CASE NO.

1
People of the Philippines vs Melissa Chua
G.R. No. 184058
March 10, 2010
First Division
CARPIO MORALES, J.:
Melissa Chua (appellant) was indicted for Illegal Recruitment
(Large Scale) and was convicted thereof by the Regional Trial Court
(RTC) of Manila. She was also indicted for five counts of Estafa but
was convicted only for three. The Court of Appeals, by
Decision[1] dated February 27, 2008, affirmed appellants conviction.
The Information[2] charging appellant, together with one Josie
Campos (Josie), with Illegal Recruitment (Large Scale), docketed as
Criminal Case No. 04-222596, reads:
The undersigned accuses JOSIE CAMPOS and
MELISSA CHUA of violation of Article 38 (a) PD 1413,
amending certain provisions of Book I, PD 442, otherwise
known as the New Labor Code of the Philippines, in
relation to Art. 13 (b) and (c ) of said Code, as further
amended by PD Nos. 1693, 1920 and 2019 and as
further amended by Sec. 6 (a), (1) and (m) of RA 8042
committed in a [sic] large scale as follows:
That sometime during the month of September,
2002, in the City of Manila, Philippines, the said
accused, conspiring and confederating together and
mutually helping each other, representing themselves to
have the capacity to contract, enlist and transport
Filipino workers for employment abroad, did then and
there willfully, unlawfully and knowingly for a fee, recruit
and promise employment/job placement abroad to ERIK

DE GUIA TAN, MARILYN O. MACARANAS, NAPOLEON H.

YU, JR., HARRY JAMES P. KING and ROBERTO C.
ANGELES for overseas employment abroad without first
having secured the required license from the Department
of Labor and Employment as required by law, and charge
or accept directly from:
ERIK DE GUIA TAN - P73,000.00
MARILYN D. MACARANAS - 83,000.00
NAPOLEON H. YU, JR. - 23,000.00
HARRY JAMES P. KING - 23,000.00
ROBERTO C. ANGELES - 23,000.00
For purposes of their deployment, which amounts are in
excess of or greater than that specified in the schedule of
allowable fees as prescribed by the POEA, and without
valid reasons and without the fault of said complainants,
failed to actually deploy them and failed to reimburse
expenses
incurred
in
connection
with
their
documentation and processing for purposes of their
deployment.
xxxx

The five Informations[3] charging appellant and Josie with

Estafa, docketed as Criminal Case Nos. 04-222597-601, were
similarly worded and varied only with respect to the names of the
five complainants and the amount that each purportedly gave to the
accused. Thus each of the Information reads:
xxxx

That on or about . . . in the City of Manila,

Philippines,
the
said
accused,
conspiring
and
confederating together and mutually helping each other,
did then and there willfully, unlawfully and feloniously
defraud xxx in the following manner, to wit: the said
accused by means of false manifestations which they
made to the said . . . to the effect that they had the power
and capacity to recruit the latter as factory worker to
work in Taiwan and could facilitate the processing of the
pertinent papers if given the necessary amount to meet
the requirements thereof, and by means of other similar
deceits, induced and succeeded in inducing said xxx to
give and deliver, as in fact he gave and delivered to the
said accused the amount of . . . on the strength of said
manifestations and representations, said accused well
knowing that the same were false and fraudulent and
were made solely to obtain, as in fact they did obtain the
amount of . . . which amount once in their possession,
with intent to defraud, they willfully, unlawfully and
feloniously misappropriated, misapplied and converted to
their own personal use and benefit, to the damage of said
. . . in the aforesaid amount of . . ., Philippine Currency.
xxxx
Appellant pleaded not guilty on arraignment. Her co-accused Josie
remained at large. The cases were consolidated, hence, trial
proceeded only with respect to appellant.
Of the five complainants, only three testified, namely, Marilyn
D. Macaranas (Marilyn), Erik de Guia Tan (Tan) and Harry James
King (King). The substance of their respective testimonies follows:
Marilyns testimony:

After she was introduced in June 2002 by Josie to appellant

as capacitated to deploy factory workers to Taiwan, she paid
appellant P80,000 as placement fee and P3,750 as medical
expenses fee, a receipt[4] for the first amount of which was issued by
appellant.
Appellant had told her that she could leave for Taiwan in the
last week of September 2002 but she did not, and despite
appellants assurance that she would leave in the first or second
week of October, just the same she did not.
She thus asked for the refund of the amount she paid but
appellant claimed that she was not in possession thereof but
promised anyway to raise the amount to pay her, but she never did.
She later learned in June 2003 that appellant was not a
licensed recruiter, prompting her to file the complaint against
appellant and Josie.
Tans testimony:
After he was introduced by Josie to appellant at the Golden
Gate, Inc., (Golden Gate) an agency situated in Paragon Tower Hotel
in Ermita, Manila, he underwent medical examination upon
appellants assurance that he could work in Taiwan as a factory
worker with a guaranteed monthly salary of 15,800 in Taiwan
currency.
He
thus
paid
appellant,
on
September
6,
[5]
2002, P70,000 representing placement fees for which she issued a
receipt. Appellant welched on her promise to deploy him to Taiwan,
however, hence, he demanded the refund of his money but
appellant failed to. He later learned that Golden Gate was not

licensed to deploy workers to Taiwan, hence, he filed the complaint

against appellant and Josie.
Kings testimony:
His friend and a fellow complainant Napoleon Yu introduced
him to Josie who in turn introduced appellant as one who could
deploy him to Taiwan.
On September 24, 2002,[6] he paid appellant P20,000
representing partial payment for placement fees amounting
to P80,000, but when he later inquired when he would be deployed,
Golden Gates office was already closed. He later learned that
Golden Gates license had already expired, prompting him to file the
complaint.
Appellant denied the charges. Claiming having worked as a
temporary cashier from January to October, 2002 at the office of
Golden Gate, owned by one Marilyn Calueng, [7] she maintained that
Golden Gate was a licensed recruitment agency and that Josie, who
is her godmother, was an agent.
Admitting having received P80,000 each from Marilyn and Tan,
receipt of which she issued but denying receiving any amount from
King, she claimed that she turned over the money to the
documentation officer, one Arlene Vega, who in turn remitted the
money to Marilyn Calueng whose present whereabouts she did not
know.
By Decision of April 5, 2006, Branch 36 of the Manila RTC
convicted appellant of Illegal Recruitment (Large Scale) and three
counts of Estafa, disposing as follows:
WHEREFORE, the prosecution having established the
guilt of accused Melissa Chua beyond reasonable doubt,

judgment is hereby rendered convicting the accused as

principal of a large scale illegal recruitment and estafa
three (3) counts and she is sentenced to life
imprisonment and to pay a fine of Five Hundred
Thousand Pesos (P500,000.00) for illegal recruitment.
The accused is likewise convicted of estafa committed
against Harry James P. King and she is sentenced to
suffer the indeterminate penalty of Four (4) years and
Two (2) months of prision correctional as minimum, to
Six (6) years and One (1) day of prision mayor as
maximum; in Criminal Case No. 04-22598; in Criminal
Case No. 04-222600 committed against Marilyn
Macaranas, accused is sentence [sic] to suffer the
indeterminate penalty of Four (4) years and Two (2)
months of prision correctional as minimum, to Twelve
(12) years and one (1) day of reclusion temporal as
maximum; and in Criminal Case No. 04-222601
committed against Erik de Guia Tan, she is likewise
sentence [sic] to suffer an indeterminate penalty of Four
(4) years and Two (2) months of prision correctional as
minimum, to Eleven (11) years and One (1) day of prision
mayor as maximum.
Accused Melissa Chua is also ordered to return the
amounts of P20,000.00 to Harry James P. King,
P83,750.00 to Marilyn D. Macaranas, and P70,000.00 to
Erik de Guia Tan.
As regards Criminal Cases Nos. 04-222597 and 04222599, both are dismissed for lack of interest of
complainants Roberto Angeles and Napoleon Yu, Jr.

In the service of her sentence, the accused is credited

with the full period of preventive imprisonment if she
agrees in writing to abide by the disciplinary rules
imposed, otherwise only 4/5 shall be credited.
SO ORDERED.

The Court of Appeals, as stated early on, affirmed the trial courts
decision by the challenged Decision of February 27, 2008, it holding
that appellants defense that, as temporary cashier of Golden Gate,
she received the money which was ultimately remitted to Marilyn
Calueng is immaterial, she having failed to prove the existence of an
employment relationship between her and Marilyn, as well as the
legitimacy of the operations of Golden Gate and the extent of her
involvement therein.
Citing People v. Sagayaga,[8] the appellate court ruled that an
employee of a company engaged in illegal recruitment may be held
liable as principal together with his employer if it is shown that he,
as in the case of appellant, actively and consciously participated
therein.
Respecting the cases for Estafa, the appellate court, noting that a
person convicted of illegal recruitment may, in addition, be
convicted of Estafa as penalized under Article 315, paragraph 2(a)
of the Revised Penal Code, held that the elements thereof were
sufficiently
established, viz: that
appellant
deceived
the
complainants by assuring them of employment in Taiwan provided
they pay the required placement fee; that relying on such
representation, the complainants paid appellant the amount
demanded; that her representation turned out to be false because
she failed to deploy them as promised; and that the complainants

suffered damages when they failed to be reimbursed the amounts

they paid.
Hence, the present appeal, appellant reiterating the same
arguments she raised in the appellate court.
The appeal is bereft of merit.
The term recruitment and placement is defined under Article
13(b) of the Labor Code of the Philippines as follows:
(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. (emphasis supplied)
On the other hand, Article 38, paragraph (a) of the Labor
Code, as amended, under which appellant was charged, provides:
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.
(emphasis supplied)

From the foregoing provisions, it is clear that any recruitment

activities to be undertaken by non-licensee or non-holder of
contracts, or as in the present case, an agency with
an expired license, shall be deemed illegal and punishable under
Article 39 of the Labor Code of the Philippines. And illegal
recruitment is deemed committed in large scale if committed
against three or more persons individually or as a group.
Thus for illegal recruitment in large scale to prosper, the
prosecution has to prove three essential elements, to wit: (1) the
accused undertook a recruitment activity under Article 13(b) or any
prohibited practice under Article 34 of the Labor Code; (2) the
accused did not have the license or the authority to lawfully engage
in the recruitment and placement of workers; and (3) the accused
committed such illegal activity against three or more persons
individually or as a group.[9]
In the present case, Golden Gate, of which appellant admitted
being a cashier from January to October 2002, was initially

authorized to recruit workers for deployment abroad. Per the

certification from the POEA, Golden Gates license only expired
on February 23, 2002 and it was delisted from the roster of licensed
agencies on April 2, 2002.
Appellant was positively pointed to as one of the persons who
enticed the complainants to part with their money upon the
fraudulent representation that they would be able to secure for
them employment abroad. In the absence of any evidence that the
complainants were motivated by improper motives, the trial courts
assessment of their credibility shall not be interfered with by the
Court.[10]
Even if appellant were a mere temporary cashier of Golden
Gate, that did not make her any less an employee to be held liable
for illegal recruitment as principal by direct participation, together
with the employer, as it was shown that she actively and
consciously participated in the recruitment process. [11]
Assuming arguendo that appellant was unaware of the illegal
nature of the recruitment business of Golden Gate, that does not
free
her
of
liability
either. Illegal
Recruitment in
Large
Scale penalized under Republic Act No. 8042, or The Migrant
Workers and Overseas Filipinos Act of 1995, is a special law, a
violation of which is malum prohibitum,not malum in se. Intent is
thus immaterial. And that explains why appellant was, aside from
Estafa, convicted of such offense.
[I]llegal
recruitment
is malum
prohibitum, while estafa is malum in se. In the first,
the criminal intent of the accused is not necessary
for conviction. In the second, such an intent is
imperative. Estafa under Article 315, paragraph 2, of

the Revised Penal Code, is committed by any person

who defrauds another by using fictitious name, or
falsely pretends to possess power, influence,
qualifications, property, credit, agency, business or
imaginary
transactions,
or by means
of similar
deceits executed prior to or simultaneously with the
commission of fraud.[12] (emphasis supplied)

WHEREFORE, the appeal is hereby DENIED.

SO ORDERED.
FIRST DIVISION

PEOPLE OF
THE PHILIPPINES,
Petitioner,
- versus -

RODOLFO GALLO y GADOT,

Accused-Appellant,
FIDES PACARDO y JUNGCO
and PILAR MANTA y DUNGO,
Accused.

G.R. No. 187730

Present:
CORONA, C.J.,
Chairperson,
VELASCO, JR.,
LEONARDO-DE CASTRO,
DEL CASTILLO, and
PEREZ, JJ.
Promulgated:
June 29, 2010

x----------------------------------------------------------------------------------------x

DECISION

VELASCO, JR., J.:

The Case
This is an appeal from the Decision[1] 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 (accusedappellant), Fides Pacardo y Jungco and Pilar Manta y Dungo
(accused), which affirmed the Decision[2] dated March 15, 2007 of
the Regional Trial Court (RTC), Branch 30 in Manila which
convicted the accused-appellant Rodolfo Gallo y Gadot (accusedappellant) 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. 02206294 to 02-206296, 02-206298 to 02-206299, 02-206301 to 02-

206307
and
02-206309
to
02-206311
were
likewise provisionally dismissed upon motion of Pacardo, Manta and
accused-appellant for failure of the respective complainants in said
cases to appear and testify during trial.
It should also be noted that after trial, Pacardo and Manta
were acquitted in Criminal Case Nos. 02-206293, 02-206297, 02206300 and 02-206308 for insufficiency of evidence. Likewise,
accused-appellant 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 02206297, both filed by Dela Caza, for syndicated illegal recruitment
and estafa, respectively.
Thus, the present appeal concerns solely accused-appellants
conviction for syndicated illegal recruitment in Criminal Case No.
02-206293 and for estafa in Criminal Case No. 02-206297.
In Criminal Case No. 02-206293, the information charges the
accused-appellant, together with the others, as follows:
The undersigned accuses MARDEOLYN MARTIR,
ISMAEL GALANZA, NELMAR MARTIR, MARCELINO
MARTIR, NORMAN MARTIR, NELSON MARTIR, MA.
CECILIA M. RAMOS, LULU MENDANES, FIDES
PACARDO y JUNGCO, RODOLFO GALLO y GADOT,
PILAR MANTA y DUNGO, ELEONOR PANUNCIO and YEO
SIN UNG of a violation of Section 6(a), (l) and (m) of
Republic Act 8042, otherwise known as the Migrant
Workers and Overseas Filipino Workers Act of 1995,
committed by a syndicate and in large scale, as follows:
That in or about and during the period comprised
between November 2000 and December, 2001, inclusive,
in the City of Manila, Philippines, the said accused
conspiring and confederating together and helping with
one another, representing themselves to have the
capacity to contract, enlist and transport Filipino workers

for employment abroad, did then and there willfully and

unlawfully, for a fee, recruit and promise employment/job
placement abroad to FERDINAND ASISTIN, ENTICE
BRENDO, REYMOND G. CENA, EDGARDO V. DELA
CAZA, RAYMUND EDAYA, SANDY O. GUANTENO,
RENATO V. HUFALAR, ELENA JUBICO, LUPO A.
MANALO, ALMA V. MENOR, ROGELIO S. MORON,
FEDILA G. NAIPA, OSCAR RAMIREZ, MARISOL L.
SABALDAN, DANILO SARE, MARY BETH SARDON,
JOHNNY SOLATORIO and JOEL TINIO in Korea as
factory workers and charge or accept directly or indirectly
from said FERDINAND ASISTIN the amount of
P45,000.00; ENTICE BRENDO P35,000.00; REYMOND
G. CENA P30,000.00; EDGARDO V. DELA CAZA
P45,000.00; RAYMUND EDAYA P100,000.00; SANDY O.
GUANTENO
P35,000.00;
RENATO
V.
HUFALAR
P70,000.00; ELENA JUBICO P30,000.00; LUPO A.
MANALO P75,000.00; ALMA V. MENOR P45,000.00;
ROGELIO S. MORON P70,000.00; FEDILA G. NAIPA
P45,000.00; OSCAR RAMIREZ P45,000.00; MARISOL L.
SABALDAN P75,000.00; DANILO SARE P100,000.00;
MARY BETH SARDON P25,000.00; JOHNNY SOLATORIO
P35,000.00; and JOEL TINIO P120,000.00 as placement
fees in connection with their overseas employment, which
amounts are in excess of or greater than those specified
in the schedule of allowable fees prescribed by the POEA
Board Resolution No. 02, Series 1998, and without valid
reasons and without the fault of the said complainants
failed to actually deploy them and failed to reimburse the
expenses incurred by the said complainants in
connection with their documentation and processing for
purposes of their deployment.[3] (Emphasis supplied)
In Criminal Case No. 02-206297, the information reads:

That on or about May 28, 2001, in the City of

Manila, Philippines, the said accused conspiring and
confederating together and helping with [sic] one another,
did then and there willfully, unlawfully and feloniously
defraud EDGARDO V. DELA CAZA, in the following
manner, to wit: the said accused by means of false
manifestations and fraudulent representations which
they made to the latter, prior to and even simultaneous
with the commission of the fraud, to the effect that they
had the power and capacity to recruit and employ said
EDGARDO V. DELA CAZA in Korea as factory worker and
could facilitate the processing of the pertinent papers if
given the necessary amount to meet the requirements
thereof; induced and succeeded in inducing said
EDGARDO V. DELA CAZA to give and deliver, as in fact,
he gave and delivered to said accused the amount of
P45,000.00 on the strength of said manifestations and
representations, said accused well knowing that the
same were false and untrue and were made [solely] for
the purpose of obtaining, as in fact they did obtain the
said amount of P45,000.00 which amount once in their
possession, with intent to defraud said [EDGARDO] V.
DELA CAZA, they willfully, unlawfully and feloniously
misappropriated, misapplied and converted the said
amount of P45,000.00 to their own personal use and
benefit, to the damage and prejudice of the said
EDGARDO V. DELA CAZA in the aforesaid amount of
P45,000.00, Philippine currency.
CONTRARY TO LAW.[4]
When arraigned on January 19, 2004, accused-appellant
Gallo entered a plea of not guilty to all charges.
On March 3, 2004, the pre-trial was terminated and trial
ensued, thereafter.

During the trial, the prosecution presented as their witnesses,

Armando Albines Roa, the Philippine Overseas Employment
Administration (POEA) representative and private complainants
Dela Caza, Guanteno and Sare. On the other hand, the defense
presented as its witnesses, accused-appellant Gallo, Pacardo and
Manta.
Version of the Prosecution
On May 22, 2001, Dela Caza was introduced by Eleanor
Panuncio to accused-appellant Gallo, Pacardo, Manta, Mardeolyn,
Lulu Mendanes, Yeo Sin Ung and another Korean national at the
office of MPM International Recruitment and Promotion Agency
(MPM Agency) located in Malate, Manila.
Dela Caza was told that Mardeolyn was the President of MPM
Agency, while Nelmar Martir was one of the incorporators. Also,
that Marcelino Martir, Norman Martir, Nelson Martir and Ma.
Cecilia Ramos were its board members. Lulu Mendanes acted as
the cashier and accountant, while Pacardo acted as the agencys
employee who was in charge of the records of the applicants. Manta,
on the other hand, was also an employee who was tasked to deliver
documents to the Korean embassy.
Accused-appellant Gallo then introduced himself as a relative
of Mardeolyn and informed Dela Caza that the agency was able to
send many workers abroad. Together with Pacardo and Manta, he
also told Dela Caza about the placement fee of One Hundred Fifty
Thousand Pesos (PhP 150,000) with a down payment of Forty-Five
Thousand Pesos (PhP 45,000) and the balance to be paid through
salary deduction.
Dela Caza, together with the other applicants, were briefed by
Mardeolyn about the processing of their application papers for job
placement in Korea as a factory worker and their possible salary.
Accused Yeo Sin Ung also gave a briefing about the business and
what to expect from the company and the salary.
With accused-appellants assurance that many workers have
been sent abroad, as well as the presence of the two (2) Korean

nationals and upon being shown the visas procured for the
deployed workers, Dela Caza was convinced to part with his money.
Thus, on May 29, 2001, he paid 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 02-206308;
II.
Accused RODOLFO GALLO y GADOT
is found guilty beyond reasonable doubt in
Criminal Case No. 02-206293 of the crime of
Illegal Recruitment committed by a syndicate
and is hereby sentenced to suffer the penalty
of life imprisonment and to pay a fine of ONE
MILLION (Php1,000,000.00) PESOS. He is also
ordered to indemnify EDGARDO DELA CAZA
of the sum of FORTY-FIVE THOUSAND
(Php45,000.00) PESOS with legal interest from
the filing of the information on September 18,
2002 until fully paid.
III.
Accused RODOLFO GALLO y GADOT in
Criminal Case No. 02-206297 is likewise found
guilty and is hereby sentenced to suffer the
indeterminate penalty of FOUR (4) years
of prision correccional as minimum to NINE (9)
years of prision mayor as maximum.
IV.
Accused RODOLFO GALLO y GADOT is
hereby ACQUITTED of the crime charged in
Criminal Cases Nos. 02-206300 and 02206308.

Let alias warrants for the arrest of the other

accused be issued anew in all the criminal cases.
Pending their arrest, the cases are sent to the archives.
The immediate release of accused Fides Pacardo
and Pilar Manta is hereby ordered unless detained for
other lawful cause or charge.
SO ORDERED.[5]
Ruling of the Appellate Court
On appeal, the CA, in its Decision dated December 24, 2008,
disposed of the case as follows:
WHEREFORE, the appealed Decision of the Regional
Trial Court of Manila, Branch 30, in Criminal Cases Nos.
02-206293 and 02-206297, dated March 15, 2007, is
AFFIRMED with the MODIFICATION that in Criminal
Case No. 02-206297, for estafa, appellant is sentenced to
four (4) years of prision correccional to ten (10) years
of prision mayor.
SO ORDERED.[6]
The CA held the totality of the prosecutions evidence showed that
the accused-appellant, together with others, engaged in the
recruitment of Dela Caza. His actions and representations to Dela
Caza can hardly be construed as the actions of a mere errand boy.
As determined by the appellate court, the offense is considered
economic sabotage having been committed by more than three (3)
persons, namely, accused-appellant Gallo, Mardeolyn, Eleonor
Panuncio and Yeo Sin Ung. More importantly, a personal found
guilty of illegal recruitment may also be convicted of estafa.[7] The
same evidence proving accused-appellants commission of the crime
of illegal recruitment in large scale also establishes his liability
for estafa under paragragh 2(a) of Article 315 of the Revised Penal
Code (RPC).
On January 15, 2009, the accused-appellant filed a timely appeal
before this Court.
The Issues

Accused-appellant interposes in the present appeal the following

assignment of errors:
I
The court a quo gravely erred in finding the accusedappellant 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 accusedappellant guilty of estafa despite the failure of the
prosecution to prove the same beyond reasonable doubt.

Our Ruling
The appeal has no merit.
Evidence supports conviction of
the crime of Syndicated Illegal
Recruitment
Accused-appellant avers that he cannot be held criminally
liable for illegal recruitment because he was neither an officer nor
an employee of the recruitment agency. He alleges that the trial
court erred in adopting the asseveration of the private complainant
that he was indeed an employee because such was not duly
supported by competent evidence. According to him, even assuming
that he was an employee, such cannot warrant his outright
conviction sans evidence that he acted in conspiracy with the
officers of the agency.
We disagree.
To commit syndicated illegal recruitment, three elements must
be established: (1) the offender undertakes either any activity
within the meaning of recruitment and placement defined under
Article 13(b), or any of the prohibited practices enumerated under
Art. 34 of the Labor Code; (2) he has no valid license or authority

required by law to enable one to lawfully engage in recruitment and

placement of workers;[8] and (3) the illegal recruitment is committed
by a group of three (3) or more persons conspiring or confederating
with one another.[9] When illegal recruitment is committed by a
syndicate or in large scale, i.e., if it is committed against three (3) or
more persons individually or as a group, it is considered an offense
involving economic sabotage.[10]
Under Art. 13(b) of the Labor Code, recruitment and
placement refers to any act of canvassing, enlisting, contracting,
transporting, utilizing, hiring or procuring workers, and includes
referrals, contract services, promising or advertising for
employment, locally or abroad, whether for profit or not.
After a thorough review of the records, we believe that the
prosecution was able to establish the elements of the offense
sufficiently. The evidence readily reveals that MPM Agency was
never licensed by the POEA to recruit workers for overseas
employment.
Even with a license, however, illegal recruitment could still be
committed under Section 6 of Republic Act No. 8042 (R.A. 8042),
otherwise known as the Migrants and Overseas Filipinos Act of
1995, viz:
Sec. 6. Definition. For purposes of this Act, illegal
recruitment shall mean any act of canvassing, enlisting,
contracting, transporting, utilizing, hiring, or procuring
workers and includes referring, contract services,
promising or advertising for employment abroad, whether
for profit or not, when undertaken by a non-licensee or
non-holder of authority contemplated under Article 13(f)
of Presidential Decree No. 442, as amended, otherwise
known as the Labor Code of the Philippines: Provided,
That any such non-licensee or non-holder who, in any
manner, offers or promises for a fee employment abroad
to two or more persons shall be deemed so engaged. It
shall, likewise, include the following act, whether

committed by any person, whether a non-licensee, nonholder, licensee or holder of authority:

(a) To charge or accept directly or indirectly any
amount greater than that specified in the
schedule of allowable fees prescribed by the
Secretary of Labor and Employment, or to make a
worker pay any amount greater than that actually
received by him as a loan or advance;
xxxx
(l) Failure to actually deploy without valid reason as
determined by the Department of Labor and
Employment; and
(m) Failure to reimburse expenses incurred by the
worker in connection with his documentation and
processing for purposes of deployment and
processing for purposes of deployment, in cases
where the deployment does not actually take
place without the workers fault. Illegal
recruitment when committed by a syndicate or in
large scale shall be considered an offense
involving economic sabotage.
Illegal recruitment is deemed committed by a
syndicate if carried out by a group of three (3) or more
persons conspiring or confederating with one another. It
is deemed committed in large scale if committed against
three (3) or more persons individually or as a group.
The persons criminally liable for the above offenses
are the principals, accomplices and accessories. In case
of juridical persons, the officers having control,
management or direction of their business shall be liable.
In the instant case, accused-appellant committed the acts
enumerated in Sec. 6 of R.A. 8042. Testimonial evidence presented
by the prosecution clearly shows that, in consideration of a promise
of foreign employment, accused-appellant received the amount of

Php 45,000.00 from Dela Caza. When accused-appellant made

misrepresentations concerning the agencys purported power and
authority to recruit for overseas employment, and in the process,
collected money in the guise of placement fees, the former clearly
committed acts constitutive of illegal recruitment.[11] Such acts were
accurately described in the testimony of prosecution witness, Dela
Caza, to wit:
PROS. MAGABLIN
Q: How about this Rodolfo Gallo?
A: He was the one who received my money.
Q: Aside from receiving your money, was there any
other representations or acts made by Rodolfo
Gallo?
A: He introduced himself to me as relative of
Mardeolyn Martir and he even intimated to me
that their agency has sent so many workers
abroad.
xxxx
PROS. MAGABLIN
Q: Mr. Witness, as you claimed you tried to
withdraw your application at the agency. Was
there any instance that you were able to talk to
Fides Pacardo, Rodolfo Gallo and Pilar Manta?
A: Yes, maam.
Q: What was the conversation that transpired
among you before you demanded the return of
your money and documents?
A: When I tried to withdraw my application as well
as my money, Mr. Gallo told me I know nothing
about your money while Pilar Manta and Fides
Pacardo told me, why should I withdraw my
application and my money when I was about to
be [deployed] or I was about to leave.
xxxx

Q: And what transpired at that office after this

Panuncio introduced you to those persons
whom you just mentioned?
A: The three of them including Rodolfo Gallo told me
that the placement fee in that agency is Php
150,000.00 and then I should deposit the
amount of Php 45,000.00. After I have
deposited said amount, I would just wait for
few days
xxxx
Q: They were the one (sic) who told you that you
have to pay Php 45,000.00 for deposit only?
A: Yes, maam, I was told by them to deposit Php
45,000.00 and then I would pay the remaining
balance of Php105,000.00, payment of it would
be through salary deduction.
Q: That is for what Mr. Witness again?
A: For placement fee.
Q: Now did you believe to (sic) them?
A: Yes, maam.
Q: Why, why did you believe?
A: Because of the presence of the two Korean
nationals and they keep on telling me that they
have sent abroad several workers and they
even showed visas of the records that they
have already deployed abroad.
Q: Aside from that, was there any other
representations which have been made upon
you or make you believe that they can deploy
you?
A: At first I was adamant but they told me If you do
not want to believe us, then we could do
nothing. But once they showed me the [visas]

of the people whom they have deployed abroad,

that was the time I believe them.
Q: So after believing on the representations, what
did you do next Mr. Witness?
A: That was the time that I decided to give the
money.
xxxx
PROS. MAGABLIN
Q: Do you have proof that you gave the money?
A: Yes, maam.
Q: Where is your proof that you gave the money?
A: I have it here.
PROS. MAGABLIN:
Witness is producing to this court a Receipt dated
May 28, 2001 in the amount of Php45,000.00 which
for purposes of record Your Honor, may I request
that the same be marked in the evidence as our
Exhibit F.
xxxx
PROS. MAGABLIN
Q: There appears a signature appearing at the left
bottom portion of this receipt. Do you know
whose signature is this?
A: Yes, maam, signature of Rodolfo Gallo.
PROS. MAGABLIN
Q: Why do you say that that is his signature?
A: Rodolfo Gallos signature Your Honor because he
was the one who received the money and he
was the one who filled up this O.R. and while
he was doing it, he was flanked by Fides
Pacardo, Pilar Manta and Mardeolyn Martir.
xxxx
Q: So it was Gallo who received your money?
A: Yes, maam.

