labor 2013 digests

8/13/2019 Labor 2013 Digests

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Money Claims (Paragraph 5, Section 10 of RA 8042)

Serrano v. Gallant Maritime Services, Inc., GR No. 167614, 24 March

2009 (Austria-Martinez)Facts: Complainant Serrano was hired by Gallant Maritime Services, Inc. and MarlowNavigation Co., Inc. under a POEA-approved contract as a Chief Officer for 12 months. Onthe date of his departure, he was constrained to accept a downgraded employment contractfor the position of Second Officer upon the assurance that he would be made Chief Officer bythe end of the following month. Because he was not made Chief Officer as promised, herefused to stay on as Second Officer and was repatriated to the Philippines with 9 monthsand 23 days remaining in his employment contract. He then filed a complaint forconstructive dismissal and for payment of money claims with the Labor Arbiter againstGallant and Marlow.

The LA declared Serrano’s dismissal as illegal and awarded him the amountequivalent to 3 months’ worth of salary for the unexpired portion of his term, followingParagraph 5, Section 10 of RA 8042. On appeal, the NLRC only corrected the LA’scomputation of the lump-sum salary awarded to Serrano, but affirmed the LA judgment inall other respects. Serrano moved for partial reconsideration and assailed theconstitutionality of Section 10 of RA 8042. The CA subsequently affirmed the NLRC butskirted the constitutional issue raised by Serrano.

Issue: W/N the clause “or for 3 months for every year of the unexpired term, whichever isless,” found in Section 10 (5) of RA 8 042, violates Section 18 of Article II (The State affirms

labor as a primary social economic force. It shall protect the rights of workers and promotetheir welfare.), Section 1 of Article III (due process and equal protection clauses), andSection 3 of Article XIII (The State shall afford full protection to labor, local and overseas,organized and unorganized, and promote full employment and equality of employmentopportunities for all.) of the 1987 Philippine Constitution.

Ruling: YES, VIOLATIVE OF ARTICLE III SECTION 1 OF THE PHILIPPINE CONSTITUTION.The Court concludes that the subject clause contains a suspect classification in that, in thecomputation 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 ormore 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 itwith a peculiar disadvantage. There being a suspect classification involving a vulnerablesector protected by the Constitution, the Court now subjects the classification to a strictjudicial scrutiny, and determines whether it serves a compelling state interest through theleast restrictive means. When the challenge to a statute is premised on the perpetuation ofprejudice against persons favored by the Constitution with special protection —such as the


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working class or a section thereof —the Court may recognize the existence of a suspectclassification and subject the same to a strict judicial scrutiny.

The subject clause has a discriminatory intent against, and invidious impact on,OFWs at three levels:

First , OFWs with employment contracts of LESS THAN ONE YEAR vis-à-vis OFWswith 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.

Under the first level, a review of previous jurisprudence shows that the subjectclause 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 areentitled 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; incase of illegal dismissal, they are entitled to monetary award equivalent to only threemonths per year of the unexpired portion of their contracts. This disparity becomes moreaggravating when jurisprudence prior to the effectivity of RA 8042 is taken into account,wherein illegally dismissed OFWs, no matter how long the period of their employmentcontracts, were entitled to their salaries for the entire unexpired portions of their contracts.The enactment of the subject clause in RA 8042 introduced a differentiated rule ofcomputation of the money claims of illegally dismissed OFWs based on their employmentperiods, in the process singling out one category whose contracts have an unexpiredportion of one year or more and subjecting them to the peculiar disadvantage of having

their monetary awards limited to their salaries for three months or for the unexpiredportion thereof, whichever is less, but all the while sparing the other category from suchprejudice, simply because the latter’s unexpired contracts fall short of one year.

With respect to the second level, the subject clause applies in cases when theunexpired portion of the contract period is at least one year, which arithmetically requiresthat the original contract period be more than one year. Viewed in that light, the subjectclause creates a sub-layer of discrimination among OFWs whose contract periods are formore than one year: those who are illegally dismissed with less than one year left in theircontracts shall be entitled to their salaries for the entire unexpired portion thereof, whilethose 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 3months only.

With respect to the third level: Prior to RA 8042, OFWs and local workers withfixed-term employment who were illegally discharged were treated alike in terms of thecomputation of their money claims: they were uniformly entitled to their salaries for theentire unexpired portions of their contracts. But with the enactment of RA 8042, specificallythe adoption of the subject clause, illegally dismissed OFWs with an unexpired portion of


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one year or more in their employment contract have since been differently treated in thattheir money claims are subject to a 3-month cap, whereas no such limitation is imposed onlocal workers with fixed-term employment.

Lastly, the Court dug deep into the records but found no compelling state interest

that the subject clause may possibly serve. In fine, the Government has failed to dischargeits burden of proving the existence of a compelling state interest that would justify theperpetuation of the discrimination against OFWs under the subject clause. There can neverbe 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 iscomposed of private businesses such as placement agencies, while the disadvantaged sectoris composed of OFWs whose protection no less than the Constitution commands. The ideathat private business interest can be elevated to the level of a compelling state interest isodious. Moreover, even if the purpose of the subject clause is to lessen the solidary liabilityof placement agencies vis-à-vis their foreign principals, there are mechanisms already inplace that can be employed to achieve that purpose without infringing on the constitutionalrights of OFWs.

Petition granted. The clause “or for three months for every year of the unexpiredterm, whichever is less,” in the fifth paragraph of Section 10 of RA 8042 is declaredunconstitutional. Subject clause being unconstitutional, Serrano is entitled to his salaries forthe entire unexpired period of 9 months and 23 days of his contract, pursuant to law andjurisprudence prior to the enactment of RA 8042.

To Filipino workers, the rights guaranteed under Section 18, Article II and Section 3,Article XIII translate to economic security and parity: all monetary benefits shouldbe equally enjoyed by workers of similar category, while all monetary obligationsshould be borne by them in equal degree; none should be denied the protection ofthe laws which is enjoyed by, or spared the burden imposed on, others in likecircumstances.

