G.R. No. 211497. March 18, 2015. HOCHENG PHILIPPINES CORPORATION, Petitioner, Vs - ANTONIO M. FARRALES, Respondent

G.R. No. 211497. March 18, 2015.
*

HOCHENG PHILIPPINES CORPORATION, petitioner, vs.ANTONIO M. FARRALES, respondent.
Labor Law; Termination of Employment; To validly dismiss an employee, the law requires the employer to prove the existence
of any of the valid or authorized causes, which, as enumerated in Article 282 of the Labor Code.—To validly dismiss an employee,
the law requires the employer to prove the existence of any of the valid or authorized causes, which, as enumerated in Article 282 of
the Labor Code, are: (a) serious misconduct or willful disobedience by the employee of the lawful orders of his employer or the
latter’s 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 his 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
representative; and (e) other causes analogous to the foregoing. As a supervisorial employee, Farrales is admittedly subject to stricter
rules of trust and confidence, and thus pursuant to its management prerogative HPC enjoys a wider latitude of discretion to assess his
continuing trustworthiness, than if he were an ordinary rank-and-file employee. HPC therefore insists that only substantial proof of
Farrales’ guilt for theft is needed to establish the just causes to dismiss him, as the NLRC lengthily asserted in its decision.
Same; Same; Security of Tenure; Consistent with the State’s avowed policy to afford protection to labor, as Article 3 of the
Labor Code and Section 3, Article XIII of the 1987 Constitution have enunciated, particularly in relation to the worker’s security of
tenure, the Court held that [t]o be lawful, the cause for termination must be a serious and grave malfeasance to justify the deprivation
of a means of livelihood.—Article 4 of the Labor Code mandates that all doubts in the implementation and interpretation of the
provisions thereof shall be resolved in favor of labor. Consistent with the State’s avowed policy to afford protection to labor, as
Article 3 of the Labor Code and Section 3, Article XIII of the 1987 Constitution have enunciated,
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* THIRD DIVISION.
32
32 SUPREME COURT REPORTS ANNOTATED
Hocheng Philippines Corporation vs. Farrales
particularly in relation to the worker’s security of tenure, the Court held that “[t]o be lawful, the cause for termination must be a
serious and grave malfeasance to justify the deprivation of a means of livelihood. This is merely in keeping with the spirit of our
Constitution and laws which lean over backwards in favor of the working class, and mandate that every doubt must be resolved in
their favor.” Moreover, the penalty imposed on the erring employee ought to be proportionate to the offense, taking into account its
nature and surrounding circumstances.
Same; Same; Serious Misconduct; Theft; Theft committed by an employee against a person other than his employer, if proven
by substantial evidence, is a cause analogous to serious misconduct.—Theft committed by an employee against a person other than
his employer, if proven by substantial evidence, is a cause analogous to serious misconduct. Misconduct is improper or wrong
conduct, it is the transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, willful in
character, and implies wrongful intent and not mere error in judgment. The misconduct to be serious must be of such grave and
aggravated character and not merely trivial or unimportant. Such misconduct, however serious, must, nevertheless, be in connection
with the employee’s work to constitute just cause for his separation.
PETITION for review on certiorari of a decision of the Court of Appeals.
The facts are stated in the opinion of the Court.
Zamora, Poblador, Vasquez & Bretana for petitioner.
Frederick T. Yu for respondent.

REYES, J.:

Before this Court on Petition for Review on Certiorari1 is the Decision2 dated October 17, 2013 of the Court of Appeals
_______________
1 Rollo, pp. 22-49.

2 Penned by Associate Justice Florito S. Macalino, with Associate Justices Sesinando E. Villon and Pedro B. Corales,
concurring; id., at pp. 54-64.
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VOL. 754, MARCH 18, 2015 33
(CA) in C.A.-G.R. S.P. No. 125103, which reversed the Decision 3 dated February 29, 2012 and Resolution4 dated May 7, 2012 of
the National Labor Relations Commission (NLRC) in NLRC LAC No. 08-002249-11, and reinstated with modifications the
Decision5 dated April 29, 2011 of the Labor Arbiter (LA) in NLRC Case No. RAB-IV-03-00618-10-C, which found that respondent
Antonio M. Farrales (Farrales) was illegally dismissed by Hocheng Philippines Corporation (HPC). The fallo of the appellate decision
reads:
1
WHEREFORE, premises considered, the Decision of the Labor Arbiter dated April 29, 2011 in NLRC Case No. RAB-IV-03-
00618-10-C is reinstated with modifications. Private respondent Hocheng Philippines Corporation is liable to pay [Farrales] the
following:
(1) Full backwages from date of dismissal on February 15, 2010 until date of decision equivalent to P276,466.67;
(2) Separation pay of one (1) month salary per year of service for a period of twelve years equivalent to P228,800.00;
(3) Appraisal year-end bonus in the sum of P11,000.00; and
(4) Attorney’s fees equivalent to 10% of the total award.
SO ORDERED.6

The Facts

Farrales was first employed by HPC on May 12, 1998 as Production Operator, followed by promotions as (1) Leadman
_______________
3 Penned by Presiding Commissioner Herminio V. Suelo, with Commissioners Angelo Ang Palana and Numeriano D. Villena,
concurring; id., at pp. 150-168.
4 Id., at pp. 170-172.
5 Issued by Labor Arbiter Edgar B. Bisana; id., at pp. 117-124.
6 Id., at pp. 63-64.
34
in 2004, (2) Acting Assistant Unit Chief in 2007, and (3) Assistant Unit Chief of Production in 2008, a supervisory position with a
monthly salary of P17,600.00. He was a consistent recipient of citations for outstanding performance, as well as appraisal and year-
end bonuses.7
On December 2, 2009, a report reached HPC management that a motorcycle helmet of an employee, Reymar Solas (Reymar), was
stolen at the parking lot within its premises on November 27, 2009. On December 3, 2009, Security Officer Francisco Paragas III
confirmed a video sequence recorded on closed-circuit television (CCTV) around 3:00 p.m. on November 27, 2009 showing Farrales
taking the missing helmet from a parked motorcycle, to wit:
a. At around 3:07:44, [Farrales] was seen walking towards the motorcycle parking lot;
b. At around 3:08:47, [Farrales] walked back towards the pedestrian gate of the company, passing by the motorcycle parking lot;
c. At around 3:08:51, [Farrales] walked back towards the motorcycle parking lot and returned to the pedestrian gate;
d. At around 3:09:10, [Farrales] called on the person of Andy Lopega and instructed him to get the helmet he was pointing at;
[and]
e. At around 3:09:30, Andy gave the helmet to [Farrales]. 8

Later that day, HPC sent Farrales a notice to explain his involvement in the alleged theft. The investigation was supported by the
employees’ union, ULO-Hocheng.9 Below is Farrales’ explanation, as summarized by the CA:
_______________
7 Id., at p. 55.
8 Id., at pp. 55-56.
9 Id., at p. 56.
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VOL. 754, MARCH 18, 2015 35
On November 27, 2009, [Farrales] borrowed a helmet from his coworker Eric Libutan (“Eric”) since they reside in the
same barangay. They agreed that Eric could get it at the house of [Farrales] or the latter could return it the next time that they will see
each other. Eric told him that his motorcycle was black in color. As there were many motorcycles with helmets, he asked another
employee, Andy Lopega (“Andy”) who was in the parking area where he could find Eric’s helmet. Andy handed over to him the
supposed helmet which he believed to be owned by Eric, then he went home.
On November 28, 2009, at around 6 o’clock in the morning, he saw Eric at their barangay and told him to get the helmet. But Eric
was in a rush to go to work, he did not bother to get it.
In the morning of December 3, 2009, upon seeing Eric in the workplace, [Farrales] asked him why he did not get the helmet from
his house. Eric told him that, “Hindi po sa akin yung nakuha nyong helmet.” [Farrales] was shocked and he immediately phoned the
HPC’s guard to report the situation that he mistook the helmet which he thought belonged to Eric. After several employees were asked
as to the ownership of the helmet, he finally found the owner thereof, which is Jun Reyes’s (“Jun”) nephew, Reymar, who was with
him on November 27, 2009. [Farrales] promptly apologized to Jun and undertook to return the helmet the following day and explained
2
that it was an honest mistake. These all happened in the morning of December 3, 2009; [Farrales] did not know yet that HPC will send
a letter demanding him to explain.10

A hearing was held on December 10, 2009 at 1:00 p.m. Present were Farrales, Eric Libutan (Eric), Andy Lopega (Andy), Jun
Reyes, Antonio Alinda, a witness, and Rolando Garciso, representing ULO-Hocheng. From Andy it was learned that at the time of the
alleged incident, he was already seated on
_______________
10 Id., at pp. 56-57.

36
his motorcycle and about to leave the company compound when Farrales approached and asked him to hand to him a yellow
helmet hanging from a motorcycle parked next to him. When Andy hesitated, Farrales explained that he owned it, and so Andy
complied. But Eric had specifically told Farrales that his helmet was colored red and black and his motorcycle was a black Honda
XRM-125 with plate number 8746-DI, parked near the perimeter fence away from the walkway to the pedestrian gate. The CCTV
showed Farrales instructing Andy to fetch a yellow helmet from a blue Rossi 110 motorcycle with plate number 3653-DN parked in
the middle of the parking lot, opposite the location given by Eric. Farrales in his defense claimed he could no longer remember the
details of what transpired that time, nor could he explain why he missed Eric’s specific directions. 11
On February 15, 2010, the HPC issued a Notice of Termination 12 to Farrales dismissing him for violation of Article 69, Class A,
Item No. 29 of the HPC Code of Discipline, which provides that “stealing from the company, its employees and officials, or from its
contractors, visitors or clients,” is akin to serious misconduct and fraud or willful breach by the employee of the trust reposed in
him by his employer or duly authorized representative, which are just causes for termination of employment under Article 282 of the
Labor Code.
On March 25, 2010, Farrales filed a complaint for illegal dismissal, nonpayment of appraisal and mid-year bonuses, service
incentive leave pay and 13th month pay. He also prayed for reinstatement, or in lieu thereof, separation pay with full backwages, plus
moral and exemplary damages and attorney’s fees. During the mandatory conference, HPC paid Farrales P10,914.51, representing his
13th month pay for the period of January to February 2010 and vacation leave/sick
_______________
11 Id., at pp. 57-58.

12 Id., at pp. 88-89.
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VOL. 754, MARCH 18, 2015 37
leave conversion. Farrales agreed to waive his claim for incentive bonus.13
On April 29, 2011, the LA ruled in favor of Farrales,14the fallo of which is as follows:
WHEREFORE, PREMISES CONSIDERED, all the respondents Hocheng Phils. Corporation, Inc. Sam Chen[g] and Judy
Geregale are found guilty of illegal dismissal and ordered jointly and severally to pay complainant the following:
1. Full backwages from date of dismissal on February 15, 2010 until date of decision equivalent to P276,466.67.
2. Separation pay of one (1) month salary per year of service for a period of twelve years equivalent to P228,800.00.
3. Appraisal year-end bonus in the sum of P11,000.00.
4. Moral damages in the sum of P200,000.00.
5. Exemplary damages in the sum of P100,000.00.
6. 10% of all sums owing as attorney’s fees or the amount of P81,626.67.
SO ORDERED.15

On appeal by HPC,16 the NLRC reversed the LA,17 and denied Farrales’ motion for reconsideration, finding substantial
evidence of just cause to terminate Farrales.18
_______________
13 Id., at pp. 58-59.

14 Id., at pp. 117-124.
15 Id., at pp. 123-124.
16 Id., at pp. 125-127.
17 Id., at pp. 150-168.
18 Id., at pp. 170-172.
38
3
On petition for certiorari to the CA,19 Farrales sought to refute the NLRC’s factual finding that he committed theft, as well as to
question NLRC’s jurisdiction over HPC’s appeal for nonpayment of appeal fees. But the CA found that HPC was able to perfect its
appeal by posting a bond equivalent to the monetary award of P897,893.37 and paying the appeal fees by postal money order in the
amount of P520.00.20
Concerning the substantive issues, the appellate court agreed with the LA that Farrales’ act of taking Reymar’s helmet did not
amount to theft, holding that HPC failed to prove that Farrales’ conduct was induced by a perverse and wrongful intent to gain, in light
of the admission of Eric that he did let Farrales borrow one of his two helmets, only that Farrales mistook Reymar’s helmet as the one
belonging to him.

Petition for Review to the Supreme Court

In this petition, HPC raises the following grounds for this Court’s review:
A. THE HONORABLE [CA] PLAINLY ERRED AND ACTED CONTRARY TO EXISTING LAW AND JURISPRUDENCE
IN REVERSING THE DECISION OF THE [NLRC] AND DECLARING ILLEGAL THE DISMISSAL FOR [HPC’s] ALLEGED
FAILURE TO PROVE THE EXISTENCE OF JUST CAUSE.
1. THERE IS SUBSTANTIAL EVIDENCE TO SHOW THAT [FARRALES] COMMITTED THEFT IN [HPC’s] PREMISES.
2. THEFT IS A JUST CAUSE FOR TERMINATION.
_______________
19 Id., at pp. 173-194.

20 Id., at p. 60.
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VOL. 754, MARCH 18, 2015 39
3. BY COMMITTING THEFT, [FARRALES], BEING A SUPERVISORIAL EMPLOYEE, FORFEITED THE TRUST
REPOSED IN HIM BY [HPC], THUS RENDERING HIM DISMISSIBLE FOR LOSS OF CONFIDENCE.
B. IN DECLARING ILLEGAL THE DISMISSAL OF [FARRALES], THE HONORABLE [CA] VIOLATED DOCTRINES
LAID DOWN BY THE SUPREME COURT.
1. COURTS CANNOT SUBSTITUTE THEIR JUDGMENT FOR THAT OF THE MANAGEMENT.
2. COURTS MUST ACCORD DUE RESPECT TO THE FINDINGS OF ADMINISTRATIVE AGENCIES.21

Chiefly, HPC insists that since the complaint below involves an administrative case, only substantial evidence, not proof of guilt
beyond reasonable doubt, is required to prove the guilt of Farrales; 22 that what the CA has done is substitute its judgment for that of
the NLRC, which is vested with statutory duty to make factual determinations based on the evidence on record. 23

Ruling of the Court

The Court resolves to deny the petition.
To validly dismiss an employee, the law requires the employer to prove the existence of any of the valid or authorized
causes,24 which, as enumerated in Article 282 of the Labor Code, are: (a) serious misconduct or willful disobedience by
_______________
21 Id., at pp. 32-33.

22 Id., at pp. 33-34.
23 Id., at pp. 42-45.
24 Lynvil Fishing Enterprises, Inc. v. Ariola, G.R. No. 181974, February 1, 2012, 664 SCRA 679, 692.
40
the employee of the lawful orders of his employer or the latter’s 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 his
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 representative; and (e) other causes analogous to the foregoing. 25 As a
supervisorial employee, Farrales is admittedly subject to stricter rules of trust and confidence, and thus pursuant to its management
prerogative HPC enjoys a wider latitude of discretion to assess his continuing trustworthiness, than if he were an ordinary rank-and-
file employee.26 HPC therefore insists that only substantial proof of Farrales’ guilt for theft is needed to establish the just causes to
dismiss him, as the NLRC lengthily asserted in its decision.
4
Article 4 of the Labor Code mandates that all doubts in the implementation and interpretation of the provisions thereof shall be
resolved in favor of labor. Consistent with the State’s avowed policy to afford protection to labor, as Article 3 of the Labor Code and
Section 3, Article XIII of the 1987 Constitution have enunciated, particularly in relation to the worker’s security of tenure, the Court
held that “[t]o be lawful, the cause for termination must be a serious and grave malfeasance to justify the deprivation of a means of
livelihood. This is merely in keeping with the spirit of our Constitution and laws which lean over backwards in favor of the working
class, and mandate that every doubt must be resolved in their favor.” 27 Moreover, the penalty imposed on the erring employee
_______________
25 Concepcion v. Minex Import Corporation, G.R. No. 153569, January 24, 2012, 663 SCRA 497, 504-505.
26 Aurelio v. NLRC, G.R. No. 99034, April 12, 1993, 221 SCRA 432, 442.
27 Gutierrez v. Singer Sewing Machine Company, 458 Phil. 401, 413; 411 SCRA 512, 522 (2003), citing Hongkong and
Shanghai
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VOL. 754, MARCH 18, 2015 41
ought to be proportionate to the offense, taking into account its nature and surrounding circumstances.
The Court has always taken care, therefore, that the employer does not invoke any baseless justification , much less management
prerogative, as a subterfuge by which to rid himself of an undesirable worker, 28 and thus in exceptional cases the Court has never
hesitated to delve into the NLRC’s factual conclusions where evidence was found insufficient to support them, or too much was
deduced from the bare facts submitted by the parties, or the LA and the NLRC came up with conflicting positions, as is true in this
case.29
As aptly pointed out by the LA, while HPC has the onus probandi that the taking of Reymar’s helmet by Farrales was with intent
to gain, it failed to discharge this burden, as shown by the following circumstances: Farrales sought and obtained the permission of
Eric, his co-employee as well as barangay coresident, to borrow his helmet; at the parking lot, Farrales asked another employee,
Andy, to fetch a yellow helmet from one of the parked motorcycles, mistakenly thinking it belonged to Eric (whom he knew owned
two helmets); the following day, November 28, Farrales asked Eric why he had not dropped by his house to get his helmet, and Eric
replied that Farrales got the wrong helmet because he still had his other helmet with him; Farrales immediately sought the help of the
company guards to locate the owner of the yellow helmet, who turned out to be Reymar; Farrales apologized to Reymar for his
mistake, and his apology was promptly accepted. 30 All these circumstances belie HPC’s claim that Farrales took Reymar’s helmet with
intent to gain, the LA said.
_______________
Banking Corp. v. NLRC, 328 Phil. 1156, 1166; 260 SCRA 49, 57 (1996).
28 Jarcia Machine Shop and Auto Supply, Inc. v. NLRC, 334 Phil. 84, 93; 266 SCRA 97, 107 (1997).
29 Nisda v. Sea Serve Maritime Agency, 611 Phil. 291, 311; 593 SCRA 668, 689 (2009).
30 Per Antonio’s explanation, Rollo, p. 312.
42
In ruling that Farrales’ dismissal by HPC was attended with utmost malice and bad faith as to justify an award of moral and
exemplary damages and attorney’s fees, the LA stated that “[i]t is succinctly clear that [the] respondents [therein] tried to blow out of
proportions the indiscretion of [Farrales] for reasons known only to them,” and moreover, “[f]inding that the dismissal on the ground
of theft is unavailing, [the] respondents [therein] immediately offered [Farrales] his former position when he filed [his] complaint.
What does this act of [the] respondents [therein] speak [of]?”31
On the other hand, the NLRC found that Farrales lied, first, when he told Andy, then already astride his motorbike at the parking
area and about to leave the company premises, that the yellow helmet belonged to him, 32 and second, when he claimed that Eric was
his neighbor, although they were not. It ruled as doubtful Farrales’ hazy recollection about what happened that afternoon at the
parking lot, since he could not even give a description of the motorcycle from which he took the yellow helmet. These circumstances,
the NLRC determined, comprise substantial proof belying Farrales’ claim of good faith. As a supervisory employee, he held a position
of high responsibility in the company making him accountable to stricter rules of trust and confidence than an ordinary employee, and
under Article 282 of the Labor Code, he is guilty of a serious misconduct and a willful breach of trust. The NLRC went on to cite a
settled policy that in trying to protect the rights of labor, the law does not authorize the oppression or self-destruction of the employer.
Management also has its own rights, which as such, are entitled to respect and enforcement in the interest of simple fair play. 33
But the Court agrees with the CA that Farrales committed no serious or willful misconduct or disobedience to warrant
_______________
31 Id., at p. 123.
32 Id., at p. 327.
33 Id., at p. 167.
5
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his dismissal. It is not disputed that Farrales lost no time in returning the helmet to Reymar the moment he was apprised of his
mistake by Eric, which proves, according to the CA, that he was not possessed of a depravity of conduct as would justify HPC’s
claimed loss of trust in him. Farrales immediately admitted his error to the company guard and sought help to find the owner of the
yellow helmet, and this, the appellate court said, only shows that Farrales did indeed mistakenly think that the helmet he took
belonged to Eric.
It is not, then, difficult to surmise that when Farrales told Andy that the yellow helmet was his, his intent was not to put up a
pretence of ownership over it and thus betray his intent to gain, as the NLRC held, but rather simply to assuage Andy’s reluctance to
heed his passing request to reach for the helmet for him; Andy, it will be recalled, was at that moment already seated in his motorbike
and about to drive out when Farrales made his request. As to Farrales’ claim that he and Eric were neighbors, suffice it to say that as
the CA noted, they resided in the same barangay, and thus, loosely, were neighbors.
The CA also pointed out that although the alleged theft occurred within its premises, HPC was not prejudiced in any way by
Farrales’ conduct since the helmet did not belong to it but to Reymar. In light of Article 69, Class A, Item No. 29 of the HPC Code of
Discipline, this observation may be irrelevant, although it may be that the LA regarded it as proving HPC’s bad faith.
Theft committed by an employee against a person other than his employer, if proven by substantial evidence, is a cause analogous
to serious misconduct.34 Misconduct is improper or wrong conduct, it is the transgression of some established and definite rule of
action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and
_______________
34 Cosmos Bottling Corp. v. Fermin, G.R. No. 193676, June 20, 2012, 674 SCRA 310, 317.
44
not mere error in judgment. The misconduct to be serious must be of such grave and aggravated character and not merely trivial or
unimportant. Such misconduct, however serious, must, nevertheless, be in connection with the employee’s work to constitute just
cause for his separation.35
But where there is no showing of a clear, valid and legal cause for termination of employment, the law considers the case a matter
of illegal dismissal.36 If doubts exist between the evidence presented by the employer and that of the employee, the scales of justice
must be tilted in favor of the latter. The employer must affirmatively show rationally adequate evidence that the dismissal was for a
justifiable cause.37
Nonetheless, the Court agrees with the CA’s dismissal of the award of moral and exemplary damages for lack of merit. There is no
satisfactory proof that the concerned officers of HPC acted in bad faith or with malice in terminating Farrales. Notwithstanding the
LA’s assertion to this effect, Farrales’ bare allegations of bad faith deserve no credence, and neither is the mere fact that he was
illegally dismissed sufficient to prove bad faith on the part of HPC’s officers. 38 But concerning the award of attorney’s fees, Farrales
was dismissed for a flimsy charge, and he was compelled to litigate to secure what is due him which HPC unjustifiably withheld.
WHEREFORE, premises considered, the petition for review is DENIED.
SO ORDERED.
_______________
35 Cosep v. NLRC, 353 Phil. 148, 158-159; 290 SCRA 704, 715 (1998).
36 Sevillana v. I.T. (International) Corp., 408 Phil. 570, 584; 356 SCRA 451, 467 (2001).
37 Asuncion v. NLRC, 414 Phil. 329, 341-342; 362 SCRA 56, 68 (2001); Nicario v. NLRC, 356 Phil. 936, 943; 295 SCRA 619,
626-627 (1998).
38 See Aliling v. Feliciano, G.R. No. 185829, April 25, 2012, 671 SCRA 186, 217.
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Velasco, Jr. (Chairperson), Peralta, Villarama, Jr. and Jardeleza, JJ., concur.
Petition denied.
Notes.—Theft committed by an employee against a person other than his employer, if proven by substantial evidence, is a cause
analogous to serious misconduct. (John Hancock Life Insurance Corporation vs. Davis, 564 SCRA92 [2008])
Security of tenure of workers is not only statutorily protected, it is also a constitutionally guaranteed right. ( Montinola vs.
Philippine Airlines, 734 SCRA 439 [2014])
——o0o——
G.R. Nos. 90394-97. February 27, 1991.*
6
HERMINIGILDO ILAS, GLICERIO BELARMINO, MARIO BARBOSA and TEODORO ENRIQUEZ, petitioners, vs. THE
NATIONAL LABOR RELATIONS COMMISSION AND ALL SEASONS MANPOWER INTERNATIONAL SERVICES,
respondents.
Remedial Law; Evidence; It is settled that the Court is not a trier of facts and that the findings of facts of administrative bodies
shall not be disturbed on appeal unless it is shown that it committed a grave abuse of discretion or otherwise acted without
jurisdiction or in excess of its jurisdiction.—No rule is more settled than that this Court is not a trier
_______________
*
FIRST DIVISION.
683
VOL. 193, FEBRUARY 7, 1991 683
Ilas vs. NLRC
of facts and that the findings of facts of administrative bodies, as public respondent, shall not be disturbed on appeal unless it is
shown that it committed a grave abuse of discretion or otherwise acted without jurisdiction or in excess of its jurisdiction. In this case,
petitioners failed to discharge their burden to warrant a departure from this rule.
PETITION for certiorari to review the decision of the National Labor Relations Commission.

Cielo B. Pre for petitioners.
Horacio R. Viola, Sr. for private respondent.
GANCAYCO, J.:
Can a recruitment agency be liable for unpaid wages and other claims of certain overseas workers who appear to have been recruited
by its agent without its knowledge and consent? This is the focal issue in this petition.
Petitioners applied for overseas employment in Doha, Qatar, with CBT/Shiek International, an unlicensed recruitment agency, under
the management of spouses Francisco Ngoho, Jr. and Corazon Ngoho. To enable them to leave, they were assisted by Eddie Sumaway
and Erlinda Espeno, the latter being a liaison officer of private respondent All Seasons Manpower International Services, a licensed
placement agency. Petitioners filed their application papers and paid their placement fees with the Ngohos. However, it was Espeno
who processed their papers and gave them travel exit passes (TEPS). They were made to sign two-year contracts of employment but
they were not given copies thereof. Subsequently, they were deployed to Doha, Qatar, where they worked for four (4) months without
being paid. They sought the assistance of the Philippine Embassy and were able to come home to the Philippines with the help of the
Philippine Overseas Employment Administration (POEA).
Hence, they filed a complaint to recover their unpaid salaries and for wages covering the unexpired portion of their contracts against
private respondent.
On June 30, 1989, the POEA rendered a decision, the dispositive part of which reads as follows:
WHEREFORE, judgment is hereby rendered, ordering the respondent to refund to complainants Bonifacio Gagascas,
Herminigildo Ilas, Diosdado Galang, Antonio Frias, Perfecto Lora, Jr., Rolando Ernacio, Emmanuel Padilla, Andres Lontabo,
Juanito Cueto, Camilo Pastrana, Mario Barbosa, Romeo Muldong, Arnold Cresidio, Dominguez de la Cruz, Samuel Leaño,
Teodoro Enriquez and Jaime Ramos, the amount of TWO THOUSAND FIVE HUNDRED PESOS (P2,500.00) each,
representing placement fees.
The claims for the salaries corresponding to the unexpired portion of the complainant's contracts are hereby ordered
DISMISSED for lack of merit.
The claims of Pedro Pabillonia, Glicerio Belarmino, Jaime Ramos, Rodolfo de Jesus, Romeo Toledo, Pedro Sagayap,
Macario Valdez, Benjamin Julio, Ernesto Yadao, Severino Pilon are hereby ordered severed from the other complaints in
view of settlement.
SO ORDERED.1
7
Both parties appealed to public respondent National Labor Relations Commission (NLRC) which in due course rendered a decision on
September 23, 1988 modifying the appealed decision to the effect that petitioners were adjudged entitled to their four (4) months
unpaid salaries to be paid by private respondent but the refund of placement fees was deleted.
A motion for reconsideration thereof was filed by private respondent. On April 28, 1989, a decision was rendered by public
respondent setting aside the decision dated September 23, 1988 and dismissing the case for lack of merit. 2
A motion for reconsideration filed by petitioners was denied in a resolution dated June 7, 1989.3
Hence, the herein petition for certiorari wherein it is alleged that public respondent committed a grave abuse of discretion in setting
aside its decision dated September 23, 1988 and rendering the questioned decision dated April 28, 1989.
The petition must fail.
No rule is more settled than that this Court is not a trier of facts and that the findings of facts of administrative bodies, as
public respondent, shall not be disturbed on appeal unless it is shown that it committed a grave abuse of discretion or
otherwise acted without jurisdiction or in excess of its jurisdiction. In this case, petitioners failed to discharge their burden to
warrant a departure from this rule.
All evidence indicate that private respondent cannot be held liable for the claims of petitioners.
Firstly, petitioners applied for overseas deployment with CBT/Shiek International through spouses Francisco and Corazon Ngoho,
Eddie Sumaway and Erlinda Espeno. They never transacted their business with the office of private respondent.
Secondly, when they worked at Doha, Qatar, their employer was CBT/Shiek International who failed to pay their wages.
Thirdly, in the TEPS provided by Espeno to enable them to travel, it was made to appear that private respondent was their
agency/contractor of petitioners and Yacoub Trading Est. is their foreign employer. They were signed by petitioners knowing that
private respondent was not their recruiter. Apparently, Espeno conspired with petitioners and Ngoho to enable petitioners to travel to
the Middle East, ostensively under the name of private respondent as agent/recruiter.
Fourthly, it turned out that petitioners were recruited for Mabeco Trading and Contracting Establishment, as the foreign principal and
not Yacoub Trading Est., which is the principal of private respondent.
Fifthly, in the very complaints filed by petitioners against private respondent they admitted that they applied for overseas employment
with the CBT/Shiek International under the management of the Ngohos.4
It is true that the rules and regulations of the POEA provide that the private employment or recruitment agency is made to assume full
and complete responsibility for all acts of its officials and representatives done in connection with recruitment and placement. 5
However, when as in this case the recruitment was actually made by Espeno in behalf of CBT/Shiek International, not the private
respondent, and the name of private respondent was only used as a means to enable petitioners to be issued TEPS for travel purposes,
obviously without the knowledge and consent of private respondent, the latter cannot be held liable for the claims of petitioners.
The observation of public respondent that the documents used in the deployment abroad of petitioners were all fake and that
petitioners knew about it is borne by the records. They did not come to court with clean hands. Thus, petitioners should suffer the
consequences of their wrongful acts.
WHEREFORE, the petition is DISMISSED for lack of merit.
SO ORDERED.
8
G.R. No. 85588. February 18, 1991.*
PHILSA INTERNATIONAL PLACEMENT AND SERVICES CORPORATION AND/OR MS. CYNTHIA K. MAGDARAOG
AND/OR SAUDI REFRESHMENT AND INDUSTRY COMPANY AND/OR SHIEK ABDUL AZIZ AL KAKI,
petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION AND MARIO TIBAY, respondents.
Labor Law; Termination of Employment; The employee may terminate the contract on grounds of serious insult, inhuman and
unbearable treatment accorded the employee by the employer and violation by the employer of the contract .—“x x x that from the
time he started to work under respondent SRICO on September 30, 1985, up to his return to the Philippines on February 7, 1986, his
salaries for October, November, December 1985, January 1986 and February 6, 1986 as well as his food allowances, were not paid
except the amount of SR 5,887.00 as salary and SR 300.00 as food allowance only; that per the Employment Contract, his monthly
salary shall be paid once a month but SCRICO (sic) failed and refused to pay his salaries and other benefits due him despite his
repeated demands; that because of the non-payment of his salaries and food allowance which constitute a serious violation of his
employment contract, he was forced to terminate his contract of employment, for if he stayed longer with SCRICO (sic), he and his
family would surely die of starvation; that per contract of employment (Par. B-2), he is entitled to a food allowance of US $100.00 or
its Saudi Riyals equivalent per month but no free food was ever given by respondent SCRICO (sic) and complainant survived only
because of doleouts and charities from friends who lent him money; that under the said contract, SCRICO (sic), was expected to
provide free laundry services but did not do so; that because of the hardship that complainant had suffered during his four (4) months
of employment with SCRICO (sic), which he could no longer endure, he decided to terminate his employment contract per letters
dated December 19, and 21, 1985 (Annexes “D” and “D-1”) addressed to Sheik Abdul-Aziz Kaki, Managing Director SCRICO (sic);
that he called the attention of his employer to the violations committed against the Ministry of Health’s standard procedure for syrup
making and preparations because during his employment he discovered that most of the concentrates, (coke, lemon, orange and
strawberry) were mostly expired and
_______________
*
FIRST DIVISION.
162
Philsa International Placement and Services Corp. vs. NLRC
all of them lost some of their chemical properties but they ignored him, that being the Quality Controller, complainant felt that
he may be held responsible if an inquiry is to be made, because his predecessor had already been prosecuted and imprisoned for such
violations committed by SCRICO (sic).” (NLRC Decision, pp. 23-24, Rollo)
Remedial Law; Appeals from Decisions of the NLRC; Findings of fact of the labor arbiter and the NLRC are generally
accorded not only respect but finality, if supported by substantial evidence.—As to whether in fact there was such a violation of
contract as narrated by Tibay, We agree with the Solicitor General that the NLRC made a clear finding that just cause for the
termination existed. This was not controverted by petitioners. Hence, this finding must be upheld and respected, for findings of fact of
quasi-judicial bodies, like the NLRC, if supported by sufficient evidence on record are conclusive.
PETITION to review the decision of the National Labor Relations Commission.

Ramon U. Ampil for petitioners.
Arturo A. Dimain and Teofilo F. Nacion for private respondent.
MEDIALDEA, J.:
This petition seeks to set aside the decision of the National Labor Relations Commission (NLRC) dated April 25, 1988, as well as its
Resolution dated October 21, 1988, affirming the decision of the Philippine Overseas Employment Administration (POEA), dated
October 26, 1987 which disposes as follows:
WHEREFORE, premises considered, judgment is hereby rendered ordering respondents PHILSA International Placement
and Services Corporation and Saudi Refreshment and Industry Company, jointly and severally:
1. To pay the complainant his earned and unpaid salaries and food allowance for four months (4) and six (6) days in the
amount of SR-6,143 or its equivalent in Philippine Currency at the time of actual payment;
9
2. To pay to the complainant his salaries for seven (7) months and twenty-two (22) days, i.e., from February 7, to October 1,
1986, corresponding to the unexpired portion of his employment contract in the amount of SR-19,333.33 or its equivalent in
Philippine Currency at the time of actual payment;
3. To reimburse to the complainant the expenses for his deployment and repatriation which was charged to him in the amount
of SR-4,735, or its equivalent in Philippine Currency at the time of actual payment; and
4. To pay to complainant 3% of the total judgment award as and by way of attorney's fees.
Payment of the above-mentioned sums of money shall be made through this office within ten (10) days from receipt hereof.
SO ORDERED. (pp. 20-21, Rollo)
The facts of the case are as follows:
On September 30, 1985, private respondent Mario Tibay (hereafter "Tibay") was employed by the Saudi Refreshment and Industry
Co. (SRICO), through the Philsa International Services Corporation (Philsa) as quality controller of SRICO for a period of twelve (12)
months at a monthly salary of SR2,500.00. On December 21, 1985, Tibay wrote his employe, relative to the termination of his
contract as follows:
To: SHEIK ABDUL AZIZ KAKI
Re: TERMINAT10N OF CONTRACT OF EMPLOYMENT
Sir:
This to inform you that I am terminating my contract of employment agreement with Saudi Refreshment and Industry Company
(SRICO) effective January 21, 1986 on the ground of the following:
1) Violations of contract of employment as follows:
a) Delayed Payment of Salary. As stated on the contract:
Section A No. 4: Basic Monthly Salary—Salary shall be paid once a month.
Section B. No. 2:
a) Delayed payment of food allowance or No free food given,
b) No free laundry service.
It's my great pleasure to have worked and stayed with your company.
Furthermore, please arrange my accounts due to me and exit papers for my departure.
Your response and approval is highly appreciated. I remain
Thank you.
Mario Tibay
Quality Controller (Records, p. 192). (pp. 22-23, Rollo)
Tibay arrived in the Philippines on February 7, 1986, and on March 3, 1986, he filed a complaint against petitioners Philsa and SRICO
for "imposition of excessive fees, non-payment and/or delay in the payment of salaries, payment of interview fee of SR1010 and
placement fee of P9,000.00 by the latter. Tibay sought the refund of both interview and placement fees.
10
In addition, Tibay also sought the recovery of his unpaid and earned salaries and food allowances for four (4) months and six (6) days
in the amount of SR6,143.00, and the reimbursement of expenses which he allegedly incurred for his repatriation to the Philippines,
which amount was forcibly collected from him by SRICO in Saudi Arabia before complainant was released/repatriated to the
Philippines (NLRC decision, pp. 23-24, Rollo).
On the other hand, petitioners Philsa and SRICO, while accepting Tibay's resignation from work, nonetheless required him to
reimburse the cost of his recruitment in the amount of approximately US $2000.00, premised on the second sentence of par. F of the
Employment Contract, as follows:
. . . Should the employee on the other hand terminate his employment at any time without just cause, he shall be liable to the
Employer or his representative the cost of his deployment to the jobsite and his repatriation plus other costs that may be
incurred due to his unilateral termination. (p. 69, Rollo)
The POEA ruled in favor of Tibay, and declared that his termination of his employment was for a just cause specially where
petitioners failed to controvert Tibay's allegations of violation of Ms contract, likewise premised on par. F of the contract, but on the
third sentence as follows:
The Employee may terminate the contract on grounds of serious insult, inhuman and unbearable treatment accorded the
Employee by the Employer and violation by the Employer of the contract and terms and conditions. . . (p. 69, Rollo)
Petitioners appealed. The NLRC rendered the disputed decision. It also denied petitioner's motion for reconsideration.
Hence this petition assigning the following errors:
1. Public respondent erred and committed grave abuse of discretion in upholding the award of SR 6,143 in salaries and food
allowances for 4 months and 6 days when the private respondent had only worked for 3 months and 21 days.
2. The public respondent erred and committed grave abuse of discretion in upholding the award for salaries corresponding to
the residual period of the contract.
3. The public respondent acted with manifest bias and partiality. Petitioners were denied a fair hearing.
On May 10, 1989, We issued a temporary restraining order against the POEA alias writ of execution dated April 4, 1989.
As correctly pointed out by NLRC, the issue in this case boils down to whether or not there was a valid reason or just cause for
terminating Tibay's employment contract.
We agree with the NLRC that the employment contract was validly terminated, premised on the third sentence of par. F of the
employment contract. Thus, in his position paper, Tibay stated:
. . . that from the time he started to work under respondent SRICO on September 30, 1985, up to his return to the Philippines
on February 7, 1986, his sales for October, November, December 1985, January 1986 and February 6, 1986 as well as his
food allowances, were not paid except the amount of SR 5,887.00 as salary and SR 300.00 as food allowance only; that per
the Employment Contract, his monthly salary shall be paid once a month but SCRICO (sic) failed and refused to pay his
salaries and other benefits due him despite his repeated demands; that because of the non-payment of his salaries and food
allowance which constitute a serious violation of his employment contract, he was forced to terminate his contract of
employment, for if he stayed longer with SCRICO (sic), he and his family would surely die of starvation; that per contract of
employment (Par. B-2), he is entitled to a food allowance of US $100.00 or its Saudi Riyals equivalent per month but no free
food was ever given by respondent SCRICO (sic) and complainant survived only because of dole outs and charities from
friends who lent him money; that under the said contract, SCRICO (sic), was expected to provide free laundry services but
did not do so; that because of the hardship that complainant had suffered during his four (4) months of employment with
SCRICO (sic), which he could no longer endure, he decided to terminate his employment contract per letters dated December
19, and 21, 1985 (Annexes "D" and "D-1") addressed to Sheik Abdul-Aziz Kaki, Managing Director SCRICO (sic); that he
called the attention of his employer to the violations committed against the Ministry of Health's standard procedure for syrup
making and preparations because during his employment he discovered that most of the concentrates, (coke, lemon, orange
and strawberry) were mostly expired and all of them lost some of their chemical properties but they ignored him, that being
the Quality Controller, complainant felt that he may be held responsible if an inquiry is to be made, because his predecessor
11
had already been prosecuted and imprisoned for such violations committed by SCRICO (sic). (NLRC Decision, pp. 23-
24, Rollo)
Petitioners' contention that Tibay resigned is not correct because Tibay's letter clearly stipulated that he was "terminating my (his)
contract of employment for . . . violation of contract."
As to whether in fact there was such a violation of contract as narrated by Tibay, We agree with the Solicitor General that the NLRC
made a clear finding that just cause for the termination existed. This was not controverted by petitioners. Hence, this finding must be
upheld and respected, for findings of fact of quasi-judicial bodies, like the NLRC, if supported by sufficient evidence on record
are conclusive, In the latest case of UFE v. The Honorable NLRC and Nestlé Phils., Inc., G.R. No. 91025, December 19,
1990, citing Palencia v. National Labor Relations Commission (G.R. No. 75763, August 21, 1987, 153 SCRA 252), We stated that the
findings of fact of the then Court of Industrial Relations (now NLRC) are conclusive and will not be disturbed. Thus:
Following a long line of decisions this Court has consistently declined to disturb the findings of fact of the then Court of
Industrial Relations whose functions the NLRC now performs. [Pambusco Employees' Union Inc. v. Court of Industrial
Relations, 68 Phil. 591 (1939); Manila Electric Co. v. National Labor Union, 70 Phil. 617 (1940); San Carlos Milling Co. v.
Court of Industrial Relations, 111 Phil. 323 (1961), 1 SCRA 734; Philippine Educational Institution v. MLQSEA. Faculty
Assn., 135 Phil. 282 (1968), 26 SCRA 272; University of Pangasinan Faculty Union v. University of Pangasinan and NLRC,
G.R. No. L-63122, February 20, 1984, 127 SCRA 691]. The findings of fact are conclusive and will not be disturbed in the
absence of a showing that there has been grave abuse of discretion. [Philippine Educational Institution v. MLQSEA Faculty
Association, 26 SCRA 272, 276] and there being no indication that the findings are unsubstantiated by evidence [University
of Pangasinan Faculty Union v. University of Pangasinan and NLRC, G.R. No. 63122, February 20, 1984,127 SCRA 694,
704].
Corollarily, factual findings of the POEA as upheld by the NLRC must likewise be respected. Thus, the petitioners failed to controvert
Tibay's allegations that "while the letter of private respondent dated December 21, 1985 (Annex "A") stated that he is terminating his
contract of employment "effective January 21, 1986", his foreign employer still required him to work until February 6, 1 986, as
evidenced by the fact that he was only able to leave the site and depart February 7, 1986. This fact is further bolstered by his letter
dated December 19, 1985 (Annex "B") wherein his intended date of contract termination was not acted upon by SRICO prompting
him to reiterate it in his December 21, 1985 letter." (NLRC Decision, p. 149, Rollo)
Hence, the POEA award of SR 6,143 to Tibay (corresponding to unpaid salaries and food allowances) did not amount to double
payment, nor result in unjust enrichment. As pointed out by Tibay in his position paper:
7. That from the time complainant started to work under respondent SCRICO (sic) on September 30, 1985 up to his return to
the Philippines on February 7, 1986, his salaries covering the periods October, November, December, 1985, January, 1986
and February 16, 1986, as well as his food allowances were not paid by his employer SCRICO (sic) except the amount of SR-
5,887 as salary and SR-300.00 as food allowance only. Said unpaid salaries and food allowance are itemized below, to wit:
a) October, November, December, 1985, January 1986 & 6

