Page |

1
G.R. No. 71813 July 20, 1987
ROSALINA PEREZ ABELLA/HDA. DANAO-RAMONA, petitioners,
vs.
THE HONORABLE NATIONAL LABOR RELATIONS COMMISSION, ROMEO QUITCO and
RICARDO DIONELE, SR., respondents.
PARAS, J .:
This is a petition for review on certiorari of the April 8, 1985 Resolution of the Ministry of Labor and
Employment affirming the July 16, 1982 Decision of the Labor Arbiter, which ruled in favor of
granting separation pay to private respondents.
On June 27, 1960, herein petitioner Rosalina Perez Abella leased a farm land in Monteverde,
Negros Occidental, known as Hacienda Danao-Ramona, for a period of ten (10) years, renewable,
at her option, for another ten (10) years (Rollo, pp. 16-20).
On August 13, 1970, she opted to extend the lease contract for another ten (10) years (Ibid, pp.
26-27).
During the existence of the lease, she employed the herein private respondents. Private
respondent Ricardo Dionele, Sr. has been a regular farm worker since 1949 and he was promoted
to Cabo in 1963. On the other hand, private respondent Romeo Quitco started as a regular
employee in 1968 and was promoted to Cabo in November of the same year.
Upon the expiration of her leasehold rights, petitioner dismissed private respondents and turned
over the hacienda to the owners thereof on October 5, 1981, who continued the management,
cultivation and operation of the farm (Rollo, pp. 33; 89).
On November 20, 1981, private respondents filed a complaint against the petitioner at the Ministry
of Labor and Employment, Bacolod City District Office, for overtime pay, illegal dismissal and
reinstatement with backwages. After the parties had presented their respective evidence, Labor
Arbiter Manuel M. Lucas, Jr., in a Decision dated July 16, 1982 (Ibid, pp. 29-31), ruled that the
dismissal is warranted by the cessation of business, but granted the private respondents
separation pay. Pertinent portion of the dispositive portion of the Decision reads:
In the instant case, the respondent closed its business operation not by reason of
business reverses or losses. Accordingly, the award of termination pay in complainants'
favor is warranted.
WHEREFORE, the respondent is hereby ordered to pay the complainants separation pay
at the rate of half-month salary for every year of service, a fraction of six (6) months being
considered one (1) year. (Rollo pp. 29-30)
On appeal on August 11, 1982, the National Labor Relations Commission, in a Resolution dated
April 8, 1985 (Ibid, pp. 3940), affirmed the decision and dismissed the appeal for lack of merit.
On May 22, 1985, petitioner filed a Motion for Reconsideration (Ibid, pp. 41-45), but the same was
denied in a Resolution dated June 10, 1985 (Ibid, p. 46). Hence, the present petition (Ibid, pp. 3-
8).
The First Division of this Court, in a Resolution dated September 16, 1985, resolved to require the
respondents to comment (Ibid, p. 58). In compliance therewith, private respondents filed their
Comment on October 23, 1985 (Ibid, pp. 53-55); and the Solicitor General on December 17, 1985
(Ibid, pp. 71-73-B).
On February 19, 1986, petitioner filed her Consolidated Reply to the Comments of private and
public respondents (Ibid, pp. 80-81).
The First Division of this Court, in a Resolution dated March 31, 1986, resolved to give due course
to the petition; and to require the parties to submit simultaneous memoranda (Ibid., p. 83). In
compliance therewith, the Solicitor General filed his Memorandum on June 18, 1986 (Ibid, pp. 89-
94); and petitioner on July 23, 1986 (Ibid, pp. 96-194).
The petition is devoid of merit.
The sole issue in this case is
WHETHER OR NOT PRIVATE RESPONDENTS ARE ENTITLED TO SEPARATION PAY.
Petitioner claims that since her lease agreement had already expired, she is not liable for payment
of separation pay. Neither could she reinstate the complainants in the farm as this is a complete
cessation or closure of a business operation, a just cause for employment termination under
Article 272 of the Labor Code.
On the other hand, the legal basis of the Labor Arbiter in granting separation pay to the private
respondents is Batas Pambansa Blg. 130, amending the Labor Code, Section 15 of which,
specifically provides:
Sec 15 Articles 285 and 284 of the Labor Code are hereby amended to read as follows:
x x x x x x x x x
Art. 284. 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
establisment 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 Ministry of Labor

Page |
2
and Employment at least one (1) month before the intended date thereof. In case of
termination due to the installation of labor-saving devices or redundancy, the worker
affected thereby shall be entitled to a separation pay equivalent to at least his one (1)
month pay or 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 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 one (1) whole year.1avvphi1
There is no question that Article 284 of the Labor Code as amended by BP 130 is the law
applicable in this case.
Article 272 of the same Code invoked by the petitioner pertains to the just causes of termination.
The Labor Arbiter does not argue the justification of the termination of employment but applied
Article 284 as amended, which provides for the rights of the employees under the circumstances
of termination.
Petitioner then contends that the aforequoted provision violates the constitutional guarantee
against impairment of obligations and contracts, because when she leased Hacienda Danao-
Ramona on June 27, 1960, neither she nor the lessor contemplated the creation of the obligation
to pay separation pay to workers at the end of the lease.
Such contention is untenable.
This issue has been laid to rest in the case of Anucension v. National Labor Union (80 SCRA 368-
369 [1977]) where the Supreme Court ruled:
It should not be overlooked, however, that the prohibition to impair the obligation of
contracts is not absolute and unqualified. The prohibition is general, affording a broad
outline and requiring construction to fill in the details. The prohibition is not to read with
literal exactness like a mathematical formula for it prohibits unreasonable impairment
only. In spite of the constitutional prohibition the State continues to possess authority to
safeguard the vital interests of its people. Legislation appropriate to safeguard said
interest may modify or abrogate contracts already in effect. For not only are existing laws
read into contracts in order to fix the obligations as between the parties but the
reservation of essential attributes of sovereign power is also read into contracts as a
postulate of the legal order. All contracts made with reference to any matter that is subject
to regulation under the police power must be understood as made in reference to the
possible exercise of that power. Otherwise, important and valuable reforms may be
precluded by the simple device of entering into contracts for the purpose of doing that
which otherwise maybe prohibited. ...
In order to determine whether legislation unconstitutionally impairs contract of obligations,
no unchanging yardstick, applicable at all times and under all circumstances, by which the
validity of each statute may be measured or determined, has been fashioned, but every
case must be determined upon its own circumstances. Legislation impairing the obligation
of contracts can be sustained when it is enacted for the promotion of the general good of
the people, and when the means adopted must be legitimate, i.e. within the scope of the
reserved power of the state construed in harmony with the constitutional limitation of that
power. (Citing Basa vs. Federacion Obrera de la Industria Tabaquera y Otros
Trabajadores de Filipinas [FOITAF] [L-27113], November 19, 1974; 61 SCRA 93,102-
113]).
The purpose of Article 284 as amended is obvious-the protection of the workers whose
employment is terminated because of the closure of establishment and reduction of personnel.
Without said law, employees like private respondents in the case at bar will lose the benefits to
which they are entitled for the thirty three years of service in the case of Dionele and fourteen
years in the case of Quitco. Although they were absorbed by the new management of the
hacienda, in the absence of any showing that the latter has assumed the responsibilities of the
former employer, they will be considered as new employees and the years of service behind them
would amount to nothing.
Moreover, to come under the constitutional prohibition, the law must effect a change in the rights
of the parties with reference to each other and not with reference to non-parties.
As correctly observed by the Solicitor General, Article 284 as amended refers to employment
benefits to farm hands who were not parties to petitioner's lease contract with the owner of
Hacienda Danao-Ramona. That contract cannot have the effect of annulling subsequent
legislation designed to protect the interest of the working class.
In any event, it is well-settled that in the implementation and interpretation of the provisions of the
Labor Code and its implementing regulations, the workingman's welfare should be the primordial
and paramount consideration. (Volshel Labor Union v. Bureau of Labor Relations, 137 SCRA 43
[1985]). It is the kind of interpretation which gives meaning and substance to the liberal and
compassionate spirit of the law as provided for in Article 4 of the New Labor Code which states
that "all doubts in the implementation and interpretation of the provisions of this Code including its
implementing rules and regulations shall be resolved in favor of labor." The policy is to extend the
applicability of the decree to a greater number of employees who can avail of the benefits under
the law, which is in consonance with the avowed policy of the State to give maximum aid and
protection to labor. (Sarmiento v. Employees Compensation Commission, 144 SCRA 422 [1986]
citing Cristobal v. Employees Compensation Commission, 103 SCRA 329; Acosta v. Employees
Compensation Commission, 109 SCRA 209).
PREMISES CONSIDERED, the instant petition is hereby DISMISSED and the July 16, 1982
Decision of the Labor Arbiter and the April 8, 1985 Resolution of the Ministry of Labor and
Employment are hereby AFFIRMED.
SO ORDERED.


Page |
3
G.R. No. 155421 July 7, 2004
ELMER M. MENDOZA, petitioner,
vs.
RURAL BANK OF LUCBAN, respondent.


D E C I S I O N


PANGANIBAN, J .:
The law protects both the welfare of employees and the prerogatives of management. Courts will
not interfere with business judgments of employers, provided they do not violate the law, collective
bargaining agreements, and general principles of fair play and justice. The transfer of personnel
from one area of operation to another is inherently a managerial prerogative that shall be upheld if
exercised in good faith -- for the purpose of advancing business interests, not of defeating or
circumventing the rights of employees.
The Case
The Court applies these principles in resolving the instant Petition for Review
1
under Rule 45 of
the Rules of Court, assailing the June 14, 2002 Decision
2
and September 25, 2002 Resolution
3
of
the Court of Appeals (CA) in CA-GR SP No. 68030. The assailed Decision disposed as follows:
"WHEREFORE, the petition for certiorari is hereby DISMISSED for lack of merit."
4

The challenged Resolution denied petitioner's Motion for Reconsideration.
The Facts
On April 25, 1999, the Board of Directors of the Rural Bank of Lucban, Inc., issued Board
Resolution Nos. 99-52 and 99-53, which read:
"Board Res. No. 99-52
"'RESOLVED AS IT IS HEREBY RESOLVED' that in line with the policy of the bank to
familiarize bank employees with the various phases of bank operations and further
strengthen the existing internal control system[,] all officers and employees are subject to
reshuffle of assignments. Moreover, this resolution does not preclude the transfer of
assignment of bank officers and employees from the branch office to the head office and
vice-versa."
"Board Res. No. 95-53
"Pursuant to Resolution No. 99-52, the following branch employees are hereby reshuffled
to their new assignments without changes in their compensation and other benefits.
NAME OF EMPLOYEES PRESENT ASSIGNMENT NEW ASSIGNMENT
JOYCE V. ZETA Bank Teller C/A Teller
CLODUALDO ZAGALA C/A Clerk Actg. Appraiser
ELMER L. MENDOZA Appraiser Clerk-Meralco Collection
CHONA R. MENDOZA Clerk-Meralco Collection Bank Teller"
5

In a letter dated April 30, 1999, Alejo B. Daya, the bank's board chairman, directed Briccio V.
Cada, the manager of the bank's Tayabas branch, to implement the reshuffle.
6
The new
assignments were to "be effective on May 1, 1999 without changes in salary, allowances, and
other benefits received by the aforementioned employees."
7

On May 3, 1999, in an undated letter addressed to Daya, Petitioner Elmer Mendoza expressed his
opinion on the reshuffle, as follows:
"RE: The recent reshuffle of employees as per
Board Resolution dated April 25, 1999
"Dear Sir:
"This is in connection with the aforementioned subject matter and which the undersigned
received on April 25, 1999.
"Needless to state, the reshuffling of the undersigned from the present position as
Appraiser to Clerk-Meralco Collection is deemed to be a demotion without any legal
basis. Before this action on your part[,] the undersigned has been besieged by intrigues
due to [the] malicious machination of a certain public official who is bruited to be your
good friend. These malicious insinuations were baseless and despite the fact that I have
been on my job as Appraiser for the past six (6) years in good standing and never
involved in any anomalous conduct, my being reshuffled to [C]lerk-[M]eralco [C]ollection
is a blatant harassment on your part as a prelude to my termination in due time. This will
constitute an unfair labor practice.

Page |
4
"Meanwhile, may I beseech your good office that I may remain in my position as
Appraiser until the reason [for] my being reshuffled is made clear.
"Your kind consideration on this request will be highly appreciated."
8

On May 10, 1999, Daya replied:
"Dear Mr. Mendoza,
"Anent your undated letter expressing your resentment/comments on the recent
management's decision to reshuffle the duties of bank employees, please be informed
that it was never the intention (of management) to downgrade your position in the bank
considering that your due compensation as Bank Appraiser is maintained and no future
reduction was intended.
"Aside from giving bank employees a wider experience in various banking operations, the
reshuffle will also afford management an effective tool in providing the bank a sound
internal control system/check and balance and a basis in evaluating the performance of
each employee. A continuing bankwide reshuffle of employees shall be made at the
discretion of management which may include bank officers, if necessary as expressed in
Board Resolution No. 99-53, dated April 25, 1999. Management merely shifted the duties
of employees, their position title [may be] retained if requested formally.
"Being a standard procedure in maintaining an effective internal control system
recommended by the Bangko Sentral ng Pilipinas, we believe that the conduct of
reshuffle is also a prerogative of bank management."
9

On June 7, 1999, petitioner submitted to the bank's Tayabas branch manager a letter in which he
applied for a leave of absence from work:
"Dear Sir:
"I wish I could continue working but due to the ailment that I always feel every now and
then, I have the honor to apply for at least ten (10) days sick leave effective June 7, 1999.
"Hoping that this request [merits] your favorable and kind consideration and
understanding."
10

On June 21, 1999, petitioner again submitted a letter asking for another leave of absence for
twenty days effective on the same date.
11

On June 24, 1999, while on his second leave of absence, petitioner filed a Complaint before
Arbitration Branch No. IV of the National Labor Relations Commission (NLRC). The Complaint --
for illegal dismissal, underpayment, separation pay and damages -- was filed against the Rural
Bank of Lucban and/or its president, Alejo B. Daya; and its Tayabas branch manager, Briccio V.
Cada. The case was docketed as NLRC Case SRAB-IV-6-5862-99-Q.
12

The labor arbiter's June 14, 2000 Decision upheld petitioner's claims as follows:
"WHEREFORE, premises considered, judgment is hereby rendered as follows:
1. Declaring respondents guilty of illegal dismissal.
2. Ordering respondents to reinstate complainant to his former position without
loss of seniority rights with full backwages from date of dismissal to actual
reinstatement in the amount of P55,000.00 as of June 30, 2000.
3. Ordering the payment of separation pay if reinstatement is not possible in the
amount ofP30,000.00 in addition to 13
th
month pay of P5,000.00 and the
usual P10,000.00 annual bonus afforded the employees.
4. Ordering the payment of unpaid salary for the period covering July 1-30, 1999
in the amount ofP5,000.00
5. Ordering the payment of moral damages in the amount of P50,000.00.
6. Ordering the payment of exemplary damages in the amount of P25,000.00
7. Ordering the payment of Attorney's fees in the amount of P18,000.00 which is
10% of the monetary award."
13