Under the policy of social justice, the law bends over backward to accommodate theinterests of the working class on the humane justification that those with lessprivilege in life should have more in law. And the obligation to afford protection tolabor is incumbent not only on the legislative and executive branches but also on thejudiciary to translate this pledge into a living reality. Social justice calls for thehumanization of laws and the equalization of social and economic forces by the Stateso that justice in its rational and objectively secular conception may at least beapproximated.

Congress retains its wide discretion in providing for a valid classification, and itspolicies should be accorded recognition and respect by the courts of justice exceptwhen they run afoul of the Constitution. The deference stops where theclassification violates a fundamental right, or prejudices persons accorded specialprotection by the Constitution. When these violations arise, this Court mustdischarge its primary role as the vanguard of constitutional guarantees, and require


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a stricter and more exacting adherence to constitutional limitations. Rational basisshould not suffice.

Under most circumstances, the Court will exercise judicial restraint in decidingquestions of constitutionality, recognizing the broad discretion given to Congress inexercising its legisl ative power. Judicial scrutiny would be based on the “rational

basis” test, and the legislative discretion would be given deferential treatment. But ifthe challenge to the statute is premised on the denial of a fundamental right, or theperpetuation of prejudice against persons favored by the Constitution with specialprotection, judicial scrutiny ought to be more strict.


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Yap v. Thenamaris Ship’s Management and Intermare Maritime Agencies, Inc., GR No. 179532, 30 May 2011 (Nachura)Facts: Complainant Yap was hired as an electrician of M/T Seascout by Intermare in behalfof its principal, Vulture Shipping Ltd. for a duration of 12 months. While Yap’s contract wasstill effective, the ship was sold for scrapping. The employees, including Yap, were informedthat they had a choice whether to be transferred to other vessels or just go home. Yapreceived seniority bonus, vacation bonus, extra bonus, along with scrapping bonus, but withrespect to the payment of his wage, he refused to accept the payment of one-month basicwage, insisting that he was entitled to the payment of the unexpired portion of his contractbecause he was illegally dismissed. He also stated that the opted for immediate transfer butnone was made. Intermare and Thenamaris alleged that Yap’s employment contract wasvalidly terminated due to the sale of the vessel and no arrangement was made for Yap’stransfer to Thenamaris’ other vessels. Thus, Yap filed with the Labor Arbiter a complaint forillegal dismissal with damages and attorney’s fees.

The LA ruled in Yap’s favor, finding that he was constructively and illegallydismissed, and that Thenamaris and Intermare were in bad faith when they assured Yap ofre-embarkation. It then stated that Yap was entitled to the unexpired portion of his contract,which was a period of nine months. The NLRC affirmed the LA’s findings of constructive andillegal dismissal, and on the bad faith on the part of Thenamaris and Intermare, but it heldthat instead of an award of salaries corresponding to nine months, Yap was only entitled tosalaries for three months as provided under Section 10 of RA 8042. Upon Yap’s motion forpartial reconsideration, the NLRC modified its ruling, stating that Yap was indeed entitled tohis salary corresponding to the unexpired portion of his contract. The CA then modified theNLRC’s ruling, stating that Yap was only entitled to three months’ worth of basic salary.While the case was pending on appeal with the Supreme Court, the Supreme Court ruled onSerrano v. Gallant Maritime Ser vices that the clause “or for three months for every year ofthe expired term, whichever is less” is unconstitutional.

Issue: W/N the Serrano ruling should be applied to the present case.

Ruling: YES. As a general rule, an unconstitutional act is not a law; it confers no rights; itimposes no duties; it affords no protection; it creates no office; it is inoperative as if it hadnot been passed at all. The general rule is supported by Article 7 of the Civil Code, whichprovides:

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

The doctrine of operative fact serves as an exception to the aforementioned general rule. Itonly applies as a matter of equity and fair play. It nullifies the effects of an unconstitutionallaw by recognizing that the existence of a statute prior to a determination ofunconstitutionality is an operative fact and may have consequences which cannot always beignored. The past cannot always be erased by a new judicial declaration. This doctrine is


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applicable when a declaration of unconstitutionality will impose an undue burden on thosewho have relied on the invalid law.

Following Serrano, this case should not be included in the aforementionedexception. After all, it was not the fault of Yap that he lost his job due to an act of illegal

dismissal committed by Thenamaris and Intermare. To rule otherwise would be iniquitousto Yap and other OFWs, and would, in effect, send a wrong signal that principals/employersand recruitment/manning agencies may violate an OFW’s security of tenure which anemployment contract embodies and actually profit from such violation based on anunconstitutional provision of law.

Yap awarded salaries for the entire unexpired portion of his employment contractconsisting of nine months.

As a rule, an unconstitutional act is not a law; it confers no rights; it imposes noduties; it affords no protection; it creates no office; it is inoperative as if it has not

been passed at all.


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Regulation of Recruitment and Placement Activities (Arts. 25-35)

Sagun v. Sunace International Management Services, GR No. 179242, 23February 2011 (Nachura)Facts: Complainant Sagun filed before the POEA a complaint for the alleged violation ofArticles 32 and 34(a) & (b) of the Labor Code against Sunace, alleging that she applied withthe latter for the position of caretaker in Taiwan and was charged P30,000.00 in cash,P10,000.00 in the form of a promissory note, and NT$60,000.00 through salary deduction,in violation of the prohibition on excessive placement fees. She additionally claimed that shewas promised to be employed as a caretaker but, at the job site, she worked as a domestichelper, and at the same time, in a poultry far m. Sunace, on the other hand, denied Sagun’sclaims, maintaining that it only collected the amount authorized by the POEA and for whichthe corresponding official receipt was issued, and stressed that it did not furnish or publishany false notice or information or document in relation to recruitment or employment as itwas duly received, passed upon, and approved by the POEA.

