1

PEOPLE OF THE PHILIPPINES,

Appellee,

 

 

 

 

- versus -

 

 

 

MELISSA CHUA,

Appellant.

 

 

G.R. No. 184058

 

Present:

 

PUNO, C.J., Chairperson,CARPIO MORALES,

LEONARDO-DE CASTRO,

BERSAMIN, and

VILLARAMA, JR., JJ.

 

Promulgated:

March 10, 2010

 

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D E C I S I O N

 

 

CARPIO MORALES, J.:

Melissa Chua (appellant) was indicted for Illegal Recruitment (Large Scale) and was

convicted thereof by the Regional Trial Court (RTC) of Manila. She was also indicted for five counts of

Estafa but was convicted only for three. The Court of Appeals, by Decision 1[1] dated February 27,

2008, affirmed appellant’s conviction.

 

The Information2[2] charging appellant, together with one Josie Campos (Josie), with Illegal

Recruitment (Large Scale), docketed as Criminal Case No. 04-222596, reads:

 

The undersigned accuses JOSIE CAMPOS and MELISSA CHUA of violation of Article 38 (a) PD 1413, amending certain provisions of Book I, PD 442, otherwise known as the New Labor Code of the Philippines, in relation to Art. 13 (b) and (c ) of said Code, as further amended by PD Nos. 1693, 1920 and 2019 and as further amended by Sec. 6 (a), (1) and (m) of RA 8042 committed in a [sic] large scale as follows:

 That sometime during the month of September, 2002, in the City of

Manila, Philippines, the said accused, conspiring and confederating together and mutually helping each other, representing themselves to have the capacity to contract, enlist and transport Filipino workers for employment abroad, did then and there willfully, unlawfully and knowingly for a fee, recruit and promise employment/job placement abroad to ERIK DE GUIA TAN, MARILYN O. MACARANAS, NAPOLEON H. YU, JR., HARRY JAMES P. KING and ROBERTO C. ANGELES for overseas employment abroad without first having secured the required license from the Department of Labor and Employment as required by law, and charge or accept directly from:

 ERIK DE GUIA TAN - P73,000.00MARILYN D. MACARANAS - 83,000.00NAPOLEON H. YU, JR. - 23,000.00

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HARRY JAMES P. KING - 23,000.00ROBERTO C. ANGELES - 23,000.00

 

For purposes of their deployment, which amounts are in excess of or greater than that specified in the schedule of allowable fees as prescribed by the POEA, and without valid reasons and without the fault of said complainants, failed to actually deploy them and failed to reimburse expenses incurred in connection with their documentation and processing for purposes of their deployment.  

x x x x 

 

The five Informations3[3] charging appellant and Josie with Estafa, docketed as Criminal Case

Nos. 04-222597-601, were similarly worded and varied only with respect to the names of the five

complainants and the amount that each purportedly gave to the accused. Thus each of the Information

reads:

 x x x x That on or about . . . in the City of Manila, Philippines, the said accused,

conspiring and confederating together and mutually helping each other, did then and there willfully, unlawfully and feloniously defraud xxx in the following manner, to wit: the said accused by means of false manifestations which they made to the said . . . to the effect that they had the power and capacity to recruit the latter as factory worker to work in Taiwan and could facilitate the processing of the pertinent papers if given the necessary amount to meet the requirements thereof, and by means of other similar deceits, induced and succeeded in inducing said xxx to give and deliver, as in fact he gave and delivered to the said accused the amount of . . . on the strength of said manifestations and representations, said accused well knowing that the same were false and fraudulent and were made solely to obtain, as in fact they did obtain the amount of . . . which amount once in their possession, with intent to defraud, they willfully, unlawfully and feloniously misappropriated, misapplied and converted to their own personal use and benefit, to the damage of said . . . in the aforesaid amount of . . ., Philippine Currency.

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 x x x x  

Appellant pleaded not guilty on arraignment. Her co-accused Josie remained at large. The

cases were consolidated, hence, trial proceeded only with respect to appellant.

 

Of the five complainants, only three testified, namely, Marilyn D. Macaranas (Marilyn), Erik

de Guia Tan (Tan) and Harry James King (King). The substance of their respective testimonies follows:

 

Marilyn’s testimony :

 

After she was introduced in June 2002 by Josie to appellant as capacitated to deploy factory

workers to Taiwan, she paid appellant P80,000 as placement fee and P3,750 as medical expenses fee, a

receipt4[4] for the first amount of which was issued by appellant.

 

Appellant had told her that she could leave for Taiwan in the last week of September 2002 but

she did not, and despite appellant’s assurance that she would leave in the first or second week of

October, just the same she did not.

 

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She thus asked for the refund of the amount she paid but appellant claimed that she was not in

possession thereof but promised anyway to raise the amount to pay her, but she never did.

 

She later learned in June 2003 that appellant was not a licensed recruiter, prompting her to file

the complaint against appellant and Josie.

 

Tan’s testimony :

 

After he was introduced by Josie to appellant at the Golden Gate, Inc., (Golden Gate) an

agency situated in Paragon Tower Hotel in Ermita, Manila, he underwent medical examination upon

appellant’s assurance that he could work in Taiwan as a factory worker with a guaranteed monthly

salary of 15,800 in Taiwan currency.

 

He thus paid appellant, on September 6, 2002, P70,0005[5] representing placement fees for

which she issued a receipt. Appellant welched on her promise to deploy him to Taiwan, however,

hence, he demanded the refund of his money but appellant failed to. He later learned that Golden Gate

was not licensed to deploy workers to Taiwan, hence, he filed the complaint against appellant and Josie.

 

King’s testimony :

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His friend and a fellow complainant Napoleon Yu introduced him to Josie who in turn

introduced appellant as one who could deploy him to Taiwan.

On September 24, 2002,6[6] he paid appellant P20,000 representing partial payment for

placement fees amounting to P80,000, but when he later inquired when he would be deployed, Golden

Gate’s office was already closed. He later learned that Golden Gate’s license had already expired,

prompting him to file the complaint.

 

Appellant denied the charges. Claiming having worked as a temporary cashier from January

to October, 2002 at the office of Golden Gate, owned by one Marilyn Calueng,7[7] she maintained that

Golden Gate was a licensed recruitment agency and that Josie, who is her godmother, was an agent.

 

Admitting having received P80,000 each from Marilyn and Tan, receipt of which she issued

but denying receiving any amount from King, she claimed that she turned over the money to the

documentation officer, one Arlene Vega, who in turn remitted the money to Marilyn Calueng whose

present whereabouts she did not know.

 

By Decision of April 5, 2006, Branch 36 of the Manila RTC convicted appellant of Illegal

Recruitment (Large Scale) and three counts of Estafa, disposing as follows:

 

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WHEREFORE, the prosecution having established the guilt of accused Melissa Chua beyond reasonable doubt, judgment is hereby rendered convicting the accused as principal of a large scale illegal recruitment and estafa three (3) counts and she is sentenced to life imprisonment and to pay a fine of Five Hundred Thousand Pesos (P500,000.00) for illegal recruitment.  

The accused is likewise convicted of estafa committed against Harry James P. King and she is sentenced to suffer the indeterminate penalty of Four (4) years and Two (2) months of prision correctional as minimum, to Six (6) years and One (1) day of prision mayor as maximum; in Criminal Case No. 04-22598; in Criminal Case No. 04-222600 committed against Marilyn Macaranas, accused is sentence [sic] to suffer the indeterminate penalty of Four (4) years and Two (2) months of prision correctional as minimum, to Twelve (12) years and one (1) day of reclusion temporal as maximum; and in Criminal Case No. 04-222601 committed against Erik de Guia Tan, she is likewise sentence [sic] to suffer an indeterminate penalty of Four (4) years and Two (2) months of prision correctional as minimum, to Eleven (11) years and One (1) day of prision mayor as maximum.  

Accused Melissa Chua is also ordered to return the amounts of P20,000.00 to Harry James P. King, P83,750.00 to Marilyn D. Macaranas, and P70,000.00 to Erik de Guia Tan.

 As regards Criminal Cases Nos. 04-222597 and 04-222599, both are

dismissed for lack of interest of complainants Roberto Angeles and Napoleon Yu, Jr. 

In the service of her sentence, the accused is credited with the full period of preventive imprisonment if she agrees in writing to abide by the disciplinary rules imposed, otherwise only 4/5 shall be credited.  

SO ORDERED. 

 

The Court of Appeals, as stated early on, affirmed the trial court’s decision by the challenged

Decision of February 27, 2008, it holding that appellant’s defense that, as temporary cashier of Golden

Gate, she received the money which was ultimately remitted to Marilyn Calueng is immaterial, she

having failed to prove the existence of an employment relationship between her and Marilyn, as well as

the legitimacy of the operations of Golden Gate and the extent of her involvement therein.

 

Citing People v. Sagayaga,8[8] the appellate court ruled that an employee of a company

engaged in illegal recruitment may be held liable as principal together with his employer if it is shown

that he, as in the case of appellant, actively and consciously participated therein.

 

Respecting the cases for Estafa, the appellate court, noting that a person convicted of illegal

recruitment may, in addition, be convicted of Estafa as penalized under Article 315, paragraph 2(a) of

the Revised Penal Code, held that the elements thereof were sufficiently established, viz: that appellant

deceived the complainants by assuring them of employment in Taiwan provided they pay the required

placement fee; that relying on such representation, the complainants paid appellant the amount

demanded; that her representation turned out to be false because she failed to deploy them as promised;

and that the complainants suffered damages when they failed to be reimbursed the amounts they paid.

 

Hence, the present appeal, appellant reiterating the same arguments she raised in the appellate

court.

 

The appeal is bereft of merit.

 

The term “recruitment and placement” is defined under Article 13(b) of the Labor Code of the

Philippines as follows:

 

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(b) “Recruitment and placement” refers to any act of canvassing, enlisting, contracting, transporting, utilizing, hiring, or procuring workers, and includes referrals, contract services, promising or advertising for employment, locally or abroad, whether for profit or not. Provided, That any person or entity which, in any manner, offers or promises for a fee employment to two or more persons shall be deemed engaged in recruitment and placement. (emphasis supplied)

 

On the other hand, Article 38, paragraph (a) of the Labor Code, as amended, under which

appellant was charged, provides:

 

Art. 38. Illegal Recruitment. – (a) Any recruitment activities, including the prohibited practices enumerated under Article 34 of this Code, to be undertaken by non-licensees or non-holders of authority shall be deemed illegal and punishable under Article 39 of this Code. The Ministry of Labor and Employment or any law enforcement officer may initiate complaints under this Article.

(b) Illegal recruitment when committed by a syndicate or in large scale shall be considered an offense involving economic sabotage and shall be penalized in accordance with Article 39 hereof.

Illegal recruitment is deemed committed by a syndicate if carried out by a group of three (3) or more persons conspiring and/or confederating with one another in carrying out any unlawful or illegal transaction, enterprise or scheme defined under the first paragraph hereof. Illegal recruitment is deemed committed in large scale if committed against three (3) or more persons individually or as a group. (emphasis supplied)

 

 

From the foregoing provisions, it is clear that any recruitment activities to be undertaken by

non-licensee or non-holder of contracts, or as in the present case, an agency with an expired license,

shall be deemed illegal and punishable under Article 39 of the Labor Code of the Philippines. And

illegal recruitment is deemed committed in large scale if committed against three or more persons

individually or as a group.

 

Thus for illegal recruitment in large scale to prosper, the prosecution has to prove three

essential elements, to wit: (1) the accused undertook a recruitment activity under Article 13(b) or any

prohibited practice under Article 34 of the Labor Code; (2) the accused did not have the license or the

authority to lawfully engage in the recruitment and placement of workers; and (3) the accused

committed such illegal activity against three or more persons individually or as a group.9[9]

 

In the present case, Golden Gate, of which appellant admitted being a cashier from January to

October 2002, was initially authorized to recruit workers for deployment abroad. Per the certification

from the POEA, Golden Gate’s license only expired on February 23, 2002 and it was delisted from the

roster of licensed agencies on April 2, 2002.

 

Appellant was positively pointed to as one of the persons who enticed the complainants to part

with their money upon the fraudulent representation that they would be able to secure for them

employment abroad. In the absence of any evidence that the complainants were motivated by improper

motives, the trial court’s assessment of their credibility shall not be interfered with by the Court.10[10]

 

910

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Even if appellant were a mere temporary cashier of Golden Gate, that did not make her any

less an employee to be held liable for illegal recruitment as principal by direct participation, together

with the employer, as it was shown that she actively and consciously participated in the recruitment

process. 11[11]

 

Assuming arguendo that appellant was unaware of the illegal nature of the recruitment

business of Golden Gate, that does not free her of liability either. Illegal Recruitment in Large Scale

penalized under Republic Act No. 8042, or “The Migrant Workers and Overseas Filipinos Act of 1995,”

is a special law, a violation of which is malum prohibitum, not malum in se. Intent is thus immaterial.

And that explains why appellant was, aside from Estafa, convicted of such offense.

 

[I]llegal recruitment is malum prohibitum, while estafa is malum in se. In the first, the criminal intent of the accused is not necessary for conviction. In the second, such an intent is imperative. Estafa under Article 315, paragraph 2, of the Revised Penal Code, is committed by any person who defrauds another by using fictitious name, or falsely pretends to possess power, influence, qualifications, property, credit, agency, business or imaginary transactions, or by means of similar deceits executed prior to or simultaneously with the commission of fraud.12[12] (emphasis supplied)

 

 

WHEREFORE, the appeal is hereby DENIED.

 

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SO ORDERED.

G.R. No. 187730               June 29, 2010

PEOPLE OF THE PHILIPPINES, Petitioner, vs.RODOLFO GALLO y GADOT, Accused-Appellant,FIDES PACARDO y JUNGCO and PILAR MANTA y DUNGO, Accused.

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D E C I S I O N

VELASCO, JR., J.:

The Case

This is an appeal from the Decision1 dated December 24, 2008 of the Court of Appeals (CA) in CA-G.R. CR-H.C. No. 02764 entitled People of the Philippines v. Rodolfo Gallo y Gadot (accused-appellant), Fides Pacardo y Jungco and Pilar Manta y Dungo (accused), which affirmed the Decision2 dated March 15, 2007 of the Regional Trial Court (RTC), Branch 30 in Manila which convicted the accused-appellant Rodolfo Gallo y Gadot ("accused-appellant") of syndicated illegal recruitment in Criminal Case No. 02-206293 and estafa in Criminal Case No. 02-206297.

The Facts

Originally, accused-appellant Gallo and accused Fides Pacardo ("Pacardo") and Pilar Manta ("Manta"), together with Mardeolyn Martir ("Mardeolyn") and nine (9) others, were charged with syndicated illegal recruitment and eighteen (18) counts of estafa committed against eighteen complainants, including Edgardo V. Dela Caza ("Dela Caza"), Sandy Guantero ("Guantero") and Danilo Sare ("Sare"). The cases were respectively docketed as Criminal Case Nos. 02-2062936 to 02-206311. However, records reveal that only Criminal Case No. 02-206293, which was filed against accused-appellant Gallo, Pacardo and Manta for syndicated illegal recruitment, and Criminal Case Nos. 02-206297, 02-206300 and 02-206308, which were filed against accused-appellant Gallo, Pacardo and Manta for estafa, proceeded to trial due to the fact that the rest of the accused remained at large. Further, the other cases, Criminal Case Nos. 02-206294 to 02-206296, 02-206298 to 02-206299, 02-206301 to 02-206307 and 02-206309 to 02-206311 were likewise provisionally dismissed upon motion of Pacardo, Manta and accused-appellant for failure of the respective complainants in said cases to appear and testify during trial.

It should also be noted that after trial, Pacardo and Manta were acquitted in Criminal Case Nos. 02-206293, 02-206297, 02-206300 and 02-206308 for insufficiency of evidence. Likewise, accused-appellant Gallo was similarly acquitted in Criminal Case Nos. 02-206300, the case filed by Guantero, and 02-206308, the case filed by Sare. However, accused-appellant was found guilty beyond reasonable doubt in Criminal Case Nos. 02-206293 and 02-206297, both filed by Dela Caza, for syndicated illegal recruitment and estafa, respectively.

Thus, the present appeal concerns solely accused-appellant’s conviction for syndicated illegal recruitment in Criminal Case No. 02-206293 and for estafa in Criminal Case No. 02-206297.

In Criminal Case No. 02-206293, the information charges the accused-appellant, together with the others, as follows:

The undersigned accuses MARDEOLYN MARTIR, ISMAEL GALANZA, NELMAR MARTIR, MARCELINO MARTIR, NORMAN MARTIR, NELSON MARTIR, MA. CECILIA M. RAMOS, LULU MENDANES, FIDES PACARDO y JUNGCO, RODOLFO GALLO y GADOT, PILAR MANTA y DUNGO, ELEONOR PANUNCIO and YEO SIN UNG of a violation of Section 6(a), (l) and (m) of Republic Act 8042, otherwise known as the Migrant Workers and Overseas Filipino Workers Act of 1995, committed by a syndicate and in large scale, as follows:

That in or about and during the period comprised between November 2000 and December, 2001, inclusive, in the City of Manila, Philippines, the said accused conspiring and confederating together and helping with one another, representing themselves to have the capacity to contract, enlist and transport Filipino workers for employment abroad, did then and there willfully and unlawfully, for a fee, recruit and promise employment/job placement abroad to FERDINAND ASISTIN, ENTICE BRENDO, REYMOND G. CENA, EDGARDO V. DELA CAZA, RAYMUND EDAYA, SANDY O. GUANTENO, RENATO V. HUFALAR, ELENA JUBICO, LUPO A. MANALO, ALMA V. MENOR, ROGELIO S. MORON, FEDILA G. NAIPA, OSCAR RAMIREZ, MARISOL L. SABALDAN, DANILO SARE, MARY BETH SARDON, JOHNNY SOLATORIO and JOEL TINIO in Korea as factory workers and charge or accept directly or indirectly from said FERDINAND ASISTIN the amount of P45,000.00; ENTICE BRENDO – P35,000.00; REYMOND G. CENA – P30,000.00; EDGARDO V. DELA CAZA – P45,000.00; RAYMUND EDAYA – P100,000.00; SANDY O. GUANTENO – P35,000.00; RENATO V. HUFALAR – P70,000.00; ELENA JUBICO – P30,000.00; LUPO A. MANALO – P75,000.00; ALMA V. MENOR – P45,000.00; ROGELIO S. MORON – P70,000.00; FEDILA G. NAIPA – P45,000.00; OSCAR RAMIREZ – P45,000.00; MARISOL L. SABALDAN – P75,000.00; DANILO SARE – P100,000.00; MARY BETH SARDON – P25,000.00; JOHNNY SOLATORIO – P35,000.00; and JOEL TINIO – P120,000.00 as placement fees in connection with their overseas employment, which amounts are in excess of or greater than those specified in the schedule of allowable fees prescribed by the POEA Board Resolution No. 02, Series 1998, and without valid reasons and without the fault of the said complainants failed to actually deploy them and failed to reimburse the expenses incurred by the said complainants in connection with their documentation and processing for purposes of their deployment.3 (Emphasis supplied)

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

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

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unlawfully and feloniously misappropriated, misapplied and converted the said amount of P45,000.00 to their own personal use and benefit, to the damage and prejudice of the said EDGARDO V. DELA CAZA in the aforesaid amount of P45,000.00, Philippine currency.

CONTRARY TO LAW.4

When arraigned on January 19, 2004, accused-appellant Gallo entered a plea of not guilty to all charges.

On March 3, 2004, the pre-trial was terminated and trial ensued, thereafter.

During the trial, the prosecution presented as their witnesses, Armando Albines Roa, the Philippine Overseas Employment Administration (POEA) representative and private complainants Dela Caza, Guanteno and Sare. On the other hand, the defense presented as its witnesses, accused-appellant Gallo, Pacardo and Manta.

Version of the Prosecution

On May 22, 2001, Dela Caza was introduced by Eleanor Panuncio to accused-appellant Gallo, Pacardo, Manta, Mardeolyn, Lulu Mendanes, Yeo Sin Ung and another Korean national at the office of MPM International Recruitment and Promotion Agency ("MPM Agency") located in Malate, Manila.

Dela Caza was told that Mardeolyn was the President of MPM Agency, while Nelmar Martir was one of the incorporators. Also, that Marcelino Martir, Norman Martir, Nelson Martir and Ma. Cecilia Ramos were its board members. Lulu Mendanes acted as the cashier and accountant, while Pacardo acted as the agency’s employee who was in charge of the records of the applicants. Manta, on the other hand, was also an employee who was tasked to deliver documents to the Korean embassy.

Accused-appellant Gallo then introduced himself as a relative of Mardeolyn and informed Dela Caza that the agency was able to send many workers abroad. Together with Pacardo and Manta, he also told Dela Caza about the placement fee of One Hundred Fifty Thousand Pesos (PhP 150,000) with a down payment of Forty-Five Thousand Pesos (PhP 45,000) and the balance to be paid through salary deduction.

Dela Caza, together with the other applicants, were briefed by Mardeolyn about the processing of their application papers for job placement in Korea as a factory worker and their possible salary. Accused Yeo Sin Ung also gave a briefing about the business and what to expect from the company and the salary.

With accused-appellant’s assurance that many workers have been sent abroad, as well as the presence of the two (2) Korean nationals and upon being shown the visas procured for the deployed workers, Dela Caza was convinced to part with his money. Thus, on May 29, 2001, he paid Forty-Five Thousand Pesos

(PhP 45,000) to MPM Agency through accused-appellant Gallo who, while in the presence of Pacardo, Manta and Mardeolyn, issued and signed Official Receipt No. 401.

Two (2) weeks after paying MPM Agency, Dela Caza went back to the agency’s office in Malate, Manila only to discover that the office had moved to a new location at Batangas Street, Brgy. San Isidro, Makati. He proceeded to the new address and found out that the agency was renamed to New Filipino Manpower Development & Services, Inc. ("New Filipino"). At the new office, he talked to Pacardo, Manta, Mardeolyn, Lulu Mendanes and accused-appellant Gallo. He was informed that the transfer was done for easy accessibility to clients and for the purpose of changing the name of the agency.

Dela Caza decided to withdraw his application and recover the amount he paid but Mardeolyn, Pacardo, Manta and Lulu Mendanes talked him out from pursuing his decision. On the other hand, accused-appellant Gallo even denied any knowledge about the money.

After two (2) more months of waiting in vain to be deployed, Dela Caza and the other applicants decided to take action. The first attempt was unsuccessful because the agency again moved to another place. However, with the help of the Office of Ambassador Señeres and the Western Police District, they were able to locate the new address at 500 Prudential Building, Carriedo, Manila. The agency explained that it had to move in order to separate those who are applying as entertainers from those applying as factory workers. Accused-appellant Gallo, together with Pacardo and Manta, were then arrested.

The testimony of prosecution witness Armando Albines Roa, a POEA employee, was dispensed with after the prosecution and defense stipulated and admitted to the existence of the following documents:

1. Certification issued by Felicitas Q. Bay, Director II, Licensing Branch of the POEA to the effect that "New Filipino Manpower Development & Services, Inc., with office address at 1256 Batangas St., Brgy. San Isidro, Makati City, was a licensed landbased agency whose license expired on December 10, 2001 and was delisted from the roster of licensed agencies on December 14, 2001." It further certified that "Fides J. Pacardo was the agency’s Recruitment Officer";

2. Certification issued by Felicitas Q. Bay of the POEA to the effect that MPM International Recruitment and Promotion is not licensed by the POEA to recruit workers for overseas employment;

3. Certified copy of POEA Memorandum Circular No. 14, Series of 1999 regarding placement fee ceiling for landbased workers.

4. Certified copy of POEA Memorandum Circular No. 09, Series of 1998 on the placement fee ceiling for Taiwan and Korean markets, and

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5. Certified copy of POEA Governing Board Resolution No. 02, series of 1998.

Version of the Defense

For his defense, accused-appellant denied having any part in the recruitment of Dela Caza. In fact, he testified that he also applied with MPM Agency for deployment to Korea as a factory worker. According to him, he gave his application directly with Mardeolyn because she was his town mate and he was allowed to pay only Ten Thousand Pesos (PhP 10,000) as processing fee. Further, in order to facilitate the processing of his papers, he agreed to perform some tasks for the agency, such as taking photographs of the visa and passport of applicants, running errands and performing such other tasks assigned to him, without salary except for some allowance. He said that he only saw Dela Caza one or twice at the agency’s office when he applied for work abroad. Lastly, that he was also promised deployment abroad but it never materialized.

Ruling of the Trial Court

On March 15, 2007, the RTC rendered its Decision convicting the accused of syndicated illegal recruitment and estafa. The dispositive portion reads:

WHEREFORE, judgment is hereby rendered as follows:

I. Accused FIDES PACARDO y JUNGO and PILAR MANTA y DUNGO are hereby ACQUITTED of the crimes charged in Criminal Cases Nos. 02-206293, 02-206297, 02-206300 and 02-206308;

II. Accused RODOLFO GALLO y GADOT is found guilty beyond reasonable doubt in Criminal Case No. 02-206293 of the crime of Illegal Recruitment committed by a syndicate and is hereby sentenced to suffer the penalty of life imprisonment and to pay a fine of ONE MILLION (Php1,000,000.00) PESOS. He is also ordered to indemnify EDGARDO DELA CAZA of the sum of FORTY-FIVE THOUSAND (Php45,000.00) PESOS with legal interest from the filing of the information on September 18, 2002 until fully paid.

III. Accused RODOLFO GALLO y GADOT in Criminal Case No. 02-206297 is likewise found guilty and is hereby sentenced to suffer the indeterminate penalty of FOUR (4) years of prision correccional as minimum to NINE (9) years of prision mayor as maximum.

IV. Accused RODOLFO GALLO y GADOT is hereby ACQUITTED of the crime charged in Criminal Cases Nos. 02-206300 and 02-206308.

Let alias warrants for the arrest of the other accused be issued anew in all the criminal cases. Pending their arrest, the cases are sent to the archives.

The immediate release of accused Fides Pacardo and Pilar Manta is hereby ordered unless detained for other lawful cause or charge.

SO ORDERED.5

Ruling of the Appellate Court

On appeal, the CA, in its Decision dated December 24, 2008, disposed of the case as follows:

WHEREFORE, the appealed Decision of the Regional Trial Court of Manila, Branch 30, in Criminal Cases Nos. 02-206293 and 02-206297, dated March 15, 2007, is AFFIRMED with the MODIFICATION that in Criminal Case No. 02-206297, for estafa, appellant is sentenced to four (4) years of prision correccional to ten (10) years of prision mayor.

SO ORDERED.6

The CA held the totality of the prosecution’s evidence showed that the accused-appellant, together with others, engaged in the recruitment of Dela Caza. His actions and representations to Dela Caza can hardly be construed as the actions of a mere errand boy.

As determined by the appellate court, the offense is considered economic sabotage having been committed by more than three (3) persons, namely, accused-appellant Gallo, Mardeolyn, Eleonor Panuncio and Yeo Sin Ung. More importantly, a personal found guilty of illegal recruitment may also be convicted of estafa.7 The same evidence proving accused-appellant’s commission of the crime of illegal recruitment in large scale also establishes his liability for estafa under paragragh 2(a) of Article 315 of the Revised Penal Code (RPC).

On January 15, 2009, the accused-appellant filed a timely appeal before this Court.

The Issues

Accused-appellant interposes in the present appeal the following assignment of errors:

I

The court a quo gravely erred in finding the accused-appellant guilty of illegal recruitment committed by a syndicate despite the failure of the prosecution to prove the same beyond reasonable doubt.

II

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The court a quo gravely erred in finding the accused-appellant guilty of estafa despite the failure of the prosecution to prove the same beyond reasonable doubt.

Our Ruling

The appeal has no merit.

Evidence supports conviction of the crime of Syndicated Illegal Recruitment

Accused-appellant avers that he cannot be held criminally liable for illegal recruitment because he was neither an officer nor an employee of the recruitment agency. He alleges that the trial court erred in adopting the asseveration of the private complainant that he was indeed an employee because such was not duly supported by competent evidence. According to him, even assuming that he was an employee, such cannot warrant his outright conviction sans evidence that he acted in conspiracy with the officers of the agency.

We disagree.

To commit syndicated illegal recruitment, three elements must be established: (1) the offender undertakes either any activity within the meaning of "recruitment and placement" defined under Article 13(b), or any of the prohibited practices enumerated under Art. 34 of the Labor Code; (2) he has no valid license or authority required by law to enable one to lawfully engage in recruitment and placement of workers;8 and (3) the illegal recruitment is committed by a group of three (3) or more persons conspiring or confederating with one another.9 When illegal recruitment is committed by a syndicate or in large scale, i.e., if it is committed against three (3) or more persons individually or as a group, it is considered an offense involving economic sabotage.10

Under Art. 13(b) of the Labor Code, "recruitment and placement" refers to "any act of canvassing, enlisting, contracting, transporting, utilizing, hiring or procuring workers, and includes referrals, contract services, promising or advertising for employment, locally or abroad, whether for profit or not".

After a thorough review of the records, we believe that the prosecution was able to establish the elements of the offense sufficiently. The evidence readily reveals that MPM Agency was never licensed by the POEA to recruit workers for overseas employment.

Even with a license, however, illegal recruitment could still be committed under Section 6 of Republic Act No. 8042 ("R.A. 8042"), otherwise known as the Migrants and Overseas Filipinos Act of 1995, viz:

Sec. 6. Definition. – For purposes of this Act, illegal recruitment shall mean any act of canvassing, enlisting, contracting, transporting, utilizing, hiring, or procuring workers and includes referring, contract services, promising or advertising for employment abroad, whether for profit or not, when

undertaken by a non-licensee or non-holder of authority contemplated under Article 13(f) of Presidential Decree No. 442, as amended, otherwise known as the Labor Code of the Philippines: Provided, That any such non-licensee or non-holder who, in any manner, offers or promises for a fee employment abroad to two or more persons shall be deemed so engaged. It shall, likewise, include the following act, whether committed by any person, whether a non-licensee, non-holder, licensee or holder of authority:

(a) To charge or accept directly or indirectly any amount greater than that specified in the schedule of allowable fees prescribed by the Secretary of Labor and Employment, or to make a worker pay any amount greater than that actually received by him as a loan or advance;

x x x x

(l) Failure to actually deploy without valid reason as determined by the Department of Labor and Employment; and

(m) Failure to reimburse expenses incurred by the worker in connection with his documentation and processing for purposes of deployment and processing for purposes of deployment, in cases where the deployment does not actually take place without the worker’s fault. Illegal recruitment when committed by a syndicate or in large scale shall be considered an offense involving economic sabotage.

