FIRST DIVISION

PEOPLE OF THE PHILIPPINES,

Appellee,

G.R. No. 184058

Present:

- versus -

MELISSA CHUA,
Appellant.

PUNO, C.J., Chairperson,

CARPIO MORALES,
LEONARDO-DE CASTRO,
BERSAMIN, and
VILLARAMA, JR., JJ.
Promulgated:
March 10, 2010

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DECISION

CARPIO MORALES, J.:

Melissa Chua (appellant) was indicted for Illegal Recruitment (Large Scale)
and was convicted thereof by the Regional Trial Court (RTC) of Manila. She was
also indicted for five counts of Estafa but was convicted only for three. The Court
of Appeals, by Decision[1] dated February 27, 2008, affirmed appellants conviction.
The Information[2] charging appellant, together with one Josie Campos
(Josie), with Illegal Recruitment (Large Scale), docketed as Criminal Case No. 04222596, reads:
The undersigned accuses JOSIE CAMPOS and MELISSA CHUA
of violation of Article 38 (a) PD 1413, amending certain provisions of
Book I, PD 442, otherwise known as the New Labor Code of the
Philippines, in relation to Art. 13 (b) and (c ) of said Code, as further
amended by PD Nos. 1693, 1920 and 2019 and as further amended by
Sec. 6 (a), (1) and (m) of RA 8042 committed in a [sic] large scale as
follows:

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

of Manila, Philippines, the said accused, conspiring and confederating
together and mutually helping each other, representing themselves to
have the capacity to contract, enlist and transport Filipino workers for
employment abroad, did then and there willfully, unlawfully and
knowingly for a fee, recruit and promise employment/job placement
abroad to ERIK DE GUIA TAN, MARILYN O. MACARANAS,
NAPOLEON H. YU, JR., HARRY JAMES P. KING and ROBERTO C.
ANGELES for overseas employment abroad without first having secured
the required license from the Department of Labor and Employment as
required by law, and charge or accept directly from:
ERIK DE GUIA TAN - P73,000.00
MARILYN D. MACARANAS - 83,000.00
NAPOLEON H. YU, JR. - 23,000.00
HARRY JAMES P. KING - 23,000.00
ROBERTO C. ANGELES - 23,000.00
For purposes of their deployment, which amounts are in excess of or
greater than that specified in the schedule of allowable fees as prescribed
by the POEA, and without valid reasons and without the fault of said
complainants, failed to actually deploy them and failed to reimburse
expenses incurred in connection with their documentation and
processing for purposes of their deployment.
xxxx

The five Informations[3] charging appellant and Josie with Estafa, docketed
as Criminal Case Nos. 04-222597-601, were similarly worded and varied only with
respect to the names of the five complainants and the amount that each purportedly
gave to the accused. Thus each of the Information reads:
xxxx
That on or about . . . in the City of Manila, Philippines, the said
accused, conspiring and confederating together and mutually helping
each other, did then and there willfully, unlawfully and feloniously
defraud xxx in the following manner, to wit: the said accused by means
of false manifestations which they made to the said . . . to the effect that

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

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

large. The cases were consolidated, hence, trial proceeded only with respect to
appellant.
Of the five complainants, only three testified, namely, Marilyn D. Macaranas
(Marilyn), Erik de Guia Tan (Tan) and Harry James King (King). The substance of
their respective testimonies follows:
Marilyns testimony:
After she was introduced in June 2002 by Josie to appellant as capacitated to
deploy factory workers to Taiwan, she paid appellant P80,000 as placement fee
and P3,750 as medical expenses fee, a receipt[4] for the first amount of which was
issued by appellant.
Appellant had told her that she could leave for Taiwan in the last week of
September 2002 but she did not, and despite appellants assurance that she would
leave in the first or second week of October, just the same she did not.
She thus asked for the refund of the amount she paid but appellant claimed
that she was not in possession thereof but promised anyway to raise the amount to
pay her, but she never did.

She later learned in June 2003 that appellant was not a licensed recruiter,
prompting her to file the complaint against appellant and Josie.
Tans testimony:
After he was introduced by Josie to appellant at the Golden Gate, Inc.,
(Golden Gate) an agency situated in Paragon Tower Hotel in Ermita, Manila, he
underwent medical examination upon appellants assurance that he could work in
Taiwan as a factory worker with a guaranteed monthly salary of 15,800 in Taiwan
currency.
He thus paid appellant, on September 6, 2002, P70,000[5] representing
placement fees for which she issued a receipt. Appellant welched on her promise to
deploy him to Taiwan, however, hence, he demanded the refund of his money but
appellant failed to. He later learned that Golden Gate was not licensed to deploy
workers to Taiwan, hence, he filed the complaint against appellant and Josie.
Kings testimony:
His friend and a fellow complainant Napoleon Yu introduced him to Josie
who in turn introduced appellant as one who could deploy him to Taiwan.
On September 24, 2002,[6] he paid appellant P20,000 representing partial
payment for placement fees amounting to P80,000, but when he later inquired
when he would be deployed, Golden Gates office was already closed. He later
learned that Golden Gates license had already expired, prompting him to file the
complaint.
Appellant denied the charges. Claiming having worked as a temporary cashier
from January to October, 2002 at the office of Golden Gate, owned by one Marilyn
Calueng,[7]she maintained that Golden Gate was a licensed recruitment agency and
that Josie, who is her godmother, was an agent.
Admitting having received P80,000 each from Marilyn and Tan, receipt of
which she issued but denying receiving any amount from King, she claimed that
she turned over the money to the documentation officer, one Arlene Vega, who in

turn remitted the money to Marilyn Calueng whose present whereabouts she did
not know.
By Decision of April 5, 2006, Branch 36 of the Manila RTC convicted appellant of
Illegal Recruitment (Large Scale) and three counts of Estafa, disposing as follows:
WHEREFORE, the prosecution having established the guilt of accused
Melissa Chua beyond reasonable doubt, judgment is hereby rendered
convicting the accused as principal of a large scale illegal recruitment
and estafa three (3) counts and she is sentenced to life imprisonment and
to pay a fine of Five Hundred Thousand Pesos (P500,000.00) for illegal
recruitment.
The accused is likewise convicted of estafa committed against Harry
James P. King and she is sentenced to suffer the indeterminate penalty of
Four (4) years and Two (2) months of prision correctional as minimum,
to Six (6) years and One (1) day of prision mayor as maximum; in
Criminal Case No. 04-22598; in Criminal Case No. 04-222600
committed against Marilyn Macaranas, accused is sentence [sic] to suffer
the indeterminate penalty of Four (4) years and Two (2) months of
prision correctional as minimum, to Twelve (12) years and one (1) day
of reclusion temporal as maximum; and in Criminal Case No. 04-222601
committed against Erik de Guia Tan, she is likewise sentence [sic] to
suffer an indeterminate penalty of Four (4) years and Two (2) months of
prision correctional as minimum, to Eleven (11) years and One (1) day
of prision mayor as maximum.
Accused Melissa Chua is also ordered to return the amounts of
P20,000.00 to Harry James P. King, P83,750.00 to Marilyn D.
Macaranas, and P70,000.00 to Erik de Guia Tan.
As regards Criminal Cases Nos. 04-222597 and 04-222599, both
are dismissed for lack of interest of complainants Roberto Angeles and
Napoleon Yu, Jr.
In the service of her sentence, the accused is credited with the full period
of preventive imprisonment if she agrees in writing to abide by the
disciplinary rules imposed, otherwise only 4/5 shall be credited.
SO ORDERED.

The Court of Appeals, as stated early on, affirmed the trial courts decision by the
challenged Decision of February 27, 2008, it holding that appellants defense that,
as temporary cashier of Golden Gate, she received the money which was ultimately
remitted to Marilyn Calueng is immaterial, she having failed to prove the existence
of an employment relationship between her and Marilyn, as well as the legitimacy
of the operations of Golden Gate and the extent of her involvement therein.
Citing People v. Sagayaga,[8] the appellate court ruled that an employee of a
company engaged in illegal recruitment may be held liable as principal together
with his employer if it is shown that he, as in the case of appellant, actively and
consciously participated therein.
Respecting the cases for Estafa, the appellate court, noting that a person convicted
of illegal recruitment may, in addition, be convicted of Estafa as penalized under
Article 315, paragraph 2(a) of the Revised Penal Code, held that the elements
thereof were sufficiently established, viz: that appellant deceived the complainants
by assuring them of employment in Taiwan provided they pay the required
placement fee; that relying on such representation, the complainants paid appellant
the amount demanded; that her representation turned out to be false because she
failed to deploy them as promised; and that the complainants suffered damages
when they failed to be reimbursed the amounts they paid.
Hence, the present appeal, appellant reiterating the same arguments she
raised in the appellate court.
The appeal is bereft of merit.
The term recruitment and placement is defined under Article 13(b) of the
Labor Code of the Philippines as follows:
(b) Recruitment and placement refers to any act of canvassing,
enlisting, contracting, transporting, utilizing, hiring, or procuring
workers, and includes referrals, contract services, promising or
advertising for employment, locally or abroad, whether for profit or

not. Provided, That any person or entity which, in any manner, offers or
promises for a fee employment to two or more persons shall be deemed
engaged in recruitment and placement. (emphasis supplied)

On the other hand, Article 38, paragraph (a) of the Labor Code, as amended,
under which appellant was charged, provides:
Art. 38. Illegal Recruitment. (a) Any recruitment activities,
including the prohibited practices enumerated under Article 34 of
this Code, to be undertaken by non-licensees or non-holders of
authority shall be deemed illegal and punishable under Article 39 of
this Code. The Ministry of Labor and Employment or any law
enforcement officer may initiate complaints under this Article.
(b) Illegal recruitment when committed by a syndicate or in large scale
shall be considered an offense involving economic sabotage and shall be
penalized in accordance with Article 39 hereof.

Illegal recruitment is deemed committed by a syndicate if carried

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

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

undertaken by non-licensee or non-holder of contracts, or as in the present case, an
agency with anexpired license, shall be deemed illegal and punishable under
Article 39 of the Labor Code of the Philippines. And illegal recruitment is deemed
committed in large scale if committed against three or more persons individually or
as a group.
Thus for illegal recruitment in large scale to prosper, the prosecution has to prove
three essential elements, to wit: (1) the accused undertook a recruitment activity
under Article 13(b) or any prohibited practice under Article 34 of the Labor Code;
(2) the accused did not have the license or the authority to lawfully engage in

the recruitment and placement of workers; and (3) the accused committed such
illegal activity against three or more persons individually or as a group.[9]
In the present case, Golden Gate, of which appellant admitted being a
cashier from January to October 2002, was initially authorized to recruit workers
for deployment abroad. Per the certification from the POEA, Golden Gates license
only expired on February 23, 2002 and it was delisted from the roster of licensed
agencies on April 2, 2002.
Appellant was positively pointed to as one of the persons who enticed the
complainants to part with their money upon the fraudulent representation that they
would be able to secure for them employment abroad. In the absence of any
evidence that the complainants were motivated by improper motives, the trial
courts assessment of their credibility shall not be interfered with by the Court.[10]

Even if appellant were a mere temporary cashier of Golden Gate, that did
not make her any less an employee to be held liable for illegal recruitment as
principal by direct participation, together with the employer, as it was shown that
she actively and consciously participated in the recruitment process. [11]
Assuming arguendo that appellant was unaware of the illegal nature of
the recruitment business of Golden Gate, that does not free her of liability
either. Illegal Recruitment in Large Scale penalized under Republic Act No. 8042,
or The Migrant Workers and Overseas Filipinos Act of 1995, is a special law, a
violation of which is malum prohibitum, not malum in se. Intent is thus
immaterial. And that explains why appellant was, aside from Estafa, convicted of
such offense.
[I]llegal
recruitment
is malum
prohibitum, while estafa is malum in se. In the first, the criminal
intent of the accused is not necessary for conviction. In the second,
such an intent is imperative. Estafa under Article 315, paragraph 2,
of the Revised Penal Code, is committed by any person who
defrauds another by using fictitious name, or falsely pretends to
possess power, influence, qualifications, property, credit, agency,

business or imaginary transactions, or by means of similar deceits

executed prior to or simultaneously with the commission of fraud.
[12]
(emphasis supplied)

WHEREFORE, the appeal is hereby DENIED.

Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
PEOPLE OF THE PHILIPPINES,
Petitioner,

G.R. No. 187730

Present:

- versus RODOLFO GALLO y GADOT,

Accused-Appellant,
FIDES PACARDO y JUNGCO and
PILAR MANTA y DUNGO,
Accused.

CORONA, C.J., Chairperson,

VELASCO, JR.,
LEONARDO-DE CASTRO,
DEL CASTILLO, and
PEREZ, JJ.
Promulgated:
June 29, 2010

x-----------------------------------------------------------------------------------------x
DECISION
VELASCO, JR., J.:

The Case
This is an appeal from the Decision[1] dated December 24, 2008 of the Court
of Appeals (CA) in CA-G.R. CR-H.C. No. 02764 entitled People of the
Philippines v. Rodolfo Gallo y Gadot (accused-appellant), Fides Pacardo y Jungco
and Pilar Manta y Dungo (accused), which affirmed the Decision[2] dated March
15, 2007 of the Regional Trial Court (RTC), Branch 30 in Manila which convicted
the accused-appellant Rodolfo Gallo y Gadot (accused-appellant) of syndicated
illegal recruitment in Criminal Case No. 02-206293 and estafa in Criminal Case
No. 02-206297.
The Facts
Originally, accused-appellant Gallo and accused Fides Pacardo (Pacardo)
and Pilar Manta (Manta), together with Mardeolyn Martir (Mardeolyn) and nine
(9) others, were charged with syndicated illegal recruitment and eighteen (18)
counts of estafa committed against eighteen complainants, including Edgardo V.
Dela Caza (Dela Caza), Sandy Guantero (Guantero) and Danilo Sare (Sare). The
cases were respectively docketed as Criminal Case Nos. 02-2062936 to 02-206311.
However, records reveal that only Criminal Case No. 02-206293, which was filed
against accused-appellant Gallo, Pacardo and Manta for syndicated illegal
recruitment, and Criminal Case Nos. 02-206297, 02-206300 and 02-206308, which
were filed against accused-appellant Gallo, Pacardo and Manta for estafa,
proceeded to trial due to the fact that the rest of the accused remained at large.
Further, the other cases, Criminal Case Nos. 02-206294 to 02-206296, 02-206298
to 02-206299, 02-206301 to 02-206307 and 02-206309 to 02-206311 were
likewiseprovisionally dismissed upon motion of Pacardo, Manta and accusedappellant for failure of the respective complainants in said cases to appear and
testify during trial.
It should also be noted that after trial, Pacardo and Manta were acquitted in
Criminal Case Nos. 02-206293, 02-206297, 02-206300 and 02-206308 for
insufficiency of evidence. Likewise, accused-appellant Gallo was similarly
acquitted in Criminal Case Nos. 02-206300, the case filed by Guantero, and 02-

206308, the case filed by Sare. However, accused-appellant was found guilty
beyond reasonable doubt in Criminal Case Nos. 02-206293 and 02-206297, both
filed by Dela Caza, for syndicated illegal recruitment and estafa, respectively.
Thus, the present appeal concerns solely accused-appellants conviction for
syndicated illegal recruitment in Criminal Case No. 02-206293 and for estafa in
Criminal Case No. 02-206297.
In Criminal Case No. 02-206293, the information charges the accusedappellant, together with the others, as follows:
The undersigned accuses MARDEOLYN MARTIR, ISMAEL
GALANZA, NELMAR MARTIR, MARCELINO MARTIR, NORMAN
MARTIR, NELSON MARTIR, MA. CECILIA M. RAMOS, LULU
MENDANES, FIDES PACARDO y JUNGCO, RODOLFO GALLO y
GADOT, PILAR MANTA y DUNGO, ELEONOR PANUNCIO and
YEO SIN UNG of a violation of Section 6(a), (l) and (m) of Republic
Act 8042, otherwise known as the Migrant Workers and Overseas
Filipino Workers Act of 1995, committed by a syndicate and in large
scale, as follows:
That in or about and during the period comprised between
November 2000 and December, 2001, inclusive, in the City of Manila,
Philippines, the said accused conspiring and confederating together and
helping with one another, representing themselves to have the capacity to
contract, enlist and transport Filipino workers for employment abroad,
did then and there willfully and unlawfully, for a fee, recruit and promise
employment/job placement abroad to FERDINAND ASISTIN, ENTICE
BRENDO, REYMOND G. CENA, EDGARDO V. DELA CAZA,
RAYMUND EDAYA, SANDY O. GUANTENO, RENATO V.
HUFALAR, ELENA JUBICO, LUPO A. MANALO, ALMA V.
MENOR, ROGELIO S. MORON, FEDILA G. NAIPA, OSCAR
RAMIREZ, MARISOL L. SABALDAN, DANILO SARE, MARY
BETH SARDON, JOHNNY SOLATORIO and JOEL TINIO in Korea as
factory workers and charge or accept directly or indirectly from said
FERDINAND ASISTIN the amount of P45,000.00; ENTICE BRENDO
P35,000.00; REYMOND G. CENA P30,000.00; EDGARDO V. DELA
CAZA P45,000.00; RAYMUND EDAYA P100,000.00; SANDY O.
GUANTENO P35,000.00; RENATO V. HUFALAR P70,000.00;

ELENA JUBICO P30,000.00; LUPO A. MANALO P75,000.00; ALMA

V. MENOR P45,000.00; ROGELIO S. MORON P70,000.00; FEDILA
G. NAIPA P45,000.00; OSCAR RAMIREZ P45,000.00; MARISOL L.
SABALDAN P75,000.00; DANILO SARE P100,000.00; MARY BETH
SARDON P25,000.00; JOHNNY SOLATORIO P35,000.00; and JOEL
TINIO P120,000.00 as placement fees in connection with their overseas
employment, which amounts are in excess of or greater than those
specified in the schedule of allowable fees prescribed by the POEA
Board Resolution No. 02, Series 1998, and without valid reasons and
without the fault of the said complainants failed to actually deploy them
and failed to reimburse the expenses incurred by the said complainants
in connection with their documentation and processing for purposes of
their deployment.[3] (Emphasis supplied)

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

That on or about May 28, 2001, in the City of Manila, Philippines,
the said accused conspiring and confederating together and helping with
[sic] one another, did then and there willfully, unlawfully and feloniously
defraud EDGARDO V. DELA CAZA, in the following manner, to wit:
the said accused by means of false manifestations and fraudulent
representations which they made to the latter, prior to and even
simultaneous with the commission of the fraud, to the effect that they
had the power and capacity to recruit and employ said EDGARDO V.
DELA CAZA in Korea as factory worker and could facilitate the
processing of the pertinent papers if given the necessary amount to meet
the requirements thereof; induced and succeeded in inducing said
EDGARDO V. DELA CAZA to give and deliver, as in fact, he gave and
delivered to said accused the amount of P45,000.00 on the strength of
said manifestations and representations, said accused well knowing that
the same were false and untrue and were made [solely] for the purpose
of obtaining, as in fact they did obtain the said amount of P45,000.00
which amount once in their possession, with intent to defraud said
[EDGARDO] V. DELA CAZA, they willfully, unlawfully and
feloniously misappropriated, misapplied and converted the said amount
of P45,000.00 to their own personal use and benefit, to the damage and
prejudice of the said EDGARDO V. DELA CAZA in the aforesaid
amount of P45,000.00, Philippine currency.
CONTRARY TO LAW.[4]

When arraigned on January 19, 2004, accused-appellant Gallo entered a plea

of not guilty to all charges.
On March 3, 2004, the pre-trial was terminated and trial ensued, thereafter.
During the trial, the prosecution presented as their witnesses, Armando
Albines Roa, the Philippine Overseas Employment Administration (POEA)
representative and private complainants Dela Caza, Guanteno and Sare. On the
other hand, the defense presented as its witnesses, accused-appellant Gallo,
Pacardo and Manta.
Version of the Prosecution
On May 22, 2001, Dela Caza was introduced by Eleanor Panuncio to
accused-appellant Gallo, Pacardo, Manta, Mardeolyn, Lulu Mendanes, Yeo Sin
Ung and another Korean national at the office of MPM International Recruitment
and Promotion Agency (MPM Agency) located in Malate, Manila.
Dela Caza was told that Mardeolyn was the President of MPM Agency,
while Nelmar Martir was one of the incorporators. Also, that Marcelino Martir,
Norman Martir, Nelson Martir and Ma. Cecilia Ramos were its board members.
Lulu Mendanes acted as the cashier and accountant, while Pacardo acted as the
agencys employee who was in charge of the records of the applicants. Manta, on
the other hand, was also an employee who was tasked to deliver documents to the
Korean embassy.
Accused-appellant Gallo then introduced himself as a relative of Mardeolyn
and informed Dela Caza that the agency was able to send many workers abroad.
Together with Pacardo and Manta, he also told Dela Caza about the placement fee
of One Hundred Fifty Thousand Pesos (PhP 150,000) with a down payment of
Forty-Five Thousand Pesos (PhP 45,000) and the balance to be paid through salary
deduction.

Dela Caza, together with the other applicants, were briefed by Mardeolyn
about the processing of their application papers for job placement in Korea as a
factory worker and their possible salary. Accused Yeo Sin Ung also gave a briefing
about the business and what to expect from the company and the salary.
With accused-appellants assurance that many workers have been sent
abroad, as well as the presence of the two (2) Korean nationals and upon being
shown the visas procured for the deployed workers, Dela Caza was convinced to
part with his money. Thus, on May 29, 2001, he paid Forty-Five Thousand Pesos
(PhP 45,000) to MPM Agency through accused-appellant Gallo who, while in the
presence of Pacardo, Manta and Mardeolyn, issued and signed Official Receipt No.
401.
Two (2) weeks after paying MPM Agency, Dela Caza went back to the
agencys office in Malate, Manila only to discover that the office had moved to a
new location atBatangas Street, Brgy. San Isidro, Makati. He proceeded to the new
address and found out that the agency was renamed to New Filipino Manpower
Development & Services, Inc. (New Filipino). At the new office, he talked to
Pacardo, Manta, Mardeolyn, Lulu Mendanes and accused-appellant Gallo. He was
informed that the transfer was done for easy accessibility to clients and for the
purpose of changing the name of the agency.
Dela Caza decided to withdraw his application and recover the amount he
paid but Mardeolyn, Pacardo, Manta and Lulu Mendanes talked him out from
pursuing his decision. On the other hand, accused-appellant Gallo even denied any
knowledge about the money.
After two (2) more months of waiting in vain to be deployed, Dela Caza and
the other applicants decided to take action. The first attempt was unsuccessful
because the agency again moved to another place. However, with the help of the
Office of Ambassador Seeres and the Western Police District, they were able to
locate the new address at 500 Prudential Building, Carriedo, Manila. The agency
explained that it had to move in order to separate those who are applying as

entertainers from those applying as factory workers. Accused-appellant Gallo,

together with Pacardo and Manta, were then arrested.
The testimony of prosecution witness Armando Albines Roa, a POEA
employee, was dispensed with after the prosecution and defense stipulated and
admitted to the existence of the following documents:
1. Certification issued by Felicitas Q. Bay, Director II, Licensing
Branch of the POEA to the effect that New Filipino Manpower
Development & Services, Inc., with office address at 1256 Batangas
St., Brgy. San Isidro, Makati City, was a licensed landbased agency
whose license expired on December 10, 2001 and was delisted from
the roster of licensed agencies on December 14, 2001. It further
certified that Fides J. Pacardo was the agencys Recruitment Officer;
2. Certification issued by Felicitas Q. Bay of the POEA to the effect
that MPM International Recruitment and Promotion is not licensed
by the POEA to recruit workers for overseas employment;
3. Certified copy of POEA Memorandum Circular No. 14, Series of
1999 regarding placement fee ceiling for landbased workers.
4. Certified copy of POEA Memorandum Circular No. 09, Series of
1998 on the placement fee ceiling for Taiwan and Korean markets,
and
5. Certified copy of POEA Governing Board Resolution No. 02, series
of 1998.

Version of the Defense

For his defense, accused-appellant denied having any part in the recruitment
of Dela Caza. In fact, he testified that he also applied with MPM Agency for
deployment toKorea as a factory worker. According to him, he gave his application
directly with Mardeolyn because she was his town mate and he was allowed to pay
only Ten Thousand Pesos (PhP 10,000) as processing fee. Further, in order to
facilitate the processing of his papers, he agreed to perform some tasks for the
agency, such as taking photographs of the visa and passport of applicants, running
errands and performing such other tasks assigned to him, without salary except for

some allowance. He said that he only saw Dela Caza one or twice at the agencys
office when he applied for work abroad. Lastly, that he was also promised
deployment abroad but it never materialized.
Ruling of the Trial Court
On March 15, 2007, the RTC rendered its Decision convicting the accused
of syndicated illegal recruitment and estafa. The dispositive portion reads:
WHEREFORE, judgment is hereby rendered as follows:
I.

Accused FIDES PACARDO y JUNGO and PILAR

MANTA y DUNGO are hereby ACQUITTED of the crimes
charged in Criminal Cases Nos. 02-206293, 02-206297, 02206300 and 02-206308;

II.

Accused RODOLFO GALLO y GADOT is found guilty

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

III.

Accused RODOLFO GALLO y GADOT in Criminal

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

IV.

Accused RODOLFO GALLO y GADOT is hereby

ACQUITTED of the crime charged in Criminal Cases Nos.
02-206300 and 02-206308.

