G.R. No.

179469 February 15, 2012

C.F. SHARP & CO. INC. and JOHN J. ROCHA, Petitioners, vs.
PIONEER INSURANCE & SURETY CORPORATION, WILFREDO C. AGUSTIN and HERNANDO G. MINIMO, Respondents.

Whether a local private employment agency may be held liable for breach of contract for failure to deploy a seafarer, is
the bone of contention in this case.

Assailed in this petition for review are the Decision1 dated 30 October 2003 and the 29 August 2007 Resolution of the
Court of Appeals in CA-G.R. CV No. 53336 finding petitioners C.F. Sharp Co. Inc. (C.F. Sharp) and John J. Rocha
(Rocha) liable for damages.

Responding to a newspaper advertisement of a job opening for sandblasters and painters in Libya, respondents
Wilfredo C. Agustin and Hernando G. Minimo applied with C.F. Sharp sometime in August 1990. After passing the
interview, they were required to submit their passports, seamans book, National Bureau of Investigation clearance,
employment certificates, certificates of seminars attended, and results of medical examination. Upon submission of the
requirements, a Contract of Employment was executed between respondents and C.F. Sharp. Thereafter, respondents
were required to attend various seminars, open a bank account with the corresponding allotment slips, and attend a pre-
departure orientation. They were then advised to prepare for immediate deployment and to report to C.F. Sharp to
ascertain the schedule of their deployment.

After a month, respondents were yet to be deployed prompting them to request for the release of the documents they
had submitted to C.F. Sharp. C.F. Sharp allegedly refused to surrender the documents which led to the filing of a
complaint by respondents before the Philippine Overseas Employment Administration (POEA) on 21 January 1991.

On 30 October 1991, POEA issued an Order finding C.F. Sharp guilty of violation of Article 34(k) of the Labor Code,
which makes it unlawful for any entity "to withhold or deny travel documents from applicant workers before departure
for monetary or financial considerations other than those authorized under this Code and its implementing rules and
regulations." Consequently, C.F. Sharps license was suspended until the return of the disputed documents to
respondents. POEA likewise declared that it has no jurisdiction to adjudicate the monetary claims of respondents.

On 10 March 1995, respondents filed a Complaint for breach of contract and damages against C.F. Sharp and its surety,
Pioneer Insurance and Surety Corporation (Pioneer Insurance), before the Regional Trial Court (RTC) of Pasay City.
Respondents claimed that C.F. Sharp falsely assured them of deployment and that its refusal to release the disputed
documents on the ground that they were already bound by reason of the Contract of Employment, denied respondents
of employment opportunities abroad and a guaranteed income. Respondents also prayed for damages. Pioneer
Insurance filed a cross claim against C.F. Sharp and John J. Rocha, the executive vice-president of C.F. Sharp, based
on an Indemnity Agreement which substantially provides that the duo shall jointly and severally indemnify Pioneer
Insurance for damages, losses, and costs which the latter may incur as surety. The RTC rendered judgment on 27 June
1996 favoring respondents, to wit:

WHEREFORE, plaintiffs causes of action having been proved with a preponderance of evidence, judgment is hereby
ordered as follows:

a. Declaring the non-deployment of plaintiffs and the refusal to release documents as breach of contract;

b. By way of compensatory damages, awarding $450 per month and $439 overtime per month, which should
have been received by plaintiffs from other employers, making a joint and solidary obligation on the part of the
two defendants C.F. Sharp and Pioneer for the period covered by the employment contracts;

c. Ordering each defendant to pay each plaintiff 50,000.00 as moral damages and another 50,000.00 each as
exemplary damages;

d. Ordering defendants to share in the payment to plaintiffs of 50,000.00 attorneys fees;

e. Defendants to pay litigation expenses and costs of suit.2

The trial court ruled that there was a violation of the contract when C.F. Sharp failed to deploy and release the papers
and documents of respondents, hence, they are entitled to damages. The trial court likewise upheld the cause of action
of respondents against Pioneer Insurance, the former being the actual beneficiaries of the surety bond.

On appeal, C.F. Sharp and Rocha raise a jurisdictional issue that the RTC has no jurisdiction over the instant case
pursuant to Section 4(a) of Executive Order No. 797 which vests upon the POEA the jurisdiction over all cases,
including money claims, arising out of or by virtue of any contract involving workers for overseas employment. C.F.
Sharp and Rocha refuted the findings of the trial court and maintained that the perfection and effectivity of the Contract
of Employment depend upon the actual deployment of respondents.

The Court of Appeals upheld the jurisdiction of the trial court by ruling that petitioners are now estopped from raising
such question because they have actively participated in the proceedings before the trial court. The Court of Appeals
further held that since there is no perfected employment contract between the parties, it is the RTC and not the POEA,
whose jurisdiction pertains only to claims arising from contracts involving Filipino seamen, which has jurisdiction over
the instant case.

Despite the finding that no contract was perfected between the parties, the Court of Appeals adjudged C.F. Sharp and
Rocha liable for damages, to wit:

WHEREFORE, the Appeal of C.F. Sharp Co Inc. and John J. Rocha is PARTIALLY GRANTED only insofar as We
declare that there is no breach of contract because no contract of employment was perfected. However, We find
appellants C.F. Sharp Co. Inc. and John J. Rocha liable to plaintiff-appellees for damages pursuant to Article 21 of the
Civil Code and award each plaintiff-appellees temperate damages amounting to 100,000.00, and moral damages in
the increased amount of 100,000.00. The award of exemplary damages and attorneys fees amounting to 50,000.00,
respectively, is hereby affirmed.3

The Court of Appeals limited the liability of Pioneer Insurance to the amount of 150,000.00 pursuant to the Contract
of Suretyship between C.F. Sharp and Pioneer Insurance.

Rocha filed the instant petition on the submission that there is no basis to hold him liable for damages under Article 21
of the Civil Code because C.F. Sharp has signified its intention to return the documents and had in fact informed
respondents that they may, at any time of the business day, withdraw their documents. Further, respondents failed to
establish the basis for which they are entitled to moral damages. Rocha refuted the award of exemplary damages
because the act of requiring respondents to sign a quitclaim prior to the release of their documents could not be
considered bad faith. Rocha also questions the award of temperate damages on the ground that the act of withholding
respondents documents could not be considered "chronic and continuing."4

Right off, insofar as Pioneer Insurance is concerned, the petition should be dismissed against it because the ruling of
the Court of Appeals limited its liability to 150,000.00 was not assailed by Rocha, hence the same has now attained
finality.

Before us, respondents maintain that they are entitled to damages under Article 21 of the Civil Code for C.F. Sharps
unjustified refusal to release the documents to them and for requiring them to sign a quitclaim which would effectively
bar them from seeking redress against petitioners. Respondents justify the award of other damages as they suffered
pecuniary losses attributable to petitioners malice and bad faith.

In his Reply, Rocha introduced a new argument, i.e., that he should not be held jointly liable with C.F. Sharp
considering that the company has a separate personality. Rocha argues that there is no showing in the Complaint that
he had participated in the malicious act complained. He adds that his liability only stems from the Indemnity
Agreement with Pioneer Insurance and does not extend to respondents.

Records disclose that Rocha was first impleaded in the case by Pioneer Insurance. Pioneer Insurance, as surety, was
sued by respondents together with C.F. Sharp. Pioneer Insurance in turn filed a third party complaint against Rocha on
the basis of an Indemnity Agreement whereby he bound himself to indemnify and hold harmless Pioneer Insurance
from and against any and all damages which the latter may incur in consequence of having become a surety. 5 The third
party complaint partakes the nature of a cross-claim.

C.F. Sharp, as defendant-appellant and Rocha, as third-party defendant-appellant, filed only one brief before the Court
of Appeals essentially questioning the declaration of the trial court that non-deployment is tantamount to breach of
contract and the award of damages. The Court of Appeals found them both liable for damages. Both C.F. Sharp and
Rocha sought recourse before this Court via a Motion for Extension of Time (To File a Petition for Review) on 19
September 2007.6 In the Petition for Review, however, C.F. Sharp was noticeably dropped as petitioner. Rocha
maintains essentially the same argument that he and C.F. Sharp were wrongfully adjudged liable for damages.

It was only in its Reply dated 25 March 2008 that Rocha, through a new representation, suddenly forwarded the
argument that he should not be held liable as an officer of C.F. Sharp. It is too late in the day for Rocha to change his
theory. It is doctrinal that defenses not pleaded in the answer may not be raised for the first time on appeal. A party
cannot, on appeal, change fundamentally the nature of the issue in the case. When a party deliberately adopts a certain
theory and the case is decided upon that theory in the court below, he will not be permitted to change the same on
appeal, because to permit him to do so would be unfair to the adverse party. 7 More so in this case, where Rocha
introduced a new theory at the Reply stage. Disingenuousness may even be indicated by the sudden exclusion of the
name of C.F. Sharp from the main petition even as Rocha posited arguments not just for himself and also in behalf of
C.F. Sharp.

The core issue pertains to damages.

The bases of the lower courts award of damages differ. In upholding the perfection of contract between respondents
and C.F. Sharp, the trial court stated that the unjustified failure to deploy and subsequently release the documents of
respondents entitled them to compensatory damages, among others. Differently, the appellate court found that no
contract was perfected between the parties that will give rise to a breach of contract. Thus, the appellate court deleted
the award of actual damages. However, it adjudged other damages against C.F. Sharp for its unlawful withholding of
documents from respondents.
We sustain the trial courts ruling.

On the issue of whether respondents are entitled to relief for failure to deploy them, the RTC ruled in this wise:

The contract of employment entered into by the plaintiffs and the defendant C.F. Sharp is an actionable document, the
same contract having the essential requisites for its validity. It is worthy to note that there are three stages of a contract:
(1) preparation, conception, or generation which is the period of negotiation and bargaining ending at the moment of
agreement of the parties. (2) Perfection or birth of the contract, which is the moment when the parties come to agree on
the terms of the contract. (3) Consummation or death, which is the fulfillment or performance of the terms agreed upon
in the contract.

Hence, it is imperative to know the stage reached by the contract entered into by the plaintiffs and C.F. sharp. Based on
the testimonies of the witnesses presented in this Court, there was already a perfected contract between plaintiffs and
defendant C.F. Sharp. Under Article 1315 of the New Civil Code of the Philippines, it states that:

xxxx

Thus, when plaintiffs signed the contract of employment with C.F. Sharp (as agent of the principal WB Slough)
consequently, the latter is under obligation to deploy the plaintiffs, which is the natural effect and consequence of the
contract agreed by them.8

We agree.

As correctly ruled at the trial, contracts undergo three distinct stages, to wit: negotiation; perfection or birth; and
consummation. Negotiation begins from the time the prospective contracting parties manifest their interest in the
contract and ends at the moment of agreement of the parties. Perfection or birth of the contract takes place when the
parties agree upon the essential elements of the contract. Consummation occurs when the parties fulfill or perform the
terms agreed upon in the contract, culminating in the extinguishment thereof.9

Under Article 1315 of the Civil Code, a contract is perfected by mere consent and from that moment the 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.10

An employment contract, like any other contract, is perfected at the moment (1) the parties come to agree upon its
terms; and (2) concur in the essential elements thereof: (a) consent of the contracting parties, (b) object certain which is
the subject matter of the contract and (c) cause of the obligation.11

We have scoured through the Contract of Employment and we hold that it is a perfected contract of employment. We
reproduce below the terms of the Contract of Employment for easy reference:

WITNESSETH

That the Seafarer shall be employed on board under the following terms and conditions:

1.1 Duration of Contract: 3 month/s

1.2 Position: SANDBLASTER/PAINTER

1.3 Basic Monthly Salary: $450.00 per month

1.4 Living Allowances: $0.00 per month

1.5 Hours of Work: 48 per week

1.6 Overtime Rate: $439.00 per month

1.7 Vacation Leave with Pay: 30.00 day/s per month on board

The terms and conditions of the Revised Employment Contract for seafarers governing the employment of all Filipino
seafarers approved by the POEA/DOLE on July 14, 1989 under Memorandum Circular No. 41 series of 1989 and
amending circulars relative thereto shall be strictly and faithfully observed.