Illegal recruitment is deemed committed by a syndicate if carried out by a group of three (3) or more persons conspiring or confederating with one another. It is deemed committed in large scale if committed against three (3) or more persons individually or as a group.

The persons criminally liable for the above offenses are the principals, accomplices and accessories. In case of juridical persons, the officers having control, management or direction of their business shall be liable.

In the instant case, accused-appellant committed the acts enumerated in Sec. 6 of R.A. 8042. Testimonial evidence presented by the prosecution clearly shows that, in consideration of a promise of foreign employment, accused-appellant received the amount of Php 45,000.00 from Dela Caza. When accused-appellant made misrepresentations concerning the agency’s purported power and authority to recruit for overseas employment, and in the process, collected money in the guise of placement fees, the former clearly committed acts constitutive of illegal recruitment.11 Such acts were accurately described in the testimony of prosecution witness, Dela Caza, to wit:

PROS. MAGABLIN

Q: How about this Rodolfo Gallo?

A: He was the one who received my money.

11

Q: Aside from receiving your money, was there any other representations or acts made by Rodolfo Gallo?

A: He introduced himself to me as relative of Mardeolyn Martir and he even intimated to me that their agency has sent so many workers abroad.

x x x x

PROS. MAGABLIN

Q: Mr. Witness, as you claimed you tried to withdraw your application at the agency. Was there any instance that you were able to talk to Fides Pacardo, Rodolfo Gallo and Pilar Manta?

A: Yes, ma’am.

Q: What was the conversation that transpired among you before you demanded the return of your money and documents?

A: When I tried to withdraw my application as well as my money, Mr. Gallo told me "I know nothing about your money" while Pilar Manta and Fides Pacardo told me, why should I withdraw my application and my money when I was about to be [deployed] or I was about to leave.

x x x x

Q: And what transpired at that office after this Panuncio introduced you to those persons whom you just mentioned?

A: The three of them including Rodolfo Gallo told me that the placement fee in that agency is Php 150,000.00 and then I should deposit the amount of Php 45,000.00. After I have deposited said amount, I would just wait for few days…

x x x x

Q: They were the one (sic) who told you that you have to pay Php 45,000.00 for deposit only?

A: Yes, ma’am, I was told by them to deposit Php 45,000.00 and then I would pay the remaining balance of Php105,000.00, payment of it would be through salary deduction.

Q: That is for what Mr. Witness again?

A: For placement fee.

Q: Now did you believe to (sic) them?

A: Yes, ma’am.

Q: Why, why did you believe?

A: Because of the presence of the two Korean nationals and they keep on telling me that they have sent abroad several workers and they even showed visas of the records that they have already deployed abroad.

Q: Aside from that, was there any other representations which have been made upon you or make you believe that they can deploy you?

A: At first I was adamant but they told me "If you do not want to believe us, then we could do nothing." But once they showed me the [visas] of the people whom they have deployed abroad, that was the time I believe them.

Q: So after believing on the representations, what did you do next Mr. Witness?

A: That was the time that I decided to give the money.

x x x x

PROS. MAGABLIN

Q: Do you have proof that you gave the money?

A: Yes, ma’am.

Q: Where is your proof that you gave the money?

A: I have it here.

PROS. MAGABLIN:

12

Witness is producing to this court a Receipt dated May 28, 2001 in the amount of Php45,000.00 which for purposes of record Your Honor, may I request that the same be marked in the evidence as our Exhibit "F".

x x x x

PROS. MAGABLIN

Q: There appears a signature appearing at the left bottom portion of this receipt. Do you know whose signature is this?

A: Yes, ma’am, signature of Rodolfo Gallo.

PROS. MAGABLIN

Q: Why do you say that that is his signature?

A: Rodolfo Gallo’s signature Your Honor because he was the one who received the money and he was the one who filled up this O.R. and while he was doing it, he was flanked by Fides Pacardo, Pilar Manta and Mardeolyn Martir.

x x x x

Q: So it was Gallo who received your money?

A: Yes, ma’am.

PROS. MAGABLIN

Q: And after that, what did this Gallo do after he received your money?

A: They told me ma’am just to call up and make a follow up with our agency.

x x x x

Q: Now Mr. Witness, after you gave your money to the accused, what happened with the application, with the promise of employment that he promised?

A: Two (2) weeks after giving them the money, they moved to a new office in Makati, Brgy. San Isidro.

x x x x

Q: And were they able to deploy you as promised by them?

A: No, ma’am, they were not able to send us abroad.12

Essentially, Dela Caza appeared very firm and consistent in positively identifying accused-appellant as one of those who induced him and the other applicants to part with their money. His testimony showed that accused-appellant made false misrepresentations and promises in assuring them that after they paid the placement fee, jobs in Korea as factory workers were waiting for them and that they would be deployed soon. In fact, Dela Caza personally talked to accused-appellant and gave him the money and saw him sign and issue an official receipt as proof of his payment. Without a doubt, accused-appellants’ actions constituted illegal recruitment.

Additionally, accused-appellant cannot argue that the trial court erred in finding that he was indeed an employee of the recruitment agency. On the contrary, his active participation in the illegal recruitment is unmistakable. The fact that he was the one who issued and signed the official receipt belies his profession of innocence.

This Court likewise finds the existence of a conspiracy between the accused-appellant and the other persons in the agency who are currently at large, resulting in the commission of the crime of syndicated illegal recruitment.

In this case, it cannot be denied that the accused-appellent together with Mardeolyn and the rest of the officers and employees of MPM Agency participated in a network of deception. Verily, the active involvement of each in the recruitment scam was directed at one single purpose – to divest complainants with their money on the pretext of guaranteed employment abroad. The prosecution evidence shows that complainants were briefed by Mardeolyn about the processing of their papers for a possible job opportunity in Korea, as well as their possible salary. Likewise, Yeo Sin Ung, a Korean national, gave a briefing about the business and what to expect from the company. Then, here comes accused-appellant who introduced himself as Mardeolyn’s relative and specifically told Dela Caza of the fact that the agency was able to send many workers abroad. Dela Caza was even showed several workers visas who were already allegedly deployed abroad. Later on, accused-appellant signed and issued an official receipt acknowledging the down payment of Dela Caza. Without a doubt, the nature and extent of the actions of accused-appellant, as well as with the other persons in MPM Agency clearly show unity of action towards a common undertaking. Hence, conspiracy is evidently present.

In People v. Gamboa,13 this Court discussed the nature of conspiracy in the context of illegal recruitment, viz:

13

Conspiracy to defraud aspiring overseas contract workers was evident from the acts of the malefactors whose conduct before, during and after the commission of the crime clearly indicated that they were one in purpose and united in its execution. Direct proof of previous agreement to commit a crime is not necessary as it may be deduced from the mode and manner in which the offense was perpetrated or inferred from the acts of the accused pointing to a joint purpose and design, concerted action and community of interest. As such, all the accused, including accused-appellant, are equally guilty of the crime of illegal recruitment since in a conspiracy the act of one is the act of all.

To reiterate, in establishing conspiracy, it is not essential that there be actual proof that all the conspirators took a direct part in every act. It is sufficient that they acted in concert pursuant to the same objective.14

Estafa

The prosecution likewise established that accused-appellant is guilty of the crime of estafa as defined under Article 315 paragraph 2(a) of the Revised Penal Code, viz:

Art. 315. Swindling (estafa). – Any person who shall defraud another by any means mentioned hereinbelow…

x x x x

2. By means of any of the following false pretenses or fraudulent acts executed prior to or simultaneously with the commission of the fraud:

(a) By using fictitious name, or falsely pretending to possess power, influence, qualifications, property, credit, agency, business or imaginary transactions; or by means of other similar deceits.

The elements of estafa in general are: (1) that the accused defrauded another (a) by abuse of confidence, or (b) by means of deceit; and (2) that damage or prejudice capable of pecuniary estimation is caused to the offended party or third person.15 Deceit is the false representation of a matter of fact, whether by words or conduct, by false or misleading allegations, or by concealment of that which should have been disclosed; and which deceives or is intended to deceive another so that he shall act upon it, to his legal injury.

All these elements are present in the instant case: the accused-appellant, together with the other accused at large, deceived the complainants into believing that the agency had the power and capability to send them abroad for employment; that there were available jobs for them in Korea as factory workers; that by reason or on the strength of such assurance, the complainants parted with their money in payment of the placement fees; that after receiving the money, accused-appellant and his co-accused went into hiding by changing their office locations without informing complainants; and that complainants were

never deployed abroad. As all these representations of the accused-appellant proved false, paragraph 2(a), Article 315 of the Revised Penal Code is thus applicable.1avvphi1

Defense of Denial Cannot Prevail over Positive Identification

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

The defense has miserably failed to show any evidence of ill motive on the part of the prosecution witnesses as to falsely testify against him.

Therefore, between the categorical statements of the prosecution witnesses, on the one hand, and bare denials of the accused, on the other hand, the former must prevail.17

Moreover, this Court accords the trial court’s findings with the probative weight it deserves in the absence of any compelling reason to discredit the same. It is a fundamental judicial dictum that the findings of fact of the trial court are not disturbed on appeal except when it overlooked, misunderstood or misapplied some facts or circumstances of weight and substance that would have materially affected the outcome of the case. We find that the trial court did not err in convicting the accused-appellant.

WHEREFORE, the appeal is DENIED for failure to sufficiently show reversible error in the assailed decision. The Decision dated December 24, 2008 of the CA in CA-G.R. CR-H.C. No. 02764 is AFFIRMED.

No costs.

SO ORDERED.

CLAUDIO S. YAP, Petitioner,

  

- versus -  

G.R. No. 179532

Present: CARPIO, J., Chairperson,NACHURA,PERALTA, ABAD, and

14

 THENAMARIS SHIP’S MANAGEMENT and INTERMARE MARITIME AGENCIES, INC., Respondents.

MENDOZA, JJ.

Promulgated:May 30, 2011

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

DECISION

 

NACHURA, J.:

 

 

Before this Court is a Petition for Review on Certiorari13[1] under Rule 45 of the Rules of

Civil Procedure, seeking the reversal of the Court of Appeals (CA) Decision 14[2] dated February 28,

2007, which affirmed with modification the National Labor Relations Commission (NLRC)

resolution15[3] dated April 20, 2005.

 

The undisputed facts, as found by the CA, are as follows:

 

 

131415

[Petitioner] Claudio S. Yap was employed as electrician of the vessel, M/T SEASCOUT on 14 August 2001 by Intermare Maritime Agencies, Inc. in behalf of its principal, Vulture Shipping Limited. The contract of employment entered into by Yap and Capt. Francisco B. Adviento, the General Manager of Intermare, was for a duration of 12 months. On 23 August 2001, Yap boarded M/T SEASCOUT and commenced his job as electrician. However, on or about 08 November 2001, the vessel was sold. The Philippine Overseas Employment Administration (POEA) was informed about the sale on 06 December 2001 in a letter signed by Capt. Adviento. Yap, along with the other crewmembers, was informed by the Master of their vessel that the same was sold and will be scrapped. They were also informed about the Advisory sent by Capt. Constatinou, which states, among others:

 “ …PLEASE ASK YR OFFICERS AND RATINGS IF THEY WISH TO

BE TRANSFERRED TO OTHER VESSELS AFTER VESSEL S DELIVERY (GREEK VIA ATHENS-PHILIPINOS VIA MANILA…

…FOR CREW NOT WISH TRANSFER TO DECLARE THEIR PROSPECTED TIME FOR REEMBARKATION IN ORDER TO SCHEDULE THEM ACCLY…”

 Yap received his seniority bonus, vacation bonus, extra bonus along with

the scrapping bonus. However, with respect to the payment of his wage, he refused to accept the payment of one-month basic wage. He insisted that he was entitled to the payment of the unexpired portion of his contract since he was illegally dismissed from employment. He alleged that he opted for immediate transfer but none was made.

 [Respondents], for their part, contended that Yap was not illegally

dismissed. They alleged that following the sale of the M/T SEASCOUT, Yap signed off from the vessel on 10 November 2001 and was paid his wages corresponding to the months he worked or until 10 November 2001 plus his seniority bonus, vacation bonus and extra bonus. They further alleged that Yap’s employment contract was validly terminated due to the sale of the vessel and no arrangement was made for Yap’s transfer to Thenamaris’ other vessels.16[4]

 

 

Thus, Claudio S. Yap (petitioner) filed a complaint for Illegal Dismissal with Damages and

Attorney’s Fees before the Labor Arbiter (LA). Petitioner claimed that he was entitled to the salaries

corresponding to the unexpired portion of his contract. Subsequently, he filed an amended complaint,

16

15

impleading Captain Francisco Adviento of respondents Intermare Maritime Agencies, Inc. (Intermare)

and Thenamaris Ship’s Management (respondents), together with C.J. Martionos, Interseas Trading and

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

 

On July 26, 2004, the LA rendered a decision17[5] in favor of petitioner, finding the latter to

have been constructively and illegally dismissed by respondents. Moreover, the LA found that

respondents acted in bad faith when they assured petitioner of re-embarkation and required him to

produce an electrician certificate during the period of his contract, but actually he was not able to board

one despite of respondents’ numerous vessels. Petitioner made several follow-ups for his re-

embarkation but respondents failed to heed his plea; thus, petitioner was forced to litigate in order to

vindicate his rights. Lastly, the LA opined that since the unexpired portion of petitioner’s contract was

less than one year, petitioner was entitled to his salaries for the unexpired portion of his contract for a

period of nine months. The LA disposed, as follows:

 

 WHEREFORE, in view of the foregoing, a decision is hereby rendered

declaring complainant to have been constructively dismissed. Accordingly, respondents Intermare Maritime Agency Incorporated, Thenamaris Ship’s Mgt., and Vulture Shipping Limited are ordered to pay jointly and severally complainant Claudio S. Yap the sum of $12,870.00 or its peso equivalent at the time of payment. In addition, moral damages of ONE HUNDRED THOUSAND PESOS (P100,000.00) and exemplary damages of FIFTY THOUSAND PESOS (P50,000.00) are awarded plus ten percent (10%) of the total award as attorney’s fees.

 Other money claims are DISMISSED for lack of merit.

 SO ORDERED.18[6] 

1718

 

Aggrieved, respondents sought recourse from the NLRC.

 

In its decision19[7] dated January 14, 2005, the NLRC affirmed the LA’s findings that

petitioner was indeed constructively and illegally dismissed; that respondents’ bad faith was evident on

their wilful failure to transfer petitioner to another vessel; and that the award of attorney’s fees was

warranted. However, the NLRC held that instead of an award of salaries corresponding to nine months,

petitioner was only entitled to salaries for three months as provided under Section 1020[8] of Republic

Act (R.A.) No. 8042,21[9] as enunciated in our ruling in Marsaman Manning Agency, Inc. v. National

Labor Relations Commission.22[10] Hence, the NLRC ruled in this wise:

 

WHEREFORE, premises considered, the decision of the Labor Arbiter finding the termination of complainant illegal is hereby AFFIRMED with a MODIFICATION. Complainant[’s] salary for the unexpired portion of his contract should only be limited to three (3) months basic salary.

 Respondents Intermare Maritime Agency, Inc.[,] Vulture Shipping

Limited and Thenamaris Ship Management are hereby ordered to jointly and severally pay complainant, the following:

 1.      Three (3) months basic salary – US$4,290.00 or its peso equivalent

at the time of actual payment.2.      Moral damages – P100,000.003.      Exemplary damages – P50,000.004.      Attorney’s fees equivalent to 10% of the total monetary award. SO ORDERED.23[11]

1920212223

16

 Respondents filed a Motion for Partial Reconsideration,24[12] praying for the reversal and setting aside of the NLRC decision, and that a new one be rendered dismissing the complaint. Petitioner, on the other hand, filed his own Motion for Partial Reconsideration,25[13] praying that he be paid the nine (9)-month basic salary, as awarded by the LA.

 

On April 20, 2005, a resolution26[14] was rendered by the NLRC, affirming the findings of

Illegal Dismissal and respondents’ failure to transfer petitioner to another vessel. However, finding

merit in petitioner’s arguments, the NLRC reversed its earlier Decision, holding that “ there can be no

choice to grant only three (3) months salary for every year of the unexpired term because there is no full

year of unexpired term which this can be applied.” Hence –

 

 

WHEREFORE, premises considered, complainant’s Motion for Partial Reconsideration is hereby granted. The award of three (3) months basic salary in the sum of US$4,290.00 is hereby modified in that complainant is entitled to his salary for the unexpired portion of employment contract in the sum of US$12,870.00 or its peso equivalent at the time of actual payment.

 

All aspect of our January 14, 2005 Decision STANDS.

 

SO ORDERED.27[15]

24252627

 

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

 

Undaunted, respondents filed a petition for certiorari28[16] under Rule 65 of the Rules of

Civil Procedure before the CA. On February 28, 2007, the CA affirmed the findings and ruling of the

LA and the NLRC that petitioner was constructively and illegally dismissed. The CA held that

respondents failed to show that the NLRC acted without statutory authority and that its findings were not

supported by law, jurisprudence, and evidence on record. Likewise, the CA affirmed the lower agencies’

findings that the advisory of Captain Constantinou, taken together with the other documents and

additional requirements imposed on petitioner, only meant that the latter should have been re-embarked.

In the same token, the CA upheld the lower agencies’ unanimous finding of bad faith, warranting the

imposition of moral and exemplary damages and attorney’s fees. However, the CA ruled that the NLRC

erred in sustaining the LA’s interpretation of Section 10 of R.A. No. 8042. In this regard, the CA relied

on the clause “or for three months for every year of the unexpired term, whichever is less” provided in

the 5th paragraph of Section 10 of R.A. No. 8042 and held:

 

In the present case, the employment contract concerned has a term of one year or 12 months which commenced on August 14, 2001. However, it was preterminated without a valid cause. [Petitioner] was paid his wages for the corresponding months he worked until the 10th of November. Pursuant to the provisions of Sec. 10, [R.A. No.] 8042, therefore, the option of “three months for every year of the unexpired term” is applicable.29[17]

 

2829

17

Thus, the CA provided, to wit:

 

WHEREFORE, premises considered, this Petition for Certiorari is DENIED. The Decision dated January 14, 2005, and Resolutions, dated April 20, 2005 and July 29, 2005, respectively, of public respondent National Labor Relations Commission-Fourth Division, Cebu City, in NLRC No. V-000038-04 (RAB VIII (OFW)-04-01-0006) are hereby AFFIRMED with the MODIFICATION that private respondent is entitled to three (3) months of basic salary computed at US$4,290.00 or its peso equivalent at the time of actual payment.

 

Costs against Petitioners.30[18]

Both parties filed their respective motions for reconsideration, which the CA, however, denied

in its Resolution31[19] dated August 30, 2007.

 

Unyielding, petitioner filed this petition, raising the following issues:

 

1)            Whether or not Section 10 of R.A. [No.] 8042, to the extent that it affords an illegally dismissed migrant worker the lesser benefit of – “salaries for [the] unexpired portion of his employment contract or for three (3) months for every year of the unexpired term, whichever is less” – is constitutional; and

 

2)            Assuming that it is, whether or not the Court of Appeals gravely erred in granting petitioner only three (3) months backwages when his unexpired

3031

term of 9 months is far short of the “every year of the unexpired term” threshold.32[20]

 

 

In the meantime, while this case was pending before this Court, we declared as

unconstitutional the clause “or for three months for every year of the unexpired term, whichever is less”

provided in the 5th paragraph of Section 10 of R.A. No. 8042 in the case of Serrano v. Gallant Maritime

Services, Inc.33[21] on March 24, 2009.

 

Apparently, unaware of our ruling in Serrano, petitioner claims that the 5th paragraph of

Section 10, R.A. No. 8042, is violative of Section 1,34[22] Article III and Section 3,35[23] Article XIII of

the Constitution to the extent that it gives an erring employer the option to pay an illegally dismissed

migrant worker only three months for every year of the unexpired term of his contract; that said

provision of law has long been a source of abuse by callous employers against migrant workers; and that

said provision violates the equal protection clause under the Constitution because, while illegally

dismissed local workers are guaranteed under the Labor Code of reinstatement with full backwages

computed from the time compensation was withheld from them up to their actual reinstatement, migrant

workers, by virtue of Section 10 of R.A. No. 8042, have to waive nine months of their collectible

backwages every time they have a year of unexpired term of contract to reckon with. Finally, petitioner

posits that, assuming said provision of law is constitutional, the CA gravely abused its discretion when it

reduced petitioner’s backwages from nine months to three months as his nine-month unexpired term

cannot accommodate the lesser relief of three months for every year of the unexpired term.36[24]

3233343536

18

 

On the other hand, respondents, aware of our ruling in Serrano, aver that our pronouncement

of unconstitutionality of the clause “or for three months for every year of the unexpired term, whichever

is less” provided in the 5th paragraph of Section 10 of R.A. No. 8042 in Serrano should not apply in this

case because Section 10 of R.A. No. 8042 is a substantive law that deals with the rights and obligations

of the parties in case of Illegal Dismissal of a migrant worker and is not merely procedural in character.

Thus, pursuant to the Civil Code, there should be no retroactive application of the law in this case.

Moreover, respondents asseverate that petitioner’s tanker allowance of US$130.00 should not be

included in the computation of the award as petitioner’s basic salary, as provided under his contract, was

only US$1,300.00. Respondents submit that the CA erred in its computation since it included the said

tanker allowance. Respondents opine that petitioner should be entitled only to US$3,900.00 and not to

US$4,290.00, as granted by the CA. Invoking Serrano, respondents claim that the tanker allowance

should be excluded from the definition of the term “salary.” Also, respondents manifest that the full sum

of P878,914.47 in Intermare’s bank account was garnished and subsequently withdrawn and deposited

with the NLRC Cashier of Tacloban City on February 14, 2007. On February 16, 2007, while this case

was pending before the CA, the LA issued an Order releasing the amount of P781,870.03 to petitioner as

his award, together with the sum of P86,744.44 to petitioner’s former lawyer as attorney’s fees, and the

amount of P3,570.00 as execution and deposit fees. Thus, respondents pray that the instant petition be

denied and that petitioner be directed to return to Intermare the sum of US$8,970.00 or its peso

equivalent.37[25]

 

On this note, petitioner counters that this new issue as to the inclusion of the tanker allowance

in the computation of the award was not raised by respondents before the LA, the NLRC and the CA,

nor was it raised in respondents’ pleadings other than in their Memorandum before this Court, which

should not be allowed under the circumstances.38[26]

3738

The petition is impressed with merit.

 

Prefatorily, it bears emphasis that the unanimous finding of the LA, the NLRC and the CA that

the dismissal of petitioner was illegal is not disputed. Likewise not disputed is the tribunals’ unanimous

finding of bad faith on the part of respondents, thus, warranting the award of moral and exemplary

damages and attorney’s fees. What remains in issue, therefore, is the constitutionality of the 5 th

paragraph of Section 10 of R.A. No. 8042 and, necessarily, the proper computation of the lump-sum

salary to be awarded to petitioner by reason of his illegal dismissal.

 

Verily, we have already declared in Serrano that the clause “or for three months for every year

of the unexpired term, whichever is less” provided in the 5th paragraph of Section 10 of R.A. No. 8042 is

unconstitutional for being violative of the rights of Overseas Filipino Workers (OFWs) to equal

protection of the laws. In an exhaustive discussion of the intricacies and ramifications of the said clause,

this Court, in Serrano, pertinently held:

 

The Court concludes that the subject clause contains a suspect classification in that, in the computation of the monetary benefits of fixed-term employees who are illegally discharged, it imposes a 3-month cap on the claim of OFWs with an unexpired portion of one year or more in their contracts, but none on the claims of other OFWs or local workers with fixed-term employment. The subject clause singles out one classification of OFWs and burdens it with a peculiar disadvantage.39[27]

39

19

 

Moreover, this Court held therein that the subject clause does not state or imply any definitive

governmental purpose; hence, the same violates not just therein petitioner’s right to equal protection, but

also his right to substantive due process under Section 1, Article III of the Constitution.40[28]

Consequently, petitioner therein was accorded his salaries for the entire unexpired period of nine months

and 23 days of his employment contract, pursuant to law and jurisprudence prior to the enactment of

R.A. No. 8042.

 

We have already spoken. Thus, this case should not be different from Serrano.

 

As a general rule, an unconstitutional act is not a law; it confers no rights; it imposes no

duties; it affords no protection; it creates no office; it is inoperative as if it has not been passed at all. The

general rule is supported by Article 7 of the Civil Code, which provides:

 

Art. 7. Laws are repealed only by subsequent ones, and their violation or non-observance shall not be excused by disuse or custom or practice to the contrary.

 

 

The doctrine of operative fact serves as an exception to the aforementioned general rule. In

Planters Products, Inc. v. Fertiphil Corporation,41[29] we held:

4041

 

The doctrine of operative fact, as an exception to the general rule, only applies as a matter of equity and fair play. It nullifies the effects of an unconstitutional law by recognizing that the existence of a statute prior to a determination of unconstitutionality is an operative fact and may have consequences which cannot always be ignored. The past cannot always be erased by a new judicial declaration.

The doctrine is applicable when a declaration of unconstitutionality will impose an undue burden on those who have relied on the invalid law. Thus, it was applied to a criminal case when a declaration of unconstitutionality would put the accused in double jeopardy or would put in limbo the acts done by a municipality in reliance upon a law creating it.42[30]

 

Following Serrano, we hold that this case should not be included in the aforementioned

exception. After all, it was not the fault of petitioner that he lost his job due to an act of illegal dismissal

committed by respondents. To rule otherwise would be iniquitous to petitioner and other OFWs, and

would, in effect, send a wrong signal that principals/employers and recruitment/manning agencies may

violate an OFW’s security of tenure which an employment contract embodies and actually profit from

such violation based on an unconstitutional provision of law.

 

In the same vein, we cannot subscribe to respondents’ postulation that the tanker allowance of

US$130.00 should not be included in the computation of the lump-sum salary to be awarded to

petitioner.

 

42

20

First. It is only at this late stage, more particularly in their Memorandum, that respondents are

raising this issue. It was not raised before the LA, the NLRC, and the CA. They did not even assail the

award accorded by the CA, which computed the lump-sum salary of petitioner at the basic salary of

US$1,430.00, and which clearly included the US$130.00 tanker allowance. Hence, fair play, justice, and

due process dictate that this Court cannot now, for the first time on appeal, pass upon this question.

Matters not taken up below cannot be raised for the first time on appeal. They must be raised seasonably

in the proceedings before the lower tribunals. Questions raised on appeal must be within the issues

framed by the parties; consequently, issues not raised before the lower tribunals cannot be raised for the

first time on appeal.43[31]

 

Second. Respondents’ invocation of Serrano is unavailing. Indeed, we made the following

pronouncements in Serrano, to wit:

 

The word salaries in Section 10(5) does not include overtime and leave pay. For seafarers like petitioner, DOLE Department Order No. 33, series 1996, provides a Standard Employment Contract of Seafarers, in which salary is understood as the basic wage, exclusive of overtime, leave pay and other bonuses; whereas overtime pay is compensation for all work “performed” in excess of the regular eight hours, and holiday pay is compensation for any work “performed” on designated rest days and holidays.44[32]

 

 

A close perusal of the contract reveals that the tanker allowance of US$130.00 was not

categorized as a bonus but was rather encapsulated in the basic salary clause, hence, forming part of the

basic salary of petitioner. Respondents themselves in their petition for certiorari before the CA averred

4344

that petitioner’s basic salary, pursuant to the contract, was “US$1,300.00 + US$130.00 tanker

allowance.”45[33] If respondents intended it differently, the contract per se should have indicated that

said allowance does not form part of the basic salary or, simply, the contract should have separated it

from the basic salary clause.

 

A final note.

 

We ought to be reminded of the plight and sacrifices of our OFWs. In Olarte v. Nayona,46[34]

this Court held that:

 

Our overseas workers belong to a disadvantaged class. Most of them come from the poorest sector of our society. Their profile shows they live in suffocating slums, trapped in an environment of crimes. Hardly literate and in ill health, their only hope lies in jobs they find with difficulty in our country. Their unfortunate circumstance makes them easy prey to avaricious employers. They will climb mountains, cross the seas, endure slave treatment in foreign lands just to survive. Out of despondence, they will work under sub-human conditions and accept salaries below the minimum. The least we can do is to protect them with our laws.

 

 

WHEREFORE, the Petition is GRANTED. The Court of Appeals Decision dated February

28, 2007 and Resolution dated August 30, 2007 are hereby MODIFIED to the effect that petitioner is

4546

21

AWARDED his salaries for the entire unexpired portion of his employment contract consisting of nine

months computed at the rate of US$1,430.00 per month. All other awards are hereby AFFIRMED. No

costs.

 

SO ORDERED.

 

 

G.R. No. 167614               March 24, 2009

ANTONIO M. SERRANO, Petitioner, vs.Gallant MARITIME SERVICES, INC. and MARLOW NAVIGATION CO., INC., Respondents.

D E C I S I O N

AUSTRIA-MARTINEZ, J.:

For decades, the toil of solitary migrants has helped lift entire families and communities out of poverty. Their earnings have built houses, provided health care, equipped schools and planted the seeds of businesses. They have woven together the world by transmitting ideas and knowledge from country to country. They have provided the dynamic human link between cultures, societies and economies. Yet, only recently have we begun to understand not only how much international migration impacts development, but how smart public policies can magnify this effect.

United Nations Secretary-General Ban Ki-MoonGlobal Forum on Migration and DevelopmentBrussels, July 10, 20071

For Antonio Serrano (petitioner), a Filipino seafarer, the last clause in the 5th paragraph of Section 10, Republic Act (R.A.) No. 8042,2 to wit:

Sec. 10. Money Claims. - x x x 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 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.

x x x x (Emphasis and underscoring supplied)

does not magnify the contributions of overseas Filipino workers (OFWs) to national development, but exacerbates the hardships borne by them by unduly limiting their entitlement in case of illegal dismissal

22

to their lump-sum salary either for the unexpired portion of their employment contract "or for three months for every year of the unexpired term, whichever is less" (subject clause). Petitioner claims that the last clause violates the OFWs' constitutional rights in that it impairs the terms of their contract, deprives them of equal protection and denies them due process.

By way of Petition for Review under Rule 45 of the Rules of Court, petitioner assails the December 8, 2004 Decision3 and April 1, 2005 Resolution4 of the Court of Appeals (CA), which applied the subject clause, entreating this Court to declare the subject clause unconstitutional.