days (Feb. 1986) or 4 months and 6 days SR-10,500.00
b) Food Allowances (US$100 x 5 x SR-3.66) SR-1,830.00
Total SR-2,330.00**
Less: Actual amount received by complainant upon

his return to the Philippines (SR-5,887* + SR300*) 6,137.00*
Total Amount — unpaid salaries and food

allowances for 4 months and 6 days SR-6,143.00***
It is therefore clear from the above that there could be no double payment as alleged because the amount of SR-5,887.00*
together with SR-300.00* as food allowance, or a total of SR-6,187.00* were deducted from private respondent's total claims
of SR 12,330.00**, resulting in the net amount of SR-6,143.00***. (pp. 149-150, Rollo)
Again, salaries corresponding to the residual period of Tibay's contract as well as his repatriation expenses, must also be
upheld.1âwphi1 The Solicitor General observed:
12
Since private respondent was forced to resign because of petitioners' failure to fulfill their part of the contract, petitioners are
liable for his wages and other benefits for the unexpired period of his employment, as well as for the expenses for his
repatriation to the Philippines.
An employee who quits his work because of the employer's unreasonable, humiliating or demeaning actions, or because
conditions of employment had turned out to be so unbearable as to render continued work impossible, is deemed to have been
illegally dismissed. . . .
When the employer illegally dismisses his employee holding an appointment for a definite period, he is liable for the
employee's wages for the unexpired period. (Roxas, et al. v. Phil. Glazing, et al. ITIRB 724; Logan v. Phil. Acetylene, 33
Phil. 178; Best v. Lizarraga Hermanos, 37 Phil. 491; Knust v. Morse, 41 Phil. 185; Wallem (Phil.) Shipping v. Ministry of
Labor, 102 SCRA 535). . . . (pp. 90-91, Rollo)
Thus, the NLRC ruled:
Respondent-appellants' (Petitioners) assignment of errors assailing the awards for salaries and food allowances for four (4)
months and six (6) days, salaries corresponding to the residual period of the contract, and payment of SR 4,735
corresponding to expenses for deployment and repatriation of the complainant deserves no merit for they are the legal and
necessary consequences of the breach of "contract of employment" by the respondent-appellants, for which they are bound to
suffer. . . . (pp. 28-29, Rollo; emphasis supplied)
We likewise agree with the NLRC when it held Philsa, as recruitment agency jointly and solidarily liable with the overseas
employer, SRICO for the breach of Tibay's employment contract (Manuel S. Catan, et al. v. NLRC, et al., G.R. No. 77297, April
15,1988; 160 SCRA 691).
ACCORDINGLY, the petition is hereby dismissed and the decision appealed from is AFFIRMED. The temporary restraining order
issued on April 4, 1989 is hereby LIFTED. No costs.
SO ORDERED.
13
G.R. No. 86042. April 30, 1991.*
FEAGLE CONSTRUCTION CORPORATION, petitioner, vs. MAURO DORADO, EDUARDO LIBRANDO, REYNALDO
DECEPIDO, DIONISIO BERGONIA, RENATO TIANGCO, EUGENIO MACAWILI, SALVADOR ARDEZA and
NATIONAL LABOR RELATIONS COMMISSION, respondents.
Labor Law; When a private recruitment agency is not jointly and severally liable with the employer for claims and liabilities
arising from the implementation of the contract of employment.—x x x When
_______________
*
FIRST DIVISION.
482
Feagle Construction Corporation vs. Dorado
an overseas worker persuades the local representatives of the principal or recruiter to send him abroad to work despite the
refusal of said local representative or recruiter to accede to the request due to the unstable condition in the area of work desired so
much so that the regular payment of the remuneration of the employee or worker and his security of tenure cannot be assured, and still
such employee or worker insists on taking a calculated risk by signing a waiver rendering the local representative or recruiter free
from any liability to said employee or laborer arising from such overseas employment, thus in such instance, the local representative
or recruiter cannot be jointly and severally held liable with the foreign principal or employer for any claim of such employee or
worker arising thereunder.
PETITION for certiorari to review the decision of the National Labor Relations Commission.

Jacinto D. Jimenezfor petitioner.
Millora, Canto & Arcamo for private respondents.
GANCAYCO, J.:
Before the Court is the motion for reconsideration filed by petitioner of the resolution of the Court dated November 23, 1989
dismissing the petition on the ground that the issues raised being particularly factual and there is no sufficient showing that the
findings contained in the questioned judgment are not supported by substantial evidence or that said judgment is tainted with grave
abuse of discretion.
After a careful consideration of the motion and the comment thereto of respondents, on March 26, 1990 the Court granted the motion,
reinstated the petition, giving due course to the petition and required the parties to submit their simultaneous memoranda. The said
memoranda have been submitted and so the case is now due for resolution.
Private respondents have been working in Saudi Arabia for three to five years with Algosaibi-Bison, Ltd. (AB for short). Sometime in
1983, AB started encountering financial difficulties because of the sudden drop in the price of oil in Saudi Arabia. 1 Thus, in 1983, the
remittance of allotments to beneficiaries of Filipino workers employed with AB were delayed. Nevertheless, their salaries were fully
paid before they left Saudi Arabia to return to the Philippines.
During all these years, petitioner never charged its Filipino workers, including private respondents, for sending them to work for AB.
Petitioner even advanced all the mobilization expenses such as medical fees, passport fees and visa application fees which were
supposed to be reimbursed by AB. Because of the financial problems of AB which could not reimburse petitioner for the mobilization
expenses, petitioner decided to stop sending back to Saudi Arabia Filipino workers who had returned to the Philippines.
Sometime in July 1984, the Filipino workers employed with AB who had returned, including private respondents, requested for a
meeting with the management of petitioner. They pleaded with petitioner to send them back to Saudi Arabia because they were jobless
in the Philippines. Mr. Florentino B. Aguila, president of petitioner, explained to them that petitioner would not want to send any
workers back to Saudi Arabia because of the big risk to them as AB was encountering financial difficulties.
14
However, the Filipino workers insisted that rather than remain jobless in the Philippines, they would rather take their chance in Saudi
Arabia. They assured petitioner that they were willing to assume the risk in case the remittance of their salaries would be delayed.
They said that they would seek the assistance of the Saudi Arabia Labor Office in case the remittance of their salaries would be
delayed. They offered to sign any written statement or waiver pledging that they would not hold petitioner liable for any delay or
non-payment of their unpaid salaries and any other amount due them from AB. It was under these circumstances that
petitioner reluctantly agreed to send private respondents to Saudi Arabia.
In accordance with their commitment, private respondents signed their respective statements or waivers which read as
follows:
That I am willing to go back to work to ABL fully aware of the above situation;
That I shall not pressure Feagle Construction Corporation to paying my delayed salaries while ABL has not fully paid its
obligations and that I shall only claim my back salaries upon the settlement of the ABL obligations, partly if ABL payments
are remitted partly, or fully, in case of full settlement of ABL obligations.
While the private respondents were in Saudi Arabia, they received their salaries directly from AB from whom they demanded direct
payment. When AB went into bankruptcy in 1986, all the Filipino workers in its employ, including private respondents, filed a
complaint with the Saudi Labor Office at Dammam. All of them dealt with the liquidator of AB directly and in their individual
capacities. So the liquidator issued to each of them a certificate stating the amount payable to each of them as soon as funds are
available. Said workers, including private respondents agreed to have the liquidator pay them through their bank accounts after the
liquidation of the company and the availability of funds.3
To assist the workers, including private respondents, petitioner wrote the liquidator to follow-up the claims of the Filipino workers.
The liquidator confirms its agreements with private respondents that they would be paid directly and even refused to furnish petitioner
a list of the individual claimants and the amounts due each of them on the ground that these matters were confidential.
The above facts are undisputed.
Under the laws of Saudi Arabia, the claims of Filipino workers have first priority for payment. Although private respondents were
promised their payments from the liquidator they filed a complaint for non-payment of wages and other benefits against petitioner and
Florentino Aguila and Rene Aguila in the Office of the Philippine Overseas and Employment Agency.
In due course, on October 7, 1987, a decision was rendered by the Administrator of said office, the dispositive part of which reads as
follows:
ACCORDINGLY, judgment is rendered ordering the respondents, jointly and severally with their foreign principal,
Algosaibi-Bison Bison Ltd., to pay the amounts due them as specified in their individual certifications issued by the Board of
Liquidators, or the equivalent thereof in Philippine Currency at the time of payment, as herein below indicated opposite the
names of the individual complainants, representing unpaid wages/salaries and other benefits, to wit:
Mauro Dorao Saudi Riyal 8,811
Eduardo Libranda SR 19,648
Reynaldo Decepida SR 18,925
Renato Tiangco SR 13,715
Dionisio Borgonia SR 11,749
Eugenio Macawili SR 12,536
Salvador Ardeza SR. 7,672
Respondents are likewise ordered to pay the sum equivalent to five (5) percent of the total award due the herein complainants
representing attorney's fees.
15
SO ORDERED.4
Petitioner appealed the decision to the National Labor Relations Commission (NLRC).1âwphi1 On October 14, 1983, a decision was
rendered by the said Commission affirming the appealed decision with the modification that Florentino Aguila and Rene Aguila are
liable only to the claim in their official capacity as officers of FEAGLE Construction Corporation.
Hence, this petition for certiorari with a prayer for the issuance of a restraining order or writ of preliminary injunction filed in this
Court alleging therein that the respondent NLRC committed a grave abuse of discretion as follows:
1. THE RESPONDENT COMMISSION ACTED WITHOUT AND/OR IN EXCESS OF ITS JURISDICTION AND WITH
GRAVE ABUSE OF DISCRETION WHEN IT DECLARED, THE PETITIONER JOINTLY AND SEVERALLY LIABLE
WITH ALGOSAIBI-BISON LTD. TO PAY THE PRIVATE RESPONDENTS' CLAIM DESPITE THE ABSENCE OF
EMPLOYEE-EMPLOYER RELATIONSHIP BETWEEN THE PETITIONER AND THE PRIVATE RESPONDENTS.
2. THE RESPONDENT COMMISSION ACTED WITHOUT AND/OR IN EXCESS OF ITS JURISDICTION AND WITH
GRAVE ABUSE OF DISCRETION WHEN IT RESOLVED AN ISSUE WHICH WAS NEVER PRESENTED, PLEADED
AND RAISED BY THE PRIVATE RESPONDENTS.
3. THE RESPONDENT COMMISSION ACTED IN EXCESS OF ITS JURISDICTION AND GRAVELY ABUSED ITS
DISCRETION WHEN IT UNJUSTIFIABLY REFUSED TO CONSIDER AND IGNORED THE PROMISSORY
OBLIGATION AS WELL AS THE RELEASE AND QUITCLAIM EXECUTED BY THE PRIVATE RESPONDENTS IN
FAVOR OF THE PETITIONER.
4. THE RESPONDENT COMMISSION ACTED IN EXCESS OF ITS JURISDICTION AND GRAVELY ABUSED ITS
DISCRETION WHEN IT RENDERED A DECISION WHICH WOULD INEVITABLY CAUSE, PROMOTE AND
ENHANCE INEQUITY AND INJUSTICE.
5. THE RESPONDENT COMMISSION GRAVELY ABUSED ITS DISCRETION WHEN IT MAINTAINED AND
ADHERED WITH (SIC) ITS ERRONEOUS DECISION AFORESTATED BY DENYING PETITIONER'S MOTION FOR
RECONSIDERATION.5
The petition is impressed with merit.
During the pendency of this case, on motion of petitioner, and without objection of respondents, this case was proposed to be
consolidated with G.R. No. 82310 inasmuch as the issues raised in both cases are similar. 6
On June 18, 1990, this Court rendered its decision in G.R. No. 82310 and G.R. No. 87998, entitled FEAGLE Construction
Corporation vs. Gavino Gayda et al. and FEAGLE Construction Corporation vs. Joseph Orpilla, et al., respectively. The
environmental facts of said cases are the same as of the present case. Thus, the Court reproduces with approval its disquisition in the
earlier decision as follows:
We agree with Public Respondents that the general rule as provided for in Section 1, Rule II of the rules and regulations of
the Philippine Overseas Employment Administration is that every licensed private recruitment agency shall be jointly and
solidarity liable with the employer for all claims and liabilities which may arise in connection with the implementation of the
contract of employment.
In this case, however, We find it necessary to deviate from the general rule. First, because of changed circumstances, and
second, because of individual agreements between petitioner and private respondents which cannot be considered void
because the same cannot be considered contrary to law.
It is the uncontradicted contention of petitioner that 13 of private respondents filed their claims for salaries due in January,
February and March of 1986, when their contracts of employment expired in 1985.
It is also clear that private respondents executed new and different contracts of employment directly with Algosaibi-Bison,
Ltd. without the participation and consent of the petitioner. The former contracts with the petitioner expired and private
respondents entered into new contracts of employment with the Algosaibi-Bison, Ltd., without the participation of petitioner.
16
The claims of private respondents were made directly with the liquidator of Algosaibi-Bison, Ltd. and they agreed to wait for
the promised payment. Again the petitioner had nothing to do with those claims.
We simply cannot ignore that petitioner was reluctant to send the private respondents back to Saudi Arabia because as early
as 1983, the Algosaibi-Bison, Ltd. started encountering financial difficulties because of the drop in the price of oil. Private
respondents were the ones who insisted that they be allowed to resume employment. They were informed of the risks
involved relating to the financial reverses of the employer. They insisted to return to Saudi Arabia and they agreed to sign
individual statements, which they did, to the effect that each one of them did not hold petitioner responsible for delay or non-
payment of their salaries and any amounts due them from Algosaibi-Bison, Ltd.
These individual statements voluntarily signed by the private respondents to convince the reluctant petitioner to send them
back to Saudi Arabia, notwithstanding their knowledge of the financial reverses of this employer, are eloquent individual
waivers of their rights against petitioner. They were informed of the risk involved in returning to an employer in serious
financial distress. They insisted on returning to work, even persuading petitioner to allow them to do so, by waiving the
possible liability of petitioner. Under these circumstances, when private respondents were insisting to return to work despite
the warning, We cannot consider their written waivers as to petitioner's responsibilities void. They were not victims of deceit
or deception. They entered into those waivers with open eyes and clear minds. They were aware of the imminent danger and
the great risks involved in their renewed ventures.
We also consider that as of record in the past, petitioner never took advantage of private respondents. They were always
treated fairly and in accordance with law. Private respondents did not question the good faith of Petitioner. Their former
employer Algosaibi-Bison, Ltd. went into bankruptcy in 1986 and petitioner had nothing to do with that. Private respondents
filed their claims directly with the Liquidator of their former employer Algosaibi-Bison Bison Ltd. They were given
certificates of the amounts due them, to be given preference under the laws of Saudi Arabia. They were to be paid directly,
again without participation of the petitioner. Petitioner wrote the Liquidator just to help private respondents, so that their
claims may be expedited.
Holding, therefore, that in view of the circumstances proven in this case, and the very clear waiver of liability individually
signed by private respondents in favor of petitioner, the petitioner cannot be held jointly and solidarity liable with the
employer Algosaibi-Bison Ltd. for the claims of private respondents. All other issues need no longer be discussed.
The said ruling is squarely applicable to this case and disposes of this case accordingly.
Hence, when an overseas worker persuades the local representative of the principal or recruiter to send him abroad to work despite the
refusal of said local representative or recruiter to accede to the request due to the unstable condition in the area of work desired so
much so that the regular payment of the remuneration of the employee or worker and his security of tenure cannot be assured, and still
such employee or worker insists on taking a calculated risk by signing a waiver rendering the local representative or recruiter free
from any liability to said employee or laborer arising from such overseas employment, thus in such instance, the local
representative or recruiter cannot be jointly and severally held liable with the foreign principal or employer for any claim of
such employee or worker arising thereunder.
One additional note should be emphasized. As the liquidator had a standing commitment to pay what is due private respondents, the
claim of private respondents should be paid by the liquidator. Indeed, it is not improbable that private respondents may have collected
by now partially if not fully what is due them. For this additional reason, the Court cannot allow the private respondents to unjustly
enrich themselves by collecting twice from the liquidator and petitioner.
WHEREFORE, the petition is given due course and is GRANTED. The decision of the NLRC dated October 14, 1983 is hereby set
aside and another decision is hereby rendered dismissing the complaint. No costs.
SO ORDERED.
G.R. No. 110524. July 29, 2002.*

17
DOUGLAS MILLARES and ROGELIO LAGDA, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION,
TRANSGLOBAL MARITIME AGENCY, INC. and ESSO INTERNATIONAL SHIPPING CO., LTD., respondents.
Labor Law; Classification of Employment; Seafarers are considered contractual employees; They can not be considered as
regular employees under Article 280 of the Labor Code.—From the foregoing cases, it is clear that seafarers are considered
contractual employees. They can not be considered as regular employees under Article 280 of the Labor Code. Their employment is
governed by the contracts they sign every time they are rehired and their employment is terminated when the contract expires. Their
employment is contractually fixed for a certain period of time. They fall under the exception of Article 280 whose employment has
been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of engagement
of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the
season. We need not depart from the rulings of the Court in the two aforementioned cases which indeed constitute stare decisis with
respect to the employment status of seafarers.
Same; Same; Same; There are certain forms of employment which also require the performance of usual and desirable
functions and which exceed one year but do not necessarily attain regular employment status under Article 280. —Petitioners insist
that they should be considered regular employees, since they have rendered services which are usually necessary and desirable to the
business of their employer, and that they have rendered more than twenty (20) years of service. While this may be true, the Brent case
has, however, held that there are certain forms of employment which also require the performance of usual and desirable functions and
which exceed one year but do not necessarily attain regular employment status under Article 280. Overseas workers including
seafarers fall under this type of employment which are governed by the mutual agreements of the parties.
Same; Same; Same; Filipino seamen are governed by the Rules and Regulations of the POEA; Contract of seamen shall be for
a fixed period, not longer than 12 months.—In this jurisdiction and as clearly stated in
_______________
*
SPECIAL FIRST DIVISION.
307
VOL. 385, JULY 29, 2002 307
Millares vs. National Labor Relations Commission
the Coyoca case, Filipino seamen are governed by the Rules and Regulations of the POEA. The Standard Employment Contract
governing the Employment of All Filipino Seamen on Board Ocean-Going Vessels of the POEA, particularly in Part I, Sec. C
specifically provides that the contract of seamen shall be for a fixed period. And in no case should the contract of seamen be longer
than 12 months.
SPECIAL CIVIL ACTION in the Supreme Court. Certiorari.
The facts are stated in the resolution of the Court.

Ongkiko, Kalaw, Manhit & Acorda Law Offices for petitioners.
Soo, Gutierrez, Leogardo & Lee and Torres, Trajano & Associates Law Office for intervenor.
Renato G. De la Cruz & Associates for private respondents.
Anacleto T. Lacanilao, Jr. for movant.
RESOLUTION
KAPUNAN, J.:
On March 14, 2000, the Court promulgated its decision in the above-entitled case, ruling in favor of the petitioners. The dispositive
portion reads, as follows:
WHEREFORE, premises considered, the assailed Decision, dated June 1, 1993, of the National Labor Relations
Commission is hereby REVERSED and SET ASIDE and a new judgment is hereby rendered ordering the private
respondents to:
(1) Reinstate petitioners Millares and Lagda to their former positions without loss of seniority rights, and to pay full
backwages computed from the time of illegal dismissal to the time of actual reinstatement;
(2) Alternatively, if reinstatement is not possible, pay petitioners Millares and Lagda separation pay equivalent to one
month's salary for every year of service; and,
(3) Jointly and severally pay petitioners One Hundred Percent (100%) of their total credited contributions as provided under
the Consecutive Enlistment Incentive Plan.
18
SO ORDERED.1
A motion for reconsideration was consequently filed2 by the private respondents to which petitioners filed an Opposition thereto. 3
In a Minute Resolution dated June 28, 2000, the Court resolved to deny the motion for reconsideration with finality. 4
Subsequently, the Filipino Association for Mariners Employment, Inc. (FAME) filed a Motion for Leave to Intervene and to Admit a
Motion for Reconsideration in Intervention.
Private respondents, meanwhile, also filed a Motion for Leave to File a Second Motion for Reconsideration of our decision.
In both motions, the private respondents and FAME respectively pray in the main that the Court reconsider its ruling that "Filipino
seafarers are considered regular employees within the context of Article 280 of the Labor Code." They claim that the decision may
establish a precedent that will adversely affect the maritime industry.
The Court resolved to set the case for oral arguments to enable the parties to present their sides.
To recall, the facts of the case are, as follows:
Petitioner Douglas Millares was employed by private respondent ESSO International Shipping Company LTD. (Esso
International, for brevity) through its local manning agency, private respondent Trans-Global Maritime Agency, Inc. (Trans-
Global, for brevity) on November 16, 1968 as a machinist. In 1975, he was promoted as Chief Engineer which position he
occupied until he opted to retire in 1989. He was then receiving a monthly salary of US $1,939.00.
On June 13, 1989, petitioner Millares applied for a leave of absence for the period July 9 to August 7, 1989. In a letter dated
June 14, 1989, Michael J. Estaniel, President of private respondent Trans-Global, approved the request for leave of absence.
On June 21, 1989, petitioner Millares wrote G.S. Hanly, Operations Manager of Exxon International Co., (now Esso
International) through Michael J. Estaniel, informing him of his intention to avail of the optional retirement plan under the
Consecutive Enlistment Incentive Plan (CEIP) considering that he had already rendered more than twenty (20) years of
continuous service. On July 13, 1989 respondent Esso International, through W.J. Vrints, Employee Relations Manager,
denied petitioner Millares' request for optional retirement on the following grounds, to wit: (1) he was employed on a
contractual basis; (2) his contract of enlistment (COE) did not provide for retirement before the age of sixty (60) years; and
(3) he did not comply with the requirement for claiming benefits under the CEIP, i.e., to submit a written advice to the
company of his intention to terminate his employment within thirty (30) days from his last disembarkation date.
On August 9, 1989, petitioner Millares requested for an extension of his leave of absence from August 9 to 24, 1989. On
August 19, 1989, Roy C. Palomar, Crewing Manager, Ship Group A, Trans-global, wrote petitioner Millares advising him
that respondent Esso International "has corrected the deficiency in its manpower requirement specifically in the Chief
Engineer rank by promoting a First Assistant Engineer to this position as a result of (his) previous leave of absence which
expired last August 8, 1989. The adjustment in said rank was required in order to meet manpower schedules as a result of
(his) inability."
On September 26, 1989, respondent Esso International, through H. Regenboog, Personnel Administrator, advised petitioner
Millares that in view of his absence without leave, which is equivalent to abandonment of his position, he had been dropped
from the roster of crew members effective September 1, 1989.
On the other hand, petitioner Lagda was employed by private respondent Esso International as wiper/oiler in June 1969. He
was promoted as Chief Engineer in 1980, a position he continued to occupy until his last COE expired on April 10, 1989. He
was then receiving a monthly salary of US$1,939.00.
On May 16, 1989, petitioner Lagda applied for a leave of absence from June 19, 1989 up to the whole month of August 1989.
On June 14, 1989, respondent Trans-Global's President, Michael J. Estaniel, approved petitioner Lagda's leave of absence
from June 22, 1989 to July 20, 1989 and advised him to report for re-assignment on July 21, 1989.
On June 26, 1989, petitioner Lagda wrote a letter to G.S. Stanley, Operations Manager of respondent Esso International,
through respondent Trans-Global's President Michael J. Estaniel, informing him of his intention to avail of the optional early
retirement plan in view of his twenty (20) years continuous service in the complaint.
19
On July 13, 1989, respondent Trans-global denied petitioner Lagda's request for availment of the optional early retirement
scheme on the same grounds upon which petitioner Millares request was denied.
On August 3, 1989, he requested for an extension of his leave of absence up to August 26, 1989 and the same was approved.
However, on September 27, 1989, respondent Esso International, through H. Regenboog, Personnel Administrator, advised
petitioner Lagda that in view of his "unavailability for contractual sea service," he had been dropped from the roster of crew
members effective September 1, 1989.
On October 5, 1989, petitioners Millares and Lagda filed a complaint-affidavit, docketed as POEA (M) 89-10-9671, for
illegal dismissal and non-payment of employee benefits against private respondents Esso International and Trans-
Global, before the POEA.5
On July 17, 1991, the POEA rendered a decision dismissing the complaint for lack of merit.
On appeal to the NLRC, the decision of the POEA was affirmed on June 1, 1993 with the following disquisition:
The first issue must be decided in the negative. Complainants-appellants, as seamen and overseas contract workers are not
covered by the term "regular employment" as defined under Article 280 of the Labor Code. The POEA, which is tasked with
protecting the rights of the Filipino workers for overseas employment to fair and equitable recruitment and employment
practices and to ensure their welfare, prescribes a standard employment contract for seamen on board ocean-going vessels for
a fixed period but in no case to exceed twelve (12) months (Part 1, Sec. C). This POEA policy appears to be in consonance
with the international maritime practice. Moreover, the Supreme Court in Brent School, Inc. vs. Zamora, 181 SCRA 702, had
held that a fixed term is essential and natural appurtenance of overseas employment contracts to which the concept of regular
employment with all that it implies is not applicable, Article 280 of the Labor Code notwithstanding. There is, therefore, no
reason to disturb the POEA Administrator's finding that complainants-appellants were hired on a contractual basis and for a
definite period. Their employment is thus governed by the contracts they sign each time they are re-hired and is terminated at
the expiration of the contract period.6
Undaunted, the petitioners elevated their case to this Court7 and successfully obtained the favorable action, which is now
vehemently being assailed.
At the hearing on November 15, 2000, the Court defined the issues for resolution in this case, namely:
I. ARE PETITIONERS REGULAR OR CONTRACTUAL EMPLOYEES WHOSE EMPLOYMENTS ARE

TERMINATED EVERYTIME THEIR CONTRACTS OF EMPLOYMENT EXPIRE?
II. ASSUMING THAT PETITIONERS ARE REGULAR EMPLOYEES, WERE THEY DISMISSED WITHOUT JUST
CAUSE SO AS TO BE ENTITLED TO REINSTATEMENT AND BACKWAGES, INCLUDING PAYMENT OF 100%
OF THEIR TOTAL CREDITED CONTRIBUTIONS TO THE CONSECUTIVE ENLISTMENT INCENTIVE PLAN
(CEIP)?
III. DOES THE PROVISION OF THE POEA STANDARD CONTRACT FOR SEAFARERS ON BOARD FOREIGN
VESSELS (SEC. C., DURATION OF CONTRACT) PRECLUDE THE ATTAINMENT BY SEAMEN OF THE STATUS
OF REGULAR EMPLOYEES?
IV. DOES THE DECISION OF THE COURT IN G.R. NO. 110524 CONTRAVENE INTERNATIONAL MARITIME
LAW, ALLEGEDLY PART OF THE LAW OF THE LAND UNDER SECTION 2, ARTICLE II OF THE
CONSTITUTION?
V. DOES THE SAME DECISION OF THE COURT CONSTITUTE A DEPARTURE FROM ITS RULING IN COYOCA
VS. NLRC (G.R. NO. 113658, March 31, 1995)?8
In answer to the private respondents' Second Motion for Reconsideration and to FAME's Motion for Reconsideration in Intervention,
petitioners maintain that they are regular employees as found by the Court in the March 14, 2000 Decision. Considering that
petitioners performed activities which are usually necessary or desirable in the usual business or trade of private respondents, they
should be considered as regular employees pursuant to Article 280, Par. 1 of the Labor Code.9 Other justifications for this ruling
include the fact that petitioners have rendered over twenty (20) years of service, as admitted by the private respondents; 10 that they
20
were recipients of Merit Pay which is an express acknowledgment by the private respondents that petitioners are regular and not just
contractual employees;11 that petitioners were registered under the Social Security System (SSS).
The petitioners further state that the case of Coyoca v. NLRC12 which the private respondents invoke is not applicable to the case at bar
as the factual milieu in that case is not the same. Furthermore, private respondents' fear that our judicial pronouncement will spell the
death of the manning industry is far from real. Instead, with the valuable contribution of the manning industry to our economy, these
seafarers are supposed to be considered as "Heroes of the Republic" whose rights must be protected. 13 Finally, the first motion for
reconsideration has already been denied with finality by this Court and it is about time that the Court should write finis to this case.
The private respondents, on the other hand, contend that: (a) the ruling holding petitioners as regular employees was not in accord
with the decision in Coyoca v. NLRC, 243 SCRA 190; (b) Art. 280 is not applicable as what applies is the POEA Rules and
Regulations Governing Overseas Employment; (c) seafarers are not regular employees based on international maritime practice; (d)
grave consequences would result on the future of seafarers and manning agencies if the ruling is not reconsidered; (e) there was no
dismissal committed; (f) a dismissed seafarer is not entitled to back wages and reinstatement, that being not allowed under the POEA
rules and the Migrant Workers Act; and, (g) petitioners are not entitled to claim the total amount credited to their account under the
CEIP.14
Meanwhile, Intervenor Filipino Association of Mariners Employment (FAME) avers that our decision, if not reconsidered, will have
negative consequences in the employment of Filipino Seafarers overseas which, in turn, might lead to the demise of the manning
industry in the Philippines. As intervenor FAME puts it:
xxx
7.1 Foreign principals will start looking for alternative sources for seafarers to man their ships. AS reported by the
BIMCO/ISF study, "there is an expectancy that there will be an increasing demand for (and supply of) Chinese seafarers,
with some commentators suggesting that this may be a long-term alternative to the Philippines." Moreover, "the political
changes within the former Eastern Bloc have made new sources of supply available to the international market." Intervenor's
recent survey among its members shows that 50 Philippine manning companies had already lost some 6,300 slots to other
Asian, East Europe and Chinese competition for the last two years;
7.2 The Philippine stands to lose an annual foreign income estimated at U.S. DOLLARS TWO HUNDRED SEVENTY
FOUR MILLION FIVE HUNDRED FORTY NINE THOUSAND (US$ 274,549,000.00) from the manning industry and
another US DOLLARS FOUR BILLION SIX HUNDRED FIFTY MILLION SEVEN HUNDRED SIX THOUSAND (US$
4,650,760,000.00) from the land-based sector if seafarers and equally situated land-based contract workers will be declared
regular employees;
7.3 Some 195,917 (as of 1998) deployed overseas Filipino seafarers will be rendered jobless should we lose the market;
7.4 Some 360 manning agencies (as of 30 June 2000) whose principals may no longer be doing business with them will close
their shops;
7.5 The contribution to the Overseas Worker's Welfare Administration by the sector, which is USD 25.00 per contract and
translates to US DOLLARS FOUR MILLION (US$ 4,000,000.00)annually, will be drastically reduced. This is not to
mention the processing fees paid to POEA, Philippine Regulatory Commission (PRC), Department of Foreign Affairs (DFA)
and Maritime Industry Authority (MARINA) for the documentation of these seafarers;
7.6 Worst, some 195,917 (as of 1998) families will suffer socially and economically, as their breadwinners will be rendered
jobless; and
7.7 It will considerably slow down the government's program of employment generation, considering that, as expected
foreign employers will now avoid hiring Filipino overseas contract workers as they will become regular employees with all
its concomitant effects.15
Significantly, the Office of the Solicitor General, in a departure from its original position in this case, has now taken the opposite
view. It has expressed its apprehension in sustaining our decision and has called for a re-examination of our ruling. 16
21
Considering all the arguments presented by the private respondents, the Intervenor FAME and the OSG, we agree that there is a need
to reconsider our position with respect to the status of seafarers which we considered as regular employees under Article 280 of the
Labor Code. We, therefore, partially grant the second motion for reconsideration.
In Brent School Inc. v. Zamora,17 the Supreme Court stated that Article 280 of the Labor Code does not apply to overseas
employment.
In the light of the foregoing description of the development of the provisions of the Labor Code bearing on term or fixed-
period employment that the question posed in the opening paragraph of this opinion should now be addressed. Is it then the
legislative intention to outlaw stipulations in employment contracts laying down a definite period therefor? Are such
stipulations in essence contrary to public policy and should not on this account be accorded legitimacy?
On the other hand, there is the gradual and progressive elimination of references to term or fixed-period employment in the
Labor Code, and the specific statement of the rule that:
Regular and Casual Employment – The provisions of written agreement to the contrary notwithstanding and
regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee
has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the
employer except where the employment has been fixed for a specific project or undertaking the completion or
termination of which has been determined at the time of the engagement of the employee or where the work or
service to be employee is seasonal in nature and the employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceding paragraph; provided that, any
employee who has rendered at least one year of service, whether such service is continuous or broken, shall be
considered a regular employee with respect to the activity in which he is employed and his employment shall
continue while such actually exists.
There is, on the other hand, the Civil Code, which has always recognized, and continues to recognize, the validity and
propriety of contracts and obligations with a fixed or definite period, and imposes no restraints on the freedom of the parties
to fix the duration of a contract, whatever its object, be it specific, goods or services, except the general admonition against
stipulations contrary to law, morals, good customs, public order or public policy. Under the Civil code, therefore, and as a
general proposition, fixed-term employment contracts are not limited, as they are under the present Labor Code, to those by
natural seasonal or for specific projects with predetermined dates of completion; they also include those to which the parties
by free choice have assigned a specific date of termination.
Some familiar examples may be cited of employment contract which may be neither for seasonal work nor for specific
projects, but to which a fixed term is an essential and natural appurtenance: overseas employment contracts, for one,
to which, whatever the nature of the engagement, the concept of regular employment with all that it implies does not
appear ever to have been applied. Article 280 of the Labor Code notwithstanding also appointments to the positions of
dean, assistant dean, college secretary, principal, and other administrative offices in educational institutions, which are by
practice or tradition rotated among the faculty members, and where fixed terms are a necessity without which no reasonable
rotation would be possible. Similarly, despite the provisions of Article 280, Policy Instructions. No. 8 of the Minister of
Labor implicitly recognize that certain company officials may be elected for what would amount to fix periods, at the
expiration of which they would have to stand down, in providing that these officials, xxx may lose their jobs as president,
executive vice-president or vice-president, etc. because the stockholders or the board of directors for one reason or another
did not reelect them.
There can of course be no quarrel with the proposition that where from the circumstances it is apparent that periods have
been imposed to preclude acquisition of tenurial security by the employee, they should be struck down or disregard as
contrary to public policy, morals, etc. But where no such intent to circumvent the law is shown, or stated otherwise, where
the reason for the law does not exists, e.g., where it is indeed the employee himself who insists upon a period or where the
nature of the engagement is such that, without being seasonal or for a specific project, a definite date of termination is a sine
qua non, would an agreement fixing a period be essentially evil or illicit, therefore anathema? Would such an agreement
come within the scope of Article 280 which admittedly was enacted "to prevent the circumvention of the right of the
employee to be secured in xxx his employment
As it is evident from even only the three examples already given that Article 280 of the Labor Code, under a narrow and
literal interpretation, not only fails to exhaust the gamut of employment contracts to which the lack of a fixed period would
be an anomaly, but would also appear to restrict, without reasonable distinctions, the right of an employee to freely stipulate
22
within his employer the duration of his engagement, it logically follows that such a literal interpretation should be eschewed
or avoided. The law must be given a reasonable interpretation, to preclude absurdity in its application. Outlawing the whole
concept of term employment and subverting to boot the principle of freedom of contract to remedy the evil of employer's
using it as a means to prevent their employees from obtaining security of tenure is like cutting off the nose to spite the face
or, more relevantly, curing a headache by lopping of the head.
It is a salutary principle in statutory construction that there exists a valid presumption that undesirable consequences
were never intended by a legislative measure, and that a construction of which the statute is fairly susceptible is
favored, which will avoid all objectionable, mischievous, indefensible, wrongful, evil, and injurious consequences."
Nothing is better settled than that courts are not to give words a meaning which would lead to absurd or
unreasonable consequences. That is a principle that goes back to In re Allen decided on October 27, 1902, where it
was held that a literal interpretation is to be rejected if it would be unjust or lead to absurd results. That is a strong
argument against its adoption. The words of Justice Laurel are particularly apt. Thus: "the appellants would lead to
an absurdity is another argument for rejecting it."
xxx We have, here, then a case where the true intent of the law is clear that calls for the application of the cardinal
rule of statutory construction that such intent of spirit must prevail over the letter thereof, for whatever is within the
spirit of a statute is within the statute, since adherence to the letter would result in absurdity, injustice and
contradictions and would defeat the plain and vital purpose of the statute.
Accordingly, and since the entire purpose behind the development of legislation culminating in the present Article 280
of the Labor code clearly appears to have been, as already observed, to prevent circumvention of the employee's right
to be secure in his tenure, the clause in said article indiscriminately and completely ruling out all written or oral
agreements conflicting with the concept of regular employment as defined therein should be construed to refer to the
substantive evil that the Code itself has singled out; agreements entered into precisely to circumvent security of
tenure. It should have no application to instances where a fixed period of employment was agreed upon knowingly
and voluntarily by the parties, without any force, duress or improper pressure being brought to bear upon the
employee and absent any other circumstances vitiating his consent, or where it satisfactorily appears that the
employer and employee dealt with each other on more or less equal terms with no moral dominance whatever being
exercised by the former over the latter. Unless thus limited in its purview, the law would be made to apply to purposes
other than those explicitly stated by its framers; it thus becomes pointless and arbitrary, unjust in its effects and apt to lead to
absurd and unintended consequences.
Again, in Pablo Coyoca v. NLRC,18 the Court also held that a seafarer is not a regular employee and is not entitled to separation pay.
His employment is governed by the POEA Standard Employment Contract for Filipino Seamen.
x x x. In this connection, it is important to note that neither does the POEA standard employment contract for Filipino
seamen provide for such benefits.
As a Filipino seaman, petitioner is governed by the Rules and Regulations Governing Overseas Employment and the
said Rules do not provide for separation or termination pay. What is embodied in petitioner's contract is the payment of
compensation arising from permanent partial disability during the period of employment. We find that private respondent
complied with the terms of contract when it paid petitioner P42,315.00 which, in our opinion, is a reasonable amount, as
compensation for his illness.
Lastly, petitioner claims that he eventually became a regular employee of private respondent and thus falls within the
purview of Articles 284 and 95 of the Labor Code. In support of this contention, petitioner cites the case of Worth Shipping
Service, Inc., et al. v. NLRC, et al., wherein we held that the crew members of the shipping company had attained regular
status and thus, were entitled to separation pay. However, the facts of said case differ from the present. In Worth, we held that
the principal and agent had "operational control and management" over the MV Orient Carrier and thus, were the actual
employers of their crew members.
From the foregoing cases, it is clear that seafarers are considered contractual employees. They can not be considered as regular
employees under Article 280 of the Labor Code. Their employment is governed by the contracts they sign everytime they are rehired
and their employment is terminated when the contract expires. Their employment is contractually fixed for a certain period of time.
They fall under the exception of Article 280 whose employment has been fixed for a specific project or undertaking the completion or
termination of which has been determined at the time of engagement of the employee or where the work or services to be performed is
23
seasonal in nature and the employment is for the duration of the season.19 We need not depart from the rulings of the Court in the two
aforementioned cases which indeed constitute stare decisis with respect to the employment status of seafarers.
Petitioners insist that they should be considered regular employees, since they have rendered services which are usually necessary and
desirable to the business of their employer, and that they have rendered more than twenty(20) years of service. While this may be true,
the Brent case has, however, held that there are certain forms of employment which also require the performance of usual and
desirable functions and which exceed one year but do not necessarily attain regular employment status under Article 280. 20 Overseas
workers including seafarers fall under this type of employment which are governed by the mutual agreements of the parties.
In this jurisdiction and as clearly stated in the Coyoca case, Filipino seamen are governed by the Rules and Regulations of the POEA.
The Standard Employment Contract governing the employment of All Filipino seamen on Board Ocean-Going Vessels of the POEA,
particularly in Part I, Sec. C specifically provides that the contract of seamen shall be for a fixed period. And in no case should the
contract of seamen be longer than 12 months. It reads:
Section C. Duration of Contract
The period of employment shall be for a fixed period but in no case to exceed 12 months and shall be stated in the Crew
Contract. Any extension of the Contract period shall be subject to the mutual consent of the parties.
Moreover, it is an accepted maritime industry practice that employment of seafarers are for a fixed period only. Constrained by the
nature of their employment which is quite peculiar and unique in itself, it is for the mutual interest of both the seafarer and the
employer why the employment status must be contractual only or for a certain period of time. Seafarers spend most of their time at sea
and understandably, they can not stay for a long and an indefinite period of time at sea. 21 Limited access to shore society during the
employment will have an adverse impact on the seafarer. The national, cultural and lingual diversity among the crew during the COE
is a reality that necessitates the limitation of its period. 22
Petitioners make much of the fact that they have been continually re-hired or their contracts renewed before the contracts expired
(which has admittedly been going on for twenty (20) years). By such circumstance they claim to have acquired regular status with all
the rights and benefits appurtenant to it.
Such contention is untenable. Undeniably, this circumstance of continuous re-hiring was dictated by practical considerations that
experienced crew members are more preferred. Petitioners were only given priority or preference because of their experience and
qualifications but this does not detract the fact that herein petitioners are contractual employees. They can not be considered regular
employees. We quote with favor the explanation of the NLRC in this wise:
xxx The reference to "permanent" and "probationary" masters and employees in these papers is a misnomer and does not alter
the fact that the contracts for enlistment between complainants-appellants and respondent-appellee Esso International were
for a definite periods of time, ranging from 8 to 12 months. Although the use of the terms "permanent" and "probationary" is
unfortunate, what is really meant is "eligible for-re-hire". This is the only logical conclusion possible because the parties
cannot and should not violate POEA's requirement that a contract of enlistment shall be for a limited period only; not
exceeding twelve (12)months.23
From all the foregoing, we hereby state that petitioners are not considered regular or permanent employees under Article 280 of the
Labor Code. Petitioners' employment have automatically ceased upon the expiration of their contracts of enlistment (COE). Since
there was no dismissal to speak of, it follows that petitioners are not entitled to reinstatement or payment of separation pay or
backwages, as provided by law.
With respect to the benefits under the Consecutive Enlistment Incentive Plan (CEIP), we hold that the petitioners are still entitled to
receive 100% of the total amount credited to him under the CEIP. Considering that we have declared that petitioners are contractual
employees, their compensation and benefits are covered by the contracts they signed and the CEIP is part and parcel of the contract.
The CEIP was formulated to entice seamen to stay long in the company. As the name implies, the program serves as an incentive for
the employees to renew their contracts with the same company for as long as their services were needed. For those who remained
loyal to them, they were duly rewarded with this additional remuneration under the CEIP, if eligible. While this is an act of
benevolence on the part of the employer, it can not, however, be denied that this is part of the benefits accorded to the employees for
services rendered. Such right to the benefits is vested upon them upon their eligibility to the program.
24
The CEIP provides that an employee becomes covered under the Plan when he completes thirty-six (36) months or an equivalent of
three (3) years of credited service with respect to employment after June 30, 1973.24 Upon eligibility, an amount shall be credited to
his account as it provides, among others:
III. Distribution of Benefits
A. Retirement, Death and Disability
When the employment of an employee terminates because of his retirement, death or permanent and total disability, a
percentage of the total amount credited to his account will be distributed to him (or his eligible survivor(s) in accordance with
the following:
Reason for Termination Percentage

a) Attainment of mandatory retirement age of 60. 100%
b) Permanent and total disability, while under contract, that is not due to 100%
accident or misconduct.
c) Permanent and total disability, while under contract, that is due to 100%
accident, and not due to misconduct.
xxx
B. Voluntary Termination
When an employee voluntary terminates his employment with at least 36 months of credited service without any misconduct
on his part, 18 percent of the total amount credited to his account, plus an additional ½ of one percent for each month (up to a
maximum of 164 months of credited service in excess of 36, will be distributed to him provided (1) the employee has
completed his last Contract of Enlistment and (2) employee advises the company in writing, within 30 days, from his last
disembarkation date, of his intention to terminate his employment. (To advise the Company in writing means that the original
letter must be sent to the Company's agent in the Philippines, a copy sent to the Company in New York).
xxx
C. Other Terminations
When the employment of an employee is terminated by the Company for a reason other than one in A and B above, without
any misconduct on his part, a percentage of the total amount credited to his account will be distributed to him in accordance
with the following.
Credited Service Percentage