The POEA Administrator dismissed the complaint for lack of merit, becausecomplainant failed to establish facts showing a violation of Article 32, since it was proventhat the amount received by Sunace as placement fee was covered by an official receipt; orof Article 34(a) as it was not shown that Sunace charged excessive fees; and of Article 34(b)simply because Sunace processed Sag un’s papers as caretaker, the position she applied andwas hired for. The Secretary of Labor then overturned the POEA decision and held Sunaceliable for collection of excessive placement fees in violation of Article 34(a). It imposed thepenalty of suspension of its license for two months, or in lieu thereof, the penalty of fine inthe amount of P20,000.00. It was also ordered to refund Sagun the excess of the placementfee exacted from her. The Office of the President affirmed the Secretary of Labor, saying thatit was immaterial that no evidence was presented to show the overcharging since theissuance of a receipt could not be expected.

The CA then reversed the OP decision for lack of sufficient evidence. It then affirmedthe POEA decision.

Issue: W/N Sunace is liable for collection of excess placement fee from Sagun.

Ruling: NO. In proceedings before administrative and quasi-judicial agencies, the quantumof evidence required to establish a fact is substantial evidence, or that level of relevantevidence which a reasonable mind might accept as adequate to justify a conclusion.

To show the amount it collected as placement fee from Sagun, Sunace presented anacknowledgement receipt showing that Sagun paid and Sunace received P20,840.00. Thisnotwithstanding, Sagun claimed that she paid more than this amount. In support of herallegation, she presented a photocopy of a promissory note she executed, and testified onthe purported deductions made by her foreign employer. In the promissory note, Sagunpromised to pay Sunace the amount of P10,000.00 that she borrowed for only two weeks.Sagun also explained that her foreign employer deducted from her salary a total amount of


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NT$60,000.00. She claimed that the P10,000.00 covered by the promissory note was neverobtained as a loan but as part of the placement fee collected by Sunace. Moreover, shealleged that the salary deductions made by her foreign employer still formed part of theplacement fee collected by Sunace.

Although a receipt is not conclusive evidence, an exhaustive review of the records ofthis case fails to disclose any other evidence sufficient and strong enough to overturn theacknowledgement embodied in Sunace’s receipt as to the amount it actually received fromSagun. Having failed to adduce sufficient rebuttal evidence, Sagun is bound by the contentsof the receipt issued by Sunace. The subject receipt remains as the primary or best evidence.To be sure, mere general allegations of payment of excessive placement fees cannot begiven merit as the charge of illegal exaction is considered a grave offense which could causethe suspension or cancellation of the agency’s license. They should be proven andsubstantiated by clear, credible, and competent evidence.

Petition denied for lack of merit.

While the Constitution is committed to the policy of social justice and to theprotection of the working class, it should not be presumed that every dispute willautomatically be decided in favor of labor.


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irrelevant. This reality is highlighted by the finding that the complainants occupiedpositions that are usually necessary and desirable in Atlanta’s usual business or trade,which characterize them as regular employees under Article 280 of the Labor Code. Thus,when they were dismissed without just or authorized cause, without notice, and without theopportunity to be heard, their dismissal was illegal under the law.

Petition denied for lack of merit. CA decision affirmed.


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Non-Diminution Rule (Art. 100)

Central Azucarera de Tarlac v. Central Azucarera de Tarlac Labor Union-NLU, GR No. 188949, 26 July 2010 (Nachura)Facts: Central Azucarera de Tarlac, in compliance with PD No. 851, had been granting itsemployees the mandatory thirteenth month pay since 1975. The formulas used were:

13 th Month Pay = Total Basic Salary / 12

Total Basic Salary = Basic Monthly Salary + First Eight Hours’ Overtime Pay on Sunday andLegal/Special Holiday + Night Premium Pay + Vacation and Sick Leaves for each Year

These formulas were used from 1975 until 2006, despite the fact that in 1976, theSupplementary Rules and Regulations Implementing PD 851 clarified that overtime pay,earnings, and other remuneration that are not part of the basic salary shall not be includedin the computation of the 13 th-month pay.

In November 2004, Central’s Labor Union staged a strike. During the pendency ofthe strike, Central declared a temporary cessation of operations. In December 2005, all thestriking union members were allowed to return to work. Subsequently, Central declaredanother temporary cessation of operation for April and May of 2006. The suspension ofoperations was lifted on June 2006, but the rank-and-file employees were allowed to reportfor work on a 15-day-per-month rotation basis that lasted until September 2006. InDecember 2006, Central gave the employees their 13 th-month pay based on the employee’stotal earnings during the year, divided by 12.

The Labor Union objected to the computation, stating that Central did not adhere to

the usual computation of the 13 th-month pay. It claimed that the divisor should have been 8instead of 12, because the employees worked only for 8 months in 2006. The union alsoasserted that there were some instances wherein the 13 th-month pay was actually less thantheir basic monthly pay.

Central insists that the difference in the computation of the 13 th-month pay was dueto an error that was only discovered and rectified only after almost 30 years. It insists thatthe length of time during which an employer has performed a certain act beneficial to theemployees does not prove that such an act was not done in error, and that for the claim ofmistake to be negated, there must be a clear showing that the employer had freely,voluntarily, and continuously performed the act, knowing that he is under no obligation todo so. It asserts that such voluntariness was absent in this case.

Issue: W/N Central is permitted to change the formula for the 13 th-month pay, whichresults to the reduction of the amounts being received by the workers, after almost 30 yearsof its implementation.

Ruling: NO. The practice of Central in giving the 13 th-month pay based on the employees’gross annual earnings which included the basic monthly salary, premium pay for work on


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rest days and special holidays, night shift differential pay and holiday pay continued foralmost thirty years, and has ripened into a company policy or practice which cannot beunilaterally withdrawn. Article 100 of the Labor Code, otherwise known as the Non-Diminution Rule, mandates that benefits given to employees cannot be taken back orreduced unilaterally by the employer because the benefit has become part of the

employment contract, written or unwritten. The rule against diminution of benefits appliesif it is shown that the grant of the benefit is based on an express policy or has ripened into apractice over a long period of time and that the practice is consistent and deliberate.Nevertheless, the rule will not apply if the practice is due to error in the construction orapplication of a doubtful or difficult question of law. But even in cases of error, it should beshown that the correction is done soon after discovery of the error.