Petitioner was hired by Gallant Maritime Services, Inc. and Marlow Navigation Co., Ltd. (respondents) under a Philippine Overseas Employment Administration (POEA)-approved Contract of Employment with the following terms and conditions:

Duration of contract 12 months

Position Chief Officer

Basic monthly salary US$1,400.00

Hours of work 48.0 hours per week

Overtime US$700.00 per month

Vacation leave with pay 7.00 days per month5

On March 19, 1998, the date of his departure, petitioner was constrained to accept a downgraded employment contract for the position of Second Officer with a monthly salary of US$1,000.00, upon the assurance and representation of respondents that he would be made Chief Officer by the end of April 1998.6

Respondents did not deliver on their promise to make petitioner Chief Officer.7 Hence, petitioner refused to stay on as Second Officer and was repatriated to the Philippines on May 26, 1998.8

Petitioner's employment contract was for a period of 12 months or from March 19, 1998 up to March 19, 1999, but at the time of his repatriation on May 26, 1998, he had served only two (2) months and seven (7) days of his contract, leaving an unexpired portion of nine (9) months and twenty-three (23) days.

Petitioner filed with the Labor Arbiter (LA) a Complaint9 against respondents for constructive dismissal and for payment of his money claims in the total amount of US$26,442.73, broken down as follows:

May 27/31,

US$ 413.90

1998 (5 days) incl. Leave pay

June 01/30, 1998

2,590.00

July 01/31, 1998

2,590.00

August 01/31, 1998

2,590.00

Sept. 01/30, 1998

2,590.00

Oct. 01/31, 1998

2,590.00

Nov. 01/30, 1998

2,590.00

Dec. 01/31, 1998

2,590.00

Jan. 01/31, 1999

2,590.00

Feb. 01/28, 1999

2,590.00

Mar. 1/19, 1999 (19 days) incl. leave pay

1,640.00

  --------------------------------------------------------------------------------

  25,382.23

Amount adjusted to chief

 

23

mate's salary

(March 19/31, 1998 to April 1/30, 1998) +

1,060.5010

  ----------------------------------------------------------------------------------------------

TOTAL CLAIM

US$ 26,442.7311

as well as moral and exemplary damages and attorney's fees.

The LA rendered a Decision dated July 15, 1999, declaring the dismissal of petitioner illegal and awarding him monetary benefits, to wit:

WHEREFORE, premises considered, judgment is hereby rendered declaring that the dismissal of the complainant (petitioner) by the respondents in the above-entitled case was illegal and the respondents are hereby ordered to pay the complainant [petitioner], jointly and severally, in Philippine Currency, based on the rate of exchange prevailing at the time of payment, the amount of EIGHT THOUSAND SEVEN HUNDRED SEVENTY U.S. DOLLARS (US $8,770.00), representing the complainant’s salary for three (3) months of the unexpired portion of the aforesaid contract of employment.1avvphi1

The respondents are likewise ordered to pay the complainant [petitioner], jointly and severally, in Philippine Currency, based on the rate of exchange prevailing at the time of payment, the amount of FORTY FIVE U.S. DOLLARS (US$ 45.00),12 representing the complainant’s claim for a salary differential. In addition, the respondents are hereby ordered to pay the complainant, jointly and severally, in Philippine Currency, at the exchange rate prevailing at the time of payment, the complainant’s (petitioner's) claim for attorney’s fees equivalent to ten percent (10%) of the total amount awarded to the aforesaid employee under this Decision.

The claims of the complainant for moral and exemplary damages are hereby DISMISSED for lack of merit.

All other claims are hereby DISMISSED.

SO ORDERED.13 (Emphasis supplied)

In awarding petitioner a lump-sum salary of US$8,770.00, the LA based his computation on the salary period of three months only -- rather than the entire unexpired portion of nine months and 23 days of petitioner's employment contract - applying the subject clause. However, the LA applied the salary rate of US$2,590.00, consisting of petitioner's "[b]asic salary, US$1,400.00/month + US$700.00/month, fixed overtime pay, + US$490.00/month, vacation leave pay = US$2,590.00/compensation per month."14

Respondents appealed15 to the National Labor Relations Commission (NLRC) to question the finding of the LA that petitioner was illegally dismissed.

Petitioner also appealed16 to the NLRC on the sole issue that the LA erred in not applying the ruling of the Court in Triple Integrated Services, Inc. v. National Labor Relations Commission17 that in case of illegal dismissal, OFWs are entitled to their salaries for the unexpired portion of their contracts.18

In a Decision dated June 15, 2000, the NLRC modified the LA Decision, to wit:

WHEREFORE, the Decision dated 15 July 1999 is MODIFIED. Respondents are hereby ordered to pay complainant, jointly and severally, in Philippine currency, at the prevailing rate of exchange at the time of payment the following:

1. Three (3) months salary

$1,400 x 3 US$4,200.00

2. Salary differential 45.00

US$4,245.00

3. 10% Attorney’s fees 424.50

TOTAL US$4,669.50

The other findings are affirmed.

SO ORDERED.19

The NLRC corrected the LA's computation of the lump-sum salary awarded to petitioner by reducing the applicable salary rate from US$2,590.00 to US$1,400.00 because R.A. No. 8042 "does not provide for the award of overtime pay, which should be proven to have been actually performed, and for vacation leave pay."20

24

Petitioner filed a Motion for Partial Reconsideration, but this time he questioned the constitutionality of the subject clause.21 The NLRC denied the motion.22

Petitioner filed a Petition for Certiorari23 with the CA, reiterating the constitutional challenge against the subject clause.24 After initially dismissing the petition on a technicality, the CA eventually gave due course to it, as directed by this Court in its Resolution dated August 7, 2003 which granted the petition for certiorari, docketed as G.R. No. 151833, filed by petitioner.

In a Decision dated December 8, 2004, the CA affirmed the NLRC ruling on the reduction of the applicable salary rate; however, the CA skirted the constitutional issue raised by petitioner.25

His Motion for Reconsideration26 having been denied by the CA,27 petitioner brings his cause to this Court on the following grounds:

I

The Court of Appeals and the labor tribunals have decided the case in a way not in accord with applicable decision of the Supreme Court involving similar issue of granting unto the migrant worker back wages equal to the unexpired portion of his contract of employment instead of limiting it to three (3) months

II

In the alternative that the Court of Appeals and the Labor Tribunals were merely applying their interpretation of Section 10 of Republic Act No. 8042, it is submitted that the Court of Appeals gravely erred in law when it failed to discharge its judicial duty to decide questions of substance not theretofore determined by the Honorable Supreme Court, particularly, the constitutional issues raised by the petitioner on the constitutionality of said law, which unreasonably, unfairly and arbitrarily limits payment of the award for back wages of overseas workers to three (3) months.

III

Even without considering the constitutional limitations [of] Sec. 10 of Republic Act No. 8042, the Court of Appeals gravely erred in law in excluding from petitioner’s award the overtime pay and vacation pay provided in his contract since under the contract they form part of his salary.28

On February 26, 2008, petitioner wrote the Court to withdraw his petition as he is already old and sickly, and he intends to make use of the monetary award for his medical treatment and medication.29 Required to comment, counsel for petitioner filed a motion, urging the court to allow partial execution of the undisputed monetary award and, at the same time, praying that the constitutional question be resolved.30

Considering that the parties have filed their respective memoranda, the Court now takes up the full merit of the petition mindful of the extreme importance of the constitutional question raised therein.

On the first and second issues

The unanimous finding of the LA, NLRC and CA that the dismissal of petitioner was illegal is not disputed. Likewise not disputed is the salary differential of US$45.00 awarded to petitioner in all three fora. What remains disputed is only the computation of the lump-sum salary to be awarded to petitioner by reason of his illegal dismissal.

Applying the subject clause, the NLRC and the CA computed the lump-sum salary of petitioner at the monthly rate of US$1,400.00 covering the period of three months out of the unexpired portion of nine months and 23 days of his employment contract or a total of US$4,200.00.

Impugning the constitutionality of the subject clause, petitioner contends that, in addition to the US$4,200.00 awarded by the NLRC and the CA, he is entitled to US$21,182.23 more or a total of US$25,382.23, equivalent to his salaries for the entire nine months and 23 days left of his employment contract, computed at the monthly rate of US$2,590.00.31

The Arguments of Petitioner

Petitioner contends that the subject clause is unconstitutional because it unduly impairs the freedom of OFWs to negotiate for and stipulate in their overseas employment contracts a determinate employment period and a fixed salary package.32 It also impinges on the equal protection clause, for it treats OFWs differently from local Filipino workers (local workers) by putting a cap on the amount of lump-sum salary to which OFWs are entitled in case of illegal dismissal, while setting no limit to the same monetary award for local workers when their dismissal is declared illegal; that the disparate treatment is not reasonable as there is no substantial distinction between the two groups;33 and that it defeats Section 18,34 Article II of the Constitution which guarantees the protection of the rights and welfare of all Filipino workers, whether deployed locally or overseas.35

Moreover, petitioner argues that the decisions of the CA and the labor tribunals are not in line with existing jurisprudence on the issue of money claims of illegally dismissed OFWs. Though there are conflicting rulings on this, petitioner urges the Court to sort them out for the guidance of affected OFWs.36

Petitioner further underscores that the insertion of the subject clause into R.A. No. 8042 serves no other purpose but to benefit local placement agencies. He marks the statement made by the Solicitor General in his Memorandum, viz.:

Often, placement agencies, their liability being solidary, shoulder the payment of money claims in the event that jurisdiction over the foreign employer is not acquired by the court or if the foreign employer

25

reneges on its obligation. Hence, placement agencies that are in good faith and which fulfill their obligations are unnecessarily penalized for the acts of the foreign employer. To protect them and to promote their continued helpful contribution in deploying Filipino migrant workers, liability for money claims was reduced under Section 10 of R.A. No. 8042. 37 (Emphasis supplied)

Petitioner argues that in mitigating the solidary liability of placement agencies, the subject clause sacrifices the well-being of OFWs. Not only that, the provision makes foreign employers better off than local employers because in cases involving the illegal dismissal of employees, foreign employers are liable for salaries covering a maximum of only three months of the unexpired employment contract while local employers are liable for the full lump-sum salaries of their employees. As petitioner puts it:

In terms of practical application, the local employers are not limited to the amount of backwages they have to give their employees they have illegally dismissed, following well-entrenched and unequivocal jurisprudence on the matter. On the other hand, foreign employers will only be limited to giving the illegally dismissed migrant workers the maximum of three (3) months unpaid salaries notwithstanding the unexpired term of the contract that can be more than three (3) months.38

Lastly, petitioner claims that the subject clause violates the due process clause, for it deprives him of the salaries and other emoluments he is entitled to under his fixed-period employment contract.39

The Arguments of Respondents

In their Comment and Memorandum, respondents contend that the constitutional issue should not be entertained, for this was belatedly interposed by petitioner in his appeal before the CA, and not at the earliest opportunity, which was when he filed an appeal before the NLRC.40

The Arguments of the Solicitor General

The Solicitor General (OSG)41 points out that as R.A. No. 8042 took effect on July 15, 1995, its provisions could not have impaired petitioner's 1998 employment contract. Rather, R.A. No. 8042 having preceded petitioner's contract, the provisions thereof are deemed part of the minimum terms of petitioner's employment, especially on the matter of money claims, as this was not stipulated upon by the parties.42

Moreover, the OSG emphasizes that OFWs and local workers differ in terms of the nature of their employment, such that their rights to monetary benefits must necessarily be treated differently. The OSG enumerates the essential elements that distinguish OFWs from local workers: first, while local workers perform their jobs within Philippine territory, OFWs perform their jobs for foreign employers, over whom it is difficult for our courts to acquire jurisdiction, or against whom it is almost impossible to enforce judgment; and second, as held in Coyoca v. National Labor Relations Commission43 and Millares v. National Labor Relations Commission,44 OFWs are contractual employees who can never acquire regular employment status, unlike local workers who are or can become regular employees.

Hence, the OSG posits that there are rights and privileges exclusive to local workers, but not available to OFWs; that these peculiarities make for a reasonable and valid basis for the differentiated treatment under the subject clause of the money claims of OFWs who are illegally dismissed. Thus, the provision does not violate the equal protection clause nor Section 18, Article II of the Constitution.45

Lastly, the OSG defends the rationale behind the subject clause as a police power measure adopted to mitigate the solidary liability of placement agencies for this "redounds to the benefit of the migrant workers whose welfare the government seeks to promote. The survival of legitimate placement agencies helps [assure] the government that migrant workers are properly deployed and are employed under decent and humane conditions."46

The Court's Ruling

The Court sustains petitioner on the first and second issues.

When the Court is called upon to exercise its power of judicial review of the acts of its co-equals, such as the Congress, it does so only when these conditions obtain: (1) that there is an actual case or controversy involving a conflict of rights susceptible of judicial determination;47 (2) that the constitutional question is raised by a proper party48 and at the earliest opportunity;49 and (3) that the constitutional question is the very lis mota of the case,50 otherwise the Court will dismiss the case or decide the same on some other ground.51

Without a doubt, there exists in this case an actual controversy directly involving petitioner who is personally aggrieved that the labor tribunals and the CA computed his monetary award based on the salary period of three months only as provided under the subject clause.

The constitutional challenge is also timely. It should be borne in mind that the requirement that a constitutional issue be raised at the earliest opportunity entails the interposition of the issue in the pleadings before a competent court, such that, if the issue is not raised in the pleadings before that competent court, it cannot be considered at the trial and, if not considered in the trial, it cannot be considered on appeal.52 Records disclose that the issue on the constitutionality of the subject clause was first raised, not in petitioner's appeal with the NLRC, but in his Motion for Partial Reconsideration with said labor tribunal,53 and reiterated in his Petition for Certiorari before the CA.54 Nonetheless, the issue is deemed seasonably raised because it is not the NLRC but the CA which has the competence to resolve the constitutional issue. The NLRC is a labor tribunal that merely performs a quasi-judicial function – its function in the present case is limited to determining questions of fact to which the legislative policy of R.A. No. 8042 is to be applied and to resolving such questions in accordance with the standards laid down by the law itself;55 thus, its foremost function is to administer and enforce R.A. No. 8042, and not to inquire into the validity of its provisions. The CA, on the other hand, is vested with the power of judicial review or the power to declare unconstitutional a law or a provision thereof, such as the subject clause.56 Petitioner's interposition of the constitutional issue before the CA was undoubtedly seasonable. The CA was therefore remiss in failing to take up the issue in its decision.

26

The third condition that the constitutional issue be critical to the resolution of the case likewise obtains because the monetary claim of petitioner to his lump-sum salary for the entire unexpired portion of his 12-month employment contract, and not just for a period of three months, strikes at the very core of the subject clause.

Thus, the stage is all set for the determination of the constitutionality of the subject clause.

Does the subject clause violate Section 10,Article III of the Constitution on non-impairmentof contracts?

The answer is in the negative.

Petitioner's claim that the subject clause unduly interferes with the stipulations in his contract on the term of his employment and the fixed salary package he will receive57 is not tenable.

Section 10, Article III of the Constitution provides:

No law impairing the obligation of contracts shall be passed.

The prohibition is aligned with the general principle that laws newly enacted have only a prospective operation,58 and cannot affect acts or contracts already perfected;59 however, as to laws already in existence, their provisions are read into contracts and deemed a part thereof.60 Thus, the non-impairment clause under Section 10, Article II is limited in application to laws about to be enacted that would in any way derogate from existing acts or contracts by enlarging, abridging or in any manner changing the intention of the parties thereto.

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

But even if the Court were to disregard the timeline, the subject clause may not be declared unconstitutional on the ground that it impinges on the impairment clause, for the law was enacted in the exercise of the police power of the State to regulate a business, profession or calling, particularly the recruitment and deployment of OFWs, with the noble end in view of ensuring respect for the dignity and well-being of OFWs wherever they may be employed.61 Police power legislations adopted by the State to promote the health, morals, peace, education, good order, safety, and general welfare of the people are generally applicable not only to future contracts but even to those already in existence, for all private contracts must yield to the superior and legitimate measures taken by the State to promote public welfare.62

Does the subject clause violate Section 1,Article III of the Constitution, and Section 18,Article II and Section 3, Article XIII on laboras a protected sector?

The answer is in the affirmative.

Section 1, Article III of the Constitution guarantees:

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 law.

Section 18,63 Article II and Section 3,64 Article XIII accord all members of the labor sector, without distinction as to place of deployment, full protection of their rights and welfare.

To Filipino workers, the rights guaranteed under the foregoing constitutional provisions translate to economic security and parity: all monetary benefits should be equally enjoyed by workers of similar category, while all monetary obligations should be borne by them in equal degree; none should be denied the protection of the laws which is enjoyed by, or spared the burden imposed on, others in like circumstances.65

Such rights are not absolute but subject to the inherent power of Congress to incorporate, when it sees fit, a system of classification into its legislation; however, to be valid, the classification must comply with these requirements: 1) it is based on substantial distinctions; 2) it is germane to the purposes of the law; 3) it is not limited to existing conditions only; and 4) it applies equally to all members of the class.66

There are three levels of scrutiny at which the Court reviews the constitutionality of a classification embodied in a law: a) the deferential or rational basis scrutiny in which the challenged classification needs only be shown to be rationally related to serving a legitimate state interest;67 b) the middle-tier or intermediate scrutiny in which the government must show that the challenged classification serves an important state interest and that the classification is at least substantially related to serving that interest;68

and c) strict judicial scrutiny69 in which a legislative classification which impermissibly interferes with the exercise of a fundamental right70 or operates to the peculiar disadvantage of a suspect class71 is presumed unconstitutional, and the burden is upon the government to prove that the classification is necessary to achieve a compelling state interest and that it is the least restrictive means to protect such interest.72

Under American jurisprudence, strict judicial scrutiny is triggered by suspect classifications73 based on race74 or gender75 but not when the classification is drawn along income categories.76

It is different in the Philippine setting. In Central Bank (now Bangko Sentral ng Pilipinas) Employee Association, Inc. v. Bangko Sentral ng Pilipinas,77 the constitutionality of a provision in the charter of

27

the Bangko Sentral ng Pilipinas (BSP), a government financial institution (GFI), was challenged for maintaining its rank-and-file employees under the Salary Standardization Law (SSL), even when the rank-and-file employees of other GFIs had been exempted from the SSL by their respective charters. Finding that the disputed provision contained a suspect classification based on salary grade, the Court deliberately employed the standard of strict judicial scrutiny in its review of the constitutionality of said provision. More significantly, it was in this case that the Court revealed the broad outlines of its judicial philosophy, to wit:

Congress retains its wide discretion in providing for a valid classification, and its policies should be accorded recognition and respect by the courts of justice except when they run afoul of the Constitution. The deference stops where the classification violates a fundamental right, or prejudices persons accorded special protection by the Constitution. When these violations arise, this Court must discharge its primary role as the vanguard of constitutional guaranties, and require a stricter and more exacting adherence to constitutional limitations. Rational basis should not suffice.

Admittedly, the view that prejudice to persons accorded special protection by the Constitution requires a stricter judicial scrutiny finds no support in American or English jurisprudence. Nevertheless, these foreign decisions and authorities are not per se controlling in this jurisdiction. At best, they are persuasive and have been used to support many of our decisions. We should not place undue and fawning reliance upon them and regard them as indispensable mental crutches without which we cannot come to our own decisions through the employment of our own endowments. We live in a different ambience and must decide our own problems in the light of our own interests and needs, and of our qualities and even idiosyncrasies as a people, and always with our own concept of law and justice. Our laws must be construed in accordance with the intention of our own lawmakers and such intent may be deduced from the language of each law and the context of other local legislation related thereto. More importantly, they must be construed to serve our own public interest which is the be-all and the end-all of all our laws. And it need not be stressed that our public interest is distinct and different from others.

x x x x

Further, the quest for a better and more "equal" world calls for the use of equal protection as a tool of effective judicial intervention.

Equality is one ideal which cries out for bold attention and action in the Constitution. The Preamble proclaims "equality" as an ideal precisely in protest against crushing inequities in Philippine society. The command to promote social justice in Article II, Section 10, in "all phases of national development," further explicitated in Article XIII, are clear commands to the State to take affirmative action in the direction of greater equality. x x x [T]here is thus in the Philippine Constitution no lack of doctrinal support for a more vigorous state effort towards achieving a reasonable measure of equality.

Our present Constitution has gone further in guaranteeing vital social and economic rights to marginalized groups of society, including labor. Under the policy of social justice, the law bends over backward to accommodate the interests of the working class on the humane justification that those with

less privilege in life should have more in law. And the obligation to afford protection to labor is incumbent not only on the legislative and executive branches but also on the judiciary to translate this pledge into a living reality. Social justice calls for the humanization of laws and the equalization of social and economic forces by the State so that justice in its rational and objectively secular conception may at least be approximated.

x x x x

Under most circumstances, the Court will exercise judicial restraint in deciding questions of constitutionality, recognizing the broad discretion given to Congress in exercising its legislative power. Judicial scrutiny would be based on the "rational basis" test, and the legislative discretion would be given deferential treatment.

But if the challenge to the statute is premised on the denial of a fundamental right, or the perpetuation of prejudice against persons favored by the Constitution with special protection, judicial scrutiny ought to be more strict. A weak and watered down view would call for the abdication of this Court’s solemn duty to strike down any law repugnant to the Constitution and the rights it enshrines. This is true whether the actor committing the unconstitutional act is a private person or the government itself or one of its instrumentalities. Oppressive acts will be struck down regardless of the character or nature of the actor.

x x x x

In the case at bar, the challenged proviso operates on the basis of the salary grade or officer-employee status. It is akin to a distinction based on economic class and status, with the higher grades as recipients of a benefit specifically withheld from the lower grades. Officers of the BSP now receive higher compensation packages that are competitive with the industry, while the poorer, low-salaried employees are limited to the rates prescribed by the SSL. The implications are quite disturbing: BSP rank-and-file employees are paid the strictly regimented rates of the SSL while employees higher in rank - possessing higher and better education and opportunities for career advancement - are given higher compensation packages to entice them to stay. Considering that majority, if not all, the rank-and-file employees consist of people whose status and rank in life are less and limited, especially in terms of job marketability, it is they - and not the officers - who have the real economic and financial need for the adjustment . This is in accord with the policy of the Constitution "to free the people from poverty, provide adequate social services, extend to them a decent standard of living, and improve the quality of life for all." Any act of Congress that runs counter to this constitutional desideratum deserves strict scrutiny by this Court before it can pass muster. (Emphasis supplied)

Imbued with the same sense of "obligation to afford protection to labor," the Court in the present case also employs the standard of strict judicial scrutiny, for it perceives in the subject clause a suspect classification prejudicial to OFWs.

28

Upon cursory reading, the subject clause appears facially neutral, for it applies to all OFWs. However, a closer examination reveals that the subject clause has a discriminatory intent against, and an invidious impact on, OFWs at two levels:

First, OFWs with employment contracts of less than one year vis-à-vis OFWs with employment contracts of one year or more;

Second, among OFWs with employment contracts of more than one year; and

Third, OFWs vis-à-vis local workers with fixed-period employment;

OFWs with employment contracts of less than one year vis-à-vis OFWs with employment contracts of one year or more

As pointed out by petitioner,78 it was in Marsaman Manning Agency, Inc. v. National Labor Relations Commission79 (Second Division, 1999) that the Court laid down the following rules on the application of the periods prescribed under Section 10(5) of R.A. No. 804, to wit:

A plain reading of Sec. 10 clearly reveals that the choice of which amount to award an illegally dismissed overseas contract worker, i.e., whether his salaries for the unexpired portion of his employment contract or three (3) months’ salary for every year of the unexpired term, whichever is less, comes into play only when the employment contract concerned has a term of at least one (1) year or more. This is evident from the words "for every year of the unexpired term" which follows the words "salaries x x x for three months." To follow petitioners’ thinking that private respondent is entitled to three (3) months salary only simply because it is the lesser amount is to completely disregard and overlook some words used in the statute while giving effect to some. This is contrary to the well-established rule in legal hermeneutics that in interpreting a statute, care should be taken that every part or word thereof be given effect since the law-making body is presumed to know the meaning of the words employed in the statue and to have used them advisedly. Ut res magis valeat quam pereat.80 (Emphasis supplied)

In Marsaman, the OFW involved was illegally dismissed two months into his 10-month contract, but was awarded his salaries for the remaining 8 months and 6 days of his contract.

Prior to Marsaman, however, there were two cases in which the Court made conflicting rulings on Section 10(5). One was Asian Center for Career and Employment System and Services v. National Labor Relations Commission (Second Division, October 1998),81 which involved an OFW who was awarded a two-year employment contract, but was dismissed after working for one year and two months. The LA declared his dismissal illegal and awarded him SR13,600.00 as lump-sum salary covering eight months, the unexpired portion of his contract. On appeal, the Court reduced the award to SR3,600.00 equivalent to his three months’ salary, this being the lesser value, to wit:

Under Section 10 of R.A. No. 8042, a worker dismissed from overseas employment without just, valid or authorized cause is entitled to his salary for the unexpired portion of his employment contract or for three (3) months for every year of the unexpired term, whichever is less.

In the case at bar, the unexpired portion of private respondent’s employment contract is eight (8) months. Private respondent should therefore be paid his basic salary corresponding to three (3) months or a total of SR3,600.82

Another was Triple-Eight Integrated Services, Inc. v. National Labor Relations Commission (Third Division, December 1998),83 which involved an OFW (therein respondent Erlinda Osdana) who was originally granted a 12-month contract, which was deemed renewed for another 12 months. After serving for one year and seven-and-a-half months, respondent Osdana was illegally dismissed, and the Court awarded her salaries for the entire unexpired portion of four and one-half months of her contract.

The Marsaman interpretation of Section 10(5) has since been adopted in the following cases:

Case Title Contract Period

Period of Service Unexpired Period Period Applied in the Computation of the Monetary Award

Skippers v. Maguad84

6 months 2 months 4 months 4 months

Bahia Shipping v. Reynaldo Chua 85

9 months 8 months 4 months 4 months

Centennial Transmarine v. dela

Cruz l86

9 months 4 months 5 months 5 months

Talidano v. Falcon87 12 months 3 months 9 months 3 months

Univan v. CA 88 12 months 3 months 9 months 3 months

Oriental v. CA 89 12 months more than 2 months

10 months 3 months

PCL v. NLRC90 12 months more than 2 months

more or less 9 months 3 months

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Olarte v. Nayona91 12 months 21 days 11 months and 9 days 3 months

JSS v.Ferrer92 12 months 16 days 11 months and 24 days 3 months

Pentagon v. Adelantar93

12 months 9 months and 7 days

2 months and 23 days 2 months and 23 days

Phil. Employ v. Paramio, et al.94

12 months 10 months 2 months Unexpired portion

Flourish Maritime v. Almanzor 95

2 years 26 days 23 months and 4 days 6 months or 3 months for each year of contract

Athenna Manpower v. Villanos 96

1 year, 10 months and 28

days

1 month 1 year, 9 months and 28 days

6 months or 3 months for each year of contract

As the foregoing matrix readily shows, the subject clause classifies OFWs into two categories. The first category includes OFWs with fixed-period employment contracts of less than one year; in case of illegal dismissal, they are entitled to their salaries for the entire unexpired portion of their contract. The second category consists of OFWs with fixed-period employment contracts of one year or more; in case of illegal dismissal, they are entitled to monetary award equivalent to only 3 months of the unexpired portion of their contracts.

The disparity in the treatment of these two groups cannot be discounted. In Skippers, the respondent OFW worked for only 2 months out of his 6-month contract, but was awarded his salaries for the remaining 4 months. In contrast, the respondent OFWs in Oriental and PCL who had also worked for about 2 months out of their 12-month contracts were awarded their salaries for only 3 months of the unexpired portion of their contracts. Even the OFWs involved in Talidano and Univan who had worked for a longer period of 3 months out of their 12-month contracts before being illegally dismissed were awarded their salaries for only 3 months.

To illustrate the disparity even more vividly, the Court assumes a hypothetical OFW-A with an employment contract of 10 months at a monthly salary rate of US$1,000.00 and a hypothetical OFW-B with an employment contract of 15 months with the same monthly salary rate of US$1,000.00. Both commenced work on the same day and under the same employer, and were illegally dismissed after one month of work. Under the subject clause, OFW-A will be entitled to US$9,000.00, equivalent to his salaries for the remaining 9 months of his contract, whereas OFW-B will be entitled to only US$3,000.00, equivalent to his salaries for 3 months of the unexpired portion of his contract, instead of US$14,000.00 for the unexpired portion of 14 months of his contract, as the US$3,000.00 is the lesser amount.

The disparity becomes more aggravating when the Court takes into account jurisprudence that, prior to

the effectivity of R.A. No. 8042 on July 14, 1995,97 illegally dismissed OFWs, no matter how long the period of their employment contracts, were entitled to their salaries for the entire unexpired portions of their contracts. The matrix below speaks for itself:

Case Title Contract Period Period of Service

Unexpired Period

Period Applied in the Computation of the Monetary Award

ATCI v. CA, et al.98 2 years 2 months 22 months 22 months

Phil. Integrated v. NLRC99

2 years 7 days 23 months and 23 days

23 months and 23 days

JGB v. NLC100 2 years 9 months 15 months 15 months

Agoy v. NLRC101 2 years 2 months 22 months 22 months

EDI v. NLRC, et al.102

2 years 5 months 19 months 19 months

Barros v. NLRC, et al.103

12 months 4 months 8 months 8 months

Philippine Transmarine v.

Carilla104

12 months 6 months and 22 days

5 months and 18 days

5 months and 18 days

It is plain that prior to R.A. No. 8042, all OFWs, regardless of contract periods or the unexpired portions thereof, were treated alike in terms of the computation of their monetary benefits in case of illegal dismissal. Their claims were subjected to a uniform rule of computation: their basic salaries multiplied by the entire unexpired portion of their employment contracts.

The enactment of the subject clause in R.A. No. 8042 introduced a differentiated rule of computation of the money claims of illegally dismissed OFWs based on their employment periods, in the process singling out one category whose contracts have an unexpired portion of one year or more and subjecting them to the peculiar disadvantage of having their monetary awards limited to their salaries for 3 months or for the unexpired portion thereof, whichever is less, but all the while sparing the other category from such prejudice, simply because the latter's unexpired contracts fall short of one year.

Among OFWs With Employment Contracts of More Than One Year

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Upon closer examination of the terminology employed in the subject clause, the Court now has misgivings on the accuracy of the Marsaman interpretation.