36 months 50%
48 " 75%
60 " 100%
When the employment of an employee is terminated due to his poor-performance, misconduct, unavailability, etc., or if
employee is not offered re-engagement for similar reasons, no distribution of any portion of employee's account will ever be
made to him (or his eligible survivor[s]).
It must be recalled that on June 21, 1989, Millares wrote a letter to his employer informing his intention to avail of the optional
retirement plan under the CEIP considering that he has rendered more than twenty (20) years of continuous service. Lagda, likewise,
manifested the same intention in a letter dated June 26, 1989. Private respondent, however, denied their requests for benefits under the
CEIP since: (1) the contract of enlistment (COE) did not provide for retirement before 60 years of age; and that (2) petitioners failed to
submit a written notice of their intention to terminate their employment within thirty (30) days from the last disembarkation date
pursuant to the provision on Voluntary Termination of the CEIP. Petitioners were eventually dropped from the roster of crew members
25
and on grounds of "abandonment" and "unavailability for contractual sea service", respectively, they were disqualified from receiving
any benefits under the CEIP.25
In our March 14, 2000 Decision, we, however, found that petitioners Millares and Lagda were not guilty of "abandonment" or
"unavailability for contractual sea service," as we have stated:
The absence of petitioners was justified by the fact that they secured the approval of private respondents to take a leave of
absence after the termination of their last contracts of enlistment. Subsequently, petitioners sought for extensions of their
respective leaves of absence. Granting arguendo that their subsequent requests for extensions were not approved, it cannot be
said that petitioners were unavailable or had abandoned their work when they failed to report back for assignment as they
were still questioning the denial of private respondents of their desire to avail of the optional early retirement policy, which
they believed in good faith to exist.26
Neither can we consider petitioners guilty of poor performance or misconduct since they were recipients of Merit Pay Awards for their
exemplary performances in the company.
Anent the letters dated June 21, 1989 (for Millares) and June 26, 1989 (for Lagda) which private respondent considered as belated
written notices of termination, we find such assertion specious. Notwithstanding, we could conveniently consider the petitioners
eligible under Section III-B of the CEIP (Voluntary Termination), but this would, however, award them only a measly amount of
benefits which to our mind, the petitioners do not rightfully deserve under the facts and circumstances of the case. As the CEIP
provides:
III. Distribution of Benefits
xxx
E. Distribution of Accounts
When an employee terminates under conditions that would qualify for a distribution of more than one specified in A, B or C
above, the largest single amount, only, will be distributed.
Since petitioners' termination of employment under the CEIP do not fall under Section III-A (Retirement, Death and Disability) or
Section III-B (Voluntary Termination), nor could they be they be considered under the second paragraph of Section III-C, as earlier
discussed; it follows that their termination falls under the first paragraph of Section III-C for which they are entitled to 100% of the
total amount credited to their accounts. The private respondents can not now renege on their commitment under the CEIP to reward
deserving and loyal employees as the petitioners in this case.
In taking cognizance of private respondent's Second Motion for Reconsideration, the Court hereby suspends the rules to make them
comformable to law and justice and to subserve an overriding public interest.
IN VIEW OF THE FOREGOING, the Court Resolved to Partially GRANT Private Respondent's Second Motion for
Reconsideration and Intervenor FAMES' Motion for Reconsideration in Intervention. The Decision of the National Labor Relations
Commission dated June 1, 1993 is hereby REINSTATED with MODIFICATION. The Private Respondents, Trans-Global Maritime
Agency, Inc. and Esso International Shipping Co., Ltd. are hereby jointly and severally ORDERED to pay petitioners One Hundred
Percent (100%) of their total credited contributions as provided under the Consecutive Enlistment Incentive Plan(CEIP).
SO ORDERED.
26
G.R. No. 198968. January 18, 2017.*

STATUS MARITIME CORPORATION, and ADMIBROS SHIPMANAGEMENT CO., LTD., petitioners, vs.RODRIGO C.
DOCTOLERO, respondent.
Labor Law; Seafarers; Disability Benefits; Conditions In Order for a Seafarer’s Claim for Total and Permanent Disability
Benefits to Prosper.—In order for a seafarer’s claim for total and permanent disability benefits to prosper, any of the following
conditions should be present: (a) The company-designated physician failed to issue a declaration as to his fitness to engage in sea duty
or disability even after the lapse of the 120-day period and there is no indication that further medical treatment would address his
temporary total disability, hence, justify an extension of the period to 240 days; (b) 240 days had lapsed without any certification
issued by the company-designated physician; (c) The company-designated physician declared that he is fit for sea duty within the 120-
day or 240-day period, as the case may be, but his physician of choice and the doctor chosen under Section 20-B(3) of the POEA-SEC
are of a contrary opinion; (d) The company-designated physician acknowledged that he is partially permanently disabled but other
doctors who he consulted, on his own and jointly with his employer, believed that his disability is not only permanent but total as well;
(e) The company-designated physician recognized that he is totally and permanently disabled but there is a dispute on the disability
grading; (f) The company-designated physician determined that his medical condition is not compensable or work-related under the
POEA-SEC but his doctor-of-choice and the third doctor selected under Section 20-B(3) of the POEA-SEC found otherwise and
declared him unfit to work; (g) The company-designated physician declared him totally and permanently disabled but the employer
refuses to pay him the corresponding benefits; and (h) The company-designated physician declared him partially and permanently
disabled within the 120-day or 240-day period but he remains incapacitated to perform his usual sea duties after the lapse of said
periods.
_______________
27
* THIRD DIVISION.

518
Status Maritime Corporation vs. Doctolero
Same; Same; The conflict between the factual findings of the Labor Arbiter (LA) and National Labor Relations Commission
(NLRC), on one hand, and those of the Court of Appeals (CA), on the other hand, compel the Supreme Court (SC) to dwell on the
factual matters and to reexamine the evidence adduced by the parties.—Although the degree and extent of the seafarer’s disability
constitute a factual question that this Court should not reassess on review, the conflict between the factual findings of the Labor
Arbiter and NLRC, on one hand, and those of the CA, on the other hand, compel the Court to dwell on the factual matters and to
reexamine the evidence adduced by the parties. Upon its reevaluation of the records, therefore, the Court concludes that the CA’s
findings in favor of entitling Doctolero to permanent and total disability benefits were erroneous. While the fact that Doctolero
suffered the disability during the term of his contract was undisputed, it was evident that he had filed his complaint for disability
benefits before the company-designated physician could determine the nature and extent of his disability, or before even the lapse of
the initial 120-day period. With Doctolero still undergoing further tests, the company-designated physician had no occasion to
determine the nature and extent of his disability upon which to base Doctolero’s “fit to work” certification or disability grading.
Consequently, the petitioners correctly argued that Doctolero had no cause of action for disability pay and sickness allowance at the
time of the filing of his complaint.
PETITION for review on certiorari of the decision and resolution of the Court of Appeals.
Tarriela, Tagao, Ona & Associates for petitioners.
Linsangan, Linsangan and Linsangan Law Office for respondent.
BERSAMIN, J.:

Petitioners Status Maritime Corporation (Status Maritime) and Admibros Shipmanagement Co., Ltd. (Admibros) appeal

519
VOL. 814, JANUARY 18, 2017 519
to assail the March 17, 2011 decision 1 and October 6, 2011 resolution2 promulgated in C.A.-G.R. S.P. No. 113206, whereby the Court
of Appeals (CA), modifying the decision3rendered on August 18, 2009 by the National Labor Relations Commission (NLRC),
awarded permanent and total disability benefits in favor of respondent Rodrigo C. Doctolero.

Antecedents

On July 28, 2006, Status Maritime, acting for and in behalf of Admibros as its principal, hired Doctolero as Chief Officer onboard
the vessel M/V Dimitris Manios II for a period of nine months with a basic monthly salary of US$1,250.00. Doctolero underwent the
required Pre-Employment Medical Examination (PEME) prior to his embarkation, and was declared “fit to work.” He boarded the
vessel in August 2006.
On October 28, 2006, while M/V Dimitris Manios II was in Mexico, Doctolero experienced chest and abdominal pains. He was
brought to a medical clinic in Vera Cruz, Mexico. When no clear diagnosis could be made, he resumed work onboard the vessel. In
the evening of the same day, however, he was brought to Clinic San Luis, also in Mexico, because he again complained of abdominal
pains. He was then diagnosed to be suffering from “Esophago-Gastritis-Duodenitis.” The attending physician, Dr. Jorge Hernandez
Bustos, recommended his repatriation.
_______________
1 Rollo, pp. 28-36; penned by Associate Justice Ricardo R. Rosario, with Associate Justices Hakim S. Abdulwahid (retired) and
Samuel H. Gaerlan, concurring.
2 Id., at pp. 38-41; penned by Associate Justice Ricardo R. Rosario, with Associate Justices Marlene Gonzales-Sison and Samuel
H. Gaerlan, concurring.
3 Id., at pp. 281-287; penned by Presiding Commissioner Benedicto R. Palacol, with Commissioners Isabel G. Panganiban-
Ortiguerra and Nieves Vivar-De Castro, concurring.

520
28
On October 29, 2006, Doctolero again experienced difficulty of breathing while waiting for his return flight schedule. He
informed the ship’s agent of his condition and requested assistance, but the latter extended no assistance to him. Thus, he, by himself,
went to the Hospitales Nacionales, where he was admitted. He paid the hospital bills amounting to MXN$7,032.17 on his own. 4 Upon
discharge, he sought assistance from the Philippine Embassy until his repatriation to the Philippines in the second week of November
2006.5
On November 16, 2006, the company-designated physician evaluated Doctolero’s condition and found normal upper gastro-
intestinal endoscopy and negative H. pylori test. 6 Doctolero was recommended for several other tests that were, however, not
administered.
On January 22, 2007, on account of the illness suffered while working onboard the M/V Dimitris Manios II, Doctolero filed in the
NLRC his complaint demanding payment of total and permanent disability benefits, reimbursement of medical and hospital expenses,
sickwage allowance, moral and exemplary damages, and legal interest on his claims.7

Ruling of the Labor Arbiter

On July 18, 2008, Labor Arbiter Pablo C. Espiritu, Jr. rendered his decision dismissing the complaint for lack of merit.8 He opined
that the initial diagnosis of gastritis-duodenitis was not one of those listed as an occupational illness in the Philippine Overseas
Employment Administration-Standard Employment Contract (POEA-SEC); and that no evidence was
_______________
4 Id., at p. 30.
5 Id., at p. 166.
6 Id.
7 Id., at p. 163B.
8 Id., at pp. 171-177.

521
VOL. 814, JANUARY 18, 2017 521
adduced to establish that such illness had been caused or aggravated by the working conditions onboard the vessel.9

Decision of the NLRC

On appeal, the NLRC affirmed the Labor Arbiter’s finding no basis for the award of sickness allowance and disability pay but held
the petitioners liable to reimburse to Doctolero the cost of his medical treatment in the amount of $7,040.65. It ratiocinated and
disposed as follows:
x x x x The illness was clearly suffered during the term of his contract and insofar as work relatedness is concerned, there being no
contrary evidence adduced by the respondents-appellees of the nonexistence of causative circumstances of complainant-appellant’s
illness, We are constrained to rule in the latter’s favor. The latter finding is likewise supported by the consistent ruling that it is not
required that the employment be the sole factor in the growth, development or acceleration of the illness to entitle the claimant to the
benefits incident thereto. It is enough that the employment had contributed, even in a small measure, to the development of the
disease.
That said, complainant-appellant is thus entitled to reimbursement of his medical expenses in Veracruz, Mexico equivalent to
$7,040.65. (Records, p. 28) However, with respect to his claims for sickness allowance and disability pay, there being no declaration
as yet of complainant-appellant’s fitness to return to work or degree of disability made by the company-designated physician,
entitlement thereto has not attached. We take note of the fact that the initial evaluation of the company-designated physician was that
the Gastroscopy was normal and after such evaluation there had been no other assessment on his condition made. We also note that
there had been no other assessment made by any other doctor of complain-
_______________
9 Id.

522
ant-appellant’s condition that would controvert the findings of the company-designated physician and that this complaint has been
filed before the 120 days period given to company-designated physician to make a fitness to return to work assessment or a disability
29
grading in the latter case. It is clear therefore that the instant case has been prematurely filed and that the cause of action for disability
claims has not arisen.
Moreover, to this date there had been no evidence showing that complainant-appellant is permanently and totally disabled.
WHEREFORE, premises considered, judgment is hereby rendered finding no basis for award of sickness allowance and
disability pay. However, respondents-appellees are hereby ordered to reimburse complainant-appellant the cost of his medical
treatment in the amount of $7,040.65. Accordingly, the decision of the Labor Arbiter dated July 18, 2008 is hereby MODIFIED.
SO ORDERED.10

Doctolero moved for reconsideration, but the NLRC denied his motion for reconsideration on January 8, 2010. 11

Decision of the CA

By petition for certiorari, Doctolero assailed the adverse decision of the NLRC in the CA, insisting that the NLRC thereby
committed grave abuse of discretion amounting to lack or excess of jurisdiction.
On March 17, 2011,12 the CA granted the petition for certiorari, and declared Doctolero’s illness as work-related because it had
been contracted by him while onboard the vessel; that he had undergone rigid preemployment medical examinations
_______________
10 Id., at pp. 168-170.

11 Id., at pp. 185-187.
12 Id., at pp. 28-36.

523
VOL. 814, JANUARY 18, 2017 523
by virtue of which the company physicians had declared him fit to work; that he was entitled to disability benefits because he had been
unable to perform his customary job for more than 120 days; and that he was further entitled to moral and exemplary damages because
the petitioners had failed to shoulder the expenses he had incurred while he was awaiting his repatriation.
The CA decision disposed thusly:
WHEREFORE, judgment is hereby rendered MODIFYING the assailed Decision of public respondent in that private
respondents are ordered to pay petitioner the following:
1. US$60,000.00 or its equivalent in Philippine peso at the time of actual payment, as permanent and total disability benefits;
2. Moral and exemplary damages in the amount of P100,000.00;
3. US$7,040.65 by way of reimbursement of the cost of medical treatment in Mexico City;
4. Legal interest on the monetary awards to be computed from the time of this decision up to the actual payment thereof;
5. Sickwage allowance equivalent to 120 days of his basic salary;
6. Attorney’s fees equivalent to 10% of the total awards.
SO ORDERED.13

Upon the petitioners’ motion for reconsideration, the CA amended the dispositive portion of its decision through the resolution
promulgated on October 6, 2011, to wit:
_______________
13 Id., at p. 35.

524
WHEREFORE, judgment is hereby rendered MODIFYING the assailed Decision of public respondent in that private
respondents are ordered to pay petitioner the following:
1. US$60,000.00 or its equivalent in Philippine peso at the time of actual payment, as permanent and total disability benefits;
2. Moral and exemplary damages in the amount of P100,000.00;
3. $7,040.65 (MXN) by way of reimbursement of the cost of medical treatment in Mexico City;
4. Legal interest on the monetary awards to be computed from the time of this decision up to the actual payment thereof;
5. Sickwage allowance equivalent to 120 days of his basic salary;
6. Attorney’s fees equivalent to 10% of the total awards.
SO ORDERED.
30
In all other respects, the motion for reconsideration is DENIEDfor lack of merit.
SO ORDERED.14
Issues

In this appeal, the petitioners argue that the PEME did not reveal the real state of health of Doctolero; that he did not show that his
illness had occurred during the term of his contract and had been work-related or had been aggravated by the conditions of his work;
and that his illness was not listed either as a disability or as an occupational disease under Section 32 and Section 32-A, respectively,
of the 2000 POEA-SEC.
_______________
14 Id., at pp. 38-41.

525
VOL. 814, JANUARY 18, 2017 525
Doctolero counters that the CA did not err because its assailed decision was based on law and jurisprudence.
In their reply, the petitioners stress that there was no finding by an independent physician that Doctolero’s illness had been work-
related or had been aggravated by his working conditions; and that Doctolero’s complaint was premature for being filed before the
expiration of the 120-day period of treatment by the company-designated physician and in the absence of the disability grading.
Based on the foregoing, the issue to be determined is whether Doctolero was entitled to claim permanent and total disability
benefits from the petitioners.

Ruling of the Court

The appeal is meritorious.
Permanent and total disability is defined in Article 198(c)(1) of the Labor Code, to wit:
x x x x
(c) The following disabilities shall be deemed total and permanent:
(1) Temporary total disability lasting continuously for more than one hundred twenty days, except as otherwise provided for in the
Rules.
x x x x

The relevant rule is Section 2, Rule X, of the Rules and Regulations Implementing Book IV of the Labor Code, which states:
Period of entitlement.—(a) The income benefit shall be paid beginning the first day of such disability. If caused by an injury or
sickness it shall not be paid longer than 120 consecutive days except where such injury or sickness still requires medical attendance
beyond 120

526
days but not to exceed 240 days from onset of disability in which case benefit for temporary total disability shall be paid. However,
the System may declare the total and permanent status at anytime after 120 days of continuous temporary total disability as may be
warranted by the degree of actual loss or impairment of physical or mental functions as determined by the System.

These provisions have to be read together with the POEA-SEC, whose Section 20(3) states:
Upon sign-off from the vessel for medical treatment, the seafarer is entitled to sickness allowance equivalent to his basic wage until he
is declared fit to work or the degree of permanent disability has been assessed by the company-designated physician but in no case
shall this period exceed one hundred twenty (120) days.15

Applying the aforementioned provisions, we find the filing of the respondent’s claim to be premature.
In order for a seafarer’s claim for total and permanent disability benefits to prosper, any of the following conditions should be
present:
(a) The company-designated physician failed to issue a declaration as to his fitness to engage in sea duty or disability even after the
lapse of the 120-day period and there is no indication that further medical treatment would address his temporary total disability,
hence, justify an extension of the period to 240 days;
(b) 240 days had lapsed without any certification issued by the company-designated physician;
31
(c) The company-designated physician declared that he is fit for sea duty within the 120-day or 240-day period, as the case may be,
but his physician of
_______________
15 Vergara v. Hammonia Maritime Services, Inc., G.R. No. 172933, October 6, 2008, 567 SCRA 610, 627.

527
VOL. 814, JANUARY 18, 2017 527
choice and the doctor chosen under Section 20-B(3) of the POEA-SEC are of a contrary opinion;
(d) The company-designated physician acknowledged that he is partially permanently disabled but other doctors who he consulted, on
his own and jointly with his employer, believed that his disability is not only permanent but total as well;
(e) The company-designated physician recognized that he is totally and permanently disabled but there is a dispute on the disability
grading;
(f) The company-designated physician determined that his medical condition is not compensable or work-related under the POEA-
SEC but his doctor-of-choice and the third doctor selected under Section 20-B(3) of the POEA-SEC found otherwise and declared
him unfit to work;
(g) The company-designated physician declared him totally and permanently disabled but the employer refuses to pay him the
corresponding benefits; and
(h) The company-designated physician declared him partially and permanently disabled within the 120-day or 240-day period but he
remains incapacitated to perform his usual sea duties after the lapse of said periods.16

Although the degree and extent of the seafarer’s disability constitute a factual question that this Court should not re-assess on
review, the conflict between the factual findings of the Labor Arbiter and NLRC, on one hand, and those of the CA, on the other hand,
compel the Court to dwell on the factual matters and to reexamine the evidence adduced by the parties. 17 Upon its reevaluation of the
records, therefore, the Court concludes that the CA’s findings in favor of entitling
_______________
16 C.F. Sharp Crew Management, Inc. v. Taok, G.R. No. 193679, July 18, 2012, 677 SCRA 296, 314-315.
17 Madrigalejos v. Geminilou Trucking Service, G.R. No. 179174, December 24, 2008, 575 SCRA 570, 573.

528
Doctolero to permanent and total disability benefits were erroneous. While the fact that Doctolero suffered the disability during
the term of his contract was undisputed, it was evident that he had filed his complaint for disability benefits before the
company-designated physician could determine the nature and extent of his disability, or before even the lapse of the initial 120-
day period. With Doctolero still undergoing further tests, the company-designated physician had no occasion to determine the nature
and extent of his disability upon which to base Doctolero’s “fit to work” certification or disability grading. Consequently, the
petitioners correctly argued that Doctolero had no cause of action for disability pay and sickness allowance at the time of the filing of
his complaint.

WHEREFORE, the Court REVERSES and SETS ASIDE the March 17, 2011 decision and October 6, 2011 resolution of the
Court of Appeals awarding permanent disability benefits to respondent Rodrigo C. Doctolero; REINSTATES the decision rendered
on August 18, 2009 by the National Labor Relations Commission; and ORDERS the respondent to pay the costs of suit.
SO ORDERED.
Velasco, Jr. (Chairperson), Reyes, Jardeleza and Caguioa,** JJ., concur.
Judgment and resolution reversed and set aside.
Note.—While it is the company-designated physician who must declare that the seaman suffered a permanent disability during
employment, it does not deprive the seafarer of his right to seek a second opinion. (Seagull Maritime Corp. vs. Dee, 520 SCRA 109
[2007])

——o0o——
G.R. No. 181375. July 13, 2016.*

32
PHIL-NIPPON KYOEI, CORP., petitioner, vs. ROSALIA T. GUDELOSAO, on her behalf and in behalf of minor children
CHRISTY MAE T. GUDELOSAO and ROSE ELDEN T. GUDELOSAO, CARMEN TANCONTIAN, on her behalf and in
behalf of the children CAMELA B. TANCONTIAN, BEVERLY B. TANCONTIAN, and ACE B. TANCONTIAN,
respondents.
Mercantile Law; Ships and Shipping; Limited Liability Rule; Articles 587 and 590 of the Code of Commerce embody the
universal principle of limited liability in all cases wherein the shipowner or agent may be properly held liable for the negligent or
illicit acts of the captain. These articles precisely intend to limit the liability of the shipowner or agent to the value of the vessel, its
appurtenances and freightage earned in the voyage, provided that the owner or agent abandons the vessel.—Article 837 applies the
limited liability rule in cases of collision. Meanwhile, Articles 587 and 590 embody the universal principle of limited liability in all
cases wherein the shipowner or agent may be properly held liable for the negligent or illicit acts of the captain. These articles precisely
intend to limit the liability of the shipowner or agent to the value of the vessel, its appurtenances and freightage earned in the voyage,
provided that the owner or agent abandons the vessel. When the vessel is totally lost, in which case abandonment is not required
because there is no vessel to
_______________
* THIRD DIVISION.

509
VOL. 796, JULY 13, 2016 509
Phil-Nippon Kyoei, Corp. vs. Gudelosao
abandon, the liability of the shipowner or agent for damages is extinguished. Nonetheless, the limited liability rule is not
absolute and is without exceptions. It does not apply in cases: (1) where the injury or death to a passenger is due either to the fault of
the shipowner, or to the concurring negligence of the shipowner and the captain; (2) where the vessel is insured; and (3) in
workmen’s compensation claims.
Same; Same; Same; In Abueg v. San Diego, 77 Phil. 730 (1946), the Supreme Court (SC) ruled that the limited liability rule
found in the Code of Commerce is inapplicable in a liability created by statute to compensate employees and laborers, or the heirs
and dependents, in cases of injury received by or inflicted upon them while engaged in the performance of their work or employment.
—In Abueg v. San Diego, 77 Phil. 730 (1946), we ruled that the limited liability rule found in the Code of Commerce is inapplicable in
a liability created by statute to compensate employees and laborers, or the heirs and dependents, in cases of injury received by or
inflicted upon them while engaged in the performance of their work or employment, to wit: The real and hypothecary nature of the
liability of the shipowner or agent embodied in the provisions of the Maritime Law, Book III, Code of Commerce, had its origin in the
prevailing conditions of the maritime trade and sea voyages during the medieval ages, attended by innumerable hazards and perils. To
offset against these adverse conditions and to encourage shipbuilding and maritime commerce, it was deemed necessary to confine the
liability of the owner or agent arising from the operation of a ship to the vessel, equipment, and freight, or insurance, if any, so that if
the shipowner or agent abandoned the ship, equipment, and freight, his liability was extinguished. But the provisions of the Code of
Commerce invoked by appellant have no room in the application of the Workmen’s Compensation Act which seeks to improve, and
aims at the amelioration of, the condition of laborers and employees. It is not the liability for the damage or loss of the cargo or injury
to, or death of, a passenger by or through the misconduct of the captain or master of the ship; nor the liability for the loss of the ship as
a result of collision; nor the responsibility for wages of the crew, but a liability created by a statute to compensate employees and
laborers in cases of injury received by or inflicted upon them, while engaged in the performance of their work or employment, or the
heirs and dependents of such laborers and employees in the event of death caused by their employment.

510
Such compensation has nothing to do with the provisions of the Code of Commerce regarding maritime commerce. It is an item
in the cost of production which must be included in the budget of any well-managed industry.
Labor Law; Seafarers; POEA-Standard Employment Contract; Akin to the death benefits under the Labor Code, these benefits
under the Philippine Overseas Employment Administration-Standard Employment Contract (POEA-SEC) are given when the
employee dies due to a work-related cause during the term of his contract.—Akin to the death benefits under the Labor Code, these
benefits under the POEA-SEC are given when the employee dies due to a work-related cause during the term of his contract. The
liability of the shipowner or agent under the POEA-SEC has likewise nothing to do with the provisions of the Code of Commerce
regarding maritime commerce. The death benefits granted under the POEA-SEC is not due to the death of a passenger by or through
the misconduct of the captain or master of the ship; nor is it the liability for the loss of the ship as result of collision; nor the liability
for wages of the crew. It is a liability created by contract between the seafarers and their employers, but secured through the State’s
intervention as a matter of constitutional and statutory duty to protect Filipino overseas workers and to secure for them the best terms
and conditions possible, in order to compensate the seafarers’ heirs and dependents in the event of death while engaged in the
33
performance of their work or employment. The POEA-SEC prescribes the set of standard provisions established and implemented by
the POEA containing the minimum requirements prescribed by the government for the employment of Filipino seafarers. While it is
contractual in nature, the POEA-SEC is designed primarily for the protection and benefit of Filipino seamen in the pursuit of their
employment onboard ocean-going vessels. As such, it is deemed incorporated in every Filipino seafarers’ contract of employment. It
is established pursuant to POEA’s power “to secure the best terms and conditions of employment of Filipino contract workers and
ensure compliance therewith” and “to protect the well-being of Filipino workers overseas” pursuant to Article 17 of the Labor Code as
amended by Executive Order (EO) Nos. 797 and 247.
Same; Same; Same; While the nature of death benefits under the Labor Code and the Philippine Overseas Employment
Administration-Standard Employment Contract (POEA-SEC) are similar,

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VOL. 796, JULY 13, 2016 511
the death benefits under the POEA-SEC are intended to be separate and distinct from, and in addition to, whatever benefits the
seafarer is entitled to under Philippine laws, including those benefits which may be claimed from the State Insurance Fund.—But
while the nature of death benefits under the Labor Code and the POEA-SEC are similar, the death benefits under the POEA-SEC are
intended to be separate and distinct from, and in addition to, whatever benefits the seafarer is entitled to under Philippine laws,
including those benefits which may be claimed from the State Insurance Fund. Thus, the claim for death benefits under the POEA-
SEC is the same species as the workmen’s compensation claims under the Labor Code — both of which belong to a different realm
from that of Maritime Law. Therefore, the limited liability rule does not apply to petitioner’s liability under the POEA-SEC.
Same; Same; Same; Solidary Liability; The basis of the solidary liability of the principal with the local manning agent is found
in the second paragraph of Section 10 of the Migrant Workers and Overseas Filipino Act of 1995, which, in part, provides: “[t]he
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, is in turn, implemented by Section 1(e)(8), Rule 2, Part II of the Philippine Overseas Employment
Administration (POEA) Rules and Regulations Governing the Recruitment and Employment of Seafarers, which requires the
undertaking of the manning agency to “[a]ssume joint and solidary liability with the employer for all claims and liabilities which may
arise in connection with the implementation of the employment contract [and Philippine Overseas Employment Administration-
Standard Employment Contract (POEA-SEC)].”—Petitioner is solidarily liable with TEMMPC and TMCL for the death benefits
under the POEA-SEC. The basis of the solidary liability of the principal with the local manning agent is found in the second paragraph
of Section 10 of the Migrant Workers and Overseas Filipino Act of 1995, which, in part, provides: “[t]he 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, is in turn, implemented by Section 1(e)(8), Rule 2, Part II of the POEA Rules and Regulations Governing the Recruitment
and Employment of Seafarers, which requires the undertaking of the manning agency to “[a]ssume joint and solidary liability with the
employer for all claims and liabilities which may arise in connection

512
with the implementation of the employment contract [and POEA-SEC].”
Same; Same; Same; Same; The rule is that the release of one solidary debtor redounds to the benefit of the others. —The rule is
that the release of one solidary debtor redounds to the benefit of the others. Considering that petitioner is solidarily liable with
TEMMPC and TMCL, we hold that the Release and Quitclaim executed by respondents in favor of TEMMPC and TMCL redounded
to petitioner’s benefit. Accordingly, the liabilities of petitioner under Section 20(A)(1) and (4)(c) of the POEA-SEC to respondents are
now deemed extinguished. We emphasize, however, that this pronouncement does not foreclose the right of reimbursement of the
solidary debtors who paid (i.e., TEMMPC and TMCL) from petitioner as their codebtor.
Same; Overseas Filipino Workers; Labor Arbiters; Jurisdiction; The Migrant Workers and Overseas Filipinos Act of 1995; The
Migrant Workers and Overseas Filipinos Act of 1995 gives the Labor Arbiters (LAs) of the National Labor Relations Commission
(NLRC) the original and exclusive jurisdiction over 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.—The Migrant Workers and Overseas Filipinos Act of 1995 gives the Labor Arbiters of the NLRC the original and exclusive
jurisdiction over 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. It further creates a joint
and several liability among the principal or employer, and the recruitment/placement agency, for any and all claims involving Filipino
workers.
Same; Same; National Labor Relations Commission; Jurisdiction; The Philippine Overseas Employment Administration
(POEA) (now the National Labor Relations Commission [NLRC]) is vested with quasi-judicial powers over all cases, including
money claims, involving employer-employee relations arising out of or by virtue of any law or contract involving Filipino workers for
34
overseas employment.—In Finman General Assurance Corp. v. Inocencio, 179 SCRA 480 (1989), we upheld the jurisdiction of the
POEA to determine a

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VOL. 796, JULY 13, 2016 513
surety’s liability under its bond. We ruled that the adjudicatory power to do so is not vested with the Insurance Commission
exclusively. The POEA (now the NLRC) is vested with quasi-judicial powers over all cases, including money claims, involving
employer-employee relations arising out of or by virtue of any law or contract involving Filipino workers for overseas employment.
Here, the award of the insurance proceeds arose out of the personal accident insurance procured by petitioner as the local principal
over the deceased seafarers who were Filipino overseas workers. The premiums paid by petitioner were, in actuality, part of the total
compensation paid for the services of the crew members. Put differently, the labor of the employees is the true source of the benefits
which are a form of additional compensation to them. Undeniably, such claim on the personal accident cover is a claim under an
insurance contract involving Filipino workers for overseas deployment within the jurisdiction of the NLRC.
Same; Seafarers; Personal Accident Insurance; While the Personal Accident Policies are casualty insurance, they do not
answer for petitioner’s liabilities arising from the sinking of the vessel. It is an indemnity insurance procured by petitioner for the
benefit of the seafarers.—We rule that while the Personal Accident Policies are casualty insurance, they do not answer for petitioner’s
liabilities arising from the sinking of the vessel. It is an indemnity insurance procured by petitioner for the benefit of the seafarers. As
a result, petitioner is not directly liable to pay under the policies because it is merely the policyholder of the Personal Accident
Policies. Section 176 (formerly Sec. 174) of The Insurance Code defines casualty insurance as follows: SEC. 174. Casualty
insurance is insurance covering loss or liability arising from accident or mishap, excluding certain types of loss which by law
or custom are considered as falling exclusively within the scope of other types of insurance such as fire or marine. It includes,
but is not limited to, employer’s liability insurance, motor vehicle liability insurance, plate glass insurance, burglary and theft
insurance, personal accident and health insurance as written by nonlife insurance companies, and other substantially similar
kinds of insurance. (Emphasis supplied) Based on Section 176, casualty insurance may cover liability or loss arising from accident or
mishap. In a liability insurance, the insurer assumes the obligation to pay third party in whose favor the liability of the insured arises.
On the

514
other hand, personal accident insurance refers to insurance against death or injury by accident or accidental means. In an
accidental death policy, the accident causing the death is the thing insured against.
Same; Same; Same; The liability of South Sea Surety & Insurance Co., Inc. (SSSICI) to the beneficiaries is direct under the
insurance contract. Under the contract, petitioner is the policyholder, with SSSICI as the insurer, the crew members as the cestui que
vie or the person whose life is being insured with another as beneficiary of the proceeds, the latter’s heirs as beneficiaries of the
policies.—The liability of SSSICI to the beneficiaries is direct under the insurance contract. Under the contract, petitioner is the
policyholder, with SSSICI as the insurer, the crew members as the cestui que vie or the person whose life is being insured with another
as beneficiary of the proceeds, and the latter’s heirs as beneficiaries of the policies. Upon petitioner’s payment of the premiums
intended as additional compensation to the crew members, SSSICI as insurer undertook to indemnify the crew members’ beneficiaries
from an unknown or contingent event. Thus, when the CA conditioned the extinguishment of petitioner’s liability on SSSICI’s
payment of the Personal Accident Policies’ proceeds, it made a finding that petitioner is subsidiarily liable for the face value of the
policies. To reiterate, however, there is no basis for such finding; there is no obligation on the part of petitioner to pay the insurance
proceeds because petitioner is, in fact, the obligee or policyholder in the Personal Accident Policies. Since petitioner is not the party
liable for the value of the insurance proceeds, it follows that the limited liability rule does not apply as well.
Librojo & Associates Law Offices for petitioner.
Dela Cruz, Entero & Associates for respondents Gudelosao, et al.

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VOL. 796, JULY 13, 2016 515
Home N. Mendoza for South Sea Surety & Insurance Co., Inc.
Retoriano & Olalia-Retoriano Law Offices for Top Ever Marine Management.

35
JARDELEZA, J.:

This is a petition for review on certiorari1 under Rule 45 of the Revised Rules of Court filed by Phil-Nippon Kyoei, Corp.
(Petitioner) from the Decision2 of the Court of Appeals (CA) dated October 4, 2007 (CA Decision) and its Resolution 3 dated January
11, 2008 in C.A.-G.R. S.P. No. 95456. The CA reinstated the Labor Arbiter’s Decision 4dated August 5, 2004 (LA Decision) with the
modification, among others, that petitioner is liable to respondents under the insurance cover it procured from South Sea Surety &
Insurance Co., Inc. (SSSICI). The CA ruled that petitioner’s liability would be extinguished only upon payment by SSSICI of the
insurance proceeds to respondents.5

Facts

Petitioner, a domestic shipping corporation, purchased a “Ro-Ro” passenger/cargo vessel “MV Mahlia” in Japan in February
2003.6 For the vessel’s one month conduction voyage from Japan to the Philippines, petitioner, as local principal, and Top Ever
Marine Management Maritime Co., Ltd.
_______________
1 Rollo, pp. 3-17.

