Republic of the Philippines

SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 118943
September 10, 2001
MARIO HORNALES, petitioner,
vs.
THE NATIONAL LABOR RELATIONS COMMISSION, JOSE CAYANAN AND
JEAC INTERNATIONAL MANAGEMENT CONTRACTOR
SERVICES, respondents.
SANDOVAL-GUTIERREZ, J.:
It is sad enough that poverty has impelled many of our countrymen to seek
greener pastures in foreign lands. But what is more lamentable is when a Filipino
recruiter, after sending his unlettered countrymen to a foreign land and letting
them suffer inhuman treatment in the hand of an abusive employer, connives with
the foreign employer in denying them their rightful compensation. Surely, there
shall be a day of reckoning for such a recruiter whose insatiable love for money
made him a tyrant to his own race.
At bench is a petition for certiorari seeking to annul and set aside
the (a) Decision1 dated July 28, 1994 of the National Labor Relations
Commission (NLRC) reversing the Decision2 of the Philippine Overseas
Employment Administration (POEA) in POEA Case No. (L) 92-07939,3 and (b) Resolution4 dated October 6, 1994 denying petitioner's motion for
reconsideration.1wphi1.nt
The facts as shown by the records are:
On July 15, 1992, Mario Hornales (herein petitioner) filed with the POEA a
complaint5 for non-payment of wages and recovery of damages against JEAC
International Management & Contractor Services (JEAC) and its owner, Jose
Cayanan (herein private respondents). As private respondents' surety, Country
Bankers Insurance Corporation (Country Bankers) was later on impleaded by
petitioner. The complaint alleged that on October 8, 1991, private respondents
sent petitioner, together with other Filipinos, to Singapore. At their departure, they
were advised that someone would meet them in Singapore. True enough, they
were welcomed by Victor Lim, the owner of Step-Up Employment Agency (StepUp Agency).6 He informed them that they would be working as fishermen with a
monthly salary of US $200.00 each. Thereafter, they boarded Ruey Horn #3, a
vessel owned by Min Fu Fishery Co. Ltd. of Taiwan.
On board the vessel, petitioner was subjected to inhumane work conditions, like
inadequate supply of food and water, maltreatment by the ship captain, and lack
of medical attendance. He was also required to work for twenty-two hours a day
without pay. Unable to bear his situation any longer, he joined the other Filipino
workers in leaving the vessel while it was docked at Mauritius Islands on July 15,
1992.
Upon his return to the Philippines, petitioner asked private respondents to pay his
salaries. Instead of doing so, they required him to surrender his passport
promising that they would procure another job for him. Later, private respondents
gave him the amount of five hundred pesos (P500.00).
Private respondents filed an answer7 claiming that, petitioner, Victor Lim and Min
Fee Fishery Co. Ltd are all "total strangers" to them. To bolster the claim, they
offered in evidence the Joint Affidavit8 of Efren B. Balucas and Alexander C.
Natura, petitioner's co-workers in Singapore, stating that while they were in
Singapore, petitioner admitted to them that he did not apply in any agency in the
Philippines; that he came to Singapore merely as a tourist; and that, he applied
directly and personally with Step-Up Agency. These statements were
corroborated by the "Certification"9 issued by Step-Up Agency.
On January 23, 1993, petitioner filed a Supplemental Affidavit10 claiming that he
was not a "total stranger" to private respondents, and that, as a matter of fact, he
knew respondent Cayanan since 1990, when they used to go to the San Lazaro
Hippodrome to watch horse races. He also averred that while the vessel was
docked at Mauritius Islands on June 1992, respondent Cayanan reminded him
and his co-workers of their loan obligations by sending them photocopies of the
PNB checks he (respondent Cayanan) issued in favor of their relatives, and
theagreements whereby they authorized Victor Lim to deduct from their salaries
the amount of their loan obligations.
On January 5, 1994, the POEA rendered a decision in favor of petitioner, the
dispositive portion of which reads:
"WHEREFORE, premises considered, respondents JEAC
International Management and Contractor Services, Jose E. Cayanan
and Travellers Insurance Corp. are hereby ordered, jointly and

severally to pay complainant the amount of US DOLLARS: ONE

THOUSAND SIX HUNDRED FORTY SIX AND 66/100 (US$ 1,
646.66) representing his unpaid salaries and US $ 164.66 as and by
way of attorney's fees. Payment shall be made in Philippine Currency
at the prevailing rate of exchange at the time of payment.
For want of jurisdiction, the claim for moral and exemplary damages
is denied.
All other claims and counterclaims are denied.
SO ORDERED."11
Incidentally, the POEA dismissed petitioner's claim against Country Bankers on
the ground that the surety bond which was effective at the time of petitioner's
deployment was that of Travelers Insurance Corporation.
On appeal, respondent NLRC vacated the decision of the POEA and dismissed
petitioner's complaint mainly on the ground that there was no employer-employee
relationship between the parties. The NLRC ratiocinated as follows:
"At the outset, we note that the record is bereft of any showing that
complainant applied with the respondent agency as a job
applicant and subsequently entered into an overseas contract with
the latter which was later processed and approved by the POEA. X x
x What appears is that complainant used the agency as a stepping
stone to enter Singapore as a tourist and obtain employment thereat
on his own. This is evidenced by Annexes "A-1 " to '"H" of
Complainant's Reply (See pp. 65-72, record) which purports to show
that the batch of complainant was obligated to pay back respondent
Jose Cayanan the expenses for their deployment. No less than the
POEA noted that the respondent agency "is a service contractor and
is not authorized to deploy fishermen." Based on this fact, the
respondent agency could not have deployed complainant as an
overseas contract worker. What is apparent is that it obtained a
tourist passport and plane ticket for complainant as a travel agent on
a clearly "fly now pay later" plan.
We cannot rely on the employment agreements and checks (See pp.
66-67, record) presented by complainant to show proof of
employment relations considering that his name does not appear in
any of the documents, hence they are merely hearsay." 12
In reversing the POEA's finding, respondent NLRC gave considerable weight to
the Joint Affidavit of Natura and Balucas.
Unsatisfied, petitioner filed a motion for reconsideration but was denied.
Petitioner now comes to this Court via a petition for certiorari, imputing grave
abuse of discretion to public respondent NLRC. He asserts that private
respondents were the ones who deployed him to Singapore to work as
fisherman; and that, respondent NLRC's conclusion that respondent JEAC was a
mere "travel agency" and petitioner, a mere tourist, has no basis in fact and in
law.
For their part, private respondents maintain that respondent NLRC did not
commit grave abuse of discretion when it set aside the decision of the POEA,
since petitioner failed to show any POEA record or document to prove that they
deployed him to work in Singapore. Neither did he present a Special Power of
Attorney to prove that Step-Up Agency authorized private respondents to recruit
and deploy contract workers in its behalf nor an Affidavit of Responsibility to
show that they (private respondents and Step-Up Agency) assumed solidary
liability to petitioner.13Private respondents likewise insist that the photocopies of
the PNB checks and agreements are hearsay and inadmissible in evidence.
The Solicitor General, in his comment, 14 joins petitioner in assailing the decision
of respondent NLRC as "baseless and erroneous." According to him, the
conclusion of respondent NLRC directly contradicts private respondents' defense
that petitioner was a "total stranger." Further, he contends that the Joint
Affidavit of Balucas and Natura are hearsay.
The cardinal issue in this case hinges on the question - Are private respondents
responsible for petitioner's recruitment and deployment to Singapore?
Let us take a closer look at the scale of evidence.

On one arm of the scale are petitioner's evidence consisting of photocopies of

the PNB checks and agreementswhich were intended to disprove private
respondents' claim that petitioner, Victor Lim and Step-Up Agency are "total
strangers." The PNB checks represent the payments made by respondent
Cayanan to the relatives of petitioner's co-workers (including Balucas and
Natura). The checks show the name of LIM Chang Koo &/or Jose Cayanan, as
drawers. While the agreements, denominated "For Fisherman Deployed For
Work To Singapore," constitute authorization to Victor Lim to deduct from the
monthly salaries of the workers the amounts of their obligations to private
respondents. Petitioner's own undertaking to private respondents reads:
"I hereby certify that my expenses abroad in going to Singapore as
fisherman amounting to SIXTEEN THOUSAND PESOS (P16,000.00)
shall be temporarily shouldered by JEAC INT'L MGT & CONT.
SERVICES and as soon as I arrive in Singapore, said amount will be
charged by MR. VICTOR LIM and will be remitted to Eng. Jose E.
Cayanan.

(Sgd.) Mario Hornales

F. CREW" 15

On the other side of the scale are the Joint Affidavit secured by private
respondents from petitioner's co-workers, Balucas and Natura, and
a Certification issued by Step-Up Agency. These evidence were intended to
prove the alleged admission of petitioner to Balucas and Natura that he went as
a tourist to Singapore and that he applied directly with Step-Up Agency.
The Certification of Step-Up Agency re-echoes the allegations in the Joint
Affidavit.
The scale of evidence must tilt in favor of petitioner.
In a catena of labor cases, this Court has consistently held that where the
adverse party is deprived of the opportunity to cross-examine the affiants,
affidavits are generally rejected for being hearsay, unless the affiant themselves
are placed on the witness stand to testify thereon. 16 Private respondents' Joint
Affidavit has no probative value. It suffers from two infirmities, first, petitioner
was not given the opportunity to cross-examine the two affiants regarding the
contents thereof, and second, the two affiants merely swore as to what petitioner
told them but not as to the truth of the statements uttered. 17
In the same vein, the Certification must not be given weight. Private
respondents not only failed to present Victor Lim before the POEA to be crossexamined by petitioner, but the Certification was also not verified or under
oath.18 To our mind, it is just a last-ditch attempt on the part of Step-Up Agency to
help private respondents free themselves from liability to petitioner. It bears
noting that private respondents, Victor Lim and Step-Up Agency, as shown by
petitioner's evidence, acted in concert in his deployment to Singapore. Hence,
such certification is, at most, self-serving.
On the other hand, the PNB Checks and the agreements presented by
petitioner strongly disprove private respondents' total strangers" theory .It may be
observed that, in their attempt to exculpate themselves from monetary liability,
private respondents adopted an extreme position, i.e., that they have nothing to
do with petitioner, Victor Lim and Step-Up Agency. Such strategy proved to be
disastrous to them. The mere presentation of documents bearing private
respondents' names and that of Step-Up Agency and Victor Lim is enough to
defeat their theory. More so, when the documetary evidence consist of bank
checks showing the existence of a joint account, and authorization agreements
revealing a contract of agency.
Private respondents' argument that petitioner's evidence are mere, photocopies
and therefore cannot be considered as the best evidence on the issue does not
persuade us. The best evidence rule enshrined in the Revised Rules on
Evidence provides that "when the subject of an inquiry is the contents of a
document, no evidence shall be admissible other than the original document
itself."19 This rule is not without exception. Some of the exception are when the
original has been lost or destroyed; cannot be produced in court without bad faith
on the part of the offeror; or when the original is in the custody or under the
control of the party against whom the evidence is offered and the latter fails to
produce it after reasonable notice.20 It would be unreasonable to demand from
petitioner the presentation of the original PNB Checks considering that it is a
banking practice that for a check to be encashed, the same must be surrendered
to the bank first. These checks are, therefore, most likely in the possession of the
bank. As to the agreements, it is reasonable to conclude that respondent
Cayanan was the one in possession of the originals thereof. It maybe recalled
that these agreements were executed by the workers for his security and
benefit. At any rate, it is worthy to note that private respondents did not disown
the PNB checks nor deny the existence of the agreements.

Notwithstanding the foregoing, it must be emphasized that the proceedings

before the POEA is non-litigious in nature. The technicalities of law and
procedure and the rules obtaining in the courts of law shall not strictly apply
thereto and a hearing officer may avail himself of all reasonable means to
ascertain the facts of the case.21 On the applicability of the Rules of Court to labor
cases, the Supreme Court has ruled in Shoemart, Inc. v. National Labor
Relations Commission22:
"The argument cannot be sustained. Whatever merit it might have in
the context of ordinary civil actions, where the rules of evidence apply
with more or less strictness, disappears when adduced in connection
with proceedings before Labor Arbiters and the National Labor
Relations Commission; for in said proceedings, the law is explicit that
'the rules of evidence prevailing in courts of law or equity shall not be
controlling and it is the (law's) spirit and intention that the
Commission and its members and the Labor Arbiters shall use every
and all reasonable means to ascertain the facts in each case speedily
and objectively and without regard to technicalities of law or
procedure, all in the interest of due process.' Indeed, it is not the
Rules of Court enacted by the Supreme Court but rather the
regulations promulgated by the National Labor Relations Commission
which govern "the hearing and disposition of cases before it and its
regional branches**.' The 'Revised Rules of Court of the Philippines
and prevailing jurisprudence,' the law says, may be applied to labor
cases only under quite stringent limits, i.e., 'in the absence of any
applicable provision (in the Rules of the Commission), and in order to
effectuate the objectives of the Labor Code**, in the interest of
expeditious labor justice and whenever practicable and convenient,
by analogy or in a suppletory character and effect." Under these
rules, the proceedings before a Labor Arbiter are 'non-litigious in
nature' in which, 'subject to the requirements of due process, the
technicalities of law and procedure and the rules obtaining in the
courts of law ** (do not) strictly apply."
Undoutedly, the factual and legal bases of respondent NLRC's conclusions are
bereft of substantial evidence - the quantum of proof in labor cases. As aptly said
by the Solicitor General, its decision is "baseless and erroneous." Its disposition
is manifestly a grave abuse of discretion. 23
In concluding that respondent JEAC was a mere "travel agency" and petitioner, a
mere "tourist, " respondent NLRC came up with a new theory which find no
support even from the evidence of private respondents, the party in whose favor
the decision was rendered. First, there is nothing in the record which shows that
respondent JEAC is a mere travel agency. Even private respondents consistently
plead that respondent JEAC is a "licensed recruitment agency authorized to
recruit and deploy overseas Filipino contract workers."
Second, the evidence upon which respondent NLRC based its findings consist
of agreements authorizing Victor Lim to deduct from the salaries of petitioner
and his co-workers the amount of their obligations to respondent Cayanan. It
would be too much of a coincidence to say that petitioner and his co-workers are
all mere tourists who allowed a certain Victor Lim to deduct from their salaries the
amount of their obligations to respondent Cayanan. What is evident here is that
there is an internal arrangement between respondent Cayanan and Victor Lim
brought about by the fact that the former deployed these workers to serve the
latter. As correctly pointed out by the POEA, there must be a "previous
arrangement" between private respondents and Victor Lim.
Significantly, from these pieces of evidence respondent NLRC could already see
the falsity in private respondents' "total strangers" theory. How could there be an
arrangement between two persons who do not know each other? Note how
respondent NLRC conveniently closed its eye to the name of Victor Lim, as
mentioned in theagreements, when it ruled that Victor Lim and Step-Up Agency
are indeed " total strangers" to private respondents. We sustain the findings of
the POEA, being more convincing and supported by substantial evidence, thus:
"[C]omplainant applied at the office of respondent agency and was
able to seek employment in Singapore through Engineer Jose
Cayanan, owner of respondent agency. Complainant's allegations are
supported by the Annexes he attached to his Reply (Annexes "'A" to
"H"). These documents readily show that it was not only complainant
who was recruited by respondent agency through Engr. Cayanan and
as agreed upon, the expenses in going to Singapore shall be
advanced by respondents. Thus their loans payable to Engr.
Cayanan and charged against their salaries. The checks
representing the salaries of the complainant and his co-workers
show that they are drawn from the account of Lim Chang Khoo
and/or Jose Gayanan. From the foregoing, it is properly noted
that complainant's salaries were taken from the funds of
respondents which means that the latter had a hand or
participated in his recruitment and deployment.

We cannot give credence to respondents' contentions that

complainant is a total stranger to them and that MIN Fee Fishery
Co. Ltd. is not its principal, neither do we believe that
respondents do not know Mr. Victor Lim who met complainant in
Singapore. Annex "B" in respondents' position paper belies
respondents' contentions. How could respondents write to a
certain Step Up Employment Agency in Singapore,
complainant's employer, when the latter is not even mentioned
in his complaint? We wonder where respondents got the name
of this employer if the same is really not known to them.
It is very unlikely for complainant to proceed to Singapore as a
tourist without knowing anybody at the site and just to apply for
work. Had there not been previous arrangements with
respondents, it is not all possible for complainant to land on a
job in Singapore because he is only a tourist.
Respondents had to resort to this misrepresentation of allowing its
recruits to leave as tourist because it is a service contractor and it is
not authorized to deploy fishermen."24

Accordingly, we find it proper to reinstate the Decision dated January 5, 1994 of

the POEA subject to the modification that the amount of P16,000, the amount
which petitioner admitted to have been advanced by respondent JEAC for his
expenses in going to Singapore28 be deducted from the total amount to be
awarded to him which includes a) US$ 1,646.66 corresponding to his unpaid
salaries and b) attorney's fees. The award of attorney's fees amounting to ten
percent (10%) of the total award is justified under Article 111 (a) of the Labor
Code. The solidary liability of Travelers Insurance Corp., as surety of respondent
JEAC, is maintained.
WHEREFORE, the petition is hereby GRANTED and the respondent
NLRC's a) Decision dated July 28, 1994, andb) Resolution dated October 6,
1994 are SET ASIDE. The Decision of POEA Administrator Felicisimo O. Joson
in POEA Case No. (L) 92-07-939 is REINSTATED with the MODIFICATION that
the sum of P16,000.00 be deducted from the total amount to be awarded to
petitioner. 1wphi1.nt
Payment should be made in Philippine currency at the prevailing rate of
exchange at the time of payment.
SO ORDERED.

Private respondents further argue that they cannot be held liable by petitioner
because no employment contract between him and Step-Up Agency had been
approved by the POEA. They also claim that the absence of a Special Power of
Attorney and an Affidavit of Responsibility, as required under Sections 1 and 2,
Rule 1, Book III of the POEA Rules and Regulations 25 only proves that they did
not deploy petitioner to Singapore.
Their argument is far from persuasive. Surely, they cannot expect us to utilize
their non-compliance with the POEA Rules and Regulations as a basis in
absolving them. To do so would be tantamount to giving premium to acts done in
violation of established rules. At most, private respondents' act of deploying
petitioner to Singapore without complying with the POEA requirements only
made them susceptible to cancellation or suspension of license as provided by
Section 2, Rule I, Book VI of POEA Rules and Regulations:
SEC.2.Grounds for suspension/cancellation of license.
xxx
xxx
m. Deploying workers whose employment and travel documents were
not processed by the Administration;

Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 179242
February 23, 2011
AVELINA F. SAGUN, Petitioner,
vs.
SUNACE INTERNATIONAL MANAGEMENT SERVICES, INC., Respondent.
RESOLUTION
NACHURA, J.:
This is a Petition for Review on certiorari under Rule 45 of the Rules of Court,
seeking to reverse and set aside the Court of Appeals (CA) Decision 1 dated
March 23, 2007 and Resolution2 dated August 16, 2007 in CA-G.R. SP No.
89298.

But of course, such violations should be threshed out in a proper administrative

proceeding for suspension or cancellation of license.