On appeal, the NLRC reversed the labor arbiter.
14
In its July 18, 2001 Resolution, it held:
"We can conceive of no reason to ascribe bad faith or malice to the respondent bank for
its implementation of its Board Resolution directing the reshuffle of employees at its
Tayabas branch to positions other than those they were occupying. While at first the
employees thereby affected would experience difficulty in adjusting to their new jobs, it
cannot be gainsaid that the objective for the reshuffle is noble, as not only would the
employees obtain additional knowledge, they would also be more well-rounded in the
operations of the bank and thus help the latter further strengthen its already existing
internal control system.
"The only inconvenience, as [w]e see it, that the [petitioner] may have experienced is that
from an appraiser he was made to perform the work of a clerk in the collection of Meralco
payments, which he may have considered as beneath him and his experience, being a
pioneer employee. But it cannot be discounted either that other employees at the
Tayabas branch were similarly reshuffled. The only logical conclusion therefore is that the
Board Resolution was not aimed solely at the [petitioner], but for all the other employees

Page |
5
of the x x x bank as well. Besides, the complainant has not shown by clear, competent
and convincing evidence that he holds a vested right to the position of Appraiser. x x x.
"How and by what manner a business concern conducts its affairs is not for this
Commission to interfere with, especially so if there is no showing, as in the case at bar,
that the reshuffle was motivated by bad faith or ill-will. x x x."
15

After the NLRC denied his Motion for Reconsideration,
16
petitioner brought before the CA a
Petition for Certiorari
17
assailing the foregoing Resolution.
Ruling of the Court of Appeals
Finding that no grave abuse of discretion could be attributed to the NLRC, the CA Decision ruled
thus:
"The so-called 'harassment' which Mendoza allegedly experienced in the aftermath of the
reshuffling of employees at the bank is but a figment of his imagination as there is no
evidence extant on record which substantiates the same. His alleged demotion, the 'cold
shoulder' stance, the things about his chair and table, and the alleged reason for the
harassment are but allegations bereft of proof and are perforce inadmissible as self-
serving statements and can never be considered repositories of truth nor serve as
foundations of court decisions anent the resolution of the litigants' rights.
"When Mendoza was reshuffled to the position of clerk at the bank, he was not demoted
as there was no [diminution] of his salary benefits and rank. He could even retain his
position title, had he only requested for it pursuant to the reply of the Chairman of the
bank's board of directors to Mendoza's letter protesting the reshuffle. There is, therefore,
no cause to doubt the reasons which the bank propounded in support of its move to
reshuffle its employees, viz:
1. to 'familiarize bank employees with the various phases of bank operations,'
and
2. to 'further strengthen the existing internal control system' of the bank.
"The reshuffling of its employees was done in good faith and cannot be made the basis of
a finding of constructive dismissal.
"The fact that Mendoza was no longer included in the bank's payroll for July 1 to 15, 1999
does not signify that the bank has dismissed the former from its employ. Mendoza
separated himself from the bank's employ when, on June 24, 1999, while on leave, he
filed the illegal dismissal case against his employer for no apparent reason at all."
18

Hence, this Petition.
19

The Issues
Petitioner raises the following issues for our consideration:
"I. Whether or not the petitioner is deemed to have voluntarily separated himself from the
service and/or abandoned his job when he filed his Complaint for constructive and
consequently illegal dismissal;
"II. Whether or not the reshuffling of private respondent'[s] employees was done in good
faith and cannot be made as the basis of a finding of constructive dismissal, even as the
[petitioner's] demotion in rank is admitted by both parties;
"III. Whether or not the ruling in the landmark case of Ruben Serrano vs. NLRC [and
Isetann Department Store (323 SCRA 445)] is applicable to the case at bar;
"IV. Whether or not the Court of Appeals erred in dismissing the petitioner's money
claims, damages, and unpaid salaries for the period July 1-30, 1999, although this was
not disputed by the private respondent; and
"V. Whether or not the entire proceedings before the Honorable Court of Appeals and the
NLRC are a nullity since the appeal filed by private respondent before the NLRC on
August 5, 2000 was on the 15
th
day or five (5) days beyond the reglem[e]ntary period of
ten (10) days as provided for by law and the NLRC Rules of Procedure."
20

In short, the main issue is whether petitioner was constructively dismissed from his employment.
The Court's Ruling
The Petition has no merit.
Main Issue:
Constructive Dismissal
Constructive dismissal is defined as an involuntary resignation resorted to when continued
employment is rendered impossible, unreasonable or unlikely; when there is a demotion in rank or
a diminution of pay; or when a clear discrimination, insensibility or disdain by an employer
becomes unbearable to the employee.
21
Petitioner argues that he was compelled to file an action
for constructive dismissal, because he had been demoted from appraiser to clerk and not given
any work to do, while his table had been placed near the toilet and eventually removed.
22
He adds
that the reshuffling of employees was done in bad faith, because it was designed primarily to force
him to resign.
23

Management Prerogative
to Transfer Employees

Page |
6
Jurisprudence recognizes the exercise of management prerogatives. For this reason, courts often
decline to interfere in legitimate business decisions of employers.
24
Indeed, labor laws discourage
interference in employers' judgments concerning the conduct of their business.
25
The law must
protect not only the welfare of employees, but also the right of employers.
In the pursuit of its legitimate business interest, management has the prerogative to transfer or
assign employees from one office or area of operation to another -- provided there is no demotion
in rank or diminution of salary, benefits, and other privileges; and the action is not motivated by
discrimination, made in bad faith, or effected as a form of punishment or demotion without
sufficient cause.
26
This privilege is inherent in the right of employers to control and manage their
enterprise effectively.
27
The right of employees to security of tenure does not give them vested
rights to their positions to the extent of depriving management of its prerogative to change their
assignments or to transfer them.
28

Managerial prerogatives, however, are subject to limitations provided by law, collective bargaining
agreements, and general principles of fair play and justice.
29
The test for determining the validity of
the transfer of employees was explained in Blue Dairy Corporation v. NLRC
30
as follows:
"[L]ike other rights, there are limits thereto. The managerial prerogative to transfer
personnel must be exercised without grave abuse of discretion, bearing in mind the basic
elements of justice and fair play. Having the right should not be confused with the manner
in which that right is exercised. Thus, it cannot be used as a subterfuge by the employer
to rid himself of an undesirable worker. In particular, the employer must be able to show
that the transfer is not unreasonable, inconvenient or prejudicial to the employee; nor
does it involve a demotion in rank or a diminution of his salaries, privileges and other
benefits. Should the employer fail to overcome this burden of proof, the employee's
transfer shall be tantamount to constructive dismissal, which has been defined as a
quitting because continued employment is rendered impossible, unreasonable or unlikely;
as an offer involving a demotion in rank and diminution in pay. Likewise, constructive
dismissal exists when an act of clear discrimination, insensibility or disdain by an
employer has become so unbearable to the employee leaving him with no option but to
forego with his continued employment."
31

Petitioner's Transfer Lawful
The employer bears the burden of proving that the transfer of the employee has complied with the
foregoing test. In the instant case, we find no reason to disturb the conclusion of the NLRC and
the CA that there was no constructive dismissal. Their finding is supported by substantial evidence
-- that amount of relevant evidence that a reasonable mind might accept as justification for a
conclusion.
32

Petitioner's transfer was made in pursuit of respondent's policy to "familiarize bank employees with
the various phases of bank operations and further strengthen the existing internal control
system"
33
of all officers and employees. We have previously held that employees may be
transferred -- based on their qualifications, aptitudes and competencies -- to positions in which
they can function with maximum benefit to the company.
34
There appears no justification for
denying an employer the right to transfer employees to expand their competence and maximize
their full potential for the advancement of the establishment. Petitioner was not singled out; other
employees were also reassigned without their express consent.
Neither was there any demotion in the rank of petitioner; or any diminution of his salary, privileges
and other benefits. This fact is clear in respondent's Board Resolutions, the April 30, 1999 letter of
Bank President Daya to Branch Manager Cada, and the May 10, 1999 letter of Daya to petitioner.
On the other hand, petitioner has offered no sufficient proof to support his allegations. Given no
credence by both lower tribunals was his bare and self-serving statement that he had been
positioned near the comfort room, made to work without a table, and given no work
assignment.
35
Purely conjectural is his claim that the reshuffle of personnel was a harassment in
retaliation for an alleged falsification case filed by his relatives against a public official.
36
While the
rules of evidence prevailing in courts of law are not controlling in proceedings before the
NLRC,
37
parties must nonetheless submit evidence to support their contentions.
Secondary Issues:
Serrano v. NLRC Inapplicable
Serrano v. NLRC
38
does not apply to the present factual milieu. The Court ruled therein that the
lack of notice and hearing made the dismissal of the employee ineffectual, but not necessarily
illegal.
39
Thus, the procedural infirmity was remedied by ordering payment of his full back wages
from the time of his dismissal.
40
The absence of constructive dismissal in the instant case
precludes the application of Serrano. Because herein petitioner was not dismissed, then he is not
entitled to his claimed monetary benefits.
Alleged Nullity of NLRC
and CA Proceedings
Petitioner argues that the proceedings before the NLRC and the CA were void, since respondent's
appeal before the NLRC had allegedly been filed beyond the reglementary period.
41
A careful
scrutiny of his Petition for Review
42
with the appellate court shows that this issue was not raised
there. Inasmuch as the instant Petition challenges the Decision of the CA, we cannot rule on
arguments that were not brought before it. This ruling is consistent with the due-process
requirement that no question shall be entertained on appeal, unless it has been raised in the court
below.
43

WHEREFORE, this Petition is DENIED, and the June 14, 2002 Decision and the September 25,
2002 Resolution of the Court of Appeals are AFFIRMED. Costs against petitioner.
SO ORDERED.


Page |
7
G.R. No. 85668 August 10, 1989
GELMART INDUSTRIES PHILS., INC., petitioner,
vs.
THE HON. NATIONAL LABOR RELATIONS COMMISSION AND FELIX FRANCIS, respondents.
Bienvenido S. Hernandez & Associates for petitioner.
Koronado B. Apuzen for private respondent.

GANCAYCO, J .:
At issue in this petition is whether or not the National Labor Relations Commission (hereinafter
referred to as NLRC) committed a grave abuse of discretion amounting to lack or excess of
jurisdiction in ordering the reinstatement of private respondent to his former position with payment
of backwages equivalent to six (6) months.
1

As revealed by the records, the background facts are as follows:
Private respondent Felix Francis started working as an auto-mechanic for petitioner Gelmart
Industries Phils., Inc. (hereinafter referred to as GELMART) sometime in 1971. As such, his work
consisted of the repair of engines and underchassis, as well as trouble shooting and overhauling
of company vehicles. He is likewise entrusted with some tools and spare parts in furtherance of
the work assigned to him.
On April 11, 1987, private respondent was caught by the security guards taking out of GELMART's
premises one (1) plastic container filled with about 16 ounces of "used' motor oil, without the
necessary gate pass to cover the same as required under GELMART's rules and regulations. By
reason thereof, petitioner, on April 13, 1987, was placed under preventive suspension pending
investigation for violation of company rules and regulations. Under the said rules, theft and/or
pilferage of company property merits an outright termination from employment.
After due investigation, or on May 20, 1987, private respondent was found guilty of theft of
company property. As a consequence, his services were severed.
Thereafter, private respondent filed a complaint for illegal dismissal before the NLRC. In a decision
dated February 26, 1988, Labor Arbiter Ceferina J. Diosana ruled that private respondent was
illegally dismissed and, accordingly, ordered the latter's reinstatement with full backwages from
April 13, 1987 up to the time of actual reinstatement.
2

The ground relied upon by the labor arbiter in her decision is worth quoting hereunder, to wit:
The most important aspect that should be considered in interpreting this rule
(referring to the company's rules on theft and pilferages) is the deprivation of the
company of property belonging to it without any compensation. Hence, the
property that must be stolen or pilfered must be property which has value.
x x x.
x x x.
In the respondent company, ... the used oil is thrown away by the mechanics. ...
In other words, the taking by complainant of the subject 16 ounces of used oil did
not deprive the respondent company of anything. As it appears, the said used oil
for as part of the waste that should be thrown away and the respondent company
had no use for the same, hence, the respondent company was not deprived of
any property ... and, therefore, and (sic) it is the position of this Labor Arbiter
that there was no stealing or pilferage to speak of.
3
(Emphasis supplied.)
From this decision, GELMART interposed an appeal with the NLRC. In its decision dated October
21, 1988, the NLRC affirmed with modification the ruling of Labor Arbiter Diosana,
4
the dispositive
portion of which reads as follows:
WHEREFORE, in view of the foregoing, the decision is hereby MODIFIED.
Respondent-appellant is hereby directed to reinstate complainant-appellee to his
former position without loss of seniority rights and to pay him backwages
equivalent to six (6) months.
SO ORDERED.
5

On December 12, 1988, GELMART filed before this Court a special civil action for certiorari with a
prayer for the issuance of a temporary restraining order.
On January 18, 1989, this Court, without necessarily giving due course to the petition, issued a
temporary restraining order enjoining respondents from enforcing the assailed decision. On the
same date, this Court required respondents to comment on the petition.
Aside from the substantive issues raised in their comment which will be discussed later on in this
decision, public respondent pointed to a procedural error allegedly committed by petitioner.
6
The
Solicitor General contends that petitioner failed to exhaust "[t]he administrative remedies afforded by
law ... before resort can be had to the courts ...
7
More specifically, our attention is called to the fact that
no motion for reconsideration of the NLRC decision was filed by petitioner. The Solicitor General then
concludes that "[s]ince petitioners failed to avail of the plain, speedy and adequate remedy accorded to
them in the ordinary course of law ..., the instant petition for certiorari ran is prematurely filed, and
hence, does not state a cause of action.
8


Page |
8
The legal provision pertinent to this issue is found in Article 223 of the Labor Code which provides,
in part:
ART. 223. Appeal. ... .
x x x.
The decision of the Commission shall be immediately executory even pending
appeal ... (Emphasis supplied.)
From this provision, it can be gleaned that the filing of a motion for reconsideration may not prove
to be an adequate remedy. For one, assuming that a motion for reconsideration is filed, nowhere
does it state that the filing thereof would automatically suspend the execution of the decision.
Second, although a motion for reconsideration has often been considered a condition precedent
for granting the writ of certiorari, this rule, however, finds exception in cases where execution had
been ordered and the need for relief is extremely urgent.
9