PROS. MAGABLIN
Q: And after that, what did this Gallo do after he
received your money?
A: They told me maam just to call up and make a
follow up with our agency.
xxxx
Q: Now Mr. Witness, after you gave your money to
the accused, what happened with the
application, with the promise of employment
that he promised?
A: Two (2) weeks after giving them the money, they
moved to a new office in Makati, Brgy. San
Isidro.
xxxx
Q: And were they able to deploy you as promised by
them?
A: No, maam, they were not able to send us abroad.
[12]

Essentially, Dela Caza appeared very firm and consistent in

positively identifying accused-appellant as one of those who
induced him and the other applicants to part with their money. His
testimony
showed
that
accused-appellant
made
false
misrepresentations and promises in assuring them that after they
paid the placement fee, jobs in Korea as factory workers were
waiting for them and that they would be deployed soon. In fact, Dela
Caza personally talked to accused-appellant and gave him the
money and saw him sign and issue an official receipt as proof of his
payment. Without a doubt, accused-appellants actions constituted
illegal recruitment.
Additionally, accused-appellant cannot argue that the trial
court erred in finding that he was indeed an employee of the

recruitment agency. On the contrary, his active participation in the

illegal recruitment is unmistakable. The fact that he was the one
who issued and signed the official receipt belies his profession of
innocence.
This Court likewise finds the existence of a conspiracy between
the accused-appellant and the other persons in the agency who are
currently at large, resulting in the commission of the crime of
syndicated illegal recruitment.
In this case, it cannot be denied that the accused-appellent
together with Mardeolyn and the rest of the officers and employees
of MPM Agency participated in a network of deception. Verily, the
active involvement of each in the recruitment scam was directed at
one single purpose to divest complainants with their money on the
pretext of guaranteed employment abroad. The prosecution evidence
shows that complainants were briefed by Mardeolyn about the
processing of their papers for a possible job opportunity in Korea,
as well as their possible salary. Likewise, Yeo Sin Ung, a Korean
national, gave a briefing about the business and what to expect
from the company. Then, here comes accused-appellant who
introduced himself as Mardeolyns relative and specifically told Dela
Caza of the fact that the agency was able to send many workers
abroad. Dela Caza was even showed several workers visas who were
already allegedly deployed abroad. Later on, 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.
In People v. Gamboa,[13] this Court discussed the nature of
conspiracy in the context of illegal recruitment, viz:

Conspiracy to defraud aspiring overseas contract

workers was evident from the acts of the malefactors

whose conduct before, during and after the commission

of the crime clearly indicated that they were one in
purpose and united in its execution. Direct proof of
previous agreement to commit a crime is not necessary
as it may be deduced from the mode and manner in
which the offense was perpetrated or inferred from the
acts of the accused pointing to a joint purpose and
design, concerted action and community of interest. As
such, all the accused, including 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
same objective.[14]
Estafa
The prosecution likewise established that accused-appellant is
guilty of the crime of estafa as defined under Article 315 paragraph
2(a) of the Revised Penal Code, viz:
Art. 315. Swindling (estafa). Any person who shall
defraud another by any means mentioned hereinbelow
xxxx
2. By means of any of the following false pretenses
or fraudulent acts executed prior to or simultaneously
with the commission of the fraud:
(a) By using fictitious name, or falsely pretending to
possess power, influence, qualifications, property,
credit,
agency,
business
or
imaginary
transactions; or by means of other similar
deceits.

The elements of estafa in general are: (1) that the accused

defrauded another (a) by abuse of confidence, or (b) by means of
deceit; and (2) that damage or prejudice capable of pecuniary
estimation is caused to the offended party or third person. [15] Deceit
is the false representation of a matter of fact, whether by words or
conduct, by false or misleading allegations, or by concealment of
that which should have been disclosed; and which deceives or is
intended to deceive another so that he shall act upon it, to his legal
injury.
All these elements are present in the instant case: the
accused-appellant, together with the other accused at large,
deceived the complainants into believing that the agency had the
power and capability to send them abroad for employment; that
there were available jobs for them in Korea as factory workers; that
by reason or on the strength of such assurance, the complainants
parted with their money in payment of the placement fees; that
after receiving the money, accused-appellant and his co-accused
went into hiding by changing their office locations without
informing complainants; and that complainants were never
deployed abroad. As all these representations of the accusedappellant proved false, paragraph 2(a), Article 315 of the Revised
Penal Code is thus applicable.
Defense of Denial Cannot Prevail
over Positive Identification

Indubitably, accused-appellants denial of the crimes charged

crumbles in the face of the positive identification made by Dela
Caza and his co-complainants as one of the perpetrators of the
crimes charged. As enunciated by this Court in People v. Abolidor,
[16]
[p]ositive identification where categorical and consistent and not
attended by any showing of ill motive on the part of the
eyewitnesses on the matter prevails over alibi and denial.

The defense has miserably failed to show any evidence of ill

motive on the part of the prosecution witnesses as to falsely testify
against him.
Therefore, between the categorical statements of the
prosecution witnesses, on the one hand, and bare denials of the
accused, on the other hand, the former must prevail. [17]
Moreover, this Court accords the trial courts findings with the
probative weight it deserves in the absence of any compelling reason
to discredit the same. It is a fundamental judicial dictum that the
findings of fact of the trial court are not disturbed on appeal except
when it overlooked, misunderstood or misapplied some facts or
circumstances of weight and substance that would have materially
affected the outcome of the case. We find that the trial court did not
err in convicting the accused-appellant.
WHEREFORE, the appeal is DENIED for failure to sufficiently
show reversible error in the assailed decision. The Decision dated
December 24, 2008 of the CA in CA-G.R. CR-H.C. No. 02764
is AFFIRMED.
No costs.
SO ORDERED.
SECOND DIVISION
CLAUDIO S. YAP,
Petitioner,

- versus -

THENAMARIS SHIPS MANAGEMENT

and INTERMARE MARITIME
AGENCIES, INC.,
Respondents.

G.R. No. 179532

Present:
CARPIO, J.,
Chairperson,
NACHURA,
PERALTA,
ABAD, and
MENDOZA, JJ.
Promulgated:

May 30, 2011

x-----------------------------------------------------------------------------------x

DECISION
NACHURA, J.:

Before this Court is a Petition for Review on Certiorari[1] under

Rule 45 of the Rules of Civil Procedure, seeking the reversal of the
Court of Appeals (CA) Decision[2]dated February 28, 2007, which
affirmed with modification the National Labor Relations
Commission (NLRC) resolution[3] 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, Yapboarded
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 ATHENSPHILIPINOS 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
Thenamaris other vessels.[4]

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.
On July 26, 2004, the LA rendered a decision [5] 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.
SO ORDERED.[6]

Aggrieved, respondents sought recourse from the NLRC.

In its decision[7] 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 entitled to salaries for three months as provided
under Section 10[8] of Republic Act (R.A.) No. 8042, [9] as enunciated
in our ruling in Marsaman Manning Agency, Inc. v. National Labor
Relations Commission.[10] 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.
SO ORDERED.[11]

Respondents filed a Motion for Partial Reconsideration, [12] 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 hand, filed his own Motion for Partial Reconsideration,
[13]
praying that he be paid the nine (9)-month basic salary, as
awarded by the LA.
On April 20, 2005, a resolution[14] 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.
SO ORDERED.[15]
Respondents filed a Motion for Reconsideration, which the
NLRC denied.
Undaunted, respondents filed a petition for certiorari[16] 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 unexpired term is applicable. [17]
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.
Costs against Petitioners.[18]
Both parties filed their respective motions for reconsideration,
which the CA, however, denied in its Resolution[19] 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 year of the
unexpired term threshold.[20]

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 paragraph of Section 10 of R.A. No. 8042 in
the case of Serrano v. Gallant Maritime Services, Inc. [21] on March 24,
2009.
Apparently, unaware of our ruling in Serrano, petitioner claims
that the 5th paragraph of Section 10, R.A. No. 8042, is violative of
Section 1,[22] Article III and Section 3, [23] 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 the lesser
relief of three months for every year of the unexpired term. [24]
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 Intermare the
sum of US$8,970.00 or its peso equivalent. [25]
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 be allowed under
the circumstances.[26]
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 one classification of OFWs
and burdens it with a peculiar disadvantage.[27]
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 Constitution.[28] 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 Products, Inc. v. Fertiphil
Corporation,[29] 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
municipality in reliance upon a law creating it.[30]
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 lumpsum 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 raised for the first time on appeal. [31]
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 holidays.[32]

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 allowance.[33] 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.
We ought to be reminded of the plight and sacrifices of our
OFWs. In Olarte v. Nayona,[34] 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

hereby AFFIRMED. No costs.

month.

All

other

awards

are

SO ORDERED.
EN BANC
G.R. Nos. L-58674-77 July 11, 1990
PEOPLE OF THE PHILIPPINES, petitioner,
vs.
HON. DOMINGO PANIS, Presiding Judge of the Court of First
Instance of Zambales & Olongapo City, Branch III and SERAPIO
ABUG, respondents.
CRUZ, J:
The basic issue in this case is the correct interpretation of Article
13(b) of P.D. 442, otherwise known as the Labor Code, reading as
follows:
(b) Recruitment and placement' refers to any act of
canvassing, enlisting, contracting, transporting, hiring,
or procuring workers, and includes referrals, contract
services, promising or advertising for employment, locally
or abroad, whether for profit or not: Provided, That any
person or entity which, in any manner, offers or promises
for a fee employment to two or more persons shall be
deemed engaged in recruitment and placement.
Four informations were filed on January 9, 1981, in the Court of
First Instance of Zambales and Olongapo City alleging that Serapio
Abug, private respondent herein, "without first securing a license
from the Ministry of Labor as a holder of authority to operate a feecharging employment agency, did then and there wilfully, unlawfully
and criminally operate a private fee charging employment agency by
charging fees and expenses (from) and promising employment in

Saudi Arabia" to four separate individuals named therein, in

violation of Article 16 in relation to Article 39 of the Labor Code. 1
Abug filed a motion to quash on the ground that the informations
did not charge an offense because he was accused of illegally
recruiting only one person in each of the four informations. Under
the proviso in Article 13(b), he claimed, there would be illegal
recruitment only "whenever two or more persons are in any manner
promised or offered any employment for a fee. " 2
Denied at first, the motion was reconsidered and finally granted in
the Orders of the trial court dated June 24 and September 17,
1981. The prosecution is now before us on certiorari. 3
The posture of the petitioner is that the private respondent is being
prosecuted under Article 39 in relation to Article 16 of the Labor
Code; hence, Article 13(b) is not applicable. However, as the first
two cited articles penalize acts of recruitment and placement
without proper authority, which is the charge embodied in the
informations, application of the definition of recruitment and
placement in Article 13(b) is unavoidable.
The view of the private respondents is that to constitute recruitment
and placement, all the acts mentioned in this article should involve
dealings with two or mre persons as an indispensable requirement.
On the other hand, the petitioner argues that the requirement of
two or more persons is imposed only where the recruitment and
placement consists of an offer or promise of employment to such
persons and always in consideration of a fee. The other acts
mentioned in the body of the article may involve even only one
person and are not necessarily for profit.
Neither interpretation is acceptable. We fail to see why the proviso
should speak only of an offer or promise of employment if the
purpose was to apply the requirement of two or more persons to all
the acts mentioned in the basic rule. For its part, the petitioner
does not explain why dealings with two or more persons are needed

where the recruitment and placement consists of an offer or

promise of employment but not when it is done through
"canvassing, enlisting, contracting, transporting, utilizing, hiring or
procuring (of) workers.
As we see it, the proviso was intended neither to impose a condition
on the basic rule nor to provide an exception thereto but merely to
create a presumption. The presumption is that the individual or
entity is engaged in recruitment and placement whenever he or it is
dealing with two or more persons to whom, in consideration of a fee,
an offer or promise of employment is made in the course of the
"canvassing, enlisting, contracting, transporting, utilizing, hiring or
procuring (of) workers. "
The number of persons dealt with is not an essential ingredient of
the act of recruitment and placement of workers. Any of the acts
mentioned in the basic rule in Article 13(b) win constitute
recruitment and placement even if only one prospective worker is
involved. The proviso merely lays down a rule of evidence that where
a fee is collected in consideration of a promise or offer of
employment to two or more prospective workers, the individual or
entity dealing with them shall be deemed to be engaged in the act of
recruitment and placement. The words "shall be deemed" create
that presumption.
This is not unlike the presumption in article 217 of the Revised
Penal Code, for example, regarding the failure of a public officer to
produce upon lawful demand funds or property entrusted to his
custody. Such failure shall be prima facie evidence that he has put
them to personal use; in other words, he shall be deemed to have
malversed such funds or property. In the instant case, the word
"shall be deemed" should by the same token be given the force of a
disputable presumption or of prima facie evidence of engaging in
recruitment and placement. (Klepp vs. Odin Tp., McHenry County
40 ND N.W. 313, 314.)

It is unfortunate that we can only speculate on the meaning of the

questioned provision for lack of records of debates and deliberations
that would otherwise have been available if the Labor Code had
been enacted as a statute rather than a presidential decree. The
trouble with presidential decrees is that they could be, and
sometimes were, issued without previous public discussion or
consultation, the promulgator heeding only his own counsel or
those of his close advisers in their lofty pinnacle of power. The not
infrequent results are rejection, intentional or not, of the interest of
the greater number and, as in the instant case, certain esoteric
provisions that one cannot read against the background facts
usually reported in the legislative journals.
At any rate, the interpretation here adopted should give more force
to the campaign against illegal recruitment and placement, which
has victimized many Filipino workers seeking a better life in a
foreign land, and investing hard- earned savings or even borrowed
funds in pursuit of their dream, only to be awakened to the reality
of a cynical deception at the hands of theirown countrymen.
WHEREFORE, the Orders of June 24, 1981, and September 17,
1981, are set aside and the four informations against the private
respondent reinstated. No costs.
SO ORDERED.
SECOND DIVISION
[G.R. No. 109583. September 5, 1997]
TRANS ACTION OVERSEAS CORPORATION, petitioner, vs. THE
HONORABLE

SECRETARY

OF

CASTIGADOR,

JOSEFINA

MAMON,

LABOR,

ROSELLE

JENELYN

CASA,

PEACHY LANIOG, VERDELINA BELGIRA, ELMA FLORES,

RAMONA LITURCO, GRACE SABANDO, GLORIA PALMA,

AVELYN

ALVAREZ,

CANDELARIA

NONO,NITA

BUSTAMANTE, CYNTHIA ARANDILLO, SANDIE AGUILAR,

DIGNA PANAGUITON, VERONICA BAYOGOS, JULIANITA
ARANADOR, LEONORA CABALLERO, NANCY BOLIVAR,
NIMFA

BUCOL,

ZITA

GALINDO,

ESTELITA

BIOCOS,

MARJORIE MACATE,RUBY SEPULVIDA, ROSALIE SONDIA,

NORA

MAQUILING,

PAULINA

CORDERO,

LENIROSE

ABANGAN, SELFA PALMA, ANTONIA NAVARRO, ELSIE

PENARUBIA, IRMA SOBREQUIL, SONY JAMUAT, CLETA
MAYO, respondents.
DECISION
ROMERO, J.:
The issue presented in the case at bar is whether or not the
Secretary of Labor and Employment has jurisdiction to cancel or
revoke the license of a private fee-charging employment agency.
From July 24 to September 9, 1987, petitioner Trans Action
Overseas Corporation, a private fee-charging employment agency,
scoured Iloilo City for possible recruits for alleged job vacancies in
Hongkong. Private respondents sought employment as domestic
helpers through petitioners employees, Luzviminda Aragon, Ben
Hur Domincil and his wife Cecille. The applicants paid placement
fees ranging from P1,000.00 to P14,000.00, but petitioner failed to
deploy them. Their demands for refund proved unavailing; thus,
they were constrained to institute complaints against petitioner for
violation of Articles 32 and 34(a)[1] of the Labor Code, as amended.
Petitioner denied having received the amounts allegedly collected
from respondents, and averred that Aragon, whose only duty was to
pre-screen and interview applicants, and the spouses Domincil were
not authorized to collect fees from the applicants. Accordingly, it

cannot
be
held
liable
for
the
money
claimed
by
respondents. Petitioner maintains that it even warned respondents
not to give any money to unauthorized individuals.
POEA Regional Extension Unit Coordinator Edgar Somes
testified that although he was aware that petitioner collected fees
from respondents, the latter insisted that they be allowed to make
the payments on the assumption that it could hasten their
deployment abroad. He added that Mrs. Honorata Manliclic, a
representative of petitioner tasked to oversee the conduct of the
interviews, told him that she was leaving behind presigned receipts
to Aragon as she cannot stay in Iloilo City for the screening of the
applicants. Manliclic, however, denied this version and argued that
it was Somes who instructed her to leave the receipts behind as it
was perfectly alright to collect fees.
On April 5, 1991, then Labor Undersecretary Nieves R. Confesor
rendered the assailed order, the dispositive portion of which reads:
WHEREFORE, respondents are hereby ordered to pay, jointly and
severally, the following claims:
1. Rosele Castigador P14,000.00
2. Josefina Mamon 3,000.00
3. Jenelyn Casa 3,000.00
4. Peachy Laniog 13,500.00
5. Verdelina Belgira 2,000.00
6. Elma Flores 2,500.00
7. Ramona Liturco 2,500.00
8. Grace Sabando 3,500.00
9. Gloria Palma 1,500.00
10. Avelyn Alvarez 1,500.00
11. Candelaria Nono 1,000.00
12. Nita Bustamante 5,000.00
13. Cynthia Arandillo 1,000.00

14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
28.
29.
30.
31.
32.
33.

Sandie Aguilar 3,000.00

Digna Panaguiton 2,500.00
Veronica Bayogos 2,000.00
Sony Jamuat 4,500.00
Irma Sobrequil 2,000.00
Elsie Penarubia 2,000.00
Antonia Navarro 2,000.00
Selfa Palma 3,000.00
Lenirose Abangan 13,300.00
Paulina Cordero 1,400.00
Nora Maquiling 2,000.00
Rosalie Sondia 2,000.00
Ruby Sepulvida 3,500.00
Marjorie Macate 1,500.00
Estelita Biocos 3,000.00
Zita Galindo 3,500.00
Nimfa Bucol 1,000.00
Nancy Bolivar 2,000.00
Leonora Caballero 13,900.00
Julianita Aranador 14,000.00

The complaints of Ma. Luz Alingasa, Nimfa Perez, and Cleta

Mayo are hereby dismissed in view of their desistance.
The following complaints are hereby dismissed for failure to
appear/prosecute:
1.
2.
3.
4.
5.

Jiyasmin Bantillo 6. Edna Salvante

Rosa de Luna Senail 7. Thelma Beltiar
Elnor Bandojo 8. Cynthia Cepe
Teresa Caldeo 9. Rosie Pavillon
Virginia Castroverde

The complaints filed by the following are hereby dismissed for

lack of evidence:

1. Aleth Palomaria 5. Mary Ann Beboso

2. Emely Padrones 6. Josefina Tejero
3. Marybeth Aparri 7. Bernadita Aprong
4. Lenia Biona 8. Joji Lull
Respondent agency is liable for twenty eight (28) counts of violation
of Article 32 and five (5) counts of Article 34 (a) with a
corresponding suspension in the aggregate period of sixty six (66)
months. Considering however, that under the schedule of penalties,
any suspension amounting to a period of 12 months merits the
imposition of the penalty of cancellation, the license of respondent
TRANS ACTION OVERSEAS CORPORATION to participate in the
overseas placement and recruitment of workers is hereby ordered
CANCELLED, effective immediately.
SO ORDERED.[2] (Underscoring supplied)
On April 29, 1991, petitioner filed its Motion for Temporary
Lifting of Order of Cancellation alleging, among other things, that to
deny it the authority to engage in placement and recruitment
activities would jeopardize not only its contractual relations with its
foreign principals, but also the welfare, interests, and livelihood of
recruited workers scheduled to leave for their respective
assignments. Finally, it manifested its willingness to post a bond to
insure payment of the claims to be awarded, should its appeal or
motion be denied.
Finding the motion to be well taken, Undersecretary Confesor
provisionally lifted the cancellation of petitioners license pending
resolution of its Motion for Reconsideration filed on May 6,
1991. On January 30, 1992, however, petitioners motion for
reconsideration was eventually denied for lack of merit, and the
April 5, 1991, order revoking its license was reinstated.
Petitioner contends that Secretary Confesor acted with grave
abuse of discretion in rendering the assailed orders on alternative

grounds, viz.: (1) it is the Philippine Overseas Employment

Administration (POEA) which has the exclusive and original
jurisdiction to hear and decide illegal recruitment cases, including
the authority to cancel recruitment licenses, or (2) the cancellation
order based on the 1987 POEA Schedule of Penalties is not valid for
non-compliance with the Revised Administrative Code of 1987
regarding its registration with the U.P. Law Center.
Under Executive Order No. 797[3] (E.O. No. 797) and Executive
Order No. 247 (E.O. No. 247),[4] the POEA was established and
mandated to assume the functions of the Overseas Employment
Development Board (OEDB), the National Seamen Board (NSB), and
the overseas employment function of the Bureau of Employment
Services (BES). Petitioner theorizes that when POEA absorbed the
powers of these agencies, Article 35 of the Labor Code, as amended,
was rendered ineffective.
The power to suspend or cancel any license or authority to
recruit employees for overseas employment is vested upon the
Secretary of Labor and Employment. Article 35 of the Labor Code,
as amended, which provides:
ART. 35. Suspension and/or Cancellation of License or Authority. The Minister of Labor shall have the power to suspend or cancel any
license or authority to recruit employees for overseas employment
for violation of rules and regulations issued by the Ministry of
Labor, the Overseas Employment Development Board, and the
National Seamen Board, or for violation of the provisions of this and
other applicable laws, General Orders and Letters of Instructions.
In the case of Eastern Assurance and Surety Corp. v. Secretary
of Labor,[5] we held that:
The penalties of suspension and cancellation of license or authority
are prescribed for violations of the above quoted provisions, among

others. And the Secretary of Labor has the power under Section 35
of the law to apply these sanctions, as well as the authority,
conferred by Section 36, not only to restrict and regulate the
recruitment and placement activities of all agencies, but also to
promulgate rules and regulations to carry out the objectives and
implement the provisions governing said activities. Pursuant to this
rule-making power thus granted, the Secretary of Labor gave the
POEA,[6] on its own initiative or upon filing of a complaint or report
or upon request for investigation by any aggrieved person, x x
(authority to) conduct the necessary proceedings for the suspension
or cancellation of the license or authority of any agency or entity for
certain enumerated offenses including 1) the imposition or acceptance, directly or indirectly, of any amount
of money, goods or services, or any fee or bond in excess of what is
prescribed by the Administration, and
2) any other violation of pertinent provisions of the Labor Code and
other relevant laws, rules and regulations.[7]
The Administrator was also given the power to order the
dismissal of the case or the suspension of the license or authority
of the respondent agency or contractor or recommend to the
Minister the cancellation thereof.[8] (Underscoring supplied)
This power conferred upon the Secretary of Labor and
Employment was echoed in People v. Diaz,[9] viz.:
A non-licensee or non-holder of authority means any person,
corporation or entity which has not been issued a valid license or
authority to engage in recruitment and placement by the Secretary
of Labor, or whose license or authority has been suspended,
revoked or cancelled by the POEA or the Secretary. (Underscoring
supplied)

In view of the Courts disposition on the matter, we rule that the

power to suspend or cancel any license or authority to recruit
employees for overseas employment is concurrently vested with the
POEA and the Secretary of Labor.
As regards petitioners alternative argument that the non-filing of
the 1987 POEA Schedule of Penalties with the UP Law Center
rendered it ineffective and, hence, cannot be utilized as basis for
penalizing them, we agree with Secretary Confesors explanation, to
wit:
On the other hand, the POEA Revised Rules on the Schedule of
Penalties was issued pursuant to Article 34 of the Labor Code, as
amended. The same merely amplified and particularized the various
violations of the rules and regulations of the POEA and clarified and
specified the penalties therefore (sic). Indeed, the questioned
schedule of penalties contains only a listing of offenses. It does not
prescribe additional rules and regulations governing overseas
employment but only detailed the administrative sanctions
imposable by this Office for some enumerated prohibited acts.
Under the circumstances, the license of the respondent agency
was cancelled on the authority of Article 35 of the Labor Code, as
amended, and not pursuant to the 1987 POEA Revised Rules on
Schedule of Penalties.[10]
WHEREFORE, in view of the foregoing, the instant petition is
hereby DISMISSED. Accordingly, the decision of the Secretary of
Labor dated April 5, 1991, is AFFIRMED. No costs.
SO ORDERED.
FIRST DIVISION

REPUBLIC OF THE PHILIPPINES, G.R. No. 167639

represented by the ADMINISTRATOR
OF THE PHILIPPINE OVERSEAS
EMPLOYMENT ADMINISTRATION
(POEA),
Petitioner, Present:
Panganiban, C.J. (Chairperson),
- versus - Ynares-Santiago,

Austria-Martinez,
Callejo, Sr., and
Chico-Nazario, JJ.