2 Penned by Associate Justice Bienvenido L. Reyes (now a member of the Court) and concurred in by Associate Justices
Apolinario D. Bruselas, Jr. and Aurora Santiago Lagman. Id., at pp. 19-39.
3 Penned by Associate Justice Bienvenido L. Reyes (now a member of the Court) and concurred in by Associate Justices
Apolinario D. Bruselas, Jr. and Aurora Santiago Lagman. Id., at pp. 48-50.
4 CA Rollo, pp. 68-80.
5 Rollo, pp. 38-39.
6 Id., at p. 8.

516
(TMCL), as foreign principal, hired Edwin C. Gudelosao, Virgilio A. Tancontian, and six other crew members. They were hired
through the local manning agency of TMCL, Top Ever Marine Management Philippine Corporation (TEMMPC). TEMMPC, through
their president and general manager, Capt. Oscar Orbeta (Capt. Orbeta), and the eight crew members signed separate contracts of
employment. Petitioner secured a Marine Insurance Policy (Maritime Policy No. 00001) from SSSICI over the vessel for
P10,800,000.00 against loss, damage, and third party liability or expense, arising from the occurrence of the perils of the sea for the
voyage of the vessel from Onomichi, Japan to Batangas, Philippines. This Marine Insurance Policy included Personal Accident
Policies for the eight crew members for P3,240,000.00 each in case of accidental death or injury.7
On February 24, 2003, while still within Japanese waters, the vessel sank due to extreme bad weather condition. Only Chief
Engineer Nilo Macasling survived the incident while the rest of the crew members, including Gudelosao and Tancontian, perished. 8
Respondents, as heirs and beneficiaries of Gudelosao and Tancontian, filed separate complaints for death benefits and other
damages against petitioner, TEMMPC, Capt. Orbeta, TMCL, and SSSICI, with the Arbitration Branch of the National Labor Relations
Commission (NLRC).9
On August 5, 2004, Labor Arbiter (LA) Pablo S. Magat rendered a Decision 10 finding solidary liability among petitioner,
TEMMPC, TMCL and Capt. Orbeta. The LA also found SSSICI liable to the respondents for the proceeds of the Personal Accident
Policies and attorney’s fees. The LA, however, ruled that the liability of petitioner shall be deemed extin-
_______________
7 Id., at pp. 20-21; CA Rollo, p. 69.

8 CA Rollo, p. 70.
9 Rollo, p. 22.
10 CA Rollo, pp. 68-80.

517
VOL. 796, JULY 13, 2016 517
guished only upon SSSICI’s payment of the insurance proceeds. The dispositive portion of the LA Decision reads:
WHEREFORE, premises considered, CAPT. OSCAR ORBETA, [TEMMPC], [TMCL], and PHIL-NIPPON KYOEI
CORPORATION are hereby directed to pay solidarily the complainants as follows:
36
Further, respondent SOUTH SEA SURETY & INSURANCE CO., INC. is hereby directed to pay
as beneficiaries complainants ROSALIA T. GUDELOSAO and CARMEN B. TANCONTIAN [P]3,240,000.00 each for the
proceeds of the Personal Accident Policy Cover it issued for each of the deceased seafarers EDWIN C. GUDELOSAO and VIRGILIO
A. TANCONTIAN plus 10% attorney’s fees thereof at [P]324,000.00 each thereof or a total of [P]648,000.00.
Nevertheless, upon payment of said proceeds to said widows by respondent SOUTH SEA SURETY & INSURANCE CO.,
INC., respondent PHIL-NIPPON CORPORATION’S liability to all the complainants is deemed extinguished.
Any other claim is hereby dismissed for lack of merit.
SO ORDERED.11
_______________
11 Id., at pp. 79-80.

518
On appeal, the NLRC modified the LA Decision in a Resolution12 dated February 28, 2006, the dispositive portion of which reads:
WHEREFORE, premises considered, the Appeals of Complainants and PNKC are GRANTED but only partially in the case of
Complainants’ Appeal, and the Appeal of [SSSICI] is DISMISSED for lack of merit. Accordingly, the Decision is SUSTAINED
subject to the modification that [SSSICI] is DIRECTED to pay Complainants in addition to their awarded claims, in the appealed
decision, additional death benefits of US$7,000 each to the minor children of Complainant Gudelosao, namely, Christy Mae T.
Gudelosao and Rose Elden T. Gudelosao.
As regards the other issues, the appealed Decision is SUSTAINED.
SO ORDERED.13

The NLRC absolved petitioner, TEMMPC and TMCL and Capt. Orbeta from any liability based on the limited liability rule. 14 It,
however, affirmed SSSICI’s liability after finding that the Personal Accident Policies answer for the death benefit claims under the
Philippine Overseas Employment Administration-Standard Employment Contract (POEA-SEC). 15 Respondents filed a Partial Motion
for Reconsideration which the NLRC denied in a Resolution dated May 5, 2006.16
Respondents filed a petition for certiorari17 before the CA where they argued that the NLRC gravely abused its discretion in ruling
that TEMMPC, TMCL, and Capt. Orbeta are absolved from the terms and conditions of the POEA-SEC by virtue of the limited
liability rule. Respondents also argued
_______________
12 Id., at pp. 8-23.

13 Id., at p. 22.
14 Id., at pp. 17-18.
15 Id., at pp. 18-20.
16 Id., at pp. 25-27.
17 Id., at pp. 32-50.

519
VOL. 796, JULY 13, 2016 519
that the NLRC gravely abused its discretion in ruling that the obligation to pay the surviving heirs rests solely on SSSICI. The CA
granted the petition, the dispositive portion thereof reads:
WHEREFORE for being impressed with merit the petition is hereby GRANTED. Accordingly, the Resolution dated February 28,
2006, and Resolution, dated May 5, 2006, of the public respondent NLRC are hereby SET ASIDE. The Decision of the Labor Arbiter
dated [August 5, 2004] is REINSTATED, subject to the following modifications:
(1) [Respondents CAPT. OSCAR ORBETA, [TEMMPC] and [TMCL] (the manning agency), are hereby directed to pay solidarily
the complainants as follows:
10% Atty’s
Death Benefits Burial Expenses
[fees]
ROSALIA T. GUDELOSAO: US$50,000 US$1,000 US$5,100
CARMEN B. TANCONTIAN: US$50,000 US$1,000 US$5,100
CARMELA B.
US$7,000 US$700
TANCONTIAN:
BEVERLY B. TANCONTIAN: US$7,000 US$700
37
10% Atty’s
Death Benefits Burial Expenses
[fees]
ACE B.
US$7,000 US$700
TANCONTIAN:
Further, [respondents] CAPT. OSCAR ORBETA, [TEMMPC] and [TMCL] (the manning agency) are hereby directed to pay
solidarity the complainants in addition to their awarded claims, additional death benefits of US$7,000 each to the minor children of
petitioner Rosalia T. Gudelosao, namely, Christy Mae T. Gudelosao and Rose Elden T. Gudelosao.
Respondent SOUTH SEA SURETY & INSURANCE CO., INC. is hereby directed to pay as beneficiaries complainants
ROSALIA T. GUDELOSAO and CARMEN B. TANCONTIAN [P]3,240,000.00 each for the pro-

520
ceeds of the Personal Accident Policy Cover it issued for each of the deceased seafarers EDWIN C. GUDELOSAO and VIRGILIO A.
TANCONTIAN plus 10% attorney’s fees thereof at [P]324,000.00 each thereof or a total of [P]648,000.00.
Nevertheless, upon payment of said proceeds to said widows by respondent SOUTH SEA SURETY & INSURANCE CO., INC.
respondent PHIL-NIPPON KYOEI, CORPORATION’s liability to all the complainants is deemed extinguished.
SO ORDERED.18

The CA found that the NLRC erred when it ruled that the obligation of petitioner, TEMMPC and TMCL for the payment of death
benefits under the POEA-SEC was ipso facto transferred to SSSICI upon the death of the seafarers. TEMMPC and TMCL cannot
raise the defense of the total loss of the ship because its liability under POEA-SEC is separate and distinct from the liability of the
shipowner.19To disregard the contract, which has the force of law between the parties, would defeat the purpose of the Labor Code and
the rules and regulations issued by the Department of Labor and Employment (DOLE) in setting the minimum terms and conditions of
employment for the protection of Filipino seamen. 20 The CA noted that the benefits being claimed are not dependent upon whether
there is total loss of the vessel, because the liability attaches even if the vessel did not sink. 21 Thus, it was error for the NLRC to
absolve TEMMPC and TMCL on the basis of the limited liability rule.
Significantly though, the CA ruled that petitioner is not liable under the POEA-SEC, but by virtue of its being a ship-

_______________
18 Rollo, pp. 38-39.

19 Id., at pp. 31-33.
20 Id., at p. 31A.
21 Id., at p. 32.

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VOL. 796, JULY 13, 2016 521
owner.22 Thus, petitioner is liable for the injuries to passengers even without a determination of its fault or negligence. It is for this
reason that petitioner obtained insurance from SSSICI — to protect itself against the consequences of a total loss of the vessel caused
by the perils of the sea. Consequently, SSSICI’s liability as petitioner’s insurer directly arose from the contract of insurance against
liability (i.e., Personal Accident Policy). 23The CA then ordered that petitioner’s liability will only be extinguished upon payment by
SSSICI of the insurance proceeds.24
Petitioner filed a Motion for Reconsideration 25 dated November 5, 2007 but this was denied by the CA in its Resolution 26 dated
January 11, 2008. On the other hand, since SSSICI did not file a motion for reconsideration of the CA Decision, the CA issued a
Partial Entry of Judgment27stating that the decision became final and executory as to SSSICI on October 27, 2007.
Hence, this petition where petitioner claims that the CA erred in ignoring the fundamental rule in Maritime Law that the
shipowner may exempt itself from liability by abandoning the vessel and freight it may have earned during the voyage, and the
proceeds of the insurance if any. Since the liability of the shipowner is limited to the value of the vessel unless there is insurance, any
claim against petitioner is limited to the proceeds arising from the insurance policies procured from SSSICI. Thus, there is no reason
in making petitioner’s exoneration from liability conditional on SSSICI’s payment of the insurance proceeds.

_______________
22 Id., at pp. 33, 38.
38
23 Id., at p. 33.
24 Id., at p. 38.
25 Id., at pp. 40-47.
26 Id., at pp. 48-50.
27 CA Rollo, p. 457.

522
On December 8, 2008, TEMMPC filed its Manifestation 28 informing us of TEMMPC and TMCL’s Joint Motion to Dismiss the
Petition and the CA’s Resolution29 dated January 11, 2008 granting it. The dismissal is based on the execution of the Release of All
Rights and Full Satisfaction Claim 30 (Release and Quitclaim) on December 14, 2007 between respondents and TEMMPC, TMCL, and
Capt. Orbeta. In a Resolution31dated January 28, 2009, we noted that TEMMPC, TMCL, and Capt. Orbeta will no longer comment on
the Petition.
On the other hand, SSSICI filed its Comment 32 to the petition dated September 3, 2010. It alleged that the NLRC has no
jurisdiction over the insurance claim because claims on the Personal Accident Policies did not arise from employer-employee
relations. It also alleged that petitioner filed a complaint for sum of money 33 in the Regional Trial Court (RTC) of Manila, Branch 46,
where it prays for the payment of the insurance proceeds on the individual Marine Insurance Policy with a Personal Accident Policy
covering the crew members of MV Mahlia. This case was eventually dismissed and is now subject of an appeal 34before the CA.
SSSICI prays that this matter be considered in resolving the present case. 35

Issues

I. Whether the doctrine of real and hypothecary nature of maritime law (also known as the limited liability rule) applies in
favor of petitioner.
_______________
28 Rollo, pp. 73-76.

29 Id., at pp. 48-50; 90-92.
30 Id., at pp. 77-88.
31 Id., at p. 95.
32 Id., at pp. 154-158.
33 Civil Case No. 05-112271, id., at p. 155.
34 C.A.-G.R. No. CV-97459 titled Phil-Nippon Kyoei Corporation v. South Sea Surety & Insurance Co., Inc., id., at p. 272.
35 Rollo, pp. 156-157, 272.

523
VOL. 796, JULY 13, 2016 523

II. Whether the CA erred in ruling that the liability of petitioner is extinguished only upon SSSICI’s payment of insurance
proceeds.

Discussion

I. Liability under the POEA-
Standard Employment Contract.

At the outset, the CA erred in absolving petitioner from the liabilities under the POEA-SEC. Petitioner was the local principal of
the deceased seafarers for the conduction trip of MV Mahlia. Petitioner hired them through TMCL, which also acted through its agent,
TEMMPC. Petitioner admitted its role as a principal of its agents TMCL, TEMMPC and Capt. Orbeta in their Joint Partial
Appeal36before the NLRC.37 As such, it is solidarily liable with TEMMPC and TMCL for the benefits under the POEA-SEC.

Doctrine of limited liability is
not applicable to claims under
POEA-SEC.

39
In this jurisdiction, the limited liability rule is embodied in Articles 587, 590 and 837 under Book III of the Code of
Commerce, viz.:
Art. 587. The ship agent shall also be civilly liable for the indemnities in favor of third persons which arise from the conduct of
the captain in the care of the goods which the vessel carried; but he may exempt himself therefrom by abandoning the vessel with all
her equipment and the freightage he may have earned during the voyage.
_______________
36 CA Rollo, pp. 130-143.

37 Id., at p. 137.

524
Art. 590. The co-owners of a vessel shall be civilly liable, in the proportion of their contribution to the common fund, for the
results of the acts of the captain, referred to in Art. 587.
Each part-owner may exempt himself from this liability by the abandonment before a notary of the part of the vessel belonging to
him.
Art. 837. The civil liability incurred by the shipowners in the cases prescribed in this section, shall be understood as limited to
the value of the vessel with all its appurtenances and freightage earned during the voyage.

Article 837 applies the limited liability rule in cases of collision. Meanwhile, Articles 587 and 590 embody the universal principle
of limited liability in all cases wherein the shipowner or agent may be properly held liable for the negligent or illicit acts of the
captain.38 These articles precisely intend to limit the liability of the shipowner or agent to the value of the vessel, its appurtenances and
freightage earned in the voyage, provided that the owner or agent abandons the vessel. 39 When the vessel is totally lost, in which case
abandonment is not required because there is no vessel to abandon, the liability of the shipowner or agent for damages is
extinguished.40 Nonetheless, the limited liability rule is not absolute and is without exceptions. It does not apply in cases: (1) where the
injury or death to a passenger is due either to the fault of the shipowner, or to the concurring negligence of the shipowner and the
captain; (2) where the vessel is insured; and (3) in workmen’s compensation claims.41
_______________
38 See Monarch Insurance Co., Inc. v. Court of Appeals, G.R. Nos. 92735, 94867 & 95578, June 8, 2000, 333 SCRA 71, 94-95,
citing Yangco v. Laserna, 73 Phil. 330 (1941).
39 Aboitiz Shipping Corporation v. Court of Appeals, G.R. Nos. 121833, 130752 & 137801, October 17, 2008, 569 SCRA 294.
40 Id., at pp. 307-308.
41 Chua Yek Hong v. Intermediate Appellate Court, No. L-74811, September 30, 1988, 166 SCRA 183, 189.

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VOL. 796, JULY 13, 2016 525
In Abueg v. San Diego,42 we ruled that the limited liability rule found in the Code of Commerce is inapplicable in a liability
created by statute to compensate employees and laborers, or the heirs and dependents, in cases of injury received by or inflicted upon
them while engaged in the performance of their work or employment, to wit:
The real and hypothecary nature of the liability of the shipowner or agent embodied in the provisions of the Maritime Law, Book
III, Code of Commerce, had its origin in the prevailing conditions of the maritime trade and sea voyages during the medieval ages,
attended by innumerable hazards and perils. To offset against these adverse conditions and to encourage shipbuilding and maritime
commerce, it was deemed necessary to confine the liability of the owner or agent arising from the operation of a ship to the vessel,
equipment, and freight, or insurance, if any, so that if the shipowner or agent abandoned the ship, equipment, and freight, his liability
was extinguished.
But the provisions of the Code of Commerce invoked by appellant have no room in the application of the Workmen’s
Compensation Act which seeks to improve, and aims at the amelioration of, the condition of laborers and employees. It is not the
liability for the damage or loss of the cargo or injury to, or death of, a passenger by or through the misconduct of the captain or master
of the ship; nor the liability for the loss of the ship as a result of collision; nor the responsibility for wages of the crew, but a liability
created by a statute to compensate employees and laborers in cases of injury received by or inflicted upon them, while engaged in the
performance of their work or employment, or the heirs and dependents of such laborers and employees in the event of death caused by
their employment. Such compensation has nothing to do with the provisions of the Code of Commerce regarding maritime commerce.
It is an item in the cost of produc-
_______________
40
42 77 Phil. 730 (1946).

526
tion which must be included in the budget of any well-managed industry.43 (Underscoring supplied)

We see no reason why the above doctrine should not apply here.
Act No. 3428, otherwise known as The Workmen’s Compensation Act 44 is the first law on workmen’s compensation in the
Philippines for work-related injury, illness, or death. This was repealed on November 1, 1974 by the Labor Code, 45 and was further
amended on December 27, 1974 by Presidential Decree No. 626. 46 The pertinent provisions are now found in Title II, Book IV of the
Labor Code on Employees Compensation and State Insurance Fund.
The death benefits granted under Title II, Book IV of the Labor Code are similar to the death benefits granted under the POEA-
SEC.47 Specifically, its Section 20(A)(1) and (4)(c) provides that:
1. In case of work-related death of the seafarer, during the term of his contract the employer shall pay his beneficiaries the
Philippine Currency equiva-
_______________
43 Id., at pp. 733-734.

44 An Act Prescribing the Compensation to be Received by Employees for Personal Injuries, Death or Illness Contracted in the
Performance of Their Duties (1927).
45 Presidential Decree No. 442 (1974). A Decree Instituting a Labor Code, thereby Revising and Consolidating Labor and Social
Laws to Afford Protection to Labor, Promote Employment and Human Resources Development and Insure Industrial Peace Based on
Social Justice.
46 Further Amending Certain Articles of Presidential Decree No. 442 entitled “Labor Code of the Philippines.”
47 2000 Amended Standard Terms and Conditions Governing the Employment of Filipino Seafarers On Board Ocean-Going
Vessels, DOLE Department Order No. 4 (2000); POEA Memorandum Circular No. 9 (2000). This is the applicable amendment at the
time the contract of employment was executed in 2003.

527
VOL. 796, JULY 13, 2016 527
lent to the amount of Fifty Thousand US dollars (US$50,000) and an additional amount of Seven Thousand US dollars
(US$7,000) to each child under the age of twenty-one (21) but not exceeding four (4) children, at the exchange rate prevailing
during the time of payment.
x x x
4. The other liabilities of the employer when the seafarer dies as a result of work-related injury or illness during the term of
employment are as follows:
x x x
c. The employer shall pay the beneficiaries of the seafarer the [Philippine] currency equivalent to the amount of One
Thousand US dollars (US$1,000) for burial expenses at the exchange rate prevailing during the time of payment.

Akin to the death benefits under the Labor Code, these benefits under the POEA-SEC are given when the employee dies due to a
work-related cause during the term of his contract. 48 The liability of the shipowner or agent under the POEA-SEC has likewise nothing
to do with the provisions of the Code of Commerce regarding maritime commerce. The death benefits granted under the POEA-SEC
is not due to the death of a passenger by or through the misconduct of the captain or master of the ship; nor is it the liability for the
loss of the ship as result of collision; nor the liability for wages of the crew. It is a liability created by contract between the seafarers
and their employers, but secured through the State’s intervention as a matter of constitutional and statutory duty to protect Filipino
overseas workers and to secure for them the best terms and conditions possible, in order to compensate the seafarers’ heirs and
dependents in the event of death
_______________
41
48 See Racelis v. United Philippine Lines, Inc., G.R. No. 198408, November 12, 2014, 740 SCRA 122, 130-131.

528
while engaged in the performance of their work or employment. The POEA-SEC prescribes the set of standard provisions established
and implemented by the POEA containing the minimum requirements prescribed by the government for the employment of Filipino
seafarers. While it is contractual in nature, the POEA-SEC is designed primarily for the protection and benefit of Filipino seamen in
the pursuit of their employment onboard ocean-going vessels.49 As such, it is deemed incorporated in every Filipino seafarers’ contract
of employment.50 It is established pursuant to POEA’s power “to secure the best terms and conditions of employment of Filipino
contract workers and ensure compliance therewith” and “to protect the well-being of Filipino workers overseas” 51 pursuant to Article
17 of the Labor Code as amended by Executive Order (EO) Nos. 79752 and 247.53
But while the nature of death benefits under the Labor Code and the POEA-SEC are similar, the death benefits under the POEA-
SEC are intended to be separate and distinct from, and in addition to, whatever benefits the seafarer is entitled to under Philippine
laws, including those benefits which may be claimed from the State Insurance Fund.54
Thus, the claim for death benefits under the POEA-SEC is the same species as the workmen’s compensation claims under the
Labor Code — both of which belong to a different realm from that of Maritime Law. Therefore, the limited li-
_______________
49 See Bergesen D.Y. Philippines, Inc. v. Estenzo, G.R. No. 141269, December 9, 2005, 477 SCRA 150, 157.
50 Supra note 48 at p. 130.
51 See Talosig v. United Philippine Lines, Inc., G.R. No. 198388, July 28, 2014, 731 SCRA 180, 187-188.
52 Reorganizing the Ministry of Labor and Employment, Creating the Philippine Overseas Employment Administration, and for
Other Purposes(1982).
53 Reorganizing the Philippines Overseas Employment Administration and for Other Purposes (1987).
54 Section 20(A)(3), POEA-SEC.

529
VOL. 796, JULY 13, 2016 529
ability rule does not apply to petitioner’s liability under the POEA-SEC.

Nevertheless, the Release and
Quitclaim benefit petitioner
as a solidary debtor.

All the same, the Release and Quitclaim executed between TEMMPC, TMCL and Capt. Oscar Orbeta, and respondents redounded
to the benefit of petitioner as a solidary debtor.
Petitioner is solidarily liable with TEMMPC and TMCL for the death benefits under the POEA-SEC. The basis of the solidary
liability of the principal with the local manning agent is found in the second paragraph of Section 10 of the Migrant Workers and
Overseas Filipino Act of 1995,55 which, in part, provides: “[t]he 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, is in turn, implemented by Section 1(e)(8),
Rule 2, Part II of the POEA Rules and Regulations Governing the Recruitment and Employment of Seafarers, which requires the
undertaking of the manning agency to “[a]ssume joint and solidary liability with the employer for all claims and liabilities which may
arise in connection with the implementation of the employment contract [and POEA-SEC].”
We have consistently applied the Civil Code provisions on solidary obligations, specifically Articles 1217 56 and 1222,57 to
_______________
55 Republic Act (RA) No. 8042 (1995), as amended by RA No. 10022 (2010).
56 Art. 1217. Payment made by one of the solidary debtors extinguishes the obligation. If two or more solidary debtors offer to
pay, the creditor may choose which offer to accept. x x x
57 Art. 1222. A solidary debtor may, in actions filed by the creditor, avail himself of all defenses which are derived from the
nature of the obligation and of those which are personal to him, or pertain to his own share. With respect to those which personally

530
42
labor cases.58 We explained in Varorient Shipping Co., Inc. v. NLRC59 the nature of the solidary liability in labor cases, to wit:
x x x The POEA Rules holds her, as a corporate officer, solidarily liable with the local licensed manning agency. Her liability is
inseparable from those of Varorient and Lagoa. If anyone of them is held liable then all of them would be liable for the same
obligation. Each of the solidary debtors, insofar as the creditor/s is/are concerned, is the debtor of the entire amount; it is only
with respect to his codebtors that he/she is liable to the extent of his/her share in the obligation. Such being the case, the Civil
Code allows each solidary debtor, in actions filed by the creditor/s, to avail himself of all defenses which are derived from the
nature of the obligation and of those which are personal to him, or pertaining to his share. He may also avail of those defenses
personally belonging to his codebtors, but only to the extent of their share in the debt. Thus, Varorient may set up all the defenses
pertaining to Colarina and Lagoa; whereas Colarina and Lagoa are liable only to the extent to which Varorient may be found liable by
the court. The complaint against Varorient, Lagoa and Colarina is founded on a common cause of action; hence, the defense or the
appeal by anyone of these solidary debtors would redound to the benefit of the others.
x x x
x x x If Varorient were to be found liable and made to pay pursuant thereto, the entire obligation would already be extinguished
even if no attempt was made to enforce the judgment against Colarina. Because there ex-
_______________
belong to the others, he may avail himself thereof only as regards that part of the debt for which the latter are responsible.
58 See Vigilla v. Philippine College of Criminology, Inc., G.R. No. 200094, June 10, 2013, 698 SCRA 247, 269.
59 G.R. No. 164940, November 28, 2007, 539 SCRA 131.

531
VOL. 796, JULY 13, 2016 531
isted a common cause of action against the three solidary obligors, as the acts and omissions imputed against them are one and
the same, an ultimate finding that Varorient was not liable would, under these circumstances, logically imply a similar
exoneration from liability for Colarina and Lagoa, whether or not they interposed any defense.60 (Emphasis supplied)

Thus, the rule is that the release of one solidary debtor redounds to the benefit of the others. 61 Considering that petitioner is
solidarily liable with TEMMPC and TMCL, we hold that the Release and Quitclaim executed by respondents in favor of TEMMPC
and TMCL redounded to petitioner’s benefit. Accordingly, the liabilities of petitioner under Section 20(A)(1) and (4)(c) of the POEA-
SEC to respondents are now deemed extinguished. We emphasize, however, that this pronouncement does not foreclose the right of
reimbursement of the solidary debtors who paid (i.e., TEMMPC and TMCL) from petitioner as their codebtor.

II. Liability under the Personal
Accident Policies.
The NLRC has jurisdiction over
the claim on the Personal Acci-
dent Policies.

We find that the CA correctly upheld the NLRC’s jurisdiction to order SSSICI to pay respondents the value of the proceeds of the
Personal Accident Policies.
The Migrant Workers and Overseas Filipinos Act of 1995 gives the Labor Arbiters of the NLRC the original and exclusive
jurisdiction over claims arising out of an employer-employee relationship or by virtue of any law or contract
_______________
60 Id., at pp. 140-143.

61 Section 10, RA No. 8042, as amended by RA No. 10022.

532
involving Filipino workers for overseas deployment, including claims for actual, moral, exemplary and other forms of damage. It
further creates a joint and several liability among the principal or employer, and the recruitment/placement agency, for any and all
claims involving Filipino workers, viz.:
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)
43
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. 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 be filed by the recruitment/placement agency, as provided by law, shall be answerable for all
money claims or damages that may be awarded to the workers. If the recruitment/placement agency is a juridical being, the corporate
officers and directors and partners as the case may be, shall themselves be jointly and solidarily liable with the corporation or
partnership for the aforesaid claims and damages. x x x (Emphasis supplied)

In Finman General Assurance Corp. v. Inocencio,62 we upheld the jurisdiction of the POEA to determine a surety’s liability under
its bond. We ruled that the adjudicatory power
_______________
62 G.R. Nos. 90273-75, November 15, 1989, 179 SCRA 480.

533
VOL. 796, JULY 13, 2016 533
to do so is not vested with the Insurance Commission exclusively. The POEA (now the NLRC) is vested with quasi-judicial powers
over all cases, including money claims, involving employer-employee relations arising out of or by virtue of any law or contract
involving Filipino workers for overseas employment. 63 Here, the award of the insurance proceeds arose out of the personal accident
insurance procured by petitioner as the local principal over the deceased seafarers who were Filipino overseas workers. The premiums
paid by petitioner were, in actuality, part of the total compensation paid for the services of the crew members. 64 Put differently, the
labor of the employees is the true source of the benefits which are a form of additional compensation to them. Undeniably, such claim
on the personal accident cover is a claim under an insurance contract involving Filipino workers for overseas deployment within the
jurisdiction of the NLRC.
It must also be noted that the amendment under Section 37-A of the Migrant Workers and Overseas Filipinos Act of 1995 on
Compulsory Insurance Coverage does not apply. The amendment requires the claimant to bring any question or dispute in the
enforcement of any insurance policy before the Insurance Commission for mediation or adjudication. The amendment, however, took
effect on May 8, 2010 long after the Personal Accident Policies in this case were procured in 2003. Accordingly, the NLRC has
jurisdiction over the claim for proceeds under the Personal Accident Policies.
In any event, SSSICI can no longer assail its liability under the Personal Accident Policies. SSSICI failed to file a motion for
reconsideration on the CA Decision. In a Resolution dated April 24, 2008, the CA certified in a Partial Entry of Judgment that the CA
Decision with respect to SSSICI has become final and executory and is recorded in the Book of Entries of
_______________
63 Id., at pp. 487-488.

64 See Pineda v. Court of Appeals, G.R. No. 105562, September 27, 1993, 226 SCRA 754, 765.

534
65
Judgments. A decision that has acquired finality becomes immutable and unalterable. This quality of immutability precludes the
modification of a final judgment, even if the modification is meant to correct erroneous conclusions of fact and law. This holds true
whether the modification is made by the court that rendered it or by the highest court in the land. Thus, SSSICI’s liability on the
Personal Accident Policies can no longer be disturbed in this petition.

SSSICI’s liability as insurer
under the Personal Accident
Policies is direct.

We, however, find that the CA erred in ruling that “upon payment of [the insurance] proceeds to said widows by respondent
SOUTH SEA SURETY & INSURANCE CO., INC., respondent PHIL-NIPPON KYOEI, CORPORATION’s liability to all the
complainants is deemed extinguished.”66
44
This ruling makes petitioner’s liability conditional upon SSSICI’s payment of the insurance proceeds. In doing so, the CA
determined that the Personal Accident Policies are casualty insurance, specifically one of liability insurance. The CA determined that
petitioner, as insured, procured from SSSICI the Personal Accident Policies in order to protect itself from the consequences of the total
loss of the vessel caused by the perils of the sea. The CA found that the liabilities insured against are all monetary claims, excluding
the benefits under the POEA-SEC, of respondents in connection with the sinking of the vessel.
We rule that while the Personal Accident Policies are casualty insurance, they do not answer for petitioner’s liabilities arising from
the sinking of the vessel. It is an indemnity insurance procured by petitioner for the benefit of the seafarers.
_______________
65 CA Rollo, pp. 456-457.

66 Rollo, p. 39.

535
VOL. 796, JULY 13, 2016 535
As a result, petitioner is not directly liable to pay under the policies because it is merely the policyholder of the Personal Accident
Policies.
Section 176 (formerly Sec. 174) of The Insurance Code67defines casualty insurance as follows:
SEC. 174. Casualty insurance is insurance covering loss or liability arising from accident or mishap, excluding certain
types of loss which by law or custom are considered as falling exclusively within the scope of other types of insurance such as
fire or marine. It includes, but is not limited to, employer’s liability insurance, motor vehicle liability insurance, plate glass
insurance, burglary and theft insurance, personal accident and health insurance as written by nonlife insurance companies, and
other substantially similar kinds of insurance. (Emphasis supplied)

Based on Section 176, casualty insurance may cover liability or loss arising from accident or mishap. In a liability insurance, the
insurer assumes the obligation to pay third party in whose favor the liability of the insured arises. 68 On the other hand, personal
accident insurance refers to insurance against death or injury by accident or accidental means. 69 In an accidental death policy, the
accident causing the death is the thing insured against.70
Notably, the parties did not submit the Personal Accident Policies with the NLRC or the CA. However, based on the
_______________
67 Presidential Decree No. 612 (1974), as amended by RA No. 10607 (2013).

68 Campos, Insurance, pp. 201-202 (1983).
69 See 43 Am Jur 2d Insurance § 555. See also De Leon & De Leon, Jr., The Insurance Code of the Philippines Annotated, p. 426
(2014).
70 Oglesby-Barnitz Bank and Trust Co. v. Clark, 112 Ohio App. 31, 38, 175 N.E. 2d 98, 103 (1959).

536
pleadings submitted by the parties, SSSICI admitted that the crew members of MV Mahlia are insured for the amount of
P3,240,000.00, payable upon the accidental death of the crew members. 71 It further admitted that the insured risk is the loss of life or
bodily injury brought about by the violent external event or accidental means. 72 Based on the foregoing, the insurer itself admits that
what is being insured against is not the liability of the shipowner for death or injuries to passengers but the death of the seafarers
arising from accident.
The liability of SSSICI to the beneficiaries is direct under the insurance contract. 73 Under the contract, petitioner is the
policyholder, with SSSICI as the insurer, the crew members as the cestui que vie or the person whose life is being insured with another
as beneficiary of the proceeds, 74 and the latter’s heirs as beneficiaries of the policies. Upon petitioner’s payment of the premiums
intended as additional compensation to the crew members, SSSICI as insurer undertook to indemnify the crew members’ beneficiaries
from an unknown or contingent event.75 Thus, when the CA conditioned the extinguishment of petitioner’s liability on SSSICI’s
payment of the Personal Accident Policies’ proceeds, it made a finding that petitioner is subsidiarily liable for the face value of the
policies. To reiterate, however, there is no basis for such finding; there is no obligation on the part of petitioner to pay the insurance
proceeds because petitioner is, in fact, the obligee or policy-
_______________
71 Position Paper for SSSICI before the NLRC, CA Rollo,

pp. 118-123.
45
72 Id., at pp. 122-123.
73 See Malayan Insurance Co., Inc. v. Philippines First Insurance Co., Inc., G.R. No. 184300, July 11, 2012, 676 SCRA 268,
286.
74 See Carale, The Philippine Insurance Law Code, Comments and Cases, p. 103 (2014).
75 Sec. 2(1) of The Insurance Code provides: “A contract of insuranceis an agreement whereby one undertakes for a
consideration to indemnify another against loss, damage, or liability arising from an unknown or contingent event. x x x”

537
VOL. 796, JULY 13, 2016 537
holder in the Personal Accident Policies. Since petitioner is not the party liable for the value of the insurance proceeds, it follows that
the limited liability rule does not apply as well.
One final note. Petitioner’s claim that the limited liability rule and its corresponding exception ( i.e., where the vessel is insured)
apply here is irrelevant because petitioner was not found liable under tort or quasi-delict. Moreover, the insurance proceeds
contemplated under the exception in the case of a lost vessel are the insurance over the vessel and pending freightage for the particular
voyage.76 It is not the insurance in favor of the seafarers, the proceeds of which are intended for their beneficiaries. Thus, if ever
petitioner is liable for the value of the insurance proceeds under tort or quasi-delict, it would be from the Marine Insurance Policy over
the vessel and not from the Personal Accident Policies over the seafarers.
WHEREFORE, the petition is PARTLY GRANTED. The CA’s Decision dated October 4, 2007 and the Resolution dated
January 11, 2008 of the Court of Appeals are AFFIRMED WITH THE FOLLOWING MODIFICATIONS:
(1) The death benefits are limited to the amount granted under the Release of All Rights and Full Satisfaction of Claim dated
December 14, 2007 executed between respondents and Top Ever Marine Management Company Ltd., Top Ever Marine
Management Philippine Corporation, and Captain Oscar Orbeta;
(2) As a solidary codebtor, petitioner’s liability to respondents under the POEA-SEC is also extinguished by virtue of the
Release of All Rights and
_______________
76 Aboitiz Shipping Corporation v. General Accident Fire and Life Assurance Corporation, Ltd., G.R. No. 100446, January 21, 1993,
217 SCRA 359, 371.