This Court is not unaware of Section 2, Rule XI of the Revised Rules of the National Labor
Relations Commission which provides in paragraphs (a) and (b) thereof:
See. 2. Finality of Decisions of the Commission
(a) The decisions, resolutions or orders of the Commission shall become
executory after ten (10) calendar days from receipt of the same.
(b) Should there be a motion for reconsideration in accordance with Sec. 9, Rule
X of these Rules, the decision shall be executory after 10 days from receipt of the
resolution on such motion.
x x x.
However, this Court has already ruled against the validity of the abovecited rule, particularly
Section 2, Rule XI, paragraph (a) in Juan vs. Musngi.
10
Interpreting the word "immediately" in Article
223 of the Labor Code to mean "without interval of time" or "without delay," this Court declared that the
NLRC rules which provide that decisions, resolutions or orders of the Commission shall become
executory after ten (10) calendar days from receipt thereof cannot prevail over Article 223 of the Labor
Code. Further amplifying on this ruling, this Court stated that administrative regulations under legislative
authority by a particular department must be in harmony with the provision of the law for the sole
purpose of carrying into effect its general provisions.
11
Otherwise stated, no period of time need elapse
before the decision of the NLRC becomes executory.
From the foregoing, it will be seen that a motion for reconsideration may not be a plain, speedy
and adequate remedy. Hence, a petition for certiorari with this Court with a prayer for the issuance
of a temporary restraining order is but a proper remedy to forestall the immediate execution of the
assailed decision.
The Court will now look into the substance of this petition. In their petition, GELMART ascribes
grave abuse of discretion on the part of the NLRC for rendering a decision that is contrary to law
and existing jurisprudence.
We find no merit in this petition.
Consistent with the policy of the State to bridge the gap between the underprivileged workingmen
and the more affluent employers, the NLRC rightfully tilted the balance in favor of the workingmen
and this was done without being blind to the concomitant right of the employer to the protection
of his property. The NLRC went on to say as follows:
We do not fully concur with the findings of the Labor Arbiter. Complainant-
appellee's suspension prior to termination had sufficient basis. We disagree with
the conclusion that complainant-appellee did not violate respondent-appellant's
rule requiring a gate pass for taking out company property as the used motor oil
was not really in a sense ' property' considering that it was plain waste and had
no commercial value. ... Used motor oil is not plain waste because it had its use
to respondent-appellant's motor pool. ... Besides, it is not for complainant-
appellee to interpret the rule according to his own understanding. Respondent
appellant had the right to interpret the rule and ... to exact discipline ... in the light
of its policy to instill discipline on its 6,000 workforce.
We find however, complainant-appellee's dismissal unwarranted. ... The penalty
of preventive suspension was sufficient punishment for the violation under the
circumstances. ...
12
(Emphasis supplied)
Thus, without being too harsh to the employer, on the one hand, and naively liberal to labor, on
the other, the NLRC correctly pointed out that private respondent cannot totally escape liability for
what is patently a violation of company rules and regulations.
To reiterate, be it of big or small commercial value, intended to be re-used or altogether disposed
of or wasted, the "used" motor oil still remains, in legal contemplation, the property of GELMART.
As such, to take the same out of GELMART's premises without the corresponding gate pass is a
violation of the company rule on theft and/or pilferage of company property. However, as this
Court ruled in Meracap vs. International Ceramics Mfg. Co., Inc., "[w]here a penalty less punitive
would suffice, whatever missteps may be committed by labor ought not to be visited with a
consequence so severe.
13
On this score, it is very difficult for this Court to discern grave abuse of
discretion on the part of the NLRC in modifying the appealed decision. The suspension imposed upon
private respondent is a sufficient penalty for the misdemeanor committed.
As stated earlier, petitioner assails the NLRC decision on the ground that the same is contrary to
existing jurisprudence, particularly citing in support thereof Firestone Tire and Rubber Co. of the
Phil. vs. Lariosa
14
Petitioner contends that by virtue of this ruling they have the right to dismiss private
respondent from employment on the ground of breach of trust or loss of confidence resulting from theft
of company property.

Page |
9
We believe otherwise.
There is nothing in Firestone which categorically gives management an unhampered right in
terminating an employee's services. The, decision in Firestone specifically focuses only on the
legality of a dismissal by reason of acts of dishonesty in the handling of company property for what
was involved in that case is theft of sixteen (16) flannel swabs which were supposed to be used to
clean certain machineries in the company.
15
In fact, a careful review of the cases cited
in Firestone
16
will readily reveal that the underlying reason behind sustaining the personam. of
dismissal or outright termination is that, under the circumstances obtaining in those cases, there exists
ample reason to distrust the employees concerned.
Thus, in upholding the dismissal of a cashier found guilty of misappropriating corporate funds, this
Court, in Metro Drug,"
17
made, a distinction between managerial personnel and-in other employees
occupying positions of trust and-in confidence from ordinary employees. On the other hand, in Dole
Philippines,
18
this Court spoke of the "nature of participation" which renders one absolutely unworthy of
the trust and-in confidence demanded by the position in upholding the dismissal of employee found
guilty of illegally selling for their philosophy benefit two (2) drums of crude oil belonging to the company.
Additionally, in Firestone, it clearly appears that to retain the employee would "[i]n the long run,
endanger the company's viability.
19

The, Court rules that these circumstances are not present in this instant case.
Contrary to the assertion of petitioner, the ruling in Firestone does not preclude the NLRC from
looking into the particular facts of the case to determine if there is ample reason to dismiss an
employee charged and subsequently found guilty of theft of company property. The, said decision
cannot be deemed as a limitation on the right of the State in the exercise of its paramount police
power to regulate or temper the prerogative of management to dismiss an erring
employee.
20
Consequently, even when there exists some rules agreed upon between the employer
and-in the employee, it cannot preclude the State from inquiring on whether or not its rigid application
would work too harshly on the employee.
Considering that private respondent herein has no previous derogatory record in his fifteen (15)
years of service with petitioner GELMART the value of the property pilfered (16 ounces of used
motor oil) is very minimal, plus the fact that petitioner failed to reasonably establish that non-
dismissal of private respondent would work undue prejudice to the viability of their operation or is
patently inimical to the company's interest, it is more in consonance with the policy of the State, as
embodied in the Constitution, to resolve all doubts in favor of labor. This is our ruling in Philippine
Air Lines, Inc. vs. Philippine Air Lines Employees Association
21
involving as it does essentially the
same facts and in circumstances. At this point, this Court does not see any reason to deviate from the
said ruling.
WHEREFORE, in view of the foregoing, the petition is DISMISSED for lack of merit. The,
restraining order issued by this Court on January 18, 1989 enjoining the enforcement of the
questioned decision of the National Labor Relations Commission is hereby lifted. No
pronouncement as to costs.
SO ORDERED.


Page |
10
PAMPANGA BUS COMPANY, INC., petitioner, vs. PAMBUSCO
EMPLOYEES UNION, INC., respondent.
G.R. No. 46739 | 1939-09-23

D E C I S I O N


MORAN, J:

On May 31, 1939, the Court of Industrial Relations issued an order, directing the petitioner herein,
Pampanga Bus Company, Inc., to recruit from the respondent, Pambusco Employees' Union, Inc.,
new employees or laborers it may need to replace members of the union who may be dismissed
from the service of the company, with the proviso that, if the union fails to provide employees
possessing the necessary qualifications, the company may employ any other persons it may
desire. This order, in substance and in effect, compels the company, against its will, to employ
preferentially, in its service, the members of the union.

We hold that the court has no authority to issue such compulsory order. The general right to make
a contract in relation to one's business is an essential part of the liberty of the citizens protected by
the due process clause of the Constitution. The right of a laborer to sell his labor to such person
as he may choose is, in its essence, the same as the right of an employer to purchase labor from
any person whom it chooses. The employer and the employee have thus an equality of right
guaranteed by the Constitution. "If the employer can compel the employer to work against the
latter's will, this is servitude. If the employer can compel the employer to give him work against the
employer's will, this is oppression." (Mills vs. United States Printing Co., 99 App. Div., 605; 91 N.
Y. S., 186, 189-192.)

Section 2 of Commonwealth Act No. 213 confers upon labor organizations the right "to collective
bargaining with employers for the purpose of seeking better working and living conditions, fair
wages, and shorter working hours for laborers, and, in general, to promote the material, social and
moral well-being of their members." The term "collective bargaining" denotes, in common usage
as well as in legal terminology, negotiations looking toward a collective agreement. This provision
in granting to labor Unions merely the right of collective bargaining, impliedly recognizes the
employer's liberty to enter or not into collective agreements with them. Indeed, we know of no
provision of the law compelling such agreements. Such a fundamental curtailment of freedom, if
ever intended by law upon grounds of public policy, should be elected in a manner that is beyond
all possibility of doubt. The supreme mandates of the Constitution should not be loosely brushed
aside.As held by the Supreme Court of the United States in Hitchman Coal & Co. vs. Mitchell
(245 U. S., 229; 62 Law. ed., 260, 276):

" . . .Whatever may be the advantages of 'collective bargaining,' it is not bargaining at all, in any
just sense, unless it is voluntary on both sides. The same liberty which enables men to form
unions, and through the union to enter into agreements with employers willing to agree, entitles
other men to remain independent of the union, and other employers to agree with them to employ
no man who owes any allegiance or obligation to the union. In the latter case, as in the former, the
parties are entitled to be protected by the law in the enjoyment of the benefits on any lawful
agreement they may make. This court repeatedly has held that the employer is a free to make
non-membership in a union a condition of employment, as the working man is free to join the
union, and that this is a part of the constitutional rights of personal liberty and private property, not
to be taken away even by legislation, unless through some proper exercise of the paramount
police power. (Adair vs. United States, 208 U. S. 161, 174; 52 Law ed., 436, 442; 28 Sup Ct. Rep.,
277; 13 Ann Cas., 764; Coppoge vs. Kansas, 236 U. S., 1, 14; 59 Law ed., 441, 446; L. R. A.,
1915C, 960; 35 Sup. Ct. Rep., 240.)"

The freedom of contract guaranteed by the Constitution may be limited by law through a proper
exercise of the paramount police power. Thus, in order to promote industrial peace, certain
limitations to the employer's right to select his employees or to discharges them, are provided in
section 21 of Commonwealth Act No. 103 and section 5 of Commonwealth Act No. 213, which
read as follows:

"It shall be unlawful for any employer to discharged of to threaten to discharged, or in other
manner discriminate against, any laborer or employee because such person has testified or is
about to testify, or because such employer believes that he may testify in any investigation,
proceeding or public hearing conducted by the Court or any board of inquiry." (Sec. 21,
Commonwealth Act No. 103.)

"Any person or persons, landlord or landlords, corporation or corporations or their agents,
partnership or partnerships or their agents, who intimidate or coerce any employee of laborer or

Page |
11
tenant under his or their employ, with the intent of preventing such employee or laborer or tenant
from joining any registered legitimate labor organization of his own choosing, or, who dismiss or
threaten to dismiss such employee or laborer or tenant from his employment for having joined, or
for being a member of, any registered legitimate labor organization, shall be guilty of a felony and
shall be punished by imprisonment of not exceeding one year or a fine not exceeding one
thousand pesos, or both, at the discretion of the court." (Sec. 5, Commonwealth Act No. 213.)

These two provisions were, however, patterned after the Wagner Act, and the Supreme Court of
the United States, in the case of National Labor Relations Board vs. Jones & Laughlin Steel
Corporation (301 U. S., 1; 81 Law ed., 893, 916), said:

"The act (Wagner Act) does not compel agreements between employers and employees. It does
not compel and agreement whatever. It does not prevent employer 'from refusing to make a
collective contract and hiring individuals on whatever terms' the employer 'may by unilateral action
determine.' The Act expressly provides in sec. 9 (a) that any individual employee or a group of
employees shall have the right at any time to present grievances to their employer. The theory of
the Act is that free opportunity for negotiation with accredited representatives of employees is
likely to promote industrial peace and may bring about the adjustments and agreements which the
Act in itself does not attempt to compel. As we said in Texas & N. O. R. Co. vs. Brotherhood of R.
& S. S. Clerks (281 U. S., 548; 74 Law. ed., 1034; 50 S. Ct., 427, supra), and repeated in Virginian
R. Co. vs. System Federation, R. E. D. (300 U. S., 515, ante, 789; 57 S. Ct., 692), the cases of
Adair vs. United States (208 U. S., 161; 52 Law. ed., 436; 28 S. Ct., 277; 13 Ann. Cas., 764), and
Coppage vs. Kansas (236 U. S., 1; 59 Law. ed., 141; 35 S. Ct., 240; L. R. A. 1915C, 960), are
inapplicable to legislation of this character. The Act does not interfere with the normal exercise of
the right of the employer to select its employees or to discharge them. The employer may not,
under cover of that right, intimidate or coerce its employees with respect to their self-organization
and representation, and, on the other hand, the board is not entitled to make its authority a pretext
for interference with the right of discharge when that right is exercised for other reasons than such
intimidation and coercion."

This ruling was reiterated and confirmed in the Associated Press vs. National Labor Relations
Board (301 U. S., 103; 81 Law. ed., 953, 960, 961).

Thus considered, the order appealed from is hereby reversed, with costs against respondent
Pambusco Employees' Union, Inc.

Avancea, C. J., Villa-Real, Imperial, Diaz, Laurel, and Concepcion, JJ., concur.




Page |
12
G.R. No. L-49582 January 7, 1986
CBTC EMPLOYEES UNION, petitioner,
vs.
THE HONORABLE JACOBO C. CLAVE, Presidential Executive Assistant, and
COMMERCIAL BANK & TRUST COMPANY OF THE PHILIPPINES, respondents.
Francisco F. Angeles for petitioner.
Pacis, Reyes, De Leon & Cruz Law, Office for respondent CBTC.
Edmundo R. AbigaN, Jr. for respondent Union.

DE LA FUENTE, J .:
Petition for certiorari seeking to annul and set aside the decision of the respondent Presidential
Executive Assistant
1
affirming that of the Acting Secretary of Labor who reversed the decision of the
National Labor Relations Comission which upheld the Voluntary Arbitrator's order directing the private
respondent bank to pay its monthly paid employees their "legal holiday pay."
Petitioner Commercial Bank and Trust Company Employees' Union (Union for short) lodged a
complaint with the Regional Office No. IV, Department of Labor, against private respondent bank
(Comtrust) for non-payment of the holiday pay benefits provided for under Article 95 of the Labor
Code in relation to Rule X, Book III of the Rules and Regulations Implementing the Labor Code.
Failing to arrive at an amicable settlement at conciliation level, the parties opted to submit their
dispute for voluntary arbitration. The issue presented was: "Whether the permanent employees of
the Bank within the collective bargaining unit paid on a monthly basis are entitled to holiday
pay effective November 1, 1974, pursuant to Article 95 (now Article 94) of the Labor Code, as
amended and Rule X (now Rule IV), Book III of the Rules and Regulations Implementing the
Labor Code. "
In addition, the disputants signed a Submission Agreement stipulating as final, unappealable and
executory the decision of the Arbitrator, including subsequent issuances for clarificatory and/or
relief purposes, notwithstanding Article 262 of the Labor Code which allow appeal in certain
instances.
2