The Court notes that the subject clause "or for three (3) months for every year of the unexpired term, whichever is less" contains the qualifying phrases "every year" and "unexpired term." By its ordinary meaning, the word "term" means a limited or definite extent of time.105 Corollarily, that "every year" is but part of an "unexpired term" is significant in many ways: first, the unexpired term must be at least one year, for if it were any shorter, there would be no occasion for such unexpired term to be measured by every year; and second, the original term must be more than one year, for otherwise, whatever would be the unexpired term thereof will not reach even a year. Consequently, the more decisive factor in the determination of when the subject clause "for three (3) months for every year of the unexpired term, whichever is less" shall apply is not the length of the original contract period as held in Marsaman,106 but the length of the unexpired portion of the contract period -- the subject clause applies in cases when the unexpired portion of the contract period is at least one year, which arithmetically requires that the original contract period be more than one year.

Viewed in that light, the subject clause creates a sub-layer of discrimination among OFWs whose contract periods are for more than one year: those who are illegally dismissed with less than one year left in their contracts shall be entitled to their salaries for the entire unexpired portion thereof, while those who are illegally dismissed with one year or more remaining in their contracts shall be covered by the subject clause, and their monetary benefits limited to their salaries for three months only.

To concretely illustrate the application of the foregoing interpretation of the subject clause, the Court assumes hypothetical OFW-C and OFW-D, who each have a 24-month contract at a salary rate of US$1,000.00 per month. OFW-C is illegally dismissed on the 12th month, and OFW-D, on the 13th month. Considering that there is at least 12 months remaining in the contract period of OFW-C, the subject clause applies to the computation of the latter's monetary benefits. Thus, OFW-C will be entitled, not to US$12,000,00 or the latter's total salaries for the 12 months unexpired portion of the contract, but to the lesser amount of US$3,000.00 or the latter's salaries for 3 months out of the 12-month unexpired term of the contract. On the other hand, OFW-D is spared from the effects of the subject clause, for there are only 11 months left in the latter's contract period. Thus, OFW-D will be entitled to US$11,000.00, which is equivalent to his/her total salaries for the entire 11-month unexpired portion.

OFWs vis-à-vis Local WorkersWith Fixed-Period Employment

As discussed earlier, prior to R.A. No. 8042, a uniform system of computation of the monetary awards of illegally dismissed OFWs was in place. This uniform system was applicable even to local workers with fixed-term employment.107

The earliest rule prescribing a uniform system of computation was actually Article 299 of the Code of Commerce (1888),108 to wit:

Article 299. If the contracts between the merchants and their shop clerks and employees should have been made of a fixed period, none of the contracting parties, without the consent of the other, may withdraw from the fulfillment of said contract until the termination of the period agreed upon.

Persons violating this clause shall be subject to indemnify the loss and damage suffered, with the exception of the provisions contained in the following articles.

In Reyes v. The Compañia Maritima,109 the Court applied the foregoing provision to determine the liability of a shipping company for the illegal discharge of its managers prior to the expiration of their fixed-term employment. The Court therein held the shipping company liable for the salaries of its managers for the remainder of their fixed-term employment.

There is a more specific rule as far as seafarers are concerned: Article 605 of the Code of Commerce which provides:

Article 605. If the contracts of the captain and members of the crew with the agent should be for a definite period or voyage, they cannot be discharged until the fulfillment of their contracts, except for reasons of insubordination in serious matters, robbery, theft, habitual drunkenness, and damage caused to the vessel or to its cargo by malice or manifest or proven negligence.

Article 605 was applied to Madrigal Shipping Company, Inc. v. Ogilvie,110 in

which the Court held the shipping company liable for the salaries and subsistence allowance of its illegally dismissed employees for the entire unexpired portion of their employment contracts.

While Article 605 has remained good law up to the present,111 Article 299 of the Code of Commerce was replaced by Art. 1586 of the Civil Code of 1889, to wit:

Article 1586. Field hands, mechanics, artisans, and other laborers hired for a certain time and for a certain work cannot leave or be dismissed without sufficient cause, before the fulfillment of the contract. (Emphasis supplied.)

Citing Manresa, the Court in Lemoine v. Alkan112 read the disjunctive "or" in Article 1586 as a conjunctive "and" so as to apply the provision to local workers who are employed for a time certain although for no particular skill. This interpretation of Article 1586 was reiterated in Garcia Palomar v. Hotel de France Company.113 And in both Lemoine and Palomar, the Court adopted the general principle that in actions for wrongful discharge founded on Article 1586, local workers are entitled to recover damages to the extent of the amount stipulated to be paid to them by the terms of their contract. On the computation of the amount of such damages, the Court in Aldaz v. Gay114 held:

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The doctrine is well-established in American jurisprudence, and nothing has been brought to our attention to the contrary under Spanish jurisprudence, that when an employee is wrongfully discharged it is his duty to seek other employment of the same kind in the same community, for the purpose of reducing the damages resulting from such wrongful discharge. However, while this is the general rule, the burden of showing that he failed to make an effort to secure other employment of a like nature, and that other employment of a like nature was obtainable, is upon the defendant. When an employee is wrongfully discharged under a contract of employment his prima facie damage is the amount which he would be entitled to had he continued in such employment until the termination of the period. (Howard vs. Daly, 61 N. Y., 362; Allen vs. Whitlark, 99 Mich., 492; Farrell vs. School District No. 2, 98 Mich., 43.)115 (Emphasis supplied)

On August 30, 1950, the New Civil Code took effect with new provisions on fixed-term employment: Section 2 (Obligations with a Period), Chapter 3, Title I, and Sections 2 (Contract of Labor) and 3 (Contract for a Piece of Work), Chapter 3, Title VIII, Book IV.116 Much like Article 1586 of the Civil Code of 1889, the new provisions of the Civil Code do not expressly provide for the remedies available to a fixed-term worker who is illegally discharged. However, it is noted that in Mackay Radio & Telegraph Co., Inc. v. Rich,117 the Court carried over the principles on the payment of damages underlying Article 1586 of the Civil Code of 1889 and applied the same to a case involving the illegal discharge of a local worker whose fixed-period employment contract was entered into in 1952, when the new Civil Code was already in effect.118

More significantly, the same principles were applied to cases involving overseas Filipino workers whose fixed-term employment contracts were illegally terminated, such as in First Asian Trans & Shipping Agency, Inc. v. Ople,119 involving seafarers who were illegally discharged. In Teknika Skills and Trade Services, Inc. v. National Labor Relations Commission,120 an OFW who was illegally dismissed prior to the expiration of her fixed-period employment contract as a baby sitter, was awarded salaries corresponding to the unexpired portion of her contract. The Court arrived at the same ruling in Anderson v. National Labor Relations Commission,121 which involved a foreman hired in 1988 in Saudi Arabia for a fixed term of two years, but who was illegally dismissed after only nine months on the job -- the Court awarded him salaries corresponding to 15 months, the unexpired portion of his contract. In Asia World Recruitment, Inc. v. National Labor Relations Commission,122 a Filipino working as a security officer in 1989 in Angola was awarded his salaries for the remaining period of his 12-month contract after he was wrongfully discharged. Finally, in Vinta Maritime Co., Inc. v. National Labor Relations Commission,123 an OFW whose 12-month contract was illegally cut short in the second month was declared entitled to his salaries for the remaining 10 months of his contract.

In sum, prior to R.A. No. 8042, OFWs and local workers with fixed-term employment who were illegally discharged were treated alike in terms of the computation of their money claims: they were uniformly entitled to their salaries for the entire unexpired portions of their contracts. But with the enactment of R.A. No. 8042, specifically the adoption of the subject clause, illegally dismissed OFWs with an unexpired portion of one year or more in their employment contract have since been differently treated in that their money claims are subject to a 3-month cap, whereas no such limitation is imposed on local workers with fixed-term employment.

The Court concludes that the subject clause contains a suspect classification in that, in the computation of the monetary benefits of fixed-term employees who are illegally discharged, it imposes a 3-month cap on the claim of OFWs with an unexpired portion of one year or more in their contracts, but none on the claims of other OFWs or local workers with fixed-term employment. The subject clause singles out one classification of OFWs and burdens it with a peculiar disadvantage.

There being a suspect classification involving a vulnerable sector protected by the Constitution, the Court now subjects the classification to a strict judicial scrutiny, and determines whether it serves a compelling state interest through the least restrictive means.

What constitutes compelling state interest is measured by the scale of rights and powers arrayed in the Constitution and calibrated by history.124 It is akin to the paramount interest of the state125 for which some individual liberties must give way, such as the public interest in safeguarding health or maintaining medical standards,126 or in maintaining access to information on matters of public concern.127

In the present case, the Court dug deep into the records but found no compelling state interest that the subject clause may possibly serve.

The OSG defends the subject clause as a police power measure "designed to protect the employment of Filipino seafarers overseas x x x. By limiting the liability to three months [sic], Filipino seafarers have better chance of getting hired by foreign employers." The limitation also protects the interest of local placement agencies, which otherwise may be made to shoulder millions of pesos in "termination pay."128

The OSG explained further:

Often, placement agencies, their liability being solidary, shoulder the payment of money claims in the event that jurisdiction over the foreign employer is not acquired by the court or if the foreign employer reneges on its obligation. Hence, placement agencies that are in good faith and which fulfill their obligations are unnecessarily penalized for the acts of the foreign employer. To protect them and to promote their continued helpful contribution in deploying Filipino migrant workers, liability for money are reduced under Section 10 of RA 8042.

This measure redounds to the benefit of the migrant workers whose welfare the government seeks to promote. The survival of legitimate placement agencies helps [assure] the government that migrant workers are properly deployed and are employed under decent and humane conditions.129 (Emphasis supplied)

However, nowhere in the Comment or Memorandum does the OSG cite the source of its perception of the state interest sought to be served by the subject clause.

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The OSG locates the purpose of R.A. No. 8042 in the speech of Rep. Bonifacio Gallego in sponsorship of House Bill No. 14314 (HB 14314), from which the law originated;130 but the speech makes no reference to the underlying reason for the adoption of the subject clause. That is only natural for none of the 29 provisions in HB 14314 resembles the subject clause.

On the other hand, Senate Bill No. 2077 (SB 2077) contains a provision on money claims, to wit:

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 the complaint, the claim arising out of an employer-employee relationship or by virtue of any law or contract involving Filipino workers for overseas employment including claims for actual, moral, exemplary and other forms of damages.

The liability of the principal and the recruitment/placement agency or any and all claims under this Section shall be joint and several.

Any compromise/amicable settlement or voluntary agreement on any money claims exclusive of damages under this Section shall not be less than fifty percent (50%) of such money claims: Provided, That any installment payments, if applicable, to satisfy any such compromise or voluntary settlement shall not be more than two (2) months. Any compromise/voluntary agreement in violation of this paragraph shall be null and void.

Non-compliance with the mandatory period for resolutions of cases provided under this Section shall subject the responsible officials to any or all of the following penalties:

(1) The salary of any such official who fails to render his decision or resolution within the prescribed period shall be, or caused to be, withheld until the said official complies therewith;

(2) Suspension for not more than ninety (90) days; or

(3) 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 incurred under other existing laws or rules and regulations as a consequence of violating the provisions of this paragraph.

But significantly, Section 10 of SB 2077 does not provide for any rule on the computation of money claims.

A rule on the computation of money claims containing the subject clause was inserted and eventually adopted as the 5th paragraph of Section 10 of R.A. No. 8042. The Court examined the rationale of the subject clause in the transcripts of the "Bicameral Conference Committee (Conference Committee) Meetings on the Magna Carta on OCWs (Disagreeing Provisions of Senate Bill No. 2077 and House Bill No. 14314)." However, the Court finds no discernible state interest, let alone a compelling one, that is sought to be protected or advanced by the adoption of the subject clause.

In fine, the Government has failed to discharge its burden of proving the existence of a compelling state interest that would justify the perpetuation of the discrimination against OFWs under the subject clause.

Assuming that, as advanced by the OSG, the purpose of the subject clause is to protect the employment of OFWs by mitigating the solidary liability of placement agencies, such callous and cavalier rationale will have to be rejected. 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 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.

Moreover, even if the purpose of the subject clause is to lessen the solidary liability of placement agencies vis-a-vis their foreign principals, there are mechanisms already in place that can be employed to achieve that purpose without infringing on the constitutional rights of OFWs.

The POEA Rules and Regulations Governing the Recruitment and Employment of Land-Based Overseas Workers, dated February 4, 2002, imposes administrative disciplinary measures on erring foreign employers who default on their contractual obligations to migrant workers and/or their Philippine agents. These disciplinary measures range from temporary disqualification to preventive suspension. The POEA Rules and Regulations Governing the Recruitment and Employment of Seafarers, dated May 23, 2003, contains similar administrative disciplinary measures against erring foreign employers.

Resort to these administrative measures is undoubtedly the less restrictive means of aiding local placement agencies in enforcing the solidary liability of their foreign principals.

Thus, the subject clause in the 5th paragraph of Section 10 of R.A. No. 8042 is violative of the right of petitioner and other OFWs to equal protection.1avvphi1

Further, there would be certain misgivings if one is to approach the declaration of the unconstitutionality of the subject clause from the lone perspective that the clause directly violates state policy on labor under Section 3,131 Article XIII of the Constitution.

While all the provisions of the 1987 Constitution are presumed self-executing,132 there are some which this Court has declared not judicially enforceable, Article XIII being one,133 particularly Section 3

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thereof, the nature of which, this Court, in Agabon v. National Labor Relations Commission,134 has described to be not self-actuating:

Thus, the constitutional mandates of protection to labor and security of tenure may be deemed as self-executing in the sense that these are automatically acknowledged and observed without need for any enabling legislation. However, to declare that the constitutional provisions are enough to guarantee the full exercise of the rights embodied therein, and the realization of ideals therein expressed, would be impractical, if not unrealistic. The espousal of such view presents the dangerous tendency of being overbroad and exaggerated. The guarantees of "full protection to labor" and "security of tenure", when examined in isolation, are facially unqualified, and the broadest interpretation possible suggests a blanket shield in favor of labor against any form of removal regardless of circumstance. This interpretation implies an unimpeachable right to continued employment-a utopian notion, doubtless-but still hardly within the contemplation of the framers. Subsequent legislation is still needed to define the parameters of these guaranteed rights to ensure the protection and promotion, not only the rights of the labor sector, but of the employers' as well. Without specific and pertinent legislation, judicial bodies will be at a loss, formulating their own conclusion to approximate at least the aims of the Constitution.

Ultimately, therefore, Section 3 of Article XIII cannot, on its own, be a source of a positive enforceable right to stave off the dismissal of an employee for just cause owing to the failure to serve proper notice or hearing. As manifested by several framers of the 1987 Constitution, the provisions on social justice require legislative enactments for their enforceability.135 (Emphasis added)

Thus, Section 3, Article XIII cannot be treated as a principal source of direct enforceable rights, for the violation of which the questioned clause may be declared unconstitutional. It may unwittingly risk opening the floodgates of litigation to every worker or union over every conceivable violation of so broad a concept as social justice for labor.

It must be stressed that Section 3, Article XIII does not directly bestow on the working class any actual enforceable right, but merely clothes it with the status of a sector for whom the Constitution urges protection through executive or legislative action and judicial recognition. Its utility is best limited to being an impetus not just for the executive and legislative departments, but for the judiciary as well, to protect the welfare of the working class. And it was in fact consistent with that constitutional agenda that the Court in Central Bank (now Bangko Sentral ng Pilipinas) Employee Association, Inc. v. Bangko Sentral ng Pilipinas, penned by then Associate Justice now Chief Justice Reynato S. Puno, formulated the judicial precept that when the challenge to a statute is premised on the perpetuation of prejudice against persons favored by the Constitution with special protection -- such as the working class or a section thereof -- the Court may recognize the existence of a suspect classification and subject the same to strict judicial scrutiny.

The view that the concepts of suspect classification and strict judicial scrutiny formulated in Central Bank Employee Association exaggerate the significance of Section 3, Article XIII is a groundless apprehension. Central Bank applied Article XIII in conjunction with the equal protection clause. Article

XIII, by itself, without the application of the equal protection clause, has no life or force of its own as elucidated in Agabon.

Along the same line of reasoning, the Court further holds that the subject clause violates petitioner's right to substantive due process, for it deprives him of property, consisting of monetary benefits, without any existing valid governmental purpose.136

The argument of the Solicitor General, that the actual purpose of the subject clause of limiting the entitlement of OFWs to their three-month salary in case of illegal dismissal, is to give them a better chance of getting hired by foreign employers. This is plain speculation. As earlier discussed, there is nothing in the text of the law or the records of the deliberations leading to its enactment or the pleadings of respondent that would indicate that there is an existing governmental purpose for the subject clause, or even just a pretext of one.

The subject clause does not state or imply any definitive governmental purpose; and it is for that precise reason that the clause violates not just petitioner's right to equal protection, but also her right to substantive due process under Section 1,137 Article III of the Constitution.

The subject clause being unconstitutional, petitioner is entitled to his salaries for the entire unexpired period of nine months and 23 days of his employment contract, pursuant to law and jurisprudence prior to the enactment of R.A. No. 8042.

On the Third Issue

Petitioner contends that his overtime and leave pay should form part of the salary basis in the computation of his monetary award, because these are fixed benefits that have been stipulated into his contract.

Petitioner is mistaken.

The word salaries in Section 10(5) does not include overtime and leave pay. For seafarers like petitioner, DOLE Department Order No. 33, series 1996, provides a Standard Employment Contract of Seafarers, in which salary is understood as the basic wage, exclusive of overtime, leave pay and other bonuses; whereas overtime pay is compensation for all work "performed" in excess of the regular eight hours, and holiday pay is compensation for any work "performed" on designated rest days and holidays.

By the foregoing definition alone, there is no basis for the automatic inclusion of overtime and holiday pay in the computation of petitioner's monetary award, unless there is evidence that he performed work during those periods. As the Court held in Centennial Transmarine, Inc. v. Dela Cruz,138

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However, the payment of overtime pay and leave pay should be disallowed in light of our ruling in Cagampan v. National Labor Relations Commission, to wit:

The rendition of overtime work and the submission of sufficient proof that said was actually performed are conditions to be satisfied before a seaman could be entitled to overtime pay which should be computed on the basis of 30% of the basic monthly salary. In short, the contract provision guarantees the right to overtime pay but the entitlement to such benefit must first be established.

In the same vein, the claim for the day's leave pay for the unexpired portion of the contract is unwarranted since the same is given during the actual service of the seamen.

WHEREFORE, the Court GRANTS the Petition. The subject clause "or for three months for every year of the unexpired term, whichever is less" in the 5th paragraph of Section 10 of Republic Act No. 8042 is DECLARED UNCONSTITUTIONAL; and the December 8, 2004 Decision and April 1, 2005 Resolution of the Court of Appeals are MODIFIED to the effect that petitioner is AWARDED his salaries for the entire unexpired portion of his employment contract consisting of nine months and 23 days computed at the rate of US$1,400.00 per month.

No costs.

SO ORDERED.

G.R. Nos. L-58674-77 July 11, 1990

PEOPLE OF THE PHILIPPINES, petitioner, vs.HON. DOMINGO PANIS, Presiding Judge of the Court of First Instance of Zambales & Olongapo City, Branch III and SERAPIO ABUG, respondents.

 

CRUZ, J:

The basic issue in this case is the correct interpretation of Article 13(b) of P.D. 442, otherwise known as the Labor Code, reading as follows:

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(b) Recruitment and placement' refers to any act of canvassing, enlisting, contracting, transporting, hiring, or procuring workers, and includes referrals, contract services, promising or advertising for employment, locally or abroad, whether for profit or not: Provided, That any person or entity which, in any manner, offers or promises for a fee employment to two or more persons shall be deemed engaged in recruitment and placement.

Four informations were filed on January 9, 1981, in the Court of First Instance of Zambales and Olongapo City alleging that Serapio Abug, private respondent herein, "without first securing a license from the Ministry of Labor as a holder of authority to operate a fee-charging employment agency, did then and there wilfully, unlawfully and criminally operate a private fee charging employment agency by charging fees and expenses (from) and promising employment in Saudi Arabia" to four separate individuals named therein, in violation of Article 16 in relation to Article 39 of the Labor Code. 1

Abug filed a motion to quash on the ground that the informations did not charge an offense because he was accused of illegally recruiting only one person in each of the four informations. Under the proviso in Article 13(b), he claimed, there would be illegal recruitment only "whenever two or more persons are in any manner promised or offered any employment for a fee. " 2

Denied at first, the motion was reconsidered and finally granted in the Orders of the trial court dated June 24 and September 17, 1981. The prosecution is now before us on certiorari. 3

The posture of the petitioner is that the private respondent is being prosecuted under Article 39 in relation to Article 16 of the Labor Code; hence, Article 13(b) is not applicable. However, as the first two cited articles penalize acts of recruitment and placement without proper authority, which is the charge embodied in the informations, application of the definition of recruitment and placement in Article 13(b) is unavoidable.

The view of the private respondents is that to constitute recruitment and placement, all the acts mentioned in this article should involve dealings with two or mre persons as an indispensable �requirement. On the other hand, the petitioner argues that the requirement of two or more persons is imposed only where the recruitment and placement consists of an offer or promise of employment to such persons and always in consideration of a fee. The other acts mentioned in the body of the article may involve even only one person and are not necessarily for profit.

Neither interpretation is acceptable. We fail to see why the proviso should speak only of an offer or promise of employment if the purpose was to apply the requirement of two or more persons to all the acts mentioned in the basic rule. For its part, the petitioner does not explain why dealings with two or more persons are needed where the recruitment and placement consists of an offer or promise of employment but not when it is done through "canvassing, enlisting, contracting, transporting, utilizing, hiring or procuring (of) workers.

As we see it, the proviso was intended neither to impose a condition on the basic rule nor to provide an exception thereto but merely to create a presumption. The presumption is that the individual or entity is engaged in recruitment and placement whenever he or it is dealing with two or more persons to whom, in consideration of a fee, an offer or promise of employment is made in the course of the "canvassing, enlisting, contracting, transporting, utilizing, hiring or procuring (of) workers. "

The number of persons dealt with is not an essential ingredient of the act of recruitment and placement of workers. Any of the acts mentioned in the basic rule in Article 13(b) win constitute recruitment and placement even if only one prospective worker is involved. The proviso merely lays down a rule of evidence that where a fee is collected in consideration of a promise or offer of employment to two or more prospective workers, the individual or entity dealing with them shall be deemed to be engaged in the act of recruitment and placement. The words "shall be deemed" create that presumption.

This is not unlike the presumption in article 217 of the Revised Penal Code, for example, regarding the failure of a public officer to produce upon lawful demand funds or property entrusted to his custody. Such failure shall be prima facie evidence that he has put them to personal use; in other words, he shall be deemed to have malversed such funds or property. In the instant case, the word "shall be deemed" should by the same token be given the force of a disputable presumption or of prima facie evidence of engaging in recruitment and placement. (Klepp vs. Odin Tp., McHenry County 40 ND N.W. 313, 314.)

It is unfortunate that we can only speculate on the meaning of the questioned provision for lack of records of debates and deliberations that would otherwise have been available if the Labor Code had been enacted as a statute rather than a presidential decree. The trouble with presidential decrees is that they could be, and sometimes were, issued without previous public discussion or consultation, the promulgator heeding only his own counsel or those of his close advisers in their lofty pinnacle of power. The not infrequent results are rejection, intentional or not, of the interest of the greater number and, as in the instant case, certain esoteric provisions that one cannot read against the background facts usually reported in the legislative journals.

At any rate, the interpretation here adopted should give more force to the campaign against illegal recruitment and placement, which has victimized many Filipino workers seeking a better life in a foreign land, and investing hard- earned savings or even borrowed funds in pursuit of their dream, only to be awakened to the reality of a cynical deception at the hands of theirown countrymen.

WHEREFORE, the Orders of June 24, 1981, and September 17, 1981, are set aside and the four informations against the private respondent reinstated. No costs.

SO ORDERED.

36

G.R. No. 109583 September 5, 1997

TRANS ACTION OVERSEAS CORPORATION, petitioner, vs.THE HONORABLE SECRETARY OF LABOR, ROSELLE CASTIGADOR, JOSEFINA MAMON, JENELYN CASA, PEACHY LANIOG, VERDELINA BELGIRA, ELMA FLORES, RAMONA LITURCO, GRACE SABANDO, GLORIA PALMA, AVELYN ALVAREZ, CANDELARIA NONO, NITA BUSTAMANTE, CYNTHIA ARANDILLO, SANDIE AGUILAR, DIGNA PANAGUITON, VERONICA BAYOGOS, JULIANITA ARANADOR, LEONORA CABALLERO, NANCY BOLIVAR, NIMFA BUCOL, ZITA GALINDO, ESTELITA BIOCOS, MARJORIE MACATE, RUBY SEPULVIDA, ROSALIE SONDIA, NORA MAQUILING, PAULINA CORDERO, LENIROSE ABANGAN, SELFA PALMA, ANTONIA NAVARRO, ELSIE PENARUBIA, IRMA SOBREQUIL, SONY JAMUAT, CLETA MAYO, respondents.

37

 

ROMERO, J.:

The issue presented in the case at bar is whether or not the Secretary of Labor and Employment has jurisdiction to cancel or revoke the license of a private fee-charging employment agency.

From July 24 to September 9, 1987, petitioner Trans Action Overseas Corporation, a private fee-charging employment agency, scoured Iloilo City for possible recruits for alleged job vacancies in Hongkong. Private respondents sought employment as domestic helpers through petitioner's employees, Luzviminda Aragon, Ben Hur Domincil and his wife Cecille. The applicants paid placement fees ranging from P1,000.00 to P14,000.00, but petitioner failed to deploy them. Their demands for refund proved unavailing; thus, they were constrained to institute complaints against petitioner for violation of Articles 32 and 34(a) 1 of the Labor Code, as amended.

Petitioner denied having received the amounts allegedly collected from respondents, and averred that Aragon, whose only duty was to pre-screen and interview applicants, and the spouses Domincil were not authorized to collect fees from the applicants. Accordingly, it cannot be held liable for the money claimed by respondents. Petitioner maintains that it even warned respondents not to give any money to unauthorized individuals.

POEA Regional Extension Unit Coordinator Edgar Somes testified that although he was aware that petitioner collected fees from respondents, the latter insisted that they be allowed to make the payments on the assumption that it could hasten their deployment abroad. He added that Mrs. Honorata Manliclic, a representative of petitioner tasked to oversee the conduct of the interviews, told him that she was leaving behind presigned receipts to Aragon as she cannot stay in Iloilo City for the screening of the applicants. Manliclic, however, denied this version and argued that it was Somes who instructed her to leave the receipts behind as it was perfectly alright to collect fees.

On April 5, 1991, then Labor Undersecretary Nieves R. Confesor rendered the assailed order, the dispositive portion of which reads:

WHEREFORE, respondents are hereby ordered to pay, jointly and severally, the following claims:

1. Rosele Castigador P14,000.00

2. Josefina Mamon 3,000.00

3. Jenelyn Casa 3,000.00

4. Peachy Laniog 13,500.00

5. Verdelina Belgira 2,000.00

6. Elma Flores 2,500.00

7. Ramona Liturco 2,500.00

8. Grace Sabando 3,500.00

9. Gloria Palma 1,500.00

10. Avelyn Alvarez 1,500.00

11. Candelaria Nono 1,000.00

12. Nita Bustamante 5,000.00

13. Cynthia Arandillo 1,000.00

14. Sandie Aguilar 3,000.00

15. Digna Panaguiton 2,500.00

16. Veronica Bayogos 2,000.00

17. Sony Jamuat 4,500.00

18. Irma Sobrequil 2,000.00

19. Elsie Penarubia 2,000.00

20. Antonia Navarro 2,000.00

21. Selfa Palma 3,000.00

22. Lenirose Abangan 13,300.00

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23. Paulina Cordero 1,400.00

24. Nora Maquiling 2,000.00

25. Rosalie Sondia 2,000.00

26. Ruby Sepulvida 3,500.00

27. Marjorie Macate 1,500.00

28. Estelita Biocos 3,000.00

29. Zita Galindo 3,500.00

30. Nimfa Bucol 1,000.00

31. Nancy Bolivar 2,000.00

32. Leonora Caballero 13,900.00

33. Julianita Aranador 14,000.00

The complaints of Ma. Luz Alingasa, Nimfa Perez, and Cleta Mayo are hereby dismissed in view of their desistance.

The following complaints are hereby dismissed for failure to appear/prosecute:

1. Jiyasmin Bantillo 6. Edna Salvante

2. Rosa de Luna Senail 7. Thelma Beltiar

3. Elnor Bandojo 8. Cynthia Cepe

4. Teresa Caldeo 9. Rosie Pavillon

5. Virginia Castroverde

The complaints filed by the following are hereby dismissed for lack of evidence:

1. Aleth Palomaria 5. Mary Ann Beboso

2. Emely Padrones 6. Josefina Tejero

3. Marybeth Aparri 7. Bernadita Aprong

4. Lenia Biona 8. Joji Lull

Respondent agency is liable for twenty eight (28) counts of violation of Article 32 and five (5) counts of Article 34 (a) with a corresponding suspension in the aggregate period of sixty six (66) months. Considering however, that under the schedule of penalties, any suspension amounting to a period of 12 months merits the imposition of the penalty of cancellation, the license of respondent TRANS ACTION OVERSEAS CORPORATION to participate in the overseas placement and recruitment of workers is hereby ordered CANCELLED, effective immediately.

SO ORDERED. 2 (Emphasis supplied)

On April 29, 1991, petitioner filed its Motion for Temporary Lifting of Order of Cancellation alleging, among other things, that to deny it the authority to engage in placement and recruitment activities would jeopardize not only its contractual relations with its foreign principals, but also the welfare, interests, and livelihood of recruited workers scheduled to leave for their respective assignments. Finally, it manifested its willingness to post a bond to insure payment of the claims to be awarded, should its appeal or motion be denied.

Finding the motion to be well taken, Undersecretary Confesor provisionally lifted the cancellation of petitioner's license pending resolution of its Motion for Reconsideration filed on May 6, 1991. On January 30, 1992, however, petitioner's motion for reconsideration was eventually denied for lack of merit, and the April 5, 1991, order revoking its license was reinstated.

Petitioner contends that Secretary; Confesor acted with grave abuse of discretion in rendering the assailed orders on alternative grounds, viz.: (1) it is the Philippine Overseas Employment Administration (POEA) which has the exclusive and original jurisdiction to hear and decide illegal recruitment cases, including the authority to cancel recruitment licenses, or (2) the cancellation order based on the 1987 POEA Schedule of Penalties is not valid for non-compliance with the Revised Administrative Code of 1987 regarding its registration with the U.P. Law Center.