Any alterations or changes, in any part of this Contract shall be evaluated, verified, processed and approved by the
Philippine Overseas Employment Administration (POEA). Upon approval, the same shall be deemed an integral part of
the Standard Employment Contract (SEC) for seafarers.

All claims, complaints or controversies relative to the implementation and interpretation of this overseas employment
contract shall be exclusively resolved through the established Grievance Machinery in the Revised Employment
Contract for seafarers, the adjudication procedures of the Philippine Overseas Employment Administration and the
Philippine Courts of Justice, in that order.

Violations of the terms and conditions of this Contract with its approved addendum shall warrant the imposition of
appropriate disciplinary or administrative sanctions against the erring party.

The Employee hereby certifies that he had received, read or has had explained to him and fully understood this contract
as well as the POEA revised Employment Contract of 1989 and the Collective Bargaining Agreement (CBA) and/or
company terms and conditions of employment covering this vessel and that he is fully aware of and has head or has had
explained to him the terms and conditions including those in the POEA Employment Contract, the CBA and this
contract which constitute his entire agreement with the employer.

The Employee also confirms that no verbal or other written promises other than the terms and conditions of this
Contract as well as the POEA Revised Employment Contract, the CBA and/or company terms and conditions had been
given to the Employee. Therefore, the Employee cannot claim any additional benefits or wages of any kind except
those which have been provided in this Contract Agreement.12

By the contract, C.F. Sharp, on behalf of its principal, International Shipping Management, Inc., hired respondents as
Sandblaster/Painter for a 3-month contract, with a basic monthly salary of US$450.00. Thus, the object of the contract
is the service to be rendered by respondents on board the vessel while the cause of the contract is the monthly
compensation they expect to receive. These terms were embodied in the Contract of Employment which was executed
by the parties. The agreement upon the terms of the contract was manifested by the consent freely given by both parties
through their signatures in the contract. Neither parties disavow the consent they both voluntarily gave. Thus, there is a
perfected contract of employment.

The Court of Appeals agreed with the submission of C.F. Sharp that the perfection and effectivity of the Contract of
Employment depend upon the actual deployment of respondents. It based its conclusion that there was no perfected
contract based on the following rationale:

The commencement of the employer-employee relationship between plaintiffs-appellees and the foreign employer, as
correctly represented by C.F. Sharp requires that conditions under Sec. D be met. The Contract of Employment was
duly "Verified and approved by the POEA." Regrettably, We have painfully scrutinized the Records and find no
evidence that plaintiffs-appellees were cleared for travel and departure to their port of embarkation overseas by
government authorities. Consequently, non-fulfillment of this condition negates the commencement and existence of
employer-employee relationship between the plaintiffs-appellees and C.F. Sharp. Accordingly, no contract between
them was perfected that will give rise to plaintiffs-appellees right of action. There can be no breach of contract when
in the first place, there is no effective contract to speak of. For the same reason, and finding that the award of actual
damages has no basis, the same is hereby deleted.13

The Court of Appeals erred.

The commencement of an employer-employee relationship must be treated separately from the perfection of an
employment contract. Santiago v. CF Sharp Crew Management, Inc.,14 which was promulgated on 10 July 2007, is an
instructive precedent on this point. In said case, petitioner was hired by respondent on board "MSV Seaspread" for
US$515.00 per month for nine (9) months, plus overtime pay. Respondent failed to deploy petitioner from the port of
Manila to Canada. We made a distinction between the perfection of the employment contract and the commencement
of the employer-employee relationship, thus:

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.15

Despite the fact that the employer-employee relationship has not commenced due to the failure to deploy respondents
in this case, respondents are entitled to rights arising from the perfected Contract of Employment, such as the right to
demand performance by C.F. Sharp of its obligation under the contract.

The right to demand performance was a categorical pronouncement in Santiago which ruled that failure to deploy
constitutes breach of contract, thereby entitling the seafarer to damages:

Respondents act of preventing petitioner from departing the port of Manila and boarding "MSV Seaspread" constitutes
a breach of contract, giving rise to petitioners cause of action. Respondent unilaterally and unreasonably reneged on its
obligation to deploy petitioner and must therefore answer for the actual damages he suffered.

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 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.16

The appellate court could not be faulted for its failure to adhere to Santiago considering that the Court of Appeals
Decision was promulgated way back in 2003 while Santiago was decided in 2007. We now reiterate Santiago and,
accordingly, decide the case at hand.

We respect the lower courts findings that C.F. Sharp unjustifiably refused to return the documents submitted by
respondent. The finding was that C.F. Sharp would only release the documents if respondent would sign a quitclaim.
On this point, the trial court was affirmed by the Court of Appeals. As a consequence, the award by the trial court of
moral damages must likewise be affirmed.

Moral damages may be recovered under Article 2219 of the Civil Code in relation to Article 21.1wphi1 The pertinent
provisions read:

Art. 2219. Moral damages may be recovered in the following and analogous cases:

xxxx

(10) Acts and actions referred to in Articles 21, 26, 27, 28, 29, 30, 32, 34, and 35.

xxxx

Art. 21. Any person who wilfully causes loss or injury to another in a manner that is contrary to morals, good customs
or public policy shall compensate the latter for the damage.

We agree with the appellate court that C.F. Sharp committed an actionable wrong when it unreasonably withheld
documents, thus preventing respondents from seeking lucrative employment elsewhere. That C.F. Sharp arbitrarily
imposed a condition that the documents would only be released upon signing of a quitclaim is tantamount to bad faith
because it effectively deprived respondents of resort to legal remedies.

Furthermore, we affirm the award of exemplary damages and attorneys fees. Exemplary damages may be awarded
when a wrongful act is accompanied by bad faith or when the defendant acted in a wanton, fraudulent, reckless,
oppressive, or malevolent manner which would justify an award of exemplary damages under Article 2232 of the Civil
Code. Since the award of exemplary damages is proper in this case, attorneys fees and cost of the suit may also be
recovered as provided under Article 2208 of the Civil Code.17

WHEREFORE, the petition is DENIED. The Decision dated 27 June 1996 of the Regional Trial Court of Pasay City is
REINSTATED. Accordingly, the Decision dated 30 October 2003 of the Court of Appeals is MODIFIED.

SO ORDERED.
 G.R. No. 77279 April 15, 1988
MANUELA S. CATAN/M.S. CATAN PLACEMENT AGENCY, petitioners, vs.
THE NATIONAL LABOR RELATIONS COMMISSION, PHILIPPINE OVERSEAS EMPLOYMENT
ADMINISTRATION and FRANCISCO D. REYES, respondents.

Petitioner, in this special civil action for certiorari, alleges grave abuse of discretion on the part of the National Labor
Relations Commission in an effort to nullify the latters resolution and thus free petitioner from liability for the
disability suffered by a Filipino worker it recruited to work in Saudi Arabia. This Court, however, is not persuaded that
such an abuse of discretion was committed. This petition must fail.

The facts of the case are quite simple.

Petitioner, a duly licensed recruitment agency, as agent of Ali and Fahd Shabokshi Group, a Saudi Arabian firm,
recruited private respondent to work in Saudi Arabia as a steelman.

The term of the contract was for one year, from May 15,1981 to May 14, 1982. However, the contract provided for its
automatic renewal:

FIFTH: The validity of this Contract is for ONE YEAR commencing from the date the SECOND
PARTY assumes hill port. This Contract is renewable automatically if neither of the PARTIES notifies
the other PARTY of his wishes to terminate the Contract by at least ONE MONTH prior to the
expiration of the contractual period. [Petition, pp. 6-7; Rollo, pp. 7-8].

The contract was automatically renewed when private respondent was not repatriated by his Saudi employer but
instead was assigned to work as a crusher plant operator. On March 30, 1983, while he was working as a crusher plant
operator, private respondent's right ankle was crushed under the machine he was operating.

On May 15, 1983, after the expiration of the renewed term, private respondent returned to the Philippines. His ankle
was operated on at the Sta. Mesa Heights Medical Center for which he incurred expenses.

On September 9, 1983, he returned to Saudi Arabia to resume his work. On May 15,1984, he was repatriated.

Upon his return, he had his ankle treated for which he incurred further expenses.

On the basis of the provision in the employment contract that the employer shall compensate the employee if he is
injured or permanently disabled in the course of employment, private respondent filed a claim, docketed as POEA Case
No. 84-09847, against petitioner with respondent Philippine Overseas Employment Administration. On April 10, 1986,
the POEA rendered judgment in favor of private respondent, the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered in favor of the complainant and against the respondent,
ordering the latter to pay to the complainant:

1. SEVEN THOUSAND NINE HUNDRED EIGHTY-FIVE PESOS and 60/100 (P7,985.60),

Philippine currency, representing disability benefits;

2. TWENTY-FIVE THOUSAND NINETY-SIX Philippine pesos and 20/100 (29,096.20) representing

reimbursement for medical expenses;

3. Ten percent (10%) of the abovementioned amounts as and for attorney's fees. [NLRC Resolution, p.
1; Rollo, p. 16].

On appeal, respondent NLRC affirmed the decision of the POEA in a resolution dated December 12, 1986.

Not satisfied with the resolution of the POEA, petitioner instituted the instant special civil action for certiorari, alleging
grave abuse of discretion on the part of the NLRC.

1. Petitioner claims that the NLRC gravely abused its discretion when it ruled that petitioner was liable to private
respondent for disability benefits since at the time he was injured his original employment contract, which petitioner
facilitated, had already expired. Further, petitioner disclaims liability on the ground that its agency agreement with the
Saudi principal had already expired when the injury was sustained.

There is no merit in petitioner's contention.

Private respondents contract of employment can not be said to have expired on May 14, 1982 as it was automatically
renewed since no notice of its termination was given by either or both of the parties at least a month before its
expiration, as so provided in the contract itself. Therefore, private respondent's injury was sustained during the lifetime
of the contract.
A private employment agency may be sued jointly and solidarily with its foreign principal for violations of the
recruitment agreement and the contracts of employment:

Sec. 10. Requirement before recruitment. Before recruiting any worker, the private employment
agency shall submit to the Bureau the following documents:

(a) A formal appointment or agency contract executed by a foreign-based employer in favor of the
license holder to recruit and hire personnel for the former ...

xxx xxx xxx

2. Power of the agency to sue and be sued jointly and solidarily with the principal or
foreign-based employer for any of the violations of the recruitment agreement and the
contracts of employment. [Section 10(a) (2) Rule V, Book I, Rules to Implement the
Labor Code].

Thus, in the recent case of Ambraque International Placement & Services v. NLRC [G.R. No. 77970, January 28,1988],
the Court ruled that a recruitment agency was solidarily liable for the unpaid salaries of a worker it recruited for
employment in Saudi Arabia.

