PI MANUFACTURING INC v PIMS

Facts: Petitioner P.I. Manufacturing,

Incorporated is a domestic corporation
engaged in the manufacture and sale of
household appliances. On the other hand,
respondent P.I. Manufacturing Supervisors
and Foremen Association (PIMASUFA) is
an organization of petitioners supervisors
and foremen, joined in this case by its
federation, the National Labor Union (NLU).
On December 10, 1987, the President
signed into law Republic Act (R.A.) No.
66402 providing, among others, an
increase in the statutory minimum wage
and salary rates of employees and workers
in the private sector.
Thereafter, on December 18, 1987,
petitioner and respondent PIMASUFA
entered into a new Collective Bargaining
Agreement (1987 CBA) whereby the
supervisors were granted an increase of
P625.00 per month and the foremen,
P475.00 per month. The increases were
made retroactive to May 12, 1987, or prior
to the passage of R.A. No. 6640, and every
year thereafter until July 26, 1989.
Issue: whether the implementation of R.A.
No. 6640 resulted in a wage distortion and
whether such distortion was cured or
remedied by the 1987 CBA.

skills, length of service, or other logical

bases of differentiation.
Otherwise stated, wage distortion means
the disappearance or virtual disappearance
of pay differentials between lower and
higher positions in an enterprise because of
compliance with a wage order.
. It is therefore undeniable that the increase
in the wage rates by virtue of R.A. No. 6640
resulted in wage distortion or the
elimination of the intentional quantitative
differences in the wage rates of the above
employees.

However, while we find the presence of

wage distortions, we are convinced that the
same were cured or remedied when
respondent PIMASUFA entered into the
1987 CBA with petitioner after the effectivity
of R.A. No. 6640. The 1987 CBA increased
the monthly salaries of the supervisors by
P625.00 and the foremen, by P475.00,
effective May 12, 1987. These increases reestablished and broadened the gap, not
only between the supervisors and the
foremen, but also between them and the
rank-and-file employees.
Interestingly, such gap as re-established by
virtue of the CBA is more than a substantial
compliance with R.A. No. 6640.

Held: We grant the motion.

Ratio: R.A. No. 6727, otherwise known as
the Wage Rationalization Act, explicitly
defines "wage distortion" as:
x x x a situation where an increase in
prescribed wage rates results in the
elimination or severe contraction of
intentional quantitative differences in wage
or salary rates between and among
employee groups in an establishment as to
effectively
obliterate
the
distinctions
embodied in such wage structure based on

We believe and so hold that the reestablishment of a significant gap or

differential between regular employees and
casual employees by operation of the CBA
was more than substantial compliance with
the requirements of the several Wage
Orders (and of Article 124 of the Labor
Code). That this re-establishment of a
significant differential was the result of
collective bargaining negotiations, rather
than of a special grievance procedure, is
not a legal basis for ignoring it.

The provisions of the CBA should be read

in harmony with the wage orders, whose
benefits should be given only to those
employees covered thereby.

contracting, transporting, utilizing, hiring or

procuring (of) workers. "

The goal of collective bargaining is the

making of agreements that will stabilize
business conditions and fix fair standards of
working conditions.

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.

People v Panis

People v Goce

Facts: 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.

Facts: On January 12, 1988, an information

for illegal recruitment committed by a
syndicate and in large scale, punishable
under Articles 38 and 39 of the Labor Code
(Presidential Decree No. 442) as amended
by Section 1(b) of Presidential Decree No.
2018, was filed against spouses Dan and
Loma Goce and herein accused-appellant
Nelly Agustin.

Illustration shows, almost all of the

members of respondent PIMASUFA have
been receiving wage rates above P100.00
and, therefore, not entitled to the P10.00
increase.