Central’s argument that the grant of the benefit was not voluntary and was due toerror in the interpretation of what is included in the basic salary deserves scantconsideration. No doubtful or difficult question of law is involved in this case. Theguidelines set by the law are not difficult to decipher. The voluntariness of the grant of thebenefit was manifested by the number of years the employer had paid the benefit to itsemployees. Central only changed its formula in the computation of the 13 th-month pay afteralmost 30 years and only after the dispute between the management and employeeserupted. Central’s act of changing the formula at this time cannot be sanctioned, as itindicates a badge of bad faith.

Furthermore, Central cannot use the argument that it is suffering from financiallosses to claim exemption from the coverage of the law on 13 th-month pay, or to spare itfrom its erroneous unilateral computation of the 13 th-month pay of its employees. UnderSection 7 of the Rules and Regulations Implementing PD No. 851, distressed employers shall

qualify for exemption from the requirement of the decree only upon prior authorization bythe Secretary of Labor. In this case, no such prior authorization has been obtained byCentral, thus, it is not entitled to claim such exemption.

In 1987, the Revised Guidelines on the Implementation of the 13 th-Month Pay Lawwas issued, and it specifically stated that the minimum 13 th-month pay required bylaw shall not be less than one-twelfth of the total basic salary earned by anemployee within a calendar year. Fu rthermore, the term “basic salary” of anemployee for the purpose of computing the 13 th-month pay was interpreted toinclude all remuneration on earnings paid by the employer for services rendered,but does not include allowances and monetary benefits which are not integrated aspart o the regular or basic salary, such as the cash equivalent of unused vacation andsick leave credits, overtime, premium, night differential and holiday pay, and cost-of-living allowances. However, these salary related benefits should be included aspart of the basic salary in the computation of the 13 th-month pay if, by individual orcollective agreement, company practice or policy, the same are treated as part of thebasic salary of the employees.


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Labor Contracting (Arts. 106-109)

Philippine Airlines Inc. v. Ligan, GR No. 146408, 30 April 2009 (Carpio-Morales)Facts: Philippine Airlines and Synergy Services Corporation entered into an Agreement asprincipal and contractor, respectively, whereby Synergy undertook to provide loading,unloading, delivery of baggage and cargo and other related services to and from PAL’saircraft at the Mactan Station. The Agreement expressly provided that Synergy was anindependent contractor and that there would be no employer-employee relationshipbetween Synergy and/or its employees on the one hand, and PAL on the other.

Synergy assigned Ligan and the other respondents to PAL following the execution ofthe Agreement on 15 July 1991. On 3 March 1992, the respondents filed complaints beforethe NLRC for underpayment, non-payment of premium pay for holidays, premium pays forrest days, service incentive leave pay, 13 th month pay and allowances, and for regularization

of employment status with PAL against Synergy, PAL, and their respective officials.Benedicto Auxtero, on the other hand, filed a complaint against Synergy and PAL for illegaldismissal and reinstatement with full backwages. All the complaints were consolidated.

The LA found Synergy to be an independent contractor and dismissed responde nts’complaint for regularization, but granted their money claims. On appeal, the NLRC declaredthat Synergy was a labor-only contractor and ordered PAL to accept respondents as itsregular employees. Only PAL assailed the NLRC decision. The CA affirmed the NLRC.

Issue: Whether Synergy is a mere labor-only contractor or a legitimate contractor.

Ruling: Synergy is a LABOR-ONLY CONTRACTOR. According to Article 106 of the LaborCode, there is “labor -only” contracting where the person supplying workers to an e mployerdoes not have substantial capital or investment in the form of tools, equipment,machineries, work premises, among others, and the workers recruited and placed by suchperson are performing activities which are directly related to the principal business of suchemployer. In such cases, the person or intermediary shall be considered merely as an agentof the employer who shall be responsible to the workers in the same manner and extent asif the latter were directly employed by him. From the records of the case, it is gathered thatthe work performed by almost all of the respondents —loading and unloading of baggageand cargo of passengers —is directly related to the main business of PAL. And theequipment used by respondents as station loaders, such as trailers and conveyors, are

owned by PAL. The records also show that PAL failed to present evidence that Synergy hadsufficient capital to engage in legitimate contracting. More significantly, however, is thatrespondents worked alongside PAL’s regular em ployees who were performing identicalwork.

For labor-only contracting to exist, Section 5 of D.O. No. 18-02 requires any of twoelements to be present:


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(i) The contractor or subcontractor does not have substantial capital or investmentwhich relates to the job, work or service to be performed and the employeesrecruited, supplied, or placed by such contractor or subcontractor areperforming activities which are directly related to the main business of theprincipal, or

(ii) The contractor does not exercise the right to control over the performance ofthe work of the contractual employee.

Even if only one of the two elements is present, then there is labor-only contracting.While PAL claims that it was Synergy’s supervisors who actually supervised respondents, itfailed to present evidence thereon. It did not even specify who the Synergy supervisorsassigned at the workplace were.

PAL moreover admitted that it fixes the respondents’ work schedule as their workwas dependent on the frequency of plane arrivals. As th e NLRC found, PAL’s managers andsupervisors approved respondents’ weekly work assignments, and respondents and other

regular PAL employees were all referred to as “station attendants” of PAL’s cargo operationand airfreight services. Since respondents performed tasks which are usually necessary anddesirable in PAL’s air transportation business, they should be deemed its regular employeesand Synergy as a labor-only contractor.

Court affirms the ruling of the NLRC and CA, ordering PAL to accept respondents asits regular employees and to give each of them salaries, allowances, and other employmentbenefits and privileges of a regular employee under the pertinent Collective BargainingAgreement.