The case arose from a complaint for alleged violation of Article 32 and Article
34(a) and (b) of the Labor Code, as amended, filed by petitioner Avelina F. Sagun
against respondent Sunace International Management Services, Inc. and the
latters surety, Country Bankers Insurance Corporation, before the Philippine
Overseas Employment Administration (POEA). The case was docketed as POEA
Case No. RV 00-03-0261.3

Meantime, we just uphold POEA's Decision holding private respondents and

Travelers Insurance Corporation jointly and severally liable to petitioner. Section
2 (e), Rule V, Book I of the Omnibus Rules lmplementing the Labor Code
requires a private employment agency to assume all responsibilities for the
implementation of the contract of employment of an overseas worker.26 This
provision is substantially reiterated in Section 1 (f) (3) of Rule II, Book II of the
POEA Rules and Regulations which provides:

Petitioner claimed that sometime in August 1998, she applied with respondent for
the position of caretaker in Taiwan. In consideration of her placement and
employment, petitioner allegedly paid P30,000.00 cash, P10,000.00 in the form
of a promissory note, and NT$60,000.00 through salary deduction, in violation of
the prohibition on excessive placement fees. She also claimed that respondent
promised to employ her as caretaker but, at the job site, she worked as a
domestic helper and, at the same time, in a poultry farm. 4

"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
xxx
f) a verified undertaking stating that the applicant:
xxx
(3) shall assume joint and solidary liability with the employer 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, however, denied petitioners allegations and maintained that it only

collected P20,840.00, the amount authorized by the POEA and for which the
corresponding official receipt was issued. It also stressed that it did not furnish or
publish any false notice or information or document in relation to recruitment or
employment as it was duly received, passed upon, and approved by the POEA. 5

n. Deploying workers workers or seafarers to vessels or principals not

accredited by the Administration;

With respect to private respondents' surety, its liability is founded on Section 4,

Rule II, Book II of the POEA Rules and Regulations. Cash and surety bonds are
required by the POEA from recruitment and employment companies precisely as
a means of ensuring prompt and effective recourse against such companies
when held liable for applicant's or worker's claims. The cash and surety bonds
shall answer for all valid and legal claims arising from violations of the conditions
for the grant and use of the license, and/or accreditations and contracts of
employment. The bonds shall likewise guarantee compliance with the provisions
of the Code and its implementing rules and regulations relating to recruitment
and placement, the POEA Rules and relevant issuances of the Department and
all liabilities which the POEA may impose.27

On December 27, 2001, POEA Administrator Rosalinda Dimapilis-Baldoz

dismissed6 the complaint for lack of merit. Specifically, the POEA Administrator
found that petitioner failed to establish facts showing a violation of Article 32,
since it was proven that the amount received by respondent as placement fee
was covered by an official receipt; or of Article 34(a) as it was not shown that
respondent charged excessive fees; and of Article 34(b) simply because
respondent processed petitioners papers as caretaker, the position she applied
and was hired for.
Aggrieved, petitioner filed a Motion for Reconsideration 7 with the Office of the
Secretary of Labor. The Secretary treated the motion as a Petition for Review. On
January 13, 2004, then Secretary of Labor Patricia A. Sto. Tomas partially
granted8 petitioners motion, the pertinent portion of which reads:
WHEREFORE, premises considered, the Motion for Reconsideration, herein
treated as a petition for review, is PARTIALLY GRANTED. The Order dated
December 27, 2001 of the POEA Administrator is partially MODIFIED, and

SUNACE International Management Services, Inc. is held liable for collection of

excessive placement fee in violation of Article 34 (a) of the Labor Code, as
amended. The penalty of suspension of its license for two (2) months, or in lieu
thereof, the penalty of fine in the amount of Twenty Thousand Pesos
(P20,000.00) is hereby imposed upon SUNACE. Further, SUNACE and its surety,
Country Bankers Insurance Corporation, are ordered to refund the petitioner the
amounts of Ten Thousand Pesos (P10,000.00) and NT$65,000.00, representing
the excessive placement fee exacted from her.
SO ORDERED.9
On appeal by respondent, the Office of the President (OP) affirmed 10 the Order of
the Secretary of Labor. In resolving the case for petitioner, the OP emphasized
the States policy on the full protection to labor, local and overseas, organized
and unorganized. It also held that it was impossible for respondent to have
extended a loan to petitioner since it was not in the business of lending money. It
likewise found it immaterial that no evidence was presented to show the
overcharging since the issuance of a receipt could not be expected.
Respondents motion for reconsideration was denied in an Order 11 dated March
21, 2005, which prompted respondent to elevate the matter to the CA via a
petition for review under Rule 43 of the Rules of Court.
On March 23, 2007, the CA decided in favor of respondent, disposing, as follows:
WHEREFORE, premises considered, the instant petition is GRANTED and the
decision of the Office of the President dated 07 January 2005 is REVERSED and
SET ASIDE for lack of sufficient evidence. The Order of the POEA Administrator
dismissing the complaint of respondent for violation of Article 34(a) and (b) of the
Labor Code is hereby AFFIRMED.
SO ORDERED.12
The appellate court reversed the rulings of the Secretary of Labor and the OP
mainly because their conclusions were based not on evidence but on
speculation, conjecture, possibilities, and probabilities.
Hence, this petition filed by petitioner, raising the sole issue of:
WHETHER THE COURT OF APPEALS ERRED IN GRANTING THE
RESPONDENTS PETITION FOR REVIEW REVERSING THE DECISION AND
ORDER [OF THE] OFFICE OF THE PRESIDENT.13
The petition is without merit.
Respondent was originally charged with violation of Article 32 and Article 34(a)
and (b) of the Labor Code, as amended. The pertinent provisions read:
ART. 32. Fees to be Paid by Workers. - Any person applying with a private fee
charging employment agency for employment assistance shall not be charged
any fee until he has obtained employment through its efforts or has actually
commenced employment. Such fee shall be always covered with the appropriate
receipt clearly showing the amount paid. The Secretary of Labor shall promulgate
a schedule of allowable fees.
ART. 34. Prohibited Practices. - It shall be unlawful for any individual, entity,
licensee, or holder of authority:
(a) To charge or accept, directly or indirectly, any amount greater than
that specified in the schedule of allowable fees prescribed by the
Secretary of Labor; or to make a worker pay any amount greater than
that actually received by him as a loan or advance;
(b) To furnish or publish any false notice or information or document
in relation to recruitment or employment.
The POEA, the Secretary of Labor, the OP, and the CA already absolved
respondent of liability under Articles 32 and 34(b). As no appeal was interposed
by petitioner when the Secretary of Labor freed respondent of said liabilities, the
only issue left for determination is whether respondent is liable for collection of
excess placement fee defined in Article 34(a) of the Labor Code, as amended.

Although initially, the POEA dismissed petitioners complaint for lack of merit, the
Secretary of Labor and the OP reached a different conclusion. On appeal to the
CA, the appellate court, however, reverted to the POEA conclusion. Following
this turn of events, we are constrained to look into the records of the case and
weigh anew the evidence presented by the parties.
We find and so hold that the POEA and the CA are correct in dismissing the
complaint for illegal exaction filed by petitioner against respondent.
In proceedings before administrative and quasi-judicial agencies, the quantum of
evidence required to establish a fact is substantial evidence, or that level of
relevant evidence which a reasonable mind might accept as adequate to justify a
conclusion.14
In this case, are the pieces of evidence presented by petitioner substantial to
show that respondent collected from her more than the allowable placement fee?
We answer in the negative.
To show the amount it collected as placement fee from petitioner, respondent
presented an acknowledgment receipt showing that petitioner paid and
respondent received P20,840.00. This notwithstanding, petitioner claimed that
she paid more than this amount. In support of her allegation, she presented a
photocopy of a promissory note she executed, and testified on the purported
deductions made by her foreign employer. In the promissory note, petitioner
promised to pay respondent the amount of P10,000.00 that she borrowed for
only two weeks.15 Petitioner also explained that her foreign employer deducted
from her salary a total amount of NT$60,000.00. She claimed that theP10,000.00
covered by the promissory note was never obtained as a loan but as part of the
placement fee collected by respondent. Moreover, she alleged that the salary
deductions made by her foreign employer still formed part of the placement fee
collected by respondent.
We are inclined to give more credence to respondents evidence, that is, the
acknowledgment receipt showing the amount paid by petitioner and received by
respondent. A receipt is a written and signed acknowledgment that money or
goods have been delivered.16 Although a receipt is not conclusive evidence, an
exhaustive review of the records of this case fails to disclose any other evidence
sufficient and strong enough to overturn the acknowledgment embodied in
respondents receipt as to the amount it actually received from petitioner. Having
failed to adduce sufficient rebuttal evidence, petitioner is bound by the contents
of the receipt issued by respondent. The subject receipt remains as the primary
or best evidence.171avvphi1
The promissory note presented by petitioner cannot be considered as adequate
evidence to show the excessive placement fee. It must be emphasized that a
promissory note is a solemn acknowledgment of a debt and a formal commitment
to repay it on the date and under the conditions agreed upon by the borrower and
the lender. A person who signs such an instrument is bound to honor it as a
legitimate obligation duly assumed by him through the signature he affixes
thereto as a token of his good faith.18 Moreover, as held by the CA, the fact that
respondent is not a lending company does not preclude it from extending a loan
to petitioner for her personal use. As for the deductions purportedly made by
petitioners foreign employer, we reiterate the findings of the CA that "there is no
single piece of document or receipt showing that deductions have in fact been
made, nor is there any proof that these deductions from the salary formed part of
the subject placement fee."19
At this point, we would like to emphasize the well-settled rule that the factual
findings of quasi-judicial agencies, like the POEA, which have acquired expertise
because their jurisdiction is confined to specific matters, are generally accorded
not only respect, but at times even finality if such findings are supported by
substantial evidence.20 While the Constitution is committed to the policy of social
justice and to the protection of the working class, it should not be presumed that
every dispute will automatically be decided in favor of labor.21
To be sure, mere general allegations of payment of excessive placement fees
cannot be given merit as the charge of illegal exaction is considered a grave
offense which could cause the suspension or cancellation of the agencys
license. They should be proven and substantiated by clear, credible, and
competent evidence.22
WHEREFORE, premises considered, the petition is DENIED for lack of merit.
The Court of Appeals Decision dated March 23, 2007 and Resolution dated
August 16, 2007 in CA-G.R. SP No. 89298 are AFFIRMED.
SO ORDERED.
ANTONIO EDUARDO B. NACHURA
Associate Justice

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. 152642
November 13, 2012
HON. PATRICIA A. STO.TOMAS, ROSALINDA BALDOZ and LUCITA
LAZO, Petitioners,
vs.
REY SALAC, WILLIE D. ESPIRITU, MARIO MONTENEGRO, DODGIE
BELONIO, LOLIT SALINEL and BUDDY BONNEVIE, Respondents.
x-----------------------x
G.R. No. 152710
HON. PATRICIA A. STO. TOMAS, in her capacity as Secretary of Department
of Labor and Employment (DOLE), HON. ROSALINDA D. BALDOZ, in her
capacity as Administrator, Philippine Overseas Employment Administration
(POEA), and the PHILIPPINE OVERSEAS EMPLOYMENT ADMINISTRATION
GOVERNING BOARD, Petitioners,
vs.
HON. JOSE G. PANEDA, in his capacity as the Presiding Judge of Branch
220, Quezon City, ASIAN RECRUITMENT COUNCIL PHILIPPINE CHAPTER,
INC. (ARCOPHIL), for itself and in behalf of its members: WORLDCARE
PHILIPPINES SERVIZO INTERNATIONALE, INC., STEADFAST
INTERNATIONAL RECRUITMENT CORP., VERDANT MANPOWER
MOBILIZATION CORP., BRENT OVERSEAS PERSONNEL, INC., ARL
MANPOWER SERVICES, INC., DAHLZEN INTERNATIONAL SERVICES, INC.,
INTERWORLD PLACEMENT CENTER, INC., LAKAS TAO CONTRACT
SERVICES LTD. CO., SSC MULTI-SERVICES, DMJ INTERNATIONAL, and
MIP INTERNATIONAL MANPOWER SERVICES, represented by its
proprietress, MARCELINA I. PAGSIBIGAN, Respondents.
x-----------------------x
G.R. No. 167590
REPUBLIC OF THE PHILIPPINES, represented by the HONORABLE
EXECUTIVE SECRETARY, the HONORABLE SECRETARY OF LABOR AND
EMPLOYMENT (DOLE), the PHILIPPINE OVERSEAS EMPLOYMENT
ADMINISTRATION (POEA), the OVERSEAS WORKERS WELFARE
ADMINISTRATION (OWWA), the LABOR ARBITERS OF THE NATIONAL
LABOR RELATIONS COMMISSION (NLRC), the HONORABLE SECRETARY
OF JUSTICE, the HONORABLE SECRETARY OF FOREIGN AFFAIRS and the
COMMISSION ON AUDIT (COA), Petitioners,
vs.
PHILIPPINE ASSOCIATION OF SERVICE EXPORTERS, INC. (P
ASEI), Respondent.
x-----------------------x
G.R. Nos. 182978-79
BECMEN SERVICE EXPORTER AND PROMOTION, INC., Petitioner,
vs.
SPOUSES SIMPLICIO AND MILA CUARESMA (for and in behalf of daughter,
Jasmin G. Cuaresma), WHITE FALCON SERVICES, INC., and JAIME ORTIZ
(President of White Falcon Services, Inc.), Respondents.
x-----------------------x
G.R. Nos. 184298-99
SPOUSES SIMPLICIO AND MILA CUARESMA (for and in behalf of deceased
daughter, Jasmin G. Cuaresma), Petitioners,
vs.
WHITE FALCON SERVICES, INC. and BECMEN SERVICES EXPORTER AND
PROMOTION, INC., Respondents.
DECISION

(Constitutionality of Sections 29 and 30, R.A. 8042)

Sections 29 and 30 of the Act1 commanded the Department of Labor and
Employment (DOLE) to begin deregulating within one year of its passage the
business of handling the recruitment and migration of overseas Filipino workers
and phase out within five years the regulatory functions of the Philippine
Overseas Employment Administration (POEA).
On January 8, 2002 respondents Rey Salac, Willie D. Espiritu, Mario
Montenegro, Dodgie Belonio, Lolit Salinel, and Buddy Bonnevie (Salac, et al.)
filed a petition for certiorari, prohibition and mandamus with application for
temporary restraining order (TRO) and preliminary injunction against petitioners,
the DOLE Secretary, the POEA Administrator, and the Technical Education and
Skills Development Authority (TESDA) Secretary-General before the Regional
Trial Court (RTC) of Quezon City, Branch 96. 2
Salac, et al. sought to: 1) nullify DOLE Department Order 10 (DOLE DO 10) and
POEA Memorandum Circular 15 (POEA MC 15); 2) prohibit the DOLE, POEA,
and TESDA from implementing the same and from further issuing rules and
regulations that would regulate the recruitment and placement of overseas
Filipino workers (OFWs); and 3) also enjoin them to comply with the policy of
deregulation mandated under Sections 29 and 30 of Republic Act 8042.
On March 20, 2002 the Quezon City RTC granted Salac, et al.s petition and
ordered the government agencies mentioned to deregulate the recruitment and
placement of OFWs.3 The RTC also annulled DOLE DO 10, POEA MC 15, and
all other orders, circulars and issuances that are inconsistent with the policy of
deregulation under R.A. 8042.
Prompted by the RTCs above actions, the government officials concerned filed
the present petition in G.R. 152642 seeking to annul the RTCs decision and
have the same enjoined pending action on the petition.
On April 17, 2002 the Philippine Association of Service Exporters, Inc. intervened
in the case before the Court, claiming that the RTC March 20, 2002 Decision
gravely affected them since it paralyzed the deployment abroad of OFWs and
performing artists. The Confederated Association of Licensed Entertainment
Agencies, Incorporated (CALEA) intervened for the same purpose. 4
On May 23, 2002 the Court5 issued a TRO in the case, enjoining the Quezon City
RTC, Branch 96, from enforcing its decision.
In a parallel case, on February 12, 2002 respondents Asian Recruitment Council
Philippine Chapter, Inc. and others (Arcophil, et al.) filed a petition for certiorari
and prohibition with application for TRO and preliminary injunction against the
DOLE Secretary, the POEA Administrator, and the TESDA DirectorGeneral,6 before the RTC of Quezon City, Branch 220, to enjoin the latter from
implementing the 2002 Rules and Regulations Governing the Recruitment and
Employment of Overseas Workers and to cease and desist from issuing other
orders, circulars, and policies that tend to regulate the recruitment and placement
of OFWs in violation of the policy of deregulation provided in Sections 29 and 30
of R.A. 8042.
On March 12, 2002 the Quezon City RTC rendered an Order, granting the
petition and enjoining the government agencies involved from exercising
regulatory functions over the recruitment and placement of OFWs. This prompted
the DOLE Secretary, the POEA Administrator, and the TESDA Director-General
to file the present action in G.R. 152710. As in G.R. 152642, the Court issued on
May 23, 2002 a TRO enjoining the Quezon City RTC, Branch 220 from enforcing
its decision.

ABAD, J.:
These consolidated cases pertain to the constitutionality of certain provisions of
Republic Act 8042, otherwise known as the Migrant Workers and Overseas
Filipinos Act of 1995.
The Facts and the Case

On December 4, 2008, however, the Republic informed 7 the Court that on April
10, 2007 former President Gloria Macapagal-Arroyo signed into law R.A.
94228 which expressly repealed Sections 29 and 30 of R.A. 8042 and adopted
the policy of close government regulation of the recruitment and deployment of
OFWs. R.A. 9422 pertinently provides:
xxxx

On June 7, 1995 Congress enacted Republic Act (R.A.) 8042 or the Migrant
Workers and Overseas Filipinos Act of 1995 that, for among other purposes, sets
the Governments policies on overseas employment and establishes a higher
standard of protection and promotion of the welfare of migrant workers, their
families, and overseas Filipinos in distress.

SEC. 1. Section 23, paragraph (b.1) of Republic Act No. 8042, otherwise known
as the "Migrant Workers and Overseas Filipinos Act of 1995" is hereby amended
to read as follows:

G.R. 152642 and G.R. 152710

(b.1) Philippine Overseas Employment Administration The Administration shall

regulate private sector participation in the recruitment and overseas placement of
workers by setting up a licensing and registration system. It shall also formulate

and implement, in coordination with appropriate entities concerned, when

necessary, a system for promoting and monitoring the overseas employment of
Filipino workers taking into consideration their welfare and the domestic
manpower requirements.

Finally, Section 9 of R.A. 8042 allowed the filing of criminal actions arising from
"illegal recruitment" before the RTC of the province or city where the offense was
committed or where the offended party actually resides at the time of the
commission of the offense.

In addition to its powers and functions, the administration shall inform migrant
workers not only of their rights as workers but also of their rights as human
beings, instruct and guide the workers how to assert their rights and provide the
available mechanism to redress violation of their rights.

The RTC of Manila declared Section 6 unconstitutional after hearing on the

ground that its definition of "illegal recruitment" is vague as it fails to distinguish
between licensed and non-licensed recruiters 11 and for that reason gives undue
advantage to the non-licensed recruiters in violation of the right to equal
protection of those that operate with government licenses or authorities.

In the recruitment and placement of workers to service the requirements for

trained and competent Filipino workers of foreign governments and their
instrumentalities, and such other employers as public interests may require, the
administration shall deploy only to countries where the Philippines has concluded
bilateral labor agreements or arrangements: Provided, That such countries shall
guarantee to protect the rights of Filipino migrant workers; and: Provided, further,
That such countries shall observe and/or comply with the international laws and
standards for migrant workers.
SEC. 2. Section 29 of the same law is hereby repealed.
SEC. 3. Section 30 of the same law is also hereby repealed.
xxxx
On August 20, 2009 respondents Salac, et al. told the Court in G.R. 152642 that
they agree9 with the Republics view that the repeal of Sections 29 and 30 of R.A.
8042 renders the issues they raised by their action moot and academic. The
Court has no reason to disagree. Consequently, the two cases, G.R. 152642 and
152710, should be dismissed for being moot and academic.
G.R. 167590
(Constitutionality of Sections 6, 7, and 9 of R.A. 8042)
On August 21, 1995 respondent Philippine Association of Service Exporters, Inc.
(PASEI) filed a petition for declaratory relief and prohibition with prayer for
issuance of TRO and writ of preliminary injunction before the RTC of Manila,
seeking to annul Sections 6, 7, and 9 of R.A. 8042 for being unconstitutional.
(PASEI also sought to annul a portion of Section 10 but the Court will take up this
point later together with a related case.)
Section 6 defines the crime of "illegal recruitment" and enumerates the acts
constituting the same. Section 7 provides the penalties for prohibited acts. Thus:
SEC. 6. Definition. For purposes of this Act, illegal recruitment shall mean any
act of canvassing, enlisting, contracting, transporting, utilizing, hiring, procuring
workers and includes referring, contract services, promising or advertising for
employment abroad, whether for profit or not, when undertaken by a non-license
or non-holder of authority contemplated under Article 13(f) of Presidential Decree
No. 442, as amended, otherwise known as the Labor Code of the Philippines:
Provided, That such non-license or non-holder, who, in any manner, offers or
promises for a fee employment abroad to two or more persons shall be deemed
so engaged. It shall likewise include the following acts, whether committed by
any person, whether a non-licensee, non-holder, licensee or holder of authority:
xxxx
SEC. 7. Penalties.
(a) Any person found guilty of illegal recruitment shall suffer the
penalty of imprisonment of not less than six (6) years and one (1) day
but not more than twelve (12) years and a fine not less than two
hundred thousand pesos (P200,000.00) nor more than five hundred
thousand pesos (P500,000.00).
(b) The penalty of life imprisonment and a fine of not less than five
hundred thousand pesos (P500,000.00) nor more than one million
pesos (P1,000,000.00) shall be imposed if illegal recruitment
constitutes economic sabotage as defined herein.
Provided, however, That the maximum penalty shall be imposed if the person
illegally recruited is less than eighteen (18) years of age or committed by a nonlicensee or non-holder of authority.10

But "illegal recruitment" as defined in Section 6 is clear and unambiguous and,

contrary to the RTCs finding, actually makes a distinction between licensed and
non-licensed recruiters. By its terms, persons who engage in "canvassing,
enlisting, contracting, transporting, utilizing, hiring, or procuring workers" without
the appropriate government license or authority are guilty of illegal recruitment
whether or not they commit the wrongful acts enumerated in that section. On the
other hand, recruiters who engage in the canvassing, enlisting, etc. of OFWs,
although with the appropriate government license or authority, are guilty of illegal
recruitment only if they commit any of the wrongful acts enumerated in Section 6.
The Manila RTC also declared Section 7 unconstitutional on the ground that its
sweeping application of the penalties failed to make any distinction as to the
seriousness of the act committed for the application of the penalty imposed on
such violation. As an example, said the trial court, the mere failure to render a
report under Section 6(h) or obstructing the inspection by the Labor Department
under Section 6(g) are penalized by imprisonment for six years and one day and
a minimum fine of P200,000.00 but which could unreasonably go even as high as
life imprisonment if committed by at least three persons.
Apparently, the Manila RTC did not agree that the law can impose such grave
penalties upon what it believed were specific acts that were not as condemnable
as the others in the lists. But, in fixing uniform penalties for each of the
enumerated acts under Section 6, Congress was within its prerogative to
determine what individual acts are equally reprehensible, consistent with the
State policy of according full protection to labor, and deserving of the same
penalties. It is not within the power of the Court to question the wisdom of this
kind of choice. Notably, this legislative policy has been further stressed in July
2010 with the enactment of R.A. 1002212 which increased even more the duration
of the penalties of imprisonment and the amounts of fine for the commission of
the acts listed under Section 7.
Obviously, in fixing such tough penalties, the law considered the unsettling fact
that OFWs must work outside the countrys borders and beyond its immediate
protection. The law must, therefore, make an effort to somehow protect them
from conscienceless individuals within its jurisdiction who, fueled by greed, are
willing to ship them out without clear assurance that their contracted principals
would treat such OFWs fairly and humanely.
As the Court held in People v. Ventura,13 the State under its police power "may
prescribe such regulations as in its judgment will secure or tend to secure the
general welfare of the people, to protect them against the consequence of
ignorance and incapacity as well as of deception and fraud." Police power is "that
inherent and plenary power of the State which enables it to prohibit all things
hurtful to the comfort, safety, and welfare of society." 14
The Manila RTC also invalidated Section 9 of R.A. 8042 on the ground that
allowing the offended parties to file the criminal case in their place of residence
would negate the general rule on venue of criminal cases which is the place
where the crime or any of its essential elements were committed. Venue, said the
RTC, is jurisdictional in penal laws and, allowing the filing of criminal actions at
the place of residence of the offended parties violates their right to due process.
Section 9 provides:
SEC. 9. Venue. A criminal action arising from illegal recruitment as defined
herein shall be filed with the Regional Trial Court of the province or city where the
offense was committed or where the offended party actually resides at the time of
the commission of the offense: Provided, That the court where the criminal action
is first filed shall acquire jurisdiction to the exclusion of other courts: Provided,
however, That the aforestated provisions shall also apply to those criminal
actions that have already been filed in court at the time of the effectivity of this
Act.
But there is nothing arbitrary or unconstitutional in Congress fixing an alternative
venue for violations of Section 6 of R.A. 8042 that differs from the venue
established by the Rules on Criminal Procedure. Indeed, Section 15(a), Rule 110
of the latter Rules allows exceptions provided by laws. Thus:

SEC. 15. Place where action is to be instituted. (a) Subject to existing laws, the
criminal action shall be instituted and tried in the court of the municipality or
territory where the offense was committed or where any of its essential
ingredients occurred. (Emphasis supplied)
xxxx
Section 9 of R.A. 8042, as an exception to the rule on venue of criminal actions
is, consistent with that laws declared policy15 of providing a criminal justice
system that protects and serves the best interests of the victims of illegal
recruitment.
G.R. 167590, G.R. 182978-79,16 and G.R. 184298-9917
(Constitutionality of Section 10, last sentence of 2nd paragraph)
G.R. 182978-79 and G.R. 184298-99 are consolidated cases. Respondent
spouses Simplicio and Mila Cuaresma (the Cuaresmas) filed a claim for death
and insurance benefits and damages against petitioners Becmen Service
Exporter and Promotion, Inc. (Becmen) and White Falcon Services, Inc. (White
Falcon) for the death of their daughter Jasmin Cuaresma while working as staff
nurse in Riyadh, Saudi Arabia.
The Labor Arbiter (LA) dismissed the claim on the ground that the Cuaresmas
had already received insurance benefits arising from their daughters death from
the Overseas Workers Welfare Administration (OWWA). The LA also gave due
credence to the findings of the Saudi Arabian authorities that Jasmin committed
suicide.
On appeal, however, the National Labor Relations Commission (NLRC) found
Becmen and White Falcon jointly and severally liable for Jasmins death and
ordered them to pay the Cuaresmas the amount of US$113,000.00 as actual
damages. The NLRC relied on the Cabanatuan City Health Offices autopsy
finding that Jasmin died of criminal violence and rape.
Becmen and White Falcon appealed the NLRC Decision to the Court of Appeals
(CA).18 On June 28, 2006 the CA held Becmen and White Falcon jointly and
severally liable with their Saudi Arabian employer for actual damages, with
Becmen having a right of reimbursement from White Falcon. Becmen and White
Falcon appealed the CA Decision to this Court.
On April 7, 2009 the Court found Jasmins death not work-related or workconnected since her rape and death did not occur while she was on duty at the
hospital or doing acts incidental to her employment. The Court deleted the award
of actual damages but ruled that Becmens corporate directors and officers are
solidarily liable with their company for its failure to investigate the true nature of
her death. Becmen and White Falcon abandoned their legal, moral, and social
duty to assist the Cuaresmas in obtaining justice for their daughter.
Consequently, the Court held the foreign employer Rajab and Silsilah, White
Falcon, Becmen, and the latters corporate directors and officers jointly and
severally liable to the Cuaresmas for: 1) P2,500,000.00 as moral damages; 2)
P2,500,000.00 as exemplary damages; 3) attorneys fees of 10% of the total
monetary award; and 4) cost of suit.
On July 16, 2009 the corporate directors and officers of Becmen, namely,
Eufrocina Gumabay, Elvira Taguiam, Lourdes Bonifacio and Eddie De Guzman
(Gumabay, et al.) filed a motion for leave to Intervene. They questioned the
constitutionality of the last sentence of the second paragraph of Section 10, R.A.
8042 which holds the corporate directors, officers and partners jointly and
solidarily liable with their company for money claims filed by OFWs against their
employers and the recruitment firms. On September 9, 2009 the Court allowed
the intervention and admitted Gumabay, et al.s motion for reconsideration.
The key issue that Gumabay, et al. present is whether or not the 2nd paragraph
of Section 10, R.A. 8042, which holds the corporate directors, officers, and
partners of recruitment and placement agencies jointly and solidarily liable for
money claims and damages that may be adjudged against the latter agencies, is
unconstitutional.
In G.R. 167590 (the PASEI case), the Quezon City RTC held as unconstitutional
the last sentence of the 2nd paragraph of Section 10 of R.A. 8042. It pointed out
that, absent sufficient proof that the corporate officers and directors of the erring
company had knowledge of and allowed the illegal recruitment, making them
automatically liable would violate their right to due process of law.
The pertinent portion of Section 10 provides:

SEC. 10. Money Claims. x x x

The liability of the principal/employer and the recruitment/placement agency for
any and all claims under this section shall be joint and several. This provision
shall be incorporated in the contract for overseas employment and shall be a
condition precedent for its approval. The performance bond to be filed by the
recruitment/placement agency, as provided by law, shall be answerable for all
money claims or damages that may be awarded to the workers. If the
recruitment/placement agency is a juridical being, the corporate officers and
directors and partners as the case may be, shall themselves be jointly and
solidarily liable with the corporation or partnership for the aforesaid claims and
damages. (Emphasis supplied)
But the Court has already held, pending adjudication of this case, that the liability
of corporate directors and officers is not automatic. To make them jointly and
solidarily liable with their company, there must be a finding that they were remiss
in directing the affairs of that company, such as sponsoring or tolerating the
conduct of illegal activities.19 In the case of Becmen and White Falcon, 20 while
there is evidence that these companies were at fault in not investigating the
cause of Jasmins death, there is no mention of any evidence in the case against
them that intervenors Gumabay, et al., Becmens corporate officers and directors,
were personally involved in their companys particular actions or omissions in
Jasmins case.
As a final note, R.A. 8042 is a police power measure intended to regulate the
recruitment and deployment of OFWs. It aims to curb, if not eliminate, the
injustices and abuses suffered by numerous OFWs seeking to work abroad. The
rule is settled that every statute has in its favor the presumption of
constitutionality. The Court cannot inquire into the wisdom or expediency of the
laws enacted by the Legislative Department. Hence, in the absence of a clear
and unmistakable case that the statute is unconstitutional, the Court must uphold
its validity.
WHEREFORE, in G.R. 152642 and 152710, the Court DISMISSES the petitions
for having become moot and academic.1wphi1
In G.R. 167590, the Court SETS ASIDE the Decision of the Regional Trial Court
ofManila dated December 8, 2004 and DECLARES Sections 6, 7, and 9 of
Republic Act 8042 valid and constitutional.
In G.R. 182978-79 and G.R. 184298-99 as well as in G.R. 167590, the Court
HOLDS the last sentence of the second paragraph of Section 10 of Republic Act
8042 valid and constitutional. The Court, however, RECONSIDERS and SETS
ASIDE the portion of its Decision in G.R. 182978-79 and G.R. 184298-99 that
held intervenors Eufrocina Gumabay, Elvira Taguiam, Lourdes Bonifacio, and
Eddie De Guzman jointly and solidarily liable with respondent Becmen Services
Exporter and Promotion, Inc. to spouses Simplicia and Mila Cuaresma for lack of
a finding in those cases that such intervenors had a part in the act or omission
imputed to their corporation.
SO ORDERED.
ROBERTO A. ABAD
Associate Justice

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. 81510 March 14, 1990
HORTENCIA SALAZAR, petitioner,
vs.
HON. TOMAS D. ACHACOSO, in his capacity as Administrator of the
Philippine Overseas Employment Administration, and FERDIE
MARQUEZ, respondents.
Gutierrez & Alo Law Offices for petitioner.

SARMIENTO, J.:

This concerns the validity of the power of the Secretary of Labor to issue
warrants of arrest and seizure under Article 38 of the Labor Code, prohibiting
illegal recruitment.
The facts are as follows:
xxx xxx xxx
1. On October 21, 1987, Rosalie Tesoro of 177 Tupaz Street, Leveriza, Pasay
City, in a sworn statement filed with the Philippine Overseas Employment
Administration (POEA for brevity) charged petitioner Hortencia Salazar, viz:
04. T: Ano ba ang dahilan at ikaw ngayon ay narito at
nagbibigay ng salaysay.
S: Upang ireklamo sa dahilan ang aking PECC Card ay
ayaw ibigay sa akin ng dati kong manager. Horty
Salazar 615 R.O. Santos, Mandaluyong, Mla.

Done in the City of Manila, this 3th

day of November, 1987.
5. On January 26, 1988 POEA Director on Licensing and Regulation Atty. Estelita
B. Espiritu issued an office order designating respondents Atty. Marquez, Atty.
Jovencio Abara and Atty. Ernesto Vistro as members of a team tasked to
implement Closure and Seizure Order No. 1205. Doing so, the group assisted by
Mandaluyong policemen and mediamen Lito Castillo of the People's Journal and
Ernie Baluyot of News Today proceeded to the residence of the petitioner at 615
R.O. Santos St., Mandaluyong, Metro Manila. There it was found that petitioner
was operating Hannalie Dance Studio. Before entering the place, the team
served said Closure and Seizure order on a certain Mrs. Flora Salazar who
voluntarily allowed them entry into the premises. Mrs. Flora Salazar informed the
team that Hannalie Dance Studio was accredited with Moreman Development
(Phil.). However, when required to show credentials, she was unable to produce
any. Inside the studio, the team chanced upon twelve talent performers
practicing a dance number and saw about twenty more waiting outside, The team
confiscated assorted costumes which were duly receipted for by Mrs. Asuncion
Maguelan and witnessed by Mrs. Flora Salazar.

05. T: Kailan at saan naganap and ginawang panloloko sa

iyo ng tao/mga taong inireklamo mo?

6. On January 28, 1988, petitioner filed with POEA the following letter:

S. Sa bahay ni Horty Salazar.

Gentlemen:

06. T: Paano naman naganap ang pangyayari?

On behalf of Ms. Horty Salazar of 615 R.O. Santos, Mandaluyong, Metro Manila,
we respectfully request that the personal properties seized at her residence last
January 26, 1988 be immediately returned on the ground that said seizure was
contrary to law and against the will of the owner thereof. Among our reasons are
the following:

S. Pagkagaling ko sa Japan ipinatawag niya ako. Kinuha

ang PECC Card ko at sinabing hahanapan ako ng
booking sa Japan. Mag 9 month's na ako sa Phils. ay
hindi pa niya ako napa-alis. So lumipat ako ng ibang
company pero ayaw niyang ibigay and PECC Card
ko.
2. On November 3, 1987, public respondent Atty. Ferdinand Marquez to whom
said complaint was assigned, sent to the petitioner the following telegram:

YOU ARE HEREBY DIRECTED TO APPEAR BEFORE FERDIE MARQUEZ

POEA ANTI ILLEGAL RECRUITMENT UNIT 6TH FLR. POEA BLDG. EDSA
COR. ORTIGAS AVE. MANDALUYONG MM ON NOVEMBER 6, 1987 AT 10 AM
RE CASE FILED AGAINST YOU. FAIL NOT UNDER PENALTY OF LAW.
4. On the same day, having ascertained that the petitioner had no license to
operate a recruitment agency, public respondent Administrator Tomas D.
Achacoso issued his challenged CLOSURE AND SEIZURE ORDER NO. 1205
which reads:
HORTY SALAZAR
No. 615 R.O. Santos St.
Mandaluyong, Metro Manila

1. Our client has not been given any prior notice or hearing, hence the Closure
and Seizure Order No. 1205 dated November 3, 1987 violates "due process of
law" guaranteed under Sec. 1, Art. III, of the Philippine Constitution.
2. Your acts also violate Sec. 2, Art. III of the Philippine Constitution which
guarantees right of the people "to be secure in their persons, houses, papers,
and effects against unreasonable searches and seizures of whatever nature and
for any purpose."
3. The premises invaded by your Mr. Ferdi Marquez and five (5) others (including
2 policemen) are the private residence of the Salazar family, and the entry,
search as well as the seizure of the personal properties belonging to our client
were without her consent and were done with unreasonable force and
intimidation, together with grave abuse of the color of authority, and constitute
robbery and violation of domicile under Arts. 293 and 128 of the Revised Penal
Code.
Unless said personal properties worth around TEN THOUSAND PESOS
(P10,000.00) in all (and which were already due for shipment to Japan) are
returned within twenty-four (24) hours from your receipt hereof, we shall feel free
to take all legal action, civil and criminal, to protect our client's interests.
We trust that you will give due attention to these important matters.

Pursuant to the powers vested in me under Presidential Decree No. 1920 and
Executive Order No. 1022, I hereby order the CLOSURE of your recruitment
agency being operated at No. 615 R.O. Santos St., Mandaluyong, Metro Manila
and the seizure of the documents and paraphernalia being used or intended to
be used as the means of committing illegal recruitment, it having verified that you
have
(1) No valid license or authority from the Department of Labor and Employment
to recruit and deploy workers for overseas employment;
(2) Committed/are committing acts prohibited under Article 34 of the New Labor
Code in relation to Article 38 of the same code.
This ORDER is without prejudice to your criminal prosecution under existing
laws.

7. On February 2, 1988, before POEA could answer the letter, petitioner filed the
instant petition; on even date, POEA filed a criminal complaint against her with
the Pasig Provincial Fiscal, docketed as IS-88-836. 1
On February 2, 1988, the petitioner filed this suit for prohibition. Although the acts
sought to be barred are alreadyfait accompli, thereby making prohibition too late,
we consider the petition as one for certiorari in view of the grave public interest
involved.
The Court finds that a lone issue confronts it: May the Philippine Overseas
Employment Administration (or the Secretary of Labor) validly issue warrants of
search and seizure (or arrest) under Article 38 of the Labor Code? It is also an
issue squarely raised by the petitioner for the Court's resolution.
Under the new Constitution, which states:

. . . no search warrant or warrant of arrest shall issue

except upon probable cause to be determined personally
by the judge after examination under oath or affirmation of
the complainant and the witnesses he may produce, and
particularly describing the place to be searched and the
persons or things to be seized. 2
it is only a judge who may issue warrants of search and arrest. 3 In one case, it
was declared that mayors may not exercise this power:
xxx xxx xxx
But it must be emphasized here and now that what has
just been described is the state of the law as it was in
September, 1985. The law has since been altered. No
longer does the mayor have at this time the power to
conduct preliminary investigations, much less issue
orders of arrest. Section 143 of the Local Government
Code, conferring this power on the mayor has been
abrogated, rendered functus officio by the 1987
Constitution which took effect on February 2, 1987, the
date of its ratification by the Filipino people. Section 2,
Article III of the 1987 Constitution pertinently provides that
"no search warrant or warrant of arrest shall issue except
upon probable cause to be determined personally by the
judge after examination under oath or affirmation of the
complainant and the witnesses he may produce, and
particularly describing the place to be searched and the
person or things to be seized." The constitutional
proscription has thereby been manifested that
thenceforth, the function of determining probable cause
and issuing, on the basis thereof, warrants of arrest or
search warrants, may be validly exercised only by judges,
this being evidenced by the elimination in the present
Constitution of the phrase, "such other responsible officer
as may be authorized by law" found in the counterpart
provision of said 1973 Constitution, who, aside from
judges, might conduct preliminary investigations and
issue warrants of arrest or search warrants. 4
Neither may it be done by a mere prosecuting body:
We agree that the Presidential Anti-Dollar Salting Task
Force exercises, or was meant to exercise, prosecutorial
powers, and on that ground, it cannot be said to be a
neutral and detached "judge" to determine the existence
of probable cause for purposes of arrest or search. Unlike
a magistrate, a prosecutor is naturally interested in the
success of his case. Although his office "is to see that
justice is done and not necessarily to secure the
conviction of the person accused," he stands, invariably,
as the accused's adversary and his accuser. To permit
him to issue search warrants and indeed, warrants of
arrest, is to make him both judge and jury in his own right,
when he is neither. That makes, to our mind and to that
extent, Presidential Decree No. 1936 as amended by
Presidential Decree No. 2002, unconstitutional. 5
Section 38, paragraph (c), of the Labor Code, as now written, was entered as an
amendment by Presidential Decrees Nos. 1920 and 2018 of the late President
Ferdinand Marcos, to Presidential Decree No. 1693, in the exercise of his
legislative powers under Amendment No. 6 of the 1973 Constitution. Under the
latter, the then Minister of Labor merely exercised recommendatory powers:
(c) The Minister of Labor or his duly authorized
representative shall have the power to recommend the
arrest and detention of any person engaged in illegal
recruitment. 6
On May 1, 1984, Mr. Marcos promulgated Presidential Decree No. 1920, with the
avowed purpose of giving more teeth to the campaign against illegal recruitment.
The Decree gave the Minister of Labor arrest and closure powers:

(b) The Minister of Labor and Employment shall have the

power to cause the arrest and detention of such nonlicensee or non-holder of authority if after proper
investigation it is determined that his activities constitute a
danger to national security and public order or will lead to
further exploitation of job-seekers. The Minister shall
order the closure of companies, establishment and
entities found to be engaged in the recruitment of workers
for overseas employment, without having been licensed
or authorized to do so. 7
On January 26, 1986, he, Mr. Marcos, promulgated Presidential Decree No.
2018, giving the Labor Minister search and seizure powers as well:
(c) The Minister of Labor and Employment or his duly
authorized representatives shall have the power to cause
the arrest and detention of such non-licensee or nonholder of authority if after investigation it is determined
that his activities constitute a danger to national security
and public order or will lead to further exploitation of jobseekers. The Minister shall order the search of the office
or premises and seizure of documents, paraphernalia,
properties and other implements used in illegal
recruitment activities and the closure of companies,
establishment and entities found to be engaged in the
recruitment of workers for overseas employment, without
having been licensed or authorized to do so. 8
The above has now been etched as Article 38, paragraph (c) of the Labor Code.
The decrees in question, it is well to note, stand as the dying vestiges of
authoritarian rule in its twilight moments.
We reiterate that the Secretary of Labor, not being a judge, may no longer issue
search or arrest warrants. Hence, the authorities must go through the judicial
process. To that extent, we declare Article 38, paragraph (c), of the Labor Code,
unconstitutional and of no force and effect.
The Solicitor General's reliance on the case of Morano v. Vivo 9 is not welltaken. Vivo involved a deportation case, governed by Section 69 of the defunct
Revised Administrative Code and by Section 37 of the Immigration Law. We have
ruled that in deportation cases, an arrest (of an undesirable alien) ordered by the
President or his duly authorized representatives, in order to carry out a final
decision of deportation is valid. 10 It is valid, however, because of the recognized
supremacy of the Executive in matters involving foreign affairs. We have held: 11
xxx xxx xxx
The State has the inherent power to deport undesirable
aliens (Chuoco Tiaco vs. Forbes, 228 U.S. 549, 57 L. Ed.
960, 40 Phil. 1122, 1125). That power may be exercised
by the Chief Executive "when he deems such action
necessary for the peace and domestic tranquility of the
nation." Justice Johnson's opinion is that when the Chief
Executive finds that there are aliens whose continued
presence in the country is injurious to the public interest,
"he may, even in the absence of express law, deport
them". (Forbes vs. Chuoco Tiaco and Crossfield, 16 Phil.
534, 568, 569; In re McCulloch Dick, 38 Phil. 41).
The right of a country to expel or deport aliens because
their continued presence is detrimental to public welfare is
absolute and unqualified (Tiu Chun Hai and Go Tam vs.
Commissioner of Immigration and the Director of NBI, 104
Phil. 949, 956). 12
The power of the President to order the arrest of aliens for deportation is,
obviously, exceptional. It (the power to order arrests) can not be made to extend
to other cases, like the one at bar. Under the Constitution, it is the sole domain of
the courts.
Moreover, the search and seizure order in question, assuming, ex gratia
argumenti, that it was validly issued, is clearly in the nature of a general warrant:

Pursuant to the powers vested in me under Presidential

Decree No. 1920 and Executive Order No. 1022, I hereby
order the CLOSURE of your recruitment agency being
operated at No. 615 R.O. Santos St., Mandaluyong,
Metro Manila and the seizure of the documents and
paraphernalia being used or intended to be used as the
means of committing illegal recruitment, it having verified
that you have

4) TOYOTA-TAMARAW, colored
white with Plate No. PBP 665; and
5) TOYOTA Hi-Lux, pick-up truck
with Plate No. NGV 472 with
marking "Bagong Silang."
In Stanford v. State of Texas, the search warrant which
authorized the search for "books, records, pamphlets,
cards, receipts, lists, memoranda, pictures, recordings
and other written instruments concerning the Communist
Parties of Texas, and the operations of the Community
Party in Texas," was declared void by the U.S. Supreme
Court for being too general. In like manner, directions to
"seize any evidence in connection with the violation of
SDC 13-3703 or otherwise" have been held too general,
and that portion of a search warrant which authorized the
seizure of any "paraphernalia which could be used to
violate Sec. 54-197 of the Connecticut General Statutes
(the statute dealing with the crime of conspiracy)" was
held to be a general warrant, and therefore invalid. The
description of the articles sought to be seized under the
search warrants in question cannot be characterized
differently.