538
Full Satisfaction of Claim dated December 14, 2007; and
(3) The last paragraph of the dispositive portion of the CA Decision dated October 4, 2007 stating: “Nevertheless, upon
payment of said proceeds to said widows by respondent SOUTH SEA SURETY & INSURANCE CO., INC., respondent
PHIL-NIPPON KYOEI, CORPORATION’s liability to all the complainants is deemed extinguished. . .” is DELETED.
SO ORDERED.
Velasco, Jr. (Chairperson), Peralta, Del Castillo** and Perez, JJ., concur.
Petition partly granted, judgment and resolution affirmed with modifications.
Notes.—The Limited Liability Rule has been explained to be that of the real and hypothecary doctrine in maritime law where the
shipowner or ship agent’s liability is held as merely coextensive with his interest in the vessel such that a total loss thereof results in its
extinction; In this jurisdiction, the Limited Liability Rule is provided in three articles of the Code of Commerce — Art. 587, Art. 590,
and Art. 837. (Dela Torre vs. Court of Appeals, 653 SCRA 714 [2011])
The only person who could avail of the Limited Liability Rule is the shipowner — he is the very person whom the Rule has been
conceived to protect — and charterers cannot invoke this as a defense. (Id.)
——o0o——
46
G.R. No. L-58011 & L-58012 November 18, 1983
VIR-JEN SHIPPING AND MARINE SERVICES, INC., petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION, ROGELIO BISULA RUBEN ARROZA JUAN GACUTNO LEONILO
ATOK, NILO CRUZ, ALVARO ANDRADA, NEMESIO ADUG SIMPLICIO BAUTISTA, ROMEO ACOSTA, and JOSE
ENCABO respondents.
Antonio R. Atienza for petitioner.
The Solicitor General for respondent NLRC,
Quasha, Asperilia, Ancheta &- Valmonte Pena Marcos Law Offices for private respondents.
R E S O L U T I O N
GUTIERREZ, JR., J.:ñé+.£ªwph!1
Before the Court en banc is a motion to reconsider the decision promulgated on July 20, 1982 which set aside the decision of
respondent National Labor Relations Commission and reinstated the decision of the National Seamen Board.
To better understand the issues raised in the motion for reconsideration, we reiterate the background facts of the case, Taken from the
decision of the National Labor Relations Commission: têñ.£îhqwâ£
It appears that on different dates in December, 1978 and January, 1979, the Seamen entered into separate contracts
of employment with the Company, engaging them to work on board M/T' Jannu for a period of twelve (12) months.
After verification and approval of their contracts by the NSB, the Seamen boarded their vessel in Japan.
On 10 January 1919, the master of the vessel complainant Rogelio H. Bisula, received a cable from the Company
advising him of the possibility that the vessel might be directed to call at ITF-controlled ports said at the same time
informing him of the procedure to be followed in the computation of the special or additional compensation of crew
members while in said ports. ITF is the acronym for the International Transport Workers Federation, a militant
international labor organization with affiliates in different ports of the world, which reputedly can tie down a vessel
in a port by preventing its loading or unloading, This is a sanction resorted to by ITF to enforce the payment of its
wages rates for seafarers the so-called ITF rates, if the wages of the crew members of a vessel who have affiliated
with it are below its prescribed rates.) In the same cable of the Company, the expressed its regrets for hot clarifying
earlier the procedure in computing the special compensation as it thought that the vessel would 'trade in Caribbean
ports only.
On 22 March 1979, the Company sent another cable to complainant Bisula, this time informing him of the
respective amounts each of the officers and crew members would receive as special compensation when the vessel
called at the port of Kwinana Australia, an ITF-controlled port. This was followed by another cable on 23 March
1979, informing him that the officers and crew members had been enrolled as members of the ITF in Sidney,
Australia, and that the membership fee for the 28 personnel complement of the vessel had already been paid.
In answer to the Company's cable last mentioned, complainant Bisula, in representation of the other officers and
crew members, sent on 24 March 1979 a cable informing the Company that the officers and crew members were not
agreeable to its 'suggestion'; that they were not contented with their present salaries 'based on the volume of works,
type of ship with hazardous cargo and registered in a world wide trade': that the 'officers and crew (were) not
interested in ITF membership if not actually paid with ITF rate that their 'demand is only 50% increase based on
present basic salary and that the proposed wage increase is the 'best and only solution to solve ITF problem' since
the Company's salary rates 'especially in tankers (are) very far in comparison with other shipping agencies in Manila
...
In reply, the Company proposed a 25% increase in the basic pay of the complainant crew members, although it
claimed, that it would "suffer and absorb considerable amount of losses." The proposal was accepted by the Seamen
47
with certain conditions which were accepted by the Company. Conformably with the agreement of the parties which
was effected through the cables abovementioned, the Seamen were paid their new salary rates.
Subsequently, the Company sought authority from the NSB to cancel the contracts of employment of the Seamen,
claiming that its principals had terminated their manning agreement because of the actuations of the Seamen. The
request was granted by the NSB Executive Director in a letter dated 10 April 1979. Soon thereafter, the Company
cabled the Seamen informing them that their contracts would be terminated upon the vessel's arrival in Japan. On 19
April 1979 they Arere asked to disembark from the vessel, their contracts were terminated, and they were repatriated
to Manila. There is no showing that the Seamen were given the opportunity to at least comment on the Company's
request for the cancellation of their contracts, although they had served only three (3) out of the twelve (12) months'
duration of their contracts.
The private respondents filed a complaint for illegal dismissal and non-payment of earned wages with the National Seamen Board.
The Vir-jen Shipping and Marine Services Inc. in turn filed a complaint for breach of contract and recovery of excess salaries and
overtime pay against the private respondents. On July 2, 1980, the NSB rendered a decision declaring that the seamen breached their
employment contracts when they demanded and received from Vir-jen Shipping wages over and above their contracted rates. The
dismissal of the seamen was declared legal and the seamen were ordered suspended.
The seamen appealed the decision to the NLRC which reversed the decision of the NSB and required the petitioner to pay the wages
and other monetary benefits corresponding to the unexpired portion of the manning contract on the ground that the termination of the
contract by the petitioner was without valid cause. Vir-jen Shipping filed the present petition.
The private respondents submit the following issues in their motion for reconsideration: têñ.£îhqwâ£
A. THIS HONORABLE COURT DID VIOLENCE TO LAW AND JURISPRUDENCE WHEN IT HELD THAT
THE FINDING OF FACT OF THE NATIONAL SEAMEN BOARD THAT THE SEAMEN VIOLATED THEIR
CONTRACTS IS MORE CREDIBLE THAN THE FINDING OF FACT OF THE NATIONAL LABOR
RELATIONS COMMISSION THAT THE SEAMEN DID NOT VIOLATE THEIR CONTRACT.
B. THIS HONORABLE COURT ERRED IN FINDING THAT VIR-JEN'S HAVING AGREED TO A 25%
INCREASE OF THE SEAMEN'S BASIC WAGE WAS NOT VOLUNTARY BUT WAS DUE TO THREATS.
C. THIS HONORABLE COURT ERRED WHEN IT TOOK COGNIZANCE OF THE ADDENDUM

AGREEMENT; ASSUMING THAT THE ADDENDUM AGREEMENT COULD BE TAKEN COGNIZANCE
OF, THIS HONORABLE COURT ERRED WHEN' IT FOUND THAT PRIVATE RESPONDENTS HAD
VIOLATED THE SAME.
D, THIS HONORABLE COURT ERRED WHEN IT DID NOT FIND PETITIONER VIRJEN LIABLE FOR
HAVING TERMINATED BEFORE EXPIRY DATE THE EMPLOYMENT CONTRACTS OF PRIVATE
RESPONDENTS, THERE BEING NO LEGAL AND JUSTIFIABLE GROUND FOR SUCH TERMINATION.
E. THIS HONORABLE COURT ERRED IN FINDING THAT THE PREPARATION BY PETITIONER OF THE
TWO PAYROLLS AND THE EXECUTION OF THE SIDE CONTRACT WERE NOT MADE IN BAD FAITH.
F. THIS HONORABLE COURT INADVERTENTLY DISCRIMINATED AGAINST PRIVATE

RESPONDENTS.
At the outset, we are faced with the question whether or not the Court en banc should give due course to the motion for
reconsideration inspite of its having been denied twice by the Court's Second Division. The case was referred to and accepted by the
Court en banc because of the movants' contention that the decision in this case by the Second Division deviated from Wallem Phil.
Shipping Inc. v. Minister of Labor (L-50734-37, February 20, 1981), a First Division case with the same facts and issues. We are
constrained to answer the initial question in the affirmative.
A fundamental postulate of Philippine Constitutional Law is the fact, that there is only one Supreme Court from whose decisions all
other courts are required to take their bearings. (Albert v. Court of First Instance, 23 SCRA 948; Barrera v. Barrera, 34 SCRA 98;
Tugade v. Court of Appeals, 85 SCRA 226). The majority of the Court's work is now performed by its two Divisions, but the Court
remains one court, single, unitary, complete, and supreme. Flowing from this nature of the Supreme Court is the fact that, while '
48
individual Justices may dissent or partially concur with one another, when the Court states what the law is, it speaks with only one
voice. And that voice being authoritative should be a clear as possible.
Any doctrine or principle of law laid down by the Court, whether en banc or in Division, may be modified or reversed only by the
Court en banc. (Section 2(3), Article X, Constitution.) In the rare instances when one Division disagrees in its views with the other
Division, or the necessary votes on an issue cannot be had in a Division, the case is brought to the Court en banc to reconcile any
seeming conflict, to reverse or modify an earlier decision, and to declare the Court's doctrine. This is what has happened in this case.
The decision sought to be reconsidered appears to be a deviation from the Court's decision, speaking through the First Division,
in Wallem Shipping, Inc. v. Hon. Minister of Labor (102 SCRA 835). Faced with two seemingly conflicting resolutions of basically
the same issue by its two Divisions, the Court. therefore, resolved to transfer the case to the Court en banc. Parenthetically, the
petitioner's comment on the third motion for reconsideration states that the resolution of the motion might be the needed vehicle to
make the ruling in the Wallem case clearer and more in time with the underlying principles of the Labor Code. We agree with the
petitioner.
After an exhaustive, painstaking, and perspicacious consideration of the motions for reconsideration and the comments, replies, and
other pleadings related thereto, the Court en banc is constrained to grant the motions. To grant the motion is to keep faith with the
constitutional mandate to afford protection to labor and to assure the rights of workers to self-organization and to just and humane
conditions of work. We sustain the decision of the respondent National labor Relations Commission.
There are various arguments raised by the petitioners but the common thread running through all of them is the contention, if not the
dismal prophecy, that if the respondent seamen are sustained by this Court, we would in effect "kill the en that lays the golden egg." In
other words, Filipino seamen, admittedly among the best in the world, should remain satisfied with relatively lower if not the lowest,
international rates of compensation, should not agitate for higher wages while their contracts of employment are subsisting, should
accept as sacred, iron clad, and immutable the side contracts which require them to falsely pretend to be members of international
labor federations, pretend to receive higher salaries at certain foreign ports only to return the increased pay once the ship leaves that
port, should stifle not only their right to ask for improved terms of employment but their freedom of speech and expression, and
should suffer instant termination of employment at the slightest sign of dissatisfaction with no protection from their Government and
their courts. Otherwise, the petitioners contend that Filipinos would no longer be accepted as seamen, those employed would lose their
jobs, and the still unemployed would be left hopeless.
This is not the first time and it will not be the last where the threat of unemployment and loss of jobs would be used to argue against
the interests of labor; where efforts by workingmen to better their terms of employment would be characterized as prejudicing the
interests of labor as a whole.
In 1867 or one hundred sixteen years ago. Chief Justice Beasley of the Supreme Court of New Jersey was ponente of the court's
opinion declaring as a conspiracy the threat of workingmen to strike in connection with their efforts to promote unionism, têñ.
£îhqwâ£
It is difficult to believe that a right exists in law which we can scarcely conceive can produce, in any posture of
affairs, other than injuriois results. It is simply the right of workmen, by concert of action, and by taking advantage
of their position, to control the business of another, I am unwilling to hold that a right which cannot, in any, event,
be advantageous to the employee, and which must always be hurtful to the employer, exists in law. In my opinion
this indictment sufficiently shows that the force of the confederates was brought to bear upon their employer for the
purpose of oppression and mischief and that this amounts to a conspiracy, (State v. Donaldson, 32 NJL 151, 1867.
Cited in Chamberlain, Sourcebook on Labor, p. 13. Emphasis supplied)
The same arguments have greeted every major advance in the rights of the workingman. And they have invariably been proved
unfounded and false.
Unionism, employers' liability acts, minimum wages, workmen's compensation, social security and collective bargaining to name a
few were all initially opposed by employers and even well meaning leaders of government and society as "killing the hen or goose
which lays the golden eggs." The claims of workingmen were described as outrageously injurious not only to the employer but more
so to the employees themselves before these claims or demands were established by law and jurisprudence as "rights" and before these
were proved beneficial to management, labor, and the nation as a whole beyond reasonable doubt.
The case before us does not represent any major advance in the rights of labor and the workingmen. The private respondents merely
sought rights already established. No matter how much the petitioner-employer tries to present itself as speaking for the entire
industry, there is no evidence that it is typical of employers hiring Filipino seamen or that it can speak for them.
49
The contention that manning industries in the Philippines would not survive if the instant case is not decided in favor of the petitioner
is not supported by evidence. The Wallem case was decided on February 20, 1981. There have been no severe repercussions, no
drying up of employment opportunities for seamen, and none of the dire consequences repeatedly emphasized by the petitioner. Why
should Vir-jen be all exception?
The wages of seamen engaged in international shipping are shouldered by the foreign principal. The local manning office is an agent
whose primary function is recruitment and who .usually gets a lump sum from the shipowner to defray the salaries of the crew. The
hiring of seamen and the determination of their compensation is subject to the interplay of various market factors and one key factor is
how much in terms of profits the local manning office and the foreign shipowner may realize after the costs of the voyage are met.
And costs include salaries of officers and crew members.
Filipino seamen are admittedly as competent and reliable as seamen from any other country in the world. Otherwise, there would not
be so many of them in the vessels sailing in every ocean and sea on this globe. It is competence and reliability, not cheap labor that
makes our seamen so greatly in demand. Filipino seamen have never demanded the same high salaries as seamen from the United
States, the United Kingdom, Japan and other developed nations. But certainly they are entitled to government protection when they
ask for fair and decent treatment by their employer.-, and when they exercise the right to petition for improved terms of employment,
especially when they feel that these are sub-standard or are capable of improvement according to internationally accepted rules. In the
domestic scene, there are marginal employers who prepare two sets of payrolls for their employees — one in keeping with minimum
wages and the other recording the sub-standard wages that the employees really receive, The reliable employers, however, not only
meet the minimums required by fair labor standards legislation but even go way above the minimums while earning reasonable profits
and prospering. The same is true of international employment. There is no reason why this Court and the Ministry of Labor and.
Employment or its agencies and commissions should come out with pronouncements based on the standards and practices of
unscrupulous or inefficient shipowners, who claim they cannot survive without resorting to tricky and deceptive schemes, instead of
Government maintaining labor law and jurisprudence according to the practices of honorable, competent, and law-abiding employers,
domestic or foreign.
If any minor advantages given to Filipino seamen may somehow cut into the profits of local manning agencies and foreign
shipowners, that is not sufficient reason why the NSB or the ILRC should not stand by the former instead of listening to
unsubstantiated fears that they would be killing the hen which lays the golden eggs.
Prescinding from the above, we now hold that neither the National Seamen Board nor the National Labor Relations Commission
should, as a matter of official policy, legitimize and enforce cubious arrangements where shipowners and seamen enter into fictitious
contracts similar to the addendum agreements or side contracts in this case whose purpose is to deceive. The Republic of the
Philippines and its ministries and agencies should present a more honorable and proper posture in official acts to the whole world,
notwithstanding our desire to have as many job openings both here and abroad for our workers. At the very least, such as sensitive
matter involving no less than our dignity as a people and the welfare of our workingmen must proceed from the Batasang Pambansa in
the form of policy legislation, not from administrative rule making or adjudication
Another issue raised by the movants is whether or not the seamen violated their contracts of employment.
The form contracts approved by the National Seamen Board are designed to protect Filipino seamen not foreign shipowners who can
take care of themselves. The standard forms embody' the basic minimums which must be incorporated as parts of the employment
contract. (Section 15, Rule V, Rules and Regulations Implementing the Labor Code.) They are not collective bargaining agreements or
immutable contracts which the parties cannot improve upon or modify in the course of the agreed period of time. To state, therefore,
that the affected seamen cannot petition their employer for higher salaries during the 12 months duration of the contract runs counter
to established principles of labor legislation. The National Labor Relations Commission, as the appellate tribunal from decisions of the
National Seamen Board, correctly ruled that the seamen did not violate their contracts to warrant their dismissal.
The respondent Commission ruled: têñ.£îhqwâ£
In the light of all the foregoing facts, we find that the cable of the seamen proposing an increase in their wage rates
was not and could not have been intended as a threat to comp el the Company to accede to their proposals. But even
assuming, if only for the sake of argument, that the demand or — proposal for a wage increase was accompanied by
a threat that they would report to ITF if the Company did not accede to the contract revision - although there really
was no such threat as pointed out earlier — the Seamen should not be held at fault for asking such a demand. In the
same case cited above, the Supreme Court held: têñ.£îhqwâ£
Petitioner claims that the dismissal of private respondents was justified because the latter
threatened the ship authorities in acceding to their demands, and this constitutes serious
50
misconduct as contemplated by the Labor Code. This contention is not well-taken. But even if
there had been such a threat, respondents' behavior should not be censured because it is but
natural for them to employ some means of pressing their demands for petitioner, the refusal to
abide with the terms of the Special Agreement, to honor and respect the same, They were only
acting in the exercise of their rights, and to deprive them of their freedom of expression is contrary
to law and public policy. There is no serious misconduct to speak of in the case at bar which
would justify respondents' dismissal just because of their firmness in their demand for the
fulfillment by petitioner of its obligation it entered into without any coercion, specially on the part
of private respondents. (Emphasis supplied).
The above citation is from Wallem.
The facts show that when the respondents boarded the M/T Jannu there was no intention to send their ship to Australia. On January
10, 1979, the petitioner sent a cable to respondent shipmaster Bisula informing him of the procedure to be followed in the computation
of special compensation of crewmembers while in ITF controlled ports and expressed regrets for not having earlier clarified the
procedure as it thought that the vessel would trade in Carribean ports only.
On March 22, 1979, the petitioner sent another cable informing Bisula of the special compensation when the ship would call at
Kwinana Australia.
The following day, shipmaster Bisula cabled Vir-jen stating that the officers and crews were not interested in ITF membership if not
paid ITF rates and that their only demand was a 50 percent increase based on their then salaries. Bisula also pointed out that Vir-jen
rates were "very far in comparison with other shipping agencies in Manila."
In reply, Vir-jen counter proposed a 25 percent increase. Only after Kyoei Tanker Co., Ltd., declined to increase the lumps sum
amount given monthly to Vir-jen was the decision to terminate the respondents' employment formulated.
The facts show that Virjen Initiated the discussions which led to the demand for increased . The seamen made a proposal and the
petitioner organized with a counter-proposal. The ship had not vet gone to Australia or any ITF controlled port. There was absolutely
no mention of any strike. much less a threat to strike. The seamen had done in act which under Philippine law or any other civilized
law would be termed illegal, oppressive, or malicious. Whatever pressure existed, it was mild compared to accepted valid modes of
labor activity.
We reiterate our ruling in Wallem. têñ.£îhqwâ£
Petitioner claims that the dismissal of private respondents was justified because the latter
threatened the ship authorities in acceding to their demands, and this constitutes serious
misconduct as contemplated by the Labor Code. This contention is not well-taken. The records fail
to establish clearly the commission of any threat, But even if there had been such a threat,
respondents' behavior should not be censured because it is but natural for them to employ some
means of pressing their demands for petitioner, who refused to abide with the terms of the Special
Agreement, to honor and respect the same, They were only acting in the exercise of their rights,
and to deprive them of their form of expression is contrary to law and public policy. ...
Our dismissing the petition is premised on the assumption that the Ministry of Labor and Employment and all its agencies exist
primarily for the workinginan's interests and, of course, the nation as a whole. The points raised by the Solicitor-General in his
comments refer to the issue of allowing what the petitioner importunes under the argument of "killing the hen which lays the golden
eggs." This is one of policy which should perhaps be directed to the Batasang Pambansa and to our country's other policy makers for
more specific legislation on the matter, subject to the constitutional provisions protecting labor, promoting social justice, and
guaranteeing non-abridgement of the freedom of speech, press, peaceable assembly and petition. We agree with the movants that there
is no showing of any cause, which under the Labor Code or any current applicable law, would warrant the termination of the
respondents' services before the expiration of their contracts. The Constitution guarantees State assurance of the rights of workers to
security of tenure. (Sec. 9, Article II, Constitution). Presumptions and provisions of law, the evidence on record, and fundamental
State policy all dictate that the motions for reconsideration should be granted.
WHEREFORE, the motions for reconsideration are hereby GRANTED. The petition is DISMISSED for lack of merit. The decision of
the National Labor Relations Commission is AFFIRMED. No costs.
51
SO ORDERED.1äwphï1.ñët
G.R. No. 109808. March 1, 1995.*

ESALYN CHAVEZ, petitioner, vs. HON. EDNA BONTO-PEREZ, HON. ROGELIO T. RAYALA, HON. DOMINGO H.
ZAPANTA, HON. JOSE N. SARMIENTO, CENTRUM PROMOTIONS & PLACEMENT CORPORATION, JOSE A.
AZUCENA, JR., and TIMES SURETY & INSURANCE COMPANY, INC., respondents.
Labor Law; Court holds that the managerial commission agreement executed by petitioner to authorize her Japanese employer
to deduct Two Hundred Fifty U.S. Dollars from her monthly basic salary is void because it is against our existing laws, morals and
public policy.—Firstly, we hold that the managerial commission agreement executed by petitioner to authorize her Japanese employer
to deduct Two Hundred Fifty U.S. Dollars (US$250.00) from her monthly basic salary is void because it is against our existing laws,
morals and public policy. It cannot supersede the standard employment contract of December 1, 1988 approved by the POEA with the
following stipulation appended thereto: “It is understood that the terms and conditions stated in this Employment Contract are in
conformance with the Standard Employment Contract for Entertainers prescribed by the POEA under Memorandum Circular No. 2,
Series of 1986. Any alterations or changes made in any part of this contract without prior approval by the POEA shall be null and
void”; (Emphasis supplied.)
Same; The basic salary of One Thousand Five Hundred U.S. Dollars guaranteed to petitioner under the parties’ standard
employment contract is in accordance with the minimum employment standards with respect to wages set by the POEA.—Clearly, the
basic salary
_______________
*
SECOND DIVISION.
74
Chavez vs. Bonto-Perez
of One Thousand Five Hundred U.S. Dollars (US$1,500.00) guaranteed to petitioner under the parties’ standard employment
contract is in accordance with the minimum employment standards with respect to wages set by the POEA. Thus, the side agreement
which reduced petitioner’s basic wage to Seven Hundred Fifty U.S. Dollars (US$750.00) is null and void for violating the POEA’s
minimum employment standards, and for not having been approved by the POEA. Indeed, this side agreement is a scheme all too
frequently resorted to by unscrupulous employers against our helpless overseas workers who are compelled to agree to satisfy their
basic economic needs.
Civil Law; Laches; Definition of Laches.—Laches has been defined as the failure or neglect for an unreasonable and
unexplained length of time to do that which, by exercising due diligence, could or should have been done earlier, thus giving rise to a
presumption that the party entitled to assert it either has abandoned or declined to assert it. It is not concerned with mere lapse of time;
the fact of delay, standing alone, is insufficient to constitute laches.
Same; Same; There is no absolute rule as to what constitutes laches.—The doctrine of laches is based upon grounds of public
policy which requires, for the peace of society, the discouragement of stale claims, and is principally a question of the inequity or
unfairness of permitting a right or claim to be enforced or asserted. There is no absolute rule as to what constitutes laches; each case is
to be determined according to its particular circumstances. The question of laches is addressed to the sound discretion of the court, and
since it is an equitable doctrine, its application is controlled by equitable considerations. It cannot be worked to defeat justice or to
perpetrate fraud and injustice.
52
Same; Same; Court holds that the doctrine of laches is inapplicable to petitioner.—In the case at bench, petitioner filed her
claim well within the three-year prescriptive period for the filing of money claims set forth in Article 291 of the Labor Code. For this
reason, we hold the doctrine of laches inapplicable to petitioner.
PETITION for certiorari to review a decision of the National Labor Relations Commission.

Felix C. Chavez for petitioner.
Angel E. Garrido for private respondents.
PUNO, J.:
One of the anguished cries in our society today is that while our laws appear to protect the poor, their interpretation is sometimes anti-
poor. In the case at bench, petitioner, a poor, uncounselled entertainment dancer signed a contract with her Japanese employer calling
for a monthly salary of One Thousand Five Hundred U.S. Dollars (US$1,500) but later had to sign an immoral side agreement
reducing her salary below the minimum standard set by the POEA. Petitioner invoked the law to collect her salary differentials, but
incredibly found public respondent straining the seams of our law to disfavor her. There is no greater disappointment to the poor like
petitioner than to discover the ugly reality behind the beautiful rhetoric of laws. We will not allow this travesty.
This is a petition for certiorari to review the Decision of the National Labor Relations Commission (NLRC), 1 dated December 29,
1992, which affirmed the Decision of public respondent Philippine Overseas Employment Agency (POEA) Administrator Jose N.
Sarmiento, dated February 17, 1992, dismissing petitioner's complaint for unpaid salaries amounting to Six Thousand Dollars
(US$6,000.00).
The facts are undisputed.
On December 1, 1988, petitioner, an entertainment dancer, entered into a standard employment contract for overseas Filipino artists
and entertainers with Planning Japan Co., Ltd.,2 through its Philippine representative, private respondent Centrum Placement &
Promotions Corporation. The contract had a duration of two (2) to six (6) months, and petitioner was to be paid a monthly
compensation of One Thousand Five Hundred Dollars (US$1,5000.00). On December 5, 1888, the POEA approved the contract.
Subsequently, petitioner executed the following side agreement with her Japanese employer through her local manager, Jaz Talents
Promotion:
Date: Dec. 10, 1988
SUBJECT: Salary Deduction

MANAGERIAL COMMISSION
DATE OF DEPARTURE: _________________
ATTENTION: MR. IWATA
I, ESALYN CHAVEZ, DANCER, do hereby with my own free will and voluntarily have the honor to authorize your
good office to please deduct the amount of TWO HUNDRED FIFTY DOLLARS ($250) from my contracted monthly
salary of SEVEN HUNDRED FIFTY DOLLARS ($750) as monthly commission for my Manager, Mr. Jose A.
Azucena, Jr.
That, my monthly salary (net) is FIVE HUNDRED DOLLARS ($500).
(sgd. by petitioner)3
On December 16, 1988, petitioner left for Osaka, Japan, where she worked for six (6) months, until June 10, 1989. She came back to
the Philippines on June 14, 1989.
Petitioner instituted the case at bench for underpayment of wages with the POEA on February 21, 1991. She prayed for the payment of
Six Thousand U.S. Dollars (US$6,000.00), representing the unpaid portion of her basic salary for six months. Charged in the case
were private respondent Centrum Promotions and Placement Corporation, the Philippine representative of Planning Japan, Co., Inc.,
its insurer, Times Surety and Insurance Co., Inc., and Jaz Talents Promotion.
53
The complaint was dismissed by public respondent POEA Administrator on February 17, 1992. He ratiocinated, inter alia:
. . . Apparently and from all indications, complainant (referring to petitioner herein) was satisfied and did not have
any complaint (about) anything regarding her employment in Japan until after almost two (2) years (when) she filed
the instant complaint on February 21, 1991. The records show that after signing the Standard Employment Contract
on December 1, 1988, she entered into a side agreement with the Japanese employer thru her local manager, Jaz
Talents Promotion consenting to a monthly salary of US$750.00 which she affirmed during the conference of May
21, 1991. Respondent agency had no knowledge nor participation in the said agreement such that it could not be
faulted for violation of the Standard Employment Contract regarding the stipulated salary. We cannot take
cognizance of such violation when one of the principal party (sic) thereto opted to receive a salary different from
what has been stipulated in their contract, especially so if the contracting party did not consent/participate in such
arrangement. Complainant (petitioner) cannot now demand from respondent agency to pay her the salary based (on)
the processed Employment Contract for she is now considered in bad faith and hence, estopped from claiming
thereto thru her own act of consenting and agreeing to receive a salary not in accordance with her contract of
employment. Moreover, her self-imposed silence for a long period of time worked to her own disadvantage as she
allowed laches to prevail which barred respondent from doing something at the outset. Normally, if a person's right
(is) violated, she/he would immediately react to protect her/his rights which is not true in the case at bar.
The term laches has been defined as one's negligence or failure to assert his right in due time or within reasonable
time from the accrual of his cause of action, thus, leading another party to believe that there is nothing wrong with
his own claim. This resulted in placing the negligent party in estoppel to assert or enforce his right. . . . Likewise, the
Supreme Court in one case held that not only is inaction within reasonable time to enforce a right the basic premise
that underlies a valid defense of laches but such inaction evinces implied consent or acquiescence to the violation of
the right . . .
Under the prevailing circumstances of this case, it is outside the regulatory powers of the Administration to rule on
the liability of respondent Jaz Talents Promotions, if any, (it) not being a licensed private agency but a promotion
which trains entertainers for abroad.
x x x x x x x x x
(Citations omitted.)
On appeal, the NLRC upheld the Decision, thus:
We fail to see any conspiracy that the complainant (petitioner herein) imputes to the respondents. She has, to put it
bluntly, not established and/or laid the basis for Us to arrive at a conclusion that the respondents have been and
should be held liable for her claims.
The way We see it, the records do not at all indicate any connection between respondents Centrum Promotion &
Placement Corporation and Jaz Talents Promotion.
There is, therefore, no merit in the appeal. Hence, We affirmed. 4
Dissatisfied with the NLRC's Decision, petitioner instituted the present petition, alleging that public respondents committed grave
abuse of discretion in finding: that she is guilty of laches; that she entered into a side contract on December 10, 1988 for the reduction
of her basic salary to Seven Hundred Fifty U.S. Dollars (US$750.00) which superseded, nullified and invalidated the standard
employment contract she entered into on December 1, 1988; and that Planning Japan Co., Ltd. and private respondents are not
solidarily liable to her for Six Thousand US Dollars (US$6,000.00) in unpaid wages. 5
The petition is meritorious.
Firstly, we hold that the managerial commission agreement executed by petitioner to authorize her Japanese Employer to deduct Two
Hundred Fifty U.S. Dollars (US$250.00) from her monthly basic salary is void because it is against our existing laws, morals and
public policy. It cannot supersede the standard employment contract of December 1, 1988 approved by the POEA with the following
stipulation appended thereto:
54
It is understood that the terms and conditions stated in this Employment Contract are in conformance with the
Standard Employment Contract for Entertainers prescribed by the POEA under Memorandum Circular No. 2, Series
of 1986. Any alterations or changes made in any part of this contract without prior approval by the POEA shall be
null and void; 6 (Emphasis supplied.)
The stipulation is in line with the provisions of Rule II, Book V and Section 2(f), Rule I, Book VI of the 1991 Rules and Regulations
Governing Overseas Employment, thus:
Book V, Rule II
Sec. 1. Employment Standards. The Administration shall determine, formulate and review employment standards in
accordance with the market development and welfare objectives of the overseas employment program and the
prevailing market conditions.
Sec. 2. Minimum Provisions for Contract. The following shall be considered the minimum requirements for
contracts of employment:
a. Guaranteed wages for regular working hours and overtime pay for services rendered beyond
regular working hours in accordance with the standards established by the Administration;
xxx xxx xxx
Sec. 3. Standard Employment Contract. The administration shall undertake development and/or periodic review of
region, country and skills specific employment contracts for landbased workers and conduct regular review of
standard employment contracts (SEC) for seafarers. These contracts shall provide for minimum employment
standards herein enumerated under Section 2, of this Rule and shall recognize the prevailing labor and social
legislations at the site of employment and international conventions. The SEC shall set the minimum terms and
conditions of employment. All employers and principals shall adopt the SEC in connection with the hiring of
workers without prejudice to their adoption of other terms and conditions of employment over and above the
minimum standards of the Administration. (Emphasis supplied.)
and
BOOK VI, RULE I
Sec. 2. Grounds for suspension/cancellation of license.
xxx xxx xxx
f. Substituting or altering employment contracts and other documents approved and verified by the Administration
from the time of actual signing thereof by the parties up to and including the period of expiration of the same
without the Administration's approval.
xxx xxx xxx
(Emphasis supplied.)
Clearly, the basic salary of One Thousand Five Hundred U.S. Dollars (US$1,500.00) guaranteed to petitioner under the parties'
standard employment contract is in accordance with the minimum employment standards with respect to wages set by the POEA,
Thus, the side agreement which reduced petitioner's basic wage to Seven Hundred Fifty U.S. Dollars (US$750.00) is null and void for
violating the POEA's minimum employment standards, and for not having been approved by the POEA. Indeed, this side agreement is
a scheme all too frequently resorted to by unscrupulous employers against our helpless overseas workers who are compelled to agree
to satisfy their basic economic needs.
Secondly. The doctrine of laches or "stale demands"' cannot be applied to petitioner. Laches has been defined as the failure or neglect
for an unreasonable and unexplained length time to do that which, by exercising due diligence, could or should have been done
55
earlier, 7 thus giving rise to a presumption that the party entitled to assert it either has abandoned or declined to assert it. 8 It is not
concerned with mere lapse of time; the fact of delay, standing alone, is insufficient to constitute laches. 9
The doctrine of laches is based upon grounds of public policy which requires, for the peace of society, the discouragement of stale
claims, and is principally a question of the inequity or unfairness of permitting a right or claim to be enforced or asserted. 10 There is
no absolute rule as to what constitutes laches; each case is to be determined according to its particular circumstances. The question of
laches is addressed to the sound discretion of the court, and since it is an equitable doctrine, its application is controlled by equitable
considerations. It cannot be worked to defeat justice or to perpetrate fraud and injustice. 11
In the case at bench, petitioner filed her claim well within the three-year prescriptive period for the filing of money claims set forth in
Article 291 of the Labor Code. 12 For this reason, we hold the doctrine of laches inapplicable to petitioner. As we ruled in Imperial
Victory Shipping Agency v. NLRC, 200 SCRA 178 (1991):
. . . Laches is a doctrine in equity while prescription is based on law. Our courts are basically courts of law not
courts of equity. Thus, laches cannot be invoked to resist the enforcement of an existing legal right. We have ruled
in Arsenal v. Intermediate Appellate Court . . . that it is a long standing principle that equity follows the law. Courts
exercising equity jurisdiction are bound by rules of law and have no arbitrary discretion to disregard them. In Zabat,
Jr. v. Court of Appeals . . ., this Court was more emphatic upholding the rules of procedure. We said therein:
As for equity, which has been aptly described as a "justice outside legality," this applied only in
the absence of, and never against, statutory law or, as in this case, judicial rules of
procedure. Aequetas nunguam contravenit legis. The pertinent positive rules being present here,
they should pre-empt and prevail over all abstract arguments based only on equity.
Thus, where the claim was filed within the three-year statutory period, recovery therefore cannot be barred by
laches. Courts should never apply the doctrine of laches earlier than the expiration of time limited for the
commencement of actions at law.
xxx xxx xxx
(Emphasis supplied. Citations omitted.)
Thirdly, private respondents Centrum and Times as well as Planning Japan Co., Ltd. — the agency's foreign principal — are solidarily
liable to petitioner for her unpaid wages. This is in accordance with stipulation 13.7 of the parties' standard employment contract
which provides:
13.7. The Employer (in this case, Planning Japan Co., Ltd. ) and its locally (sic) agent/promoter/representative
(private respondent Centrum Promotions & Placement Corporation) shall be jointly and severally responsible for the
proper implementation of the terms and conditions in this Contract. 13 (Emphasis supplied.)
This solidary liability also arises from the provisions of Section 10(a)(2), Rule V, Book I of the Omnibus Rules
Implementing the Labor Code, as amended, thus:
Sec. 10. Requirement before recruitment. — Before recruiting any worker, the private employment agency shall
submit to the Bureau the following documents:
a) A formal appointment or agency contract executed by a foreign-based employer in favor of the license holder to
recruit and hire personnel for the former . . . . Such formal appointment or recruitment agreement shall contain the
following provisions, among others:
xxx xxx xxx
2. Power of the agency to sue and be sued jointly and solidarily with the principal or foreign based employer for
any of the violations of the recruitment agreement and the contracts of employment.
xxx xxx xxx
56
(Emphasis supplied.)
Our overseas workers constitute an exploited class. Most of them come from the poorest sector of our society. They are thoroughly
disadvantaged. Their profile shows they live in suffocating slums, trapped in an environment of crime. Hardly literate and in ill health,
their only hope lies in jobs they can hardly find 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 in our land. Regretfully, respondent public officials who should sympathize with the working class appear to have a different
orientation.
IN VIEW WHEREOF, the petition is GRANTED. The Decisions of respondent POEA Administrator and NLRC Commissioners in
POEA Case No. Adj. 91-02-199 (ER), respectively dated February 17 and December 29, 1992, and the Resolution of the NLRC, dated
March 23, 1993, are REVERSED and SET ASIDE. Private respondents are held jointly and severally liable to petitioner for the
payment of SIX THOUSAND US DOLLARS (US$6,000.00) in unpaid wages. Costs against private respondents.
SO ORDERED.
G. R. Nos. 57999, 58143-53. August 15, 1989.*

RESURRECCION SUZARA, CESAR DIMAANDAL, ANGELITO MENDOZA, ANTONIO TANEDO, AMORSOLO CABRERA, DOMINADOR SANTOS, ISIDRO BRACIA, RAMON DE BELEN, ERNESTO SABADO,
MARTIN MALA-BANAN, ROMEO HUERTO and VITALIANO PANGUE, petitioners, vs. THE HON. JUDGE ALFREDO L. BENIPAYO and MAGSAYSAY LINES, INC., respondents.
G.R. Nos. 64781-99. August 15, 1989.*
RESURRECCION SUZARA, CESAR DIMAANDAL, ANGELITO MENDOZA, ANTONIO TANEDO, RAYMUNDO PEREZ, AMORSOLO CABRERA, DOMINADOR SANTOS, ISIDRO BRACIA, CATALINO CASICA,
VITALIANO PANGUE, RAMON DE BELEN, EDUARDO PAGTALUNAN, ANTONIO MIRANDA, RAMON UNIANA, ERNESTO SABADO, MARTIN MALABANAN, ROMEO HUERTO and WILFREDO CRISTOBAL,
petitioners, vs. THE HONORABLE NATIONAL LABOR RELATIONS COMMISSION, THE NATIONAL SEAMEN BOARD (now the Philippine Overseas Employment Administration), and MAGSAYSAY LINES, INC.,
respondents.
G. R. Nos. 57999, 58143-53. August 15, 1989.*

G.R. Nos. 64781-99. August 15, 1989.*
RESURRECCION SUZARA, CESAR DIMAANDAL, ANGELITO MENDOZA, ANTONIO TANEDO, RAYMUNDO PEREZ, AMORSOLO CABRERA, DOMINADOR SANTOS, ISIDRO BRACIA, CATALINO CASICA,
VITALIANO PANGUE, RAMON DE BELEN, EDUARDO PAGTALUNAN, ANTONIO MIRANDA, RAMON UNIANA, ERNESTO SABADO, MARTIN MALABANAN, ROMEO HUERTO and WILFREDO CRISTOBAL,
petitioners, vs. THE HONORABLE NATIONAL LABOR RELATIONS COMMISSION, THE NATIONAL SEAMEN BOARD (now the Philippine Overseas Employment Administration), and MAGSAYSAY LINES, INC.,
respondents.
G. R. Nos. 57999, 58143-53. August 15, 1989.*

G. R. Nos. 57999, 58143-53. August 15, 1989.*
57
G. R. Nos. 57999, 58143-53. August 15, 1989.*
RESURRECCION SUZARA, CESAR DIMAANDAL, ANGELITO MENDOZA, ANTONIO TANEDO, AMORSOLO
CABRERA, DOMINADOR SANTOS, ISIDRO BRACIA, RAMON DE BELEN, ERNESTO SABADO, MARTIN MALA-
BANAN, ROMEO HUERTO and VITALIANO PANGUE, petitioners, vs. THE HON. JUDGE ALFREDO L. BENIPAYO and
MAGSAYSAY LINES, INC., respondents.
G.R. Nos. 64781-99. August 15, 1989.*