PRINCIPALIA MANAGEMENT AND

PERSONNEL CONSULTANTS, Promulgated:
INCORPORATED,
Respondent. April 19, 2006
x
--------------------------------------------------------------------------------------- x
DECISION

YNARES-SANTIAGO, J.:

Petitioner assails the September 20, 2004 Resolution [1] 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 and transcripts of the hearings, as well as the March 29,
2005 Resolution[2] 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 0307-1497. The second complaint dated October 14, 2003 filed by
Rafael E. Baldoza (Baldoza) was docketed as POEA Case No. RV 0307-1453.
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 deploy
Concha for employment abroad.[3]
In its March 15, 2004 Order,[4] 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.

Baldoza initiated the second complaint on October 14,

2003[5] 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, however, failed to deploy Baldoza as agreed
hence, in an Order dated April 29, 2004, [6] the POEA suspended
Principalias documentary processing.
Principalia moved for reconsideration which the POEA granted
on June 25, 2004.[7] 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,
Principalia
filed
a
[8]
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.
On June 14, 2004,[9] 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
imposing the suspension orders before the matter can be heard in
full. On June 17, 2004,[10] 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.
SO ORDERED.[11]

After the hearing on the preliminary injunction, Administrator

Baldoz
and
Atty.
Abara
submitted
their
Memorandum
(Memorandum).[12] In an Order dated July 2, 2004, [13] 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-03-071497, 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,
Memorandum.

defendants

submitted

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.
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. RV03-07-1497, 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 unless a contrary
Order is issued by this court.[14] (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.
POEA appealed to the Court of Appeals which was
dismissed[15] 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
motion for reconsideration was denied[16]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 THE
REVERSAL OF THE PRESUMPTION OF REGULARITY OF
AN OFFICIAL ACT.[17]

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 noncompliance 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 quasi-judicial
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, 2004,[18] POEA only attached the TSN dated June 30, 2004,
[19]
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 occurrence in our

jurisdiction.[20] Indeed, if we apply the Rules strictly, we cannot fault

the Court of Appeals for dismissing the petition [21] 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 immediate implementation of the
suspension of its license continues.[22]
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 Filipinoapplicants. 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 are not specified by law and he is given unlimited
discretion.[23] 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.

FIRST DIVISION
SANTOSA B. DATUMAN,
Petitioner,

G.R. No. 156029

Present:

versus

FIRST
COSMOPOLITAN
MANPOWER
AND
PROMOTION
SERVICES,
INC.,
Respondent.

PUNO, C.J.,*
CARPIO,**
AUSTRIA-MARTINEZ,***
CORONA,
CARPIO MORALES,*** and
LEONARDO-DE
CASTRO, JJ.

Promulgated:
November 14, 2008

x----------------------------------------------------------------------------------------x
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[1] datedAugust 7, 2002, in CA-G.R. SP No.
59825, setting aside the Decision of the National Labor Relations
Commission (NLRC).
The facts are as follows:
Sometime in 1989, respondent First Cosmopolitan Manpower
& Promotion Services, Inc. recruited petitioner Santosa B. Datuman
to work abroad under the following terms and conditions:
Site of employment - Bahrain
Employees Classification/Position/Grade - Saleslady
Basic Monthly Salary - US$370.00
Duration of Contract - One (1) year
Foreign Employer - Mohammed Sharif Abbas Ghulam
Hussain[2]

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

paying the required placement fee. However, her employer
Mohammed Hussain took her passport when she arrived there; and
instead of working as a saleslady, she was forced to work as a
domestic helper with a salary of Forty Bahrain Dinar (BD40.00),

equivalent only to One Hundred US Dollars (US$100.00). This was

contrary to the agreed salary of US$370.00 indicated in her
Contract of Employment signed in the Philippines and approved by
the Philippine Overseas Employment Administration (POEA). [3]
On September 1, 1989, her employer compelled her to sign
another contract, transferring her to another employer as
housemaid with a salary of BD40.00 for the duration of two (2)
years.[4] She pleaded with him to give her a release paper and to
return her passport but her pleas were unheeded. Left with no
choice, she continued working against her will. Worse, she even
worked without compensation from September 1991 to April 1993
because of her employers continued failure and refusal to pay her
salary despite demand. In May 1993, she was able to finally return
to the Philippines through the help of the Bahrain Passport and
Immigration Department.[5]
In May 1995, petitioner filed a complaint before the POEA
Adjudication Office against respondent for underpayment and
nonpayment of salary, vacation leave pay and refund of her plane
fare, docketed as Case No. POEA ADJ. (L) 95-05-1586. [6] While the
case was pending, she filed the instant case before the NLRC for
underpayment of salary for a period of one year and six months,
nonpayment of vacation pay and reimbursement of return airfare.
When the parties failed to arrive at an amicable settlement
before the Labor Arbiter, they were required to file their respective
position papers, subsequent pleadings and documentary exhibits.
In its Position Paper,[7] respondent countered that petitioner
actually agreed to work in Bahrain as a housemaid for one (1) year
because it was the only position available then. However, since such
position was not yet allowed by the POEA at that time, they
mutually agreed to submit the contract to the POEA indicating

petitioners position as saleslady. Respondent added that it was

actually petitioner herself who violated the terms of their contract
when she allegedly transferred to another employer without
respondents knowledge and approval. Lastly, respondent raised the
defense of prescription of cause of action since the claim was filed
beyond the three (3)-year period from the time the right accrued,
reckoned from either 1990 or 1991.[8]
On April 29, 1998, Labor Arbiter Jovencio Mayor, Jr. rendered
a Decision finding respondent liable for violating the terms of the
Employment Contract and ordering it to pay petitioner: (a) the
amount of US$4,050.00, or its equivalent rate prevailing at the time
of payment, representing her salary differentials for fifteen (15)
months; and, (b) the amount of BD 180.00 or its equivalent rate
prevailing at the time of payment, representing the refund of plane
ticket, thus:
From the foregoing factual backdrop, the only
crucial issue for us to resolve in this case is whether or
not complainant is entitled to her monetary claims.
xxx
In the instant case, from the facts and
circumstances laid down, it is thus self-evident that the
relationship of the complainant and respondent agency is
governed by the Contract of Employment, the basic terms
a covenants of which provided for the position of
saleslady, monthly compensation of US$370.00 and
duration of contract for one (1) year. As it is, when the
parties complainant and respondent Agency signed and
executed the POEA approved Contract of Employment,
this agreement is the law that governs them. Thus, when
respondent agency deviated from the terms of the
contract by assigning the position of a housemaid to
complainant instead of a saleslady as agreed upon in the

POEA-approved Contract of Employment, respondent

Agency committed a breach of said Employment
Contract. Worthy of mention is the fact that
respondent agency in their Position Paper paragraph
2, Brief Statement of the Facts and of the Case
admitted that it had entered into an illegal contract
with complainant by proposing the position of a
housemaid which said position was then not allowed
by the POEA, by making it appear in the Employment
Contract that the position being applied for is the
position of a saleslady. As it is, we find indubitably
clear that the foreign employer had took advantage to
the herein hopeless complainant and because of this
ordeal, the same obviously rendered complainants
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 Agencys liability for complainants
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 complainants 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$4050.00
We are also inclined to grant complainants entitlement to
a refund of her plane ticket in the amount of BD 180
Bahrain Dinar or the equivalent in Philippine Currency at
the rate of exchange prevailing at the time of payment.
Anent complainants claim for vacation leave pay and
overtime pay, we cannot, however, grant the same for
failure on the part of complainant to prove with
particularity the months that she was not granted
vacation leave and the day wherein she did render
overtime work.
Also, we could not grant complainants prayer for award of
damages and attorneys fees for lack of factual and legal
basis.
WHEREFORE, premises considered, judgment is hereby
rendered, finding respondent Agency liable for violating
the term of Employment Contract and respondent First
Cosmopolitan Manpower and Promotions is hereby
ordered:
To pay complainant the amount of US$ FOUR
THOUSAND AND FIFTY (US$4,050.00), or its equivalent
rate prevailing at the time of payment, representing her
salary differentials for fifteen (15) months;
To pay complainant the amount of BD 180.00 or its
equivalent rate prevailing at the time of payment,
representing the refund of plane ticket;

All other claims are hereby dismissed for lack of merit.

SO ORDERED.[9] (emphasis supplied)
On appeal, the NLRC, Second Division, issued a
Decision[10] 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, 1995when she arrived from the
jobsite in April 1993. Since the cause of action for salary
differential accrues at the time when it falls due, it is
clear that only the claims for the months of May 1993 to
April 1994 have not yet prescribed. With an approved
salary rate of US$370.00 vis--vis the amount of salary
received which was $100.00, complainant is entitled to
the salary differential for the said period in the amount
of $2,970.00.
xxx
WHEREFORE, premises considered, judgment is
hereby rendered MODIFYING the assailed Decision by
reducing the award of salary differentials to $2,970.00 to
the complainant.
The rest of the disposition is AFFIRMED.
SO ORDERED.[11]
On July 21, 2000, respondent elevated the matter to the CA
through a petition for certiorari under Rule 65.

On August 2, 2000,[12] the CA dismissed the petition for being

insufficient in form pursuant to the last paragraph of Section 3,
Rule 42 of the 1997 Rules of Civil Procedure, as amended.
On October 20, 2000,[13] however, the CA reinstated the petition
upon respondents motion for reconsideration. [14]
On August 7, 2002, the CA issued the assailed
Decision[15] granting the petition and reversing the NLRC and the
Labor Arbiter, thus:
Under Section 1 (f), Rule II, Book II of the 1991 POEA
Rules and Regulations, the local agency shall assume
joint and solidary liability with the employer for all claims
and liabilities which may arise in connection with the
implementation of the contract, including but not limited
to payment of wages, health and disability compensation
and repatriation.
Respondent Commission was correct in declaring
that claims of private respondent for salary differentials
accruing earlier than April of 1993 had indeed
prescribed. It must be noted that petitioner company is
privy only to the first contract. Granting arguendo that
its liability extends to the acts of its foreign principal, the
Towering Recruiting Services, which appears to have a
hand in the execution of the second contract, it is Our
considered opinion that the same would, at the most,
extend only up to the expiration of the second contract or
until 01 September 1991.Clearly, the money claims
subject of the complaint filed in 1995 had prescribed.
However, this Court declares respondent Commission as
not only having abused its discretion, but as being

without jurisdiction at all, in declaring private

respondent entitled to salary differentials. After decreeing
the money claims accruing before April 1993 as having
prescribed, it has no more jurisdiction to hold petitioner
company for salary differentials after that period.To
reiterate, the local agency shall assume joint and solidary
liability with the employer for all claims and liabilities
which may arise in connection with the implementation
of the contract.Which contract? Upon a judicious
consideration, we so hold that it is only in connection
with the first contract. The provisions in number 2,
Section 10 (a), Rule V, Book I of the Omnibus Rules
Implementing the Labor Code Section 1 (f), Rule II, Book
II of the 1991 POEA Rules and Regulations were not
made to make the local agency a perpetual insurer
against all untoward acts that may be done by the foreign
principal or the direct employer abroad. It is only as
regards the principal contract to which it is privy shall its
liability extend. In Catan v. National Labor Relations
Commission, 160 SCRA 691 (1988), it was held that the
responsibilities of the local agent and the foreign
principal towards the contracted employees under the
recruitment agreement extends up to and until the
expiration of the employment contracts of the employees
recruited and employed pursuant to the said recruitment
agreement.
xxx
Foregoing considered, the assailed Decision dated 24
February 2000 and the Resolution dated 23 June 2000 of
respondent Commission in NLRC NCR CA 016354-98 are
hereby SET ASIDE.

SO ORDERED.[16]
Petitioners Motion for Reconsideration[17] thereon was denied in
the assailed Resolution[18] 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 petitioners money claims pursuant
to their Contract of Employment.
We grant the petition.

On whether respondent is solidarily

liable for petitioners monetary claims
Section 1 of Rule II of the POEA Rules and Regulations states
that:

Section 1. Requirements for Issuance of License. Every

applicant for license to operate a private employment
agency or manning agency shall submit a written
application together with the following requirements:

xxx
f. A verified undertaking stating that the applicant:
xxx
(3) Shall assume joint and solidary liability with the
employer for all claims and liabilities which may arise
in connection with the implementation of the
contract; including but not limited to payment of
wages, death
and
disability
compensation
and
repatriation. (emphasis supplied)

The above provisions are clear that the private employment

agency shall assume joint and solidary liability with the employer.
[19]
This Court has, time and again, ruled that private employment
agencies are held jointly and severally liable with the foreign-based
employer for any violation of the recruitment agreement or contract of
employment.[20] This joint and solidary liability imposed by law
against recruitment agencies and foreign employers is meant to
assure the aggrieved worker of immediate and sufficient payment of
what is due him.[21] This is in line with the policy of the state to
protect and alleviate the plight of the working class.

In the assailed Decision, the CA disregarded the aforecited provision

of the law and the policy of the state when it reversed the findings of
the NLRC and the Labor Arbiter. As the agency which recruited
petitioner, respondent is jointly and solidarily liable with the latters
principal
employer
abroad
for
her
(petitioners)
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 POEA-approved
contract and any continuation of petitioners employment beyond
the original one-year term, against the will of petitioner, are
continuing breaches of the original POEA-approved contract. To
accept the CAs 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
workers arrival in the country of employment. Such outcome is
certainly contrary to the States policy of extending protection and
support to our overseas workers. To be sure, Republic Act No. 8042
explicitly prohibits the substitution or alteration to the prejudice of
the worker of employment contracts already approved and verified
by the Department of Labor and Employment (DOLE) from the time
of actual signing thereof by the parties up to and including the
period of the expiration of the same without the approval of the
DOLE.[22]

Respondents contention that it was petitioner herself who

violated their Contract of Employment when she signed another
contract in Bahrain deserves scant consideration.It is the finding of
both the Labor Arbiter and the NLRC which, significantly, the CA
did not disturb that petitioner was forced to work long after the
term of her original POEA-approved contract, through the illegal
acts of the foreign employer.
In Placewell International Services Corporation v. Camote,[23] we
held that the subsequently executed side agreement of an overseas
contract worker with her foreign employer which reduced his salary
below the amount approved by the POEA is void because it is
against our existing laws, morals and public policy. The said side
agreement cannot supersede the terms of the standard employment
contract approved by the POEA.
Hence, in the present case, the diminution in the salary of
petitioner from US$370.00 to US$100 (BD 40.00) per month is void
for violating the POEA-approved contract which set the minimum
standards, terms, and conditions of her employment. Consequently,
the solidary liability of respondent with petitioners foreign employer
for petitioners money claims continues although she was forced to
sign another contract in Bahrain. It is the terms of the original
POEA-approved employment contract that shall govern the
relationship of petitioner with the respondent recruitment agency
and the foreign employer. We agree with the Labor Arbiter and the
NLRC that the precepts of justice and fairness dictate that
petitioner must be compensated for all months worked regardless of
the supposed termination of the original contract in April 1990. It is
undisputed that petitioner was compelled to render service until
April 1993 and for the entire period that she worked for the foreign
employer or his unilaterally appointed successor, she should have
been paid US$370/month for every month worked in accordance
with her original contract.

Respondent cannot disclaim liability for the acts of the foreign

employer which forced petitioner to remain employed in violation of
our laws and under the most oppressive conditions on the
allegation that it purportedly had no knowledge of, or participation
in, the contract unwillingly signed by petitioner abroad. We cannot
give credence to this claim considering that respondent by its own
allegations knew from the outset that the contract submitted to the
POEA for approval was not to be the real contract.Respondent
blithely admitted to submitting to the POEA a contract stating that
the position to be filled by petitioner is that of Saleslady although
she was to be employed as a domestic helper since the latter
position was not approved for deployment by the POEA at that
time. Respondents 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 agencys 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 agencys 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 petitioners 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 petitioners 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 petitioners causes of action was for underpayment
of salaries. The NLRC correctly ruled the right to claim unpaid
salaries (or in this case, unpaid salary differentials) accrue as they
fall due.[24] Thus, petitioners 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 respondents 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 respondents foreign principal, i.e. 1991. We have
discussed previously the reasons why (a) the CAs 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 petitioners right to
claim salary differentials has not prescribed, we must count three
years prior to the filing of the complaint on May 31, 1995. Thus,
only claims accruing prior to May 31, 1992 have prescribed when
the complaint was filed on May 31, 1995. Petitioner is entitled to
her claims for salary differentials for the period May 31, 1992 to
April 1993, or approximately eleven (11) months. [25]
We find that the NLRC correctly computed the salary differential
due to petitioner at US$2,970.00 (US$370.00 as approved salary
rate US$100.00 as salary received = US$290 as underpaid salary
per month x 11 months). However, it should be for the period May
31, 1992 to April 1993 and not May 1993 to April 1994 as
erroneously stated in the NLRCs Decision.
A final note
This Court reminds local recruitment agencies that it is their
bounden duty to guarantee our overseas workers that they are
being recruited for bona fide jobs with bona fideemployers. 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.
SECOND DIVISION

STOLT-NIELSEN
TRANSPORTATION
GROUP, INC. AND CHUNG
GAI SHIP MANAGEMENT,
Petitioners,

-versus-

G.R. No. 177498

Present:
CARPIO, J.,
Chairperson,
PEREZ,
SERENO,
REYES, and
PERLAS-BERNABE,JJ.*
Promulgated:

SULPECIO MEDEQUILLO,
JR.,
Respondent.

January 18, 2012

x-----------------------------------------------x

DECISION
PEREZ, J.:
Before the Court is a Petition for Review on Certiorari1 of the
Decision2 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
February 28, 2003 and the Resolution dated July 27,
2005 are AFFIRMED.3
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 complaint-affidavit, 4 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, petitioners failed to
submit their respective pleadings despite the opportunity given to
them.5
On 21 July 2000, Labor Arbiter Vicente R. Layawen rendered a
judgment6 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:

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

payment.7

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 of the second
contract.8 However, he ruled that there was no substantial evidence
to grant the prayer for moral and exemplary damages. 9
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 respondent was exorbitant and not
in accordance with law.10
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).
In all other respects, the assailed decision so stands
as, AFFIRMED.11

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 before the POEA, the only notice they received was a
copy of the decision of the Labor Arbiter. 12
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 notice of change of
address was served on the POEA.13
The NLRC upheld the finding of unjustified termination of contract
for failure on the part of the petitioners to present evidence that
would justify their non-deployment of the respondent. 14 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 and Overseas
Filipinos Act of 1995 which provides for such limitation. 15
However, the NLRC upheld the reduction of the monetary award
with respect to the deletion of the overtime pay due to the nondeployment of the respondent.16
The Partial Motion for Reconsideration filed by the petitioners
was denied by the NLRC in its Resolution dated 27 July 2005. 17
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 PENALIZES SUCH
OMISSION WITH A MERE REPRIMAND.18
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
4. There must be the validity of the new contract. 19

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 definitely liable for the breach of the
second contract.20
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 second contract.21

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 Commission,22 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 and, without justifiable
reason, ought not to be altered, modified or reversed.
(Emphasis supplied)23
With the finding that respondent was still employed under the
first contract when he negotiated with petitioners on the second
contract,24 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 reasonable
mind might accept as adequate to justify a conclusion. 25 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, they
may be examined by the courts.26 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 contract was already time-barred.27

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 condition for the
commencement of the employment.28 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 other, to give something or to
render some service.29 The contracting parties may establish such
stipulations, clauses, terms and conditions as they may deem
convenient, provided they are not contrary to law, morals, good
customs, public order, or public policy. 30
The POEA Standard Employment Contract provides that
employment shall commence upon the actual departure of the
seafarer from the airport or seaport in the port of hire. 31 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 their
nature, may be in keeping with good faith, usage and law. 32
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 nondeployment 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 non-deployment, for no evidence
to prove the same was presented.33
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, he would be liable for damages. 34
Further, we do not agree with the contention of the petitioners
that the penalty is a mere reprimand.

The POEA Rules and Regulations Governing Overseas

Employment35 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)

The appellate court correctly ruled that the penalty of

reprimand36 provided under Rule IV, Part VI of the POEA Rules and
Regulations Governing the Recruitment and Employment of Landbased 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 deploy him. 37
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. 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 employeremployee 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 worth of salary
as provided in the contract.38 This is but proper because of the nondeployment of respondent without just cause.
WHEREFORE, the appeal is DENIED. The 31 January 2007
Decision of the Court of Appeals in CA-G.R. SP. No. 91632 is
herebyAFFIRMED. 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.
FIRST DIVISION
[G.R. No. 121777. January 24, 2001]
THE
PEOPLE
OF
THE
PHILIPPINES, plaintiff-appellee,
vs. CAROL M. DELA PIEDRA, accused-appellant.
DECISION
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 economic
sabotage in that the same were committed in large scale. [1]
Arraigned on June 20, 1994, the accused pleaded not guilty [2] 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 houses 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 by having Fermindoza pose as an applicant. [3]
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 given a bio-data form, which will serve as the teams
cue to enter the house.[4]
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 papers[5] on the table.[6]
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 when asked by the investigators.[8] A check by Ramos with
the POEA revealed that the acused was not licensed or authorized
to conduct recruitment.[9] A certification[10] dated February 2, 1994
stating thus was executed by Renegold M. Macarulay, Officer-inCharge 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 written statements.[11]
At the trial, Nancy Araneta, 23, recounted that she was at
Jasmine Alejandros 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 Jasmines 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 witness the arrest since she was at the porch when it
happened.[12]
Maria Lourdes Modesto, 26, was also in Jasmine Alejandros
house on January 30, 1994. A friend of Jasmine had informed her
that there was someone recruiting in Jasmines house. Upon
arriving at the Alejandro residence, Lourdes was welcomed by
Jasmine.
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. Jasmine gave back the
money to Lourdes after the raid.[13]
Denial comprised the accuseds 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 Jasmines 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 Malicays 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 Malicays 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 Malicays 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 Jasmines 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 Jasmines 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 Jasmines 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 (Malicays) substitute. Ramos told the accused to
explain in their office.
The accused denied in court that she went to Jasmines
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 alleged applicants as processing fee. [14]
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 Malicays 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 applicants. She disclaimed any knowledge regarding
the P2,000 application fee.[15]
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 would sometimes go downtown alone. He said he did
not notice that she conducted any recruitment. [16]
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.
SO ORDERED.[17]
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 ACCUSED-APPELLANT 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 ACCUSED-APPELLANT,
HENCE, ACCUSED-APPELLANT SHOULD BE ACQUITTED;
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 ACCUSED-APPELLANT 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
CONSTITUTION.[18]
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 vagueness and, thus, violates
the due process clause.[19]
Due process requires that the terms of a penal statute must be
sufficiently explicit to inform those who are subject to it what
conduct on their part will render them liable to its penalties. [20] 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 void for vagueness. [21] The constitutional
vice in a vague or indefinite statute is the injustice to the accused in
placing him on trial for an offense, the nature of which he is given
no fair warning.[22]
We reiterated these principles in People vs. Nazario:[23]
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. Panis,[24] where this Court,
to use appellants 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.
Appellants 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 be prima 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 instrumentalities
necessary for its execution are within the reach of those intrusted
therewith.[25]
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 constitutionally permissible and the constitutionally
impermissible applications of the statute.[26]
In Blo Umpar Adiong vs. Commission on Elections,[27] 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.
Appellant also invokes the equal protection clause[28] in her
defense. She points out that although the evidence purportedly
shows that Jasmine Alejandro handed out application forms and
even received Lourdes Modestos 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 on its face may be grossly discriminatory in its
operation.[29] 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 Constitution.[30]
The prosecution of one guilty person while others equally guilty
are not prosecuted, however, is not, by itself, a denial of the equal
protection of the laws.[31] Where the official action purports to be in
conformity to the statutory classification, an erroneous or mistaken
performance of the statutory duty, although a violation of the
statute, is not without more a denial of the equal protection of the
laws.[32] 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
discrimination.[33] 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 prosecutions
sound assessment whether the evidence before it can justify a
reasonable belief that a person has committed an offense. [34] The
presumption is that the prosecuting officers regularly performed
their duties,[35] 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
appellants 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 appellants
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 commission of a crime.[36]
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 enforcement of law would
suffer a complete breakdown.[37]
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 Code. [38]In case of illegal recruitment in large
scale, a third element is added: that the accused commits said acts
against three or more persons, individually or as a group. [39]
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 sustain that no improper motive

existed and that their testimony is worthy of full faith and credence.
[40]

Appellants denials cannot prevail over the positive declaration of

the prosecution witnesses. Affirmative testimony of persons who are
eyewitnesses of the fact asserted easily overrides negative testimony.
[41]

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 appellants 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 rendered inadmissible in evidence.
[42]
Here, even if the documents seized were deemed inadmissible,
her conviction would stand in view of Araneta and Modestos
testimonies.
Appellant attempts to cast doubt on the prosecutions 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 disfavor for it can easily be
concocted but difficult to prove. [43] 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 regularly in the absence of evidence to the contrary. [44]

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 recruitment of three or more persons
whether individually or as a group. [45] 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 more persons.[46] 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.
The affidavit[47] Baez executed jointly with Araneta cannot
support Aranetas testimony. The affidavit was neither identified, nor
its contents affirmed, by Baez. Insofar as it purports to prove that
appellant recruited Baez, therefore, the affidavit is hearsay and
inadmissible.[48] In any case, hearsay evidence, such as the said
affidavit, has little probative value.[49]
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
informed of the nature and cause of the accusation against her. [50]
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 well as to
identify the accused.[51]
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 Honor.[52]
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 prosecution.[53]
xxx
Courts may consider a piece of evidence only for the purpose for
which it was offered,[54] 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 is unconstitutional for being unduly harsh. [55]
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.

SO ORDERED.
THIRD DIVISION
ESTATE OF NELSON R. DULAY,
represented
by
his
wife
MERRIDY JANE P. DULAY,
Petitioner,

- versus

G.R. No. 172642

Present:
PERALTA, J., Acting Chairperson,*
ABAD,
VILLARAMA, JR.,**
MENDOZA, and
PERLAS-BERNABE, JJ.

ABOITIZ JEBSEN MARITIME,

Promulgated:
INC.
and
GENERAL
June 13, 2012
CHARTERERS, INC.,
Respondents.
x----------------------------------------------------------------------------------------x

DECISION

PERALTA, J.:
Before the Court is a petition for review on certiorari under Rule 45
of the Rules of Court seeking to reverse and set aside the
Decision[1] and Resolution[2] 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
Collective

through

the

Bargaining

grievance

procedure

Agreement

(CBA)

of

the

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 work-related. 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 employeremployee 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 CBA
but reversed the latters ruling as to the proximate cause
of Nelsons death.[3]

Herein

respondents

then

filed

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.
SO ORDERED.[4]

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

implementation

cases
of

arising

collective

from

the

bargaining

interpretation

agreements.

or

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 (Labor Code) treats in particular.[5] 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

application

conflict
of

any

in
of

the
the

interpretation
provisions

of

or
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 freedom to take appropriate action.
[6]

(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 to submit
a dispute to voluntary arbitration then that procedure should be
strictly observed.[7]
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

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 law which they are entrusted
to enforce, have the force of law, and are entitled to great respect.
[8]
Such rules and regulations partake of the nature of a statute and
are just as binding as if they have been written in the statute itself.
[9]
In the instant case, the Court finds no cogent reason to depart
from this rule.
The above interpretation of the DOLE, DFA and POEA is also in
consonance with the policy of the state to promote voluntary
arbitration as a mode of settling labor disputes.[10]
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 CA-G.R. SP No. 76489 dated
July 11, 2005 and April 18, 2006, respectively, are AFFIRMED.

SO ORDERED.