Under Executive Order No. 797 3 (E.O. No. 797) and Executive Order No. 247 (E.O. No. 247), 4 the POEA was established and mandated to assume the functions of the Overseas Employment Development Board (OEDB), the National Seamen Board (NSB), and the overseas employment function of the Bureau of Employment Services (BES). Petitioner theorizes that when POEA absorbed the powers of these agencies, Article 35 of the Labor Code, as amended, was rendered ineffective.

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The power to suspend or cancel any license or authority to recruit employees for overseas employment is vested upon the Secretary of Labor and Employment. Article 35 of the Labor Code, as amended, which provides:

Art. 5. Suspension and/or Cancellation of License or Authority — The Minister of Labor shall have the power to suspend or cancel any license or authority to recruit employees for overseas employment for violation of rules and regulations issued by the Ministry of Labor, the Overseas Employment Development Board, and the National Seamen Board, or for violation of the provisions of this and other applicable laws, General Orders and Letters of Instructions.

In the case of Eastern Assurance and Surety Corp. v. Secretary of Labor, 5 we held that:

The penalties of suspension and cancellation of license or authority are prescribed for violations of the above quoted provisions, among others. And the Secretary of Labor has the power under Section 35 of the law to apply these sanctions, as well as the authority, conferred by Section 36, not only to "restrict and regulate the recruitment and placement activities of all agencies," but also to "promulgate rules and regulations to carry out the objectives and implement the provisions" governing said activities. Pursuant to this rule-making power thus granted, the Secretary of Labor gave the POEA, 6 "on its own initiative or upon filing of a complaint or report or upon request for investigation by any aggrieved person, . . (authority to) conduct the necessary proceedings for the suspension or cancellation of the license or authority of any agency or entity" for certain enumerated offenses including —

1) the imposition or acceptance, directly or indirectly, of any amount of money, goods or services, or any fee or bond in excess of what is prescribed by the Administration, and

2) any other violation of pertinent provisions of the Labor Code and other relevant laws, rules and regulations. 7

The Administrator was also given the power to "order the dismissal of the case of the suspension of the license or authority of the respondent agency or contractor or recommend to the Minister the cancellation thereof." 8 (Emphasis supplied)

This power conferred upon the Secretary of Labor and Employment was echoed in People v. Diaz, 9 viz.:

A non-licensee or non-holder of authority means any person, corporation or entity which has not been issued a valid license or authority to engage in recruitment and

placement by the Secretary of Labor, or whose license or authority has been suspended, revoked or cancelled by the POEA or the Secretary. (Emphasis supplied)

In view of the Court's disposition on the matter, we rule that the power to suspend or cancel any license or authority to recruit employees for overseas employment is concurrently vested with the POEA and the Secretary of Labor.

As regards petitioner's alternative argument that the non-filing of the 1987 POEA Schedule of Penalties with the UP Law Center rendered it ineffective and, hence, cannot be utilized as basis for penalizing them, we agree with Secretary Confesor's explanation, to wit:

On the other hand, the POEA Revised Rules on the Schedule of Penalties was issued pursuant to Article 34 of the Labor Code, as amended. The same merely amplified and particularized the various violations of the rules and regulations of the POEA and clarified and specified the penalties therefore (sic). Indeed, the questioned schedule of penalties contains only a listing of offenses. It does not prescribe additional rules and regulations governing overseas employment but only detailed the administrative sanctions imposable by this Office for some enumerated prohibited acts.

Under the circumstances, the license of the respondent agency was cancelled on the authority of Article 35 of the Labor Code, as amended, and not pursuant to the 1987 POEA Revised Rules on Schedule of Penalties. 10

WHEREFORE, in view of the foregoing, the instant petition is hereby DISMISSED. Accordingly, the decision of the Secretary of Labor dated April 5, 1991, is AFFIRMED. No costs.

G.R. No. 167639             April 19, 2006

REPUBLIC OF THE PHILIPPINES, represented by the ADMINISTRATOR OF THE PHILIPPINE OVERSEAS EMPLOYMENT ADMINISTRATION (POEA), Petitioner, vsPRINCIPALIA MANAGEMENT AND PERSONNEL CONSULTANTS, INCORPORATED, Respondent.

D E C I S I O N

YNARES-SANTIAGO, J.:

Petitioner assails the September 20, 2004 Resolution1 of the Court of Appeals in CA-G.R. SP No. 86170, dismissing outright the petition for certiorari for failure to attach copies of all relevant pleadings

40

and transcripts of the hearings, as well as the March 29, 2005 Resolution2 denying the motion for reconsideration.

This case stemmed from two separate complaints filed before the Philippine Overseas Employment Administration (POEA) against Principalia Management and Personnel Consultants, Incorporated (Principalia) for violation of the 2002 POEA Rules and Regulations. The first complaint dated July 16, 2003 filed by Ruth Yasmin Concha (Concha) was docketed as POEA Case No. RV 03-07-1497. The second complaint dated October 14, 2003 filed by Rafael E. Baldoza (Baldoza) was docketed as POEA Case No. RV 03-07-1453.

In the first complaint, Concha alleged that in August 2002, she applied with Principalia for placement and employment as caregiver or physical therapist in the USA or Canada. Despite paying P20,000.00 out of the P150,000.00 fee required by Principalia which was not properly receipted, Principalia failed to deploy Concha for employment abroad.3

In its March 15, 2004 Order,4 the Adjudication Office of the POEA found Principalia liable for violations of the 2002 POEA Rules and Regulations, particularly for collecting a fee from the applicant before employment was obtained; for non-issuance of official receipt; and for misrepresenting that it was able to secure employment for Concha. For these infractions, Principalia’s license was ordered suspended for 12 months or in lieu thereof, Pricipalia is ordered to pay a fine of P120,000.00 and to refund Concha’s placement fee of P20,000.00.

Baldoza initiated the second complaint on October 14, 20035 alleging that Principalia assured him of employment in Doha, Qatar as a machine operator with a monthly salary of $450.00. After paying P20,000.00 as placement fee, he departed for Doha, Qatar on May 31, 2003 but when he arrived at the jobsite, he was made to work as welder, a job which he had no skills. He insisted that he was hired as machine operator but the alternative position offered to him was that of helper, which he refused. Thus, he was repatriated on July 5, 2003.

On November 12, 2003, Baldoza and Principalia entered into a compromise agreement with quitclaim and release whereby the latter agreed to redeploy Baldoza for employment abroad. Principalia, however, failed to deploy Baldoza as agreed hence, in an Order dated April 29, 2004,6 the POEA suspended Principalia’s documentary processing.

Principalia moved for reconsideration which the POEA granted on June 25, 2004.7 The latter lifted its order suspending the documentary processing by Principalia after noting that it exerted efforts to obtain overseas employment for Baldoza within the period stipulated in the settlement agreement but due to Baldoza’s lack of qualification, his application was declined by its foreign principal.

Meanwhile, on June 14, 2004, or before the promulgation of POEA’s order lifting the suspension, Principalia filed a Complaint8 (Complaint) against Rosalinda D. Baldoz in her capacity as Administrator of POEA and Atty. Jovencio R. Abara in his capacity as POEA Conciliator, before the Regional Trial

Court (RTC) of Mandaluyong City for "Annulment of Order for Suspension of Documentation Processing with Damages and Application for Issuance of a Temporary Restraining Order and/or Writ of Preliminary Injunction, and a Writ of Preliminary Mandatory Injunction." Principalia claimed that the suspension of its documentary processing would ruin its reputation and goodwill and would cause the loss of its applicants, employers and principals. Thus, a writ of preliminary injunction and a writ of mandatory injunction must be issued to prevent serious and irreparable damage to it.

On June 14, 2004,9 Judge Paulita B. Acosta-Villarante of the RTC of Mandaluyong City, Branch 211, granted a 72-hour restraining order enjoining Administrator Baldoz and Atty. Abara to refrain from imposing the suspension orders before the matter can be heard in full. On June 17, 2004,10 Judge Rizalina T. Capco-Umali, RTC of Mandaluyong City, Branch 212, held thus:

WHEREFORE, in order to preserve status quo ANTE, the prayer for a Temporary Restraining Order is hereby GRANTED enjoining the defendant[s] ROSALINDA D. BALDOZ and ATTY. JOVENCIO ABARA, other officers of Philippine Overseas Employment Administration, their subordinates, agents, representatives and all other persons acting for and in their behalf, for (sic) implementing the Orders of Suspension under VC No. LRD 03-100-95 and POEA Case No. RV-03-07-1497.

Let the hearing on Preliminary Injunction and Preliminary Mandatory Injunction be set on June 22, 2004 at 1:30 o’clock in the afternoon.1avvphil.net

SO ORDERED.11

After the hearing on the preliminary injunction, Administrator Baldoz and Atty. Abara submitted their Memorandum (Memorandum).12 In an Order dated July 2, 2004,13 the trial court held that the issue on the application for preliminary mandatory injunction has become moot because POEA had already released the renewal of license of Principalia. However, on the issue against the implementation of the order of suspension, the trial court resolved, to wit:

Accordingly, the only issue left for the resolution of this Court is whether or not a Writ of Preliminary Prohibitory Injunction will lie against the immediate implementation of the Order of Suspension of License of the Plaintiff dated March 15, 2004 under POEA case No. RV-03-07-1497, issued by the POEA Administrator Rosalinda D. Baldoz.

In support of its Application for a Writ of Preliminary Prohibitory Injunction, Plaintiff presented evidence to prove the following:

(1) that it has a license,

(2) that the said license was renewed,

41

(3) the existence of the two (2) suspension orders subject of this case;

(4) the irreparable damages to the Plaintiff.

The defendants on the other hand did not present evidence to controvert the evidence of the plaintiff. Instead, defendants submitted a Memorandum.

Upon a careful evaluation and assessment of the evidence by the plaintiff and their respective memoranda of the parties, this Court finds the need to issue the Writ of Preliminary Prohibitory Injunction prayed for by the plaintiff.

It bears stressing that the Order of Suspension dated March 15, 2004 is still pending appeal before the Office of the Secretary of Labor and Employment.

It is likewise significant to point out that the said Order dated March 15, 2004 does not categorically state that the suspension of Plaintiff’s License is immediately executory contrary to the contention of the defendants.1avvphil.net

Counsel for POEA argued that the basis for the immediate implementation thereof is Section 5, Rule V, Part VI of the 2002 POEA Rules and Regulation, which is quoted hereunder, as follows:

"Section 5. Stay of Execution. The decision of the Administration shall be stayed during the pendency of the appeal; Provided that where the penalty imposed carried the maximum penalty of twelve (12) months suspension o[r] cancellation of license, the decision shall be immediately executory despite pendency of the appeal."

The Order dated March 15, 2004 decreed Plaintiff as having violated Section 2 (a) (d) and (e) of Rule I, Part VI of the POEA Rules and Regulations and the Plaintiffs was imposed the penalty of twelve (12) months suspension of license (or in lieu, to pay fine of P120,000, it being it[s] first offense).

Violation of Section 2 (a) (d) and (e) Rule I, Part VI of POEA Rules and Regulations imposes a penalty of two (2) months to six (6) months suspension of license for the FIRST offender (sic). And in the absence of mitigating or aggravating circumstance, the medium range of the imposable penalty which is four (4) months shall be meted out. Being a first offender, the plaintiff was imposed suspension of license for four (4) months for each violation or an aggregate period of suspension for twelve (12) months for the three (3) violations.

It was not however made clear in the Order of Suspension dated March 15, 2004 that the Plaintiff’s case falls under the EXCEPTION under Section 5 Rule V, Part VI of the 2002 POEA Rules and Regulation, warranting the immediate implementation thereof even if an appeal is pending with the POEA.

The Plaintiff had established that even if it has been granted a renewal license, but if the same is suspended under the March 15, 2004 Order in POEA case No. RV-03-07-1497, it could not use the license to do business. As earlier mentioned, the said Order is still pending appeal.

In the meantime that the appeal has not been resolved, Plaintiff’s clients/principals will have to look for other agencies here and abroad, to supply their needs for employees and workers. The end result would be a tremendous loss and even closure of its business. More importantly, Plaintiff’s reputation would be tarnished and it would be difficult, if not impossible for it to regain its existing clientele if the immediate implementation of the suspension of its license continues.

The defendants and even the POEA, upon the other hand, will not suffer any damage, if the immediate implementation of the suspension of plaintiff’s license as decreed in the March 15, 2004 Order, is enjoined.

WHEREFORE, as prayed for by the Plaintiff, the application for the issuance of the Writ of Preliminary Prohibitory Injunction is hereby GRANTED, upon posting of a bond in the amount of FIVE HUNDRED THOUSAND PESOS (Php 500,000.00), enjoining and restraining the Defendants ROSALINDA D. BALDOZ and Atty. Jovencio Abarra (sic), other officers of the POEA, their subordinates, agents, representative, and all other persons acting for and in their behalf, from immediately implementing the Order of Suspension dated March 15, 2004 under POEA Case No. RV-03-07-1497.

The Writ of Preliminary Prohibitory Injunction shall be in full force and effect immediately upon receipt thereof and to be carried out on subsequent days thereafter pending the termination of this case and/or unless a contrary Order is issued by this court.14 (Emphasis supplied)

The trial court stressed that it issued the injunctive writ because the order of suspension dated March 15, 2004 is still pending appeal before the Office of the Secretary of Labor and Employment; that there is a possibility that Principalia will suffer tremendous losses and even closure of business pending appeal; that POEA will not suffer any damage if the immediate implementation of the suspension of Principalia is enjoined; that the order does not categorically state that the suspension of the license is immediately executory.

POEA appealed to the Court of Appeals which was dismissed15 outright for failure of POEA to attach copies of its Memorandum dated June 30, 2004, as well as the transcripts of the hearings conducted on June 22, 2004 and June 29, 2004 as required under Section 3 of Rule 46 of the Rules of Court. POEA’s motion for reconsideration was denied16 hence, this petition on the following grounds:

I

SECTION 1, RULE 65 OF THE REVISED RULES OF COURT REQUIRES ONLY THAT THE PETITION SHOULD BE ACCOMPANIED BY CERTIFIED TRUE COPIES OF THE JUDGMENT, ORDER OR RESOLUTION SUBJECT THEREOF AND OTHER DOCUMENTS RELEVANT AND

42

PERTINENT THERETO. PETITIONER ATTACHED ALL THE DOCUMENTS PERTINENT TO THE PETITION FILED WITH THE COURT OF APPEALS.

II

THE REGIONAL TRIAL COURT GRAVELY ABUSED ITS DISCRETION WHEN IT GRANTED RESPONDENT PRICIPALIA’S APPLICATION FOR A WRIT OF PRELIMINARY INJUNCTION DESPITE THE ABSENCE OF A CLEAR AND CONVINCING RIGHT TO THE RELIEF DEMANDED.

III

THE REGIONAL TRIAL COURT COMMITTED GRAVE ABUSE OF DISCRETION WHEN IT GRANTED RESPONDENT PRINCIPALIA’S APPLICATION DESPITE THE ABSENCE OF PROOF OF IRREPARABLE DAMAGE AS REQUIRED UNDER THE RULES OF COURT.

IV

THE INJUNCTIVE WRIT ISSUED BY THE REGIONAL TRIAL COURT DOES NOT LIE TO ENJOIN AN ACCOMPLISHED ACT.

V

THE ISSUANCE OF AN INJUNCTIVE WRIT BY THE REGIONAL TRIAL COURT IS TANTAMOUNT TO THE REVERSAL OF THE PRESUMPTION OF REGULARITY OF AN OFFICIAL ACT.17

The core issues for resolution are as follows: (1) whether the Court of Appeals erred in dismissing the Petition for Certiorari based on purely technical grounds; and (2) whether the trial court erred in issuing the writ of preliminary injunction.

POEA avers that the Court of Appeals’ Resolution dismissing outright the petition for certiorari is not valid because the documents attached to the petition substantially informed the Court of Appeals that the trial court gravely abused its discretion in granting the preliminary injunction. Thus, the attached documents were sufficient to render an independent assessment of its improvident issuance.

We disagree.

The Court of Appeals dismissed the petition for certiorari due to POEA’s failure to comply with Section 3, Rule 46 and Section 1, Rule 65 of the Rules of Court which read as follows:

RULE 46

SEC. 3. Contents and filing of petition; effect of non-compliance with requirements. - The petition shall contain the full names and actual addresses of all the petitioners and respondents, a concise statement of the matters involved, the factual background of the case, and the grounds relied upon for the relief prayed for.

In actions filed under Rule 65, the petition shall further indicate the material dates showing when notice of the judgment or final order or resolution subject thereof was received, when a motion for new trial or reconsideration, if any, was filed and when notice of the denial thereof was received.

It shall be filed in seven (7) clearly legible copies together with proof of service thereof on the respondent with the original copy intended for the court indicated as such by the petitioner, and shall be accompanied by a clearly legible duplicate original or certified true copy of the judgment, order, resolution, or ruling subject thereof, such material portions of the record as are referred to therein, and other documents relevant or pertinent thereto. The certification shall be accomplished by the proper clerk of court or by his duly authorized representative, or by the proper officer of the court, tribunal, agency or office involved or by his duly authorized representative. The other requisite number of copies of the petition shall be accompanied by clearly legible plain copies of all documents attached to the original.

x x x x

The failure of the petitioner to comply with any of the foregoing requirements shall be sufficient ground for the dismissal of the petition. (Emphasis supplied)

RULE 65

SECTION. 1. Petition for certiorari. – When any tribunal, board or officer exercising judicial or quasi-judicial functions has acted without or in excess of its or his jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction, and there is no appeal, nor any plain, speedy, and adequate remedy in the ordinary course of law, a person aggrieved thereby may file a verified petition in the proper court, alleging the facts with certainty and praying that judgment be rendered annulling or modifying the proceedings of such tribunal, board or officer, and granting such incidental reliefs as law and justice may require.

The petition shall be accompanied by a certified true copy of the judgment, order or resolution subject thereof, copies of all pleadings and documents relevant and pertinent thereto, and a sworn certification of non-forum shopping as provided in the third paragraph of Section 3, Rule 46.

In the case at bar, the Court of Appeals dismissed the petition for certiorari due to POEA’s failure to attach the following relevant documents: (1) the Memorandum filed by POEA in the trial court to

43

oppose the Complaint; and (2) the transcripts of stenographic notes (TSN) of the hearings conducted by the trial court on June 22, 2004 and June 29, 2004. In its motion for reconsideration dated October 13, 2004,18 POEA only attached the TSN dated June 30, 2004,19 with the explanation that the trial court did not furnish it with copies of the other hearings. However, we note that POEA still failed to attach a copy of the Memorandum which the Court of Appeals deemed essential in its determination of the propriety of the trial court’s issuance of the writ of preliminary prohibitory injunction.

The allowance of the petition on the ground of substantial compliance with the Rules is not a novel occurrence in our jurisdiction.20 Indeed, if we apply the Rules strictly, we cannot fault the Court of Appeals for dismissing the petition21 because the POEA did not demonstrate willingness to comply with the requirements set by the rules and to submit the necessary documents which the Court of Appeals need to have a proper perspective of the case.

POEA avers that the trial court gravely abused its discretion in granting the writ of preliminary prohibitory injunction when the requirements to issue the same have not been met. It asserts that Principalia had no clear and convincing right to the relief demanded as it had no proof of irreparable damage as required under the Rules of Court.

We do not agree.

The trial court did not decree that the POEA, as the granting authority of Principalia’s license to recruit, is not allowed to determine Principalia’s compliance with the conditions for the grant, as POEA would have us believe. For all intents and purposes, POEA can determine whether the licensee has complied with the requirements. In this instance, the trial court observed that the Order of Suspension dated March 15, 2004 was pending appeal with the Secretary of the Department of Labor and Employment (DOLE). Thus, until such time that the appeal is resolved with finality by the DOLE, Principalia has a clear and convincing right to operate as a recruitment agency.

Furthermore, irreparable damage was duly proven by Principalia. Suspension of its license is not easily quantifiable nor is it susceptible to simple mathematical computation, as alleged by POEA. The trial court in its Order stated, thus:

In the meantime that the appeal has not been resolved, Plaintiff’s clients/principals will have to look for other agencies here and abroad, to supply their needs for employees and workers. The end result would be a tremendous loss and even closure of its business. More importantly, Plaintiff’s reputation would be tarnished and it would be difficult, if not impossible for it to regain its existing clientele if the immediate implementation of the suspension of its license continues.22

If the injunctive writ was not granted, Principalia would have been labeled as an untrustworthy recruitment agency before there could be any final adjudication of its case by the DOLE. It would have lost both its employer-clients and its prospective Filipino-applicants. Loss of the former due to a tarnished reputation is not quantifiable.

Moreover, POEA would have no authority to exercise its regulatory functions over Principalia because the matter had already been brought to the jurisdiction of the DOLE. Principalia has been granted the license to recruit and process documents for Filipinos interested to work abroad. Thus, POEA’s action of suspending Principalia’s license before final adjudication by the DOLE would be premature and would amount to a violation of the latter’s right to recruit and deploy workers.

Finally, the presumption of regular performance of duty by the POEA under Section 3 (m), Rule 131 of the Rules of Court, finds no application in the case at bar, as it applies only where a duty is imposed on an official to act in a certain way, and assumes that the law tells him what his duties are. Therefore the presumption that an officer will discharge his duties according to law does not apply where his duties are not specified by law and he is given unlimited discretion.23 The issue threshed out before the trial court was whether the order of suspension should be implemented pending appeal. It did not correct a ministerial duty of the POEA. As such, the presumption on the regularity of performance of duty does not apply.

WHEREFORE, in light of the foregoing, the petition is DENIED for lack of merit.

SO ORDERED.

G.R. No. 156029             November 14, 2008

SANTOSA B. DATUMAN, petitioner, vs.FIRST COSMOPOLITAN MANPOWER AND PROMOTION SERVICES, INC., respondent.

D E C I S I O N

LEONARDO-DE CASTRO, J.:

Before us is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure, as amended, assailing the Court of Appeals (CA) Decision1 dated August 7, 2002, in CA-G.R. SP No. 59825, setting aside the Decision of the National Labor Relations Commission (NLRC).

The facts are as follows:

44

Sometime in 1989, respondent First Cosmopolitan Manpower & Promotion Services, Inc. recruited petitioner Santosa B. Datuman to work abroad under the following terms and conditions:

Site of employment - Bahrain

Employees Classification/Position/Grade - Saleslady

Basic Monthly Salary - US$370.00

Duration of Contract - One (1) year

Foreign Employer - Mohammed Sharif Abbas Ghulam Hussain

On April 17, 1989, petitioner was deployed to Bahrain after paying the required placement fee. However, her employer Mohammed Hussain took her passport when she arrived there; and instead of working as a saleslady, she was forced to work as a domestic helper with a salary of Forty Bahrain Dinar (BD40.00), equivalent only to One Hundred US Dollars (US$100.00). This was contrary to the agreed salary of US$370.00 indicated in her Contract of Employment signed in the Philippines and approved by the Philippine Overseas Employment Administration (POEA).3

On September 1, 1989, her employer compelled her to sign another contract, transferring her to another employer as housemaid with a salary of BD40.00 for the duration of two (2) years.4 She pleaded with him to give her a release paper and to return her passport but her pleas were unheeded. Left with no choice, she continued working against her will. Worse, she even worked without compensation from September 1991 to April 1993 because of her employer's continued failure and refusal to pay her salary despite demand. In May 1993, she was able to finally return to the Philippines through the help of the Bahrain Passport and Immigration Department.5

In May 1995, petitioner filed a complaint before the POEA Adjudication Office against respondent for underpayment and nonpayment of salary, vacation leave pay and refund of her plane fare, docketed as Case No. POEA ADJ. (L) 95-05-1586.6 While the case was pending, she filed the instant case before the NLRC for underpayment of salary for a period of one year and six months, nonpayment of vacation pay and reimbursement of return airfare.

When the parties failed to arrive at an amicable settlement before the Labor Arbiter, they were required to file their respective position papers, subsequent pleadings and documentary exhibits.

In its Position Paper,7 respondent countered that petitioner actually agreed to work in Bahrain as a housemaid for one (1) year because it was the only position available then. However, since such position was not yet allowed by the POEA at that time, they mutually agreed to submit the contract to the POEA indicating petitioner's position as saleslady. Respondent added that it was actually petitioner herself who violated the terms of their contract when she allegedly transferred to another employer without

respondent's knowledge and approval. Lastly, respondent raised the defense of prescription of cause of action since the claim was filed beyond the three (3)-year period from the time the right accrued, reckoned from either 1990 or 1991.8

On April 29, 1998, Labor Arbiter Jovencio Mayor, Jr. rendered a Decision finding respondent liable for violating the terms of the Employment Contract and ordering it to pay petitioner: (a) the amount of US$4,050.00, or its equivalent rate prevailing at the time of payment, representing her salary differentials for fifteen (15) months; and, (b) the amount of BD 180.00 or its equivalent rate prevailing at the time of payment, representing the refund of plane ticket, thus:

From the foregoing factual backdrop, the only crucial issue for us to resolve in this case is whether or not complainant is entitled to her monetary claims.

x x x

In the instant case, from the facts and circumstances laid down, it is thus self-evident that the relationship of the complainant and respondent agency is governed by the Contract of Employment, the basic terms a covenants of which provided for the position of saleslady, monthly compensation of US$370.00 and duration of contract for one (1) year. As it is, when the parties - complainant and respondent Agency - signed and executed the POEA - approved Contract of Employment, this agreement is the law that governs them. Thus, when respondent agency deviated from the terms of the contract by assigning the position of a housemaid to complainant instead of a saleslady as agreed upon in the POEA-approved Contract of Employment, respondent Agency committed a breach of said Employment Contract. Worthy of mention is the fact that respondent agency in their Position Paper paragraph 2, Brief Statement of the Facts and of the Case - admitted that it had entered into an illegal contract with complainant by proposing the position of a housemaid which said position was then not allowed by the POEA, by making it appear in the Employment Contract that the position being applied for is the position of a saleslady. As it is, we find indubitably clear that the foreign employer had took advantage to the herein hopeless complainant and because of this ordeal, the same obviously rendered complainant's continuous employment unreasonable if not downright impossible. The facts and surrounding circumstances of her ordeal was convincingly laid down by the complainant in her Position Paper, from which we find no flaws material enough to disregard the same. Complainant had clearly made out her case and no amount of persuasion can convince us to tilt the scales of justice in favor of respondents whose defense was anchored solely on the flimsy allegations that for a period of more than five (5) years - from 1989 until 1995 - nothing was heard from her or from her relatives, presuming then that complainant had no problem with her employment abroad. We also find that the pleadings and the annexes filed by the parties reveal a total lapse on the part of respondent First Cosmopolitan Manpower and Promotions - their failure to support with substantial evidence their contention that complainant transferred from one employer to another without knowledge and approval of respondent agency in contravention of the terms of the POEA approved Employment

45

Contract. Obviously, respondent Agency anchored its disquisition on the alleged "contracts" signed by the complainant that she agreed with the terms of said contracts - one (1) year duration only and as a housemaid - to support its contention that complainant violated the contract agreement by transferring from one employer to another on her own volition without the knowledge and consent of respondent agency. To us, this posture of respondent agency is unavailing. These "documents" are self-serving. We could not but rule that the same were fabricated to tailor-fit their defense that complainant was guilty of violating the terms of the Employment Contract. Consequently, we could not avoid the inference of a more logical conclusion that complainant was forced against her will to continue with her employment notwithstanding the fact that it was in violation of the original Employment Contract including the illegal withholding of her passport.

With the foregoing, we find and so rule that respondent Agency failed to discharge the burden of proving with substantial evidence that complainant violated the terms of the Employment Contract, thus negating respondent Agency's liability for complainant's money claims. All the more, the record is bereft of any evidence to show that complainant Datuman is either not entitled to her wage differentials or have already received the same from respondent. As such, we are perforce constrained to grant complainant's prayer for payment of salary differentials computed as follows:

January 1992 April 1993 (15 months)

US$370.00 agreed salary

US$100.00 actual paid salary

US$270.00 balance

US$270.00 x 15 months = US$4050.00

We are also inclined to grant complainant's entitlement to a refund of her plane ticket in the amount of BD 180 Bahrain Dinar or the equivalent in Philippine Currency at the rate of exchange prevailing at the time of payment.

Anent complainant's claim for vacation leave pay and overtime pay, we cannot, however, grant the same for failure on the part of complainant to prove with particularity the months that she was not granted vacation leave and the day wherein she did render overtime work.

Also, we could not grant complainant's prayer for award of damages and attorney's fees for lack of factual and legal basis.

WHEREFORE, premises considered, judgment is hereby rendered, finding respondent Agency liable for violating the term of Employment Contract and respondent First Cosmopolitan Manpower and Promotions is hereby ordered:

To pay complainant the amount of US$ FOUR THOUSAND AND FIFTY (US$4,050.00), or its equivalent rate prevailing at the time of payment, representing her salary differentials for fifteen (15) months;

To pay complainant the amount of BD 180.00 or its equivalent rate prevailing at the time of payment, representing the refund of plane ticket;

All other claims are hereby dismissed for lack of merit.

SO ORDERED.9 (emphasis supplied)

On appeal, the NLRC, Second Division, issued a Decision10 affirming with modification the Decision of Labor Arbiter Mayor, Jr., by reducing the award of salary differentials from US$4,050.00 to US$2,970.00 ratiocinating as follows:

Accordingly, we find that the claims for salary differentials accruing earlier than April of 1993 had indeed prescribed. This is so as complainant had filed her complaint on May 31, 1995 when she arrived from the jobsite in April 1993. Since the cause of action for salary differential accrues at the time when it falls due, it is clear that only the claims for the months of May 1993 to April 1994 have not yet prescribed. With an approved salary rate of US$370.00 vis-à-vis the amount of salary received which was $100.00, complainant is entitled to the salary differential for the said period in the amount of $2,970.00.

x x x

WHEREFORE, premises considered, judgment is hereby rendered MODIFYING the assailed Decision by reducing the award of salary differentials to $2,970.00 to the complainant.

The rest of the disposition is AFFIRMED.

SO ORDERED.11

On July 21, 2000, respondent elevated the matter to the CA through a petition for certiorari under Rule 65.

46

On August 2, 2000,12 the CA dismissed the petition for being insufficient in form pursuant to the last paragraph of Section 3, Rule 42 of the 1997 Rules of Civil Procedure, as amended.

On October 20, 2000,13 however, the CA reinstated the petition upon respondent's motion for reconsideration.14

On August 7, 2002, the CA issued the assailed Decision15 granting the petition and reversing the NLRC and the Labor Arbiter, thus:

Under Section 1 (f), Rule II, Book II of the 1991 POEA Rules and Regulations, the local agency shall assume joint and solidary liability with the employer for all claims and liabilities which may arise in connection with the implementation of the contract, including but not limited to payment of wages, health and disability compensation and repatriation.

