent
was constructively dismissed by the petitioners. The dispositive portion reads:
WHEREFORE, premises considered, judgment is hereby rendered, declaring the respondents guilty of
constructively dismissing the complainant by not honoring the employment contract. Accordingly,
respondents are hereby ordered jointly and solidarily to pay complainant the following:
7

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

The Labor Arbiter found the first contract entered into by and between the complainant and the
respondents to have been novated by the execution of the second contract. In other words,
respondents cannot be held liable for the first contract but are clearly and definitely liable for the breach
8
of the second contract. However, he ruled that there was no substantial evidence to grant the prayer
9
for moral and exemplary damages.
The petitioners appealed the adverse decision before the National Labor Relations Commission
assailing that they were denied due process, that the respondent cannot be considered as dismissed
from employment because he was not even deployed yet and the monetary award in favor of the
10
respondent was exorbitant and not in accordance with law.
On 28 February 2003, the NLRC affirmed with modification the Decision of the Labor Arbiter. The
dispositive portion reads:
WHEREFORE, premises considered, the decision under review is hereby, MODIFIED BY DELETING
the award of overtime pay in the total amount of Three Thousand Six Hundred Thirty Six US Dollars
(US $3,636.00).
11

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

Before the NLRC, the petitioners assailed that they were not properly notified of the hearings that were
conducted before the Labor Arbiter. They further alleged that after the suspension of proceedings
12
before the POEA, the only notice they received was a copy of the decision of the Labor Arbiter.
The NLRC ruled that records showed that attempts to serve the various notices of hearing were made
on petitioners counsel on record but these failed on account of their failure to furnish the Office of the
Labor Arbiter a copy of any notice of change of address. There was also no evidence that a service of
13
notice of change of address was served on the POEA.
The NLRC upheld the finding of unjustified termination of contract for failure on the part of the
14
petitioners to present evidence that would justify their non-deployment of the respondent. It denied the
claim of the petitioners that the monetary award should be limited only to three (3) months for every
year of the unexpired term of the contract. It ruled that the factual incidents material to the case
transpired within 1991-1992 or before the effectivity of Republic Act No. 8042 or the Migrant Workers
15
and Overseas Filipinos Act of 1995 which provides for such limitation.

However, the NLRC upheld the reduction of the monetary award with respect to the deletion of the
16
overtime pay due to the non-deployment of the respondent.
The Partial Motion for Reconsideration filed by the petitioners was denied by the NLRC in its Resolution
17
dated 27 July 2005.
The petitioners filed a Petition for Certiorari before the Court of Appeals alleging grave abuse of
discretion on the part of NLRC when it affirmed with modification the ruling of the Labor Arbiter. They
prayed that the Decision and Resolution promulgated by the NLRC be vacated and another one be
issued dismissing the complaint of the respondent.
Finding no grave abuse of discretion, the Court of Appeals AFFIRMED the Decision of the labor
tribunal.
The Courts Ruling
The following are the assignment of errors presented before this Court:
I.
THE COURT A QUO ERRED IN FINDING THAT THE SECOND CONTRACT NOVATED THE FIRST
CONTRACT.

1. THERE WAS NO NOVATION OF THE FIRST CONTRACT BY THE SECOND CONTRACT; THE
ALLEGATION OF ILLEGAL DISMISSAL UNDER THE FIRST CONTRACT MUST BE
RESOLVED SEPARATELY FROM THE ALLEGATION OF FAILURE TO DEPLOY UNDER THE
SECOND CONTRACT.

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

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

EMPLOYMENT HAS NOT YET COMMENCED.

2. ASSUMING THERE WAS OMISSION UNDER THE SECOND CONTRACT, PETITIONERS CAN
ONLY BE FOUND AS HAVING FAILED IN DEPLOYING PRIVATE RESPONDENT BUT WITH
VALID REASON.
III.
THE COURT A QUO ERRED IN FAILING TO FIND THAT EVEN ASSUMING THERE WAS BASIS FOR
HOLDING PETITIONER LIABLE FOR "FAILURE TO DEPLOY" RESPONDENT, THE POEA RULES
18
PENALIZES SUCH OMISSION WITH A MERE "REPRIMAND."
The petitioners contend that the first employment contract between them and the private respondent is
different from and independent of the second contract subsequently executed upon repatriation of
respondent to Manila.
We do not agree.
Novation is the extinguishment of an obligation by the substitution or change of the obligation by a
subsequent one which extinguishes or modifies the first, either by changing the object or principal
conditions, or, by substituting another in place of the debtor, or by subrogating a third person in the
rights of the creditor. In order for novation to take place, the concurrence of the following requisites is
indispensable:
1. There must be a previous valid obligation,
2. There must be an agreement of the parties concerned to a new contract,
3. There must be the extinguishment of the old contract, and
19

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

In its ruling, the Labor Arbiter clarified that novation had set in between the first and second contract. To
quote:
xxx [T]his office would like to make it clear that the first contract entered into by and between the
complainant and the respondents is deemed to have been novated by the execution of the second
contract. In other words, respondents cannot be held liable for the first contract but are clearly and
20
definitely liable for the breach of the second contract.
This ruling was later affirmed by the Court of Appeals in its decision ruling that:
Guided by the foregoing legal precepts, it is evident that novation took place in this particular case. The
parties impliedly extinguished the first contract by agreeing to enter into the second contract to placate
Medequillo, Jr. who was unexpectedly dismissed and repatriated to Manila. The second contract would
not have been necessary if the petitioners abided by the terms and conditions of Madequillo, Jr.s

employment under the first contract. The records also reveal that the 2nd contract extinguished the first
contract by changing its object or principal. These contracts were for overseas employment aboard
different vessels. The first contract was for employment aboard the MV "Stolt Aspiration" while the
second contract involved working in another vessel, the MV "Stolt Pride." Petitioners and Madequillo, Jr.
accepted the terms and conditions of the second contract. Contrary to petitioners assertion, the first
contract was a "previous valid contract" since it had not yet been terminated at the time of Medequillo,
Jr.s repatriation to Manila. The legality of his dismissal had not yet been resolved with finality.
Undoubtedly, he was still employed under the first contract when he negotiated with petitioners on the
second contract. As such, the NLRC correctly ruled that petitioners could only be held liable under the
21
second contract.
We concur with the finding that there was a novation of the first employment contract.
We reiterate once more and emphasize the ruling in Reyes v. National Labor Relations
22
Commission, to wit:
x x x [F]indings of quasi-judicial bodies like the NLRC, and affirmed by the Court of Appeals in due
course, are conclusive on this Court, which is not a trier of facts.
xxxx
x x x Findings of fact of administrative agencies and quasi-judicial bodies, which have acquired
expertise because their jurisdiction is confined to specific matters, are generally accorded not
only respect, but finality when affirmed by the Court of Appeals. Such findings deserve full respect
23
and, without justifiable reason, ought not to be altered, modified or reversed.(Emphasis supplied)
With the finding that respondent "was still employed under the first contract when he negotiated with
24
petitioners on the second contract", novation became an unavoidable conclusion.
Equally settled is the rule that factual findings of labor officials, who are deemed to have acquired
expertise in matters within their jurisdiction, are generally accorded not only respect but even finality by
the courts when supported by substantial evidence, i.e., the amount of relevant evidence which a
25
reasonable mind might accept as adequate to justify a conclusion. But these findings are not infallible.
When there is a showing that they were arrived at arbitrarily or in disregard of the evidence on record,
26
they may be examined by the courts. In this case, there was no showing of any arbitrariness on the
part of the lower courts in their findings of facts. Hence, we follow the settled rule.
We need not dwell on the issue of prescription. It was settled by the Court of Appeals with its ruling that
recovery of damages under the first contract was already time-barred. Thus:
Accordingly, the prescriptive period of three (3) years within which Medequillo Jr. may initiate money
claims under the 1st contract commenced on the date of his repatriation. xxx The start of the three (3)
year prescriptive period must therefore be reckoned on February 1992, which by Medequillo Jr.s own
admission was the date of his repatriation to Manila. It was at this point in time that Medequillo Jr.s
cause of action already accrued under the first contract. He had until February 1995 to pursue a case
for illegal dismissal and damages arising from the 1st contract. With the filing of his Complaint-Affidavit
on March 6, 1995, which was clearly beyond the prescriptive period, the cause of action under the 1st
27
contract was already time-barred.
The issue that proceeds from the fact of novation is the consequence of the non-deployment of
respondent.
The petitioners argue that under the POEA Contract, actual deployment of the seafarer is a suspensive
28
condition for the commencement of the employment. We agree with petitioners on such point.
However, even without actual deployment, the perfected contract gives rise to obligations on the part of
petitioners.
A contract is a meeting of minds between two persons whereby one binds himself, with respect to the
29
other, to give something or to render some service. The contracting parties may establish such
stipulations, clauses, terms and conditions as they may deem convenient, provided they are not
30
contrary to law, morals, good customs, public order, or public policy.
The POEA Standard Employment Contract provides that employment shall commence "upon the actual
31
departure of the seafarer from the airport or seaport in the port of hire." We adhere to the terms and
conditions of the contract so as to credit the valid prior stipulations of the parties before the controversy
started. Else, the obligatory force of every contract will be useless. Parties are bound not only to the
fulfillment of what has been expressly stipulated but also to all the consequences which, according to
32
their nature, may be in keeping with good faith, usage and law.
Thus, even if by the standard contract employment commences only "upon actual departure of the
seafarer", this does not mean that the seafarer has no remedy in case of non-deployment without any
valid reason. Parenthetically, the contention of the petitioners of the alleged poor performance of
respondent while on board the first ship MV "Stolt Aspiration" cannot be sustained to justify the non33
deployment, for no evidence to prove the same was presented.

We rule that distinction must be made between the perfection of the employment contract and the
commencement of the employer-employee relationship. The perfection of the contract, which in this
case coincided with the date of execution thereof, occurred when petitioner and respondent agreed on
the object and the cause, as well as the rest of the terms and conditions therein. The commencement of
the employer-employee relationship, as earlier discussed, would have taken place had petitioner been
actually deployed from the point of hire. Thus, even before the start of any employer-employee
relationship, contemporaneous with the perfection of the employment contract was the birth of certain
rights and obligations, the breach of which may give rise to a cause of action against the erring party.
Thus, if the reverse had happened, that is the seafarer failed or refused to be deployed as agreed upon,
34
he would be liable for damages.
Further, we do not agree with the contention of the petitioners that the penalty is a mere reprimand.
35

The POEA Rules and Regulations Governing Overseas Employment dated 31 May 1991 provides for
the consequence and penalty against in case of non-deployment of the seafarer without any valid
reason. It reads:
Section 4. Workers Deployment. An agency shall deploy its recruits within the deployment period as
indicated below:
xxx
b. Thirty (30) calendar days from the date of processing by the administration of the employment
contracts of seafarers.
Failure of the agency to deploy a worker within the prescribed period without valid reasons shall
be a cause for suspension or cancellation of license or fine. In addition, the agency shall return
all documents at no cost to the worker.(Emphasis and underscoring supplied)
36

The appellate court correctly ruled that the penalty of reprimand provided under Rule IV, Part VI of the
POEA Rules and Regulations Governing the Recruitment and Employment of Land-based Overseas
Workers is not applicable in this case. The breach of contract happened on February 1992 and the law
applicable at that time was the 1991 POEA Rules and Regulations Governing Overseas Employment.
The penalty for non-deployment as discussed is suspension or cancellation of license or fine.
Now, the question to be dealt with is how will the seafarer be compensated by reason of the
unreasonable non-deployment of the petitioners?
The POEA Rules Governing the Recruitment and Employment of Seafarers do not provide for the
award of damages to be given in favor of the employees. The claim provided by the same law refers to
a valid contractual claim for compensation or benefits arising from employer-employee relationship or
for any personal injury, illness or death at levels provided for within the terms and conditions of
employment of seafarers. However, the absence of the POEA Rules with regard to the payment of
damages to the affected seafarer does not mean that the seafarer is precluded from claiming the same.
The sanctions provided for non-deployment do not end with the suspension or cancellation of license or
fine and the return of all documents at no cost to the worker. As earlier discussed, they do not forfend a
seafarer from instituting an action for damages against the employer or agency which has failed to
37
deploy him.
We thus decree the application of Section 10 of Republic Act No. 8042 (Migrant Workers Act) which
provides for money claims by reason of a contract involving Filipino workers for overseas
deployment.lavvphil The law provides:
Sec. 10. Money Claims. Notwithstanding any provision of law to the contrary, the Labor Arbiters of the
National Labor Relations Commission (NLRC) shall have the original and exclusive jurisdiction to hear
and decide, within ninety (90) calendar days after the filing of the complaint, the claims arising out of an
employer-employee relationship or by virtue of any law or contract involving Filipino workers for
overseas deployment including claims for actual, moral, exemplary and other forms of damages. x x x
(Underscoring supplied)
Following the law, the claim is still cognizable by the labor arbiters of the NLRC under the second
phrase of the provision.
Applying the rules on actual damages, Article 2199 of the New Civil Code provides that one is entitled
to an adequate compensation only for such pecuniary loss suffered by him as he has duly proved.
Respondent is thus liable to pay petitioner actual damages in the form of the loss of nine (9) months
38
worth of salary as provided in the contract. This is but proper because of the non-deployment of
respondent without just cause.
WHEREFORE, the appeal is DENIED. The 31 January 2007 Decision of the Court of Appeals in CAG.R. SP. No. 91632 is hereby AFFIRMED. The Petitioners are hereby ordered to pay Sulpecio
Medequillo, Jr., the award of actual damages equivalent to his salary for nine (9) months as provided by
the Second Employment Contract.
SO ORDERED.

G.R. No. 121777

January 24, 2001

THE PEOPLE OF THE PHILIPPINES vs. CAROL M. DELA PIEDRA

KAPUNAN, J.:
Accused-appellant Carol M. dela Piedra questions her conviction for illegal recruitment in large scale
and assails, as well, the constitutionality of the law defining and penalizing said crime.
The Court affirms the constitutionality of the law and the conviction of the accused, but reduces the
penalty imposed upon her.
The accused was charged before the Regional Trial Court of Zamboanga City in an information
alleging:
That on or about January 30, 1994, in the City of Zamboanga, Philippines, and within the jurisdiction of
this Honorable Court, the above-named accused, without having previously obtained from the
Philippine Overseas Employment Administration, a license or authority to engage in recruitment and
overseas placement of workers, did then and there, wilfully, unlawfully and feloniously, offer and
promise for a fee employment abroad particularly in Singapore thus causing Maria Lourdes Modesto [y]
Gadrino, Nancy Araneta y Aliwanag and Jennelyn Baez y Timbol, all qualified to apply, in fact said
Maria Lourdes Modesto had already advanced the amount of P2,000.00 to the accused for and in
consideration of the promised employment which did not materialized [sic] thus causing damage and
prejudice to the latter in the said sum; furthermore, the acts complained of herein tantamount [sic] to
1
economic sabotage in that the same were committed in large scale.
2

Arraigned on June 20, 1994, the accused pleaded not guilty to these charges.
At the trial, the prosecution presented five (5) witnesses, namely, Erlie Ramos, SPO2 Erwin
Manalopilar, Eileen Fermindoza, Nancy Araneta and Lourdes Modesto. The succeeding narration is
gathered from their testimonies:
On January 30, 1994, at exactly 10:00 in the morning, Erlie Ramos, Attorney II of the Philippine
Overseas Employment Agency (POEA), received a telephone call from an unidentified woman inquiring
about the legitimacy of the recruitment conducted by a certain Mrs. Carol Figueroa. Ramos, whose
duties include the surveillance of suspected illegal recruiters, immediately contacted a friend, a certain
Mayeth Bellotindos, so they could both go to No. 26-D, Tetuan Highway, Sta. Cruz, Zamboanga City,
where the recruitment was reportedly being undertaken. Upon arriving at the reported area at around
4:00 p.m., Bellotindos entered the house and pretended to be an applicant. Ramos remained outside
and stood on the pavement, from where he was able to see around six (6) persons in the house's sala.
Ramos even heard a woman, identified as Carol Fegueroa, talk about the possible employment she
has to provide in Singapore and the documents that the applicants have to comply with. Fifteen (15)
minutes later, Bellotindos came out with a bio-data form in hand.
On February 1, 1994, Ramos conferred with a certain Capt. Mendoza of the Criminal Investigation
Service (CIS) to organize the arrest of the alleged illegal recruiter. Also present were other members of
the CIS, including Col. Rodolfo Almonte, Regional Director of the PNP-CIS for Region IX, Eileen
Fermindoza, and a certain SPO3 Santos. The group planned to entrap the illegal recruiter the next day
3
by having Fermindoza pose as an applicant.
On February 2, 1994, at around 8:00 p.m., Col. Almonte directed the case to SPO2 Erwin Manalopilar,
a member of the Philippine National Police who was assigned as an investigator of the CIS, to conduct
a surveillance of the area to confirm the report of illegal recruitment. Accordingly, he, along with Eileen
Fermindoza, immediately proceeded to Tetuan Highway. The two did not enter the house where the
recruitment was supposedly being conducted, but Fermindoza interviewed two people who informed
them that some people do go inside the house. Upon returning to their office at around 8:30 a.m., the
two reported to Capt. Mendoza who organized a team to conduct the raid.
The raiding team, which included Capt. Mendoza, SPO2 Manalopilar, Fermindoza and a certain Oscar
Bucol, quickly set off and arrived at the reported scene at 9:30 that morning. There they met up with
Erlie Ramos of the POEA. Fermindoza then proceeded to enter the house while the rest of the team
posted themselves outside to secure the area. Fermindoza was instructed to come out after she was
4
given a bio-data form, which will serve as the team's cue to enter the house.