SECOND DIVISION
G.R. No. 162419
July 10, 2007
PAUL V. SANTIAGO, petitioner,
vs.
CF SHARP CREW MANAGEMENT, INC., respondent.
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 CA-G.R. SP No. 68404.1
Petitioner had been working as a seafarer for Smith Bell
Management, Inc. (respondent) for about five (5) years. 2On 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.
Kindly advise.3
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 to Seaspread. 4

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 its foreign principal, Cable
and Wireless (Marine) Ltd.5 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.
SO ORDERED.6
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, and attorneys fees should be dismissed. 7 On the
other hand, the NLRC found respondents decision not to deploy
petitioner to be a valid exercise of its management prerogative. 8 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.
SO ORDERED.9
Petitioner moved for the reconsideration of the NLRCs Decision but
his motion was denied for lack of merit.10 He elevated the case to
the Court of Appeals through a petition for certiorari.
In its Decision11 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), there is nothing more left in
the labor arbiters Decision to affirm.12
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
the POEA Rules.13 It agreed with the NLRCs finding that petitioners
non-deployment was a valid exercise of respondents management
prerogative.14 It added that since petitioner had not departed from
the Port of Manila, no employer-employee relationship between the
parties arose and any claim for damages against the so-called
employer could have no leg to stand on. 15
Petitioners subsequent motion for reconsideration was denied on
19 February 2004.16
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 established jurisprudence on the matter. 17
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 actual damages,
consisting of the stipulated salary and fixed overtime
pay.18Petitioner adds that since the contract is deemed
consummated, he should be considered an employee for all intents
and purposes, and thus the labor arbiter and/or the NLRC has
jurisdiction to take cognizance of his claims. 19
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 attaining the status of a
regular employee.20
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 executed an affidavit21 strongly
denying having called respondent, and that the other alleged callers
did not even disclose their identities to respondent. 22 Thus, it was

error for the Court of Appeals to adopt the unfounded conclusion of

the NLRC, as the same was not based on substantial evidence. 23
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 of contractual obligations and as such is
cognizable by civil courts.24 On another matter, respondent claims
that the second issue posed by petitioner involves a recalibration of
facts which is outside the jurisdiction of this Court. 25
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 no employer-employee
relationship was created between the parties. 26
However, a distinction must be made between the perfection of the
employment contract and the commencement of the employeremployee 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 who was not deployed by his agency.
The fact that the POEA Rules27 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 nondeployment 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 service," 28 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 of Stolt-Nielsen Marine Services (Phils.), Inc. v. National
Labor Relations Commission29 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 or even just lulling
away his time would be extremely unfair and unreasonable. 30
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 compelled
the plaintiff to incur expenses to protect his interest. 31 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 rights of the employees
under special laws or under valid agreements. 32 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 with respondent.
In Millares v. National Labor Relations Commission,33 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 they be
employed on a contractual basis.34
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.
EN BANC
G.R. No. 170139
August 5, 2014
SAMEER OVERSEAS PLACEMENT AGENCY, INC., Petitioner,
vs.
JOY C. CABILES, Respondent.
DECISION
LEONEN, J.:
This case involves an overseas Filipino worker with shattered
dreams. It is our duty, given the facts and the law, to approximate
justice for her.
We are asked to decide a petition for review1 on certiorari assailing
the Court of Appeals decision2 dated June 27, 2005. This decision
partially affirmed the National Labor RelationsCommissions

resolution dated March 31, 2004,3declaring respondents dismissal

illegal, directing petitioner to pay respondents three-month salary
equivalent to New Taiwan Dollar (NT$) 46,080.00, and ordering it to
reimburse the NT$3,000.00 withheld from respondent, and pay her
NT$300.00 attorneys fees.4
Petitioner, Sameer Overseas Placement Agency, Inc., is a
recruitment and placement agency.5 Responding to an ad it
published, respondent, Joy C. Cabiles, submitted her application
for a quality control job in Taiwan.6
Joys application was accepted.7 Joy was later asked to sign a
oneyear employment contract for a monthly salary of
NT$15,360.00.8 She alleged that Sameer Overseas Agency required
her to pay a placement fee of P70,000.00 when she signed the
employment contract.9
Joy was deployed to work for TaiwanWacoal, Co. Ltd. (Wacoal) on
June 26, 1997.10 She alleged that in her employment contract, she
agreed to work as quality control for one year.11 In Taiwan, she was
asked to work as a cutter.12
Sameer Overseas Placement Agencyclaims that on July 14, 1997, a
certain Mr. Huwang from Wacoal informedJoy, without prior notice,
that she was terminated and that "she should immediately report to
their office to get her salary and passport."13 She was asked to
"prepare for immediate repatriation."14
Joy claims that she was told that from June 26 to July 14, 1997,
she only earned a total of NT$9,000. 15 According to her, Wacoal
deducted NT$3,000 to cover her plane ticket to Manila. 16
On October 15, 1997, Joy filed a complaint 17 with the National
Labor Relations Commission against petitioner and Wacoal. She
claimed that she was illegally dismissed.18 She asked for the return
of her placement fee, the withheld amount for repatriation costs,
payment of her salary for 23 months as well as moral and
exemplary damages.19 She identified Wacoal as Sameer Overseas
Placement Agencys foreign principal. 20

Sameer Overseas Placement Agency alleged that respondent's

termination was due to her inefficiency, negligence in her duties,
and her "failure to comply with the work requirements [of] her
foreign [employer]."21 The agency also claimed that it did not ask for
a placement fee of P70,000.00.22 As evidence, it showedOfficial
Receipt No. 14860 dated June 10, 1997, bearing the amount
of P20,360.00.23 Petitioner added that Wacoal's accreditation with
petitioner had already been transferred to the Pacific Manpower &
Management Services, Inc. (Pacific) as of August 6, 1997. 24 Thus,
petitioner asserts that it was already substituted by Pacific
Manpower.25
Pacific Manpower moved for the dismissal of petitioners claims
against it.26 It alleged that there was no employer-employee
relationship between them.27 Therefore, the claims against it were
outside the jurisdiction of the Labor Arbiter.28 Pacific Manpower
argued that the employment contract should first be presented so
that the employers contractual obligations might be identified. 29 It
further denied that it assumed liability for petitioners illegal acts. 30
On July 29, 1998, the Labor Arbiter dismissed Joys
complaint.31 Acting Executive Labor Arbiter Pedro C.Ramos ruled
that her complaint was based on mereallegations.32 The Labor
Arbiter found that there was no excess payment of placement fees,
based on the official receipt presented by petitioner. 33 The Labor
Arbiter found unnecessary a discussion on petitioners transfer of
obligations to Pacific34 and considered the matter immaterial in view
of the dismissal of respondents complaint.35
Joy appealed36 to the National Labor Relations Commission.
In a resolution37 dated March 31, 2004, the National Labor
Relations Commission declared that Joy was illegally dismissed. 38 It
reiterated the doctrine that the burden of proof to show that the
dismissal was based on a just or valid cause belongs to the
employer.39 It found that Sameer Overseas Placement Agency failed
to prove that there were just causes for termination. 40 There was no
sufficient proofto show that respondent was inefficient in her work

and that she failed to comply with company

requirements.41 Furthermore, procedural dueprocess was not
observed in terminating respondent.42
The National Labor Relations Commission did not rule on the issue
of reimbursement of placement fees for lack of jurisdiction. 43 It
refused to entertain the issue of the alleged transfer of obligations
to Pacific.44 It did not acquire jurisdiction over that issue because
Sameer Overseas Placement Agency failed to appeal the Labor
Arbiters decision not to rule on the matter. 45
The National Labor Relations Commission awarded respondent only
three (3) months worth of salaryin the amount of NT$46,080, the
reimbursement of the NT$3,000 withheld from her, and attorneys
fees of NT$300.46
The Commission denied the agencys motion for
reconsideration47 dated May 12, 2004 through a resolution48 dated
July 2, 2004.
Aggrieved by the ruling, Sameer Overseas Placement Agency caused
the filing of a petition49 for certiorari with the Court of Appeals
assailing the National Labor Relations Commissions resolutions
dated March 31, 2004 and July 2, 2004.
The Court of Appeals50 affirmed the decision of the National Labor
Relations Commission with respect to the finding of illegal
dismissal, Joys entitlement to the equivalent of three months worth
of salary, reimbursement of withheld repatriation expense, and
attorneys fees.51 The Court of Appeals remanded the case to the
National Labor Relations Commission to address the validity of
petitioner's allegations against Pacific.52 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.
SO ORDERED.53
Dissatisfied, Sameer Overseas Placement Agency filed this
petition.54
We are asked to determine whether the Court of Appeals erred when
it affirmed the ruling of the National Labor Relations Commission
finding respondent illegally dismissed and awarding her three
months worth of salary, the reimbursement of the cost ofher
repatriation, and attorneys fees despite the alleged existence of just
causes of termination.
Petitioner reiterates that there was just cause for termination
because there was a finding of Wacoal that respondent was
inefficient in her work.55
Therefore, it claims that respondents dismissal was valid. 56
Petitioner also reiterates that since Wacoals accreditation was
validly transferred to Pacific at the time respondent filed her
complaint, it should be Pacific that should now assume
responsibility for Wacoals contractual obligations to the workers
originally recruited by petitioner.57

Sameer Overseas Placement Agencyspetition is without merit. We

find for respondent.
I
Sameer Overseas Placement Agency failed to show that there was
just cause for causing Joys dismissal. The employer, Wacoal, also
failed to accord her due process of law.
Indeed, employers have the prerogative to impose productivity and
quality standards at work.58 They may also impose reasonable rules
to ensure that the employees comply with these standards. 59 Failure
to comply may be a just cause for their dismissal. 60 Certainly,
employers cannot be compelled to retain the services of anemployee
who is guilty of acts that are inimical to the interest of the
employer.61 While the law acknowledges the plight and vulnerability
of workers, it does not "authorize the oppression or self-destruction
of the employer."62 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 tenure." 63Workers 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.
Security of tenure for labor is guaranteed by our Constitution. 64
Employees are not stripped of their security of tenure when they
move to work in a different jurisdiction. With respect to the rights of
overseas Filipino workers, we follow the principle of lex loci
contractus.Thus, in Triple Eight Integrated Services, Inc. v.
NLRC,65 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 decisionmaking processes affecting their rights and benefits as may be
provided by law.
....
This public policy should be borne in mind in this case because to
allow foreign employers to determine for and by themselves whether
an overseas contract worker may be dismissed on the ground of
illness would encourage illegal or arbitrary pretermination of
employment contracts.66 (Emphasis supplied, citation omitted)
Even with respect to fundamental procedural rights, this court
emphasized in PCL Shipping Philippines, Inc. v. NLRC, 67 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 case. 68 (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.
Petitioners allegation that respondentwas inefficient in her work
and negligent in her duties69 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 affirmatively show rationally
adequate evidence that the dismissal was for a justifiable
cause."70 Failure to show that there was valid or just cause for
termination would necessarily mean that the dismissal was illegal. 71
To show that dismissal resulting from inefficiency in work is valid, it
must be shown that: 1) the employer has set standards of conduct
and workmanship against which the employee will be judged; 2) the
standards of conduct and workmanship must have been
communicated tothe employee; and 3) the communication was
made at a reasonable time prior to the employees performance
assessment.
This is similar to the law and jurisprudence on probationary
employees, which allow termination ofthe employee only when there
is "just cause or when [the probationary employee] fails to qualify as
a regular employee in accordance with reasonable standards made
known by the employer to the employee at the time of his [or her]
engagement."72
However, we do not see why the application of that ruling should be
limited to probationary employment. That rule is basic to the idea of
security of tenure and due process, which are guaranteed to all
employees, whether their employment is probationary or regular.
The pre-determined standards that the employer sets are the bases
for determining the probationary employees fitness, propriety,
efficiency, and qualifications as a regular employee. Due process
requires that the probationary employee be informed of such
standards at the time of his or her engagement so he or she can
adjusthis or her character or workmanship accordingly. Proper
adjustment to fit the standards upon which the employees
qualifications will be evaluated will increase ones chances of being
positively assessed for regularization by his or her employer.

Assessing an employees work performance does not stop after

regularization. The employer, on a regular basis, determines if an
employee is still qualified and efficient, based on work standards.
Based on that determination, and after complying with the due
process requirements of notice and hearing, the employer may
exercise its management prerogative of terminating the employee
found unqualified.
The regular employee must constantlyattempt to prove to his or her
employer that he or she meets all the standards for employment.
This time, however, the standards to be met are set for the purpose
of retaining employment or promotion. The employee cannot be
expected to meet any standard of character or workmanship if such
standards were not communicated to him or her. Courts should
remain vigilant on allegations of the employers failure to
communicatework standards that would govern ones employment
"if [these are] to discharge in good faith [their] duty to adjudicate." 73
In this case, petitioner merely alleged that respondent failed to
comply with her foreign employers work requirements and was
inefficient in her work.74 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.
A valid dismissal requires both a valid cause and adherence to the
valid procedure of dismissal.75 The employer is required to give the
charged employee at least two written notices before
termination.76 One of the written notices must inform the employee
of the particular acts that may cause his or her dismissal. 77 The
other notice must "[inform] the employee of the employers
decision."78 Aside from the notice requirement, the employee must
also be given "an opportunity to be heard."79
Petitioner failed to comply with the twin notices and hearing
requirements. Respondent started working on June 26, 1997. She
was told that she was terminated on July 14, 1997 effective on the
same day and barely a month from her first workday. She was also
repatriated on the same day that she was informed of her
termination. The abruptness of the termination negated any finding
that she was properly notified and given the opportunity to be
heard. Her constitutional right to due process of law was violated.
II
Respondent Joy Cabiles, having been illegally dismissed, is entitled
to her salary for the unexpired portion ofthe employment contract
that was violated together with attorneys fees and reimbursement
of amounts withheld from her salary.
Section 10 of Republic Act No. 8042,otherwise known as the
Migrant Workers and Overseas Filipinos Act of1995, states
thatoverseas workers who were terminated without just, valid, or
authorized cause "shall be entitled to the full reimbursement of his
placement fee with interest of twelve (12%) per annum, plus his
salaries for the unexpired portion of his employment contract or for
three (3) months for every year of the unexpired term, whichever is
less."
Sec. 10. MONEY CLAIMS. Notwithstanding any provision of law to
the contrary, the Labor Arbiters of the National Labor Relations

Commission (NLRC) shall have the original and exclusive

jurisdiction to hear and decide, within ninety (90) calendar days
after filing of the complaint, the claims arising out of an employeremployee relationship or by virtue of any law or contract involving
Filipino workers for overseas deployment including claims for
actual, moral, exemplary and other forms of damages.
The liability of the principal/employer and the
recruitment/placement agency for any and all claims under this
section shall be joint and several. This provisions [sic] shall be
incorporated in the contract for overseas employment and shall be a
condition precedent for its approval. The performance bond to be
filed by the recruitment/placementagency, as provided by law, shall
be answerable for all money claims or damages that may be
awarded to the workers. If the recruitment/placement agency is a
juridical being, the corporate officers and directors and partners as
the case may be, shall themselves be jointly and solidarily liable
with the corporation orpartnership for the aforesaid claims and
damages.
Such liabilities shall continue during the entire period or duration
of the employment contract and shall not be affected by any
substitution, amendment or modification made locally or in a
foreign country of the said contract.
Any compromise/amicable settlement or voluntary agreement on
money claims inclusive of damages under this section shall be paid
within four (4) months from the approval of the settlement by the
appropriate authority.
In case of termination of overseas employment without just, valid or
authorized cause as defined by law or contract, the workers shall be
entitled to the full reimbursement of his placement fee with interest
of twelve (12%) per annum, plus his salaries for the unexpired
portion of his employment contract or for three (3) months for every
year of the unexpired term, whichever is less.
....
(Emphasis supplied)

Section 15 of Republic Act No. 8042 states that "repatriation of the

worker and the transport of his [or her] personal belongings shall be
the primary responsibility of the agency which recruited or deployed
the worker overseas." The exception is when "termination of
employment is due solely to the fault of the worker," 80 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.
In Serrano v. Gallant Maritime Services, Inc. and Marlow Navigation
Co., Inc.,82 this court ruled that the clause "or for three (3) months
for every year of the unexpired term, whichever is less" 83 is

unconstitutional for violating the equal protection clause and

substantive due process.84
A statute or provision which was declared unconstitutional is not a
law. It "confers no rights; it imposes no duties; it affords no
protection; it creates no office; it is inoperative as if it has not been
passed at all."85
We are aware that the clause "or for three (3) months for every year
of the unexpired term, whichever is less"was reinstated in Republic
Act No. 8042 upon promulgation of Republic Act No. 10022 in 2010.
Section 7 of Republic Act No. 10022 provides:
Section 7.Section 10 of Republic Act No. 8042, as amended, is
hereby amended to read as follows:
SEC. 10. Money Claims. Notwithstanding any provision of law to
the contrary, the Labor Arbiters of the National Labor Relations
Commission (NLRC) shall have the original and exclusive
jurisdiction to hear and decide, within ninety (90) calendar days
after the filing of the complaint, the claims arising out of an
employer-employee relationship or by virtue of any law or contract
involving Filipino workers for overseas deployment including claims
for actual, moral, exemplary and other forms of damage. Consistent
with this mandate, the NLRC shall endeavor to update and keep
abreast with the developments in the global services industry.
The liability of the principal/employer and the
recruitment/placement agency for any and all claims under this
section shall be joint and several. This provision shall be
incorporated in the contract for overseas employment and shall be a
condition precedent for its approval. The performance bond to de
[sic] filed by the recruitment/placement agency, as provided by law,
shall be answerable for all money claims or damages that may be
awarded to the workers. If the recruitment/placement agency is a
juridical being, the corporate officers and directors and partners as
the case may be, shall themselves be jointly and solidarily liable
with the corporation or partnership for the aforesaid claims and
damages.

Such liabilities shall continue during the entire period or duration

of the employment contract and shall not be affected by any
substitution, amendment or modification made locally or in a
foreign country of the said contract.
Any compromise/amicable settlement or voluntary agreement on
money claims inclusive of damages under this section shall be paid
within thirty (30) days from approval of the settlement by the
appropriate authority.
In case of termination of overseas employment without just, valid or
authorized cause as defined by law or contract, or any
unauthorized deductions from the migrant workers salary, the
worker shall be entitled to the full reimbursement if [sic] his
placement fee and the deductions made with interest at twelve
percent (12%) per annum, plus his salaries for the unexpired
portion of his employment contract or for three (3) months for every
year of the unexpired term, whichever is less.
In case of a final and executory judgement against a foreign
employer/principal, it shall be automatically disqualified, without
further proceedings, from participating in the Philippine Overseas
Employment Program and from recruiting and hiring Filipino
workers until and unless it fully satisfies the judgement award.
Noncompliance with the mandatory periods for resolutions of case
providedunder this section shall subject the responsible officials to
any or all of the following penalties:
(a) The salary of any such official who fails to render his
decision or resolution within the prescribed period shall be, or
caused to be, withheld until the said official complies
therewith;
(b) Suspension for not more than ninety (90) days; or
(c) Dismissal from the service with disqualification to hold any
appointive public office for five (5) years.
Provided, however,That the penalties herein provided shall be
without prejudice to any liability which any such official may have
incured [sic] under other existing laws or rules and regulations as a

consequence of violating the provisions of this paragraph.

(Emphasis supplied)
Republic Act No. 10022 was promulgated on March 8, 2010. This
means that the reinstatement of the clause in Republic Act No.
8042 was not yet in effect at the time of respondents termination
from work in 1997.86 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 protection and enforcement of
constitutional rights."87 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.
Thus, in a resolution88 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.
In its comment,89 petitioner argued that the clause was
constitutional.90 The legislators intended a balance between the
employers and the employees rights by not unduly burdening the
local recruitment agency.91 Petitioner is also of the view that the
clause was already declared as constitutional in Serrano. 92
The Office of the Solicitor General also argued that the clause was
valid and constitutional.93 However, since the parties never raised
the issue of the constitutionality of the clause asreinstated in

Republic Act No. 10022, its contention is that it is beyond judicial

review.94
On the other hand, respondentargued that the clause was
unconstitutional because it infringed on workers right to contract. 95
We observe that the reinstated clause, this time as provided in
Republic Act. No. 10022, violates the constitutional rights to equal
protection and due process.96 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 same class are treated alike, in
terms of "privileges conferred and liabilities enforced." 97 It is a
guarantee against "undue favor and individual or class privilege, as
well as hostile discrimination or the oppression of inequality." 98
In creating laws, the legislature has the power "to make distinctions
and classifications."99
In exercising such power, it has a wide discretion. 100
The equal protection clause does not infringe on this legislative
power.101 A law is void on this basis, only if classifications are made
arbitrarily.102 There is no violation of the equal protection clause if
the law applies equally to persons within the same class and if
there are reasonable grounds for distinguishing between those
falling within the class and those who do not fall within the
class.103 A law that does not violate the equal protection clause
prescribesa reasonable classification.104
A reasonable classification "(1) must rest on substantial
distinctions; (2) must be germane to the purposes of the law; (3)
must not be limited to existing conditions only; and (4) must apply
equally to all members of the same class." 105

The reinstated clause does not satisfy the requirement of reasonable

classification.
In Serrano, we identified the classifications made by the reinstated
clause. It distinguished between fixed-period overseas workers and
fixedperiod local workers.106 It also distinguished between overseas
workers with employment contracts of less than one year and
overseas workers with employment contracts of at least one
year.107 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 and those with less than a year
left in their contracts when they were illegally dismissed. 108
The Congress classification may be subjected to judicial review. In
Serrano, there is a "legislative classification which impermissibly
interferes with the exercise of a fundamental right or operates to the
peculiar disadvantage of a suspect class."109
Under the Constitution, labor is afforded special protection. 110 Thus,
this court in Serrano, "[i]mbued with the same sense of obligation
to afford protection to labor, . . . employ[ed] the standard of strict
judicial scrutiny, for it perceive[d] in the subject clause a suspect
classification prejudicial to OFWs."111
We also noted in Serranothat before the passage of Republic Act No.
8042, the money claims of illegally terminated overseas and local
workers with fixed-term employment werecomputed in the same
manner.112 Their money claims were computed based onthe
"unexpired portions of their contracts."113 The adoption of the
reinstated clause in Republic Act No. 8042 subjected the money
claims of illegally dismissed overseas workers with an unexpired
term of at least a year to a cap of three months worth of their
salary.114 There was no such limitation on the money claims of
illegally terminated local workers with fixed-term employment. 115
We observed that illegally dismissed overseas workers whose
employment contracts had a term of less than one year were
granted the amount equivalent to the unexpired portion of their
employment contracts.116 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 contracts.117
Observing the terminologies used inthe clause, we also found that
"the subject clause creates a sub-layer of discrimination among
OFWs whose contract periods are for more than one year: those
who are illegally dismissed with less than one year left in their
contracts shall be entitled to their salaries for the entire unexpired
portion thereof, while those who are illegally dismissed with one
year or more remaining in their contracts shall be covered by the
reinstated clause, and their monetary benefits limited to their
salaries for three months only."118
We do not need strict scrutiny to conclude that these classifications
do not rest on any real or substantial distinctions that would justify
different treatments in terms of the computation of money claims
resulting from illegal termination.
Overseas workers regardless of their classifications are entitled to
security of tenure, at least for the period agreed upon in their
contracts. This means that they cannot be dismissed before the end
of their contract terms without due process. If they were illegally
dismissed, the workers right to security of tenure is violated.
The rights violated when, say, a fixed-period local worker is illegally
terminated are neither greater than norless than the rights violated
when a fixed-period overseas worker is illegally terminated. It is
state policy to protect the rights of workers withoutqualification as
to the place of employment.119 In both cases, the workers are
deprived of their expected salary, which they could have earned had
they not been illegally dismissed. For both workers, this deprivation
translates to economic insecurity and disparity. 120 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 employeeswho can never acquire
regular employment status, unlike local workers" 121 because it
already justifies differentiated treatment in terms ofthe computation
of money claims.122
Likewise, the jurisdictional and enforcement issues on overseas
workers money claims do not justify a differentiated treatment in
the computation of their money claims.123 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
overseas Filipinos in distress, and for other purposes." 124 Further,
we find specious the argument that reducing the liability of
placement agencies "redounds to the benefit of the [overseas]
workers."125
Putting a cap on the money claims of certain overseas workers does
not increase the standard of protection afforded to them. On the
other hand, foreign employers are more incentivizedby the
reinstated clause to enter into contracts of at least a year because it
gives them more flexibility to violate our overseas workers rights.
Their liability for arbitrarily terminating overseas workers is
decreased at the expense of the workers whose rights they violated.
Meanwhile, these overseas workers who are impressed with an
expectation of a stable job overseas for the longer contract period
disregard other opportunities only to be terminated earlier. They are
left with claims that are less than what others in the same situation
would receive. The reinstated clause, therefore, creates a situation
where the law meant to protect them makes violation of rights
easier and simply benign to the violator.

As Justice Brion said in his concurring opinion in Serrano:

Section 10 of R.A. No. 8042 affects these well-laid rules and
measures, and in fact provides a hidden twist affecting the
principal/employers liability. While intended as an incentive
accruing to recruitment/manning agencies, the law, as worded,
simply limits the OFWs recovery in wrongfuldismissal situations.
Thus, it redounds to the benefit of whoever may be liable, including
the principal/employer the direct employer primarily liable for the
wrongful dismissal. In this sense, Section 10 read as a grant of
incentives to recruitment/manning agencies oversteps what it
aims to do by effectively limiting what is otherwise the full liability
of the foreign principals/employers. Section 10, in short, really
operates to benefit the wrong party and allows that party, without
justifiable reason, to mitigate its liability for wrongful dismissals.
Because of this hidden twist, the limitation ofliability under Section
10 cannot be an "appropriate" incentive, to borrow the term that
R.A. No. 8042 itself uses to describe the incentive it envisions under
its purpose clause.
What worsens the situation is the chosen mode of granting the
incentive: instead of a grant that, to encourage greater efforts at
recruitment, is directly related to extra efforts undertaken, the law
simply limits their liability for the wrongful dismissals of already
deployed OFWs. This is effectively a legally-imposed partial
condonation of their liability to OFWs, justified solely by the laws
intent to encourage greater deployment efforts. Thus, the
incentive,from a more practical and realistic view, is really part of a
scheme to sell Filipino overseas labor at a bargain for purposes
solely of attracting the market. . . .
The so-called incentive is rendered particularly odious by its effect
on the OFWs the benefits accruing to the recruitment/manning
agencies and their principals are takenfrom the pockets of the
OFWs to whom the full salaries for the unexpired portion of the
contract rightfully belong. Thus, the principals/employers and the
recruitment/manning agencies even profit from their violation of

the security of tenure that an employment contract embodies.