One who claims to be an independent contractor has to prove that he contracted todo the work according to his own methods and without being subject to theemployer’s control except only as to the results.

An express provision in the Service Agreement that the contractor is an independentcontractor and there would be “no employer -employee relationship betweencontractor and its employees on one hand, and principal on the other hand” is notlegally binding and conclusive as contractual provisions are not valid determinantsof the existence of such relationship. It is the totality of facts and surroundingcircumstances of the case which is determinative of the parties’ relationship.


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STOLT-NIELSEN TRANSPORTATION GROUP, INC. AND CHUNGGAI SHIP MANAGEMENT vs SULPECIO MEDEQUILLO, JR

PEREZ, J .:

FACTS:

On 6 March 1995, Sulpecio Madequillo filed a complaint before theAdjudication Office of POEA Stolt-Nielsen for illegal dismissal under a firstcontract and for failure to deploy under a second contract. Sulpecio allegedthat:

1. On 6 November 1991(First Contract), he was hired by Stolt-Nielsen MarineServices, In c 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 periodcommencing 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 whilethe vessel was at Batangas, he was ordered by the ship’s master to disembark thevessel and repatriated back to Manila for no reason or explanation;

5. Upon his return to Manila, he immediately proceeded to the petitioner’s officewhere he was transferred employment with another vessel named MV “StoltPride” 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 withthe Second Employment Contract.


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10. On 22 December 1994, he demanded for his passport, seaman’s book and otheremployment documents. However, he was only allowed to claim the saiddocuments 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.

Stolt’s contentions: (1) the first employment contract between them andSulpecio is different from and independent of the second contract subsequentlyexecuted upon repatriation of respondent to Manila. (2) under the POEAContract, actual deployment of the seafarer is a suspensive condition for thecommencement of the employment .

ISSUE:

(1) W/N the 1st

employment contract is different from and independent from the 2nd

? NO. there wasnovation of the 1 st contract when Sulpecio entered the 2 nd.(2) W/N the action for recovery of damages prescribed? YES(3) W/N employment commences upon the actual deployment of seafearers? YES(4) How will the seafarer be compensated by reason of the unreasonable

non-deployment of the petitioners?

HELD:

(1) Novation is the extinguishment of an obligation by the substitution orchange of the obligation by a subsequent one which extinguishes or modifiesthe first, either by changing the object or principal conditions, or, bysubstituting another in place of the debtor, or by subrogating a third person inthe rights of the creditor. In order foer novation to take place, the concurrenceof the following requisites is indispensable:

1. There must be a previous valid obligation,

2. There must be an agreement of the parties concerned to a new contract,

3. There must be the extinguishment of the old contract, and

4. There must be the validity of the new contract .19

There was a novation of the first employment contract.

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With the finding that respondent “was still employed under the firstcontract when he negotiatedwith petitioners on the second contract” , 24 novation

became an unavoidable conclusion.

(2)

The recovery of damages under the first contract was already time-barred.

Accordingly, the prescriptive period of three (3) years within which Medequillo Jr. mayinitiate money claims under the 1 st contract commenced on the date of his repatriation.xxx The start of the three (3) year prescriptive period must therefore be reckoned onFebruary 1992, which by Medequillo Jr.’s own admission was the date of his repatriationto Manila. It was at this point in time that Medequillo Jr.’s cause of action alreadyaccrued under the first contract. He had until February 1995 to pursue a case for illegaldismissal and damages arising from the 1 st contract. With the filing of his Complaint-

Affidavit on March 6, 1995, which was clearly beyond the prescriptive period, the causeof action under the 1 st contract was already time-barred.

(3)

Actual deployment of the seafarer is a suspensive condition for thecommencement of the employment. 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 someservice .29 The contracting parties may establish such stipulations, clauses, termsand conditions as they may deem convenient, provided they are not contrary tolaw, morals, good customs, public order, or public policy .30

The POEA Standard Employment Contract provides that employmentshall commence “upon the actual departure of the seafarer from the airport orseaport in the port of hire. ”31 We adhere to the terms and conditions of thecontract so as to credit the valid prior stipulations of the parties before thecontroversy started. Else, the obligatory force of every contract will be useless.Parties are bound not only to the fulfillment of what has been expresslystipulated 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

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no remedy in case of non-deployment without any valid reason. Parenthetically,the contention of the petitioners of the alleged poor performance of respondentwhile on board the first ship MV “Stolt Aspiration” cannot be sus tained 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 theemployment contract and the commencement of the employer-employeerelationship. The perfection of the contract, which in this case coincided withthe date of execution thereof, occurred when petitioner and respondent agreedon the object and the cause, as well as the rest of the terms and conditionstherein. The commencement of the employer-employee relationship, as earlierdiscussed, would have taken place had petitioner been actually deployedfrom the point of hire . Thus, even before the start of any employer-employeerelationship, contemporaneous with the perfection of the employment contractwas the birth of certain rights and obligations, the breach of which may giverise to a cause of action against the erring party. Thus, if the reverse hadhappened, that is the seafarer failed or refused to be deployed as agreed upon,he would be liable for damages .34

(4) 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 ofSeafarers do not provide for the award of damages to be given in favor of theemployees. The claim provided by the same law refers to a valid contractualclaim for compensation or benefits arising from employer-employeerelationship or for any personal injury, illness or death at levels provided forwithin the terms and conditions of employment of seafarers. However, theabsence 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 thesame. The sanctions provided for non-deployment do not end with thesuspension or cancellation of license or fine and the return of all documents atno cost to the worker. As earlier discussed, they do not forfend a seafarer frominstituting an action for damages against the employer or agency which hasfailed to deploy him .37

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We thus decree the application of Section 10 of Republic Act No. 8042(Migrant Workers Act) which provides for money claims by reason of acontract 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) shallhave 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 anemployer-employee relationship or by virtue of any law or contract involvingFilipino 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 ofthe 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 liableto pay petitioner actual damages in the form of the l oss of nine (9) months’worth of salary as provided in the contract .38 This is but proper because of thenon-deployment of respondent without just cause.