Fermindoza introduced herself as a job applicant to a man and a woman, apparently the owners of the
house, and went inside. There, she saw another woman, later identified as Jasmine, coming out of the
bathroom. The man to whom Fermindoza earlier introduced herself told Jasmine that Fermindoza was
applying for a position. Jasmine, who was then only wearing a towel, told her that she would just get
dressed. Jasmine then came back and asked Fermindoza what position she was applying for.
Fermindoza replied that she was applying to be a babysitter or any other work so long as she could go
abroad. Jasmine then gave her an application form.
A few minutes later, a certain Carol arrived. Jasmine informed Carol that Fermindoza was an applicant.
Fermindoza asked Carol what the requirements were and whether she (Fermindoza) was qualified.
Carol told Fermindoza that if she had a passport, she could fill up the application papers. Fermindoza
replied that she had no passport yet. Carol said she need not worry since Jasmine will prepare the
passport for her. While filling up the application form, three women who appeared to be friends of
Jasmine arrived to follow up the result of their applications and to give their advance payment. Jasmine
got their papers and put them on top of a small table. Fermindoza then proceeded to the door and
signaled to the raiding party by raising her hand.
Capt. Mendoza asked the owners of the house, a married couple, for permission to enter the same. The
owners granted permission after the raiding party introduced themselves as members of the CIS. Inside
the house, the raiding party saw some supposed applicants. Application forms, already filled up, were in
the hands of one Mrs. Carol Figueroa. The CIS asked Figueroa if she had a permit to recruit. Figueroa
retorted that she was not engaged in recruitment. Capt. Mendoza nevertheless proceeded to arrest
Figueroa. He took the application forms she was holding as the raiding party seized the other
5
6
papers on the table.
The CIS team then brought Figueroa, a certain Jasmine Alejandro, and the three women suspected to
be applicants, to the office for investigation.7
In the course of their investigation, the CIS discovered that Carol Figueroa had many aliases, among
them, Carol Llena and Carol dela Piedra. The accused was not able to present any authority to recruit
8
when asked by the investigators. A check by Ramos with the POEA revealed that the acused was not
9
10
licensed or authorized to conduct recruitment. A certification dated February 2, 1994 stating thus was
executed by Renegold M. Macarulay, Officer-in-Charge of the POEA.
The CIS likewise interviewed the supposed applicants, Lourdes Modesto, Nancy Araneta and Jennelyn
Baez, all registered nurses working at the Cabato Medical Hospital, who executed their respective
11
written statements.
At the trial, Nancy Araneta, 23, recounted that she was at Jasmine Alejandro's house in the afternoon of
January 30, 1994. Araneta had learned from Sandra Aquino, also a nurse at the Cabato Medical
Hospital, that a woman was there to recruit job applicants for Singapore.
Araneta and her friends, Jennelyn Baez and Sandra Aquino, arrived at Jasmine's house at around 4:30
p.m. Jasmine welcomed them and told them to sit down. They listened to the "recruiter" who was then
talking to a number of people. The recruiter said that she was "recruiting" nurses for Singapore. Araneta
and her friends then filled up bio-data forms and were required to submit pictures and a transcript of
records. They were also told to pay P2,000, and "the rest will be salary deduction." Araneta submitted
her bio-data form to Carol that same afternoon, but did not give any money because she was "not yet
sure."
On the day of the raid on February 2, 1994, Araneta was again at the Alejandro residence to submit her
transcript of records and her picture. She arrived at the house 30 minutes before the raid but did not
12
witness the arrest since she was at the porch when it happened.
Maria Lourdes Modesto, 26, was also in Jasmine Alejandro's house on January 30, 1994. A friend of
Jasmine had informed her that there was someone recruiting in Jasmine's house. Upon arriving at the
Alejandro residence, Lourdes was welcomed by Jasmine.1wphi1.nt
Lourdes recalled that Carol Figueroa was already briefing some people when she arrived. Carol
Figueroa asked if they would like a "good opportunity" since a hospital was hiring nurses. She gave a
breakdown of the fees involved: P30,000 for the visa and the round trip ticket, and P5,000 as placement
fee and for the processing of the papers. The initial payment was P2,000, while P30,000 will be by
salary deduction.
Lourdes filled up the application form and submitted it to Jasmine. After the interview, she gave the
initial payment of P2,000 to Jasmine, who assured Lourdes that she was authorized to receive the
money. On February 2, 1994, however, Lourdes went back to the house to get back the money.
13
Jasmine gave back the money to Lourdes after the raid.
Denial comprised the accused's defense.
Carol dela Piedra, 37, is a housewife and a resident of Cebu City. Her husband is a businessman from
Cebu, the manager of the Region 7 Branch of the Grollier International Encyclopedia. They own an
apartment in Cebu City, providing lodging to students.
The accused claimed that she goes to Singapore to visit her relatives. She first traveled to Singapore
on August 21, 1993 as a tourist, and came back to the Philippines on October 20 of the same year.

Thereafter, she returned to Singapore on December 10, 1993.

On December 21, 1993, while in Singapore, the accused was invited to a Christmas party sponsored by
the Zamboanga City Club Association. On that occasion, she met a certain Laleen Malicay, who sought
her help. A midwife, Malicay had been working in Singapore for six (6) years. Her employer is a certain
Mr. Tan, a close friend of Carol.
According to the accused, Malicay sent P15,000 home for her father who was then seriously ill. Malicay
was not sure, however, whether her father received the money so she requested the accused to verify
from her relatives receipt thereof. She informed the accused that she had a cousin by the name of
Jasmine Alejandro. Malicay gave the accused Jasmine's telephone number, address and a sketch of
how to get there.
The accused returned to the country on January 21, 1994. From Cebu City, the accused flew to
Zamboanga City on January 23, 1994 to give some presents to her friends.
On January 30, 1994, the accused called up Jasmine Alejandro, Laleen Malicay's cousin, to inform her
that she would be going to her house. At around noon that day, the accused, accompanied by her friend
Hilda Falcasantos, arrived at the house where she found Jasmine entertaining some friends. Jasmine
came down with two of her friends whom she introduced as her classmates. Jasmine told them that the
accused was a friend of Laleen Malicay.
The accused relayed to Jasmine Malicay's message regarding the money the latter had sent. Jasmine
assured her that they received the money, and asked Carol to tell Malicay to send more money for
medicine for Malicay's mother. Jasmine also told her that she would send something for Malicay when
the accused goes back to Singapore. The accused replied that she just needed to confirm her flight
back to Cebu City, and will return to Jasmine's house. After the meeting with Jasmine, the accused
went shopping with Hilda Falcasantos. The accused was in the house for only fifteen (15) minutes.
On February 2, 1994, the accused went to the Philippine Airlines office at 7:30 in the morning to confirm
her 5:30 p.m. flight to Cebu City. She then proceeded to Jasmine's residence, arriving there at past 8
a.m.
Inside the house, she met a woman who asked her, "Are you Carol from Singapore?" The accused, in
turn, asked the woman if she could do anything for her. The woman inquired from Carol if she was
recruiting. Carol replied in the negative, explaining that she was there just to say goodbye to Jasmine.
The woman further asked Carol what the requirements were if she (the woman) were to go to
Singapore. Carol replied that she would need a passport.
Two (2) minutes later, three (3) girls entered the house looking for Jasmine. The woman Carol was
talking with then stood up and went out. A minute after, three (3) members of the CIS and a POEA
official arrived. A big man identified himself as a member of the CIS and informed her that they received
a call that she was recruiting. They told her she had just interviewed a woman from the CIS. She denied
this, and said that she came only to say goodbye to the occupants of the house, and to get whatever
Jasmine would be sending for Laleen Malicay. She even showed them her ticket for Cebu City.
Erlie Ramos then went up to Jasmine's room and returned with some papers. The accused said that
those were the papers that Laleen Malicay requested Jasmine to give to her (the accused). The
accused surmised that because Laleen Malicay wanted to go home but could not find a replacement,
one of the applicants in the forms was to be her (Malicay's) substitute. Ramos told the accused to
explain in their office.
The accused denied in court that she went to Jasmine's residence to engage in recruitment. She
claimed she came to Zamboanga City to visit her friends, to whom she could confide since she and her
husband were having some problems. She denied she knew Nancy Araneta or that she brought
information sheets for job placement. She also denied instructing Jasmine to collect P2,000 from
14
alleged applicants as processing fee.
The accused presented two witnesses to corroborate her defense.
The first, Jasmine Alejandro, 23, testified that she met the accused for the first time only on January 30,
1994 when the latter visited them to deliver Laleen Malicay's message regarding the money she sent.
Carol, who was accompanied by a certain Hilda Falcasantos, stayed in their house for 10 to 15 minutes
only. Carol came back to the house a few days later on February 2 at around 8:00 in the morning to "get
the envelope for the candidacy of her daughter." Jasmine did not elaborate.
Jasmine denied that she knew Nancy Araneta or Lourdes Modesto. She denied that the accused
conducted recruitment. She claimed she did not see Carol distribute bio-data or application forms to job
15
applicants. She disclaimed any knowledge regarding the P2,000 application fee.
The other defense witness, Ernesto Morales, a policeman, merely testified that the accused stayed in
their house in No. 270 Tugbungan, Zamboanga City, for four (4) days before her arrest, although she
16
would sometimes go downtown alone. He said he did not notice that she conducted any recruitment.
On May 5, 1995, the trial court rendered a decision convicting the accused, thus:
WHEREFORE, in view of all the foregoing consideration[s][,] this Court finds the accused Carol
dela Piedra alias Carol Llena and Carol Figueroa guilty beyond reasonable doubt of Illegal

Recruitment committed in a large scale and hereby sentences her to suffer the penalty of LIFE
IMPRISONMENT and to pay a fine of P100,000.00, and also to pay the costs.
Being a detention prisoner, the said accused is entitled to the full time of the period of her
detention during the pendency of this case under the condition set forth in Article 29 of the
Revised Penal Code.
17

SO ORDERED.

The accused, in this appeal, ascribes to the trial court the following errors:
I
WITH DUE RESPECT, THE LOWER COURT ERRED IN NOT FINDING SEC. 13 (B) OF P.D.
442[,] AS AMENDED[,] OTHERWISE KNOWN AS [THE] ILLEGAL RECRUITMENT LAW
UNCONSTITUTIONAL.
II
WITH DUE RESPECT, THE LOWER COURT ERRED IN NOT HOLDING THAT THE
APPREHENDING TEAM COMPOSED OF POEA AND CIS REPRESENTATIVES ENTERED
INTO [sic] THE RESIDENCE OF JASMIN[E] ALEJANDRO WITHOUT ANY SEARCH
WARRANT IN VIOLATION OF ARTICLE III, SECTION 2 OF THE PHILIPPINE
CONSTITUTION, AND ANY EVIDENCE OBTAINED IN VIOLATION THEREOF, SHALL BE
INADMISSIBLE FOR ANY PURPOSE IN ANY PROCEEDING AS PROVIDED UNDER
ARTICLE III, SECTION 3, (2) OF THE SAME CONSTITUTION;
III
WITH DUE RESPECT, THE LOWER COURT ERRED IN IGNORING THAT WHEN SPO2 [sic]
EILE[E]N FERMINDOZA ENTERED THE RESIDENCE OF JASMIN[E] ALEJANDRO, THERE
WAS NO CRIME COMMITTED WHATSOEVER, HENCE THE ARREST OF THE ACCUSEDAPPELLANT WAS ILLEGAL;
[IV]
WITH DUE RESPECT, THE LOWER COURT ERRED IN NOT DISCOVERING THAT SPO2 [sic]
EILE[E]N FERMINDOZA WAS NOT ILLEGALLY RECRUITED BY THE
APPELLANT, HENCE, ACCUSED-APPELLANT SHOULD BE ACQUITTED;

ACCUSED-

V
WITH DUE RESPECT, THE LOWER COURT ERRED IN NOT DETECTING THAT NANCY
ARANETA WAS NOT ILLEGALLY RECRUITED BY THE ACCUSED-APPELLANT, HENCE,
ACCUSED SHOULD BE EXONERATED;
VI
WITH DUE RESPECT, THE LOWER COURT ERRED IN NOT REALIZING THAT MARIA
LOURDES MODESTO WAS NOT ILLEGALLY RECRUITED BY THE ACCUSED-APPELLANT,
HENCE, ACCUSED-APPELLANT SHOULD BE EXCULPATED;
VII
WITH DUE RESPECT, THE LOWER COURT ERRED IN FINDING THAT THE ACCUSEDAPPELLANT WAS CHARGED WITH LARGE SCALE ILLEGAL RECRUITMENT ON JANUARY
30, 1994, THE DATE STATED IN THE INFORMATION AS THE DATE OF THE CRIME, BUT
ACCUSED WAS ARRESTED ON FEB. 2, 1994 AND ALL THE EVIDENCES [sic] INDICATED
[sic] THAT THE ALLEGED CRIME WERE [sic] COMMITTED ON FEB. 2, 1994, HENCE, THE
INFORMATION IS FATALLY DEFECTIVE;
VIII
WITH DUE RESPECT, THE LOWER COURT ERRED IN NOT FINDING THAT THE ALLEGED
CRIME OF ILLEGAL RECRUITMENT WAS COMMITTED NOT ON [sic] LARGE SCALE,
HENCE, THE PENALTY SHOULD NOT BE LIFE IMPRISONMENT;
IX
WITH DUE RESPECT, THE LOWER COURT ERRED IN NOT FINDING THAT THOSE
EVIDENCES [sic] SEIZED AT THE HOUSE OF JASMIN[E] ALEJANDRO AND PRESENTED
TO THE COURT WERE PLANTED BY A BOGUS ATTORNEY[,] ERLIE S. RAMOS OF THE
POEA;
X
WITH DUE RESPECT, THE LOWER COURT ERRED IN NOT DISCOVERING THAT
ACCUSED-APPELLANT DID NOT RECEIVE ANY PAYMENT EVEN A SINGLE CENTAVO
FROM THE ALLEGED VICTIMS WHO DID NOT SUFFER DAMAGE IN ANY MANNER, YET
SHE WAS CONVICTED TO SERVE HER ENTIRE LIFE BEHIND PRISON BARS. SUCH
PUNISHMENT WAS CRUEL AND UNUSUAL, HENCE, A WANTON VIOLATION OF THE
18
CONSTITUTION.