Conversely, lesser protection is afforded the OFW, not only because
of the lessened recovery afforded him or her by operation of law, but
also because this same lessened recovery renders a wrongful
dismissal easier and less onerous to undertake; the lesser cost of
dismissing a Filipino will always bea consideration a foreign
employer will take into account in termination of employment
decisions. . . .126
Further, "[t]here can never be a justification for any form of
government action that alleviates the burden of one sector, but
imposes the same burden on another sector, especially when the
favored sector is composed of private businesses suchas placement
agencies, while the disadvantaged sector is composed ofOFWs
whose protection no less than the Constitution commands. The idea
thatprivate business interest can be elevated to the level of a
compelling state interest is odious."127
Along the same line, we held that the reinstated clause violates due
process rights. It is arbitrary as it deprives overseas workers of their
monetary claims without any discernable valid purpose. 128
Respondent Joy Cabiles is entitled to her salary for the unexpired
portion of her contract, in accordance with Section 10 of Republic
Act No. 8042. The award of the three-month equivalence of
respondents salary must be modified accordingly. Since she started
working on June 26, 1997 and was terminated on July 14, 1997,
respondent is entitled to her salary from July 15, 1997 to June 25,
1998. "To rule otherwise would be iniquitous to petitioner and other
OFWs, and would,in effect, send a wrong signal that
principals/employers and recruitment/manning agencies may
violate an OFWs security of tenure which an employment contract
embodies and actually profit from such violation based on an
unconstitutional provision of law."129
III
On the interest rate, the Bangko Sentral ng Pilipinas Circular No.
799 of June 21, 2013, which revised the interest rate for loan or

forbearance from 12% to 6% in the absence of stipulation,applies in

this case. The pertinent portions of Circular No. 799, Series of
2013, read: The Monetary Board, in its Resolution No. 796 dated 16
May 2013, approved the following revisions governing the rate of
interest in the absence of stipulation in loan contracts, thereby
amending Section 2 of Circular No. 905, Series of 1982:
Section 1. The rate of interest for the loan or forbearance of any
money, goods or credits and the rate allowed in judgments, in the
absence of an express contract as to such rateof interest, shall be
six percent (6%) per annum.
Section 2. In view of the above, Subsection X305.1 of the Manual of
Regulations for Banks and Sections 4305Q.1, 4305S.3 and 4303P.1
of the Manual of Regulations for Non-Bank Financial Institutions
are hereby amended accordingly.
This Circular shall take effect on 1 July 2013.
Through the able ponencia of Justice Diosdado Peralta, we laid
down the guidelines in computing legal interest in Nacar v. Gallery
Frames:130
II. With regard particularly to an award of interest in the concept of
actual and compensatory damages, the rate of interest, as well as
the accrual thereof, is imposed, as follows:
1. When the obligation is breached, and it consists in the
payment of a sum of money, i.e., a loan or forbearance of
money, the interest due should be that which may have been
stipulated in writing. Furthermore, the interest due shall itself
earn legal interest from the time it is judicially demanded. In
the absence of stipulation, the rate of interest shall be 6% per
annum to be computed from default, i.e., from judicial or
extrajudicial demand under and subject to the provisions of
Article 1169 of the Civil Code.
2. When an obligation, not constituting a loan or forbearance
of money, is breached, an interest on the amount of damages
awarded may be imposed at the discretion of the court at the
rate of 6% per annum. No interest, however, shall be adjudged

on unliquidated claims or damages, except when or until the

demand can be established with reasonable certainty.
Accordingly, where the demand is established with reasonable
certainty, the interest shall begin to run from the time the
claim is made judicially or extrajudicially (Art. 1169, Civil
Code), but when such certainty cannot be so reasonably
established at the time the demand is made, the interest shall
begin to run only from the date the judgment of the court is
made (at which time the quantification of damages may be
deemed to have been reasonably ascertained). The actual base
for the computation of legal interest shall, in any case, be on
the amount finally adjudged. 3. When the judgment of the
court awarding a sum of money becomes final and executory,
the rate of legal interest, whether the case falls under
paragraph 1 or paragraph 2, above, shall be 6% per annum
from such finality until its satisfaction, this interim period
being deemed to be by then an equivalent to a forbearance of
credit.
And, in addition to the above, judgments that have become final
and executory prior to July 1, 2013, shall not be disturbed and
shall continue to be implemented applying the rate of interest fixed
therein.131
Circular No. 799 is applicable only in loans and forbearance of
money, goods, or credits, and in judgments when there is no
stipulation on the applicable interest rate. Further, it is only
applicable if the judgment did not become final and executory
before July 1, 2013.132
We add that Circular No. 799 is not applicable when there is a law
that states otherwise. While the Bangko Sentral ng Pilipinas has the
power to set or limit interest rates,133 these interest rates do not
apply when the law provides that a different interest rate shall be
applied. "[A] Central Bank Circular cannot repeal a law. Only a law
can repeal another law."134

For example, Section 10 of Republic Act No. 8042 provides that

unlawfully terminated overseas workers are entitled to the
reimbursement of his or her placement fee with an interest of 12%
per annum. Since Bangko Sentral ng Pilipinas circulars
cannotrepeal Republic Act No. 8042, the issuance of Circular No.
799 does not have the effect of changing the interest on awards for
reimbursement of placement fees from 12% to 6%. This is despite
Section 1 of Circular No. 799, which provides that the 6% interest
rate applies even to judgments.
Moreover, laws are deemed incorporated in contracts. "The
contracting parties need not repeat them. They do not even have to
be referred to. Every contract, thus, contains not only what has
been explicitly stipulated, but the statutory provisions that have
any bearing on the matter."135 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 plight.136
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 indispensable party without
which no final determination can be had of an action. 137
The provision on joint and several liability in the Migrant Workers
and Overseas Filipinos Act of 1995 assures overseas workers that
their rights will not be frustrated with these complications. The
fundamental effect of joint and several liability is that "each of the
debtors is liable for the entire obligation." 138 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 employer may be "enforced to the full extent" 139 against
the local agent,the overseas worker is assured of immediate and
sufficientpayment of what is due them.140
Corollary to the assurance of immediate recourse in law, the
provision on joint and several liability in the Migrant Workers and
Overseas Filipinos Act of 1995 shifts the burden of going after the
foreign employer from the overseas worker to the local employment
agency. However, it must be emphasized that the local agency that
is held to answer for the overseas workers money claims is not
leftwithout remedy. The law does not preclude it from going after the
foreign employer for reimbursement of whatever payment it has
made to the employee to answer for the money claims against the
foreign employer.
A further implication of making localagencies jointly and severally
liable with the foreign employer is thatan additional layer of
protection is afforded to overseas workers. Local agencies, which are
businesses by nature, are inoculated with interest in being always
on the lookout against foreign employers that tend to violate labor
law. Lest they risk their reputation or finances, local agenciesmust
already have mechanisms for guarding against unscrupulous
foreign employers even at the level prior to overseas employment
applications.
With the present state of the pleadings, it is not possible to
determine whether there was indeed a transfer of obligations from
petitioner to Pacific. This should not be an obstacle for the
respondent overseas worker to proceed with the enforcement of this
judgment. Petitioner is possessed with the resources to determine
the proper legal remedies to enforce its rights against Pacific, if any.
V

Many times, this court has spoken on what Filipinos may encounter
as they travel into the farthest and mostdifficult reaches of our
planet to provide for their families. In Prieto v. NLRC: 141
The Court is not unaware of the many abuses suffered by our
overseas workers in the foreign land where they have ventured,
usually with heavy hearts, in pursuit of a more fulfilling future.
Breach of contract, maltreatment, rape, insufficient nourishment,
sub-human lodgings, insults and other forms of debasement, are
only a few of the inhumane acts towhich they are subjected by their
foreign employers, who probably feel they can do as they please in
their own country. Whilethese workers may indeed have relatively
little defense against exploitation while they are abroad, that
disadvantage must not continue to burden them when they return
to their own territory to voice their muted complaint. There is no
reason why, in their very own land, the protection of our own laws
cannot be extended to them in full measure for the redress of their
grievances.142
But it seems that we have not said enough.
We face a diaspora of Filipinos. Their travails and their heroism can
be told a million times over; each of their stories as real as any
other. Overseas Filipino workers brave alien cultures and the
heartbreak of families left behind daily. They would count the
minutes, hours, days, months, and years yearning to see their sons
and daughters. We all know of the joy and sadness when they come
home to see them all grown up and, being so, they remember what
their work has cost them. Twitter accounts, Facetime, and many
other gadgets and online applications will never substitute for their
lost physical presence.
Unknown to them, they keep our economy afloat through the ebb
and flow of political and economic crises. They are our true
diplomats, they who show the world the resilience, patience, and
creativity of our people. Indeed, we are a people who contribute
much to the provision of material creations of this world.

This government loses its soul if we fail to ensure decent treatment

for all Filipinos. We default by limiting the contractual wages that
should be paid to our workers when their contracts are breached by
the foreign employers. While we sit, this court will ensure that our
laws will reward our overseas workers with what they deserve: their
dignity.
Inevitably, their dignity is ours as weil.
WHEREFORE, the petition is DENIED. The decision of the Court of
Appeals is AFFIRMED with modification. Petitioner Sameer
Overseas Placement Agency is ORDERED to pay respondent Joy C.
Cabiles the amount equivalent to her salary for the unexpired
portion of her employment contract at an interest of 6% per annum
from the finality of this judgment. Petitioner is also ORDERED to
reimburse respondent the withheld NT$3,000.00 salary and pay
respondent attorney's fees of NT$300.00 at an interest of 6% per
annum from the finality of this judgment.
The clause, "or for three (3) months for every year of the unexpired
term, whichever is less" in Section 7 of Republic Act No. 10022
amending Section 10 of Republic Act No. 8042 is declared
unconstitutional and, therefore, null and void.
SO ORDERED.
FIRST DIVISION
G.R. No. 207010, February 18, 2015
MAERSK-FILIPINAS CREWING, INC., A.P. MOLLER SINGAPORE
PTE. LIMITED, AND JESUS AGBAYANI, Petitioners, v. TORIBIO C.
AVESTRUZ,*Respondent.
DECISION
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari1 are the
Decision2 dated January 4, 2013 and the Resolution3 dated April
16, 2013 rendered by the Court of Appeals (CA) in CA-G.R. SP No.
125773 which reversed and set aside the Decision 4 dated April 26,
2012 and the Resolution5 dated June 18, 2012 of the National

Labor Relations Commission (NLRC) in NLRC NCR Case No. (M) 0710704-11 [NLRC LAC No. (OFW-M)-01-000123-12] dismissing the
illegal dismissal complaint filed by respondent Toribio C. Avestruz
(Avestruz) and awarding him nominal
damages.chanroblesvirtuallawlibrary
The Facts
On April 28, 2011, petitioner Maersk-Filipinas Crewing, Inc.
(Maersk), on behalf of its foreign principal, petitioner A.P. Moller
Singapore Pte. Ltd. (A.P. Moller), hired Avestruz as Chief Cook on
board the vessel M/V Nedlloyd Drake for a period of six (6) months,
with a basic monthly salary of US$698.00. 6 Avestruz boarded the
vessel on May 4, 2011.7cralawred
On June 22, 2011, in the course of the weekly inspection of the
vessels galley, Captain Charles C. Woodward (Captain Woodward)
noticed that the cover of the garbage bin in the kitchen near the
washing area was oily. As part of Avestruzs job was to ensure the
cleanliness of the galley, Captain Woodward called Avestruz and
asked him to stand near the garbage bin where the former took the
latters right hand and swiped it on the oily cover of the garbage bin,
telling Avestruz to feel it. Shocked, Avestruz remarked, Sir if you
are looking for [dirt], you can find it[;] the ship is big. Tell us if you
want to clean and we will clean it. Captain Woodward replied by
shoving Avestruzs chest, to which the latter complained and said,
Dont touch me, causing an argument to ensue between
them.8cralawred
Later that afternoon, Captain Woodward summoned and
required9 Avestruz to state in writing what transpired in the galley
that morning. Avestruz complied and submitted his written
statement10 on that same day. Captain Woodward likewise asked
Messman Jomilyn P. Kong (Kong) to submit his own written
statement regarding the incident, to which the latter immediately

complied.11 On the very same day, Captain Woodward informed

Avestruz that he would be dismissed from service and be
disembarked in India. On July 3, 2011, Avestruz was disembarked
in Colombo, Sri Lanka and arrived in the Philippines on July 4,
2011.12cralawred
Subsequently, he filed a complaint13 for illegal dismissal, payment
for the unexpired portion of his contract, damages, and attorneys
fees against Maersk, A.P. Moller, and Jesus Agbayani (Agbayani), an
officer14 of Maersk.15 He alleged that no investigation or hearing was
conducted nor was he given the chance to defend himself before he
was dismissed, and that Captain Woodward failed to observe the
provisions under Section 17 of the Philippine Overseas Employment
Administration (POEA) Standard Employment Contract (POEA-SEC)
on disciplinary procedures. Also, he averred that he was not given
any notice stating the ground for his dismissal.16 Additionally, he
claimed that the cost of his airfare in the amount of US$606.15 was
deducted from his wages.17 Furthermore, Avestruz prayed for the
award of the following amounts: (a) US$5,372.00 representing his
basic wages, guaranteed overtime, and vacation leave; (b) on board
allowance of US$1,936.00; (c) ship maintenance bonus of
US$292.00; (d) hardship allowance of US$8,760.00; (e)
P300,000.00 as moral damages, (f) P200,000.00 as exemplary
damages; and (g) attorneys fees of ten percent (10%) of the total
monetary award.18cralawred
In their defense,19 Maersk, A.P. Moller, and Agbayani (petitioners)
claimed that during his stint on the vessel, Avestruz failed to attend
to his tasks, specifically to maintain the cleanliness of the galley,
which prompted Captain Woodward to issue weekly
reminders.20 Unfortunately, despite the reminders, Avestruz still
failed to perform his duties properly.21 On June 22, 2011, when
again asked to comply with the aforesaid duty, Avestruz became
angry and snapped, retorting that he did not have time to do all the

tasks required of him. As a result, Captain Woodward initiated

disciplinary proceedings and informed Avestruz during the hearing
of the offenses he committed, i.e., his repeated failure to follow
directives pertaining to his duty to maintain the cleanliness of the
galley, as well as his act of insulting an officer. 22 Thereafter, he was
informed of his dismissal from service due to
insubordination.23 Relative thereto, Captain Woodward sent two (2)
electronic mail messages24 (e-mails) to Maersk explaining the
decision to terminate Avestruzs employment and requesting for
Avestruzs replacement. Avestruz was discharged from the vessel
and arrived in the Philippines on July 4, 2011. 25cralawred
Petitioners maintained that Avestruz was dismissed for a just and
valid cause and is, therefore, not entitled to recover his salary for
the unexpired portion of his contract.26 They likewise claimed that
they were justified in deducting his airfare from his salary, and that
the latter was not entitled to moral and exemplary damages and
attorneys fees.27 Hence, they prayed that the complaint be
dismissed for lack of merit.28cralawred
The LA Ruling
In a Decision29 dated November 29, 2011, the Labor Arbiter (LA)
dismissed Avestruzs complaint for lack of merit. The LA found that
he failed to perform his duty of maintaining cleanliness in the
galley, and that he also repeatedly failed to obey the directives of his
superior, which was tantamount to insubordination.30 In support of
its finding, the LA cited the Collective Bargaining Agreement 31 (CBA)
between the parties which considers the act of insulting a superior
officer by words or deed as an act of insubordination. 32cralawred
Aggrieved, Avestruz appealed33 to the
NLRC.chanroblesvirtuallawlibrary
The NLRC Ruling

In a Decision34 dated April 26, 2012, the NLRC sustained the

validity of Avestruzs dismissal but found that petitioners failed to
observe the procedures laid down in Section 17 of the POEASEC,35 which states:chanRoblesvirtualLawlibrary
SECTION 17. DISCIPLINARY PROCEDURES.
The Master shall comply with the following disciplinary procedures
against an erring seafarer:
A. The Master shall furnish the seafarer with a written
notice containing the following:
1. Grounds for the charges as listed in Section 33 of
this Contract or analogous act constituting the
same.
2. Date, time and place for a formal investigation of
the charges against the seafarer concerned.
B. The Master or his authorized representative shall
conduct the investigation or hearing, giving the
seafarer the opportunity to explain or defend himself
against the charges. These procedures must be duly
documented and entered into the ships logbook.
C. If after the investigation or hearing, the Master is
convinced that imposition of a penalty is justified, the
Master shall issue a written notice of penalty and the
reasons for it to the seafarer, with copies furnished to
the Philippine agent.
D. Dismissal for just cause may be effected by the Master
without furnishing the seafarer with a notice of dismissal
if there is a clear and existing danger to the safety of the
crew or the vessel. The Master shall send a complete
report to the manning agency substantiated by

witnesses, testimonies and any other documents in

support thereof. (Emphases supplied)
cralawlawlibrary
As the records are bereft of evidence showing compliance with the
foregoing rules, the NLRC held petitioners jointly and severally
liable to pay Avestruz the amount of P30,000.00 by way of nominal
damages.36cralawred
Avestruz moved for reconsideration37 of the aforesaid Decision,
which was denied in the Resolution38dated June 18, 2012.
Dissatisfied, he elevated the matter to the CA via petition
for certiorari.39cralawred
The CA Ruling
In a Decision40 dated January 4, 2013, the CA reversed and set
aside the rulings of the NLRC and instead, found Avestruz to have
been illegally dismissed. Consequently, it directed petitioners to pay
him, jointly and severally, the full amount of his placement fee and
deductions made, with interest at twelve percent (12%) per annum,
as well as his salaries for the unexpired portion of his contract, and
attorneys fees of ten percent (10%) of the total award. All other
money claims were denied for lack of merit.41cralawred
In so ruling, the CA found that the conclusion of the NLRC, which
affirmed that of the LA, that Avestruz was lawfully dismissed, was
not supported by substantial evidence, there being no factual basis
for the charge of insubordination which petitioners claimed was the
ground for Avestruzs dismissal. It found that petitioners, as
employers, were unable to discharge the burden of proof required of
them to establish that Avestruz was guilty of insubordination,
which necessitates the occurrence of two (2) conditions as a just
cause for dismissal: (1) the employees assailed conduct must have
been willful, that is, characterized by a wrongful and perverse

attitude; and (2) the order violated must have been reasonable,
lawful, made known to the employee, and must pertain to the duties
which he had been engaged to discharge. The CA found that,
contrary to the rulings of the labor tribunals, there was no evidence
on record to bolster petitioners claims that Avestruz willfully failed
to comply with his duties as Chief Cook and that he displayed a
perverse and wrongful attitude.42cralawred
Moreover, it gave more credence to Avestruzs account of the
incident in the galley on June 22, 2011, being supported in part by
the statement43 of Kong, who witnessed the incident. On the other
hand, the e-mails sent by Captain Woodward to Maersk were
uncorroborated. On this score, the CA observed the absence of any
logbook entries to support petitioners stance. 44cralawred
Similarly, the CA found that petitioners failed to accord procedural
due process to Avestruz, there being no compliance with the
requirements of Section 17 of the POEA-SEC as above-quoted, or
the two-notice rule. It held that the statement 45 Captain
Woodward issued to Avestruz neither contained the grounds for
which he was being charged nor the date, time, and place for the
conduct of a formal investigation. Likewise, Captain Woodward
failed to give Avestruz any notice of penalty and the reasons for its
imposition, with copies thereof furnished to the Philippine
Agent.46cralawred
In arriving at the monetary awards given to Avestruz, the CA
considered the provisions of Section 7 of Republic Act No. (RA)
10022,47 amending RA 8042,48 which grants upon the illegally
dismissed overseas worker the full reimbursement [of] 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. However, with respect to
Avestruzs claims for overtime and leave pay, the same were denied

for failure to show entitlement thereto. All other monetary claims

were likewise denied in the absence of substantial evidence to prove
the same. Finally, the CA awarded attorneys fees of ten percent
(10%) of the total monetary award in accordance with Article
11149 of the Labor Code.50cralawred
Petitioners moved for reconsideration,51 which the CA denied in its
Resolution52 dated April 16, 2013, hence, this petition.
The Issue Before the Court
The sole issue advanced for the Courts resolution is whether or not
the CA erred when it reversed and set aside the ruling of the NLRC
finding that Avestruz was legally dismissed and accordingly,
dismissing the complaint, albeit with payment of nominal damages
for violation of procedural due process.
The Courts Ruling
The petition is devoid of merit.
Generally, a re-examination of factual findings cannot be done by
the Court acting on a petition for review on certiorari because the
Court is not a trier of facts but reviews only questions of law. 53Thus,
in petitions for review on certiorari, only questions of law may
generally be put into issue. This rule, however, admits of certain
exceptions.54 In this case, considering that the factual findings of
the LA and the NLRC, on the one hand, and the CA, on the other
hand, are contradictory, the general rule that only legal issues may
be raised in a petition for review on certiorari under Rule 45 of the
Rules of Court does not apply,55 and the Court retains the authority
to pass upon the evidence presented and draw conclusions
therefrom.56cralawred
It is well-settled that the burden of proving that the termination of
an employee was for a just or authorized cause lies with the

employer. If the employer fails to meet this burden, the conclusion

would be that the dismissal was unjustified and, therefore,
illegal.57 In order to discharge this burden, the employer must
present substantial evidence, which is defined as that amount of
relevant evidence which a reasonable mind might accept as
adequate to justify a conclusion,58 and not based on mere surmises
or conjectures.59cralawred
After a punctilious examination of the evidence on record, the Court
finds that the CA did not err in reversing and setting aside the
factual conclusions of the labor tribunals that Avestruzs dismissal
was lawful. Instead, the Court finds that there was no just or valid
cause for his dismissal, hence, he was illegally dismissed.
Petitioners maintain that Avestruz was dismissed on the ground of
insubordination, consisting of his repeated failure to obey his
superiors order to maintain cleanliness in the galley of the vessel
as well as his act of insulting a superior officer by words or
deeds.60 In support of this contention, petitioners presented as
evidence the e-mails sent by Captain Woodward, both dated June
22, 2011, and time-stamped 10:07 a.m. and 11:40 a.m.,
respectively, which they claim chronicled the relevant
circumstances that eventually led to Avestruzs dismissal.
The Court, however, finds these e-mails to be uncorroborated and
self-serving, and therefore, do not satisfy the requirement of
substantial evidence as would sufficiently discharge the burden of
proving that Avestruz was legally dismissed. On the contrary,
petitioners failed to prove that he committed acts of insubordination
which would warrant his dismissal.
Insubordination, as a just cause for the dismissal of an employee,
necessitates the concurrence of at least two requisites: (1) the
employees assailed conduct must have been willful, that is,

characterized by a wrongful and perverse attitude; and (2) the order

violated must have been reasonable, lawful, made known to the
employee, and must pertain to the duties which he had been
engaged to discharge.61cralawred
In this case, the contents of Captain Woodwards e-mails do not
establish that Avestruzs conduct had been willful, or characterized
by a wrongful and perverse attitude. The Court concurs with the
CAs observation that Avestruzs statement62 regarding the incident
in the galley deserves more credence, being corroborated 63 by Kong,
a messman who witnessed the same.
Conversely, apart from Captain Woodwards e-mails, no other
evidence was presented by the petitioners to support their claims.
While rules of evidence are not strictly observed in proceedings
before administrative bodies,64 petitioners should have offered
additional proof to corroborate the statements 65 described therein.
Thus, in Ranises v. NLRC66 which involved a seafarer who was
repatriated to the Philippines for allegedly committing illegal acts
amounting to a breach of trust, as based on a telex dispatch by the
Master of the vessel, the Court impugned and eventually vetoed the
credence given by the NLRC upon the telex, to
wit:chanRoblesvirtualLawlibrary
Unfortunately, the veracity of the allegations contained in the
aforecited telex was never proven by respondent employer. Neither
was it shown that respondent employer exerted any effort to even
verify the truthfulness of Capt. Sonodas report and establish
petitioners culpability for his alleged illegal acts. Worse, no other
evidence was submitted to corroborate the charges against
petitioner.67cralawlawlibrary
Likewise, in Skippers United Pacific, Inc. v. NLRC,68 the Court ruled
that the lone evidence offered by the employer to justify the
seafarers dismissal, i.e., the telexed Chief Engineers Report which

contained the causes for said dismissal, did not suffice to discharge
the onus required of the employer to show that the termination of
an employees service was valid.69 The same doctrine was
enunciated in Pacific Maritime Services, Inc. v. Ranay,70 where the
Court held that the telefax transmission purportedly executed and
signed by a person on board the vessel is insufficient evidence to
prove the commission of the acts constituting the grounds for the
dismissal of two seafarers, being uncorroborated
evidence.71cralawred
As in this case, it was incumbent upon the petitioners to present
other substantial evidence to bolster their claim that Avestruz
committed acts that constitute insubordination as would warrant
his dismissal. At the least, they could have offered in evidence
entries in the ships official logbook showing the infractions or acts
of insubordination purportedly committed by Avestruz, the ships
logbook being the official repository of the day-to-day transactions
and occurrences on board the vessel.72 Having failed to do so, their
position that Avestruz was lawfully dismissed cannot be sustained.
Similarly, the Court affirms the finding of the CA that Avestruz was
not accorded procedural due process, there being no compliance
with the provisions of Section 17 of the POEA-SEC as above-cited,
which requires the two-notice rule. As explained in Skippers
Pacific, Inc. v. Mira:73cralawred
An erring seaman is given a written notice of the charge against him
and is afforded an opportunity to explain or defend himself. Should
sanctions be imposed, then a written notice of penalty and the
reasons for it shall be furnished the erring seafarer. It is only in the
exceptional case of clear and existing danger to the safety of the
crew or vessel that the required notices are dispensed with; but just
the same, a complete report should be sent to the manning agency,
supported by substantial evidence of the findings. 74cralawlawlibrary

In this case, there is dearth of evidence to show that Avestruz had

been given a written notice of the charge against him, or that he
was given the opportunity to explain or defend himself. The
statement75 given by Captain Woodward requiring him to explain in
writing the events that transpired at the galley in the morning of
June 22, 2011 hardly qualifies as a written notice of the charge
against him, nor was it an opportunity for Avestruz to explain or
defend himself. While Captain Woodward claimed in his email76 that he conducted a disciplinary hearing informing
Avestruz of his inefficiency, no evidence was presented to support
the same.
Neither was Avestruz given a written notice of penalty and the
reasons for its imposition. Instead, Captain Woodward verbally
informed him that he was dismissed from service and would be
disembarked from the vessel. It bears stressing that only in the
exceptional case of clear and existing danger to the safety of the
crew or vessel that the required notices may be dispensed with,
and, once again, records are bereft of evidence showing that such
was the situation when Avestruz was dismissed.
Finally, with respect to the monetary awards given to Avestruz, the
Court finds the same to be in consonance with Section 10 of RA
8042, as amended by RA 10022, which
reads:chanRoblesvirtualLawlibrary
Section 10. Money claims. x x x.chanrobleslaw
xxxx
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 of 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.77cralawred
xxxx
cralawlawlibrary
Similarly, the Court affirms the grant of attorneys fees of ten
percent (10%) of the total award. All other monetary awards are
denied for lack of merit.
WHEREFORE, the petition is DENIED. The Decision dated January
4, 2013 and the Resolution dated April 16, 2013 rendered by the
Court of Appeals in CA-G.R. SP No. 125773 are hereby AFFIRMED.
SO ORDERED.cralawlawlibrary
THIRD DIVISION
SUNACE INTERNATIONAL
MANAGEMENT SERVICES, INC.
Petitioner,

- versus -

NATIONAL LABOR RELATIONS

COMMISSION,
Second
Division; HON. ERNESTO S.
DINOPOL, in his capacity as

G.R. No. 161757

Present:
QUISUMBING, J.,
Chairperson,
CARPIO,
CARPIO MORALES, and
TINGA, JJ.

Labor Arbiter, NLRC; NCR,

Arbitration Branch, Quezon
City
and
DIVINA
A.
MONTEHERMOZO,
Respondents.

Promulgated:
January 25, 2006

x - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -----x

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 domestic helper under a 12-month contract
effective February 1, 1997.[1] 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.
Shortly after her return or on February 14, 2000, Divina filed
a complaint[2] 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 Summons [3] 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.
On April 6, 2000, Divina filed her Position Paper [4] 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
Savings

for

1997
1998
1999

NT10,450.00
NT9,500.00
NT13,300.00

NT23,100.00
NT36,000.00
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 Answer and Position Paper,[6] 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 2hereof;
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 POSITION PAPER[7] 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.