In the course of the hearing, the Arbitrator apprised the parties of an interpretative bulletin on "holiday
pay" about to be issued by the Department of Labor. Whereupon, the Union filed a
Manifestation
3
which insofar as relevant stated:
6. That complainant union . . . has manifested its apprehension on the contents
of the said Interpretative Bulletin in view of a well-nigh irresistible move on the
part of the employers to exclude permanent workers similarly situated as the
employees of Comtrust from the coverage of the holiday pay benefit despite the
express and self-explanatory provisions of the law, its implementing rules and
opinions thereon . . . .
7. That in the event that said Interpretative Bulletin regarding holiday pay would
be adverse to the present claim . . . in that it would in effect exclude the said
employees from enjoyment of said benefit, whether wholly or partially,
complainant union respectfully reserves the right to take such action as may be
appropriate to protect its interests, a question of law being involved. . . . An
Interpretative Bulletin which was inexistent at the time the said commitment was
made and which may be contrary to the law itself should not bar the right of the
union to claim for its holiday pay benefits.
On April 22, 1976, the Arbitrator handed down an award on the dispute. Relevant portions thereof
read as follows:
The uncontroverted facts of this case are as follows:
(1) That the complainant Union is the recognized sole and exclusive collective
bargaining representative of all the permanent rank-and-file employees of the
Bank with an existing Collective Bargaining Agreement covering the period from
July 1, 1974 up to June 30, 1977;
(2) That ... the standard workweek of the Bank generally consists of five (5) days
of eight (8) hours each day which, . . . said five days are generally from Monday
thru Friday; and, as a rule, Saturdays, Sundays and the regular holidays are not
considered part of the standard workweek.
(3) That, in computing the equivalent daily rate of its employees covered by the
CBA who are paid on a monthly basis, the following computation is used, as per
the provisions of Section 4, Article VII, of the CBA (Annex "A"):
Daily Rate = Basic Monthly Salary plus CLA x 12 250
Basic Hourly Rate = Daily Rate 8
(4) That the divisor of '250', . . . was arrived at by subtracting the 52 Sundays, 52
Saturdays, the 10 regular holidays and December 31 (secured thru bargaining),
or a total of 115 off-days from the 365 days of the year or a difference of 250
days.
Considering the above uncontroverted facts, the principal question to be resolved
is whether or not the monthly pay of the covered employees already includes
what Article 94 of the Labor Code requires as regular holiday pay benefit in the

Page |
13
amount of his regular daily wage (100% if unworked or 200% if worked) during
the regular holidays enumerated therein, i.e., Article 94(c) of the Labor Code.
In its latest Memorandum, filed on March 26, 1976, the Bank
relies heavily on the provisions of Section 2, Rule IV, Book 111,
of the Rules and Regulations implementing particularly Article
94 (formerly Article 208) of the Labor Code, which Section
reads as follows:
SECTION 2. Status of employees paid by the month -Employees who are
uniformly paid by the month, irrespective of the number of' working days therein
with a salary of not less than the statutory or established minimum wage, shall be
presumed to be paid for all days in the month whether worked or not.
For this purpose, the monthly minimum wage shall not be less than the statutory
minimum wage multiplied by 365 days divided by twelve. (Emphasis supplied).
While admitting that there has virtually been no change effected by Presidential
Decree No. 850, which amended the Labor Code, other than the re-numbering of
the original Article 208 of said Code to what is now Article 94, the Bank, however,
attaches a great deal of significance in the above-quoted Rule as to render the
question at issue 'moot and academic'.
On the other hand, the Union maintains, in its own latest Memorandum, filed also
on March 26, 1976, that the legal presumption established in the above-quoted
Rule is merely a disputable presumption. This contention of the Union is now
supported by a pronouncement categorically to that effect by no less than the
National Labor Relations Commission (NLRC) in the case of The Chartered Bank
Employees Association vs. The Chartered Bank. NLRC Case No. (s) RB-IV-
1739-75 (RO4-5-3028-75), which reads, in part, as follows:
. . . A disputable presumption was sea in that it would be
presumed the salary of monthly-paid employees may already
include rest days, such as Saturdays, Sundays, special and
legal holidays, worked or unworked, in effect connoting
that evidence to the contrary may destroy such a supposed
legal presumption. Indeed, the Rule merely sets a presumption.
It does not conclusively presume that the salary of monthly-paid
employees already includes unworked holidays. . . .
The practice of the Bank of paying its employees a sum
equivalent to Base pay plus Premium on Saturdays, Sundays
and special and legal holidays, destroys the legal presumption
that monthly pay is for an days of the month. For if the monthly
pay is payment for all days of the month, then why should the
employee be paid again for working on such rest days.
(Emphasis supplied)
There is no reason at present not to adopt the above ruling of the Honorable
Comission, especially considering the fact that this Arbitrator, in asking a query
on the nature of the presumption established by the above Rule, from the
Director of Labor Standards in the PMAP Conference held at the Makati Hotel on
March 13, 1976, was given the categorical answer that said presumption is
merely disputable. This answer from the Labor Standards Director is significant
inasmuch as it is his office, the Bureau of Labor Standards, that is reportedly
instrumental in the preparation of the implementing Rules, particularly on Book III
of the Labor Code on Conditions of Employment, to which group the present
Rule under discussion belongs.
So, rather than rendering moot and academic the issue at hand, as suggested by
the Bank, the more logical step to take is to determine whether or not there is
sufficient evidence to overcome the disputable presumption established by the
Rule.
It is unquestioned, and as provided for in the CBA itself, that the divisor used in
determining the daily rate of the monthly-paid employees is '250'.
xxx xxx xxx
Against this backdrop, certain relevant and logical conclusions result, namely:
(A) The Bank maintains that, since its inception or start of operations in 1954, all
monthly-paid employees in the Bank are paid their monthly salaries without any
deduction for unworked Saturdays, Sundays, legals and special holidays. On the
other hand, it also maitains that, as a matter of fact, 'always conscious of its
employee who has to work, on respondent's rest days of Saturdays and Sundays
or on a legal holiday, an employee who works overtime on any of said days is
paid one addition regular pay for the day plus 50% of said regular pay (Bank's
Memorandum, page 3, filed January 21, 1976). . . .
xxx xxx xxx
On the other hand, there is more reason to believe that, if the Bank has never
made any deduction from its monthly-paid employees for unworked Saturdays,
Sundays, legal and special holidays, it is because there is really nothing to
deduct properly since the monthly, salary never really included pay for such
unworked days-and which give credence to the conclusion that the divisor '250' is
the proper one to use in computing the equivalent daily rate of the monthly-paid
employees.

Page |
14
(B) The Bank further maintains that the holiday pay is intended only for daily-paid
workers. In this regard, the NLRC has this to say , in the same above-quoted
Chartered Bank case:
It is contended that holiday pay is primarily for daily wage
earners. Let us examine the law, more specifically Article 95
(now Article 94) of the Labor Code to see whether it supports
this contention. The words used in the Decree are 'every
worker', while the framers of the Implementing Rules preferred
the use of the phrase 'all employees.' Both the decree itself and
the Rules mentioned enumerated the excepted workers. It is a
basic rule of statutory construction that putting an exception
limits or modifies the enumeration or meaning made in the
law. it is thus easy to see that a mere reading of the Decree and
of the Rules would show that the monthly-paid employees of the
Bank are not expressly included in the enumeration of the
exception.
Special notice is made of the fact that the criteria at once
readable from the exception referred to is the nature of the job
and the number of employees involved, and not whether the
employee is a daily-wage earner or a regular monthly-paid
employee.
There is no reason at all to digress from the above-quoted observation of the
Honorable Commission for purposes of the present case.
xxx xxx xxx
Finally, inasmuch as Article 94 of the Labor Code is one of its so-called self-
executing provisions, conjointly with its corresponding implementing Rules, it is to
be taken to have taken effect, as of November 1, 1974, as per Section I (1), Rule
IV, Book III , of the Implementing Rules.
WHEREAS, all the above premises considered, this Arbitrator rules that:
(1) All the monthly-paid employees of the Bank herein represented by the Union
and as governed by their Collective Bargaining Agreement, are entitled to the
holiday pay benefits as provided for in Article 94 of the labor Code and as
implemented by Rule IV, Book III, of the corresponding implementing Rules,
except for any day or any longer period designated by lawor holding a general
election or referendum;
(2) Paragraph (1) hereof means that any covered employee who does not work
on any of the regular holidays enumerated in Article 94 (c) of the Labor Code,
except that which is designated for election or referendum purposes, is still
entitled to receive an amount equivalent to his regular daily wage in addition to
his monthly salary. If he work on any of the regular holidays, other than that
which is designated for election or referendum purposes, he is entitled to twice,
his regular daily wage in addition to his monthly salary. The 50% premium pay
provided for in the CBA for working on a rest day (which has been interpreted by
the parties to include the holidays) shall be deemed already included in the 200%
he receives for working on a regular holiday. With respect to the day or any
longer period designated by law for holding a general election or referendum, if
the employee does not work on such day or period he shall no longer be entitled
to receive any additional amount other than his monthly salary which is deemed
to include already his regular daily wage for such day or period. If he works on
such day or period, he shall be entitled to an amount equivalent to his regular
daily wage (100%) for that day or period in addition to his monthly salary. The
50% premium pay provided for in the CBA for working on that day or period shall
be deemed already included in the additional 100% he receives for working on
such day or period; and
(3) The Bank is hereby ordered to pay all the above employees in accordance
with the above paragraphs (1) and (2), retroactive from November 1, 1974.
SO ORDERED.
April 22, 1976, Manila, Philippines.
4

The next day, on April 23, 1976, the Department of Labor released Policy Instructions No. 9,
hereinbelow quoted:
The Rules implementing PD 850 have clarified the policy in the implementation of
the ten (10) paid legal holidays. Before PD 850, the number of working days a
year in a firm was considered important in determining entitlement to the benefit.
Thus, where an employee was working for at least 313 days, he was considered
definitely already paid. If he was working for less than 313, there was no certainty
whether the ten (10) paid legal holidays were already paid to him or not.
The ten (10) paid legal holidays law, to start with, is intended to benefit principally
daily employees. In the case of monthly, only those whose monthly salary did not
yet include payment for the ten (10) paid legal holidays are entitled to the benefit.
Under the rules implementing PD 850, this policy has been fully clarified to
eliminate controversies on the entitlement of monthly paid employees. The new
determining rule is this: If the monthly paid employee is receiving not less than P
240, the maximum monthly minimum wage, and his monthly pay is uniform from
January to December, he is presumed to be already paid the ten (10) paid legal
holidays. However, if deductions are made from his monthly salary on account of

Page |
15
holidays in months where they occur, then he is still entitled to the ten (10) paid
legal holidays.
These new interpretations must be uniformly and consistently upheld.
This issuance shall take effect immediately.
After receipt of a copy of the award, private respondent filed a motion for reconsideration, followed
by a supplement thereto. Said motion for reconsideration was denied. A copy of the order of denial
was received by private respondent on July 8, 1976.
Said private respondent interposed an appeal to the National Labor Relations Commission
(NLRC), contending that the Arbitrator demonstrated gross incompetence and/or grave abuse of
discretion when he entirely premised the award on the Chartered Bank case and failed to apply
Policy Instructions No. 9. This appeal was dismissed on August 16, 1976, by the NLRC because it
was filed way beyond the ten-day period for perfecting an appeal and because it contravened the
agreement that the award shall be final and unappealable.
Private respondent then appealed to the Secretary of Labor. On June 30, 1977, the Acting
Secretary of Labor reversed the NLRC decision and ruled that the appeal was filed on time and
that a review of the case was inevitable as the money claim exceeded P100,000.00.
5
Regarding
the timeliness of the appeal, it was pointed out that the labor Department had on several occasions
treated a motion for reconsideration (here, filed before the Arbitrator) as an appeal to the proper
appellate body in consonance with the spirit of the Labor Code to afford the parties a just, expeditious
and inexpensive disposition of their claims, liberated from the strict technical rules obtaining in the
ordinary courts.
Anent the issue whether or not the agreement barred the appeal, it was noted that the
Manifestation, supra, "is not of slight significance because it has in fact abrogated complainant's
commitment to abide with the decision of the Voluntary Arbitrator without any reservation" and
amounted to a "virtual repudiation of the agreement vesting finality"
6
on the arbitrator's disposition.
And on the principal issue of holiday pay, the Acting Secretary, guided by Policy Instructions No.
9, applied thesame retrospectively, among other things.
In due time, the Union appealed to the Office of the President. In affirming the assailed decision,
Presidential Executive Assistant Jacobo C. Clave relied heavily on the Manifestation and Policy
Instructions No. 9.
Hence, this petition.
On January 10, 1981, petitioner filed a motion to substitute the Bank of the Philippine Islands as
private respondent, as a consequence of the Articles of Merger executed by said bank and
Commercial Bank & Trust Co. which inter alia designated the former as the surviving corporate
entity. Said motion was granted by the Court.
We find the petitioner impressed with merit.
In excluding the union members of herein petitioner from the benefits of the holiday pay law, public
respondent predicated his ruling on Section 2, Rule IV, Book III of the Rules to implement Article
94 of the labor Code promulgated by the then Secretary of labor and Policy Instructions No. 9.
In Insular Bank of Asia and America Employees' Union (IBAAEU) vs. Inciong,
7
this Court's Second
Division, speaking through former Justice Makasiar, expressed the view and declared that the
aforementioned section and interpretative bulletin are null and void, having been promulgated by the
then Secretary of Labor in excess of his rule-making authority. It was pointed out, inter alia, that in the
guise of clarifying the provisions on holiday pay, said rule and policy instructions in effect amended the
law by enlarging the scope of the exclusions. We further stated that the then Secretary of Labor went as
far as to categorically state that the benefit is principally intended for daily paid employees whereas the
law clearly states that every worker shall be paid their regular holiday pay-which is incompatible with the
mandatory directive, in Article 4 of the Labor Code, that "all doubts in the implementation and
interpretation of the provisions of Labor Code, including its implementing rules and regulations, shall be
resolved in favor of labor." Thus, there was no basis at all to deprive the union members of their right to
holiday pay.
In the more recent case of The Chartered Bank Employees Association vs. Hon. Ople,
8
this Court
in an en bancdecision had the occasion to reiterate the above-stated pronouncement. We added:
The questioned Section 2, Rule IV, Book III of the Integrated Rules and the
Secretary's Policy Instruction No. 9 add another excluded group, namely,
'employees who are uniformly paid by the month'. While the additional exclusion
is only in the form of a presumption that all monthly paid employees have already
been paid holiday pay, it constitutes a taking away or a deprivation which must
be in the law if it is to be valid. An administrative interpretation which diminishes
the benefits of labor more than what the statute delimits or withholds is obviously
ultra vires.
In view of the foregoing, the challenged decision of public respondent has no leg to stand on as it
was premised principally on the same Section 2, Rule IV, Book III of the Implementing Rules and
Policy Instructions No. 9. This being the decisive issue to be resolved, We find no necessity to
pass upon the other issues raised, such as the effects of the Union's Manifestation and the
propriety of applying Policy Instructions No. 9 retroactively to the instant case.
WHEREFORE, the questioned decisions of the respondent Presidential Executive Assistant and
the Acting Secretary of labor are hereby set aside, and the award of the Arbitrator reinstated.
Costs against the private respondent.
IT IS SO ORDERED.
Teehankee (Chairman), Plana, Relova, Gutierrez, Jr., and Patajo, JJ., concur.
Melencio-Herrera, J., took no part.

Page |
16
G.R. No. L-69870 November 29, 1988
NATIONAL SERVICE CORPORATION (NASECO) AND ARTURO L. PEREZ, petitioners,
vs.
THE HONORABLE THIRD DIVISION, NATIONAL LABOR RELATIONS COMMISSION,
MINISTRY OF LABOR AND EMPLOYMENT, MANILA AND EUGENIA C. CREDO, respondents.
G.R. No. 70295 November 29,1988
EUGENIA C. CREDO, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, NATIONAL SERVICES CORPORATION AND
ARTURO L. PEREZ, respondents.
The Chief Legal Counsel for respondents NASECO and Arturo L. Perez.
Melchor R. Flores for petitioner Eugenia C. Credo.