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

The immediate release of accused Fides Pacardo and Pilar Manta

is hereby ordered unless detained for other lawful cause or charge.
SO ORDERED.[5]

Ruling of the Appellate Court

On appeal, the CA, in its Decision dated December 24, 2008, disposed of the case
as follows:
WHEREFORE, the appealed Decision of the Regional Trial Court of
Manila, Branch 30, in Criminal Cases Nos. 02-206293 and 02-206297,
dated March 15, 2007, is AFFIRMED with the MODIFICATION that in
Criminal Case No. 02-206297, for estafa, appellant is sentenced to four
(4) years of prision correccional to ten (10) years of prision mayor.
SO ORDERED.[6]

The CA held the totality of the prosecutions evidence showed that the accusedappellant, together with others, engaged in the recruitment of Dela Caza. His
actions and representations to Dela Caza can hardly be construed as the actions of
a mere errand boy.
As determined by the appellate court, the offense is considered economic sabotage
having been committed by more than three (3) persons, namely, accused-appellant
Gallo, Mardeolyn, Eleonor Panuncio and Yeo Sin Ung. More importantly, a
personal found guilty of illegal recruitment may also be convicted of estafa.[7] The
same evidence proving accused-appellants commission of the crime of illegal
recruitment in large scale also establishes his liability for estafa under paragragh
2(a) of Article 315 of the Revised Penal Code (RPC).
On January 15, 2009, the accused-appellant filed a timely appeal before this Court.

The Issues
Accused-appellant interposes in the present appeal the following assignment of
errors:
I
The court a quo gravely erred in finding the accused-appellant guilty of
illegal recruitment committed by a syndicate despite the failure of the
prosecution to prove the same beyond reasonable doubt.
II
The court a quo gravely erred in finding the accused-appellant guilty
of estafa despite the failure of the prosecution to prove the same beyond
reasonable doubt.

Our Ruling
The appeal has no merit.
Evidence supports conviction of the
crime
of
Syndicated
Illegal
Recruitment
Accused-appellant avers that he cannot be held criminally liable for illegal
recruitment because he was neither an officer nor an employee of the recruitment
agency. He alleges that the trial court erred in adopting the asseveration of the
private complainant that he was indeed an employee because such was not duly
supported by competent evidence. According to him, even assuming that he was an
employee, such cannot warrant his outright conviction sans evidence that he acted
in conspiracy with the officers of the agency.
We disagree.

To commit syndicated illegal recruitment, three elements must be

established: (1) the offender undertakes either any activity within the meaning of
recruitment and placement defined under Article 13(b), or any of the prohibited
practices enumerated under Art. 34 of the Labor Code; (2) he has no valid license
or authority required by law to enable one to lawfully engage in recruitment and
placement of workers;[8] and (3) the illegal recruitment is committed by a group of
three (3) or more persons conspiring or confederating with one another.[9] When
illegal recruitment is committed by a syndicate or in large scale, i.e., if it is
committed against three (3) or more persons individually or as a group, it is
considered an offense involving economic sabotage.[10]
Under Art. 13(b) of the Labor Code, recruitment and placement refers to any
act of canvassing, enlisting, contracting, transporting, utilizing, hiring or procuring
workers, and includes referrals, contract services, promising or advertising for
employment, locally or abroad, whether for profit or not.
After a thorough review of the records, we believe that the prosecution was
able to establish the elements of the offense sufficiently. The evidence readily
reveals that MPM Agency was never licensed by the POEA to recruit workers for
overseas employment.
Even with a license, however, illegal recruitment could still be committed
under Section 6 of Republic Act No. 8042 (R.A. 8042), otherwise known as
the Migrants and Overseas Filipinos Act of 1995, viz:
Sec. 6. Definition. For purposes of this Act, illegal recruitment
shall mean any act of canvassing, enlisting, contracting, transporting,
utilizing, hiring, or procuring workers and includes referring, contract
services, promising or advertising for employment abroad, whether for
profit or not, when undertaken by a non-licensee or non-holder of
authority contemplated under Article 13(f) of Presidential Decree No.
442, as amended, otherwise known as the Labor Code of the Philippines:
Provided, That any such non-licensee or non-holder who, in any manner,
offers or promises for a fee employment abroad to two or more persons
shall be deemed so engaged. It shall, likewise, include the following act,

whether committed by any person, whether a non-licensee, non-holder,

licensee or holder of authority:
(a) To charge or accept directly or indirectly any amount greater
than that specified in the schedule of allowable fees prescribed
by the Secretary of Labor and Employment, or to make a
worker pay any amount greater than that actually received by
him as a loan or advance;
xxxx
(l) Failure to actually deploy without valid reason as determined
by the Department of Labor and Employment; and
(m) Failure to reimburse expenses incurred by the worker in
connection with his documentation and processing for
purposes of deployment and processing for purposes of
deployment, in cases where the deployment does not actually
take place without the workers fault. Illegal recruitment when
committed by a syndicate or in large scale shall be considered
an offense involving economic sabotage.
Illegal recruitment is deemed committed by a syndicate if carried
out by a group of three (3) or more persons conspiring or confederating
with one another. It is deemed committed in large scale if committed
against three (3) or more persons individually or as a group.
The persons criminally liable for the above offenses are the
principals, accomplices and accessories. In case of juridical persons, the
officers having control, management or direction of their business shall
be liable.

In the instant case, accused-appellant committed the acts enumerated in Sec.

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

PROS. MAGABLIN
Q: How about this Rodolfo Gallo?
A: He was the one who received my money.
Q: Aside from receiving your money, was there any other
representations or acts made by Rodolfo Gallo?
A: He introduced himself to me as relative of Mardeolyn Martir
and he even intimated to me that their agency has sent so
many workers abroad.
xxxx
PROS. MAGABLIN
Q: Mr. Witness, as you claimed you tried to withdraw your
application at the agency. Was there any instance that you
were able to talk to Fides Pacardo, Rodolfo Gallo and Pilar
Manta?
A: Yes, maam.
Q: What was the conversation that transpired among you before
you demanded the return of your money and documents?
A: When I tried to withdraw my application as well as my money,
Mr. Gallo told me I know nothing about your money while
Pilar Manta and Fides Pacardo told me, why should I
withdraw my application and my money when I was about
to be [deployed] or I was about to leave.
xxxx
Q: And what transpired at that office after this Panuncio
introduced you to those persons whom you just mentioned?
A: The three of them including Rodolfo Gallo told me that the
placement fee in that agency is Php 150,000.00 and then I
should deposit the amount of Php 45,000.00. After I have
deposited said amount, I would just wait for few days
xxxx
Q: They were the one (sic) who told you that you have to pay Php
45,000.00 for deposit only?
A: Yes, maam, I was told by them to deposit Php 45,000.00 and
then I would pay the remaining balance of Php105,000.00,
payment of it would be through salary deduction.

Q: That is for what Mr. Witness again?

A: For placement fee.
Q: Now did you believe to (sic) them?
A: Yes, maam.
Q: Why, why did you believe?
A: Because of the presence of the two Korean nationals and they
keep on telling me that they have sent abroad several
workers and they even showed visas of the records that
they have already deployed abroad.
Q: Aside from that, was there any other representations which
have been made upon you or make you believe that they
can deploy you?
A: At first I was adamant but they told me If you do not want to
believe us, then we could do nothing. But once they
showed me the [visas] of the people whom they have
deployed abroad, that was the time I believe them.
Q: So after believing on the representations, what did you do next
Mr. Witness?
A: That was the time that I decided to give the money.
xxxx
PROS. MAGABLIN
Q: Do you have proof that you gave the money?
A: Yes, maam.
Q: Where is your proof that you gave the money?
A: I have it here.
PROS. MAGABLIN:
Witness is producing to this court a Receipt dated May 28, 2001
in the amount of Php45,000.00 which for purposes of record Your
Honor, may I request that the same be marked in the evidence as
our Exhibit F.
xxxx
PROS. MAGABLIN
Q: There appears a signature appearing at the left bottom portion
of this receipt. Do you know whose signature is this?

A: Yes, maam, signature of Rodolfo Gallo.

PROS. MAGABLIN
Q: Why do you say that that is his signature?
A: Rodolfo Gallos signature Your Honor because he was the one
who received the money and he was the one who filled up
this O.R. and while he was doing it, he was flanked by
Fides Pacardo, Pilar Manta and Mardeolyn Martir.
xxxx
Q: So it was Gallo who received your money?
A: Yes, maam.

PROS. MAGABLIN
Q: And after that, what did this Gallo do after he received your
money?
A: They told me maam just to call up and make a follow up with
our agency.
xxxx
Q: Now Mr. Witness, after you gave your money to the accused,
what happened with the application, with the promise of
employment that he promised?
A: Two (2) weeks after giving them the money, they moved to a
new office in Makati, Brgy. San Isidro.
xxxx
Q: And were they able to deploy you as promised by them?
A: No, maam, they were not able to send us abroad. [12]

Essentially, Dela Caza appeared very firm and consistent in positively

identifying accused-appellant as one of those who induced him and the other
applicants to part with their money. His testimony showed that accused-appellant
made false misrepresentations and promises in assuring them that after they paid
the placement fee, jobs in Korea as factory workers were waiting for them and that
they would be deployed soon. In fact, Dela Caza personally talked to accused-

appellant and gave him the money and saw him sign and issue an official receipt as
proof of his payment. Without a doubt, accused-appellants actions constituted
illegal recruitment.
Additionally, accused-appellant cannot argue that the trial court erred in
finding that he was indeed an employee of the recruitment agency. On the contrary,
his active participation in the illegal recruitment is unmistakable. The fact that he
was the one who issued and signed the official receipt belies his profession of
innocence.
This Court likewise finds the existence of a conspiracy between the accusedappellant and the other persons in the agency who are currently at large, resulting
in the commission of the crime of syndicated illegal recruitment.
In this case, it cannot be denied that the accused-appellent together with
Mardeolyn and the rest of the officers and employees of MPM Agency participated
in a network of deception. Verily, the active involvement of each in the recruitment
scam was directed at one single purpose to divest complainants with their money
on the pretext of guaranteed employment abroad. The prosecution evidence shows
that complainants were briefed by Mardeolyn about the processing of their papers
for a possible job opportunity in Korea, as well as their possible salary. Likewise,
Yeo Sin Ung, a Korean national, gave a briefing about the business and what to
expect from the company. Then, here comes accused-appellant who introduced
himself as Mardeolyns relative and specifically told Dela Caza of the fact that the
agency was able to send many workers abroad. Dela Caza was even showed
several workers visas who were already allegedly deployed abroad. Later on,
accused-appellant signed and issued an official receipt acknowledging the down
payment of Dela Caza. Without a doubt, the nature and extent of the actions of
accused-appellant, as well as with the other persons in MPM Agency clearly show
unity of action towards a common undertaking. Hence, conspiracy is evidently
present.
In People v. Gamboa,[13] this Court discussed the nature of conspiracy in the
context of illegal recruitment, viz:

Conspiracy to defraud aspiring overseas contract workers was

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

To reiterate, in establishing conspiracy, it is not essential that there be actual

proof that all the conspirators took a direct part in every act. It is sufficient that
they acted in concert pursuant to the same objective.[14]
Estafa
The prosecution likewise established that accused-appellant is guilty of the
crime of estafa as defined under Article 315 paragraph 2(a) of the Revised Penal
Code, viz:
Art. 315. Swindling (estafa). Any person who shall defraud
another by any means mentioned hereinbelow
xxxx
2. By means of any of the following false pretenses or fraudulent
acts executed prior to or simultaneously with the commission of the
fraud:
(a) By using fictitious name, or falsely pretending to possess
power, influence, qualifications, property, credit, agency,
business or imaginary transactions; or by means of other
similar deceits.

The elements of estafa in general are: (1) that the accused defrauded another
(a) by abuse of confidence, or (b) by means of deceit; and (2) that damage or
prejudice capable of pecuniary estimation is caused to the offended party or third
person.[15] Deceit is the false representation of a matter of fact, whether by words or
conduct, by false or misleading allegations, or by concealment of that which
should have been disclosed; and which deceives or is intended to deceive another
so that he shall act upon it, to his legal injury.
All these elements are present in the instant case: the accused-appellant,
together with the other accused at large, deceived the complainants into believing
that the agency had the power and capability to send them abroad for employment;
that there were available jobs for them in Korea as factory workers; that by reason
or on the strength of such assurance, the complainants parted with their money in
payment of the placement fees; that after receiving the money, accused-appellant
and his co-accused went into hiding by changing their office locations without
informing complainants; and that complainants were never deployed abroad. As all
these representations of the accused-appellant proved false, paragraph 2(a), Article
315 of the Revised Penal Code is thus applicable.
Defense of Denial Cannot Prevail
over Positive Identification
Indubitably, accused-appellants denial of the crimes charged crumbles in the
face of the positive identification made by Dela Caza and his co-complainants as
one of the perpetrators of the crimes charged. As enunciated by this Court
in People v. Abolidor,[16] [p]ositive identification where categorical and consistent
and not attended by any showing of ill motive on the part of the eyewitnesses on
the matter prevails over alibi and denial.
The defense has miserably failed to show any evidence of ill motive on the
part of the prosecution witnesses as to falsely testify against him.

Therefore, between the categorical statements of the prosecution witnesses,

on the one hand, and bare denials of the accused, on the other hand, the former
must prevail.[17]
Moreover, this Court accords the trial courts findings with the probative
weight it deserves in the absence of any compelling reason to discredit the same. It
is a fundamental judicial dictum that the findings of fact of the trial court are not
disturbed on appeal except when it overlooked, misunderstood or misapplied some
facts or circumstances of weight and substance that would have materially affected
the outcome of the case. We find that the trial court did not err in convicting the
accused-appellant.
WHEREFORE, the appeal is DENIED for failure to sufficiently show
reversible error in the assailed decision. The Decision dated December 24, 2008 of
the CA in CA-G.R. CR-H.C. No. 02764 is AFFIRMED.
No costs.

Republic of the Philippines

Supreme Court
Manila
SECOND DIVISION

CLAUDIO S. YAP,
Petitioner,

G.R. No. 179532

Present:

- versus -

CARPIO, J.,
Chairperson,
NACHURA,
PERALTA,
ABAD, and
MENDOZA, JJ.

THENAMARIS SHIPS MANAGEMENT

and INTERMARE MARITIME AGENCIES,
INC.,
Promulgated:
Respondents.
May 30, 2011

x------------------------------------------------------------------------------------x
DECISION
NACHURA, J.:
Before this Court is a Petition for Review on Certiorari[1] under Rule 45 of
the Rules of Civil Procedure, seeking the reversal of the Court of Appeals (CA)
Decision[2]dated February 28, 2007, which affirmed with modification the National
Labor Relations Commission (NLRC) resolution[3] dated April 20, 2005.
The undisputed facts, as found by the CA, are as follows:
[Petitioner] Claudio S. Yap was employed as electrician of the vessel,
M/T SEASCOUT on 14 August 2001 by Intermare Maritime Agencies,
Inc. in behalf of its principal, Vulture Shipping Limited. The contract of
employment entered into by Yap and Capt. Francisco B. Adviento, the
General Manager of Intermare, was for a duration of 12 months. On 23
August 2001, Yapboarded M/T SEASCOUT and commenced his job as
electrician. However, on or about 08 November 2001, the vessel was
sold. The Philippine Overseas Employment Administration (POEA) was

informed about the sale on 06 December 2001 in a letter signed by Capt.

Adviento. Yap, along with the other crewmembers, was informed by the
Master of their vessel that the same was sold and will be scrapped. They
were also informed about the Advisory sent by Capt. Constatinou, which
states, among others:
PLEASE ASK YR OFFICERS AND RATINGS IF THEY WISH TO BE
TRANSFERRED TO OTHER VESSELS AFTER VESSEL S
DELIVERY (GREEK VIA ATHENS-PHILIPINOS VIA MANILA
FOR CREW NOT WISH TRANSFER TO DECLARE THEIR
PROSPECTED TIME FOR REEMBARKATION IN ORDER TO
SCHEDULE THEM ACCLY
Yap received his seniority bonus, vacation bonus, extra bonus along with
the scrapping bonus. However, with respect to the payment of his wage,
he refused to accept the payment of one-month basic wage. He insisted
that he was entitled to the payment of the unexpired portion of his
contract since he was illegally dismissed from employment. He alleged
that he opted for immediate transfer but none was made.
[Respondents], for their part, contended that Yap was not illegally
dismissed. They alleged that following the sale of the M/T SEASCOUT,
Yap signed off from the vessel on 10 November 2001 and was paid his
wages corresponding to the months he worked or until 10 November
2001 plus his seniority bonus, vacation bonus and extra bonus. They
further alleged that Yaps employment contract was validly terminated
due to the sale of the vessel and no arrangement was made for Yaps
transfer to Thenamaris other vessels.[4]

Thus, Claudio S. Yap (petitioner) filed a complaint for Illegal Dismissal with
Damages and Attorneys Fees before the Labor Arbiter (LA). Petitioner claimed
that he was entitled to the salaries corresponding to the unexpired portion of his
contract. Subsequently, he filed an amended complaint, impleading Captain
Francisco Adviento of respondents Intermare Maritime Agencies, Inc. (Intermare)
and Thenamaris Ships Management (respondents), together with C.J. Martionos,
Interseas Trading and Financing Corporation, and Vulture Shipping Limited/Stejo
Shipping Limited.

On July 26, 2004, the LA rendered a decision[5] in favor of petitioner, finding the
latter to have been constructively and illegally dismissed by
respondents. Moreover, the LA found that respondents acted in bad faith when
they assured petitioner of re-embarkation and required him to produce an
electrician certificate during the period of his contract, but actually he was not able
to board one despite of respondents numerous vessels. Petitioner made several
follow-ups for his re-embarkation but respondents failed to heed his plea; thus,
petitioner was forced to litigate in order to vindicate his rights. Lastly, the LA
opined that since the unexpired portion of petitioners contract was less than one
year, petitioner was entitled to his salaries for the unexpired portion of his contract
for a period of nine months. The LA disposed, as follows:
WHEREFORE, in view of the foregoing, a decision is hereby
rendered declaring complainant to have been constructively
dismissed. Accordingly, respondents Intermare Maritime Agency
Incorporated, Thenamaris Ships Mgt., and Vulture Shipping Limited are
ordered to pay jointly and severally complainant Claudio S. Yap the sum
of $12,870.00 or its peso equivalent at the time of payment. In addition,
moral damages of ONE HUNDRED THOUSAND PESOS
(P100,000.00) and exemplary damages of FIFTY THOUSAND
PESOS (P50,000.00) are awarded plus ten percent (10%) of the total
award as attorneys fees.
Other money claims are DISMISSED for lack of merit.
SO ORDERED.[6]

Aggrieved, respondents sought recourse from the NLRC.

In its decision[7] dated January 14, 2005, the NLRC affirmed the LAs
findings that petitioner was indeed constructively and illegally dismissed; that
respondents bad faith was evident on their wilful failure to transfer petitioner to
another vessel; and that the award of attorneys fees was warranted. However, the
NLRC held that instead of an award of salaries corresponding to nine months,
petitioner was only entitled to salaries for three months as provided under Section
10[8] of Republic Act (R.A.) No. 8042,[9] as enunciated in our ruling in Marsaman

Manning Agency, Inc. v. National Labor Relations Commission.[10] Hence, the

NLRC ruled in this wise:
WHEREFORE, premises considered, the decision of the Labor
Arbiter finding the termination of complainant illegal is hereby
AFFIRMED with a MODIFICATION. Complainant[s] salary for the
unexpired portion of his contract should only be limited to three (3)
months basic salary.
Respondents Intermare Maritime Agency, Inc.[,] Vulture Shipping
Limited and Thenamaris Ship Management are hereby ordered to jointly
and severally pay complainant, the following:
1. Three (3) months basic salary US$4,290.00 or its peso
equivalent at the time of actual payment.
2. Moral damages P100,000.00
3. Exemplary damages P50,000.00
4. Attorneys fees equivalent to 10% of the total monetary award.
SO ORDERED.[11]

Respondents filed a Motion for Partial Reconsideration,[12] praying for the reversal
and setting aside of the NLRC decision, and that a new one be rendered dismissing
the complaint. Petitioner, on the other hand, filed his own Motion for Partial
Reconsideration,[13] praying that he be paid the nine (9)-month basic salary, as
awarded by the LA.
On April 20, 2005, a resolution [14] was rendered by the NLRC, affirming the
findings of Illegal Dismissal and respondents failure to transfer petitioner to
another vessel. However, finding merit in petitioners arguments, the NLRC
reversed its earlier Decision, holding that there can be no choice to grant only
three (3) months salary for every year of the unexpired term because there is no
full year of unexpired term which this can be applied. Hence
WHEREFORE, premises considered, complainants Motion for Partial
Reconsideration is hereby granted. The award of three (3) months basic
salary in the sum of US$4,290.00 is hereby modified in that complainant
is entitled to his salary for the unexpired portion of employment contract
in the sum of US$12,870.00 or its peso equivalent at the time of actual
payment.
All aspect of our January 14, 2005 Decision STANDS.
SO ORDERED.[15]

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

Undaunted, respondents filed a petition for certiorari[16] under Rule 65 of the
Rules of Civil Procedure before the CA. On February 28, 2007, the CA affirmed
the findings and ruling of the LA and the NLRC that petitioner was constructively
and illegally dismissed. The CA held that respondents failed to show that the
NLRC acted without statutory authority and that its findings were not supported by
law, jurisprudence, and evidence on record. Likewise, the CA affirmed the lower
agencies findings that the advisory of Captain Constantinou, taken together with
the other documents and additional requirements imposed on petitioner, only
meant that the latter should have been re-embarked. In the same token, the CA
upheld the lower agencies unanimous finding of bad faith, warranting the

imposition of moral and exemplary damages and attorneys fees. However, the CA
ruled that the NLRC erred in sustaining the LAs interpretation of Section 10 of
R.A. No. 8042. In this regard, the CA relied on the clause or for three months for
every year of the unexpired term, whichever is less provided in the 5th paragraph of
Section 10 of R.A. No. 8042 and held:
In the present case, the employment contract concerned has a term
of one year or 12 months which commenced on August 14, 2001.
However, it was preterminated without a valid cause. [Petitioner] was
paid his wages for the corresponding months he worked until the 10 th of
November. Pursuant to the provisions of Sec. 10, [R.A. No.] 8042,
therefore, the option of three months for every year of the unexpired
term is applicable.[17]

Thus, the CA provided, to wit:

WHEREFORE, premises considered, this Petition for Certiorari
is DENIED. The Decision dated
January
14,
2005,
and Resolutions, dated April 20, 2005 and July 29, 2005, respectively, of
public respondent National Labor Relations Commission-Fourth
Division, Cebu City, in NLRC No. V-000038-04 (RAB VIII (OFW)-0401-0006) are hereby AFFIRMED with the MODIFICATION that
private respondent is entitled to three (3) months of basic salary
computed at US$4,290.00 or its peso equivalent at the time of actual
payment.
Costs against Petitioners.[18]

Both parties filed their respective motions for reconsideration, which the
CA, however, denied in its Resolution[19] dated August 30, 2007.
Unyielding, petitioner filed this petition, raising the following issues:
1)

Whether or not Section 10 of R.A. [No.] 8042, to the extent that it

affords an illegally dismissed migrant worker the lesser benefit of
salaries for [the] unexpired portion of his employment
contract or for three (3) months for every year of the unexpired
term, whichever is less is constitutional; and

2)

Assuming that it is, whether or not the Court of Appeals gravely

erred in granting petitioner only three (3) months backwages when
his unexpired term of 9 months is far short of theevery year of the
unexpired term threshold.[20]

In the meantime, while this case was pending before this Court, we declared
as unconstitutional the clause or for three months for every year of the unexpired
term, whichever is less provided in the 5th paragraph of Section 10 of R.A. No.
8042 in the case of Serrano v. Gallant Maritime Services, Inc.[21] on March 24,
2009.
Apparently, unaware of our ruling in Serrano, petitioner claims that the
5 paragraph of Section 10, R.A. No. 8042, is violative of Section 1, [22] Article III
and Section 3,[23] Article XIII of the Constitution to the extent that it gives an erring
employer the option to pay an illegally dismissed migrant worker only three
months for every year of the unexpired term of his contract; that said provision of
law has long been a source of abuse by callous employers against migrant workers;
and that said provision violates the equal protection clause under the Constitution
because, while illegally dismissed local workers are guaranteed under the Labor
Code of reinstatement with full backwages computed from the time compensation
was withheld from them up to their actual reinstatement, migrant workers, by
virtue of Section 10 of R.A. No. 8042, have to waive nine months of their
collectible backwages every time they have a year of unexpired term of contract to
reckon with. Finally, petitioner posits that, assuming said provision of law is
constitutional, the CA gravely abused its discretion when it reduced petitioners
th

backwages from nine months to three months as his nine-month unexpired term
cannot accommodate the lesser relief of three months for every year of the
unexpired term.[24]
On the other hand, respondents, aware of our ruling in Serrano, aver that our
pronouncement of unconstitutionality of the clause or for three months for every
year of the unexpired term, whichever is less provided in the 5th paragraph of
Section 10 of R.A. No. 8042 in Serrano should not apply in this case because
Section 10 of R.A. No. 8042 is a substantive law that deals with the rights and
obligations of the parties in case of Illegal Dismissal of a migrant worker and is not
merely procedural in character. Thus, pursuant to the Civil Code, there should be
no retroactive application of the law in this case. Moreover, respondents asseverate
that petitioners tanker allowance of US$130.00 should not be included in the
computation of the award as petitioners basic salary, as provided under his
contract, was only US$1,300.00. Respondents submit that the CA erred in its
computation since it included the said tanker allowance. Respondents opine that
petitioner should be entitled only to US$3,900.00 and not to US$4,290.00, as
granted by the CA. Invoking Serrano, respondents claim that the tanker allowance
should be excluded from the definition of the term salary. Also, respondents
manifest that the full sum ofP878,914.47 in Intermares bank account was garnished
and subsequently withdrawn and deposited with the NLRC Cashier of Tacloban
City on February 14, 2007. On February 16, 2007, while this case was pending
before the CA, the LA issued an Order releasing the amount of P781,870.03 to
petitioner as his award, together with the sum of P86,744.44 to petitioners former
lawyer as attorneys fees, and the amount of P3,570.00 as execution and deposit
fees. Thus, respondents pray that the instant petition be denied and that petitioner
be directed to return to Intermare the sum of US$8,970.00 or its peso equivalent.[25]
On this note, petitioner counters that this new issue as to the inclusion of the
tanker allowance in the computation of the award was not raised by respondents
before the LA, the NLRC and the CA, nor was it raised in respondents pleadings
other than in their Memorandum before this Court, which should not be allowed
under the circumstances.[26]
The petition is impressed with merit.