To Sunaces . . . ANSWER TO COMPLAINANTS POSITION PAPER, Divina filed

a 2-page reply,[8] 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 B[9] 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
anything
that
resulted
thereform
(sic).
[10]
(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,
morals, and public policy.[11]

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

2000,[12] the dispositive portion of which reads:

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.
SO
supplied)

ORDERED.[13] (Underescoring

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

2002,[14] affirmed the Labor Arbiters decision.
Via petition for certiorari,[15] Sunace elevated the case to the
Court of Appeals which dismissed it outright by Resolution of
November 12, 2002,[16] 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.
ACCORDINGLY, the petition is hereby DENIED
DUE COURSE and DISMISSED.[17]
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, 2004,[18] 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 broker Wang,
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
President[19]

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 contract. As Sunace points out in its Reply [20] 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 was made on her

salary. It contains nothing about the extension or
the petitioners consent thereto.[21]

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, the
act of its principal extending [Divinas] employment
contract necessarily bound it,[22]

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, employer Xiong, not the other way
around.[23] 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 provision of law.[24]

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 hereby REVERSED and SET
ASIDE. The complaint of respondent Divina A. Montehermozo
against petitioner is DISMISSED.
SO ORDERED.
SECOND DIVISION

G.R. No. 198587, January 14, 2015

SAUDI ARABIAN AIRLINES (SAUDIA) AND BRENDA J.
BETIA, Petitioners, v. MA. JOPETTE M. REBESENCIO,
MONTASSAH B. SACAR-ADIONG, ROUEN RUTH A. CRISTOBAL
AND LORAINE S. SCHNEIDER-CRUZ, Respondents.
DECISION
LEONEN, J.:
All Filipinos are entitled to the protection of the rights guaranteed
in the Constitution.
This is a Petition for Review on Certiorari with application for the
issuance of a temporary restraining order and/or writ of
preliminary injunction under Rule 45 of the 1997 Rules of Civil
Procedure praying that judgment be rendered reversing and setting
aside the June 16, 2011 Decision 1 and September 13, 2011
Resolution2 of the Court of Appeals in CA-G.R. SP. No. 113006.
Petitioner Saudi Arabian Airlines (Saudia) is a foreign corporation
established and existing under the laws of Jeddah, Kingdom of
Saudi Arabia. It has a Philippine office located at 4/F, Metro House
Building, Sen. Gil J. Puyat Avenue, Makati City.3 In its Petition filed
with this court, Saudia identified itself as
follows:chanroblesvirtuallawlibrary
1. Petitioner SAUDIA is a foreign corporation established and
existing under the Royal Decree No. M/24 of 18.07.1385H
(10.02.1962G) in Jeddah, Kingdom of Saudi Arabia ("KSA"). Its
Philippine Office is located at 4/F Metro House Building, Sen, Gil J.
Puyat Avenue, Makati City (Philippine Office). It may be served with
orders of this Honorable Court through undersigned counsel at
4th and 6th Floors, Citibank Center Bldg., 8741 Paseo de Roxas,
Makati City.4 (Emphasis supplied)
Respondents (complainants before the Labor Arbiter) were recruited
and hired by Saudia as Temporary Flight Attendants with the

accreditation and approval of the Philippine Overseas Employment

Administration.5 After undergoing seminars required by the
Philippine Overseas Employment Administration for deployment
overseas, as well as training modules offered by Saudia (e.g., initial
flight attendant/training course and transition training), and after
working as Temporary Flight Attendants, respondents became
Permanent Flight Attendants. They then entered into Cabin
Attendant contracts with Saudia: Ma. Jopette M. Rebesencio (Ma.
Jopette) on May 16, 1990;6Montassah B. Sacar-Adiong (Montassah)
and Rouen Ruth A. Cristobal (Rouen Ruth) on May 22, 1993; 7and
Loraine Schneider-Cruz (Loraine) on August 27, 1995.8
Respondents continued their employment with Saudia until they
were separated from service on various dates in 2006. 9
Respondents contended that the termination of their employment
was illegal. They alleged that the termination was made solely
because they were pregnant.10
As respondents alleged, they had informed Saudia of their
respective pregnancies and had gone through the necessary
procedures to process their maternity leaves. Initially, Saudia had
given its approval but later on informed respondents that its
management in Jeddah, Saudi Arabia had disapproved their
maternity leaves. In addition, it required respondents to file their
resignation letters.11
Respondents were told that if they did not resign, Saudia would
terminate them all the same. The threat of termination entailed the
loss of benefits, such as separation pay and ticket discount
entitlements.12
Specifically, Ma. Jopette received a call on October 16, 2006 from
Saudia's Base Manager, Abdulmalik Saddik

(Abdulmalik).13 Montassah was informed personally by Abdulmalik

and a certain Faisal Hussein on October 20, 2006 after being
required to report to the office one (1) month into her maternity
leave.14 Rouen Ruth was also personally informed by Abdulmalik on
October 17, 2006 after being required to report to the office by her
Group Supervisor.15 Loraine received a call on October 12, 2006
from her Group Supervisor, Dakila Salvador.16
Saudia anchored its disapproval of respondents' maternity leaves
and demand for their resignation on its "Unified Employment
Contract for Female Cabin Attendants" (Unified Contract). 17 Under
the Unified Contract, the employment of a Flight Attendant who
becomes pregnant is rendered void. It
provides:chanroblesvirtuallawlibrary
(H) Due to the essential nature of the Air Hostess functions to be
physically fit on board to provide various services required in
normal or emergency cases on both domestic/international flights
beside her role in maintaining continuous safety and security of
passengers, and since she will not be able to maintain the required
medical fitness while at work in case of pregnancy, accordingly, if
the Air Hostess becomes pregnant at any time during the term
of this contract, this shall render her employment contract as
void and she will be terminated due to lack of medical
fitness.18 (Emphasis supplied)
In their Comment on the present Petition,19 respondents
emphasized that the Unified Contract took effect on September 23,
2006 (the first day of Ramadan),20 well after they had filed and had
their maternity leaves approved. Ma. Jopette filed her maternity
leave application on September 5, 2006. 21Montassah filed her
maternity leave application on August 29, 2006, and its approval
was already indicated in Saudia's computer system by August 30,
2006.22 Rouen Ruth filed her maternity leave application on
September 13, 2006,23 and Loraine filed her maternity leave
application on August 22, 2006.24

Rather than comply and tender resignation letters, respondents

filed separate appeal letters that were all rejected. 25
Despite these initial rejections, respondents each received calls on
the morning of November 6, 2006 from Saudia's office secretary
informing them that their maternity leaves had been approved.
Saudia, however, was quick to renege on its approval. On the
evening of November 6, 2006, respondents again received calls
informing them that it had received notification from Jeddah, Saudi
Arabia that their maternity leaves had been disapproved. 26
Faced with the dilemma of resigning or totally losing their benefits,
respondents executed handwritten resignation letters. In
Montassah's and Rouen Ruth's cases, their resignations were
executed on Saudia's blank letterheads that Saudia had provided.
These letterheads already had the word "RESIGNATION" typed on
the subject portions of their headings when these were handed to
respondents.27
On November 8, 2007, respondents filed a Complaint against
Saudia and its officers for illegal dismissal and for underpayment of
salary, overtime pay, premium pay for holiday, rest day, premium,
service incentive leave pay, 13th month pay, separation pay, night
shift differentials, medical expense reimbursements, retirement
benefits, illegal deduction, lay-over expense and allowances, moral
and exemplary damages, and attorney's fees.28 The case was initially
assigned to Labor Arbiter Hermino V. Suelo and docketed as NLRC
NCR Case No. 00-11-12342-07.
Saudia assailed the jurisdiction of the Labor Arbiter. 29 It claimed
that all the determining points of contact referred to foreign law and
insisted that the Complaint ought to be dismissed on the ground
of forum non conveniens.30 It added that respondents had no cause

of action as they resigned voluntarily.31

On December 12, 2008, Executive Labor Arbiter Fatima JambaroFranco rendered the Decision32dismissing respondents' Complaint.
The dispositive portion of this Decision
reads:chanroblesvirtuallawlibrary
WHEREFORE, premises' considered, judgment is hereby
rendered DISMISSING the instant complaint for lack of
jurisdiction/merit.33cralawlawlibrary
On respondents' appeal, the National Labor Relations Commission's
Sixth Division reversed the ruling of Executive Labor Arbiter
Jambaro-Franco. It explained that "[considering that complainantsappellants are OFWs, the Labor Arbiters and the NLRC has [sic]
jurisdiction to hear and decide their complaint for illegal
termination."34 On the matter of forum non conveniens, it noted that
there were no special circumstances that warranted its abstention
from exercising jurisdiction.35 On the issue of whether respondents
were validly dismissed, it held that there was nothing on record to
support Saudia's claim that respondents resigned voluntarily.
The dispositive portion of the November 19, 2009 National Labor
Relations Commission Decision36reads:chanroblesvirtuallawlibrary
WHEREFORE, premises considered, judgment is hereby rendered
finding the appeal impressed with merit. The respondents-appellees
are hereby directed to pay complainants-appellants the aggregate
amount of SR614,001.24 corresponding to their backwages and
separation pay plus ten (10%) percent thereof as attorney's fees.
The decision of the Labor Arbiter dated December 12, 2008 is
hereby VACATED and SET ASIDE. Attached is the computation
prepared by this Commission and made an integral part of this
Decision.37cralawlawlibrary
In the Resolution dated February 11, 2010, 38 the National Labor
Relations Commission denied petitioners' Motion for
Reconsideration.

In the June 16, 2011 Decision,39 the Court of Appeals denied

petitioners' Rule 65 Petition and modified the Decision of the
National Labor Relations Commission with respect to the award of
separation pay and backwages.
The dispositive portion of the Court of Appeals Decision
reads:chanroblesvirtuallawlibrary
WHEREFORE, the instant petition is hereby DENIED. The Decision
dated November 19, 2009 issued by public respondent, Sixth
Division of the National Labor Relations Commission - National
Capital Region is MODIFIED only insofar as the computation of the
award of separation pay and backwages. For greater clarity,
petitioners are ordered to pay private respondents separation pay
which shall be computed from private respondents' first day of
employment up to the finality of this decision, at the rate of one
month per year of service and backwages which shall be computed
from the date the private respondents were illegally terminated until
finality of this decision. Consequently, the ten percent (10%)
attorney's fees shall be based on the total amount of the award. The
assailed Decision is affirmed in all other respects.
The labor arbiter is hereby DIRECTED to make a recomputation
based on the foregoing.40cralawlawlibrary
In the Resolution dated September 13, 2011, 41 the Court of Appeals
denied petitioners' Motion for Reconsideration.
Hence, this Appeal was filed.
The issues for resolution are the following:
First, whether the Labor Arbiter and the National Labor Relations
Commission may exercise jurisdiction over Saudi Arabian Airlines
and apply Philippine law in adjudicating the present dispute;

Second, whether respondents' voluntarily resigned or were illegally

terminated; and
Lastly, whether Brenda J. Betia may be held personally liable along
with Saudi Arabian Airlines.chanRoblesvirtualLawlibrary
I
Summons were validly served on Saudia and jurisdiction over it
validly acquired.
There is no doubt that the pleadings and summons were served on
Saudia through its counsel.42Saudia, however, claims that the Labor
Arbiter and the National Labor Relations Commission had no
jurisdiction over it because summons were never served on it but
on "Saudia Manila."43 Referring to itself as "Saudia Jeddah," it
claims that "Saudia Jeddah" and not "Saudia Manila" was the
employer of respondents because:
First, "Saudia Manila" was never a party to the Cabin Attendant
contracts entered into by respondents;
Second, it was "Saudia Jeddah" that provided the funds to pay for
respondents' salaries and benefits; and
Lastly, it was with "Saudia Jeddah" that respondents filed their
resignations.44
Saudia posits that respondents' Complaint was brought against the
wrong party because "Saudia Manila," upon which summons was
served, was never the employer of respondents. 45
Saudia is vainly splitting hairs in its effort to absolve itself of
liability. Other than its bare allegation, there is no basis for

concluding that "Saudia Jeddah" is distinct from "Saudia Manila."

What is clear is Saudia's statement in its own Petition that what it
has is a "Philippine Office . . . located at 4/F Metro House Building,
Sen. Gil J. Puyat Avenue, Makati City."46 Even in the position paper
that Saudia submitted to the Labor Arbiter,47 what Saudia now
refers to as "Saudia Jeddah" was then only referred to as "Saudia
Head Office at Jeddah, KSA,"48 while what Saudia now refers to as
"Saudia Manila" was then only referred to as "Saudia's office in
Manila."49
By its own admission, Saudia, while a foreign corporation, has a
Philippine office.
Section 3(d) of Republic Act No.. 7042, otherwise known as the
Foreign Investments Act of 1991, provides the
following:chanroblesvirtuallawlibrary
The phrase "doing business" shall include . . . opening offices,
whether called "liaison" offices or branches; . . . and any other
act or acts that imply a continuity of commercial dealings or
arrangements and contemplate to that extent the performance of
acts or works, or the exercise of some of the functions normally
incident to, and in progressive prosecution of commercial gain or of
the purpose and object of the business organization. (Emphasis
supplied)
A plain application of Section 3(d) of the Foreign Investments Act
leads to no other conclusion than that Saudia is a foreign
corporation doing business in the Philippines. As such, Saudia may
be sued in the Philippines and is subject to the jurisdiction of
Philippine tribunals.
Moreover, since there is no real distinction between "Saudia Jeddah"
and "Saudia Manila" the latter being nothing more than Saudia's
local office service of summons to Saudia's office in Manila

sufficed to vest jurisdiction over Saudia's person in Philippine

tribunals.chanRoblesvirtualLawlibrary
II
Saudia asserts that Philippine courts and/or tribunals are not in a
position to make an intelligent decision as to the law and the facts.
This is because respondents' Cabin Attendant contracts require the
application of the laws of Saudi Arabia, rather than those of the
Philippines.50 It claims that the difficulty of ascertaining foreign law
calls into operation the principle of forum non conveniens, thereby
rendering improper the exercise of jurisdiction by Philippine
tribunals.51
A choice of law governing the validity of contracts or the
interpretation of its provisions dees not necessarily imply forum non
conveniens. Choice of law and forum non conveniens are entirely
different matters.
Choice of law provisions are an offshoot of the fundamental
principle of autonomy of contracts. Article 1306 of the Civil Code
firmly ensconces this:chanroblesvirtuallawlibrary
Article 1306. The contracting parties may establish such
stipulations, clauses, terms and conditions as they may deem
convenient, provided they are not contrary to law, morals, good
customs, public order, or public policy.
In contrast, forum non conveniens is a device akin to the rule
against forum shopping. It is designed to frustrate illicit means for
securing advantages and vexing litigants that would otherwise be
possible if the venue of litigation (or dispute resolution) were left
entirely to the whim of either party.
Contractual choice of law provisions factor into transnational
litigation and dispute resolution in one of or in a combination of
four ways: (1) procedures for settling disputes, e.g., arbitration; (2)

forum, i.e., venue; (3) governing law; and (4) basis for
interpretation. Forum non conveniens relates to, but is not
subsumed by, the second of these.
Likewise, contractual choice of law is not determinative of
jurisdiction. Stipulating on the laws of a given jurisdiction as the
governing law of a contract does not preclude the exercise of
jurisdiction by tribunals elsewhere. The reverse is equally true: The
assumption of jurisdiction by tribunals does not ipso facto mean
that it cannot apply and rule on the basis of the parties' stipulation.
In Hasegawa v. Kitamura:52ChanRoblesVirtualawlibrary
Analytically, jurisdiction and choice of law are two distinct concepts.
Jurisdiction considers whether it is fair to cause a defendant to
travel to this state; choice of law asks the further question whether
the application of a substantive law V'hich will determine the merits
of the case is fair to both parties. The power to exercise jurisdiction
does not automatically give a state constitutional authority to apply
forum law. While jurisdiction and the choice of the lex fori will often,
coincide, the "minimum contacts" for one do not always provide the
necessary "significant contacts" for the other. The question of
whether the law of a state can be applied to a transaction is
different from the question of whether the courts of that state have
jurisdiction to enter a judgment.53cralawlawlibrary
As various dealings, commercial or otherwise, are facilitated by the
progressive ease of communication and travel, persons from various
jurisdictions find themselves transacting with each other. Contracts
involving foreign elements are, however, nothing new. Conflict of
laws situations precipitated by disputes and litigation anchored on
these contracts are not totally novel.
Transnational transactions entail differing laws on the requirements
Q for the validity of the formalities and substantive provisions of
contracts and their interpretation. These transactions inevitably
lend themselves to the possibility of various fora for litigation and

dispute resolution. As observed by an eminent expert on

transnational law:chanroblesvirtuallawlibrary
The more jurisdictions having an interest in, or merely even a point
of contact with, a transaction or relationship, the greater the
number of potential fora for the resolution of disputes arising out of
or related to that transaction or relationship. In a world of increased
mobility, where business and personal transactions transcend
national boundaries, the jurisdiction of a number of different fora
may easily be invoked in a single or a set of related
disputes.54cralawlawlibrary
Philippine law is definite as to what governs the formal or extrinsic
validity of contracts. The first paragraph of Article 17 of the Civil
Code provides that "[t]he forms and solemnities of contracts . . .
shall be governed by the laws of the country in which they are
executed"55 (i.e., lex loci celebrationis).
In contrast, there is no statutorily established mode of settling
conflict of laws situations on matters pertaining to substantive
content of contracts. It has been noted that three (3) modes have
emerged: (1) lex loci contractus or the law of the place of the making;
(2) lex loci solutionis or the law of the place of performance; and
(3) lex loci intentionis or the law intended by the parties.56
Given Saudia's assertions, of particular relevance to resolving the
present dispute is lex loci intentionis.
An author observed that Spanish jurists and commentators
"favor lex loci intentionis."57 These jurists and commentators proceed
from the Civil Code of Spain, which, like our Civil Code, is silent on
what governs the intrinsic validity of contracts, and the same civil
law traditions from which we draw ours.
In this jurisdiction, this court, in Philippine Export and Foreign Loan
Guarantee v. V.P. Eusebio Construction, Inc.,58 manifested preference

for allowing the parties to select the law applicable to their

contract":chanroblesvirtuallawlibrary
No conflicts rule on essential validity of contracts is expressly
provided for in our laws. The rule followed by most legal systems,
however, is that the intrinsic validity of a contract must be governed
by the lex contractus or "proper law of the contract." This is the law
voluntarily agreed upon by the parties (the lex loci voluntatis) or the
law intended by them either expressly or implicitly (the lex loci
intentionis). The law selected may be implied from such factors as
substantial connection with the transaction, or the nationality or
domicile of the parties. Philippine courts would do well to adopt the
first and most basic rule in most legal systems, namely, to allow the
parties to select the law applicable to their contract, subject to the
limitation that it is not against the law, morals, or public policy of the
forum and that the chosen law must bear a substantive relationship
to the transaction.59 (Emphasis in the original)
Saudia asserts that stipulations set in the Cabin Attendant
contracts require the application of the laws of Saudi Arabia. It
insists that the need to comply with these stipulations calls into
operation the doctrine of forum non conveniens and, in turn, makes
it necessary for Philippine tribunals to refrain from exercising
jurisdiction.
As mentioned, contractual choice of laws factors into transnational
litigation in any or a combination of four (4) ways. Moreover, forum
non conveniens relates to one of these: choosing between multiple
possible fora.
Nevertheless, the possibility of parallel litigation in multiple fora
along with the host of difficulties it poses is not unique to
transnational litigation. It is a difficulty that similarly arises in
disputes well within the bounds of a singe jurisdiction.
When parallel litigation arises strictly within the context of a single

jurisdiction, such rules as those on forum shopping, litis pendentia,

and res judicata come into operation. Thus, in the Philippines, the
1997 Rules on Civil Procedure provide for willful and deliberate
forum shopping as a ground not only for summary dismissal with
prejudice but also for citing parties and counsels in direct
contempt, as well as for the imposition of administrative
sanctions.60 Likewise, the same rules expressly provide that a party
may seek the dismissal of a Complaint or another pleading
asserting a claim on the ground "[t]hat there is another action
pending between the same parties for the same cause," i.e., litis
pendentia, or "[t]hat the cause of action is barred by a prior
judgment,"61 i.e., res judicata.
Forum non conveniens, like the rules of forum shopping, litis
pendentia, and res judicata, is a means of addressing the problem of
parallel litigation. While the rules of forum shopping, litis pendentia,
and res judicata are designed to address the problem of parallel
litigation within a single jurisdiction, forum non conveniens is a
means devised to address parallel litigation arising in multiple
jurisdictions.
Forum non conveniens literally translates to "the forum is
inconvenient."62 It is a concept in private international law and was
devised to combat the "less than honorable" reasons and excuses
that litigants use to secure procedural advantages, annoy and
harass defendants, avoid overcrowded dockets, and select a
"friendlier" venue.63 Thus, the doctrine of forum non
conveniens addresses the same rationale that the rule against
forum shopping does, albeit on a multijurisdictional scale.
Forum non conveniens, like res judicata,64 is a concept originating in
common law.65 However, unlike the rule on res judicata, as well as
those on litis pendentia and forum shopping, forum non
conveniensfinds no textual anchor, whether in statute or in

procedural rules, in our civil law system. Nevertheless,

jurisprudence has applied forum non conveniens as basis for a court
to decline its exercise of jurisdiction.66
Forum non conveniens is soundly applied not only to address
parallel litigation and undermine a litigant's capacity to vex and
secure undue advantages by engaging in forum shopping on an
international scale. It is also grounded on principles of comity and
judicial efficiency.
Consistent with the principle of comity, a tribunal's desistance in
exercising jurisdiction on account of forum non conveniens is a
deferential gesture to the tribunals of another sovereign. It is a
measure that prevents the former's having to interfere in affairs
which are better and more competently addressed by the latter.
Further, forum non conveniens entails a recognition not only that
tribunals elsewhere are better suited to rule on and resolve a
controversy, but also, that these tribunals are better positioned to
enforce judgments and, ultimately, to dispense justice. Forum non
conveniensprevents the embarrassment of an awkward situation
where a tribunal is rendered incompetent in the face of the greater
capability both analytical and practical of a tribunal in
another jurisdiction.
The wisdom of avoiding conflicting and unenforceable judgments is
as much a matter of efficiency and economy as it is a matter of
international courtesy. A court would effectively be neutering itself
if it insists on adjudicating a controversy when it knows full well
that it is in no position to enforce its judgment. Doing so is not only
an exercise in futility; it is an act of frivolity. It clogs the dockets of
a.tribunal and leaves it to waste its efforts on affairs, which, given
transnational exigencies, will be reduced to mere academic, if not
trivial, exercises.

Accordingly, under the doctrine of forum non conveniens, "a court,

in conflicts of law cases, mayrefuse impositions on its jurisdiction
where it is not the most 'convenient' or available forum and the
parties are not precluded from seeking remedies
elsewhere."67 In Puyat v. Zabarte,68 this court recognized the
following situations as among those that may warrant a court's
desistance from exercising jurisdiction:chanroblesvirtuallawlibrary
1) The belief that the matter can be better tried and decided
elsewhere, either because the main aspects of the case
transpired in a foreign jurisdiction or the material witnesses
have their residence there;
2) The belief that the non-resident plaintiff sought the forum[,] a
practice known as forum shopping[,] merely to secure procedural
advantages or to convey or harass the defendant;
3) The unwillingness to extend local judicial facilities to non
residents or aliens when the docket may already be overcrowded;
4) The inadequacy of the local judicial machinery for effectuating
the right sought to be maintained; and
5) The difficulty of ascertaining foreign law. 69
In Bank of America, NT&SA, Bank of America International, Ltd. v.
Court of Appeals,70 this court underscored that a Philippine court
may properly assume jurisdiction over a case if it chooses to do so
to the extent: "(1) that the Philippine Court is one to which the
parties may conveniently resort to; (2) that the Philippine Court is
in a position to make an intelligent decision as to the law and the
facts; and (3) that the Philippine Court has or is likely to have power
to enforce its decision."71
The use of the word "may" (i.e., "may refuse impositions on its
jurisdiction"72) in the decisions shows that the matter of jurisdiction

rests on the sound discretion of a court. Neither the mere

invocation of forum non conveniens nor the averment of foreign
elements operates to automatically divest a court of jurisdiction.
Rather, a court should renounce jurisdiction only "after 'vital facts
are established, to determine whether special circumstances'
require the court's desistance."73 As the propriety of applying forum
non conveniens is contingent on a factual determination, it is,
therefore, a matter of defense.74
The second sentence of Rule 9, Section 1 of the 1997 Rules of Civil
Procedure is exclusive in its recital of the grounds for dismissal that
are exempt from the omnibus motion rule: (1) lack of jurisdiction
over the subject matter; (2) litis pendentia; (3) res judicata; and (4)
prescription. Moreover, dismissal on account offorum non
conveniens is a fundamentally discretionary matter. It is, therefore,
not a matter for a defendant to foist upon the court at his or her
own convenience; rather, it must be pleaded at the earliest possible
opportunity.
On the matter of pleading forum non conveniens, we state the rule,
thus: Forum non conveniens must not only be clearly pleaded as a
ground for dismissal; it must be pleaded as such at the earliest
possible opportunity. Otherwise, it shall be deemed waived.
This court notes that in Hasegawa,76 this court stated that forum
non conveniens is not a ground for a motion to dismiss. The factual
ambience of this case however does not squarely raise the viability
of this doctrine. Until the opportunity comes to review the use of
motions to dismiss for parallel litigation, Hasegawa remains
existing doctrine.
Consistent with forum non conveniens as fundamentally a factual
matter, it is imperative that it proceed from & factually established
basis. It would be improper to dismiss an action pursuant to forum

non conveniens based merely on a perceived, likely, or hypothetical

multiplicity of fora. Thus, a defendant must also plead and show
that a prior suit has, in fact, been brought in another jurisdiction.
The existence of a prior suit makes real the vexation engendered by
duplicitous litigation, the embarrassment of intruding into the
affairs of another sovereign, and the squandering of judicial efforts
in resolving a dispute already lodged and better resolved elsewhere.
As has been noted:chanroblesvirtuallawlibrary
A case will not be stayed o dismissed on [forum] non
conveniens grounds unless the plaintiff is shown to have an
available alternative forum elsewhere. On this, the moving party
bears the burden of proof.
A number of factors affect the assessment of an alternative forum's
adequacy. The statute of limitations abroad may have run, of the
foreign court may lack either subject matter or personal jurisdiction
over the defendant. . . . Occasionally, doubts will be raised as to the
integrity or impartiality of the foreign court (based, for example, on
suspicions of corruption or bias in favor of local nationals), as to the
fairness of its judicial procedures, or as to is operational efficiency
(due, for example, to lack of resources, congestion and delay, or
interfering circumstances such as a civil unrest). In one noted case,
[it was found] that delays of 'up to a quarter of a century' rendered
the foreign forum... inadequate for these
purposes.77cralawlawlibrary
We deem it more appropriate and in the greater interest of prudence
that a defendant not only allege supposed dangerous tendencies in
litigating in this jurisdiction; the defendant must also show that such
danger is real and present in that litigation or dispute resolution has
commenced in another jurisdiction and that a foreign tribunal has
chosen to exercise jurisdiction.
III

Forum non conveniens finds no application and does not operate to

divest Philippine tribunals of jurisdiction and to require the
application of foreign law.
Saudia invokes forum non conveniens to supposedly effectuate the
stipulations of the Cabin Attendant contracts that require the
application of the laws of Saudi Arabia.
Forum non conveniens relates to forum, not to the choice of
governing law. Thai forum non conveniensmay ultimately result in
the application of foreign law is merely an incident of its
application. In this strict sense, forum non conveniens is not
applicable. It is not the primarily pivotal consideration in this case.
In any case, even a further consideration of the applicability
of forum non conveniens on the incidental matter of the law
governing respondents' relation with Saudia leads to the conclusion
that it is improper for Philippine tribunals to divest themselves of
jurisdiction.
Any evaluation of the propriety of contracting parties' choice of a
forum and'its incidents must grapple with two (2) considerations:
first, the availability and adequacy of recourse to a foreign tribunal;
and second, the question of where, as between the forum court and a
foreign court, the balance of interests inhering in a dispute weighs
more heavily.
The first is a pragmatic matter. It relates to the viability of ceding
jurisdiction to a foreign tribunal and can be resolved by juxtaposing
the competencies and practical circumstances of the tribunals in
alternative fora. Exigencies, like the statute of limitations, capacity
to enforce orders and judgments, access to records, requirements
for the acquisition of jurisdiction, and even questions relating to the

integrity of foreign courts, may render undesirable or even totally

unfeasible recourse to a foreign court. As mentioned, we consider it
in the greater interest of prudence that a defendant show, in
pleading forum non conveniens, that litigation has commenced in
another jurisdiction and that a foieign tribunal has, in fact, chosen
to exercise jurisdiction.
Two (2) factors weigh into a court's appraisal of the balance of
interests inhering in a dispute: first, the vinculum which the parties
and their relation have to a given jurisdiction; and second, the
public interest that must animate a tribunal, in its capacity as an
agent of the sovereign, in choosing to assume or decline
jurisdiction. The first is more concerned with the parties, their
personal circumstances, and private interests; the second concerns
itself with the state and the greater social order.
In considering the vinculum, a court must look into the
preponderance of linkages which the parties and their transaction
may have to either jurisdiction. In this respect, factors, such as the
parties' respective nationalities and places of negotiation, execution,
performance, engagement or deployment, come into play.
In considering public interest, a court proceeds with a
consciousness that it is an organ of the state. It must, thus,
determine if the interests of the sovereign (which acts through it)
are outweighed by those of the alternative jurisdiction. In this
respect, the court delves into a consideration of public policy.
Should it find that public interest weighs more heavily in favor of its
assumption of jurisdiction, it should proceed in adjudicating the
dispute, any doubt or .contrary view arising from the
preponderance of linkages notwithstanding.
Our law on contracts recognizes the validity of contractual choice of
law provisions. Where such provisions exist, Philippine tribunals,

acting as the forum court, generally defer to the parties' articulated

choice.
This is consistent with the fundamental principle of autonomy of
contracts. Article 1306 of the Civ:l Code expressly provides that
"[t]he contracting parties may establish 'such stipulations, clauses,
terms and conditions as they may deem convenient." 78 Nevertheless,
while a Philippine tribunal (acting as the forum court) is called
upon to respect the parties' choice of governing law, such respect
must not be so permissive as to lose sight of considerations of law,
morals, good customs, public order, or public policy that underlie
the contract central to the controversy.
Specifically with respect to public policy, in Pakistan International
Airlines Corporation v. Ople,79 this court explained
that:chanroblesvirtuallawlibrary
counter-balancing the principle of autonomy of contracting parties
is the equally general rule that provisions of applicable law,
especially provisions relating to matters affected with public policy,
are deemed written inta the contract. Put a little differently, the
governing principle is that parties may not contract away applicable
provisions of law especially peremptory provisions dealing with
matters heavily impressed with public interest. 80 (Emphasis
supplied)
Article II, Section 14 of the 1987 Constitution provides that "[t]he
State ... shall ensure the fundamental equality before the law of
women and men." Contrasted with Article II, Section 1 of the 1987
Constitution's statement that "[n]o person shall ... be denied the
equal protection of the laws," Article II, Section 14 exhorts the State
to "ensure." This does not only mean that the Philippines shall not
countenance nor lend legal recognition and approbation to
measures that discriminate on the basis of one's being male or
female. It imposes an obligation to actively engage in securing the
fundamental equality of men and women.