Even if indeed petitioner and the Saudi principal had already severed their agency agreement at the time private
respondent was injured, petitioner may still be sued for a violation of the employment contract because no notice of the
agency agreement's termination was given to the private respondent:

Art 1921. If the agency has been entrusted for the purpose of contra with specified persons, its
revocation shall not prejudice the latter if they were not given notice thereof. [Civil Code].

In this connection the NLRC elaborated:

Suffice it to state that albeit local respondent M. S. Catan Agency was at the time of complainant's
accident resulting in his permanent partial disability was (sic) no longer the accredited agent of its
foreign principal, foreign respondent herein, yet its responsibility over the proper implementation of
complainant's employment/service contract and the welfare of complainant himself in the foreign job
site, still existed, the contract of employment in question not having expired yet. This must be so,
because the obligations covenanted in the recruitment agreement entered into by and between the
local agent and its foreign principal are not coterminus with the term of such agreement so that if
either or both of the parties decide to end the agreement, the responsibilities of such parties towards
the contracted employees under the agreement do not at all end, but the same extends up to and until
the expiration of the employment contracts of the employees recruited and employed pursuant to the
said recruitment agreement. Otherwise, this will render nugatory the very purpose for which the law
governing the employment of workers for foreign jobs abroad was enacted. [NLRC Resolution, p. 4;
Rollo, p. 18]. (Emphasis supplied).

2. Petitioner contends that even if it is liable for disability benefits, the NLRC gravely abused its discretion when it
affirmed the award of medical expenses when the said expenses were the consequence of private respondent's
negligence in returning to work in Saudi Arabia when he knew that he was not yet medically fit to do so.

Again, there is no merit in this contention.

No evidence was introduced to prove that private respondent was not medically fit to work when he returned to Saudi
Arabia. Exhibit "B", a certificate issued by Dr. Shafquat Niazi, the camp doctor, on November 1, 1983, merely stated
that private respondent was "unable to walk properly, moreover he is still complaining [of] pain during walking and
different lower limbs movement" [Annex "B", Reply; Rollo, p. 51]. Nowhere does it say that he was not medically fit
to work.

Further, since petitioner even assisted private respondent in returning to work in Saudi Arabia by purchasing his ticket
for him [Exhibit "E"; Annex "A", Reply to Respondents' Comments], it is as if petitioner had certified his fitness to
work. Thus, the NLRC found:

Furthermore, it has remained unrefuted by respondent that complainant's subsequent departure or

return to Saudi Arabia on September 9, 1983 was with the full knowledge, consent and assistance of
the former. As shown in Exhibit "E" of the record, it was respondent who facilitated the travel papers
of complainant. [NLRC Resolution, p. 5; Rollo, p. 19].

WHEREFORE, in view of the foregoing, the petition is DISMISSED for lack of merit, with costs against petitioner.

SO ORDERED.
 G.R. No. 138193 March 5, 2003
OSM SHIPPING PHILIPPINES, INC., petitioner, vs.
NATIONAL LABOR RELATIONS COMMISSION (Third Division) and FERMIN F. GUERRERO, respondents.

The Rules of Court do not require that all supporting papers and documents accompanying a petition for certiorari
should be duplicate originals or certified true copies. Furthermore, unilateral decisions to alter the use of a vessel from
overseas service to coastwise shipping will not affect the validity of an existing employment contract validly executed.
Workers should not be prejudiced by actions done solely by employers without the former's consent or participation.

The Case

Before us is a Petition for Review on Certiorari1 under Rule 45 of the Rules of Court, seeking to set aside the February
11, 1999 and the March 26, 1999 Resolutions of the Court of Appeals (CA) in CA-GR SP No. 50667. The assailed
Resolutions dismissed a Petition filed in the CA, challenging an adverse ruling of the National Labor Relations
Commission (NLRC). The first Resolution disposed as follows:

"We resolve to OUTRIGHTLY DISMISS the petition."2

The second Resolution3 denied petitioners' Motion for Reconsideration.

On the other hand, the NLRC Decision disposed in this wise:

"WHEREFORE, premises considered, the Decision appealed from is hereby MODIFIED in that respondents
OSM Shipping Phils. Inc. and its principal, Philippine Carrier Shipping Agency Services Co. are jointly and
severally ordered to pay complainant the sum of ELEVEN THOUSAND THREE HUNDRED FIFTY NINE
and 65/100 [US dollars] (US$11,359.65) or its peso equivalent at the time of payment representing
complainant's unpaid salaries, accrued fixed overtime pay, allowance, vacation leave pay and termination
pay."4

The Facts

This case originated from a Complaint filed by Fermin F. Guerrero against OSM Shipping Philippines, Inc.; and its
principal, Philippine Carrier Shipping Agency Services Co. The Complaint was for illegal dismissal and non-payment
of salaries, overtime pay and vacation pay. The facts are summarized in the NLRC Decision as follows:

"[Private respondent] was hired by [Petitioner] OSM for and in behalf of its principal, Phil Carrier Shipping
Agency Services Co. (PC-SLC) to board its vessel MN '[Princess] Hoa' as a Master Mariner for a contract
period of ten (10) months. Under the said contract, his basic monthly salary is US$1,070.00, US$220.00
allowance, US$321.00 fixed overtime, US$89 vacation leave pay per month for . . . 44 hours [of] work per
week. He boarded the vessel on July 21, 1994 and complied faithfully with the duties assigned to him.

"[Private respondent] alleged that from the start of his work with MN 'Princess Hoa', he was not paid any
compensation at all and was forced to disembark the vessel sometime in January 1995 because he cannot even
buy his basic personal necessities. For almost seven (7) months, i.e. from July 1994 to January 1995, despite
the services he rendered, no compensation or remuneration was ever paid to him. Hence, this case for illegal
dismissal, [non-payment] of salaries, overtime pay and vacation pay.

"[Petitioner] OSM, for its part, alleged that on July 26, 1994, Concorde Pacific, an American company which
owns MN 'Princess Hoa', then a foreign registered vessel, appointed . . . Philippine Carrier Shipping Agency
Services Co. (PC-SASCO) as ship manager particularly to negotiate, transact and deal with any third persons,
entities or corporations in the planning of crewing selection or determination of qualifications of Filipino
Seamen. On the same date, [Petitioner] OSM entered into a Crew Agreement with . . . PC-SASCO for the
purpose of processing the documents of crew members of MN 'Princess Hoa'. The initial plan of the [s]hip-
owner was to use the vessel in the overseas trade, particularly the East Asian Growth Area. Thereafter, the
contract of [private respondent] was processed before the POEA on September 20, 1994.

"OSM alleged further that the shipowner changed its plans on the use of the vessel. Instead of using it for
overseas trade, it decided to use it in the coastwise trade, thus, the crewmembers hired never left the
Philippines and were merely used by the shipowner in the coastwise trade. Considering that the MN 'Princess
Hoa' was a foreign registered vessel and could not be used in the coastwise trade, the shipowner converted the
vessel to Philippine registry on September 28, 1994 by way of bareboat chartering it out to another entity
named Philippine Carrier Shipping Lines Co. (PCSLC). To do this, the shipowner through Conrado V. Tendido
had to terminate its management agreement with . . . PC-SASCO on September 28, 1994 by a letter of
termination dated September 20, 1994. In the same letter of termination, the ship owner stated that it has
bareboat chartered out the vessel to said [PCSLC] and converted it into Philippine registry. Consequently, . . .
PC-SASCO terminated its crew agreement with OSM in a letter dated December 5, 1994. Because of the
bareboat charter of the vessel to PCSLC and its subsequent conversion to Philippine registry and use in
coastwise trade as well as to the termination of the management agreement and crew agency agreement, a
 termination of contract ensued whereby PCSLC, the bareboat charterer, became the disponent owner/employer
of the crew.

As a disponent owner/employer, PCSLC is now responsible for the payment of complainant's wages. . . . .5

Labor Arbiter (LA) Manuel R. Caday rendered a Decision6 in favor of Private Respondent Guerrero. Petitioner and its
principal, Philippine Carrier Shipping Agency Services, Co. (PC-SASCO), were ordered to jointly and severally pay
Guerrero his unpaid salaries and allowances, accrued fixed overtime pay, vacation leave pay and termination pay. The
Decision held that there was a constructive dismissal of private respondent, since he had not been paid his salary for
seven months. It also dismissed petitioner's contention that there was a novation of the employment contract.

On appeal, the NLRC (Third Division) affirmed the LA's Decision, with a modification as to the amount of liability.
On January 28, 1999, petitioner filed with the CA a Petition7 to set aside the NLRC judgment. The petition was
dismissed, because petitioner had allegedly failed to comply with the requirements of Section 3 of Rule 46 of the Rules
of Court. Specifically, petitioner had attached to its Petition, not a duplicate original or a certified true copy of the LA's
Decision, but a mere machine copy thereof. Further, it had not indicated the actual address of Private Respondent
Fermin F. Guerrero.8

Hence, this Petition.9

The Issues

In its Memorandum, petitioner raises the following issues for the Court's consideration:

"1. Did not the Court of Appeals err in interpreting and applying the 1997 Rules when it required as attachment
to the Petition for Certiorari the duplicate original of another Decision which is not the subject of the said
Petition?

"2. Did not the Court of Appeals err in interpreting and applying the 1997 Rules when it disregarded the
subsequent compliance made by petitioner?

"3. Did not the Court of Appeals err in interpreting and applying the 1997 Rules when it did not consider the
Notice to private respondent Guerrero through his counsel as Notice to Guerrero himself?"10

The foregoing issues all refer to the question of whether, procedurally, petitioner has complied with Section 3 of Rule
46 of the Rules of Court. Additionally and in the interest of speedy justice, this Court will also resolve the substantive
issue brought before the CA: did the NLRC commit grave abuse of discretion in ruling in favor of private respondent?

The Court's Ruling

While petitioner is procedurally correct, the case should nonetheless be decided on the merits in favor of private
respondent.

Procedural Issue:
Compliance with the Rules of Court

Petitioner puts at issue the proper interpretation of Section 3 of Rule 46 of the Rules of Court. 11 Specifically, was
petitioner required to attach a certified true copy of the LA's Decision to its Petition for Certiorari challenging the
NLRC judgment?

Section 3 of Rule 46 does not require that all supporting papers and documents accompanying a petition be duplicate
originals or certified true copies. Even under Rule 65 on certiorari and prohibition, petitions need to be accompanied
only by duplicate originals or certified true copies of the questioned judgment, order or resolution. Other relevant
documents and pleadings attached to it may be mere machine copies thereof.12 Numerous decisions issued by this
Court emphasize that in appeals under Rule 45 and in original civil actions for certiorari under Rule 65 in relation to
Rules 46 and 56, what is required to be certified is the copy of the questioned judgment, final order or
resolution.13 Since the LA's Decision was not the questioned ruling, it did not have to be certified. What had to be
certified was the NLRC Decision. And indeed it was.

As to the alleged missing address of private respondent, the indication by petitioner that Guerrero could be served with
process care of his counsel was substantial compliance with the Rules.

This Court has held that the sending of pleadings to a party is not required, provided that the party is represented by
counsel.14 This rule is founded on considerations of fair play, inasmuch as an attorney of record is engaged precisely
because a party does not feel competent to deal with the intricacies of law and procedure. 15 Both jurisprudence16 and
the basics of procedure17 provide that when a party has appeared through counsel, service is to be made upon the latter,
unless the court specifically orders that it be upon the party.
We also note that from the inception of the case at the LA's office, all pleadings addressed to private respondent had
always been sent to his counsel, Atty. Danilo G. Macalino. Note that private respondent, who was employed as a
seaman, was often out of his home. The service of pleadings and other court processes upon him personally would have
been futile, as he would not have been around to receive them.