PADILLA, J .:
Consolidated special civil actions for certiorari seeking to review the decision * of the Third Division, National
Labor Relations Commission in Case No. 11-4944-83 dated 28 November 1984 and its resolution dated 16 January 1985 denying motions for
reconsideration of said decision.
Eugenia C. Credo was an employee of the National Service Corporation (NASECO), a domestic
corporation which provides security guards as well as messengerial, janitorial and other similar
manpower services to the Philippine National Bank (PNB) and its agencies. She was first
employed with NASECO as a lady guard on 18 July 1975. Through the years, she was promoted
to Clerk Typist, then Personnel Clerk until she became Chief of Property and Records, on 10
March 1980.
1

Sometime before 7 November 1983, Credo was administratively charged by Sisinio S. Lloren,
Manager of Finance and Special Project and Evaluation Department of NASECO, stemming from
her non-compliance with Lloren's memorandum, dated 11 October 1983, regarding certain entry
procedures in the company's Statement of Billings Adjustment. Said charges alleged that Credo
"did not comply with Lloren's instructions to place some corrections/additional remarks in the
Statement of Billings Adjustment; and when [Credo] was called by Lloren to his office to explain
further the said instructions, [Credo] showed resentment and behaved in a scandalous manner by
shouting and uttering remarks of disrespect in the presence of her co-employees."
2

On 7 November 1983, Credo was called to meet Arturo L. Perez, then Acting General Manager of
NASECO, to explain her side before Perez and NASECO's Committee on Personnel Affairs in
connection with the administrative charges filed against her. After said meeting, on the same date,
Credo was placed on "Forced Leave" status for 1 5 days, effective 8 November 1983.
3

Before the expiration of said 15-day leave, or on 18 November 1983, Credo filed a complaint,
docketed as Case No. 114944-83, with the Arbitration Branch, National Capital Region, Ministry of
Labor and Employment, Manila, against NASECO for placing her on forced leave, without due
process.
4

Likewise, while Credo was on forced leave, or on 22 November 1983, NASECO's Committee on
Personnel Affairs deliberated and evaluated a number of past acts of misconduct or infractions
attributed to her.
5
As a result of this deliberation, said committee resolved:
1. That, respondent [Credo] committed the following offenses in the Code of
Discipline, viz:
OFFENSE vs. Company Interest & Policies
No. 3 Any discourteous act to customer, officer and employee of client
company or officer of the Corporation.
OFFENSE vs. Public Moral
No. 7 Exhibit marked discourtesy in the course of official duties or use of
profane or insulting language to any superior officer.
OFFENSE vs. Authority
No. 3 Failure to comply with any lawful order or any instructions of a superior
officer.
2. That, Management has already given due consideration to respondent's
[Credo] scandalous actuations for several times in the past. Records also show
that she was reprimanded for some offense and did not question it. Management
at this juncture, has already met its maximum tolerance point so it has decided to
put an end to respondent's [Credo] being an undesirable employee.
6

The committee recommended Credo's termination, with forfeiture of benefits.
7

On 1 December 1983, Credo was called age to the office of Perez to be informed that she was
being charged with certain offenses. Notably, these offenses were those which NASECO's
Committee on Personnel Affairs already resolved, on 22 November 1983 to have been committed
by Credo.

Page |
17
In Perez's office, and in the presence of NASECO's Committee on Personnel Affairs, Credo was
made to explain her side in connection with the charges filed against her; however, due to her
failure to do so,
8
she was handed a Notice of Termination, dated 24 November 1983, and made
effective 1 December 1983.
9
Hence, on 6 December 1983, Credo filed a supplemental complaint for
illegal dismissal in Case No. 11-4944-83, alleging absence of just or authorized cause for her dismissal
and lack of opportunity to be heard.
10

After both parties had submitted their respective position papers, affidavits and other documentary
evidence in support of their claims and defenses, on 9 May 1984, the labor arbiter rendered a
decision: 1) dismissing Credo's complaint, and 2) directing NASECO to pay Credo separation pay
equivalent to one half month's pay for every year of service.
11

Both parties appealed to respondent National Labor Relations Commission (NLRC) which, on 28
November 1984, rendered a decision: 1) directing NASECO to reinstate Credo to her former
position, or substantially equivalent position, with six (6) months' backwages and without loss of
seniority rights and other privileges appertaining thereto, and 2) dismissing Credo's claim for
attorney's fees, moral and exemplary damages. As a consequence, both parties filed their
respective motions for reconsideration,
12
which the NLRC denied in a resolution of 16 January
1985.
13

Hence, the present recourse by both parties. In G.R. No. 68970, petitioners challenge as grave
abuse of discretion the dispositive portion of the 28 November 1984 decision which ordered
Credo's reinstatement with backwages.
14
Petitioners contend that in arriving at said questioned order,
the NLRC acted with grave abuse of discretion in finding that: 1) petitioners violated the requirements
mandated by law on termination, 2) petitioners failed in the burden of proving that the termination of
Credo was for a valid or authorized cause, 3) the alleged infractions committed by Credo were not
proven or, even if proved, could be considered to have been condoned by petitioners, and 4) the
termination of Credo was not for a valid or authorized cause.
15

On the other hand, in G.R. No. 70295, petitioner Credo challenges as grave abuse of discretion
the dispositive portion of the 28 November 1984 decision which dismissed her claim for attorney's
fees, moral and exemplary damages and limited her right to backwages to only six (6) months.
16

As guidelines for employers in the exercise of their power to dismiss employees for just causes,
the law provides that:
Section 2. Notice of dismissal. Any employer who seeks to dismiss a worker
shall furnish him a written notice stating the particular acts or omission
constituting the grounds for his dismissal.
xxx xxx xxx
Section 5. Answer and Hearing. The worker may answer the allegations
stated against him in the notice of dismissal within a reasonable period from
receipt of such notice. The employer shall afford the worker ample opportunity to
be heard and to defend himself with the assistance of his representative, if he so
desires.
Section 6. Decision to dismiss. The employer shall immediately notify a worker
in writing of a decision to dismiss him stating clearly the reasons therefor.
17

These guidelines mandate that the employer furnish an employee sought to be dismissed two (2)
written notices of dismissal before a termination of employment can be legally effected. These are
the notice which apprises the employee of the particular acts or omissions for which his dismissal
is sought and the subsequent notice which informs the employee of the employer's decision to
dismiss him.
Likewise, a reading of the guidelines in consonance with the express provisions of law on
protection to labor
18
(which encompasses the right to security of tenure) and the broader dictates of
procedural due process necessarily mandate that notice of the employer's decision to dismiss an
employee, with reasons therefor, can only be issued after the employer has afforded the employee
concerned ample opportunity to be heard and to defend himself.
In the case at bar, NASECO did not comply with these guidelines in effecting Credo's dismissal.
Although she was apprised and "given the chance to explain her side" of the charges filed against
her, this chance was given so perfunctorily, thus rendering illusory Credo's right to security of
tenure. That Credo was not given ample opportunity to be heard and to defend herself is evident
from the fact that the compliance with the injunction to apprise her of the charges filed against her
and to afford her a chance to prepare for her defense was dispensed in only a day. This is not
effective compliance with the legal requirements aforementioned.
The fact also that the Notice of Termination of Credo's employment (or the decision to dismiss her)
was dated 24 November 1983 and made effective 1 December 1983 shows that NASECO was
already bent on terminating her services when she was informed on 1 December 1983 of the
charges against her, and that any hearing which NASECO thought of affording her after 24
November 1983 would merely be pro forma or an exercise in futility.
Besides, Credo's mere non-compliance with Lorens memorandum regarding the entry procedures
in the company's Statement of Billings Adjustment did not warrant the severe penalty of dismissal
of the NLRC correctly held that:
... on the charge of gross discourtesy, the CPA found in its Report, dated 22
November 1983 that, "In the process of her testimony/explanations she again
exhibited a conduct unbecoming in front of NASECO Officers and argued to Mr.
S. S. Lloren in a sarcastic and discourteous manner, notwithstanding, the fact
that she was inside the office of the Acctg. General Manager." Let it be noted,
however, that the Report did not even describe how the so called "conduct
unbecoming" or "discourteous manner" was done by complainant. Anent the
"sarcastic" argument of complainant, the purported transcript
19
of the meeting
held on 7 November 1983 does not indicate any sarcasm on the part of complainant.
At the most, complainant may have sounded insistent or emphatic about her work

Page |
18
being more complete than the work of Ms. de Castro, yet, the complaining officer
signed the work of Ms. de Castro and did not sign hers.
As to the charge of insubordination, it may be conceded, albeit unclear, that
complainant failed to place same corrections/additional remarks in the Statement
of Billings Adjustments as instructed. However, under the circumstances
obtaining, where complainant strongly felt that she was being discriminated
against by her superior in relation to other employees, we are of the considered
view and so hold, that a reprimand would have sufficed for the infraction, but
certainly not termination from services.
20

As this Court has ruled:
... where a penalty less punitive would suffice, whatever missteps may be
committed by labor ought not to be visited with a consequence so severe. It is
not only because of the law's concern for the working man. There is, in addition,
his family to consider. Unemployment brings untold hardships and sorrows on
those dependent on the wage-earner.
21

Of course, in justifying Credo's termination of employment, NASECO claims as additional lawful
causes for dismissal Credo's previous and repeated acts of insubordination, discourtesy and
sarcasm towards her superior officers, alleged to have been committed from 1980 to July 1983.
22

If such acts of misconduct were indeed committed by Credo, they are deemed to have been
condoned by NASECO. For instance, sometime in 1980, when Credo allegedly "reacted in a
scandalous manner and raised her voice" in a discussion with NASECO's Acting head of the
Personnel Administration
23
no disciplinary measure was taken or meted against her. Nor was she
even reprimanded when she allegedly talked 'in a shouting or yelling manner" with the Acting Manager
of NASECO's Building Maintenance and Services Department in 1980
24
or when she allegedly
"shouted" at NASECO's Corporate Auditor "in front of his subordinates displaying arrogance and unruly
behavior" in 1980, or when she allegedly shouted at NASECO's Internal Control Consultant in
1981.
25
But then, in sharp contrast to NASECO's penchant for ignoring the aforesaid acts of
misconduct, when Credo committed frequent tardiness in August and September 1983, she was
reprimanded.
26

Even if the allegations of improper conduct (discourtesy to superiors) were satisfactorily proven,
NASECO's condonation thereof is gleaned from the fact that on 4 October 1983, Credo was given
a salary adjustment for having performed in the job "at least [satisfactorily]"
27
and she was then
rated "Very Satisfactory"
28
as regards job performance, particularly in terms of quality of work, quantity
of work, dependability, cooperation, resourcefulness and attendance.
Considering that the acts or omissions for which Credo's employment was sought to be legally
terminated were insufficiently proved, as to justify dismissal, reinstatement is proper. For "absent
the reason which gave rise to [the employee's] separation from employment, there is no intention
on the part of the employer to dismiss the employee concerned."
29
And, as a result of having been
wrongfully dismissed, Credo is entitled to three (3) years of backwages without deduction and
qualification.
30

However, while Credo's dismissal was effected without procedural fairness, an award of
exemplary damages in her favor can only be justified if her dismissal was effected in a wanton,
fraudulent, oppressive or malevolent manner.
31
A judicious examination of the record manifests no
such conduct on the part of management. However, in view of the attendant circumstances in the case,
i.e., lack of due process in effecting her dismissal, it is reasonable to award her moral damages. And,
for having been compelled to litigate because of the unlawful actuations of NASECO, a reasonable
award for attorney's fees in her favor is in order.
In NASECO's comment
32
in G.R. No. 70295, it is belatedly argued that the NLRC has no jurisdiction to
order Credo's reinstatement. NASECO claims that, as a government corporation (by virtue of its being a
subsidiary of the National Investment and Development Corporation (NIDC), a subsidiary wholly owned
by the Philippine National Bank (PNB), which in turn is a government owned corporation), the terms and
conditions of employment of its employees are governed by the Civil Service Law, rules and
regulations. In support of this argument, NASECO cites National Housing Corporation vs.
JUCO,
33
where this Court held that "There should no longer be any question at this time that employees
of government-owned or controlled corporations are governed by the civil service law and civil service
rifles and regulations."
It would appear that, in the interest of justice, the holding in said case should not be given
retroactive effect, that is, to cases that arose before its promulgation on 17 January 1985. To do
otherwise would be oppressive to Credo and other employees similarly situated, because under
the same 1973 Constitution ,but prior to the ruling inNational Housing Corporation vs. Juco, this
Court had recognized the applicability of the Labor Code to, and the authority of the NLRC to
exercise jurisdiction over, disputes involving terms and conditions of employment in government
owned or controlled corporations, among them, the National Service Corporation (NASECO).<r e|| an 1w>
34

Furthermore, in the matter of coverage by the civil service of government-owned or controlled
corporations, the 1987 Constitution starkly varies from the 1973 Constitution, upon which National
Housing Corporation vs. Juco is based. Under the 1973 Constitution, it was provided that:
The civil service embraces every branch, agency, subdivision, and
instrumentality of the Government, including every government-owned or
controlled corporation. ...
35

On the other hand, the 1987 Constitution provides that:
The civil service embraces all branches, subdivisions, instrumentalities, and
agencies of the Government, including government-owned or controlled
corporations with original charter.
36
(Emphasis supplied)
Thus, the situations sought to be avoided by the 1973 Constitution and expressed by the Court in
the National Housing . Corporation case in the following manner

Page |
19
The infirmity of the respondents' position lies in its permitting a circumvention or
emasculation of Section 1, Article XII-B of the constitution. It would be possible
for a regular ministry of government to create a host of subsidiary corporations
under the Corporation Code funded by a willing legislature. A government-owned
corporation could create several subsidiary corporations. These subsidiary
corporations would enjoy the best of two worlds. Their officials and employees
would be privileged individuals, free from the strict accountability required by the
Civil Service Decree and the regulations of the Commission on Audit. Their
incomes would not be subject to the competitive restrains of the open market nor
to the terms and conditions of civil service employment. Conceivably, all
government-owned or controlled corporations could be created, no longer by
special charters, but through incorporations under the general law. The
Constitutional amendment including such corporations in the embrace of the civil
service would cease to have application. Certainly, such a situation cannot be
allowed to exist.
37

appear relegated to relative insignificance by the 1987 Constitutional provision that the Civil
Service embraces government-owned or controlled corporations with original charter; and,
therefore, by clear implication, the Civil Service does not include government-owned or controlled
corporations which are organized as subsidiaries of government-owned or controlled corporations
under the general corporation law.
The proceedings in the 1986 Constitutional Commission also shed light on the Constitutional
intent and meaning in the use of the phrase "with original charter." Thus
THE PRESIDING OFFICER (Mr. Trenas) Commissioner
Romulo is recognized.
MR. ROMULO. I beg the indulgence of the Committee. I was
reading the wrong provision.
I refer to Section 1, subparagraph I which reads:
The Civil Service embraces all branches, subdivisions, instrumentalities, and
agencies of the government, including government-owned or controlled
corporations.
My query: Is Philippine Airlines covered by this provision? MR. FOZ. Will the
Commissioner please state his previous question?
MR. ROMULO. The phrase on line 4 of Section 1,
subparagraph 1, under the Civil Service Commission, says:
"including government-owned or controlled corporations.' Does
that include a corporation, like the Philippine Airlines which is
government-owned or controlled?
MR. FOZ. I would like to throw a question to the Commissioner.
Is the Philippine Airlines controlled by the government in the
sense that the majority of stocks are owned by the government?
MR. ROMULO. It is owned by the GSIS. So, this is what we
might call a tertiary corporation. The GSIS is owned by the
government. Would this be covered because the provision says
"including government-owned or controlled corporations."
MR. FOZ. The Philippine Airlines was established as a private
corporation. Later on, the government, through the GSIS,
acquired the controlling stocks. Is that not the correct situation?
MR. ROMULO. That is true as Commissioner Ople is about to
explain. There was apparently a Supreme Court decision that
destroyed that distinction between a government-owned
corporation created under the Corporation Law and a
government-owned corporation created by its own charter.
MR. FOZ. Yes, we recall the Supreme Court decision in the
case of NHA vs. Juco to the effect that all government
corporations irrespective of the manner of creation, whether by
special charter or by the private Corporation Law, are deemed
to be covered by the civil service because of the wide-
embracing definition made in this section of the existing 1973
Constitution. But we recall the response to the question of
Commissioner Ople that our intendment in this provision is just
to give a general description of the civil service. We are not here
to make any declaration as to whether employees of
government-owned or controlled corporations are barred from
the operation of laws, such as the Labor Code of the
Philippines.
MR. ROMULO. Yes.
MR. OPLE. May I be recognized, Mr. Presiding Officer, since
my name has been mentioned by both sides.
MR. ROMULO. I yield part of my time.
THE PRESIDING OFFICER (Mr.Trenas). Commissioner Ople is
recognized.
MR. OPLE. In connection with the coverage of the Civil Service
Law in Section 1 (1), may I volunteer some information that may