The Convention on the Elimination of all Forms of Discrimination

against Women (CEDAW), signed and ratified by the Philippines on
July 15, 1980, and on August 5, 1981, respectively, 81 is part of the
law of the land. In view of the widespread signing and ratification of,
as well as adherence (in practice) to it by states, it may even be said
that many provisions of the CEDAW may have become customary
international law. The CEDAW gives effect to the Constitution's
policy statement in Article II, Section 14. Article I of the CEDAW
defines "discrimination against women"
as:chanroblesvirtuallawlibrary
any distinction, exclusion or restriction made on the basis of sex
which has the effect or purpose of impairing or nullifying the
recognition, enjoyment or exercise by women, irrespective of their
marital status, on a basis of equality of men and women, of human
rights and fundamental freedoms in the political, economic, social,
cultural, civil or any other field.82cralawlawlibrary
The constitutional exhortation to ensure fundamental equality, as
illumined by its enabling law, the CEDAW, must inform and animate
all the actions of all personalities acting on behalf of the State. It is,
therefore, the bounden duty of this court, in rendering judgment on
the disputes brought before it, to ensure that no discrimination is
heaped upon women on the mere basis of their being women. This
is a point so basic and central that all our discussions and
pronouncements regardless of whatever averments there may be
of foreign law must proceed from this premise.
So informed and animated, we emphasize the glaringly
discriminatory nature of Saudia's policy. As argued by respondents,
Saudia's policy entails the termination of employment of flight
attendants who become pregnant. At the risk of stating the
obvious, pregnancy is an occurrence that pertains specifically to
women. Saudia's policy excludes from and restricts employment on
the basis of no other consideration but sex.

We do not lose sight of the reality that pregnancy does present

physical limitations that may render difficult the performance of
functions associated with being a flight attendant. Nevertheless, it
would be the height of iniquity to view pregnancy as a disability so
permanent and immutable that, it must entail the termination of
one's employment. It is clear to us that any individual, regardless of
gender, may be subject to exigencies that limit the performance of
functions. However, we fail to appreciate how pregnancy could be
such an impairing occurrence that it leaves no other recourse but
the complete termination of the means through which a woman
earns a living.
Apart from the constitutional policy on the fundamental equality
before the law of men and women, it is settled that contracts
relating to labor and employment are impressed with public
interest. Article 1700 of the Civil Code provides that "[t]he relation
between capital and labor are not merely contractual. They are so
impressed with public interest that labor contracts must yield to the
common good."
Consistent with this, this court's pronouncements in Pakistan
International Airlines Corporation83 are clear and
unmistakable:chanroblesvirtuallawlibrary
Petitioner PIA cannot take refuge in paragraph 10 of its employment
agreement which specifies, firstly, the law of Pakistan as the
applicable law of the agreement, and, secondly, lays the venue for
settlement of any dispute arising out of or in connection with the
agreement "only [in] courts of Karachi, Pakistan". The first clause of
paragraph 10 cannot be invoked to prevent the application of
Philippine labor laws and'regulations to the subject matter of this
case, i.e., the employer-employee relationship between petitioner PIA
and private respondents. We have already pointed out that the
relationship is much affected with public interest and that the

otherwise applicable Philippine laws and regulations cannot be

rendered illusory by the parties agreeing upon some other law to
govern their relationship. . . . Under these circumstances, paragraph
10 of the employment agreement cannot be given effect so as to
oust Philippine agencies and courts of the jurisdiction vested upon
them by Philippine law.84 (Emphasis supplied)
As the present dispute relates to (what the respondents allege to be)
the illegal termination of respondents' employment, this case is
immutably a matter of public interest and public policy. Consistent
with clear pronouncements in law and jurisprudence, Philippine
laws properly find application in and govern this case. 'Moreover, as
this premise for Saudia's insistence on the application forum non
conveniens has been shattered, it follows that Philippine tribunals
may properly assume jurisdiction over the present controversy.
Philippine jurisprudence provides ample illustrations of when a
court's renunciation of jurisdiction on account of forum non
conveniens is proper or improper.'
In Philsec Investment Corporation v. Court of Appeals,85 this court
noted that the trial court failed to consider that one of the plaintiffs
was a domestic corporation, that one of the defendants was a
Filipino, and that it was the extinguishment of the latter's debt that
was the object of the transaction subject of the litigation. Thus, this
court held, among others, that the trial court's refusal to assume
jurisdiction was not justified by forum non conveniens and
remanded the case to the trial court.
In Raytheon International, Inc. v. Rouzie, Jr.,86 this court sustained
the trial court's assumption of jurisdiction considering that the trial
court could properly enforce judgment on the petitioner which was
a foreign corporation licensed to do business in the Philippines.
In Pioneer International, Ltd. v. Guadiz, Jr.,87 this court found no
reason to disturb the trial court's assumption of jurisdiction over a

case in which, as noted by the trial court, "it is more convenient to

hear and decide the case in the Philippines because Todaro [the
plaintiff] resides in the Philippines and the contract allegedly
breached involve[d] employment in the Philippines." 88
In Pacific Consultants International Asia, Inc. v. Schonfeld,89 this
court held that the fact that the complainant in an illegal dismissal
case was a Canadian citizen and a repatriate did not warrant the
application of forum non conveniens considering that: (1) the Labor
Code does not include forum non conveniens as a ground for the
dismissal of a complaint for illegal dismissal; (2) the propriety of
dismissing a case based on forum non conveniens requires a factual
determination; and (3) the requisites for assumption of jurisdiction
as laid out in Bank of America, NT&SA90 were all satisfied.
In contrast, this court ruled in The Manila Hotel Corp. v. National
Labor Relations Commission91 that the National Labor Relations Q
Commission was a seriously inconvenient forum. In that case,
private respondent Marcelo G. Santos was working in the Sultanate
of Oman when he received a letter from Palace Hotel recruiting him
for employment in Beijing, China. Santos accepted the offer.
Subsequently, however, he was released from employment
supposedly due to business reverses arising from political
upheavals in China (i.e., the Tiananmen Square incidents of 1989).
Santos later filed a Complaint for illegal dismissal impleading Palace
Hotel's General Manager, Mr. Gerhard Schmidt, the Manila Hotel
International Company Ltd. (which was, responsible for training
Palace Hotel's personnel and staff), and the Manila Hotel
Corporation (which owned 50% of Manila Hotel International
Company Ltd.'s capital stock).
In ruling against the National Labor Relations Commission's
exercise of jurisdiction, this court noted that the main aspects of
the case transpired in two (2) foreign jurisdictions, Oman and

China, and that the case involved purely foreign elements.

Specifically, Santos was directly hired by a foreign employer through
correspondence sent to Oman. Also, the proper defendants were
neither Philippine nationals nor engaged in business in the
Philippines, while the main witnesses were not residents of the
Philippines. Likewise, this court noted that the National Labor
Relations Commission was in no position to conduct the following:
first, determine the law governing the employment contract, as it
was entered into in foreign soil; second, determine the facts, as
Santos' employment was terminated in Beijing; and third, enforce
its judgment, since Santos' employer, Palace Hotel, was
incorporated under the laws of China and was not even served with
summons.
Contrary to Manila Hotel, the case now before us does not entail a
preponderance of linkages that favor a foreign jurisdiction.
Here, the circumstances of the parties and their relation do not
approximate the circumstances enumerated in Puyat,92 which this
court recognized as possibly justifying the desistance of Philippine
tribunals from exercising jurisdiction.
First, there is no basis for concluding that the case can be more
conveniently tried elsewhere. As established earlier, Saudia is doing
business in the Philippines. For their part, all four (4) respondents
are Filipino citizens maintaining residence in the Philippines and,
apart from their previous employment with Saudia, have no other
connection to the Kingdom of Saudi Arabia. It would even be to
respondents' inconvenience if this case were to be tried elsewhere.
Second, the records are bereft of any indication that respondents
filed their Complaint in an effort to engage in forum shopping or to
vex and inconvenience Saudia.

Third, there is no indication of "unwillingness to extend local

judicial facilities to non-residents or aliens."93 That Saudia has
managed to bring the present controversy all the way to this court
proves this.
Fourth, it cannot be said that the local judicial machinery is
inadequate for effectuating the right sought to be maintained.
Summons was properly served on Saudia and jurisdiction over its
person was validly acquired.
Lastly, there is not even room for considering foreign law. Philippine
law properly governs the present dispute.
As the question of applicable law has been settled, the supposed
difficulty of ascertaining foreign law (which requires the application
of forum non conveniens) provides no insurmountable inconvenience
or special circumstance that will justify depriving Philippine
tribunals of jurisdiction.
Even if we were to assume, for the sake of discussion, that it is the
laws of Saudi Arabia which should apply, it does not follow that
Philippine tribunals should refrain from exercising jurisdiction. To.
recall our pronouncements in Puyat,94 as well as in Bank of
America, NT&SA,95 it is not so much the mere applicability of foreign
law which calls into operation forum non conveniens. Rather, what
justifies a court's desistance from exercising jurisdiction is
"[t]he difficulty of ascertaining foreign law"96 or the inability of a
"Philippine Court to make an intelligent decision as to the law[.]" 97
Consistent with lex loci intentionis, to the extent that it is proper
and practicable (i.e., "to make an intelligent decision" 98), Philippine
tribunals may apply the foreign law selected by the parties. In fact,
(albeit without meaning to make a pronouncement on the accuracy
and reliability of respondents' citation) in this case, respondents

themselves have made averments as to the laws of Saudi Arabia. In

their Comment, respondents write:chanroblesvirtuallawlibrary
Under the Labor Laws of Saudi Arabia and the Philippines[,] it is
illegal and unlawful to terminate the employment of any woman by
virtue of pregnancy. The law in Saudi Arabia is even more harsh
and strict [sic] in that no employer can terminate the employment of
a female worker or give her a warning of the same while on
Maternity Leave, the specific provision of Saudi Labor Laws on the
matter is hereto quoted as follows:chanroblesvirtuallawlibrary
"An employer may not terminate the employment of a female worker
or give her a warning of the same while on maternity leave." (Article
155, Labor Law of the Kingdom of Saudi Arabia, Royal Decree No.
M/51.)99cralawlawlibrary
All told, the considerations for assumption of jurisdiction by
Philippine tribunals as outlined in Bank of America, NT&SA100 have
been satisfied. First, all the parties are based in the Philippines and
all the material incidents transpired in this jurisdiction. Thus, the
parties may conveniently seek relief from Philippine tribunals.
Second, Philippine tribunals are in a position to make an intelligent
decision as to the law and the facts. Third, Philippine tribunals are
in a position to enforce their decisions. There is no compelling basis
for ceding jurisdiction to a foreign tribunal. Quite the contrary, the
immense public policy considerations attendant to this case
behoove Philippine tribunals to not shy away from their duty to rule
on the case.chanRoblesvirtualLawlibrary
IV
Respondents were illegally terminated.
In Bilbao v. Saudi Arabian Airlines,101 this court defined voluntary
resignation as "the voluntary act of an employee who is in a
situation where one believes that personal reasons cannot be
sacrificed in favor of the exigency of the service, and one has no
other choice but to dissociate oneself from employment. It is a

formal pronouncement or relinquishment of an office, with the

intention of relinquishing the office accompanied by the act of
relinquishment."102 Thus, essential to the act of resignation is
voluntariness. It must be the result of an employee's exercise of his
or her own will.
In the same case of Bilbao, this court advanced a means for
determining whether an employee resigned
voluntarily:chanroblesvirtuallawlibrary
As the intent to relinquish must concur with the overt act of
relinquishment, the acts of the employee before and after the alleged
resignation must be considered in determining whether he or she, in
fact, intended, to sever his or her employment.103(Emphasis supplied)
On the other hand, constructive dismissal has been defined as
"cessation of work because 'continued employment is rendered
impossible, unreasonable or unlikely, as an offer involving a
demotion in rank or a diminution in pay' and other benefits." 104
In Penaflor v. Outdoor Clothing Manufacturing
Corporation,105 constructive dismissal has been described as
tantamount to "involuntarily [sic] resignation due to the harsh,
hostile, and unfavorable conditions set by the employer." 106 In the
same case, it was noted that "[t]he gauge for constructive dismissal
is whether a reasonable person in the employee's position would feel
compelled to give up his employment under the prevailing
circumstances."107
Applying the cited standards on resignation and constructive
dismissal, it is clear that respondents were constructively
dismissed. Hence, their termination was illegal.
The termination of respondents' employment happened when they
were pregnant and expecting to incur costs on account of child
delivery and infant rearing. As noted by the Court of Appeals,

pregnancy is a time when they need employment to sustain their

families.108 Indeed, it goes against normal and reasonable human
behavior to abandon one's livelihood in a time of great financial
need.
It is clear that respondents intended to remain employed with
Saudia. All they did was avail of their maternity leaves. Evidently,
the very nature of a maternity leave means that a pregnant
employee will not report for work only temporarily and that she will
resume the performance of her duties as soon as the leave
allowance expires.
It is also clear that respondents exerted all efforts to' remain
employed with Saudia. Each of them repeatedly filed appeal letters
(as much as five [5] letters in the case of Rebesencio 109) asking
Saudia to reconsider the ultimatum that they resign or be
terminated along with the forfeiture of their benefits. Some of them
even went to Saudia's office to personally seek reconsideration. 110
Respondents also adduced a copy of the "Unified Employment
Contract for Female Cabin Attendants."111 This contract deemed
void the employment of a flight attendant who becomes pregnant
and threatened termination due to lack of medical fitness. 112 The
threat of termination (and the forfeiture of benefits that it entailed)
is enough to compel a reasonable person in respondents' position to
give up his or her employment.
Saudia draws attention to how respondents' resignation letters were
supposedly made in their own handwriting. This minutia fails to
surmount all the other indications negating any voluntariness on
respondents' part. If at all, these same resignation letters are proof
of how any supposed resignation did not arise from respondents'
own initiative. As earlier pointed out, respondents' resignations were
executed on Saudia's blank letterheads that Saudia had provided.

These letterheads already had the word "RESIGNATION" typed on

the subject portion of their respective headings when these were
handed to respondents.113ChanRoblesVirtualawlibrary
"In termination cases, the burden of proving just or valid cause for
dismissing an employee rests on the employer." 114 In this case,
Saudia makes much of how respondents supposedly completed
their exit interviews, executed quitclaims, received their separation
pay, and took more than a year to file their Complaint. 115 If at all,
however, these circumstances prove only the fact of their
occurrence, nothing more. The voluntariness of respondents'
departure from Saudia is non sequitur.
Mere compliance with standard procedures or processes, such as
the completion of their exit interviews, neither negates compulsion
nor indicates voluntariness.
As with respondent's resignation letters, their exit interview forms
even support their claim of illegal dismissal and militates against
Saudia's arguments. These exit interview forms, as reproduced by
Saudia in its own Petition, confirms the unfavorable conditions as
regards respondents' maternity leaves. Ma. Jopette's and Loraine's
exit interview forms are particularly
telling:chanroblesvirtuallawlibrary
a. From Ma. Jopette's exit interview form:
3. In what respects has the job met or failed to meet your
expectations?
THE SUDDEN TWIST OF DECISION REGARDING THE MATERNITY
LEAVE.116
b. From Loraine's exit interview form:

1. What are your main reasons for leaving Saudia? What

company are you joining?
xxx xxx xxx
Others
CHANGING POLICIES REGARDING MATERNITY LEAVE
(PREGNANCY)117
As to respondents' quitclaims, in Phil. Employ Services and
Resources, Inc. v. Paramio,118 this court noted that "[i]f (a) there is
clear proof that the waiver was wangled from an unsuspecting or
gullible person; or (b) the terms of the settlement are
unconscionable, and on their face invalid, such quitclaims must be
struck down as invalid or illegal."119 Respondents executed their
quitclaims after having been unfairly given an ultimatum to resign
or be terminated (and forfeit their
benefits).chanRoblesvirtualLawlibrary
V
Having been illegally and unjustly dismissed, respondents are
entitled to full backwages and benefits from the time of their
termination until the finality of this Decision. They are likewise
entitled to separation pay in the amount of one (1) month's salary
for every year of service until the fmality of this Decision, with a
fraction of a year of at least six (6) months being counted as one (1)
whole year.
Moreover, "[m]oral damages are awarded in termination cases where
the employee's dismissal was attended by bad faith, malice or fraud,
or where it constitutes an act oppressive to labor, or where it was
done in a manner contrary to morals, good customs or public
policy."120 In this case, Saudia terminated respondents' employment
in a manner that is patently discriminatory and running afoul of
the public interest that underlies employer-employee relationships.
As such, respondents are entitled to moral damages.

To provide an "example or correction for the public good" 121 as

against such discriminatory and callous schemes, respondents are
likewise entitled to exemplary damages.
In a long line of cases, this court awarded exemplary damages to
illegally dismissed employees whose "dismissal[s were] effected in a
wanton, oppressive or malevolent manner."122 This court has
awarded exemplary damages to employees who were terminated on
such frivolous, arbitrary, and unjust grounds as membership in or
involvement with labor unions,123 injuries sustained in the course of
employment,124 development of a medical condition due to the
employer's own violation of the employment contract, 125 and lodging
of a Complaint against the employer.126 Exemplary damages were
also awarded to employees who were deemed illegally dismissed by
an employer in an attempt to evade compliance with statutorily
established employee benefits.127 Likewise, employees dismissed for
supposedly just causes, but in violation of due process
requirements, were awarded exemplary damages.128
These examples pale in comparison to the present controversy.
Stripped of all unnecessary complexities, respondents were
dismissed for no other reason than simply that they were pregnant.
This is as wanton, oppressive, and tainted with bad faith as any
reason for termination of employment can be. This is no ordinary
case of illegal dismissal. This is a case of manifest gender
discrimination. It is an affront not only to our statutes and policies
on employees' security of tenure, but more so, to the Constitution's
dictum of fundamental equality between men and women. 129
The award of exemplary damages is, therefore, warranted, not only
to remind employers of the need to adhere to the requirements of
procedural and substantive due process in termination of
employment, but more importantly, to demonstrate that gender

discrimination should in no case be countenanced.

Having been compelled to litigate to seek reliefs for their illegal and
unjust dismissal, respondents are likewise entitled to attorney's fees
in the amount of 10% of the total monetary award. 130
VI
Petitioner Brenda J. Betia may not be held liable.
A corporation has a personality separate and distinct from those of
the persons composing it. Thus, as a rule, corporate directors and
officers are not liable for the illegal termination of a corporation's
employees. It is only when they acted in bad faith or with malice
that they become solidarity liable with the corporation. 131
In Ever Electrical Manufacturing, Inc. (EEMI) v. Samahang
Manggagawa ng Ever Electrical,132 this court clarified that "[b]ad
faith does not connote bad judgment or negligence; it imports a
dishonest purpose or some moral obliquity and conscious doing of
wrong; it means breach of a known duty through some motive or
interest or ill will; it partakes of the nature of fraud." 133
Respondents have not produced proof to show that Brenda J. Betia
acted in bad faith or with malice as regards their termination. Thus,
she may not be held solidarity liable with Saudia.cralawred
WHEREFORE, with the MODIFICATIONS that first, petitioner
Brenda J. Betia is not solidarity liable with petitioner Saudi Arabian
Airlines, and second, that petitioner Saudi Arabian Airlines is liable
for moral and exemplary damages. The June 16, 2011 Decision and
the September 13, 2011 Resolution of the Court of Appeals in CAG.R. SP. No. 113006 are hereby AFFIRMED in all other respects.
Accordingly, petitioner Saudi Arabian Airlines is ordered to pay
respondents:

(1) Full backwages and all other benefits computed from the
respective dates in which each of the respondents were illegally
terminated until the finality of this Decision;
(2) Separation pay computed from the respective dates in which
each of the respondents commenced employment until the
finality of this Decision at the rate of one (1) month's salary for
every year of service, with a fraction of a year of at least six (6)
months being counted as one (1) whole year;
(3) Moral damages in the amount of P100,000.00 per respondent;
(4) Exemplary damages in the amount of P200,000.00 per
respondent; and
(5) Attorney's fees equivalent to 10% of the total award.
Interest of 6% per annum shall likewise be imposed on the total
judgment award from the finality of this Decision until full
satisfaction thereof.
This case is REMANDED to the Labor Arbiter to make a detailed
computation of the amounts due to respondents which petitioner
Saudi Arabian Airlines should pay without delay.
SO ORDERED.chanroblesvirtuallawlibrary
SECOND DIVISION
G.R. No. 205703, March 07, 2016
INDUSTRIAL PERSONNEL & MANAGEMENT SERVICES, INC.
(IPAMS), SNC LAVALIN ENGINEERS & CONTRACTORS, INC. AND
ANGELITO C. HERNANDEZ, Petitioners, v. JOSE G. DE VERA AND
ALBERTO B. ARRIOLA, Respondents.

DECISION

MENDOZA, J.:
When can a foreign law govern an overseas employment contract?
This is the fervent question that the Court shall resolve, once and
for all.
This petition for review on certiorari seeks to reverse and set aside
the January 24, 2013 Decision1 of the Court of Appeals (CA) in CAG.R. SP No. 118869, which modified the November 30, 2010
Decision2 of the National Labor Relations Commission (NLRC) and
its February 2, 2011 Resolution,3 in NLRC LAC Case No. 08000572-10/NLRC Case No. NCR 09-13563-09, a case for illegal
termination of an Overseas Filipino Worker (OFW).
The Facts
Petitioner Industrial Personnel & Management Services, Inc.
(IPAMS) is a local placement agency duly organized and existing
under Philippine laws, with petitioner Angelito C. Hernandez as its
president and managing director. Petitioner SNC Lavalin Engineers
& Contractors, Inc. (SNC-Lavalin) is the principal of IPAMS, a
Canadian company with business interests in several countries. On
the other hand, respondent Alberto Arriola (Arriola) is a licensed
general surgeon in the Philippines.4
Employee's Position
Arriola was offered by SNC-Lavalin, through its letter,5 dated May 1,
2008, the position of Safety Officer in its Ambatovy Project site in
Madagascar. The position offered had a rate of CA$32.00 per hour
for forty (40) hours a week with overtime pay in excess of forty (40)
hours. It was for a period of nineteen (19) months starting from
June 9, 2008 to December 31, 2009.

Arriola was then hired by SNC-Lavalin, through its local manning

agency, IPAMS, and his overseas employment contract was
processed with the Philippine Overseas Employment Agency
(POEA)6 In a letter of understanding,7 dated June 5, 2008, SNCLavalin confirmed Arriola's assignment in the Ambatovy Project.
According to Arriola, he signed the contract of employment in the
Philippines.8 On June 9, 2008, Arriola started working in
Madagascar.
After three months, Arriola received a notice of pre-termination of
employment,9 dated September 9, 2009, from SNC-Lavalin. It stated
that his employment would be pre-terminated effective September
11, 2009 due to diminishing workload in the area of his expertise
and the unavailability of alternative assignments. Consequently, on
September 15, 2009, Arriola was repatriated. SNC-Lavalin deposited
in Arriola's bank account his pay amounting to Two Thousand Six
Hundred Thirty Six Dollars and Eight Centavos (CA$2,636.80),
based on Canadian labor law.
Aggrieved, Arriola filed a complaint against the petitioners for illegal
dismissal and non-payment of overtime pay, vacation leave and sick
leave pay before the Labor Arbiter (LA). He claimed that SNC-Lavalin
still owed him unpaid salaries equivalent to the three-month
unexpired portion of his contract, amounting to, more or less, One
Million Sixty-Two Thousand Nine Hundred Thirty-Six Pesos
(P1,062,936.00). He asserted that SNC-Lavalin never offered any
valid reason for his early termination and that he was not given
sufficient notice regarding the same. Arriola also insisted that the
petitioners must prove the applicability of Canadian law before the
same could be applied to his employment contract.
Employer's Position
The petitioners denied the charge of illegal dismissal against them.

