PHILIPPINE AIRLINES vs LIGAN Case Digest PHILIPPINE AIRLINES, INC. v. ENRIQUE LIGAN, et al. G.R. No.

146408, 30 April 2009 FACTS: Enrique Ligan, et al. and the other respondents were employees of Synergy Services Corporation (Synergy) which provides manpower for Philippine Airlines. It was later discovered that Synergy is a labor-only contractor. They were dismissed by Philippine Airlines on several grounds, one of which is in the guise of retrenchment. The legality of the dismissal of the Ligan, et al. has been pending before the Court of Appeals. Philippine Airlines paid the wages of the Ligan, et al. but contested the employment status of Roque Pilapil for he is already terminated and Benedicto Auxtero who signed the Release and Quitclaim and Waiver". Philippine Airlines therefore pleads to the court to reconsider its first Decision on the payment of wages and benefits. ISSUE: Whether or not the Supreme Court shall overrule its first decision regarding the grant of wages and benefits to Ligan, et al. HELD: In light of these recent manifestations-informations of the parties, the Court finds that a modification of the Decision is in order, the claims with respect to Pilapil and Auxtero having been deemed extinguished even before the promulgation of the Decision. That Pilapil was a regular employee yields to the final finding of a valid dismissal in the supervening case involving his own misconduct, while Auxteros attempt at forum-shopping should not be countenanced. IN ALL OTHER RESPECTS, the Court finds no sufficient reason to deviate from its Decision, but proceeds, nonetheless, to clarify a few points. While this Courts Decision ruled on the regular status of Ligan, et al., it must be deemed to be without prejudice to the resolution of the issue of illegal dismissal in the proper case. Notably, subject of the Decision was Ligan, et al.s complaints for regularization and under-/non-payment of benefits. The Court did not and could not take cognizance of the validity of the eventual dismissal

of Ligan, et al. because the matter of just or authorized cause is beyond the issues of the case. That is why the Court did not order reinstatement for such relief presupposes a finding of illegal dismissal in the proper case which, as the parties now manifest, pends before the appellate court. All told, the pending illegal dismissal case in CA-G.R. SP No. 00922 may now take its course. The Courts finding that Ligan, et al. are regular employees of PAL neither frustrates nor preempts the appellate courts proceedings in resolving the issue of retrenchment as an authorized cause for termination. If an authorized cause for dismissal is later found to exist, PAL would still have to pay Ligan, et al. their corresponding benefits and salary differential up to June 30, 1998. Otherwise, if there is a finding of illegal dismissal, an order for reinstatement with full backwages does not conflict with the Courts declaration of the regular employee status of Ligan, et al.

Eparwa v. Liceo de Cagayan DECISION CARPIO, J.: The Case This is a petition for certiorari[1] of the Decision[2] dated 20 April 2001 and the Resolution dated 21 September 2001 of the Court of Appeals (appellate court) in CA-G.R. SP No. 59120, Liceo de Cagayan University v. The Hon. National Labor Relations Commission, Fifth Division, Eparwa Security and Janitorial Services, Inc., et al. The appellate court reinstated the 18 August 1999 decision[3] of the Labor Arbiter and remanded the case to the Regional Arbitration Board, Branch No. 10 of Cagayan de Oro City to compute what is due to Liceo de Cagayan University (LDCU) from Eparwa Security and Janitorial Services, Inc. (Eparwa). The Facts On 1 December 1997, Eparwa and LDCU, through their representatives, entered into a Contract for Security Services. The pertinent portion of the contract provides that: 5. For and in consideration of this security, protective and safety services, [LDCU] agrees to pay [Eparwa] FIVE THOUSAND PESOS ONLY (P5,000.00), Philippine Currency per guard a month payable within fifteen (15) days after [Eparwa] presents its service invoice. [Eparwa] shall furnish [LDCU] a monthly copy of SSS contribution of guards and monthly payroll of each guard assigned at [LDCUs] premises on a monthly basis[.][4] Eparwa allocated the contracted amount of P5,000 per security guard per month in the following manner: Basic Pay (P104.50 x 391.5/12)

Night Diff. Pay 13th mo. Pay 5 day incentive leave Uniform allowance Employers SSS, Medicare, ECC contribution Agency share VAT CONTRACT RATE (rounded off to P5,000.00)[5]

11 28 43 50 22 42 45 P

On 21 December 1998, 11 security guards (security guards) whom Eparwa assigned to LDCU from 1 December 1997 to 30 November 1998 filed a complaint before the National Labor Relations Commissions (NLRC) Regional Arbitration Branch No. 10 in Cagayan de Oro City. Docketed as NLRC-RABX Case No. 10-0100102-99, the complaint was filed against both Eparwa and LDCU for underpayment of salary, legal holiday pay, 13th month pay, rest day, service incentive leave, night shift differential, overtime pay, and payment for attorneys fees. LDCU made a cross-claim and prayed that Eparwa should reimburse LDCU for any payment to the security guards. The Ruling of the Labor Arbiter In its decision dated 18 August 1999, the Labor Arbiter found that the security guards are entitled to wage differentials and premium for holiday and rest day work. The Labor Arbiter held Eparwa and LDCU solidarily liable pursuant to Article 109 of the Labor Code. The dispositive portion of the Labor Arbiters decision reads: WHEREFORE, judgment is rendered[:] 1. P3,409.31 Ordering respondents [LDCU] and [Eparwa] solidarily liable to pay [the security guards] for underpayment,

holiday and rest day, as follows: Name 1. Casiero 2. Villarino 3. Lumbab 4. Caballero 5. Cajilla 6. Paduanga 7. Dungog 8. Magallanes 9. Dungog 10. Dungog 11. Bahian , , , , , , , , , , , Jovencio Leonardo Adriano Gregorio, Jr. Delfin, Jr. Arnold Achimedes Eduardo Luigi Telford Wilfredo Amount P 46,819.95 46,819.95 46,819.95 46,819.95 37,918.95 20,321.10 46,819.95 46,819.95 46,819.95 46,819.95 30,741.30 P 463,540.95 LDCU filed an appeal before the NLRC. LDCU agreed with the Labor Arbiters decision on the security guards entitlement to salary differential but challenged the propriety of the amount of the award. LDCU alleged that security guards not similarly situated were granted uniform monetary awards and that the decision did not include the basis of the computation of the amount of the award. Eparwa also filed an appeal before the NLRC. For its part, Eparwa questioned its liability for the security guards claims and the awarded cross-claim amounts.

2.

Denying the claim of unpaid 13th month pay, service incentive leave and night shift premium pay for lack of merit; Ordering respondent [Eparwa] to reimburse respondent [LDCU] for whatever amount the latter may be required to pay [the security guards]; Ordering respondent [Eparwa] to pay respondent [LDCU] P20,000.00 and P5,000.00 each of the [security guards], moral and exemplary damages; Ordering [Eparwa] to pay 10% of attorneys fee[s][;] The rest of the claims are denied for lack of merit. So Ordered.[6]

The Ruling of the NLRC The Fifth Division of the NLRC resolved Eparwa and LDCUs separate appeals in its Resolution[7] dated 19 January 2000. The NLRC found that the security guards are entitled to wage differentials and premium for holiday and rest day work. Although the NLRC held Eparwa and LDCU solidarily liable for the wage differentials and premium for holiday and rest day work, the NLRC did not require Eparwa to reimburse LDCU for its payments to the security guards. The NLRC also ordered the recomputation of the monetary awards according to the dates actually worked by each security guard. The dispositive portion of the NLRC Resolution reads thus: WHEREFORE, the appealed decision is AFFIRMED, subject to the modification that the portions thereof directing respondent EPARWA Security Agency and Janitorial Services, Inc. to reimburse respondent Liceo de Cagayan University for whatever amount the latter may have paid complainants and to pay respondent Liceo de Cagayan University the sum [sic] [of] P20,000.00 and P5,000.00, representing moral and

3.

4.

5. 6.

exemplary damages, respectively, of each complainants [sic], are deleted for lack of legal basis. Further the monetary awards for wage differential and premiums for holiday and rest day works shall be recomputed by the Regional Arbitration Branch of origin at the execution stage of the proceedings. Co[n]formably, the award of Attorneys fee[s] is equivalent to ten (10%) percent of the aggregate monetary award as finally adjusted. SO ORDERED.[8] Eparwa and LDCU again filed separate motions for partial reconsideration of the 19 January 2000 NLRC Resolution. LDCU questioned the NLRCs deletion of LDCUs entitlement to reimbursement by Eparwa. Eparwa, on the other hand, prayed that LDCU be made to reimburse Eparwa for whatever amount it may pay to the security guards. In its Resolution dated 14 March 2000, the NLRC declared that although Eparwa and LDCU are solidarily liable to the security guards for the monetary award, LDCU alone is ultimately liable. The NLRC resolved the issue thus: WHEREFORE, the assailed resolution, dated 19 January 2000, is MODIFIED in that respondent Liceo de Cagayan University (LICEO) is ordered to reimburse respondent Eparwa Security and Janitorial Services, Inc. (EPARWA) for whatever amount the latter may have paid to complainants arising from this case. SO ORDERED.[9] LDCU filed a petition for certiorari[10] before the appellate court assailing the NLRCs decision. LDCU took issue with the NLRCs order that LDCU should reimburse Eparwa. LDCU stated that this would free Eparwa from any liability for payment of the security guards money claims.

The Ruling of the Appellate Court In its Decision promulgated on 20 April 2001, the appellate court granted LDCUs petition and reinstated the Labor Arbiters decision. The appellate court also allowed LDCU to claim reimbursement from Eparwa. The appellate courts decision reads thus: WHEREFORE, foregoing considered, the petition is hereby GRANTED. The decision dated August 18, 1999 of Labor Arbiter Celenito N. Daing is REINSTATED. The case is hereby REMANDED to the Regional Arbitration Board, Branch No. 10 of Cagayan de Oro City to compute what is due to LDCU from EPARWA. SO ORDERED.[11] Eparwa filed a motion for reconsideration of the appellate courts decision. Eparwa stressed that jurisprudence is consistent in ruling that the ultimate liability for the payment of the monetary award rests with LDCU alone. The appellate court denied Eparwas motion for reconsideration for lack of merit. Hence, this petition. The Issue The petition raises this sole legal issue: Is LDCU alone ultimately liable to the security guards for the wage differentials and premium for holiday and rest day pay? The Ruling of the Court The petition has merit. Eparwa and LDCUs Solidary Liability and LDCUs Ultimate Liability

Articles 106, 107 and 109 of the Labor Code read: Art. 106. Contractor or subcontractor. Whenever an employer enters into a contract with another person for the performance of the formers work, the employees of the contractor and of the latters subcontractor, if any, shall be paid in accordance with the provisions of this Code. In the event that the contractor or subcontractor fails to pay the wages of his employees in accordance with this Code, the employer shall be jointly and severally liable with his contractor or subcontractor to such employees to the extent of the work performed under the contract, in the same manner and extent that he is liable to employees directly employed by him. The Secretary of Labor may, by appropriate regulations, restrict or prohibit the contracting out of labor to protect the rights of workers established under this Code. In so prohibiting or restricting, he may make appropriate distinctions between labor-only contracting and job contracting as well as differentiations within these types of contracting and determine who among the parties involved shall be considered the employer for purposes of this Code, to prevent any violation or circumvention of any provision of this Code. There is labor-only contracting where the person supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others, and the workers recruited and placed by such persons are performing activities which are directly related to the principal business of the employer. In such cases, the person or

intermediary shall be considered merely as an agent of the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him. Article 107. Indirect employer. The provisions of the immediately preceding Article shall likewise apply to any person, partnership, association or corporation which, not being an employer, contracts with an independent contractor for the performance of any work, task, job or project. Article 109. Solidary liability. The provisions of existing laws to the contrary notwithstanding, every employer or indirect employer shall be held responsible with his contractor or subcontractor for any violation of any provision of this Code. For purposes of determining the extent of their civil liability under this Chapter, they shall be considered as direct employers. This Courts ruling in Eagle Security Agency, Inc. v. NLRC[12] squarely applies to the present case. In Eagle, we ruled that: This joint and several liability of the contractor and the principal is mandated by the Labor Code to assure compliance of the provisions therein including the statutory minimum wage [Article 99, Labor Code]. The contractor is made liable by virtue of his status as direct employer. The principal, on the other hand, is made the indirect employer of the contractors employees for purposes of paying the employees their wages should the contractor be unable to pay them. This joint and several liability facilitates, if not guarantees, payment of the workers performance of any work, task, job or project, thus giving the workers ample protection as mandated by the 1987 Constitution [See Article II Sec. 18 and Article