Prefatorily, it bears emphasis that the unanimous finding of the LA, the
NLRC and the CA that the dismissal of petitioner was illegal is not disputed.
Likewise not disputed is the tribunals unanimous finding of bad faith on the part of
respondents, thus, warranting the award of moral and exemplary damages and
attorneys fees. What remains in issue, therefore, is the constitutionality of the
5th paragraph of Section 10 of R.A. No. 8042 and, necessarily, the proper
computation of the lump-sum salary to be awarded to petitioner by reason of his
illegal dismissal.
Verily, we have already declared in Serrano that the clause or for three
months for every year of the unexpired term, whichever is less provided in the
5th paragraph of Section 10 of R.A. No. 8042 is unconstitutional for being violative
of the rights of Overseas Filipino Workers (OFWs) to equal protection of the laws.
In an exhaustive discussion of the intricacies and ramifications of the said clause,
this Court, in Serrano, pertinently held:
The Court concludes that the subject clause contains a suspect
classification in that, in the computation of the monetary benefits of
fixed-term employees who are illegally discharged, it imposes a 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.[27]

Moreover, this Court held therein that the subject clause does not state or
imply any definitive governmental purpose; hence, the same violates not just
therein petitioners right to equal protection, but also his right to substantive due
process under Section 1, Article III of the Constitution.[28] Consequently, petitioner
therein was accorded his salaries for the entire unexpired period of nine months
and 23 days of his employment contract, pursuant to law and jurisprudence prior to
the enactment of R.A. No. 8042.
We have already spoken. Thus, this case should not be different
from Serrano.

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

imposes no duties; it affords no protection; it creates no office; it is inoperative as
if it has not been passed at all. The general rule is supported by Article 7 of the
Civil Code, which provides:
Art. 7. Laws are repealed only by subsequent ones, and their
violation or non-observance shall not be excused by disuse or custom or
practice to the contrary.

The doctrine of operative fact serves as an exception to the aforementioned

general rule. In Planters Products, Inc. v. Fertiphil Corporation,[29] we held:
The doctrine of operative fact, as an exception to the general rule,
only applies as a matter of equity and fair play. It nullifies the effects of
an unconstitutional law by recognizing that the existence of a statute
prior to a determination of unconstitutionality is an operative fact and
may have consequences which cannot always be ignored. The past
cannot always be erased by a new judicial declaration.
The doctrine is applicable when a declaration of
unconstitutionality will impose an undue burden on those who have
relied on the invalid law. Thus, it was applied to a criminal case when a
declaration of unconstitutionality would put the accused in double
jeopardy or would put in limbo the acts done by a municipality in
reliance upon a law creating it.[30]

Following Serrano, we hold that this case should not be included in the
aforementioned exception. After all, it was not the fault of petitioner that he lost his
job due to an act of illegal dismissal committed by respondents. To rule otherwise
would be iniquitous to petitioner and other OFWs, and would, in effect, send a
wrong signal that principals/employers and recruitment/manning agencies may
violate an OFWs security of tenure which an employment contract embodies and
actually profit from such violation based on an unconstitutional provision of law.
In the same vein, we cannot subscribe to respondents postulation that the
tanker allowance of US$130.00 should not be included in the computation of the
lump-sum salary to be awarded to petitioner.

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

that respondents are raising this issue. It was not raised before the LA, the NLRC,
and the CA. They did not even assail the award accorded by the CA, which
computed the lump-sum salary of petitioner at the basic salary of US$1,430.00,
and which clearly included the US$130.00 tanker allowance. Hence, fair play,
justice, and due process dictate that this Court cannot now, for the first time on
appeal, pass upon this question. Matters not taken up below cannot be raised for
the first time on appeal. They must be raised seasonably in the proceedings before
the lower tribunals. Questions raised on appeal must be within the issues framed by
the parties; consequently, issues not raised before the lower tribunals cannot be
raised for the first time on appeal.[31]
Second. Respondents invocation of Serrano is unavailing. Indeed, we made
the following pronouncements in Serrano, to wit:
The word salaries in Section 10(5) does not include overtime
and leave pay. For seafarers like petitioner, DOLE Department Order
No. 33, series 1996, provides a Standard Employment Contract of
Seafarers, in which salary is understood as the basic wage, exclusive
of overtime, leave pay and other bonuses; whereas overtime pay is
compensation for all work performed in excess of the regular eight
hours, and holiday pay is compensation for any work performed on
designated rest days and holidays.[32]

A close perusal of the contract reveals that the tanker allowance of

US$130.00 was not categorized as a bonus but was rather encapsulated in the basic
salary clause, hence, forming part of the basic salary of petitioner. Respondents
themselves in their petition for certiorari before the CA averred that petitioners
basic salary, pursuant to the contract, was US$1,300.00 + US$130.00 tanker
allowance.[33] If respondents intended it differently, the contract per se should have
indicated that said allowance does not form part of the basic salary or, simply, the
contract should have separated it from the basic salary clause.
A final note.

We ought to be reminded of the plight and sacrifices of our OFWs. In Olarte

v. Nayona,[34] this Court held that:
Our overseas workers belong to a disadvantaged class. Most of
them come from the poorest sector of our society. Their profile shows
they live in suffocating slums, trapped in an environment of crimes.
Hardly literate and in ill health, their only hope lies in jobs they find with
difficulty in our country. Their unfortunate circumstance makes them
easy prey to avaricious employers. They will climb mountains, cross the
seas, endure slave treatment in foreign lands just to survive. Out of
despondence, they will work under sub-human conditions and accept
salaries below the minimum. The least we can do is to protect them with
our laws.

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

dated February 28, 2007 and Resolution dated August 30, 2007 are
hereby MODIFIED to the effect that petitioner is AWARDED his salaries for the
entire unexpired portion of his employment contract consisting of nine months
computed at the rate of US$1,430.00 per month. All other awards are
hereby AFFIRMED. No costs.
SO ORDERED.
Republic
SUPREME
Manila

of

the

Philippines
COURT

EN BANC
G.R. Nos. L-58674-77 July 11, 1990
PEOPLE
OF
THE
PHILIPPINES, petitioner,
vs.
HON. DOMINGO PANIS, Presiding Judge of the Court of First Instance of Zambales &
Olongapo City, Branch III and SERAPIO ABUG, respondents.

CRUZ, J:

The basic issue in this case is the correct interpretation of Article 13(b) of P.D. 442, otherwise known
as the Labor Code, reading as follows:
(b) Recruitment and placement' refers to any act of canvassing, enlisting,
contracting, transporting, hiring, or procuring workers, and includes referrals, contract
services, promising or advertising for employment, locally or abroad, whether for
profit or not: Provided, That any person or entity which, in any manner, offers or
promises for a fee employment to two or more persons shall be deemed engaged in
recruitment and placement.
Four informations were filed on January 9, 1981, in the Court of First Instance of Zambales and
Olongapo City alleging that Serapio Abug, private respondent herein, "without first securing a license
from the Ministry of Labor as a holder of authority to operate a fee-charging employment agency, did
then and there wilfully, unlawfully and criminally operate a private fee charging employment agency
by charging fees and expenses (from) and promising employment in Saudi Arabia" to four separate
individuals named therein, in violation of Article 16 in relation to Article 39 of the Labor Code. 1
Abug filed a motion to quash on the ground that the informations did not charge an offense because
he was accused of illegally recruiting only one person in each of the four informations. Under the
proviso in Article 13(b), he claimed, there would be illegal recruitment only "whenever two or more
persons are in any manner promised or offered any employment for a fee. " 2
Denied at first, the motion was reconsidered and finally granted in the Orders of the trial court dated
June 24 and September 17, 1981. The prosecution is now before us on certiorari. 3
The posture of the petitioner is that the private respondent is being prosecuted under Article 39 in
relation to Article 16 of the Labor Code; hence, Article 13(b) is not applicable. However, as the first
two cited articles penalize acts of recruitment and placement without proper authority, which is the
charge embodied in the informations, application of the definition of recruitment and placement in
Article 13(b) is unavoidable.
The view of the private respondents is that to constitute recruitment and placement, all the acts
mentioned in this article should involve dealings with two or m re persons as an indispensable
requirement. On the other hand, the petitioner argues that the requirement of two or more persons is
imposed only where the recruitment and placement consists of an offer or promise of employment to
such persons and always in consideration of a fee. The other acts mentioned in the body of the
article may involve even only one person and are not necessarily for profit.
Neither interpretation is acceptable. We fail to see why the proviso should speak only of an offer or
promise of employment if the purpose was to apply the requirement of two or more persons to all the
acts mentioned in the basic rule. For its part, the petitioner does not explain why dealings with two or
more persons are needed where the recruitment and placement consists of an offer or promise of
employment but not when it is done through "canvassing, enlisting, contracting, transporting,
utilizing, hiring or procuring (of) workers.
As we see it, the proviso was intended neither to impose a condition on the basic rule nor to provide
an exception thereto but merely to create a presumption. The presumption is that the individual or
entity is engaged in recruitment and placement whenever he or it is dealing with two or more

persons to whom, in consideration of a fee, an offer or promise of employment is made in the course
of the "canvassing, enlisting, contracting, transporting, utilizing, hiring or procuring (of) workers. "
The number of persons dealt with is not an essential ingredient of the act of recruitment and
placement of workers. Any of the acts mentioned in the basic rule in Article 13(b) win constitute
recruitment and placement even if only one prospective worker is involved. The proviso merely lays
down a rule of evidence that where a fee is collected in consideration of a promise or offer of
employment to two or more prospective workers, the individual or entity dealing with them shall be
deemed to be engaged in the act of recruitment and placement. The words "shall be deemed" create
that presumption.
This is not unlike the presumption in article 217 of the Revised Penal Code, for example, regarding
the failure of a public officer to produce upon lawful demand funds or property entrusted to his
custody. Such failure shall beprima facie evidence that he has put them to personal use; in other
words, he shall be deemed to have malversed such funds or property. In the instant case, the word
"shall be deemed" should by the same token be given the force of a disputable presumption or
of prima facie evidence of engaging in recruitment and placement. (Klepp vs. Odin Tp., McHenry
County 40 ND N.W. 313, 314.)
It is unfortunate that we can only speculate on the meaning of the questioned provision for lack of
records of debates and deliberations that would otherwise have been available if the Labor Code
had been enacted as a statute rather than a presidential decree. The trouble with presidential
decrees is that they could be, and sometimes were, issued without previous public discussion or
consultation, the promulgator heeding only his own counsel or those of his close advisers in their
lofty pinnacle of power. The not infrequent results are rejection, intentional or not, of the interest of
the greater number and, as in the instant case, certain esoteric provisions that one cannot read
against the background facts usually reported in the legislative journals.
At any rate, the interpretation here adopted should give more force to the campaign against illegal
recruitment and placement, which has victimized many Filipino workers seeking a better life in a
foreign land, and investing hard- earned savings or even borrowed funds in pursuit of their dream,
only to be awakened to the reality of a cynical deception at the hands of theirown countrymen.
WHEREFORE, the Orders of June 24, 1981, and September 17, 1981, are set aside and the four
informations against the private respondent reinstated. No costs.
SO ORDERED.
Teehankee, CJ, Abad Santos, Feria, Yap, Fernan, Narvasa, Melencio-Herrera, Alampay, Gutierrez,
Jr. and Paras, JJ., concur.

[G.R. No. 109583. September 5, 1997]

TRANS ACTION OVERSEAS CORPORATION, petitioner, vs. THE

HONORABLE SECRETARY OF LABOR, ROSELLE CASTIGADOR,
JOSEFINA MAMON, JENELYN CASA, PEACHY LANIOG,
VERDELINA BELGIRA, ELMA FLORES, RAMONA LITURCO,

GRACE SABANDO, GLORIA PALMA, AVELYN ALVAREZ,

CANDELARIA
NONO,NITA
BUSTAMANTE,
CYNTHIA
ARANDILLO,
SANDIE AGUILAR,
DIGNA PANAGUITON,
VERONICA BAYOGOS, JULIANITA ARANADOR, LEONORA
CABALLERO, NANCY BOLIVAR, NIMFA BUCOL, ZITA GALINDO,
ESTELITA BIOCOS, MARJORIE MACATE, RUBY SEPULVIDA,
ROSALIE SONDIA, NORA MAQUILING, PAULINA CORDERO,
LENIROSE ABANGAN, SELFA PALMA, ANTONIA NAVARRO,
ELSIE PENARUBIA, IRMA SOBREQUIL, SONY JAMUAT, CLETA
MAYO, respondents.
DECISION
ROMERO, J.:

The issue presented in the case at bar is whether or not the Secretary of Labor and
Employment has jurisdiction to cancel or revoke the license of a private fee-charging
employment agency.
From July 24 to September 9, 1987, petitioner Trans Action Overseas Corporation,
a private fee-charging employment agency, scoured Iloilo City for possible recruits for
alleged job vacancies in Hongkong. Private respondents sought employment as
domestic helpers through petitioners employees, Luzviminda Aragon, Ben Hur Domincil
and his wife Cecille. The applicants paid placement fees ranging from P1,000.00
to P14,000.00, but petitioner failed to deploy them. Their demands for refund proved
unavailing; thus, they were constrained to institute complaints against petitioner for
violation of Articles 32 and 34(a) of the Labor Code, as amended.
[1]

Petitioner denied having received the amounts allegedly collected from

respondents, and averred that Aragon, whose only duty was to pre-screen and interview
applicants, and the spouses Domincil were not authorized to collect fees from the
applicants. Accordingly, it cannot be held liable for the money claimed by
respondents. Petitioner maintains that it even warned respondents not to give any
money to unauthorized individuals.
POEA Regional Extension Unit Coordinator Edgar Somes testified that although he
was aware that petitioner collected fees from respondents, the latter insisted that they
be allowed to make the payments on the assumption that it could hasten their
deployment abroad. He added that Mrs. Honorata Manliclic, a representative of
petitioner tasked to oversee the conduct of the interviews, told him that she was leaving
behind presigned receipts to Aragon as she cannot stay in Iloilo City for the screening of

the applicants. Manliclic, however, denied this version and argued that it was Somes
who instructed her to leave the receipts behind as it was perfectly alright to collect fees.
On April 5, 1991, then Labor Undersecretary Nieves R. Confesor rendered the
assailed order, the dispositive portion of which reads:

WHEREFORE, respondents are hereby ordered to pay, jointly and severally, the
following claims:
1. Rosele Castigador P14,000.00
2. Josefina Mamon 3,000.00
3. Jenelyn Casa 3,000.00
4. Peachy Laniog 13,500.00
5. Verdelina Belgira 2,000.00
6. Elma Flores 2,500.00
7. Ramona Liturco 2,500.00
8. Grace Sabando 3,500.00
9. Gloria Palma 1,500.00
10. Avelyn Alvarez 1,500.00
11. Candelaria Nono 1,000.00
12. Nita Bustamante 5,000.00
13. Cynthia Arandillo 1,000.00
14. Sandie Aguilar 3,000.00
15. Digna Panaguiton 2,500.00
16. Veronica Bayogos 2,000.00
17. Sony Jamuat 4,500.00

18. Irma Sobrequil 2,000.00

19. Elsie Penarubia 2,000.00
20. Antonia Navarro 2,000.00
21. Selfa Palma 3,000.00
22. Lenirose Abangan 13,300.00
23. Paulina Cordero 1,400.00
24. Nora Maquiling 2,000.00
25. Rosalie Sondia 2,000.00
26. Ruby Sepulvida 3,500.00
27. Marjorie Macate 1,500.00
28. Estelita Biocos 3,000.00
29. Zita Galindo 3,500.00
30. Nimfa Bucol 1,000.00
31. Nancy Bolivar 2,000.00
32. Leonora Caballero 13,900.00
33. Julianita Aranador 14,000.00
The complaints of Ma. Luz Alingasa, Nimfa Perez, and Cleta Mayo are hereby
dismissed in view of their desistance.
The following complaints are hereby dismissed for failure to appear/prosecute:

1. Jiyasmin Bantillo 6. Edna Salvante

2. Rosa de Luna Senail 7. Thelma Beltiar
3. Elnor Bandojo 8. Cynthia Cepe

4. Teresa Caldeo 9. Rosie Pavillon

5. Virginia Castroverde
The complaints filed by the following are hereby dismissed for lack of evidence:

1. Aleth Palomaria 5. Mary Ann Beboso

2. Emely Padrones 6. Josefina Tejero
3. Marybeth Aparri 7. Bernadita Aprong
4. Lenia Biona 8. Joji Lull
Respondent agency is liable for twenty eight (28) counts of violation of Article 32 and
five (5) counts of Article 34 (a) with a corresponding suspension in the aggregate
period of sixty six (66) months.Considering however, that under the schedule of
penalties, any suspension amounting to a period of 12 months merits the imposition of
the penalty of cancellation, the license of respondent TRANS ACTION OVERSEAS
CORPORATION to participate in the overseas placement and recruitment of workers
is hereby ordered CANCELLED, effective immediately.
SO ORDERED. (Underscoring supplied)
[2]

On April 29, 1991, petitioner filed its Motion for Temporary Lifting of Order of
Cancellation alleging, among other things, that to deny it the authority to engage in
placement and recruitment activities would jeopardize not only its contractual relations
with its foreign principals, but also the welfare, interests, and livelihood of recruited
workers scheduled to leave for their respective assignments. Finally, it manifested its
willingness to post a bond to insure payment of the claims to be awarded, should its
appeal or motion be denied.
Finding the motion to be well taken, Undersecretary Confesor provisionally lifted the
cancellation of petitioners license pending resolution of its Motion for Reconsideration
filed on May 6, 1991. On January 30, 1992, however, petitioners motion for
reconsideration was eventually denied for lack of merit, and the April 5, 1991, order
revoking its license was reinstated.
Petitioner contends that Secretary Confesor acted with grave abuse of discretion in
rendering the assailed orders on alternative grounds, viz.: (1) it is the Philippine
Overseas Employment Administration (POEA) which has the exclusive and original
jurisdiction to hear and decide illegal recruitment cases, including the authority to cancel

recruitment licenses, or (2) the cancellation order based on the 1987 POEA Schedule of
Penalties is not valid for non-compliance with the Revised Administrative Code of 1987
regarding its registration with the U.P. Law Center.
Under Executive Order No. 797 (E.O. No. 797) and Executive Order No. 247 (E.O.
No. 247), the POEA was established and mandated to assume the functions of the
Overseas Employment Development Board (OEDB), the National Seamen Board
(NSB), and the overseas employment function of the Bureau of Employment Services
(BES). Petitioner theorizes that when POEA absorbed the powers of these
agencies, Article 35 of the Labor Code, as amended, was rendered ineffective.
[3]

[4]

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

ART. 35. Suspension and/or Cancellation of License or Authority. - The Minister of

Labor shall have the power to suspend or cancel any license or authority to recruit
employees for overseas employment for violation of rules and regulations issued by
the Ministry of Labor, the Overseas Employment Development Board, and the
National Seamen Board, or for violation of the provisions of this and other applicable
laws, General Orders and Letters of Instructions.
In the case of Eastern Assurance and Surety Corp. v. Secretary of Labor, we held
that:
[5]

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

1) the imposition or acceptance, directly or indirectly, of any amount of money, goods

or services, or any fee or bond in excess of what is prescribed by the Administration,
and

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

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

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

A non-licensee or non-holder of authority means any person, corporation or entity

which has not been issued a valid license or authority to engage in recruitment and
placement by the Secretary of Labor, or whose license or authority has been
suspended, revoked or cancelled by the POEA or the Secretary. (Underscoring
supplied)
In view of the Courts disposition on the matter, we rule that the power to suspend or
cancel any license or authority to recruit employees for overseas employment is
concurrently vested with the POEA and the Secretary of Labor.
As regards petitioners alternative argument that the non-filing of the 1987 POEA
Schedule of Penalties with the UP Law Center rendered it ineffective and, hence,
cannot be utilized as basis for penalizing them, we agree with Secretary Confesors
explanation, to wit:

On the other hand, the POEA Revised Rules on the Schedule of Penalties was issued
pursuant to Article 34 of the Labor Code, as amended. The same merely amplified and
particularized the various violations of the rules and regulations of the POEA and
clarified and specified the penalties therefore (sic). Indeed, the questioned schedule of
penalties contains only a listing of offenses. It does not prescribe additional rules and
regulations governing overseas employment but only detailed the administrative
sanctions imposable by this Office for some enumerated prohibited acts.
Under the circumstances, the license of the respondent agency was cancelled on
the authority of Article 35 of the Labor Code, as amended, and not pursuant to the 1987
POEA Revised Rules on Schedule of Penalties.
[10]

WHEREFORE, in view of the foregoing, the instant petition is hereby

DISMISSED. Accordingly, the decision of the Secretary of Labor dated April 5, 1991, is
AFFIRMED. No costs.
SO ORDERED.

Regalado, (Chairman), Puno Mendoza, and Torres, Jr., JJ., concur.

FIRST DIVISION

REPUBLIC OF THE PHILIPPINES, G.R. No. 167639

represented by the ADMINISTRATOR
OF THE PHILIPPINE OVERSEAS
EMPLOYMENT ADMINISTRATION
(POEA),
Petitioner, Present:
Panganiban, C.J. (Chairperson),
- versus - Ynares-Santiago,
Austria-Martinez,
Callejo, Sr., and
Chico-Nazario, JJ.
PRINCIPALIA MANAGEMENT AND
PERSONNEL CONSULTANTS, Promulgated:
INCORPORATED,
Respondent. April 19, 2006
x
x

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

DECISION
YNARES-SANTIAGO, J.:

Petitioner assails the September 20, 2004 Resolution [1] of the

Court of Appeals in CA-G.R. SP No. 86170, dismissing outright the
petition for certiorari for failure to attach copies of all relevant
pleadings and transcripts of the hearings, as well as the March 29,
2005 Resolution[2] denying the motion for reconsideration.

This case stemmed from two separate complaints filed before the
Philippine Overseas Employment Administration (POEA) against
Principalia Management and Personnel Consultants, Incorporated
(Principalia) for violation of the 2002 POEA Rules and
Regulations. The first complaint dated July 16, 2003 filed by Ruth
Yasmin Concha (Concha) was docketed as POEA Case No. RV 0307-1497. The second complaint dated October 14, 2003 filed by
Rafael E. Baldoza (Baldoza) was docketed as POEA Case No. RV
03-07-1453.

In the first complaint, Concha alleged that in August 2002, she

applied with Principalia for placement and employment as
caregiver or physical therapist in the USA or Canada.Despite
paying P20,000.00 out of the P150,000.00 fee required by
Principalia which was not properly receipted, Principalia failed to
deploy Concha for employment abroad.[3]

In its March 15, 2004 Order,[4] the Adjudication Office of the

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

Baldoza initiated the second complaint on October 14,

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

On November 12, 2003, Baldoza and Principalia entered into a

compromise agreement with quitclaim and release whereby the
latter
agreed
to
redeploy
Baldoza
for
employment
abroad. Principalia, however, failed to deploy Baldoza as agreed
hence, in an Order dated April 29, 2004,[6] the POEA suspended
Principalias documentary processing.

Principalia moved for reconsideration which the POEA

granted on June 25, 2004. [7] The latter lifted its order suspending
the documentary processing by Principalia after noting that it
exerted efforts to obtain overseas employment for Baldoza within

the period stipulated in the settlement agreement but due to

Baldozas lack of qualification, his application was declined by its
foreign principal.

Meanwhile, on June 14, 2004, or before the promulgation of

POEAs order lifting the suspension, Principalia filed a
Complaint[8] (Complaint) against Rosalinda D. Baldoz in her
capacity as Administrator of POEA and Atty. Jovencio R. Abara in
his capacity as POEA Conciliator, before the Regional Trial Court
(RTC) of Mandaluyong City for Annulment of Order for Suspension
of Documentation Processing with Damages and Application for
Issuance of a Temporary Restraining Order and/or Writ of
Preliminary Injunction, and a Writ of Preliminary Mandatory
Injunction. Principalia claimed that the suspension of its
documentary processing would ruin its reputation and goodwill
and would cause the loss of its applicants, employers and
principals. Thus, a writ of preliminary injunction and a writ of
mandatory injunction must be issued to prevent serious and
irreparable damage to it.