Issue: The basic issue in this case is the

correct interpretation of Article 13(b) of P.D.
442, otherwise known as the Labor Code,
Held: 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.
Ratio: 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,

It is appellant's defensive theory that all she

did was to introduce complainants to the
Goce spouses.
Issue: whether or not appellant Agustin
merely introduced complainants to the
Goce couple or her actions went beyond
that.
Held: The testimonial evidence hereon
show that she indeed further committed
acts constitutive of illegal recruitment.
Ratio: All four prosecution witnesses
testified that it was Agustin whom they
initially approached regarding their plans of
working overseas. It was from her that they
learned about the fees they had to pay, as
well as the papers that they had to submit.
It was after they had talked to her that they
met the accused spouses who owned the
placement agency.

Article 38 of the Labor Code, as amended

by Presidential Decree No. 2018, provides
that any recruitment activity, including the
prohibited practices enumerated in Article
34 of said Code, undertaken by nonlicensees or non-holders of authority shall
be deemed illegal and punishable under
Article 39 thereof. The same article further
provides that illegal recruitment shall be
considered an offense involving economic
sabotage if any of these qualifying
circumstances exist, namely, (a) when
illegal recruitment is committed by a
syndicate, i.e., if it is carried out by a group
of three or more persons conspiring and/or
confederating with one another; or (b) when
illegal recruitment is committed in large
scale, i.e., if it is committed against three or
more persons individually or as a group.
On the other hand, referral is the act of
passing along or forwarding of an applicant
for employment after an initial interview of a
selected applicant for employment to a
selected employer, placement officer or
bureau.
There is illegal recruitment when one gives
the impression of having the ability to send
a worker abroad." 29 It is undisputed that
appellant gave complainants the distinct
impression that she had the power or ability
to send people abroad for work such that
the latter were convinced to give her the
money she demanded in order to be so
employed.
Her act of collecting from each of the
complainants payment for their respective
passports, training fees, placement fees,
medical tests and other sundry expenses
unquestionably constitutes an act of
recruitment within the meaning of the law.
DARVIN v CA
Facts: The evidence for the prosecution,
based on the testimony of private
respondent, Macaria Toledo, shows that
sometime in March, 1992, she met
accused-appellant Darvin in the latter's

residence at Dimasalang, Imus, Cavite,

through the introduction of their common
friends, Florencio Jake Rivera and Leonila
Rivera. In said meeting, accused-appellant
allegedly convinced Toledo that by giving
her P150,000.00, the latter can immediately
leave for the United States without any
appearance before the U.S. embassy.
Issue: whether the accused-appellant
indeed engaged in recruitment activities, as
defined under the Labor Code.
Held: We find the appeal impressed with
merit.
Ratio: Applied to the present case, to
uphold the conviction of accused-appellant,
two elements need to be shown: (1) the
person charged with the crime must have
undertaken recruitment activities; and (2)
the said person does not have a license or
authority to do so.
In this case, we find no sufficient evidence
to prove that accused-ppellant offered a job
to private respondent. It is not clear that
accused gave the impression that she was
capable of providing the private respondent
work abroad. What is established, however,
is that the private respondent gave
accused-appellant P150,000.00. The claim
of the accused that the P150,000.00 was
for payment of private respondent's air fare
and US visa and other expenses cannot be
ignored because the receipt for the
P150,000.00, which was presented by both
parties during the trial of the case, stated
that it was "for Air Fare and Visa to USA."
13 Had the amount been for something else
in addition to air fare and visa expenses,
such as work placement abroad, the receipt
should have so stated.
By themselves, procuring a passport, airline
tickets and foreign visa for another
individual, without more, can hardly qualify
as recruitment activities. Aside from the
testimony of private respondent, there is
nothing to show that accused-appellant
engaged in recruitment activities.