XIII Sec. 3]. In the case at bar, it is beyond dispute that the security guards are the employees of EAGLE [See Article VII Sec. 2 of the Contract for Security Services; G.R. No. 81447, Rollo, p. 34]. That they were assigned to guard the premises of PTSI pursuant to the latters contract with EAGLE and that neither of these two entities paid their wage and allowance increases under the subject wage orders are also admitted [See Labor Arbiters Decision, p. 2; G.R. No. 81447, Rollo, p. 75]. Thus, the application of the aforecited provisions of the Labor Code on joint and several liability of the principal and contractor is appropriate [See Del Rosario & Sons Logging Enterprises, Inc. v. NLRC, G.R. No. 64204, May 31, 1985, 136 SCRA 669]. The solidary liability of PTSI and EAGLE, however, does not preclude the right of reimbursement from his co-debtor by the one who paid [See Article 1217, Civil Code]. It is with respect to this right of reimbursement that petitioners can find support in the aforecited contractual stipulation and Wage Order provision. The Wage Orders are explicit that payment of the increases are to be borne by the principal or client. To be borne, however, does not mean that the principal, PTSI in this case, would directly pay the security guards the wage and allowance increases because there is no privity of contract between them. The security guards contractual relationship is with their immediate employer, EAGLE. As an employer, EAGLE is tasked, among others, with the payment of their wages [See Article VII Sec. 3 of the Contract for Security Services, supra and Bautista v. Inciong, G.R. No. 52824, March 16, 1988, 158 SCRA 665]. On the other hand, there existed a contractual agreement between PTSI and EAGLE

wherein the former availed of the security services provided by the latter. In return, the security agency collects from its client payment for its security services. This payment covers the wages for the security guards and also expenses for their supervision and training, the guards bonds, firearms with ammunitions, uniforms and other equipments, accessories, tools, materials and supplies necessary for the maintenance of a security force. Premises considered, the security guards immediate recourse for the payment of the increases is with their direct employer, EAGLE. However, in order for the security agency to comply with the new wage and allowance rates it has to pay the security guards, the Wage Orders made specific provision to amend existing contracts for security services by allowing the adjustment of the consideration paid by the principal to the security agency concerned. What the Wage Orders require, therefore, is the amendment of the contract as to the consideration to cover the service contractors payment of the increases mandated. In the end, therefore, ultimate liability for the payment of the increases rests with the principal. In view of the foregoing, the security guards should claim the amount of the increases from EAGLE. Under the Labor Code, in case the agency fails to pay them the amounts claimed, PTSI should be held solidarily liable with EAGLE [Articles 106,107 and 109]. Should EAGLE pay, it can claim an adjustment from PTSI for an increase in consideration to cover the increases payable to the security guards. However, in the instant case, the contract for security services had already expired without being amended consonant with the Wage Orders. It is also apparent from a reading of a record that

EAGLE does not now demand from PTSI any adjustment in the contract price and its main concern is freeing itself from liability. Given these peculiar circumstances, if PTSI pays the security guards, it cannot claim reimbursement from EAGLE. But in case it is EAGLE that pays them, the latter can claim reimbursement from PTSI in lieu of an adjustment, considering that the contract, [sic] had expired and had not been renewed.[13] (Emphasis added) We repeatedly upheld our ruling in Eagle regarding reimbursement in the subsequent cases of Spartan Security & Detective Agency, Inc. v. NLRC,[14] Development Bank of the Philippines v. NLRC,[15] Alpha Investigation and Security Agency, Inc. v. NLRC,[16] Helpmate, Inc. v. NLRC, et al.,[17] and Lapanday Agricultural Development Corporation v. Court of Appeals.[18] For the security guards, the actual source of the payment of their wage differentials and premium for holiday and rest day work does not matter as long as they are paid. This is the import of Eparwa and LDCUs solidary liability. Creditors, such as the security guards, may collect from anyone of the solidary debtors. Solidary liability does not mean that, as between themselves, two solidary debtors are liable for only half of the payment. LDCUs ultimate liability comes into play because of the expiration of the Contract for Security Services. There is no privity of contract between the security guards and LDCU, but LDCUs liability to the security guards remains because of Articles 106, 107 and 109 of the Labor Code. Eparwa is already precluded from asking LDCU for an adjustment in the contract price because of the expiration of the contract, but Eparwas liability to the security guards remains because of their employer-employee relationship. In lieu of an adjustment in the contract price, Eparwa may claim reimbursement from LDCU for any payment it may make to the security guards. However, LDCU cannot claim any reimbursement from Eparwa for any payment it may make to the security guards.

WHEREFORE, we GRANT the petition. We SET ASIDE the Decision dated 20 April 2001 and the Resolution dated 21 September 2001 of the Court of Appeals. We REINSTATE the Resolutions dated 19 January 2000 and 14 March 2000 of the National Labor Relations Commission. SO ORDERED.

UNIVERSAL ROBINA CORPORATION V CATAPANG 473 SCRA 189 CALLEJO, SR; October 14, 2005 FACTS - Petitioner Universal Robina Corporation is a corporation duly organized and existing under the Philippine laws, while petitioner Randy Gregorio is the manager of the petitioner companys duck farm in Calauan, Laguna. - The individual respondents were hired by the petitioner company on various dates from 1991 to 1993 to work at its duck farm in Barangay Sto. Tomas, Calauan, Laguna. The respondents were hired under an employment contract which provided for a five-month period. After the expiration of the said employment contracts, the petitioner company would renew them and re-employ the respondents. This practice continued until sometime in 1996, when the petitioners informed the respondents that they were no longer renewing their employment contracts. - In October 1996, the respondents filed separate complaints for illegal dismissal, reinstatement, backwages, damages and attorneys fees against the petitioners. The complaints were later consolidated. On March 30, 1999, after due proceedings, the Labor Arbiter rendered a decision in favor of the respondents, which NLRC and the CA affirmed. - On appeal, the petitioners submit that the respondents are not regular employees. They aver that it is of no moment that the respondents have rendered service for more than a year since they were covered by the five-month individual contracts to which they duly acquiesced. The petitioners contend that they were free to terminate the services of the respondents at the expiration of their individual contracts. The petitioners maintain that, in doing so, they merely implemented the terms of the contracts. - The petitioners assert that the respondents contracts of employment were not intended to circumvent security of tenure. They point out that the respondents knowingly and voluntarily agreed to sign the contracts without the petitioners having exercised any undue advantage over them. Moreover, there is no evidence showing that the petitioners exerted moral dominance on the respondents.[\ ISSUE WON the respondent employees of the corporation are regular employees and therefore their termination for causes outside of the

Labor Code is patently illegal HELD YES Ratio An employee shall be deemed to be of regular status when he has been performing a job for at least one year even if the performance is not continuous and merely intermittent. Reasoning - In any case, we find that the CA, the NLRC and the Labor Arbiter correctly categorized the respondents as regular employees of the petitioner company. In Abasolo v. National Labor Relations Commission, the Court reiterated the test in determining whether one is a regular employee: - The primary standard, therefore, of determining regular employment is the reasonable connection between the particular activity performed by the employee in relation to the usual trade or business of the employer. The test is whether the former is usually necessary or desirable in the usual business or trade of the employer. The connection can be determined by considering the nature of work performed and its relation to the scheme of the particular business or trade in its entirety. Also, if the employee has been performing the job for at least a year, even if the performance is not continuous and merely intermittent, the law deems repeated and continuing need for its performance as sufficient evidence of the necessity if not indispensability of that activity to the business. Hence, the employment is considered regular, but only with respect to such activity and while such activity exists. - It is obvious that the said five-month contract of employment was used by petitioners as a convenient subterfuge to prevent private respondents from becoming regular employees. Such contractual arrangement should be struck down or disregarded as contrary to public policy or morals. To uphold the same would, in effect, permit petitioners to avoid hiring permanent or regular employees by simply hiring them on a temporary or casual basis, thereby violating the employees security of tenure in their jobs. Petitioners act of repeatedly and continuously hiring private respondents in a span of ... 3 to 5 years to do the same kind of work negates their contention that private respondents were hired for a specific project or undertaking only. - Further, factual findings of labor officials who are deemed to have acquired expertise in matters within their respective jurisdiction are generally accorded not only respect but even finality, and bind us when supported by substantial evidence. Disposition petition is

DENIED DUE COURSE. The Decision of the Court of Appeals is AFFIRMED.

PAUL V. SANTIAGO, petitioner, vs. MANAGEMENT, INC., respondent. G.R. No. 162419 July 10, 2007 TINGA, J.:

CF

SHARP

CREW

FACTS: Petitioner had been working as a seafarer for Smith Bell Management, Inc. (respondent) for about five (5) years. He signed a new contract of employment with the duration of 9 months on Feb 3 1998 and he was to be deployed 10 days after. This contract was approved by POEA. A week before the date of departure, the respondent received a phone call from petitioners wife and some unknown callers asking not to send the latter off because if allowed, he will jump ship in Canada. Because of the said information, petitioner was told that he would not be leaving for Canada anymore. This prompted him to file a complaint for illegal dismissal against the respondent. The LA held the latter responsible. On appeal, the NLRC ruled that there is no employeremployee relationship between petitioner and respondent, hence, the claims should be dismissed. The CA agreed with the NLRCs finding that since petitioner had not departed from the Port of Manila, no employer-employee relationship between the parties arose and any claim for damages against the so-called employer could have no leg to stand on. ISSUE: When does the employer-employee relationship involving seafarers commence? RULING: 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. Respondents act of preventing petitioner from departing the port of Manila and boarding "MSV Seaspread" constitutes a breach of contract, giving rise to petitioners cause of action. Respondent unilaterally and unreasonably reneged on its obligation to deploy petitioner and must therefore answer for the actual damages he suffered.

PNOC-ENERGY DEVELOPMENT CORPORATION vs. NLRC 222 SCRA 831 Facts: In November, 1987, while holding the position of Geothermal Construction Secretary, Engineering and Construction Department, at Tongonan Geothermal Project, Ormoc City, Manuel S. Pineda decided to run for councilor of the Municipality of Kananga, Leyte, in the local elections scheduled in January, 1988, and filed the corresponding certificate of candidacy for the position. Objection to Pinedas being a candidate while retaining his job in the PNOC-EDC was shortly thereafter registered by Mayor Arturo Cornejos of Kananga, Leyte. Section 66 of the Election Code provides among others that officers and employees of GOCCs are considered as ipso facto resigned upon the filing of their certificate of candidacy. It was the argument of Pineda that PNOC-EDC was not created through a special law, it is not covered by the Civil Service Law and, therefore, not contemplated under Section 66 of the Election Code. Issue: Whether or not an employee in a government- owned or controlled corporation without an original charter falls within the scope of Section 66 of the Omnibus Election Code. Held: Yes. If a corporations capital stock is owned by the Government, or it is operated and managed by officers charged with the mission of fulfilling the public objectives for which it has been organized, it is a government-owned or controlled corporation even if organized under the Corporation Code and not under a special statute. Employees thereof, even if not covered by the Civil Service but by the Labor Code, are nonetheless employees in government-owned or controlled corporation, and come within the letter of Section 66 of the Omnibus Election Code, declaring them ipso facto resigned from their office upon the filing of their certificate of candidacy.

