MODULE 2: JURISDICTION AND PROCEEDINGS BEFORE THE LABOR ARBITER

Case No. Topic: Cases involving Overseas Filipino Workers

(See RA 8042, as amended)

Case Title: PAUL V. SANTIAGO, petitioner, vs. CF SHARP CREW MANAGEMENT,

INC., respondent.

July 10, 2007

G.R. No. 162419            

TINGA, J.

Digest

Doctrine: 

The fact that the POEA Rules are silent as to the payment of damages to the affected
seafarer does not mean that the seafarer is precluded from claiming the same. The
sanctions provided for non-deployment do not end with the suspension or cancellation
of license or fine and the return of all documents at no cost to the worker. They do not
forfend a seafarer from instituting an action for damages against the employer or
agency which has failed to deploy him.

The POEA Rules only provide sanctions which the POEA can impose on erring
agencies. It does not provide for damages and money claims recoverable by
aggrieved employees because it is not the POEA, but the NLRC, which has
jurisdiction over such matters.

Facts: 

Petitioner had been working as a seafarer for Smith Bell Management, Inc.
(respondent) for about five (5) years. On 3 February 1998, petitioner signed a new
contract of employment with respondent, with the duration of nine (9) months. He was
assured of a monthly salary of US$515.00, overtime pay and other benefits. The
following day or on 4 February 1998, the contract was approved by the Philippine
Overseas Employment Administration (POEA). Petitioner was to be deployed on
board the "MSV Seaspread" which was scheduled to leave the port of Manila for
Canada on 13 February 1998.

A week before the scheduled date of departure, Capt. Pacifico Fernandez,

respondent’s Vice President, sent a facsimile message to the captain of "MSV
Seaspread," saying that he got a tip that the petitioner will jump ship in Canada.
petitioner was thus told that he would not be leaving for Canada anymore, but he was
reassured that he might be considered for deployment at some future date.

Petitioner filed a complaint for illegal dismissal, damages, and attorney's fees against
respondent and its foreign principal, Cable and Wireless (Marine) Ltd. The Labor
Arbiter ruled that the employment contract remained valid but had not commenced
since petitioner was not deployed. According to her, respondent violated the rules and
regulations governing overseas employment when it did not deploy petitioner. On
appeal by respondent, the National Labor Relations Commission (NLRC) ruled that
there is no employer-employee relationship between petitioner and respondent. In the
absence of an employer-employee relationship between the parties, the claims for
illegal dismissal, actual damages, and attorney’s fees should be dismissed. On the
other hand, the NLRC found respondent’s decision not to deploy petitioner to be a
valid exercise of its management prerogative. The CA agreed with the NLRC’s finding
that petitioner’s non-deployment was a valid exercise of respondent’s management
prerogative and that since petitioner had not departed from the Port of Manila, no
employer-employee relationship between the parties arose and any claim for
damages against the so-called employer could have no leg to stand on.

Issue: Whether the seafarer, who was prevented from leaving the port of Manila and
refused deployment without valid reason but whose POEA-approved employment
contract provides that the employer-employee relationship shall commence only upon
the seafarer’s actual departure from the port in the point of hire, is entitled to relief?

Ruling:
YES. A distinction must be made between the perfection of the employment contract
and the commencement of the employer-employee relationship. The perfection of the
contract, which in this case coincided with the date of execution thereof, occurred
when petitioner and respondent agreed on the object and the cause, as well as the
rest of the terms and conditions therein. The commencement of the employer-
employee relationship, as earlier discussed, would have taken place had petitioner
been actually deployed from the point of hire. Thus, even before the start of any
employer-employee relationship, contemporaneous with the perfection of the
employment contract was the birth of certain rights and obligations, the breach of
which may give rise to a cause of action against the erring party. Thus, if the reverse
had happened, that is the seafarer failed or refused to be deployed as agreed upon,
he would be liable for damages.
Respondent’s act of preventing petitioner from departing the port of Manila and
boarding "MSV Seaspread" constitutes a breach of contract, giving rise to petitioner’s
cause of action. Respondent unilaterally and unreasonably reneged on its obligation
to deploy petitioner and must therefore answer for the actual damages he suffered.

Despite the absence of an employer-employee relationship between petitioner and

respondent, the Court rules that the NLRC has jurisdiction over petitioner’s complaint.
The jurisdiction of labor arbiters is not limited to claims arising from employer-
employee relationships as provided under Section 10 of R.A. No. 8042 (Migrant
Workers Act). Since the present petition involves the employment contract entered
into by petitioner for overseas employment, his claims are cognizable by the labor
arbiters of the NLRC.

Article 2199 of the Civil Code provides that one is entitled to an adequate
compensation only for such pecuniary loss suffered by him as he has duly proved.
Respondent is thus liable to pay petitioner actual damages in the form of the loss of
nine (9) months’ worth of salary as provided in the contract.