WALLEM PHILIPPINES SHIPPING INC. v

MINISTER OF LABOR
Facts: Private respondents were hired by
petitioner sometime in May 1975 to work as
seamen for a period of ten months on board
the M/V Woermann Sanaga, a Dutch vessel
owned and operated by petitioner's
European
principals.
While
their
employment contracts were still in force,
private respondents were dismissed by
their employer, petitioner herein, and were
discharged from the ship on charges that
they instigated the International Transport
Federation (ITF) to demand the application
of worldwide ITF seamen's rates to their
crew.
Issue: The whole controversy is centered
around the liability of petitioner when it
ordered the dismissal of herein private
respondents before the expiration of their
respective employment contracts.
Held: The findings and conclusion of the
Board should be sustained.
Ratio: As already intimated above, there is
no logic in the statement made by the
Secretariat's Hearing Officer that the private
respondents are liable for breach of their
employment
contracts
for
accepting
salaries higher than their contracted rates.
Said respondents are not signatories to the
Special Agreement, nor was there any
showing that they instigated the execution
thereof. Respondents should not be blamed
for accepting higher salaries since it is but
human for them to grab every opportunity
which would improve their working
conditions and earning capacity.
The records fail to establish clearly the
commission of any threat. But even if there
had been such a threat, respondents'
behavior should not be censured because it
is but natural for them to employ some
means of pressing their demands for
petitioner, who refused to abide with the
terms of the Special Agreement, to honor
and respect the same. They were only

acting in the exercise of their rights, and to

deprive them of their freedom of expression
is contrary to law and public policy.
VIR-JEN SHIPPING v NLRC
Facts: The records show that private
respondents have a manning contract for a
period of one (1) year with petitioner in
representation of its principal Kyoei Tanker
Co. Ltd.
Aware of the problem that vessels not
paying rates imposed by the International
Transport Workers Federation (ITF) would
be detained or interdicted in foreign ports
controlled by the ITF, petitioner and private
respondents executed a side contract to the
effect that should the vessel M/T Jannu be
required to pay ITF rates when it calls on
any ITF controlled foreign port, private
respondents would return to petitioner the
amounts so paid to them.
On March 23, 1979, the master of the
vessel who is one of the private
respondents sent a cable to petitioner, while
said vessel was en route to Australia which
is an ITF controlled port, stating that private
respondents were not contented with the
salary and benefits stipulated in the
manning contract, and demanded that they
be given 50% increase thereof, as the "best
and only solution to solve ITF problem."
The seamen were accordingly disembarked
in Japan and repatriated to Manila.
Issue: That the respondent NLRC had no
more jurisdiction to entertain private
respondents' appeal because the NSB
decision became final and executory for
failure of said respondents to serve on he
petitioner a copy of their "APPEAL AND
MEMORANDUM OF APPEAL" within the
ten (10) day reglementary period for appeal
and even after the expiration of said period;
Held: We have arrived at the conclusion
that the shortened period of ten (10) days

fixed by Article 223 contemplates calendar

days and not working days.
Ratio: We are persuaded to this
conclusion, if only because We believe that
it is precisely in the interest of labor that the
law has commanded that labor cases be
promptly, if not peremptorily, dispose of.
Long periods for any acts to be done by the
contending parties can be taken advantage
of more by management than by labor.
Most labor claims are decided in their favor
and management is generally the appellant.
Delay, in most instances, gives the
employers more opportunity not only to
prepare even ingenious defenses, what
with well-paid talented lawyers they can
afford, but even to wear out the efforts and
meager resources of the workers, to the
point that not infrequently the latter either
give up or compromise for less than what is
due them.
Issue: Whether or not the Seamen
breached their respective employment
contracts;
Held: With respect to the first issue, the
Board believes that the answer should be in
the affirmative.
Ratio: This is so for the Seamen demanded
and in fact received from the Company
wages over and above their contracted
rates, which in effect is an alteration or
modification of a valid and subsisting
contract; and the same not having been
done thru mutual consent and without the
prior approval of the Board the alteration or
modification is contrary to the provisions of
the New Labor Code, as amended, more
particularly Art. 34 (i) thereof which states
that:
Art. 34. Prohibited practices.It shall be
unlawful for any individual, entity, licensee
or holder of authority:
xxx

xxx

xxx

(i)
To substitute or alter employment
contracts approved and verified by the
Department of Labor from the time of actual
signing thereof by the parties up to and
including the period of expiration of the
same without the approval of the
Department of Labor;
xxx