PNOC-ENERGY DEVELOPMENT CORPORATION, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION (Third Division) and DANILO MERCADO, respondents. Bacorro & Associates for petitioner. Alberto L. Dalmacion for private respondent. PARAS, J.:p This is a petition for certiorari to set aside the Resolution * dated July 3, 1987 of respondent National Labor Relations Commission (NLRC for brevity) which affirmed the decision dated April 30, 1986 of Labor Arbiter Vito J. Minoria of the NLRC, Regional Arbitration Branch No. VII at Cebu City in Case No. RAB-VII-0556-85 entitled "Danilo Mercado, Complainant, vs. Philippine National Oil Company-Energy Development Corporation, Respondent", ordering the reinstatement of complainant Danilo Mercado and the award of various monetary claims. The factual background of this case is as follows: Private respondent Danilo Mercado was first employed by herein petitioner Philippine National Oil Company-Energy Development Corporation (PNOC-EDC for brevity) on August 13, 1979. He held various positions ranging from clerk, general clerk to shipping clerk during his employment at its Cebu office until his transfer to its establishment at Palimpinon, Dumaguete, Oriental Negros on September 5, 1984. On June 30, 1985, private respondent Mercado was dismissed. His last salary was P1,585.00 a month basic pay plus P800.00 living allowance (Labor Arbiter's Decision, Annex "E" of Petition, Rollo, p. 52). The grounds for the dismissal of Mercado are allegedly serious acts of dishonesty committed as follows: 1. On ApriI 12, 1985, Danilo Mercado was ordered to purchase 1,400 pieces of nipa shingles from Mrs. Leonardo Nodado of Banilad, Dumaguete City, for the total purchase price of Pl,680.00. Against company policy, regulations and specific orders, Danilo Mercado withdrew the nipa shingles from the supplier but paid the amount of P1,000.00 only. Danilo Mercado appropriated the balance of P680.00 for his personal use; 2. In the same transaction stated above, the supplier agreed to give the company a discount of P70.00 which Danilo Mercado did not report to the company;

3. On March 28, 1985, Danilo Mercado was instructed to contract the services of Fred R. Melon of Dumaguete City, for the fabrication of rubber stamps, for the total amount of P28.66. Danilo Mercado paid the amount of P20.00 to Fred R. Melon and appropriated for his personal use the balance of P8.66. In addition, private respondent, Danilo Mercado violated company rules and regulations in the following instances: 1. On June 5, 1985, Danilo Mercado was absent from work without leave, without proper turn-over of his work, causing disruption and delay of company work activities; 2. On June 15, 1985, Danilo Mercado went on vacation leave without prior leave, against company policy, rules and regulations. (Petitioner's Memorandum, Rollo, p. 195). On September 23, 1985, private respondent Mercado filed a complaint for illegal dismissal, retirement benefits, separation pay, unpaid wages, etc. against petitioner PNOC-EDC before the NLRC Regional Arbitration Branch No. VII docketed as Case No. RAB-VII-0556-85. After private respondent Mercado filed his position paper on December 16, 1985 (Annex "B" of the Petition, Rollo, pp. 28-40), petitioner PNOC-EDC filed its Position Paper/Motion to Dismiss on January 15, 1986, praying for the dismissal of the case on the ground that the Labor Arbiter and/or the NLRC had no jurisdiction over the case (Annex "C" of the Petition, Rollo, pp. 41-45), which was assailed by private respondent Mercado in his Opposition to the Position Paper/Motion to Dismiss dated March 12, 1986 (Annex "D" of the Petition, Rollo, pp. 46-50). The Labor Arbiter ruled in favor of private respondent Mercado. The dispositive onion of said decision reads as follows: WHEREFORE, in view of the foregoing, respondents are hereby ordered: 1) To reinstate complainant to his former position with full back wages from the date of his dismissal up to the time of his actual reinstatement without loss of seniority rights and other privileges; 2) To pay complainant the amount of P10,000.00 representing his personal share of his savings account with the respondents; 3) To pay complainants the amount of P30,000.00 moral damages; P20,000.00 exemplary damages and P5,000.00 attorney's fees; 4) To pay complainant the amount of P792.50 as his proportionate 13th month pay for 1985.

Respondents are hereby further ordered to deposit the aforementioned amounts with this Office within ten days from receipt of a copy of this decision for further disposition. SO ORDERED. (Labor Arbiter's Decision, Rollo, p. 56) The appeal to the NLRC was dismissed for lack of merit on July 3, 1987 and the assailed decision was affirmed. Hence, this petition. The issues raised by petitioner in this instant petition are: 1. Whether or not matters of employment affecting the PNOC-EDC, a government-owned and controlled corporation, are within the jurisdiction of the Labor Arbiter and the NLRC. 2. Assuming the affirmative, whether or not the Labor Arbiter and the NLRC are justified in ordering the reinstatement of private respondent, payment of his savings, and proportionate 13th month pay and payment of damages as well as attorney's fee. Petitioner PNOC-EDC alleges that it is a corporation wholly owned and controlled by the government; that the Energy Development Corporation is a subsidiary of the Philippine National Oil Company which is a government entity created under Presidential Decree No. 334, as amended; that being a government-owned and controlled corporation, it is governed by the Civil Service Law as provided for in Section 1, Article XII-B of the 1973 Constitution, Section 56 of Presidential Decree No. 807 (Civil Service Decree) and Article 277 of Presidential Decree No. 442, as amended (Labor Code). The 1973 Constitution provides: The Civil Service embraces every branch, agency, subdivision and instrumentality of the government including government-owned or controlled corporations. Petitioner PNOC-EDC argued that since Labor Arbiter Minoria rendered the decision at the time when the 1973 Constitution was in force, said decision is null and void because under the 1973 Constitution, government-owned and controlled corporations were governed by the Civil Service Law. Even assuming that PNOC-EDC has no original or special charter and Section 2(i), Article IX-B of the 1987 Constitution provides that: The Civil Service embraces all branches, subdivision, instrumentalities and agencies of the Government, including government-owned or controlled corporations with original charters. such circumstances cannot give validity to the decision of the Labor

Arbiter (Ibid., pp. 192-193). This issue has already been laid to rest in the case of PNOC-EDC vs. Leogardo, 175 SCRA 26 (July 5, 1989), involving the same petitioner and the same issue, where this Court ruled that the doctrine that employees of government-owned and/or con controlled corporations, whether created by special law or formed as subsidiaries under the General Corporation law are governed by the Civil Service Law and not by the Labor Code, has been supplanted by the present Constitution. "Thus, under the present state of the law, the test in determining whether a government-owned or controlled corporation is subject to the Civil Service Law are the manner of its creation, such that government corporations created by special charter are subject to its provisions while those incorporated under the General Corporation Law are not within its coverage." Specifically, the PNOC-EDC having been incorporated under the General Corporation Law was held to be a government owned or controlled corporation whose employees are subject to the provisions of the Labor Code (Ibid.). The fact that the case arose at the time when the 1973 Constitution was still in effect, does not deprive the NLRC of jurisdiction on the premise that it is the 1987 Constitution that governs because it is the Constitution in place at the time of the decision (NASECO v. NLRC, G.R. No. 69870, 168 SCRA 122 [1988]). In the case at bar, the decision of the NLRC was promulgated on July 3, 1987. Accordingly, this case falls squarely under the rulings of the aforementioned cases. As regards the second issue, the record shows that PNOC-EDC's accusations of dishonesty and violations of company rules are not supported by evidence. Nonetheless, while acknowledging the rule that administrative bodies are not governed by the strict rules of evidence, petitioner PNOC-EDC alleges that the labor arbiter's propensity to decide the case through the position papers submitted by the parties is violative of due process thereby rendering the decision null and void (Ibid., p. 196). On the other hand, private respondent contends that as can be seen from petitioner's Motion for Reconsideration and/or Appeal dated July 28, 1986 (Annex "F" of the Petition, Rollo, pp. 57- 64), the latter never questioned the findings of facts of the Labor Arbiter but simply limited its objection to the lack of legal basis in view of its stand that the

NLRC had no jurisdiction over the case (Private Respondent's Memorandum, Rollo, p. 104). Petitioner PNOC-EDC filed its Position Paper/Motion to Dismiss dated January 15, 1986 (Annex "C" of the Petition Rollo, pp. 41-45) before the Regional Arbitration Branch No. VII of Cebu City and its Motion for Reconsideration and/or Appeal dated July 28, 1986 (Annex "F" of the Petition, Rollo, pp. 57-64) before the NLRC of Cebu City. Indisputably, the requirements of due process are satisfied when the parties are given an opportunity to submit position papers. What the fundamental law abhors is not the absence of previous notice but rather the absolute lack of opportunity to ventilate a party's side. There is no denial of due process where the party submitted its position paper and flied its motion for reconsideration (Odin Security Agency vs. De la Serna, 182 SCRA 472 [February 21, 1990]). Petitioner's subsequent Motion for Reconsideration and/or Appeal has the effect of curing whatever irregularity might have been committed in the proceedings below (T.H. Valderama and Sons, Inc. vs. Drilon, 181 SCRA 308 [January 22, 1990]). Furthermore, it has been consistently held that findings of administrative agencies which have acquired expertise because their jurisdiction is confined to specific matters are accorded not only respect but even finality (Asian Construction and Development Corporation vs. NLRC, 187 SCRA 784 [July 27, 1990]; Lopez Sugar Corporation vs. Federation of Free Workers, 189 SCRA 179 [August 30, 1990]). Judicial review by this Court does not go so far as to evaluate the sufficiency of the evidence but is limited to issues of jurisdiction or grave abuse of discretion (Filipinas Manufacturers Bank vs. NLRC, 182 SCRA 848 [February 28, 1990]). A careful study of the records shows no substantive reason to depart from these established principles. While it is true that loss of trust or breach of confidence is a valid ground for dismissing an employee, such loss or breach of trust must have some basis (Gubac v. NLRC, 187 SCRA 412 [July 13, 1990]). As found by the Labor Arbiter, the accusations of petitioner PNOC-EDC against private respondent Mercado have no basis. Mrs. Leonardo Nodado, from whom the nipa shingles were purchased, sufficiently explained in her affidavit (Rollo, p. 36) that the total purchase price of P1,680.00 was paid by respondent Mercado as agreed upon. The alleged discount given by Mrs. Nodado is not supported by evidence

as well as the alleged appropriation of P8.66 from the cost of fabrication of rubber stamps. The Labor Arbiter, likewise, found no evidence to support the alleged violation of company rules. On the contrary, he found respondent Mercado's explanation in his affidavit (Rollo, pp. 38-40) as to the alleged violations to be satisfactory. Moreover, these findings were never contradicted by petitioner petitioner PNOC-EDC. PREMISES CONSIDERED, the petition is DENIED and the resolution of respondent NLRC dated July 3, 1987 is AFFIRMED with the modification that the moral damages are reduced to Ten Thousand (P10,000.00) Pesos, and the exemplary damages reduced to Five Thousand (P5,000.00) Pesos. SO ORDERED.

GLORY v. VERGARA DECISION YNARES-SANTIAGO, J.: This petition[1] for review on certiorari assails the September 18, 2006 Decision[2] of the Court of Appeals in CA-G.R. SP No. 73377 which set aside the December 20, 2001 Decision and July 22, 2002 Order of the National Labor Relations Commission in NLRC NCR CA No. 022914-00 and declared that respondents Buenaventura B. Vergara and Roselyn T. Tumasis were illegally dismissed; and the February 6, 2007 Resolution[3] denying the motion for reconsideration. Petitioner Glory Philippines, Inc. manufactures money-counting machines. In June 1998, it created a Parts Inspection Section (PIS) tasked to inspect the machine parts for exportation to its exclusive buyer, Glory Limited Japan (Glory Japan). Petitioner hired respondents on July 6, 1998, allegedly as members of the PIS. However, the employment contracts[4] which they signed only on August 18, 1998, indicated them as Production Operators in the Production Section with a daily wage of Php188.00. The contracts covered the period from July 31 to August 30, 1998. Thereafter, respondents employment contracts were extended on a monthly basis. For the periods from August 31 to October 20, 1998, and October 21 to November 30, 1998, respondents signed their respective employment contracts designating them as members of the PIS. From December 1, 1998 to April 27, 1999, respondents performed the same duties and responsibilities despite the absence of employment contracts. On April 27, 1999, however, they were each made to sign employment contracts[5] covering the period from February 28 to April 30, 1999. On April 26, 1999,[6] petitioners President, Mr. Takeo Oshima, informed the Assistant Manager that the contractual

employees in the PIS would no longer be needed by the company as Glory Japan had cancelled its orders. Nevertheless, despite the alleged lack of need for respondents services, petitioner claimed that it reluctantly agreed to extend respondents employment due to their insistent pleas. Thus, for the period from May 1 to May 15, 1999, respondents signed employment contracts with a higher wage of Php200.00 a day. Respondents claimed that they continued to work until May 25, 1999 when, at the close of working hours, petitioners security guard advised them that their employment had been terminated and that they would no longer be allowed to enter the premises. Consequently, on May 27, 1999, they filed separate complaints for illegal dismissal with the Department of Labor and Employment, Region IV. The cases were subsequently referred to the National Labor Relations Commission (NLRC) for resolution. On October 29, 1999, the Labor Arbiter rendered a decision[7] finding that respondents were regular employees because they performed activities desirable to the usual business or trade of petitioner for almost eleven (11) months; and that they were illegally dismissed for lack of just cause and non-observance of due process. Thus: Hence, in accordance with Art. 280, we believe as we ought to believe that complainants [herein respondents] were regular employees since their engagement was not fixed for a specific project or undertaking for a particular season. As regular employees, complainants had all the rights to security of tenure. xxxx After a careful perusal of the record of this case, we could not find any glimpse of just cause and the observance of due process before and during the termination of complainants

services. In this case, only general allegations were asserted by respondent such as declining order from Glory Japan coupled with poor work performance of complainants to justify the dismissal of the latter. This afterthought averment, in the absence of any substantial evidence to prove respondents defense, should be considered as empty allegation and must miserably fail. Thus, we declare as we ought to declare that the dismissal of complainants Vergara and Tumasis were (sic) illegal in the absence of any just cause as enunciated in Art. 282 and the nonobservance of due process in the termination of complainants services.[8] On appeal, the NLRC affirmed the findings of the Labor Arbiter. However, upon motion for reconsideration, the NLRC reversed and set aside its earlier decision[9] and dismissed the complaint for lack of merit. The NLRC ruled that respondents were project employees and that their employment was terminated upon expiration of their employment contracts. Respondents motion for reconsideration was denied hence, they filed a petition for certiorari before the Court of Appeals. On September 18, 2006, the appellate court granted the petition, as follows: WHEREFORE, the PETITION FOR CERTIORARI IS GRANTED. The DECISION dated December 20, 2001 and the ORDER dated July 22, 2002 are SET ASIDE and the DECISION of Labor Arbiter Dominador B. Medroso, Jr. dated October 29, 1999 is REINSTATED subject to the following MODIFICATIONS: 1. Should the reinstatement of the petitioners [herein respondents] be no longer feasible because the section/division to

which they used to be assigned no longer exists, separation pay equivalent to 1 month salary for every year of service from the time of dismissal until finality of this DECISION shall be paid; 2. Full backwages to be paid to the petitioners shall be from the time of dismissal until actual reinstatement or, in case separation pay is proper, until finality of this DECISION; and Other monetary awards granted in the DECISION dated October 29, 1999 shall be paid reckoned from the start of their employment until their actual reinstatement or, in case separation pay is proper, until finality of this DECISION.