In the first assigned error, appellant maintains that the law defining "recruitment and placement" violates
due process. Appellant also avers, as part of her sixth assigned error, that she was denied the equal
protection of the laws.
We shall address the issues jointly.
Appellant submits that Article 13 (b) of the Labor Code defining "recruitment and placement" is void for
19
vagueness and, thus, violates the due process clause.
Due process requires that the terms of a penal statute must be sufficiently explicit to inform those who
20
are subject to it what conduct on their part will render them liable to its penalties. A criminal statute
that "fails to give a person of ordinary intelligence fair notice that his contemplated conduct is forbidden
by the statute," or is so indefinite that "it encourages arbitrary and erratic arrests and convictions," is
21
void for vagueness. The constitutional vice in a vague or indefinite statute is the injustice to the
22
accused in placing him on trial for an offense, the nature of which he is given no fair warning.
23

We reiterated these principles in People vs. Nazario:

As a rule, a statute or act may be said to be vague when it lacks comprehensible standards that men
"of common intelligence must necessarily guess at its meaning and differ as to its application." It is
repugnant to the Constitution in two respects: (1) it violates due process for failure to accord persons,
especially the parties targeted by it, fair notice of the conduct to avoid; and (2) it leaves law enforcers
unbridled discretion in carrying out its provisions and become an arbitrary flexing of the Government
muscle.
We added, however, that:
x x x the act must be utterly vague on its face, that is to say, it cannot be clarified by either a
saving clause or by construction. Thus, in Coates v. City of Cincinnati, the U.S. Supreme Court
struck down an ordinance that had made it illegal for "three or more persons to assemble on any
sidewalk and there conduct themselves in a manner annoying to persons passing by." Clearly,
the ordinance imposed no standard at all "because one may never know in advance what
'annoys some people but does not annoy others.'"
Coates highlights what has been referred to as a "perfectly vague" act whose obscurity is
evident on its face. It is to be distinguished, however, from legislation couched in imprecise
languagebut which nonetheless specifies a standard though defectively phrasedin which
case, it may be "saved" by proper construction.
Here, the provision in question reads:
ART. 13. Definitions.(a) x x x.
(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.
x x x.
When undertaken by non-licensees or non-holders of authority, recruitment activities are punishable as
follows:
ART. 38. Illegal Recruitment. (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. The Ministry of
Labor and Employment or any law enforcement officer may initiate complaints under this Article.
(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
illegal transaction, 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.
x x x.
Art. 39. Penalties. (a) The penalty of life imprisonment and a fine of One Hundred Thousand
Pesos (P100,000) shall be imposed if illegal recruitment constitutes economic sabotage as
defined herein:
(b) Any licensee or holder of authority found violating or causing another to violate any provision
of this Title or its implementing rules and regulations, shall upon conviction thereof, suffer the
penalty of imprisonment of not less than five years or a fine of not less than P10,000 nor more
than P50,000 or both such imprisonment and fine, at the discretion of the court;

(c) Any person who is neither a licensee nor a holder of authority under this Title found violating
any provision thereof or its implementing rules and regulations shall, upon conviction thereof,
suffer the penalty of imprisonment of not less than four years nor more than eight years or a fine
of not less than P20,000 nor more than P100,000 or both such imprisonment and fine, at the
discretion of the court;
x x x.
In support of her submission that Article 13 (b) is void for vagueness, appellant invokes People vs.
24
Panis, where this Court, to use appellant's term, "criticized" the definition of "recruitment and
placement" as follows:
It is unfortunate that we can only speculate on the meaning of the questioned provision for lack of
records of debates and deliberations that would otherwise have been available if the Labor Code had
been enacted as a statute rather than a presidential decree is that they could be, and sometimes were,
issued without previous public discussion or consultation, the promulgator heeding only his own
counsel or those of his close advisers in their lofty pinnacle of power. The not infrequent results are
rejection, intentional or not, of the interest of the greater number and, as in the instant case, certain
esoteric provisions that one cannot read against the background facts usually reported in the legislative
journals.
If the Court in Panis "had to speculate on the meaning of the questioned provision," appellant asks,
what more "the ordinary citizen" who does not possess the "necessary [legal] knowledge?"
Appellant further argues that the acts that constitute "recruitment and placement" suffer from
overbreadth since by merely "referring" a person for employment, a person may be convicted of illegal
recruitment.
These contentions cannot be sustained.
Appellant's reliance on People vs. Panis is misplaced. The issue in Panis was whether, under the
proviso of Article 13 (b), the crime of illegal recruitment could be committed only "whenever two or more
persons are in any manner promised or offered any employment for a fee." The Court held in the
negative, explaining:
As we see it, the proviso was intended neither to impose a condition on the basic rule nor to provide an
exception thereto but merely to create a presumption. The presumption is that the individual or entity is
engaged in recruitment and placement whenever he or it is dealing with two or more persons to whom,
in consideration of a fee, an offer or promise of employment is made in the course of the "canvassing,
enlisting, contracting, transporting, utilizing, hiring or procuring (of) workers."
The number of persons dealt with is not an essential ingredient of the act of recruitment and placement
of workers. Any of the acts mentioned in the basic rule in Article 13(b) will constitute recruitment and
placement even if only one prospective worker is involved. The proviso merely lays down a rule of
evidence that where a fee is collected in consideration of a promise or offer of employment to two or
more prospective workers, the individual or entity dealing with them shall be deemed to be engaged in
the act of recruitment and placement. The words "shall be deemed" create that presumption.
This is not unlike the presumption in article 217 of the Revised Penal Code, for example, regarding the
failure of a public officer to produce upon lawful demand funds or property entrusted to his custody.
Such failure shall beprima facie evidence that he has put them to personal use; in other words, he shall
be deemed to have malversed such funds or property. In the instant case, the word "shall be deemed"
should by the same token be given the force of a disputable presumption or of prima facie evidence of
engaging in recruitment and placement.
It is unfortunate that we can only speculate on the meaning of the questioned provision for lack of
records of debates and deliberations that would otherwise have been available if the Labor Code had
been enacted as a statute rather than a presidential decree is that they could be, and sometimes were,
issued without previous public discussion or consultation, the promulgator heeding only his own
counsel or those of his close advisers in their lofty pinnacle of power. The not infrequent results are
rejection, intentional or not, of the interest of the greater number and, as in the instant case, certain
esoteric provisions that one cannot read against the background facts usually reported in the legislative
journals.
At any rate, the interpretation here adopted should give more force to the campaign against illegal
recruitment and placement, which has victimized many Filipino workers seeking a better life in a foreign
land, and investing hard-earned savings or even borrowed funds in pursuit of their dream, only to be
awakened to the reality of a cynical deception at the hands of their own countrymen.
Evidently, therefore, appellant has taken the penultimate paragraph in the excerpt quoted above out of
context. The Court, in Panis, merely bemoaned the lack of records that would help shed light on the
meaning of the proviso. The absence of such records notwithstanding, the Court was able to arrive at a
reasonable interpretation of the proviso by applying principles in criminal law and drawing from the
language and intent of the law itself. Section 13 (b), therefore, is not a "perfectly vague act" whose
obscurity is evident on its face. If at all, the proviso therein is merely couched in imprecise language
that was salvaged by proper construction. It is not void for vagueness.
An act will be declared void and inoperative on the ground of vagueness and uncertainty, only upon a

showing that the defect is such that the courts are unable to determine, with any reasonable degree of
certainty, what the legislature intended. x x x. In this connection we cannot pretermit reference to the
rule that "legislation should not be held invalid on the ground of uncertainty if susceptible of any
reasonable construction that will support and give it effect. An Act will not be declared inoperative and
ineffectual on the ground that it furnishes no adequate means to secure the purpose for which it is
passed, if men of common sense and reason can devise and provide the means, and all the
25
instrumentalities necessary for its execution are within the reach of those intrusted therewith."
That Section 13 (b) encompasses what appellant apparently considers as customary and harmless acts
such as " labor or employment referral" ("referring" an applicant, according to appellant, for employment
to a prospective employer) does not render the law overbroad. Evidently, appellant misapprehends
concept of overbreadth.
A statute may be said to be overbroad where it operates to inhibit the exercise of individual freedoms
affirmatively guaranteed by the Constitution, such as the freedom of speech or religion. A generally
worded statute, when construed to punish conduct which cannot be constitutionally punished is
unconstitutionally vague to the extent that it fails to give adequate warning of the boundary between the
26
constitutionally permissible and the constitutionally impermissible applications of the statute.
27

In Blo Umpar Adiong vs. Commission on Elections, for instance, we struck down as void for
overbreadth provisions prohibiting the posting of election propaganda in any place including private
vehicles other than in the common poster areas sanctioned by the COMELEC. We held that the
challenged provisions not only deprived the owner of the vehicle the use of his property but also
deprived the citizen of his right to free speech and information. The prohibition in Adiong, therefore, was
so broad that it covered even constitutionally guaranteed rights and, hence, void for overbreadth. In the
present case, however, appellant did not even specify what constitutionally protected freedoms are
embraced by the definition of "recruitment and placement" that would render the same constitutionally
overbroad.
28

Appellant also invokes the equal protection clause in her defense. She points out that although the
evidence purportedly shows that Jasmine Alejandro handed out application forms and even received
Lourdes Modesto's payment, appellant was the only one criminally charged. Alejandro, on the other
hand, remained scot-free. From this, appellant concludes that the prosecution discriminated against her
on grounds of regional origins. Appellant is a Cebuana while Alejandro is a Zamboanguea, and the
alleged crime took place in Zamboanga City.
The argument has no merit.
At the outset, it may be stressed that courts are not confined to the language of the statute under
challenge in determining whether that statute has any discriminatory effect. A statute nondiscriminatory
29
on its face may be grossly discriminatory in its operation. Though the law itself be fair on its face and
impartial in appearance, yet, if it is applied and administered by public authority with an evil eye and
unequal hand, so as practically to make unjust and illegal discriminations between persons in similar
circumstances, material to their rights, the denial of equal justice is still within the prohibition of the
30
Constitution.
The prosecution of one guilty person while others equally guilty are not prosecuted, however, is not, by
31
itself, a denial of the equal protection of the laws. Where the official action purports to be in conformity
to the statutory classification, an erroneous or mistaken performance of the statutory duty, although a
32
violation of the statute, is not without more a denial of the equal protection of the laws. The unlawful
administration by officers of a statute fair on its face, resulting in its unequal application to those who
are entitled to be treated alike, is not a denial of equal protection unless there is shown to be present in
it an element of intentional or purposeful discrimination. This may appear on the face of the action taken
with respect to a particular class or person, or it may only be shown by extrinsic evidence showing a
discriminatory design over another not to be inferred from the action itself.But a discriminatory
purpose is not presumed, there must be a showing of "clear and intentional
33
discrimination." Appellant has failed to show that, in charging appellant in court, that there was a
"clear and intentional discrimination" on the part of the prosecuting officials.
The discretion of who to prosecute depends on the prosecution's sound assessment whether the
evidence before it can justify a reasonable belief that a person has committed an offense.34 The
35
presumption is that the prosecuting officers regularly performed their duties, and this presumption can
be overcome only by proof to the contrary, not by mere speculation. Indeed, appellant has not
presented any evidence to overcome this presumption. The mere allegation that appellant, a Cebuana,
was charged with the commission of a crime, while a Zamboanguea, the guilty party in appellant's
eyes, was not, is insufficient to support a conclusion that the prosecution officers denied appellant equal
protection of the laws.
There is also common sense practicality in sustaining appellant's prosecution.
While all persons accused of crime are to be treated on a basis of equality before the law, it does not
follow that they are to be protected in the commission of crime. It would be unconscionable, for
instance, to excuse a defendant guilty of murder because others have murdered with impunity. The

remedy for unequal enforcement of the law in such instances does not lie in the exoneration of the
guilty at the expense of society x x x. Protection of the law will be extended to all persons equally in the
pursuit of their lawful occupations, but no person has the right to demand protection of the law in the
36
commission of a crime.
Likewise,
[i]f the failure of prosecutors to enforce the criminal laws as to some persons should be converted into a
defense for others charged with crime, the result would be that the trial of the district attorney for
nonfeasance would become an issue in the trial of many persons charged with heinous crimes and the
37
enforcement of law would suffer a complete breakdown.
We now come to the third, fourth and fifth assigned errors, all of which involve the finding of guilt by the
trial court.
Illegal recruitment is committed when two elements concur. First, the offender has no valid license or
authority required by law to enable one to lawfully engage in recruitment and placement of workers.
Second, he or she undertakes either any activity within the meaning of "recruitment and placement"
defined under Article 13 (b), or any prohibited practices enumerated under Article 34 of the Labor
38
Code. In case of illegal recruitment in large scale, a third element is added: that the accused commits
39
said acts against three or more persons, individually or as a group.
In this case, the first element is present. The certification of POEA Officer-in-Charge Macarulay states
that appellant is not licensed or authorized to engage in recruitment and placement.
The second element is also present. Appellant is presumed engaged in recruitment and placement
under Article 13 (b) of the Labor Code. Both Nancy Araneta and Lourdes Modesto testified that
appellant promised them employment for a fee. Their testimonies corroborate each other on material
points: the briefing conducted by appellant, the time and place thereof, the fees involved. Appellant has
not shown that these witnesses were incited by any motive to testify falsely against her. The absence of
evidence as to an improper motive actuating the principal witnesses of the prosecution strongly tends to
40
sustain that no improper motive existed and that their testimony is worthy of full faith and credence.
Appellant's denials cannot prevail over the positive declaration of the prosecution witnesses. Affirmative
41
testimony of persons who are eyewitnesses of the fact asserted easily overrides negative testimony.
That appellant did not receive any payment for the promised or offered employment is of no moment.
From the language of the statute, the act of recruitment may be "for profit or not;" it suffices that the
accused "promises or offers for a fee employment" to warrant conviction for illegal recruitment.
The testimonies of Araneta and Modesto, coming as they do from credible witnesses, meet the
standard of proof beyond reasonable doubt that appellant committed recruitment and placement. We
therefore do not deem it necessary to delve into the second and third assigned errors assailing the
legality of appellant's arrest and the seizure of the application forms. A warrantless arrest, when
unlawful, has the effect of invalidating the search incidental thereto and the articles so seized are
42
rendered inadmissible in evidence. Here, even if the documents seized were deemed inadmissible,
her conviction would stand in view of Araneta and Modesto's testimonies.
Appellant attempts to cast doubt on the prosecution's case by claiming in her ninth assigned error that
Erlie Ramos of the POEA supposedly "planted" the application forms. She also assails his character,
alleging that he passed himself off as a lawyer, although this was denied by Ramos.
The claim of "frame-up," like alibi, is a defense that has been invariably viewed by the Court with
43
disfavor for it can easily be concocted but difficult to prove. Apart from her self-serving testimony,
appellant has not offered any evidence that she was indeed framed by Ramos. She has not even hinted
at any motive for Ramos to frame her. Law enforcers are presumed to have performed their duties
44
regularly in the absence of evidence to the contrary.
Considering that the two elements of lack of license or authority and the undertaking of an activity
constituting recruitment and placement are present, appellant, at the very least, is liable for "simple"
illegal recruitment. But is she guilty of illegal recruitment in large scale? We find that she is not.
A conviction for large scale illegal recruitment must be based on a finding in each case of illegal
45
recruitment of three or more persons whether individually or as a group. In this case, only two
persons, Araneta and Modesto, were proven to have been recruited by appellant. The third person
named in the complaint as having been promised employment for a fee, Jennelyn Baez, was not
presented in court to testify.
It is true that law does not require that at least three victims testify at the trial; nevertheless, it is
necessary that there is sufficient evidence proving that the offense was committed against three or
46
more persons. In this case, evidence that appellant likewise promised her employment for a fee is
sketchy. The only evidence that tends to prove this fact is the testimony of Nancy Araneta, who said
that she and her friends, Baez and Sandra Aquino, came to the briefing and that they (she and her
"friends") filled up application forms.

47

The affidavit Baez executed jointly with Araneta cannot support Araneta's testimony. The affidavit was
neither identified, nor its contents affirmed, by Baez. Insofar as it purports to prove that appellant
48
recruited Baez, therefore, the affidavit is hearsay and inadmissible. In any case, hearsay evidence,
49
such as the said affidavit, has little probative value.
Neither can appellant be convicted for recruiting CIS agent Eileen Fermindoza or even the other
persons present in the briefing of January 30, 1994. Appellant is accused of recruiting only the three
persons named in the information Araneta, Modesto and Baez. The information does not include
Fermindoza or the other persons present in the briefing as among those promised or offered
employment for a fee. To convict appellant for the recruitment and placement of persons other than
those alleged to have been offered or promised employment for a fee would violate her right to be
50
informed of the nature and cause of the accusation against her.
In any event, the purpose of the offer of the testimonies of Araneta, Morales and Fermindoza,
respectively, was limited as follows:
FISCAL BELDUA:
Your Honor please, we are offering the oral testimony of the witness, as one of those
recruited by the accused, and also to identify some exhibits for the prosecution and as
51
well as to identify the accused.
xxx
FISCAL BELDUA:
We are offering the oral testimony of the witness, Your Honor, to testify on the fact about
her recruitment by the accused and immediately before the recruitment, as well as to
identify some exhibits for the prosecution, and also the accused in this case, Your
52
Honor.
xxx
FISCAL BELDUA:
This witness is going to testify that at around that date Your Honor, she was connected
with the CIS, that she was instructed together with a companion to conduct a
surveillance on the place where the illegal recruitment was supposed to be going on, that
she acted as an applicant, Your Honor, to ascertain the truthfulness of the illegal
recruitment going on, to identify the accused, as well as to identify some exhibits for the
53
prosecution.
xxx
54

Courts may consider a piece of evidence only for the purpose for which it was offered, and the
purpose of the offer of their testimonies did not include the proving of the purported recruitment of other
supposed applicants by appellant.
Appellant claims in her seventh assigned error that the information is fatally defective since it charges
her with committing illegal recruitment in large scale on January 30, 1994 while the prosecution
evidence supposedly indicates that she committed the crime on February 2, 1994.
We find that the evidence for the prosecution regarding the date of the commission of the crime does
not vary from that charged in the information. Both Nancy Araneta and Lourdes Modesto testified that
on January 30, 1994, while in the Alejandro residence, appellant offered them employment for a fee.
Thus, while the arrest was effected only on February 2, 1994, the crime had already been committed
three (3) days earlier on January 30, 1994.
The eighth and tenth assigned errors, respectively, pertain to the penalty of life imprisonment imposed
by the trial court as well as the constitutionality of the law prescribing the same, appellant arguing that it
55
is unconstitutional for being unduly harsh. Section 19 (1), Article III of the Constitution states:
"Excessive fines shall not be imposed, nor cruel, degrading or inhuman punishment inflicted."
The penalty of life imprisonment imposed upon appellant must be reduced. Because the prosecution
was able to prove that appellant committed recruitment and placement against two persons only, she
cannot be convicted of illegal recruitment in large scale, which requires that recruitment be committed
against three or more persons. Appellant can only be convicted of two counts of "simple" illegal
recruitment, one for that committed against Nancy Araneta, and another count for that committed
against Lourdes Modesto. Appellant is sentenced, for each count, to suffer the penalty of four (4) to six
(6) years of imprisonment and to pay a fine of P30,000.00. This renders immaterial the tenth assigned
error, which assumes that the proper imposable penalty upon appellant is life imprisonment.
WHEREFORE, the decision of the regional trial court is MODIFIED. Appellant is hereby declared guilty
of illegal recruitment on two (2) counts and is sentenced, for each count, to suffer the penalty of four (4)
to six (6) years of imprisonment and to pay a fine of P30,000.00.1wphi1.nt
SO ORDERED.