Respondent Commission was correct in declaring that claims of private respondent "for salary differentials accruing earlier than April of 1993 had indeed prescribed." It must be noted that petitioner company is privy only to the first contract. Granting arguendo that its liability extends to the acts of its foreign principal, the Towering Recruiting Services, which appears to have a hand in the execution of the second contract, it is Our considered opinion that the same would, at the most, extend only up to the expiration of the second contract or until 01 September 1991. Clearly, the money claims subject of the complaint filed in 1995 had prescribed.

However, this Court declares respondent Commission as not only having abused its discretion, but as being without jurisdiction at all, in declaring private respondent entitled to salary differentials. After decreeing the money claims accruing before April 1993 as having prescribed, it has no more jurisdiction to hold petitioner company for salary differentials after that period. To reiterate, the local agency shall assume joint and solidary liability with the employer for all claims and liabilities which may arise in connection with the implementation of the contract. Which contract? Upon a judicious consideration, we so hold that it is only in connection with the first contract. The provisions in number 2, Section 10 (a), Rule V, Book I of the Omnibus Rules Implementing the Labor Code Section 1 (f), Rule II, Book II of the 1991 POEA Rules and Regulations were not made to make the local agency a perpetual insurer against all untoward acts that may be done by the foreign principal or the direct employer abroad. It is only as regards the principal contract to which it is privy shall its liability extend. In Catan v. National Labor Relations Commission, 160 SCRA 691 (1988), it was held that the responsibilities of the local agent and the foreign principal towards the contracted employees under the recruitment agreement extends up to and until the expiration of the employment contracts of the employees recruited and employed pursuant to the said recruitment agreement.

x x x

Foregoing considered, the assailed Decision dated 24 February 2000 and the Resolution dated 23 June 2000 of respondent Commission in NLRC NCR CA 016354-98 are hereby SET ASIDE.

SO ORDERED.16

Petitioner's Motion for Reconsideration17 thereon was denied in the assailed Resolution18 dated November 14, 2002.

Hence, the present petition based on the following grounds:

I.

THE HONORABLE COURT OF APPEALS COMMITTED A REVERSIBLE ERROR WHEN IT ABANDONED THE FACTUAL FINDINGS OF THE LABOR ARBITER AS AFFIRMED BY THE NATIONAL LABOR RELATIONS COMMISSION.

II.

THE HONORABLE COURT OF APPEALS PATENTLY ERRED IN HOLDING THAT THE RESPONDENT AGENCY IS ONLY A [sic] PRIVY AND LIABLE TO THE PRINCIPAL CONTRACT.

III.

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT THE CAUSE OF ACTION OF THE PETITIONER ALREADY PRESCRIBED.

The respondent counters in its Comment that the CA is correct in ruling that it is not liable for the monetary claims of petitioner as the claim had already prescribed and had no factual basis.

Simply put, the issues boil down to whether the CA erred in not holding respondent liable for petitioner's money claims pursuant to their Contract of Employment.

We grant the petition.

On whether respondent is solidarily liable for petitioner's monetary claims

Section 1 of Rule II of the POEA Rules and Regulations states that:

47

Section 1. Requirements for Issuance of License. - Every applicant for license to operate a private employment agency or manning agency shall submit a written application together with the following requirements:

x x x

f. A verified undertaking stating that the applicant:

x x x

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

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

In the assailed Decision, the CA disregarded the aforecited provision of the law and the policy of the state when it reversed the findings of the NLRC and the Labor Arbiter. As the agency which recruited petitioner, respondent is jointly and solidarily liable with the latter's principal employer abroad for her (petitioner's) money claims. Respondent cannot, therefore, exempt itself from all the claims and liabilities arising from the implementation of their POEA-approved Contract of Employment.

We cannot agree with the view of the CA that the solidary liability of respondent extends only to the first contract (i.e. the original, POEA-approved contract which had a term of until April 1990). The signing of the "substitute" contracts with the foreign employer/principal before the expiration of the POEA-approved contract and any continuation of petitioner's employment beyond the original one-year term, against the will of petitioner, are continuing breaches of the original POEA-approved contract. To accept the CA's reasoning will open the floodgates to even more abuse of our overseas workers at the hands of their foreign employers and local recruiters, since the recruitment agency could easily escape its mandated solidary liability for breaches of the POEA-approved contract by colluding with their foreign principals in substituting the approved contract with another upon the worker's arrival in the country of employment. Such outcome is certainly contrary to the State's policy of extending protection and support to our overseas workers. To be sure, Republic Act No. 8042 explicitly prohibits the substitution or alteration to the prejudice of the worker of employment contracts already approved and verified by the Department of Labor and Employment (DOLE) from the time of actual signing thereof

by the parties up to and including the period of the expiration of the same without the approval of the DOLE.22

Respondent's contention that it was petitioner herself who violated their Contract of Employment when she signed another contract in Bahrain deserves scant consideration. It is the finding of both the Labor Arbiter and the NLRC - which, significantly, the CA did not disturb - that petitioner was forced to work long after the term of her original POEA-approved contract, through the illegal acts of the foreign employer.

In Placewell International Services Corporation v. Camote,23 we held that the subsequently executed side agreement of an overseas contract worker with her foreign employer which reduced his salary below the amount approved by the POEA is void because it is against our existing laws, morals and public policy. The said side agreement cannot supersede the terms of the standard employment contract approved by the POEA.

Hence, in the present case, the diminution in the salary of petitioner from US$370.00 to US$100 (BD 40.00) per month is void for violating the POEA-approved contract which set the minimum standards, terms, and conditions of her employment. Consequently, the solidary liability of respondent with petitioner's foreign employer for petitioner's money claims continues although she was forced to sign another contract in Bahrain. It is the terms of the original POEA-approved employment contract that shall govern the relationship of petitioner with the respondent recruitment agency and the foreign employer. We agree with the Labor Arbiter and the NLRC that the precepts of justice and fairness dictate that petitioner must be compensated for all months worked regardless of the supposed termination of the original contract in April 1990. It is undisputed that petitioner was compelled to render service until April 1993 and for the entire period that she worked for the foreign employer or his unilaterally appointed successor, she should have been paid US$370/month for every month worked in accordance with her original contract.

Respondent cannot disclaim liability for the acts of the foreign employer which forced petitioner to remain employed in violation of our laws and under the most oppressive conditions on the allegation that it purportedly had no knowledge of, or participation in, the contract unwillingly signed by petitioner abroad. We cannot give credence to this claim considering that respondent by its own allegations knew from the outset that the contract submitted to the POEA for approval was not to be the "real" contract. Respondent blithely admitted to submitting to the POEA a contract stating that the position to be filled by petitioner is that of "Saleslady" although she was to be employed as a domestic helper since the latter position was not approved for deployment by the POEA at that time. Respondent's evident bad faith and admitted circumvention of the laws and regulations on migrant workers belie its protestations of innocence and put petitioner in a position where she could be exploited and taken advantage of overseas, as what indeed happened to her in this case.

We look upon with great disfavor the unsubstantiated actuations of innocence or ignorance on the part of local recruitment agencies of acts of their foreign principals, as if the agencies' responsibility ends with the deployment of the worker. In the light of the recruitment agency's legally mandated joint and several

48

liability with the foreign employer for all claims in connection with the implementation of the contract, it is the recruitment agency's responsibility to ensure that the terms and conditions of the employment contract, as approved by the POEA, are faithfully complied with and implemented properly by its foreign client/principal. Indeed, it is in its best interest to do so to avoid being haled to the courts or labor tribunals and defend itself from suits for acts of its foreign principal.

On whether petitioner's claims for underpaid salaries have prescribed

It should be recalled that the Labor Arbiter and the NLRC similarly found that petitioner is entitled to underpaid salaries, albeit they differed in the number of months for which salary differentials should be paid. The CA, on the other hand, held that all of petitioner's monetary claims have prescribed pursuant to Article 291 of the Labor Code which provides that:

Art. 291. Money Claims. - All money claims arising from employer-employee relations accruing during the effectivity of this Code shall be filed within three years from the time that cause of action accrued; otherwise, they shall be forever barred. (emphasis supplied)

We do not agree with the CA when it held that the cause of action of petitioner had already prescribed as the three-year prescriptive period should be reckoned from September 1, 1989 when petitioner was forced to sign another contract against her will. As stated in the complaint, one of petitioner's causes of action was for underpayment of salaries. The NLRC correctly ruled the right to claim unpaid salaries (or in this case, unpaid salary differentials) accrue as they fall due.24 Thus, petitioner's cause of action to claim salary differential for October 1989 only accrued after she had rendered service for that month (or at the end of October 1989). Her right to claim salary differential for November 1989 only accrued at the end of November 1989, and so on and so forth.

Both the Labor Arbiter and the NLRC found that petitioner was forced to work until April 1993. Interestingly, the CA did not disturb this finding but held only that the extent of respondent's liability was limited to the term under the original contract or, at most, to the term of the subsequent contract entered into with the participation of respondent's foreign principal, i.e. 1991. We have discussed previously the reasons why (a) the CA's theory of limited liability on the part of respondent is untenable and (b) the petitioner has a right to be compensated for all months she, in fact, was forced to work. To determine for which months petitioner's right to claim salary differentials has not prescribed, we must count three years prior to the filing of the complaint on May 31, 1995. Thus, only claims accruing prior to May 31, 1992 have prescribed when the complaint was filed on May 31, 1995. Petitioner is entitled to her claims for salary differentials for the period May 31, 1992 to April 1993, or approximately eleven (11) months.25

We find that the NLRC correctly computed the salary differential due to petitioner at US$2,970.00 (US$370.00 as approved salary rate - US$100.00 as salary received = US$290 as underpaid salary per month x 11 months). However, it should be for the period May 31, 1992 to April 1993 and not May 1993 to April 1994 as erroneously stated in the NLRC's Decision.

A final note

This Court reminds local recruitment agencies that it is their bounden duty to guarantee our overseas workers that they are being recruited for bona fide jobs with bona fide employers. Local agencies should never allow themselves to be instruments of exploitation or oppression of their compatriots at the hands of foreign employers. Indeed, being the ones who profit most from the exodus of Filipino workers to find greener pastures abroad, recruiters should be first to ensure the welfare of the very people that keep their industry alive.

WHEREFORE, the petition is GRANTED. The assailed Decision of the Court of Appeals dated August 7, 2002 and Resolution dated November 14, 2002 in CA-G.R. SP No. 59825 are REVERSED AND SET ASIDE. The Decision of the National Labor Relations Commission dated February 24, 2000 is REINSTATED with a qualification with respect to the award of salary differentials, which should be granted for the period May 31, 1992 to April 1993 and not May 1993 to April 1994.

SO ORDERED.

[G.R. No. 177498, January 18, 2012]

STOLT-NIELSEN TRANSPORTATION GROUP, INC. AND CHUNG GAI SHIP MANAGEMENT, PETITIONERS, VS. SULPECIO MEDEQUILLO, JR., RESPONDENT.

D E C I S I O N

PEREZ, J.:

Before the Court is a Petition for Review on Certiorari[1] of the Decision[2] of the First Division of the Court of Appeals in CA-G.R. SP No. 91632 dated 31 January 2007, denying the petition for certiorari filed by Stolt-Nielsen Transportation Group, Inc. and Chung Gai Ship Management (petitioners) and affirming the Resolution of the National Labor Relations Commission (NLRC). The dispositive portion of the assailed decision reads:

WHEREFORE, the petition is hereby DENIED. Accordingly, the assailed Decision promulgated on February 28, 2003 and the Resolution dated July 27, 2005 are AFFIRMED.[3]

The facts as gathered by this Court follow:

On 6 March 1995, Sulpecio Madequillo (respondent) filed a complaint before the Adjudication Office of the Philippine Overseas Employment Administration (POEA) against the petitioners for illegal dismissal

49

under a first contract and for failure to deploy under a second contract. In his complaint-affidavit,[4] respondent alleged that:

1. On 6 November 1991(First Contract), he was hired by Stolt-Nielsen Marine Services, Inc on behalf of its principal Chung-Gai Ship Management of Panama as Third Assistant Engineer on board the vessel “Stolt Aspiration” for a period of nine (9) months;

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

3. On 8 November 1991, he joined the vessel MV “Stolt Aspiration”;4. On February 1992 or for nearly three (3) months of rendering service and while the vessel was

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

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

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

Employment Contract on 18 September 1992.8. Despite the commencement of the Second Contract on 21 April 1992, petitioners failed to

deploy him with the vessel MV “Stolt Pride”;9. He made a follow-up with the petitioner but the same refused to comply with the Second

Employment Contract.10. On 22 December 1994, he demanded for his passport, seaman’s book and other employment

documents. However, he was only allowed to claim the said documents in exchange of his signing a document;

11. He was constrained to sign the document involuntarily because without these documents, he could not seek employment from other agencies.

He prayed for actual, moral and exemplary damages as well as attorney’s fees for his illegal dismissal and in view of the Petitioners’ bad faith in not complying with the Second Contract.

The case was transferred to the Labor Arbiter of the DOLE upon the effectivity of the Migrant Workers and Overseas Filipinos Act of 1995.

The parties were required to submit their respective position papers before the Labor Arbiter. However, petitioners failed to submit their respective pleadings despite the opportunity given to them.[5]

On 21 July 2000, Labor Arbiter Vicente R. Layawen rendered a judgment[6] finding that the respondent was constructively dismissed by the petitioners. The dispositive portion reads:

WHEREFORE, premises considered, judgment is hereby rendered, declaring the respondents guilty of constructively dismissing the complainant by not honoring the employment contract. Accordingly, respondents are hereby ordered jointly and solidarily to pay complainant the following:

1. $12,537.00 or its peso equivalent at the time of payment.[7]

The Labor Arbiter found the first contract entered into by and between the complainant and the respondents to have been novated by the execution of the second contract. In other words, respondents cannot be held liable for the first contract but are clearly and definitely liable for the breach of the second contract.[8] However, he ruled that there was no substantial evidence to grant the prayer for moral and exemplary damages.[9]

The petitioners appealed the adverse decision before the National Labor Relations Commission assailing that they were denied due process, that the respondent cannot be considered as dismissed from employment because he was not even deployed yet and the monetary award in favor of the respondent was exorbitant and not in accordance with law.[10]

On 28 February 2003, the NLRC affirmed with modification the Decision of the Labor Arbiter. The dispositive portion reads:

WHEREFORE, premises considered, the decision under review is hereby, MODIFIED BY DELETING the award of overtime pay in the total amount of Three Thousand Six Hundred Thirty Six US Dollars (US $3,636.00).

In all other respects, the assailed decision so stands as, AFFIRMED.[11]

Before the NLRC, the petitioners assailed that they were not properly notified of the hearings that were conducted before the Labor Arbiter. They further alleged that after the suspension of proceedings before the POEA, the only notice they received was a copy of the decision of the Labor Arbiter.[12]

The NLRC ruled that records showed that attempts to serve the various notices of hearing were made on petitioners’ counsel on record but these failed on account of their failure to furnish the Office of the Labor Arbiter a copy of any notice of change of address. There was also no evidence that a service of notice of change of address was served on the POEA.[13]

The NLRC upheld the finding of unjustified termination of contract for failure on the part of the petitioners to present evidence that would justify their non-deployment of the respondent.[14] It denied the claim of the petitioners that the monetary award should be limited only to three (3) months for every year of the unexpired term of the contract. It ruled that the factual incidents material to the case transpired within 1991-1992 or before the effectivity of Republic Act No. 8042 or the Migrant Workers and Overseas Filipinos Act of 1995 which provides for such limitation.[15]

However, the NLRC upheld the reduction of the monetary award with respect to the deletion of the overtime pay due to the non-deployment of the respondent.[16]

50

The Partial Motion for Reconsideration filed by the petitioners was denied by the NLRC in its Resolution dated 27 July 2005.[17]

The petitioners filed a Petition for Certiorari before the Court of Appeals alleging grave abuse of discretion on the part of NLRC when it affirmed with modification the ruling of the Labor Arbiter. They prayed that the Decision and Resolution promulgated by the NLRC be vacated and another one be issued dismissing the complaint of the respondent.

Finding no grave abuse of discretion, the Court of Appeals AFFIRMED the Decision of the labor tribunal.

The Court’s Ruling    

The following are the assignment of errors presented before this Court:

I.

THE COURT A QUO ERRED IN FINDING THAT THE SECOND CONTRACT NOVATED THE FIRST CONTRACT.

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

B. THE ALLEGED ILLEGAL DISMISSAL UNDER THE FIRST CONTRACT TRANSPIRED MORE THAN THREE (3) YEARS AFTER THE CASE WAS FILED AND THEREFORE HIS CASE SHOULD HAVE BEEN DISMISSED FOR BEING BARRED BY PRESCRIPTION.

II.

THE COURT A QUO ERRED IN RULING THAT THERE WAS CONSTRUCTIVE DISMISSAL UNDER THE SECOND CONTRACT.

A. IT IS LEGALLY IMPOSSIBLE TO HAVE CONSTRUCTIVE DISMISSAL WHEN THE EMPLOYMENT HAS NOT YET COMMENCED.

B. ASSUMING THERE WAS OMISSION UNDER THE SECOND CONTRACT, PETITIONERS CAN ONLY BE FOUND AS HAVING FAILED IN DEPLOYING PRIVATE RESPONDENT BUT WITH VALID REASON.

III.

THE COURT A QUO ERRED IN FAILING TO FIND THAT EVEN ASSUMING THERE WAS BASIS FOR HOLDING PETITIONER LIABLE FOR “FAILURE TO DEPLOY” RESPONDENT, THE POEA RULES PENALIZES SUCH OMISSION WITH A MERE “REPRIMAND.”[18]

The petitioners contend that the first employment contract between them and the private respondent is different from and independent of the second contract subsequently executed upon repatriation of respondent to Manila.

We do not agree.

Novation is the extinguishment of an obligation by the substitution or change of the obligation by a subsequent one which extinguishes or modifies the first, either by changing the object or principal conditions, or, by substituting another in place of the debtor, or by subrogating a third person in the rights of the creditor. In order for novation to take place, the concurrence of the following requisites is indispensable:

1. There must be a previous valid obligation, 2. There must be an agreement of the parties concerned to a new contract, 3. There must be the extinguishment of the old contract, and4. There must be the validity of the new contract.[19]

In its ruling, the Labor Arbiter clarified that novation had set in between the first and second contract. To quote:

xxx [T]his office would like to make it clear that the first contract entered into by and between the complainant and the respondents is deemed to have been novated by the execution of the second contract. In other words, respondents cannot be held liable for the first contract but are clearly and definitely liable for the breach of the second contract.[20]

This ruling was later affirmed by the Court of Appeals in its decision ruling that:

Guided by the foregoing legal precepts, it is evident that novation took place in this particular case. The parties impliedly extinguished the first contract by agreeing to enter into the second contract to placate Medequillo, Jr. who was unexpectedly dismissed and repatriated to Manila. The second contract would not have been necessary if the petitioners abided by the terms and conditions of Madequillo, Jr.’s employment under the first contract. The records also reveal that the 2nd contract extinguished the first contract by changing its object or principal. These contracts were for overseas employment aboard different vessels. The first contract was for employment aboard the MV “Stolt Aspiration” while the second contract involved working in another vessel, the MV “Stolt Pride.” Petitioners and Madequillo, Jr. accepted the terms and conditions of the second contract. Contrary to petitioners’ assertion, the first contract was a “previous valid contract” since it had not yet been terminated at the time of Medequillo,

51

Jr.’s repatriation to Manila. The legality of his dismissal had not yet been resolved with finality. Undoubtedly, he was still employed under the first contract when he negotiated with petitioners on the second contract. As such, the NLRC correctly ruled that petitioners could only be held liable under the second contract.[21]

We concur with the finding that there was a novation of the first employment contract.

We reiterate once more and emphasize the ruling in Reyes v. National Labor Relations Commission,[22] to wit:

x x x [F]indings of quasi-judicial bodies like the NLRC, and affirmed by the Court of Appeals in due course, are conclusive on this Court, which is not a trier of facts.

x x x x

x x x Findings of fact of administrative agencies and quasi-judicial bodies, which have acquired expertise because their jurisdiction is confined to specific matters, are generally accorded not only respect, but finality when affirmed by the Court of Appeals. Such findings deserve full respect and, without justifiable reason, ought not to be altered, modified or reversed.(Emphasis supplied)[23]

With the finding that respondent “was still employed under the first contract when he negotiated with petitioners on the second contract”,[24] novation became an unavoidable conclusion.

Equally settled is the rule that factual findings of labor officials, who are deemed to have acquired expertise in matters within their jurisdiction, are generally accorded not only respect but even finality by the courts when supported by substantial evidence, i.e., the amount of relevant evidence which a reasonable mind might accept as adequate to justify a conclusion.[25] But these findings are not infallible. When there is a showing that they were arrived at arbitrarily or in disregard of the evidence on record, they may be examined by the courts.[26] In this case, there was no showing of any arbitrariness on the part of the lower courts in their findings of facts. Hence, we follow the settled rule.

We need not dwell on the issue of prescription. It was settled by the Court of Appeals with its ruling that recovery of damages under the first contract was already time-barred. Thus:

Accordingly, the prescriptive period of three (3) years within which Medequillo Jr. may initiate money claims under the 1st contract commenced on the date of his repatriation. xxx The start of the three (3) year prescriptive period must therefore be reckoned on February 1992, which by Medequillo Jr.’s own admission was the date of his repatriation to Manila. It was at this point in time that Medequillo Jr.’s cause of action already accrued under the first contract. He had until February 1995 to pursue a case for illegal dismissal and damages arising from the 1st contract. With the filing of his Complaint-Affidavit on March 6, 1995, which was clearly beyond the prescriptive period, the cause of action under the 1st contract was already time-barred.[27]

The issue that proceeds from the fact of novation is the consequence of the non-deployment of

respondent.

The petitioners argue that under the POEA Contract, actual deployment of the seafarer is a suspensive condition for the commencement of the employment.[28] We agree with petitioners on such point. However, even without actual deployment, the perfected contract gives rise to obligations on the part of petitioners.

A contract is a meeting of minds between two persons whereby one binds himself, with respect to the other, to give something or to render some service.[29] The contracting parties may establish such stipulations, clauses, terms and conditions as they may deem convenient, provided they are not contrary to law, morals, good customs, public order, or public policy.[30]

The POEA Standard Employment Contract provides that employment shall commence “upon the actual departure of the seafarer from the airport or seaport in the port of hire.”[31] We adhere to the terms and conditions of the contract so as to credit the valid prior stipulations of the parties before the controversy started. Else, the obligatory force of every contract will be useless. Parties are bound not only to the fulfillment of what has been expressly stipulated but also to all the consequences which, according to their nature, may be in keeping with good faith, usage and law.[32]

Thus, even if by the standard contract employment commences only “upon actual departure of the seafarer”, this does not mean that the seafarer has no remedy in case of non-deployment without any valid reason. Parenthetically, the contention of the petitioners of the alleged poor performance of respondent while on board the first ship MV “Stolt Aspiration” cannot be sustained to justify the non-deployment, for no evidence to prove the same was presented.[33]

We rule that distinction must be made between the perfection of the employment contract and the commencement of the employer-employee relationship. The perfection of the contract, which in this case coincided with the date of execution thereof, occurred when petitioner and respondent agreed on the object and the cause, as well as the rest of the terms and conditions therein. The commencement of the employer-employee relationship, as earlier discussed, would have taken place had petitioner been actually deployed from the point of hire. Thus, even before the start of any employer-employee relationship, contemporaneous with the perfection of the employment contract was the birth of certain rights and obligations, the breach of which may give rise to a cause of action against the erring party. Thus, if the reverse had happened, that is the seafarer failed or refused to be deployed as agreed upon, he would be liable for damages.[34]

Further, we do not agree with the contention of the petitioners that the penalty is a mere reprimand.

The POEA Rules and Regulations Governing Overseas Employment[35] dated 31 May 1991 provides for the consequence and penalty against in case of non-deployment of the seafarer without any valid reason. It reads:

Section 4. Worker’s Deployment. — An agency shall deploy its recruits within the deployment period as indicated below:

52

xxx

b. Thirty (30) calendar days from the date of processing by the administration of the employment contracts of seafarers.

Failure of the agency to deploy a worker within the prescribed period without valid reasons shall be a cause for suspension or cancellation of license or fine. In addition, the agency shall return all documents at no cost to the worker.(Emphasis and underscoring supplied)

The appellate court correctly ruled that the penalty of reprimand[36] provided under Rule IV, Part VI of the POEA Rules and Regulations Governing the Recruitment and Employment of Land-based Overseas Workers is not applicable in this case. The breach of contract happened on February 1992 and the law applicable at that time was the 1991 POEA Rules and Regulations Governing Overseas Employment. The penalty for non-deployment as discussed is suspension or cancellation of license or fine.

Now, the question to be dealt with is how will the seafarer be compensated by reason of the unreasonable non-deployment of the petitioners?

The POEA Rules Governing the Recruitment and Employment of Seafarers do not provide for the award of damages to be given in favor of the employees. The claim provided by the same law refers to a valid contractual claim for compensation or benefits arising from employer-employee relationship or for any personal injury, illness or death at levels provided for within the terms and conditions of employment of seafarers. However, the absence of the POEA Rules with regard to the payment of damages to the affected seafarer does not mean that the seafarer is precluded from claiming the same. The sanctions provided for non-deployment do not end with the suspension or cancellation of license or fine and the return of all documents at no cost to the worker. As earlier discussed, they do not forfend a seafarer from instituting an action for damages against the employer or agency which has failed to deploy him.[37]

We thus decree the application of Section 10 of Republic Act No. 8042 (Migrant Workers Act) which provides for money claims by reason of a contract involving Filipino workers for overseas deployment. The law provides:

Sec. 10. Money Claims. – Notwithstanding any provision of law to the contrary, the Labor Arbiters of the National Labor Relations Commission (NLRC) shall have the original and exclusive jurisdiction to hear and decide, within ninety (90) calendar days after the filing of the complaint, the claims arising out of an employer-employee relationship or by virtue of any law or contract involving Filipino workers for overseas deployment including claims for actual, moral, exemplary and other forms of damages. x x x (Underscoring supplied)

Following the law, the claim is still cognizable by the labor arbiters of the NLRC under the second phrase of the provision.

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

worth of salary as provided in the contract.[38] This is but proper because of the non-deployment of respondent without just cause.

WHEREFORE, the appeal is DENIED. The 31 January 2007 Decision of the Court of Appeals in CA-G.R. SP. No. 91632 is hereby AFFIRMED. The Petitioners are hereby ordered to pay Sulpecio Medequillo, Jr., the award of actual damages equivalent to his salary for nine (9) months as provided by the Second Employment Contract.

SO ORDERED.

[G.R. No. 121777. January 24, 2001]

THE PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs. CAROL M. DELA PIEDRA, accused-appellant.

D E C I S I O N

KAPUNAN, J.:

Accused-appellant Carol M. dela Piedra questions her conviction for illegal recruitment in large scale and assails, as well, the constitutionality of the law defining and penalizing said crime.

The Court affirms the constitutionality of the law and the conviction of the accused, but reduces the penalty imposed upon her.

The accused was charged before the Regional Trial Court of Zamboanga City in an information alleging:

53

That on or about January 30, 1994, in the City of Zamboanga, Philippines, and within the jurisdiction of this Honorable Court, the above-named accused, without having previously obtained from the Philippine Overseas Employment Administration, a license or authority to engage in recruitment and overseas placement of workers, did then and there, wilfully, unlawfully and feloniously, offer and promise for a fee employment abroad particularly in Singapore thus causing Maria Lourdes Modesto [y] Gadrino, Nancy Araneta y Aliwanag and Jennelyn Baez y Timbol, all qualified to apply, in fact said Maria Lourdes Modesto had already advanced the amount of P2,000.00 to the accused for and in consideration of the promised employment which did not materialized [sic] thus causing damage and prejudice to the latter in the said sum; furthermore, the acts complained of herein tantamount [sic] to economic sabotage in that the same were committed in large scale.i[1]

Arraigned on June 20, 1994, the accused pleaded not guiltyii[2] to these charges.

At the trial, the prosecution presented five (5) witnesses, namely, Erlie Ramos, SPO2 Erwin Manalopilar, Eileen Fermindoza, Nancy Araneta and Lourdes Modesto. The succeeding narration is gathered from their testimonies:

On January 30, 1994, at exactly 10:00 in the morning, Erlie Ramos, Attorney II of the Philippine Overseas Employment Agency (POEA), received a telephone call from an unidentified woman inquiring about the legitimacy of the recruitment conducted by a certain Mrs. Carol Figueroa. Ramos, whose duties include the surveillance of suspected illegal recruiters, immediately contacted a friend, a certain Mayeth Bellotindos, so they could both go to No. 26-D, Tetuan Highway, Sta. Cruz, Zamboanga City, where the recruitment was reportedly being undertaken. Upon arriving at the reported area at around 4:00 p.m., Bellotindos entered the house and pretended to be an applicant. Ramos remained outside and stood on the pavement, from where he was able to see around six (6) persons in the house’s sala. Ramos even heard a woman, identified as Carol Fegueroa, talk about the possible employment she has to provide in Singapore and the documents that the applicants have to comply with. Fifteen (15) minutes later, Bellotindos came out with a bio-data form in hand.

On February 1, 1994, Ramos conferred with a certain Capt. Mendoza of the Criminal Investigation Service (CIS) to organize the arrest of the alleged illegal recruiter. Also present were other members of the CIS, including Col. Rodolfo Almonte, Regional Director of the PNP-CIS for Region IX, Eileen Fermindoza, and a certain SPO3 Santos. The group planned to entrap the illegal recruiter the next day by having Fermindoza pose as an applicant.iii[3]

On February 2, 1994, at around 8:00 p.m., Col. Almonte directed the case to SPO2 Erwin Manalopilar, a member of the Philippine National Police who was assigned as an investigator of the CIS, to conduct a surveillance of the area to confirm the report of illegal recruitment. Accordingly, he, along with Eileen

Fermindoza, immediately proceeded to Tetuan Highway. The two did not enter the house where the recruitment was supposedly being conducted, but Fermindoza interviewed two people who informed them that some people do go inside the house. Upon returning to their office at around 8:30 a.m., the two reported to Capt. Mendoza who organized a team to conduct the raid.