On June 14, 2004,[9] Judge Paulita B. Acosta-Villarante of the RTC of

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

WHEREFORE, in order to preserve status quo ANTE, the

prayer for a Temporary Restraining Order is hereby
GRANTED enjoining the defendant[s] ROSALINDA D.
BALDOZ and ATTY. JOVENCIO ABARA, other officers of

Philippine Overseas Employment Administration, their

subordinates, agents, representatives and all other
persons acting for and in their behalf, for (sic)
implementing the Orders of Suspension under VC No. LRD
03-100-95 and POEA Case No. RV-03-07-1497.

Let the hearing on Preliminary Injunction and Preliminary

Mandatory Injunction be set on June 22, 2004 at 1:30
oclock in the afternoon.

SO ORDERED.[11]

After the hearing on the preliminary injunction, Administrator

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

Accordingly, the only issue left for the resolution of this

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

In support of its Application for a Writ of Preliminary

Prohibitory Injunction, Plaintiff presented evidence to
prove the following:

(1) that it has a license,

(2) that the said license was renewed,
(3) the existence of the two (2) suspension orders
subject of this case;
(4) the irreparable damages to the Plaintiff.

The defendants on the other hand did not

present evidence to controvert the evidence of the
plaintiff. Instead,
defendants
submitted
a
Memorandum.

Upon a careful evaluation and assessment of the

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

It bears stressing that the Order of

Suspension dated March 15, 2004 is still pending
appeal before the Office of the Secretary of Labor
and Employment.

It is likewise significant to point out that the said

Order dated March 15, 2004 does not categorically state
that the suspension of Plaintiffs License is immediately
executory contrary to the contention of the defendants.

Counsel for POEA argued that the basis for the

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

Section 5. Stay of Execution. The decision of

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

The Order dated March 15, 2004 decreed Plaintiff as

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

Violation of Section 2 (a) (d) and (e) Rule I, Part VI of POEA

Rules and Regulations imposes a penalty of two (2)
months to six (6) months suspension of license for the
FIRST offender (sic).And in the absence of mitigating or
aggravating circumstance, the medium range of the

imposable penalty which is four (4) months shall be

meted out. Being a first offender, the plaintiff was
imposed suspension of license for four (4) months for
each violation or an aggregate period of suspension for
twelve (12) months for the three (3) violations.

It was not however made clear in the Order of

Suspension dated March 15, 2004 that the
Plaintiffs case falls under the EXCEPTION under
Section 5 Rule V, Part VI of the 2002 POEA Rules
and
Regulation,
warranting
the
immediate
implementation thereof even if an appeal is pending
with the POEA.

The Plaintiff had established that even if it has been

granted a renewal license, but if the same is suspended
under the March 15, 2004 Order in POEA case No. RV-0307-1497, it could not use the license to do business. As
earlier mentioned, the said Order is still pending appeal.

In the meantime that the appeal has not been

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

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

WHEREFORE, as prayed for by the Plaintiff, the

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

The Writ of Preliminary Prohibitory Injunction shall be in

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

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

the order does not categorically state that the suspension of the
license is immediately executory.

POEA appealed to the Court of Appeals which was

dismissed[15] outright for failure of POEA to attach copies of its
Memorandum dated June 30, 2004, as well as the transcripts of
the hearings conducted on June 22, 2004 and June 29, 2004 as
required under Section 3 of Rule 46 of the Rules of Court. POEAs
motion for reconsideration was denied [16]hence, this petition on
the following grounds:

I
SECTION 1, RULE 65 OF THE REVISED RULES OF COURT
REQUIRES ONLY THAT THE PETITION SHOULD BE
ACCOMPANIED BY CERTIFIED TRUE COPIES OF THE
JUDGMENT, ORDER OR RESOLUTION SUBJECT THEREOF
AND OTHER DOCUMENTS RELEVANT AND PERTINENT
THERETO. PETITIONER ATTACHED ALL THE DOCUMENTS
PERTINENT TO THE PETITION FILED WITH THE COURT OF
APPEALS.

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

III

THE REGIONAL TRIAL COURT COMMITTED GRAVE ABUSE

OF DISCRETION WHEN IT GRANTED RESPONDENT
PRINCIPALIAS APPLICATION DESPITE THE ABSENCE OF
PROOF OF IRREPARABLE DAMAGE AS REQUIRED UNDER
THE RULES OF COURT.

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

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

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

POEA avers that the Court of Appeals Resolution dismissing

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

We disagree.

The Court of Appeals dismissed the petition for certiorari due

to POEAs failure to comply with Section 3, Rule 46 and Section 1,
Rule 65 of the Rules of Court which read as follows:

RULE 46

SEC. 3. Contents and filing of petition; effect of non-compliance with

requirements. - The petition shall contain the full names and actual addresses of
all the petitioners and respondents, a concise statement of the matters involved,
the factual background of the case, and the grounds relied upon for the relief
prayed for.

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

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

xxxx

The failure of the petitioner to comply with

any of the foregoing requirements shall be
sufficient ground for the dismissal of the
petition. (Emphasis supplied)

RULE 65

SECTION. 1. Petition for certiorari. When any tribunal,

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

The petition shall be accompanied by a certified

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

In the case at bar, the Court of Appeals dismissed the petition for
certiorari due to POEAs failure to attach the following relevant
documents: (1) the Memorandum filed by POEA in the trial court
to oppose the Complaint; and (2) the transcripts of stenographic
notes (TSN) of the hearings conducted by the trial court on June
22, 2004 and June 29, 2004. In its motion for reconsideration
dated October 13, 2004,[18] POEA only attached the TSN
dated June 30, 2004,[19] with the explanation that the trial court
did not furnish it with copies of the other hearings. However, we
note that POEA still failed to attach a copy of the Memorandum
which the Court of Appeals deemed essential in its determination
of the propriety of the trial courts issuance of the writ of
preliminary prohibitory injunction.

The allowance of the petition on the ground of substantial

compliance with the Rules is not a novel occurrence in our
jurisdiction.[20] Indeed, if we apply the Rules strictly, we cannot
fault the Court of Appeals for dismissing the petition [21] because
the POEA did not demonstrate willingness to comply with the
requirements set by the rules and to submit the necessary
documents which the Court of Appeals need to have a proper
perspective of the case.

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

We do not agree.

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

Furthermore, irreparable damage was duly proven by

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

In the meantime that the appeal has not been resolved,

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

If the injunctive writ was not granted, Principalia would have

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

Moreover, POEA would have no authority to exercise its regulatory

functions over Principalia because the matter had already been
brought to the jurisdiction of the DOLE.Principalia has been
granted the license to recruit and process documents for Filipinos
interested to work abroad. Thus, POEAs action of suspending
Principalias license before final adjudication by the DOLE would be
premature and would amount to a violation of the latters right to
recruit and deploy workers.

Finally, the presumption of regular performance of duty by

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

WHEREFORE, in light of the foregoing, the petition is DENIED for

lack of merit.

SO ORDERED.

Republic
SUPREME
Manila

of

the

Philippines
COURT

FIRST DIVISION
G.R. No. 156029

November 14, 2008

SANTOSA
B.
DATUMAN, petitioner,
vs.
FIRST COSMOPOLITAN MANPOWER AND PROMOTION SERVICES,
INC., respondent.
DECISION
LEONARDO-DE CASTRO, J.:
Before us is a petition for review on certiorari under Rule 45 of the 1997 Rules
of Civil Procedure, as amended, assailing the Court of Appeals (CA)
Decision1 dated August 7, 2002, in CA-G.R. SP No. 59825, setting aside the
Decision of the National Labor Relations Commission (NLRC).
The facts are as follows:
Sometime in 1989, respondent First Cosmopolitan Manpower & Promotion
Services, Inc. recruited petitioner Santosa B. Datuman to work abroad under
the following terms and conditions:

Site of employment

- Bahrain

Employees Classification/Position/Grade

- Saleslady

Basic Monthly Salary

- US$370.00

Duration of Contract

- One (1) year

Foreign Employer

- Mohammed Sharif Abbas Ghulam Hussain2

On April 17, 1989, petitioner was deployed to Bahrain after paying the
required placement fee. However, her employer Mohammed Hussain took her
passport when she arrived there; and instead of working as a saleslady, she
was forced to work as a domestic helper with a salary of Forty Bahrain Dinar
(BD40.00), equivalent only to One Hundred US Dollars (US$100.00). This was
contrary to the agreed salary of US$370.00 indicated in her Contract of
Employment signed in the Philippines and approved by the Philippine
Overseas Employment Administration (POEA).3
On September 1, 1989, her employer compelled her to sign another contract,
transferring her to another employer as housemaid with a salary of BD40.00
for the duration of two (2) years.4 She pleaded with him to give her a release
paper and to return her passport but her pleas were unheeded. Left with no
choice, she continued working against her will. Worse, she even worked
without compensation from September 1991 to April 1993 because of her
employer's continued failure and refusal to pay her salary despite demand. In
May 1993, she was able to finally return to the Philippines through the help of
the Bahrain Passport and Immigration Department.5
In May 1995, petitioner filed a complaint before the POEA Adjudication Office
against respondent for underpayment and nonpayment of salary, vacation
leave pay and refund of her plane fare, docketed as Case No. POEA ADJ. (L)
95-05-1586.6 While the case was pending, she filed the instant case before
the NLRC for underpayment of salary for a period of one year and six months,
nonpayment of vacation pay and reimbursement of return airfare.
When the parties failed to arrive at an amicable settlement before the Labor
Arbiter, they were required to file their respective position papers, subsequent
pleadings and documentary exhibits.
In its Position Paper,7 respondent countered that petitioner actually agreed to
work in Bahrain as a housemaid for one (1) year because it was the only
position available then. However, since such position was not yet allowed by
the POEA at that time, they mutually agreed to submit the contract to the

POEA indicating petitioner's position as saleslady. Respondent added that it

was actually petitioner herself who violated the terms of their contract when
she allegedly transferred to another employer without respondent's knowledge
and approval. Lastly, respondent raised the defense of prescription of cause
of action since the claim was filed beyond the three (3)-year period from the
time the right accrued, reckoned from either 1990 or 1991.8
On April 29, 1998, Labor Arbiter Jovencio Mayor, Jr. rendered a Decision
finding respondent liable for violating the terms of the Employment Contract
and ordering it to pay petitioner: (a) the amount of US$4,050.00, or its
equivalent rate prevailing at the time of payment, representing her salary
differentials for fifteen (15) months; and, (b) the amount of BD 180.00 or its
equivalent rate prevailing at the time of payment, representing the refund of
plane ticket, thus:
From the foregoing factual backdrop, the only crucial issue for us to
resolve in this case is whether or not complainant is entitled to her
monetary claims.
xxx
In the instant case, from the facts and circumstances laid down, it is
thus self-evident that the relationship of the complainant and respondent
agency is governed by the Contract of Employment, the basic terms a
covenants of which provided for the position of saleslady, monthly
compensation of US$370.00 and duration of contract for one (1) year.
As it is, when the parties - complainant and respondent Agency - signed
and executed the POEA - approved Contract of Employment, this
agreement is the law that governs them. Thus, when respondent agency
deviated from the terms of the contract by assigning the position of a
housemaid to complainant instead of a saleslady as agreed upon in the
POEA-approved Contract of Employment, respondent Agency
committed a breach of said Employment Contract. Worthy of mention
is the fact that respondent agency in their Position Paper
paragraph 2, Brief Statement of the Facts and of the Case admitted that it had entered into an illegal contract with
complainant by proposing the position of a housemaid which said
position was then not allowed by the POEA, by making it appear in
the Employment Contract that the position being applied for is the
position of a saleslady. As it is, we find indubitably clear that the
foreign employer had took advantage to the herein hopeless
complainant and because of this ordeal, the same obviously

rendered complainant's continuous employment unreasonable if

not downright impossible. The facts and surrounding circumstances
of her ordeal was convincingly laid down by the complainant in her
Position Paper, from which we find no flaws material enough to
disregard the same. Complainant had clearly made out her case and no
amount of persuasion can convince us to tilt the scales of justice in
favor of respondents whose defense was anchored solely on the flimsy
allegations that for a period of more than five (5) years - from 1989 until
1995 - nothing was heard from her or from her relatives, presuming then
that complainant had no problem with her employment abroad. We also
find that the pleadings and the annexes filed by the parties reveal a total
lapse on the part of respondent First Cosmopolitan Manpower and
Promotions - their failure to support with substantial evidence their
contention that complainant transferred from one employer to another
without knowledge and approval of respondent agency in contravention
of the terms of the POEA approved Employment Contract. Obviously,
respondent Agency anchored its disquisition on the alleged "contracts"
signed by the complainant that she agreed with the terms of said
contracts - one (1) year duration only and as a housemaid - to support
its contention that complainant violated the contract agreement by
transferring from one employer to another on her own volition without
the knowledge and consent of respondent agency. To us, this posture of
respondent agency is unavailing. These "documents" are self-serving.
We could not but rule that the same were fabricated to tailor-fit their
defense that complainant was guilty of violating the terms of the
Employment Contract. Consequently, we could not avoid the inference
of a more logical conclusion that complainant was forced against her will
to continue with her employment notwithstanding the fact that it was in
violation of the original Employment Contract including the illegal
withholding of her passport.
With the foregoing, we find and so rule that respondent Agency failed to
discharge the burden of proving with substantial evidence that
complainant violated the terms of the Employment Contract, thus
negating respondent Agency's liability for complainant's money claims.
All the more, the record is bereft of any evidence to show that
complainant Datuman is either not entitled to her wage differentials or
have already received the same from respondent. As such, we are
perforce constrained to grant complainant's prayer for payment of salary
differentials computed as follows:

January 1992 April 1993 (15 months)

US$370.00 agreed salary
US$100.00 actual paid salary
US$270.00 balance
US$270.00 x 15 months = US$4050.00
We are also inclined to grant complainant's entitlement to a refund of
her plane ticket in the amount of BD 180 Bahrain Dinar or the equivalent
in Philippine Currency at the rate of exchange prevailing at the time of
payment.
Anent complainant's claim for vacation leave pay and overtime pay, we
cannot, however, grant the same for failure on the part of complainant to
prove with particularity the months that she was not granted vacation
leave and the day wherein she did render overtime work.
Also, we could not grant complainant's prayer for award of damages
and attorney's fees for lack of factual and legal basis.
WHEREFORE, premises considered, judgment is hereby rendered,
finding respondent Agency liable for violating the term of Employment
Contract and respondent First Cosmopolitan Manpower and Promotions
is hereby ordered:
To pay complainant the amount of US$ FOUR THOUSAND AND FIFTY
(US$4,050.00), or its equivalent rate prevailing at the time of payment,
representing her salary differentials for fifteen (15) months;
To pay complainant the amount of BD 180.00 or its equivalent rate
prevailing at the time of payment, representing the refund of plane
ticket;
All other claims are hereby dismissed for lack of merit.
SO ORDERED.9 (emphasis supplied)

On appeal, the NLRC, Second Division, issued a Decision 10 affirming with

modification the Decision of Labor Arbiter Mayor, Jr., by reducing the award of
salary differentials from US$4,050.00 to US$2,970.00 ratiocinating as follows:
Accordingly, we find that the claims for salary differentials accruing
earlier than April of 1993 had indeed prescribed. This is so as
complainant had filed her complaint on May 31, 1995 when she arrived
from the jobsite in April 1993. Since the cause of action for salary
differential accrues at the time when it falls due, it is clear that only the
claims for the months of May 1993 to April 1994 have not yet
prescribed. With an approved salary rate of US$370.00 vis--vis the
amount of salary received which was $100.00, complainant is entitled to
the salary differential for the said period in the amount of $2,970.00.
xxx
WHEREFORE, premises considered, judgment is hereby rendered
MODIFYING the assailed Decision by reducing the award of salary
differentials to $2,970.00 to the complainant.
The rest of the disposition is AFFIRMED.
SO ORDERED.11
On July 21, 2000, respondent elevated the matter to the CA through a petition
for certiorari under Rule 65.
On August 2, 2000,12 the CA dismissed the petition for being insufficient in
form pursuant to the last paragraph of Section 3, Rule 42 of the 1997 Rules of
Civil Procedure, as amended.
On October 20, 2000,13 however, the CA reinstated the petition upon
respondent's motion for reconsideration.14
On August 7, 2002, the CA issued the assailed Decision15 granting the petition
and reversing the NLRC and the Labor Arbiter, thus:
Under Section 1 (f), Rule II, Book II of the 1991 POEA Rules and
Regulations, the local agency shall assume joint and solidary liability
with the employer for all claims and liabilities which may arise in
connection with the implementation of the contract, including but not

limited to payment of wages, health and disability compensation and

repatriation.
Respondent Commission was correct in declaring that claims of private
respondent "for salary differentials accruing earlier than April of 1993
had indeed prescribed." It must be noted that petitioner company is
privy only to the first contract. Granting arguendo that its liability extends
to the acts of its foreign principal, the Towering Recruiting Services,
which appears to have a hand in the execution of the second contract, it
is Our considered opinion that the same would, at the most, extend only
up to the expiration of the second contract or until 01 September 1991.
Clearly, the money claims subject of the complaint filed in 1995 had
prescribed.
However, this Court declares respondent Commission as not only
having abused its discretion, but as being without jurisdiction at all, in
declaring private respondent entitled to salary differentials. After
decreeing the money claims accruing before April 1993 as having
prescribed, it has no more jurisdiction to hold petitioner company for
salary differentials after that period. To reiterate, the local agency shall
assume joint and solidary liability with the employer for all claims and
liabilities which may arise in connection with the implementation of the
contract. Which contract? Upon a judicious consideration, we so hold
that it is only in connection with thefirst contract. The provisions in
number 2, Section 10 (a), Rule V, Book I of the Omnibus Rules
Implementing the Labor Code Section 1 (f), Rule II, Book II of the 1991
POEA Rules and Regulations were not made to make the local agency
a perpetual insurer against all untoward acts that may be done by the
foreign principal or the direct employer abroad. It is only as regards the
principal contract to which it is privy shall its liability extend. In Catan v.
National Labor Relations Commission, 160 SCRA 691 (1988), it was
held that the responsibilities of the local agent and the foreign principal
towards the contracted employees under the recruitment agreement
extends up to and until the expiration of the employment contracts of the
employees recruited and employed pursuant to the said recruitment
agreement.
xxx
Foregoing considered, the assailed Decision dated 24 February 2000
and the Resolution dated 23 June 2000 of respondent Commission in
NLRC NCR CA 016354-98 are hereby SET ASIDE.

SO ORDERED.16
Petitioner's Motion for Reconsideration17 thereon was denied in the assailed
Resolution18 dated November 14, 2002.
Hence, the present petition based on the following grounds:
I.
THE HONORABLE COURT OF APPEALS COMMITTED A
REVERSIBLE ERROR WHEN IT ABANDONED THE FACTUAL
FINDINGS OF THE LABOR ARBITER AS AFFIRMED BY THE
NATIONAL LABOR RELATIONS COMMISSION.
II.
THE HONORABLE COURT OF APPEALS PATENTLY ERRED IN
HOLDING THAT THE RESPONDENT AGENCY IS ONLY A [sic] PRIVY
AND LIABLE TO THE PRINCIPAL CONTRACT.
III.
THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN
HOLDING THAT THE CAUSE OF ACTION OF THE PETITIONER
ALREADY PRESCRIBED.
The respondent counters in its Comment that the CA is correct in ruling that it
is not liable for the monetary claims of petitioner as the claim had already
prescribed and had no factual basis.
Simply put, the issues boil down to whether the CA erred in not holding
respondent liable for petitioner's money claims pursuant to their Contract of
Employment.
We grant the petition.
On whether respondent is solidarily liable for petitioner's monetary
claims
Section 1 of Rule II of the POEA Rules and Regulations states that:
Section 1. Requirements for Issuance of License. - Every applicant for
license to operate a private employment agency or manning agency

shall submit a written application together with the following

requirements:
xxx
f. A verified undertaking stating that the applicant:
xxx
(3) Shall assume joint and solidary liability with the employer for all
claims and liabilities which may arise in connection with the
implementation of the contract; including but not limited to payment of
wages, death and disability compensation and repatriation. (emphasis
supplied)
The above provisions are clear that the private employment agency shall
assume joint and solidary liability with the employer.19 This Court has, time
and again, ruled that private employment agencies are held jointly and
severally liable with the foreign-based employer for any violation of the
recruitment agreement or contract of employment.20 This joint and solidary
liability imposed by law against recruitment agencies and foreign employers is
meant to assure the aggrieved worker ofimmediate and sufficient payment of
what is due him.21 This is in line with the policy of the state to protect and
alleviate the plight of the working class.
In the assailed Decision, the CA disregarded the aforecited provision of the
law and the policy of the state when it reversed the findings of the NLRC and
the Labor Arbiter. As the agency which recruited petitioner, respondent is
jointly and solidarily liable with the latter's principal employer abroad for her
(petitioner's) money claims. Respondent cannot, therefore, exempt itself from
all the claims and liabilities arising from the implementation of their POEAapproved Contract of Employment.
We cannot agree with the view of the CA that the solidary liability of
respondent extends only to the first contract (i.e. the original, POEA-approved
contract which had a term of until April 1990). The signing of the "substitute"
contracts with the foreign employer/principal before the expiration of the
POEA-approved contract and any continuation of petitioner's employment
beyond the original one-year term, against the will of petitioner, are continuing
breaches of the original POEA-approved contract. To accept the CA's
reasoning will open the floodgates to even more abuse of our overseas
workers at the hands of their foreign employers and local recruiters, since the

recruitment agency could easily escape its mandated solidary liability for
breaches of the POEA-approved contract by colluding with their foreign
principals in substituting the approved contract with another upon the worker's
arrival in the country of employment. Such outcome is certainly contrary to the
State's policy of extending protection and support to our overseas workers. To
be sure, Republic Act No. 8042 explicitly prohibits the substitution or alteration
to the prejudice of the worker of employment contracts already approved and
verified by the Department of Labor and Employment (DOLE) from the time of
actual signing thereof by the parties up to and including the period of the
expiration of the same without the approval of the DOLE.22
Respondent's contention that it was petitioner herself who violated their
Contract of Employment when she signed another contract in Bahrain
deserves scant consideration. It is the finding of both the Labor Arbiter and the
NLRC - which, significantly, the CA did not disturb - that petitioner was forced
to work long after the term of her original POEA-approved contract, through
the illegal acts of the foreign employer.
In Placewell International Services Corporation v. Camote,23 we held that the
subsequently executed side agreement of an overseas contract worker with
her foreign employer which reduced his salary below the amount approved by
the POEA is void because it is against our existing laws, morals and public
policy. The said side agreement cannot supersede the terms of the standard
employment contract approved by the POEA.
Hence, in the present case, the diminution in the salary of petitioner from
US$370.00 to US$100 (BD 40.00) per month is void for violating the POEAapproved contract which set the minimum standards, terms, and conditions of
her employment. Consequently, the solidary liability of respondent with
petitioner's foreign employer for petitioner's money claims continues although
she was forced to sign another contract in Bahrain. It is the terms of the
original POEA-approved employment contract that shall govern the
relationship of petitioner with the respondent recruitment agency and the
foreign employer. We agree with the Labor Arbiter and the NLRC that the
precepts of justice and fairness dictate that petitioner must be compensated
for all months worked regardless of the supposed termination of the original
contract in April 1990. It is undisputed that petitioner was compelled to render
service until April 1993 and for the entire period that she worked for the
foreign employer or his unilaterally appointed successor, she should have
been paid US$370/month for every month worked in accordance with her
original contract.