(1) No valid license or authority

from the Department of Labor and
Employment to recruit and deploy
workers for overseas employment;
(2) Committed/are committing acts
prohibited under Article 34 of the
New Labor Code in relation to
Article 38 of the same code.
This ORDER is without prejudice to your criminal
prosecution under existing laws. 13
We have held that a warrant must identify clearly the things to be seized,
otherwise, it is null and void, thus:

In the Stanford case, the U.S. Supreme court calls to

mind a notable chapter in English history; the era of
disaccord between the Tudor Government and the
English Press, when "Officers of the Crown were given
roving commissions to search where they pleased in
order to suppress and destroy the literature of dissent
both Catholic and Puritan." Reference herein to such
historical episode would not be relevant for it is not the
policy of our government to suppress any newspaper or
publication that speaks with "the voice of non-conformity"
but poses no clear and imminent danger to state
security. 14

xxx xxx xxx

Another factor which makes the search warrants under
consideration constitutionally objectionable is that they
are in the nature of general warrants. The search
warrants describe the articles sought to be seized in this
wise:
1) All printing equipment,
paraphernalia, paper, ink, photo
equipment, typewriters, cabinets,
tables, communications/ recording
equipment, tape recorders,
dictaphone and the like used
and/or connected in the printing of
the "WE FORUM" newspaper and
any and all
documents/communications,
letters and facsimile of prints
related to the "WE FORUM"
newspaper.
2) Subversive documents,
pamphlets, leaflets, books, and
other publications to promote the
objectives and purposes of the
subversive organizations known
as Movement for Free Philippines,
Light-a-Fire Movement and April 6
Movement; and

For the guidance of the bench and the bar, we reaffirm the following principles:
1. Under Article III, Section 2, of the l987 Constitution, it is
only judges, and no other, who may issue warrants of
arrest and search:
2. The exception is in cases of deportation of illegal and
undesirable aliens, whom the President or the
Commissioner of Immigration may order arrested,
following a final order of deportation, for the purpose of
deportation.
WHEREFORE, the petition is GRANTED. Article 38, paragraph (c) of the Labor
Code is declared UNCONSTITUTIONAL and null and void. The respondents are
ORDERED to return all materials seized as a result of the implementation of
Search and Seizure Order No. 1205.
No costs.

3) Motor vehicles used in the

distribution/circulation of the "WE
FORUM" and other subversive
materials and propaganda, more
particularly,
1) Toyota-Corolla, colored yellow
with Plate No. NKA 892;
2) DATSUN, pick-up colored white
with Plate No. NKV 969;
3) A delivery truck with Plate No.
NBS 542;

SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 160444
August 29, 2012
WALL EM MARITIME SERVICES, INC., Petitioner,
vs.
ERNESTO C. TANAWAN, Respondent.
DECISION
BERSAMIN, J.:
A seafarer, to be entitled to disability benefits, must prove that the injury was
suffered during the term of the employment, and must submit himself to the
company-designated physician for evaluation within three days from his
repatriation.

10

The Case
For review on certiorari is the decision promulgated on November 29,
2002,1 whereby the Court of Appeals (CA) annulled the decision rendered on
June 13, 2001 by the National Labor Relations Commission (NLRC) and
reinstated the decision dated January 21, 2000 of the Labor Arbiter.

1) ORDERING respondents to pay the complainant,

jointly and severally, in Philippine Currency, based on the
rate of exchange prevailing at the time of actual payment,
the following amounts representing the complainants
disability benefits:

Antecedents
On May 12, 1997, the petitioner, then acting as local agent of Scandic Ship
Management, Ltd., engaged Ernesto C. Tanawan as dozer driver assigned to the
vessel, M/V Eastern Falcon, for a period of 12 months. Under the employment
contract, Tanawan was entitled to a basic salary of US$355.00/month, overtime
pay of US$2.13/hour, and vacation leave pay of US$35.00/month. 2

a) Foot injury US$5,225.00

b) Eye injury US$20,900.00
2) AND ORDERING, FURTHERMORE, respondents to
pay the complainant attorneys fees equivalent to ten
percent (10%) of the total monetary awards granted to the
aforesaid employee under this Decision.

On November 22, 1997, while Tanawan was assisting two co-workers in lifting a
steel plate aboard the vessel, a corner of the steel plate touched the floor of the
deck, causing the sling to slide and the steel plate to hit his left foot. He was
brought to a hospital in Malaysia where his left foot was placed in a cast. His xray examination showed he had suffered multiple left toes fracture (i.e., left 2nd
proximal phalanx and 3rd to 5th metatarsal).3

All other claims are DISMISSED for lack of merit.

SO ORDERED.18

Following Tanawans repatriation on November 28, 1997, his designated

physician, Dr. Robert D. Lim, conducted the evaluation and treatment of his foot
injury at Metropolitan Hospital, the designated hospital. Tanawan was initially
evaluated on December 1, 1997 and was referred to Metropolitan Hospitals
orthopedic surgeon who reviewed the x-rays and advised Tanawan to continue
with his immobilization to allow good fracture healing.4
On December 22, 1997, Tanawans cast was removed, and he was advised to
start motion exercises and partial weight bearing.5 He underwent physical
therapy for two months at the St. Camillus Hospital.6 On March 26, 1998, the
orthopedic surgeon suggested pinning and bone grafting of the 5th metatarsal
bone after noticing that there was no callous formation there. 7
On April 7, 1998, Tanawan underwent bone grafting and was discharged on the
next day.8 On May 21, 1998, conformably with the orthopedic surgeons findings,
Dr. Lim reported that Tanawan was already asymptomatic and pronounced him fit
to work.9 It is noted that from November 30, 1997 until April 1998, Tanawan was
paid sickness allowances equivalent to his monthly salary.10
On March 31, 1988, while Tanawan was still under treatment by Dr. Lim, he also
sought the services of Dr. Rimando Saguin to assess the extent of his disability
due to the same injury. Dr. Saguin categorized the foot injury as Grade 12 based
on the Philippine Overseas Employment Administration (POEA) Schedule of
Disability.11
On August 25, 1998, due to the worsening condition of his right eye, Tanawan
also went to the clinic of Dr. Hernando D. Bunuan for a disability evaluation, not
of his foot injury but of an eye injury that he had supposedly sustained while on
board the vessel.12
Tanawans position paper narrated how he had sustained the eye injury, stating
that on October 5, 1997, the Chief Engineer directed him to spray-paint the
loader of the vessel; that as he was opening a can of thinner, some of the thinner
accidentally splashed into his right eye; that he was rushed to the Office of the
Chief Mate for emergency treatment; and that the ship doctor examined him five
days later, and told him that there was nothing to worry about and that he could
continue working.13
Dr. Bunuan referred him to Dr. Tim Jimenez, an ophthalmologist, who diagnosed
him to be suffering from a retinal detachment with vitreous hemorrhage on the
right eye for which surgical repair was needed. Dr. Bunuan categorized his
disability as Grade 7.14
On November 26, 1998, Tanawan filed in the Arbitration Branch of the NLRC a
complaint for disability benefits for the foot and eye injuries, sickness allowance,
damages and attorneys fees against the petitioner and its foreign principal.
In its answer, the petitioner denied Tanawans claim for disability benefits for his
foot injury, averring that he was already fit to work based on Dr. Lims
certification;15 that he did not sustain the alleged eye injury while on board the
vessel because no such injury was reported; 16 that the claim for sickness
allowance was already paid when he underwent treatment. 17
Ruling of the Labor Arbiter
On January 21, 2000, the Labor Arbiter ruled in Tanawans favor, viz:
WHEREFORE, premises considered, judgment is hereby
rendered:

The Labor Arbiter found sufficient evidence to support Tanawans claim for
disability benefits for the foot and eye injuries, according credence to the medical
certificate issued by Dr. Saguin classifying Tanawans foot injury as Grade 12;
Tanawans declaration which was not contradicted by the petitionerthat some
paint thinner splashed into his right eye on October 5, 1997; and the letter of Dr.
Bunuan to the effect that the disability due to the eye injury was classified as
Grade 7.
The Labor Arbiter discounted Dr. Lims certification declaring Tanawan fit to work
on the ground that Dr. Lim had no personal knowledge of such fact because it
had been the orthopedic surgeon who had made the finding; hence, the
certification was hearsay evidence, not deserving of any probative weight. The
Labor Arbiter denied Tanawans claim for sickness allowance in light of the
showing that such claim had already been paid. 19
The petitioner appealed to the NLRC. In its appeal, the petitioner contended that
Dr. Saguins certification was issued on March 31, 1998 while Tanawan was still
under treatment by Dr. Lim;20 that the disability grading by Dr. Saguin had no
factual or legal basis considering that Tanawan was later declared fit to work on
May 21, 1998 by the company-designated physician, the only physician
authorized to determine whether a seafarer was fit to work or was disabled; 21 that
the medical report of the orthopedic surgeon who actually treated Tanawan
reinforced Dr. Lims fit-to-work certification, because the report stated that
Tanawan was already asymptomatic and could go back to work anytime; 22 that
Tanawan failed to discharge his burden of proof to establish that he had
sustained the injury while on board the vessel; that Tanawan did not submit
himself to a post-employment medical examination for the eye injury and did not
mention such injury while he underwent treatment for his foot injury, an indication
that the eye injury was only an afterthought; 23 that there was also no evidence
that the alleged eye injury was directly caused by the thinner, the certification of
Dr. Bunuan not having stated its cause; 24 and that a certification from an eye
specialist, a certain Dr. Willie Angbue-Te, showed the contrary, because the
certification attested that the splashing of some thinner on the eye would not in
any way lead to vitreous hemorrhage with retinal detachment, which was usually
caused by trauma, pre-existing lattice degeneration, diabetic retinopathy, high
myopia, retinal tear or retinal holes.25
Ruling of the NLRC
On June 13, 2001, the NLRC reversed the Labor Arbiters decision and
dismissed Tanawans complaint for lack of merit. 26
After the NLRC denied his motion for reconsideration,27 Tanawan commenced a
special civil action for certiorari in the CA.
Ruling of the CA
On November 29, 2002, the CA rendered its assailed decision in favor of
Tanawan,28 whose dispositive portion reads as follows:
WHEREFORE, having found that public respondent NLRC committed grave
abuse of discretion, the Court hereby ANNULS the assailed Decision and
Resolution and REINSTATES the decision of the Labor Arbiter dated January 21,
2000.
SO ORDERED.

11

The CA discoursed that what was being compensated in disability compensation

was not the injury but the incapacity to work; that considering that the foot injury
incapacitated Tanawan from further working as dozer driver for the petitioners
principal, he should be given disability benefits; that Dr. Lims certification had no
probative weight because it was self-serving and biased infavor of the petitioner;
that Tanawans claim for the eye injury was warranted because the injury
occurred during the term of the employment contract; and that an injury, to be
compensable, need not be work-connected.29

surgical and hospital treatment as well as board and lodging until the seafarer is
declared fit to work or to be repatriated.

On October 17, 2003, the CA denied the petitioners motion for reconsideration
for lack of merit.30

3. Upon sign-off from the vessel for medical treatment, the seafarer is entitled to
sickness allowance equivalent to his basic wage until he is declared fit to work or
the degree of permanent disability has been assessed by the companydesignated physician, but in no case shall this period exceed one hundred twenty
(120) days.

Issues
Hence, this appeal, with the petitioner tendering the following issues:
1. WHETHER OR NOT THE STANDARD EMPLOYMENT CONTRACT OF THE
PHILIPPINE OVERSEAS EMPLOYMENT ADMINISTRATION ("POEA") IS THE
LAW BETWEEN THE SEAMAN AND THE MANNING AGENT.
2. WHETHER OR NOT A COMPANY-DESIGNATED PHYSICIAN POSSESSES
THE LEGAL AUTHORITY TO DECLARE A SEAMAN FIT OR DISABLED
UNDER THE LAW.
3. WHETHER OR NOT A SEAMAN CAN CLAIM DISABILITY BENEFITS AFTER
HE FAILED TO REPORT HIS ALLEGED INJURY WITHIN THE THREE-DAY
REGLEMENTARY PERIOD AS REQUIRED AND IMPOSED BY LAW.31
The petitioner insists that under the POEA Standard Employment Contract
(POEA SEC), which governed the relationship between the seafarer and his
manning agent, it was the company-designated physician who would assess and
establish the fitness or disability of the repatriated seaman; that Tanawans claim
for any disability benefit had no basis because the company-designated
physician already pronounced him fit to work; that Tanawan should have reported
the eye injury to the company-designated physician within three working days
upon his arrival in the country pursuant to Sec. 20(B)(3) of the POEA SEC; that
his non-reporting now barred Tanawan from recovering disability benefit for the
eye injury; that to ignore the application of the 3-day reglementary period would
lead to the indiscriminate filing of baseless claims against the manning agencies
and their foreign principals; and that more probative weight should be accorded
to the certification of Dr. Lim about the foot injury and the opinion of Dr. AngbueTe on the alleged eye injury.
On the other hand, Tanawan submits that the determination of the fitness or
disability of a seafarer was not the exclusive prerogative of the companydesignated physician; and that his failure to undergo a post-employment medical
examination for the eye injury within three days from his repatriation did not bar
his claim for disability benefits.32
Ruling
The petition is partly meritorious.
The employment of seafarers, and its incidents, including claims for death
benefits, are governed by the contracts they sign every time they are hired or
rehired. Such contracts have the force of law between the parties as long as their
stipulations are not contrary to law, morals, public order or public policy. While the
seafarers and their employers are governed by their mutual agreements, the
POEA rules and regulations require that the POEA SEC, which contains the
standard terms and conditions of the seafarers employment in foreign oceangoing vessels, be integrated in every seafarers contract.33
The pertinent provision of the 1996 POEA SEC, which was in effect at the time of
Tanawans employment, was Section 20(B), which reads:
SECTION 20. COMPENSATION AND BENEFITS
xxx
B. COMPENSATION AND BENEFITS FOR INJURY OR ILLNESS:
The liabilities of the employer when the seafarer suffers injury or illness during
the term of his contract are as follows:
1. The employer shall continue to pay the seafarer his wages during the time he
is on board the vessel;
2. If the injury or illness requires medical and/or dental treatment in a foreign port,
the employer shall be liable for the full cost of such medical, serious dental,

However, if after repatriation, the seafarer still requires medical attention arising
from said injury or illness, he shall be so provided at cost to the employer until
such time he is declared fit or the degree of his disability has been established by
the company-designated physician.

For this purpose, the seafarer shall submit himself to a post-employment medical
examination by a company-designated physician within three working days upon
his return except when he is physically incapacitated to do so, in which case, a
written notice to the agency within the same period is deemed as compliance.
Failure of the seafarer to comply with the mandatory reporting requirement shall
result in his forfeiture of the right to claim the above benefits.
It is clear from the provision that the one tasked to determine whether the
seafarer suffers from any disability or is fit to work is the company-designated
physician. As such, the seafarer must submit himself to the company-designated
physician for a post employment medical examination within three days from his
repatriation. But the assessment of the company-designated physician is not
final, binding or conclusive on the seafarer, the labor tribunals, or the courts. The
seafarer may request a second opinion and consult a physician of his choice
regarding his ailment or injury, and the medical report issued by the physician of
his choice shall also be evaluated on its inherent merit by the labor tribunal and
the court.34
Tanawan submitted himself to Dr. Lim, the company-designated physician, for a
medical examination on December 1, 1997, which was within the 3-day
reglementary period from his repatriation. The medical examination conducted
focused on Tanawans foot injury, the cause of his repatriation. Nothing was
mentioned of an eye injury. Dr. Lim treated Tanawan for the foot injury from
December 1, 1997 until May 21, 1998, when Dr. Lim declared him fit to work.
Within that period that lasted 172 days, Tanawan was unable to perform his job,
an indication of a permanent disability. Under the law, there is permanent
disability if a worker is unable to perform his job for more than 120 days,
regardless of whether or not he loses the use of any part of his body.35
That the company-designated physician did not render any finding of disability is
of no consequence. Disability should be understood more on the loss of earning
capacity rather than on the medical significance of the disability.36Even in the
absence of an official finding by the company-designated physician to the effect
that the seafarer suffers a disability and is unfit for sea duty, the seafarer may still
be declared to be suffering from a permanent disability if he is unable to work for
more than 120 days.37 What clearly determines the seafarers entitlement to
permanent disability benefits is his inability to work for more than 120
days.38 Although the company-designated physician already declared the
seafarer fit to work, the seafarers disability is still considered permanent and
total if such declaration is made belatedly (that is, more than 120 days after
repatriation).39
After the lapse of the 120-day period from his repatriation, Tanawan consulted Dr.
Saguin, his own private physician, for the purpose of having an evaluation of the
degree of his disability. At that time, he was due to undergo bone grafting and
pinning of the 5th metatarsal bone, as Dr. Lim recommended. Dr. Saguins finding
that Tanawan had a Grade 12 disability was, therefore, explicable and plausible.
On the other hand, Tanawans claim for disability benefits due to the eye injury
was already barred by his failure to report the injury and to have his eye
examined by a company-designated physician.40 The rationale for the rule is that
reporting the illness or injury within three days from repatriation fairly makes it
easier for a physician to determine the cause of the illness or injury. Ascertaining
the real cause of the illness or injury beyond the period may prove difficult. 41 To
ignore the rule might set a precedent with negative repercussions, like opening
the floodgates to a limitless number of seafarers claiming disability benefits, or
causing unfairness to the employer who would have difficulty determining the
cause of a claimants illness because of the passage of time. The employer
would then have no protection against unrelated disability claims. 42
Tanawan did not report the eye injury either to the petitioner or to Dr. Lim while
he was undergoing treatment for the foot injury.1wphi1 Curiously, he did not
even offer any explanation as to why he had his eye examined only on August
25, 1998, or after almost nine months from his repatriation.

12

Under the 1996 POEA SEC,43 it was enough to show that the injury or illness was
sustained during the term of the contract. The Court has declared that the
unqualified phrase "during the term" found in Section 20(B) thereof covered all
injuries or illnesses occurring during the lifetime of the contract. 44
It is the oft-repeated rule, however, that whoever claims entitlement to the
benefits provided by law should establish his right to the benefits by substantial
evidence.45 As such, Tanawan must present concrete proof showing that he
acquired or contracted the injury or illness that resulted to his disability during the
term of his employment contract.46 Proof of this circumstance was particularly
crucial in view of his non-reporting of the injury to the petitioner. Yet, he did not
present any proof of having sustained the eye injury during the term of his
contract. All that he submitted was his bare allegation that his eye had been
splashed with some thinner while he was on board the vessel. He also did not
adduce any proof demonstrating that the splashing of thinner could have caused
the retinal detachment with vitreous hemorrhage. At the very least, he should
have adduced proof that would tie the accident to the eye injury. We note at this
juncture that even the certification by Dr. Bunuan provided no information on the
possible cause of the eye injury.
Consequently, the claim for disability benefit for the eye injury is denied in view of
Tanawans non-reporting of the injury to the petitioner and of his failure to prove
that the injury. was sustained during the term of his employment.
WHEREFORE, the Court PARTIALLY GRANTS the petition for review;
and DELETES the award of US$20,900.00 as disability benefits for the eye
injury.
No pronouncement on costs of suit.
SO ORDERED.
LUCAS P. BERSAMIN
Associate Justice
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 182430
December 4, 2009
LEOPOLDO ABANTE, Petitioner,
vs.
KJGS FLEET MANAGEMENT MANILA and/or GUY DOMINGO A.
MACAPAYAG, KRISTIAN GERHARD JEBSENS SKIPSRENDERI
A/S, Respondents.
DECISION
CARPIO MORALES, J.:
On January 4, 2000, Leopoldo Abante (petitioner) was hired by respondent KJGS
Fleet Management Manila (KJGS) to work as ablebodied seaman aboard M/T
Rathboyne, for a period of nine months and with a basic salary of US$535.00 per
month.
Sometime in June, 2000, while carrying equipment on board the vessel,
petitioner slipped and hurt his back. Upon the vessels arrival in Kaohsiung,
Taiwan on July 4, 2000, petitioner was brought to a hospital whereupon he was
diagnosed to be suffering from "lower back pain r/o old fracture lesion 4th lumbar
body." Nevertheless, he was still declared to be fit for restricted work and was
advised to see another doctor in the next port of call. Unable to bear the pain,
petitioner was, on his request, repatriated to the Philippines on July 19, 2000.
On July 21, 2000, petitioner reported to KJGS and was referred to a companydesignated physician, Dr. Roberto D. Lim (Dr. Lim), at the Metropolitan Hospital.
After a series of tests, he was diagnosed to be suffering from "Foraminal stenosis
L3-L14 and central disc protrusion L4-L5" on account of which he
underwent Laminectomy and Discectomyon August 18, 2000, the cost of which
was borne by KJGS. He was discharged from the hospital 10 days later, but was
advised to continue physical therapy. He was seen by Dr. Lim around 10 times
from the time he was discharged until February 20, 2001 when he was
pronounced fit to resume sea duties. He, however, refused to sign his Certificate
of Fitness for Work.1
Petitioner later sought the opinion of another doctor, Dr. Jocelyn Myra R. Caja,
who diagnosed him to have "failed back syndrome" and gave a grade 6 disability
rating2 --- which rating rendered him medically unfit to work again as a seaman
and called for the award of US$25,000.00 disability benefits --- drawing him to file
on April 27, 2001 a Complaint3 before the National Labor Relations Commission
(NLRC), docketed as NLRC OFW Case No. 01-04-0736-00, for disability
compensation in the amount of US$25,000.00, moral and exemplary damages
and attorneys fees.