G.R. No. 172642

June 13, 2012

ESTATE OF NELSON R. DULAY, represented by his wife MERRIDY JANE P. DULAY vs.
ABOITIZ JEBSEN MARITIME, INC. and GENERAL CHARTERERS, INC.
DECISION
PERALTA, J.:
Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court seeking to
1
2
reverse and set aside the Decision and Resolution dated July 11, 2005 and April 18, 2006 of the Court
of Appeals (CA) in CA-G.R. SP No. 76489.
The factual and procedural antecedents of the case, as summarized by the CA, are as follows:
Nelson R. Dulay (Nelson, for brevity) was employed by [herein respondent] General Charterers Inc.
(GCI), a subsidiary of co-petitioner [herein co-respondent] Aboitiz Jebsen Maritime Inc. since 1986. He
initially worked as an ordinary seaman and later as bosun on a contractual basis. From September 3,
1999 up to July 19, 2000, Nelson was detailed in petitioners vessel, the MV Kickapoo Belle.
On August 13, 2000, or 25 days after the completion of his employment contract, Nelson died due to
acute renal failure secondary to septicemia. At the time of his death, Nelson was a bona fide member of
the Associated Marine Officers and Seamans Union of the Philippines (AMOSUP), GCIs collective
bargaining agent. Nelsons widow, Merridy Jane, thereafter claimed for death benefits through the
grievance procedure of the Collective Bargaining Agreement (CBA) between AMOSUP and GCI.
However, on January 29, 2001, the grievance procedure was "declared deadlocked" as petitioners
refused to grant the benefits sought by the widow.
On March 5, 2001, Merridy Jane filed a complaint with the NLRC Sub-Regional Arbitration Board in
General Santos City against GCI for death and medical benefits and damages.
On March 8, 2001, Joven Mar, Nelsons brother, received P20,000.00 from [respondents] pursuant to
article 20(A)2 of the CBA and signed a "Certification" acknowledging receipt of the amount and
releasing AMOSUP from further liability. Merridy Jane contended that she is entitled to the aggregate
sum of Ninety Thousand Dollars ($90,000.00) pursuant to [A]rticle 20 (A)1 of the CBA x x x
xxxx
Merridy Jane averred that the P20,000.00 already received by Joven Mar should be considered
advance payment of the total claim of US$90,000.[00].
[Herein respondents], on the other hand, asserted that the NLRC had no jurisdiction over the action on
account of the absence of employer-employee relationship between GCI and Nelson at the time of the
latters death. Nelson also had no claims against petitioners for sick leave allowance/medical benefit by
reason of the completion of his contract with GCI. They further alleged that private respondent is not
entitled to death benefits because petitioners are only liable for such "in case of death of the seafarer
during the term of his contract pursuant to the POEA contract" and the cause of his death is not workrelated. Petitioners admitted liability only with respect to article 20(A)2 [of the CBA]. x x x

xxxx
However, as petitioners stressed, the same was already discharged.
The Labor Arbiter ruled in favor of private respondent. It took cognizance of the case by virtue of Article
217 (a), paragraph 6 of the Labor Code and the existence of a reasonable causal connection between
the employer-employee relationship and the claim asserted. It ordered the petitioner to
pay P4,621,300.00, the equivalent of US$90,000.00 less P20,000.00, at the time of judgment x x x
xxxx
The Labor Arbiter also ruled that the proximate cause of Nelsons death was not work-related.
On appeal, [the NLRC] affirmed the Labor Arbiters decision as to the grant of death benefits under the
3
CBA but reversed the latters ruling as to the proximate cause of Nelsons death.
Herein respondents then filed a special civil action for certiorari with the CA contending that the NLRC
committed grave abuse of discretion in affirming the jurisdiction of the NLRC over the case; in ruling
that a different provision of the CBA covers the death claim; in reversing the findings of the Labor
Arbiter that the cause of death is not work-related; and, in setting aside the release and quitclaim
executed by the attorney-in-fact and not considering the P20,000.00 already received by Merridy Jane
through her attorney-in-fact.
On July 11, 2005, the CA promulgated its assailed Decision, the dispositive portion of which reads as
follows:
WHEREFORE, in view of the foregoing, the petition is hereby GRANTED and the case is REFERRED
to the National Conciliation and Mediation Board for the designation of the Voluntary Arbitrator or the
constitution of a panel of Voluntary Arbitrators for the appropriate resolution of the issue on the matter
of the applicable CBA provision.
4

SO ORDERED.

The CA ruled that while the suit filed by Merridy Jane is a money claim, the same basically involves the
interpretation and application of the provisions in the subject CBA. As such, jurisdiction belongs to the
voluntary arbitrator and not the labor arbiter.
Petitioner filed a Motion for Reconsideration but the CA denied it in its Resolution of April 18, 2006.
Hence, the instant petition raising the sole issue of whether or not the CA committed error in ruling that
the Labor Arbiter has no jurisdiction over the case.
Petitioner contends that Section 10 of Republic Act (R.A.) 8042, otherwise known as the Migrant
Workers and Overseas Filipinos Act of 1995, vests jurisdiction on the appropriate branches of the
NLRC to entertain disputes regarding the interpretation of a collective bargaining agreement involving
migrant or overseas Filipino workers. Petitioner argues that the abovementioned Section amended
Article 217 (c) of the Labor Code which, in turn, confers jurisdiction upon voluntary arbitrators over
interpretation or implementation of collective bargaining agreements and interpretation or enforcement
of company personnel policies.
The pertinent provisions of Section 10 of R.A. 8042 provide as follows:
SEC. 10. Money Claims. - Notwithstanding any provision of law to the contrary, the Labor Arbiters of the
National Labor Relations Commission (NLRC) shall have the original and exclusive jurisdiction to hear
and decide, within ninety (90) calendar days after filing of the complaint, the claims arising out of an
employer-employee relationship or by virtue of any law or contract involving Filipino workers for
overseas deployment including claims for actual, moral, exemplary and other forms of damages.
Article 217(c) of the Labor Code, on the other hand, states that:
xxxx
(c) Cases arising from the interpretation or implementation of collective bargaining agreements
and those arising from the interpretation or enforcement of company personnel policies shall be
disposed by the Labor Arbiter by referring the same to the grievance machinery and voluntary
arbitration as may be provided in said agreements.
On their part, respondents insist that in the present case, Article 217, paragraph (c) as well as Article
261 of the Labor Code remain to be the governing provisions of law with respect to unresolved
grievances arising from the interpretation and implementation of collective bargaining agreements.
Under these provisions of law, jurisdiction remains with voluntary arbitrators.
Article 261 of the Labor Code reads, thus:
ARTICLE 261. Jurisdiction of Voluntary Arbitrators or panel of Voluntary Arbitrators. The Voluntary
Arbitrator or panel of Voluntary Arbitrators shall have original and exclusive jurisdiction to hear and
decide all unresolved grievances arising from the interpretation or implementation of the Collective
Bargaining Agreement and those arising from the interpretation or enforcement of company personnel
policies referred to in the immediately preceding article. Accordingly, violations of a Collective
Bargaining Agreement, except those which are gross in character, shall no longer be treated as unfair
labor practice and shall be resolved as grievances under the Collective Bargaining Agreement. For
purposes of this article, gross violations of Collective Bargaining Agreement shall mean flagrant and/or

malicious refusal to comply with the economic provisions of such agreement.

The Commission, its Regional Offices and the Regional Directors of the Department of Labor and
Employment shall not entertain disputes, grievances or matters under the exclusive and original
jurisdiction of the Voluntary Arbitrator or panel of Voluntary Arbitrators and shall immediately dispose
and refer the same to the Grievance Machinery or Voluntary Arbitration provided in the Collective
Bargaining Agreement.
The petition is without merit.
It is true that R.A. 8042 is a special law governing overseas Filipino workers. However, a careful
reading of this special law would readily show that there is no specific provision thereunder which
provides for jurisdiction over disputes or unresolved grievances regarding the interpretation or
implementation of a CBA. Section 10 of R.A. 8042, which is cited by petitioner, simply speaks, in
general, of "claims arising out of an employer-employee relationship or by virtue of any law or contract
involving Filipino workers for overseas deployment including claims for actual, moral, exemplary and
other forms of damages." On the other hand, Articles 217(c) and 261 of the Labor Code are very
specific in stating that voluntary arbitrators have jurisdiction over cases arising from the interpretation or
implementation of collective bargaining agreements. Stated differently, the instant case involves a
situation where the special statute (R.A. 8042) refers to a subject in general, which the general statute
5
(Labor Code) treats in particular. In the present case, the basic issue raised by Merridy Jane in her
complaint filed with the NLRC is: which provision of the subject CBA applies insofar as death benefits
due to the heirs of Nelson are concerned. The Court agrees with the CA in holding that this issue clearly
involves the interpretation or implementation of the said CBA. Thus, the specific or special provisions of
the Labor Code govern.
In any case, the Court agrees with petitioner's contention that the CBA is the law or contract between
the parties. Article 13.1 of the CBA entered into by and between respondent GCI and AMOSUP, the
union to which petitioner belongs, provides as follows:
The Company and the Union agree that in case of dispute or conflict in the interpretation or
application of any of the provisions of this Agreement, or enforcement of Company policies, the
same shall be settled through negotiation, conciliation or voluntary arbitration. The Company
and the Union further agree that they will use their best endeavor to ensure that any dispute will be
discussed, resolved and settled amicably by the parties hereof within ninety (90) days from the date of
filing of the dispute or conflict and in case of failure to settle thereof any of the parties retain their
6
freedom to take appropriate action. (Emphasis supplied)
From the foregoing, it is clear that the parties, in the first place, really intended to bring to conciliation or
voluntary arbitration any dispute or conflict in the interpretation or application of the provisions of their
CBA. It is settled that when the parties have validly agreed on a procedure for resolving grievances and
7
to submit a dispute to voluntary arbitration then that procedure should be strictly observed.
It may not be amiss to point out that the abovequoted provisions of the CBA are in consonance with
Rule VII, Section 7 of the present Omnibus Rules and Regulations Implementing the Migrant Workers
and Overseas Filipinos Act of 1995, as amended by Republic Act No. 10022, which states that "[f]or
OFWs with collective bargaining agreements, the case shall be submitted for voluntary arbitration in
accordance with Articles 261 and 262 of the Labor Code." The Court notes that the said Omnibus Rules
and Regulations were promulgated by the Department of Labor and Employment (DOLE) and the
Department of Foreign Affairs (DFA) and that these departments were mandated to consult with the
Senate Committee on Labor and Employment and the House of Representatives Committee on
Overseas Workers Affairs.
In the same manner, Section 29 of the prevailing Standard Terms and Conditions Governing the
Employment of Filipino Seafarers on Board Ocean Going Vessels, promulgated by the Philippine
Overseas Employment Administration (POEA), provides as follows:
Section 29. Dispute Settlement Procedures. In cases of claims and disputes arising from this
employment, the parties covered by a collective bargaining agreement shall submit the claim or
dispute to the original and exclusive jurisdiction of the voluntary arbitrator or panel of
arbitrators. If the parties are not covered by a collective bargaining agreement, the parties may at their
option submit the claim or dispute to either the original and exclusive jurisdiction of the National Labor
Relations Commission (NLRC), pursuant to Republic Act (RA) 8042, otherwise known as the Migrant
Workers and Overseas Filipinos Act of 1995 or to the original and exclusive jurisdiction of the voluntary
arbitrator or panel of arbitrators. If there is no provision as to the voluntary arbitrators to be appointed by
the parties, the same shall be appointed from the accredited voluntary arbitrators of the National
Conciliation and Mediation Board of the Department of Labor and Employment.
The Philippine Overseas Employment Administration (POEA) shall exercise original and exclusive
jurisdiction to hear and decide disciplinary action on cases, which are administrative in character,
involving or arising out of violations of recruitment laws, rules and regulations involving employers,
principals, contracting partners and Filipino seafarers. (Emphasis supplied)
It is clear from the above that the interpretation of the DOLE, in consultation with their counterparts in
the respective committees of the Senate and the House of Representatives, as well as the DFA and the

POEA is that with respect to disputes involving claims of Filipino seafarers wherein the parties are
covered by a collective bargaining agreement, the dispute or claim should be submitted to the
jurisdiction of a voluntary arbitrator or panel of arbitrators. It is only in the absence of a collective
bargaining agreement that parties may opt to submit the dispute to either the NLRC or to voluntary
arbitration. It is elementary that rules and regulations issued by administrative bodies to interpret the
8
law which they are entrusted to enforce, have the force of law, and are entitled to great respect. Such
rules and regulations partake of the nature of a statute and are just as binding as if they have been
9
written in the statute itself. In the instant case, the Court finds no cogent reason to depart from this
rule.1wphi1
The above interpretation of the DOLE, DFA and POEA is also in consonance with the policy of the state
10
to promote voluntary arbitration as a mode of settling labor disputes.
No less than the Philippine Constitution provides, under the third paragraph, Section 3, Article XIII,
thereof that "[t]he State shall promote the principle of shared responsibility between workers and
employers and the preferential use of voluntary modes in settling disputes, including conciliation, and
shall enforce their mutual compliance therewith to foster industrial peace."
Consistent with this constitutional provision, Article 211 of the Labor Code provides the declared policy
of the State "[t]o promote and emphasize the primacy of free collective bargaining and negotiations,
including voluntary arbitration, mediation and conciliation, as modes of settling labor or industrial
disputes."
On the basis of the foregoing, the Court finds no error in the ruling of the CA that the voluntary arbitrator
has jurisdiction over the instant case.
WHEREFORE, the petition is DENIED. The Decision and Resolution of the Court of Appeals in CAG.R. SP No. 76489 dated July 11, 2005 and April 18, 2006, respectively, are AFFIRMED.
SO ORDERED.
G.R. No. 162419

July 10, 2007

PAUL V. SANTIAGO vs. CF SHARP CREW MANAGEMENT, INC.

DECISION
TINGA, J.:
At the heart of this case involving a contract between a seafarer, on one hand, and the manning agent
and the foreign principal, on the other, is this erstwhile unsettled legal quandary: whether the seafarer,
who was prevented from leaving the port of Manila and refused deployment without valid reason but
whose POEA-approved employment contract provides that the employer-employee relationship shall
commence only upon the seafarers actual departure from the port in the point of hire, is entitled to
relief?
This treats of the petition for review filed by Paul V. Santiago (petitioner) assailing the Decision and
Resolution of the Court of Appeals dated 16 October 2003 and 19 February 2004, respectively, in CA1
G.R. SP No. 68404.
Petitioner had been working as a seafarer for Smith Bell Management, Inc. (respondent) for about five
2

(5) years. On 3 February 1998, petitioner signed a new contract of employment with respondent, with
the duration of nine (9) months. He was assured of a monthly salary of US$515.00, overtime pay and
other benefits. The following day or on 4 February 1998, the contract was approved by the Philippine
Overseas Employment Administration (POEA). Petitioner was to be deployed on board the "MSV
Seaspread" which was scheduled to leave the port of Manila for Canada on 13 February 1998.
A week before the scheduled date of departure, Capt. Pacifico Fernandez, respondents Vice President,
sent a facsimile message to the captain of "MSV Seaspread," which reads:
I received a phone call today from the wife of Paul Santiago in Masbate asking me not to send
her husband to MSV Seaspread anymore. Other callers who did not reveal their identity gave
me some feedbacks that Paul Santiago this time if allowed to depart will jump ship in Canada
like his brother Christopher Santiago, O/S who jumped ship from the C.S. Nexus in Kita-kyushu,
Japan last December, 1997.
We do not want this to happen again and have the vessel penalized like the C.S. Nexus in
Japan.
Forewarned is forearmed like his brother when his brother when he was applying he behaved
like a Saint but in his heart he was a serpent. If you agree with me then we will send his
replacement.
3

Kindly advise.

To this message the captain of "MSV Seaspread" replied:

Many thanks for your advice concerning P. Santiago, A/B. Please cancel plans for him to return
4
to Seaspread.

On 9 February 1998, petitioner was thus told that he would not be leaving for Canada anymore, but he
was reassured that he might be considered for deployment at some future date.
Petitioner filed a complaint for illegal dismissal, damages, and attorney's fees against respondent and
5
its foreign principal, Cable and Wireless (Marine) Ltd. The case was raffled to Labor Arbiter Teresita
Castillon-Lora, who ruled that the employment contract remained valid but had not commenced since
petitioner was not deployed. According to her, respondent violated the rules and regulations governing
overseas employment when it did not deploy petitioner, causing petitioner to suffer actual damages
representing lost salary income for nine (9) months and fixed overtime fee, all amounting to US$7,
209.00.
The labor arbiter held respondent liable. The dispositive portion of her Decision dated 29 January 1999
reads:
WHEREFORE, premises considered, respondent is hereby Ordered to pay complainant actual
damages in the amount of US$7,209.00 plus 10% attorney's fees, payable in Philippine peso at
the rate of exchange prevailing at the time of payment.
All the other claims are hereby DISMISSED for lack of merit.
6

SO ORDERED.