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JOEB M. ALIVIADO vs. PROCTER & GAMBLE PHILS., INC., and PROMM-GEM INC.

FACTS:

Petitioners worked as merchandisers of P&G from various dates.

They all individually signed employment contracts with either Promm-Gem or SAPS forperiods of more or less five months at a time .5 They were assigned at different outlets,supermarkets and stores where they handled all the products of P&G. They received theirwages from Promm-Gem or SAPS .6

SAPS and Promm-Gem imposed disciplinary measures on erring merchandisers for reasonssuch as habitual absenteeism, dishonesty or changing day-off without prior notice .7

P&G is principally engaged in the manufacture and production of different consumer andhealth products, which it sells on a wholesale basis to various supermarkets anddistributors .8 To enhance consumer awareness and acceptance of the products, P&Gentered into contracts with Promm-Gem and SAPS for the promotion and merchandising ofits products .9

In December 1991, petitioners filed a complain t10 against P&G for regularization, serviceincentive leave pay and other benefits with damages. The complaint was later amended 11 toinclude the matter of their subsequent dismissal.

Petitioners’ Arguments

Petitioners insist that they are employees of P&G. They claim that they were recruited by thesalesmen of P&G and were engaged to undertake merchandising chores for P&G longbefore the existence of Promm-Gem and/or SAPS. They further claim that when the latterhad its so-called re-alignment program, petitioners were instructed to fill up application formsand report to the agencies which P&G created .18

Petitioners further claim that P&G instigated their dismissal from work as can be gleanedfrom its lette r 19 to SAPS dated February 24, 1993, informing the latter that theirMerchandising Services Contract will no longer be renewed.

Petitioners further assert that Promm-Gem and SAPS are labor-only contractors providing

services of manpower to their client. They insist that since they had been engaged toperform activities which are necessary or desirable in the usual business or trade of P&G,then they are its regular employees .20

P&G ’s Arguments: 1)P&G further argues that there is no employment relationship betweenit and petitioners. It was Promm-Gem or SAPS that (selected petitioners and engaged theirservices; paid their salaries; wielded the power of dismissal; and had the power of controlover their conduct of work.

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2)P&G also contends that the Labor Code neither defines nor limits which services oractivities may be validly outsourced. Thus, an employer can farm out any of its activities toan independent contractor, regardless of whether such activity is peripheral or core in nature.It insists that the determination of whether to engage the services of a job contractor or toengage in direct hiring is within the ambit of management prerogative.

ISSUES:

(1) whether P&G is the employer of petitioners?Some petitioners , having been recruited and supplied by SAPS 41 -- which engagedin labor-only contracting -- are considered as the employees of P&G.Other petitioners having worked under, and been dismissed by Promm-Gem, areconsidered the employees of Promm-Gem, not of P&G.

a) whether Promm-Gem and SAPS are labor-only contractors or legitimate jobcontractors?Promm-Gem cannot be considered as a labor-only contractor. We find that it is alegitimate independent contractor.

(2) whether petitioners were illegally dismissed? YES, Illegally dismissed.

(3) whether petitioners are entitled for payment of actual, moral and exemplary damages aswell as litigation costs and attorney’s fees.

HELD:

1)

a) There is "labor-only" contracting where the person supplying workers to an employer doesnot have substantial capital or investment in the form of tools, equipment, machineries, workpremises, among others, and the workers recruited and placed by such person areperforming activities which are directly related to the principal business of such employer. Insuch cases, the person or intermediary shall be considered merely as an agent of theemployer who shall be responsible to the workers in the same manner and extent as if thelatter were directly employed by him.

Rule VIII-A, Book III of the Omnibus Rules Implementing the Labor Code, as amended byDepartment Order No. 18-02 ,24 distinguishes between legitimate and labor-only contracting:

x x x x

Section 3. Trilateral Relationship in Contracting Arrangements.

Section 5. Prohibition against labor-only contracting

(Art 248 LC) "

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x x x x (Underscoring supplied.)

Clearly, the law and its implementing rules allow contracting arrangements for theperformance of specific jobs, works or services. Indeed, it is management prerogative tofarm out any of its activities, regardless of whether such activity is peripheral or core innature. However, in order for such outsourcing to be valid, it must be made to

an independent contractor because the current labor rules expressly prohibit labor-onlycontracting.

To emphasize, there is labor-only contracting when the contractor or sub-contractor merelyrecruits, supplies or places workers to perform a job, work or service for aprincipa l25 and any of the following elements are present:

i) The contractor or subcontractor does not have substantial capital or investmentwhich relates to the job, work or service to be performed and the employeesrecruited, supplied or placed by such contractor or subcontractor are performingactivities which are directly related to the main business of the principal; or

ii) The contractor does not exercise the right to control over the performance of thework of the contractualemployee. (Underscoring supplied)

In the instant case, we find that Promm-Gem has substantial investment which relates tothe work to be performed . These factors negate the existence of the element specified inSection 5(i) of DOLE Department Order No. 18-02.

The records also show that Promm-Gem supplied its complainant-workers with therelevant materials, such as markers, tapes, liners and cutters, necessary for them toperform their work. Promm-Gem also issued uniforms to them. I t is also relevant tomention that Promm-Gem already considered the complainants working under it as itsregular, not merely contractual or project, employees .32 This circumstance negates theexistence of element (ii) as stated in Section 5 of DOLE Department Order No. 18-02, whichspeaks of contractual employees. This, furthermore, negates – on the part of Promm-Gem – bad faith and intent to circumvent labor laws which factors have often been tipping pointsthat lead the Court to strike down the employment practice or agreement concerned ascontrary to public policy, morals, good customs or public order .33

On the other hand, the Articles of Incorporation of SAPS shows that it has a paid-in capital ofonly P31,250.00. There is no other evidence presented to show how much its working capitaland assets are. Furthermore, there is no showing of substantial investment in tools,equipment or other assets.