Page |
20
be helpful both to the interpellator and to the Committee.
Following the proclamation of martial law on September 21,
1972, this issue of the coverage of the Labor Code of the
Philippines and of the Civil Service Law almost immediately
arose. I am, in particular, referring to the period following the
coming into force and effect of the Constitution of 1973, where
the Article on the Civil Service was supposed to take immediate
force and effect. In the case of LUZTEVECO, there was a strike
at the time. This was a government-controlled and government-
owned corporation. I think it was owned by the PNOC with just
the minuscule private shares left. So, the Secretary of Justice at
that time, Secretary Abad Santos, and myself sat down, and the
result of that meeting was an opinion of the Secretary of Justice
which 9 became binding immediately on the government that
government corporations with original charters, such as the
GSIS, were covered by the Civil Service Law and corporations
spun off from the GSIS, which we called second generation
corporations functioning as private subsidiaries, were covered
by the Labor Code. Samples of such second generation
corporations were the Philippine Airlines, the Manila
Hotel and the Hyatt. And that demarcation worked very well. In fact, all of these
companies I have mentioned as examples, except for the Manila Hotel, had
collective bargaining agreements. In the Philippine Airlines, there were, in fact,
three collective bargaining agreements; one, for the ground people or the PALIA
one, for the flight attendants or the PASAC and one for the pilots of the ALPAC
How then could a corporation like that be covered by the Civil Service law? But,
as the Chairman of the Committee pointed out, the Supreme Court decision in
the case of NHA vs. Juco unrobed the whole thing. Accordingly, the Philippine
Airlines, the Manila Hotel and the Hyatt are now considered under that decision
covered by the Civil Service Law. I also recall that in the emergency meeting of
the Cabinet convened for this purpose at the initiative of the Chairman of the
Reorganization Commission, Armand Fabella, they agreed to allow the CBA's to
lapse before applying the full force and effect of the Supreme Court decision. So,
we were in the awkward situation when the new government took over. I can
agree with Commissioner Romulo when he said that this is a problem which I am
not exactly sure we should address in the deliberations on the Civil Service Law
or whether we should be content with what the Chairman said that Section 1 (1)
of the Article on the Civil Service is just a general description of the coverage of
the Civil Service and no more.
Thank you, Mr. Presiding Officer.
MR. ROMULO. Mr. Presiding Officer, for the moment, I would
be satisfied if the Committee puts on records that it is not their
intent by this provision and the phrase "including government-
owned or controlled corporations" to cover such companies as
the Philippine Airlines.
MR. FOZ. Personally, that is my view. As a matter of fact, when
this draft was made, my proposal was really to eliminate, to
drop from the provision, the phrase "including government-
owned or controlled corporations."
MR. ROMULO. Would the Committee indicate that is the intent
of this provision?
MR. MONSOD. Mr. Presiding Officer, I do not think the
Committee can make such a statement in the face of an
absolute exclusion of government-owned or controlled
corporations. However, this does not preclude the Civil Service
Law to prescribe different rules and procedures, including
emoluments for employees of proprietary corporations, taking
into consideration the nature of their operations. So, it is a
general coverage but it does not preclude a distinction of the
rules between the two types of enterprises.
MR. FOZ. In other words, it is something that should be left to
the legislature to decide. As I said before, this is just a general
description and we are not making any declaration whatsoever.
MR. MONSOD. Perhaps if Commissioner Romulo would like a
definitive understanding of the coverage and the Gentleman
wants to exclude government-owned or controlled corporations
like Philippine Airlines, then the recourse is to offer an
amendment as to the coverage, if the Commissioner does not
accept the explanation that there could be a distinction of the
rules, including salaries and emoluments.
MR. ROMULO. So as not to delay the proceedings, I will
reserve my right to submit such an amendment.
xxx xxx xxx
THE PRESIDING OFFICE (Mr. Trenas) Commissioner Romulo
is recognized.
MR. ROMULO. On page 2, line 5, I suggest the following
amendment after "corporations": Add a comma (,) and the
phrase EXCEPT THOSE EXERCISING PROPRIETARY
FUNCTIONS.

Page |
21
THE PRESIDING OFFICER (Mr. Trenas). What does the
Committee say?
SUSPENSION OF SESSION
MR. MONSOD. May we have a suspension of the session?
THE PRESIDING OFFICER (Mr. Trenas). The session is
suspended.
It was 7:16 p.m.
RESUMPTION OF SESSION
At 7:21 p.m., the session was resumed.
THE PRESIDING OFFICER (Mr. Trenas). The session is resumed.
Commissioner Romulo is recognized.
MR. ROMULO. Mr. Presiding Officer, I am amending my original proposed
amendment to now read as follows: "including government-owned or controlled
corporations WITH ORIGINAL CHARTERS." The purpose of this amendment is
to indicate that government corporations such as the GSIS and SSS, which have
original charters, fall within the ambit of the civil service. However, corporations
which are subsidiaries of these chartered agencies such as the Philippine
Airlines, Manila Hotel and Hyatt are excluded from the coverage of the civil
service.
THE PRESIDING OFFICER (Mr. Trenas). What does the
Committee say?
MR. FOZ. Just one question, Mr. Presiding Officer. By the term
"original charters," what exactly do we mean?
MR. ROMULO. We mean that they were created by law, by an
act of Congress, or by special law.
MR. FOZ. And not under the general corporation law.
MR. ROMULO. That is correct. Mr. Presiding Officer.
MR. FOZ. With that understanding and clarification, the
Committee accepts the amendment.
MR. NATIVIDAD. Mr. Presiding officer, so those created by the
general corporation law are out.
MR. ROMULO. That is correct:
38

On the premise that it is the 1987 Constitution that governs the instant case because it is the
Constitution in place at the time of decision thereof, the NLRC has jurisdiction to accord relief to
the parties. As an admitted subsidiary of the NIDC, in turn a subsidiary of the PNB, the NASECO
is a government-owned or controlled corporation without original charter.
Dr. Jorge Bocobo, in his Cult of Legalism, cited by Mr. Justice Perfecto in his concurring opinion
in Gomez vs. Government Insurance Board (L-602, March 31, 1947, 44 O.G. No. 8, pp. 2687,
2694; also published in 78 Phil. 221) on the effectivity of the principle of social justice embodied in
the 1935 Constitution, said:
Certainly, this principle of social justice in our Constitution as generously
conceived and so tersely phrased, was not included in the fundamental law as a
mere popular gesture. It was meant to (be) a vital, articulate, compelling principle
of public policy. It should be observed in the interpretation not only of future
legislation, but also of all laws already existing on November 15, 1935. It was
intended to change the spirit of our laws, present and future. Thus, all the laws
which on the great historic event when the Commonwealth of the Philippines was
born, were susceptible of two interpretations strict or liberal, against or in favor of
social justice, now have to be construed broadly in order to promote and achieve
social justice. This may seem novel to our friends, the advocates of legalism but
it is the only way to give life and significance to the above-quoted principle of the
Constitution. If it was not designed to apply to these existing laws, then it would
be necessary to wait for generations until all our codes and all our statutes shall
have been completely charred by removing every provision inimical to social
justice, before the policy of social justice can become really effective. That would
be an absurd conclusion. It is more reasonable to hold that this constitutional
principle applies to all legislation in force on November 15, 1935, and all laws
thereafter passed.
WHEREFORE, in view of the foregoing, the challenged decision of the NLRC is AFFIRMED with
modifications. Petitioners in G.R. No. 69870, who are the private respondents in G.R. No. 70295,
are ordered to: 1) reinstate Eugenia C. Credo to her former position at the time of her termination,
or if such reinstatement is not possible, to place her in a substantially equivalent position, with
three (3) years backwages, from 1 December 1983, without qualification or deduction, and without
loss of seniority rights and other privileges appertaining thereto, and 2) pay Eugenia C. Credo
P5,000.00 for moral damages and P5,000.00 for attorney's fees.

Page |
22
If reinstatement in any event is no longer possible because of supervening events, petitioners in
G.R. No. 69870, who are the private respondents in G.R. No. 70295 are ordered to pay Eugenia
C. Credo, in addition to her backwages and damages as above described, separation pay
equivalent to one-half month's salary for every year of service, to be computed on her monthly
salary at the time of her termination on 1 December 1983.
G.R. No. 85279 July 28, 1989
SOCIAL SECURITY SYSTEM EMPLOYEES ASSOCIATION (SSSEA), DIONISION T. BAYLON,
RAMON MODESTO, JUANITO MADURA, REUBEN ZAMORA, VIRGILIO DE ALDAY, SERGIO
ARANETA, PLACIDO AGUSTIN, VIRGILIO MAGPAYO, petitioner,
vs.
THE COURT OF APPEALS, SOCIAL SECURITY SYSTEM (SSS), HON. CEZAR C. PERALEJO,
RTC, BRANCH 98, QUEZON CITY, respondents.
Vicente T. Ocampo & Associates for petitioners.

CORTES, J :
Primarily, the issue raised in this petition is whether or not the Regional Trial Court can enjoin the
Social Security System Employees Association (SSSEA) from striking and order the striking
employees to return to work. Collaterally, it is whether or not employees of the Social Security
System (SSS) have the right to strike.
The antecedents are as follows:
On June 11, 1987, the SSS filed with the Regional Trial Court of Quezon City a complaint for
damages with a prayer for a writ of preliminary injunction against petitioners, alleging that on June
9, 1987, the officers and members of SSSEA staged an illegal strike and baricaded the entrances
to the SSS Building, preventing non-striking employees from reporting for work and SSS members
from transacting business with the SSS; that the strike was reported to the Public Sector Labor -
Management Council, which ordered the strikers to return to work; that the strikers refused to
return to work; and that the SSS suffered damages as a result of the strike. The complaint prayed
that a writ of preliminary injunction be issued to enjoin the strike and that the strikers be ordered to
return to work; that the defendants (petitioners herein) be ordered to pay damages; and that the
strike be declared illegal.
It appears that the SSSEA went on strike after the SSS failed to act on the union's demands,
which included: implementation of the provisions of the old SSS-SSSEA collective bargaining
agreement (CBA) on check-off of union dues; payment of accrued overtime pay, night differential
pay and holiday pay; conversion of temporary or contractual employees with six (6) months or
more of service into regular and permanent employees and their entitlement to the same salaries,
allowances and benefits given to other regular employees of the SSS; and payment of the
children's allowance of P30.00, and after the SSS deducted certain amounts from the salaries of
the employees and allegedly committed acts of discrimination and unfair labor practices [Rollo, pp.
21-241].
The court a quo, on June 11, 1987, issued a temporary restraining order pending resolution of the
application for a writ of preliminary injunction [Rollo, p. 71.] In the meantime, petitioners filed a
motion to dismiss alleging the trial court's lack of jurisdiction over the subject matter [Rollo, pp. 72-
82.] To this motion, the SSS filed an opposition, reiterating its prayer for the issuance of a writ of
injunction [Rollo, pp. 209-222]. On July 22,1987, in a four-page order, the court a quo denied the
motion to dismiss and converted the restraining order into an injunction upon posting of a bond,
after finding that the strike was illegal [Rollo, pp. 83- 86]. As petitioners' motion for the
reconsideration of the aforesaid order was also denied on August 14, 1988 [Rollo, p. 94],
petitioners filed a petition for certiorari and prohibition with preliminary injunction before this Court.
Their petition was docketed as G.R. No. 79577. In a resolution dated October 21, 1987, the Court,
through the Third Division, resolved to refer the case to the Court of Appeals. Petitioners filed a
motion for reconsideration thereof, but during its pendency the Court of Appeals on March 9,1988
promulgated its decision on the referred case [Rollo, pp. 130-137]. Petitioners moved to recall the
Court of Appeals' decision. In the meantime, the Court on June 29,1988 denied the motion for
reconsideration in G.R. No. 97577 for being moot and academic. Petitioners' motion to recall the
decision of the Court of Appeals was also denied in view of this Court's denial of the motion for
reconsideration [Rollo, pp. 141- 143]. Hence, the instant petition to review the decision of the
Court of Appeals [Rollo, pp. 12-37].
Upon motion of the SSS on February 6,1989, the Court issued a temporary restraining order
enjoining the petitioners from staging another strike or from pursuing the notice of strike they filed
with the Department of Labor and Employment on January 25, 1989 and to maintain the status
quo [Rollo, pp. 151-152].
The Court, taking the comment as answer, and noting the reply and supplemental reply filed by
petitioners, considered the issues joined and the case submitted for decision.
The position of the petitioners is that the Regional Trial Court had no jurisdiction to hear the case
initiated by the SSS and to issue the restraining order and the writ of preliminary injunction, as
jurisdiction lay with the Department of Labor and Employment or the National Labor Relations
Commission, since the case involves a labor dispute.
On the other hand, the SSS advances the contrary view, on the ground that the employees of the
SSS are covered by civil service laws and rules and regulations, not the Labor Code, therefore
they do not have the right to strike. Since neither the DOLE nor the NLRC has jurisdiction over the
dispute, the Regional Trial Court may enjoin the employees from striking.
In dismissing the petition for certiorari and prohibition with preliminary injunction filed by
petitioners, the Court of Appeals held that since the employees of the SSS, are government
employees, they are not allowed to strike, and may be enjoined by the Regional Trial Court, which
had jurisdiction over the SSS' complaint for damages, from continuing with their strike.