On appeal by respondent, the National Labor Relations Commission (NLRC) ruled that there is no
employer-employee relationship between petitioner and respondent because under the Standard Terms
and Conditions Governing the Employment of Filipino Seafarers on Board Ocean Going Vessels (POEA
Standard Contract), the employment contract shall commence upon actual departure of the seafarer
from the airport or seaport at the point of hire and with a POEA-approved contract. In the absence of an
employer-employee relationship between the parties, the claims for illegal dismissal, actual damages,
7
and attorneys fees should be dismissed. On the other hand, the NLRC found respondents decision
8
not to deploy petitioner to be a valid exercise of its management prerogative. The NLRC disposed of
the appeal in this wise:
WHEREFORE, in the light of the foregoing, the assailed Decision dated January 29, 1999 is
hereby AFFIRMED in so far as other claims are concerned and with MODIFICATION by
VACATING the award of actual damages and attorneys fees as well as excluding Pacifico
Fernandez as party respondent.
9

SO ORDERED.

Petitioner moved for the reconsideration of the NLRCs Decision but his motion was denied for lack of
10
merit. He elevated the case to the Court of Appeals through a petition for certiorari.
11

In its Decision dated 16 October 2003, the Court of Appeals noted that there is an ambiguity in the
NLRCs Decision when it affirmed with modification the labor arbiters Decision, because by the very
modification introduced by the Commission (vacating the award of actual damages and attorneys fees),
12
there is nothing more left in the labor arbiters Decision to affirm.
According to the appellate court, petitioner is not entitled to actual damages because damages are not
recoverable by a worker who was not deployed by his agency within the period prescribed in
13

the POEA Rules. It agreed with the NLRCs finding that petitioners non-deployment was a valid
14
exercise of respondents management prerogative. It added that since petitioner had not departed
from the Port of Manila, no employer-employee relationship between the parties arose and any claim
15
for damages against the so-called employer could have no leg to stand on.
16

Petitioners subsequent motion for reconsideration was denied on 19 February 2004.

The present petition is anchored on two grounds, to wit:

A. The Honorable Court of Appeals committed a serious error of law when it ignored [S]ection
10 of Republic Act [R.A.] No. 8042 otherwise known as the Migrant Workers Act of 1995 as well
as Section 29 of the Standard Terms and Conditions Governing the Employment of Filipino
Seafarers On-Board Ocean-Going Vessels (which is deemed incorporated under the petitioners
POEA approved Employment Contract) that the claims or disputes of the Overseas Filipino
Worker by virtue of a contract fall within the jurisdiction of the Labor Arbiter of the NLRC.
B. The Honorable Court of Appeals committed a serious error when it disregarded the required
quantum of proof in labor cases, which is substantial evidence, thus a total departure from
17
established jurisprudence on the matter.
Petitioner maintains that respondent violated the Migrant Workers Act and the POEA Rules when it
failed to deploy him within thirty (30) calendar days without a valid reason. In doing so, it had
unilaterally and arbitrarily prevented the consummation of the POEA- approved contract. Since it
prevented his deployment without valid basis, said deployment being a condition to the consummation
of the POEA contract, the contract is deemed consummated, and therefore he should be awarded
18
actual damages, consisting of the stipulated salary and fixed overtime pay. Petitioner adds that since

the contract is deemed consummated, he should be considered an employee for all intents and
19
purposes, and thus the labor arbiter and/or the NLRC has jurisdiction to take cognizance of his claims.
Petitioner additionally claims that he should be considered a regular employee, having worked for five
(5) years on board the same vessel owned by the same principal and manned by the same local agent.
He argues that respondents act of not deploying him was a scheme designed to prevent him from
20
attaining the status of a regular employee.
Petitioner submits that respondent had no valid and sufficient cause to abandon the employment
contract, as it merely relied upon alleged phone calls from his wife and other unnamed callers in
arriving at the conclusion that he would jump ship like his brother. He points out that his wife had
21
executed an affidavit strongly denying having called respondent, and that the other alleged callers did
22
not even disclose their identities to respondent. Thus, it was error for the Court of Appeals to adopt the
23
unfounded conclusion of the NLRC, as the same was not based on substantial evidence.
On the other hand, respondent argues that the Labor Arbiter has no jurisdiction to award petitioners
monetary claims. His employment with respondent did not commence because his deployment was
withheld for a valid reason. Consequently, the labor arbiter and/or the NLRC cannot entertain
adjudication of petitioners case much less award damages to him. The controversy involves a breach
24
of contractual obligations and as such is cognizable by civil courts. On another matter, respondent
claims that the second issue posed by petitioner involves a recalibration of facts which is outside the
25
jurisdiction of this Court.
There is some merit in the petition.
There is no question that the parties entered into an employment contract on 3 February 1998, whereby
petitioner was contracted by respondent to render services on board "MSV Seaspread" for the
consideration of US$515.00 per month for nine (9) months, plus overtime pay. However, respondent
failed to deploy petitioner from the port of Manila to Canada. Considering that petitioner was not able to
depart from the airport or seaport in the point of hire, the employment contract did not commence, and
26
no employer-employee relationship was created between the parties.
However, a distinction must be made between the perfection of the employment contract and the
commencement of the employer-employee relationship. The perfection of the contract, which in this
case coincided with the date of execution thereof, occurred when petitioner and respondent agreed on
the object and the cause, as well as the rest of the terms and conditions therein. The commencement of
the employer-employee relationship, as earlier discussed, would have taken place had petitioner been
actually deployed from the point of hire. Thus, even before the start of any employer-employee
relationship, contemporaneous with the perfection of the employment contract was the birth of certain
rights and obligations, the breach of which may give rise to a cause of action against the erring party.
Thus, if the reverse had happened, that is the seafarer failed or refused to be deployed as agreed upon,
he would be liable for damages.
Moreover, while the POEA Standard Contract must be recognized and respected, neither the manning
agent nor the employer can simply prevent a seafarer from being deployed without a valid reason.
Respondents act of preventing petitioner from departing the port of Manila and boarding "MSV
Seaspread" constitutes a breach of contract, giving rise to petitioners cause of action. Respondent
unilaterally and unreasonably reneged on its obligation to deploy petitioner and must therefore answer
for the actual damages he suffered.
We take exception to the Court of Appeals conclusion that damages are not recoverable by a worker
27
who was not deployed by his agency. The fact that the POEA Rules are silent as to the payment of
damages to the affected seafarer does not mean that the seafarer is precluded from claiming the same.
The sanctions provided for non-deployment do not end with the suspension or cancellation of license or
fine and the return of all documents at no cost to the worker. They do not forfend a seafarer from
instituting an action for damages against the employer or agency which has failed to deploy him.
The POEA Rules only provide sanctions which the POEA can impose on erring agencies. It does not
provide for damages and money claims recoverable by aggrieved employees because it is not the
POEA, but the NLRC, which has jurisdiction over such matters.
Despite the absence of an employer-employee relationship between petitioner and respondent, the
Court rules that the NLRC has jurisdiction over petitioners complaint. The jurisdiction of labor arbiters is
not limited to claims arising from employer-employee relationships. Section 10 of R.A. No. 8042
(Migrant Workers Act), provides that:
Sec. 10. Money Claims. Notwithstanding any provision of law to the contrary, the Labor
Arbiters of the National Labor Relations Commission (NLRC) shall have the original and
exclusive jurisdiction to hear and decide, within ninety (90) calendar days after the filing of the
complaint, the claims arising out of an employer-employee relationship or by virtue of any law or
contract involving Filipino workers for overseas deployment including claims for actual, moral,
exemplary and other forms of damages. x x x [Emphasis supplied]
Since the present petition involves the employment contract entered into by petitioner for overseas

employment, his claims are cognizable by the labor arbiters of the NLRC.
Article 2199 of the Civil Code provides that one is entitled to an adequate compensation only for such
pecuniary loss suffered by him as he has duly proved. Respondent is thus liable to pay petitioner actual
damages in the form of the loss of nine (9) months worth of salary as provided in the contract. He is
not, however, entitled to overtime pay. While the contract indicated a fixed overtime pay, it is not a
guarantee that he would receive said amount regardless of whether or not he rendered overtime work.
Even though petitioner was "prevented without valid reason from rendering regular much less overtime
28
service," the fact remains that there is no certainty that petitioner will perform overtime work had he
been allowed to board the vessel. The amount of US$286.00 stipulated in the contract will be paid only
if and when the employee rendered overtime work. This has been the tenor of our rulings in the case
29
of Stolt-Nielsen Marine Services (Phils.), Inc. v. National Labor Relations Commission where we
discussed the matter in this light:
The contract provision means that the fixed overtime pay of 30% would be the basis for
computing the overtime pay if and when overtime work would be rendered. Simply stated, the
rendition of overtime work and the submission of sufficient proof that said work was actually
performed are conditions to be satisfied before a seaman could be entitled to overtime pay
which should be computed on the basis of 30% of the basic monthly salary. In short, the contract
provision guarantees the right to overtime pay but the entitlement to such benefit must first be
established. Realistically speaking, a seaman, by the very nature of his job, stays on board a
ship or vessel beyond the regular eight-hour work schedule. For the employer to give him
overtime pay for the extra hours when he might be sleeping or attending to his personal chores
30
or even just lulling away his time would be extremely unfair and unreasonable.
The Court also holds that petitioner is entitled to attorneys fees in the concept of damages and
expenses of litigation. Attorney's fees are recoverable when the defendant's act or omission has
31
compelled the plaintiff to incur expenses to protect his interest. We note that respondents basis for
not deploying petitioner is the belief that he will jump ship just like his brother, a mere suspicion that is
based on alleged phone calls of several persons whose identities were not even confirmed. Time and
again, this Court has upheld management prerogatives so long as they are exercised in good faith for
the advancement of the employers interest and not for the purpose of defeating or circumventing the
32
rights of the employees under special laws or under valid agreements. Respondents failure to deploy
petitioner is unfounded and unreasonable, forcing petitioner to institute the suit below. The award of
attorneys fees is thus warranted.
However, moral damages cannot be awarded in this case. While respondents failure to deploy
petitioner seems baseless and unreasonable, we cannot qualify such action as being tainted with bad
faith, or done deliberately to defeat petitioners rights, as to justify the award of moral damages. At
most, respondent was being overzealous in protecting its interest when it became too hasty in making
its conclusion that petitioner will jump ship like his brother.
We likewise do not see respondents failure to deploy petitioner as an act designed to prevent the latter
from attaining the status of a regular employee. Even if petitioner was able to depart the port of Manila,
he still cannot be considered a regular employee, regardless of his previous contracts of employment
33
with respondent. InMillares v. National Labor Relations Commission, the Court ruled that seafarers are
considered contractual employees and cannot be considered as regular employees under 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. The exigencies of their work necessitates that
34
they be employed on a contractual basis.
WHEREFORE, petition is GRANTED IN PART. The Decision dated 16 October 2003 and the
Resolution dated 19 February 2004 of the Court of Appeals are REVERSED and SET ASIDE. The
Decision of Labor Arbiter Teresita D. Castillon-Lora dated 29 January 1999 is REINSTATED with the
MODIFICATION that respondent CF Sharp Crew Management, Inc. is ordered to pay actual or
compensatory damages in the amount of US$4,635.00
representing salary for nine (9) months as stated in the contract, and attorneys fees at the reasonable
rate of 10% of the recoverable amount.
SO ORDERED.

G.R. No. 170139

August 5, 2014

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

DECISION
LEONEN, J.:
This case involves an overseas Filipino worker with shattered dreams. It is our duty, given the facts and
the law, to approximate justice for her.
1

We are asked to decide a petition for review on certiorari assailing the Court of Appeals
2
decision
dated June 27, 2005. This decision partially affirmed the National Labor
3
RelationsCommissions resolution dated March 31, 2004, declaring respondents dismissal illegal,
directing petitioner to pay respondents three-month salary equivalent to New Taiwan Dollar (NT$)
46,080.00, and ordering it to reimburse the NT$3,000.00 withheld from respondent, and pay her
4
NT$300.00 attorneys fees.
Petitioner, Sameer Overseas Placement Agency, Inc., is a recruitment and placement
5
agency. Responding to an ad it published, respondent, Joy C. Cabiles, submitted her application for a
6
quality control job in Taiwan.
7

Joys application was accepted. Joy was later asked to sign a oneyear employment contract for a
8
monthly salary of NT$15,360.00. She alleged that Sameer Overseas Agency required her to pay a
9
placement fee of P70,000.00 when she signed the employment contract.
10

Joy was deployed to work for TaiwanWacoal, Co. Ltd. (Wacoal) on June 26, 1997. She alleged that in
11
her employment contract, she agreed to work as quality control for one year. In Taiwan, she was
12

asked to work as a cutter.

Sameer Overseas Placement Agencyclaims that on July 14, 1997, a certain Mr. Huwang from Wacoal
informedJoy, without prior notice, that she was terminated and that "she should immediately report to
13
14
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
15
16
NT$9,000. According to her, Wacoal deducted NT$3,000 to cover her plane ticket to Manila.
17

On October 15, 1997, Joy filed a complaint with the National Labor Relations Commission against
18
petitioner and Wacoal. She claimed that she was illegally dismissed. She asked for the return of her
placement fee, the withheld amount for repatriation costs, payment of her salary for 23 months as well
19
as moral and exemplary damages. She identified Wacoal as Sameer Overseas Placement Agencys
20
foreign principal.
Sameer Overseas Placement Agency alleged that respondent's termination was due to her inefficiency,
negligence in her duties, and her "failure to comply with the work requirements [of] her foreign
21
22
[employer]." The agency also claimed that it did not ask for a placement fee of P70,000.00. As
evidence, it showedOfficial Receipt No. 14860 dated June 10, 1997, bearing the amount
23
of P20,360.00. Petitioner added that Wacoal's accreditation with petitioner had already been
transferred to the Pacific Manpower & Management Services, Inc. (Pacific) as of August 6,
24
25
1997. Thus, petitioner asserts that it was already substituted by Pacific Manpower.
26

Pacific Manpower moved for the dismissal of petitioners claims against it.

It alleged that there was no

26

Pacific Manpower moved for the dismissal of petitioners claims against it. It alleged that there was no
27
employer-employee relationship between them. Therefore, the claims against it were outside the
28
jurisdiction of the Labor Arbiter. Pacific Manpower argued that the employment contract should first be
29
presented so that the employers contractual obligations might be identified. It further denied that it
30
assumed liability for petitioners illegal acts.
31

On July 29, 1998, the Labor Arbiter dismissed Joys complaint. Acting Executive Labor Arbiter Pedro
32
C.Ramos ruled that her complaint was based on mereallegations. The Labor Arbiter found that there
33
was no excess payment of placement fees, based on the official receipt presented by petitioner. The
34
Labor Arbiter found unnecessary a discussion on petitioners transfer of obligations to Pacific and
35
considered the matter immaterial in view of the dismissal of respondents complaint.
36

Joy appealed to the National Labor Relations Commission.

37

In a resolution dated March 31, 2004, the National Labor Relations Commission declared that Joy was
38
illegally dismissed. It reiterated the doctrine that the burden of proof to show that the dismissal was
39
based on a just or valid cause belongs to the employer. It found that Sameer Overseas Placement
40
Agency failed to prove that there were just causes for termination. There was no sufficient proofto
show that respondent was inefficient in her work and that she failed to comply with company
41
42
requirements. Furthermore, procedural dueprocess was not observed in terminating respondent.
The National Labor Relations Commission did not rule on the issue of reimbursement of placement fees
43
for lack of jurisdiction. It refused to entertain the issue of the alleged transfer of obligations to
44
Pacific. It did not acquire jurisdiction over that issue because Sameer Overseas Placement Agency
45
failed to appeal the Labor Arbiters decision not to rule on the matter.
The National Labor Relations Commission awarded respondent only three (3) months worth of salaryin
the amount of NT$46,080, the reimbursement of the NT$3,000 withheld from her, and attorneys fees of
46
NT$300.
47

The Commission denied the agencys motion for reconsideration

48
resolution dated July 2, 2004.

dated May 12, 2004 through a

49

Aggrieved by the ruling, Sameer Overseas Placement Agency caused the filing of a petition for
certiorari with the Court of Appeals assailing the National Labor Relations Commissions resolutions
dated March 31, 2004 and July 2, 2004.
50

The Court of Appeals affirmed the decision of the National Labor Relations Commission with respect
to the finding of illegal dismissal, Joys entitlement to the equivalent of three months worth of salary,
51
reimbursement of withheld repatriation expense, and attorneys fees. The Court of Appeals remanded
the case to the National Labor Relations Commission to address the validity of petitioner's allegations
52
against Pacific. The Court of Appeals held, thus: Although the public respondent found the dismissal
of the complainant-respondent illegal, we should point out that the NLRC merely awarded her three (3)
months backwages or the amount of NT$46,080.00, which was based upon its finding that she was
dismissed without due process, a finding that we uphold, given petitioners lack of worthwhile
discussion upon the same in the proceedings below or before us. Likewise we sustain NLRCs finding in
regard to the reimbursement of her fare, which is squarely based on the law; as well as the award of
attorneys fees.
But we do find it necessary to remand the instant case to the public respondent for further proceedings,
for the purpose of addressing the validity or propriety of petitioners third-party complaint against the
transferee agent or the Pacific Manpower & Management Services, Inc. and Lea G. Manabat. We
should emphasize that as far as the decision of the NLRC on the claims of Joy Cabiles, is concerned,
the same is hereby affirmed with finality, and we hold petitioner liable thereon, but without prejudice to
further hearings on its third party complaint against Pacific for reimbursement.
WHEREFORE, premises considered, the assailed Resolutions are hereby partly AFFIRMED in
accordance with the foregoing discussion, but subject to the caveat embodied inthe last sentence. No
costs.
53

SO ORDERED.