----

Furthermore, the petitioners have been charged with the merchandising and promotionof the products of P&G, an activity that has already been considered by the Court asdoubtlessly directly related to the manufacturing business ,38 which is the principalbusiness of P&G. Considering that SAPS has no substantial capital or investment and theworkers it recruited are performing activities which are directly related to the principalbusiness of P&G, we find that the former is engaged in "labor-only contracting".

"Where ‘labo r-only’ contracting exists, the Labor Code itself establishes an employer -employee relationship between the employer and the employees of the ‘labor -only’

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contractor. "39 The statute establishes this relationship for a comprehensive purpose: toprevent a circumvention of labor laws. The contractor is considered merely an agent of theprincipal employer and the latter is responsible to the employees of the labor-only contractoras if such employees had been directly employed by the principal employer .40

2)

In cases of regular employment, the employer shall not terminate the services of anemployee except for a jus t43 or authorized 44 cause.

In the instant case, the termination letters given by Promm-Gem to its employees uniformlyspecified the cause of dismissal as grave misconduct and breach of trust.

Misconduct has been defined as improper or wrong conduct; the transgression of someestablished and definite rule of action, a forbidden act, a dereliction of duty, unlawful incharacter implying wrongful intent and not mere error of judgment. The misconduct to beserious must be of such grave and aggravated character and not merely trivial andunimportant .46 To be a just cause for dismissal, such misconduct (a) must be serious; (b)

must relate to the performance of the employee’s duties; and (c) must show that theemployee has become unfit to continue working for the employer .47

In other words, in order to constitute serious misconduct which will warrant the dismissal ofan employee under paragraph (a) of Article 282 of the Labor Code, it is not sufficient that theact or conduct complained of has violated some established rules or policies. It is equallyimportant and required that the act or conduct must have been performed with wrongfulintent .48 In the instant case, petitioners-employees of Promm-Gem may have committed anerror of judgment in claiming to be employees of P&G, but it cannot be said that they weremotivated by any wrongful intent in doing so. As such, we find them guilty of only simplemisconduct for assailing the integrity of Promm-Gem as a legitimate and independentpromotion firm. A misconduct which is not serious or grave, as that existing in the instantcase, cannot be a valid basis for dismissing an employee.

Meanwhile, loss of trust and confidence, as a ground for dismissal, must be based on thewillful breach of the trust reposed in the employee by his employer. Ordinary breach will notsuffice. A breach of trust is willful if it is done intentionally, knowingly and purposely, without

justifiable excuse, as distinguished from an act done carelessly, thoughtlessly, heedlessly orinadvertently .49

Loss of trust and confidence, as a cause for termination of employment, is premised on thefact that the employee concerned holds a position of responsibility or of trust and confidence.

As such, he must be invested with confidence on delicate matters, such as custody, handlingor care and protection of the property and assets of the employer. And, in order to constitutea just cause for dismissal, the act complained of must be work-related and must show that

the employee is unfit to continue to work for the employer .50

In the instant case, thepetitioners-employees of Promm-Gem have not been shown to be occupying positions ofresponsibility or of trust and confidence. Neither is there any evidence to show that they areunfit to continue to work as merchandisers for Promm-Gem.

All told, we find no valid cause for the dismissal of petitioners-employees of Promm-Gem.

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While Promm-Gem had complied with the procedural aspect of due process in terminatingthe employment of petitioners-employees, it failed to comply with the substantive aspectof due process as the acts complained of neither constitute serious misconduct norbreach of trust. Hence , the dismissal is illegal.

With regard to the petitioners placed with P&G by SAPS, they were given no written notice of

dismissal. The records show that upon receipt by SAPS o f P&G’s letter terminating their"Merchandising Services Contact" effective March 11, 1993, they in turn verbally informedthe concerned petitioners not to report for work anymore. The concerned petitioners relatedtheir

Neither SAPS nor P&G dispute the existence of these circumstances. Parenthetically, unlikePromm-Gem which dismissed its employees for grave misconduct and breach of trust due todisloyalty, SAPS dismissed its employees upon the initiation of P&G. It is evident that SAPSdoes not carry on its own business because the termination of its contract with P&Gautomatically meant for it also the termination of its employees’ services. It is obvious fromits act that SAPS had no other clients and had no intention of seeking other clients in order tofurther its merchandising business. From all indications SAPS, existed to cater solely to theneed of P&G for the supply of employees in the latter’s merchandising concerns only. Underthe circumstances prevailing in the instant case, we cannot consider SAPS asan independent contractor.

Going back to the matter of dismissal, it must be emphasized that the onus probandi to provethe lawfulness of the dismissal rests with the employer .53 In termination cases, the burden ofproof rests upon the employer to show that the dismissal is for just and valid cause .54 In theinstant case, P&G failed to discharge the burden of proving the legality and validity of thedismissals of those petitioners who are considered its employees. Hence, the dismissalsnecessarily were not justified and are therefore illegal.

3)

Moral and exemplary damages are recoverable where the dismissal of an employee wasattended by bad faith or fraud or constituted an act oppressive to labor or was done in amanner contrary to morals, good customs or public policy .55

With regard to the employees of Promm-Gem, there being no evidence of bad faith,fraud or any oppressive act on the part of the latter, we find no support for the awardof damages.

As for P&G, the records show that it dismissed its employees through SAPS in amanner oppressive to labor. The sudden and peremptory barring of the concernedpetitioners from work, and from admission to the work place, after just a one-day verbalnotice, and for no valid cause bellows oppression and utter disregard of the right to due

process of the concerned petitioners. Hence, an award of moral damages is called for .

Lastly, under Article 279 of the Labor Code, an employee who is unjustly dismissed fromwork shall be entitled to reinstatement without loss of seniority rights and other privileges,inclusive of allowances, and other benefits or their monetary equivalent from the time thecompensation was withheld up to the time of actual reinstatement .57Hence , all thepetitioners, having been illegally dismissed are entitled to reinstatement without lossof seniority rights and with full back wages and other benefits from the time of theirillegal dismissal up to the time of their actual reinstatement.