Respondent cannot disclaim liability for the acts of the foreign employer which
forced petitioner to remain employed in violation of our laws and under the
most oppressive conditions on the allegation that it purportedly had no
knowledge of, or participation in, the contract unwillingly signed by petitioner
abroad. We cannot give credence to this claim considering that respondent by
its own allegations knew from the outset that the contract submitted to the
POEA for approval was not to be the "real" contract. Respondent blithely
admitted to submitting to the POEA a contract stating that the position to be
filled by petitioner is that of "Saleslady" although she was to be employed as a
domestic helper since the latter position was not approved for deployment by
the
POEA
at
that
time.
Respondent's
evident
bad
faith
and admitted circumvention of the laws and regulations on migrant workers
belie its protestations of innocence and put petitioner in a position where she
could be exploited and taken advantage of overseas, as what indeed
happened to her in this case.
We look upon with great disfavor the unsubstantiated actuations of innocence
or ignorance on the part of local recruitment agencies of acts of their foreign
principals, as if the agencies' responsibility ends with the deployment of the
worker. In the light of the recruitment agency's legally mandated joint and
several liability with the foreign employer for all claims in connection with
the implementation of the contract, it is the recruitment agency's
responsibility to ensure that the terms and conditions of the employment
contract, as approved by the POEA, are faithfully complied with and
implemented properly by its foreign client/principal. Indeed, it is in its best
interest to do so to avoid being haled to the courts or labor tribunals and
defend itself from suits for acts of its foreign principal.
On whether petitioner's claims for underpaid salaries have prescribed
It should be recalled that the Labor Arbiter and the NLRC similarly found that
petitioner is entitled to underpaid salaries, albeit they differed in the number of
months for which salary differentials should be paid. The CA, on the other
hand, held that all of petitioner's monetary claims have prescribed pursuant to
Article 291 of the Labor Code which provides that:
Art. 291. Money Claims. - All money claims arising from employeremployee relations accruing during the effectivity of this Code shall be
filed within three years from the time that cause of action accrued;
otherwise, they shall be forever barred. (emphasis supplied)

We do not agree with the CA when it held that the cause of action of petitioner
had already prescribed as the three-year prescriptive period should be
reckoned from September 1, 1989 when petitioner was forced to sign another
contract against her will. As stated in the complaint, one of petitioner's causes
of action was for underpayment of salaries. The NLRC correctly ruled the right
to claim unpaid salaries (or in this case, unpaid salary differentials) accrue as
they fall due.24 Thus, petitioner's cause of action to claim salary differential for
October 1989 only accrued after she had rendered service for that month (or
at the end of October 1989). Her right to claim salary differential for November
1989 only accrued at the end of November 1989, and so on and so forth.
Both the Labor Arbiter and the NLRC found that petitioner was forced to work
until April 1993. Interestingly, the CA did not disturb this finding but held only
that the extent of respondent's liability was limited to the term under the
original contract or, at most, to the term of the subsequent contract entered
into with the participation of respondent's foreign principal, i.e. 1991. We have
discussed previously the reasons why (a) the CA's theory of limited liability on
the part of respondent is untenable and (b) the petitioner has a right to be
compensated for all months she, in fact, was forced to work. To determine for
which months petitioner's right to claim salary differentials has not prescribed,
we must count three years prior to the filing of the complaint on May 31, 1995.
Thus, only claims accruing prior to May 31, 1992 have prescribed when the
complaint was filed on May 31, 1995. Petitioner is entitled to her claims for
salary differentials for the period May 31, 1992 to April 1993, or approximately
eleven (11) months.25
We find that the NLRC correctly computed the salary differential due to
petitioner at US$2,970.00 (US$370.00 as approved salary rate - US$100.00
as salary received = US$290 as underpaid salary per month x 11 months).
However, it should be for the period May 31, 1992 to April 1993 and not May
1993 to April 1994 as erroneously stated in the NLRC's Decision.
A final note
This Court reminds local recruitment agencies that it is their bounden duty to
guarantee our overseas workers that they are being recruited for bona
fide jobs with bona fide employers. Local agencies should never allow
themselves to be instruments of exploitation or oppression of their compatriots
at the hands of foreign employers. Indeed, being the ones who profit most
from the exodus of Filipino workers to find greener pastures abroad, recruiters
should be first to ensure the welfare of the very people that keep their industry
alive.

WHEREFORE, the petition is GRANTED. The assailed Decision of the Court

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

SECOND DIVISION

STOLT-NIELSEN
TRANSPORTATION GROUP,
INC. AND CHUNG GAI SHIP
MANAGEMENT,

G.R. No. 177498

Present:

Petitioners,
CARPIO, J.,
Chairperson,
PEREZ,
SERENO,
-versus-

REYES, and
PERLAS-BERNABE, JJ.*

SULPECIO MEDEQUILLO,
JR.,

Promulgated:

Respondent.
January 18, 2012

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

DECISION

PEREZ, J.:

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

WHEREFORE, the petition is hereby DENIED. Accordingly, the

assailed Decision promulgated on February 28, 2003 and the Resolution dated
July 27, 2005 are AFFIRMED.
3

The facts as gathered by this Court follow:

On 6 March 1995, Sulpecio Madequillo (respondent) filed a complaint before

the Adjudication Office of the Philippine Overseas Employment Administration
(POEA) against the petitioners for illegal dismissal under a first contract and for
failure to deploy under a second contract. In his complaint-affidavit, respondent
alleged that:
4

1.

On 6 November 1991(First Contract), he was hired by Stolt-Nielsen Marine

Services, Inc on behalf of its principal Chung-Gai Ship Management of Panama
as Third Assistant Engineer on board the vessel Stolt Aspiration for a period of
nine (9) months;

2.

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

3.

On 8 November 1991, he joined the vessel MV Stolt Aspiration;

4.

On February 1992 or for nearly three (3) months of rendering service and while
the vessel was at Batangas, he was ordered by the ships master to disembark the
vessel and repatriated back to Manila for no reason or explanation;

5.

Upon his return to Manila, he immediately proceeded to the petitioners office

where he was transferred employment with another vessel named MV Stolt
Pride under the same terms and conditions of the First Contract;

6.

On 23 April 1992, the Second Contract was noted and approved by the POEA;

7.

The POEA, without knowledge that he was not deployed with the vessel, certified
the Second Employment Contract on 18 September 1992.

8.

Despite the commencement of the Second Contract on 21 April 1992, petitioners

failed to deploy him with the vessel MV Stolt Pride;

9.

He made a follow-up with the petitioner but the same refused to comply with the
Second Employment Contract.

10.

On 22 December 1994, he demanded for his passport, seamans book and other
employment documents. However, he was only allowed to claim the said
documents in exchange of his signing a document;

11.

He was constrained to sign the document involuntarily because without these

documents, he could not seek employment from other agencies.

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

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

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

On 21 July 2000, Labor Arbiter Vicente R. Layawen rendered a

judgment finding that the respondent was constructively dismissed by the petitioners.
The dispositive portion reads:
6

WHEREFORE, premises considered, judgment is hereby rendered,

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

1.

$12,537.00 or its peso equivalent at the time of payment.

The Labor Arbiter found the first contract entered into by and between the
complainant and the respondents to have been novated by the execution of the second
contract. In other words, respondents cannot be held liable for the first contract but are
clearly and definitely liable for the breach of the second contract. However, he ruled
8

that there was no substantial evidence to grant the prayer for moral and exemplary
damages.
9

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

On 28 February 2003, the NLRC affirmed with modification the Decision of

the Labor Arbiter. The dispositive portion reads:

WHEREFORE, premises considered, the decision under review is hereby,

MODIFIED BY DELETING the award of overtime pay in the total amount of
Three Thousand Six Hundred Thirty Six US Dollars (US $3,636.00).

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

11

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

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

The NLRC upheld the finding of unjustified termination of contract for failure on the
part of the petitioners to present evidence that would justify their non-deployment of
the respondent. It denied the claim of the petitioners that the monetary award should
be limited only to three (3) months for every year of the unexpired term of the
contract. It ruled that the factual incidents material to the case transpired within 19911992 or before the effectivity of Republic Act No. 8042 or the Migrant Workers and
Overseas Filipinos Act of 1995 which provides for such limitation.
14

15

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

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

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

Finding no grave abuse of discretion, the Court of Appeals AFFIRMED the

Decision of the labor tribunal.

The Courts Ruling

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

I.

THE COURT A QUO ERRED IN FINDING THAT THE SECOND CONTRACT

NOVATED THE FIRST CONTRACT.

1.

THERE WAS NO NOVATION OF THE FIRST CONTRACT BY THE

SECOND CONTRACT; THE ALLEGATION OF ILLEGAL DISMISSAL
UNDER THE FIRST CONTRACT MUST BE RESOLVED SEPARATELY
FROM THE ALLEGATION OF FAILURE TO DEPLOY UNDER THE
SECOND CONTRACT.

2.

THE ALLEGED ILLEGAL DISMISSAL UNDER THE FIRST CONTRACT

TRANSPIRED MORE THAN THREE (3) YEARS AFTER THE CASE WAS
FILED AND THEREFORE HIS CASE SHOULD HAVE BEEN DISMISSED
FOR BEING BARRED BY PRESCRIPTION.

II.

THE COURT A QUO ERRED IN RULING THAT THERE WAS

CONSTRUCTIVE DISMISSAL UNDER THE SECOND CONTRACT.

1.

IT IS LEGALLY IMPOSSIBLE TO HAVE CONSTRUCTIVE DISMISSAL

WHEN THE EMPLOYMENT HAS NOT YET COMMENCED.

2.

ASSUMING THERE WAS OMISSION UNDER THE SECOND

CONTRACT, PETITIONERS CAN ONLY BE FOUND AS HAVING
FAILED IN DEPLOYING PRIVATE RESPONDENT BUT WITH VALID
REASON.

III.

THE COURT A QUO ERRED IN FAILING TO FIND THAT EVEN

ASSUMING THERE WAS BASIS FOR HOLDING PETITIONER LIABLE
FOR FAILURE TO DEPLOY RESPONDENT, THE POEA RULES
PENALIZES SUCH OMISSION WITH A MERE REPRIMAND.
18

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

We do not agree.

Novation is the extinguishment of an obligation by the substitution or change of

the obligation by a subsequent one which extinguishes or modifies the first, either by
changing the object or principal conditions, or, by substituting another in place of the
debtor, or by subrogating a third person in the rights of the creditor. In order for
novation to take place, the concurrence of the following requisites is indispensable:
1. There must be a previous valid obligation,
2. There must be an agreement of the parties concerned to a new contract,
3. There must be the extinguishment of the old contract, and
4. There must be the validity of the new contract.

19

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

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

held liable for the first contract but are clearly and definitely liable for the breach
of the second contract.
20

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

Guided by the foregoing legal precepts, it is evident that novation took

place in this particular case. The parties impliedly extinguished the first contract
by agreeing to enter into the second contract to placate Medequillo, Jr. who was
unexpectedly dismissed and repatriated to Manila. The second contract would not
have been necessary if the petitioners abided by the terms and conditions of
Madequillo, Jr.s employment under the first contract. The records also reveal that
the 2nd contract extinguished the first contract by changing its object or principal.
These contracts were for overseas employment aboard different vessels. The first
contract was for employment aboard the MV Stolt Aspiration while the second
contract involved working in another vessel, the MV Stolt Pride. Petitioners and
Madequillo, Jr. accepted the terms and conditions of the second contract. Contrary
to petitioners assertion, the first contract was a previous valid contract since it
had not yet been terminated at the time of Medequillo, Jr.s repatriation to Manila.
The legality of his dismissal had not yet been resolved with finality. Undoubtedly,
he was still employed under the first contract when he negotiated with petitioners
on the second contract. As such, the NLRC correctly ruled that petitioners could
only be held liable under the second contract.
21

We concur with the finding that there was a novation of the first employment
contract.
We reiterate once more and emphasize the ruling in Reyes v. National Labor
Relations Commission, to wit:
22

x x x [F]indings of quasi-judicial bodies like the NLRC, and affirmed by the

Court of Appeals in due course, are conclusive on this Court, which is not a trier
of facts.

xxxx

x x x Findings of fact of administrative agencies and quasi-judicial bodies,

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

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

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

26

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

Accordingly, the prescriptive period of three (3) years within which

Medequillo Jr. may initiate money claims under the 1st contract commenced on the
date of his repatriation. xxx The start of the three (3) year prescriptive period must
therefore be reckoned on February 1992, which by Medequillo Jr.s own
admission was the date of his repatriation to Manila. It was at this point in time

that Medequillo Jr.s cause of action already accrued under the first contract. He
had until February 1995 to pursue a case for illegal dismissal and damages arising
from the 1stcontract. With the filing of his Complaint-Affidavit on March 6, 1995,
which was clearly beyond the prescriptive period, the cause of action under the
1st contract was already time-barred.
27

The issue that proceeds from the fact of novation is the consequence of the nondeployment of respondent.

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

A contract is a meeting of minds between two persons whereby one binds

himself, with respect to the other, to give something or to render some service. The
contracting parties may establish such stipulations, clauses, terms and conditions as
they may deem convenient, provided they are not contrary to law, morals, good
customs, public order, or public policy.
29

30

The POEA Standard Employment Contract provides that employment shall

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

32

Thus, even if by the standard contract employment commences only upon

actual departure of the seafarer, this does not mean that the seafarer has no remedy in
case of non-deployment without any valid reason. Parenthetically, the contention of
the petitioners of the alleged poor performance of respondent while on board the first

ship MV Stolt Aspiration cannot be sustained to justify the non-deployment, for no

evidence to prove the same was presented.
33

We rule that distinction must be made between the perfection of the

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

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

The POEA Rules and Regulations Governing Overseas Employment dated 31

May 1991 provides for the consequence and penalty against in case of nondeployment of the seafarer without any valid reason. It reads:
35

Section 4. Workers Deployment. An agency shall deploy its recruits within the
deployment period as indicated below:

xxx

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

Failure of the agency to deploy a worker within the prescribed period

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

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

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

The POEA Rules Governing the Recruitment and Employment of Seafarers do

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

We thus decree the application of Section 10 of Republic Act No. 8042

(Migrant Workers Act) which provides for money claims by reason of a contract
involving Filipino workers for overseas deployment. The law provides:

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

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

Applying the rules on actual damages, Article 2199 of the New Civil Code
provides that one is entitled to an adequate compensation only for such pecuniary loss
suffered by him as he has duly proved. Respondent is thus liable to pay petitioner
actual damages in the form of the loss of nine (9) months worth of salary as provided
in the contract. This is but proper because of the non-deployment of respondent
without just cause.
38

WHEREFORE, the appeal is DENIED. The 31 January 2007 Decision of the

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

SO ORDERED.

FIRST DIVISION

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

THE PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs. CAROL M.

DELA PIEDRA, accused-appellant.
DECISION
KAPUNAN, J.:

Accused-appellant Carol M. dela Piedra questions her conviction for illegal recruitment in
large scale and assails, as well, the constitutionality of the law defining and penalizing said
crime.
The Court affirms the constitutionality of the law and the conviction of the accused, but
reduces the penalty imposed upon her.
The accused was charged before the Regional Trial Court of Zamboanga City in an
information alleging:

That on or about January 30, 1994, in the City of Zamboanga, Philippines, and within
the jurisdiction of this Honorable Court, the above-named accused, without having
previously obtained from the Philippine Overseas Employment Administration, a
license or authority to engage in recruitment and overseas placement of workers, did
then and there, wilfully, unlawfully and feloniously, offer and promise for a fee
employment abroad particularly in Singapore thus causing Maria Lourdes Modesto
[y] Gadrino, Nancy Araneta y Aliwanag and Jennelyn Baez y Timbol, all qualified to
apply, in fact said Maria Lourdes Modesto had already advanced the amount of
P2,000.00 to the accused for and in consideration of the promised employment which
did not materialized [sic] thus causing damage and prejudice to the latter in the said
sum; furthermore, the acts complained of herein tantamount [sic] to economic
sabotage in that the same were committed in large scale. [1]
Arraigned on June 20, 1994, the accused pleaded not guilty[2] to these charges.
At the trial, the prosecution presented five (5) witnesses, namely, Erlie Ramos, SPO2 Erwin
Manalopilar, Eileen Fermindoza, Nancy Araneta and Lourdes Modesto. The succeeding narration
is gathered from their testimonies:
On January 30, 1994, at exactly 10:00 in the morning, Erlie Ramos, Attorney II of the
Philippine Overseas Employment Agency (POEA), received a telephone call from an
unidentified woman inquiring about the legitimacy of the recruitment conducted by a certain
Mrs. Carol Figueroa. Ramos, whose duties include the surveillance of suspected illegal
recruiters, immediately contacted a friend, a certain Mayeth Bellotindos, so they could both go to
No. 26-D, Tetuan Highway, Sta. Cruz, Zamboanga City, where the recruitment was reportedly
being undertaken. Upon arriving at the reported area at around 4:00 p.m., Bellotindos entered the
house and pretended to be an applicant. Ramos remained outside and stood on the pavement,
from where he was able to see around six (6) persons in the houses sala. Ramos even heard a
woman, identified as Carol Fegueroa, talk about the possible employment she has to provide in

Singapore and the documents that the applicants have to comply with. Fifteen (15) minutes later,
Bellotindos came out with a bio-data form in hand.
On February 1, 1994, Ramos conferred with a certain Capt. Mendoza of the Criminal
Investigation Service (CIS) to organize the arrest of the alleged illegal recruiter. Also present
were other members of the CIS, including Col. Rodolfo Almonte, Regional Director of the PNPCIS for Region IX, Eileen Fermindoza, and a certain SPO3 Santos. The group planned to entrap
the illegal recruiter the next day by having Fermindoza pose as an applicant.[3]
On February 2, 1994, at around 8:00 p.m., Col. Almonte directed the case to SPO2 Erwin
Manalopilar, a member of the Philippine National Police who was assigned as an investigator of
the CIS, to conduct a surveillance of the area to confirm the report of illegal
recruitment. Accordingly, he, along with Eileen Fermindoza, immediately proceeded to Tetuan
Highway. The two did not enter the house where the recruitment was supposedly being
conducted, but Fermindoza interviewed two people who informed them that some people do go
inside the house. Upon returning to their office at around 8:30 a.m., the two reported to Capt.
Mendoza who organized a team to conduct the raid.
The raiding team, which included Capt. Mendoza, SPO2 Manalopilar, Fermindoza and a
certain Oscar Bucol, quickly set off and arrived at the reported scene at 9:30 that morning. There
they met up with Erlie Ramos of the POEA. Fermindoza then proceeded to enter the house while
the rest of the team posted themselves outside to secure the area. Fermindoza was instructed to
come out after she was given a bio-data form, which will serve as the teams cue to enter the
house.[4]
Fermindoza introduced herself as a job applicant to a man and a woman, apparently the
owners of the house, and went inside. There, she saw another woman, later identified as Jasmine,
coming out of the bathroom. The man to whom Fermindoza earlier introduced herself told
Jasmine that Fermindoza was applying for a position. Jasmine, who was then only wearing a
towel, told her that she would just get dressed. Jasmine then came back and asked Fermindoza
what position she was applying for. Fermindoza replied that she was applying to be a babysitter
or any other work so long as she could go abroad.Jasmine then gave her an application form.
A few minutes later, a certain Carol arrived. Jasmine informed Carol that Fermindoza was an
applicant. Fermindoza asked Carol what the requirements were and whether she (Fermindoza)
was qualified.Carol told Fermindoza that if she had a passport, she could fill up the application
papers. Fermindoza replied that she had no passport yet. Carol said she need not worry since
Jasmine will prepare the passport for her. While filling up the application form, three women
who appeared to be friends of Jasmine arrived to follow up the result of their applications and to
give their advance payment. Jasmine got their papers and put them on top of a small
table. Fermindoza then proceeded to the door and signaled to the raiding party by raising her
hand.
Capt. Mendoza asked the owners of the house, a married couple, for permission to enter the
same. The owners granted permission after the raiding party introduced themselves as members
of the CIS.Inside the house, the raiding party saw some supposed applicants. Application forms,
already filled up, were in the hands of one Mrs. Carol Figueroa. The CIS asked Figueroa if she
had a permit to recruit.Figueroa retorted that she was not engaged in recruitment. Capt. Mendoza

nevertheless proceeded to arrest Figueroa. He took the application forms she was holding as the
raiding party seized the other papers[5] on the table.[6]
The CIS team then brought Figueroa, a certain Jasmine Alejandro, and the three women
suspected to be applicants, to the office for investigation.[7]
In the course of their investigation, the CIS discovered that Carol Figueroa had many
aliases, among them, Carol Llena and Carol dela Piedra. The accused was not able to present any
authority to recruit when asked by the investigators.[8] A check by Ramos with the POEA
revealed that the acused was not licensed or authorized to conduct recruitment. [9] A
certification[10] dated February 2, 1994 stating thus was executed by Renegold M. Macarulay,
Officer-in-Charge of the POEA.
The CIS likewise interviewed the supposed applicants, Lourdes Modesto, Nancy Araneta
and Jennelyn Baez, all registered nurses working at the Cabato Medical Hospital, who executed
their respective written statements.[11]
At the trial, Nancy Araneta, 23, recounted that she was at Jasmine Alejandros house in the
afternoon of January 30, 1994. Araneta had learned from Sandra Aquino, also a nurse at the
Cabato Medical Hospital, that a woman was there to recruit job applicants for Singapore.
Araneta and her friends, Jennelyn Baez and Sandra Aquino, arrived at Jasmines house at
around 4:30 p.m. Jasmine welcomed them and told them to sit down. They listened to the
recruiter who was then talking to a number of people. The recruiter said that she was recruiting
nurses for Singapore. Araneta and her friends then filled up bio-data forms and were required to
submit pictures and a transcript of records. They were also told to pay P2,000, and the rest will
be salary deduction. Araneta submitted her bio-data form to Carol that same afternoon, but did
not give any money because she was not yet sure.
On the day of the raid on February 2, 1994, Araneta was again at the Alejandro residence to
submit her transcript of records and her picture. She arrived at the house 30 minutes before the
raid but did not witness the arrest since she was at the porch when it happened.[12]
Maria Lourdes Modesto, 26, was also in Jasmine Alejandros house on January 30, 1994. A
friend of Jasmine had informed her that there was someone recruiting in Jasmines house. Upon
arriving at the Alejandro residence, Lourdes was welcomed by Jasmine.
Lourdes recalled that Carol Figueroa was already briefing some people when she
arrived. Carol Figueroa asked if they would like a good opportunity since a hospital was hiring
nurses. She gave a breakdown of the fees involved: P30,000 for the visa and the round trip ticket,
and P5,000 as placement fee and for the processing of the papers. The initial payment was
P2,000, while P30,000 will be by salary deduction.
Lourdes filled up the application form and submitted it to Jasmine. After the interview, she
gave the initial payment of P2,000 to Jasmine, who assured Lourdes that she was authorized to
receive the money. On February 2, 1994, however, Lourdes went back to the house to get back
the money. Jasmine gave back the money to Lourdes after the raid.[13]
Denial comprised the accuseds defense.

Carol dela Piedra, 37, is a housewife and a resident of Cebu City. Her husband is a
businessman from Cebu, the manager of the Region 7 Branch of the Grollier International
Encyclopedia. They own an apartment in Cebu City, providing lodging to students.
The accused claimed that she goes to Singapore to visit her relatives. She first traveled to
Singapore on August 21, 1993 as a tourist, and came back to the Philippines on October 20 of the
same year.Thereafter, she returned to Singapore on December 10, 1993.
On December 21, 1993, while in Singapore, the accused was invited to a Christmas party
sponsored by the Zamboanga City Club Association. On that occasion, she met a certain Laleen
Malicay, who sought her help. A midwife, Malicay had been working in Singapore for six (6)
years. Her employer is a certain Mr. Tan, a close friend of Carol.
According to the accused, Malicay sent P15,000 home for her father who was then seriously
ill. Malicay was not sure, however, whether her father received the money so she requested the
accused to verify from her relatives receipt thereof. She informed the accused that she had a
cousin by the name of Jasmine Alejandro. Malicay gave the accused Jasmines telephone number,
address and a sketch of how to get there.
The accused returned to the country on January 21, 1994. From Cebu City, the accused flew
to Zamboanga City on January 23, 1994 to give some presents to her friends.
On January 30, 1994, the accused called up Jasmine Alejandro, Laleen Malicays cousin, to
inform her that she would be going to her house. At around noon that day, the accused,
accompanied by her friend Hilda Falcasantos, arrived at the house where she found Jasmine
entertaining some friends. Jasmine came down with two of her friends whom she introduced as
her classmates. Jasmine told them that the accused was a friend of Laleen Malicay.
The accused relayed to Jasmine Malicays message regarding the money the latter had
sent. Jasmine assured her that they received the money, and asked Carol to tell Malicay to send
more money for medicine for Malicays mother. Jasmine also told her that she would send
something for Malicay when the accused goes back to Singapore. The accused replied that she
just needed to confirm her flight back to Cebu City, and will return to Jasmines house. After the
meeting with Jasmine, the accused went shopping with Hilda Falcasantos. The accused was in
the house for only fifteen (15) minutes.
On February 2, 1994, the accused went to the Philippine Airlines office at 7:30 in the
morning to confirm her 5:30 p.m. flight to Cebu City. She then proceeded to Jasmines residence,
arriving there at past 8 a.m.
Inside the house, she met a woman who asked her, Are you Carol from Singapore? The
accused, in turn, asked the woman if she could do anything for her. The woman inquired from
Carol if she was recruiting. Carol replied in the negative, explaining that she was there just to say
goodbye to Jasmine. The woman further asked Carol what the requirements were if she (the
woman) were to go to Singapore.Carol replied that she would need a passport.
Two (2) minutes later, three (3) girls entered the house looking for Jasmine. The woman
Carol was talking with then stood up and went out. A minute after, three (3) members of the CIS
and a POEA official arrived. A big man identified himself as a member of the CIS and informed
her that they received a call that she was recruiting. They told her she had just interviewed a
woman from the CIS. She denied this, and said that she came only to say goodbye to the

occupants of the house, and to get whatever Jasmine would be sending for Laleen Malicay. She
even showed them her ticket for Cebu City.
Erlie Ramos then went up to Jasmines room and returned with some papers. The accused
said that those were the papers that Laleen Malicay requested Jasmine to give to her (the
accused). The accused surmised that because Laleen Malicay wanted to go home but could not
find a replacement, one of the applicants in the forms was to be her (Malicays) substitute. Ramos
told the accused to explain in their office.
The accused denied in court that she went to Jasmines residence to engage in
recruitment. She claimed she came to Zamboanga City to visit her friends, to whom she could
confide since she and her husband were having some problems. She denied she knew Nancy
Araneta or that she brought information sheets for job placement. She also denied instructing
Jasmine to collect P2,000 from alleged applicants as processing fee.[14]
The accused presented two witnesses to corroborate her defense.
The first, Jasmine Alejandro, 23, testified that she met the accused for the first time only on
January 30, 1994 when the latter visited them to deliver Laleen Malicays message regarding the
money she sent. Carol, who was accompanied by a certain Hilda Falcasantos, stayed in their
house for 10 to 15 minutes only. Carol came back to the house a few days later on February 2 at
around 8:00 in the morning to get the envelope for the candidacy of her daughter. Jasmine did
not elaborate.
Jasmine denied that she knew Nancy Araneta or Lourdes Modesto. She denied that the
accused conducted recruitment. She claimed she did not see Carol distribute bio-data or
application forms to job applicants. She disclaimed any knowledge regarding the P2,000
application fee.[15]
The other defense witness, Ernesto Morales, a policeman, merely testified that the accused
stayed in their house in No. 270 Tugbungan, Zamboanga City, for four (4) days before her arrest,
although she would sometimes go downtown alone. He said he did not notice that she conducted
any recruitment.[16]
On May 5, 1995, the trial court rendered a decision convicting the accused, thus:

WHEREFORE, in view of all the foregoing consideration[s][,] this Court finds the
accused Carol dela Piedra alias Carol Llena and Carol Figueroa guilty beyond
reasonable doubt of Illegal Recruitment committed in a large scale and hereby
sentences her to suffer the penalty of LIFE IMPRISONMENT and to pay a fine of
P100,000.00, and also to pay the costs.
Being a detention prisoner, the said accused is entitled to the full time of the period of
her detention during the pendency of this case under the condition set forth in Article
29 of the Revised Penal Code.
SO ORDERED.[17]
The accused, in this appeal, ascribes to the trial court the following errors:

WITH DUE RESPECT, THE LOWER COURT ERRED IN NOT FINDING SEC.
13 (B) OF P.D. 442[,] AS AMENDED[,] OTHERWISE KNOWN AS [THE]
ILLEGAL RECRUITMENT LAW UNCONSTITUTIONAL.
II

WITH DUE RESPECT, THE LOWER COURT ERRED IN NOT HOLDING

THAT THE APPREHENDING TEAM COMPOSED OF POEA AND CIS
REPRESENTATIVES ENTERED INTO [sic] THE RESIDENCE OF
JASMIN[E] ALEJANDRO WITHOUT ANY SEARCH WARRANT IN
VIOLATION OF ARTICLE III, SECTION 2 OF THE PHILIPPINE
CONSTITUTION, AND ANY EVIDENCE OBTAINED IN VIOLATION
THEREOF, SHALL BE INADMISSIBLE FOR ANY PURPOSE IN ANY
PROCEEDING AS PROVIDED UNDER ARTICLE III, SECTION 3, (2) OF
THE SAME CONSTITUTION;
III

WITH DUE RESPECT, THE LOWER COURT ERRED IN IGNORING THAT

WHEN SPO2 [sic] EILE[E]N FERMINDOZA ENTERED THE RESIDENCE
OF JASMIN[E] ALEJANDRO, THERE WAS NO CRIME COMMITTED
WHATSOEVER, HENCE THE ARREST OF THE ACCUSED-APPELLANT
WAS ILLEGAL;
[IV]

WITH DUE RESPECT, THE LOWER COURT ERRED IN NOT

DISCOVERING THAT SPO2 [sic] EILE[E]N FERMINDOZA WAS NOT
ILLEGALLY RECRUITED BY THE ACCUSED-APPELLANT, HENCE,
ACCUSED-APPELLANT SHOULD BE ACQUITTED;
V

WITH DUE RESPECT, THE LOWER COURT ERRED IN NOT DETECTING

THAT NANCY ARANETA WAS NOT ILLEGALLY RECRUITED BY THE
ACCUSED-APPELLANT, HENCE, ACCUSED SHOULD BE EXONERATED;
VI

WITH DUE RESPECT, THE LOWER COURT ERRED IN NOT REALIZING

THAT MARIA LOURDES MODESTO WAS NOT ILLEGALLY RECRUITED

BY THE ACCUSED-APPELLANT, HENCE, ACCUSED-APPELLANT

SHOULD BE EXCULPATED;
VII

WITH DUE RESPECT, THE LOWER COURT ERRED IN FINDING THAT

THE ACCUSED-APPELLANT WAS CHARGED WITH LARGE SCALE
ILLEGAL RECRUITMENT ON JANUARY 30, 1994, THE DATE STATED IN
THE INFORMATION AS THE DATE OF THE CRIME, BUT ACCUSED WAS
ARRESTED ON FEB. 2, 1994 AND ALL THE EVIDENCES [sic] INDICATED
[sic] THAT THE ALLEGED CRIME WERE [sic] COMMITTED ON FEB. 2,
1994, HENCE, THE INFORMATION IS FATALLY DEFECTIVE;
VIII

WITH DUE RESPECT, THE LOWER COURT ERRED IN NOT FINDING

THAT THE ALLEGED CRIME OF ILLEGAL RECRUITMENT WAS
COMMITTED NOT ON [sic] LARGE SCALE, HENCE, THE PENALTY
SHOULD NOT BE LIFE IMPRISONMENT;
IX

WITH DUE RESPECT, THE LOWER COURT ERRED IN NOT FINDING

THAT THOSE EVIDENCES [sic] SEIZED AT THE HOUSE OF JASMIN[E]
ALEJANDRO AND PRESENTED TO THE COURT WERE PLANTED BY A
BOGUS ATTORNEY[,] ERLIE S. RAMOS OF THE POEA;
X

WITH DUE RESPECT, THE LOWER COURT ERRED IN NOT

DISCOVERING THAT ACCUSED-APPELLANT DID NOT RECEIVE ANY
PAYMENT EVEN A SINGLE CENTAVO FROM THE ALLEGED VICTIMS
WHO DID NOT SUFFER DAMAGE IN ANY MANNER, YET SHE WAS
CONVICTED TO SERVE HER ENTIRE LIFE BEHIND PRISON BARS. SUCH
PUNISHMENT WAS CRUEL AND UNUSUAL, HENCE, A WANTON
VIOLATION OF THE CONSTITUTION.[18]
In the first assigned error, appellant maintains that the law defining recruitment and
placement violates due process. Appellant also avers, as part of her sixth assigned error, that she
was denied the equal protection of the laws.
We shall address the issues jointly.
Appellant submits that Article 13 (b) of the Labor Code defining recruitment and placement
is void for vagueness and, thus, violates the due process clause.[19]

Due process requires that the terms of a penal statute must be sufficiently explicit to inform
those who are subject to it what conduct on their part will render them liable to its penalties. [20] A
criminal statute that fails to give a person of ordinary intelligence fair notice that his
contemplated conduct is forbidden by the statute, or is so indefinite that it encourages arbitrary
and erratic arrests and convictions, is void for vagueness.[21] The constitutional vice in a vague or
indefinite statute is the injustice to the accused in placing him on trial for an offense, the nature
of which he is given no fair warning.[22]
We reiterated these principles in People vs. Nazario:[23]

As a rule, a statute or act may be said to be vague when it lacks comprehensible

standards that men of common intelligence must necessarily guess at its meaning and
differ as to its application. It is repugnant to the Constitution in two respects: (1) it
violates due process for failure to accord persons, especially the parties targeted by it,
fair notice of the conduct to avoid; and (2) it leaves law enforcers unbridled discretion
in carrying out its provisions and become an arbitrary flexing of the Government
muscle.
We added, however, that:

x x x the act must be utterly vague on its face, that is to say, it cannot be clarified by
either a saving clause or by construction. Thus, in Coates v. City of Cincinnati, the
U.S. Supreme Court struck down an ordinance that had made it illegal for three or
more persons to assemble on any sidewalk and there conduct themselves in a manner
annoying to persons passing by. Clearly, the ordinance imposed no standard at all
because one may never know in advance what annoys some people but does not
annoy others.
Coates highlights what has been referred to as a perfectly vague act whose obscurity
is evident on its face. It is to be distinguished, however, from legislation couched in
imprecise languagebut which nonetheless specifies a standard though defectively
phrasedin which case, it may be saved by proper construction.
Here, the provision in question reads:

ART. 13. Definitions.(a) x x x.

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

x x x.
When undertaken by non-licensees or non-holders of authority, recruitment activities are
punishable as follows:

ART. 38. Illegal Recruitment. (a) Any recruitment activities, including the prohibited
practices enumerated under Article 34 of this Code, to be undertaken by non-licensees
or non-holders of authority shall be deemed illegal and punishable under Article 39 of
this Code. The Ministry of Labor and Employment or any law enforcement officer
may initiate complaints under this Article.
(b) Illegal recruitment when committed by a syndicate or in large scale shall be
considered an offense involving economic sabotage and shall be penalized in
accordance with Article 39 hereof.
Illegal recruitment is deemed committed by a syndicate if carried out by a group of
three (3) or more persons conspiring and/or confederating with one another in
carrying out any unlawful or illegal transaction, enterprise or scheme defined under
the first paragraph hereof. Illegal recruitment is deemed committed in large scale if
committed against three (3) or more persons individually or as a group.
x x x.

Art. 39. Penalties. (a) The penalty of life imprisonment and a fine of One Hundred
Thousand Pesos (P100,000) shall be imposed if illegal recruitment constitutes
economic sabotage as defined herein:
(b) Any licensee or holder of authority found violating or causing another to violate
any provision of this Title or its implementing rules and regulations, shall upon
conviction thereof, suffer the penalty of imprisonment of not less than five years or a
fine of not less than P10,000 nor more than P50,000 or both such imprisonment and
fine, at the discretion of the court;
(c) Any person who is neither a licensee nor a holder of authority under this Title
found violating any provision thereof or its implementing rules and regulations shall,
upon conviction thereof, suffer the penalty of imprisonment of not less than four years
nor more than eight years or a fine of not less than P20,000 nor more than P100,000
or both such imprisonment and fine, at the discretion of the court;
x x x.
In support of her submission that Article 13 (b) is void for vagueness, appellant
invokes People vs. Panis,[24] where this Court, to use appellants term, criticized the definition of
recruitment and placement as follows:

It is unfortunate that we can only speculate on the meaning of the questioned provision for
lack of records of debates and deliberations that would otherwise have been available if the
Labor Code had been enacted as a statute rather than a presidential decree is that they could be,
and sometimes were, issued without previous public discussion or consultation, the promulgator
heeding only his own counsel or those of his close advisers in their lofty pinnacle of power. The
not infrequent results are rejection, intentional or not, of the interest of the greater number and,
as in the instant case, certain esoteric provisions that one cannot read against the background
facts usually reported in the legislative journals.
If the Court in Panis had to speculate on the meaning of the questioned provision, appellant asks,
what more the ordinary citizen who does not possess the necessary [legal] knowledge?
Appellant further argues that the acts that constitute recruitment and placement suffer from
overbreadth since by merely referring a person for employment, a person may be convicted of
illegal recruitment.
These contentions cannot be sustained.
Appellants reliance on People vs. Panis is misplaced. The issue in Panis was whether, under
the proviso of Article 13 (b), the crime of illegal recruitment could be committed only whenever
two or more persons are in any manner promised or offered any employment for a fee. The Court
held in the negative, explaining:

As we see it, the proviso was intended neither to impose a condition on the basic rule
nor to provide an exception thereto but merely to create a presumption. The
presumption is that the individual or entity is engaged in recruitment and placement
whenever he or it is dealing with two or more persons to whom, in consideration of a
fee, an offer or promise of employment is made in the course of the canvassing,
enlisting, contracting, transporting, utilizing, hiring or procuring (of) workers.
The number of persons dealt with is not an essential ingredient of the act of
recruitment and placement of workers. Any of the acts mentioned in the basic rule in
Article 13(b) will constitute recruitment and placement even if only one prospective
worker is involved. The proviso merely lays down a rule of evidence that where a fee
is collected in consideration of a promise or offer of employment to two or more
prospective workers, the individual or entity dealing with them shall be deemed to be
engaged in the act of recruitment and placement. The words shall be deemed create
that presumption.
This is not unlike the presumption in article 217 of the Revised Penal Code, for
example, regarding the failure of a public officer to produce upon lawful demand
funds or property entrusted to his custody.Such failure shall be prima facie evidence
that he has put them to personal use; in other words, he shall be deemed to have
malversed such funds or property. In the instant case, the word shall be deemed should
by the same token be given the force of a disputable presumption or of prima
facie evidence of engaging in recruitment and placement.

It is unfortunate that we can only speculate on the meaning of the questioned

provision for lack of records of debates and deliberations that would otherwise have
been available if the Labor Code had been enacted as a statute rather than a
presidential decree is that they could be, and sometimes were, issued without previous
public discussion or consultation, the promulgator heeding only his own counsel or
those of his close advisers in their lofty pinnacle of power. The not infrequent results
are rejection, intentional or not, of the interest of the greater number and, as in the
instant case, certain esoteric provisions that one cannot read against the background
facts usually reported in the legislative journals.
At any rate, the interpretation here adopted should give more force to the campaign
against illegal recruitment and placement, which has victimized many Filipino
workers seeking a better life in a foreign land, and investing hard-earned savings or
even borrowed funds in pursuit of their dream, only to be awakened to the reality of a
cynical deception at the hands of their own countrymen.
Evidently, therefore, appellant has taken the penultimate paragraph in the excerpt quoted
above out of context. The Court, in Panis, merely bemoaned the lack of records that would help
shed light on the meaning of the proviso. The absence of such records notwithstanding, the Court
was able to arrive at a reasonable interpretation of the proviso by applying principles in criminal
law and drawing from the language and intent of the law itself. Section 13 (b), therefore, is not a
perfectly vague act whose obscurity is evident on its face. If at all, the proviso therein is merely
couched in imprecise language that was salvaged by proper construction. It is not void for
vagueness.

An act will be declared void and inoperative on the ground of vagueness and
uncertainty, only upon a showing that the defect is such that the courts are unable to
determine, with any reasonable degree of certainty, what the legislature intended. x x
x. In this connection we cannot pretermit reference to the rule that legislation should
not be held invalid on the ground of uncertainty if susceptible of any reasonable
construction that will support and give it effect. An Act will not be declared
inoperative and ineffectual on the ground that it furnishes no adequate means to secure
the purpose for which it is passed, if men of common sense and reason can devise and
provide the means, and all the instrumentalities necessary for its execution are within
the reach of those intrusted therewith.[25]
That Section 13 (b) encompasses what appellant apparently considers as customary and
harmless acts such as labor or employment referral (referring an applicant, according to
appellant, for employment to a prospective employer) does not render the law
overbroad. Evidently, appellant misapprehends concept of overbreadth.
A statute may be said to be overbroad where it operates to inhibit the exercise of individual
freedoms affirmatively guaranteed by the Constitution, such as the freedom of speech or religion.
A generally worded statute, when construed to punish conduct which cannot be constitutionally

punished is unconstitutionally vague to the extent that it fails to give adequate warning of the
boundary between the constitutionally permissible and the constitutionally impermissible
applications of the statute.[26]
In Blo Umpar Adiong vs. Commission on Elections,[27] for instance, we struck down as void
for overbreadth provisions prohibiting the posting of election propaganda in any place including
private vehicles other than in the common poster areas sanctioned by the COMELEC. We held
that the challenged provisions not only deprived the owner of the vehicle the use of his property
but also deprived the citizen of his right to free speech and information. The prohibition
in Adiong, therefore, was so broad that it covered even constitutionally guaranteed rights and,
hence, void for overbreadth. In the present case, however, appellant did not even specify what
constitutionally protected freedoms are embraced by the definition of recruitment and placement
that would render the same constitutionally overbroad.
Appellant also invokes the equal protection clause [28] in her defense. She points out that
although the evidence purportedly shows that Jasmine Alejandro handed out application forms
and even received Lourdes Modestos payment, appellant was the only one criminally charged.
Alejandro, on the other hand, remained scot-free. From this, appellant concludes that the
prosecution discriminated against her on grounds of regional origins. Appellant is a Cebuana
while Alejandro is a Zamboanguea, and the alleged crime took place in Zamboanga City.
The argument has no merit.
At the outset, it may be stressed that courts are not confined to the language of the statute
under challenge in determining whether that statute has any discriminatory effect. A statute
nondiscriminatory on its face may be grossly discriminatory in its operation.[29] Though the law
itself be fair on its face and impartial in appearance, yet, if it is applied and administered by
public authority with an evil eye and unequal hand, so as practically to make unjust and illegal
discriminations between persons in similar circumstances, material to their rights, the denial of
equal justice is still within the prohibition of the Constitution.[30]
The prosecution of one guilty person while others equally guilty are not prosecuted,
however, is not, by itself, a denial of the equal protection of the laws. [31] Where the official action
purports to be in conformity to the statutory classification, an erroneous or mistaken performance
of the statutory duty, although a violation of the statute, is not without more a denial of the equal
protection of the laws.[32]The unlawful administration by officers of a statute fair on its face,
resulting in its unequal application to those who are entitled to be treated alike, is not a denial of
equal protection unless there is shown to be present in it an element
of intentional or purposeful discrimination. This may appear on the face of the action taken with
respect to a particular class or person, or it may only be shown by extrinsic evidence showing a
discriminatory design over another not to be inferred from the action itself. But a discriminatory
purpose is not presumed, there must be a showing of clear and intentional discrimination. [33] Appellant has
failed to show that, in charging appellant in court, that there was a clear and intentional
discrimination on the part of the prosecuting officials.
The discretion of who to prosecute depends on the prosecutions sound assessment whether
the evidence before it can justify a reasonable belief that a person has committed an offense.
[34]
The presumption is that the prosecuting officers regularly performed their duties, [35] and this
presumption can be overcome only by proof to the contrary, not by mere speculation. Indeed,

appellant has not presented any evidence to overcome this presumption. The mere allegation that
appellant, a Cebuana, was charged with the commission of a crime, while a Zamboanguea, the
guilty party in appellants eyes, was not, is insufficient to support a conclusion that the
prosecution officers denied appellant equal protection of the laws.
There is also common sense practicality in sustaining appellants prosecution.

While all persons accused of crime are to be treated on a basis of equality before the
law, it does not follow that they are to be protected in the commission of crime. It
would be unconscionable, for instance, to excuse a defendant guilty of murder
because others have murdered with impunity. The remedy for unequal enforcement of
the law in such instances does not lie in the exoneration of the guilty at the expense of
society x x x. Protection of the law will be extended to all persons equally in the
pursuit of their lawful occupations, but no person has the right to demand protection
of the law in the commission of a crime.[36]
Likewise,

[i]f the failure of prosecutors to enforce the criminal laws as to some persons should
be converted into a defense for others charged with crime, the result would be that the
trial of the district attorney for nonfeasance would become an issue in the trial of
many persons charged with heinous crimes and the enforcement of law would suffer a
complete breakdown.[37]
We now come to the third, fourth and fifth assigned errors, all of which involve the finding
of guilt by the trial court.
Illegal recruitment is committed when two elements concur. First, the offender has no valid
license or authority required by law to enable one to lawfully engage in recruitment and
placement of workers.Second, he or she undertakes either any activity within the meaning of
recruitment and placement defined under Article 13 (b), or any prohibited practices enumerated
under Article 34 of the Labor Code.[38]In case of illegal recruitment in large scale, a third element
is added: that the accused commits said acts against three or more persons, individually or as a
group.[39]
In this case, the first element is present. The certification of POEA Officer-in-Charge
Macarulay states that appellant is not licensed or authorized to engage in recruitment and
placement.
The second element is also present. Appellant is presumed engaged in recruitment and
placement under Article 13 (b) of the Labor Code. Both Nancy Araneta and Lourdes Modesto
testified that appellant promised them employment for a fee. Their testimonies corroborate each
other on material points: the briefing conducted by appellant, the time and place thereof, the fees
involved. Appellant has not shown that these witnesses were incited by any motive to testify
falsely against her. The absence of evidence as to an improper motive actuating the principal
witnesses of the prosecution strongly tends to sustain that no improper motive existed and that
their testimony is worthy of full faith and credence.[40]

Appellants denials cannot prevail over the positive declaration of the prosecution
witnesses. Affirmative testimony of persons who are eyewitnesses of the fact asserted easily
overrides negative testimony.[41]
That appellant did not receive any payment for the promised or offered employment is of no
moment. From the language of the statute, the act of recruitment may be for profit or not; it
suffices that the accused promises or offers for a fee employment to warrant conviction for
illegal recruitment.
The testimonies of Araneta and Modesto, coming as they do from credible witnesses, meet
the standard of proof beyond reasonable doubt that appellant committed recruitment and
placement. We therefore do not deem it necessary to delve into the second and third assigned
errors assailing the legality of appellants arrest and the seizure of the application forms. A
warrantless arrest, when unlawful, has the effect of invalidating the search incidental thereto and
the articles so seized are rendered inadmissible in evidence.[42] Here, even if the documents seized
were deemed inadmissible, her conviction would stand in view of Araneta and Modestos
testimonies.
Appellant attempts to cast doubt on the prosecutions case by claiming in her ninth assigned
error that Erlie Ramos of the POEA supposedly planted the application forms. She also assails
his character, alleging that he passed himself off as a lawyer, although this was denied by Ramos.
The claim of frame-up, like alibi, is a defense that has been invariably viewed by the Court
with disfavor for it can easily be concocted but difficult to prove. [43] Apart from her self-serving
testimony, appellant has not offered any evidence that she was indeed framed by Ramos. She has
not even hinted at any motive for Ramos to frame her. Law enforcers are presumed to have
performed their duties regularly in the absence of evidence to the contrary.[44]
Considering that the two elements of lack of license or authority and the undertaking of an
activity constituting recruitment and placement are present, appellant, at the very least, is liable
for simple illegal recruitment. But is she guilty of illegal recruitment in large scale? We find that
she is not.
A conviction for large scale illegal recruitment must be based on a finding in each case of
illegal recruitment of three or more persons whether individually or as a group. [45] In this case,
only two persons, Araneta and Modesto, were proven to have been recruited by appellant. The
third person named in the complaint as having been promised employment for a fee, Jennelyn
Baez, was not presented in court to testify.
It is true that law does not require that at least three victims testify at the trial; nevertheless,
it is necessary that there is sufficient evidence proving that the offense was committed against
three or more persons.[46] In this case, evidence that appellant likewise promised her employment
for a fee is sketchy. The only evidence that tends to prove this fact is the testimony of Nancy
Araneta, who said that she and her friends, Baez and Sandra Aquino, came to the briefing and
that they (she and her friends) filled up application forms.
The affidavit[47] Baez executed jointly with Araneta cannot support Aranetas testimony. The
affidavit was neither identified, nor its contents affirmed, by Baez. Insofar as it purports to prove
that appellant recruited Baez, therefore, the affidavit is hearsay and inadmissible. [48] In any case,
hearsay evidence, such as the said affidavit, has little probative value.[49]

Neither can appellant be convicted for recruiting CIS agent Eileen Fermindoza or even the
other persons present in the briefing of January 30, 1994. Appellant is accused of recruiting only
the three persons named in the information Araneta, Modesto and Baez. The information does
not include Fermindoza or the other persons present in the briefing as among those promised or
offered employment for a fee. To convict appellant for the recruitment and placement of persons
other than those alleged to have been offered or promised employment for a fee would violate
her right to be informed of the nature and cause of the accusation against her.[50]
In any event, the purpose of the offer of the testimonies of Araneta, Morales and
Fermindoza, respectively, was limited as follows:
FISCAL BELDUA:
Your Honor please, we are offering the oral testimony of the witness, as one of those recruited by the
accused, and also to identify some exhibits for the prosecution and as well as to identify the
accused.[51]

xxx
FISCAL BELDUA:
We are offering the oral testimony of the witness, Your Honor, to testify on the fact about her
recruitment by the accused and immediately before the recruitment, as well as to identify some
exhibits for the prosecution, and also the accused in this case, Your Honor.[52]

xxx
FISCAL BELDUA:
This witness is going to testify that at around that date Your Honor, she was connected with the CIS,
that she was instructed together with a companion to conduct a surveillance on the place where
the illegal recruitment was supposed to be going on, that she acted as an applicant, Your Honor, to
ascertain the truthfulness of the illegal recruitment going on, to identify the accused, as well as to
identify some exhibits for the prosecution.[53]

xxx
Courts may consider a piece of evidence only for the purpose for which it was offered, [54] and the
purpose of the offer of their testimonies did not include the proving of the purported recruitment
of other supposed applicants by appellant.
Appellant claims in her seventh assigned error that the information is fatally defective since
it charges her with committing illegal recruitment in large scale on January 30, 1994 while the
prosecution evidence supposedly indicates that she committed the crime on February 2, 1994.
We find that the evidence for the prosecution regarding the date of the commission of the
crime does not vary from that charged in the information. Both Nancy Araneta and Lourdes
Modesto testified that on January 30, 1994, while in the Alejandro residence, appellant offered
them employment for a fee. Thus, while the arrest was effected only on February 2, 1994, the
crime had already been committed three (3) days earlier on January 30, 1994.
The eighth and tenth assigned errors, respectively, pertain to the penalty of life
imprisonment imposed by the trial court as well as the constitutionality of the law prescribing the
same, appellant arguing that it is unconstitutional for being unduly harsh.[55]

The penalty of life imprisonment imposed upon appellant must be reduced. Because the
prosecution was able to prove that appellant committed recruitment and placement against two
persons only, she cannot be convicted of illegal recruitment in large scale, which requires that
recruitment be committed against three or more persons. Appellant can only be convicted of two
counts of simple illegal recruitment, one for that committed against Nancy Araneta, and another
count for that committed against Lourdes Modesto. Appellant is sentenced, for each count, to
suffer the penalty of four (4) to six (6) years of imprisonment and to pay a fine of
P30,000.00. This renders immaterial the tenth assigned error, which assumes that the proper
imposable penalty upon appellant is life imprisonment.
WHEREFORE, the decision of the regional trial court is MODIFIED. Appellant
is hereby declared guilty of illegal recruitment on two (2) counts and is sentenced, for each
count, to suffer the penalty of four (4) to six (6) years of imprisonment and to pay a fine of
P30,000.00.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Puno, Pardo, and Ynares-Santiago, JJ., con

Republic of the Philippines

Supreme Court
Manila
THIRD DIVISION
ESTATE OF NELSON R. DULAY,
represented
by
his
wife
MERRIDY JANE P. DULAY,
Petitioner,

G.R. No. 172642

Present:
PERALTA, J., Acting Chairperson,*
ABAD,

- versus

VILLARAMA, JR.,**
MENDOZA, and
PERLAS-BERNABE, JJ.