54

Dissatisfied, Sameer Overseas Placement Agency filed this petition.

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

56

Therefore, it claims that respondents dismissal was valid.

Petitioner also reiterates that since Wacoals accreditation was validly transferred to Pacific at the time
respondent filed her complaint, it should be Pacific that should now assume responsibility for Wacoals
57
contractual obligations to the workers originally recruited by petitioner.
Sameer Overseas Placement Agencyspetition is without merit. We find for respondent.
I
Sameer Overseas Placement Agency failed to show that there was just cause for causing Joys
dismissal. The employer, Wacoal, also failed to accord her due process of law.
58

Indeed, employers have the prerogative to impose productivity and quality standards at work. They
59
may also impose reasonable rules to ensure that the employees comply with these standards. Failure
60
to comply may be a just cause for their dismissal. Certainly, employers cannot be compelled to retain
61
the services of anemployee who is guilty of acts that are inimical to the interest of the employer. While
the law acknowledges the plight and vulnerability of workers, it does not "authorize the oppression or
62
self-destruction of the employer." Management prerogative is recognized in law and in our
jurisprudence.
This prerogative, however, should not be abused. It is "tempered with the employees right to security of
63
tenure." Workers are entitled to substantive and procedural due process before termination. They may
not be removed from employment without a validor just cause as determined by law and without going
through the proper procedure.
64

Security of tenure for labor is guaranteed by our Constitution.

Employees are not stripped of their security of tenure when they move to work in a different jurisdiction.
With respect to the rights of overseas Filipino workers, we follow the principle of lex loci
65
contractus.Thus, in Triple Eight Integrated Services, Inc. v. NLRC, this court noted:
Petitioner likewise attempts to sidestep the medical certificate requirement by contending that since
Osdana was working in Saudi Arabia, her employment was subject to the laws of the host country.
Apparently, petitioner hopes tomake it appear that the labor laws of Saudi Arabia do not require any
certification by a competent public health authority in the dismissal of employees due to illness.
Again, petitioners argument is without merit.
First, established is the rule that lex loci contractus (the law of the place where the contract is made)
governs in this jurisdiction. There is no question that the contract of employment in this case was
perfected here in the Philippines. Therefore, the Labor Code, its implementing rules and regulations,
and other laws affecting labor apply in this case.Furthermore, settled is the rule that the courts of the
forum will not enforce any foreign claim obnoxious to the forums public policy. Herein the Philippines,
employment agreements are more than contractual in nature. The Constitution itself, in Article XIII,
Section 3, guarantees the special protection of workers, to wit:
The State shall afford full protection to labor, local and overseas, organized and unorganized, and
promote full employment and equality of employment opportunities for all.
It shall guarantee the rights of all workers to selforganization, collective bargaining and negotiations,
and peaceful concerted activities, including the right to strike in accordance with law. They shall be
entitled to security of tenure, humane conditions of work, and a living wage. Theyshall also participate
in policy and decision-making processes affecting their rights and benefits as may be provided by law.
....
This public policy should be borne in mind in this case because to allow foreign employers to determine
for and by themselves whether an overseas contract worker may be dismissed on the ground of illness
66
would encourage illegal or arbitrary pretermination of employment contracts. (Emphasis supplied,
citation omitted)
Even with respect to fundamental procedural rights, this court emphasized in PCL Shipping Philippines,
67
Inc. v. NLRC, to wit:
Petitioners admit that they did notinform private respondent in writing of the charges against him and
that they failed to conduct a formal investigation to give him opportunity to air his side. However,
petitioners contend that the twin requirements ofnotice and hearing applies strictly only when the
employment is within the Philippines and that these need not be strictly observed in cases of
international maritime or overseas employment.
The Court does not agree. The provisions of the Constitution as well as the Labor Code which afford
protection to labor apply to Filipino employees whether working within the Philippines or abroad.
Moreover, the principle of lex loci contractus (the law of the place where the contract is made) governs
in this jurisdiction. In the present case, it is not disputed that the Contract of Employment entered into
by and between petitioners and private respondent was executed here in the Philippines with the
approval of the Philippine Overseas Employment Administration (POEA). Hence, the Labor Code
together with its implementing rules and regulations and other laws affecting labor apply in this

together with its implementing rules and regulations and other laws affecting labor apply in this
68
case. (Emphasis supplied, citations omitted)
By our laws, overseas Filipino workers (OFWs) may only be terminated for a just or authorized cause
and after compliance with procedural due process requirements.
Article 282 of the Labor Code enumerates the just causes of termination by the employer. Thus:
Art. 282. Termination by employer. An employer may terminate an employment for any of the following
causes:
(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his
employer or representative in connection with his work;
(b) Gross and habitual neglect by the employee of his duties;
(c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly
authorized representative;
(d) Commission of a crime or offense by the employee against the person of his employer or any
immediate member of his family or his duly authorized representatives; and
(e) Other causes analogous to the foregoing.
69

Petitioners allegation that respondentwas inefficient in her work and negligent in her duties may,
therefore, constitute a just cause for termination under Article 282(b), but only if petitioner was able to
prove it.
The burden of proving that there is just cause for termination is on the employer. "The employer must
70
affirmatively show rationally adequate evidence that the dismissal was for a justifiable cause." Failure
to show that there was valid or just cause for termination would necessarily mean that the dismissal
71
was illegal.
To show that dismissal resulting from inefficiency in work is valid, it must be shown that: 1) the employer
has set standards of conduct and workmanship against which the employee will be judged; 2) the
standards of conduct and workmanship must have been communicated tothe employee; and 3) the
communication was made at a reasonable time prior to the employees performance assessment.
This is similar to the law and jurisprudence on probationary employees, which allow termination ofthe
employee only when there is "just cause or when [the probationary employee] fails to qualify as a
regular employee in accordance with reasonable standards made known by the employer to the
72
employee at the time of his [or her] engagement."
However, we do not see why the application of that ruling should be limited to probationary
employment. That rule is basic to the idea of security of tenure and due process, which are guaranteed
to all employees, whether their employment is probationary or regular.
The pre-determined standards that the employer sets are the bases for determining the probationary
employees fitness, propriety, efficiency, and qualifications as a regular employee. Due process requires
that the probationary employee be informed of such standards at the time of his or her engagement so
he or she can adjusthis or her character or workmanship accordingly. Proper adjustment to fit the
standards upon which the employees qualifications will be evaluated will increase ones chances of
being positively assessed for regularization by his or her employer.
Assessing an employees work performance does not stop after regularization. The employer, on a
regular basis, determines if an employee is still qualified and efficient, based on work standards. Based
on that determination, and after complying with the due process requirements of notice and hearing, the
employer may exercise its management prerogative of terminating the employee found unqualified.
The regular employee must constantlyattempt to prove to his or her employer that he or she meets all
the standards for employment. This time, however, the standards to be met are set for the purpose of
retaining employment or promotion. The employee cannot be expected to meet any standard of
character or workmanship if such standards were not communicated to him or her. Courts should
remain vigilant on allegations of the employers failure to communicatework standards that would
73
govern ones employment "if [these are] to discharge in good faith [their] duty to adjudicate."
In this case, petitioner merely alleged that respondent failed to comply with her foreign employers work
74
requirements and was inefficient in her work. No evidence was shown to support such allegations.
Petitioner did not even bother to specify what requirements were not met, what efficiency standards
were violated, or what particular acts of respondent constituted inefficiency.
There was also no showing that respondent was sufficiently informed of the standards against which
her work efficiency and performance were judged. The parties conflict as to the position held by
respondent showed that even the matter as basic as the job title was not clear.
The bare allegations of petitioner are not sufficient to support a claim that there is just cause for
termination. There is no proof that respondent was legally terminated.
Petitioner failed to comply with
the due process requirements

Respondents dismissal less than one year from hiring and her repatriation on the same day show not
onlyfailure on the partof petitioner to comply with the requirement of the existence of just cause for
termination. They patently show that the employersdid not comply with the due process requirement.
75

A valid dismissal requires both a valid cause and adherence to the valid procedure of dismissal. The
employer is required to give the charged employee at least two written notices before
76
termination. One of the written notices must inform the employee of the particular acts that may cause
77
78
his or her dismissal. The other notice must "[inform] the employee of the employers decision." Aside
79
from the notice requirement, the employee must also be given "an opportunity to be heard."
Petitioner failed to comply with the twin notices and hearing requirements. Respondent started working
on June 26, 1997. She was told that she was terminated on July 14, 1997 effective on the same day
and barely a month from her first workday. She was also repatriated on the same day that she was
informed of her termination. The abruptness of the termination negated any finding that she was
properly notified and given the opportunity to be heard. Her constitutional right to due process of law
was violated.
II
Respondent Joy Cabiles, having been illegally dismissed, is entitled to her salary for the unexpired
portion ofthe employment contract that was violated together with attorneys fees and reimbursement of
amounts withheld from her salary.
Section 10 of Republic Act No. 8042,otherwise known as the Migrant Workers and Overseas Filipinos
Act of1995, states thatoverseas workers who were terminated without just, valid, or authorized cause
"shall be entitled to the full reimbursement of his placement fee with interest of twelve (12%) per
annum, plus his salaries for the unexpired portion of his employment contract or for three (3) months for
every year of the unexpired term, whichever is less."
Sec. 10. MONEY CLAIMS. Notwithstanding any provision of law to the contrary, the Labor Arbiters of
the National Labor Relations Commission (NLRC) shall have the original and exclusive jurisdiction to
hear and decide, within ninety (90) calendar days after filing of the complaint, the claims arising out of
an employer-employee relationship or by virtue of any law or contract involving Filipino workers for
overseas deployment including claims for actual, moral, exemplary and other forms of damages.
The liability of the principal/employer and the recruitment/placement agency for any and all claims
under this section shall be joint and several. This provisions [sic] shall be incorporated in the contract
for overseas employment and shall be a condition precedent for its approval. The performance bond to
be filed by the recruitment/placementagency, as provided by law, shall be answerable for all money
claims or damages that may be awarded to the workers. If the recruitment/placement agency is a
juridical being, the corporate officers and directors and partners as the case may be, shall themselves
be jointly and solidarily liable with the corporation orpartnership for the aforesaid claims and damages.
Such liabilities shall continue during the entire period or duration of the employment contract and shall
not be affected by any substitution, amendment or modification made locally or in a foreign country of
the said contract.
Any compromise/amicable settlement or voluntary agreement on money claims inclusive of damages
under this section shall be paid within four (4) months from the approval of the settlement by the
appropriate authority.
In case of termination of overseas employment without just, valid or authorized cause as defined by law
or contract, the workers shall be entitled to the full reimbursement of his placement fee with interest of
twelve (12%) per annum, plus his salaries for the unexpired portion of his employment contract or for
three (3) months for every year of the unexpired term, whichever is less.
....
(Emphasis supplied)
Section 15 of Republic Act No. 8042 states that "repatriation of the worker and the transport of his [or
her] personal belongings shall be the primary responsibility of the agency which recruited or deployed
the worker overseas." The exception is when "termination of employment is due solely to the fault of the
80
worker," which as we have established, is not the case. It reads: SEC. 15. REPATRIATION OF
WORKERS; EMERGENCY REPATRIATION FUND. The repatriation of the worker and the transport
of his personal belongings shall be the primary responsibility of the agency which recruited or deployed
the worker overseas. All costs attendant to repatriation shall be borne by or charged to the agency
concerned and/or its principal. Likewise, the repatriation of remains and transport of the personal
belongings of a deceased worker and all costs attendant thereto shall be borne by the principal and/or
local agency. However, in cases where the termination of employment is due solely to the fault of the
worker, the principal/employer or agency shall not in any manner be responsible for the repatriation of
the former and/or his belongings.

....
81

The Labor Code also entitles the employee to 10% of the amount of withheld wages as attorneys
feeswhen the withholding is unlawful.
The Court of Appeals affirmedthe National Labor Relations Commissions decision to award respondent
NT$46,080.00 or the threemonth equivalent of her salary, attorneys fees of NT$300.00, and the
reimbursement of the withheld NT$3,000.00 salary, which answered for her repatriation.
We uphold the finding that respondent is entitled to all of these awards. The award of the three-month
equivalent of respondents salary should, however, be increased to the amount equivalent to the
unexpired term of the employment contract.
82

In Serrano v. Gallant Maritime Services, Inc. and Marlow Navigation Co., Inc., this court ruled that the
83
clause "or for three (3) months for every year of the unexpired term, whichever is less" is
84
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
85
all."
We are aware that the clause "or for three (3) months for every year of the unexpired term, whichever is
less"was reinstated in Republic Act No. 8042 upon promulgation of Republic Act No. 10022 in 2010.
Section 7 of Republic Act No. 10022 provides:
Section 7.Section 10 of Republic Act No. 8042, as amended, is hereby amended to read as follows:
SEC. 10. Money Claims. Notwithstanding any provision of law to the contrary, the Labor Arbiters of the
National Labor Relations Commission (NLRC) shall have the original and exclusive jurisdiction to hear
and decide, within ninety (90) calendar days after the filing of the complaint, the claims arising out of an
employer-employee relationship or by virtue of any law or contract involving Filipino workers for
overseas deployment including claims for actual, moral, exemplary and other forms of damage.
Consistent with this mandate, the NLRC shall endeavor to update and keep abreast with the
developments in the global services industry.
The liability of the principal/employer and the recruitment/placement agency for any and all claims
under this section shall be joint and several. This provision shall be incorporated in the contract for
overseas employment and shall be a condition precedent for its approval. The performance bond to de
[sic] filed by the recruitment/placement agency, as provided by law, shall be answerable for all money
claims or damages that may be awarded to the workers. If the recruitment/placement agency is a
juridical being, the corporate officers and directors and partners as the case may be, shall themselves
be jointly and solidarily liable with the corporation or partnership for the aforesaid claims and damages.
Such liabilities shall continue during the entire period or duration of the employment contract and shall
not be affected by any substitution, amendment or modification made locally or in a foreign country of
the said contract.
Any compromise/amicable settlement or voluntary agreement on money claims inclusive of damages
under this section shall be paid within thirty (30) days from approval of the settlement by the appropriate
authority.
In case of termination of overseas employment without just, valid or authorized cause as defined by law
or contract, or any unauthorized deductions from the migrant workers salary, the worker shall be
entitled to the full reimbursement if [sic] his placement fee and the deductions made with interest at
twelve percent (12%) per annum, plus his salaries for the unexpired portion of his employment contract
or for three (3) months for every year of the unexpired term, whichever is less.
In case of a final and executory judgement against a foreign employer/principal, it shall be automatically
disqualified, without further proceedings, from participating in the Philippine Overseas Employment
Program and from recruiting and hiring Filipino workers until and unless it fully satisfies the judgement
award.
Noncompliance with the mandatory periods for resolutions of case providedunder this section shall
subject the responsible officials to any or all of the following penalties:
(a) The salary of any such official who fails to render his decision or resolution within the
prescribed period shall be, or caused to be, withheld until the said official complies therewith;
(b) Suspension for not more than ninety (90) days; or
(c) Dismissal from the service with disqualification to hold any appointive public office for five (5)
years.
Provided, however,That the penalties herein provided shall be without prejudice to any liability which
any such official may have incured [sic] under other existing laws or rules and regulations as a
consequence of violating the provisions of this paragraph. (Emphasis supplied)
Republic Act No. 10022 was promulgated on March 8, 2010. This means that the reinstatement of the
clause in Republic Act No. 8042 was not yet in effect at the time of respondents termination from work
86
in 1997. Republic Act No. 8042 before it was amended byRepublic Act No. 10022 governs this case.