xxx

xxx

The revision of the contract was not done

thru mutual consent for the Company did
not voluntarily agree to an increase of
wage, but was only constrained to make a
counter-proposal of 25% increase to
prevent the vessel from being interdicted
and/or detained by the ITF because at the
time the demand for salary increase was
made the vessel was enroute to Kwinana,
Australia (via Senipah, Indonesia), a port
where the ITF is strong and militant.
While the Board recognizes the rights of the
Seamen to seek higher wages provided the
increase is arrived at thru mutual consent, it
could not however, sanction the same if the
consent of the employer is secured thru
threats, intimidation or force.
Issue: Whether or not the Seamen were
illegally dismissed by the Company;
Held: the Board believes that the
termination of the services of the Seamen
was legal and in accordance with the
provisions of their respective employment
contracts.
Ratio: Considering the findings of the
Board that the Seamen breached their
contracts, their subsequent repatriation was
justified. While it may be true that the
Seamen were hired for a definite period
their services could be terminated prior to
the completion of the fun term thereof for a
just and valid cause.
It may be stated in passing that Vir-jen
Shipping & Marine Services, Inc., despite
the fact that it was compelled to accede to a
25% salary increase for the Seamen, tried

to convince its principal Kyoei Tanker, Ltd.

to an adjustment in their agency fee to
answer for the 25% increase, but the latter
not only denied the request but likewise
terminated their Manning, Agreement. The
Seamen's breach of their employment
contracts and the subsequent termination of
the Manning Agreement of Vir-jen Shipping
& Marine Services, Inc. with the Kyoei
Tanker, Ltd., justified the termination of the
Seamen's services.
Chavez v Perez
Facts: On December 1, 1988, petitioner, an
entertainment dancer, entered into a
standard employment contract for overseas
Filipino artists and entertainers with
Planning Japan Co., Ltd., 2 through its
Philippine
representative,
private
respondent
Centrum
Placement
&
Promotions Corporation.
December 5, 1888, the POEA approved the
contract.
Subsequently, petitioner executed the
following side agreement with her Japanese
employer through her local manager, Jaz
Talents Promotion:
Date: Dec. 10, 1988
SUBJECT:

Salary Deduction

MANAGERIAL COMMISSION
DATE
OF
_________________

DEPARTURE:

ATTENTION: MR. IWATA

I, ESALYN CHAVEZ, DANCER, do hereby
with my own free will and voluntarily have
the honor to authorize your good office to
please deduct the amount of TWO

HUNDRED FIFTY DOLLARS ($250) from

my contracted monthly salary of SEVEN
HUNDRED FIFTY DOLLARS ($750) as
monthly commission for my Manager, Mr.
Jose A. Azucena, Jr.
That, my monthly salary (net) is FIVE
HUNDRED DOLLARS ($500).
Issue: wages with the POEA on February
21, 1991. She prayed for the payment of
Six Thousand U.S. Dollars (US$6,000.00),
representing the unpaid portion of her basic
salary for six months.
Held: The petition is meritorious.
Ratio: Firstly, we hold that the managerial
commission agreement executed by
petitioner to authorize her Japanese
Employer to deduct Two Hundred Fifty U.S.
Dollars (US$250.00) from her monthly basic
salary is void because it is against our
existing laws, morals and public policy. It
cannot
supersede
the
standard
employment contract of December 1, 1988
approved by the POEA with the following
stipulation appended
Any alterations or changes made in any
part of this contract without prior approval
by the POEA shall be null and void
Clearly, the basic salary of One Thousand
Five Hundred U.S. Dollars (US$1,500.00)
guaranteed to petitioner under the parties'
standard employment contract is in
accordance with the minimum employment
standards with respect to wages set by the
POEA, Thus, the side agreement which
reduced petitioner's basic wage to Seven
Hundred Fifty U.S. Dollars (US$750.00) is
null and void for violating the POEA's
minimum employment standards, and for
not having been approved by the POEA.