By Decision4 of July 24, 2003, Labor Arbiter Jovencio Ll. Mayor, Jr. dismissed the
complaint, holding that under Philippine Overseas Employment Administration
(POEA) Memo Circular No. 9, series of 2000, in the event of conflict between the
assessment of the company-designated physician and the doctor chosen by the
seafarer, the opinion of a third doctor agreed on by both the employer and the
seafarer should be sought. Hence, the Labor Arbiter held that petitioners
immediate filing of the complaint, insisting on his own physicians assessment,
was premature and, therefore, the assessment of the company-designated
physician that he is still fit to work prevails.
On petitioners appeal, the NLRC, by Decision 5 of January 31, 2005, ordered the
remand of the case to the Labor Arbiter for further proceedings. It held that since
there were two conflicting diagnoses as to petitioners fitness to work, the matter
must be referred to a third doctor to determine his entitlement to disability
benefits under the new POEA Standard Employment Contract for seafarers.
KJGSs Motion for Reconsideration of said Decision was denied by Resolution 6 of
November 3, 2006, hence, it appealed to the Court of Appeals.
By Decision7 of December 10, 2007, the appellate court reversed and set aside
the NLRC ruling and reinstated the Labor Arbiters Decision. It held that Sec. 20
(B) of POEA Memo Circular No. 9, series of 2000, which requires a third doctor in
case of conflicting assessments, is inapplicable.
Noting that the employment contract between KJGS and petitioner was executed
on January 4, 2000, the appellate court held that the contract is governed by
Memo Circular No. 55, series of 1996, which did not have a similar provision,
hence, it is the determination or assessment of the company-designated
physician which is deemed controlling. Petitioners motion for reconsideration
having been denied by Resolution8 of April 1, 2008, he interposed the present
petition, insisting that he is entitled to Grade 6 disability benefits under the new
POEA Standard Employment Contract.
The petition is meritorious.
Section 20 (B) (3) of the POEA Standard Employment Contract of 2000 provides:
SECTION 20. COMPENSATION AND BENEFITS FOR INJURY AND ILLNESS
The liabilities of the employer when the seafarer suffers work-related injury or
illness during the term of his contract are as follows:
xxxx
3. Upon sign-off from the vessel for medical treatment, the seafarer is entitled to
sickness allowance equivalent to his basic wage until he is declared fit to work or
the degree of permanent disability has been assessed by the companydesignated physician but in no case shall this period exceed one hundred twenty
(120) days.
For this purpose, the seafarer shall submit himself to a post-employment medical
examination by a company-designated physician within three working days upon
his return except when he is physically incapacitated to do so, in which case, a
written notice to the agency within the same period is deemed as compliance.
Failure of the seafarer to comply with the mandatory reporting requirement shall
result in his forfeiture of the right to claim the above benefits.
If a doctor appointed by the seafarer disagrees with the assessment, a third
doctor may be agreed jointly between the Employer and the seafarer. The third
doctors decision shall be final and binding on both parties. (emphasis supplied)
Clearly, the above provision does not preclude the seafarer from getting a second
opinion as to his condition for purposes of claiming disability benefits, for as held
in NYK-Fil Ship Management v. Talavera::9
This provision substantially incorporates the 1996 POEA Standard Employment
Contract. Passing on the 1996 POEA Standard Employment Contract, this Court
held that "[w]hile it is the company-designated physician who must declare that
the seaman suffers a permanent disability during employment, it does not deprive
the seafarer of his right to seek a second opinion," hence, the Contract
"recognizes the prerogative of the seafarer to request a second opinion and, for
this purpose, to consult a physician of his choice." (emphasis and underscoring
supplied)
In the present case, it is undisputed that petitioner immediately consulted with a
physician of his choice after initially having been seen and operated on by a

13

company-designated physician. It was after he got a second opinion and a

finding that he is unfit for further work as a seaman that he filed the claim for
disability benefits.
Respecting the appellate courts ruling that it is POEA Memo Circular No. 55,
series of 1996 which is applicable and not Memo Circular No. 9, series of 2000,
apropos is the ruling in Seagull Maritime Corporation v. Dee 10 involving
employment contract entered into in 1999, before the promulgation of POEA
Memo Circular No. 9, series of 2000 or the use of the new POEA Standard
Employment Contract, like that involved in the present case. In said case, the
Court applied the 2000 Circular in holding that while it is the company-designated
physician who must declare that the seaman suffered permanent disability during
employment, it does not deprive the seafarer of his right to seek a second
opinion which can then be used by the labor tribunals in awarding disability
claims.
Courts are called upon to be vigilant in their time-honored duty to protect labor,
especially in cases of disability or ailment. When applied to Filipino seamen, the
perilous nature of their work is considered in determining the proper benefits to
be awarded. These benefits, at the very least, should approximate the risks they
brave on board the vessel every single day.
Accordingly, if serious doubt exists on the company-designated physicians
declaration of the nature of a seamans injury and its corresponding impediment
grade, resort to prognosis of other competent medical professionals should be
made. In doing so, a seaman should be given the opportunity to assert his claim
after proving the nature of his injury. These evidences will in turn be used to
determine the benefits rightfully accruing to him. (emphasis and underscoring
supplied)
It bears noting that Dr. Lims medical findings did not significantly differ from
those of Dr. Cajas. In essence, even if Dr. Lim declared petitioner to be fit to
resume sea duties, still, the final diagnosis of "foraminal stenosis and central disc
protrusion" remained six months post-surgery.11 It is understandable that a
company-designated physician is more positive than that of a physician of the
seafarers choice. It is on this account that a seafarer is given the option by the
POEA Standard Employment Contract to seek a second opinion from his
preferred physician.
Petitioners are, at this point, reminded that the POEA standard employment
contract for seamen was designed primarily for the protection and benefit of
Filipino seamen in the pursuit of their employment on board ocean-going vessels.
Its provisions must be construed and applied fairly, reasonably and liberally in
their favor. Only then can its beneficent provisions be fully carried into effect.
(emphasis and underscoring supplied)121avvphi1
In HFS Philippines v. Pilar,13 where the findings of the independent physicians
were given more credence than those of the company-designated physicians, the
Court held:
The bottomline is this: the certification of the company-designated physician
would defeat respondents claim while the opinion of the independent physicians
would uphold such claim. In such a situation, we adopt the findings favorable to
respondent.
The law looks tenderly on the laborer. Where the evidence may be reasonably
interpreted in two divergent ways, one prejudicial and the other favorable to him,
the balance must be tilted in his favor consistent with the principle of social
justice. (emphasis and underscoring supplied)
As to whether petitioner can claim disability benefits, the Court rules in the
affirmative. Permanent disability refers to the inability of a worker to perform his
job for more than 120 days, regardless of whether he loses the use of any part
of his body. What determines petitioners entitlement to permanent disability
benefits is his inability to work for more than 120 days.14 In the case at bar, it was
only on February 20, 2001 that the Certificate of Fitness for Work was issued by
Dr. Lim, more than 6 months from the time he was initially evaluated by the
doctor on July 24, 2000 and after he underwent operation on August 18, 2000.
It is gathered15 from the documents emanating from the Office of Dr. Lim that
petitioner was seen by him from July 24, 2000 up to February 20, 2001 or a total
of 13 times; and except for the medical reports dated February 5, 2001 and
February 20, 2001 (when the doctor finally pronounced petitioner fit to work), Dr.
Lim consistently recommended that petitioner continue his physical
rehabilitation/therapy and revisit clinic on specific dates for re-evaluation, thereby
implying that petitioner was not yet fit to work.

Given a seafarers entitlement to permanent disability benefits when he is unable

to work for more than 120 days, the failure of the company-designated physician
to pronounce petitioner fit to work within the 120-day period entitles him to
permanent total disability benefit in the amount of US$60,000.00. 16
Respecting the claim for moral and exemplary damages, the same cannot be
granted, there being no concrete showing of bad faith or malice on the part of
KJGS. The records show that it shouldered all the expenses incurred in
petitioners surgery and subsequent rehabilitation. And it regularly inquired from
Dr. Lim about petitioners condition.
The claim for attorneys fees is granted following Article 2208 of the New Civil
Code which allows its recovery in actions for recovery of wages of laborers and
actions for indemnity under the employer's liability laws. The same fees are also
recoverable when the defendant's act or omission has compelled the plaintiff to
incur expenses to protect his interest 17 as in the present case following the
refusal by respondent to settle his claims. Pursuant to prevailing jurisprudence,
petitioner is entitled to attorneys fees of ten percent (10%) of the monetary
award.
WHEREFORE, the decision and resolution of the Court of Appeals dated
December 10, 2007, and April 1, 2008, respectively, are REVERSED and SET
ASIDE. Respondents are held jointly and severally liable to pay petitioner the
following: a) permanent total disability benefits of US$60,000.00 at its peso
equivalent at the time of actual payment; and b) attorney's fees of ten percent
(10%) of the total monetary award at its peso equivalent at the time of actual
payment.
SO ORDERED.
CONCHITA CARPIO MORALES
Associate Justice
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 186475
June 26, 2013
POSEIDON INTERNATIONAL MARITIME SERVICES, INC., Petitioner,
vs.
TITO R. TAMALA, FELIPE S. SAURIN, JR., ARTEMIO A. BO-OC and JOEL S.
FERNANDEZ, Respondents.
DECISION
BRION, J.:
We resolve in this petition for review on certiorari 1 the challenge to the
September 30, 2008 Decision2 and the February 11, 20093 Resolution of the
Court of Appeals (CA) in CA-G.R. SP No. 98783. These CA rulings set aside the
December 29, 2006 and February 12, 2007 Resolutions 4 of the National Labor
Relations Commission (NLRC) in NLRC CA No. 049479-06. The NLRC, in turn,
affirmed in toto the May 2006 Decision5 of the labor arbiter (LA) dismissing the
complaint for illegal termination of employment filed by respondents Tito R.
Tamala, Felipe S. Saurin, Jr., Artemio A. Bo-oc and Joel S. Fernandez against
petitioner Poseidon International Maritime Services, Inc. (Poseidon), and its
principal, Van Doorn Fishing Pty, Ltd. (Van Doorn).
The Factual Antecedents
In 2004, Poseidon hired the respondents, in behalf of Van Doorn, to man the
fishing vessels of Van Doorn and those of its partners Dinko Tuna Farmers Pty.
Ltd. (Dinko) and Snappertuna Cv. Lda. (Snappertuna) - at the coastal and
offshore area of Cape Verde Islands. The respondents contracting dates,
positions, vessel assignments, duration of the contract, basic monthly salaries,
guaranteed overtime pay and vacation leave pay, as reflected in their approved
contracts,6 are summarized below:
Artemio A.
Bo-oc

Joel S.
Fernandez

Felipe S.
Saurin, Jr.

Tito R.
Tamala

Date
Contracted

June 1, 2004

June 24, 2004

July 19, 20047

October 20,
2004

Position

Third Engineer

Chief Mate

Third Engineer

Ordinary
Seaman

Vessel
Assignment

M/V "Lukoran
DVA"

M/V "Lukoran
DVA"

M/V "Lukoran
Cetriri"

M/V
"Lukoran
DVA"

14

Contract
Duration

Twelve (12)
months

Twelve (12)
months

Twelve (12)
months

Twelve (12)
months

Basic
Monthly
Salary

US$800.00

US$1,120.00

US$800.00

US$280.00

Guaranteed
Overtime
Pay

US$240.00/mo

US$336.00/mo

US$240.00/mo

US$84.00/mo

Vacation
Leave Pay

US$66.66

US$93.33

US$66.66

US$23.33

The fishing operations for which the respondents were hired started on
September 17, 2004. On November 20, 2004, the operations abruptly stopped
and did not resume. On May 25, 2005, before the respondents disembarked from
the vessels, Goran Ekstrom of Snappertuna (the respondents immediate
employer on board the fishing vessels) and the respondents executed an
agreement (May 25, 2005 agreement) regarding the respondents salaries. 8 The
agreement provided that the respondents would get the full or 100% of their
unpaid salaries for the unexpired portion of their pre-terminated contract in
accordance with Philippine laws. The respective amounts the respondents would
receive per the May 25, 2005 agreement are:
Artemio A. Bo-oc

US$6,047.99

Joel S. Fernandez

US$7,767.90

Felipe S. Saurin, Jr.

US$6,647.99

Tito R. Tamala

US$7,047.99

On May 26, 2005, however, Poseidon and Van Doorn, with Goran of
Snappertuna and Dinko Lukin of Dinko, entered into another agreement (letter of
acceptance) reducing the previously agreed amount to 50% of the respondents
unpaid salaries (settlement pay) for the unexpired portion of their contract. 9 On
May 28, 2005, the respondents arrived in Manila. On June 10, 2005, the
respondents received the settlement pay under their letter of acceptance. The
respondents then signed a waiver and quitclaim 10 and the corresponding cash
vouchers.11
On November 16, 2005, the respondents filed a complaint 12 before the Labor
Arbitration Branch of the NLRC, National Capital Region for illegal termination of
employment with prayer for the payment of their salaries for the unexpired
portion of their contracts; and for non-payment of salaries, overtime pay and
vacation leave pay.13 The respondents also prayed for moral and exemplary
damages and attorneys fees.
The respondents anchored their claim on their May 25, 2005 agreement with
Goran, and contended that their subsequent execution of the waiver and
quitclaim in favor of Poseidon and Van Doorn should not be given weight nor
allowed to serve as a bar to their claim. The respondents alleged that their dire
need for cash for their starving families compelled and unduly influenced their
decision to sign their respective waivers and quitclaims. In addition, the
complicated language employed in the document rendered it highly suspect.
In their position paper,14 Poseidon and Van Doorn argued that the respondents
had no cause of action to collect the remaining 50% of their unpaid wages. To
Poseidon and Van Doorn, the respondents voluntary and knowing agreement to
the settlement pay, which they confirmed when they signed the waivers and
quitclaims, now effectively bars their claim. Poseidon and Van Doorn submitted
before the LA the signed letter of acceptance, the waiver and quitclaim, and the
cash vouchers to support their stance.
In a Decision15 dated May 2006, the LA dismissed the respondents complaint for
lack of merit, declaring as valid and binding their waivers and quitclaims. The LA
explained that while quitclaims executed by employees are generally frowned
upon and do not bar them from recovering the full measure of what is legally due,
excepted from this rule are the waivers knowingly and voluntarily agreed to by
the employees, such as the waivers assailed by the respondents. Citing
jurisprudence, the LA added that the courts should respect, as the law between
the parties, those legitimate waivers and quitclaims that represent voluntary and
reasonable settlement of employees claims. In the respondents case, this
pronouncement holds more weight, as they understood fully well the contents of
their waivers and knew the consequences of their acts.
The LA did not give probative weight to the May 25, 2005 agreement considering
that the entities which contracted the respondents services - Poseidon and Van
Doorn did not actively participate. Moreover, the LA noted that the respondents
signed letter of acceptance superseded this agreement. The LA likewise
considered the respondents belated filing of the complaint as a mere
afterthought.

Finally, the LA dismissed the issue of illegal dismissal, noting that the
respondents already abandoned this issue in their pleadings. The respondents
appealed16 the LAs decision before the NLRC.
The Ruling of the NLRC
By Resolution17 dated December 29, 2006, the NLRC affirmed in toto the LAs
decision. As the LA did, the NLRC ruled that the respondents knowing and
voluntary acquiescence to the settlement and their acceptance of the payments
made bind them and effectively bar their claims. The NLRC also regarded the
amounts the respondents received as settlement pay to be reasonable; despite
the cessation of the fishing operations, the respondents were still paid their full
wages from December 2004 to January 2005 and 50% of their wages from
February 2005 until their repatriation in May 2005.
On February 12, 2007, the NLRC denied18 the respondents motion for
reconsideration,19 prompting them to file with the CA a petition for
certiorari20 under Rule 65 of the Rules of Court.
The Ruling of the CA
In its September 30, 2008 Decision,21 the CA granted the respondents petition
and ordered Poseidon and Van Doorn to pay the respondents the amounts
tabulated below, representing the difference between the amounts they were
entitled to receive under the May 25, 2005 agreement and the amounts that they
received as settlement pay:
Artemio A. Bo-oc

US$3,705.00

Joel S. Fernandez

US$4,633.57

Felipe S. Saurin, Jr.

US$4,008.62

Tito R. Tamala
US$4,454.20
In setting aside the NLRCs ruling, the CA considered the waivers and quitclaims
invalid and highly suspicious. The CA noted that the respondents in fact
questioned in their pleadings the letters due execution. In contrast with the
NLRC, the CA observed that the respondents were coerced and unduly
influenced into accepting the 50% settlement pay and into signing the waivers
and quitclaims because of their financial distress. The CA moreover considered
the amounts stated in the May 25, 2005 agreement with Goran to be more
reasonable and in keeping with Section 10 of Republic Act (R.A.) No. 8042 or the
Migrant Workers and Overseas Filipinos Act of 1995.
The CA also pointed out with emphasis that the pre-termination of the
respondents employment contract was simply the result of Van Doorns decision
to stop its operations.
Finally, the CA did not consider the respondents complaint as a mere
afterthought; the respondents are precisely given under the Labor Code a threeyear prescriptive period to allow them to institute such actions.
Poseidon filed the present petition after the CA denied its motion for
Reconsideration22 in the CAs February 11, 2009 Resolution.23
The Petition
Poseidons petition argues that the labor tribunals findings are not only binding
but are fully supported by evidence. Poseidon contends that the CAs application
of Section 10 of R.A. No. 8042 to justify the amounts it awarded to the
respondents is misplaced, as the respondents never raised the issue of illegal
dismissal before the NLRC and the CA. It claims that the respondents, in
assailing the NLRC ruling before the CA, mainly questioned the validity of the
waivers and quitclaims they signed and their binding effect on them. While the
respondents raised the issue of illegal dismissal before the LA, they eventually
abandoned it in their pleadings a matter the LA even pointed out in her May
2006 Decision.
Poseidon further argues that the NLRC did not exceed its jurisdiction nor gravely
abuse its discretion in deciding the case in its favor, pointing out that the
respondents raised issues pertaining to mere errors of judgment before the CA.
Thus, as matters stood, these issues did not call for the grant of a writ of
certiorari as this prerogative writ is limited to the correction of errors of jurisdiction
committed through grave abuse of discretion, not errors of judgment.
Finally, Poseidon maintains that it did not illegally dismiss the respondents.
Highlighting the CAs observation and the respondents own admission in their

15

various pleadings, Poseidon reiterates that it simply ceased its fishing operations
as a business decision in the exercise of its management prerogative.

8042 applies only to an illegally dismissed overseas contract worker or a worker

dismissed from overseas employment without just, valid or authorized cause. 34

The Case for the Respondents

Whether the respondents in the present case were illegally dismissed is a

question we resolve in the negative for three reasons.

The respondents point out in their comment24 that the petition raises questions of
fact, which are not proper for a Rule 45 petition. They likewise point out that the
petition did not specifically set forth the grounds as required under Rule 45 of the
Rules of Court. On the merits, and relying on the CA ruling, the respondents
argue that Poseidon dismissed them without a valid cause and without the
observance of due process.
The Issues
At the core of this case are the validity of the respondents waivers and quitclaims
and the issue of whether these should bar their claim for unpaid salaries. At the
completely legal end is the question of whether Section 10 of R.A. No. 8042
applies to the respondents claim.
The Courts Ruling
We resolve to partly GRANT the petition.
Preliminary considerations
The settled rule is that a petition for review on certiorari under Rule 45 is limited
to the review of questions of law,25i.e., to legal errors that the CA may have
committed in its decision,26 in contrast with the review for jurisdictional errors that
we undertake in original certiorari actions under Rule 65. 27 In reviewing the legal
correctness of a CA decision rendered under Rule 65 of the Rules of Court, we
examine the CA decision from the prism of whether it correctly determined the
presence or absence of grave abuse of discretion in the NLRC decision before it,
and not strictly on the basis of whether the NLRC decision under review is
intrinsically correct.28 In other words, we have to be keenly aware that the CA
undertook a Rule 65 review, not a review on appeal, of the NLRC decision
challenged before it.29
Viewed in this light, we do not re-examine the factual findings of the NLRC and
the CA, nor do we substitute our own judgment for theirs, 30 as their findings of
fact are generally conclusive on this Court. We cannot touch on factual questions
"except in the course of determining whether the CA correctly ruled in
determining whether or not the NLRC committed grave abuse of discretion in
considering and appreciating the factual [issues before it]." 31
On the Merits of the Case
The core issue decided by the tribunals below is the validity of the respondents
waivers and quitclaims. The CA set aside the NLRC ruling for grave abuse of
discretion; the CA essentially found the waivers and quitclaims unreasonable and
involuntarily executed, and could not have superseded the May 25, 2005
agreement. In doing so, and in giving weight to the May 25, 2005 agreement, the
CA found justification under Section 10 of R.A. No. 8042.
The respondents are not entitled to
the unpaid portion of their salaries
under Section 10 of R.A. No. 8042
The application of Section 10 of R.A. No. 8042 presumes a finding of illegal
dismissal. The pertinent portion of Section 10 of R.A. No. 8042 reads:
SEC. 10. MONEY CLAIMS. x x x
xxxx
In case of termination of overseas employment without just, valid or authorized
cause as defined by law or contract. [emphasis and italics ours]
A plain reading of this provision readily shows that it applies only to cases of
illegal dismissal or dismissal without any just, authorized or valid cause and finds
no application in cases where the overseas Filipino worker was not illegally
dismissed.32 We found the occasion to apply this rule in International
Management Services v. Logarta,33where we held that Section 10 of R.A. No.