3.

The case is remanded to the Labor Arbiter for the prompt computation of the benefits in favor of the petitioners as hereby determined. The private respondent shall pay costs of suit. SO ORDERED.[10] Petitioners motion for reconsideration was denied hence, this petition raising the following issues:[11] A. THE COURT OF APPEALS COMMITTED SERIOUS AND MANIFEST ERROR IN AFFIRMING THE LABOR ARBITERS DECISION FINDING THAT RESPONDENTS ARE REGULAR EMPLOYEES OF THE PETITIONER

B. THE COURT OF APPEALS COMMITTED SERIOUS AND MANIFEST ERROR IN AFFIRMING THE LABOR ARBITERS DECISION FINDING THAT RESPONDENTS WERE ILLEGALLY DISMISSED C. THE COURT OF APPEALS COMMITTED SERIOUS AND MANIFEST ERROR IN AFFIRMING THE LABOR ARBITERS DECISION FINDING THAT RESPONDENTS ARE ENTITLED TO BACKWAGES, TH SEPARATION PAY, 13 MONTH PAY AND SERVICE INCENTIVE LEAVE PAY Petitioner claims that respondents were contractual and/or project employees because their employment was dependent on the transaction with Glory Japan. Respondents, on the other hand, claim that they were regular employees and that they were dismissed without just or authorized cause and due process of law. The issues for resolution are: 1) whether respondents were regular employees; and 2) whether respondents were illegally dismissed. The petition lacks merit. In Perpetual Help Credit Cooperative, Inc. v. Faburada,[12] we explained that there are three kinds of employees as provided under Article 280 of the Labor Code, thus: Article 280 of the Labor Code provides for three kinds of employees: (1) regular employees or those who have been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer; (2) project employees or those whose employment has been

fixed for a specific project or undertaking, the completion or termination of which has been determined at the time of the engagement of the employee or where the work or service to be performed is seasonal in nature and the employment is for the duration of the season; and (3) casual employees or those who are neither regular nor project employees x x x.[13] There is no merit in petitioners claim that respondents were project employees whose employment was coterminous with the transaction with Glory Japan. In Grandspan Development Corporation v. Bernardo,[14] the Court held that the principal test for determining whether particular employees are properly characterized as project employees, as distinguished from regular employees, is whether or not the project employees were assigned to carry out a specific project or undertaking, the duration and scope of which were specified at the time the employees were engaged for that project. As defined, project employees are those workers hired (1) for a specific project or undertaking, and (2) the completion or termination of such project or undertaking has been determined at the time of engagement of the employee.[15] In the instant case, respondents employment contracts failed to state the specific project or undertaking for which they were allegedly engaged. While petitioner claims that respondents were hired for the transaction with Glory Japan, the same was not indicated in the contracts. As correctly observed by the Court of Appeals, nothing therein suggested or even hinted that their employment was dependent on the continuous patronage of Glory Japan.[16] Further, the employment contracts did not indicate the duration and scope of the project or undertaking as required by law. It is not enough that an employee is hired for a specific project or phase of work to qualify as a project employee. There must also be a determination of, or a clear agreement on, the completion or termination of the project at the time the employee was

engaged,[17] which is absent in this case. Respondents were given pro forma employment contracts which were repeatedly renewed upon petitioners behest. Respondents were hired on July 6, 1998 but signed their initial employment contracts only on August 18, 1998. The contracts covered the period from July 31 to August 30, 1998 and respondents were designated therein as Production Operators. Thereafter, respondents were hired as members of the PIS and their employment contracts were extended several times, to wit: from August 31 to October 20, 1998; from October 21 to November 30, 1998; from February 28 to April 30, 1999; and, from May 1 to May 15, 1999. It bears stressing that from December 1, 1998 to April 27, 1999, respondents reported for work despite the absence of employment contracts. On April 27, 1999, however, they were belatedly made to sign employment contracts for the period from February 28 to April 30, 1999. Although petitioners transaction with Glory Japan was terminated sometime in April 1999, yet respondents were allowed to work without interruption until May 25, 1999. In fact, petitioner even paid them higher salaries of Php200.00 a day. To our mind, the foregoing factual circumstances negate petitioners claim that respondents were project employees. We quote with approval the ruling of the Court of Appeals, as follows: The manner by which the private respondent [herein petitioner] dealt with the petitioners [herein respondents] was obviously plagued with basic irregularities. Although they were supposedly hired as PSI staff and started working on July 6, 1998, they were still made to sign individual pro forma employment contracts only much later i.e., on August 18, 1999, with their employment position being stated therein as production operators in the Production Section being purportedly extended from July 31, 1998 to August 30, 1998. From then until October 20, 1998, they were made to sign employment

contracts on more or less month-to-month terms for the position of PSI staff. Thereafter, they continued working for the private respondent from December 1, 1998 until April 27, 1999 even if they had [not] signed any written contract for such employment period. We are baffled why they were once again made to signify on April 27, 1999 their conformity to an employment contract for the period from February 28, 1999 to April 30, 1999 and later to another contract for the period from May 1, 1999 to May 15, 1999. To us, the private respondents illegal intention became clearer from such acts. Its making the petitioners sign written employment contracts a few days before the purported end of their employment periods (as stated in such contracts) was a diaphanous ploy to set periods with a view for their possible severance from employment should the private respondent so willed it. If the term of the employment was truly determined at the beginning of the employment, why was there delay in the signing of the readymade contracts that were entirely prepared by the employer? Also, the changes in the positions supposedly held by the petitioners in the company belied the private respondents adamant contention that the petitioners were hired solely for the purpose of manning PIS during its alleged dry run period that ended on October 20, 1998. We view such situation as a very obvious ploy of the private respondent to evade the petitioners eventual regularization.[18] Likewise, we cannot give credence to petitioners claim that respondents were fixed term employees. Petitioners reliance on our ruling in Philippine Village Hotel v. National Labor Relations Commission[19] is misplaced because the facts in the said case are not in all fours with the case at bar. In said case, the employees were hired

only for a one-month period and their employment contracts were never renewed. In the instant case, respondents original employment contracts were renewed four times. In the last instance, their contracts were extended despite the cessation of petitioners alleged transaction with Glory Japan. Thus, respondents were continuously under the employ of petitioner, performing the same duties and responsibilities, from July 6, 1998 to May 25, 1999. In Philips Semiconductors (Phils.), Inc. v. Fadriquela,[20] we held that such a continuing need for respondents services is sufficient evidence of the necessity and indispensability of their services to petitioners business.[21] Consequently, we find that respondents were regular employees defined under Article 280 of the Labor Code as those who have been engaged to perform activities which are usually necessary or desirable in the usual business or trade of petitioner. Respondents are entitled to security of tenure notwithstanding the contrary provisions of their employment contracts. Under the Labor Code, the requirements for the lawful dismissal of an employee are two-fold, the substantive and the procedural aspects. Not only must the dismissal be for a valid or authorized cause, the rudimentary requirements of due process - notice and hearing must, likewise, be observed before an employee may be dismissed. Without the concurrence of the two, the termination would, in the eyes of the law, be illegal.[22] As an employer, petitioner has the burden of proving that respondents dismissal was for a cause allowed under the law and that they were afforded due process. However, it failed to discharge this burden. While it claims that the dismissal was due to the expiration of respondents employment contracts and the termination of the transaction with Glory Japan, the facts and evidence show otherwise. Indeed, the periods of employment were imposed in circumvention of respondents right to security of tenure. Time and again, we held that the practice of imposing a limited period in an employment contract to circumvent the constitutional guarantee on security of tenure should be struck down or disregarded as contrary to public policy or morals.[23] So it is in this case.

In sum, we find no reason to deviate from the findings of the Court of Appeals that respondents were regular employees and that they were illegally dismissed by petitioner. Under Article 279[24] of the Labor Code, an employee who was illegally dismissed from work is entitled to reinstatement without loss of seniority rights, and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement. Where reinstatement is no longer feasible, separation pay shall be granted in lieu of reinstatement.[25] It appears that respondents were paid the amount of Php91,015.15 corresponding to their payroll reinstatement from March 29, 1999 up to November 30, 2000.[26] The said amount should thus be deducted from the computation for respondents backwages. WHEREFORE, the petition is DENIED. The September 18, 2006 Decision and the February 6, 2007 Resolution of the Court of Appeals in CA-G.R. SP. No. 73377 are AFFIRMED with MODIFICATIONS. Respondents are entitled to: a) reinstatement, and if reinstatement is no longer feasible, separation pay equivalent to one (1) month pay for every year of service; b) full backwages from the time the compensation was withheld until actual reinstatement or, in case separation pay is proper, until finality of this Decision less the amount of Php90,015.15; and c) 13th Month Pay and Service Incentive Leave Pay reckoned from the start of their employment until actual reinstatement or, in case separation pay is proper, until finality of this Decision. SO ORDERED.

Espina v. CA FACTS Respondent MY San informed its employees and union that they intend to sell the company to respondent Monde and that MY San will terminate their employment and payment of their separation pay will be in accordance with the law. In connection with this event, the union and MY San agreed that a list of MY San employees will be submitted to respondent Monde purposes of rehiring if said employee applies and qualifies, subject to such criteria as the new corporation may impose. Respondent Monde then commenced its operations. All the former employees of respondent M.Y. San who were terminated upon its closure and who applied and qualified for probationary employment, including petitioners herein, started working for respondent Monde on a contractual basis for a period of six months. Subsequently, petitioners were terminated on various dates. Thus, petitioners filed a complaint for illegal dismissal and underpayment, damages and attorneys fees and litigation cost with the NLRC- RAB. Petitioners alleged that respondent My San stopped its operations, but three days after, resumed its operation with the same top management running the business; the union officers, in exchange for being rehired, acceded to bust the union; and the sale of respondent M.Y. San to respondent Monde was merely a ploy to circumvent the provisions of the Labor Code. Respondent M.Y. San insisted that its employer-employee relationship with petitioners had ceased to exist, thus, the complaint for illegal dismissal against it could no longer prosper. It further contended that the power to hire and fire employees is now lodged in the new business owner, respondent Monde. On the other hand, respondent Monde alleged that petitioners had no cause of action against it. Monde claimed that the respective supervisors of Monde conducted an evaluation of the performance of all its probationary employees, including herein complainants, to

determine their fitness to qualify as regular employees therein. The probationary employees of Monde who passed the performance appraisal and who qualified as regular employees thereof were accordingly appointed as such. Out of the one hundred sixteen (116) probationary employees engaged by respondent Monde, a total of seventy-four employees qualified for regular employment. For those who did not qualify for regular employment, including herein complainants, respondent Monde gave complainants the remainder of their probationary period within which to prove their qualification for regular employment therewith. Notwithstanding the opportunity given to herein complainants to improve their performance to qualify for regular employment with Monde, complainants either: (a) resigned from their employment with Monde; (b) refused to report for work on 02 May 2001 and on the days following; or (c) failed to qualify for regular employment at the expiration of the period of their probationary employment. ISSUE Whether or not petitioners were illegally dismissed. HELD The SC held that petitioners were validly dismissed. Petitioners were validly separated from respondent MY San. Work is a necessity that has economic significance deserving legal protection. The provisions on social justice and protection to labor in the Constitution dictate so. However, employers are also accorded rights and privileges to assure their self-determination and independence and reasonable return of capital. This mass of privileges comprises the so-called management prerogatives. One of the rights accorded an employer is the right to close an establishment or undertaking. Just as no law forces anyone to go into business, no law can compel anybody to continue the same. The right to close the operations of an establishment or undertaking is explicitly recognized under the Labor Code as one of the authorized causes in terminating employment of workers, the only limitation being that the closure must not be for the purpose of circumventing the provisions on terminations