Page |
23
Thus, the sequential questions to be resolved by the Court in deciding whether or not the Court of
Appeals erred in finding that the Regional Trial Court did not act without or in excess of jurisdiction
when it took cognizance of the case and enjoined the strike are as follows:
1. Do the employees of the SSS have the right to strike?
2. Does the Regional Trial Court have jurisdiction to hear the case initiated by the SSS and to
enjoin the strikers from continuing with the strike and to order them to return to work?
These shall be discussed and resolved seriatim
I
The 1987 Constitution, in the Article on Social Justice and Human Rights, provides that the State
"shall guarantee the rights of all workers to self-organization, collective bargaining and
negotiations, and peaceful concerted activities, including the right to strike in accordance with law"
[Art. XIII, Sec. 31].
By itself, this provision would seem to recognize the right of all workers and employees, including
those in the public sector, to strike. But the Constitution itself fails to expressly confirm this
impression, for in the Sub-Article on the Civil Service Commission, it provides, after defining the
scope of the civil service as "all branches, subdivisions, instrumentalities, and agencies of the
Government, including government-owned or controlled corporations with original charters," that
"[t]he right to self-organization shall not be denied to government employees" [Art. IX(B), Sec. 2(l)
and (50)]. Parenthetically, the Bill of Rights also provides that "[tlhe right of the people, including
those employed in the public and private sectors, to form unions, associations, or societies for
purposes not contrary to law shall not abridged" [Art. III, Sec. 8]. Thus, while there is no question
that the Constitution recognizes the right of government employees to organize, it is silent as to
whether such recognition also includes the right to strike.
Resort to the intent of the framers of the organic law becomes helpful in understanding the
meaning of these provisions. A reading of the proceedings of the Constitutional Commission that
drafted the 1987 Constitution would show that in recognizing the right of government employees to
organize, the commissioners intended to limit the right to the formation of unions or associations
only, without including the right to strike.
Thus, Commissioner Eulogio R. Lerum, one of the sponsors of the provision that "[tlhe right to self-
organization shall not be denied to government employees" [Art. IX(B), Sec. 2(5)], in answer to the
apprehensions expressed by Commissioner Ambrosio B. Padilla, Vice-President of the
Commission, explained:
MR. LERUM. I think what I will try to say will not take that long. When we
proposed this amendment providing for self-organization of government
employees, it does not mean that because they have the right to organize, they
also have the right to strike. That is a different matter. We are only talking about
organizing, uniting as a union. With regard to the right to strike, everyone will
remember that in the Bill of Rights, there is a provision that the right to form
associations or societies whose purpose is not contrary to law shall not be
abridged. Now then, if the purpose of the state is to prohibit the strikes coming
from employees exercising government functions, that could be done because
the moment that is prohibited, then the union which will go on strike will be an
illegal union. And that provision is carried in Republic Act 875. In Republic Act
875, workers, including those from the government-owned and controlled, are
allowed to organize but they are prohibited from striking. So, the fear of our
honorable Vice- President is unfounded. It does not mean that because we
approve this resolution, it carries with it the right to strike. That is a different
matter. As a matter of fact, that subject is now being discussed in the Committee
on Social Justice because we are trying to find a solution to this problem. We
know that this problem exist; that the moment we allow anybody in the
government to strike, then what will happen if the members of the Armed Forces
will go on strike? What will happen to those people trying to protect us? So that is
a matter of discussion in the Committee on Social Justice. But, I repeat, the right
to form an organization does not carry with it the right to strike. [Record of the
Constitutional Commission, vol. 1, p. 569].
It will be recalled that the Industrial Peace Act (R.A. No. 875), which was repealed by the Labor
Code (P.D. 442) in 1974, expressly banned strikes by employees in the Government, including
instrumentalities exercising governmental functions, but excluding entities entrusted with
proprietary functions:
.Sec. 11. Prohibition Against Strikes in the Government. The terms and
conditions of employment in the Government, including any political subdivision
or instrumentality thereof, are governed by law and it is declared to be the policy
of this Act that employees therein shall not strike for the purpose of securing
changes or modification in their terms and conditions of employment. Such
employees may belong to any labor organization which does not impose the
obligation to strike or to join in strike:Provided, however, That this section shall
apply only to employees employed in governmental functions and not those
employed in proprietary functions of the Government including but not limited to
governmental corporations.
No similar provision is found in the Labor Code, although at one time it recognized the right of
employees of government corporations established under the Corporation Code to organize and
bargain collectively and those in the civil service to "form organizations for purposes not contrary
to law" [Art. 244, before its amendment by B.P. Blg. 70 in 1980], in the same breath it provided
that "[t]he terms and conditions of employment of all government employees, including employees
of government owned and controlled corporations, shall be governed by the Civil Service Law,
rules and regulations" [now Art. 276]. Understandably, the Labor Code is silent as to whether or
not government employees may strike, for such are excluded from its coverage [Ibid]. But then the
Civil Service Decree [P.D. No. 807], is equally silent on the matter.

Page |
24
On June 1, 1987, to implement the constitutional guarantee of the right of government employees
to organize, the President issued E.O. No. 180 which provides guidelines for the exercise of the
right to organize of government employees. In Section 14 thereof, it is provided that "[t]he Civil
Service law and rules governing concerted activities and strikes in the government service shall be
observed, subject to any legislation that may be enacted by Congress." The President was
apparently referring to Memorandum Circular No. 6, s. 1987 of the Civil Service Commission
under date April 21, 1987 which, "prior to the enactment by Congress of applicable laws
concerning strike by government employees ... enjoins under pain of administrative sanctions, all
government officers and employees from staging strikes, demonstrations, mass leaves, walk-outs
and other forms of mass action which will result in temporary stoppage or disruption of public
service." The air was thus cleared of the confusion. At present, in the absence of any legislation
allowing government employees to strike, recognizing their right to do so, or regulating the
exercise of the right, they are prohibited from striking, by express provision of Memorandum
Circular No. 6 and as implied in E.O. No. 180. [At this juncture, it must be stated that the validity of
Memorandum Circular No. 6 is not at issue].
But are employees of the SSS covered by the prohibition against strikes?
The Court is of the considered view that they are. Considering that under the 1987 Constitution
"[t]he civil service embraces all branches, subdivisions, instrumentalities, and agencies of the
Government, including government-owned or controlled corporations with original charters" [Art.
IX(B), Sec. .2(l) see also Sec. 1 of E.O. No. 180 where the employees in the civil service are
denominated as "government employees"] and that the SSS is one such government-controlled
corporation with an original charter, having been created under R.A. No. 1161, its employees are
part of the civil service [NASECO v. NLRC, G.R. Nos. 69870 & 70295, November 24,1988] and
are covered by the Civil Service Commission's memorandum prohibiting strikes. This being the
case, the strike staged by the employees of the SSS was illegal.
The statement of the Court in Alliance of Government Workers v. Minister of Labor and
Employment [G.R. No. 60403, August 3, 1:983, 124 SCRA 11 is relevant as it furnishes the
rationale for distinguishing between workers in the private sector and government employees with
regard to the right to strike:
The general rule in the past and up to the present is that 'the terms and
conditions of employment in the Government, including any political subdivision
or instrumentality thereof are governed by law" (Section 11, the Industrial Peace
Act, R.A. No. 875, as amended and Article 277, the Labor Code, P.D. No. 442,
as amended). Since the terms and conditions of government employment are
fixed by law, government workers cannot use the same weapons employed by
workers in the private sector to secure concessions from their employers. The
principle behind labor unionism in private industry is that industrial peace cannot
be secured through compulsion by law. Relations between private employers and
their employees rest on an essentially voluntary basis. Subject to the minimum
requirements of wage laws and other labor and welfare legislation, the terms and
conditions of employment in the unionized private sector are settled through the
process of collective bargaining. In government employment, however, it is the
legislature and, where properly given delegated power, the administrative heads
of government which fix the terms and conditions of employment. And this is
effected through statutes or administrative circulars, rules, and regulations, not
through collective bargaining agreements. [At p. 13; Emphasis supplied].
Apropos is the observation of the Acting Commissioner of Civil Service, in his position paper
submitted to the 1971 Constitutional Convention, and quoted with approval by the Court
in Alliance, to wit:
It is the stand, therefore, of this Commission that by reason of the nature of the
public employer and the peculiar character of the public service, it must
necessarily regard the right to strike given to unions in private industry as not
applying to public employees and civil service employees. It has been stated that
the Government, in contrast to the private employer, protects the interest of all
people in the public service, and that accordingly, such conflicting interests as
are present in private labor relations could not exist in the relations between
government and those whom they employ. [At pp. 16-17; also quoted in National
Housing Corporation v. Juco, G.R. No. 64313, January 17,1985,134 SCRA
172,178-179].
E.O. No. 180, which provides guidelines for the exercise of the right to organize of government
employees, while clinging to the same philosophy, has, however, relaxed the rule to allow
negotiation where the terms and conditions of employment involved are not among those fixed by
law. Thus:
.SECTION 13. Terms and conditions of employment or improvements thereof,
except those that are fixed by law, may be the subject of negotiations between
duly recognized employees' organizations and appropriate government
authorities.
The same executive order has also provided for the general mechanism for the settlement of labor
disputes in the public sector to wit:
.SECTION 16. The Civil Service and labor laws and procedures, whenever
applicable, shall be followed in the resolution of complaints, grievances and
cases involving government employees. In case any dispute remains unresolved
after exhausting all the available remedies under existing laws and procedures,
the parties may jointly refer the dispute to the [Public Sector Labor- Management]
Council for appropriate action.
Government employees may, therefore, through their unions or associations, either petition the
Congress for the betterment of the terms and conditions of employment which are within the ambit
of legislation or negotiate with the appropriate government agencies for the improvement of those
which are not fixed by law. If there be any unresolved grievances, the dispute may be referred to
the Public Sector Labor - Management Council for appropriate action. But employees in the civil
service may not resort to strikes, walk-outs and other temporary work stoppages, like workers in
the private sector, to pressure the Govemment to accede to their demands. As now provided

Page |
25
under Sec. 4, Rule III of the Rules and Regulations to Govern the Exercise of the Right of
Government- Employees to Self- Organization, which took effect after the instant dispute arose,
"[t]he terms and conditions of employment in the government, including any political subdivision or
instrumentality thereof and government- owned and controlled corporations with original charters
are governed by law and employees therein shall not strike for the purpose of securing changes
thereof."
II
The strike staged by the employees of the SSS belonging to petitioner union being prohibited by
law, an injunction may be issued to restrain it.
It is futile for the petitioners to assert that the subject labor dispute falls within the exclusive
jurisdiction of the NLRC and, hence, the Regional Trial Court had no jurisdiction to issue a writ of
injunction enjoining the continuance of the strike. The Labor Code itself provides that terms and
conditions of employment of government employees shall be governed by the Civil Service Law,
rules and regulations [Art. 276]. More importantly, E.O. No. 180 vests the Public Sector Labor -
Management Council with jurisdiction over unresolved labor disputes involving government
employees [Sec. 16]. Clearly, the NLRC has no jurisdiction over the dispute.
This being the case, the Regional Trial Court was not precluded, in the exercise of its general
jurisdiction under B.P. Blg. 129, as amended, from assuming jurisdiction over the SSS's complaint
for damages and issuing the injunctive writ prayed for therein. Unlike the NLRC, the Public Sector
Labor - Management Council has not been granted by law authority to issue writs of injunction in
labor disputes within its jurisdiction. Thus, since it is the Council, and not the NLRC, that has
jurisdiction over the instant labor dispute, resort to the general courts of law for the issuance of a
writ of injunction to enjoin the strike is appropriate.
Neither could the court a quo be accused of imprudence or overzealousness, for in fact it had
proceeded with caution. Thus, after issuing a writ of injunction enjoining the continuance of the
strike to prevent any further disruption of public service, the respondent judge, in the same order,
admonished the parties to refer the unresolved controversies emanating from their employer-
employee relationship to the Public Sector Labor - Management Council for appropriate action
[Rollo, p. 86].
III
In their "Petition/Application for Preliminary and Mandatory Injunction," and reiterated in their reply
and supplemental reply, petitioners allege that the SSS unlawfully withheld bonuses and benefits
due the individual petitioners and they pray that the Court issue a writ of preliminary prohibitive
and mandatory injunction to restrain the SSS and its agents from withholding payment thereof and
to compel the SSS to pay them. In their supplemental reply, petitioners annexed an order of the
Civil Service Commission, dated May 5, 1989, which ruled that the officers of the SSSEA who are
not preventively suspended and who are reporting for work pending the resolution of the
administrative cases against them are entitled to their salaries, year-end bonuses and other fringe
benefits and affirmed the previous order of the Merit Systems Promotion Board.
The matter being extraneous to the issues elevated to this Court, it is Our view that petitioners'
remedy is not to petition this Court to issue an injunction, but to cause the execution of the
aforesaid order, if it has already become final.
WHEREFORE, no reversible error having been committed by the Court of Appeals, the instant
petition for review is hereby DENIED and the decision of the appellate court dated March 9, 1988
in CA-G.R. SP No. 13192 is AFFIRMED. Petitioners' "Petition/Application for Preliminary and
Mandatory Injunction" dated December 13,1988 is DENIED.
SO ORDERED.


Page |
26
G.R. Nos. L-58674-77 July 11, 1990
PEOPLE OF THE PHILIPPINES, petitioner,
vs.
HON. DOMINGO PANIS, Presiding Judge of the Court of First Instance of Zambales &
Olongapo City, Branch III and SERAPIO ABUG, respondents.

CRUZ, J :
The basic issue in this case is the correct interpretation of Article 13(b) of P.D. 442, otherwise
known as the Labor Code, reading as follows:
(b) Recruitment and placement' refers to any act of canvassing, enlisting,
contracting, transporting, hiring, or procuring workers, and includes referrals,
contract services, promising or advertising for employment, locally or abroad,
whether for profit or not: Provided, That any person or entity which, in any
manner, offers or promises for a fee employment to two or more persons shall be
deemed engaged in recruitment and placement.
Four informations were filed on January 9, 1981, in the Court of First Instance of Zambales and
Olongapo City alleging that Serapio Abug, private respondent herein, "without first securing a
license from the Ministry of Labor as a holder of authority to operate a fee-charging employment
agency, did then and there wilfully, unlawfully and criminally operate a private fee charging
employment agency by charging fees and expenses (from) and promising employment in Saudi
Arabia" to four separate individuals named therein, in violation of Article 16 in relation to Article 39
of the Labor Code.
1

Abug filed a motion to quash on the ground that the informations did not charge an offense
because he was accused of illegally recruiting only one person in each of the four informations.
Under the proviso in Article 13(b), he claimed, there would be illegal recruitment only "whenever
two or more persons are in any manner promised or offered any employment for a fee. "
2

Denied at first, the motion was reconsidered and finally granted in the Orders of the trial court
dated June 24 and September 17, 1981. The prosecution is now before us on certiorari.
3