When a law is passed, this court awaits an actual case that clearly raises adversarial positions in their
proper context before considering a prayer to declare it as unconstitutional.
However, we are confronted with a unique situation. The law passed incorporates the exact clause
already declared as unconstitutional, without any perceived substantial change in the circumstances.
This may cause confusion on the part of the National Labor Relations Commission and the Court of
Appeals.At minimum, the existence of Republic Act No. 10022 may delay the execution of the judgment
in this case, further frustrating remedies to assuage the wrong done to petitioner.
Hence, there is a necessity to decide this constitutional issue.
Moreover, this court is possessed with the constitutional duty to "[p]romulgate rules concerning the
87
protection and enforcement of constitutional rights." When cases become mootand academic, we do
not hesitate to provide for guidance to bench and bar in situations where the same violations are
capable of repetition but will evade review. This is analogous to cases where there are millions of
Filipinos working abroad who are bound to suffer from the lack of protection because of the restoration
of an identical clause in a provision previously declared as unconstitutional.
In the hierarchy of laws, the Constitution is supreme. No branch or office of the government may
exercise its powers in any manner inconsistent with the Constitution, regardless of the existence of any
law that supports such exercise. The Constitution cannot be trumped by any other law. All laws must be
read in light of the Constitution. Any law that is inconsistent with it is a nullity.
Thus, when a law or a provision of law is null because it is inconsistent with the Constitution,the nullity
cannot be cured by reincorporation or reenactment of the same or a similar law or provision. A law or
provision of law that was already declared unconstitutional remains as such unless circumstances have
sochanged as to warrant a reverse conclusion.
We are not convinced by the pleadings submitted by the parties that the situation has so changed so as
to cause us to reverse binding precedent.
Likewise, there are special reasons of judicial efficiency and economy that attend to these cases. The
new law puts our overseas workers in the same vulnerable position as they were prior to Serrano.
Failure to reiterate the very ratio decidendi of that case will result in the same untold economic
hardships that our reading of the Constitution intended to avoid. Obviously, we cannot countenance
added expenses for further litigation thatwill reduce their hardearned wages as well as add to the
indignity of having been deprived of the protection of our laws simply because our precedents have not
been followed. There is no constitutional doctrine that causes injustice in the face of empty procedural
niceties. Constitutional interpretation is complex, but it is never unreasonable.
88

Thus, in a resolution dated October 22, 2013, we ordered the parties and the Office of the Solicitor
General to comment on the constitutionality of the reinstated clause in Republic Act No. 10022.
89

90

In its comment, petitioner argued that the clause was constitutional. The legislators intended a
balance between the employers and the employees rights by not unduly burdening the local
91
recruitment agency. Petitioner is also of the view that the clause was already declared as constitutional
92
in Serrano.
93

The Office of the Solicitor General also argued that the clause was valid and constitutional. However,
since the parties never raised the issue of the constitutionality of the clause asreinstated in Republic Act
94
No. 10022, its contention is that it is beyond judicial review.
On the other hand, respondentargued that the clause was unconstitutional because it infringed on
95
workers right to contract.
We observe that the reinstated clause, this time as provided in Republic Act. No. 10022, violates the
96

constitutional rights to equal protection and due process. Petitioner as well as the Solicitor General
have failed to show any compelling changein the circumstances that would warrant us to revisit the
precedent.
We reiterate our finding in Serrano v. Gallant Maritime that limiting wages that should be recovered by
anillegally dismissed overseas worker to three months is both a violation of due process and the equal
protection clauses of the Constitution.
Equal protection of the law is a guarantee that persons under like circumstances and falling within the
97
same class are treated alike, in terms of "privileges conferred and liabilities enforced." It is a
guarantee against "undue favor and individual or class privilege, as well as hostile discrimination or the
98
oppression of inequality."
99

In creating laws, the legislature has the power "to make distinctions and classifications."
100

In exercising such power, it has a wide discretion.

101

The equal protection clause does not infringe on this legislative power. A law is void on this basis,
102
only if classifications are made arbitrarily. There is no violation of the equal protection clause if the

law applies equally to persons within the same class and if there are reasonable grounds for
103
distinguishing between those falling within the class and those who do not fall within the class. A law
104
that does not violate the equal protection clause prescribesa reasonable classification.
A reasonable classification "(1) must rest on substantial distinctions; (2) must be germane to the
purposes of the law; (3) must not be limited to existing conditions only; and (4) must apply equally to all
105
members of the same class."
The reinstated clause does not satisfy the requirement of reasonable classification.
In Serrano, we identified the classifications made by the reinstated clause. It distinguished between
106
fixed-period overseas workers and fixedperiod local workers. It also distinguished between overseas
workers with employment contracts of less than one year and overseas workers with employment
107
contracts of at least one year.
Within the class of overseas workers with at least one-year
employment contracts, there was a distinction between those with at least a year left in their contracts
108
and those with less than a year left in their contracts when they were illegally dismissed.
The Congress classification may be subjected to judicial review. In Serrano, there is a "legislative
classification which impermissibly interferes with the exercise of a fundamental right or operates to the
109
peculiar disadvantage of a suspect class."
110

Under the Constitution, labor is afforded special protection. Thus, this court in Serrano, "[i]mbued with
the same sense of obligation to afford protection to labor, . . . employ[ed] the standard of strict judicial
111
scrutiny, for it perceive[d] in the subject clause a suspect classification prejudicial to OFWs."
We also noted in Serranothat before the passage of Republic Act No. 8042, the money claims of
illegally terminated overseas and local workers with fixed-term employment werecomputed in the same
112
manner.
Their money claims were computed based onthe "unexpired portions of their
113
contracts." The adoption of the reinstated clause in Republic Act No. 8042 subjected the money
claims of illegally dismissed overseas workers with an unexpired term of at least a year to a cap of
114
three months worth of their salary. There was no such limitation on the money claims of illegally
115
terminated local workers with fixed-term employment.
We observed that illegally dismissed overseas workers whose employment contracts had a term of less
than one year were granted the amount equivalent to the unexpired portion of their employment
116
contracts. Meanwhile, illegally dismissed overseas workers with employment terms of at least a year
were granted a cap equivalent to three months of their salary for the unexpired portions of their
117
contracts.
Observing the terminologies used inthe clause, we also found that "the subject clause creates a sublayer of discrimination among OFWs whose contract periods are for more than one year: those who are
illegally dismissed with less than one year left in their contracts shall be entitled to their salaries for the
entire unexpired portion thereof, while those who are illegally dismissed with one year or more
remaining in their contracts shall be covered by the reinstated clause, and their monetary benefits
118
limited to their salaries for three months only."
We do not need strict scrutiny to conclude that these classifications do not rest on any real or
substantial distinctions that would justify different treatments in terms of the computation of money
claims resulting from illegal termination.
Overseas workers regardless of their classifications are entitled to security of tenure, at least for the
period agreed upon in their contracts. This means that they cannot be dismissed before the end of their
contract terms without due process. If they were illegally dismissed, the workers right to security of
tenure is violated.
The rights violated when, say, a fixed-period local worker is illegally terminated are neither greater than
norless than the rights violated when a fixed-period overseas worker is illegally terminated. It is state
119
policy to protect the rights of workers withoutqualification as to the place of employment. In both
cases, the workers are deprived of their expected salary, which they could have earned had they not
been illegally dismissed. For both workers, this deprivation translates to economic insecurity and
120
disparity.
The same is true for the distinctions between overseas workers with an employment
contract of less than one year and overseas workers with at least one year of employment contract, and
between overseas workers with at least a year left in their contracts and overseas workers with less
than a year left in their contracts when they were illegally dismissed.
For this reason, we cannot subscribe to the argument that "[overseas workers] are contractual
121
employeeswho can never acquire regular employment status, unlike local workers"
because it
122
already justifies differentiated treatment in terms ofthe computation of money claims.
Likewise, the jurisdictional and enforcement issues on overseas workers money claims do not justify a
123
differentiated treatment in the computation of their money claims. If anything, these issues justify an
equal, if not greater protection and assistance to overseas workers who generally are more prone to

exploitation given their physical distance from our government.

We also find that the classificationsare not relevant to the purpose of the law, which is to "establish a
higher standard of protection and promotion of the welfare of migrant workers, their families and
124
overseas Filipinos in distress, and for other purposes." Further, we find specious the argument that
125
reducing the liability of placement agencies "redounds to the benefit of the [overseas] workers."
Putting a cap on the money claims of certain overseas workers does not increase the standard of
protection afforded to them. On the other hand, foreign employers are more incentivizedby the
reinstated clause to enter into contracts of at least a year because it gives them more flexibility to
violate our overseas workers rights. Their liability for arbitrarily terminating overseas workers is
decreased at the expense of the workers whose rights they violated. Meanwhile, these overseas
workers who are impressed with an expectation of a stable job overseas for the longer contract period
disregard other opportunities only to be terminated earlier. They are left with claims that are less than
what others in the same situation would receive. The reinstated clause, therefore, creates a situation
where the law meant to protect them makes violation of rights easier and simply benign to the violator.
As Justice Brion said in his concurring opinion in Serrano:
Section 10 of R.A. No. 8042 affects these well-laid rules and measures, and in fact provides a hidden
twist affecting the principal/employers liability. While intended as an incentive accruing to
recruitment/manning agencies, the law, as worded, simply limits the OFWs recovery in
wrongfuldismissal situations. Thus, it redounds to the benefit of whoever may be liable, including the
principal/employer the direct employer primarily liable for the wrongful dismissal. In this sense,
Section 10 read as a grant of incentives to recruitment/manning agencies oversteps what it aims to
do by effectively limiting what is otherwise the full liability of the foreign principals/employers. Section
10, in short, really operates to benefit the wrong party and allows that party, without justifiable reason, to
mitigate its liability for wrongful dismissals. Because of this hidden twist, the limitation ofliability under
Section 10 cannot be an "appropriate" incentive, to borrow the term that R.A. No. 8042 itself uses to
describe the incentive it envisions under its purpose clause.
What worsens the situation is the chosen mode of granting the incentive: instead of a grant that, to
encourage greater efforts at recruitment, is directly related to extra efforts undertaken, the law simply
limits their liability for the wrongful dismissals of already deployed OFWs. This is effectively a legallyimposed partial condonation of their liability to OFWs, justified solely by the laws intent to encourage
greater deployment efforts. Thus, the incentive,from a more practical and realistic view, is really part of
a scheme to sell Filipino overseas labor at a bargain for purposes solely of attracting the market. . . .
The so-called incentive is rendered particularly odious by its effect on the OFWs the benefits
accruing to the recruitment/manning agencies and their principals are takenfrom the pockets of the
OFWs to whom the full salaries for the unexpired portion of the contract rightfully belong. Thus, the
principals/employers and the recruitment/manning agencies even profit from their violation of the
security of tenure that an employment contract embodies. Conversely, lesser protection is afforded the
OFW, not only because of the lessened recovery afforded him or her by operation of law, but also
because this same lessened recovery renders a wrongful dismissal easier and less onerous to
undertake; the lesser cost of dismissing a Filipino will always bea consideration a foreign employer will
126
take into account in termination of employment decisions. . . .
Further, "[t]here can never be a justification for any form of government action that alleviates the burden
of one sector, but imposes the same burden on another sector, especially when the favored sector is
composed of private businesses suchas placement agencies, while the disadvantaged sector is
composed ofOFWs whose protection no less than the Constitution commands. The idea thatprivate
127
business interest can be elevated to the level of a compelling state interest is odious."
Along the same line, we held that the reinstated clause violates due process rights. It is arbitrary as it
128
deprives overseas workers of their monetary claims without any discernable valid purpose.
Respondent Joy Cabiles is entitled to her salary for the unexpired portion of her contract, in accordance
with Section 10 of Republic Act No. 8042. The award of the three-month equivalence of respondents
salary must be modified accordingly. Since she started working on June 26, 1997 and was terminated
on July 14, 1997, respondent is entitled to her salary from July 15, 1997 to June 25, 1998. "To rule
otherwise would be iniquitous to petitioner and other OFWs, and would,in effect, send a wrong signal
that principals/employers and recruitment/manning agencies may violate an OFWs security of tenure
which an employment contract embodies and actually profit from such violation based on an
129
unconstitutional provision of law."

III
On the interest rate, the Bangko Sentral ng Pilipinas Circular No. 799 of June 21, 2013, which revised
the interest rate for loan or forbearance from 12% to 6% in the absence of stipulation,applies in this
case. The pertinent portions of Circular No. 799, Series of 2013, read: The Monetary Board, in its
Resolution No. 796 dated 16 May 2013, approved the following revisions governing the rate of interest
in the absence of stipulation in loan contracts, thereby amending Section 2 of Circular No. 905, Series
of 1982:
Section 1. The rate of interest for the loan or forbearance of any money, goods or credits and the rate
allowed in judgments, in the absence of an express contract as to such rateof interest, shall be six
percent (6%) per annum.
Section 2. In view of the above, Subsection X305.1 of the Manual of Regulations for Banks and
Sections 4305Q.1, 4305S.3 and 4303P.1 of the Manual of Regulations for Non-Bank Financial
Institutions are hereby amended accordingly.
This Circular shall take effect on 1 July 2013.
Through the able ponencia of Justice Diosdado Peralta, we laid down the guidelines in computing legal
130
interest in Nacar v. Gallery Frames:
II. With regard particularly to an award of interest in the concept of actual and compensatory damages,
the rate of interest, as well as the accrual thereof, is imposed, as follows:
1. When the obligation is breached, and it consists in the payment of a sum of money, i.e., a
loan or forbearance of money, the interest due should be that which may have been stipulated in
writing. Furthermore, the interest due shall itself earn legal interest from the time it is judicially
demanded. In the absence of stipulation, the rate of interest shall be 6% per annum to be
computed from default, i.e., from judicial or extrajudicial demand under and subject to the
provisions of Article 1169 of the Civil Code.
2. When an obligation, not constituting a loan or forbearance of money, is breached, an interest
on the amount of damages awarded may be imposed at the discretion of the court at the rate of
6% per annum. No interest, however, shall be adjudged on unliquidated claims or damages,
except when or until the demand can be established with reasonable certainty. Accordingly,
where the demand is established with reasonable certainty, the interest shall begin to run from
the time the claim is made judicially or extrajudicially (Art. 1169, Civil Code), but when such
certainty cannot be so reasonably established at the time the demand is made, the interest shall
begin to run only from the date the judgment of the court is made (at which time the
quantification of damages may be deemed to have been reasonably ascertained). The actual
base for the computation of legal interest shall, in any case, be on the amount finally adjudged.
3. When the judgment of the court awarding a sum of money becomes final and executory, the
rate of legal interest, whether the case falls under paragraph 1 or paragraph 2, above, shall be
6% per annum from such finality until its satisfaction, this interim period being deemed to be by
then an equivalent to a forbearance of credit.
And, in addition to the above, judgments that have become final and executory prior to July 1, 2013,
131
shall not be disturbed and shall continue to be implemented applying the rate of interest fixed therein.
Circular No. 799 is applicable only in loans and forbearance of money, goods, or credits, and in
judgments when there is no stipulation on the applicable interest rate. Further, it is only applicable if the
132
judgment did not become final and executory before July 1, 2013.
We add that Circular No. 799 is not applicable when there is a law that states otherwise. While the
133
Bangko Sentral ng Pilipinas has the power to set or limit interest rates, these interest rates do not
apply when the law provides that a different interest rate shall be applied. "[A] Central Bank Circular
134
cannot repeal a law. Only a law can repeal another law."
For example, Section 10 of Republic Act No. 8042 provides that unlawfully terminated overseas
workers are entitled to the reimbursement of his or her placement fee with an interest of 12% per
annum. Since Bangko Sentral ng Pilipinas circulars cannotrepeal Republic Act No. 8042, the issuance
of Circular No. 799 does not have the effect of changing the interest on awards for reimbursement of
placement fees from 12% to 6%. This is despite Section 1 of Circular No. 799, which provides that the
6% interest rate applies even to judgments.
Moreover, laws are deemed incorporated in contracts. "The contracting parties need not repeat them.
They do not even have to be referred to. Every contract, thus, contains not only what has been explicitly
135

stipulated, but the statutory provisions that have any bearing on the matter." There is, therefore, an
implied stipulation in contracts between the placement agency and the overseasworker that in case the
overseas worker is adjudged as entitled to reimbursement of his or her placement fees, the amount
shall be subject to a 12% interest per annum. This implied stipulation has the effect of removing awards
for reimbursement of placement fees from Circular No. 799s coverage.
The same cannot be said for awardsof salary for the unexpired portion of the employment contract
under Republic Act No. 8042. These awards are covered by Circular No. 799 because the law does not

provide for a specific interest rate that should apply.