RESURRECCION SUZARA, CESAR DIMAANDAL, ANGELITO MENDOZA, ANTONIO TANEDO, RAYMUNDO
PEREZ, AMORSOLO CABRERA, DOMINADOR SANTOS, ISIDRO BRACIA, CATALINO CASICA, VITALIANO
PANGUE, RAMON DE BELEN, EDUARDO PAGTALUNAN, ANTONIO MIRANDA, RAMON UNIANA, ERNESTO
SABADO, MARTIN MALABANAN, ROMEO HUERTO and WILFREDO CRISTOBAL, petitioners, vs. THE
HONORABLE NATIONAL LABOR RELATIONS COMMISSION, THE NATIONAL SEAMEN BOARD (now the Philippine
Overseas Employment Administration), and MAGSAYSAY LINES, INC., respondents.
_______________
*
EN BANC.
466
Suzara vs. Benipayo
Labor; National Seamen’s Board; Evidence; Nothing in the public and private respondents’ pleadings to support the
allegations that petitioners used force and violence to secure the special agreement signed in Vancouver, British Columbia.—There is
58
nothing in the public and private respondents’ pleadings, to support the allegations that the petitioners used force and violence to
secure the special agreement signed in Vancouver, British Columbia. There was no need for any form of intimidation coming from the
Filipino seamen because the Canadian Brotherhood of Railways and Transport Workers (CBRT), a strong Canadian labor union,
backed by an international labor federation was actually doing all the influencing not only on the ship-owners and employers but also
against third world seamen themselves who, by receiving lower wages and cheaper accommodations, were threatening the
employment and livelihood of seamen from developed nations.
Same; Same; Same; No proof that petitioners initiated a conspiracy with the ITF or deliberately sought its assistance in order
to receive higher wages.—The bases used by the respondent NSB to support its decision do not prove that the petitioners initiated a
conspiracy with the ITF or deliberately sought its assistance in order to receive higher wages. They only prove that when ITF acted in
petitioners’ behalf for an increase in wages, the latter manifested their support. This would be a logical and natural reaction for any
worker in whose benefit the ITF or any other labor group had intervened. The petitioners admit that while they expressed their
conformity to and their sentiments for higher wages by means of placards, they, nevertheless, continued working and going about their
usual chores. In other words, all they did was to exercise their freedom of speech in a most peaceful way. The ITF people, in turn, did
not employ any violent means to force the private respondent to accede to their demands. Instead, they simply applied effective
pressure when they intimated the possibility of interdiction should the shipowner fail to heed the call for an upward adjustment of the
rates of the Filipino seamen. Interdiction is nothing more than a refusal of ITF members to render service for the ship, such as to load
or unload its cargo, to provision it or to perform such other chores ordinarily incident to the docking of the ship at a certain port. It was
the fear of ITF interdiction, not any action taken by the seamen on board the vessel which led the shipowners to yield.
Same; Same; Same; Conclusion that it is ITF’s policy not to intervene with the plight of crew members of a vessel unless its
intervention was sought is without basis.—The NSB’s conclusion that it is ITF’s
467
VOL. 176, AUGUST 15, 1989 467
Suzara vs. Benipayo
policy not to intervene with the plight of crewmembers of a vessel unless its intervention was sought is without basis. This Court
is cognizant of the fact that during the period covered by the labor controversies in Wallem Philippines Shipping, Inc. v. Minister of
Labor (102 SCRA 835 [1981]; Vir-Jen Shipping and Marine Services, Inc. v. NLRC (supra) and these consolidated petitions, the ITF
was militant worldwide especially in Canada, Australia, Scandinavia, and various European countries, interdicting foreign vessels and
demanding wage increases for third world seamen. There was no need for Filipino or other seamen to seek ITF intervention. The ITF
was waiting on its own volition in all Canadian ports, not particularly for the petitioner’s vessel but for all ships similarly situated. As
earlier stated, the ITF was not really acting for the petitioners out of pure altruism. The ITF was merely protecting the interests of its
own members. The petitioners happened to be pawns in a higher and broader struggle between the ITF on one hand and shipowners
and third world seamen, on the other. To subject our seamen to criminal prosecution and punishment for having been caught in such a
struggle is out of the question.
Same; Same; Same; Court cannot affirm the NSB and NLRC’s findings that there was violence, physical or otherwise employed
by the petitioners in demanding for additional wages.—Given these factual situations, therefore, we cannot affirm the NSB and
NLRC’s findings that there was violence, physical or otherwise employed by the petitioners in demanding for additional wages. The
fact that the petitioners placed placards on the gangway of their ship to show support for ITF’s demands for wage differentials for their
own benefit and the resulting ITF’s threatened interdiction do not constitute violence. The petitioners were exercising their freedom of
speech and expressing sentiments in their hearts when they placed the placard “We want ITF Rates.” Under the facts and
circumstances of these petitions, we see no reason to deprive the seamen of their right to freedom of expression guaranteed by the
Philippine Constitution and the fundamental law of Canada where they happened to exercise it.
Same; Same; Same; Conclusion that the acts of the petitioners in demanding and receiving wages over and above the NSB-
approved contracts rates is in effect an alteration of their valid and subsisting contract is without basis. —We likewise, find the public
respondents’ conclusions that the acts of the petitioners in demanding and receiving wages over and above the rates appearing in their
NSB-approved contracts is in effect an alteration of their valid and subsisting con-
468
Suzara vs. Benipayo
tracts because the same were not obtained through mutual consent and without the prior approval of the NSB to be without
basis, not only because the private respondent’s consent to pay additional wages was not vitiated by any violence or intimidation on
the part of the petitioners but because the said NSB-approved form contracts are not unalterable contracts that can have no room for
improvement during their effectivity or which ban any amendments during their term.
PETITIONS to review the decisions of the National Seamen Board and National Labor Relations Commission.
The facts are stated in the opinion of the Court. Quasha, Asperilla, Ancheta, Peña and Nolasco for petitioners.
Samson S. Alcantara for private respondent.
GUTIERREZ, JR., J.:
59
These petitions ask for a re-examination of this Court's precedent — setting decision in Vir-Jen Shipping and Marine Services Inc. v.
National Labor Relations Commission, et al. (125 SCRA 577 [1983]). On constitutional, statutory, and factual grounds, we find no
reason to disturb the doctrine in Vir-Jen Shipping and to turn back the clock of progress for sea-based overseas workers. The
experience gained in the past few years shows that, following said doctrine, we should neither deny nor diminish the enjoyment by
Filipino seamen of the same rights and freedoms taken for granted by other working-men here and abroad.
The cases at bar involve a group of Filipino seamen who were declared by the defunct National Seamen Board (NSB) guilty of
breaching their employment contracts with the private respondent because they demanded, upon the intervention and assistance of a
third party, the International Transport Worker's Federation (ITF), the payment of wages over and above their contracted rates without
the approval of the NSB. The petitioners were ordered to reimburse the total amount of US$91,348.44 or its equivalent in Philippine
Currency representing the said over-payments and to be suspended from the NSB registry for a period of three years. The National
Labor Relations Commission (NLRC) affirmed the decision of the NSB.
In a corollary development, the private respondent, for failure of the petitioners to return the overpayments made to them upon
demand by the former, filed estafa charges against some of the petitioners. The criminal cases were eventually consolidated in the sala
of then respondent Judge Alfredo Benipayo. Hence, these consolidated petitions, G.R. No. 64781-99 and G.R. Nos. 57999 and 58143-
53, which respectively pray for the nullification of the decisions of the NLRC and the NSB, and the dismissal of the criminal cases
against the petitioners.
The facts are found in the questioned decision of the NSB in G.R. No. 64781-99.
From the records of this case it appears that the facts established and/or admitted by the parties are the following:
that on different dates in 1977 and 1978 respondents entered into separate contracts of employment (Exhs. "B" to
"B-17", inclusive) with complainant (private respondent) to work aboard vessels owned/operated/manned by the
latter for a period of 12 calendar months and with different rating/position, salary, overtime pay and allowance,
hereinbelow specified: ...; that aforesaid employment contracts were verified and approved by this Board; that on
different dates in April 1978 respondents (petitioners) joined the M/V "GRACE RIVER"; that on or about October
30, 1978 aforesaid vessel, with the respondents on board, arrived at the port of Vancouver, Canada; that at this port
respondent received additional wages under rates prescribed by the Intemational Transport Worker's Federation
(ITF) in the total amount of US$98,261.70; that the respondents received the amounts appearing opposite their
names, to wit: ...; that aforesaid amounts were over and above the rates of pay of respondents as appearing in their
employment contracts approved by this Board; that on November 10, 1978, aforesaid vessel, with respondent on
board, left Vancouver, Canada for Yokohama, Japan; that on December 14, 1978, while aforesaid vessel, was at
Yura, Japan, they were made to disembark. (pp. 64-66, Rollo)
Furthermore, according to the petitioners, while the vessel was docked at Nagoya, Japan, a certain Atty. Oscar Torres of the NSB
Legal Department boarded the vessel and called a meeting of the seamen including the petitioners, telling them that for their own good
and safety they should sign an agreement prepared by him on board the vessel and that if they do, the cases filed against them with
NSB on November 17, 1978 would be dismissed. Thus, the petitioners signed the. "Agreement" dated December 5, 1978. (Annex C of
Petition) However, when they were later furnished xerox copies of what they had signed, they noticed that the line "which amount(s)
was/were received and held by CREWMEMBERS in trust for SHIPOWNERS" was inserted therein, thereby making it appear that the
amounts given to the petitioners representing the increase in their wages based on ITF rates were only received by them in trust for the
private respondent.
When the vessel reached Manila, the private respondent demanded from the petitioners the "overpayments" made to them in Canada.
As the petitioners refused to give back the said amounts, charges were filed against some of them with the NSB and the Professional
Regulations Commission. Estafa charges were also filed before different branches of the then Court of First Instance of Manila which,
as earlier stated, were subsequently consolidated in the sala of the respondent Judge Alfredo Benipayo and which eventually led to
G.R. Nos. 57999 and 58143-53.
In G.R. Nos. 64781-99, the petitioners claimed before the NSB that contrary to the private respondent's allegations, they did not
commit any illegal act nor stage a strike while they were on board the vessel; that the "Special Agreement" entered into in Vancouver
to pay their salary differentials is valid, having been executed after peaceful negotiations. Petitioners further argued that the amounts
they received were in accordance with the provision of law, citing among others, Section 18, Rule VI, Book I of the Rules and
Regulations Implementing the Labor Code which provides that "the basic minimum salary of seamen shall not be less than the
prevailing minimum rates established by the International Labor Organization (ILO) or those prevailing in the country whose flag the
employing vessel carries, whichever is higher ..."; and that the "Agreement" executed in Nagoya, Japan had been forced upon them
and that intercalations were made to make it appear that they were merely trustees of the amounts they received in Vancouver.
60
On the other hand, the private respondent alleged that the petitioners breached their employment contracts when they, acting in
concert and with the active participations of the ITF while the vessel was in Vancouver, staged an illegal strike and by means of
threats, coercion and intimidation compelled the owners of the vessel to pay to them various sums totalling US$104,244.35; that the
respondent entered into the "Special Agreement" to pay the petitioners' wage differentials because it was under duress as the vessel
would not be allowed to leave Vancouver unless the said agreement was signed, and to prevent the shipowner from incurring further
delay in the shipment of goods; and that in view of petitioners' breach of contract, the latter's names must be removed from the NSB's
Registry and that they should be ordered to return the amounts they received over and above their contracted rates.
The respondent NSB ruled that the petitioners were guilty of breach of contract because despite subsisting and valid NSB-approved
employment contracts, the petitioners sought the assistance of a third party (ITF) to demand from the private respondent wages in
accordance with the ITF rates, which rates are over and above their rates of pay as appearing in their NSB-approved contracts. As
bases for this conclusion, the NSB stated:
1) The fact that respondents sought the aid of a third party (ITF) and demanded for wages and overtime pay based
on ITF rates is shown in the entries of their respective Pay-Off Clearance Slips which were marked as their Exhs.
"1" to "18", and we quote "DEMANDED ITF WAGES, OVERTIME, DIFFERENTIALS APRIL TO OCTOBER
1978". Respondent Suzara admitted that the entries in his Pay-Off Clearance Slip (Exh. "1") are correct (TSN., p.
16, Dec. 6, 1979).lâwphî1.ñèt Moreover, it is the policy (reiterated very often) by the ITF that it does not interfere in
the affairs of the crewmembers and masters and/or owners of a vessel unless its assistance is sought by the
crewmembers themselves. Under this pronounced policy of the ITF, it is reasonable to assume that the
representatives of the ITF in Vancouver, Canada assisted and intervened by reason of the assistance sought by the
latter.
2) The fact that the ITF assisted and intervened for and in behalf of the respondents in the latter's demand for higher
wages could be gleaned from the answer of the respondents when they admitted that the ITF acted in their behalf in
the negotiations for increase of wages. Moreover, respondent Cesar Dimaandal admitted that the ITF differential pay
was computed by the ITF representative (TSN, p. 7, Dec. 12, 1979)
3) The fact that complainant and the owner/operator of the vessel were compelled to sign the Special Agreement
(Exh. "20") and to pay ITF differentials to respondents in order not to delay the departure of the vessel and to
prevent further losses is shown in the "Agreement" (Exhs. "R-21") ... (pp. 69-70, Rollo)
The NSB further said:
While the Board recognizes the rights of the respondents to demand for higher wages, provided the means are
peaceful and legal, it could not, however, sanction the same if the means employed are violent and illegal. In the
case at bar, the means employed are violent and illegal for in demanding higher wages the respondents sought the
aid of a third party and in turn the latter intervened in their behalf and prohibited the vessel from sailing unless the
owner and/or operator of the vessel acceded to respondents' demand for higher wages. To avoid suffering further
incalculable losses, the owner and/or operator of the vessel had no altemative but to pay respondents' wages in
accordance with the ITF scale. The Board condemns the act of a party who enters into a contract and with the use of
force/or intimidation causes the other party to modify said contract. If the respondents believe that they have a valid
ground to demand from the complainant a revision of the terms of their contracts, the same should have been done in
accordance with law and not thru illegal means. (at p. 72, Rollo).
Although the respondent NSB found that the petitioners were entitled to the payment of earned wages and overtime pay/allowance
from November 1, 1978 to December 14, 1978, it nevertheless ruled that the computation should be based on the rates of pay as
appearing in the petitioners' NSB-approved contracts. It ordered that the amounts to which the petitioners are entitled under the said
computation should be deducted from the amounts that the petitioners must return to the private respondent.
On appeal, the NLRC affirmed the NSB's findings. Hence, the petition in G.R. Nos. 64781-99.
Meanwhile, the petitioners in G.R. Nos. 57999 and 58143-53 moved to quash the criminal cases of estafa filed against them on the
ground that the alleged crimes were committed, if at all, in Vancouver, Canada and, therefore, Philippine courts have no jurisdiction.
The respondent judge denied the motion. Hence, the second petition.
The principal issue in these consolidated petitions is whether or not the petitioners are entitled to the amounts they received from the
private respondent representing additional wages as determined in the special agreement. If they are, then the decision of the NLRC
61
and NSB must be reversed. Similarly, the criminal cases of estafa must be dismissed because it follows as a consequence that the
amounts received by the petitioners belong to them and not to the private respondent.
In arriving at the questioned decision, the NSB ruled that the petitioners are not entitled to the wage differentials as determined by the
ITF because the means employed by them in obtaining the same were violent and illegal and because in demanding higher wages the
petitioners sought the aid of a third party, which, in turn, intervened in their behalf and prohibited the vessel from sailing unless the
owner and/or operator of the vessel acceded to respondents' demand for higher wages. And as proof of this conclusion, the NSB cited
the following: (a) the entries in the petitioners Pay-Off Clearance Slip which contained the phrase "DEMANDED ITF WAGES ...";
(b) the alleged policy of the ITF in not interfering with crewmembers of a vessel unless its intervention is sought by the crewmembers
themselves; (c), the petitioners' admission that ITF acted in their behalf; and (d) the fact that the private respondent was compelled to
sign the special agreement at Vancouver, Canada.
There is nothing in the public and private respondents' pleadings, to support the allegations that the petitioners used force and violence
to secure the special agreement signed in Vancouver. British Columbia. There was no need for any form of intimidation coming from
the Filipino seamen because the Canadian Brotherhood of Railways and Transport Workers (CBRT), a strong Canadian labor union,
backed by an international labor federation was actually doing all the influencing not only on the ship-owners and employers but also
against third world seamen themselves who, by receiving lower wages and cheaper accommodations, were threatening the
employment and livelihood of seamen from developed nations.
The bases used by the respondent NSB to support its decision do not prove that the petitioners initiated a conspiracy with the ITF or
deliberately sought its assistance in order to receive higher wages. They only prove that when ITF acted in petitioners' behalf for an
increase in wages, the latter manifested their support. This would be a logical and natural reaction for any worker in whose benefit the
ITF or any other labor group had intervened. The petitioners admit that while they expressed their conformity to and their sentiments
for higher wages by means of placards, they, nevertheless, continued working and going about their usual chores. In other words, all
they did was to exercise their freedom of speech in a most peaceful way. The ITF people, in turn, did not employ any violent means to
force the private respondent to accede to their demands. Instead, they simply applied effective pressure when they intimated the
possibility of interdiction should the shipowner fail to heed the call for an upward adjustment of the rates of the Filipino seamen.
Interdiction is nothing more than a refusal of ITF members to render service for the ship, such as to load or unload its cargo, to
provision it or to perform such other chores ordinarily incident to the docking of the ship at a certain port. It was the fear of ITF
interdiction, not any action taken by the seamen on board the vessel which led the shipowners to yield.
The NSB's contusion that it is ITF's policy not to intervene with the plight of crewmembers of a vessel unless its intervention was
sought is without basis. This Court is cognizant of the fact that during the period covered by the labor controversies in Wallem
Philippines Shipping, Inc. v. Minister of Labor (102 SCRA 835 [1981]; Vir-Jen Shipping and Marine Services, Inc. v. NLRC (supra)
and these consolidated petitions, the ITF was militant worldwide especially in Canada, Australia, Scandinavia, and various European
countries, interdicting foreign vessels and demanding wage increases for third world seamen. There was no need for Filipino or other
seamen to seek ITF intervention. The ITF was waiting on its own volition in all Canadian ports, not particularly for the petitioners'
vessel but for all ships similarly situated. As earlier stated, the ITF was not really acting for the petitioners out of pure altruism. The
ITF was merely protecting the interests of its own members. The petitioners happened to be pawns in a higher and broader struggle
between the ITF on one hand and shipowners and third world seamen, on the other. To subject our seamen to criminal prosecution and
punishment for having been caught in such a struggle is out of the question.
As stated in Vir-Jen Shipping (supra):
The seamen had done no act which under Philippine law or any other civilized law would be termed illegal,
oppressive, or malicious. Whatever pressure existed, it was mild compared to accepted and valid modes of labor
activity. (at page 591)
Given these factual situations, therefore, we cannot affirm the NSB and NLRC's finding that there was violence, physical or otherwise
employed by the petitioners in demanding for additional wages. The fact that the petitioners placed placards on the gangway of their
ship to show support for ITF's demands for wage differentials for their own benefit and the resulting ITF's threatened interdiction do
not constitute violence. The petitioners were exercising their freedom of speech and expressing sentiments in their hearts when they
placed the placard We Want ITF Rates." Under the facts and circumstances of these petitions, we see no reason to deprive the seamen
of their right to freedom of expression guaranteed by the Philippine Constitution and the fundamental law of Canada where they
happened to exercise it.
As we have ruled in Wallem Phil. Shipping Inc. v. Minister of Labor, et al. supra:
62
Petitioner claims that the dismissal of private respondents was justified because the latter threatened the ship
authorities in acceding to their demands, and this constitutes serious misconduct as contemplated by the Labor Code.
This contention is now well-taken. The records fail to establish clearly the commission of any threat. But even if
there had been such a threat, respondents' behavior should not be censured because it is but natural for them to
employ some means of pressing their demands for petitioner, who refused to abide with the terms of the Special
Agreement, to honor and respect the same. They were only acting in the exercise of their rights, and to deprive them
of their freedom of expression is contrary to law and public policy. ... (at page 843)
We likewise, find the public respondents' conclusions that the acts of the petitioners in demanding and receiving wages over and
above the rates appearing in their NSB-approved contracts is in effect an alteration of their valid and subsisting contracts because the
same were not obtained through. mutual consent and without the prior approval of the NSB to be without basis, not only because the
private respondent's consent to pay additional wages was not vitiated by any violence or intimidation on the part of the petitioners but
because the said NSB-approved form contracts are not unalterable contracts that can have no room for improvement during their
effectivity or which ban any amendments during their term.
For one thing, the employer can always improve the working conditions without violating any law or stipulation.
We stated in the Vir-Jen case (supra) that:
The form contracts approved by the National Seamen Board are designed to protect Filipino seamen not foreign
shipowners who can take care of themselves. The standard forms embody the basic minimums which must be
incorporated as parts of the employment contract. (Section 15, Rule V, Rules and Regulations Implementing the
Labor Code).lâwphî1.ñèt They are not collective bargaining agreements or immutable contracts which the parties
cannot improve upon or modify in the course of the agreed period of time. To state, therefore, that the affected
seamen cannot petition their employer for higher salaries during the 12 months duration of the contract runs counter
to estabhshed principles of labor legislation. The National Labor Relations Commission, as the appellate tribunal
from the decisions of the National Seamen Board, correctly ruled that the seamen did not violate their contracts to
warrant their dismissal. (at page 589)
It is impractical for the NSB to require the petitioners, caught in the middle of a labor struggle between the ITF and owners of ocean
going vessels halfway around the world in Vancouver, British Columbia to first secure the approval of the NSB in Manila before
signing an agreement which the employer was willing to sign. It is also totally unrealistic to expect the petitioners while in Canada to
exhibit the will and strength to oppose the ITF's demand for an increase in their wages, assuming they were so minded.
An examination of Annex C of the petition, the agreement signed in Japan by the crewmembers of the M/V Grace River and a certain
M. Tabei, representative of the Japanese shipowner lends credence to the petitioners' claim that the clause "which amount(s) was
received and held by CREWMEMBERS in trust for SHIPOWNER" was an intercalation added after the execution of the agreement.
The clause appears too closely typed below the names of the 19 crewmen and their wages with no similar intervening space as that
which appears between all the paragraphs and the triple space which appears between the list of crewmembers and their wages on one
hand and the paragraph above which introduces the list, on the other. The verb "were" was also inserted above the verb "was" to make
the clause grammatically correct but the insertion of "were" is already on the same line as "Antonio Miranda and 5,221.06" where it
clearly does not belong. There is no other space where the word "were" could be intercalated. (See Rollo, page 80).
At any rate, the proposition that the petitioners should have pretended to accept the increased wages while in Vancouver but returned
them to the shipowner when they reached its country, Japan, has already been answered earlier by the Court:
Filipino seamen are admittedly as competent and reliable as seamen from any other country in the world. Otherwise,
there would not be so many of them in the vessels sailing in every ocean and sea on this globe. It is competence and
reliability, not cheap labor that makes our seamen so greatly in demand. Filipino seamen have never demanded the
same high salaries as seamen from the United States, the United Kingdom, Japan and other developed nations. But
certainly they are entitled to government protection when they ask for fair and decent treatment by their employer
and when they exercise the right to petition for improved terms of employment, especially when they feel that these
are sub-standard or are capable of improvement according to internationally accepted rules. In the domestic scene,
there are marginal employers who prepare two sets of payrolls for their employees — one in keeping with minimum
wages and the other recording the sub-standard wages that the employees really receive. The reliable employers,
however, not only meet the minimums required by fair labor standards legislation but even go away above the
minimums while earning reasonable profits and prospering. The same is true of international employment. There is
no reason why this court and the Ministry of Labor and Employment or its agencies and commissions should come
out with pronouncements based on the standards and practices of unscrupulous or inefficient shipowners, who claim
63
they cannot survive without resorting to tricky and deceptive schemes, instead of Government maintaining labor law
and jurisprudence according to the practices of honorable, competent, and law-abiding employers, domestic or
foreign. (Vir-Jen Shipping, supra, pp. 587-588)
It is noteworthy to emphasize that while the Intemational Labor Organization (ILO) set the minimum basic wage of able seamen at
US$187.00 as early as October 1976, it was only in 1979 that the respondent NSB issued Memo Circular No. 45, enjoining all
shipping companies to adopt the said minimum basic wage. It was correct for the respondent NSB to state in its decision that when the
petitioners entered into separate contracts between 1977-1978, the monthly minimum basic wage for able seamen ordered by NSB
was still fixed at US$130.00. However, it is not the fault of the petitioners that the NSB not only violated the Labor Code which
created it and the Rules and Regulations Implementing the Labor Code but also seeks to punish the seamen for a shortcoming of NSB
itself.
Article 21(c) of the Labor Code, when it created the NSB, mandated the Board to "(O)btain the best possible terms and conditions of
employment for seamen."
Section 15, Rule V of Book I of the Rules and Regulations Implementing the Labor Code provides:
Sec. 15. Model contract of employment. — The NSB shall devise a model contract of employment which shall
embody all the requirements of pertinent labor and social legislations and the prevailing standards set by applicable
International Labor Organization Conventions. The model contract shall set the minimum standards of the terms and
conditions to govern the employment of Filipinos on board vessels engaged in overseas trade. All employers of
Filipinos shall adopt the model contract in connection with the hiring and engagement of the services of Filipino
seafarers, and in no case shall a shipboard employment contract be allowed where the same provides for benefits
less than those enumerated in the model employment contract, or in any way conflicts with any other provisions
embodied in the model contract.
Section 18 of Rule VI of the same Rules and Regulations provides:
Sec. 18. Basic minimum salary of able-seamen. — The basic minimum salary of seamen shall be not less than the
prevailing minimxun rates established by the International Labor Organization or those prevailing in the country
whose flag the employing vessel carries, whichever is higher. However, this provision shall not apply if any
shipping company pays its crew members salaries above the minimum herein provided.
Section 8, Rule X, Book I of the Omnibus Rules provides:
Section 8. Use of standard format of service agreement. — The Board shall adopt a standard format of service
agreement in accordance with pertinent labor and social legislation and prevailing standards set by applicable
International Labor Organization Conventions. The standard format shall set the minimum standard of the terms and
conditions to govern the employment of Filipino seafarers but in no case shall a shipboard employment contract
(sic), or in any way conflict with any other provision embodied in the standard format.
It took three years for the NSB to implement requirements which, under the law, they were obliged to follow and execute
immediately. During those three years, the incident in Vancouver happened. The terms and conditions agreed upon in Vancouver were
well within ILO rates even if they were above NSB standards at the time.
The sanctions applied by NSB and affirmed by NLRC are moreover not in keeping with the basic premise that this Court stressed in
the Vir-Jen Shipping case (supra) that the Ministry now the Department of Labor and Employment and all its agencies exist primarily
for the workingman's interest and the nation's as a whole.
Implicit in these petitions and the only reason for the NSB to take the side of foreign shipowners against Filipino seamen is the
"killing the goose which lays the golden eggs" argument. We reiterate the ruling of the Court in Vir-Jen Shipping (supra)
There are various arguments raised by the petitioners but the common thread running through all of them is the
contention, if not the dismal prophecy, that if the respondent seamen are sustained by this Court, we would in effect
"kill the hen that lays the golden egg." In other words, Filipino seamen, admittedly among the best in the world,
should remain satisfied with relatively lower if not the lowest, international rates of compensation, should not agitate
for higher wages while their contracts of employment are subsisting, should accept as sacred, iron clad, and
immutable the side contracts which require: them to falsely pretend to be members of international labor federations,
64
pretend to receive higher salaries at certain foreign ports only to return the increased pay once the ship leaves that
port, should stifle not only their right to ask for improved terms of employment but their freedom of speech and
expression, and should suffer instant termination of employment at the slightest sign of dissatisfaction with no
protection from their Government and their courts. Otherwise, the petitioners contend that Filipinos would no longer
be accepted as seamen, those employed would lose their jobs, and the still unemployed would be left hopeless.
This is not the first time and it will not be the last where the threat of unemployment and loss of jobs would be used to argue against
the interests of labor; where efforts by workingmen to better their terms of employment would be characterized as prejudicing the
interests of labor as a whole.
xxx xxx xxx
Unionism, employers' liability acts, minimum wages, workmen's compensation, social security and collective
bargaining to name a few were all initially opposed by employers and even well meaning leaders of government and
society as "killing the hen or goose which lays the golden eggs." The claims of workingmen were described as
outrageously injurious not only to the employer but more so to the employees themselves before these claims or
demands were established by law and jurisprudence as "rights" and before these were proved beneficial to
management, labor, and the national as a whole beyond reasonable doubt.
The case before us does not represent any major advance in the rights of labor and the workingmen. The private
respondents merely sought rights already established. No matter how much the petitioner-employer tries to present
itself as speaking for the entire industry, there is no evidence that it is typical of employers hiring Filipino seamen or
that it can speak for them.
The contention that manning industries in the Philippines would not survive if the instant case is not decided in favor
of the petitioner is not supported by evidence. The Wallem case was decided on February 20, 1981. There have been
no severe repercussions, no drying up of employment opportunities for seamen, and none of the dire consequences
repeatedly emphasized by the petitioner. Why should Vir-Jen be an exception?
The wages of seamen engaged in international shipping are shouldered by the foreign principal. The local manning
office is an agent whose primary function is recruitment and who usually gets a lump sum from the shipowner to
defray the salaries of the crew. The hiring of seamen and the determination of their compensation is subject to the
interplay of various market factors and one key factor is how much in terms of profits the local manning office and
the foreign shipowner may realize after the costs of the voyage are met. And costs include salaries of officers and
crew members. (at pp. 585-586)
The Wallem Shipping case, was decided in 1981. Vir-Jen Shipping was decided in 1983. It is now 1989. There has'been no drying up
of employment opportunities for Filipino seamen. Not only have their wages improved thus leading ITF to be placid and quiet all
these years insofar as Filipinos are concerned but the hiring of Philippine seamen is at its highest level ever.
Reporting its activities for the year 1988, the Philippine Overseas Employment Administration (POEA) stated that there will be an
increase in demand for seamen based overseas in 1989 boosting the number to as high as 105,000. This will represent a 9.5 percent
increase from the 1988 aggregate. (Business World, News Briefs, January 11, 1989 at page 2) According to the POEA, seabased
workers numbering 95,913 in 1988 exceeded by a wide margin of 28.15 percent the year end total in 1987. The report shows that sea-
based workers posted bigger monthly increments compared to those of landbased workers. (The Business Star, Indicators, January 11,
1988 at page 2)
Augmenting this optimistic report of POEA Administrator Tomas Achacoso is the statement of Secretary of Labor Franklin M. Drilon
that the Philippines has a big jump over other crewing nations because of the Filipinos' abilities compared with any European or
westem crewing country. Drilon added that cruise shipping is also a growing market for Filipino seafarers because of their flexibility
in handling odd jobs and their expertise in handling almost all types of ships, including luxury liners. (Manila Bulletin, More Filipino
Seamen Expected Development, December 27, 1988 at page 29).lâwphî1.ñèt Parenthetically, the minimum monthly salary of able
bodied seamen set by the ILO and adhered to by the Philippines is now $276.00 (id.) more than double the $130.00 sought to be
enforced by the public respondents in these petitions.
The experience from 1981 to the present vindicates the finding in Vir-Jen Shipping that a decision in favor of the seamen would not
necessarily mean severe repercussions, drying up of employment opportunities for seamen, and other dire consequences predicted by
manning agencies and recruiters in the Philippines.
65
From the foregoing, we find that the NSB and NLRC committed grave abuse of discretion in finding the petitioners guilty of using
intimidation and illegal means in breaching their contracts of employment and punishing them for these alleged offenses.
Consequently, the criminal prosecutions for estafa in G.R. Nos. 57999 and 58143-53 should be dismissed.
WHEREFORE, the petitions are hereby GRANTED. The decisions of the National Seamen Board and National Labor Relations
Commission in G. R. Nos. 64781-99 are REVERSED and SET ASIDE and a new one is entered holding the petitioners not guilty of
the offenses for which they were charged. The petitioners' suspension from the National Seamen Board's Registry for three (3) years is
LIFTED. The private respondent is ordered to pay the petitioners their earned but unpaid wages and overtime pay/allowance from
November 1, 1978 to December 14, 1978 according to the rates in the Special Agreement that the parties entered into in Vancouver,
Canada.
The criminal cases for estafa, subject matter of G. R. Nos. 57999 and 58143-53, are ordered DISMISSED.
SO ORDERED.
G.R. No. 205727. January 18, 2017.*

RUTCHER T. DAGASDAS, petitioner, vs. GRAND PLACEMENT AND GENERAL SERVICES CORPORATION,
respondent.
Remedial Law; Civil Procedure; Appeals; Petition for Review on Certiorari; As a rule, only questions of law may be raised in a
petition under Rule 45 of the Rules of Court. However, this rule allows certain exceptions, including a situation where the findings of
fact of the courts or tribunals below are conflicting.—As a rule, only questions of law may be raised in a petition under Rule 45 of the
Rules of Court. However, this rule allows certain exceptions, including a situation where the findings of fact of the courts or tribunals
below are conflicting. In this case, the CA and the NLRC arrived at divergent factual findings anent Dagasdas’ termination. As such,
the Court deems it necessary to reexamine these findings and determine whether the CA has sufficient basis to annul the NLRC
Decision, and set aside its finding that Dagasdas was illegally dismissed from work.
Labor Law; Management Prerogative; It is well-settled that employers have the prerogative to impose standards on the work
quantity and quality of their employees and provide measures to ensure compliance therewith.—It is well-settled that employers have
the prerogative to impose standards on the work quantity and quality of their employees and provide measures to ensure compliance
therewith. Noncompliance with work standards may thus be a valid cause for dismissing an employee. Nonetheless, to ensure that
employers will not abuse their prerogatives, the same is tempered by security of tenure whereby the employees are guaranteed
substantive and procedural due process before they are dismissed from work.
Same; Security of Tenure; Lex Loci Contractus; Since the employment contracts of Overseas Filipino Workers (OFWs) are
perfected in the Philippines, and following the principle of lex loci contractus (the law of the place where the contract is made), these
contracts are
_______________
* FIRST DIVISION.

66
530
Dagasdas vs. Grand Placement and GeneralServices Corporation
governed by our laws, primarily the Labor Code of the Philippines and its implementing rules and regulations (IRR); Thus,
even if a Filipino is employed abroad, he or she is entitled to security of tenure, among other constitutional rights. —Security of tenure
remains even if employees, particularly the Overseas Filipino Workers (OFWs), work in a different jurisdiction. Since the
employment contracts of OFWs are perfected in the Philippines, and following the principle of lex loci contractus (the law of the place
where the contract is made), these contracts are governed by our laws, primarily the Labor Code of the Philippines and its
implementing rules and regulations. At the same time, our laws generally apply even to employment contracts of OFWs as our
Constitution explicitly provides that the State shall afford full protection to labor, whether local or overseas. Thus, even if a Filipino is
employed abroad, he or she is entitled to security of tenure, among other constitutional rights.
Same; Probationary Employees; As regards a probationary employee, his or her dismissal may be allowed only if there is just
cause or such reason to conclude that the employee fails to qualify as regular employee pursuant to reasonable standards made
known to the employee at the time of engagement.—Even assuming that Dagasdas was still a probationary employee when he was
terminated, his dismissal must still be with a valid cause. As regards a probationary employee, his or her dismissal may be allowed
only if there is just cause or such reason to conclude that the employee fails to qualify as regular employee pursuant to reasonable
standards made known to the employee at the time of engagement. Here, ITM failed to prove that it informed Dagasdas of any
predetermined standards from which his work will be gauged. In the contract he signed while still in the Philippines, Dagasdas was
employed as Network Technician; on the other hand, his new contract indicated that he was employed as Superintendent. However, no
job description — or such duties and responsibilities attached to either position — was adduced in evidence. It thus means that the job
for which Dagasdas was hired was not definite from the beginning. Indeed, Dagasdas was not sufficiently informed of the work
standards for which his performance will be measured. Even his position based on the job title given him was not fully explained by
his employer. Simply put, ITM failed to show that it set and communicated work standards for Dagasdas to follow, and on which his
efficiency (or the lack thereof) may be determined.

531
VOL. 814, JANUARY 18, 2017 531
Same; Employment Contracts; Overseas Filipino Workers; Unless the employment contract of an Overseas Filipino Worker
(OFW) is processed through the Philippine Overseas Employment Administration (POEA), the same does not bind the concerned
OFW because if the contract is not reviewed by the POEA, certainly the State has no means of determining the suitability of foreign
laws to our overseas workers.—The new contract was not shown to have been processed through the POEA. Under our Labor Code,
employers hiring OFWs may only do so through entities authorized by the Secretary of the Department of Labor and Employment.
Unless the employment contract of an OFW is processed through the POEA, the same does not bind the concerned OFW because if
the contract is not reviewed by the POEA, certainly the State has no means of determining the suitability of foreign laws to our
overseas workers.
Same; Termination of Employment; Overseas Filipino Workers; The employer must inform the employee of the cause or causes
for his or her termination, and thereafter, the employer’s decision to dismiss him. Aside from the notice requirement, the employee
must be accorded the opportunity to be heard.—A valid dismissal requires substantive and procedural due process. As regards the
latter, the employer must give the concerned employee at least two notices before his or her termination. Specifically, the employer
must inform the employee of the cause or causes for his or her termination, and thereafter, the employer’s decision to dismiss him.
Aside from the notice requirement, the employee must be accorded the opportunity to be heard. Here, no prior notice of purported
infraction, and such opportunity to explain on any accusation against him was given to Dagasdas. He was simply given a notice of
termination. In fact, it appears that ITM intended not to comply with the twin notice requirement. As above quoted, under the new
contract, ITM reserved in its favor the right to terminate the contract without serving any notice to Dagasdas in specified cases, which
included such situation where the employer decides to dismiss the employee within the probationary period. Without doubt, ITM
violated the due process requirement in dismissing an employee.
Same; Quitclaims; Generally, the employee’s waiver or quitclaim cannot prevent the employee from demanding benefits to
which he or she is entitled, and from filing an illegal dismissal case.—Generally, the employee’s waiver or quitclaim cannot prevent
the

532
employee from demanding benefits to which he or she is entitled, and from filing an illegal dismissal case. This is because
waiver or quitclaim is looked upon with disfavor, and is frowned upon for being contrary to public policy. Unless it can be established
that the person executing the waiver voluntarily did so, with full understanding of its contents, and with reasonable and credible
67
consideration, the same is not a valid and binding undertaking. Moreover, the burden to prove that the waiver or quitclaim was
voluntarily executed is with the employer.
Miguel C. Inocencio, Jr. for petitioner.
Neal J. Chua for respondent.
DEL CASTILLO, J.:

Before us is a Petition for Review on Certiorari assailing the September 26, 2012 Decision 1 of the Court of Appeals (CA) in C.A.-
G.R. S.P. No. 115396, which annulled and set aside the March 29, 2010 2 and June 2, 20103 Resolutions of the National Labor
Relations Commission (NLRC) in NLRC LAC OFW-L-02-000071-10, and concomitantly reinstated the November 27, 2009
Decision4 of the Labor Arbiter (LA) dismissing the Complaint for lack of merit.
_______________
1 CA Rollo, pp. 312-320; penned by Associate Justice Manuel M. Barrios and concurred in by Associate Justices Remedios A.
Salazar-Fernando and Normandie B. Pizarro.
2 Id., at pp. 128-135; penned by Commissioner Napoleon M. Menese and concurred in by Presiding Commissioner Raul T.
Aquino and Commissioner Teresita D. Castillon-Lora.
3 Id., at pp. 145-146.
4 Id., at pp. 103-108; penned by Labor Arbiter Virginia T. Luyas-Azarraga.

533
VOL. 814, JANUARY 18, 2017 533
Also challenged is the January 28, 2013 Resolution5denying the Motion for Reconsideration filed by Rutcher T. Dagasdas
(Dagasdas).

Factual Antecedents

Grand Placement and General Services Corp. (GPGS) is a licensed recruitment or placement agency in the Philippines while Saudi
Aramco (Aramco) is its counterpart in Saudi Arabia. On the other hand, Industrial & Management Technology Methods Co. Ltd.
(ITM) is the principal of GPGS, a company existing in Saudi Arabia.6
In November 2007, GPGS, for and on behalf of ITM, employed Dagasdas as Network Technician. He was to be deployed in Saudi
Arabia under a one-year contract7 with a monthly salary of Saudi Riyal (SR) 5,112.00. Before leaving the Philippines, Dagasdas
underwent skill training8 and predeparture orientation as Network Technician. 9Nonetheless, his Job Offer 10 indicated that he was
accepted by Aramco and ITM for the position of “Supt.”
Dagasdas contended that although his position under his contract was as a Network Technician, he actually applied for and was
engaged as a Civil Engineer considering that his transcript of records, 11 diploma12 as well as his curriculum vitae13 showed that he had
a degree in Civil Engineering, and his work experiences were all related to this field. Purportedly, the position of Network Technician
was only for the
_______________
5 Id., at pp. 353-355.

6 Id., at pp. 21, 38.
7 Id., at pp. 62-65.
8 Id., at p. 66.
9 Id., at p. 67.
10 Id., at pp. 60-61.
11 Id., at pp. 54-57.
12 Id., at p. 58.
13 Id., at pp. 49-52.

534
purpose of securing a visa for Saudi Arabia because ITM could not support visa application for Civil Engineers. 14
68
On February 8, 2008, Dagasdas arrived in Saudi Arabia. 15 Thereafter, he signed with ITM a new employment contract 16 which
stipulated that the latter contracted him as Superintendent or in any capacity within the scope of his abilities with salary of SR5,112.00
and allowance of SR2,045.00 per month. Under this contract, Dagasdas shall be placed under a three-month probationary period; and
this new contract shall cancel all contracts prior to its date from any source.
On February 11, 2008, Dagasdas reported at ITM’s worksite in Khurais, Saudi Arabia. 17 There, he was allegedly given tasks suited
for a Mechanical Engineer, which were foreign to the job he applied for and to his work experience. Seeing that he would not be able
to perform well in his work, Dagasdas raised his concern to his Supervisor in the Mechanical Engineering Department. Consequently,
he was transferred to the Civil Engineering Department, was temporarily given a position as Civil Construction Engineer, and was
issued an identification card good for one month. Dagasdas averred that on March 9, 2008, he was directed to exit the worksite but
Rashid H. Siddiqui (Siddiqui), the Site Coordinator Manager, advised him to remain in the premises, and promised to secure him the
position he applied for. However, before Dagasdas’ case was investigated, Siddiqui had severed his employment with ITM. 18
In April 2008, Dagasdas returned to Al-Khobar and stayed at the ITM Office.19 Later, ITM gave him a termination no-
_______________
14 Id., at p. 39.
15 Id., at p. 75.
16 Id., at pp. 68-72.
17 Id., at p. 75.
18 Id., at pp. 39-40.
19 Id., at p. 40.

535
VOL. 814, JANUARY 18, 2017 535
tice20 indicating that his last day of work was on April 30, 2008, and he was dismissed pursuant to clause 17.4.3 of his contract, which
provided that ITM reserved the right to terminate any employee within the three-month probationary period without need of any
notice to the employee.21
Before his repatriation, Dagasdas signed a Statement of Quitclaim 22 with Final Settlement23 stating that ITM paid him all the
salaries and benefits for his services from February 11, 2008 to April 30, 2008 in the total amount of SR7,156.80, and ITM was
relieved from all financial obligations due to Dagasdas.
On June 24, 2008, Dagasdas returned to the Philippines. 24 Thereafter, he filed an illegal dismissal case against GPGS, ITM, and
Aramco.
Dagasdas accused GPGS, ITM, and Aramco of misrepresentation, which resulted in the mismatch in the work assigned to him. He
contended that such claim was supported by exchanges of electronic mail (e-mail) establishing that GPGS, ITM, and Aramco were
aware of the job mismatch that had befallen him. 25 He also argued that although he was engaged as a project employee, he was still
entitled to security of tenure for the duration of his contract. He maintained that GPGS, ITM, and Aramco merely invented “imaginary
cause/s” to terminate him. Thus, he claimed that he was dismissed without cause and due process of law. 26
GPGS, ITM, and Aramco countered that Dagasdas was legally dismissed. They explained that Dagasdas was aware that he was
employed as Network Technician but he could not
_______________
20 Id., at p. 81.
21 Id., at p. 70.
22 Id., at p. 82.
23 Id., at pp. 83-84.
24 Id., at p. 21.
25 Id., at pp. 92-93.
26 Id., at p. 42.

536
perform his work in accordance with the standards of his employer. They added that Dagasdas was informed of his poor performance,
and he conformed to his termination as evidenced by his quitclaim. 27 They also stressed that Dagasdas was only a probationary
employee since he worked for ITM for less than three months.28

69

On November 27, 2009, the LA dismissed the case for lack of merit.
The LA pointed out that when Dagasdas signed his new employment contract in Saudi Arabia, he accepted its stipulations,
including the fact that he had to undergo probationary status. She declared that this new contract was more advantageous for Dagasdas
as his position was upgraded to that of a Superintendent, and he was likewise given an allowance of SR2,045.00 aside from his salary
of SR5,112.00 per month. According to the LA, for being more favorable, this new contract was not prohibited by law. She also
decreed that Dagasdas fell short of the expected work performance; as such, his employer dismissed him as part of its management
prerogative.
Consequently, Dagasdas appealed to the NLRC.

Ruling of the National Labor
Relations Commission

On March 29, 2010, the NLRC issued a Resolution finding Dagasdas’ dismissal illegal. The decretal portion of the NLRC
Resolution reads:
WHEREFORE, the decision appealed from is hereby REVERSED, and the respondent[s] are hereby
_______________
27 Id., at pp. 22-24.