of employment embodied in article 283 of the Labor Code. Under Article 283 of the Labor Code, three requirements are necessary for a valid cessation of business operations, namely: (1) service of a written notice to the employees and to the DOLE at least one (1) month before the intended date thereof; (2) the cessation must be bona fide in character; and (3) payment to the employees of termination pay amounting to at least one half (1/2) month pay for every year of service, or one (1) month pay, whichever is higher. The records reveal that private respondent M.Y. San complied with the aforecited requirements. M.Y. San employees were adequately informed of the intended business closure and a written notice to the Regional Director of DOLE was filed by respondent M.Y. San, informing the DOLE that M.Y. San will be closed effective 31 January 2001. The ultimate test of the validity of closure or cessation of establishment or undertaking is that it must be bona fide in character. And the burden of proving such falls upon the employer. Respondent M.Y. San in good faith complied with the requirements for closure; sold and conveyed all its assets to respondent Monde for valuable consideration; and there were no previous labor problems. It has been ruled that an employer may adopt policies or changes or adjustments in the operations to insure profit to itself or protect the investments of its stockholders, and in the exercise of such management prerogative, the employer may merge or consolidate its business with another, or sell or dispose all or substantially all of its assets and properties which may bring about the dismissal or termination of its employees in the process. Petitioners were also validly dismissed by respondent Monde. There is no dispute that petitioners were probationary employees as stated in their individual contracts of employment with respondent Monde. While petitioners were only probationary employees who do not enjoy permanent status, nonetheless, they were still entitled to the

constitutional protection of security of tenure. As may be gleaned in article 281 of the Labor Code, their employment may only be terminated for a valid and just cause or for failing to qualify as a regular employee in accordance with the reasonable standards made known to him by the employer at the time of engagement and after being accorded due process. Procedural due process requires that the employee be given two written notices before he is terminated, consisting of a notice which apprises the employee of the particular acts/omissions for which the dismissal is sought and the subsequent notice which informs the employee of the employers decision to dismiss him. In the case at bar, petitioners were notified of the standards they have to meet to qualify as regular employees of respondent Monde when the latter apprised them, at the start of their employment. Some of the petitioners in this case voluntarily resigned (Barnuevo, Reyes, Ollorsa, and Cerbito), some were validly dismissed because of Absence Without Leave (Espina, Aquino, Bandino, Petalio, Jr., Ebreo, B. Paz, Deocareza and L. Paz), while some others were terminated because they failed to qualify as regular employees in accordance with the terms and conditions of their probationary employment with respondent Monde (Celis, Fernandez, Rodriguez, Punzalan, Lourdes Alfonso Q., Panlilio, Arceo, Pascual, Bajo, Blanco, Abela, Fajanilag, and Wong). It must be noted that petitioners were terminated prior to the expiration of their probationary contracts. As probationary employees, they enjoyed only temporary employment status. In general terms, this meant that they were terminable anytime, permanent employment not having been attained in the meantime. The employer could well decide if he no longer needed the probationarys service or his performance fell short of expectations, as a probationary employee is one who, for a given period of time, is under observation and evaluation to determine whether or not he is qualified for permanent employment. During the probationary period, the employer is given the opportunity to observe the skill, competence and attitude of the employee to determine if he has the qualification to meet the

reasonable standards for permanent employment. The length of time is immaterial in determining the correlative rights of both the employer and the employee in dealing with each other during said period. Thus, as long as the termination was made before the expiration of the sixmonth probationary period, the employer was well within his rights to sever the employer-employee relationship. A contrary interpretation would defeat the clear meaning of the term probationary. Terminating employment is one of respondent Mondes prerogatives. As an employer, respondent Monde has the right to regulate, according to its discretion and best judgment, including work assignment, working methods, processes to be followed, working regulations, transfer of employees, work supervision, lay-off of workers and the discipline, dismissal and recall of workers. Management has the prerogative to discipline its employees and to impose appropriate penalties on erring workers pursuant to company rules and regulations. This Court has upheld a companys management prerogatives so long as they are exercised in good faith for the advancement of the employers interest and not for the purpose of defeating or circumventing the rights of the employees under special laws and valid agreements. The law imposes many obligations on the employer such as providing just compensation to workers, observance of the procedural requirements of notice and hearing in the termination of employment. On the other hand, the law recognizes the right of the employer to expect from its workers not only good performance, adequate work and diligence, but also good conduct and loyalty. The employer may not be compelled to continue to employ such persons whose continuance in the service will patently be inimical to his interest. Thus, respondent Monde exercised in good faith its management prerogative as there is no dispute that petitioners had been habitually absent, neglectful of their work, and rendered unsatisfactory service, to the damage and prejudice of the company.

ICMC v. NLRC FACTS - Petitioner International Catholic Migration Commission (ICMC), a non-profit organization dedicated to refugee service at the Philippine Refugee Processing Center in Morong, Bataan engaged the services of private respondent Bernadette Galang as a probationary cultural orientation teacher with a monthly salary of P2,000.00. - Three (3) months thereafter, private respondent was informed, orally and in writing, that her services were being terminated for her failure to meet the prescribed standards of petitioner as reflected in the performance evaluation of her supervisors - Private respondent filed a complaint for illegal dismissal, unfair labor practice and unpaid wages against petitioner with the then Ministry of Labor and Employment, praying for reinstatement with backwages, exemplary and moral damages. - Labor Arbiter Pelagio A. Carpio rendered his decision dismissing the complaint for illegal dismissal as well as the complaint for moral and exemplary damages but ordering the petitioner to pay private respondent the sum of P6,000.00 as payment for the last three (3) months of the agreed employment period pursuant to her verbal contract of employment. - Both parties appealed the decision to the National Labor Relations Commission. - The NLRC, by a majority vote, sustained the decision of the Labor Arbiter and thus dismissed both appeals for lack of merit. - Dissatisfied, petitioner filed the instant petition. ISSUE WON an employee who was terminated during the probationary period of her employment is entitled to her salary for the unexpired portion of her six-month probationary employment HELD NO - There is justifiable basis for the reversal of public respondent's award of salary for the unexpired three-month portion of private respondent's six-month probationary employment in the light of its express finding that there was no illegal dismissal - There is no dispute that private respondent was terminated during her probationary period of employment for failure to qualify as a regular member of petitioner's teaching staff in accordance with its reasonable standards: private respondent was found by petitioner to be deficient in classroom management, teacher-student relationship and teaching techniques. Failure to qualify as a regular employee in accordance with the

reasonable standards of the employer is a just cause for terminating a probationary employee specifically recognized under Article 282 (now Article 2813) of the Labor Code. - It must be noted that notwithstanding the finding of legality of the termination of private respondent, public respondent justified the award of salary for the unexpired portion of the probationary employment on the ground that a probationary employment for six (6) months is an employment for a "definite period" which requires the employer to exhaust the entire probationary period to give the employee the opportunity to meet the required standards. - The legal basis of public respondent is erroneous. A probationary employee, as understood under Article 282 (nowArticle 281) of the Labor Code, is one who is on trial by an employer during which the employer determines whether or not he is qualified for permanent employment. A probationary appointment is made to afford the employer an opportunity to observe the fitness of a probationer while at work, and to ascertain whether he will become a proper and efficient employee. - The word "probationary", as used to describe the period of employment, implies the purpose of the term or period, but not its length. - Being in the nature of a "trial period" the essence of a probationary period of employment fundamentally lies in the purpose or objective sought to be attained by both the employer and the employee during said period. The length of time is immaterial in determining the correlative rights of both in dealing with each other during said period. - A281 LC gives ample authority to the employer to terminate a probationary employee for a just cause or when he fails to qualify as a regular employee in accordance with reasonable standards made known by the employer to the employee at the time of his engagement. - There is nothing under Article 281 of the Labor Code that would preclude the employer from extending a regular or a permanent appointment to an employee once the employer finds that the employee is qualified for regular employment even before the expiration of the probationary period. Conversely, Article 281 of the Labor Code does not likewise preclude the employer from terminating the probationary employment on justifiable causes as in the instant case. - There was no showing, as borne out by the records, that there was

circumvention of the rights of private respondent when she was informed of her termination. Private respondent was duly notified, orally and in writing, that her services as cultural orientation teacher were terminated for failure to meet the prescribed standards of petitioner. - The dissatisfaction of petitioner over the performance of private respondent in this regard is a legitimate exercise of its prerogative to select whom to hire or refuse employment for the success of its program or undertaking. - It was a grave abuse of discretion on the part of public respondent to order petitioner to pay private respondent her salary for the unexpired three-month portion of her six-month probationary employment when she was validly terminated during her probationary employment. To sanction such action would not only be unjust, but oppressive on the part of the employer Disposition Petition granted.

DELA CRUZ V NLRC (LO) 290 SCRA 1 DAVIDE JR; November 20, 1998 NATURE Special Civil Action.Certiorari FACTS - Petitioner started working for Emmanuel Lo as a crew hand in the latters fishing boat. He was over several years promoted to be the Patron of the boat until he was dismissed. From the case, it was shown that respondent was the one who hired, paid salary to, and eventually fired dela Cruz. - Respondent claims that he was in joint venture with the petitioner and hence there was no employer-employee relationship between them. As pointed out by the Labor Arbiter, however, Lo exercised the control in the activities and that therefore there was in fact an employer-employee relationship. - The Labor arbiter found the dismissal not to be justified and ordered Lo to pay separation pay bu not back wages as the same, he opines ws not prayed for. Petitioner was however found to be a managerial employee and hence was hence excluded from the coverage of the law as regards conditions of employment. - Both parties appealed the decision. ISSUE WON NLRC committed rave abuse of discretion amounting to lack or excess of jurisdiction in dismissing petitioners claim for separation pay, back wages, allowances, and damages HELD YES - Article 279 of the Labor Code mandates that petitioner who was unjustly dismissed from work is entitled to reinstatement without loss of seniority rights and other privileges and to full back pay, inclusive of allowances, and to other benefits or their monetary equivalent computed from the time compensation was withheld up to time of actual reinstatement. The grant of back wages allows the unjustly and illegally dismissed employee to recover from the employer that which the former lost by way of wages as a result of his dismissal from employment. Reasoning - Apparently, the form used in filing the case did not include a box for back wages and hence the petitioner had to particular item to tick off.

The court ruled that award of back wages resulting from the illegal dismissal of an employee is a substantial right. Thus, the failure to claim back wages in a complaint is a mere procedural lapse which cannot defeat a right granted under substantive law. Disposition Petition granted with modification as to back wages.