Dispositive Portion:

WHEREFORE, petition is GRANTED IN PART. The Decision dated 16 October 2003

and the Resolution dated 19 February 2004 of the Court of Appeals are REVERSED
and SET ASIDE. The Decision of Labor Arbiter Teresita D. Castillon-Lora dated 29
January 1999 is REINSTATED with the MODIFICATION that respondent CF Sharp
Crew Management, Inc. is ordered to pay actual or compensatory damages in the
amount of US$4,635.00 representing salary for nine (9) months as stated in the
contract, and attorney’s fees at the reasonable rate of 10% of the recoverable
amount.
Case No. Topic: In relation to DOLE jurisdiction under 128 and 129

Case Title: EX-BATAAN VETERANS SECURITY AGENCY, INC., Petitioner, vs.

THE SECRETARY OF LABOR, Respondents.

November 20, 2007

G.R. NO. 152396

CARPIO, J.

Digest

Doctrine: 

The visitorial and enforcement powers of the DOLE Regional Director to order and
enforce compliance with labor standard laws can be exercised even where the
individual claim exceeds P5,000.

Facts: 

Ex-Bataan Veterans Security Agency, Inc. (EBVSAI) is in the business of providing

security services while private respondents are EBVSAI's employees assigned to the
National Power Corporation at Ambuklao Hydro Electric Plant, Bokod, Benguet
(Ambuklao Plant). On 20 February 1996, private respondents led by Alexander Pong
(Pong) instituted a complaint for underpayment of wages against EBVSAI before the
Regional Office of the Department of Labor and Employment (DOLE).

On 7 March 1996, the Regional Office conducted a complaint inspection at the

Ambuklao Plant where the following violations were noted: (1) non-presentation of
records; (2) non-payment of holiday pay; (3) non-payment of rest day premium; (4)
underpayment of night shift differential pay; (5) non-payment of service incentive
leave; (6) underpayment of 13th month pay; (7) no registration; (8) no annual medical
report; (9) no annual work accidental report; (10) no safety committee; and (11) no
trained first aider. On the same date, the Regional Office issued a notice of
hearing requiring EBVSAI and private respondents to attend the hearing on 22 March
1996. Other hearings were set for 8 May 1996, 27 May 1996 and 10 June 1996.

the Director of the Regional Office (Regional Director) issued an order directing the
petitioner to pay the computed deficiencies owing to the affected employees. EBVSAI
filed a motion for reconsideration and alleged that the Regional Director does not
have jurisdiction over the subject matter of the case because the money claim of each
private respondent exceeded P5,000. EBVSAI pointed out that the Regional Director
should have endorsed the case to the Labor Arbiter. The Secretary of Labor affirmed
the Regional Director’s order. The CA affirmed the SOLE’s decision.

Issue:

1. Whether the Secretary of Labor or his duly authorized representatives acquired

jurisdiction over EBVSAI; and

2. Whether the Secretary of Labor or his duly authorized representatives have

jurisdiction over the money claims of private respondents which exceed P5,000.

Ruling:

1. YES. The Rules on the Disposition of Labor Standards Cases in the Regional
Offices (rules) specifically state that notices and copies of orders shall be
served on the parties or their duly authorized representatives at their last
known address or, if they are represented by counsel, through the latter. The
rules shall be liberally construed and only in the absence of any applicable
provision will the Rules of Court apply in a suppletory character.

In this case, EBVSAI does not deny having received the notices of hearing. In fact,
on 29 March and 13 June 1996, Danilo Burgos and Edwina Manao, detachment
commander and bookkeeper of EBVSAI, respectively, appeared before the
Regional Director. They claimed that the 22 March 1996 notice of hearing was
received late and manifested that the notices should be sent to the Manila office.
Thereafter, the notices of hearing were sent to the Manila office. They were also
informed of EBVSAI's violations and were asked to present the employment
records of the private respondents for verification. They were, moreover, asked to
submit, within 10 days, proof of compliance or their position paper. The Regional
Director validly acquired jurisdiction over EBVSAI. EBVSAI can no longer question
the jurisdiction of the Regional Director after receiving the notices of hearing and
after appearing before the Regional Director.

2. YES. "the visitorial and enforcement powers of the DOLE Regional Director to
order and enforce compliance with labor standard laws can be exercised even
where the individual claim exceeds P5,000."
 However, if the labor standards case is covered by the exception clause in Article
128(b) of the Labor Code, then the Regional Director will have to endorse the case
to the appropriate Arbitration Branch of the NLRC. In order to divest the Regional
Director or his representatives of jurisdiction, the following elements must be
present: (a) that the employer contests the findings of the labor regulations officer
and raises issues thereon; (b) that in order to resolve such issues, there is a need
to examine evidentiary matters; and (c) that such matters are not verifiable in the
normal course of inspection. The rules also provide that the employer shall raise
such objections during the hearing of the case or at any time after receipt of the
notice of inspection results.

In this case, the Regional Director validly assumed jurisdiction over the money
claims of private respondents even if the claims exceeded P5,000 because such
jurisdiction was exercised in accordance with Article 128(b) of the Labor Code and
the case does not fall under the exception clause.

Dispositive Portion:
WHEREFORE, we DENY the petition. We AFFIRM the 29 May 2001 Decision and the
26 February 2002 Resolution of the Court of Appeals in CA-G.R. SP No. 57653.