The raiding team, which included Capt. Mendoza, SPO2 Manalopilar, Fermindoza and a certain Oscar Bucol, quickly set off and arrived at the reported scene at 9:30 that morning. There they met up with Erlie Ramos of the POEA. Fermindoza then proceeded to enter the house while the rest of the team posted themselves outside to secure the area. Fermindoza was instructed to come out after she was given a bio-data form, which will serve as the team’s cue to enter the house.iv[4]

Fermindoza introduced herself as a job applicant to a man and a woman, apparently the owners of the house, and went inside. There, she saw another woman, later identified as Jasmine, coming out of the bathroom. The man to whom Fermindoza earlier introduced herself told Jasmine that Fermindoza was applying for a position. Jasmine, who was then only wearing a towel, told her that she would just get dressed. Jasmine then came back and asked Fermindoza what position she was applying for. Fermindoza replied that she was applying to be a babysitter or any other work so long as she could go abroad. Jasmine then gave her an application form.

A few minutes later, a certain Carol arrived. Jasmine informed Carol that Fermindoza was an applicant. Fermindoza asked Carol what the requirements were and whether she (Fermindoza) was qualified. Carol told Fermindoza that if she had a passport, she could fill up the application papers. Fermindoza replied that she had no passport yet. Carol said she need not worry since Jasmine will prepare the passport for her. While filling up the application form, three women who appeared to be friends of Jasmine arrived to follow up the result of their applications and to give their advance payment. Jasmine got their papers and put them on top of a small table. Fermindoza then proceeded to the door and signaled to the raiding party by raising her hand.

Capt. Mendoza asked the owners of the house, a married couple, for permission to enter the same. The owners granted permission after the raiding party introduced themselves as members of the CIS. Inside the house, the raiding party saw some supposed applicants. Application forms, already filled up, were in the hands of one Mrs. Carol Figueroa. The CIS asked Figueroa if she had a permit to recruit. Figueroa retorted that she was not engaged in recruitment. Capt. Mendoza nevertheless proceeded to arrest Figueroa. He took the application forms she was holding as the raiding party seized the other papersv[5] on the table.vi[6]

The CIS team then brought Figueroa, a certain Jasmine Alejandro, and the three women suspected to be applicants, to the office for investigation.vii[7]

iiiiiiiv

54

In the course of their investigation, the CIS discovered that Carol Figueroa had many aliases, among them, Carol Llena and Carol dela Piedra. The accused was not able to present any authority to recruit when asked by the investigators.viii[8] A check by Ramos with the POEA revealed that the acused was not licensed or authorized to conduct recruitment.ix[9] A certificationx[10] dated February 2, 1994 stating thus was executed by Renegold M. Macarulay, Officer-in-Charge of the POEA.

The CIS likewise interviewed the supposed applicants, Lourdes Modesto, Nancy Araneta and Jennelyn Baez, all registered nurses working at the Cabato Medical Hospital, who executed their respective written statements.xi[11]

At the trial, Nancy Araneta, 23, recounted that she was at Jasmine Alejandro’s house in the afternoon of January 30, 1994. Araneta had learned from Sandra Aquino, also a nurse at the Cabato Medical Hospital, that a woman was there to recruit job applicants for Singapore.

Araneta and her friends, Jennelyn Baez and Sandra Aquino, arrived at Jasmine’s house at around 4:30 p.m. Jasmine welcomed them and told them to sit down. They listened to the “recruiter” who was then talking to a number of people. The recruiter said that she was “recruiting” nurses for Singapore. Araneta and her friends then filled up bio-data forms and were required to submit pictures and a transcript of records. They were also told to pay P2,000, and “the rest will be salary deduction.” Araneta submitted her bio-data form to Carol that same afternoon, but did not give any money because she was “not yet sure.”

On the day of the raid on February 2, 1994, Araneta was again at the Alejandro residence to submit her transcript of records and her picture. She arrived at the house 30 minutes before the raid but did not witness the arrest since she was at the porch when it happened.xii[12]

Maria Lourdes Modesto, 26, was also in Jasmine Alejandro’s house on January 30, 1994. A friend of Jasmine had informed her that there was someone recruiting in Jasmine’s house. Upon arriving at the Alejandro residence, Lourdes was welcomed by Jasmine.

Lourdes recalled that Carol Figueroa was already briefing some people when she arrived. Carol Figueroa asked if they would like a “good opportunity” since a hospital was hiring nurses. She gave a breakdown of the fees involved: P30,000 for the visa and the round trip ticket, and P5,000 as placement

fee and for the processing of the papers. The initial payment was P2,000, while P30,000 will be by salary deduction.

Lourdes filled up the application form and submitted it to Jasmine. After the interview, she gave the initial payment of P2,000 to Jasmine, who assured Lourdes that she was authorized to receive the money. On February 2, 1994, however, Lourdes went back to the house to get back the money. Jasmine gave back the money to Lourdes after the raid.xiii[13]

Denial comprised the accused’s defense.

Carol dela Piedra, 37, is a housewife and a resident of Cebu City. Her husband is a businessman from Cebu, the manager of the Region 7 Branch of the Grollier International Encyclopedia. They own an apartment in Cebu City, providing lodging to students.

The accused claimed that she goes to Singapore to visit her relatives. She first traveled to Singapore on August 21, 1993 as a tourist, and came back to the Philippines on October 20 of the same year. Thereafter, she returned to Singapore on December 10, 1993.

On December 21, 1993, while in Singapore, the accused was invited to a Christmas party sponsored by the Zamboanga City Club Association. On that occasion, she met a certain Laleen Malicay, who sought her help. A midwife, Malicay had been working in Singapore for six (6) years. Her employer is a certain Mr. Tan, a close friend of Carol.

According to the accused, Malicay sent P15,000 home for her father who was then seriously ill. Malicay was not sure, however, whether her father received the money so she requested the accused to verify from her relatives receipt thereof. She informed the accused that she had a cousin by the name of Jasmine Alejandro. Malicay gave the accused Jasmine’s telephone number, address and a sketch of how to get there.

The accused returned to the country on January 21, 1994. From Cebu City, the accused flew to Zamboanga City on January 23, 1994 to give some presents to her friends.

vviviiviiiixxxixiixiii

55

On January 30, 1994, the accused called up Jasmine Alejandro, Laleen Malicay’s cousin, to inform her that she would be going to her house. At around noon that day, the accused, accompanied by her friend Hilda Falcasantos, arrived at the house where she found Jasmine entertaining some friends. Jasmine came down with two of her friends whom she introduced as her classmates. Jasmine told them that the accused was a friend of Laleen Malicay.

The accused relayed to Jasmine Malicay’s message regarding the money the latter had sent. Jasmine assured her that they received the money, and asked Carol to tell Malicay to send more money for medicine for Malicay’s mother. Jasmine also told her that she would send something for Malicay when the accused goes back to Singapore. The accused replied that she just needed to confirm her flight back to Cebu City, and will return to Jasmine’s house. After the meeting with Jasmine, the accused went shopping with Hilda Falcasantos. The accused was in the house for only fifteen (15) minutes.

On February 2, 1994, the accused went to the Philippine Airlines office at 7:30 in the morning to confirm her 5:30 p.m. flight to Cebu City. She then proceeded to Jasmine’s residence, arriving there at past 8 a.m.

Inside the house, she met a woman who asked her, “Are you Carol from Singapore?” The accused, in turn, asked the woman if she could do anything for her. The woman inquired from Carol if she was recruiting. Carol replied in the negative, explaining that she was there just to say goodbye to Jasmine. The woman further asked Carol what the requirements were if she (the woman) were to go to Singapore. Carol replied that she would need a passport.

Two (2) minutes later, three (3) girls entered the house looking for Jasmine. The woman Carol was talking with then stood up and went out. A minute after, three (3) members of the CIS and a POEA official arrived. A big man identified himself as a member of the CIS and informed her that they received a call that she was recruiting. They told her she had just interviewed a woman from the CIS. She denied this, and said that she came only to say goodbye to the occupants of the house, and to get whatever Jasmine would be sending for Laleen Malicay. She even showed them her ticket for Cebu City.

Erlie Ramos then went up to Jasmine’s room and returned with some papers. The accused said that those were the papers that Laleen Malicay requested Jasmine to give to her (the accused). The accused surmised that because Laleen Malicay wanted to go home but could not find a replacement, one of the applicants in the forms was to be her (Malicay’s) substitute. Ramos told the accused to explain in their office.

The accused denied in court that she went to Jasmine’s residence to engage in recruitment. She claimed she came to Zamboanga City to visit her friends, to whom she could confide since she and her husband were having some problems. She denied she knew Nancy Araneta or that she brought information sheets for job placement. She also denied instructing Jasmine to collect P2,000 from alleged applicants as processing fee.xiv[14]

The accused presented two witnesses to corroborate her defense.

The first, Jasmine Alejandro, 23, testified that she met the accused for the first time only on January 30, 1994 when the latter visited them to deliver Laleen Malicay’s message regarding the money she sent. Carol, who was accompanied by a certain Hilda Falcasantos, stayed in their house for 10 to 15 minutes only. Carol came back to the house a few days later on February 2 at around 8:00 in the morning to “get the envelope for the candidacy of her daughter.” Jasmine did not elaborate.

Jasmine denied that she knew Nancy Araneta or Lourdes Modesto. She denied that the accused conducted recruitment. She claimed she did not see Carol distribute bio-data or application forms to job applicants. She disclaimed any knowledge regarding the P2,000 application fee.xv[15]

The other defense witness, Ernesto Morales, a policeman, merely testified that the accused stayed in their house in No. 270 Tugbungan, Zamboanga City, for four (4) days before her arrest, although she would sometimes go downtown alone. He said he did not notice that she conducted any recruitment.xvi

[16]

On May 5, 1995, the trial court rendered a decision convicting the accused, thus:

WHEREFORE, in view of all the foregoing consideration[s][,] this Court finds the accused Carol dela Piedra alias Carol Llena and Carol Figueroa guilty beyond reasonable doubt of Illegal Recruitment committed in a large scale and hereby sentences her to suffer the penalty of LIFE IMPRISONMENT and to pay a fine of P100,000.00, and also to pay the costs.

Being a detention prisoner, the said accused is entitled to the full time of the period of her detention during the pendency of this case under the condition set forth in Article 29 of the Revised Penal Code.

SO ORDERED.xvii[17]

The accused, in this appeal, ascribes to the trial court the following errors:

xivxvxvixvii

56

I

WITH DUE RESPECT, THE LOWER COURT ERRED IN NOT FINDING SEC. 13 (B) OF P.D. 442[,] AS AMENDED[,] OTHERWISE KNOWN AS [THE] ILLEGAL RECRUITMENT LAW UNCONSTITUTIONAL.

II

WITH DUE RESPECT, THE LOWER COURT ERRED IN NOT HOLDING THAT THE APPREHENDING TEAM COMPOSED OF POEA AND CIS REPRESENTATIVES ENTERED INTO [sic] THE RESIDENCE OF JASMIN[E] ALEJANDRO WITHOUT ANY SEARCH WARRANT IN VIOLATION OF ARTICLE III, SECTION 2 OF THE PHILIPPINE CONSTITUTION, AND ANY EVIDENCE OBTAINED IN VIOLATION THEREOF, SHALL BE INADMISSIBLE FOR ANY PURPOSE IN ANY PROCEEDING AS PROVIDED UNDER ARTICLE III, SECTION 3, (2) OF THE SAME CONSTITUTION;

III

WITH DUE RESPECT, THE LOWER COURT ERRED IN IGNORING THAT WHEN SPO2 [sic] EILE[E]N FERMINDOZA ENTERED THE RESIDENCE OF JASMIN[E] ALEJANDRO, THERE WAS NO CRIME COMMITTED WHATSOEVER, HENCE THE ARREST OF THE ACCUSED-APPELLANT WAS ILLEGAL;

[IV]

WITH DUE RESPECT, THE LOWER COURT ERRED IN NOT DISCOVERING THAT SPO2 [sic] EILE[E]N FERMINDOZA WAS NOT ILLEGALLY RECRUITED BY THE ACCUSED-APPELLANT, HENCE, ACCUSED-APPELLANT SHOULD BE ACQUITTED;

V

WITH DUE RESPECT, THE LOWER COURT ERRED IN NOT DETECTING THAT NANCY ARANETA WAS NOT ILLEGALLY RECRUITED BY THE ACCUSED-APPELLANT, HENCE, ACCUSED SHOULD BE EXONERATED;

VI

WITH DUE RESPECT, THE LOWER COURT ERRED IN NOT REALIZING THAT MARIA LOURDES MODESTO WAS NOT ILLEGALLY RECRUITED BY THE ACCUSED-APPELLANT, HENCE, ACCUSED-APPELLANT SHOULD BE EXCULPATED;

VII

WITH DUE RESPECT, THE LOWER COURT ERRED IN FINDING THAT THE ACCUSED-APPELLANT WAS CHARGED WITH LARGE SCALE ILLEGAL RECRUITMENT ON JANUARY 30, 1994, THE DATE STATED IN THE INFORMATION AS THE DATE OF THE CRIME, BUT ACCUSED WAS ARRESTED ON FEB. 2, 1994 AND ALL THE EVIDENCES [sic] INDICATED [sic] THAT THE ALLEGED CRIME WERE [sic] COMMITTED ON FEB. 2, 1994, HENCE, THE INFORMATION IS FATALLY DEFECTIVE;

VIII

WITH DUE RESPECT, THE LOWER COURT ERRED IN NOT FINDING THAT THE ALLEGED CRIME OF ILLEGAL RECRUITMENT WAS COMMITTED NOT ON [sic] LARGE SCALE, HENCE, THE PENALTY SHOULD NOT BE LIFE IMPRISONMENT;

IX

WITH DUE RESPECT, THE LOWER COURT ERRED IN NOT FINDING THAT THOSE EVIDENCES [sic] SEIZED AT THE HOUSE OF JASMIN[E] ALEJANDRO AND PRESENTED TO THE COURT WERE PLANTED BY A BOGUS ATTORNEY[,] ERLIE S. RAMOS OF THE POEA;

X

WITH DUE RESPECT, THE LOWER COURT ERRED IN NOT DISCOVERING THAT ACCUSED-APPELLANT DID NOT RECEIVE ANY PAYMENT EVEN A SINGLE CENTAVO FROM THE ALLEGED VICTIMS WHO DID NOT SUFFER DAMAGE IN ANY MANNER, YET SHE WAS CONVICTED TO SERVE HER ENTIRE LIFE BEHIND PRISON BARS. SUCH PUNISHMENT WAS CRUEL AND UNUSUAL, HENCE, A WANTON VIOLATION OF THE CONSTITUTION.xviii[18]

In the first assigned error, appellant maintains that the law defining “recruitment and placement” violates due process. Appellant also avers, as part of her sixth assigned error, that she was denied the equal protection of the laws.

We shall address the issues jointly.

xviii

57

Appellant submits that Article 13 (b) of the Labor Code defining “recruitment and placement” is void for vagueness and, thus, violates the due process clause.xix[19]

Due process requires that the terms of a penal statute must be sufficiently explicit to inform those who are subject to it what conduct on their part will render them liable to its penalties.xx[20] A criminal statute that “fails to give a person of ordinary intelligence fair notice that his contemplated conduct is forbidden by the statute,” or is so indefinite that “it encourages arbitrary and erratic arrests and convictions,” is void for vagueness.xxi[21] The constitutional vice in a vague or indefinite statute is the injustice to the accused in placing him on trial for an offense, the nature of which he is given no fair warning.xxii[22]

We reiterated these principles in People vs. Nazario:xxiii[23]

As a rule, a statute or act may be said to be vague when it lacks comprehensible standards that men “of common intelligence must necessarily guess at its meaning and differ as to its application.” It is repugnant to the Constitution in two respects: (1) it violates due process for failure to accord persons, especially the parties targeted by it, fair notice of the conduct to avoid; and (2) it leaves law enforcers unbridled discretion in carrying out its provisions and become an arbitrary flexing of the Government muscle.

We added, however, that:

x x x the act must be utterly vague on its face, that is to say, it cannot be clarified by either a saving clause or by construction. Thus, in Coates v. City of Cincinnati, the U.S. Supreme Court struck down an ordinance that had made it illegal for “three or more persons to assemble on any sidewalk and there conduct themselves in a manner annoying to persons passing by.” Clearly, the ordinance imposed no standard at all “because one may never know in advance what ‘annoys some people but does not annoy others.’”

Coates highlights what has been referred to as a “perfectly vague” act whose obscurity is evident on its face. It is to be distinguished, however, from legislation couched in imprecise language—but which nonetheless specifies a standard though defectively phrased—in which case, it may be “saved” by proper construction.

Here, the provision in question reads:

ART. 13. Definitions.—(a) x x x.

(b) “Recruitment and placement” refers to any act of canvassing, enlisting, contracting, transporting, utilizing, hiring or procuring workers, and includes referrals, contract services, promising or advertising for employment, locally or abroad, whether for profit or not: Provided, That any person or entity which, in any manner, offers or promises for a fee employment to two or more persons shall be deemed engaged in recruitment and placement.

x x x.

When undertaken by non-licensees or non-holders of authority, recruitment activities are punishable as follows:

ART. 38. Illegal Recruitment. — (a) Any recruitment activities, including the prohibited practices enumerated under Article 34 of this Code, to be undertaken by non-licensees or non-holders of authority shall be deemed illegal and punishable under Article 39 of this Code. The Ministry of Labor and Employment or any law enforcement officer may initiate complaints under this Article.

(b) Illegal recruitment when committed by a syndicate or in large scale shall be considered an offense involving economic sabotage and shall be penalized in accordance with Article 39 hereof.

Illegal recruitment is deemed committed by a syndicate if carried out by a group of three (3) or more persons conspiring and/or confederating with one another in carrying out any unlawful or illegal transaction, enterprise or scheme defined under the first paragraph hereof. Illegal recruitment is deemed committed in large scale if committed against three (3) or more persons individually or as a group.

x x x.

Art. 39. Penalties. – (a) The penalty of life imprisonment and a fine of One Hundred Thousand Pesos (P100,000) shall be imposed if illegal recruitment constitutes economic sabotage as defined herein:

(b) Any licensee or holder of authority found violating or causing another to violate any provision of this Title or its implementing rules and regulations, shall upon conviction thereof, suffer the penalty of imprisonment of not less than five years or a fine of not less than P10,000 nor more than P50,000 or both such imprisonment and fine, at the discretion of the court;

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(c) Any person who is neither a licensee nor a holder of authority under this Title found violating any provision thereof or its implementing rules and regulations shall, upon conviction thereof, suffer the penalty of imprisonment of not less than four years nor more than eight years or a fine of not less than P20,000 nor more than P100,000 or both such imprisonment and fine, at the discretion of the court;

x x x.

In support of her submission that Article 13 (b) is void for vagueness, appellant invokes People vs. Panis,xxiv[24] where this Court, to use appellant’s term, “criticized” the definition of “recruitment and placement” as follows:

It is unfortunate that we can only speculate on the meaning of the questioned provision for lack of records of debates and deliberations that would otherwise have been available if the Labor Code had been enacted as a statute rather than a presidential decree is that they could be, and sometimes were, issued without previous public discussion or consultation, the promulgator heeding only his own counsel or those of his close advisers in their lofty pinnacle of power. The not infrequent results are rejection, intentional or not, of the interest of the greater number and, as in the instant case, certain esoteric provisions that one cannot read against the background facts usually reported in the legislative journals.

If the Court in Panis “had to speculate on the meaning of the questioned provision,” appellant asks, what more “the ordinary citizen” who does not possess the “necessary [legal] knowledge?”

Appellant further argues that the acts that constitute “recruitment and placement” suffer from overbreadth since by merely “referring” a person for employment, a person may be convicted of illegal recruitment.

These contentions cannot be sustained.

Appellant’s reliance on People vs. Panis is misplaced. The issue in Panis was whether, under the proviso of Article 13 (b), the crime of illegal recruitment could be committed only “whenever two or more persons are in any manner promised or offered any employment for a fee.” The Court held in the negative, explaining:

As we see it, the proviso was intended neither to impose a condition on the basic rule nor to provide an exception thereto but merely to create a presumption. The presumption is that the individual or entity is engaged in recruitment and placement whenever he or it is dealing with two or more persons to whom, in consideration of a fee, an offer or promise of employment is made in the course of the “canvassing, enlisting, contracting, transporting, utilizing, hiring or procuring (of) workers.”

The number of persons dealt with is not an essential ingredient of the act of recruitment and placement of workers. Any of the acts mentioned in the basic rule in Article 13(b) will constitute recruitment and placement even if only one prospective worker is involved. The proviso merely lays down a rule of evidence that where a fee is collected in consideration of a promise or offer of employment to two or more prospective workers, the individual or entity dealing with them shall be deemed to be engaged in the act of recruitment and placement. The words “shall be deemed” create that presumption.

This is not unlike the presumption in article 217 of the Revised Penal Code, for example, regarding the failure of a public officer to produce upon lawful demand funds or property entrusted to his custody. Such failure shall be prima facie evidence that he has put them to personal use; in other words, he shall be deemed to have malversed such funds or property. In the instant case, the word “shall be deemed” should by the same token be given the force of a disputable presumption or of prima facie evidence of engaging in recruitment and placement.

It is unfortunate that we can only speculate on the meaning of the questioned provision for lack of records of debates and deliberations that would otherwise have been available if the Labor Code had been enacted as a statute rather than a presidential decree is that they could be, and sometimes were, issued without previous public discussion or consultation, the promulgator heeding only his own counsel or those of his close advisers in their lofty pinnacle of power. The not infrequent results are rejection, intentional or not, of the interest of the greater number and, as in the instant case, certain esoteric provisions that one cannot read against the background facts usually reported in the legislative journals.

At any rate, the interpretation here adopted should give more force to the campaign against illegal recruitment and placement, which has victimized many Filipino workers seeking a better life in a foreign land, and investing hard-earned savings or even borrowed funds in pursuit of their dream, only to be awakened to the reality of a cynical deception at the hands of their own countrymen.

Evidently, therefore, appellant has taken the penultimate paragraph in the excerpt quoted above out of context. The Court, in Panis, merely bemoaned the lack of records that would help shed light on the meaning of the proviso. The absence of such records notwithstanding, the Court was able to arrive at a reasonable interpretation of the proviso by applying principles in criminal law and drawing from the language and intent of the law itself. Section 13 (b), therefore, is not a “perfectly vague act” whose obscurity is evident on its face. If at all, the proviso therein is merely couched in imprecise language that was salvaged by proper construction. It is not void for vagueness.

An act will be declared void and inoperative on the ground of vagueness and uncertainty, only upon a showing that the defect is such that the courts are unable to determine, with any reasonable degree of certainty, what the legislature intended. x x x. In this connection we cannot pretermit reference to the rule that “legislation should not be held invalid on the ground of uncertainty if susceptible of any reasonable construction that will support and give it effect. An Act will not be declared inoperative and ineffectual on the ground that it furnishes no adequate means to secure the purpose for which it is

xxiv

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passed, if men of common sense and reason can devise and provide the means, and all the instrumentalities necessary for its execution are within the reach of those intrusted therewith.”xxv[25]

That Section 13 (b) encompasses what appellant apparently considers as customary and harmless acts such as “ labor or employment referral” (“referring” an applicant, according to appellant, for employment to a prospective employer) does not render the law overbroad. Evidently, appellant misapprehends concept of overbreadth.

A statute may be said to be overbroad where it operates to inhibit the exercise of individual freedoms affirmatively guaranteed by the Constitution, such as the freedom of speech or religion. A generally worded statute, when construed to punish conduct which cannot be constitutionally punished is unconstitutionally vague to the extent that it fails to give adequate warning of the boundary between the constitutionally permissible and the constitutionally impermissible applications of the statute.xxvi[26]

In Blo Umpar Adiong vs. Commission on Elections,xxvii[27] for instance, we struck down as void for overbreadth provisions prohibiting the posting of election propaganda in any place – including private vehicles – other than in the common poster areas sanctioned by the COMELEC. We held that the challenged provisions not only deprived the owner of the vehicle the use of his property but also deprived the citizen of his right to free speech and information. The prohibition in Adiong, therefore, was so broad that it covered even constitutionally guaranteed rights and, hence, void for overbreadth. In the present case, however, appellant did not even specify what constitutionally protected freedoms are embraced by the definition of “recruitment and placement” that would render the same constitutionally overbroad.

Appellant also invokes the equal protection clausexxviii[28] in her defense. She points out that although the evidence purportedly shows that Jasmine Alejandro handed out application forms and even received Lourdes Modesto’s payment, appellant was the only one criminally charged. Alejandro, on the other hand, remained scot-free. From this, appellant concludes that the prosecution discriminated against her on grounds of regional origins. Appellant is a Cebuana while Alejandro is a Zamboangueña, and the alleged crime took place in Zamboanga City.

The argument has no merit.

At the outset, it may be stressed that courts are not confined to the language of the statute under challenge in determining whether that statute has any discriminatory effect. A statute nondiscriminatory on its face may be grossly discriminatory in its operation.xxix[29] Though the law itself be fair on its face and impartial in appearance, yet, if it is applied and administered by public authority with an evil eye and unequal hand, so as practically to make unjust and illegal discriminations between persons in similar circumstances, material to their rights, the denial of equal justice is still within the prohibition of the Constitution.xxx[30]

The prosecution of one guilty person while others equally guilty are not prosecuted, however, is not, by itself, a denial of the equal protection of the laws.xxxi[31] Where the official action purports to be in conformity to the statutory classification, an erroneous or mistaken performance of the statutory duty, although a violation of the statute, is not without more a denial of the equal protection of the laws.xxxii

[32] The unlawful administration by officers of a statute fair on its face, resulting in its unequal application to those who are entitled to be treated alike, is not a denial of equal protection unless there is shown to be present in it an element of intentional or purposeful discrimination. This may appear on the face of the action taken with respect to a particular class or person, or it may only be shown by extrinsic evidence showing a discriminatory design over another not to be inferred from the action itself. But a discriminatory purpose is not presumed, there must be a showing of “clear and intentional discrimination.”xxxiii[33] Appellant has failed to show that, in charging appellant in court, that there was a “clear and intentional discrimination” on the part of the prosecuting officials.

The discretion of who to prosecute depends on the prosecution’s sound assessment whether the evidence before it can justify a reasonable belief that a person has committed an offense.xxxiv[34] The presumption is that the prosecuting officers regularly performed their duties,xxxv[35] and this presumption can be overcome only by proof to the contrary, not by mere speculation. Indeed, appellant has not presented any evidence to overcome this presumption. The mere allegation that appellant, a Cebuana, was charged with the commission of a crime, while a Zamboangueña, the guilty party in appellant’s eyes, was not, is insufficient to support a conclusion that the prosecution officers denied appellant equal protection of the laws.

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There is also common sense practicality in sustaining appellant’s prosecution.

While all persons accused of crime are to be treated on a basis of equality before the law, it does not follow that they are to be protected in the commission of crime. It would be unconscionable, for instance, to excuse a defendant guilty of murder because others have murdered with impunity. The remedy for unequal enforcement of the law in such instances does not lie in the exoneration of the guilty at the expense of society x x x. Protection of the law will be extended to all persons equally in the pursuit of their lawful occupations, but no person has the right to demand protection of the law in the commission of a crime.xxxvi[36]

Likewise,

[i]f the failure of prosecutors to enforce the criminal laws as to some persons should be converted into a defense for others charged with crime, the result would be that the trial of the district attorney for nonfeasance would become an issue in the trial of many persons charged with heinous crimes and the enforcement of law would suffer a complete breakdown.xxxvii[37]

We now come to the third, fourth and fifth assigned errors, all of which involve the finding of guilt by the trial court.

Illegal recruitment is committed when two elements concur. First, the offender has no valid license or authority required by law to enable one to lawfully engage in recruitment and placement of workers. Second, he or she undertakes either any activity within the meaning of “recruitment and placement” defined under Article 13 (b), or any prohibited practices enumerated under Article 34 of the Labor Code.xxxviii[38] In case of illegal recruitment in large scale, a third element is added: that the accused commits said acts against three or more persons, individually or as a group.xxxix[39]

In this case, the first element is present. The certification of POEA Officer-in-Charge Macarulay states that appellant is not licensed or authorized to engage in recruitment and placement.

The second element is also present. Appellant is presumed engaged in recruitment and placement under Article 13 (b) of the Labor Code. Both Nancy Araneta and Lourdes Modesto testified that appellant promised them employment for a fee. Their testimonies corroborate each other on material points: the

briefing conducted by appellant, the time and place thereof, the fees involved. Appellant has not shown that these witnesses were incited by any motive to testify falsely against her. The absence of evidence as to an improper motive actuating the principal witnesses of the prosecution strongly tends to sustain that no improper motive existed and that their testimony is worthy of full faith and credence.xl[40]

Appellant’s denials cannot prevail over the positive declaration of the prosecution witnesses. Affirmative testimony of persons who are eyewitnesses of the fact asserted easily overrides negative testimony.xli[41]

That appellant did not receive any payment for the promised or offered employment is of no moment. From the language of the statute, the act of recruitment may be “for profit or not;” it suffices that the accused “promises or offers for a fee employment” to warrant conviction for illegal recruitment.

The testimonies of Araneta and Modesto, coming as they do from credible witnesses, meet the standard of proof beyond reasonable doubt that appellant committed recruitment and placement. We therefore do not deem it necessary to delve into the second and third assigned errors assailing the legality of appellant’s arrest and the seizure of the application forms. A warrantless arrest, when unlawful, has the effect of invalidating the search incidental thereto and the articles so seized are rendered inadmissible in evidence.xlii[42] Here, even if the documents seized were deemed inadmissible, her conviction would stand in view of Araneta and Modesto’s testimonies.

Appellant attempts to cast doubt on the prosecution’s case by claiming in her ninth assigned error that Erlie Ramos of the POEA supposedly “planted” the application forms. She also assails his character, alleging that he passed himself off as a lawyer, although this was denied by Ramos.

The claim of “frame-up,” like alibi, is a defense that has been invariably viewed by the Court with disfavor for it can easily be concocted but difficult to prove.xliii[43] Apart from her self-serving testimony, appellant has not offered any evidence that she was indeed framed by Ramos. She has not even hinted at any motive for Ramos to frame her. Law enforcers are presumed to have performed their duties regularly in the absence of evidence to the contrary.xliv[44]

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Considering that the two elements of lack of license or authority and the undertaking of an activity constituting recruitment and placement are present, appellant, at the very least, is liable for “simple” illegal recruitment. But is she guilty of illegal recruitment in large scale? We find that she is not.

A conviction for large scale illegal recruitment must be based on a finding in each case of illegal recruitment of three or more persons whether individually or as a group.xlv[45] In this case, only two persons, Araneta and Modesto, were proven to have been recruited by appellant. The third person named in the complaint as having been promised employment for a fee, Jennelyn Baez, was not presented in court to testify.