They claimed that SNC-Lavalin was greatly affected by the global

financial crises during the latter part of 2008. The economy of
Madagascar, where SNC-Lavalin had business sites, also slowed
down. As proof of its looming financial standing, SNC-Lavalin
presented a copy of a news item in the Financial Post, 10 dated
March 5, 2009, showing the decline of the value of its stocks. Thus,
it had no choice but to minimize its expenditures and operational
expenses. It re-organized its Health and Safety Department at the
Ambatovy Project site and Arriola was one of those affected. 11
The petitioners also invoked EDI-Staffbuilders International, Inc. v.
NLRC12 (EDI-Staffbuilders), pointing out that particular labor laws of
a foreign country incorporated in a contract freely entered into
between an OFW and a foreign employer through the latter's agent
was valid. In the present case, as all of Arriola's employment
documents were processed in Canada, not to mention that SNCLavalin's office was in Ontario, the principle of lex loci
celebrationis was applicable. Thus, the petitioners insisted that
Canadian laws governed the contract.
The petitioners continued that the pre-termination of Arriola's
contract was valid for being consistent with the provisions of both
the Expatriate Policy and laws of Canada. The said foreign law did
not require any ground for early termination of employment, and
the only requirement was the written notice of termination. Even
assuming that Philippine laws should apply, Arriola would still be
validly dismissed because domestic law recognized retrenchment
and redundancy as legal grounds for termination.
In their Rejoinder,13 the petitioners presented a copy of the
Employment Standards Act (ESA) of Ontario, which was duly
authenticated by the Canadian authorities and certified by the
Philippine Embassy.

The LA Ruling
In a Decision,14 dated May 31, 2010, the LA dismissed Arriola's
complaint for lack of merit. The LA ruled that the rights and
obligations among and between the OFW, the local recruiter/agent,
and the foreign employer/principal were governed by the
employment contract pursuant to the EDI-Staffbuilders case. Thus,
the provisions on termination of employment found in the ESA, a
foreign law which governed Arriola's employment contract, were
applied. Given that SNC-Lavalin was able to produce the duly
authenticated ESA, the LA opined that there was no other
conclusion but to uphold the validity of Arriola's dismissal based on
Canadian law. The fallo of the LA decision reads:
chanRoblesvirtualLawlibrary
WHEREFORE, all the foregoing premises being considered,
judgment is hereby rendered dismissing the complaint for lack of
merit.
SO ORDERED.15ChanRoblesVirtualawlibrary
Aggrieved, Arriola elevated the LA decision before the NLRC.
The NLRC Ruling
In its decision, dated November 30, 2010, the NLRC reversed the LA
decision and ruled that Arriola was illegally dismissed by the
petitioners. Citing PNB v. Cabansag,16 the NLRC stated that whether
employed locally or overseas, all Filipino workers enjoyed the
protective mantle of Philippine labor and social legislation, contract
stipulations to the contrary notwithstanding. Thus, the Labor Code
of the Philippines and Republic Act (R.A.) No. 8042, or the Migrant
Workers Act, as amended, should be applied. Moreover, the NLRC
added that the overseas employment contract of Arriola was
processed in the POEA.

Applying the Philippine laws, the NLRC found that there was no
substantial evidence presented by the petitioners to show any just
or authorized cause to terminate Arriola. The ground of financial
losses by SNC-Lavalin was not supported by sufficient and credible
evidence. The NLRC concluded that, for being illegally dismissed,
Arriola should be awarded CA$81,920.00 representing sixteen (16)
months of Arriola's purported unpaid salary, pursuant to
the Serrano v. Gallant17 doctrine. The decretal portion of the NLRC
decision states:
chanRoblesvirtualLawlibrary
WHEREFORE, premises considered, judgment is hereby rendered
finding complainant-appellant to have been illegally dismissed.
Respondents-appellees are hereby ordered to pay complainantappellant the amount of CA$81,920.00, or its Philippine Peso
equivalent prevailing at the time of payment. Accordingly, the
decision of the Labor Arbiter dated May 31, 2010 is hereby
VACATED and SET ASIDE.
SO ORDERED.18ChanRoblesVirtualawlibrary
The petitioners moved for reconsideration, but their motion was
denied by the NLRC in its resolution, dated February 2, 2011.
Undaunted, the petitioners filed a petition for certiorari before the
CA arguing that it should be the ESA, or the Ontario labor law, that
should be applied in Arriola's employment contract. No temporary
restraining order, however, was issued by the CA.
The Execution Proceedings
In the meantime, execution proceedings were commenced before the
LA by Arriola. The LA granted the motion for execution in the
Order,19 dated August 8, 2011.
The petitioners appealed the execution order to the NLRC. In its

Decision,20 dated May 31, 2012, the NLRC corrected the decretal
portion of its November 30, 2010 decision. It decreased the award of
backpay in the amount of CA$26,880.00 or equivalent only to three
(3) months and three (3) weeks pay based on 70-hours per week
workload. The NLRC found that when Arriola was dismissed on
September 9, 2009, he only had three (3) months and three (3)
weeks or until December 31, 2009 remaining under his employment
contract.
Still not satisfied with the decreased award, IPAMS filed a separate
petition for certiorari before the CA. In its decision, dated July 25,
2013, the CA affirmed the decrease in Arriola's backpay because
the unpaid period in his contract was just three (3) months and
three (3) weeks.
Unperturbed, IPAMS appealed before the Court and the case was
docketed as G.R. No. 212031. The appeal, however, was dismissed
outright by the Court in its resolution, dated August 8, 2014,
because it was belatedly filed and it did not comply with Sections 4
and 5 of Rule 7 of the Rules of Court. Hence, it was settled in the
execution proceedings that the award of backpay to Arriola should
only amount to three (3) months and three (3) weeks of his pay.
The CA Ruling
Returning to the principal case of illegal dismissal, in its assailed
January 24, 2013 decision, the CA affirmed that Arriola was
illegally dismissed by the petitioners. The CA explained that even
though an authenticated copy of the ESA was submitted, it did not
mean that the said foreign law automatically applied in this case.
Although parties were free to establish stipulations in their
contracts, the same must remain consistent with law, morals, good
custom, public order or public policy. The appellate court wrote that
the ESA allowed an employer to disregard the required notice of

termination by simply giving the employee a severance pay. The ESA

could not be made to apply in this case for being contrary to our
Constitution, specifically on the right of due process. Thus, the CA
opined that our labor laws should find application.
As the petitioners neither complied with the twin notice-rule nor
offered any just or authorized cause for his termination under the
Labor Code, the CA held that Arriola's dismissal was illegal.
Accordingly, it pronounced that Arriola was entitled to his salary for
the unexpired portion of his contract which is three (3) months and
three (3) weeks salary. It, however, decreased the award of backpay
to Arriola because the NLRC made a wrong calculation. Based on
his employment contract, the backpay of Arriola should only be
computed on a 40-hour per week workload, or in the amount of
CA$19,200.00. The CA disposed the case in this wise:
chanRoblesvirtualLawlibrary
WHEREFORE, in view of the foregoing premises, the petition is
PARTIALLY GRANTED. The assailed Order of the National Labor
Relations Commission in NLRC LAC No. 08-000572-10/NLRC Case
No. NCR 09-13563-09 is MODIFIED in that private respondent is
only entitled to a monetary judgment equivalent to his unpaid
salaries in the amount of CA$19,200.00 or its Philippine Peso
equivalent.
SO ORDERED.21ChanRoblesVirtualawlibrary
Hence, this petition, anchored on the following
ISSUES
I
WHETHER OR NOT RESPONDENT ARRIOLA WAS VALIDLY
DISMISSED PURSUANT TO THE EMPLOYMENT CONTRACT.
II

GRANTING THAT THERE WAS ILLEGAL DISMISSAL IN THE

CASE AT BAR, WHETHER OR NOT THE SIX-WEEK ON, TWOWEEK OFF SCHEDULE SHOULD BE USED IN THE
COMPUTATION OF ANY MONETARY AWARD.
III
GRANTING THAT THERE WAS ILLEGAL DISMISSAL, WHETHER
OR NOT THE AMOUNT BEING CLAIMED BY RESPONDENTS
HAD ALREADY BEEN SATISFIED, OR AT THE VERY LEAST,
WHETHER OR NOT THE AMOUNT OF CA$2,636.80 SHOULD BE
DEDUCTED FROM THE MONETARY
AWARD.22ChanRoblesVirtualawlibrary
The petitioners argue that the rights and obligations of the OFW,
the local recruiter, and the foreign employer are governed by the
employment contract, citing EDI-Staffbuilders; that the terms and
conditions of Arriola's employment are embodied in the Expatriate
Policy, Ambatovy Project - Site, Long Term, hence, the laws of
Canada must be applied; that the ESA, or the Ontario labor law,
does not require any ground for the early termination of
employment and it permits the termination without any notice
provided that a severance pay is given; that the ESA was duly
authenticated by the Canadian authorities and certified by the
Philippine Embassy; that the NLRC Sixth Division exhibited bias
and bad faith when it made a wrong computation on the award of
backpay; and that, assuming there was illegal dismissal, the
CA$2,636.80, earlier paid to Arriola, and his home leaves should be
deducted from the award of backpay.
In his Comment,23 Arriola countered that foreign laws could not
apply to employment contracts if they were contrary to law, morals,
good customs, public order or public policy, invoking Pakistan
International Airlines Corporation v. Ople (Pakistan

International);24 that the ESA was not applicable because it was

contrary to his constitutional right to due process; that the
petitioners failed to substantiate an authorized cause to justify his
dismissal under Philippine labor law; and that the petitioners could
not anymore claim a deduction of CA$2,636.80 from the award of
backpay because it was raised for the first time on appeal.
In their Reply,25 the petitioners asserted that R.A. No. 8042
recognized the applicability of foreign laws on labor contracts; that
the Pakistan International case was superseded by EDIStaffbuilders and other subsequent cases; and that SNC-Lavalin
suffering financial losses was an authorized cause to terminate
Arriola's employment.
In his Memorandum,26 Arriola asserted that his employment
contract was executed in the Philippines and that the alleged
authorized cause of financial losses by the petitioners was not
substantiated by evidence.
In their Consolidated Memorandum,27 the petitioners reiterated that
the ESA was applicable in the present case and that recent
jurisprudence recognized that the parties could agree on the
applicability of foreign laws in their labor contracts.
The Court's Ruling
The petition lacks merit.
Application of foreign laws with labor contracts
At present, Filipino laborers, whether skilled or professional, are
enticed to depart from the motherland in search of greener
pastures. There is a distressing reality that the offers of employment
abroad are more lucrative than those found in our own soils. To
reap the promises of the foreign dream, our unsung heroes must

endure homesickness, solitude, discrimination, mental and

emotional struggle, at times, physical turmoil, and, worse, death.
On the other side of the table is the growing number of foreign
employers attracted in hiring Filipino workers because of their
reasonable compensations and globally-competitive skills and
qualifications. Between the dominant foreign employers and the
vulnerable and desperate OFWs, however, there is an inescapable
truth that the latter are in need of greater safeguard and protection.
In order to afford the full protection of labor to our OFWs, the State
has vigorously enacted laws, adopted regulations and policies, and
established agencies to ensure that their needs are satisfied and
that they continue to work in a humane living environment outside
of the country. Despite these efforts, there are still issues left
unsolved in the realm of overseas employment. One existing
question is posed before the Court -when should an overseas labor
contract be governed by a foreign law? To answer this burning
query, a review of the relevant laws and jurisprudence is warranted.
R.A. No. 8042, or the Migrant Workers Act, was enacted to institute
the policies on overseas employment and to establish a higher
standard of protection and promotion of the welfare of migrant
workers.28 It emphasized that while recognizing the significant
contribution of Filipino migrant workers to the national economy
through their foreign exchange remittances, the State does not
promote overseas employment as a means to sustain economic
growth and achieve national development.29 Although it
acknowledged claims arising out of law or contract involving Filipino
workers,30 it does not categorically provide that foreign laws are
absolutely and automatically applicable in overseas employment
contracts.
The issue of applying foreign laws to labor contracts was initially
raised before the Court in Pakistan International. It was stated in

the labor contract therein (1) that it would be governed by the laws
of Pakistan, (2) that the employer have the right to terminate the
employee at any time, and (3) that the one-month advance notice in
terminating the employment could be dispensed with by paying the
employee an equivalent one-month salary. Therein, the Court
elaborated on the parties' right to stipulate in labor contracts, to
wit:
chanRoblesvirtualLawlibrary
A contract freely entered into should, of course, be respected, as PIA
argues, since a contract is the law between the parties. The
principle of party autonomy in contracts is not, however, an
absolute principle. The rule in Article 1306, of our Civil Code is that
the contracting parties may establish such stipulations as they may
deem convenient, "provided they are not contrary to law, morals,
good customs, public order or public policy." Thus, counterbalancing the principle of autonomy of contracting parties is the
equally general rule that provisions of applicable law, especially
provisions relating to matters affected with public policy, are
deemed written into the contract. Put a little differently, the
governing principle is that parties may not contract away applicable
provisions of law especially peremptory provisions dealing with
matters heavily impressed with public interest. The law relating to
labor and employment is clearly such an area and parties are
not at liberty to insulate themselves and their relationships
from the impact of labor laws and regulations by simply
contracting with each other. x x x31
[Emphases Supplied]
In that case, the Court held that the labor relationship between
OFW and the foreign employer is "much affected with public interest
and that the otherwise applicable Philippine laws and regulations
cannot be rendered illusory by the parties agreeing upon some
other law to govern their relationship." 32 Thus, the Court applied
the Philippine laws, instead of the Pakistan laws. It was also held

that the provision in the employment contract, where the employer

could terminate the employee at any time for any ground and it
could even disregard the notice of termination, violates the
employee's right to security of tenure under Articles 280 and 281 of
the Labor Code.
In EDI-Staffbuilders, the case heavily relied on by the petitioners, it
was reiterated that, "[i]n formulating the contract, the parties may
establish such stipulations, clauses, terms and conditions as they
may deem convenient, provided they are not contrary to law,
morals, good customs, public order, or public policy." 33 In that case,
the overseas contract specifically stated that Saudi Labor Laws
would govern matters not provided for in the contract. The
employer, however, failed to prove the said foreign law, hence, the
doctrine of processual presumption came into play and the
Philippine labor laws were applied. Consequently, the Court did not
discuss any longer whether the Saudi labor laws were contrary to
Philippine labor laws.
The case of Becmen Service Exporter and Promotion, Inc. v. Spouses
Cuaresma,34 though not an illegal termination case, elucidated on
the effect of foreign laws on employment. It involved a complaint for
insurance benefits and damages arising from the death of a Filipina
nurse from Saudi Arabia. It was initially found therein that there
was no law in Saudi Arabia that provided for insurance arising from
labor accidents. Nevertheless, the Court concluded that the
employer and the recruiter in that case abandoned their legal,
moral and social obligation to assist the victim's family in obtaining
justice for her death, and so her family was awarded P5,000,000.00
for moral and exemplary damages.
In ATCI Overseas Corporation v. Echin35 (ATCI Overseas), the private
recruitment agency invoked the defense that the foreign employer
was immune from suit and that it did not sign any document

agreeing to be held jointly and solidarily liable. Such defense,

however, was rejected because R.A. No. 8042 precisely afforded the
OFWs with a recourse against the local agency and the foreign
employer to assure them of an immediate and sufficient payment of
what was due. Similar to EDI-Staffbuilders, the local agency therein
failed to prove the Kuwaiti law specified in the labor contract,
pursuant to Sections 24 and 25 of Rule 132 of the Revised Rules of
Court.
Also, in the recent case of Sameer Overseas Placement Agency, Inc.
v. Cabiles36 (Sameer Overseas), it was declared that the security of
tenure for labor was guaranteed by our Constitution and employees
were not stripped of the same when they moved to work in other
jurisdictions. Citing PCL Shipping Phils., Inc. v. NLRC37 (PCL
Shipping), the Court held that the principle of lex loci contractus (the
law of the place where the contract is made) governed in this
jurisdiction. As it was established therein that the overseas labor
contract was executed in the Philippines, the Labor Code and the
fundamental procedural rights were observed. It must be noted that
no foreign law was specified in the employment contracts in both
cases.
Lastly, in Saudi Arabian Airlines (Saudia) v. Rebesencio38, the
employer therein asserted the doctrine of forum non conveniens
because the overseas employment contracts required the
application of the laws of Saudi Arabia, and so, the Philippine
courts were not in a position to hear the case. In striking down
such argument, the Court held that while a Philippine tribunal was
called upon to respect the parties' choice of governing law, such
respect must not be so permissive as to lose sight of considerations
of law, morals, good customs, public order, or public policy that
underlie the contract central to the controversy. As the dispute in
that case related to the illegal termination of the employees due to
their pregnancy, then it involved a matter of public interest and

public policy. Thus, it was ruled that Philippine laws properly found
application and that Philippine tribunals could assume jurisdiction.
Based on the foregoing, the general rule is that Philippine laws
apply even to overseas employment contracts. This rule is rooted in
the constitutional provision of Section 3, Article XIII that the State
shall afford full protection to labor, whether local or overseas.
Hence, even if the OFW has his employment abroad, it does not
strip him of his rights to security of tenure, humane conditions of
work and a living wage under our Constitution.39
As an exception, the parties may agree that a foreign law shall
govern the employment contract. A synthesis of the existing laws
and jurisprudence reveals that this exception is subject to the
following requisites:
chanRoblesvirtualLawlibrary
1. That it is expressly stipulated in the overseas
employment contract that a specific foreign law shall
govern;
2. That the foreign law invoked must be proven before the
courts pursuant to the Philippine rules on evidence;
3. That the foreign law stipulated in the overseas
employment contract must not be contrary to law,
morals, good customs, public order, or public policy of
the Philippines; and
4. That the overseas employment contract must be
processed through the POEA.
The Court is of the view that these four (4) requisites must be
complied with before the employer could invoke the applicability of a
foreign law to an overseas employment contract. With these
requisites, the State would be able to abide by its constitutional
obligation to ensure that the rights and well-being of our OFWs are
fully protected. These conditions would also invigorate the policy
under R.A. No. 8042 that the State shall, at all times, uphold the

dignity of its citizens whether in country or overseas, in general,

and the Filipino migrant workers, in particular.40 Further, these
strict terms are pursuant to the jurisprudential doctrine that
"parties may not contract away applicable provisions of law
especially peremptory provisions dealing with matters heavily
impressed with public interest,"41 such as laws relating to labor. At
the same time, foreign employers are not at all helpless to apply
their own laws to overseas employment contracts provided that they
faithfully comply with these requisites.
If the first requisite is absent, or that no foreign law was expressly
stipulated in the employment contract which was executed in the
Philippines, then the domestic labor laws shall apply in accordance
with the principle of lex loci contractus. This is based on the cases
of Sameer Overseasand PCL Shipping.
If the second requisite is lacking, or that the foreign law was not
proven pursuant to Sections 24 and 25 of Rule 132 of the Revised
Rules of Court, then the international law doctrine of processual
presumption operates. The said doctrine declares that "[w]here a
foreign law is not pleaded or, even if pleaded, is not proved, the
presumption is that foreign law is the same as ours." 42 This was
observed in the cases of EDI-Staffbuilders and ATCI Overseas.
If the third requisite is not met, or that the foreign law stipulated is
contrary to law, morals, good customs, public order or public policy,
then Philippine laws govern. This finds legal bases in the Civil Code,
specifically: (1) Article 17, which provides that laws which have, for
their object, public order, public policy and good customs shall not
be rendered ineffective by laws of a foreign country; and (2) Article
1306, which states that the stipulations, clauses, terms and
conditions in a contract must not be contrary to law, morals, good
customs, public order, or public policy. The said doctrine was
applied in the case of Pakistan International.

Finally, if the fourth requisite is missing, or that the overseas

employment contract was not processed through the POEA, then
Article 18 of the Labor Code is violated. Article 18 provides that no
employer may hire a Filipino worker for overseas employment except
through the boards and entities authorized by the Secretary of
Labor. In relation thereto, Section 4 of R.A. No. 8042, as amended,
declares that the State shall only allow the deployment of overseas
Filipino workers in countries where the rights of Filipino migrant
workers are protected. Thus, the POEA, through the assistance of
the Department of Foreign Affairs, reviews and checks whether the
countries have existing labor and social laws protecting the rights of
workers, including migrant workers.43 Unless processed through the
POEA, the State has no effective means of assessing the suitability
of the foreign laws to our migrant workers. Thus, an overseas
employment contract that was not scrutinized by the POEA
definitely cannot be invoked as it is an unexamined foreign law.
In other words, lacking any one of the four requisites would
invalidate the application of the foreign law, and the Philippine law
shall govern the overseas employment contract.
As the requisites of the applicability of foreign laws in overseas labor
contract have been settled, the Court can now discuss the merits of
the case at bench.
A judicious scrutiny of the records of the case demonstrates that
the petitioners were able to observe the second requisite, or that the
foreign law must be proven before the court pursuant to the
Philippine rules on evidence. The petitioners were able to present
the ESA, duly authenticated by the Canadian authorities and
certified by the Philippine Embassy, before the LA. The fourth
requisite was also followed because Arriola's employment contract
was processed through the POEA.44

Unfortunately for the petitioners, those were the only requisites that
they complied with. As correctly held by the CA, even though an
authenticated copy of the ESA was submitted, it did not mean that
said foreign law could be automatically applied to this case. The
petitioners miserably failed to adhere to the two other requisites,
which shall be discussed in seratim.
The foreign law was not expressly specified in the employment
contract
The petitioners failed to comply with the first requisite because no
foreign law was expressly stipulated in the overseas employment
contract with Arriola. In its pleadings, the petitioners did not
directly cite any specific provision or stipulation in the said labor
contract which indicated the applicability of the Canadian labor
laws or the ESA. They failed to show on the face of the contract that
a foreign law was agreed upon by the parties. Rather, they simply
asserted that the terms and conditions of Arriola's employment
were embodied in the Expatriate Policy, Ambatovy Project - Site,
Long Term.45 Then, they emphasized provision 8.20 therein,
regarding interpretation of the contract, which provides that said
policy would be governed and construed with the laws of the
country where the applicable SNC-Lavalin, Inc. office was
located.46 Because of this provision, the petitioners insisted that the
laws of Canada, not of Madagascar or the Philippines, should apply.
Then, they finally referred to the ESA.
It is apparent that the petitioners were simply attempting to stretch
the overseas employment contract of Arriola, by implication, in
order that the alleged foreign law would apply. To sustain such
argument would allow any foreign employer to improperly invoke a
foreign law even if it is not anymore reasonably contemplated by the
parties to control the overseas employment. The OFW, who is

susceptible by his desire and desperation to work abroad, would

blindly sign the labor contract even though it is not clearly
established on its face which state law shall apply. Thus, a better
rule would be to obligate the foreign employer to expressly declare at
the onset of the labor contract that a foreign law shall govern it. In
that manner, the OFW would be informed of the applicable law
before signing the contract.
Further, it was shown that the overseas labor contract was executed
by Arriola at his residence in Batangas and it was processed at the
POEA on May 26, 2008.47 Considering that no foreign law was
specified in the contract and the same was executed in the
Philippines, the doctrine of lex loci celebrationis applies and the
Philippine laws shall govern the overseas employment of Arriola.
The foreign law invoked is contrary to the Constitution and the Labor
Code
Granting arguendo that the labor contract expressly stipulated the
applicability of Canadian law, still, Arriola's employment cannot be
governed by such foreign law because the third requisite is not
satisfied. A perusal of the ESA will show that some of its provisions
are contrary to the Constitution and the labor laws of the
Philippines.
First, the ESA does not require any ground for the early termination
of employment.48 Article 54 thereof only provides that no employer
should terminate the employment of an employee unless a written
notice had been given in advance.49 Necessarily, the employer can
dismiss any employee for any ground it so desired. At its own
pleasure, the foreign employer is endowed with the absolute power
to end the employment of an employee even on the most whimsical
grounds.

Second, the ESA allows the employer to dispense with the prior
notice of termination to an employee. Article 65(4) thereof indicated
that the employer could terminate the employment without notice
by simply paying the employee a severance pay computed on the
basis of the period within which the notice should have been
given.50 The employee under the ESA could be immediately
dismissed without giving him the opportunity to explain and defend
himself.
The provisions of the ESA are patently inconsistent with the right to
security of tenure. Both the Constitution51 and the Labor
Code52 provide that this right is available to any employee. In a host
of cases, the Court has upheld the employee's right to security of
tenure in the face of oppressive management behavior and
management prerogative. Security of tenure is a right which cannot
be denied on mere speculation of any unclear and nebulous basis. 53
Not only do these provisions collide with the right to security of
tenure, but they also deprive the employee of his constitutional
right to due process by denying him of any notice of termination
and the opportunity to be heard.54 Glaringly, these disadvantageous
provisions under the ESA produce the same evils which the Court
vigorously sought to prevent in the cases of Pakistan
Internationaland Sameer Overseas. Thus, the Court concurs with
the CA that the ESA is not applicable in this case as it is against
our fundamental and statutory laws.
In fine, as the petitioners failed to meet all the four (4) requisites on
the applicability of a foreign law, then the Philippine labor laws
must govern the overseas employment contract of Arriola.
No authorized cause for dismissal was proven
Article 279 of our Labor Code has construed security of tenure to

mean that the employer shall not terminate the services of an

employee except for a just cause or when authorized by
law.55Concomitant to the employer's right to freely select and engage
an employee is the employer's right to discharge the employee for
just and/or authorized causes. To validly effect terminations of
employment, the discharge must be for a valid cause in the manner
required by law. The purpose of these two-pronged qualifications is
to protect the working class from the employer's arbitrary and
unreasonable exercise of its right to dismiss. 56
Some of the authorized causes to terminate employment under the
Labor Code would be installation of labor-saving devices,
redundancy, retrenchment to prevent losses and the closing or
cessation of operation of the establishment or undertaking. 57 Each
authorized cause has specific requisites that must be proven by the
employer with substantial evidence before a dismissal may be
considered valid.
Here, the petitioners assert that the economy of Madagascar
weakened due to the global financial crisis. Consequently, SNCLavalin's business also slowed down. To prove its sagging financial
standing, SNC-Lavalin presented a copy of a news item in the
Financial Post, dated March 5, 2009. They insist that SNC-Lavalin
had no choice but to minimize its expenditures and operational
expenses.58 In addition, the petitioners argued that the government
of Madagascar prioritized the employment of its citizens, and not
foreigners. Thus, Arriola was terminated because there was no more
job available for him.59
The Court finds that Arriola was not validly dismissed. The
petitioners simply argued that they were suffering from financial
losses and Arriola had to be dismissed. It was not even clear what
specific authorized cause, whether retrenchment or redundancy,
was used to justify Arriola's dismissal. Worse, the petitioners did

not even present a single credible evidence to support their claim of

financial loss. They simply offered an unreliable news article which
deserves scant consideration as it is undoubtedly hearsay. Time and
again the Court has ruled that in illegal dismissal cases like the
present one, the onus of proving that the employee was dismissed
and that the dismissal was not illegal rests on the employer, and
failure to discharge the same would mean that the dismissal is not
justified and, therefore, illegal.60
As to the amount of backpay awarded, the Court finds that the
computation of the CA was valid and proper based on the
employment contract of Arriola. Also, the issue of whether the
petitioners had made partial payments on the backpay is a matter
best addressed during the execution process.chanrobleslaw
WHEREFORE, the petition is DENIED. The January 24, 2013
Decision of the Court of Appeals in CA-G.R. SP No. 118869
is AFFIRMED in toto.
SO ORDERED.