ABOITIZ

JEBSEN

MARITIME,

INC.
and
CHARTERERS, INC.,
Respondents.

GENERAL

Promulgated:
June 13, 2012

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

DECISION

PERALTA, J.:

Before the Court is a petition for review on certiorari under Rule

45 of the Rules of Court seeking to reverse and set aside the
Decision[1] and Resolution[2] dated July 11, 2005 and April 18, 2006
of the Court of Appeals (CA) in CA-G.R. SP No. 76489.

The factual and procedural antecedents

summarized by the CA, are as follows:

of

the

case,

Nelson R. Dulay (Nelson, for brevity) was employed by

[herein respondent] General Charterers Inc. (GCI), a
subsidiary of co-petitioner [herein co-respondent]
Aboitiz Jebsen Maritime Inc. since 1986. He initially
worked as an ordinary seaman and later as bosun on a
contractual basis. From September 3, 1999 up to July 19,
2000, Nelson was detailed in petitioners vessel, the MV
Kickapoo Belle.

as

On August 13, 2000, or 25 days after the completion of

his employment contract, Nelson died due to acute renal
failure secondary to septicemia. At the time of his death,
Nelson was a bona fide member of the Associated
Marine Officers and Seamans Union of the Philippines
(AMOSUP), GCIs collective bargaining agent. Nelsons
widow, Merridy Jane, thereafter claimed for death
benefits through the grievance procedure of the
Collective Bargaining Agreement (CBA) between
AMOSUP and GCI. However, on January 29, 2001, the
grievance procedure was declared deadlocked as
petitioners refused to grant the benefits sought by the
widow.

On March 5, 2001, Merridy Jane filed a complaint with

the NLRC Sub-Regional Arbitration Board in General
Santos City against GCI for death and medical benefits
and damages.

On March 8, 2001, Joven Mar, Nelsons brother,

received P20,000.00 from [respondents] pursuant to
article 20(A)2 of the CBA and signed a Certification
acknowledging receipt of the amount and releasing
AMOSUP from further liability. Merridy Jane contended
that she is entitled to the aggregate sum of Ninety
Thousand Dollars ($90,000.00) pursuant to [A]rticle 20
(A)1 of the CBA x x x

xxxx

Merridy Jane averred that the P20,000.00 already

received by Joven Mar should be considered advance
payment of the total claim of US$90,000.[00].

[Herein respondents], on the other hand, asserted that

the NLRC had no jurisdiction over the action on account
of the absence of employer-employee relationship
between GCI and Nelson at the time of the latters death.
Nelson also had no claims against petitioners for sick
leave allowance/medical benefit by reason of the
completion of his contract with GCI. They further alleged
that private respondent is not entitled to death benefits
because petitioners are only liable for such in case of
death of the seafarer during the term of his contract
pursuant to the POEA contract and the cause of his
death is not work-related. Petitioners admitted liability
only with respect to article 20(A)2 [of the CBA]. x x x

xxxx

However, as petitioners stressed, the same was already

discharged.

The Labor Arbiter ruled in favor of private respondent. It

took cognizance of the case by virtue of Article 217 (a),
paragraph 6 of the Labor Code and the existence of a

reasonable causal connection between the employeremployee relationship and the claim asserted. It ordered
the petitioner to pay P4,621,300.00, the equivalent of
US$90,000.00 less P20,000.00, at the time of
judgment x x x

xxxx

The Labor Arbiter also ruled that the proximate cause of

Nelsons death was not work-related.

On appeal, [the NLRC] affirmed the Labor Arbiters

decision as to the grant of death benefits under the CBA
but reversed the latters ruling as to the proximate cause
of Nelsons death.[3]

Herein respondents then filed a special civil action

for certiorari with the CA contending that the NLRC committed
grave abuse of discretion in affirming the jurisdiction of the NLRC
over the case; in ruling that a different provision of the CBA
covers the death claim; in reversing the findings of the Labor
Arbiter that the cause of death is not work-related; and, in setting
aside the release and quitclaim executed by the attorney-in-fact
and not considering the P20,000.00 already received by Merridy
Jane through her attorney-in-fact.

On July 11, 2005, the CA promulgated its assailed Decision,

the dispositive portion of which reads as follows:

WHEREFORE, in view of the foregoing, the petition is

hereby GRANTED and the case is REFERRED to the
National Conciliation and Mediation Board for the
designation of the Voluntary Arbitrator or the constitution
of a panel of Voluntary Arbitrators for the appropriate
resolution of the issue on the matter of the applicable
CBA provision.

SO ORDERED.[4]

The CA ruled that while the suit filed by Merridy Jane is a

money claim, the same basically involves the interpretation and
application of the provisions in the subject CBA. As such,
jurisdiction belongs to the voluntary arbitrator and not the labor
arbiter.

Petitioner filed a Motion for Reconsideration but the CA

denied it in its Resolution of April 18, 2006.

Hence, the instant petition raising the sole issue of whether

or not the CA committed error in ruling that the Labor Arbiter has
no jurisdiction over the case.

Petitioner contends that Section 10 of Republic Act (R.A.)

8042, otherwise known as the Migrant Workers and Overseas
Filipinos Act of 1995, vests jurisdiction on the appropriate
branches of the NLRC to entertain disputes regarding the
interpretation of a collective bargaining agreement involving
migrant or overseas Filipino workers. Petitioner argues that the
abovementioned Section amended Article 217 (c) of the Labor
Code which, in turn, confers jurisdiction upon voluntary arbitrators
over interpretation or implementation of collective bargaining
agreements and interpretation or enforcement of company
personnel policies.

The pertinent provisions of Section 10 of R.A. 8042 provide

as follows:

SEC. 10. Money Claims. - Notwithstanding any

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

Article 217(c) of the Labor Code, on the other hand, states that:

xxxx

(c) Cases arising from the interpretation or

implementation of collective bargaining agreements and
those arising from the interpretation or enforcement of
company personnel policies shall be disposed by the
Labor Arbiter by referring the same to the grievance
machinery and voluntary arbitration as may be provided
in said agreements.

On their part, respondents insist that in the present case, Article

217, paragraph (c) as well as Article 261 of the Labor Code
remain to be the governing provisions of law with respect to
unresolved grievances arising from the interpretation and
implementation of collective bargaining agreements. Under these
provisions of law, jurisdiction remains with voluntary arbitrators.

Article 261 of the Labor Code reads, thus:

ARTICLE 261. Jurisdiction of Voluntary Arbitrators or

panel of Voluntary Arbitrators. The Voluntary Arbitrator or
panel of Voluntary Arbitrators shall have original and
exclusive jurisdiction to hear and decide all unresolved
grievances
arising
from
the
interpretation
or
implementation of the Collective Bargaining Agreement
and those arising from the interpretation or enforcement
of company personnel policies referred to in the
immediately preceding article. Accordingly, violations of a

Collective Bargaining Agreement, except those which are

gross in character, shall no longer be treated as unfair
labor practice and shall be resolved as grievances under
the Collective Bargaining Agreement. For purposes of this
article, gross violations of Collective Bargaining
Agreement shall mean flagrant and/or malicious refusal to
comply with the economic provisions of such agreement.

The Commission, its Regional Offices and the Regional

Directors of the Department of Labor and Employment
shall not entertain disputes, grievances or matters under
the exclusive and original jurisdiction of the Voluntary
Arbitrator or panel of Voluntary Arbitrators and shall
immediately dispose and refer the same to the Grievance
Machinery or Voluntary Arbitration provided in the
Collective Bargaining Agreement.

The petition is without merit.

It is true that R.A. 8042 is a special law governing overseas

Filipino workers. However, a careful reading of this special law
would readily show that there is no specific provision thereunder
which provides for jurisdiction over disputes or unresolved
grievances regarding the interpretation or implementation of a
CBA. Section 10 of R.A. 8042, which is cited by petitioner, simply
speaks, in general, of claims arising out of an employer-employee
relationship or by virtue of any law or contract involving Filipino
workers for overseas deployment including claims for actual,

moral, exemplary and other forms of damages. On the other

hand, Articles 217(c) and 261 of the Labor Code are very specific
in stating that voluntary arbitrators have jurisdiction over cases
arising from the interpretation or implementation of collective
bargaining agreements. Stated differently, the instant case
involves a situation where the special statute (R.A. 8042) refers to
a subject in general, which the general statute (Labor Code)
treats in particular.[5] In the present case, the basic issue raised by
Merridy Jane in her complaint filed with the NLRC is: which
provision of the subject CBA applies insofar as death benefits due
to the heirs of Nelson are concerned. The Court agrees with the
CA in holding that this issue clearly involves the interpretation or
implementation of the said CBA. Thus, the specific or special
provisions of the Labor Code govern.

In any case, the Court agrees with petitioner's contention that the
CBA is the law or contract between the parties. Article 13.1 of the
CBA entered into by and between respondent GCI and AMOSUP,
the union to which petitioner belongs, provides as follows:

The Company and the Union agree that in case of

dispute or conflict in the interpretation or
application of any of the provisions of this
Agreement, or enforcement of Company policies,
the same shall be settled through negotiation,
conciliation or voluntary arbitration. The Company
and the Union further agree that they will use their best
endeavor to ensure that any dispute will be discussed,
resolved and settled amicably by the parties hereof within
ninety (90) days from the date of filing of the dispute or
conflict and in case of failure to settle thereof any of the

parties retain their freedom to take appropriate action.

[6]
(Emphasis supplied)

From the foregoing, it is clear that the parties, in the first place,
really intended to bring to conciliation or voluntary arbitration any
dispute or conflict in the interpretation or application of the
provisions of their CBA. It is settled that when the parties have
validly agreed on a procedure for resolving grievances and to
submit a dispute to voluntary arbitration then that procedure
should be strictly observed.[7]

It may not be amiss to point out that the abovequoted provisions

of the CBA are in consonance with Rule VII, Section 7 of the
present Omnibus Rules and Regulations Implementing the Migrant
Workers and Overseas Filipinos Act of 1995, as amended by
Republic Act No. 10022, which states that [f]or OFWs with
collective bargaining agreements, the case shall be submitted for
voluntary arbitration in accordance with Articles 261 and 262 of
the Labor Code. The Court notes that the said Omnibus Rules and
Regulations were promulgated by the Department of Labor and
Employment (DOLE) and the Department of Foreign Affairs (DFA)
and that these departments were mandated to consult with the
Senate Committee on Labor and Employment and the House of
Representatives Committee on Overseas Workers Affairs.

In the same manner, Section 29 of the prevailing Standard Terms

and Conditions Governing the Employment of Filipino Seafarers on
Board Ocean Going Vessels, promulgated by the Philippine
Overseas Employment Administration (POEA), provides as follows:

Section 29. Dispute Settlement Procedures. In cases of

claims and disputes arising from this employment,
the parties covered by a collective bargaining
agreement shall submit the claim or dispute to the
original and exclusive jurisdiction of the voluntary
arbitrator or panel of arbitrators. If the parties are
not covered by a collective bargaining agreement, the
parties may at their option submit the claim or dispute to
either the original and exclusive jurisdiction of the
National Labor Relations Commission (NLRC), pursuant to
Republic Act (RA) 8042, otherwise known as the Migrant
Workers and Overseas Filipinos Act of 1995 or to the
original and exclusive jurisdiction of the voluntary
arbitrator or panel of arbitrators. If there is no provision as
to the voluntary arbitrators to be appointed by the
parties, the same shall be appointed from the accredited
voluntary arbitrators of the National Conciliation and
Mediation Board of the Department of Labor and
Employment.

The Philippine Overseas Employment Administration

(POEA) shall exercise original and exclusive jurisdiction to
hear and decide disciplinary action on cases, which are
administrative in character, involving or arising out of
violations of recruitment laws, rules and regulations
involving employers, principals, contracting partners and
Filipino seafarers. (Emphasis supplied)

It is clear from the above that the interpretation of the DOLE, in

consultation with their counterparts in the respective committees
of the Senate and the House of Representatives, as well as the
DFA and the POEA is that with respect to disputes involving claims
of Filipino seafarers wherein the parties are covered by a
collective bargaining agreement, the dispute or claim should be
submitted to the jurisdiction of a voluntary arbitrator or panel of
arbitrators. It is only in the absence of a collective bargaining
agreement that parties may opt to submit the dispute to either
the NLRC or to voluntary arbitration. It is elementary that rules
and regulations issued by administrative bodies to interpret the
law which they are entrusted to enforce, have the force of law,
and are entitled to great respect. [8] Such rules and regulations
partake of the nature of a statute and are just as binding as if
they have been written in the statute itself. [9] In the instant case,
the Court finds no cogent reason to depart from this rule.

The above interpretation of the DOLE, DFA and POEA is also in

consonance with the policy of the state to promote voluntary
arbitration as a mode of settling labor disputes. [10]

No less than the Philippine Constitution provides, under the third

paragraph, Section 3, Article XIII, thereof that [t]he State shall
promote the principle of shared responsibility between workers
and employers and the preferential use of voluntary modes in
settling disputes, including conciliation, and shall enforce their
mutual compliance therewith to foster industrial peace.

Consistent with this constitutional provision, Article 211 of the

Labor Code provides the declared policy of the State [t]o promote
and emphasize the primacy of free collective bargaining and
negotiations, including voluntary arbitration, mediation and
conciliation, as modes of settling labor or industrial disputes.

On the basis of the foregoing, the Court finds no error in the ruling
of the CA that the voluntary arbitrator has jurisdiction over the
instant case.

WHEREFORE, the petition is DENIED. The Decision and

Resolution of the Court of Appeals in CA-G.R. SP No. 76489 dated
July 11, 2005 and April 18, 2006, respectively, are AFFIRMED.

SECOND DIVISION
PAUL V. SANTIAGO, G.R. No. 162419
Petitioner,
Present:
QUISUMBING,* J.,
- versus - Chairperson,
CARPIO,**
CARPIO MORALES,

TINGA, and
CF SHARP CREW MANAGEMENT, VELASCO, JR., JJ.
INC.,
Respondent.
Promulgated:
July 10, 2007
x----------------------------------------------------------------------------x

DECISION
TINGA, J.:

At the heart of this case involving a contract between a

seafarer, on one hand, and the manning agent and the
foreign principal, on the other, is this erstwhile unsettled legal
quandary: whether the seafarer, who was prevented from
leaving the port of Manila and refused deployment without
valid reason but whose POEA-approved employment contract
provides that the employer-employee relationship shall
commence only upon the seafarers actual departure from the
port in the point of hire, is entitled to relief?
This treats of the petition for review filed by Paul V.
Santiago (petitioner) assailing the Decision and Resolution of the

Court of Appeals dated 16 October 2003 and 19 February 2004,

respectively, in CA-G.R. SP No. 68404.[1]

Petitioner had been working as a seafarer for Smith Bell

Management, Inc. (respondent) for about five (5) years.[2] On 3
February 1998, petitioner signed a new contract of employment
with respondent, with the duration of nine (9) months. He was
assured of a monthly salary of US$515.00, overtime pay and
other benefits. The following day or on 4 February 1998, the
contract was approved by the Philippine Overseas Employment
Administration (POEA). Petitioner was to be deployed on board the
MSV
Seaspread
which
was
scheduled
to
leave
the port of Manila for Canada on 13 February 1998.

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

Fernandez, respondents Vice President, sent a facsimile message
to the captain of MSV Seaspread, which reads:
I received a phone call today from the wife of Paul
Santiago in Masbate asking me not to send her husband to
MSV Seaspread anymore. Other callers who did not reveal
their identity gave me some feedbacks that Paul Santiago
this time if allowed to depart will jump ship in Canada like
his brother Christopher Santiago, O/S who jumped ship
from the C.S. Nexus in Kita-kyushu, Japanlast December,
1997.

We do not want this to happen again and have the

vessel penalized like the C.S. Nexus in Japan.
Forewarned is forearmed like his brother when his
brother when he was applying he behaved like a Saint
but in his heart he was a serpent. If you agree with me
then we will send his replacement.
Kindly advise.[3]

To this message the captain of MSV Seaspread replied:

Many thanks for your advice concerning P. Santiago, A/B.
Please cancel plans for him to return to Seaspread.[4]

On 9 February 1998, petitioner was thus told that

he would not be leaving for Canada anymore, but he was
reassured that he might be considered for deployment at some
future date.

Petitioner filed a complaint for illegal dismissal, damages, and

attorney's fees against respondent and its foreign principal, Cable
and Wireless (Marine) Ltd.[5] The case was raffled to Labor Arbiter
Teresita Castillon-Lora, who ruled that the employment contract
remained valid but had not commenced since petitioner was not
deployed. According to her, respondent violated the rules and
regulations governing overseas employment when it did not
deploy petitioner, causing petitioner to suffer actual

damages representing lost salary income for nine (9) months and
fixed overtime fee, all amounting to US$7, 209.00.

The labor arbiter held respondent liable. The dispositive

portion of her Decision dated 29 January 1999 reads:
WHEREFORE,
premises
considered,
respondent
is
hereby Ordered to pay complainant actual damages in the
amount of US$7,209.00 plus 10% attorney's fees, payable
in Philippine peso at the rate of exchange prevailing at the
time of payment.
All the other claims are hereby DISMISSED for lack of
merit.

SO ORDERED.[6]

On appeal by respondent, the National Labor Relations

Commission (NLRC) ruled that there is no employer-employee
relationship between petitioner and respondent because under
the Standard Terms and Conditions Governing the Employment of
Filipino Seafarers on Board Ocean Going Vessels (POEA Standard
Contract), the employment contract shall commence upon actual
departure of the seafarer from the airport or seaport at the point
of hire and with a POEA-approved contract. In the absence of an
employer-employee relationship between the parties, the claims
for illegal dismissal, actual damages, and attorneys fees should
be
dismissed.[7] On
the
other
hand,
the
NLRC
foundrespondents decision not to deploy petitioner to be a valid

exercise of its management prerogative. [8] The NLRC disposed of

the appeal in this wise:
WHEREFORE, in the light of the foregoing, the assailed
Decision dated January 29, 1999 is hereby AFFIRMED in so
far as other claims are concerned and with MODIFICATION
by VACATING the award of actual damages and attorneys
fees as well as excluding Pacifico Fernandez as party
respondent.

SO ORDERED.[9]

Petitioner moved for the reconsideration of the NLRCs Decision

but his motion was denied for lack of merit. [10] He elevated the
case to the Court of Appeals through a petition for certiorari.

In its Decision[11] dated 16 October 2003, the Court of

Appeals noted that there is an ambiguity in the NLRCs Decision
when it affirmed with modification the labor arbiters Decision,
because by the very modification introduced by the Commission
(vacating the award of actual damages and attorneys fees), there
is nothing more left in the labor arbiters Decision to affirm. [12]

According to the appellate court, petitioner is not entitled to

actual damages because damages are not recoverable by a
worker who was not deployed by his agency within the
period prescribed in
the POEA Rules.[13] It agreed with the NLRCs finding that
petitioners non-deployment was a valid exercise of respondents

management prerogative.[14] It added that since petitioner had

not departed from the Port of Manila, no employer-employee
relationship between the parties arose and any claim for
damages against the so-called employercould have no leg to
stand on.[15]

Petitioners subsequent motion for reconsideration was denied

on 19 February 2004.[16]

The present petition is anchored on two grounds, to wit:

A.
The Honorable Court of Appeals committed a
serious error of law when it ignored [S]ection 10 of Republic
Act [R.A.] No. 8042 otherwise known as the Migrant Workers
Act of 1995 as well as Section 29 of the Standard Terms and
Conditions Governing the Employment of Filipino Seafarers
On-Board Ocean-Going Vessels (which is deemed
incorporated under the petitioners POEA approved
Employment Contract) that the claims or disputes of the
Overseas Filipino Worker by virtue of a contract fall within
the jurisdiction of the Labor Arbiter of the NLRC.

B.
The Honorable Court of Appeals committed a
serious error when it disregarded the required quantum of
proof in labor cases, which is substantial evidence, thus a
total departure from established jurisprudence on the
matter.[17]

Petitioner maintains that respondent violated the Migrant

Workers Act and the POEA Rules when it failed to deploy him

within thirty (30) calendar days without a valid reason. In doing

so, it had unilaterally and arbitrarily prevented the consummation
of the POEA- approved contract. Since it prevented his
deployment without valid basis, said deployment being a
condition to the consummation of the POEA contract, the contract
is deemed consummated, and therefore he should be awarded
actual damages, consisting of the stipulated salary and fixed
overtime pay.[18] Petitioner adds that since the contract is deemed
consummated, he should be considered an employee for all
intents and purposes, and thus the labor arbiter and/or the NLRC
has jurisdiction to take cognizance of his claims. [19]

Petitioner additionally claims that he should be considered a

regular employee, having worked for five (5) years on board the
same vessel owned by the same principal and manned by the
same local agent. He argues that respondents act of not
deploying him was a scheme designed to prevent him from
attaining the status of a regular employee. [20]

Petitioner submits that respondent had no valid and sufficient

cause to abandon the employment contract, as it merely relied
upon alleged phone calls from his wife and other unnamed callers
in arriving at the conclusion that he would jump ship like his
brother. He points out that his wife had executed an
affidavit[21] strongly denying having called respondent, and that
the other alleged callers did not even disclose their identities to
respondent.[22] Thus, it was error for the Court of Appeals to adopt
the unfounded conclusion of the NLRC, as the same was not
based on substantial evidence.[23]

On the other hand, respondent argues that the Labor Arbiter

has no jurisdiction to award petitioners monetary claims. His
employment with respondent did not commence because his
deployment was withheld for a valid reason. Consequently, the
labor arbiter and/or the NLRC cannot entertain adjudication of
petitioners case much less award damages to him. The
controversy involves a breach of contractual obligations and as
such is cognizable by civil courts. [24] On another matter,
respondent claims that the second issue posed by petitioner
involves a recalibration of facts which is outside the jurisdiction of
this Court.[25]

There is some merit in the petition.

There is no question that the parties entered into an

employment contract on 3 February 1998, whereby petitioner was
contracted by respondent to render services on board MSV
Seaspread for the consideration of US$515.00 per month for nine
(9) months, plus overtime pay. However, respondent failed to
deploy petitioner from the port of Manila toCanada. Considering
that petitioner was not able to depart from the airport or seaport
in the point of hire, the employment contract did not commence,
and no employer-employee relationship was created between the
parties.[26]

However, a distinction must be made between the perfection

of the employment contract and the commencement of the
employer-employee relationship. The perfection ofthe
contract,
which in this

case coincided with the date of execution thereof, occurred when

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

Moreover, while the POEA Standard Contract must be

recognized and respected, neither the manning agent nor the
employer can simply prevent a seafarer from being
deployed without a valid reason.

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.

We take exception to the Court of Appeals conclusion that

damages are not recoverable by a worker who was not deployed
by his agency. The fact that the POEA Rules [27] are silent as to the
payment of damages to the affected seafarer does not mean that
the seafarer is precluded from claiming the same. The
sanctions provided for non-deployment do not end with the
suspension or cancellation of license or fine and the return of all
documents at no cost to the worker. They do not forfend a
seafarer from instituting an action for damages against the
employer or agency which has failed to deploy him.

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

Despite the absence of an employer-employee relationship

between petitioner and respondent, the Court rules that the NLRC
has jurisdiction over petitioners complaint. The jurisdiction of
labor arbiters is not limited to claims arising from employeremployee relationships. Section 10 of R.A. No. 8042 (Migrant
Workers Act), provides that:
Sec. 10. Money Claims. Notwithstanding any provision of
law to the contrary, the Labor Arbiters of the National Labor
Relations Commission (NLRC) shall have the original and
exclusive jurisdiction to hear and decide, within ninety (90)
calendar days after the filing of the complaint, the claims
arising out of an employer-employee relationship or by
virtue of any law or contract involving Filipino

workers for overseas deployment including claims

for actual, moral, exemplary and other forms of
damages. x x x [Emphasis supplied]

Since the present petition involves the employment contract

entered into by petitioner for overseas employment, his claims
are cognizable by the labor arbiters of the NLRC.

Article 2199 of the Civil Code provides that one is entitled to an

adequate compensation only for such pecuniary loss suffered by
him as he has duly proved. Respondent is thus liable to pay
petitioner actual damages in the form of the loss of nine
(9) months worth of salary as provided in the contract. He is not,
however, entitled to overtime pay. While the contract indicated a
fixed overtime pay, it is not a guarantee that he would receive
said amount regardless of whether or not he rendered overtime
work. Even though petitioner was prevented without valid reason
from rendering regular much less overtime service, [28] the fact
remains that there is no certainty that petitioner will perform
overtime work had he been allowed to board the vessel. The
amount of US$286.00 stipulated in the contract will be paid only if
and when the employee rendered overtime work.This has been
the tenor of our rulings in the case of Stolt-Nielsen Marine
Services
(Phils.),
Inc.
v.
National
Labor
Relations
[29]
Commission
where we discussed the matter in this light:
The contract provision means that the fixed overtime pay
of 30% would be the basis for computing the overtime
pay if and when overtime work would be rendered. Simply
stated, the rendition of overtime work and the submission
of sufficient proof that said work was actually performed
are conditions to be satisfied before a seaman could be
entitled to overtime pay which should be computed on
the basis of 30% of the basic monthly salary. In short, the

contract provision guarantees the right to overtime pay

but the entitlement to such benefit must first be
established.Realistically speaking, a seaman, by the very
nature of his job, stays on board a ship or vessel beyond
the regular eight-hour work schedule. For the employer to
give him overtime pay for the extra hours when he might
be sleeping or attending to his personal chores or even
just lulling away his time would be extremely unfair and
unreasonable.[30]

The Court also holds that petitioner is entitled to attorneys

fees in the concept of damages and expenses of litigation.
Attorney's fees are recoverable when the defendant's act or
omission has compelled the plaintiff to incur expenses to protect
his interest.[31] We note that respondents basis for not deploying
petitioner is the belief that he will jump ship just like his brother,
a mere suspicion that is based on alleged phone calls of several
persons whose identities were not even confirmed. Time and
again, this Court has upheld management prerogatives so long as
they are exercised in good faith for the advancement of the
employers interest and not for the purpose of defeating or
circumventing the rights of the employees under special laws or
under valid agreements.[32] Respondents failure to deploy
petitioner is unfounded and unreasonable, forcing petitioner to
institute the suit below. The award of attorneys fees is thus
warranted.