It is true that law does not require that at least three victims testify at the trial; nevertheless, it is necessary that there is sufficient evidence proving that the offense was committed against three or more persons.xlvi[46] In this case, evidence that appellant likewise promised her employment for a fee is sketchy. The only evidence that tends to prove this fact is the testimony of Nancy Araneta, who said that she and her friends, Baez and Sandra Aquino, came to the briefing and that they (she and her “friends”) filled up application forms.

The affidavitxlvii[47] Baez executed jointly with Araneta cannot support Araneta’s testimony. The affidavit was neither identified, nor its contents affirmed, by Baez. Insofar as it purports to prove that appellant recruited Baez, therefore, the affidavit is hearsay and inadmissible.xlviii[48] In any case, hearsay evidence, such as the said affidavit, has little probative value.xlix[49]

Neither can appellant be convicted for recruiting CIS agent Eileen Fermindoza or even the other persons present in the briefing of January 30, 1994. Appellant is accused of recruiting only the three persons named in the information — Araneta, Modesto and Baez. The information does not include Fermindoza or the other persons present in the briefing as among those promised or offered employment for a fee. To convict appellant for the recruitment and placement of persons other than those alleged to have been offered or promised employment for a fee would violate her right to be informed of the nature and cause of the accusation against her.l[50]

In any event, the purpose of the offer of the testimonies of Araneta, Morales and Fermindoza, respectively, was limited as follows:

FISCAL BELDUA:

Your Honor please, we are offering the oral testimony of the witness, as one of those recruited by the accused, and also to identify some exhibits for the prosecution and as well as to identify the accused.li[51]

x x x

FISCAL BELDUA:

We are offering the oral testimony of the witness, Your Honor, to testify on the fact about her recruitment by the accused and immediately before the recruitment, as well as to identify some exhibits for the prosecution, and also the accused in this case, Your Honor.lii[52]

x x x

FISCAL BELDUA:

This witness is going to testify that at around that date Your Honor, she was connected with the CIS, that she was instructed together with a companion to conduct a surveillance on the place where the illegal recruitment was supposed to be going on, that she acted as an applicant, Your Honor, to ascertain the truthfulness of the illegal recruitment going on, to identify the accused, as well as to identify some exhibits for the prosecution.liii[53]

x x x

Courts may consider a piece of evidence only for the purpose for which it was offered,liv[54] and the purpose of the offer of their testimonies did not include the proving of the purported recruitment of other supposed applicants by appellant.

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62

Appellant claims in her seventh assigned error that the information is fatally defective since it charges her with committing illegal recruitment in large scale on January 30, 1994 while the prosecution evidence supposedly indicates that she committed the crime on February 2, 1994.

We find that the evidence for the prosecution regarding the date of the commission of the crime does not vary from that charged in the information. Both Nancy Araneta and Lourdes Modesto testified that on January 30, 1994, while in the Alejandro residence, appellant offered them employment for a fee. Thus, while the arrest was effected only on February 2, 1994, the crime had already been committed three (3) days earlier on January 30, 1994.

The eighth and tenth assigned errors, respectively, pertain to the penalty of life imprisonment imposed by the trial court as well as the constitutionality of the law prescribing the same, appellant arguing that it is unconstitutional for being unduly harsh.lv[55]

The penalty of life imprisonment imposed upon appellant must be reduced. Because the prosecution was able to prove that appellant committed recruitment and placement against two persons only, she cannot be convicted of illegal recruitment in large scale, which requires that recruitment be committed against three or more persons. Appellant can only be convicted of two counts of “simple” illegal recruitment, one for that committed against Nancy Araneta, and another count for that committed against Lourdes Modesto. Appellant is sentenced, for each count, to suffer the penalty of four (4) to six

lv

[G.R. No. 172642, June 13, 2012]

ESTATE OF NELSON R. DULAY, REPRESENTED BY HIS WIFE MERRIDY JANE P. DULAY, PETITIONER, VS. ABOITIZ JEBSEN MARITIME, INC. AND GENERAL

CHARTERERS, INC., RESPONDENTS.

D E C I S I O N

PERALTA, J.:

Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court seeking to reverse and set aside the Decision[1] and Resolution[2] dated July 11, 2005 and April 18, 2006 of the Court of Appeals (CA) in CA-G.R. SP No. 76489.

The factual and procedural antecedents of the case, as summarized by the CA, are as follows:

Nelson R. Dulay (Nelson, for brevity) was employed by [herein respondent] General Charterers Inc. (GCI), a subsidiary of co-petitioner [herein co-respondent] Aboitiz Jebsen Maritime Inc. since 1986. He initially worked as an ordinary seaman and later as bosun on a contractual basis. From September 3, 1999 up to July 19, 2000, Nelson was detailed in petitioners’ vessel, the MV Kickapoo Belle.

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(6) years of imprisonment and to pay a fine of P30,000.00. This renders immaterial the tenth assigned error, which assumes that the proper imposable penalty upon appellant is life imprisonment.

WHEREFORE, the decision of the regional trial court is MODIFIED. Appellant is hereby declared guilty of illegal recruitment on two (2) counts and is sentenced, for each count, to suffer the penalty of four (4) to six (6) years of imprisonment and to pay a fine of P30,000.00.

SO ORDERED.

On August 13, 2000, or 25 days after the completion of his employment contract, Nelson died due to acute renal failure secondary to septicemia. At the time of his death, Nelson was a bona fide member of the Associated Marine Officers and Seaman’s Union of the Philippines (AMOSUP), GCI’s collective bargaining agent. Nelson’s widow, Merridy Jane, thereafter claimed for death benefits through the grievance procedure of the Collective Bargaining Agreement (CBA) between AMOSUP and GCI. However, on January 29, 2001, the grievance procedure was “declared deadlocked” as petitioners refused to grant the benefits sought by the widow.

On March 5, 2001, Merridy Jane filed a complaint with the NLRC Sub-Regional Arbitration Board in General Santos City against GCI for death and medical benefits and damages.

On March 8, 2001, Joven Mar, Nelson’s brother, received P20,000.00 from [respondents] pursuant to article 20(A)2 of the CBA and signed a “Certification” acknowledging receipt of the amount and releasing AMOSUP from further liability. Merridy Jane contended that she is entitled to the aggregate sum of Ninety Thousand Dollars ($90,000.00) pursuant to [A]rticle 20 (A)1 of the CBA x x x

x x x x

Merridy Jane averred that the P20,000.00 already received by Joven Mar should be considered advance payment of the total claim of US$90,000.[00].

[Herein respondents], on the other hand, asserted that the NLRC had no jurisdiction over the action on account of the absence of employer-employee relationship between GCI and Nelson at the time of the latter’s death. Nelson also had no claims against petitioners for sick leave allowance/medical benefit by reason of the completion of his contract with GCI. They further alleged that private respondent is not entitled to death benefits because petitioners are only liable for such “in case of death of the seafarer during the term of his contract pursuant to the POEA contract” and the cause of his death is not work-related. Petitioners admitted liability only with respect to article 20(A)2 [of the CBA]. x x x

x x x x

However, as petitioners stressed, the same was already discharged.

The Labor Arbiter ruled in favor of private respondent. It took cognizance of the case by virtue of Article 217 (a), paragraph 6 of the Labor Code and the existence of a reasonable causal connection between the employer-employee relationship and the claim asserted. It ordered the petitioner to pay P4,621,300.00, the equivalent of US$90,000.00 less P20,000.00, at the time of judgment  x x x

x x x x

The Labor Arbiter also ruled that the proximate cause of Nelson’s death was not work-related.

On appeal, [the NLRC] affirmed the Labor Arbiter’s decision as to the grant of death benefits under the CBA but reversed the latter’s ruling as to the proximate cause of Nelson’s death.[3]

Herein respondents then filed a special civil action for certiorari with the CA contending that the NLRC committed grave abuse of discretion in affirming the jurisdiction of the NLRC over the case; in ruling that a different provision of the CBA covers the death claim; in reversing the findings of the Labor Arbiter that the cause of death is not work-related; and,  in setting aside the release and quitclaim executed by the attorney-in-fact and not considering the P20,000.00 already received by Merridy Jane through her attorney-in-fact.

On July 11, 2005, the CA promulgated its assailed Decision, the dispositive portion of which reads as follows:

WHEREFORE, in view of the foregoing, the petition is hereby GRANTED and the case is REFERRED to the National Conciliation and Mediation Board for the designation of the Voluntary Arbitrator or the constitution of a panel of Voluntary Arbitrators for the appropriate resolution of the issue on the matter of the applicable CBA provision.

SO ORDERED.[4]

The CA ruled that while the suit filed by Merridy Jane is a money claim, the same basically involves the interpretation and application of the provisions in the subject CBA. As such, jurisdiction belongs to the voluntary arbitrator and not the labor arbiter.

Petitioner filed a Motion for Reconsideration but the CA denied it in its Resolution of April 18, 2006.

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Hence, the instant petition raising the sole issue of whether or not the CA committed error in ruling that the Labor Arbiter has no jurisdiction over the case.

Petitioner contends that Section 10 of Republic Act (R.A.) 8042, otherwise known as the Migrant Workers and Overseas Filipinos Act of 1995, vests jurisdiction on the appropriate branches of the NLRC to entertain disputes regarding the interpretation of a collective bargaining agreement involving migrant or overseas Filipino workers. Petitioner argues that the abovementioned Section amended Article 217 (c) of the Labor Code which, in turn, confers jurisdiction upon voluntary arbitrators over interpretation or implementation of collective bargaining agreements and interpretation or enforcement of company personnel policies.

The pertinent provisions of Section 10 of R.A. 8042 provide as follows:

SEC. 10. Money Claims. - Notwithstanding any provision of law to the contrary, the Labor Arbiters of the National Labor Relations Commission (NLRC) shall have the original and exclusive jurisdiction to hear and decide, within ninety (90) calendar days after filing of the complaint, the claims arising out of an employer-employee relationship or by virtue of any law or contract involving Filipino workers for overseas deployment including claims for actual, moral, exemplary and other forms of damages.

Article 217(c) of the Labor Code, on the other hand, states that:

x x x x

(c) Cases arising from the interpretation or implementation of collective bargaining agreements and those arising from the interpretation or enforcement of company personnel policies shall be disposed by the Labor Arbiter by referring the same to the grievance machinery and voluntary arbitration as may be provided in said agreements.

On their part, respondents insist that in the present case, Article 217, paragraph (c) as well as Article 261 of the Labor Code remain to be the governing provisions of law with respect to unresolved grievances arising from the interpretation and implementation of collective bargaining agreements. Under these provisions of law, jurisdiction remains with voluntary arbitrators.

Article 261 of the Labor Code reads, thus:

ARTICLE 261. Jurisdiction of Voluntary Arbitrators or panel of Voluntary Arbitrators. – The Voluntary Arbitrator or panel of Voluntary Arbitrators shall have original and exclusive jurisdiction to hear and decide all unresolved grievances arising from the interpretation or implementation of the Collective Bargaining Agreement and those arising from the interpretation or enforcement of company personnel policies referred to in the immediately preceding article. Accordingly, violations of a Collective Bargaining Agreement, except those which are gross in character, shall no longer be treated as unfair labor practice and shall be resolved as grievances under the Collective Bargaining Agreement. For purposes of this article, gross violations of Collective Bargaining Agreement shall mean flagrant and/or malicious refusal to comply with the economic provisions of such agreement.

The Commission, its Regional Offices and the Regional Directors of the Department of Labor and Employment shall not entertain disputes, grievances or matters under the exclusive and original jurisdiction of the Voluntary Arbitrator or panel of Voluntary Arbitrators and shall immediately dispose and refer the same to the Grievance Machinery or Voluntary Arbitration provided in the Collective Bargaining Agreement.

The petition is without merit.

It is true that R.A. 8042 is a special law governing overseas Filipino workers. However, a careful reading of this special law would readily show that there is no specific provision thereunder which provides for jurisdiction over disputes or unresolved grievances regarding the interpretation or implementation of a CBA.  Section 10 of R.A. 8042, which is cited by petitioner, simply speaks, in general, of “claims arising out of an employer-employee relationship or by virtue of any law or contract involving Filipino workers for overseas deployment including claims for actual, moral, exemplary and other forms of damages.” On the other hand, Articles 217(c) and 261 of the Labor Code are very specific in stating that voluntary arbitrators have jurisdiction over cases arising from the interpretation or implementation of collective bargaining agreements. Stated differently, the instant case involves a situation where the special statute (R.A. 8042) refers to a subject in general, which the general statute (Labor Code) treats in particular.[5] In the present case, the basic issue raised by Merridy Jane in her complaint filed with the NLRC is: which provision of the subject CBA applies insofar as death benefits due to the heirs of Nelson are concerned.  The Court agrees with the CA in holding that this issue clearly involves the interpretation or implementation of the said CBA. Thus, the specific or special provisions

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of the Labor Code govern.

In any case, the Court agrees with petitioner's contention that the CBA is the law or contract between the parties. Article 13.1 of the CBA entered into by and between respondent GCI and AMOSUP, the union to which petitioner belongs, provides as follows:

The Company and the Union agree that in case of dispute or conflict in the interpretation or application of any of the provisions of this Agreement, or enforcement of Company policies, the same shall be settled through negotiation, conciliation or voluntary arbitration. The Company and the Union further agree that they will use their best endeavor to ensure that any dispute will be discussed, resolved and settled amicably by the parties hereof within ninety (90) days from the date of filing of the dispute or conflict and in case of failure to settle thereof any of the parties retain their freedom to take appropriate action.[6] (Emphasis supplied)

From the foregoing, it is clear that the parties, in the first place, really intended to bring to conciliation or voluntary arbitration any dispute or conflict in the interpretation or application of the provisions of their CBA.   It is settled that when the parties have validly agreed on a procedure for resolving grievances and to submit a dispute to voluntary arbitration then that procedure should be strictly observed.[7]

It may not be amiss to point out that the abovequoted provisions of the CBA are in consonance with Rule VII, Section 7 of the present Omnibus Rules and Regulations Implementing the Migrant Workers and Overseas Filipinos Act of 1995, as amended by Republic Act No. 10022, which states that “[f]or OFWs with collective bargaining agreements, the case shall be submitted for voluntary arbitration in accordance with Articles 261 and 262 of the Labor Code.” The Court notes that the said Omnibus Rules and Regulations were promulgated by the Department of Labor and Employment (DOLE) and the Department of Foreign Affairs (DFA) and that these departments were mandated to consult with the Senate Committee on Labor and Employment and the House of Representatives Committee on Overseas Workers Affairs.

In the same manner, Section 29 of the prevailing Standard Terms and Conditions Governing the Employment of Filipino Seafarers on Board Ocean Going Vessels, promulgated by the Philippine Overseas Employment Administration (POEA), provides as follows:

Section 29. Dispute Settlement Procedures.  -  In cases of claims and disputes arising from this employment, the parties covered by a collective bargaining agreement shall submit the claim or dispute to the original and exclusive jurisdiction of the voluntary arbitrator or panel of arbitrators. If the parties are not covered by a collective bargaining agreement, the parties may at their option submit the claim or dispute to either the original and exclusive jurisdiction of the National Labor Relations Commission (NLRC), pursuant to Republic Act (RA) 8042, otherwise known as the Migrant Workers and Overseas Filipinos Act of 1995 or to the original and exclusive jurisdiction of the voluntary arbitrator or panel of arbitrators. If there is no provision as to the voluntary arbitrators to be appointed by the parties, the same shall be appointed from the accredited voluntary arbitrators of the National Conciliation and Mediation Board of the Department of Labor and Employment.

The Philippine Overseas Employment Administration (POEA) shall exercise original and exclusive jurisdiction to hear and decide disciplinary action on cases, which are administrative in character, involving or arising out of violations of recruitment laws, rules and regulations involving employers, principals, contracting partners and Filipino seafarers. (Emphasis supplied)

It is clear from the above that the interpretation of the DOLE, in consultation with their counterparts in the respective committees of the Senate and the House of Representatives, as well as the DFA and the POEA is that with respect to disputes involving claims of Filipino seafarers wherein the parties are covered by a collective bargaining agreement, the dispute or claim should be submitted to the jurisdiction of a voluntary arbitrator or panel of arbitrators. It is only in the absence of a collective bargaining agreement that parties may opt to submit the dispute to either the NLRC or to voluntary arbitration.  It is elementary that rules and regulations issued by administrative bodies to interpret the law which they are entrusted to enforce, have the force of law, and are entitled to great respect.[8] Such rules and regulations partake of the nature of a statute and are just as binding as if they have been written in the statute itself.[9] In the instant case, the Court finds no cogent reason to depart from this rule.

The above interpretation of the DOLE, DFA and POEA is also in consonance with the policy of the state to promote voluntary arbitration as a mode of settling labor disputes.[10]

No less than the Philippine Constitution provides, under the third paragraph, Section 3, Article XIII, thereof that “[t]he State shall promote the principle of shared responsibility between workers and employers and the preferential use of voluntary modes in settling disputes, including conciliation, and shall enforce their mutual compliance therewith to foster industrial peace.”

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Consistent with this constitutional provision, Article 211 of the Labor Code provides the declared policy of the State “[t]o promote and emphasize the primacy of free collective bargaining and negotiations, including voluntary arbitration, mediation and conciliation, as modes of settling labor or industrial disputes.”

On the basis of the foregoing, the Court finds no error in the ruling of the CA that the voluntary arbitrator has jurisdiction over the instant case.

WHEREFORE, the petition is DENIED. The Decision and Resolution of the Court of Appeals in CA-G.R. SP No. 76489 dated July 11, 2005 and April 18, 2006, respectively, are AFFIRMED.

SO ORDERED.

G.R. No. 162419             July 10, 2007

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

D E C I S I O N

TINGA, J.:

At the heart of this case involving a contract between a seafarer, on one hand, and the manning agent and the foreign principal, on the other, is this erstwhile unsettled legal quandary: whether the seafarer, who was prevented from leaving the port of Manila and refused deployment without valid reason but whose POEA-approved employment contract provides that the employer-employee relationship shall commence only upon the seafarer’s actual departure from the port in the point of hire, is entitled to relief?

This treats of the petition for review filed by Paul V. Santiago (petitioner) assailing the Decision and Resolution of the Court of Appeals dated 16 October 2003 and 19 February 2004, respectively, in CA-G.R. SP No. 68404.1

Petitioner had been working as a seafarer for Smith Bell Management, Inc. (respondent) for about five (5) years.2 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.

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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," which reads:

I received a phone call today from the wife of Paul Santiago in Masbate asking me not to send her husband to MSV Seaspread anymore. Other callers who did not reveal their identity gave me some feedbacks that Paul Santiago this time if allowed to depart will jump ship in Canada like his brother Christopher Santiago, O/S who jumped ship from the C.S. Nexus in Kita-kyushu, Japan last December, 1997.

We do not want this to happen again and have the vessel penalized like the C.S. Nexus in Japan.

Forewarned is forearmed like his brother when his brother when he was applying he behaved like a Saint but in his heart he was a serpent. If you agree with me then we will send his replacement.

Kindly advise.3

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

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

On 9 February 1998, petitioner was thus told that he would not be leaving for Canada anymore, but he was reassured that he might be considered for deployment at some future date.

Petitioner filed a complaint for illegal dismissal, damages, and attorney's fees against respondent and its foreign principal, Cable and Wireless (Marine) Ltd.5 The case was raffled to Labor Arbiter Teresita Castillon-Lora, who ruled that the employment contract remained valid but had not commenced since petitioner was not deployed. According to her, respondent violated the rules and regulations governing

overseas employment when it did not deploy petitioner, causing petitioner to suffer actual damages representing lost salary income for nine (9) months and fixed overtime fee, all amounting to US$7, 209.00.

The labor arbiter held respondent liable. The dispositive portion of her Decision dated 29 January 1999 reads:

WHEREFORE, premises considered, respondent is hereby Ordered to pay complainant actual damages in the amount of US$7,209.00 plus 10% attorney's fees, payable in Philippine peso at the rate of exchange prevailing at the time of payment.

All the other claims are hereby DISMISSED for lack of merit.

SO ORDERED.6

On appeal by respondent, the National Labor Relations Commission (NLRC) ruled that there is no employer-employee relationship between petitioner and respondent because under the Standard Terms and Conditions Governing the Employment of Filipino Seafarers on Board Ocean Going Vessels (POEA Standard Contract), the employment contract shall commence upon actual departure of the seafarer from the airport or seaport at the point of hire and with a POEA-approved contract. In the absence of an employer-employee relationship between the parties, the claims for illegal dismissal, actual damages, and attorney’s fees should be dismissed.7 On the other hand, the NLRC found respondent’s decision not to deploy petitioner to be a valid exercise of its management prerogative.8 The NLRC disposed of the appeal in this wise:

WHEREFORE, in the light of the foregoing, the assailed Decision dated January 29, 1999 is hereby AFFIRMED in so far as other claims are concerned and with MODIFICATION by VACATING the award of actual damages and attorney’s fees as well as excluding Pacifico Fernandez as party respondent.

SO ORDERED.9

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

In its Decision11 dated 16 October 2003, the Court of Appeals noted that there is an ambiguity in the NLRC’s Decision when it affirmed with modification the labor arbiter’s Decision, because by the very modification introduced by the Commission (vacating the award of actual damages and attorney’s fees), there is nothing more left in the labor arbiter’s Decision to affirm.12

According to the appellate court, petitioner is not entitled to actual damages because damages are not recoverable by a worker who was not deployed by his agency within the period prescribed in

the POEA Rules.13 It agreed with the NLRC’s finding that petitioner’s non-deployment was a valid exercise of respondent’s management prerogative.14 It added that since petitioner had not departed from the Port of Manila, no employer-employee relationship between the parties arose and any claim for damages against the so-called employer could have no leg to stand on.15

Petitioner’s subsequent motion for reconsideration was denied on 19 February 2004.16

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

A. The Honorable Court of Appeals committed a serious error of law when it ignored [S]ection 10 of Republic Act [R.A.] No. 8042 otherwise known as the Migrant Worker’s Act of 1995 as well as Section 29 of the Standard Terms and Conditions Governing the Employment of Filipino Seafarers On-Board Ocean-Going Vessels (which is deemed incorporated under the petitioner’s POEA approved Employment Contract) that the claims or disputes of the Overseas Filipino Worker by virtue of a contract fall within the jurisdiction of the Labor Arbiter of the NLRC.

B. The Honorable Court of Appeals committed a serious error when it disregarded the required quantum of proof in labor cases, which is substantial evidence, thus a total departure from established jurisprudence on the matter.17

Petitioner maintains that respondent violated the Migrant Workers Act and the POEA Rules when it failed to deploy him within thirty (30) calendar days without a valid reason. In doing so, it had unilaterally and arbitrarily prevented the consummation of the POEA- approved contract. Since it prevented his deployment without valid basis, said deployment being a condition to the consummation of the POEA contract, the contract is deemed consummated, and therefore he should be awarded actual damages, consisting of the stipulated salary and fixed overtime pay.18 Petitioner adds that since the contract is deemed consummated, he should be considered an employee for all intents and purposes, and thus the labor arbiter and/or the NLRC has jurisdiction to take cognizance of his claims.19

Petitioner additionally claims that he should be considered a regular employee, having worked for five (5) years on board the same vessel owned by the same principal and manned by the same local agent. He argues that respondent’s act of not deploying him was a scheme designed to prevent him from attaining the status of a regular employee.20

Petitioner submits that respondent had no valid and sufficient cause to abandon the employment contract, as it merely relied upon alleged phone calls from his wife and other unnamed callers in arriving at the conclusion that he would jump ship like his brother. He points out that his wife had executed an affidavit21 strongly denying having called respondent, and that the other alleged callers did not even disclose their identities to respondent.22 Thus, it was error for the Court of Appeals to adopt the unfounded conclusion of the NLRC, as the same was not based on substantial evidence.23

On the other hand, respondent argues that the Labor Arbiter has no jurisdiction to award petitioner’s monetary claims. His employment with respondent did not commence because his deployment was withheld for a valid reason. Consequently, the labor arbiter and/or the NLRC cannot entertain adjudication of petitioner’s case much less award damages to him. The controversy involves a breach of contractual obligations and as such is cognizable by civil courts.24 On another matter, respondent claims that the second issue posed by petitioner involves a recalibration of facts which is outside the jurisdiction of this Court.25

There is some merit in the petition.

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There is no question that the parties entered into an employment contract on 3 February 1998, whereby petitioner was contracted by respondent to render services on board "MSV Seaspread" for the consideration of US$515.00 per month for nine (9) months, plus overtime pay. However, respondent failed to deploy petitioner from the port of Manila to Canada. Considering that petitioner was not able to depart from the airport or seaport in the point of hire, the employment contract did not commence, and no employer-employee relationship was created between the parties.26

However, a distinction must be made between the perfection of the employment contract and the commencement of the employer-employee relationship. The perfection of the contract, which in this case coincided with the date of execution thereof, occurred when petitioner and respondent agreed on the object and the cause, as well as the rest of the terms and conditions therein. The commencement of the employer-employee relationship, as earlier discussed, would have taken place had petitioner been actually deployed from the point of hire. Thus, even before the start of any employer-employee relationship, contemporaneous with the perfection of the employment contract was the birth of certain rights and obligations, the breach of which may give rise to a cause of action against the erring party. Thus, if the reverse had happened, that is the seafarer failed or refused to be deployed as agreed upon, he would be liable for damages.

Moreover, while the POEA Standard Contract must be recognized and respected, neither the manning agent nor the employer can simply prevent a seafarer from being deployed without a valid reason.

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.

We take exception to the Court of Appeals’ conclusion that damages are not recoverable by a worker who was not deployed by his agency. The fact that the POEA Rules27 are silent as to the payment of damages to the affected seafarer does not mean that the seafarer is precluded from claiming the same. The sanctions provided for non-deployment do not end with the suspension or cancellation of license or fine and the return of all documents at no cost to the worker. They do not forfend a seafarer from instituting an action for damages against the employer or agency which has failed to deploy him.

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

Despite the absence of an employer-employee relationship between petitioner and respondent, the Court rules that the NLRC has jurisdiction over petitioner’s complaint. The jurisdiction of labor arbiters is not limited to claims arising from employer-employee relationships. Section 10 of R.A. No. 8042 (Migrant Workers Act), provides that:

Sec. 10. Money Claims. – Notwithstanding any provision of law to the contrary, the Labor Arbiters of the National Labor Relations Commission (NLRC) shall have the original and exclusive jurisdiction to hear and decide, within ninety (90) calendar days after the filing of the complaint, the claims arising out of an employer-employee relationship or by virtue of any law or contract involving Filipino workers for overseas deployment including claims for actual, moral, exemplary and other forms of damages. x x x [Emphasis supplied]

Since the present petition involves the employment contract entered into by petitioner for overseas employment, his claims are cognizable by the labor arbiters of the NLRC.

Article 2199 of the Civil Code provides that one is entitled to an adequate compensation only for such pecuniary loss suffered by him as he has duly proved. Respondent is thus liable to pay petitioner actual damages in the form of the loss of nine (9) months’ worth of salary as provided in the contract. He is not, however, entitled to overtime pay. While the contract indicated a fixed overtime pay, it is not a guarantee that he would receive said amount regardless of whether or not he rendered overtime work. Even though petitioner was "prevented without valid reason from rendering regular much less overtime service,"28 the fact remains that there is no certainty that petitioner will perform overtime work had he been allowed to board the vessel. The amount of US$286.00 stipulated in the contract will be paid only if and when the employee rendered overtime work. This has been the tenor of our rulings in the case of Stolt-Nielsen Marine Services (Phils.), Inc. v. National Labor Relations Commission29 where we discussed the matter in this light:

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The contract provision means that the fixed overtime pay of 30% would be the basis for computing the overtime pay if and when overtime work would be rendered. Simply stated, the rendition of overtime work and the submission of sufficient proof that said work was actually performed are conditions to be satisfied before a seaman could be entitled to overtime pay which should be computed on the basis of 30% of the basic monthly salary. In short, the contract provision guarantees the right to overtime pay but the entitlement to such benefit must first be established. Realistically speaking, a seaman, by the very nature of his job, stays on board a ship or vessel beyond the regular eight-hour work schedule. For the employer to give him overtime pay for the extra hours when he might be sleeping or attending to his personal chores or even just lulling away his time would be extremely unfair and unreasonable.30

The Court also holds that petitioner is entitled to attorney’s fees in the concept of damages and expenses of litigation. Attorney's fees are recoverable when the defendant's act or omission has compelled the plaintiff to incur expenses to protect his interest.31 We note that respondent’s basis for not deploying petitioner is the belief that he will jump ship just like his brother, a mere suspicion that is based on alleged phone calls of several persons whose identities were not even confirmed. Time and again, this Court has upheld management prerogatives so long as they are exercised in good faith for the advancement of the employer’s interest and not for the purpose of defeating or circumventing the rights of the employees under special laws or under valid agreements.32 Respondent’s failure to deploy petitioner is unfounded and unreasonable, forcing petitioner to institute the suit below. The award of attorney’s fees is thus warranted.

However, moral damages cannot be awarded in this case. While respondent’s failure to deploy petitioner seems baseless and unreasonable, we cannot qualify such action as being tainted with bad faith, or done deliberately to defeat petitioner’s rights, as to justify the award of moral damages. At most, respondent was being overzealous in protecting its interest when it became too hasty in making its conclusion that petitioner will jump ship like his brother.

We likewise do not see respondent’s failure to deploy petitioner as an act designed to prevent the latter from attaining the status of a regular employee. Even if petitioner was able to depart the port of Manila, he still cannot be considered a regular employee, regardless of his previous contracts of employment with respondent. In Millares v. National Labor Relations Commission,33 the Court ruled that seafarers

are considered contractual employees and cannot be considered as regular employees under the Labor Code. Their employment is governed by the contracts they sign every time they are rehired and their employment is terminated when the contract expires. The exigencies of their work necessitates that they be employed on a contractual basis.34

WHEREFORE, petition is GRANTED IN PART. The Decision dated 16 October 2003 and the Resolution dated 19 February 2004 of the Court of Appeals are REVERSED and SET ASIDE. The Decision of Labor Arbiter Teresita D. Castillon-Lora dated 29 January 1999 is REINSTATED with the MODIFICATION that respondent CF Sharp Crew Management, Inc. is ordered to pay actual or compensatory damages in the amount of US$4,635.00

representing salary for nine (9) months as stated in the contract, and attorney’s fees at the reasonable rate of 10% of the recoverable amount.

SO ORDERED.