First, the respondents references to illegal dismissal in their several pleadings

were mere cursory declarations rather than a definitive demand for redress. The
LAs May 2006 Decision clearly enunciated this point when she dismissed the
respondents claim of illegal dismissal "as complainants themselves have lost
interest to pursue the same." 35
Second, the respondents, in their motion for reconsideration filed before the
NLRC, positively argued that the fishing operations for which they were hired
ceased as a result of the business decision of Van Doorn and of its
partners;36thus, negating by omission any claim for illegal dismissal.
Third, the CA, in its assailed decision, likewise made the very same inference
that the fishing operations ceased as a result of a business decision of Van
Doorn and of its partners. In other words, the manner of dismissal was not a
contested issue; the records clearly showed that the respondents employment
was terminated because Van Doorn and its partners simply decided to stop their
fishing operations in the exercise of their management prerogative, which
prerogative even our labor laws recognize.
We confirm in this regard that, by law and subject to the States corollary right to
review its determination,37management has the right to regulate the business and
control its every aspect.38 Included in this management right is the freedom to
close or cease its operations for any reason, as long as it is done in good faith
and the employer faithfully complies with the substantive and procedural
requirements laid down by law and jurisprudence.39 Article 283 of our Labor Code
provides:
Art. 283. Closure of establishment and reduction of personnel. - The employer
may also terminate the employment of any employee due to the installation of
labor-saving devices, redundancy, retrenchment to prevent losses or the closing
or cessation of operation of the establishment or undertaking unless the closing
is for the purpose of circumventing the provisions of this Title, by serving a written
notice on the workers and the [Department of Labor and Employment] at least
one (1) month before the intended date thereof. x x x In case of retrenchment to
prevent losses and in cases of closures or cessation of operations of
establishment or undertaking not due to serious business losses or financial
reverses, the separation pay shall be equivalent to one (1) month pay or at least
one-half (1/2) month pay for every year of service, whichever is higher. A fraction
of at least six (6) months shall be considered as one (1) whole year. [Italics,
underscores and emphases ours]
This provision applies in the present case as under the contract the employer
and the workers signed and submitted to the Philippine Overseas Employment
Agency (POEA), the Philippine labor law expressly applies.
This legal reality is reiterated under Section 18-B, paragraph 2, 40 in relation with
Section 2341 of the POEA Standard Employment Contract (POEA-SEC) (which is
deemed written into every overseas employment contract) which recognizes the
validity of the cessation of the business operations as a valid ground for the
termination of an overseas employment. This recognition is subject to compliance
with the following requisites:
1. The decision to close or cease operations must be bona fide in
character;
2. Service of written notice on the affected employees and on the
Department of Labor and Employment (DOLE) at least one (1) month
prior to the effectivity of the termination; and
3. Payment to the affected employees of termination or separation
pay equivalent to one (1) month pay or at least one-half (1/2) month
pay for every year of service, whichever is higher.42
We are sufficiently convinced, based on the records, that Van Doorns termination
of the respondents employment arising from the cessation of its fishing
operations complied with the above requisites and is thus valid.
We observe that the records of the case do not show that Van Doorn ever
intended to defeat the respondents rights under our labor laws when it undertook
its decision to close its fishing operations on November 20, 2004. From this date

16

until six months after, the undertaking was at a complete halt. That Van Doorn
and its partners might have suffered losses during the six-month period is not
entirely remote. Yet, Van Doorn did not immediately repatriate the respondents or
hire another group of seafarers to replace the respondents in a move to resume
its fishing operations. Quite the opposite, the respondents, although they were no
longer rendering any service or doing any work, still received their full salary for
November 2004 up to January 2005. In fact, from February 2005 until they were
repatriated to the Philippines in May 2005, the respondents still received wages,
albeit half of their respective basic monthly salary rate. Had Van Doorn intended
to stop its fishing operations simply to terminate the respondents employment, it
would have immediately repatriated the respondents to the Philippines soon
after, in order that it may hire other seafarers to replace them a possibility that
did not take place.
Considering therefore the absence of any indication that Van Doorn stopped its
fishing operations to circumvent the protected rights of the respondents, our
courts have no basis to question the reason that might have impelled Van Doorn
to reach its closure decision.43
In sum, since Poseidon ceased its fishing operations in the valid exercise of its
management prerogative, Section 10 of R.A. No. 8042 finds no application.
Consequently, we find that the CA erroneously imputed grave abuse of discretion
on the part of the NLRC in not applying Section 10 of R.A. No. 8042 and in
awarding the respondents the unpaid portion of their full salaries.
The waivers and quitclaims signed by
the respondents are valid and
binding
We cannot support the CAs act of giving greater evidentiary weight to the May
25, 2005 agreement over the respondents waivers and quitclaims; not only do
we find the latter documents to be reasonable and duly executed, we also find
that they superseded the May 25, 2005 agreement.
Generally, this Court looks with disfavor at quitclaims executed by employees for
being contrary to public policy.44Where the person making the waiver, however,
has done so voluntarily, with a full understanding of its terms and with the
payment of credible and reasonable consideration, we have no option but to
recognize the transaction to be valid and binding.45
We find the requisites for the validity of the respondents quitclaim present in this
case. We base this conclusion on the following observations:
First, the respondents acknowledged in their various pleadings, as well as in the
very document denominated as "waiver and quitclaim," that they voluntarily
signed the document after receiving the agreed settlement pay.
Second, the settlement pay is reasonable under the circumstances, especially
when contrasted with the amounts to which they were respectively entitled to
receive as termination pay pursuant to Section 23 of the POEA-SEC and Article
283 of the Labor Code. The comparison of these amounts is tabulated below:
1wphi1
Settlement Pay

Termination Pay

Joel S. Fernandez

US$3134.33

US$1120.00

Artemio A. Bo-oc

US$2342.37

US$800.00

Felipe S. Saurin, Jr.

US$2639.37

US$800.00

Tito R. Tamala
US$2593.79
US$280.00
Thus, the respondents undeniably received more than what they were entitled to
receive under the law as a result of the cessation of the fishing operations.
Third, the contents of the waiver and quitclaim are clear, unequivocal and
uncomplicated so that the respondents could fully understand the import of what
they were signing and of its consequences. 46 Nothing in the records shows that
what they received was different from what they signed for.
Fourth, the respondents are mature and intelligent individuals, with college
degrees, and are far from the naive and unlettered individuals they portrayed
themselves to be.1wphi1
Fifth, while the respondents contend that they were coerced and unduly
influenced in their decision to accept the settlement pay and to sign the waivers
and quitclaims, the records of the case do not support this claim. The
respondents claims that they were in "dire need for cash" and that they would

not be paid anything if they would not sign do not constitute the coercion nor
qualify as the undue influence contemplated by law sufficient to invalidate a
waiver and quitclaim,47 particularly in the circumstances attendant in this case.
The records show that the respondents, along with their other fellow seafarers,
served as each others witnesses when they agreed and signed their respective
waivers and quitclaims.
Sixth, the respondents voluntary and knowing conformity to the settlement pay
was proved not only by the waiver and quitclaim, but by the letters of acceptance
and the vouchers evidencing payment. With these documents on record, the
burden shifts to the respondents to prove coercion and undue influence other
than through their bare self-serving claims. No such evidence appeared on
record at any stage of the proceedings.
In these lights and in the absence of any evidence showing that fraud, deception
or misrepresentation attended the execution of the waiver and quitclaim, we are
sufficiently convinced that a valid transaction took place. Consequently, we find
that the CA erroneously imputed grave abuse of discretion in misreading the
submitted evidence, and in relying on the May 25, 2005 agreement and on
Section 10 of R.A. No. 8042.
The respondents are entitled to
nominal damages for failure of Van
Doorn to observe the procedural
requisites for the termination of
employment under Article 283 of the
Labor Code
As a final note, we observe that while Van Doorn has a just and valid cause to
terminate the respondents employment, it failed to meet the requisite procedural
safeguards provided under Article 283 of the Labor Code. In the termination of
employment under Article 283, Van Doorn, as the employer, is required to serve a
written notice to the respondents and to the DOLE of the intended termination of
employment at least one month prior to the cessation of its fishing operations.
Poseidon could have easily filed this notice, in the way it represented Van Doorn
in its dealings in the Philippines. While this omission does not affect the validity of
the termination of employment, it subjects the employer to the payment of
indemnity in the form of nominal damages.48
Consistent with our ruling in Jaka Food Processing Corporation v. Pacot, 49 we
deem it proper to award the respondents nominal damages in the amount
of P30,000.00 as indemnity for the violation of the required statutory procedures.
Poseidon shall be solidarily liable to the respondents for the payment of these
damages.50
WHEREFORE, in view of these considerations, we hereby GRANT in PART the
petition and accordingly REVERSE and SET ASIDE the Decision dated
September 30, 2008 and the Resolution dated February 11, 2009 of the Court of
Appeals in CA-G.R. SP No. 98783. We REINSTATE the Resolution dated
December 29, 2006 of the National Labor Relations Commission with the
MODIFICATION that petitioner Poseidon International Maritime Services, Inc. is
ordered to pay each of the respondents nominal damages in the amount
of P30,000.00. Costs against the respondents.
SO ORDERED.
ARTURO D. BRION
Associate Justice
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 154213
August 23, 2012
EASTERN MEDITERRANEAN MARITIME LTD. AND AGEMAR MANNING
AGENCY, INC., Petitioners,
vs.
EST ANISLAO SURIO, FREDDIE PALGUIRAN, GRACIANO MORALES,
HENRY CASTILLO, ARISTOTLE ARREOLA, ALEXANDER YGOT, ANRIQUE
BA TTUNG, GREGORIO ALDOVINO, NARCISO FRIAS, VICTOR FLORES,
SAMUEL MARCIAL, CARLITO PALGUIRAN, DUQUE VINLUAN, .JESUS
MENDEGORIN, NEIL FLORES, ROMEO MANGALIAG, JOE GARFIN and
SALESTINO SUSA, Respondents.
*
PEREZ
DECISION
BERSAMIN, J.:

17

On appeal is the decision the Court of Appeals (CA) promulgated on December

21, 2001 affirming the resolution of the National Labor Relations Commission
(NLRC) declaring itself to be without appellate jurisdiction to review the decision
of the Philippine Overseas Employment Administration (POEA) involving
petitioners complaint for disciplinary action against respondents. 1
Respondents were former crewmembers of MT Seadance, a vessel owned by
petitioner Eastern Mediterranean Maritime Ltd. and manned and operated by
petitioner Agemar Manning Agency, Inc. While respondents were still on board
the vessel, they experienced delays in the payment of their wages and in the
remittance of allotments, and were not paid for extra work and extra overtime
work. They complained about the vessels inadequate equipment, and about the
failure of the petitioners to heed their repeated requests for the improvement of
their working conditions. On December 19, 1993, when MT Seadance docked at
the port of Brofjorden, Sweden to discharge oil, representatives of the
International Transport Federation (ITF) boarded the vessel and found the wages
of the respondents to be below the prevailing rates. The ensuing negotiations
between the ITF and the vessel owner on the increase in respondents wages
resulted in the payment by the vessel owner of wage differentials and the
immediate repatriation of respondents to the Philippines.
Subsequently, on December 23, 1993, the petitioners filed against the newlyrepatriated respondents a complaint for disciplinary action based on breach of
discipline and for the reimbursement of the wage increases in the Workers
Assistance and Adjudication Office of the POEA.
During the pendency of the administrative complaint in the POEA, Republic Act
No. 8042 (Migrant Workers and Overseas Filipinos Act of 1995) took effect on
July 15, 1995. Section 10 of Republic Act No. 8042 vested original and exclusive
jurisdiction over all money claims arising out of employer-employee relationships
involving overseas Filipino workers in the Labor Arbiters, to wit:

Petitioners contended in their petition that:

THE NLRC GRAVELY ABUSED ITS DISCRETION AND/OR GRAVELY ERRED
IN DISMISSING PETITIONERS APPEAL AND MOTION FOR
RECONSIDERATION WHEN IT REFUSED TO TAKE COGNIZANCE OF
PETITIONERS APPEAL DESPITE BEING EMPOWERED TO DO SO UNDER
THE LAW.6
On December 21, 2001, the CA dismissed the petition for certiorari and
mandamus, holding that the inclusion and deletion of overseas contract workers
from the POEA blacklist/watchlist were within the exclusive jurisdiction of the
POEA to the exclusion of the NLRC, and that the NLRC had no appellate
jurisdiction to review the matter, viz:
Section 10 of RA 8042, otherwise known as the Migrant Workers and Overseas
Filipinos Act of 1995, provides that:
"Money Claims Notwithstanding any provision of law to the contrary, the Labor
Arbiters of the National Labor Relations Commission (NLRC) shall have the
original and exclusive jurisdiction to hear and decide, within ninety (90) calendar
days after the filing of the complaint, the claims arising out of an employeremployee relationship or by virtue of any law or contract involving Filipino
workers for overseas deployment including claims for actual, moral, exemplary
and other forms of damages.
xxxx
Likewise, the Rules and Regulations implementing RA 8042 reiterate the
jurisdiction of POEA, thus:

Section 10. Money Claims. Notwithstanding any provision of law to the

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

"Section 28. Jurisdiction of the POEA. The POEA shall exercise original and
exclusive jurisdiction to hear and decide:

The jurisdiction over such claims was previously exercised by the POEA under
the POEA Rules and Regulations of 1991 (1991 POEA Rules).

b) Disciplinary action cases and other special cases, which are administrative in
character, involving employers, principals, contracting partners and Filipino
migrant workers."

On May 23, 1996, the POEA dismissed the complaint for disciplinary action.
Petitioners received the order of dismissal on July 24, 1996. 2
Relying on Section 1, Rule V, Book VII of the 1991 POEA Rules, petitioners filed
a partial appeal on August 2, 1996 in the NLRC, still maintaining that
respondents should be administratively sanctioned for their conduct while they
were on board MT Seadance.
On March 21, 1997, the NLRC dismissed petitioners appeal for lack of
jurisdiction,3 thus:
We dismiss the partial appeal.
The Commission has no jurisdiction to review cases decided by the POEA
Administrator involving disciplinary actions. Under the Migrant Workers and
Overseas Filipinos Act of 1995, the Labor Arbiter shall have jurisdiction over
money claims involving employer-employee relationship (sec. 10, R.A. 8042).
Said law does not provide that appeals from decisions arising from complaint for
disciplinary action rest in the Commission.
PREMISES CONSIDERED, instant appeal from the Order of May 23, 1996 is
hereby DISMISSED for lack of jurisdiction.
SO ORDERED.
Not satisfied, petitioners moved for reconsideration, but the NLRC denied their
motion. They received the denial on July 8, 1997.4
Petitioners then commenced in this Court a special civil action for certiorari and
mandamus. Citing St. Martin Funeral Homes v. National Labor Relations
Commission,5 however, the Court referred the petition to the CA on November
25, 1998.

a) All cases, which are administrative in character, involving or arising out of

violations of rules and regulations relating to licensing and registration of
recruitment and employment agencies or entities; and

Further, Sections 6 and 7 Rule VII, Book VII of the POEA Rules & Regulations
(1991) provide:
"Sec. 6. Disqualification of Contract Workers. Contract workers, including
seamen, against whom have been imposed or with pending obligations imposed
upon them through an order, decision or resolution shall be included in the POEA
Blacklist Workers shall be disqualified from overseas employment unless
properly cleared by the Administration or until their suspension is served or lifted.
Sec. 7. Delisting of the Contract Workers Name from the POEA Watchlist. The
name of an overseas worker may be excluded, deleted and removed from the
POEA Watchlist only after disposition of the case by the Administration."
Thus, it can be concluded from the afore-quoted law and rules that, public
respondent has no jurisdiction to review disciplinary cases decided by the POEA
involving contract workers. Clearly, the matter of inclusion and deletion of
overseas contract workers in the POEA Blacklist/Watchlist is within the exclusive
jurisdiction of the POEA to the exclusion of the public respondent. Nor has the
latter appellate jurisdiction to review the findings of the POEA involving such
cases.
xxx
In fine, we find and so hold, that, no grave abuse of discretion can be imputed to
the public respondent when it issued the assailed Decision and Order, dated
March 21, 1997 and June 13, 1997, respectively, dismissing petitioners appeal
from the decision of the POEA.
WHEREFORE, finding the instant petition not impressed with merit, the same is
hereby DENIED DUE COURSE. Costs against petitioners.
SO ORDERED.7

18

Issue
Petitioners still appeal, submitting to the Court the sole issue of:
WHETHER OR NOT THE NLRC HAS JURISDICTION TO REVIEW ON APPEAL
CASES DECIDED BY THE POEA ON MATTERS PERTAINING TO
DISCIPLINARY ACTIONS AGAINST PRIVATE RESPONDENTS.
They contend that both the CA and the NLRC had no basis to rule that the NLRC
had no jurisdiction to entertain the appeal only because Republic Act No. 8042
had not provided for its retroactive application.
Respondents counter that the appeal should have been filed with the Secretary
of Labor who had exclusive jurisdiction to review cases involving administrative
matters decided by the POEA.
Ruling
The petition for review lacks merit.
Petitioners adamant insistence that the NLRC should have appellate authority
over the POEAs decision in the disciplinary action because their complaint
against respondents was filed in 1993 was unwarranted. Although Republic Act
No. 8042, through its Section 10, transferred the original and exclusive
jurisdiction to hear and decide money claims involving overseas Filipino workers
from the POEA to the Labor Arbiters, the law did not remove from the POEA the
original and exclusive jurisdiction to hear and decide all disciplinary action cases
and other special cases administrative in character involving such workers. The
obvious intent of Republic Act No. 8042 was to have the POEA focus its efforts in
resolving all administrative matters affecting and involving such workers. This
intent was even expressly recognized in the Omnibus Rules and Regulations
Implementing the Migrant Workers and Overseas Filipinos Act of
1995 promulgated on February 29, 1996, viz:
Section 28. Jurisdiction of the POEA. The POEA shall exercise original and
exclusive jurisdiction to hear and decide:
(a) all cases, which are administrative in character, involving or arising out of
violations or rules and regulations relating to licensing and registration of
recruitment and employment agencies or entities; and
(b) disciplinary action cases and other special cases, which are administrative in
character, involving employers, principals, contracting partners and Filipino
migrant workers.
Section 29. Venue The cases mentioned in Section 28(a) of this Rule, may be
filed with the POEA Adjudication Office or the DOLE/POEA regional office of the
place where the complainant applied or was recruited, at the option of the
complainant. The office with which the complaint was first filed shall take
cognizance of the case.
Disciplinary action cases and other special cases, as mentioned in the preceding
Section, shall be filed with the POEA Adjudication Office.
It is clear to us, therefore, that the NLRC had no appellate jurisdiction to review
the decision of the POEA in disciplinary cases involving overseas contract
workers.
Petitioners position that Republic Act No. 8042 should not be applied
retroactively to the review of the POEAs decision dismissing their complaint
against respondents has no support in jurisprudence. Although, as a rule, all laws
are prospective in application unless the contrary is expressly provided, 8 or
unless the law is procedural or curative in nature,9 there is no serious question
about the retroactive applicability of Republic Act No. 8042 to the appeal of the
POEAs decision on petitioners disciplinary action against respondents. In a way,
Republic Act No. 8042 was a procedural law due to its providing or omitting
guidelines on appeal. A law is procedural, according to De Los Santos v. Vda. De
Mangubat,10 when it
Refers to the adjective law which prescribes rules and forms of procedure in
order that courts may be able to administer justice. Procedural laws do not come
within the legal conception of a retroactive law, or the general rule against the
retroactive operation of statues they may be given retroactive effect on actions
pending and undetermined at the time of their passage and this will not violate
any right of a person who may feel that he is adversely affected, insomuch as
there are no vested rights in rules of procedure.
Republic Act No. 8042 applies to petitioners complaint by virtue of the case
being then still pending or undetermined at the time of the laws passage, there
being no vested rights in rules of procedure. 11 They could not validly insist that

the reckoning period to ascertain which law or rule should apply was the time
when the disciplinary complaint was originally filed in the POEA in 1993.
Moreover, Republic Act No. 8042 and its implementing rules and regulations
were already in effect when petitioners took their appeal. A statute that eliminates
the right to appeal and considers the judgment rendered final and unappealable
only destroys the right to appeal, but not the right to prosecute an appeal that has
been perfected prior to its passage, for, at that stage, the right to appeal has
already vested and cannot be impaired. 12 Conversely and by analogy, an appeal
that is perfected when a new statute affecting appellate jurisdiction comes into
effect should comply with the provisions of the new law, unless otherwise
provided by the new law. Relevantly, petitioners need to be reminded that the
right to appeal from a decision is a privilege established by positive laws, which,
upon authorizing the taking of the appeal, point out the cases in which it is proper
to present the appeal, the procedure to be observed, and the courts by which the
appeal is to be proceeded with and resolved.13 This is why we consistently hold
that the right to appeal is statutory in character, and is available only if granted by
law or statute.14
When Republic Act No. 8042 withheld the appellate jurisdiction of the NLRC in
respect of cases decided by the POEA, the appellate jurisdiction was vested in
the Secretary of Labor in accordance with his power of supervision and control
under Section 38(1), Chapter 7, Title II, Book III of the Revised Administrative
Code of 1987, to wit:
Section 38. Definition of Administrative Relationship. Unless otherwise
expressly stated in the Code or in other laws defining the special relationships of
particular agencies, administrative relationships shall be categorized and defined
as follows:
Supervision and Control. Supervision and control shall include authority to act
directly whenever a specific function is entrusted by law or regulation to a
subordinate; direct the performance of duty; restrain the commission of acts;
review, approve, reverse or modify acts and decisions of subordinate officials or
units; determine priorities in the execution of plans and programs. Unless a
different meaning is explicitly provided in the specific law governing the
relationship of particular agencies, the word "control" shall encompass
supervision and control as defined in this paragraph. xxx.
Thus, Section 1, Part VII, Rule V of the 2003 POEA Rules and Regulations
specifically provides, as follows:
Section 1. Jurisdiction. The Secretary shall have the exclusive and original
jurisdiction to act on appeals or petition for review of disciplinary action cases
decided by the Administration.
In conclusion, we hold that petitioners should have appealed the adverse
decision of the POEA to the Secretary of Labor instead of to the NLRC.
Consequently, the CA, being correct on its conclusions, committed no error in
upholding the NLRC.
WHEREFORE, we AFFIRM the decision promulgated on December 21, 2001 by
the Court of Appeals; and ORDERthe petitioners to pay the costs of suit.
SO ORDERED.
LUCAS P. BERSAMIN
Associate Justice

Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION

19

G.R. No. 100641 June 14, 1993

FARLE P. ALMODIEL, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION (FIRST DIVISION),
RAYTHEON PHILS., INC., respondents.