G.R. No. 155903 September 14, 2007 C.F. SHARP CREW MANAGEMENT, INC., petitioner, vs. HON. UNDERSECRETARY JOSE M. ESPANOL, JR., HON. SECRETARY LEONARDO A. QUISUMBING and RIZAL INTERNATIONAL SHIPPING SERVICES, respondents. DECISION NACHURA, J.: The petitioner C.F. Sharp Crew Management, Inc. (C.F. Sharp) appeals by certiorari the April 30, 2002 Decision1 of the Court of Appeals (CA) in CA-G.R. SP No. 53747 and the November 5, 2002 Resolution2 denying its reconsideration. In 1991, Louis Cruise Lines (LCL), a foreign corporation duly organized and existing under the laws of Cyprus, entered into a Crewing Agreement3 with Papadopolous Shipping, Ltd. (PAPASHIP). PAPASHIP in turn appointed private respondent Rizal International Shipping Services (Rizal) as manning agency in the Philippines, recruiting Filipino seamen for LCLs vessel. On October 3, 1996, LCL terminated the Crewing Agreement with PAPASHIP to take effect on December 31, 1996. It then appointed C.F. Sharp as crewing agent in the Philippines. C.F. Sharp requested for accreditation as the new manning agency of LCL with the Philippine Overseas Employment Administration (POEA), but Rizal objected on the ground that its accreditation still existed and would only expire on December 31, 1996. Pending approval of the accreditation, Theodoros Savva and Adrias Tjiakouris of LCL arrived in the Philippines and conducted a series of interviews for seafarers at C.F. Sharps office. Rizal reported LCLs recruitment activities to the POEA on December 9, 1996, and requested an ocular inspection of C.F. Sharps premises. On December 17, 1996, POEA representatives conducted an inspection and found Savva and Tjiakouris at C.F. Sharp interviewing and recruiting hotel staffs, cooks, and chefs for M/V Cyprus, with scheduled deployment in January 1997.4 The Inspection Report5 signed by Corazon Aquino of the POEA and countersigned by Mr. Reynaldo Banawis of C.F. Sharp was thereafter submitted to the POEA. On January 2, 1997, Rizal filed a complaint6 for illegal recruitment, cancellation or revocation of license, and blacklisting against LCL and C.F. Sharp with the POEA, docketed as POEA Case No. RV-97-01-

004. Then, on January 31, 1997, Rizal filed a Supplemental Complaint7 adding violation of Section 29 of the Labor Code of the Philippines, for designating and/or appointing agents, representatives and employees, without prior approval from the POEA. For its part, C.F. Sharp admitted that Savva and Tjiakouris conducted interviews at C.F. Sharps office, but denied that they were for recruitment and selection purposes. According to C.F. Sharp, the interviews were held for LCLs ex-crew members who had various complaints against Rizal. It belittled the inspection report of the POEA inspection team claiming that it simply stated that interviews and recruitment were undertaken, without reference to who were conducting the interview and for what vessels.8 C.F. Sharp also averred that Rizal was guilty of forum shopping, and prayed for the dismissal of the complaint on this ground and for its lack of merit. 9 The POEA Administrator was not persuaded and found C.F. Sharp liable for illegal recruitment. According to the Administrator, the inspection report of Ms. Aquino established that Savva and Tjiakouris had conducted, and, at the time of the inspection, had been conducting interviews, selection and hiring for LCL, without any authority from the POEA. The Administrator also held that C.F. Sharp violated Section 29 of the Labor Code when it designated officers and agents without prior approval of the POEA. 10 Thus, the Administrator disposed: WHEREFORE, premises considered, the respondent CF Sharp Agency is as it is hereby ordered suspended for a period of six (6) months or in lieu thereof, it is ordered to pay a fine of P50,000.00 for violation of Art. 29 of the Labor Code, as amended in relation to Sec. 6(b), Rule II, Book II of the Rules and Regulations Governing Overseas Employment in accordance with the schedule of penalties. Further, the respondent CF Sharp is as it is hereby ordered suspended for another period of [eighteen] (18) months or to pay the fine of P180,000.00 for committing 9 counts of violation of Article 29 of the Labor Code as amended in relation to Sec. 2(k), Rule I, Book VI of the Rules and Regulations governing Overseas Employment. The period of suspension shall be served cummulatively (sic). The charges of violation of Sec. 6(b) of RA 8042 are hereby referred to the Anti-Illegal Recruitment Branch for appropriate action. SO ORDERED.11 C.F. Sharp elevated the Administrators ruling to the Department of

Labor and Employment (DOLE). On December 19, 1997, the then Secretary of Labor, Leonardo A. Quisumbing,12 issued an Order,13 ruling that: WHEREFORE, except as above MODIFIED, the Order dated March 13, 1997 of the POEA Administrator is AFFIRMED. Accordingly, the C.F. Sharp Crew Management, Inc. is hereby found guilty of having violated Sec. 6, R.A. 8042 in relation to Article 13 (b) and (f), and Article 16 of the Labor Code as amended; Rule II (jj), Book I and Sec 1 and 6, Rule I, Book II, POEA Rules and Regulations Governing Overseas Employment, for having conspired and confederated with the [Louis] Cruise Lines, Theodorus Savva and Andrias (sic) Tjiakouris in the recruitment of seafarers for LCLs ships, before it was duly accredited by POEA as the manning agency of LCL, thus a non-holder of authority at the time. The penalty imposed against it of suspension of its license for six (6) months or in lieu thereof, to pay a fine of Fifty Thousand Pesos (P50,000.00), is AFFIRMED. Further, C.F. Sharp Crew Management, Inc. is hereby found guilty of one (1) count of violation of Art. 29 of the Labor Code in relation to Sec. 2 (k), Rule I, Book VI of the Rules and Regulations Governing Overseas Employment, and is imposed the penalty of two (2) months suspension of its license or in lieu thereof, to pay a fine of P20,000.00. The penalties of suspension for both violations shall be served cumulatively. Out of the P230,000.00 cash supersedeas bond posted by the petitioner-appellant, let the amount of P160,000.00 be released and refunded to it, retaining P70,000.00 to be applied to the payment of the fines as imposed above, should the petitioner opt to pay the fine instead of undergoing suspension of its license. However, the suspension shall remain in force until such fine is paid, or in the event that the petitioner-appellant further appeals this Order. The charge and finding of violation of Sec. 6 (b) of R.A. 8042 are hereby referred to the Anti-Illegal Recruitment Branch for appropriate action. SO ORDERED.14 C.F. Sharps motion for reconsideration having been denied on February 5, 1999 by the then Undersecretary, Jose M. Espanol, Jr.,15 it elevated the case to this Court on petition for certiorari, with the case docketed as G.R. No. 137573. But, in the June 16, 1999 Resolution,

this Court referred the petition to the CA. In the meantime, on April 15, 1999, C.F. Sharp requested the lifting of the suspension decreed by the Secretary of Labor in his December 19, 1997 Order,16 which was granted by Deputy Administrator for Licensing and Adjudication Valentin C. Guanio. C.F. Sharp was allowed to deploy seafarers for its principals. Consequently, on April 30, 2002, the CA denied C.F. Sharps petition for certiorari,17 holding that C.F. Sharp was already estopped from assailing the Secretary of Labors ruling because it had manifested its option to have the cash bond posted answer for the alternative fines imposed upon it. By paying the adjudged fines, C.F. Sharp effectively executed the judgment, having acquiesced to, and ratified the execution of the assailed Orders of the Secretary of Labor. The CA also agreed with the POEA Administrator and the Secretary of Labor that Savva and Tjiakouris of LCL, along with C.F. Sharp, undertook recruitment activities on December 7, 9 to 12, 1996, sans any authority. Finally, it affirmed both labor officials finding that C.F. Sharp violated Article 29 of the Labor Code and Section 2(k), Rule I, Book VI of the POEA Rules when it appointed Henry Desiderio as agent, without prior approval from the POEA. Thus, the appellate court declared that the Secretary of Labor acted well within his discretion in holding C.F. Sharp liable for illegal recruitment. C.F. Sharp filed a motion for reconsideration,18 but the CA denied it on November 25, 2002.19 Hence, this appeal, positing these issues: A. WHETHER OR NOT THE COURT OF APPEALS PATENTLY ERRED IN RULING THAT PETITIONER IS IN ESTOPPEL IN QUESTIONING THE ORDER DATED DECEMBER 19, 1997 AND THE RESOLUTION DATED FEBRUARY 5, 1999. B. WHETHER OR NOT THE COURT OF APPEALS PATENTLY ERRED WHEN IT RULED THAT PETITIONER IS LIABLE FOR VIOLATION OF SECTION 6[,] R.A. NO. 8042 IN RELATION TO ARTICLE 13 (b) and (f) AND ARTICLE 66 (sic) OF THE LABOR CODE AS AMENDED; RULE II (jj) BOOK I; AND SECTIONS 1 AND 6, RULE I, BOOK III POEA RULES AND REGULATIONS GOVERNING OVERSEAS EMPLOYMENT. WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED WHEN IT RULED THAT PETITIONER IS LIABLE FOR VIOLATION OF ARTICLE 29 OF THE LABOR CODE, AS

AMENDED, IN RELATION TO SECTION II (k)[,] RULE I, BOOK VI OF THE RULES AND REGULATIONS GOVERNING OVERSEAS EMPLOYMENT.20 C.F. Sharp faults the CA for ruling that petitioner is estopped from questioning the resolutions of the Secretary of Labor. It denied that it voluntarily executed, or acquiesced to, the assailed resolutions of the Secretary. The general rule is that when a judgment has been satisfied, it passes beyond review, satisfaction being the last act and the end of the proceedings, and payment or satisfaction of the obligation thereby established produces permanent and irrevocable discharge; hence, a judgment debtor who acquiesces to and voluntarily complies with the judgment is estopped from taking an appeal therefrom.21 In holding C.F. Sharp in estoppel, the CA apparently relied on the April 15, 1999 Order of the POEA, and, thus, declared: [P]etitioner C.F. Sharp had already manifested its option to have the cash bond posted as an answer for the alternative fines imposed in the Orders dated December 19, 1997 as stated in the Order dated April 15, 1999 of the POEA, Adjudication Office x x x. Thus, for voluntary execution of the Order of the Secretary of DOLE dated December 19, 1997 by paying the adjudged fines, the petitioner was then estopped from assailing such Order before Us by way of petition for certiorari. Where a party voluntarily executes, partially or totally a judgment or acquiesces or ratifies the execution of the same, he is estopped from appealing therefrom. x x x.22 The April 15, 1999 Order of Deputy Commissioner Valentin C. Guanio reads: Respondent C.F. Sharp Crew Management, Inc., thru counsel having manifested its option to have the cash bond posted answer for the alternative fines imposed in the above-entitled case; the alternative suspension imposed in the Order of the Secretary dated December 19, 1997 is hereby Lifted. SO ORDERED.23 This Order was issued in response to C.F. Sharps request to lift the suspension decree of the Secretary of Labor. The request stated, viz.: [W]e write in behalf of our client, C.F. Sharp Crew Management Inc., regarding the Advice To Operating Units dated April 15, 1999, which arose from the Decision of the Office of the Secretary of Labor in the case entitled C.F. Sharp Crew Management, Inc. versus Rizal Shipping

and docketed as RV 97-01-004. In this connection, we would like to express our option to have the cash bond posted by us in the case entitled C.F. Sharp Crew Management, Inc. versus Rizal Shipping and docketed as RV 97-01044 to answer for any fine that the Supreme Court may finally decide that our client should pay in the Case entitled, C.F. Sharp Crew Management, Inc. vs. Secretary Leonardo Quisumbing and Rizal International Shipping Services and docketed as G.R. No. 137573. Under the circumstances, it is most respectfully requested that the aforesaid advice be RECALLED and that a clearance be issued in favor of our client, C.F. Sharp Crew Management, Inc. Hoping for your immediate and favorable action on the matter.24 (Emphasis supplied) C.F. Sharps letter was explicit that the cash bond posted would be answerable for any fine that it may ultimately be held liable to pay by virtue of a final decision. In fact, on March 25, 1999, prior to the filing of the above-quoted letter-request, C.F. Sharp had already filed a petition for certiorari assailing the Orders of the Secretary of Labor. Furthermore, there is no showing that the assailed Order of then Secretary Quisumbing was indeed executed to warrant the appellate courts conclusion that C.F. Sharp was estopped from assailing the said Order. Clearly, there is no basis for the CA to rule that C.F. Sharp voluntarily executed, or acquiesced to, the execution of the unfavorable ruling of the Secretary of Labor. The first issue having been settled, we now resolve whether C.F. Sharp is liable for illegal recruitment. C.F. Sharp denies committing illegal recruitment activities in December 1996. It posits that the interviews undertaken by Savva and Tjiakouris do not amount to illegal recruitment under Section 6 of Republic Act No. 8042 or the Migrants Workers Act. Further, it contends that the interviews conducted were not for selection and recruitment purposes, but were in connection with the seamens past employment with Rizal, specifically, their complaints for nonremittance of SSS premiums, withholding of wages, illegal exactions from medical examinations and delayed allotments. It claims that it was only upon approval of its application for accreditation that the employment contracts were entered into and actual deployment of the seamen was made. C.F. Sharp, thus, concludes that it cannot be held liable for illegal recruitment.

The reasoning is specious. Undoubtedly, in December 1996, LCL had no approved POEA license to recruit. C.F. Sharps accreditation as LCLs new manning agency was still pending approval at that time. Yet Savva and Tjiakouris, along with C.F. Sharp, entertained applicants for LCLs vessels, and conducted preparatory interviews. Article 13(b) of the Labor Code defines recruitment and placement as: 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. On the basis of this definition and contrary to what C.F. Sharp wants to portray - the conduct of preparatory interviews is a recruitment activity. The fact that C.F. Sharp did not receive any payment during the interviews is of no moment. From the language of Article 13(b), the act of recruitment may be "for profit or not." Notably, it is the lack of the necessary license or authority, not the fact of payment, that renders the recruitment activity of LCL unlawful. C.F. Sharps claim that the interviews were not for selection and recruitment purposes does not impress. As the Secretary of Labor aptly said: This Office cannot conceive of a good reason why LCL/Savva/Tjiakouris should be interested at the time in unearthing alleged violations committed by Rizal Shipping whose representative status as manning agency was to be terminated in just a few weeks thereafter, spending valuable time and money in the process. They stood to gain nothing from such taxing exercise involving several hundreds of ex-crew members, which could be handled by government agencies like the POEA, NLRC, SSS. The observation of the POEA Administrator that the complaints of the crewmen were filed only after Rizal Shipping filed its complaints with the POEA merely to bolster the defense of CF Sharp/LCL/Savva and Tjiakouris, is telling. Upon the other hand, it was more to LCLS gain to interview, select and recruit the disembarking crewmen previously recruited by Rizal Shipping, using CF Sharps facilities, as this would result in less recruitment time and cost.