However, moral damages cannot be awarded in this

case. While respondents failure to deploy petitioner seems
baseless and unreasonable, we cannot qualify such action as
being tainted with bad faith, or done deliberately to defeat
petitioners rights, as to justify the award of moral damages. At
most, respondent was being overzealous in protecting its interest

when it became too hasty in making its conclusion that petitioner

will jump ship like his brother.

We likewise do not see respondents failure to deploy

petitioner as an act designed to prevent the latter from attaining
the status of a regular employee. Even if petitioner was able to
depart the port of Manila, he still cannot be considered a regular
employee, regardless of his previous contracts of employment
with respondent. In Millares

v. National Labor Relations Commission,[33] the Court ruled that

seafarers are considered contractual employees and cannot be
considered as regular employees under the Labor Code. Their
employment is governed by the contracts they sign every time
they are rehired and their employment is terminated when the
contract expires. The exigencies of their work necessitates that
they be employed on a contractual basis. [34]

WHEREFORE, petition is GRANTED IN PART. The Decision

dated 16 October 2003 and the Resolution dated 19 February
2004 of the Court of Appeals are REVERSED and SET ASIDE. The
Decision of Labor Arbiter Teresita D. Castillon-Lora dated 29
January
1999 is
REINSTATED
with the
MODIFICATION
that respondent
CF
Sharp
Crew
Management,
Inc. is ordered to pay actual or compensatory damages in
the amount of US$4,635.00
representing salary for nine (9) months as stated in the contract,
and attorneys fees at the reasonable rate of 10% of the
recoverable amount.

SO ORDERED.

SO ORDERED.

G.R. No. 170139, August 05, 2014

SAMEER OVERSEAS PLACEMENT AGENCY, INC., Petitioner, v. JOY C. CABILES, Respondent.

FACTS OF THE CASE:

Petitioner, Sameer Overseas Placement Agency, Inc., is a recruitment and placement agency.
Responding to an ad it published, respondent, Joy C. Cabiles, submitted her application for a
quality control job in Taiwan, and signed with a one-year employment contract for a monthly
salary of NT$15,360.00.
The agency required her to pay a placement fee of 70,000.00 when she signed the employment
contract.
She was deployed to work in Taiwan for Wacoal, but was given a position as a cutter.
Sameer Overseas Placement Agency claims that on July 14, 1997, a certain Mr. Huwang from
Wacoal informed Joy, without prior notice, that she was terminated and that she should
immediately report to their office to get her salary and passport. She was asked to prepare for
immediate repatriation.
Joy claims that she was told that from June 26 to July 14, 1997, she only earned a total of
NT$9,000. According to her, Wacoal deducted NT$3,000 to cover her plane ticket to Manila.
She filed a filed a complaint with the National Labor Relations Commission against petitioner
and Wacoal for illegal dismissal.
Sameers Defense:
o

Respondents termination was due to her inefficiency, negligence in her duties, and her
failure to comply with the work requirements [of] her foreign [employer];

The agency also claimed that it did not ask for a placement fee of NT$70,000.00
(evidenced by an OR bearing NT% 20,360.00);

Petitioner added that Wacoals accreditation with petitioner had already been
transferred to the Pacific Manpower & Management Services, Inc. (Aug. 06, 1997) thus,
obligation is substituted with Pacific, which the latter denied
Labor Arbiter Ruling:

Case is dismissed Rationale: Complaint is based on mere allegations.

No excess payment of placement fees, based on the official receipt presented by

petitioner

Transfer of obligation to Pacific is immaterial

NLRC Ruling:

Joy is illegally dismissed

Reiterated the doctrine that the burden of proof to show that the dismissal was based
on a just or valid cause belongs to the employer

It found that Sameer Overseas Placement Agency failed to prove that there were just
causes for termination.

There was no sufficient proof to show that respondent was inefficient in her work and
that she failed to comply with company requirements. 41 Furthermore, procedural due process
was not observed in terminating respondent.

Did not rule on the issue of reimbursement of placement fees for lack of jurisdiction

It refused to entertain the issue of the alleged transfer of obligations to Pacific.

It did not acquire jurisdiction over that issue because Sameer Overseas Placement
Agency failed to appeal the Labor Arbiters decision not to rule on the matter.
Sameer filed for MR but NLRC dismissed; filed for petition for certiorari at CA
CA Ruling:

Affirmed NLRC with respect to the finding of illegal dismissal, Joys entitlement to the
equivalent of three months worth of salary, reimbursement of withheld repatriation expense,
and attorneys fees.

Remanded case to NLRC to address the validity of petitioners allegations against Pacific.

ISSUE OF THE CASE:

o

WON the Court of Appeals erred when it affirmed the ruling of the National Labor
Relations Commission finding respondent illegally dismissed and awarding her three months
worth of salary, the reimbursement of the cost of her repatriation, and attorneys fees despite
the alleged existence of just causes of termination;

WON there was a just cause for termination because there was a finding of Wacoal that
respondent was inefficient in her work;

WON Pacific that should now assume responsibility for Wacoals contractual obligations

to the workers originally recruited by petitioner

SC RULING/RATIONALE:
1.) JUST CAUSE:
o

Sameer Overseas Placement Agencys petition is without merit. SC find for respondent.

Sameer Overseas Placement Agency failed to show that there was just cause for causing
Joys dismissal. The employer, Wacoal, also failed to accord her due process of law.
o

Indeed, employers have the prerogative to impose productivity and quality standards
at work. They may also impose reasonable rules to ensure that the employees comply with these
standards.59 Failure to comply may be a just cause for their dismissal. Certainly, employers cannot
be compelled to retain the services of an employee who is guilty of acts that are inimical to the
interest of the employer. While the law acknowledges the plight and vulnerability of workers, it
does not authorize the oppression or self-destruction of the employer. Management prerogative
is recognized in law and in our jurisprudence.This prerogative, however, should not be abused. It
is tempered with the employees right to security of tenure. Workers are entitled to substantive
and procedural due process before termination. They may not be removed from employment
without a valid or just cause as determined by law and without going through the proper
procedure.Security of tenure for labor is guaranteed by our Constitution
With respect to the rights of overseas Filipino workers, follow the principle of lex loci

contractus.
o

Pinned Triple Eight Integrated Services, Inc. v. NLRC

Article 282 of the Labor Code enumerates the just causes of termination by the
employer. Thus:
Art. 282. Termination by employer.

o
o

An employer may terminate an employment for any of the following

causes: (a) Serious misconduct or willful disobedience by the employee of the lawful
orders of his employer or representative in connection with his work;(b) Gross and
habitual neglect by the employee of his duties;(c) Fraud or willful breach by the employee
of the trust reposed in him by his employer or duly authorized representative;(d)
Commission of a crime or offense by the employee against the person of his employer or
any immediate member of his family or his duly authorized representatives;(e) Other
causes analogous to the foregoing.

Petitioners allegation that respondent was inefficient in her work and negligent

in her duties may, therefore, constitute a just cause for termination under Article 282(b), but
only if petitioner was able to prove it.
The burden of proving that there is just cause for termination is on the

employer. The employer must affirmatively show rationally adequate evidence that the
dismissal was for a justifiable cause. Failure to show that there was valid or just cause for
termination would necessarily mean that the dismissal was illegal.
To show that dismissal resulting from inefficiency in work is valid, it must be

shown that:
1) the employer has set standards of conduct and workmanship against

which the employee will be judged;

2) the standards of conduct and workmanship must have been

communicated to the employee; and

3) the communication was made at a reasonable time prior to the

employees performance assessment.

o

The regular employee must constantly attempt to prove to his or her employer
that he or she meets all the standards for employment. Courts should remain vigilant on
allegations of the employers failure to communicate work standards that would govern
ones employment if [these are] to discharge in good faith [their] duty to adjudicate.

2.) DUE PROCESS REQUIREMENT

Petitioner failed to comply with the due process requirement

o
o

A valid dismissal requires both a valid cause and adherence to the valid
procedure of dismissal.The employer is required to give the charged employee at least two
written notices before termination.

One of the written notices must inform the employee of the particular acts that
may cause his or her dismissal.77 The other notice must [inform] the employee of the
employers decision. Aside from the notice requirement, the employee must also be given
an opportunity to be heard.

3.) Republic Act No. 8042, otherwise known as the Migrant Workers and Overseas
Filipinos Act of 1995

Respondent Joy Cabiles, having been illegally dismissed, is entitled to her salary for the

unexpired portion of the employment contract that was violated together with attorneys fees
and reimbursement of amounts withheld from her salary.
o

Sec 10 of RA 1082 MONEY CLAIMS

SEC. 15. REPATRIATION OF WORKERS; EMERGENCY REPATRIATION FUND

The reinstatement of the clause in Republic Act No. 8042 was not yet in effect at
the time of respondents termination from work in 1997. Republic Act No. 8042 before it
was amended by Republic Act No. 10022 governs this case.
Republic Act. No. 10022, violates the constitutional rights to equal protection and

due process.
SC reiterate their finding in Serrano v. Gallant Maritime that limiting

wages that should be recovered by an illegally dismissed overseas worker to three

months is both a violation of due process and the equal protection clauses of the
Constitution.
o

Respondent Joy Cabiles is entitled to her salary for the unexpired portion
of her contract, in accordance with Section 10 of Republic Act No. 8042. The award of the
three-month equivalence of respondents salary must be modified accordingly. Since she
started working on June 26, 1997 and was terminated on July 14, 1997, respondent is
entitled to her salary from July 15, 1997 to June 25, 1998. To rule otherwise would be
iniquitous to petitioner and other OFWs, and would, in effect, send a wrong signal that
principals/employers and recruitment/manning agencies may violate an OFWs security of
tenure which an employment contract embodies and actually profit from such violation
based on an unconstitutional provision of law.

Respondent is also entitled to an interest of 6% per annum on her money

claims from the finality of this judgment.

4.) LIABILITIES OF EMPLOYER

SC clarify the liabilities of Wacoal as principal and petitioner as the employment agency

that facilitated respondents overseas employment.

o

Section 10 of the Migrant Workers and Overseas Filipinos Act of 1995 provides
that the foreign employer and the local employment agency are jointly and severally liable
for money claims including claims arising out of an employer-employee relationship and/or
damages. This section also provides that the performance bond filed by the local agency

shall be answerable for such money claims or damages if they were awarded to the
employee.
This provision is in line with the states policy of affording protection to labor and

alleviating workers plight.

The Migrant Workers and Overseas Filipinos Act of 1995 ensures that overseas

workers have recourse in law despite the circumstances of their employment. By providing
that the liability of the foreign employer may be enforced to the full extent against the local
agent, the overseas worker is assured of immediate and sufficient payment of what is due
them.
Pinned Prieto vs NLRC

o
o

The Court is not unaware of the many abuses suffered by our overseas
workers in the foreign land where they have ventured, usually with heavy hearts, in pursuit of
a more fulfilling future. Breach of contract, maltreatment, rape, insufficient nourishment, subhuman lodgings, insults and other forms of debasement, are only a few of the inhumane acts
to which they are subjected by their foreign employers, who probably feel they can do as they
please in their own country. While these workers may indeed have relatively little defense
against exploitation while they are abroad, that disadvantage must not continue to burden
them when they return to their own territory to voice their muted complaint. There is no
reason why, in their very own land, the protection of our own laws cannot be extended to
them in full measure for the redress of their grievances.

The decision of the Court of Appeals is AFFIRMED with modification. Petitioner Sameer
Overseas Placement Agency is ORDERED to pay respondent Joy C. Cabiles the amount
equivalent to her salary for the unexpired portion of her employment contract at an
interest of 6% per annum from the finality of this judgment. Petitioner is also ORDERED
to reimburse respondent the withheld NT$3,000.00 salary and pay respondent attorneys
fees of NT$300.00 at an interest of 6% per annum from the finality of this judgment.
The clause, or for three (3) months for every year of the unexpired term, whichever is
less in Section 7 of Republic Act No. 10022 amending Section 10 of Republic Act No. 8042
is declared unconstitutional and, therefore, null and void.

THIRD DIVISION
SUNACE INTERNATIONAL
MANAGEMENT SERVICES, INC.
Petitioner,

G.R. No. 161757

Present:

QUISUMBING, J., Chairperson,

CARPIO,
CARPIO MORALES, and
TINGA, JJ.

- versus NATIONAL LABOR RELATIONS

COMMISSION,
Second
Division; HON.
ERNESTO
S.
DINOPOL, in his capacity as Labor
Arbiter, NLRC; NCR, Arbitration
Branch, Quezon City and DIVINA A.
MONTEHERMOZO,
Respondents.

Promulgated:
January 25, 2006

x - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x
DECISION
CARPIO MORALES, J.:
Petitioner, Sunace International Management Services (Sunace), a
corporation duly organized and existing under the laws of the Philippines,
deployed to Taiwan Divina A. Montehermozo (Divina) as a domestic helper under
a 12-month contract effective February 1, 1997. The deployment was with the
assistance of a Taiwanese broker, Edmund Wang, President of Jet Crown
International Co., Ltd.
[1]

After her 12-month contract expired on February 1, 1998, Divina continued

working for her Taiwanese employer, Hang Rui Xiong, for two more years, after
which she returned to the Philippines on February 4, 2000.
Shortly after her return or on February 14, 2000, Divina filed a
complaint before the National Labor Relations Commission (NLRC) against
Sunace, one Adelaide Perez, the Taiwanese broker, and the employer-foreign
principal alleging that she was jailed for three months and that she was underpaid.
[2]

The following day or on February 15, 2000, Labor Arbitration Associate

Regina T. Gavin issued Summons to the Manager of Sunace, furnishing it with a
copy of Divinas complaint and directing it to appear for mandatory conference on
February 28, 2000.
[3]

The scheduled mandatory conference was reset. It appears to have been

concluded, however.
On April 6, 2000, Divina filed her Position Paper claiming that under her
original one-year contract and the 2-year extended contract which was with the
knowledge and consent of Sunace, the following amounts representing income tax
and savings were deducted:
[4]

Year

Deduction for
Income Tax

Deduction for Savings

1997
1998
1999

NT10,450.00
NT9,500.00
NT13,300.00

NT23,100.00
NT36,000.00
NT36,000.00;

[5]

and while the amounts deducted in 1997 were refunded to her, those deducted in
1998 and 1999 were not. On even date, Sunace, by its Proprietor/General Manager
Maria Luisa Olarte, filed its Verified Answer and Position Paper, claiming as
follows, quoted verbatim:
[6]

COMPLAINANT IS NOT ENTITLED

FOR THE REFUND OF HER 24 MONTHS
SAVINGS
3. Complainant could not anymore claim nor entitled for the refund of her 24 months
savings as she already took back her saving already last year and the employer did
not deduct any money from her salary, in accordance with a Fascimile
Message from the respondent SUNACEs employer, Jet Crown International Co.
Ltd., a xerographic copy of which is herewith attached as ANNEX 2hereof;
COMPLAINANT IS NOT ENTITLED
TO REFUND OF HER 14 MONTHS TAX
AND PAYMENT OF ATTORNEYS FEES

4. There is no basis for the grant of tax refund to the complainant as the she finished
her one year contract and hence, was not illegally dismissed by her employer.
She could only lay claim over the tax refund or much more be awarded of
damages such as attorneys fees as said reliefs are available only when the
dismissal of a migrant worker is without just valid or lawful cause as defined by
law or contract.
The rationales behind the award of tax refund and payment of attorneys fees is not to
enrich the complainant but to compensate him for actual injury suffered.
Complainant did not suffer injury, hence, does not deserve to be compensated for
whatever kind of damages.
Hence, the complainant has NO cause of action against respondent SUNACE for
monetary claims, considering that she has been totally paid of all the monetary
benefits due her under her Employment Contract to her full satisfaction.
6. Furthermore, the tax deducted from her salary is in compliance with
the Taiwanese law, which respondent SUNACE has no control and complainant
has to obey and this Honorable Office has no authority/jurisdiction to intervene
because the power to tax is a sovereign power which the Taiwanese Government
is supreme in its own territory. The sovereign power of taxation of a state is
recognized under international law and among sovereign states.

7. That respondent SUNACE respectfully reserves the right to file supplemental Verified
Answer and/or Position Paper to substantiate its prayer for the dismissal of the
above case against the herein respondent. AND BY WAY OF x x x x (Emphasis and underscoring supplied)

Reacting to Divinas Position Paper, Sunace filed on April 25, 2000 an . . . ANSWER
TO COMPLAINANTS POSITION PAPER alleging that Divinas 2-year extension of her
contract was without its knowledge and consent, hence, it had no liability attaching
to any claim arising therefrom, and Divina in fact executed a Waiver/Quitclaim and
Release of Responsibility and an Affidavit of Desistance, copy of each document
was annexed to said . . . ANSWER TO COMPLAINANTS POSITION PAPER.
[7]

To Sunaces . . . ANSWER TO COMPLAINANTS POSITION PAPER, Divina filed a 2-page

reply, without, however, refuting Sunaces disclaimer of knowledge of the
extension of her contract and without saying anything about the Release, Waiver
and Quitclaim and Affidavit of Desistance.
[8]

The Labor Arbiter, rejected Sunaces claim that the extension of Divinas contract
for two more years was without its knowledge and consent in this wise:
We reject Sunaces submission that it should not be held
responsible for the amount withheld because her contract was extended for
2 more years without its knowledge and consent because as Annex
B shows, Sunace and Edmund Wang have not stopped communicating
with each other and yet the matter of the contracts extension and Sunaces
alleged non-consent thereto has not been categorically established.
[9]

What Sunace should have done was to write to POEA about the
extension and its objection thereto, copy furnished the complainant herself,
her foreign employer, Hang Rui Xiong and the Taiwanese broker, Edmund
Wang.
And because it did not, it is presumed to have consented to the
extension and should be liable for anything that resulted thereform (sic).
(Underscoring supplied)
[10]

The Labor Arbiter rejected too Sunaces argument that it is not liable on account of
Divinas execution of a Waiver and Quitclaim and an Affidavit of Desistance.
Observed the Labor Arbiter:
Should the parties arrive at any agreement as to the whole or any part of
the dispute, the same shall be reduced to writing and signed by the parties and
their respective counsel (sic), if any, before the Labor Arbiter.
The settlement shall be approved by the Labor Arbiter after being satisfied
that it was voluntarily entered into by the parties and after having explained to
them the terms and consequences thereof.
A compromise agreement entered into by the parties not in the presence of
the Labor Arbiter before whom the case is pending shall be approved by him, if
after confronting the parties, particularly the complainants, he is satisfied that they
understand the terms and conditions of the settlement and that it was entered into
freely voluntarily (sic) by them and the agreement is not contrary to law, morals,
and public policy.
And because no consideration is indicated in the documents, we strike
them down as contrary to law, morals, and public policy.
[11]

He accordingly decided in favor of Divina, by decision of October 9, 2000, the

dispositive portion of which reads:
[12]

Wherefore, judgment is hereby rendered ordering respondents SUNACE

INTERNATIONAL SERVICES and its owner ADELAIDA PERGE, both in their
personal capacities and as agent of Hang Rui Xiong/Edmund Wang to jointly and
severally pay complainant DIVINA A. MONTEHERMOZO the sum of
NT91,950.00 in its peso equivalent at the date of payment, as refund for the
amounts which she is hereby adjudged entitled to as earlier discussed plus 10%
thereof as attorneys fees since compelled to litigate, complainant had to engage
the services of counsel.
SO ORDERED. (Underescoring supplied)
[13]

On appeal of Sunace, the NLRC, by Resolution of April 30, 2002, affirmed

the Labor Arbiters decision.
[14]

Via petition for certiorari, Sunace elevated the case to the Court of Appeals
which dismissed it outright by Resolution of November 12, 2002, the full text of
which reads:
[15]

[16]

The petition for certiorari faces outright dismissal.

The petition failed to allege facts constitutive of grave abuse of discretion
on the part of the public respondent amounting to lack of jurisdiction when the
NLRC affirmed the Labor Arbiters finding that petitioner Sunace International
Management Services impliedly consented to the extension of the contract of
private respondent Divina A. Montehermozo. It is undisputed that petitioner was
continually communicating with private respondents foreign employer (sic). As
agent of the foreign principal, petitioner cannot profess ignorance of such
extension
as
obviously, the
act
of
the
principal
extending
complainant (sic) employment contract necessarily bound it. Grave abuse of
discretion is not present in the case at bar.
ACCORDINGLY,
the
COURSE and DISMISSED.

petition

is

hereby DENIED

DUE

[17]

SO ORDERED.
(Emphasis on words in capital letters in the original; emphasis on words in
small letters and underscoring supplied)

Its Motion for Reconsideration having been denied by the appellate court by
Resolution of January 14, 2004, Sunace filed the present petition for review on
certiorari.
[18]

The Court of Appeals affirmed the Labor Arbiter and NLRCs finding that
Sunace knew of and impliedly consented to the extension of Divinas 2-year
contract. It went on to state that It is undisputed that [Sunace] was continually
communicating with [Divinas] foreign employer. It thus concluded that [a]s agent
of the foreign principal, petitioner cannot profess ignorance of such extension as
obviously, the act of the principal extending complainant (sic) employment
contract necessarily bound it.
Contrary to the Court of Appeals finding, the alleged continuous
communication was with the Taiwanese broker Wang, not with the foreign
employer Xiong.
The February 21, 2000 telefax message from the Taiwanese broker to
Sunace, the only basis of a finding of continuous communication, reads verbatim:
xxxx
Regarding to Divina, she did not say anything about her
saving in police station. As we contact with her employer, she took
back her saving already last years. And they did not deduct any
money from her salary. Or she will call back her employer to check
it again. If her employer said yes! we will get it back for her.

Thank you and best regards.

(sgd.)
Edmund Wang
President
[19]

The finding of the Court of Appeals solely on the basis of the above-quoted
telefax message, that Sunace continually communicated with the foreign principal
(sic) and therefore was aware of and had consented to the execution of the
extension of the contract is misplaced. The message does not provide evidence that
Sunace was privy to the new contract executed after the expiration on February 1,
1998
of
the
original
contract.
That
Sunace
and
the
Taiwanese broker communicated regarding Divinas allegedly withheld savings

does not necessarily mean that Sunace ratified the extension of the contract. As
Sunace points out in its Reply filed before the Court of Appeals,
[20]

As can be seen from that letter communication, it was just an

information given to the petitioner that the private respondent had t[aken]
already her savings from her foreign employer and that no deduction was
made on her salary. It contains nothing about the extension or the
petitioners consent thereto.
[21]

Parenthetically, since the telefax message is dated February 21, 2000, it is

safe to assume that it was sent to enlighten Sunace who had been directed, by
Summons issued on February 15, 2000, to appear on February 28, 2000 for a
mandatory conference following Divinas filing of the complaint on February 14,
2000.
Respecting the Court of Appeals following dictum:
As agent of its foreign principal, [Sunace] cannot profess ignorance of
such an extension as obviously, the act of its principal extending [Divinas]
employment contract necessarily bound it,
[22]

it too is a misapplication, a misapplication of the theory of imputed knowledge.

The theory of imputed knowledge ascribes the knowledge of the agent, Sunace, to
the principal, employer Xiong, not the other way around. The knowledge of the
principal-foreign employer cannot, therefore, be imputed to its agent Sunace.
[23]

There being no substantial proof that Sunace knew of and consented to be

bound under the 2-year employment contract extension, it cannot be said to be
privy thereto. As such, it and its owner cannot be held solidarily liable for any of
Divinas claims arising from the 2-year employment extension. As the New Civil
Code provides,
Contracts take effect only between the parties, their assigns, and
heirs, except in case where the rights and obligations arising from the
contract are not transmissible by their nature, or by stipulation or by
provision of law.
[24]

Furthermore, as Sunace correctly points out, there was an implied revocation

of its agency relationship with its foreign principal when, after the termination of
the original employment contract, the foreign principal directly negotiated with
Divina and entered into a new and separate employment contract in Taiwan. Article
1924 of the New Civil Code reading
The agency is revoked if the principal directly manages the business
entrusted to the agent, dealing directly with third persons.

thus applies.
In light of the foregoing discussions, consideration of the validity of the
Waiver and Affidavit of Desistance which Divina executed in favor of Sunace is
rendered unnecessary.
WHEREFORE, the petition is GRANTED. The challenged resolutions of
the Court of Appeals are hereby REVERSED and SET ASIDE. The complaint of
respondent Divina A. Montehermozo against petitioner is DISMISSED.
SO ORDERED.