This Court has repeatedly held that while courts should meticulously observe the Rules, they should not be overly strict
about procedural lapses that do not impair the proper administration of justice.18 Rather, procedural rules should be
liberally construed to secure the just, speedy and inexpensive disposition of every action and proceeding.19

Substantive Issue:
Liability of Petitioner for Unpaid Salaries

It is worthwhile to note that what is involved in this case is the recovery of unpaid salaries and other monetary benefits.
The Court is mindful of the plight of private respondent and, indeed, of workers in general who are seeking to recover
wages that are being unlawfully withheld from them. Such recovery should not be needlessly delayed at the expense of
their survival. This case is now on its ninth year since its inception at the LA's office. Its remand to the CA will only
unduly delay its disposition. In the interest of substantial justice,20 this Court will decide the case on the merits based
upon the records of the case, particularly those relating to the OSM Shipping Philippines' Petition before the CA.

On behalf of its principal, PC-SASCO, petitioner does not deny hiring Private Respondent Guerrero as master mariner.
However, it argues that since he was not deployed overseas, his employment contract became ineffective, because its
object was allegedly absent. Petitioner contends that using the vessel in coastwise trade and subsequently chartering it
to another principal had the effect of novating the employment contract. We are not persuaded.

As approved by the Philippine Overseas Employment Agency (POEA), petitioner was the legitimate manning agent of
PC-SASCO.21 As such, it was allowed to select, recruit, hire and deploy seamen on board the vessel M/V Princess Hoa,
which was managed by its principal, PC-SASCO.22 It was in this capacity that petitioner hired private respondent as
master mariner. They then executed and agreed upon an employment contract.

An employment contract, like any other contract, is perfected at the moment (1) the parties come to agree upon its
terms; and (2) concur in the essential elements thereof: (a) consent of the contracting parties, (b) object certain which is
the subject matter of the contract and (c) cause of the obligation.23 Based on the perfected contract, Private Respondent
Guerrero complied with his obligations thereunder and rendered his services on board the vessel. Contrary to
petitioner's contention, the contract had an object, which was the rendition of service by private respondent on board
the vessel. The non-deployment of the ship overseas did not affect the validity of the perfected employment contract.
After all, the decision to use the vessel for coastwise shipping was made by petitioner only and did not bear the written
conformity of private respondent. A contract cannot be novated by the will of only one party. 24 The claim of petitioner
that it processed the contract of private respondent with the POEA only after he had started working is also without
merit. Petitioner cannot use its own misfeasance to defeat his claim.

Petitioner, as manning agent, is jointly and severally liable with its principal,25 PC-SASCO, for private respondent's
claim. This conclusion is in accordance with Section 1 of Rule II of the POEA Rules and Regulations. 26 Joint and
solidary liability is meant to assure aggrieved workers of immediate and sufficient payment of what is due them. 27The
fact that petitioner and its principal have already terminated their agency agreement does not relieve the former of its
liability. The reason for this ruling was given by this Court in Catan v. National Labor Relations Commission,28which
we reproduce in part as follows:

"This must be so, because the obligations covenanted in the [manning] agreement between the local agent and
its foreign principal are not coterminus with the term of such agreement so that if either or both of the parties
decide to end the agreement, the responsibilities of such parties towards the contracted employees under the
agreement do not at all end, but the same extends up to and until the expiration of the employment contracts of
the employees recruited and employed pursuant to the said recruitment agreement. Otherwise, this will render
nugatory the very purpose for which the law governing the employment of workers for foreign jobs abroad was
enacted."29

WHEREFORE, the assailed Resolutions are hereby SET ASIDE, and the September 10, 1998 NLRC
Decision REINSTATED and AFFIRMED. Costs against petitioner.

SO ORDERED.
 G.R. No. 156029 November 14, 2008
SANTOSA B. DATUMAN, petitioner, vs.
FIRST COSMOPOLITAN MANPOWER AND PROMOTION SERVICES, INC., respondent.

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

Accordingly, we find that the claims for salary differentials accruing earlier than April of 1993 had indeed
prescribed. This is so as complainant had filed her complaint on May 31, 1995 when she arrived from the
jobsite in April 1993. Since the cause of action for salary differential accrues at the time when it falls due, it is
clear that only the claims for the months of May 1993 to April 1994 have not yet prescribed. With an approved
salary rate of US$370.00 vis--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 the first contract. The
provisions in number 2, Section 10 (a), Rule V, Book I of the Omnibus Rules Implementing the Labor Code Section
1 (f), Rule II, Book II of the 1991 POEA Rules and Regulations were not made to make the local agency a perpetual
insurer against all untoward acts that may be done by the foreign principal or the direct employer abroad. It is only
as regards the principal contract to which it is privy shall its liability extend. In Catan v. National Labor Relations
Commission, 160 SCRA 691 (1988), it was held that the responsibilities of the local agent and the foreign principal
towards the contracted employees under the recruitment agreement extends up to and until the expiration of the
employment contracts of the employees recruited and employed pursuant to the said recruitment agreement.

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 of immediate and sufficient payment of what is due him.21 This is in line with the policy of the state
to protect and alleviate the plight of the working class.

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

We cannot agree with the view of the CA that the solidary liability of respondent extends only to the first contract (i.e.
the original, POEA-approved contract which had a term of until April 1990). The signing of the "substitute" contracts
with the foreign employer/principal before the expiration of the POEA-approved contract and any continuation of
petitioner's employment beyond the original one-year term, against the will of petitioner, are continuing breaches of the
original POEA-approved contract. To accept the CA's reasoning will open the floodgates to even more abuse of our
overseas workers at the hands of their foreign employers and local recruiters, since the recruitment agency could easily
escape its mandated solidary liability for breaches of the POEA-approved contract by colluding with their foreign
principals in substituting the approved contract with another upon the worker's arrival in the country of employment.
Such outcome is certainly contrary to the State's policy of extending protection and support to our overseas workers.
To be sure, Republic Act No. 8042 explicitly prohibits the substitution or alteration to the prejudice of the worker of
employment contracts already approved and verified by the Department of Labor and Employment (DOLE) from the
time of actual signing thereof by the parties up to and including the period of the expiration of the same without the
approval of the DOLE.22

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

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

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

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

We look upon with great disfavor the unsubstantiated actuations of innocence or ignorance on the part of local
recruitment agencies of acts of their foreign principals, as if the agencies' responsibility ends with the deployment of
the worker. In the light of the recruitment agency's legally mandated joint and several liability with the foreign
employer for all claims in connection with the implementation of the contract, it is the recruitment agency's
responsibility to ensure that the terms and conditions of the employment contract, as approved by the POEA, are
faithfully complied with and implemented properly by its foreign client/principal. Indeed, it is in its best interest to do
so to avoid being haled to the courts or labor tribunals and defend itself from suits for acts of its foreign principal.

On whether petitioner's claims for underpaid salaries have prescribed

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

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

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

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

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

A final note

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

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

SO ORDERED.
 Becmen Service Exporter and Promotion v Sps. Simplicio and Mila Cuaresma (in behalf of daughter Jasmin),
White Falcon Services, and Jaime Ortiz (Pres. Of White Falcon)
Sps. Cuaresma (in behalf of Jasmin) v White Falcon and Becmen

Facts:
Jan 1997 Jasmin was deployed by Becmen to serve as assistant nurse in Al-Birk Hospital in Saudi under a 3 year
contract, for $247/mo.

June 1998 - she died. Jessie Fajardo, co-worker, found her dead inside her dormitory room with mouth foaming and
smelling of poison. Medical report of Al-Birk Hosp stated that the cause of death was poisoning halt in blood
circulation, respiratory system and brain damage due to poisoning from unknown substance.

Sep 1998 her body was repatriated to Manila. The City Health Officer of Cabanatuan found that Jasmin died under
violent circumstances not poisoning abrasions at her inner lip and gums; lacerated wounds and abrasions on her left
and right ears; lacerated wounds and hematoma (contusions) on her elbows; abrasions and hematoma on her thigh and
legs; intra-muscular hemorrhage at the anterior chest; rib fracture; puncture wounds; and abrasions on the labia minora.
Mar 1999 Jasmins body was exhumed by NBI. Toxicology report tested negative ffor non-volatile, metallic poison
and insecticides.

Sps. Cuaresmas received from OWWA the following: 50k death benefits, 50k loss of life; 20k funeral expenses; 10k
medical reimbursement.

Nov 1999 Sps. Filed complaint against Becmen and Rajab & Silsilah Co (principal in Saudi) claiming death and
insurance benefits. Sps. Claim that Jasmins death was work-related having occurred at the employers premises; their
entitled to iqama insurance; compensatory damages amounting to $103k which is the sum of her monthly salary 35
years (she was 25 yo when she died, assuming she would survive until 60 yo).

Becmen and Rajab claim that Jasmin committed suicide and relied on the medical report of Al Birk. They deny liability
since the Sps. Had already received their benefits from OWWA. Later, Becmen manifested that Rajab had terminated
their agency, and impleaded White Falcon as the new agency of Rajab.

Summary of Rulings
LArb dismissed for lack of merit, giving credence to Al Birk medical report
NLRC reversed, found Jasmin a victim of compensable work-connected criminal aggression; both agencies
are solidarily liable to pay $113; later reduced to $80k
CA affirmed; later reduced the award to $8k (monthly salary x remaining contract period)

Issues
WON death is compensable NO
WON death was by suicide NO
WON Becmen and Falcon are liable YES, solidary liability

Ratio
1. Death NOT WORK RELATED, therefore not compensable (i.e., not liable for lost earnings)

At time of death, Jasmin was not on duty but at her dormitory room on personal time. Court stated that the
foreign employer cannot be expected to ensure her safety even while she is not on duty. What an employee
does on free time is beyond the employers sphere of inquiry.

The dormitory room also cannot be considered as employers premises.

2. Rajab, Becmen, White Falcon solidarily liable for moral and exemplary damages

Court admonished Becmen and Falcon for simply dismissing Jasmins case as one of suicide instead of
fighting for her rights. The Agencies prioritized their corporate interest over that of Jasmin.

RA 8042 Migrant Workers and Overseas Filipinos Act provides that the State shall at all times uphold the
dignity of its citizens, whether in the country or overseas. The rights and interest of distressed overseas
Filipinos are adequately protected and safeguarded.

Becmen and Falcon, both licensed recruitment agencies, miserably failed to abide by RA 8042. Recruitment
agencies are expected to extend assistance to deployed OFWs, be the first to come the rescue of our distressed
OFWs; and have the primary obligation to protect the rights and ensure the welfare of our OFWs. It should
have been them who sought justice for Jasmin. Instead, it was the parents who requested an autopsy in the Ph
to confirm the Saudi report. Court stated that the parents have done all that was within their power to
investigate Jasmins case on their own.
Art 19 CC every person must, in the exercise of his rights and in the performance of his duties, act with
justice, give everyone his due, and observe honesty and good faith.
Art 21 CC any person who willfully causes loss or injury to another in a manner that is contrary to morals,
good customs or public policy shall compensate the later for the damage.
Art 24 CC in all contractual, property or other relations, when one of the parties is at a disadvantage on
account of his moral dependence, ignorance, indigence, mental weakness, tender age or other handicap, the
courts must be vigilant for his protection.