Respondents are further ordered to pay complainant

P200,000.00 as moral damages and P20,000.00 as
exemplary damages, plus ten percent (10%) of the total
award as attorney's fees. 1
Raytheon appealed therefrom on the grounds that the Labor Arbiter committed
grave abuse of discretion in denying its rights to dismiss petitioner on the ground
of redundancy, in relying on baseless surmises and self-serving assertions of the
petitioner that its act was tainted with malice and bad faith and in awarding moral
and exemplary damages and attorney's fees.

Apolinario Lomabao, Jr. for petitioner.

Vicente A. Cruz, Jr., for private respondent.

NOCON, J.:
Subject of this petition for certiorari is the decision dated March 21, 1991 of the
National Labor Relations Commission in NLRC Case No.
00-00645-89 which reversed and set aside the Labor Arbiter's decision dated
September 27, 1989 and ordered instead the payment of separation pay and
financial assistance of P100,000.00. Petitioner imputes grave abuse of discretion
on the part of the Commission and prays for the reinstatement of the Labor
Arbiter's decision which declared his termination on the ground of redundancy
illegal.
Petitioner Farle P. Almodiel is a certified public accountant who was hired in
October, 1987 as Cost Accounting Manager of respondent Raytheon Philippines,
Inc. through a reputable placement firm, John Clements Consultants, Inc. with a
starting monthly salary of P18,000.00. Before said employment, he was the
accounts executive of Integrated Microelectronics, Inc. for several years. He left
his lucrative job therein in view of the promising career offered by Raytheon. He
started as a probationary or temporary employee. As Cost Accounting Manager,
his major duties were: (1) plan, coordinate and carry out year and physical
inventory; (2) formulate and issue out hard copies of Standard Product costing
and other cost/pricing analysis if needed and required and (3) set up the written
Cost Accounting System for the whole company. After a few months, he was
given a regularization increase of P1,600.00 a month. Not long thereafter, his
salary was increased to P21,600.00 a month.
On August 17, 1988, he recommended and submitted a Cost Accounting/Finance
Reorganization, affecting the whole finance group but the same was disapproved
by the Controller. However, he was assured by the Controller that should his
position or department which was apparently a one-man department with no staff
becomes untenable or unable to deliver the needed service due to manpower
constraint, he would be given a three (3) year advance notice.
In the meantime, the standard cost accounting system was installed and used at
the Raytheon plants and subsidiaries worldwide. It was likewise adopted and
installed in the Philippine operations. As a consequence, the services of a Cost
Accounting Manager allegedly entailed only the submission of periodic reports
that would use computerized forms prescribed and designed by the international
head office of the Raytheon Company in California, USA.
On January 27, 1989, petitioner was summoned by his immediate boss and in
the presence of IRD Manager, Mr. Rolando Estrada, he was told of the abolition
of his position on the ground of redundancy. He pleaded with management to
defer its action or transfer him to another department, but he was told that the
decision of management was final and that the same has been conveyed to the
Department of Labor and Employment. Thus, he was constrained to file the
complaint for illegal dismissal before the Arbitration Branch of the National
Capital Region, NLRC, Department of Labor and Employment.
On September 27, 1989, Labor Arbiter Daisy Cauton-Barcelona rendered a
decision, the dispositive portion of which reads as follows:
WHEREFORE, judgment is hereby rendered declaring
that complainant's termination on the ground of
redundancy is highly irregular and without legal and
factual basis, thus ordering the respondents to reinstate
complainant to his former position with full backwages
without lost of seniority rights and other benefits.

On March 21, 1991, the NLRC reversed the decision and directed Raytheon to
pay petitioner the total sum of P100,000.00 as separation pay/financial
assistance. The dispositive portion of which is hereby quoted as follows:
WHEREFORE, the appealed decision is hereby set aside.
In its stead, Order is hereby issued directing respondent
to pay complainant the total separation pay/financial
assistance of One Hundred Thousand Pesos
(P100,000.00).

SO ORDERED. 2
From this decision, petitioner filed the instant petition averring that:
The public respondent committed grave abuse of
discretion amounting to (lack of) or in excess of
jurisdiction in declaring as valid and justified the
termination of petitioner on the ground of redundancy in
the face of clearly established finding that petitioner's
termination was tainted with malice, bad faith and
irregularity. 3
Termination of an employee's services because of redundancy is governed by
Article 283 of the Labor Code which provides as follows:
Art. 283. Closure of establishment and reduction of
personnel. The employer may also terminate the
employment of any employee due to installation of laborsaving devices, redundancy, retrenchment to prevent
losses or the closing or cessation of operation of the
establishment or undertaking unless the closing is for the
purpose of circumventing the provisions of this Title, by
serving a written notice on the worker and the Department
of Labor and Employment at least one (1) month before
the intended date thereof. In case of termination due to
installation of labor-saving devices or redundancy, the
worker affected thereby shall be entitled to a separation
pay equivalent to at least one (1) month pay for every
year of service, whichever is higher. In case of
retrenchment to prevent losses and in cases of closure or
cessation of operations of establishment or undertaking
not due to serious business losses or financial reverses,
the separation pay shall be equivalent to at least one (1)
month pay or at least one-half (1/2) month pay for every
year of service, whichever is higher. A fraction of at least
six (6) months shall be considered as one (1) whole year.
There is no dispute that petitioner was duly advised, one (1) month before, of the
termination of his employment on the ground of redundancy in a written notice by
his immediate superior, Mrs. Magdalena B.D. Lopez sometime in the afternoon of
January 27, 1989. He was issued a check for P54,863.00 representing
separation pay but in view of his refusal to acknowledge the notice and the
check, they were sent to him thru registered mail on January 30, 1989. The
Department of Labor and Employment was served a copy of the notice of
termination of petitioner in accordance with the pertinent provisions of the Labor
Code and the implementing rules.
The crux of the controversy lies on whether bad faith, malice and irregularity
crept in the abolition of petitioner's position of Cost Accounting Manager on the
ground of redundancy. Petitioner claims that the functions of his position were

20

absorbed by the Payroll/Mis/Finance Department under the management of

Danny Ang Tan Chai, a resident alien without any working permit from the
Department of Labor and Employment as required by law. Petitioner relies on the
testimony of Raytheon's witness to the effect that corollary functions appertaining
to cost accounting were dispersed to other units in the Finance Department. And
granting that his department has to be declared redundant, he claims that he
should have been the Manager of the Payroll/Mis/Finance Department which
handled general accounting, payroll and encoding. As a B. S. Accounting
graduate, a CPA with M.B.A. units, 21 years of work experience, and a natural
born Filipino, he claims that he is better qualified than Ang Tan Chai, a B.S.
Industrial Engineer, hired merely as a Systems Analyst Programmer or its
equivalent in early 1987, promoted as MIS Manager only during the middle part
of 1988 and a resident alien.
On the other hand, Raytheon insists that petitioner's functions as Cost
Accounting Manager had not been absorbed by Ang Tan Chai, a permanent
resident born in this country. It claims to have established below that Ang Tan
Chai did not displace petitioner or absorb his functions and duties as they were
occupying entirely different and distinct positions requiring different sets of
expertise or qualifications and discharging functions altogether different and
foreign from that of petitioner's abolished position. Raytheon debunks petitioner's
reliance on the testimony of Mr. Estrada saying that the same witness testified
under oath that the functions of the Cost Accounting Manager had been
completely dispensed with and the position itself had been totally abolished.
Whether petitioner's functions as Cost Accounting Manager have been dispensed
with or merely absorbed by another is however immaterial. Thus, notwithstanding
the dearth of evidence on the said question, a resolution of this case can be
arrived at without delving into this matter. For even conceding that the functions
of petitioner's position were merely transferred, no malice or bad faith can be
imputed from said act. A survey of existing case law will disclose that in Wiltshire
File Co., Inc. v. NLRC, 4 the position of Sales Manager was abolished on the
ground of redundancy as the duties previously discharged by the Sales Manager
simply added to the duties of the General Manager to whom the Sales Manager
used to report. In adjudging said termination as legal, this Court said that
redundancy, for purposes of our Labor Code, exists where the services of an
employee are in excess of what is reasonably demanded by the actual
requirements of the enterprise. The characterization of an employee's services
as no longer necessary or sustainable, and therefore, properly terminable, was
an exercise of business judgment on the part of the employer. The wisdom or
soundness of such characterization or decision was not subject to discretionary
review on the part of the Labor Arbiter nor of the NLRC so long, of course, as
violation of law or merely arbitrary and malicious action is not shown.
In the case of International Macleod, Inc. v. Intermediate Appellate Court, 5 this
Court also considered the position of Government Relations Officer to have
become redundant in view of the appointment of the International Heavy
Equipment Corporation as the company's dealer with the government. It held
therein that the determination of the need for the phasing out of a department as
a labor and cost saving device because it was no longer economical to retain
said services is a management prerogative and the courts will not interfere with
the exercise thereof as long as no abuse of discretion or merely arbitrary or
malicious action on the part of management is shown.

Considering further that petitioner herein held a position which was definitely
managerial in character, Raytheon had a broad latitude of discretion in abolishing
his position. An employer has a much wider discretion in terminating employment
relationship of managerial personnel compared to rank and file employees. 7 The
reason obviously is that officers in such key positions perform not only functions
which by nature require the employer's full trust and confidence but also
functions that spell the success or failure of an enterprise.
Likewise destitute of merit is petitioner's imputation of unlawful discrimination
when Raytheon caused corollary functions appertaining to cost accounting to be
absorbed by Danny Ang Tan Chai, a resident alien without a working permit.
Article 40 of the Labor Code which requires employment permit refers to nonresident aliens. The employment permit is required for entry into the country for
employment purposes and is issued after determination of the non-availability of
a person in the Philippines who is competent, able and willing at the time of
application to perform the services for which the alien is desired. Since Ang Tan
Chai is a resident alien, he does not fall within the ambit of the provision.
Petitioner also assails Raytheon's choice of Ang Tan Chai to head the
Payroll/Mis/Finance Department, claiming that he is better qualified for the
position. It should be noted, however, that Ang Tan Chai was promoted to the
position during the middle part of 1988 or before the abolition of petitioner's
position in early 1989. Besides the fact that Ang Tan Chai's promotion thereto is a
settled matter, it has been consistently held that an objection founded on the
ground that one has better credentials over the appointee is frowned upon so
long as the latter possesses the minimum qualifications for the position. In the
case at bar, since petitioner does not allege that Ang Tan Chai does not qualify
for the position, the Court cannot substitute its discretion and judgment for that
which is clearly and exclusively management prerogative. To do so would take
away from the employer what rightly belongs to him as aptly explained
in National Federation of Labor Unions v. NLRC: 8
It is a well-settled rule that labor laws do not authorize
interference with the employer's judgment in the conduct
of his business. The determination of the qualification and
fitness of workers for hiring and firing, promotion or
reassignment are exclusive prerogatives of management.
The Labor Code and its implementing Rules do not vest
in the Labor Arbiters nor in the different Divisions of the
NLRC (nor in the courts) managerial authority. The
employer is free to determine, using his own discretion
and business judgment, all elements of employment,
"from hiring to firing" except in cases of unlawful
discrimination or those which may be provided by law.
There is none in the instant case.
Finding no grave abuse of discretion on the part of the National Labor Relations
Commission in reversing and annulling the decision of the Labor Arbiter and that
on the contrary, the termination of petitioner's employment was anchored on a
valid and authorized cause under Article 283 of the Labor Code, the instant
petition for certiorari must fail.
SO ORDERED.

In the same vein, this Court ruled in Bondoc v. People's Bank and Trust Co., 6 that
the bank's board of directors possessed the power to remove a department
manager whose position depended on the retention of the trust and confidence of
management and whether there was need for his services. Although some
vindictive motivation might have impelled the abolition of his position, this Court
expounded that it is undeniable that the bank's board of directors possessed the
power to remove him and to determine whether the interest of the bank justified
the existence of his department.
Indeed, an employer has no legal obligation to keep more employees than are
necessary for the operation of its business. Petitioner does not dispute the fact
that a cost accounting system was installed and used at Raytheon subsidiaries
and plants worldwide; and that the functions of his position involve the
submission of periodic reports utilizing computerized forms designed and
prescribed by the head office with the installation of said accounting system.
Petitioner attempts to controvert these realities by alleging that some of the
functions of his position were still indispensable and were actually dispersed to
another department. What these indispensable functions that were dispersed, he
failed however, to specify and point out. Besides, the fact that the functions of a
position were simply added to the duties of another does not affect the legitimacy
of the employer's right to abolish a position when done in the normal exercise of
its prerogative to adopt sound business practices in the management of its
affairs.

Narvasa, C.J., Padilla and Regalado, JJ., concur.

Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 166920
February 19, 2007
PACIFIC CONSULTANTS INTERNATIONAL ASIA, INC. and JENS PETER
HENRICHSEN, Petitioners,
vs.
KLAUS K. SCHONFELD, Respondent.
DECISION
CALLEJO, SR., J.:
Before us is a Petition for Review on Certiorari under Rule 45 of the Revised
Rules of Court of the Decision1 of the Court of Appeals (CA) in CA-G.R. SP No.
76563. The CA decision reversed the Resolution of the National Labor Relations
Commission (NLRC) in NLRC NCR CA No. 029319-01, which, in turn, affirmed
the Decision of the Labor Arbiter in NLRC NCR Case No. 30-12-04787-00
dismissing the complaint of respondent Klaus K. Schonfeld.

21

The antecedent facts are as follows:

8. Transportation: Included for in the remuneration.

Respondent is a Canadian citizen and was a resident of New Westminster,

British Columbia, Canada. He had been a consultant in the field of environmental
engineering and water supply and sanitation. Pacicon Philippines, Inc. (PPI) is a
corporation duly established and incorporated in accordance with the laws of the
Philippines. The primary purpose of PPI was to engage in the business of
providing specialty and technical services both in and out of the Philippines. 2 It is
a subsidiary of Pacific Consultants International of Japan (PCIJ). The president of
PPI, Jens Peter Henrichsen, who was also the director of PCIJ, was based in
Tokyo, Japan. Henrichsen commuted from Japan to Manila and vice versa, as
well as in other countries where PCIJ had business.

9. Leave Travels: You are entitled to two leave travels per

year.

In 1997, PCIJ decided to engage in consultancy services for water and sanitation
in the Philippines. In October 1997, respondent was employed by PCIJ, through
Henrichsen, as Sector Manager of PPI in its Water and Sanitation Department.
However, PCIJ assigned him as PPI sector manager in the Philippines. His
salary was to be paid partly by PPI and PCIJ.

Travel: Mobilization travel will be from New Westminster,

B.C., Canada.

On January 7, 1998, Henrichsen transmitted a letter of employment to

respondent in Canada, requesting him to accept the same and affix his
conformity thereto. Respondent made some revisions in the letter of employment
and signed the contract.3 He then sent a copy to Henrichsen. The letter of
employment reads:
Mr. Klaus K. Schonfeld
II-365 Ginger Drive
New Westminster, B.C.
Canada V3L 5L5
Tokyo 7

10. Shipment of Personal

Effects: The maximum allowance is US$4,000.00.
11. Mobilization

This letter is send (sic) to you in duplicate; we kindly request you to sign and
return one copy to us.
Yours sincerely,
Pacific Consultants International
Jens Peter Henrichsen
Above terms and conditions accepted
Date: 2 March 1998

January 1998
Dear Mr. Schonfeld,
Letter of Employment
This Letter of Employment with the attached General Conditions of Employment
constitutes the agreement under which you will be engaged by our Company on
the terms and conditions defined hereunder. In case of any discrepancies or
contradictions between this Letter of Employment and the General Conditions of
Employment, this Letter of Employment will prevail.
You will, from the date of commencement, be ["seconded"] to our subsidiary
Pacicon Philippines, Inc. in Manila, hereinafter referred as Pacicon. Pacicon will
provide you with a separate contract, which will define that part of the present
terms and conditions for which Pacicon is responsible. In case of any
discrepancies or contradictions between the present Letter of Employment and
the contract with Pacicon Philippines, Inc. or in the case that Pacicon should not
live up to its obligations, this Letter of Employment will prevail.
1. Project Country: The Philippines with possible shortterm assignments in other countries.

(Sgd.)
Klaus Schonfeld
as annotated and initialed4
Section 21 of the General Conditions of Employment appended to the letter of
employment reads:
21 Arbitration
Any question of interpretation, understanding or fulfillment of the conditions of
employment, as well as any question arising between the Employee and the
Company which is in consequence of or connected with his employment with the
Company and which can not be settled amicably, is to be finally settled, binding
to both parties through written submissions, by the Court of Arbitration in
London.5
Respondent arrived in the Philippines and assumed his position as PPI Sector
Manager. He was accorded the status of a resident alien.

2. Duty Station: Manila, the Philippines.

3. Family Status: Married.
4. Position: Sector Manager, Water and Sanitation.
5. Commencement: 1st October 1997.
6. Remuneration: US$7,000.00 per month. The amount
will be paid partly as a local salary (US$2,100.00 per
month) by Pacicon and partly as an offshore salary
(US$4,900.00) by PCI to bank accounts to be nominated
by you.
A performance related component corresponding to
17.6% of the total annual remuneration, subject to
satisfactory performance against agreed tasks and
targets, paid offshore.

As required by Rule XIV (Employment of Aliens) of the Omnibus Rules

Implementing the Labor Code, PPI applied for an Alien Employment Permit
(Permit) for respondent before the Department of Labor and Employment
(DOLE). It appended respondents contract of employment to the
application.1awphi1.net
On February 26, 1999, the DOLE granted the application and issued the Permit
to respondent. It reads:
Republic of the Philippines
Department of Labor & Employment
National Capital Region
ALIEN EMPLOYMENT PERMIT
ISSUED TO: SCHONFELD, KLAUS KURT
DATE OF BIRTH: January 11, 1942 NATIONALITY: Canadian

7. Accommodation: The company will provide partly

furnished accommodation to a rent including association
fees, taxes and VAT not exceeding the Pesos equivalent
of US$2,900.00 per month.

POSITION: VP WATER & SANITATION

EMPLOYER: PACICON PHILIPPINES, INC.