In sum, if judgment did not become final and executory before July 1, 2013 and there was no stipulation
in the contract providing for a different interest rate, other money claims under Section 10 of Republic
Act No. 8042 shall be subject to the 6% interest per annum in accordance with Circular No. 799.
This means that respondent is also entitled to an interest of 6% per annum on her money claims from
the finality of this judgment.
IV
Finally, we clarify the liabilities ofWacoal as principal and petitioner as the employment agency that
facilitated respondents overseas employment.
Section 10 of the Migrant Workers and Overseas Filipinos Act of 1995 provides that the foreign
employer and the local employment agency are jointly and severally liable for money claims including
claims arising out of an employer-employee relationship and/or damages. This section also provides
that the performance bond filed by the local agency shall be answerable for such money claims or
damages if they were awarded to the employee.
This provision is in line with the states policy of affording protection to labor and alleviating workers
136
plight.
In overseas employment, the filing of money claims against the foreign employer is attended by
practical and legal complications.1wphi1 The distance of the foreign employer alonemakes it difficult
for an overseas worker to reach it and make it liable for violations of the Labor Code. There are also
possible conflict of laws, jurisdictional issues, and procedural rules that may be raised to frustrate an
overseas workersattempt to advance his or her claims.
It may be argued, for instance, that the foreign employer must be impleaded in the complaint as an
137
indispensable party without which no final determination can be had of an action.
The provision on joint and several liability in the Migrant Workers and Overseas Filipinos Act of 1995
assures overseas workers that their rights will not be frustrated with these complications. The
fundamental effect of joint and several liability is that "each of the debtors is liable for the entire
138
obligation." A final determination may, therefore, be achieved even if only oneof the joint and several
debtors are impleaded in an action. Hence, in the case of overseas employment, either the local
agency or the foreign employer may be sued for all claims arising from the foreign employers labor law
violations. This way, the overseas workers are assured that someone the foreign employers local
agent may be made to answer for violationsthat the foreign employer may have committed.
The Migrant Workers and Overseas Filipinos Act of 1995 ensures that overseas workers have recourse
in law despite the circumstances of their employment. By providing that the liability of the foreign
139
employer may be "enforced to the full extent" against the local agent,the overseas worker is assured
140
of immediate and sufficientpayment of what is due them.
Corollary to the assurance of immediate recourse in law, the provision on joint and several liability in the
Migrant Workers and Overseas Filipinos Act of 1995 shifts the burden of going after the foreign
employer from the overseas worker to the local employment agency. However, it must be emphasized
that the local agency that is held to answer for the overseas workers money claims is not leftwithout
remedy. The law does not preclude it from going after the foreign employer for reimbursement of
whatever payment it has made to the employee to answer for the money claims against the foreign
employer.
A further implication of making localagencies jointly and severally liable with the foreign employer is
thatan additional layer of protection is afforded to overseas workers. Local agencies, which are
businesses by nature, are inoculated with interest in being always on the lookout against foreign
employers that tend to violate labor law. Lest they risk their reputation or finances, local agenciesmust
already have mechanisms for guarding against unscrupulous foreign employers even at the level prior
to overseas employment applications.
With the present state of the pleadings, it is not possible to determine whether there was indeed a
transfer of obligations from petitioner to Pacific. This should not be an obstacle for the respondent
overseas worker to proceed with the enforcement of this judgment. Petitioner is possessed with the
resources to determine the proper legal remedies to enforce its rights against Pacific, if any.

V
Many times, this court has spoken on what Filipinos may encounter as they travel into the farthest and
141
mostdifficult reaches of our planet to provide for their families. In Prieto v. NLRC:
The Court is not unaware of the many abuses suffered by our overseas workers in the foreign land
where they have ventured, usually with heavy hearts, in pursuit of a more fulfilling future. Breach of
contract, maltreatment, rape, insufficient nourishment, sub-human lodgings, insults and other forms of
debasement, are only a few of the inhumane acts towhich they are subjected by their foreign
employers, who probably feel they can do as they please in their own country. Whilethese workers may
indeed have relatively little defense against exploitation while they are abroad, that disadvantage must
not continue to burden them when they return to their own territory to voice their muted complaint.
There is no reason why, in their very own land, the protection of our own laws cannot be extended to
142
them in full measure for the redress of their grievances.
But it seems that we have not said enough.
We face a diaspora of Filipinos. Their travails and their heroism can be told a million times over; each of
their stories as real as any other. Overseas Filipino workers brave alien cultures and the heartbreak of
families left behind daily. They would count the minutes, hours, days, months, and years yearning to
see their sons and daughters. We all know of the joy and sadness when they come home to see them
all grown up and, being so, they remember what their work has cost them. Twitter accounts, Facetime,
and many other gadgets and online applications will never substitute for their lost physical presence.
Unknown to them, they keep our economy afloat through the ebb and flow of political and economic
crises. They are our true diplomats, they who show the world the resilience, patience, and creativity of
our people. Indeed, we are a people who contribute much to the provision of material creations of this
world.
This government loses its soul if we fail to ensure decent treatment for all Filipinos. We default by
limiting the contractual wages that should be paid to our workers when their contracts are breached by
the foreign employers. While we sit, this court will ensure that our laws will reward our overseas workers
with what they deserve: their dignity.
Inevitably, their dignity is ours as weil.
WHEREFORE, the petition is DENIED. The decision of the Court of Appeals is AFFIRMED with
modification. Petitioner Sameer Overseas Placement Agency is ORDERED to pay respondent Joy C.
Cabiles the amount equivalent to her salary for the unexpired portion of her employment contract at an
interest of 6% per annum from the finality of this judgment. Petitioner is also ORDERED to reimburse
respondent the withheld NT$3,000.00 salary and pay respondent attorney's fees of NT$300.00 at an
interest of 6% per annum from the finality of this judgment.
The clause, "or for three (3) months for every year of the unexpired term, whichever is less" in Section 7
of Republic Act No. 10022 amending Section 10 of Republic Act No. 8042 is declared unconstitutional
and, therefore, null and void.
SO ORDERED.

G.R. No. 161757

January 25, 2006

SUNACE INTERNATIONAL MANAGEMENT SERVICES, INC. vs. NATIONAL LABOR RELATIONS

COMMISSION, Second Division; HON. ERNESTO S. DINOPOL, in his capacity as Labor Arbiter,
NLRC; NCR, Arbitration Branch, Quezon City and DIVINA A. MONTEHERMOZO
DECISION
CARPIO MORALES, J.:
Petitioner, Sunace International Management Services (Sunace), a corporation duly organized and
existing under the laws of the Philippines, deployed to Taiwan Divina A. Montehermozo (Divina) as a
1
domestic helper under a 12-month contract effective February 1, 1997. The deployment was with the
assistance of a Taiwanese broker, Edmund Wang, President of Jet Crown International Co., Ltd.
After her 12-month contract expired on February 1, 1998, Divina continued working for her Taiwanese
employer, Hang Rui Xiong, for two more years, after which she returned to the Philippines on February
4, 2000.
2

Shortly after her return or on February 14, 2000, Divina filed a complaint before the National Labor
Relations Commission (NLRC) against Sunace, one Adelaide Perez, the Taiwanese broker, and the
employer-foreign principal alleging that she was jailed for three months and that she was underpaid.
The following day or on February 15, 2000, Labor Arbitration Associate Regina T. Gavin issued
3
Summons to the Manager of Sunace, furnishing it with a copy of Divinas complaint and directing it to
appear for mandatory conference on February 28, 2000.
The scheduled mandatory conference was reset. It appears to have been concluded, however.
4

On April 6, 2000, Divina filed her Position Paper claiming that under her original one-year contract and
the 2-year extended contract which was with the knowledge and consent of Sunace, the following
amounts representing income tax and savings were deducted:

Year Deduction for Income Tax Deduction for Savings

1997 NT10,450.00
NT23,100.00
1998 NT9,500.00
NT36,000.00
1999 NT13,300.00
NT36,000.00;5
and while the amounts deducted in 1997 were refunded to her, those deducted in 1998 and 1999 were
not. On even date, Sunace, by its Proprietor/General Manager Maria Luisa Olarte, filed its Verified
6
Answer and Position Paper, claiming as follows, quoted verbatim:
COMPLAINANT IS NOT ENTITLED FOR THE REFUND OF HER 24 MONTHS SAVINGS
3. Complainant could not anymore claim nor entitled for the refund of her 24 months savings as she
already took back her saving already last year and the employer did not deduct any money from her
salary, in accordance with a Fascimile Message from the respondent SUNACEs employer, Jet Crown
International Co. Ltd., a xerographic copy of which is herewith attached as ANNEX "2" hereof;
COMPLAINANT IS NOT ENTITLED TO REFUND OF HER 14 MONTHS TAX AND PAYMENT OF
ATTORNEYS FEES
4. There is no basis for the grant of tax refund to the complainant as the she finished her one year
contract and hence, was not illegally dismissed by her employer. She could only lay claim over the tax
refund or much more be awarded of damages such as attorneys fees as said reliefs are available only
when the dismissal of a migrant worker is without just valid or lawful cause as defined by law or
contract.
The rationales behind the award of tax refund and payment of attorneys fees is not to enrich the
complainant but to compensate him for actual injury suffered. Complainant did not suffer injury, hence,
does not deserve to be compensated for whatever kind of damages.
Hence, the complainant has NO cause of action against respondent SUNACE for monetary claims,
considering that she has been totally paid of all the monetary benefits due her under her Employment
Contract to her full satisfaction.
6. Furthermore, the tax deducted from her salary is in compliance with the Taiwanese law, which
respondent SUNACE has no control and complainant has to obey and this Honorable Office has no
authority/jurisdiction to intervene because the power to tax is a sovereign power which the Taiwanese
Government is supreme in its own territory. The sovereign power of taxation of a state is recognized
under international law and among sovereign states.

7. That respondent SUNACE respectfully reserves the right to file supplemental Verified Answer and/or
Position Paper to substantiate its prayer for the dismissal of the above case against the herein
respondent. AND BY WAY OF x x x x (Emphasis and underscoring supplied)
Reacting to Divinas Position Paper, Sunace filed on April 25, 2000 an ". . . answer to complainants
7
position paper" alleging that Divinas 2-year extension of her contract was without its knowledge and
consent, hence, it had no liability attaching to any claim arising therefrom, and Divina in fact executed a
Waiver/Quitclaim and Release of Responsibility and an Affidavit of Desistance, copy of each document
was annexed to said ". . . answer to complainants position paper."
8

To Sunaces ". . . answer to complainants position paper," Divina filed a 2-page reply, without,
however, refuting Sunaces disclaimer of knowledge of the extension of her contract and without saying
anything about the Release, Waiver and Quitclaim and Affidavit of Desistance.
The Labor Arbiter, rejected Sunaces claim that the extension of Divinas contract for two more years
was without its knowledge and consent in this wise:
We reject Sunaces submission that it should not be held responsible for the amount withheld because
her contract was extended for 2 more years without its knowledge and consent because as Annex
9
"B" shows, Sunace and Edmund Wang have not stopped communicating with each other and yet the
matter of the contracts extension and Sunaces alleged non-consent thereto has not been categorically
established.
What Sunace should have done was to write to POEA about the extension and its objection thereto,
copy furnished the complainant herself, her foreign employer, Hang Rui Xiong and the Taiwanese
broker, Edmund Wang.
And because it did not, it is presumed to have consented to the extension and should be liable for
10
anything that resulted thereform (sic). (Underscoring supplied)
The Labor Arbiter rejected too Sunaces argument that it is not liable on account of Divinas execution of
a Waiver and Quitclaim and an Affidavit of Desistance. Observed the Labor Arbiter:
Should the parties arrive at any agreement as to the whole or any part of the dispute, the same shall be
reduced to writing and signed by the parties and their respective counsel (sic), if any, before the Labor
Arbiter.
The settlement shall be approved by the Labor Arbiter after being satisfied that it was voluntarily
entered into by the parties and after having explained to them the terms and consequences thereof.
A compromise agreement entered into by the parties not in the presence of the Labor Arbiter before
whom the case is pending shall be approved by him, if after confronting the parties, particularly the
complainants, he is satisfied that they understand the terms and conditions of the settlement and that it
was entered into freely voluntarily (sic) by them and the agreement is not contrary to law, morals, and
public policy.
And because no consideration is indicated in the documents, we strike them down as contrary to law,
11
morals, and public policy.
12

He accordingly decided in favor of Divina, by decision of October 9, 2000,

which reads:

the dispositive portion of

Wherefore, judgment is hereby rendered ordering respondents SUNACE INTERNATIONAL SERVICES

and its owner ADELAIDA PERGE, both in their personal capacities and as agent of Hang Rui
Xiong/Edmund Wang to jointly and severally pay complainant DIVINA A. MONTEHERMOZO the sum of
NT91,950.00 in its peso equivalent at the date of payment, as refund for the amounts which she is
hereby adjudged entitled to as earlier discussed plus 10% thereof as attorneys fees since compelled to
litigate, complainant had to engage the services of counsel.
13

SO ORDERED. (Underescoring supplied)

14

On appeal of Sunace, the NLRC, by Resolution of April 30, 2002,

decision.

affirmed the Labor Arbiters

15

Via petition for certiorari, Sunace elevated the case to the Court of Appeals which dismissed it outright
16
by Resolution of November 12, 2002, the full text of which reads:
The petition for certiorari faces outright dismissal.
The petition failed to allege facts constitutive of grave abuse of discretion on the part of the public
respondent amounting to lack of jurisdiction when the NLRC affirmed the Labor Arbiters finding that
petitioner Sunace International Management Services impliedly consented to the extension of the
contract of private respondent Divina A. Montehermozo. It is undisputed that petitioner was continually
communicating with private respondents foreign employer (sic). As agent of the foreign principal,
"petitioner cannot profess ignorance of such extension as obviously, the act of the principal
extending complainant (sic) employment contract necessarily bound it." Grave abuse of discretion

is not present in the case at bar.

17

ACCORDINGLY, the petition is hereby DENIED DUE COURSE and DISMISSED.

SO ORDERED.

(Emphasis on words in capital letters in the original; emphasis on words in small letters and
underscoring supplied)
Its Motion for Reconsideration having been denied by the appellate court by Resolution of January 14,
18
2004, Sunace filed the present petition for review on certiorari.
The Court of Appeals affirmed the Labor Arbiter and NLRCs finding that Sunace knew of and impliedly
consented to the extension of Divinas 2-year contract. It went on to state that "It is undisputed that
[Sunace] was continually communicating with [Divinas] foreign employer." It thus concluded that "[a]s
agent of the foreign principal, petitioner cannot profess ignorance of such extension as obviously, the
act of the principal extending complainant (sic) employment contract necessarily bound it."
Contrary to the Court of Appeals finding, the alleged continuous communication was with the
Taiwanese brokerWang, not with the foreign employer Xiong.
The February 21, 2000 telefax message from the Taiwanese broker to Sunace, the only basis of a
finding of continuous communication, reads verbatim:
xxxx
Regarding to Divina, she did not say anything about her saving in police station. As we contact with her
employer, she took back her saving already last years. And they did not deduct any money from her
salary. Or she will call back her employer to check it again. If her employer said yes! we will get it back
for her.
Thank you and best regards.
(Sgd.)
Edmund Wang
President19
The finding of the Court of Appeals solely on the basis of the above-quoted telefax message, that
Sunace continually communicated with the foreign "principal" (sic) and therefore was aware of and had
consented to the execution of the extension of the contract is misplaced. The message does not
provide evidence that Sunace was privy to the new contract executed after the expiration on February
1, 1998 of the original contract. That Sunace and the Taiwanese broker communicated regarding
Divinas allegedly withheld savings does not necessarily mean that Sunace ratified the extension of the
20
contract. As Sunace points out in its Reply filed before the Court of Appeals,
As can be seen from that letter communication, it was just an information given to the petitioner that the
private respondent had t[aken] already her savings from her foreign employer and that no deduction
21
was made on her salary. It contains nothing about the extension or the petitioners consent thereto.
Parenthetically, since the telefax message is dated February 21, 2000, it is safe to assume that it was
sent to enlighten Sunace who had been directed, by Summons issued on February 15, 2000, to appear
on February 28, 2000 for a mandatory conference following Divinas filing of the complaint on February
14, 2000.
Respecting the Court of Appeals following dictum:
As agent of its foreign principal, [Sunace] cannot profess ignorance of such an extension as obviously,
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the act of its principal extending [Divinas] employment contract necessarily bound it,
it too is a misapplication, a misapplication of the theory of imputed knowledge.
The theory of imputed knowledge ascribes the knowledge of the agent, Sunace, to the principal,
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employer Xiong,not the other way around. The knowledge of the principal-foreign employer cannot,
therefore, be imputed to its agent Sunace.
There being no substantial proof that Sunace knew of and consented to be bound under the 2-year
employment contract extension, it cannot be said to be privy thereto. As such, it and its "owner" cannot
be held solidarily liable for any of Divinas claims arising from the 2-year employment extension. As the
New Civil Code provides,
Contracts take effect only between the parties, their assigns, and heirs, except in case where the rights
and obligations arising from the contract are not transmissible by their nature, or by stipulation or by
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provision of law.
Furthermore, as Sunace correctly points out, there was an implied revocation of its agency relationship
with its foreign principal when, after the termination of the original employment contract, the foreign
principal directly negotiated with Divina and entered into a new and separate employment contract in
Taiwan. Article 1924 of the New Civil Code reading
The agency is revoked if the principal directly manages the business entrusted to the agent, dealing

directly with third persons.

thus applies.
In light of the foregoing discussions, consideration of the validity of the Waiver and Affidavit of
Desistance which Divina executed in favor of Sunace is rendered unnecessary.
WHEREFORE, the petition is GRANTED. The challenged resolutions of the Court of Appeals are
herebyREVERSED and SET ASIDE. The complaint of respondent Divina A. Montehermozo against
petitioner isDISMISSED.
SO ORDERED.