Rajab, Becmen and Falcons acts and omissions are against public policy because they undermine and subvert
the interest and general welfare of our OFWs.

Whether employed locally or overseas, all Fil workers enjoy the protective mantel of PH labor and social laws,
contract stipulations to the contrary notwithstanding. This is in keeping with the Consti provision for the State
to afford protection to labor, promote full employement, ensure equal work opportunities.

All labor legislation and all labor contracts shall be construed in favor of the safety and decent living for the
laborer.

As a result of their misconduct, Cuaresmas are entitled to moral damages for which Becmen and Falcon are
solidarily liable. Grant of moral damages to the employee by reason of misconduct on the part of the
employer is sanctioned by Art 2219 (10) CC.

Private employment agencies are held jointly and severally liable with the foreign-basd employer for any
violation of the recruitment agreement or contract of employement. This is meanth to assure the aggrieved
worker of immediate and sufficient payment. If the agency is a juridical being, the corporate officers and
directors and partners are also solidarily liable.

Falcons assumption of Becmens liability does not absolve Becmen.

CA decision set aside. Awarded P2.5M as moral damages, P250k as exemplary damages.
 G.R. No. 161757 January 25, 2006
SUNACE INTERNATIONAL MANAGEMENT SERVICES, INC.Petitioner, vs.
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.

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, 1997.1 The deployment was with the assistance of a Taiwanese broker, Edmund Wang,
President of Jet Crown International Co., Ltd.

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 complaint2 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.

The following day or on February 15, 2000, Labor Arbitration Associate Regina T. Gavin issued Summons 3 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.

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

On April 6, 2000, Divina filed her Position Paper4 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:

Year Deduction for Income Tax Deduction for Savings

1997 NT10,450.00 NT23,100.00
1998 NT9,500.00 NT36,000.00
1999 NT13,300.00 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,6claiming as follows, quoted verbatim:

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 "2" hereof;

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"7alleging 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."

To Sunaces ". . . answer to complainants position paper," Divina filed a 2-page reply,8 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.

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"9 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.

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).10 (Underscoring supplied)

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, 2000,12 the dispositive portion of which reads:

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.

On appeal of Sunace, the NLRC, by Resolution of April 30, 2002,14 affirmed the Labor Arbiters decision.

Via petition for certiorari,15 Sunace elevated the case to the Court of Appeals which dismissed it outright by Resolution
of November 12, 2002,16 the full text of which reads:

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 petition is hereby DENIED DUE COURSE and DISMISSED.17 SO ORDERED.

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

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, President19

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 Reply20 filed before the Court of Appeals,

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.23 The knowledge of the principal-foreign employer cannot, therefore, be imputed to its agent Sunace.

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.
 G.R. No. 192558 February 15, 2012
BITOY JAVIER (DANILO P. JAVIER), Petitioner, vs.
FLY ACE CORPORATION/FLORDELYN CASTILLO, Respondents.

This is a petition under Rule 45 of the Rules of Civil Procedure assailing the March 18, 2010 Decision 1 of the Court of
Appeals (CA) and its June 7, 2010 Resolution,2 in CA-G.R. SP No. 109975, which reversed the May 28, 2009
Decision3 of the National Labor Relations Commission (NLRC) in the case entitled Bitoy Javier v. Fly Ace/Flordelyn
Castillo,4 holding that petitioner Bitoy Javier (Javier) was illegally dismissed from employment and ordering Fly Ace
Corporation (Fly Ace) to pay backwages and separation pay in lieu of reinstatement.

Antecedent Facts

On May 23, 2008, Javier filed a complaint before the NLRC for underpayment of salaries and other labor standard
benefits. He alleged that he was an employee of Fly Ace since September 2007, performing various tasks at the
respondents warehouse such as cleaning and arranging the canned items before their delivery to certain locations,
except in instances when he would be ordered to accompany the companys delivery vehicles, as pahinante; that he
reported for work from Monday to Saturday from 7:00 oclock in the morning to 5:00 oclock in the afternoon; that
during his employment, he was not issued an identification card and payslips by the company; that on May 6, 2008, he
reported for work but he was no longer allowed to enter the company premises by the security guard upon the
instruction of Ruben Ong (Mr. Ong), his superior;5 that after several minutes of begging to the guard to allow him to
enter, he saw Ong whom he approached and asked why he was being barred from entering the premises; that Ong
replied by saying, "Tanungin mo anak mo;" 6 that he then went home and discussed the matter with his family; that he
discovered that Ong had been courting his daughter Annalyn after the two met at a fiesta celebration in Malabon City;
that Annalyn tried to talk to Ong and convince him to spare her father from trouble but he refused to accede; that
thereafter, Javier was terminated from his employment without notice; and that he was neither given the opportunity to
refute the cause/s of his dismissal from work.

To support his allegations, Javier presented an affidavit of one Bengie Valenzuela who alleged that Javier was a
stevedore or pahinante of Fly Ace from September 2007 to January 2008. The said affidavit was subscribed before the
Labor Arbiter (LA).7

For its part, Fly Ace averred that it was engaged in the business of importation and sales of groceries. Sometime in
December 2007, Javier was contracted by its employee, Mr. Ong, as extra helper on a pakyaw basis at an agreed rate of
300.00 per trip, which was later increased to 325.00 in January 2008. Mr. Ong contracted Javier roughly 5 to 6
times only in a month whenever the vehicle of its contracted hauler, Milmar Hauling Services, was not available. On
April 30, 2008, Fly Ace no longer needed the services of Javier. Denying that he was their employee, Fly Ace insisted
that there was no illegal dismissal.8 Fly Ace submitted a copy of its agreement with Milmar Hauling Services and
copies of acknowledgment receipts evidencing payment to Javier for his contracted services bearing the words, "daily
manpower (pakyaw/piece rate pay)" and the latters signatures/initials.

Ruling of the Labor Arbiter

On November 28, 2008, the LA dismissed the complaint for lack of merit on the ground that Javier failed to present
proof that he was a regular employee of Fly Ace. He wrote:

Complainant has no employee ID showing his employment with the Respondent nor any document showing that he
received the benefits accorded to regular employees of the Respondents. His contention that Respondent failed to give
him said ID and payslips implies that indeed he was not a regular employee of Fly Ace considering that complainant
was a helper and that Respondent company has contracted a regular trucking for the delivery of its products.

Respondent Fly Ace is not engaged in trucking business but in the importation and sales of groceries. Since there is a
regular hauler to deliver its products, we give credence to Respondents claim that complainant was contracted on
"pakiao" basis.

As to the claim for underpayment of salaries, the payroll presented by the Respondents showing salaries of workers on
"pakiao" basis has evidentiary weight because although the signature of the complainant appearing thereon are not
uniform, they appeared to be his true signature.

xxxx

Hence, as complainant received the rightful salary as shown by the above described payrolls, Respondents are not
liable for salary differentials. 9

Ruling of the NLRC

On appeal with the NLRC, Javier was favored. It ruled that the LA skirted the argument of Javier and immediately
concluded that he was not a regular employee simply because he failed to present proof. It was of the view that
a pakyaw-basis arrangement did not preclude the existence of employer-employee relationship. "Payment by result x x
x is a method of compensation and does not define the essence of the relation. It is a mere method of computing
compensation, not a basis for determining the existence or absence of an employer-employee relationship.10 " The
NLRC further averred that it did not follow that a worker was a job contractor and not an employee, just because the
work he was doing was not directly related to the employers trade or business or the work may be considered as
"extra" helper as in this case; and that the relationship of an employer and an employee was determined by law and the
same would prevail whatever the parties may call it. In this case, the NLRC held that substantial evidence was
sufficient basis for judgment on the existence of the employer-employee relationship. Javier was a regular employee of
Fly Ace because there was reasonable connection between the particular activity performed by the employee (as a
"pahinante") in relation to the usual business or trade of the employer (importation, sales and delivery of groceries). He
may not be considered as an independent contractor because he could not exercise any judgment in the delivery of
company products. He was only engaged as a "helper."

Finding Javier to be a regular employee, the NLRC ruled that he was entitled to a security of tenure. For failing to
present proof of a valid cause for his termination, Fly Ace was found to be liable for illegal dismissal of Javier who was
likewise entitled to backwages and separation pay in lieu of reinstatement. The NLRC thus ordered:

WHEREFORE, premises considered, complainants appeal is partially GRANTED. The assailed Decision of the
labor arbiter is VACATED and a new one is hereby entered holding respondent FLY ACE CORPORATION guilty of
illegal dismissal and non-payment of 13th month pay. Consequently, it is hereby ordered to pay complainant DANILO
"Bitoy" JAVIER the following:

1. Backwages - 45,770.83

2. Separation pay, in lieu of reinstatement - 8,450.00

3. Unpaid 13th month pay (proportionate) - 5,633.33

TOTAL - 59,854.16

All other claims are dismissed for lack of merit.

SO ORDERED.11

Ruling of the Court of Appeals

On March 18, 2010, the CA annulled the NLRC findings that Javier was indeed a former employee of Fly Ace and
reinstated the dismissal of Javiers complaint as ordered by the LA. The CA exercised its authority to make its own
factual determination anent the issue of the existence of an employer-employee relationship between the parties.
According to the CA:

xxx

In an illegal dismissal case the onus probandi rests on the employer to prove that its dismissal was for a valid cause.
However, before a case for illegal dismissal can prosper, an employer-employee relationship must first be established.
x x x it is incumbent upon private respondent to prove the employee-employer relationship by substantial evidence.

xxx

It is incumbent upon private respondent to prove, by substantial evidence, that he is an employee of petitioners, but he
failed to discharge his burden. The non-issuance of a company-issued identification card to private respondent supports
petitioners contention that private respondent was not its employee.12

The CA likewise added that Javiers failure to present salary vouchers, payslips, or other pieces of evidence to bolster
his contention, pointed to the inescapable conclusion that he was not an employee of Fly Ace. Further, it found that
Javiers work was not necessary and desirable to the business or trade of the company, as it was only when there were
scheduled deliveries, which a regular hauling service could not deliver, that Fly Ace would contract the services of
Javier as an extra helper. Lastly, the CA declared that the facts alleged by Javier did not pass the "control test."

He contracted work outside the company premises; he was not required to observe definite hours of work; he was not
required to report daily; and he was free to accept other work elsewhere as there was no exclusivity of his contracted
service to the company, the same being co-terminous with the trip only.13 Since no substantial evidence was presented
to establish an employer-employee relationship, the case for illegal dismissal could not prosper.

The petitioners moved for reconsideration, but to no avail.

Hence, this appeal anchored on the following grounds:

I.
 WHETHER THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT THE
PETITIONER WAS NOT A REGULAR EMPLOYEE OF FLY ACE.

II.