28 Id., at p. 88.

537
VOL. 814, JANUARY 18, 2017 537
ordered to pay the complainant the salaries corresponding to the unexpired portion of his contract amounting to SR46,008 (SR5112 x
9 months, or from May 1, 2008 to January 31, 2009), plus ten percent (10%) thereof as attorney’s fees. The respondents are jointly and
severally liable for the judgment awards, which are payable in Philippine currency converted on the basis of the exchange rate
prevailing at the time of actual payment.
SO ORDERED.29

The NLRC stated that Dagasdas, who was a Civil Engineering graduate, was “recruited on paper” by GPGS as Network
Technician but the real understanding between the parties was to hire him as Superintendent. It held that GPGS erroneously recruited
Dagasdas, and failed to inform him that he was hired as a “Mechanical Superintendent” meant for a Mechanical Engineer. It declared
that while ITM has the prerogative to continue the employment of individuals only if they were qualified, Dagasdas’ dismissal
amounted to illegal termination since the mismatch between his qualifications and the job given him was no fault of his.
The NLRC added that Dagasdas should not be made to suffer the consequences of the miscommunication between GPGS and
ITM considering that the government obligates employment agencies recruiting Filipinos for overseas work to “select only medically
and technically qualified recruits.”30
On June 2, 2010, the NLRC denied the Motion for Reconsideration of its Resolution dated March 29, 2010.
Undeterred, GPGS filed a Petition for Certiorari with the CA ascribing grave abuse of discretion on the part of the NLRC in
ruling that Dagasdas was illegally dismissed.
_______________
29 Id., at p. 134.
30 Id., at p. 133.

538

Ruling of the Court of Appeals

On September 26, 2012, the CA set aside the NLRC Resolutions and reinstated the LA Decision dismissing the case for lack of
merit.
The CA could not accede to the conclusion that the real agreement between the parties was to employ Dagasdas as Superintendent.
It stressed that Dagasdas left the Philippines pursuant to his employment contract indicating that he was to work as a Network
Technician; when he arrived in Saudi Arabia and signed a new contract for the position of a Superintendent, the agreement was with
70
no participation of GPGS, and said new contract was only between Dagasdas and ITM. It emphasized that after commencing work as
Superintendent, Dagasdas realized that he could not perform his tasks, and “[s]eemingly, it was [Dagasdas] himself who voluntarily
withdrew from his assigned work for lack of competence.” 31 It faulted the NLRC for falling to consider that Dagasdas backed out as
Superintendent on the excuse that the same required the skills of a Mechanical Engineer.
In holding that Dagasdas’ dismissal was legal, the CA gave credence to Dagasdas’ Statement of Quitclaim and Final Settlement. It
ruled that for having voluntarily accepted money from his employer, Dagasdas accepted his termination and released his employer
from future financial obligations arising from his past employment with it.
On January 28, 2013, the CA denied Dagasdas’ Motion for Reconsideration.
Hence, Dagasdas filed this Petition raising these grounds:
[1] THE HONORABLE COURT OF APPEALS COMMITIED A REVERSIBLE ERROR WHEN IT REVERSED THE
FACTUAL FINDINGS OF THE NATIONAL LABOR RELATIONS COMMISSION.32
_______________
31 Id., at p. 318.
32 Rollo, p. 26.

539
VOL. 814, JANUARY 18, 2017 539
[2] THE HONORABLE COURT OF APPEALS PATENTLY ERRED WITH ITS FINDINGS THAT THE CONTRACT SIGNED
BY DAGASDAS IN AL KHOBAR IS MORE ADVANTAGEOUS TO THE LATTER AND THAT IT WAS [H]IS PERSONAL
ACT OR DECISION [TO SIGN] THE SAME.33
[3] THE HONORABLE COURT OF APPEALS ALSO GRAVELY ERRED IN FAULTING THE NLRC FOR ITS FAILURE TO
INVALIDATE OR DISCUSS THE FINAL SETTLEMENT AND STATEMENT OF QUITCLAIM SIGNED BY [DAGASDAS]. 34

Dagasdas reiterates that he was only recruited “on paper” as a Network Technician but the real agreement between him and his
employer was to engage him as Superintendent in the field of Civil Engineering, he being a Civil Engineering graduate with vast
experience in said field. He stresses that he was terminated because of a “discipline mismatch” as his employer actually needed a
Mechanical (Engineer) Superintendent, not a Civil Engineer.
In addition, Dagasdas insists that he did not voluntarily back out from his work. If not for the discipline mismatch, he could have
performed his job as was expected of him. He also denies that the new employment contract he signed while in Saudi Arabia was
more advantageous to him since the basic salary and allowance stipulated therein are just the same with that in his Job Offer. He
argues that the new contract was even disadvantageous because it was inserted therein that he still had to undergo probationary status
for three months.
Finally, Dagasdas contends that the new contract he signed while in Saudi Arabia was void because it was not approved by the
Philippine Overseas Employment Administration (POEA). He also claims that CA should have closely
_______________
33 Id., at p. 29.
34 Id., at p. 32.

540
examined his quitclaim because he only signed it to afford his plane ticket for his repatriation.
On the other hand, GPGS maintains that Dagasdas was fully aware that he applied for and was accepted as Network Technician. It
also stresses that it was Dagasdas himself who decided to accept from ITM a new job offer when he arrived in Saudi Arabia. It further
declares that Dagasdas’ quitclaim is valid as there is no showing that he was compelled to sign it.

Issue

Was Dagasdas validly dismissed from work?

Our Ruling

The Petition is with merit.
71
As a rule, only questions of law may be raised in a petition under Rule 45 of the Rules of Court. However, this rule allows certain
exceptions, including a situation where the findings of fact of the courts or tribunals below are conflicting. 35 In this case, the CA and
the NLRC arrived at divergent factual findings anent Dagasdas’ termination. As such, the Court deems it necessary to reexamine these
findings and determine whether the CA has sufficient basis to annul the NLRC Decision, and set aside its finding that Dagasdas was
illegally dismissed from work.
Moreover, it is well-settled that employers have the prerogative to impose standards on the work quantity and quality of their
employees and provide measures to ensure compliance therewith. Noncompliance with work standards may thus be a valid cause for
dismissing an employee. Nonetheless, to ensure that employers will not abuse their prerogatives, the same is tempered by security of
tenure whereby the
_______________
35 Unicol Management Services, Inc. v. Malipot, G.R. No. 206562, January 21, 2015, 747 SCRA 191, 202-203.

541
VOL. 814, JANUARY 18, 2017 541
employees are guaranteed substantive and procedural due process before they are dismissed from work. 36
Security of tenure remains even if employees, particularly the Overseas Filipino Workers (OFW), work in a different jurisdiction.
Since the employment contracts of OFWs are perfected in the Philippines, and following the principle of lex loci contractus (the law
of the place where the contract is made), these contracts are governed by our laws, primarily the Labor Code of the Philippines and its
implementing rules and regulations.37 At the same time, our laws generally apply even to employment contracts of OFWs as our
Constitution explicitly provides that the State shall afford full protection to labor, whether local or overseas. 38 Thus, even if a Filipino
is employed abroad, he or she is entitled to security of tenure, among other constitutional rights. 39
In this case, prior to his deployment and while still in the Philippines, Dagasdas was made to sign a POEA-approved contract with
GPGS, on behalf of ITM; and upon arrival in Saudi Arabia, ITM made him sign a new employment contract. Nonetheless, this new
contract, which was used as basis for dismissing Dagasdas, is void.
First, Dagasdas’ new contract is in clear violation of his right to security of tenure.
Under the Labor Code of the Philippines the following are the just causes for dismissing an employee:
_______________
36 Sameer Overseas Placement Agency, Inc. v. Cabiles, G.R. No. 170139, August 5, 2014, 732 SCRA 22, 41-42.
37 Id., at p. 42.
38 Constitution, Article XIII.
Section 3. 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.
39 Industrial Personnel & Management Services, Inc. (IPAMS) v. De Vera, G.R. No. 205703, March 7, 2016, 785 SCRA 562,
581.

542
ARTICLE 297. [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 representative; and
(e) Other causes analogous to the foregoing.40

However, per the notice of termination given to Dagasdas, ITM terminated him for violating clause 17.4.3 of his new
contract, viz.:
17.4 The Company reserves the right to terminate this agreement without serving any notice to the Consultant in the following
cases:
x x x x
17.4.3 If the Consultant is terminated by company or its client within the probation period of 3 months. 41

72
Based on the foregoing, there is no clear justification for the dismissal of Dagasdas other than the exercise of ITM’s right to
terminate him within the probationary period.
_______________
40 Labor Code of the Philippines, Amended and Renumbered, July 21, 2015.
41 CA Rollo, p. 70.

543
VOL. 814, JANUARY 18, 2017 543
While our Civil Code recognizes that parties may stipulate in their contracts such terms and conditions as they may deem
convenient, these terms and conditions must not be contrary to law, morals, good customs, public order or policy. 42 The above cited
clause is contrary to law because as discussed, our Constitution guarantees that employees, local or overseas, are entitled to security of
tenure. To allow employers to reserve a right to terminate employees without cause is violative of this guarantee of security of tenure.
Moreover, even assuming that Dagasdas was still a probationary employee when he was terminated, his dismissal must still be
with a valid cause. As regards a probationary employee, his or her dismissal may be allowed only if there is just cause or such reason
to conclude that the employee fails to qualify as regular employee pursuant to reasonable standards made known to the employee at
the time of engagement.43
Here, ITM failed to prove that it informed Dagasdas of any predetermined standards from which his work will be gauged. 44 In the
contract he signed while still in the Philippines, Dagsadas was employed as Network Technician; on the other hand, his new contract
indicated that he was employed as Superintendent. However, no job description — or such duties and responsibilities attached to
either position — was adduced in evidence. It thus means that the job for which Dagasdas was hired was not definite from the
beginning.
Indeed, Dagasdas was not sufficiently informed of the work standards for which his performance will be measured. Even his
position based on the job title given him was not fully
_______________
42 Civil Code of the Philippines.

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. (1255a)
44 Id.

544
explained by his employer. Simply put, ITM failed to show that it set and communicated work standards for Dagasdas to follow, and
on which his efficiency (or the lack thereof) may be determined.
Second, the new contract was not shown to have been processed through the POEA. Under our Labor Code, employers hiring
OFWs may only do so through entities authorized by the Secretary of the Department of Labor and Employment. 45 Unless the
employment contract of an OFW is processed through the POEA, the same does not bind the concerned OFW because if the contract
is not reviewed by the POEA, certainly the State has no means of determining the suitability of foreign laws to our overseas workers. 46
This new contract also breached Dagasdas’ original contract as it was entered into even before the expiration of the original
contract approved by the POEA. Therefore, it cannot supersede the original contract; its terms and conditions, including reserving in
favor of the employer the right to terminate an employee without notice during the probationary period, are void. 47
Third, under this new contract, Dagasdas was not afforded procedural due process when he was dismissed from work.
As cited above, a valid dismissal requires substantive and procedural due process. As regards the latter, the employer must give
the concerned employee at least two notices before
_______________
45 Article 18. Ban on Direct-Hiring.—No employer may hire a Filipino worker for overseas employment except through the
Boards and entities authorized by the Secretary of Labor. Direct-hiring by members of the diplomatic corps, international
organizations and such other employers as may be allowed by the Secretary of Labor is exempted from this provision. (Labor Code of
the Philippines, Amended & Renumbered, July 21, 2015)
46 Supra note 39.
47 Datuman v. First Cosmopolitan Manpower and Promotion Services, Inc., 591 Phil. 662, 673-674; 571 SCRA 41, 54-55
(2008).
73

545
VOL. 814, JANUARY 18, 2017 545
his or her termination. Specifically, the employer must inform the employee of the cause or causes for his or her termination, and
thereafter, the employer’s decision to dismiss him. Aside from the notice requirement, the employee must be accorded the opportunity
to be heard.48
Here, no prior notice of purported infraction, and such opportunity to explain on any accusation against him was given to
Dagasdas. He was simply given a notice of termination. In fact, it appears that ITM intended not to comply with the twin notice
requirement. As above quoted, under the new contract, ITM reserved in its favor the right to terminate the contract without serving
any notice to Dagasdas in specified cases, which included such situation where the employer decides to dismiss the employee within
the probationary period. Without doubt, ITM violated the due process requirement in dismissing an employee.
Lastly, while it is shown that Dagasdas executed a waiver in favor of his employer, the same does not preclude him from filing this
suit.
Generally, the employee’s waiver or quitclaim cannot prevent the employee from demanding benefits to which he or she is
entitled, and from filing an illegal dismissal case. This is because waiver or quitclaim is looked upon with disfavor, and is frowned
upon for being contrary to public policy. Unless it can be established that the person executing the waiver voluntarily did so, with full
understanding of its contents, and with reasonable and credible consideration, the same is not a valid and binding undertaking.
Moreover, the burden to prove that the waiver or quitclaim was voluntarily executed is with the employer. 49
_______________
49 Universal Staffing Services, Inc. v. National Labor Relations Commission, 581 Phil. 199, 209-210; 559 SCRA 221, 232
(2008).
48 EDI-Staffbuilders International, Inc. v. National Labor Relations Commission, 563 Phil. 1, 28-29; 537 SCRA 409, 436 (2007).

546
In this case, however, neither did GPGS nor its principal, ITM, successfully discharged its burden. GPGS and/or ITM failed to
show that Dagasdas indeed voluntarily waived his claims against the employer.
Indeed, even if Dagasdas signed a quitclaim, it does not necessarily follow that he freely and voluntarily agreed to waive all his
claims against his employer. Besides, there was no reasonable consideration stipulated in said quitclaim considering that it only
determined the actual payment due to Dagasdas from February 11, 2008 to April 30, 2008. Verily, this quitclaim, under the semblance
of a final settlement, cannot absolve GPGS nor ITM from liability arising from the employment contract of Dagasdas. 50
All told, the dismissal of Dagasdas was without any valid cause and due process of law. Hence, the NLRC properly ruled that
Dagasdas was illegally dismissed. Evidently, it was an error on the part of the CA to hold that the NLRC committed grave abuse of
discretion amounting to lack or excess of jurisdiction when the NLRC ruled for Dagasdas.
WHEREFORE, the Petition is GRANTED. The Decision dated September 26, 2012 and Resolution dated January 28, 2013 of
the Court of Appeals in C.A.-G.R. S.P. No. 115396 are REVERSED and SET ASIDE. Accordingly, the March 29, 2010 and June 2,
2010 Resolutions of the National Labor Relations Commission in NLRC LAC OFW-L-02-000071-10 are REINSTATED.
SO ORDERED.
Sereno (CJ., Chairperson), Leonardo-De Castro, Perlas-Bernabe and Caguioa, JJ., concur.
Petition granted, judgment and resolution reversed and set aside.
_______________
50 Id.

547
VOL. 814, JANUARY 18, 2017 547
Notes.—It is acknowledged that an employer has free rein and enjoys a wide latitude of discretion to regulate all aspects of
employment, including the prerogative to instill discipline on his employees and to impose penalties, including dismissal, if warranted,
upon erring employees. (Caong, Jr. vs. Regualos, 640 SCRA 597 [2011])
The law protects both the welfare of employees and the prerogatives of management. (The University of the Immaculate
Conception vs. National Labor Relations Commission, 640 SCRA 608 [2011])

74
——o0o——
G.R. No. 170139. August 5, 2014.*
SAMEER OVERSEAS PLACEMENT AGENCY, INC., petitioner, vs. JOY C. CABILES, respondent.
Labor Law; Termination of Employment; Employers cannot be compelled to retain the services of an employee who is guilty of
acts that are inimical to the interest of the employer.—Indeed, employers have the prerogative to impose productivity and quality
standards at work. They may also impose reasonable rules to ensure that the employees comply with these standards. Failure to
comply may be a just cause for their dismissal. Certainly, employers cannot be compelled to retain the services of an employee who is
guilty of acts that are inimical to the interest of the employer. While the law acknowledges the plight and vulnerability of workers, it
does not “authorize the oppression or self-destruction of the employer.” Management prerogative is recognized in law and in our
jurisprudence. This prerogative, however, should not be abused. It is “tempered with the employee’s right to security of tenure.”
Workers are entitled to substantive and procedural due process before termination. They may not be removed from employment
without a valid or just cause as determined by law and without going through the proper procedure.
Same; Same; Inefficiency; 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 to the employee; and 3) the communication was made at a reasonable time prior to the
employee’s performance assessment.—The burden of proving that there is just cause for termination is on the employer. “The
employer must affirmatively show rationally adequate evidence that the dismissal was for a justifiable cause.” Failure to show that
there was valid or just cause for termination would necessarily mean that the dismissal was illegal. 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
_______________
* EN BANC.
23be judged; 2) the standards of conduct and workmanship must have been communicated to the employee; and 3) the
communication was made at a reasonable time prior to the employee’s performance assessment.
Same; Probationary Employees; Due Process; 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 adjust his or her character or workmanship accordingly. —The
predetermined standards that the employer sets are the bases for determining the probationary employee’s 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 adjust his or her character or workmanship accordingly. Proper
adjustment to fit the standards upon which the employee’s qualifications will be evaluated will increase one’s chances of being
positively assessed for regularization by his or her employer.
Same; Termination of Employment; Two-Notice Rule; The employer is required to give the charged employee at least two
written notices before termination; Aside from the notice requirement, the employee must also be given “an opportunity to be
heard.”—A valid dismissal requires both a valid cause and adherence to the valid procedure of dismissal. The employer is required to
give the charged employee at least two written notices before termination. One of the written notices must inform the employee of the
particular acts that may cause his or her dismissal. The other notice must “[inform] the employee of the employer’s decision.” Aside
from the notice requirement, the employee must also be given “an opportunity to be heard.” Petitioner failed to comply with the twin
notices and hearing requirements. Respondent started working on June 26, 1997. She was told that she was terminated on July 14,
1997 effective on the same day and barely a month from her first workday. She was also repatriated on the same day that she was
informed of her termination. The abruptness of the termination negated any finding that she was properly notified and given the
opportunity to be heard. Her constitutional right to due process of law was violated.24 Same; Same; Migrant Workers and Overseas
Filipinos Act of 1995 (R.A. No. 8042); Section 10 of Republic Act (R.A.) No. 8042, otherwise known as the Migrant Workers and
Overseas Filipinos Act of 1995, states that overseas 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.”—Respondent Joy
Cabiles, having been illegally dismissed, is entitled to her salary for the unexpired portion of the employment contract that was
violated together with attorney’s 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 of 1995, states that overseas 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.”
Same; Same; Same; Repatriation; Section 15 of Republic Act (R.A.) 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.”—Section 15 of Republic Act No. 8042 states that “repatriation of the worker and the transport of his [or her] personal
belongings shall be the primary responsibility of the agency which recruited or deployed the worker overseas.” The exception is when
“termination of employment is due solely to the fault of the worker,” which as we have established, is not the case. It reads: SEC.
15. REPATRIATION OF WORKERS; EMERGENCY REPATRIATION FUND.—The repatriation of the worker and the transport of
his personal belongings shall be the primary responsibility of the agency 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
75
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 any25manner be responsible for the repatriation of the former and/or his belongings.
Same; Same; Attorneys Fees; The Labor Code also entitles the employee to 10% of the amount of withheld wages as attorney’s
fees when the withholding is unlawful.—The Labor Code also entitles the employee to 10% of the amount of withheld wages as
attorney’s fees when the withholding is unlawful. The Court of Appeals affirmed the National Labor Relations Commission’s decision
to award respondent NT$46,080.00 or the three-month equivalent of her salary, attorney’s 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 respondent’s salary should, however, be increased to the amount
equivalent to the unexpired term of the employment contract.
Same; Same; Constitutional Law; Equal Protection of the Laws; Due Process; In Serrano v. Gallant Maritime Services, Inc.
and Marlow Navigation Co., Inc., 582 SCRA 254 (2009), the Supreme Court (SC) ruled that the clause “or for three (3) months for
every year of the unexpired term, whichever is less” is unconstitutional for violating the equal protection clause and substantive due
process.—In Serrano v. Gallant Maritime Services, Inc. and Marlow Navigation Co., Inc., 582 SCRA 254 (2009), this court ruled that
the clause “or for three (3) months for every year of the unexpired term, whichever is less” is unconstitutional for violating the equal
protection clause and substantive due process. A statute or provision which was declared unconstitutional is not a law. It “confers no
rights; it imposes no duties; it affords no protection; it creates no office; it is inoperative as if it has not been passed at all.” 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.
Statutory Construction; Statutes; 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.—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
26of the existence of any law that supports such exercise. The Constitution cannot be trumped by any other law. All laws must
be read in light of the Constitution. Any law that is inconsistent with it is a nullity. Thus, when a law or a provision of law is null
because it is inconsistent with the Constitution, the nullity cannot be cured by reincorporation or reenactment of the same or a similar
law or provision. A law or provision of law that was already declared unconstitutional remains as such unless circumstances have so
changed as to warrant a reverse conclusion.
Constitutional Law; Equal Protection of the Laws; Due Process; 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.”—
We observe that the reinstated clause, this time as provided in Republic Act. No. 10022, violates the constitutional rights to equal
protection and due process. Petitioner as well as the Solicitor General have failed to show any compelling change in 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 an illegally dismissed overseas worker to three months is both a violation of due process and the equal
protection clauses of the Constitution. Equal protection of the law is a guarantee that persons under like circumstances and falling
within the same class are treated alike, in terms of “privileges conferred and liabilities enforced.” It is a guarantee against “undue
favor and individual or class privilege, as well as hostile discrimination or the oppression of inequality.”
Same; Same; 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. —
In creating laws, the legislature has the power “to make distinctions and classifications.” In exercising such power, it has a wide
discretion. The equal protection clause does not infringe on this legislative power. A law is void on this basis, only if classifications
are made arbitrarily. There is no violation of the equal protection clause if the law applies equally to persons within the same class and
if there are reasonable grounds for distinguishing between those falling within the class and those who do not fall within the class. A
law that does27not violate the equal protection clause prescribes a reasonable classification. A reasonable classification “(1) must rest
on substantial distinctions; (2) must be germane to the purposes of the law; (3) must not be limited to existing conditions only; and (4)
must apply equally to all members of the same class.” The reinstated clause does not satisfy the requirement of reasonable
classification.
Same; Same; There can never be a justification for any form of government action that alleviates the burden of one sector, but
imposes the same burden on another sector, especially when the favored sector is composed of private businesses such as placement
agencies, while the disadvantaged sector is composed of Overseas Filipino Workers (OFWs) whose protection no less than the
Constitution commands.—[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 such as
placement agencies, while the disadvantaged sector is composed of OFWs whose protection no less than the Constitution commands.
The idea that private business interest can be elevated to the level of a compelling state interest is odious.” 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. 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 respondent’s 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 OFW’s security of tenure
which an employment contract embodies and actually profit from such violation based on an unconstitutional provision of law.”
76
Interest Rates; Bangko Sentral ng Pilipinas Circular No. 799; The Bangko Sentral ng Pilipinas (BSP) 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. —
On the interest rate, the Bangko Sentral ng Pilipinas Circular No. 799 of
28June 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 rate of 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.
Same; Same; Loans; 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; Circular No. 799 is not applicable when there is a law that
states otherwise.—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. We add that Circular No. 799 is not applicable when there is a law that states otherwise. While the Bangko
Sentral ng Pilipinas has the power to set or limit interest rates, these interest rates do not apply when the law provides that a different
interest rate shall be applied. “[A] Central Bank Circular cannot repeal a law. Only a law can repeal another law.”
Same; Same; Labor Law; Placement Fees; There is an implied stipulation in contracts between the placement agency and the
overseas worker 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. 799’s coverage.—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
29that have any bearing on the matter.” There is, therefore, an implied stipulation in contracts between the placement agency
and the overseas worker 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. 799’s coverage.
Same; Same; Same; Awards of salary for the unexpired portion of the employment contract under Republic Act (R.A.) No. 8042
are covered by Circular No. 799 because the law does not provide for a specific interest rate that should apply. —The same cannot be
said for awards of 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.
Labor Law; Overseas Filipino Workers; Solidary Obligations; Migrant Workers and Overseas Filipinos Act of 1995 (Republic
Act [R.A.] No. 8042); 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.—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 state’s
policy of affording protection to labor and alleviating workers’ plight. In overseas employment, the filing of money claims against the
foreign employer is attended by practical and legal complications. The distance of the foreign employer alone makes it difficult for an
overseas worker to reach it and make it liable for violations of the Labor Code. There are also possible con-30flict of laws,
jurisdictional issues, and procedural rules that may be raised to frustrate an overseas worker’s attempt to advance his or her claims.
Same; Same; Same; In the case of overseas employment, either the local agency or the foreign employer may be sued for all
claims arising from the foreign employer’s labor law violations.—The fundamental effect of joint and several liability is that “each of
the debtors is liable for the entire obligation.” A final determination may, therefore, be achieved even if only one of 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 employer’s labor law violations. This way, the overseas workers are assured that
someone — the foreign employer’s local agent — may be made to answer for violations that 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” against
the local agent, the overseas worker is assured of immediate and sufficient payment of what is due them.
Same; Same; Same; It must be emphasized that the local agency that is held to answer for the overseas worker’s money claims
is not left without 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.—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
77
emphasized that the local agency that is held to answer for the overseas worker’s money claims is not left without 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 local agencies jointly and severally liable
with the foreign employer is that an 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
31that tend to violate labor law. Lest they risk their reputation or finances, local agencies must already have mechanisms for
guarding against unscrupulous foreign employers even at the level prior to overseas employment applications.
Brion, J., Concurring and Dissenting Opinion:
Constitutional Law; Equal Protection of the Laws; View that take exception to the ponencia’s full adoption of the ruling in
Serrano v. Gallant Maritime Services, Inc., et al., 582 SCRA 254 (2009), to the extent that it applies the strict scrutiny standard in
invoking the equal protection guarantee.—I take exception to the ponencia’s full adoption of the ruling in Serrano v. Gallant
Maritime Services, Inc., et al., 582 SCRA 254 (2009), to the extent that it applies the strict scrutiny standard in invoking the equal
protection guarantee. To my mind, the circumstances of this case do not justify the ponencia’s approach of extending and expanding
the use of the strict scrutiny standard in invalidating the subject clause (as reinstated in R.A. No. 8042 by R.A. No. 10022). The
conclusion that the subject clause created a “suspect” classification is simply misplaced. The approach, sadly, only unnecessarily
shifted the burden to the government, to prove: (1) a compelling state interest; and (2) that the legislation is narrowly tailored to
achieve the intended result. It also unnecessarily undermines the presumed constitutionality of statutes and of the respect that
the Court accords to the acts of a co-equal branch. The differential or rational basis scrutiny, i.e., where the challenged
classification needs only be shown to be rationally related to serving a legitimate state interest, would have undoubtedly served the
purpose without bringing these unnecessary implications.
Labor Law; Overseas Filipino Workers; Migrant Workers and Overseas Filipinos Act of 1995 (R.A. No. 8042); View that
Republic Act (R.A.) No. 8042 is discernibly a piece of social legislation that the State enacted in the exercise of its police power,
precisely to give teeth and arms to the constitutional provisions on labor under its aim to “establish a higher standard of protection
and promotion of the welfare of migrant worker, their families and of overseas Filipinos in distress.”—R.A. No. 8042 is discernibly a
piece of social legislation that the State enacted in the exercise of its police power, precisely to give teeth and arms to the
constitutional provisions on labor under
32its aim to “establish a higher standard of protection and promotion of the welfare of migrant worker, their families and of
overseas Filipinos in distress.” Otherwise stated, it draws power and life from the constitutional provisions that it seeks to concretize
and implement. As I pointed out in my Serrano Opinion, “the express policy declarations of R.A. No. 8042 show that its purposes are
reiterations of the very same policies enshrined in the Constitution x x x [They] patently characterize R.A. No. 8042 as a direct
implementation of the constitutional objectives on Filipino overseas work so that it must be read and understood in terms of these
policy objectives. Under this interpretative guide, any provision in R.A. No. 8042 inimical to the interest of an overseas Filipino
worker (OFW) cannot have any place in the law.” [Underscoring supplied] Note also (again, as I reflected in my Serrano Opinion)
that while R.A. No. 8042 acknowledges that the State shall “promote full employment,” it likewise provides that “the State does not
promote overseas employment as a means to sustain economic growth and national development. The existence of overseas
employment program rests solely on the assurance that the dignity and fundamental human rights and freedom of Filipino citizens
shall not, at any time, be compromised and violated.” The Act, however, concludes its Declaration of Policies by stating that
“[n]onetheless, the deployment of Filipino overseas workers, whether land-based or sea-based, by local service contractors and
manning agencies employing them shall be encouraged. Appropriate incentives may be extended to them.”
Same; Same; Same; View that Section 10 of Republic Act (R.A.) No. 8042 obviously protects the Overseas Filipino Workers
(OFWs) as against the employer and the recruitment agency in cases of unlawful termination of service. Unfortunately, it limits the
liability to the “reimbursement of the placement fee and interest, and the payment of 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.”—Of particular importance to the
present case is Section 10 of R.A. No. 8042 which governs the OFWs’ money claims. Pursuant to its terms, the Act obviously protects
the OFW as against the employer and the recruitment agency in cases of unlawful termination of service. Unfortunately, it limits the
liability to the “reimbursement of the placement fee and interest, and the payment of 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.”33This limitation is a step
backward as it imposes a cap on the liability of the foreign principal/employer and the contractor/recruitment agency even as it earlier
declared their liability joint and solidary. To be an “appropriate incentive,” this limitation of liability can only be justified under the
terms of the law, i.e., “the incentive must necessarily relate to the law’s purpose with reasonable expectation that it would serve
this purpose; it must also accrue to its intended beneficiaries (the recruitment/placement agencies), and not to parties to whom
the reason for the grant does not apply.”
Same; Same; Same; View that Section 10 of Republic Act (R.A.) No. 8042 actually limits what is otherwise the foreign
principal/employer’s full liability under the Act and exceeds what the Act intended — to grant incentives to recruitment/manning
agencies.—As I pointed out in my Serrano Opinion, Section 10 of R.A. No. 8042 provides measures that collectively protect
OFWs, i.e., by ensuring the integrity of their contracts; by establishing the responsible parties; and by providing the mechanisms for
their enforcement that imposes direct and primary liability to the foreign principal employer. Yet, Section 10 presents a hidden twist
affecting the principal/employer’s liability. As worded, the Act “simply limits the OFWs’ recovery in wrongful dismissal 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.” From this perspective, Section 10 actually limits what is otherwise the foreign principal/employer’s full
liability under the Act and exceeds what the Act intended — to grant incentives to recruitment/manning agencies. “Section 10, in
78
short, really operates to benefit the wrong party and allows that party, without justifiable reason, to mitigate its liability for
wrongful dismissals.” [Emphasis supplied] “Because of this hidden twist, the limitation of liability under Section 10 cannot be an
“appropriate” incentive.”
Same; Same; Same; View that the liability limitation for wrongful dismissals of already deployed Overseas Filipino Workers
(OFWs) is really part of a scheme to sell Filipino overseas labor at a bargain for purposes solely of attracting the market, a scheme
that sadly reduces our OFWs to mere cash cows.—The chosen mode of granting the incentive, i.e., the liability limitation for
wrongful dismissals of already deployed OFWs, effectively imposed,
34with legal sanction, a partial condonation of the foreign principal/employer’s liability to OFWs. The incentive,
therefore, “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,” a scheme that sadly reduces our OFWs to mere cash cows.
Same; Same; Same; View that the “incentive scheme” effectively benefits the recruitment/manning agencies and foreign
principal/employer at the expense of the Overseas Filipino Workers (OFWs) from whom the salaries for the unexpired portion of the
contract are taken and to whom these salaries rightfully belong.—The “incentive scheme” effectively benefits the
recruitment/manning agencies and foreign principal/employer at the expense of the OFWs from whom the salaries for the
unexpired portion of the contract are taken and to whom these salaries rightfully belong. In effect, “the principals/employers and
the recruitment/manning agencies profit from their violation of the security of tenure that an employment contract embodies.” The
OFWs, on the other hand, are afforded lesser protection because: (1) they are afforded reduced recovery by operation of law; (2) the
reduced recovery renders wrongful dismissal situations more alluring, easier to facilitate and less onerous to undertake which foreign
employers will most certainly consider in termination of employment decisions. These inimical effects obviously will remain as long
as the subject clause remains in Section 10 of R.A. No. 8042, this time as reinstated by R.A. No. 10022. The “inherently oppressive,
arbitrary, confiscatory and inimical provision [under Section 10 of R.A. No. 8042 should, therefore,] be struck down for its conflict
with the substantive aspect of the constitutional due process guarantee. Thus, I vote to declare as unconstitutional the phrase “for
three (3) months for every year of the unexpired terms, whichever is less” in the fifth and final paragraph of Section 10 of R.A.
8042.”
PETITION for review on certiorari of a decision of the Court of Appeals.
Gaspar V. Tagalo for petitioner.
Julio F. Andres, Jr. for private respondent.
35LEONEN, J.:
This case involves an overseas Filipino worker with shattered dreams. It is our duty, given the facts and the law, to approximate
justice for her.
We are asked to decide a petition for review 1 on certiorari assailing the Court of Appeals’ decision 2 dated June 27, 2005. This
decision partially affirmed the National Labor Relations Commission’s resolution dated March 31, 2004, 3 declaring respondent’s
dismissal illegal, directing petitioner to pay respondent’s 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 attorney’s 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
Joy’s application was accepted. 7 Joy was later asked to sign a one-year 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 Taiwan Wacoal, Co., Ltd. (Wacoal) on June 26, 1997.10 She alleged that in her employ-
_______________
1 Rollo, pp. 3-29.
2 Id., at pp. 32-44.
3 Id., at pp. 125-131.
4 Id., at p. 131.
5 Id., at p. 3.
6 Id., at p. 126.
7 Id., at p. 102.
8 Id.
9 Id.
10 Id., at pp. 54 and 102.
36ment 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 Agency claims that on July 14, 1997, a certain Mr. Huwang from Wacoal informed Joy, without prior
notice, that she was terminated and that “she should immediately report to their office to get her salary and passport.” 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. 18She asked for the return of her placement fee, the withheld amount for repatriation costs,
79
payment of her salary for 23 months as well as moral and exemplary damages. 19 She identified Wacoal as Sameer Overseas Placement
Agency’s 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
_______________
11 Id., at pp. 6-7 and 195-196.
12 Id., at p. 36.
13 Id.
14 Id.
15 Id., at p. 127.
16 Id.
17 Id., at p. 53.
18 Id.
19 Id., at pp. 33, 53 and 54.
20 Id.
21 Id., at p. 11.
37that it did not ask for a placement fee of P70,000.00. 22 As evidence, it showed Official 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, 1997.24Thus, petitioner asserts that it was already substituted
by Pacific Manpower.25
Pacific Manpower moved for the dismissal of petitioner’s 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 employer’s contractual obligations might be identified. 29 It
further denied that it assumed liability for petitioner’s illegal acts.30
On July 29, 1998, the Labor Arbiter dismissed Joy’s complaint. 31 Acting Executive Labor Arbiter Pedro C. Ramos ruled that her
complaint was based on mere allegations. 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 petitioner’s transfer of obligations to
Pacific34 and considered
_______________
22 Id., at p. 56.
23 Id., at pp. 56 and 62.
24 Id., at p. 57.
25 Id.
26 Id., at p. 107.
27 Id.
28 Id.
29 Id., at p. 108.
30 Id.
31 Id., at pp. 101-112.
32 Id., at pp. 108-110.
33 Id., at p. 110.
34 Id., at pp. 111-112.
38the matter immaterial in view of the dismissal of respondent’s 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 proof to show that respondent was inefficient in her work and that she failed to comply with company
requirements.41 Furthermore, procedural due process 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 Arbiter’s decision not to rule on the matter. 45
The National Labor Relations Commission awarded respondent only three (3) months worth of salary in the amount
_______________
35 Id.
36 Id., at pp. 113-123.
37 Id., at pp. 125-131.
38 Id., at p. 131.
39 Id., at p. 129.
40 Id.
41 Id.
80
42 Id., at p. 130.
43 Id.
44 Id., at p. 131.
45 Id.
39of NT$46,080, the reimbursement of the NT$3,000 withheld from her, and attorney’s fees of NT$300.46
The Commission denied the agency’s 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 petition 49 for certiorari with the Court of
Appeals assailing the National Labor Relations Commission’s 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, Joy’s entitlement to the equivalent of three months worth of salary, reimbursement of withheld repatriation expense, and
attorney’s 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 petitioner’s lack of worthwhile discussion upon the same in the
proceedings below or before us. Likewise we sustain NLRC’s finding in regard to the reimbursement of her fare, which
_______________
46 Id.
47 Id., at pp. 132-137.
48 Id., at pp. 139-141.
49 Id., at pp. 142-153.
50 Thirteenth Division, decision penned by Associate Justice Renato C. Dacudao with Associate Justices Edgardo F. Sundiam and
Japar B. Dimaampao, concurring.
51 Rollo, pp. 43-44.
52 Id.
40is squarely based on the law; as well as the award of attorney’s 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 petitioner’s 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 in the 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 of
her repatriation, and attorney’s 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 respondent’s dismissal was valid.56
_______________
53 Id.
54 Id., at pp. 3-29.
55 Id., at p. 11.
56 Id.
41 Petitioner also reiterates that since Wacoal’s accreditation was validly transferred to Pacific at the time respondent filed her
complaint, it should be Pacific that should now assume responsibility for Wacoal’s contractual obligations to the workers originally
recruited by petitioner.57
Sameer Overseas Placement Agency’s petition is without merit. We find for respondent.
Sameer Overseas Placement Agency failed to show that there was just cause for causing Joy’s 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 an employee 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.”62Management prerogative is recognized in law and in our jurisprudence.
_______________
57 Id., at pp. 9-11.
81
58 Leonardo v. National Labor Relations Commission, 389 Phil. 118, 126-127; 333 SCRA 589, 598 (2000) [Per J. De Leon, Jr.,
Second Division].
59 Id.
60 Id.
61 San Miguel Corporation v. Ubaldo, G.R. No. 92859, February 1, 1993, 218 SCRA 293, 301 [Per J. Campos, Jr., Second
Division].
62 Id.
42
This prerogative, however, should not be abused. It is “tempered with the employee’s right to security of tenure.” 63 Workers are
entitled to substantive and procedural due process before termination. They may not be removed from employment without a valid or
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 to make 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, petitioner’s 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
_______________
63 Bascon v. Court of Appeals, 466 Phil. 719, 732; 422 SCRA 122, 133 (2004) [Per J. Quisumbing, Second Division].
64 Const., Art. XIII, Sec. 3.
65 359 Phil. 955; 299 SCRA 608 (1998) [Per J. Romero, Third Division].
43the forum will not enforce any foreign claim obnoxious to the forum’s public policy. Here in 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 self-organization, 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. They shall also participate in policy and decision-making processes affecting their rights and benefits as
may be provided by law.
. . . .
This public policy should be borne in mind in this case because to allow foreign employers to determine for and by themselves
whether an overseas contract worker may be dismissed on the ground of illness would encourage illegal or arbitrary pretermination of
employment contracts.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 not inform private respondent in writing of the charges against him and that they failed to conduct a
formal investigation to give
_______________
66 Id., at pp. 968-969; pp. 618-619.
67 540 Phil. 65; 511 SCRA 44 (2006) [Per J. Austria-Martinez, First Division].
44him opportunity to air his side. However, petitioners contend that the twin requirements of notice 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;
82
(b) Gross and habitual neglect by the employee of his duties;
_______________
68 Id., at pp. 80-81; pp. 60-61.
45
(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.
Petitioner’s allegation that respondent was inefficient in her work and negligent in her duties 69 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 to the employee; and 3) the communication was made at a reasonable time prior to the employee’s performance
assessment.
_______________
69 Rollo, p. 11.
70 Hilton Heavy Equipment Corporation v. Dy, G.R. No. 164860, February 2, 2010, 611 SCRA 329, 338 [Per J. Carpio, Second
Division], citing Dizon v. NLRC, 259 Phil. 523, 529; 180 SCRA 52, 57-58 (1989) [PerJ. Feliciano, Third Division].
71 Skippers United Pacific, Inc. v. National Labor Relations Commission, 527 Phil. 248, 257; 494 SCRA 661, 667 (2006)
[Per J.Austria-Martinez, First Division].
46
This is similar to the law and jurisprudence on probationary employees, which allow termination of the 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 predetermined standards that the employer sets are the bases for determining the probationary employee’s 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 adjust his or her character or workmanship accordingly. Proper
adjustment to fit the standards upon which the employee’s qualifications will be evaluated will increase one’s chances of being
positively assessed for regularization by his or her employer.
Assessing an employee’s 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 constantly attempt 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.
_______________
72 Labor Code, Art. 281; See also Tamson’s Enterprises, Inc. v. Court of Appeals, G.R. No. 192881, November 16, 2011, 660
SCRA 374, 383 [Per J. Mendoza, Third Division].
47The 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 employer’s failure to communicate work standards that would govern
one’s 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 employer’s 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
Respondent’s dismissal less than one year from hiring and her repatriation on the same day show not only failure on the part of
petitioner to comply with the requirement of the existence of just cause for termination. They patently show that
_______________
83
73 See Dissenting Opinion of J. Brion in Abbott Laboratories Philippines v. Alcaraz, G.R. No. 192571, July 23, 2013, 701 SCRA
682, 752 [Per J. Perlas-Bernabe, En Banc]. This ponencia joined J. Brion.
74 Rollo, p. 129.
48the employers did 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 employer’s decision.” 78Aside
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 of the employment
contract that was violated together with attorney’s fees and reimbursement of amounts withheld from her salary.
_______________
75 Skippers United Pacific, Inc. v. Doza, et al., G.R. No. 175558, February 8, 2012, 665 SCRA 412, 426 [Per J. Carpio, Second
Division].
76 Id.
77 Id.
78 Id.
79 Id.
49
Section 10 of Republic Act No. 8042, otherwise known as the Migrant Workers and Overseas Filipinos Act of 1995, states that
overseas workers who were terminated without just, valid, or authorized cause “shall be entitled to the full reimbursement of his
placement fee with interest of twelve (12%) per annum, plus his salaries for the unexpired portion of his employment contract or for
three (3) months for every year of the unexpired term, whichever is less.”