Finally, the claim of Savva and Tjiakouris that Savva "talked to the POEA representative during their visit" about these interviews and the violations which were confirmed, is just an afterthought to support their defense; there is no entry in the Inspection Report confirming such claim. If such claim were true, then the "able officer" of CF Sharp (LCLs Attorney-in fact) who signed his conformity on the 4th page of the report, and put his initial on the last page of the report containing the handwritten findings of the inspectors on the selection and recruitment activities of Savva and Tjiakouris, would have insisted that an entry be made thereon about what Savva told the inspectors, or he could simply himself have written thereon that the two LCL officials merely conducted interviews on the violations committed by Rizal Shipping. However, the report is bereft of anything to that effect. More significant is the fact that the inspectors, in their Memorandum dated December 11, 1996 (the very same day they conducted the inspection), stated that they "approached said persons" (referring to Banawis, Savva and Tjiakouris) "and told us that they were doing interview to select applicants to complement the crew of a passenger ship for [LOUIS] CRUISE LINES."25 Indeed, it was Savva and Tjiakouris that conducted the interviews, and undertook selection and hiring. However, C.F. Sharp cannot steer clear of liability for it conspired with LCL in committing illegal recruitment activities. As the Secretary of Labor had taken pains to demonstrate: x x x [T]here is substantial evidence on record that as alleged by Rizal Shipping, CF Sharp conspired with LCL and its officers Savva and Tjiakouris to conduct recruitment activities in its offices, at a time when LCL was not yet its POEA-accredited principal, in violation of Sec. 6, R.A. 8042 in relation to Article 13(b) and (f) and Article 16 of the Labor Code as amended; Rule II(jj) Book I, and Sec. 1 and 6, Rule I, Book III, all of the POEA Rules and Regulations Governing Overseas Employment. Indeed, C.F. Sharp was aware of these violations when it alleged in its Petition for Review that: "in any and all events, the findings relied upon by the Public Respondent show, at best, that the parties responsible for the alleged acts of illegal recruitment are LCL and its officers alone, or at worst, LCL and its officers, in conspiracy with petitioner. Yet, it is petitioner alone, who is severely punished and penalized." (underscoring supplied)

xxxx The intention, agreement and both common design of both LCL and CF Sharp to engage in recruitment of crewmen for LCLs ships had already been made manifest when LCL through Savva had instructed, in the October 14, 1996 letter to disembarking crewmembers, for the latter to report to CF Sharp for processing of their papers. This was followed by the execution by LCL on October 17, 1996 of a Special Power of Attorney in favor of CF Sharp as new manning agent and attorney-in-fact of LCL, with authority, among others, "to sign, authenticate and deliver all documents necessary to complete any transaction related to the recruitment and hiring of Filipino seamen including the necessary steps to facilitate the departure of recruited seamen"; "to assume, on our behalf and for our account, any liability that may arise in connection with the recruitment of seamen and/or implementation of the employment contract of said seamen." And on November 8, 1996, CF Sharp applied for accreditation as manning agent of LCL for the latters five named vessels. The discovery by the POEA inspectors of the selection and recruitment activities undertaken by Savva and Tjiakouris at CF Sharps offices on December 11, 1996, followed. The interviews by Savva and Tjiakouris at CF Sharps offices on December 7, 1996 with around 300 crewmen, as sworn to by 98 crewmen (their affidavits were submitted in evidence by CF Sharp); the interviews for selection and recruitment from December 9 to 12, 1996 as found by the POEA inspectors; and the immediate deployment of 154 crewmen for LCL right after [the] POEA approval of accreditation of LCL as principal of CF Sharp, could not have been undertaken without the assistance and cooperation of CF Sharp, even before such transfer of accreditation was granted by POEA. The petitioner-appellant must be reminded that prior to approval of the transfer of accreditation, no recruitment or deployment may be made by the principal by itself or through the would-be transferee manning agency, or by the latter, as this would constitute illegal recruitment by a non-holder of authority under Sec. 6, R.A. 8042 in relation to Article 13(b) and (f) and Article 16 of the Labor Code as amended; Rule II(jj), Book I, and Sec. 1 and 6, Rule 1, Book III, POEA Rules and Regulations Governing Overseas Employment. The petitioner-appellant alleges that "there is no need for a license to enable LCLs officers to conduct their alleged activities of interviewing, selecting and hiring crewmen. Indeed, LCLs officers

could have conducted these activities without a license." Such claim is without legal basis, as direct hiring by employers of Filipino workers for overseas employment is banned; they can only do so through, among others, licensed private recruitment and shipping/mining agencies (Art. 18, Labor Code as amended; Sec. 1, Rule 1, Book II, POEA Rules and Regulations Governing Overseas Employment).26 We need not say more. C.F. Sharp also denies violating Article 29 of the Labor Code. It insists that Henry Desiderio was neither an employee nor an agent of C.F. Sharp. Yet, except for its barefaced denial, no proof was adduced to substantiate it. Desiderios name does not appear in the list of employees and officials submitted by C.F. Sharp to the POEA. However, his name appeared as the contact person of the applicants for the position of 2nd and 3rd assistant engineers and machinist/fitter in C.F Sharps advertisement in the February 2, 1997 issue of The Bulletin Today.27 Article 29 of the Labor Code is explicit, viz.: Art. 29. NON-TRANSFERABILITY OF LICENSE OR AUTHORITY No license or authority shall be used directly or indirectly by any person other than the one in whose favor it was issued or at any place other than that stated in the license or authority, nor may such license or authority be transferred, conveyed or assigned to any other person or entity. Any transfer of business address, appointment or designation of any agent or representative including the establishment of additional offices anywhere shall be subject to the prior approval of the Department of Labor. (Emphasis ours) Thus, Section 2(k), Rule 1, Book VI of the POEA Rules Governing Overseas Employment provides: Section 2. Grounds for Suspension/Cancellation of License. xxxx k. Appointing or designating agents, representatives or employees without prior approval from the Administration. The appointment or designation of Desiderio as an employee or agent of C.F. Sharp, without prior approval from the POEA, warrants administrative sanction. The CA, therefore, correctly rejected C.F. Sharps posture. Apparently, realizing the folly of its defenses, C.F. Sharp assails the

admissibility of the Memorandum and Inspection Report of the POEA. It contends that these are patently inadmissible against C.F. Sharp for it was not given an opportunity to crossexamine the POEA inspectors regarding the report. The argument does not deserve even a short shrift. First, C.F. Sharp did not raise it before the POEA and Secretary of Labor. The issue was raised for the first time in its petition for certiorari with the CA, where the jurisdiction of the appellate court is limited to issues of jurisdiction and grave abuse of discretion. On numerous occasions, we have made it clear that to allow fresh issues at this stage of the proceedings is violative of fair play, justice and due process.28 Second, jurisprudence is replete with rulings that administrative bodies are not bound by the technical niceties of law and procedure and the rules obtaining in the courts of law.29 Hence, whatever merit C.F. Sharps argument might have in the context of ordinary civil actions, where the rules of evidence apply with greater rigidity, disappears when adduced in connection with labor cases. The claim of denial of due process on the part of C.F. Sharp must also be rejected. The essence of due process lies in the reasonable opportunity afforded a party to be heard and to submit any evidence in support of its defense. What is vital is not the opportunity to crossexamine an adverse witness, but an opportunity to be heard.30 In this case, C.F. Sharp was given ample opportunity to be heard, to adduce evidence in support of its version of the material occurrences, and to controvert Rizals allegation and the Inspection Report. It submitted its position paper with supporting affidavits and documents, and additionally pleaded its causes on appeal before the Secretary of Labor. Under the circumstances, a claim of denial of due process on C.F. Sharps part is completely unavailing. C.F. Sharp next impugns the probative value given by the Administrator and the Secretary of Labor to the Inspection Report. It alleges that the POEA Administrator, the Labor Secretary and the CA relied only on the Inspection Report and gave very little or no probative value to the affidavits that it submitted in support of its claim. C.F. Sharp would have us re-evaluate the factual veracity and probative value of the evidence submitted in the proceedings a quo. C.F. Sharp may well be reminded that it is not our function to review, examine, and evaluate or weigh the evidence adduced by the parties.

Elementary is the principle that this Court is not a trier of facts. Judicial review of labor cases does not go beyond the evaluation of the sufficiency of the evidence upon which the labor officials' findings rest. Hence, where the factual findings of the labor tribunals or agencies conform to, and are affirmed by, the CA, the same are accorded respect and finality, and are binding upon this Court. It is only when the findings of the labor agencies and the appellate court are in conflict that this Court will review the records to determine which findings should be upheld as being more in conformity with the evidentiary facts. Where the CA affirms the labor agencies on review and there is no showing whatsoever that said findings are patently erroneous, this Court is bound by the said findings.31 Although the rule admits of several exceptions, none of them are in point in this case. In any event, we have carefully examined the factual findings of the CA and found the same to be borne out of the record and sufficiently anchored on the evidence presented. WHEREFORE, the petition is DENIED. The Decision and Resolution of the Court of Appeals in CA-G.R. SP. No. 53747 are AFFIRMED. SO ORDERED.

PEOPLE V GUTIERREZ 422 SCRA 32 TlNGA; February 5, 2004 Appeal from the decision of the trial court FACTS - FLOR GUTIERREZ Y TIMOD with CECILIA BAUTISTA, ESTHER GAMILDE, LINDA RABAINO and MARILYN GARCIA mutually helped one another in recruiting for overseas job placement and actual contract EVELYN V. RAMOS, ROSEMARIE I. TUGADE, GENEROSA G. ASUNCION and ROSALYN B. SUMAYO as domestic helpers in Dubai, United Arab Emirates, for a fee ranging from P10,000.00 to P15,000.00 each, without first obtaining the required license and/or authority from the Philippine Overseas Employment Administration (POEA). - In her defense, the accused claimed that as an employee of a duly licensed agency who was tasked to recruit and offer job placements abroad, she could not be held liable for illegal recruitment. She admitted that she had no authority to recruit in her personal capacity, but that her authority emanated from a Special Power of Attorney (SPA) and a Certification issued by a licensed agency. - At the time complainants applied for overseas employment, the accused was employed as a Marketing Directress of Sarifudin Manpower and General Services, a duly licensed agency. A Special Power of Attorney (SPA) from Sarifudin, dated May 1, 1994. A Certification dated February 3, 1995, issued by the same agency, also states that: MRS. FLOR T. GUTIERREZ was (sic) employed as OVERSEAS MARKETING DIRECTRESS of SARIFUDIN MANPOWER AND GENERAL SERVICES, effective May 1994, up to the present - But Edwin Cristobal, POEA Labor Employment Officer, found that the said agency revoked the appointment of Ms. Flor Gutierrez as Overseas Mktg. Director/Manager in a letter dated Dec. 15, 1995, although POEA has not received nor acknowledged the representation of Ms. Gutierrez. Cristobal explained that the POEA, Never had a letter from Sarifudin registering or authorizing Flor Gutierrez... rather, [what] we received [was a] revocation of her appointment. He also revealed that the name of the accused does not appear in the records of the POEA as being employed by the agency from the assumption of its license on June 11, 1993, up to its termination on June 11, 1995.