WHETHER THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT THE

PETITIONER IS NOT ENTITLED TO HIS MONETARY CLAIMS.14

The petitioner contends that other than its bare allegations and self-serving affidavits of the other employees, Fly Ace
has nothing to substantiate its claim that Javier was engaged on a pakyaw basis. Assuming that Javier was indeed hired
on a pakyaw basis, it does not preclude his regular employment with the company. Even the acknowledgment receipts
bearing his signature and the confirming receipt of his salaries will not show the true nature of his employment as they
do not reflect the necessary details of the commissioned task. Besides, Javiers tasks as pahinante are related, necessary
and desirable to the line of business by Fly Ace which is engaged in the importation and sale of grocery items. "On
days when there were no scheduled deliveries, he worked in petitioners warehouse, arranging and cleaning the stored
cans for delivery to clients."15 More importantly, Javier was subject to the control and supervision of the company, as
he was made to report to the office from Monday to Saturday, from 7:00 oclock in the morning until 5:00 oclock in
the afternoon. The list of deliverable goods, together with the corresponding clients and their respective purchases and
addresses, would necessarily have been prepared by Fly Ace. Clearly, he was subjected to compliance with company
rules and regulations as regards working hours, delivery schedule and output, and his other duties in the warehouse. 16

The petitioner chiefly relied on Chavez v. NLRC,17 where the Court ruled that payment to a worker on a per trip basis is
not significant because "this is merely a method of computing compensation and not a basis for determining the
existence of employer-employee relationship." Javier likewise invokes the rule that, "in controversies between a
laborer and his master, x x x doubts reasonably arising from the evidence should be resolved in the formers favour.
The policy is reflected is no less than the Constitution, Labor Code and Civil Code."18

Claiming to be an employee of Fly Ace, petitioner asserts that he was illegally dismissed by the latters failure to
observe substantive and procedural due process. Since his dismissal was not based on any of the causes recognized by
law, and was implemented without notice, Javier is entitled to separation pay and backwages.

In its Comment,19 Fly Ace insists that there was no substantial evidence to prove employer-employee relationship.
Having a service contract with Milmar Hauling Services for the purpose of transporting and delivering company
products to customers, Fly Ace contracted Javier as an extra helper or pahinante on a mere "per trip basis." Javier, who
was actually a loiterer in the area, only accompanied and assisted the company driver when Milmar could not deliver or
when the exigency of extra deliveries arises for roughly five to six times a month. Before making a delivery, Fly Ace
would turn over to the driver and Javier the delivery vehicle with its loaded company products. With the vehicle and
products in their custody, the driver and Javier "would leave the company premises using their own means, method,
best judgment and discretion on how to deliver, time to deliver, where and [when] to start, and manner of delivering the
products."20

Fly Ace dismisses Javiers claims of employment as baseless assertions. Aside from his bare allegations, he presented
nothing to substantiate his status as an employee. "It is a basic rule of evidence that each party must prove his
affirmative allegation. If he claims a right granted by law, he must prove his claim by competent evidence, relying on
the strength of his own evidence and not upon the weakness of his opponent." 21 Invoking the case of Lopez v. Bodega
City,22 Fly Ace insists that in an illegal dismissal case, the burden of proof is upon the complainant who claims to be an
employee. It is essential that an employer-employee relationship be proved by substantial evidence. Thus, it cites:

In an illegal dismissal case, the onus probandi rests on the employer to prove that its dismissal of an employee was for
a valid cause. However, before a case for illegal dismissal can prosper, an employer-employee relationship must first
be established.

Fly Ace points out that Javier merely offers factual assertions that he was an employee of Fly Ace, "which are
unfortunately not supported by proof, documentary or otherwise."23 Javier simply assumed that he was an employee of
Fly Ace, absent any competent or relevant evidence to support it. "He performed his contracted work outside the
premises of the respondent; he was not even required to report to work at regular hours; he was not made to register his
time in and time out every time he was contracted to work; he was not subjected to any disciplinary sanction imposed
to other employees for company violations; he was not issued a company I.D.; he was not accorded the same benefits
given to other employees; he was not registered with the Social Security System (SSS)as petitioners employee; and, he
was free to leave, accept and engage in other means of livelihood as there is no exclusivity of his contracted services
with the petitioner, his services being co-terminus with the trip only. All these lead to the conclusion that petitioner is
not an employee of the respondents."24

Moreover, Fly Ace claims that it had "no right to control the result, means, manner and methods by which Javier would
perform his work or by which the same is to be accomplished." 25 In other words, Javier and the company driver were
given a free hand as to how they would perform their contracted services and neither were they subjected to definite
hours or condition of work.
Fly Ace likewise claims that Javiers function as a pahinante was not directly related or necessary to its principal
business of importation and sales of groceries. Even without Javier, the business could operate its usual course as it did
not involve the business of inland transportation. Lastly, the acknowledgment receipts bearing Javiers signature and
words "pakiao rate," referring to his earned salaries on a per trip basis, have evidentiary weight that the LA correctly
considered in arriving at the conclusion that Javier was not an employee of the company.

The Court affirms the assailed CA decision.

It must be noted that the issue of Javiers alleged illegal dismissal is anchored on the existence of an employer-
employee relationship between him and Fly Ace. This is essentially a question of fact. Generally, the Court does not
review errors that raise factual questions. However, when there is conflict among the factual findings of the antecedent
deciding bodies like the LA, the NLRC and the CA, "it is proper, in the exercise of Our equity jurisdiction, to review
and re-evaluate the factual issues and to look into the records of the case and re-examine the questioned findings."26 In
dealing with factual issues in labor cases, "substantial evidence that amount of relevant evidence which a reasonable
mind might accept as adequate to justify a conclusion is sufficient."27

As the records bear out, the LA and the CA found Javiers claim of employment with Fly Ace as wanting and deficient.
The Court is constrained to agree. Although Section 10, Rule VII of the New Rules of Procedure of the NLRC28 allows
a relaxation of the rules of procedure and evidence in labor cases, this rule of liberality does not mean a complete
dispensation of proof. Labor officials are enjoined to use reasonable means to ascertain the facts speedily and
objectively with little regard to technicalities or formalities but nowhere in the rules are they provided a license to
completely discount evidence, or the lack of it. The quantum of proof required, however, must still be satisfied. Hence,
"when confronted with conflicting versions on factual matters, it is for them in the exercise of discretion to determine
which party deserves credence on the basis of evidence received, subject only to the requirement that their decision
must be supported by substantial evidence."29 Accordingly, the petitioner needs to show by substantial evidence that he
was indeed an employee of the company against which he claims illegal dismissal.

Expectedly, opposing parties would stand poles apart and proffer allegations as different as chalk and cheese. It is,
therefore, incumbent upon the Court to determine whether the party on whom the burden to prove lies was able to
hurdle the same. "No particular form of evidence is required to prove the existence of such employer-employee
relationship. Any competent and relevant evidence to prove the relationship may be
admitted.http://www.lawphil.net/judjuris/juri2009/may2009/gr_179652_2009.html - fnt31 Hence, while no particular
form of evidence is required, a finding that such relationship exists must still rest on some substantial evidence.
Moreover, the substantiality of the evidence depends on its quantitative as well as its qualitative aspects."30 Although
substantial evidence is not a function of quantity but rather of quality, the x x x circumstances of the instant case
demand that something more should have been proffered. Had there been other proofs of employment, such as x x x
inclusion in petitioners payroll, or a clear exercise of control, the Court would have affirmed the finding of employer-
employee relationship."31

In sum, the rule of thumb remains: the onus probandi falls on petitioner to establish or substantiate such claim by the
requisite quantum of evidence.32 "Whoever claims entitlement to the benefits provided by law should establish his or
her right thereto x x x."33 Sadly, Javier failed to adduce substantial evidence as basis for the grant of relief.

In this case, the LA and the CA both concluded that Javier failed to establish his employment with Fly Ace. By way of
evidence on this point, all that Javier presented were his self-serving statements purportedly showing his activities as
an employee of Fly Ace. Clearly, Javier failed to pass the substantiality requirement to support his claim. Hence, the
Court sees no reason to depart from the findings of the CA.

While Javier remains firm in his position that as an employed stevedore of Fly Ace, he was made to work in the
company premises during weekdays arranging and cleaning grocery items for delivery to clients, no other proof was
submitted to fortify his claim. The lone affidavit executed by one Bengie Valenzuela was unsuccessful in strengthening
Javiers cause. In said document, all Valenzuela attested to was that he would frequently see Javier at the workplace
where the latter was also hired as stevedore.34 Certainly, in gauging the evidence presented by Javier, the Court cannot
ignore the inescapable conclusion that his mere presence at the workplace falls short in proving employment therein.
The supporting affidavit could have, to an extent, bolstered Javiers claim of being tasked to clean grocery items when
there were no scheduled delivery trips, but no information was offered in this subject simply because the witness had
no personal knowledge of Javiers employment status in the company. Verily, the Court cannot accept Javiers
statements, hook, line and sinker.

The Court is of the considerable view that on Javier lies the burden to pass the well-settled tests to determine the
existence of an employer-employee relationship, viz: (1) the selection and engagement of the employee; (2) the
payment of wages; (3) the power of dismissal; and (4) the power to control the employees conduct. Of these elements,
the most important criterion is whether the employer controls or has reserved the right to control the employee not only
as to the result of the work but also as to the means and methods by which the result is to be accomplished.35

In this case, Javier was not able to persuade the Court that the above elements exist in his case.1avvphi1 He could not
submit competent proof that Fly Ace engaged his services as a regular employee; that Fly Ace paid his wages as an
employee, or that Fly Ace could dictate what his conduct should be while at work. In other words, Javiers allegations
did not establish that his relationship with Fly Ace had the attributes of an employer-employee relationship on the basis
of the above-mentioned four-fold test. Worse, Javier was not able to refute Fly Aces assertion that it had an agreement
with a hauling company to undertake the delivery of its goods. It was also baffling to realize that Javier did not dispute
Fly Aces denial of his services exclusivity to the company. In short, all that Javier laid down were bare allegations
without corroborative proof.

Fly Ace does not dispute having contracted Javier and paid him on a "per trip" rate as a stevedore, albeit on
a pakyaw basis. The Court cannot fail to note that Fly Ace presented documentary proof that Javier was indeed paid on
a pakyaw basis per the acknowledgment receipts admitted as competent evidence by the LA. Unfortunately for Javier,
his mere denial of the signatures affixed therein cannot automatically sway us to ignore the documents because
"forgery cannot be presumed and must be proved by clear, positive and convincing evidence and the burden of proof
lies on the party alleging forgery."36

Considering the above findings, the Court does not see the necessity to resolve the second issue presented.

One final note. The Courts decision does not contradict the settled rule that "payment by the piece is just a method of
compensation and does not define the essence of the relation." 37 Payment on a piece-rate basis does not negate regular
employment. "The term wage is broadly defined in Article 97 of the Labor Code as remuneration or earnings, capable
of being expressed in terms of money whether fixed or ascertained on a time, task, piece or commission basis. Payment
by the piece is just a method of compensation and does not define the essence of the relations. Nor does the fact that
the petitioner is not covered by the SSS affect the employer-employee relationship. However, in determining whether
the relationship is that of employer and employee or one of an independent contractor, each case must be determined
on its own facts and all the features of the relationship are to be considered." 38 Unfortunately for Javier, the attendant
facts and circumstances of the instant case do not provide the Court with sufficient reason to uphold his claimed status
as employee of Fly Ace.

While the Constitution is committed to the policy of social justice and the protection of the working class, it should not
be supposed that every labor dispute will be automatically decided in favor of labor. Management also has its rights
which are entitled to respect and enforcement in the interest of simple fair play. Out of its concern for the less
privileged in life, the Court has inclined, more often than not, toward the worker and upheld his cause in his conflicts
with the employer. Such favoritism, however, has not blinded the Court to the rule that justice is in every case for the
deserving, to be dispensed in the light of the established facts and the applicable law and doctrine.39

WHEREFORE, the petition is DENIED. The March 18, 2010 Decision of the Court of Appeals and its June 7, 2010
Resolution, in CA-G.R. SP No. 109975, are hereby AFFIRMED.