Sec. 10. MONEY CLAIMS.—Notwithstanding any provision of law to the contrary, the Labor Arbiters of the National Labor
Relations Commission (NLRC) shall have the original and exclusive jurisdiction to hear and decide, within ninety (90) calendar days
after filing of the complaint, the claims arising out of an employer-employee relationship or by virtue of any law or contract involving
Filipino workers for overseas deployment including claims for actual, moral, exemplary and other forms of damages.
The liability of the principal/employer and the recruitment/placement agency for any and all claims under this section shall be joint
and several. This provisions [sic] shall be incorporated in the contract for overseas employment and shall be a condition precedent for
its approval. The performance bond to be filed by the recruitment/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
50this 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,”80which 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.
. . . .
_______________
80 Rep. Act. No. 8042 (1995), Sec. 15.
84
51
The Labor Code81 also entitles the employee to 10% of the amount of withheld wages as attorney’s fees when the withholding is
unlawful.
The Court of Appeals affirmed the National Labor Relations Commission’s decision to award respondent NT$46,080.00 or the
three-month equivalent of her salary, attorney’s 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
respondent’s 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 rein-
_______________
81 Article 111. Attorney’s Fees.—(a) In cases of unlawful withholding of wages, the culpable party may be assessed attorney’s
fees equivalent to ten percent of the amount of wages recovered.
82 601 Phil. 245; 582 SCRA 254 (2009) [Per J. Austria-Martinez, En Banc].
83 Rep. Act. No. 8042 (1995), Sec. 10, par. 5.
84 Serrano v. Gallant Maritime Services, Inc., supra at pp. 302 and 304; p. 302.
85 Yap v. Thenamaris Ship’s Management, G.R. No. 179532, May 30, 2011, 649 SCRA 369, 380 [Per J. Nachura, Second
Division].
52stated 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.
53
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 worker’s 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 judgment 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 judgment award.
Noncompliance with the mandatory periods for resolutions of case provided under 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,
54withheld 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)
85
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 respondent’s termination from work in 1997. 86 Republic Act No. 8042 before it was
amended by Republic 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.
_______________
55
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 moot and 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 so changed 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
_______________
87 Const., Art. VIII, Sec. 5(5).
56Constitution intended to avoid. Obviously, we cannot countenance added expenses for further litigation that will reduce their hard-
earned 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 as reinstated in Republic Act No. 10022, its contention is that it is beyond judicial
review.94
On the other hand, respondent argued that the clause was unconstitutional because it infringed on workers’ right to contract. 95
_______________
88 Rollo, pp. 266-267.
89 Id., at pp. 309-328.
90 Id., at p. 311.
91 Id.
92 Id.
93 Id., at pp. 364-371.
94 Id., at p. 371.
95 Id., at p. 304.
57 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. 96Petitioner as well as the Solicitor General have failed to show any compelling change in 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 an illegally 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
86
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 distin-
_______________
96 Const., Art. III, Sec. 1. No person shall be deprived of life, liberty, or property without due process of law, nor shall any person
be denied the equal protection of the laws.
97 Ichong v. Hernandez, 101 Phil. 1155, 1164 (1957) [Per J. Labrador, En Banc].
98 Id., at p. 1164.
99 Id., at p. 1177.
100 Id.
101 Id., at pp. 1164 and 1177.
102 Id., at pp. 1165 and 1177.
guishing 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 prescribes a 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 fixed-period 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
_______________
103 Id., at p. 1164.
104 People v. Cayat, 68 Phil. 12, 18 (1939) [Per J. Moran, En Banc].
105 Id., at p. 18.
106 Serrano v. Gallant Maritime Services, Inc., supra note 82 at pp. 294-298; p. 302.
107 Id., at pp. 287-292; p. 283.
108 Id., at pp. 292-294; p. 290.
109 Id., at p. 282; p. 278.
59 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 Serrano that before the passage of Republic Act No. 8042, the money claims of illegally terminated overseas and
local workers with fixed-term employment were computed in the same manner. 112 Their money claims were computed based on the
“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 in the clause, we also found that “the subject clause creates a sub-layer of discrimination among
OFWs whose contract periods are for more than
_______________
110 Const., Art. XIII, Sec. 3.
111 Serrano v. Gallant Maritime Services, Inc., supra note 82 at p. 286; p. 302.
112 Id., at pp. 297-298; p. 294.
113 Id., at p. 298; p. 295.
114 Id.
115 Id.
116 Id., at pp. 287-292; p. 292.
117 Id.
60one 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
87
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 nor less than the rights
violated when a fixed-period overseas worker is illegally terminated. It is state policy to protect the rights of workers without
qualification 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.
_______________
118 Id., at p. 293; p. 290.
119 Id., at p. 281; p. 308.
120 Id.
61
For this reason, we cannot subscribe to the argument that “[overseas workers] are contractual employees who can never acquire
regular employment status, unlike local workers” 121 because it already justifies differentiated treatment in terms of the 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 classifications are 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 incentivized by 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
_______________
121 Id., at p. 277; p. 272.
122 Id.
123 Id., at pp. 276-277; p. 295.
124 Rep. Act. No. 8042 (1995); See also Rep. Act No. 10022 (2010).
125 Serrano v. Gallant Maritime Services, Inc., supra note 82 at p. 277; p. 316.
62other 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/employer’s liability. While intended as an incentive accruing to recruitment/manning agencies, the law, as worded, simply
limits the OFWs’ recovery in wrongful dismissal 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 of liability 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 law’s
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. . . .
63
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 taken from 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
88
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 be a 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 such as placement
agencies, while the disadvantaged sector is composed of OFWs whose protection no less than the Constitution commands. The idea
that private business interest can be elevated to the level of a compelling state interest is odious.” 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
_______________
126 See Concurring Opinion of J. Brion in Serrano v. Gallant Maritime Services, Inc., supra note 82 at pp. 319-321; pp. 319-320.
127 Id., at p. 301; p. 299.
128 Id., at p. 304; p. 302.
64equivalence of respondent’s 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 OFW’s 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 PilipinasCircular 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 rate of 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.
_______________
65
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 cer-
_______________
130 G.R. No. 189871, August 13, 2013, 703 SCRA 439 [Per J. Peralta, En Banc].
66tainty 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
89
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
_______________
131 Id., at pp. 457-458. This court modified the guidelines laid down in Eastern Shipping Lines v. Court of Appeals, G.R. No.
97412, July 12, 1994, 234 SCRA 78, 97 [Per J. Vitug, En Banc] to embody Bangko Sentral ng Pilipinas Circular No. 799.
132 Nacar v. Gallery Frames, supra note 130 at p. 457.
133 Id.
67interest 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 cannot
repeal 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 overseas
worker 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. 799’s coverage.
The same cannot be said for awards of 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.
_______________
134 Palanca v. Court of Appeals, G.R. No. 106685, December 2, 1994, 238 SCRA 593, 601 [Per J. Quiason, En Banc].
135 Maritime Company of the Philippines v. Reparations Commission, 148-B Phil. 65, 70; 40 SCRA 70, 74 (1971)
[Per J. Fernando, En Banc].
68
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 of Wacoal as principal and petitioner as the employment agency that facilitated respondent’s
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 state’s policy of affording protection to labor and alleviating workers’ plight. 136
In overseas employment, the filing of money claims against the foreign employer is attended by practical and legal complications.
The distance of the foreign employer alone makes it difficult for an overseas worker to reach it and make it
_______________
136 ATCI Overseas Corporation v. Echin, G.R. No. 178551, October 11, 2010, 632 SCRA 528, 533 [Per J. Carpio-Morales, Third
Division], citing Datuman v. First Cosmopolitan Manpower and Promotion Services, Inc., 591 Phil. 662, 673; 571 SCRA 41, 52-53
(2008) [Per J. Leonardo-De Castro, First Division]; Migrant Workers and Overseas Filipinos Act of 1995, Sec. 2(b).
69liable 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 worker’s attempt 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 one of 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
employer’s labor law violations. This way, the overseas workers are assured that someone — the foreign employer’s local agent —
may be made to answer for violations that 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 as-
90
_______________
137 Rules of Court, Rule 3, Sec. 7.
138 PH Credit Corporation v. Court of Appeals, 421 Phil. 821, 832; 370 SCRA 155, 165 (2001) [Per J. Panganiban, Third
Division].
139 See also Azucena, Jr., C.A., Everyone’s Labor Code, p. 29. (5th ed., 2007).
70sured of immediate and sufficient payment 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 worker’s money
claims is not left without 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 local agencies jointly and severally liable with the foreign employer is that an 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
agencies must 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.
_______________
140 Id.
71
V
Many times, this court has spoken on what Filipinos may encounter as they travel into the farthest and most difficult 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 to which they are subjected by their
foreign employers, who probably feel they can do as they please in their own country. While these 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
_______________
141 G.R. No. 93699, September 10, 1993, 226 SCRA 232 [Per J. Cruz, First Division].
142 Id., at pp. 239-240, also cited in Triple Eight Integrated Services v. NLRC, 359 Phil. 955, 968; 299 SCRA 608, 618 (1998)
[Per J. Romero, Third Division].
72up 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 well.
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 ORDEREDto 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.73
91
G.R. No. 168715. September 15, 2010.*
MEDLINE MANAGEMENT, INC. and GRECOMAR SHIPPING AGENCY, petitioners, vs. GLICERIA ROSLINDA and
ARIEL ROSLINDA, respondents.
Labor Law; Seafarers; Money Claims; Prescription; Article 291 of the Labor Code is the law governing the prescription of
money claims of seafarers, a class of overseas contract workers; Article 291 prevails over Section 28 of the Standard Employment
Contract for Seafarers which provides for claims to be brought only within one year from the date of the seafarer’s return to the point
of hire; Section 28 insofar as it limits the prescriptive period within which the seafarers may file their money claims, is hereby
declared null and void.—In Southeastern Shipping v. Navarra, Jr., 621 SCRA 361 (2010), we ruled that “Article 291 is the law
governing the prescription of money claims of seafarers, a class of overseas contract workers. This law prevails over Section 28 of the
Standard Employment Contract for Seafarers which provides for claims to be brought only within one year from the date of the
seafarer’s return to the point of hire.” We further declared that “for the guidance of all, Section 28 of the Standard Employment
Contract for Seafarers, insofar as it limits the prescriptive period within which the seafarers may file their money claims, is hereby
declared null and void. The applicable provision is Article 291 of the Labor Code, it being more favorable to the seafarers and more in
accord with the State’s declared policy to afford full protection to labor. The prescriptive period in the present case is thus three years
from the time the cause of action accrues.”
Same; Same; Same; Same; Parties in Interest; As the parties claiming benefits for the death of a seafarer, respondents can file a
case with the Labor Arbiter as provided for under Section 28 of the POEA SEC.—Petitioners’ claim that the Labor Arbiter has no
jurisdiction to hear the case for want of employer-employee relationship between the parties lacks merit. Petitioners have not taken
into consideration that respondents, as heirs of Juliano, have the personality to file the claim for death benefits. As the parties claiming
benefits for the death of a seafarer, they can file a case with the
_______________
* FIRST DIVISION.
472
Medline Management, Inc. vs. Roslinda
Labor Arbiter as provided for under Section 28 of the POEA SEC. It is clearly provided therein that the NLRC shall have
original and exclusive jurisdiction over any and all disputes or controversies arising out of or by virtue of the Contract.
Same; Same; Death Benefits; In order to avail of death benefits, the death of the employee should occur during the effectivity
of the employment contract.—In Southeastern Shipping v. Navarra, Jr., 621 SCRA 361 (2010), we declared that “in order to avail of
death benefits, the death of the employee should occur during the effectivity of the employment contract.” “The death of a seaman
during the term of employment makes the employer liable to his heirs for death compensation benefits. Once it is established that the
seaman died during the effectivity of his employment contract, the employer is liable.” Juliano did not die while he was under the
employ of petitioners. His contract of employment ceased when he was discharged on January 20, 2000, after having completed his
contract thereat. He died on August 27, 2001 or one year, seven months and seven days after the expiration of his contract. Thus, his
beneficiaries are not entitled to the death benefits under the Standard Employment Contract for Seafarers.
Same; Labor Code; Motion to Dismiss; A motion to dismiss on the ground of failure to comply with a condition precedent is a
prohibited pleading.—A motion to dismiss that can be availed of is one which is based on lack of jurisdiction over the subject matter,
improper venue, res judicata, prescription and forum shopping. Conversely, a motion to dismiss on the ground of failure to comply
with a condition precedent is, therefore, a prohibited pleading. Hence, the Labor Arbiter did not commit any grave abuse of discretion
amounting to lack or excess of jurisdiction when she denied the Motion to Dismiss filed by petitioners.
Same; Same; Appeals; When the law says that the orders appealable to the Commission are those which will become final and
executory if not appealed, it can only refer to a final order, not an interlocutory order such as a denial of a motion to dismiss .—All
the three provisions above-mentioned refer to final orders and not interlocutory ones, such as, a denial of a motion to dismiss. Based
on the above provisions, the Labor Arbiter’s decisions, resolutions or orders shall be final and executory unless appealed to the
Commission.
473
VOL. 630, SEPTEMBER 15, 2010 473
Only a final order can attain the final and executory stage; an interlocutory order cannot go that far. Consequently, when the law
says that the orders appealable to the Commission are those which will become final and executory if not appealed, it can only refer to
a final order, not an interlocutory order, such as a denial of a motion to dismiss.
Del Rosario and Del Rosario for petitioners.
92
Dela Cruz, Entero & Associates for respondents.
DEL CASTILLO, J.:
If a seafarer dies after the termination of his contract of employment, the Court can only commiserate with his heirs because it has
no alternative but to declare that his beneficiaries are not entitled to the death benefits provided in the Philippine Overseas
Employment Administration (POEA) Standard Employment Contract (SEC).
This Petition for Review on Certiorari1 assails the Decision2 dated March 11, 2005 of the Court of Appeals (CA) in CA-G.R. SP
No. 87648, which dismissed the petition for certiorari with prayer for the issuance of a writ of preliminary injunction and/or
restraining order challenging the Resolution dated August 31, 2004 3 and October 15, 20044 of the National Labor Relations
Commission (NLRC) in NLRC NCR CA No. 040435-
_______________
1 Rollo, pp. 25-81.

2 CA Rollo, pp. 221-228; penned by Associate Justice Conrado M. Vasquez, Jr. and concurred in by Associate Justices Rebecca
De Guia-Salvador and Aurora Santiago Lagman.
3 Id., at pp. 57-59.
4 Id., at pp. 61-62.
474
04. Also assailed is the Resolution5 dated June 22, 2005 denying the Motion for Reconsideration.
Factual Antecedents
Petitioner Medline Management, Inc. (MMI), on behalf of its foreign principal, petitioner Grecomar Shipping Agency (GSA),
hired Juliano Roslinda (Juliano) to work on board the vessel MV “Victory.” Juliano was previously employed by the petitioners under
two successive separate employment contracts of varying durations. His latest contract was approved by the POEA on September 9,
1998 for a duration of nine months.6 In accordance with which, he boarded the vessel MV “Victory” on October 25, 1998 as an oiler
and, after several months of extension, was discharged on January 20, 2000.
Months after his repatriation, or on March 6, 2000, Juliano consulted Dr. Pamela R. Lloren (Dr. Lloren) of Metropolitan Hospital.
He complained about abdominal distention which is the medical term for a patient who vomits previously ingested foods. From March
8 to August 24, 2000, Juliano visited Dr. Lloren for a series of medical treatment. 7 In a Medical Certificate8 issued by Dr. Lloren, the
condition of Juliano required hemodialysis which was initially done twice a week for a period of two months and then once every 10
days. In medicine, hemodialysis is the method of removing waste products such as creatinine and urea, as well as freeing water from
the blood, when the kidneys are in renal failure.9
On August 27, 2001, Juliano died. On September 4, 2003, his wife Gliceria Roslinda and son Ariel Roslinda, respondents herein,
filed a complaint against MMI and GSA for
_______________
5 Id., at p. 261.
6 Id., at p. 191.
7 Id., at p. 104.
8 Id., at p. 102.
9 http://en.wikipedia.org/wiki/Hemodialysis (visited September 13, 2010).
475
VOL. 630, SEPTEMBER 15, 2010 475
payment of death compensation, reimbursement of medical expenses, damages, and attorney’s fees before the Labor Arbitration
Branch of the NLRC.
Petitioners received on September 25, 2003 a copy of the summons 10 and complaint. Instead of filing an answer, they filed a
Motion to Dismiss11 on the grounds of prescription, lack of jurisdiction and prematurity. Petitioners contended that the action has
already prescribed because it was filed three years, seven months and 22 days from the time the deceased seafarer reached the point of
hire. They also argued that the case should be dismissed outright for prematurity because respondents failed to comply with a
condition precedent by not availing of the grievance machinery. Lastly, petitioners opined that the Labor Arbiter had no jurisdiction
because there exists no employer-employee relationship between the parties.On January 9, 2004, respondents submitted their Position
Paper with Opposition to Motion to Dismiss. 12 On January 26, 2004, petitioners submitted their Comment/Reply with Motion to
Expunge Complainant’s Position Paper.13
On April 21, 2004, Labor Arbiter Fatima Jambaro-Franco denied the Motion to Dismiss filed by the petitioners. The dispositive
portion provides:
“WHEREFORE, premises considered, the Motion to Dismiss is hereby DENIED for lack of merit.
93
In order to expedite the proceedings of this case, the respondents [herein petitioners] are hereby ordered to submit their position
paper on May 18, 2004 at 9:30 a.m.
_______________
10 CA Rollo, p. 68.
11 Id., at pp. 72-84.
12 Id., at pp. 87-99.
13 Id., at pp. 143-151.
476
SO ORDERED.”14
Ruling of the National Labor Relations Commission
Petitioners, instead of complying with the order of the Labor Arbiter to submit their position paper, filed their Notice of Appeal
with Memorandum15 of Appeal on May 7, 2004 with the NLRC.
Petitioners asserted that the Labor Arbiter seriously erred in disregarding the basic provision of the POEA Contract. According to
them, the POEA contract is clear that any claim arising from the employment of a seafarer should be filed within one year from the
seafarer’s return to the point of hire; otherwise, it shall be barred forever. In addition, petitioners claimed that the Labor Arbiter also
erred when she issued an order without resolving the other issues in their Motion to Dismiss. The Labor Arbiter failed to take into
consideration that respondents have no employer-employee relationship with herein petitioners, which means that the former have no
cause of action against the latter. Lastly, they opined that the Labor Arbiter failed to resolve the issue of prematurity when the present
case was filed without passing through the grievance committee.
On August 31, 2004, the NLRC issued its Resolution, the dispositive portion of which provides:
“PREMISES CONSIDERED, respondents’ appeal from the Order dated April 21, 2004 is hereby DISMISSED for lack of merit.
Let records herein be REMANDED to Arbitration Branch of origin for immediate appropriate proceedings.
SO ORDERED.”16
_______________
14 Id., at p. 65.
15 Id., at pp. 152-186.
16 Id., at p. 58.
477
VOL. 630, SEPTEMBER 15, 2010 477
Ruling of the Court of Appeals
After reviewing the case on certiorari, the CA ruled that the claim was filed within the three-year prescriptive period which must
be reckoned from the time of Juliano’s death on August 27, 2001 and not from the date of his repatriation on January 20, 2000. As to
the denial of the Motion to Dismiss, it found that under Section 3 of Rule V of the NLRC Rules of Procedure, an order denying the
Motion to Dismiss or suspension of its resolution until the final determination of the case, is not appealable. Anent the issue that the
Labor Arbiter had no jurisdiction over the case because there exists no employee-employer relationship between the parties, the CA
held that such matter is a factual issue which should be threshed out in the trial of the case. Being a factual matter needing evidence
for its existence, a motion to dismiss is not the proper remedy. The dispositive portion of the CA Decision states:
“IN VIEW OF ALL THE FOREGOING, the instant petition is ordered DISMISSED. Costs against the petitioners.
SO ORDERED.”17
After the denial by the CA of their Motion for Reconsideration, petitioners filed the present petition for review on certiorari.
Issues
Petitioners raise the following issues:

I.
Whether the CA seriously erred in holding that the Order of the Labor Arbiter dismissing the Motion to Dismiss is not appealable.
_______________
17 Id., at p. 227.
478
II.
94
Whether the CA seriously erred in ruling that the claim is not yet barred by prescription despite the fact that it was filed beyond the
one-year prescriptive period provided by the POEA Standard Employment Contract.
III.
Whether the ruling of the CA is contrary to the jurisprudence laid down in the case of Fem’s Elegance Lodging House vs. Murillo
decided by this Court.
Petitioners’ Arguments
Petitioners contend that although Rule 1, Section 3 of the NLRC Rules of Procedure provides for the suppletory application of the
Rules of Court, the same is proper only in the absence of applicable provision in the NLRC Rules of Procedure to the issue at hand.
Here, Section 1, Rule VI of the NLRC Rules of Procedure and Article 223 of the Labor Code specifically provide that any order of the
Labor Arbiter is appealable to the NLRC, regardless if it is final or interlocutory in nature. Hence, there is no room for the suppletory
application of the Rules of Court in the case at bench.
Petitioners also argue that the POEA SEC provides that the employer and the seafarer agree that all claims arising from the
contract shall be made within one year from the date of seafarer’s return to the point of hire. Hence, respondents’ claim for death
benefits has clearly prescribed because they filed their complaint before the NLRC Arbitration Branch only on September 11, 2003 or
three years seven months and 22 days after the return of Juliano to the point of hire on January 20, 2000.
Respondents’ Arguments
Respondents posit that Section 3, Rule V of the NLRC Rules of Procedure clearly provides that an order denying a motion to
dismiss or suspension of its resolution until the
479
VOL. 630, SEPTEMBER 15, 2010 479
final determination of the case is not appealable. It is for this reason that petitioners were required to proceed with the Arbitration
Branch of origin for further proceedings.
Moreover, respondents argue that the Motion to Dismiss filed by the petitioners was properly denied by the Labor Arbiter because
the cause of action has not yet prescribed. The prescriptive period that should apply is three years and not one year as provided for in
the POEA SEC. Therefore, when the complaint was filed on September 4, 2003, it is well within the three-year prescriptive period.
The reckoning point is the time when the cause of action accrued which is from the time of death of the seafarer and not from the time
of repatriation.
Our Ruling
A close perusal of the three issues presented for our review readily reveals a single issue of substance—that the Labor Arbiter
seriously erred in denying the Motion to Dismiss filed by the petitioners without ruling on all the grounds raised by them. Another
issue involved a procedural ground—that the CA erred in dismissing the petition assailing the denial of the Motion to Dismiss based
on Section 3, Rule V of the NLRC Rules of Procedure.
The Labor Arbiter Properly Denied the
Motion to Dismiss
The denial of the Motion to Dismiss by the Labor Arbiter, the NLRC, and the CA was made in accordance with prevailing law and
jurisprudence. It should be noted that in the Motion to Dismiss filed by the petitioners before the Labor Arbiter, they cited
prescription, lack of jurisdiction and failure to comply with a condition precedent, as the three grounds for dismissal of the case.480
Prescription
The employment contract signed by Juliano stated that “Upon approval, the same shall be deemed an integral part of the Standard
Employment Contract (SEC) for seafarers.”18 Section 28 of the POEA SEC states:
“SECTION 28. JURISDICTION
The Philippine Overseas Employment Administration (POEA) or the National Labor Relations Commission (NLRC) shall have
original and exclusive jurisdiction over any and all disputes or controversies arising out of or by virtue of this Contract.
Recognizing the peculiar nature of overseas shipboard employment, the employer and the seafarer agree that all claims arising
from this contract shall be made within one (1) year from the date of the seafarer’s return to the point of hire.” (Emphasis supplied)
On the other hand, the Labor Code states:
“ART. 291. Money claims.—All money claims arising from employer-employee relations accruing during the effectivity of this
Code shall be filed within three (3) years from the time the cause of action accrued; otherwise they shall forever be barred.
x x x x” (Emphasis supplied)
In Southeastern Shipping v. Navarra, Jr.,19 we ruled that “Article 291 is the law governing the prescription of money claims of
seafarers, a class of overseas contract workers. This law prevails over Section 28 of the Standard Employment Contract for Seafarers
which provides for claims to be brought only within one year from the date of the seafarer’s return to the point of hire.” We further
declared that “for the guidance of all, Section 28 of the Standard Employment Contract for Seafarers, insofar as it limits the
prescriptive period within
95
_______________
18 Id., at p. 191.
19 G.R. No. 167678, June 22, 2010, 621 SCRA 361.
481
VOL. 630, SEPTEMBER 15, 2010 481
which the seafarers may file their money claims, is hereby declared null and void. The applicable provision is Article 291 of the Labor
Code, it being more favorable to the seafarers and more in accord with the State’s declared policy to afford full protection to labor.
The prescriptive period in the present case is thus three years from the time the cause of action accrues.”
In the present case, the cause of action accrued on August 27, 2001 when Juliano died. Hence, the claim has not yet prescribed,
since the complaint was filed with the arbitration branch of the NLRC on September 4, 2003.
Lack of Jurisdiction
Petitioners’ claim that the Labor Arbiter has no jurisdiction to hear the case for want of employer-employee relationship between
the parties lacks merit. Petitioners have not taken into consideration that respondents, as heirs of Juliano, have the personality to file
the claim for death benefits. As the parties claiming benefits for the death of a seafarer, they can file a case with the Labor Arbiter as
provided for under Section 28 of the POEA SEC. It is clearly provided therein that the NLRC shall have original and exclusive
jurisdiction over any and all disputes or controversies arising out of or by virtue of the Contract.
Furthermore, Section 20 of the Standard Terms and Conditions Governing the Employment of Filipino Seafarers On-Board
Ocean-Going Vessels states:
A. COMPENSATION AND BENEFITS FOR DEATH
1. In the case of work-related death of the seafarer during the term of his contract, the employer shall pay his beneficiaries the
Philippine Currency equivalent to the amount of Fifty Thousand US dollars (US$ 50,000.00) and an additional amount of Seven
Thousand US Dollars (US$ 7,000.00) to each child under the age of twenty-one (21) but not exceeding four (4) children, at the
exchange rate prevailing during the time of payment.482
x x x x
In filing the complaint for payment of death compensation, reimbursement of medical expenses, damages and attorney’s fees
before the Labor Arbitration Branch of the NLRC, respondents are actually enforcing their entitlement to the above provision of the
contract of Juliano with petitioners. They are the real parties in interest as they stand to be benefited or injured by the judgment in this
case, or the parties entitled to the avails of the case.
Having shown that respondents have the personality to file the complaint and that the Labor Arbiter has the original and exclusive
jurisdiction over the said claims, then this ground for petitioners’ Motion to Dismiss has no basis and, therefore, its denial was proper.
Failure to Comply with a Condition Precedent
Petitioners likewise contend that the present claim should have been dismissed on the ground that respondents prematurely filed
the present complaint because the employment contract requires respondents to first bring their claim before the Grievance Machinery.
Indeed, the records of this case would not give us any idea on what actions were taken by respondents before they filed the case.
What can only be deduced from the records is that respondents demanded from petitioners the payment of death benefits and the
reimbursement of medical expenses incurred by Juliano from the time of his repatriation on January 20, 2000 until his death on
August 27, 2001 amounting to P149,490.00 which was refused by petitioners. There is therefore no showing that they complied with
the provisions of the employment contract to first bring the matter before the Grievance Machinery.
Having shown that respondents failed to bring this matter to the Grievance Machinery as provided in the POEA SEC, can we now
conclude that the Labor Arbiter erred in denying
483
VOL. 630, SEPTEMBER 15, 2010 483
the Motion to Dismiss on the ground that respondents failed to comply with a condition precedent? We answer this in the negative.
The denial by the Labor Arbiter of the Motion to Dismiss filed by petitioners on the ground of non-compliance with a condition
precedent is still proper.
Section 4, Rule III of the New Rules of Procedure of the NLRC (As amended by NLRC Resolution No. 01-02, series of 2002)
provides:
“SECTION 4. PROHIBITED PLEADINGS AND MOTIONS.—The following pleadings, motions or petitions shall not be
allowed in the cases covered by these Rules:
(a) Motion to dismiss the complaint except on the ground of lack of jurisdiction over the subject matter, improper
venue, resadjudicata, prescription and forum shopping;
x x x x”
The above provision thus explicitly provides that a motion to dismiss that can be availed of is one which is based on lack of
jurisdiction over the subject matter, improper venue, res judicata, prescription and forum shopping. Conversely, a motion to dismiss
96
on the ground of failure to comply with a condition precedent is, therefore, a prohibited pleading. Hence, the Labor Arbiter did not
commit any grave abuse of discretion amounting to lack or excess of jurisdiction when she denied the Motion to Dismiss filed by
petitioners.
Having shown that the Labor Arbiter properly denied the Motion to Dismiss, the NLRC and the CA have likewise acted in
accordance with law in denying the appeal of the dismissal of such Motion to Dismiss.
The CA Properly Denied the Petition
Based on Section 3, Rule V of the NLRC
Rules of Procedure
Petitioners contend that Section 3 (now Section 6), Rule V of the NLRC Rules of Procedure is in direct conflict with the
484
provisions of Section 1, Rule VI of the same NLRC Rules of Procedure and Article 223 of the Labor Code and, hence, it should be the
latter which should prevail.
We do not agree.
Section 3 (now Section 6) of Rule V and Section 1 of Rule VI of the NLRC Rules of Procedure, as amended, provide:
“SECTION 3. MOTION TO DISMISS.—On or before the date set for the conference, the respondent may file a motion to
dismiss. Any motion to dismiss on the ground of lack of jurisdiction, improper venue, or that the cause of action is barred by prior
judgment, prescription or forum shopping, shall be immediately resolved by the Labor Arbiter by a written order. An order denying
the motion to dismiss or suspending its resolution until the final determination of the case is not appealable.
SECTION 1. PERIODS OF APPEAL.—Decisions, resolutions or orders of the Labor Arbiter shall be final and executory
unless appealed to the Commission by any or both parties within ten (10) calendar days from receipt of such decisions, resolutions or
orders of the Labor Arbiter and in case of a decision of the Regional Director within five (5) calendar days from receipt of such
decisions, resolutions, or orders. If the 10th or 5th day, as the case may be, falls on a Saturday, Sunday or a holiday, the last day to
perfect the appeal shall be the next working day.”
Another provision cited by petitioners is Article 223 of the Labor Code which states:
“ART. 223. Appeal.—Decisions, awards, or orders of the Labor Arbiter are final and executory unless appealed to the
Commission by any or both parties within ten (10) calendar days from receipt of such decisions, awards, or orders. Such appeal may
be entertained only on any of the following grounds:
x x x x”
However, all the three provisions above-mentioned refer to final orders and not interlocutory ones, such as, a denial of a motion to
dismiss. Based on the above provisions, the Labor Arbiter’s decisions, resolutions or orders shall be final and
485
VOL. 630, SEPTEMBER 15, 2010 485
executory unless appealed to the Commission. Only a final order can attain the final and executory stage; an interlocutory order cannot
go that far. Consequently, when the law says that the orders appealable to the Commission are those which will become final and
executory if not appealed, it can only refer to a final order, not an interlocutory order, such as a denial of a motion to dismiss.
There is no conflict between the above provisions. The CA therefore correctly dismissed the petition assailing the denial of the
Motion to Dismiss based on Section 3 (now Section 6), Rule V of the NLRC Rules of Procedure because it involved an interlocutory
order. Admittedly, the order denying a Motion to Dismiss is an interlocutory order because it still requires a party to perform certain
acts leading to the final adjudication of a case.
Lastly, petitioners’ reliance in FEM’s Elegance Lodging House v. Murillo 20 to justify their position that an interlocutory order like
the denial of their Motion to Dismiss can be appealed is misplaced. The CA properly addressed this issue in this wise:
“Reliance in the case of FEM’s Elegance vs. Murillo is misdirected. In that case, the Labor Arbiter’s denial was appealed directly
to the Supreme Court and did not pass the Court of Appeals. In ruling that orders of the Labor Arbiter shall be appealable to the Court
of Appeals, the High Court, to our mind, was simply saying that you cannot go and seek review directly from the Labor Arbiter to the
Supreme Court. One has to pass first the NLRC.”21
For Expediency, this Court can Decide
the Merits of this Case
This Court is aware that in this case, since the petition is denied, the normal procedure is for it to remand the case to
_______________
20 310 Phil. 107; 240 SCRA 94 (1995).

21 CA Rollo, p. 226.
486
97
the Labor Arbiter for further proceedings. “However, when there is enough basis on which the Court may render a proper evaluation
of the merits of petitioners’ case, x x x the Court may dispense with the time[-]consuming procedure in order to prevent further delays
in the disposition of the case.” 22 Indeed, remand of the case to the Labor Arbiter for further reception of evidence is not conducive to
the speedy administration of justice and it becomes unnecessary where the Court is in a position to resolve the dispute based on the
records before it. Briefly stated, a remand of the instant case to the Labor Arbiter would serve no purpose save to further delay its
disposition contrary to the spirit of fair play.
“It is an accepted precept of procedural law that the Court may resolve the dispute in a single proceeding, instead of remanding the
case to the lower court for further proceedings if, based on the records, pleadings, and other evidence, the matter can readily be ruled
upon.”23 Instead of remanding the case to the Labor Arbiter for further proceedings, we will resolve the dispute to serve the ends of
justice.
The complete records of this case have already been elevated to this Court. The pleadings on record will fully support this
adjudication.
Respondents are not Entitled to the
Death Benefits Provided Under the
POEA Standard Employment Contract
In Southeastern Shipping v. Navarra, Jr.,24 we declared that “in order to avail of death benefits, the death of the employee should
occur during the effectivity of the employment contract.” “The death of a seaman during the term of employment makes the em-
22 Somoso v. Court of Appeals, G.R. No. 78050, October 23, 1989, 178 SCRA 654, 663.
23 Bunao v. Social Security System, G.R. No. 159606, December 13, 2005, 477 SCRA 564, 571.
24 Supra note 19.
487
VOL. 630, SEPTEMBER 15, 2010 487
ployer liable to his heirs for death compensation benefits. Once it is established that the seaman died during the effectivity of his
employment contract, the employer is liable.”25
Juliano did not die while he was under the employ of petitioners. His contract of employment ceased when he was discharged on
January 20, 2000, after having completed his contract thereat. He died on August 27, 2001 or one year, seven months and seven days
after the expiration of his contract. Thus, his beneficiaries are not entitled to the death benefits under the Standard Employment
Contract for Seafarers.
Moreover, there is no evidence to show that Juliano’s illness was acquired during the term of his employment with petitioners. In
respondents’ Position Paper,26 they admitted that Juliano was discharged not because of any illness but due to the expiration of his
employment contract.27 Although they stated that Juliano was hospitalized on August 28, 1999, or five months before his contract
expired, they presented no proof to support this allegation. Instead, what respondents presented were the Medical Certificates 28 issued
by Dr. Lloren attesting to the fact that on March 6, 2000, Juliano consulted her complaining of abdominal distention. We find this not
substantial evidence to prove that Juliano’s illness which caused his death was contracted during the term of his contract. 29 “Indeed,
the death of a seaman several months after his repatriation for illness does not necessarily mean that: a) the seaman died of the same
illness; b) his working conditions increased the risk of contracting the illness which caused his
25 Prudential Shipping and Management Corporation v. Sta. Rita, G.R. No. 166580, February 8, 2007, 515 SCRA 157, 168.
26 CA Rollo, pp. 87-99.
27 Id., at p. 88.
28 Id., at pp. 102-103.
29 Hermogenes v. Osco Shipping Services, Inc., G.R. No. 141505, August 18, 2005, 467 SCRA 301, 308.
488
death; and c) the death is compensable, unless there is some reasonable basis to support otherwise.” 30 In the instant case, Juliano was
repatriated not because of any illness but because his contract of employment expired. There is likewise no proof that he contracted his
illness during the term of his employment or that his working conditions increased the risk of contracting the illness which caused his
death.
“While the Court adheres to the principle of liberality in favor of the seafarer in construing the Standard Employment Contract, we
cannot allow claims for compensation based on surmises. When the evidence presented negates compensability, this Court has no
choice but to deny the claim, lest we cause injustice to the employer.”31
WHEREFORE, the instant petition for review on certiorari is DENIED.
We hereby declare that the claim for death benefits of respondents Gliceria Roslinda and Ariel Roslinda has not yet prescribed but
petitioners are not liable to pay to respondents death compensation benefits under the Standard Employment Contract for Seafarers
considering that Juliano’s death occurred after the effectivity of his contract. The Labor Arbiter is therefore DIRECTED to dismiss the
complaint filed by herein respondents against the petitioners for payment of death compensation, reimbursement of medical expenses,
damages and attorney’s fees.
SO ORDERED.
98
Corona (C.J., Chairperson), Carpio-Morales,** Velasco, Jr. and Perez, JJ., concur.
Petition denied.
99

G.R. No. 211497. March 18, 2015. HOCHENG PHILIPPINES CORPORATION, Petitioner, Vs - ANTONIO M. FARRALES, Respondent

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G.R. No. 211497. March 18, 2015. HOCHENG PHILIPPINES CORPORATION, Petitioner, Vs - ANTONIO M. FARRALES, Respondent

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G.R. No. 211497. March 18, 2015.

1 Rollo, pp. 22-49.

10 Id., at pp. 56-57.

11 Id., at pp. 57-58.

13 Id., at pp. 58-59.

19 Id., at pp. 173-194.

21 Id., at pp. 32-33.

G.R. Nos. 90394-97. February 27, 1991.*

The facts are stated in the opinion of the Court.

The petition must fail.

WHEREFORE, the petition is DISMISSED for lack of merit.

PETITION to review the decision of the National Labor Relations Commission.

The facts are stated in the opinion of the Court.

SO ORDERED. (pp. 20-21, Rollo)

The facts of the case are as follows:

To: SHEIK ABDUL AZIZ KAKI

Re: TERMINAT10N OF CONTRACT OF EMPLOYMENT

1) Violations of contract of employment as follows:

a) Delayed Payment of Salary. As stated on the contract:

Section A No. 4: Basic Monthly Salary—Salary shall be paid once a month.

a) Delayed payment of food allowance or No free food given,

b) No free laundry service.

Your response and approval is highly appreciated. I remain

Hence this petition assigning the following errors:

a) October, November, December, 1985, January 1986 & 6

b) Food Allowances (US$100 x 5 x SR-3.66) SR-1,830.00

Less: Actual amount received by complainant upon

Total Amount — unpaid salaries and food

Thus, the NLRC ruled:

The facts are stated in the opinion of the Court.

The above facts are undisputed.

Mauro Dorao Saudi Riyal 8,811

Eduardo Libranda SR 19,648

Reynaldo Decepida SR 18,925

Renato Tiangco SR 13,715

Dionisio Borgonia SR 11,749

Eugenio Macawili SR 12,536

Salvador Ardeza SR. 7,672

The petition is impressed with merit.

G.R. No. 110524. July 29, 2002.*

SPECIAL CIVIL ACTION in the Supreme Court. Certiorari.

The facts are stated in the resolution of the Court.

To recall, the facts of the case are, as follows:

I. ARE PETITIONERS REGULAR OR CONTRACTUAL EMPLOYEES WHOSE EMPLOYMENTS ARE

Section C. Duration of Contract

A. Retirement, Death and Disability

Reason for Termination Percentage

Credited Service Percentage

III. Distribution of Benefits

10 Id., at pp. 168-170.

14 Id., at pp. 38-41.

G.R. No. 181375. July 13, 2016.*

1 Rollo, pp. 3-17.

7 Id., at pp. 20-21; CA Rollo, p. 69.

11 Id., at pp. 79-80.

12 Id., at pp. 8-23.

18 Rollo, pp. 38-39.

22 Id., at pp. 33, 38.

28 Rollo, pp. 73-76.

36 CA Rollo, pp. 130-143.

43 Id., at pp. 733-734.

60 Id., at pp. 140-143.