- Defense likewise alleged that complainants Rosemarie Tugade and Evelyn Ramos executed Affidavits of Desistance dated May 12, 1995, stating that the accused had returned to them the amounts they paid her and that the complaint was a result of a misunderstanding. - Trial court rendered its Decision finding the accused guilty beyond reasonable doubt of Illegal Recruitment in Large Scale. Accused Flor Gutierrez filed an appeal seeking the reversal of her conviction. ISSUE WON Gutierres as a representative of a duly licensed recruitment agency, she cannot be held guilty of Illegal Recruitment in Large Scale HELD NO - Appellant cannot escape liability by claiming that she was not aware that before working for her employer in the recruitment agency, she should first be registered with the POEA. Illegal recruitment in large scale is malum prohibitum, not malum in se. Good faith is not a defense. - That appellant engaged in recruitment and placement is beyond dispute. The complaining witnesses categorically testified that the accused promised them on several occasions that they would be leaving for work abroad. Appellant received complainants money and documents, a fact that the complainants themselves witnessed and which the accused acknowledged when she returned the same to them after the filing of the case against her. Appellant even brought complainant Rosalyn Sumayo to the airport three times, raising her expectations, but leaving her hanging in mid-air. The accused even had the audacity to demand cancellation fees from the complainants when they asked for a refund. Moreover, the Affidavits of Desistance executed by two of the complainants deserve little weight. The Court attaches no persuasive value to affidavits of desistance, especially when executed as an afterthought. - Section 11, Rule II, Book II of the Rules and Regulations Governing Overseas Employment requires the prior approval of the POEA of the appointment of representatives or agents: Section 11. Appointment of Representatives. Every appointment of representatives or agents of licensed agency shall be subject to prior approval or authority of the Administration. The approval may be issued upon submission of or compliance with the following requirements: a. Proposed appointment or Special Power of Attorney; b. Clearances of the proposed representative or agent from NBI;

c. A sworn or verified statement by the designating or appointing person or company assuming full responsibility for all the acts of the agent or representative done in connection with the recruitment and placement of workers. Approval by the Administration of the appointment or designation does not authorize the agent or representative to establish a branch or extension office of the licensed agency represented. Any revocation or amendment in the appointment should be communicated to the administration. Otherwise, the designation or appointment shall be deemed as not revoked or amended. Section 1, Rule X of the same Book, in turn, provides that recruitment and placement activities of agents or representatives appointed by a licensee, whose appointments were not authorized by the Administration shall likewise constitute illegal recruitment. - The Certification from the POEA that it has not received nor acknowledged the representation of Ms. Gutierrez establishes that the appointment of appellant by Serafudin as a representative or agent was not authorized by the POEA. It may be true that the POEA received from Serafudin a revocation of appellants appointment, but still is of no consequence since Serafudin in the first place did not submit her appointment to the POEA, and so the POEA has nothing to approve. - As found by the trial court the evidence on record, notably appellants own version, indicates that she was running her own labor recruitment business. Disposition Decision of the Regional Trial Court, finding appellant Flor Gutierrez y Timod guilty beyond reasonable doubt of the crime of Illegal Recruitment in Large Scale and sentencing her to life imprisonment and to pay a fine of P100,000.00 is AFFIRMED.

ANTONIO M. SERRANO VS. GALLANT MARITIME SERVICES, INC. AND MARLOW NAVIGATION CO., INC. GR No. 167614 March 24, 2009 En banc FACTS: Petitioner Antonio Serrano was hired by respondents Gallant Maritime Services, Inc. and Marlow Navigation Co., Inc., under a POEAapproved contract of employment for 12 months, as Chief Officer, with the basic monthly salary of US$1,400, plus $700/month overtime pay, and 7 days paid vacation leave per month. On March 19, 1998, the date of his departure, Serrano was constrained to accept a downgraded employment contract for the position of Second Officer with a monthly salary of US$1,000 upon the assurance and representation of respondents that he would be Chief Officer by the end of April 1998. Respondents did not deliver on their promise to make Serrano Chief Officer. Hence, Serrano refused to stay on as second Officer and was repatriated to the Philippines on May 26, 1998, serving only two (2) months and seven (7) days of his contract, leaving an unexpired portion of nine (9) months and twenty-three (23) days. Serrano filed with the Labor Arbiter (LA) a Complaint against respondents for constructive dismissal and for payment of his money claims in the total amount of US$26,442.73 (based on the computation of $2590/month from June 1998 to February 199, $413.90 for March 1998, and $1640 for March 1999) as well as moral and exemplary damages. The LA declared the petitioners dismissal illegal and awarded him US$8,770, representing his salaray for three (3) months of the unexpired portion of the aforesaid contract of employment, plus $45 for salary differential and for attorneys fees equivalent to 10% of the total amount; however, no compensation for damages as prayed was awarded. On appeal, the NLRC modified the LA decision and awarded Serrano $4669.50, representing three (3) months salary at $1400/month, plus 445 salary differential and 10% for attorneys fees. This decision was based on the provision of RA 8042, which was made into law on July 15, 1995. Serrano filed a Motion for Partial Reconsideration, but this time he questioned the constitutionality of the last clause in the 5th paragraph of Section 10 of RA 8042, which reads:

 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. The NLRC denied the Motion; hence, Serrano filed a Petition for Certiorari with the Court of Appeals (CA), reiterating the constitutional challenge against the subject clause. The CA affirmed the NLRC ruling on the reduction of the applicable salary rate, but skirted the constitutional issue raised by herein petitioner Serrano. ISSUES: 1. Whether or not the subject clause violates Section 10, Article III of the Constitution on non-impairment of contracts; 2. Whether or not the subject clause violate Section 1, Article III of the Constitution, and Section 18, Article II and Section 3, Article XIII on labor as a protected sector. HELD: On the first issue. The answer is in the negative. Petitioners 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 receive 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, and cannot affect acts or contracts already perfected; however, as to laws already in existence, their provisions are read into contracts and deemed a part thereof. 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. 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. On the second issue. 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, Article II and Section 3, 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. 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. 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; 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; and c) strict judicial scrutiny in which a legislative classification which impermissibly interferes with the exercise of a fundamental right or operates to the peculiar disadvantage of a suspect class 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. 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--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--vis local workers with fixed-period employment; In sum, prior to R.A. No. 8042, OFWs and local workers with fixedterm 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 3month 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. It is akin to the paramount interest of the state for which some individual liberties must give way, such as the public interest in safeguarding health or maintaining medical standards, or in maintaining access to information on matters of public concern. In the present case, 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 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. 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

Pearanda v. Baganga Plywood Corporation [G.R. No. May 3, 2006] Facts Sometime in June 1999, petitioner Pearanda was hired as an employee of respondent to take charge of the operations and maintenance of its steam plant boiler. In 2001, Pearanda filed a Complaint for illegal dismissal with money claims against BPC. Labor Arbiter ruled that there was no illegal dismissal and that the complaint was premature because he was still employed by BPC. It also ruled that he was a managerial employee. Issue: Was he entitled to overtime pay and other monetary benefits? Held: Article 82 of the Labor Code exempts managerial employees from the coverage of labor standards. Under this provision, managerial employees are those whose primary duty consists of the management of the establishment in which they are employed or of a department or subdivision. However, petitioner was a member of the managerial staff, which also takes him out of the coverage oflaborstandards. Likemanagerialemployees,officersandmembersofthemanagerialstaffare not entitled to the provisions of law on labor standards. Thus, there is no justification to award overtime pay and premium pay for rest days to petitioner.

Facts: Petition for review on certiorari in the resolution of the Court of Industrial Relations. Herein respondents filed a petition with the CIR containing the full recognition of the right of Collective bargaining, close shop and check off. Also, that the work performed in excess of 8 hours be paid an overtime pay of 50 per cent the regular rate of pay, and that work performed on Sundays and legal holidays be paid double the regular rate of pay. In one of the hearing of the case, the Court ruled that the employees are only entitled to receive overtime pay for work rendered in excess of 8 hours on ordinary days including Sundays and legal holidays. Herein petitioner sought for the reconsideration of the decision only in so far as it interpreted that the period during which a seaman is aboard a tugboat shall be considered as working time for the purpose of the 8 hours Labor Law. However, it was denied. Hence, this petition. Issue: Whether or not the definition for hours of work as presently applied to dry land laborers equally applicable to seaman Held: No. The Court ruled that we do not need to set for seaman a criterion different from that applied to laborers on land, that the only thing to be done is to determine the meaning and scope of the term working place. A laborer need not leave the premises of the factory, shop or boat in order that his period of rest shall not be counted, it being enough that he cease to work may rest completely and leave or may leave at his will the spot where he actually stays while working, to go somewhere else, whether within or outside the premises of said factory, shop or boat. If these requires are complied with, the period of such rest shall not be counted. Claimants rendered services to the Company from 6am to 6pm including Sundays and holidays, which implies either that said laborers were not given any recess at all, or that they were not allowed to leave the spot their working place, or that they could not rest completely. Resolutions of the Court of Industrial Relations appealed from are affirmed with costs against petitioner.

ASIA PACIFIC CHARTERING (PHILS.) INC. v. MARIA LINDA R. FAROLAN 393 SCRA 454 (2002) FACTS: Petitioner Asia Pacific Chartering (Phils.) Inc. (Asia) is tasked with the selling of passenger and cargo spaces for Scandinavian Airlines System. Petitioner Asia, through its Vice President Catalino Bondoc (Bondoc), offered Respondent Maria Linda R. Farolan (Farolan) the sales manager position to which Farolan accepted. Upon Vice President Bondocs request, Farolan submitted a detailed report attributing the drop of sales revenue to market forces beyond her control. Consequently, Asia directed Roberto Zozobrado (Zozobrado) to implement solutions. Zozobrado informally took over Farolans marketing and sales responsibilities but she continued to receive her salary. Asia claims that the increase in sales revenue was due to Zozobrados management. Asia then sent a letter of termination to Farolan on the ground of loss of confidence", forcing Farolan to file a complaint for illegal dismissal. The Labor Arbiter found that the dismissal was illegal for lack of just cause, however, such decision was reversed by the National Labor Relations Commission (NLRC) stating that the termination of employment due to loss of confidence is within management prerogative. On appeal, the Court of Appeals upheld the labor arbiters decision. Hence, the filing of this petition. ISSUE: Whether or not Respondent Farolans dismissal was illegal HELD: A statement of the requisites for a valid dismissal of an employee is thus in order, to wit: (a) the employee must be afforded due process, i.e., he must be given opportunity to be heard and to defend himself; and (b) dismissal must be for a valid cause. The manner by which Respondent Farolan was dismissed violated the basic precepts of fairness and due process - Respondent Farolan was dismissed, without being afforded the opportunity to be heard and to present evidence in her defense. She was never given a written notice stating the particular acts or omission constituting the grounds for her dismissal as required by law.

January 9, 1992 With respect to rank and file personnel, loss of trust and confidence as ground for valid dismissal requires proof of involvement in the alleged events in question and that mere uncorroborated assertions and accusations by the employer will not be sufficient. But as regards a managerial employee, mere existence of a basis for believing that such employee has breached the trust of his employer would suffice for his dismissal. Loss of trust and confidence to be a valid ground for an employees dismissal must be based on a willful breach and founded on clearly established facts. A breach is willful if it is done intentionally, knowingly and purposely, without justifiable excuse. It is not disputed that Farolans job description, and the terms and conditions of her employment, with the exception of her salary and allowances, were never reduced to writing. Even assuming, however, that Farolan was a managerial employee, the stated ground (in the letter of termination) for her dismissal, loss of confidence," should have a basis and determination thereof cannot be left entirely to the employer. Labor Standards Hours of Work OT Pay of a Project Based Employee

In 1977, Rada was contracted by Philnor Consultants and Planners, Inc as a driver. He was assigned to a specific project in Manila. The contract he signed was for 2.3 years. His task was to drive employees to the project from 7am to 4pm. He was allowed to bring home the company vehicle in order to provide a timely transportation service to the other project workers. The project he was assigned to was not completed as scheduled hence, since he has a satisfactory record, he was re-contracted for an additional 10 months. After 10 months the project was not yet completed. Several contracts thereafter were made until the project was finished in 1985. At the completion of the project, Rada was terminated as his employment was co-terminous with the project. He later sued Philnor for non payment of separation pay and overtime pay. He said he is entitled to be paid OT pay because he uses extra time to get to the project site from his home and from the project site to his home everyday in total, he spends an average of 3 hours OT every day. ISSUE: Whether or not Rada is entitled to separation pay and OT pay. HELD: Separation pay NO. Overtime pay Yes. Separation Pay The SC ruled that Rada was a project employee whose work was coterminous with the project for which he was hired. Project employees, as distinguished from regular or non-project employees, are mentioned in Section 281 of the Labor Code as those where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee.

Project employees are not entitled to termination pay if they are terminated as a result of the completion of the project or any phase thereof in which they are employed, regardless of the number of projects in which they have been employed by a particular construction company. Moreover, the company is not required to obtain clearance from the Secretary of Labor in connection with such termination. OT Pay Rada is entitled to OT pay. The fact that he picks up employees of Philnor at certain specified points along EDSA in going to the project site and drops them off at the same points on his way back from the field office going home to Marikina, Metro Manila is not merely incidental to Radas job as a driver. On the contrary, said transportation arrangement had been adopted, not so much for the convenience of the employees, but primarily for the benefit of Philnor. As embodied in Philnors memorandum, they allowed their drivers to bring home their transport vehicles in order for them to provide a timely transport service and to avoid delay not really so that the drivers could enjoy the benefits of the company vehicles nor for them to save on fair.