SO ORDERED.
 Manaya vs Alabang Country Club
G.R. 168988 June 19, 2007

Topic: Liberal Construction

Facts: Manaya (Employee) was hired by Alabang Country Club (ACC)(Employer). He was informed that his services
was no longer required, without any reason. As such, he filed an illegal dismissal case against ACC. The Labor Arbiter
ruled in favor of Manaya. ACC appealed to the NLRC, but the latter dismissed the appeal for it was filed out of time.
ACC is now contending that NLRC should have liberally interpreted and applied the rules, allowing them to file the
appeal even beyond the reglementary period.

Issue: Should the NLRC allow ACC to file its Appeal even beyond the reglementary period?

Ruling: No. Court will only allow the liberal interpretation of the Rules when there is an extraordinary circumstance
that justify deviation from its stringent rules. In this case no extraordinary existed. It is a basic and irrefragable rule
that in carrying out and in interpreting the provisions of the Labor Code and its implementing regulations, the
workingmans welfare should be the primordial and paramount consideration. The interpretation herein made gives
meaning and substance to the liberal and compassionate spirit of the law enunciated in Article 4 of the Labor Code that
"all doubts in the implementation and interpretation of the provisions of the Labor Code including its implementing
rules and regulations shall be resolved in favor of labor."

The NLRC is not bound by the technical rules of procedure and is allowed to be liberal in the interpretation of rules in
deciding labor cases. However, such liberality should not be applied in the instant case as it would render futile the
very purpose for which the principle of liberality is adopted. The liberal interpretation in favor of labor stems from the
mandate that the workingmans welfare should be the primordial and paramount consideration.

Indeed, there is no room for liberality in the instant case "as it would render futile the very purpose for which the
principle of liberality is adopted." As so rightfully enunciated, "the liberal interpretation in favor of labor stems from
the mandate that the workingmans welfare should be the primordial and paramount consideration." This Court has
repeatedly ruled that delay in the settlement of labor cases cannot be countenanced. Not only does it involve the
survival of an employee and his loved ones who are dependent on him for food, shelter, clothing, medicine and
education; it also wears down the meager resources of the workers to the point that, not infrequently, they either give
up or compromise for less than what is due them.
 ERNESTO CALLADO vs. INTERNATIONAL RICE RESEARCH INSTITUTE (IRRI)

G.R. No. 106483 May 22, 1995/ ROMERO, J.:

Facts: Ernesto Callado, petitioner, was employed as a driver at the IRRI. One day while driving an IRRI vehicle on an
official trip to the NAIA and back to the IRRI, petitioner figured in an accident.

Petitioner was informed of the findings of a preliminary investigation conducted by the IRRI's Human Resource
Development Department Manager. In view of the findings, he was charged with:
(1) Driving an institute vehicle while on official duty under the influence of liquor;
(2) Serious misconduct consisting of failure to report to supervisors the failure of the vehicle to start because of a
problem with the car battery, and
(3) Gross and habitual neglect of duties.

Petitioner submitted his answer and defenses to the charges against him. However, IRRI issued a Notice of
Termination to petitioner.

Thereafter, petitioner filed a complaint before the Labor Arbiter for illegal dismissal, illegal suspension and indemnity
pay with moral and exemplary damages and attorney's fees.

IRRI wrote the Labor Arbiter to inform him that the Institute enjoys immunity from legal process by virtue of Article 3
of Presidential Decree No. 1620, 5 and that it invokes such diplomatic immunity and privileges as an international
organization in the instant case filed by petitioner, not having waived the same.

While admitting IRRI's defense of immunity, the Labor Arbiter, nonetheless, cited an Order issued by the Institute to
the effect that "in all cases of termination, respondent IRRI waives its immunity," and, accordingly, considered the
defense of immunity no longer a legal obstacle in resolving the case.

The NLRC found merit in private respondent's appeal and, finding that IRRI did not waive its immunity, ordered the
aforesaid decision of the Labor Arbiter set aside and the complaint dismissed.

In this petition petitioner contends that the immunity of the IRRI as an international organization granted by Article 3
of Presidential Decree No. 1620 may not be invoked in the case at bench inasmuch as it waived the same by virtue of
its Memorandum on "Guidelines on the handling of dismissed employees in relation to P.D. 1620."

Issue: Did the (IRRI) waive its immunity from suit in this dispute which arose from an employer-employee
relationship?

Held: No.

P.D. No. 1620, Article 3 provides:

Art. 3. Immunity from Legal Process. The Institute shall enjoy immunity from any penal, civil and administrative
proceedings, except insofar as that immunity has been expressly waived by the Director-General of the Institute or his
authorized representatives.

The SC upholds the constitutionality of the aforequoted law. There is in this case "a categorical recognition by the
Executive Branch of the Government that IRRI enjoys immunities accorded to international organizations, which
determination has been held to be a political question conclusive upon the Courts in order not to embarass a political
department of Government.
It is a recognized principle of international law and under our system of separation of powers that diplomatic immunity
is essentially a political question and courts should refuse to look beyond a determination by the executive branch of
the government, and where the plea of diplomatic immunity is recognized and affirmed by the executive branch of the
government as in the case at bar, it is then the duty of the courts to accept the claim of immunity upon appropriate
suggestion by the principal law officer of the government or other officer acting under his direction.

The raison d'etre for these immunities is the assurance of unimpeded performance of their functions by the agencies
concerned.

The grant of immunity to IRRI is clear and unequivocal and an express waiver by its Director-General is the only way
by which it may relinquish or abandon this immunity.

In cases involving dismissed employees, the Institute may waive its immunity, signifying that such waiver is
discretionary on its part.
 Title: DAVAO CITY WATER DISTRICT vs. CIVIL SERVICE COMMISSION
Citation: 201 SCRA 593 [G.R. No. 95237-38, September 13, 1991]
Ponente: MEDIALDEA

FACTS:

Petitioners are among the more than five hundred (500) water districts existing throughout the country formed
pursuant to the provisions of PD No. 198, as amended by PDs. 768 and 1479, otherwise known as the
"Provincial Water Utilities Act of 1973 which was issued by then President Ferdinand E. Marcos by virtue
of his legislative power. It authorized the different local legislative bodies to form and create their respective
water districts through a resolution they will pass subject to the guidelines, rules and regulations therein laid
down. The decree further created and formed the "Local Water Utilities Administration" (LWUA), a
national agency attached to the National Economic and Development Authority (NEDA), and granted with
regulatory power necessary to optimize public service from water utilities operations.

The respondents, on the other hand, are the Civil Service Commission (CSC) and the Commission on Audit
(COA), both government agencies and represented in this case by the Solicitor General.

There exists a divergence of opinions between COA on one hand, and the (LWUA), on the other hand, with
respect to the authority of COA to audit the different water districts.

COA opined that the audit of the water districts is simply an act of discharging the visitorial power vested in
them by law .

On the other hand, LWUA maintained that only those water districts with subsidies from the government fall
within the COA's jurisdiction and only to the extent of the amount of such subsidies, pursuant to the provision
of the Government Auditing Code of the Phils.

Petitioners' main argument is that they are private corporations without original charter, hence they are outside
the jurisdiction of respondents CSC and COA.

ISSUE:

Whether or not the Local Water Districts formed and created pursuant to the provisions of Presidential Decree No. 198,
as amended, are government-owned or controlled corporations with original charter falling under the Civil Service Law
and/or covered by the visitorial power of the Commission on Audit

HELD:

After a fair consideration of the parties' arguments coupled with a careful study of the applicable laws as well
as the constitutional provisions involved, We rule against the petitioners and reiterate Our ruling in
Tanjay case declaring water districts government-owned or controlled corporations with original
charter.

Ascertained from a consideration of the whole statute, PD 198 is a special law applicable only to the
different water districts created pursuant thereto. In all its essential terms, it is obvious that it pertains to a
special purpose which is intended to meet a particular set of conditions and circumstances. The fact that said
decree generally applies to all water districts throughout the country does not change the fact that PD 198 is a
special law.

By "government-owned or controlled corporation with original charter," We mean government owned or

controlled corporation created by a special law and not under the Corporation Code of the Philippines.

No consideration may thus be given to petitioners' contention that the operative act which created the water
districts are the resolutions of the respective local sanggunians and that consequently, PD 198, as amended,
cannot be considered as their charter.

It is to be noted that PD 198, as amended is the source of authorization and power to form and maintain a
district.
 It is clear that what has been excluded from the coverage of the CSC are those corporations created
pursuant to the Corporation Code. Significantly, petitioners are not created under the said code, but on
the contrary, they were created pursuant to a special law and are governed primarily by its provision.

It is clear therefrom that the power to appoint the members who will comprise the Board of Directors belongs
to the local executives of the local subdivision units where such districts are located. In contrast, the members
of the Board of Directors or trustees of a private corporation are elected from among the members and
stockholders thereof. It would not be amiss to emphasize at this point that a private corporation is created for
the private purpose, benefit, aim and end of its members or stockholders. Necessarily, said members or
stockholders should be given a free hand to choose those who will compose the governing body of their
corporation. But this is not the case here and this clearly indicates that petitioners are definitely not private
corporations.

The foregoing disquisition notwithstanding, We are, however, not unaware of the serious repercussion
this may bring to the thousands of water districts' employees throughout the country who stand to be
affected because they do not have the necessary civil service eligibilities. As these employees are equally
protected by the constitutional guarantee to security of tenure, We find it necessary to rule for the
protection of such right which cannot be impaired by a subsequent ruling of this Court. Thus, those
employees who have already acquired their permanent employment status at the time of the
promulgation of this decision cannot be removed by the mere reason that they lack the necessary civil
service eligibilities.
ACCORDINGLY, petitioners are declared "government-owned or controlled corporations with original
charter" which fall under the jurisdiction of the public respondents CSC and COA.
 DFA vs NLRC Case Digest
Diplomatic Immunity, Suits against International Agencies

Facts:
On 27 January 1993, private respondent Magnayi filed an illegal dismissal case against Asian Development Bank. Two
summonses were served, one sent directly to the ADB and the other through the Department of Foreign Affairs. ADB
and the DFA notified respondent Labor Arbiter that the ADB, as well as its President and Officers, were covered by an
immunity from legal process except for borrowings, guaranties or the sale of securities pursuant to Article 50(1) and
Article 55 of the Agreement Establishing the Asian Development Bank (the "Charter") in relation to Section 5 and
Section 44 of the Agreement Between The Bank and The Government Of The Philippines Regarding The Bank's
Headquarters (the "Headquarters Agreement").

The Labor Arbiter took cognizance of the complaint on the impression that the ADB had waived its diplomatic
immunity from suit and, in time, rendered a decision in favor Magnayi. The ADB did not appeal the decision. Instead,
on 03 November 1993, the DFA referred the matter to the NLRC; in its referral, the DFA sought a "formal vacation of
the void judgment." When DFA failed to obtain a favorable decision from the NLRC, it filed a petition for certiorari.

Issues:
1. Whether or not ADB is immune from suit

2. Whether or not by entering into service contracts with different private companies, ADB has descended to the level
of an ordinary party to a commercial transaction giving rise to a waiver of its immunity from suit

3. Whether or not the DFA has the legal standing to file the present petition

4. Whether or not the extraordinary remedy of certiorari is proper in this case

Held:
1. Under the Charter and Headquarters Agreement, the ADB enjoys immunity from legal process of every form, except
in the specified cases of borrowing and guarantee operations, as well as the purchase, sale and underwriting of
securities. The Banks officers, on their part, enjoy immunity in respect of all acts performed by them in their official
capacity. The Charter and the Headquarters Agreement granting these immunities and privileges are treaty covenants
and commitments voluntarily assumed by the Philippine government which must be respected.