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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.

FACTS:

Nelson R. Dulay was employed by GCI, a subsidiary of co-petitioner [herein co-respondent] Aboitiz Jebsen Maritime Inc. since 1986. He initially worked as an ordinary seaman and lateras bosun on a contractual basis. From September 3, 1999 up to July 19, 2000, Nelson wasdetailed in petitioners’ vessel, the MV Kickapoo Belle.

On August 13, 2000, or 25 days after the completion of his employment contract, Nelsondied due to acute renal failure secondary to septicemia. At the time of his death, Nelson wasa bona fide member of the Associated Marine Officers and Seaman’s Union of thePhilippines (AMOSUP), GCI’s collective bargaining agent. Nelson’s widow, Merridy Jane,

thereafter claimed for death benefits through the grievance procedure of the CollectiveBargaining Agreement (CBA) between AMOSUP and GCI. However, on January 29, 2001,the grievance procedure was "declared deadlocked" as petitioners refused to grant thebenefits sought by the widow.

On March 5, 2001, Merridy Jane filed a complaint with the NLRC Sub-Regional ArbitrationBoard 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 ofthe amount and releasing AMOSUP from further liability. Merridy Jane contended that she isentitled to the aggregate sum of Ninety Thousand Dollars ($90,000.00) pursuant to the CBA.

DULA Y’s contention: Section 10 of Republic Act (R.A.) 8042, otherwise known as theMigrant Workers and Overseas Filipinos Act of 1995, vests jurisdiction on the appropriatebranches of the NLRC to entertain disputes regarding the interpretation of a collectivebargaining agreement involving migrant or overseas Filipino workers. Such Section amended

Article 217 (c) of the Labor Code which, in turn, confers jurisdiction upon voluntary arbitratorsover interpretation or implementation of collective bargaining agreements and interpretationor enforcement of company personnel policies.

Aboitiz’s contention: Article 217, paragraph (c) as well as Article 261 of the Labor Coderemain to be the governing provisions of law with respect to unresolved grievances arisingfrom the interpretation and implementation of collective bargaining agreements. Under theseprovisions of law, jurisdiction remains with voluntary arbitrators.

ISSUE:

W/N Labor Arbiter has jurisdiction? NO, the voluntary arbitrator has jurisdiction over theinstant case.

HELD:


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It is true that R.A. 8042 is a special law governing overseas Filipino workers. However, acareful reading of this special law would readily show that there is no specific provisionthereunder which provides for jurisdiction over disputes or unresolved grievances regardingthe interpretation or implementation of a CBA. Section 10 of R.A. 8042, which is cited bypetitioner, simply speaks, in general, of "claims arising out of an employer-employeerelationship 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." Onthe other hand, Articles 217(c) and 261 of the Labor Code are very specific in stating thatvoluntary arbitrators have jurisdiction over cases arising from the interpretation orimplementation of collective bargaining agreements. Stated differently, the instant caseinvolves 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 basicissue raised by Merridy Jane in her complaint filed with the NLRC is: which provision of thesubject CBA applies insofar as death benefits due to the heirs of Nelson are concerned. TheCourt agrees with the CA in holding that this issue clearly involves the interpretation orimplementation of the said CBA. Thus, the specific or special provisions of the Labor Codegovern.

It may not be amiss to point out that the abovequoted provisions of the CBA are inconsonance with Rule VII, Section 7 of the present Omnibus Rules and RegulationsImplementing the Migrant Workers and Overseas Filipinos Act of 1995, as amended byRepublic Act No. 10022, which states that "[f]or OFWs with collective bargainingagreements, the case shall be submitted for voluntary arbitration in accordance with Articles261 and 262 of the Labor Code." The Court notes that the said Omnibus Rules andRegulations were promulgated by the Department of Labor and Employment (DOLE) and theDepartment of Foreign Affairs (DFA) and that these departments were mandated to consultwith the Senate Committee on Labor and Employment and the House of RepresentativesCommittee on Overseas Workers Affairs.

In the same manner, Section 29 of the prevailing Standard Terms and Conditions Governingthe Employment of Filipino Seafarers on Board Ocean Going Vessels, promulgated by the

Philippine Overseas Employment Administration (POEA), provides as follows:

Section 29. Dispute Settlement Procedu res. − In cases of claims and disputes arisingfrom this employment, the parties covered by a collective bargaining agreement shallsubmit the claim or dispute to the original and exclusive jurisdiction of the voluntaryarbitrator or panel of arbitrators. If the parties are not covered by a collective bargainingagreement, the parties may at their option submit the claim or dispute to either the originaland exclusive jurisdiction of the National Labor Relations Commission (NLRC), pursuant toRepublic 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 ofarbitrators. If there is no provision as to the voluntary arbitrators to be appointed by theparties, the same shall be appointed from the accredited voluntary arbitrators of the NationalConciliation and Mediation Board of the Department of Labor and Employment.

The Philippine Overseas Employment Administration (POEA) shall exercise original andexclusive jurisdiction to hear and decide disciplinary action on cases, which areadministrative in character, involving or arising out of violations of recruitment laws, rules andregulations involving employers, principals, contracting partners and Filipino seafarers.(Emphasis supplied)

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It is only in the absence of a collective bargaining agreement that parties may opt tosubmit the dispute to either the NLRC or to voluntary arbitration . It is elementary thatrules and regulations issued by administrative bodies to interpret the law which they areentrusted to enforce, have the force of law, and are entitled to great respect .8 Such rules andregulations partake of the nature of a statute and are just as binding as if they have beenwritten in the statute itself .9 In the instant case, the Court finds no cogent reason to depart

from this rule.1âwphi1

Consistent with this constitutional provision, Article 211 of the Labor Code provides thedeclared policy of the State "[t]o promote and emphasize the primacy of free collectivebargaining and negotiations, including voluntary arbitration, mediation and conciliation, asmodes of settling labor or industrial disputes."
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