22

ADDRESS: 27/F Rufino Pacific Towers Bldg., Ayala Ave., Makati City
PERMIT
ISSUED ON: February 26, 1999 SIGNATURE OF BEARER:
VALID UNTIL: January 7, 2000 (Sgd.)
APPROVED: BIENVENIDO S. LAGUESMA
By: MAXIMO B. ANITO
REGIONAL DIRECTOR
(Emphasis supplied)6
Respondent received his compensation from PPI for the following periods:
February to June 1998, November to December 1998, and January to August
1999. He was also reimbursed by PPI for the expenses he incurred in connection
with his work as sector manager. He reported for work in Manila except for
occasional assignments abroad, and received instructions from Henrichsen. 7
On May 5, 1999, respondent received a letter from Henrichsen informing him that
his employment had been terminated effective August 4, 1999 for the reason that
PCIJ and PPI had not been successful in the water and sanitation sector in the
Philippines.8 However, on July 24, 1999, Henrichsen, by electronic
mail,9 requested respondent to stay put in his job after August 5, 1999, until such
time that he would be able to report on certain projects and discuss all the
opportunities he had developed.10 Respondent continued his work with PPI until
the end of business hours on October 1, 1999.
Respondent filed with PPI several money claims, including unpaid salary, leave
pay, air fare from Manila to Canada, and cost of shipment of goods to Canada.
PPI partially settled some of his claims (US$5,635.99), but refused to pay the
rest.
On December 5, 2000, respondent filed a Complaint 11 for Illegal Dismissal
against petitioners PPI and Henrichsen with the Labor Arbiter. It was docketed as
NLRC-NCR Case No. 30-12-04787-00.
In his Complaint, respondent alleged that he was illegally dismissed; PPI had not
notified the DOLE of its decision to close one of its departments, which resulted
in his dismissal; and they failed to notify him that his employment was terminated
after August 4, 1999. Respondent also claimed for separation pay and other
unpaid benefits. He alleged that the company acted in bad faith and disregarded
his rights. He prayed for the following reliefs:
1. Judgment be rendered in his favor ordering the respondents to
reinstate complainant to his former position without loss of seniority
and other privileges and benefits, and to pay his full backwages from
the time compensation was with held (sic) from him up to the time of
his actual reinstatement. In the alternative, if reinstatement is no
longer feasible, respondents must pay the complainant full
backwages, and separation pay equivalent to one month pay for
every year of service, or in the amount of US$16,400.00 as
separation pay;
2. Judgment be rendered ordering the respondents to pay the
outstanding monetary obligation to complainant in the amount of
US$10,131.76 representing the balance of unpaid salaries, leave pay,
cost of his air travel and shipment of goods from Manila to Canada;
and
3. Judgment be rendered ordering the respondent company to pay
the complainant damages in the amount of no less than US
$10,000.00 and to pay 10% of the total monetary award as attorneys
fees, and costs.
Other reliefs just and equitable under the premises are, likewise, prayed
for.12 1awphi1.net
Petitioners filed a Motion to Dismiss the complaint on the following grounds: (1)
the Labor Arbiter had no jurisdiction over the subject matter; and (2) venue was
improperly laid. It averred that respondent was a Canadian citizen, a transient
expatriate who had left the Philippines. He was employed and dismissed by

PCIJ, a foreign corporation with principal office in Tokyo, Japan. Since

respondents cause of action was based on his letter of employment executed in
Tokyo, Japan dated January 7, 1998, under the principle of lex loci contractus,
the complaint should have been filed in Tokyo, Japan. Petitioners claimed that
respondent did not offer any justification for filing his complaint against PPI
before the NLRC in the Philippines. Moreover, under Section 12 of the General
Conditions of Employment appended to the letter of employment dated January
7, 1998, complainant and PCIJ had agreed that any employment-related dispute
should be brought before the London Court of Arbitration. Since even the
Supreme Court had already ruled that such an agreement on venue is valid,
Philippine courts have no jurisdiction.13
Respondent opposed the Motion, contending that he was employed by PPI to
work in the Philippines under contract separate from his January 7, 1998 contract
of employment with PCIJ. He insisted that his employer was PPI, a Philippineregistered corporation; it is inconsequential that PPI is a wholly-owned subsidiary
of PCIJ because the two corporations have separate and distinct personalities;
and he received orders and instructions from Henrichsen who was the president
of PPI. He further insisted that the principles of forum non conveniens and lex
loci contractus do not apply, and that although he is a Canadian citizen,
Philippine Labor Laws apply in this case.
Respondent adduced in evidence the following contract of employment dated
January 9, 1998 which he had entered into with Henrichsen:
Mr. Klaus K. Schonfeld
II-365 Ginger Drive
New Westminster, B.C.
Canada V3L 5L5
Manila 9 January, 1998
Dear Mr. Schonfeld,
Letter of Employment
This Letter of Employment with the attached General Conditions of Employment
constitutes the agreement, under which you will be engaged by Pacicon
Philippines, Inc. on the terms and conditions defined hereunder.
1. Project Country: The Philippines with possible
assignments in other countries.
2. Duty Station: Manila, the Philippines.
3. Family Status: Married.
4. Position: Sector Manager Water and Sanitation
Sector.
5. Commencement: 1 January, 1998.
6. Remuneration: US$3,100.00 per month payable to a
bank account to be nominated by you.
7. Accommodation: The company will provide partly
furnished accommodation to a rent including association
fees, taxes and VAT not exceeding the Pesos equivalent
of US$2300.00 per month.
8. Transportation: Included for in the remuneration.
9. Shipment of Personal The maximum allowance is
US$2500.00 in Effects: connection with initial shipment of
personal effects from Canada.
10. Mobilization Travel: Mobilization travel will be from
New Westminster, B.C., Canada.
This letter is send (sic) to you in duplicate; we kindly request you to sign and
return one copy to us.

23

Yours sincerely,

B. ASSUMING ARGUENDO THAT THE CLOSURE OF

RESPONDENT COMPANYS WATER AND SANITATION
SECTOR WAS JUSTIFIABLE, PETITIONERS
DISMISSAL WAS INEFFECTUAL AS THE
DEPARTMENT OF LABOR AND EMPLOYMENT (DOLE)
AND PETITIONER WAS NOT NOTIFIED THIRTY (30)
DAYS BEFORE THE ALLEGED CLOSURE.19

Pacicon Philippines, Inc.

Jens Peter Henrichsen
President14
According to respondent, the material allegations of the complaint, not
petitioners defenses, determine which quasi-judicial body has jurisdiction.
Section 21 of the Arbitration Clause in the General Conditions of Employment
does not provide for an exclusive venue where the complaint against PPI for
violation of the Philippine Labor Laws may be filed. Respondent pointed out that
PPI had adopted two inconsistent positions: it was first alleged that he should
have filed his complaint in Tokyo, Japan; and it later insisted that the complaint
should have been filed in the London Court of Arbitration. 15
In their reply, petitioners claimed that respondents employer was PCIJ, which
had exercised supervision and control over him, and not PPI. Respondent was
dismissed by PPI via a letter of Henrichsen under the letterhead of PCIJ in
Japan.16 The letter of employment dated January 9, 1998 which respondent relies
upon did not bear his (respondents) signature nor that of Henrichsen.
On August 2, 2001, the Labor Arbiter rendered a decision granting petitioners
Motion to Dismiss. The dispositive portion reads:
WHEREFORE, finding merit in respondents Motion to Dismiss, the same is
hereby granted. The instant complaint filed by the complainant is dismissed for
lack of merit.
SO ORDERED.17
The Labor Arbiter found, among others, that the January 7, 1998 contract of
employment between respondent and PCIJ was controlling; the Philippines was
only the "duty station" where Schonfeld was required to work under the General
Conditions of Employment. PCIJ remained respondents employer despite his
having been sent to the Philippines. Since the parties had agreed that any
differences regarding employer-employee relationship should be submitted to the
jurisdiction of the court of arbitration in London, this agreement is controlling.

Respondent averred that the absence or existence of a written contract of

employment is not decisive of whether he is an employee of PPI. He maintained
that PPI, through its president Henrichsen, directed his work/duties as Sector
Manager of PPI; proof of this was his letter-proposal to the Development Bank of
the Philippines for PPI to provide consultancy services for the Construction
Supervision of the Water Supply and Sanitation component of the World BankAssisted LGU Urban Water and Sanitation Project.20 He emphasized that as
gleaned from Alien Employment Permit (AEP) No. M-029908-5017 issued to him
by DOLE on February 26, 1999, he is an employee of PPI. It was PPI president
Henrichsen who terminated his employment; PPI also paid his salary and
reimbursed his expenses related to transactions abroad. That PPI is a whollyowned subsidiary of PCIJ is of no moment because the two corporations have
separate and distinct personalities.
The CA found the petition meritorious. Applying the four-fold test 21 of determining
an employer-employee relationship, the CA declared that respondent was an
employee of PPI. On the issue of venue, the appellate court declared that, even
under the January 7, 1998 contract of employment, the parties were not
precluded from bringing a case related thereto in other venues. While there was,
indeed, an agreement that issues between the parties were to be resolved in the
London Court of Arbitration, the venue is not exclusive, since there is no
stipulation that the complaint cannot be filed in any other forum other than in the
Philippines.
On November 25, 2004, the CA rendered its decision granting the petition, the
decretal portion of which reads:
WHEREFORE, the petition is GRANTED in that the assailed Resolutions of the
NLRC are hereby REVERSED and SET ASIDE. Let this case be REMANDED to
the Labor Arbiter a quo for disposition of the case on the merits.
SO ORDERED.22

On appeal, the NLRC agreed with the disquisitions of the Labor Arbiter and
affirmed the latters decision in toto.18
Respondent then filed a petition for certiorari under Rule 65 with the CA where he
raised the following arguments:

A motion for the reconsideration of the above decision was filed by PPI and
Henrichsen, which the appellate court denied for lack of merit. 23
In the present recourse, PPI and Henrichsen, as petitioners, raise the following
issues:

I
I
WITH ALL DUE RESPECT, THE HONORABLE NATIONAL LABOR RELATIONS
COMMISSION GRAVELY ABUSED ITS DISCRETION AMOUNTING TO LACK
OR EXCESS OF JURISDICTION WHEN IT AFFIRMED THE LABOR ARBITERS
DECISION CONSIDERING THAT:
A. PETITIONERS TRUE EMPLOYER IS NOT PACIFIC CONSULTANTS
INTERNATIONAL OF JAPAN BUT RESPONDENT COMPANY, AND
THEREFORE, THE LABOR ARBITER HAS JURISDICTION OVER THE
INSTANT CASE; AND

THE COURT OF APPEALS GRAVELY ERRED IN RULING THAT AN

EMPLOYMENT RELATIONSHIP EXISTED BETWEEN PETITIONERS AND
RESPONDENT DESPITE THE UNDISPUTED FACT THAT RESPONDENT, A
FOREIGN NATIONAL, WAS HIRED ABROAD BY A FOREIGN CORPORATION,
EXECUTED HIS EMPLOYMENT CONTRACT ABROAD, AND WAS MERELY
"SECONDED" TO PETITIONERS SINCE HIS WORK ASSIGNMENT WAS IN
MANILA.
II

B. THE PROPER VENUE FOR THE PRESENT COMPLAINT IS THE

ARBITRATION BRANCH OF THE NLRC AND NOT THE COURT OF
ARBITRATION IN LONDON.
II
WITH ALL DUE RESPECT, THE HONORABLE NATIONAL LABOR RELATIONS
COMMISSION GRAVELY ABUSED ITS DISCRETION AMOUNTING TO LACK
OR EXCESS OF JURISDICTION WHEN IT AFFIRMED THE DISMISSAL OF
THE COMPLAINT CONSIDERING THAT PETITIONERS TERMINATION FROM
EMPLOYMENT IS ILLEGAL:
A. THE CLOSURE OF RESPONDENT COMPANYS
WATER AND SANITATION SECTOR WAS NOT BONA
FIDE.

THE COURT OF APPEALS GRAVELY ERRED IN RULING THAT THE LABOR

ARBITER A QUO HAS JURISDICTION OVER RESPONDENTS CLAIM
DESPITE THE UNDISPUTED FACT THAT RESPONDENT, A FOREIGN
NATIONAL, WAS HIRED ABROAD BY A FOREIGN CORPORATION,
EXECUTED HIS EMPLOYMENT CONTRACT ABROAD, AND HAD AGREED
THAT ANY DISPUTE BETWEEN THEM "SHALL BE FINALLY SETTLED BY THE
COURT OF ARBITRATION IN LONDON."24
Petitioners fault the CA for reversing the findings of the Labor Arbiter and the
NLRC. Petitioners aver that the findings of the Labor Arbiter, as affirmed by the
NLRC, are conclusive on the CA. They maintain that it is not within the province
of the appellate court in a petition for certiorari to review the facts and evidence
on record since there was no conflict in the factual findings and conclusions of
the lower tribunals. Petitioners assert that such findings and conclusions, having
been made by agencies with expertise on the subject matter, should be deemed
binding and conclusive. They contend that it was the PCIJ which employed
respondent as an employee; it merely seconded him to petitioner PPI in the
Philippines, and assigned him to work in Manila as Sector Manager. Petitioner

24

PPI, being a wholly-owned subsidiary of PCIJ, was never the employer of

respondent.

employment contract. Section 5, Rule XIV (Employment of Aliens) of the

Omnibus Rules provides:

Petitioners assert that the January 9, 1998 letter of employment which

respondent presented to prove his employment with petitioner PPI is of doubtful
authenticity since it was unsigned by the purported parties. They insist that PCIJ
paid respondents salaries and only coursed the same through petitioner PPI.
PPI, being its subsidiary, had supervision and control over respondents work,
and had the responsibilities of monitoring the "daily administration" of
respondent. Respondent cannot rely on the pay slips, expenses claim forms, and
reimbursement memoranda to prove that he was an employee of petitioner PPI
because these documents are of doubtful authenticity.

SECTION 1. Coverage. This rule shall apply to all aliens employed or seeking
employment in the Philippines and the present or prospective employers.

Petitioners further contend that, although Henrichsen was both a director of PCIJ
and president of PPI, it was he who signed the termination letter of respondent
upon instructions of PCIJ. This is buttressed by the fact that PCIJs letterhead
was used to inform him that his employment was terminated. Petitioners further
assert that all work instructions came from PCIJ and that petitioner PPI only
served as a "conduit." Respondents Alien Employment Permit stating that
petitioner PPI was his employer is but a necessary consequence of his being
"seconded" thereto. It is not sufficient proof that petitioner PPI is respondents
employer. The entry was only made to comply with the DOLE requirements.
There being no evidence that petitioner PPI is the employer of respondent, the
Labor Arbiter has no jurisdiction over respondents complaint.
Petitioners aver that since respondent is a Canadian citizen, the CA erred in
ignoring their claim that the principlesof forum non conveniens and lex loci
contractus are applicable. They also point out that the principal office, officers
and staff of PCIJ are stationed in Tokyo, Japan; and the contract of employment
of respondent was executed in Tokyo, Japan.
Moreover, under Section 21 of the General Conditions for Employment
incorporated in respondents January 7, 1998 letter of employment, the dispute
between respondent and PCIJ should be settled by the court of arbitration of
London. Petitioners claim that the words used therein are sufficient to show the
exclusive and restrictive nature of the stipulation on venue.
Petitioners insist that the U.S. Labor-Management Act applies only to U.S.
workers and employers, while the Labor Code of the Philippines applies only to
Filipino employers and Philippine-based employers and their employees, not to
PCIJ. In fine, the jurisdictions of the NLRC and Labor Arbiter do not extend to
foreign workers who executed employment agreements with foreign employers
abroad, although "seconded" to the Philippines. 25
In his Comment,26 respondent maintains that petitioners raised factual issues in
their petition which are proscribed under Section 1, Rule 45 of the Rules of Court.
The finding of the CA that he had been an employee of petitioner PPI and not of
PCIJ is buttressed by his documentary evidence which both the Labor Arbiter
and the NLRC ignored; they erroneously opted to dismiss his complaint on the
basis of the letter of employment and Section 21 of the General Conditions of
Employment. In contrast, the CA took into account the evidence on record and
applied case law correctly.
The petition is denied for lack of merit.

SECTION 2. Submission of list. All employers employing foreign nationals,

whether resident or non-resident, shall submit a list of nationals to the Bureau
indicating their names, citizenship, foreign and local address, nature of
employment and status of stay in the Philippines.
SECTION 3. Registration of resident aliens. All employed resident aliens shall
register with the Bureau under such guidelines as may be issued by it.
SECTION 4. Employment permit required for entry. No alien seeking
employment, whether as a resident or non-resident, may enter the Philippines
without first securing an employment permit from the Ministry. If an alien enters
the country under a non-working visa and wishes to be employed thereafter, he
may only be allowed to be employed upon presentation of a duly approved
employment permit.
SECTION 5. Requirements for employment permit applicants. The application
for an employment permit shall be accompanied by the following:
(a) Curriculum vitae duly signed by the applicant indicating his
educational background, his work experience and other data showing
that he possesses technical skills in his trade or profession.
(b) Contract of employment between the employer and the principal
which shall embody the following, among others:
1. That the non-resident alien worker shall comply with all
applicable laws and rules and regulations of the
Philippines;
2. That the non-resident alien worker and the employer
shall bind themselves to train at least two (2) Filipino
understudies for a period to be determined by the
Minister; and
3. That he shall not engage in any gainful employment
other than that for which he was issued a permit.
(c) A designation by the employer of at least two (2) understudies for
every alien worker. Such understudies must be the most ranking
regular employees in the section or department for which the
expatriates are being hired to insure the actual transfer of technology.
Under Section 6 of the Rule, the DOLE may issue an alien employment permit
based only on the following:
(a) Compliance by the applicant and his employer with the
requirements of Section 2 hereof;

It must be stressed that in resolving a petition for certiorari, the CA is not

proscribed from reviewing the evidence on record. Under Section 9 of Batas
Pambansa Blg. 129, as amended by R.A. No. 7902, the CA is empowered to
pass upon the evidence, if and when necessary, to resolve factual issues. 27 If it
appears that the Labor Arbiter and the NLRC misappreciated the evidence to
such an extent as to compel a contrary conclusion if such evidence had been
properly appreciated, the factual findings of such tribunals cannot be given great
respect and finality.28

(b) Report of the Bureau Director as to the availability or nonavailability of any person in the Philippines who is competent and
willing to do the job for which the services of the applicant are
desired;

Inexplicably, the Labor Arbiter and the NLRC ignored the documentary evidence
which respondent appended to his pleadings showing that he was an employee
of petitioner PPI; they merely focused on the January 7, 1998 letter of
employment and Section 21 of the General Conditions of Employment.

(d) Admissibility of the alien as certified by the Commission on

Immigration and Deportation;

Petitioner PPI applied for the issuance of an AEP to respondent before the
DOLE. In said application, PPI averred that respondent is its employee. To show
that this was the case, PPI appended a copy of respondents employment
contract. The DOLE then granted the application of PPI and issued the permit.
It bears stressing that under the Omnibus Rules Implementing the Labor Code,
one of the requirements for the issuance of an employment permit is the

(c) His assessment as to whether or not the employment of the

applicant will redound to the national interest;

(e) The recommendation of the Board of Investments or other

appropriate government agencies if the applicant will be employed in
preferred areas of investments or in accordance with the imperative
of economic development.
Thus, as claimed by respondent, he had an employment contract with petitioner
PPI; otherwise, petitioner PPI would not have filed an application for a Permit

25

with the DOLE. Petitioners are thus estopped from alleging that the PCIJ, not
petitioner PPI, had been the employer of respondent all along.

court of arbitration in London is an exclusive venue to bring forth any complaint

arising out of the employment contract.

We agree with the conclusion of the CA that there was an employer-employee

relationship between petitioner PPI and respondent using the four-fold test.
Jurisprudence is firmly settled that whenever the existence of an employment
relationship is in dispute, four elements constitute the reliable yardstick: (a) the
selection and engagement of the employee; (b) the payment of wages; (c) the
power of dismissal; and (d) the employers power to control the employees
conduct. It is the so-called "control test" which constitutes the most important
index of the existence of the employer-employee relationshipthat is, whether the
employer controls or has reserved the right to control the employee not only as to
the result of the work to be done but also as to the means and methods by which
the same is to be accomplished. Stated otherwise, an employer-employee
relationship exists where the person for whom the services are performed
reserves the right to control not only the end to be achieved but also the means
to be used in reaching such end. 29 We quote with approval the following ruling of
the CA:

Petitioners contend that respondent should have filed his Complaint in his place
of permanent residence, or where the PCIJ holds its principal office, at the place
where the contract of employment was signed, in London as stated in their
contract. By enumerating possible venues where respondent could have filed his
complaint, however, petitioners themselves admitted that the provision on venue
in the employment contract is indeed merely permissive.

[T]here is, indeed, substantial evidence on record which would erase any doubt
that the respondent company is the true employer of petitioner. In the case at bar,
the power to control and supervise petitioners work performance devolved upon
the respondent company. Likewise, the power to terminate the employment
relationship was exercised by the President of the respondent company. It is not
the letterhead used by the company in the termination letter which controls, but
the person who exercised the power to terminate the employee. It is also
inconsequential if the second letter of employment executed in the Philippines
was not signed by the petitioner. An employer-employee relationship may indeed
exist even in the absence of a written contract, so long as the four elements
mentioned in the Mafinco case are all present. 30
The settled rule on stipulations regarding venue, as held by this Court in the
vintage case of Philippine Banking Corporation v. Tensuan, 31 is that while they
are considered valid and enforceable, venue stipulations in a contract do not, as
a rule, supersede the general rule set forth in Rule 4 of the Revised Rules of
Court in the absence of qualifying or restrictive words. They should be
considered merely as an agreement or additional forum, not as limiting venue to
the specified place. They are not exclusive but, rather permissive. If the intention
of the parties were to restrict venue, there must be accompanying language
clearly and categorically expressing their purpose and design that actions
between them be litigated only at the place named by them. 32
In the instant case, no restrictive words like "only," "solely," "exclusively in this
court," "in no other court save ," "particularly," "nowhere else but/except ," or
words of equal import were stated in the contract.33 It cannot be said that the

Petitioners insistence on the application of the principle of forum non conveniens

must be rejected. The bare fact that respondent is a Canadian citizen and was a
repatriate does not warrant the application of the principle for the following
reasons:
First. The Labor Code of the Philippines does not include forum non
conveniens as a ground for the dismissal of the complaint. 34
Second. The propriety of dismissing a case based on this principle
requires a factual determination; hence, it is properly considered as
defense.35
Third. In Bank of America, NT&SA, Bank of America International,
Ltd. v. Court of Appeals,36 this Court held that:
x x x [a] Philippine Court may assume jurisdiction over the case if it chooses to
do so; provided, that the following requisites are met: (1) that the Philippine Court
is one to which the parties may conveniently resort to; (2) that the Philippine
Court is in a position to make an intelligent decision as to the law and the facts;
and, (3) that the Philippine Court has or is likely to have power to enforce its
decision. x x x
Admittedly, all the foregoing requisites are present in this case.
WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals in
CA-G.R. SP No. 76563 is AFFIRMED. This case is REMANDED to the Labor
Arbiter for disposition of the case on the merits. Cost against petitioners.
SO ORDERED.
ROMEO J. CALLEJO, SR.
Associate Justice

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