Being an international organization that has been extended a diplomatic status, the ADB is independent of the
municipal law. "One of the basic immunities of an international organization is immunity from local jurisdiction, i.e.,
that it is immune from the legal writs and processes issued by the tribunals of the country where it is found. The
obvious reason for this is that the subjection of such an organization to the authority of the local courts would afford a
convenient medium thru which the host government may interfere in their operations or even influence or control its
policies and decisions of the organization; besides, such subjection to local jurisdiction would impair the capacity of
such body to discharge its responsibilities impartially on behalf of its member-states."

2. No. The ADB didn't descend to the level of an ordinary party to a commercial transaction, which should have
constituted a waiver of its immunity from suit, by entering into service contracts with different private companies.
There are two conflicting concepts of sovereign immunity, each widely held and firmly established. According to the
classical or absolute theory, a sovereign cannot, without its consent, be made a respondent in the Courts of another
sovereign. According to the newer or restrictive theory, the immunity of the sovereign is recognized only with regard
to public acts or acts jure imperii of a state, but not with regard toprivate act or acts jure gestionis.

Certainly, the mere entering into a contract by a foreign state with a private party cannot be the ultimate test. Such an
act can only be the start of the inquiry. The logical question is whether the foreign state is engaged in the activity in the
regular course of business. If the foreign state is not engaged regularly in a business or trade, the particular act or
transaction must then be tested by its nature. If the act is in pursuit of a sovereign activity, or an incident thereof, then it
is an act jure imperii, especially when it is not undertaken for gain or profit.

The service contracts referred to by private respondent have not been intended by the ADB for profit or gain but are
official acts over which a waiver of immunity would not attach.

3. Yes. The DFA's function includes, among its other mandates, the determination of persons and institutions covered
by diplomatic immunities, a determination which, when challenged, entitles it to seek relief from the court so as not to
seriously impair the conduct of the country's foreign relations. The DFA must be allowed to plead its case whenever
necessary or advisable to enable it to help keep the credibility of the Philippine government before the international
community. When international agreements are concluded, the parties thereto are deemed to have likewise accepted the
responsibility of seeing to it that their agreements are duly regarded. In our country, this task falls principally on the
DFA as being the highest executive department with the competence and authority to so act in this aspect of the
international arena. In Holy See vs. Hon. Rosario, Jr., this Court has explained the matter in good detail; viz:
"In Public International Law, when a state or international agency wishes to plead sovereign or diplomatic immunity in
a foreign court, it requests the Foreign Office of the state where it is sued to convey to the court that said defendant is
entitled to immunity.

"In the United States, the procedure followed is the process of 'suggestion,' where the foreign state or the international
organization sued in an American court requests the Secretary of State to make a determination as to whether it is
entitled to immunity. If the Secretary of State finds that the defendant is immune from suit, he, in turn, asks the
Attorney General to submit to the court a 'suggestion' that the defendant is entitled to immunity.

"In the Philippines, the practice is for the foreign government or the international organization to first secure an
executive endorsement of its claim of sovereign or diplomatic immunity. But how the Philippine Foreign Office
conveys its endorsement to the courts varies. In International Catholic Migration Commission vs. Calleja, 190 SCRA
130 (1990), the Secretary of Foreign Affairs just sent a letter directly to the Secretary of Labor and Employment,
informing the latter that the respondent-employer could not be sued because it enjoyed diplomatic immunity. In World
Health Organization vs. Aquino, 48 SCRA 242 (1972), the Secretary of Foreign Affairs sent the trial court a telegram
to that effect. In Baer vs. Tizon, 57 SCRA 1 (1974), the U.S. Embassy asked the Secretary of Foreign Affairs to request
the Solicitor General to make, in behalf of the Commander of the United States Naval Base at Olongapo City,
Zambales, a 'suggestion' to respondent Judge. The Solicitor General embodied the 'suggestion' in a manifestation and
memorandum as amicus curiae.

"In the case at bench, the Department of Foreign Affairs, through the Office of Legal Affairs moved with this Court to
be allowed to intervene on the side of petitioner. The Court allowed the said Department to file its memorandum in
support of petitioner's claim of sovereign immunity.

"In some cases, the defense of sovereign immunity was submitted directly to the local courts by the respondents
through their private counsels. In cases where the foreign states bypass the Foreign Office, the courts can inquire into
the facts and make their own determination as to the nature of the acts and transactions involved."

4. Yes. Relative to the propriety of the extraordinary remedy of certiorari, the Court has, under special circumstances,
so allowed and entertained such a petition when (a) the questioned order or decision is issued in excess of or without
jurisdiction, or (b) where the order or decision is a patent nullity, which, verily, are the circumstances that can be said
to obtain in the present case. When an adjudicator is devoid of jurisdiction on a matter before him, his action that
assumes otherwise would be a clear nullity.

Petition for certiorari is GRANTED, and the decision of the Labor Arbiter, dated 31 August 1993 is VACATED for
being NULL AND VOID. (DFA vs NLRC, G.R. No. 113191, 18 September 1996)
 G.R. No. 181806 : March 12, 2014
WESLEYAN UNIVERSITY-PHILIPPINES, Petitioner, v.
WESLEYAN UNIVERSITY-PHILIPPINES FACULTY and STAFF ASSOCIATION, Respondent.

FACTS:
Wesleyan University-Philippines (Petitioner), a non-stock, non-profit educational institution duly organized and
existing under the laws of the Philippines and Wesleyan University-Philippines Faculty and Staff Association
(Respondent), a duly registered labor organization acting as the sole and exclusive bargaining agent of all rank-and-file
faculty and staff employees of petitioner signed a 5-year CBA9 effective June 1, 2003 until May 31, 2008.

A Memorandum providing guidelines on the implementation of vacation and sick leave credits as well as vacation
leave commutation was issued by petitioner, through its President, Atty. Guillermo T. Maglaya (Atty. Maglaya).
Respondent President, Cynthia L. De Lara (De Lara) wrote a letter to Atty. Maglaya informing him that respondent is
not amenable to the unilateral changes made by petitioner and questioning the guidelines for being contrary to the
existing practices and the CBA.

Petitioner advised respondent to file a grievance complaint on the implementation of the vacation and sick leave policy
during their Labor Management Committee (LMC) Meeting. Petitioner announced therein its plan of implementing a
one-retirement policy whichwas unacceptable to respondent.

Unable to settle their differences at the grievance level, the parties referred the matter to a Voluntary Arbitrator. Respondent
submitted affidavits showing that there is an established practice of giving two retirement benefits: one from the Private
Education Retirement Annuity Association (PERAA) Plan and another from the CBA Retirement Plan.

The Voluntary Arbitrator declared that the one-retirement policy and the Memorandum dated August 16, 2005 is
contrary to law.

Petitioner appealed the case to the CA via a Petition for Review under Rule 43 of the Rules of Court. The CA affirmed
the nullification of the one-retirement policy and the Memorandum dated August 16, 2005 on the ground that these
unilaterally amended the CBA without the consent of respondent. Petitioner moved for reconsideration but the CA
denied the same.

ISSUES: Whether or not the Court of Appeals committed grave and palpable error in ruling that a university practice
of granting its employees two (2) sets of Retirement Benefits had already been established? Whether or not the Court
of Appeals committed grave and palpable error in revoking petitioner Memorandum dated 16 August 2005 for being
contrary to extant policy?

HELD: Decision of the Court of Appeals is sustained.

LABOR LAW: non-diminution rule

Article 100 of the Labor Code provides for the Non-Diminution Rule. This rule prohibits the employers from
eliminating or reducing the benefits received by their employees. It applies only if the benefit is based on an express
policy, a written contract, or has ripened into a practice. To be considered a practice, it must be consistently and deliberately
made by the employer over a long period of time. However, this rule admits of an exception and that is when the practice is
due to error in the construction or application of a doubtful or difficult question of law. The error, however, must be
corrected immediately after its discovery; otherwise, the rule on Non-Diminution of Benefits would still apply.

In the case at bar, respondent presented substantial evidence in the form of affidavits supporting its claim that there are
two retirement plans. As gleaned from the affidavits, petitioner has been giving two retirement benefits as early as
1997. Petitioner failed to present any evidence to refute the veracity of said affidavits. Moreover, no evidence was
shown to prove petitioner contention that there is only one retirement plan as the CBA Retirement Plan and the
PERAA Plan are one and the same.

LABOR LAW: collective bargaining agreement cannot be unilaterally changed

The Memorandum dated August 16, 2005 imposes a limitation not agreed upon by the parties nor stated in the CBA.
Hence, it must be struck down.

It is provided in Sections 1 and 2 of Article XII of the CBA that all covered employees are entitled to 15 days sick
leave and 15 days vacation leave with pay every year and that after the second year of service, all unused vacation
leave shall be converted to cash and paid to the employee at the end of each school year, not later than August 30 of
each year. Whereas, it is provided in the Memorandum dated August 16, 2005 that vacation and sick leave credits are
not automatic as leave credits would be earned on a month-to-month basis. The said Memorandum, therefore, limits the
available leave credits of an employee at the start of the school year.

Basic is the rule that when the provisions of the CBA is clear, the literal meaning of the stipulation shall govern. Any
doubt in its interpretation must be resolved in favor of labor.

The present petition for review is DENIED.

 RENATO REAL vs. SANGU PHILIPPINES, INC. ET AL. and/or KIICHI ABE
G.R. No. 168757.January 19, 2011.

Facts:
Renato Real was the Manager of respondent corporation Sangu Philippines, Inc. which is engaged in thebusiness of
providing manpower for general services. He filed a complaint for illegal dismissal againstthe respondents stating that
he was neither notified of the Board meeting during which his removal wasdiscussed nor was he formally charged with
any infraction.Respondents, on the other hand, said that Real committed gross acts of misconduct detrimental
to thecompany since 2000. The LA declared petitioner as having been illegally dismissed. Sangu appealed to NLRC
and established petitioners status as a stockholder and as a corporate officer and hence, his action against respondent
corporation is an intra-corporate controversy over which the Labor Arbiter has no jurisdiction. NLRC modified the
LAs decision. On appeal, the CA affirmed the decision of NLRC.Hence, this petition.

Issue:
Whether or not petitioners complaint for illegal dismissal constitutes an intra-corporate controversy.

Ruling:
To determine whether a case involves an intra-corporate controversy, and is to be heard and decided bythe branches of
the RTC specifically designated by the Court to try and decide such cases, two elementsmust concur: (a) the status or
relationship of the parties, and (2) the nature of the question that is thesubject of their controversy.The first element
requires that the controversy must arise out of intra-corporate or partnership relationsbetween any or all of the parties
and the corporation x x . The second element requires that the disputeamong the parties be intrinsically connected with
the regulation of the corporation. If the nature of thecontroversy involves matters that are purely civil in character,
necessarily, the case does not involve anintra-corporate controversy.Guided by this recent jurisprudence, we thus find no
merit in respondents contention that the fact alone that petitioner is a stockholder and director of respondent corporation
automatically classifies thiscase as an intra-corporate controversy. To reiterate, not all conflicts between the
stockholders and thecorporation are classified as intra-corporate. There are other factors to consider in determining
whetherthe dispute involves corporate matters as to consider them as intra-corporate controversie