The posture of the petitioner is that the private respondent is being prosecuted under Article 39 in
relation to Article 16 of the Labor Code; hence, Article 13(b) is not applicable. However, as the first
two cited articles penalize acts of recruitment and placement without proper authority, which is the
charge embodied in the informations, application of the definition of recruitment and placement in
Article 13(b) is unavoidable.
The view of the private respondents is that to constitute recruitment and placement, all the acts
mentioned in this article should involve dealings with two or mre persons as an indispensable
requirement. On the other hand, the petitioner argues that the requirement of two or more persons
is imposed only where the recruitment and placement consists of an offer or promise of
employment to such persons and always in consideration of a fee. The other acts mentioned in
the body of the article may involve even only one person and are not necessarily for profit.
Neither interpretation is acceptable. We fail to see why the proviso should speak only of an offer or
promise of employment if the purpose was to apply the requirement of two or more persons to all
the acts mentioned in the basic rule. For its part, the petitioner does not explain why dealings with
two or more persons are needed where the recruitment and placement consists of an offer or
promise of employment but not when it is done through "canvassing, enlisting, contracting,
transporting, utilizing, hiring or procuring (of) workers.
As we see it, the proviso was intended neither to impose a condition on the basic rule nor to
provide an exception thereto but merely to create a presumption. The presumption is that the
individual or entity is engaged in recruitment and placement whenever he or it is dealing with two
or more persons to whom, in consideration of a fee, an offer or promise of employment is made in
the course of the "canvassing, enlisting, contracting, transporting, utilizing, hiring or procuring (of)
workers. "
The number of persons dealt with is not an essential ingredient of the act of recruitment and
placement of workers. Any of the acts mentioned in the basic rule in Article 13(b) win constitute
recruitment and placement even if only one prospective worker is involved. The proviso merely
lays down a rule of evidence that where a fee is collected in consideration of a promise or offer of
employment to two or more prospective workers, the individual or entity dealing with them shall be
deemed to be engaged in the act of recruitment and placement. The words "shall be deemed"
create that presumption.
This is not unlike the presumption in article 217 of the Revised Penal Code, for example,
regarding the failure of a public officer to produce upon lawful demand funds or property entrusted
to his custody. Such failure shall beprima facie evidence that he has put them to personal use; in
other words, he shall be deemed to have malversed such funds or property. In the instant case,
the word "shall be deemed" should by the same token be given the force of a disputable
presumption or of prima facie evidence of engaging in recruitment and placement. (Klepp vs. Odin
Tp., McHenry County 40 ND N.W. 313, 314.)
It is unfortunate that we can only speculate on the meaning of the questioned provision for lack of
records of debates and deliberations that would otherwise have been available if the Labor Code
had been enacted as a statute rather than a presidential decree. The trouble with presidential
decrees is that they could be, and sometimes were, issued without previous public discussion or
consultation, the promulgator heeding only his own counsel or those of his close advisers in their
lofty pinnacle of power. The not infrequent results are rejection, intentional or not, of the interest of
the greater number and, as in the instant case, certain esoteric provisions that one cannot read
against the background facts usually reported in the legislative journals.
At any rate, the interpretation here adopted should give more force to the campaign against illegal
recruitment and placement, which has victimized many Filipino workers seeking a better life in a

Page |
27
foreign land, and investing hard- earned savings or even borrowed funds in pursuit of their dream,
only to be awakened to the reality of a cynical deception at the hands of theirown countrymen.
WHEREFORE, the Orders of June 24, 1981, and September 17, 1981, are set aside and the four
informations against the private respondent reinstated. No costs.
SO ORDERED.


Page |
28
G.R. No. 113161 August 29, 1995
PEOPLE OF THE PHILIPPINES, plaintiff-appellee,
vs.
LOMA GOCE y OLALIA, DAN GOCE and NELLY D. AGUSTIN, accused. NELLY D.
AGUSTIN, accused-appellant.

REGALADO, J .:
On January 12, 1988, an information for illegal recruitment committed by a syndicate and in large
scale, punishable under Articles 38 and 39 of the Labor Code (Presidential Decree No. 442) as
amended by Section 1(b) of Presidential Decree No. 2018, was filed against spouses Dan and
Loma Goce and herein accused-appellant Nelly Agustin in the Regional Trial Court of Manila,
Branch 5, alleging
That in or about and during the period comprised between May 1986 and June
25, 1987, both dates inclusive, in the City of Manila, Philippines, the said
accused, conspiring and confederating together and helping one another,
representing themselves to have the capacity to contract, enlist and transport
Filipino workers for employment abroad, did then and there willfully and
unlawfully, for a fee, recruit and promise employment/job placement abroad, to
(1) Rolando Dalida y Piernas, (2) Ernesto Alvarez y Lubangco, (3) Rogelio
Salado y Savillo, (4) Ramona Salado y Alvarez, (5) Dionisio Masaya y de
Guzman, (6) Dave Rivera y de Leon, (7) Lorenzo Alvarez y Velayo, and (8)
Nelson Trinidad y Santos, without first having secured the required license or
authority from the Department of Labor.
1

On January 21, 1987, a warrant of arrest was issued against the three accused but not one of
them was arrested.
2
Hence, on February 2, 1989, the trial court ordered the case archived but it issued
a standing warrant of arrest against the accused.
3

Thereafter, on learning of the whereabouts of the accused, one of the offended parties, Rogelio
Salado, requested on March 17, 1989 for a copy of the warrant of arrest.
4
Eventually, at around
midday of February 26, 1993, Nelly Agustin was apprehended by the Paraaque police.
5
On March 8,
1993, her counsel filed a motion to revive the case and requested that it be set for hearing "for purposes
of due process and for the accused to immediately have her day in court"
6
Thus, on April 15, 1993, the
trial court reinstated the case and set the arraignment for May 3, 1993,
7
on which date of Agustin
pleaded not guilty
8
and the case subsequently went to trial.
Four of the complainants testified for the prosecution. Rogelio Salado was the first to take the
witness stand and he declared that sometime in March or April, 1987, he was introduced by
Lorenzo Alvarez, his brother-in-law and a co-applicant, to Nelly Agustin in the latter's residence at
Factor, Dongalo, Paraaque, Metro Manila. Representing herself as the manager of the Clover
Placement Agency, Agustin showed him a job order as proof that he could readily be deployed for
overseas employment. Salado learned that he had to pay P5,000.00 as processing fee, which
amount he gave sometime in April or May of the same year. He was issued the corresponding
receipt.
9

Also in April or May, 1987, Salado, accompanied by five other applicants who were his relatives,
went to the office of the placement agency at Nakpil Street, Ermita, Manila where he saw Agustin
and met the spouses Dan and Loma Goce, owners of the agency. He submitted his bio-data and
learned from Loma Goce that he had to give P12,000.00, instead of the original amount of
P5,000.00 for the placement fee. Although surprised at the new and higher sum, they
subsequently agreed as long as there was an assurance that they could leave for abroad.
10

Thereafter, a receipt was issued in the name of the Clover Placement Agency showing that
Salado and his aforesaid co-applicants each paid P2,000.00, instead of the P5,000.00 which each
of them actually paid. Several months passed but Salado failed to leave for the promised overseas
employment. Hence, in October, 1987, along with the other recruits, he decided to go to the
Philippine Overseas Employment Administration (POEA) to verify the real status of Clover
Placement Agency. They discovered that said agency was not duly licensed to recruit job
applicants. Later, upon learning that Agustin had been arrested, Salado decided to see her and to
demand the return of the money he had paid, but Agustin could only give him P500.00.
11

Ramona Salado, the wife of Rogelio Salado, came to know through her brother, Lorenzo Alvarez,
about Nelly Agustin. Accompanied by her husband, Rogelio, Ramona went to see Agustin at the
latter's residence. Agustin persuaded her to apply as a cutter/sewer in Oman so that she could join
her husband. Encouraged by Agustin's promise that she and her husband could live together while
working in Oman, she instructed her husband to give Agustin P2,000.00 for each of them as
placement fee, or the total sum of P4,000.00.
12

Much later, the Salado couple received a telegram from the placement agency requiring them to
report to its office because the "NOC" (visa) had allegedly arrived. Again, around February, or
March, 1987, Rogelio gave P2,000.00 as payment for his and his wife's passports. Despite follow-
up of their papers twice a week from February to June, 1987, he and his wife failed to leave for
abroad.
13

Complainant Dionisio Masaya, accompanied by his brother-in-law, Aquiles Ortega, applied for a
job in Oman with the Clover Placement Agency at Paraaque, the agency's former office address.
There, Masaya met Nelly Agustin, who introduced herself as the manager of the agency, and the
Goce spouses, Dan and Loma, as well as the latter's daughter. He submitted several pertinent
documents, such as his bio-data and school credentials.
14

In May, 1986, Masaya gave Dan Goce P1,900.00 as an initial downpayment for the placement
fee, and in September of that same year, he gave an additional P10,000.00. He was issued
receipts for said amounts and was advised to go to the placement office once in a while to follow
up his application, which he faithfully did. Much to his dismay and chagrin, he failed to leave for
abroad as promised. Accordingly, he was forced to demand that his money be refunded but Loma
Goce could give him back only P4,000.00 in installments.
15


Page |
29
As the prosecution's fourth and last witness, Ernesto Alvarez took the witness stand on June 7,
1993. He testified that in February, 1987, he met appellant Agustin through his cousin, Larry
Alvarez, at her residence in Paraaque. She informed him that "madalas siyang nagpapalakad sa
Oman" and offered him a job as an ambulance driver at the Royal Hospital in Oman with a
monthly salary of about $600.00 to $700.00.
16

On March 10, 1987, Alvarez gave an initial amount of P3,000.00 as processing fee to Agustin at
the latter's residence. In the same month, he gave another P3,000.00, this time in the office of the
placement agency. Agustin assured him that he could leave for abroad before the end of 1987. He
returned several times to the placement agency's office to follow up his application but to no avail.
Frustrated, he demanded the return of the money he had paid, but Agustin could only give back
P500.00. Thereafter, he looked for Agustin about eight times, but he could no longer find her.
17

Only herein appellant Agustin testified for the defense. She asserted that Dan and Loma Goce
were her neighbors at Tambo, Paraaque and that they were licensed recruiters and owners of
the Clover Placement Agency. Previously, the Goce couple was able to send her son, Reynaldo
Agustin, to Saudi Arabia. Agustin met the aforementioned complainants through Lorenzo Alvarez
who requested her to introduce them to the Goce couple, to which request she acceded.
18

Denying any participation in the illegal recruitment and maintaining that the recruitment was
perpetrated only by the Goce couple, Agustin denied any knowledge of the receipts presented by
the prosecution. She insisted that the complainants included her in the complaint thinking that this
would compel her to reveal the whereabouts of the Goce spouses. She failed to do so because in
truth, so she claims, she does not know the present address of the couple. All she knew was that
they had left their residence in 1987.
19

Although she admitted having given P500.00 each to Rogelio Salado and Alvarez, she explained
that it was entirely for different reasons. Salado had supposedly asked for a loan, while Alvarez
needed money because he was sick at that time.
20

On November 19, 1993, the trial court rendered judgment finding herein appellant guilty as a
principal in the crime of illegal recruitment in large scale, and sentencing her to serve the penalty
of life imprisonment, as well as to pay a fine of P100,000.00.
21

In her present appeal, appellant Agustin raises the following arguments: (1) her act of introducing
complainants to the Goce couple does not fall within the meaning of illegal recruitment and
placement under Article 13(b) in relation to Article 34 of the Labor Code; (2) there is no proof of
conspiracy to commit illegal recruitment among appellant and the Goce spouses; and (3) there is
no proof that appellant offered or promised overseas employment to the complainants.
22
These
three arguments being interrelated, they will be discussed together.
Herein appellant is accused of violating Articles 38 and 39 of the Labor Code. Article 38 of the
Labor Code, as amended by Presidential Decree No. 2018, provides that any recruitment activity,
including the prohibited practices enumerated in Article 34 of said Code, undertaken by non-
licensees or non-holders of authority shall be deemed illegal and punishable under Article 39
thereof. The same article further provides that illegal recruitment shall be considered an offense
involving economic sabotage if any of these qualifying circumstances exist, namely, (a) when
illegal recruitment is committed by a syndicate, i.e., if it is carried out by a group of three or more
persons conspiring and/or confederating with one another; or (b) when illegal recruitment is
committed in large scale, i.e., if it is committed against three or more persons individually or as a
group.
At the outset, it should be made clear that all the accused in this case were not authorized to
engage in any recruitment activity, as evidenced by a certification issued by Cecilia E. Curso,
Chief of the Licensing and Regulation Office of the Philippine Overseas Employment
Administration, on November 10, 1987. Said certification states that Dan and Loma Goce and
Nelly Agustin are neither licensed nor authorized to recruit workers for overseas
employment.
23
Appellant does not dispute this. As a matter of fact her counsel agreed to stipulate that
she was neither licensed nor authorized to recruit applicants for overseas employment. Appellant,
however, denies that she was in any way guilty of illegal recruitment.
24

It is appellant's defensive theory that all she did was to introduce complainants to the Goce
spouses. Being a neighbor of said couple, and owing to the fact that her son's overseas job
application was processed and facilitated by them, the complainants asked her to introduce them
to said spouses. Allegedly out of the goodness of her heart, she complied with their request. Such
an act, appellant argues, does not fall within the meaning of "referral" under the Labor Code to
make her liable for illegal recruitment.
Under said Code, recruitment and placement refers to any act of canvassing, enlisting,
contracting, transporting, utilizing, hiring or procuring workers, and includes referrals, contract
services, promising or advertising for employment, locally or abroad, whether for profit or
not; provided, that any person or entity which, in any manner, offers or promises for a fee
employment to two or more persons shall be deemed engaged in recruitment and
placement.
25
On the other hand, referral is the act of passing along or forwarding of an applicant for
employment after an initial interview of a selected applicant for employment to a selected employer,
placement officer or bureau.
26

Hence, the inevitable query is whether or not appellant Agustin merely introduced complainants to
the Goce couple or her actions went beyond that. The testimonial evidence hereon show that she
indeed further committed acts constitutive of illegal recruitment. All four prosecution witnesses
testified that it was Agustin whom they initially approached regarding their plans of working
overseas. It was from her that they learned about the fees they had to pay, as well as the papers
that they had to submit. It was after they had talked to her that they met the accused spouses who
owned the placement agency.
As correctly held by the trial court, being an employee of the Goces, it was therefore logical for
appellant to introduce the applicants to said spouses, they being the owners of the agency. As
such, appellant was actually making referrals to the agency of which she was a part. She was
therefore engaging in recruitment activity.
27

Despite Agustin's pretensions that she was but a neighbor of the Goce couple, the testimonies of
the prosecution witnesses paint a different picture. Rogelio Salado and Dionisio Masaya testified

Page |
30
that appellant represented herself as the manager of the Clover Placement Agency. Ramona
Salado was offered a job as a cutter/sewer by Agustin the first time they met, while Ernesto
Alvarez remembered that when he first met Agustin, the latter represented herself as "nagpapaalis
papunta sa Oman."
28
Indeed, Agustin played a pivotal role in the operations of the recruitment agency,
working together with the Goce couple.
There is illegal recruitment when one gives the impression of having the ability to send a worker
abroad."
29
It is undisputed that appellant gave complainants the distinct impression that she had the
power or ability to send people abroad for work such that the latter were convinced to give her the
money she demanded in order to be so employed.
30

It cannot be denied that Agustin received from complainants various sums for purpose of their
applications. Her act of collecting from each of the complainants payment for their respective
passports, training fees, placement fees, medical tests and other sundry expenses unquestionably
constitutes an act of recruitment within the meaning of the law. In fact, appellant demanded and
received from complainants amounts beyond the allowable limit of P5,000.00 under government
regulations. It is true that the mere act of a cashier in receiving money far exceeding the amount
allowed by law was not considered per se as "recruitment and placement" in contemplation of law,
but that was because the recipient had no other participation in the transactions and did not
conspire with her co-accused in defrauding the victims.
31
That is not the case here.
Appellant further argues that "there is no evidence of receipts of collections/payments from
complainants to appellant." On the contrary, xerox copies of said receipts/vouchers were
presented by the prosecution. For instance, a cash voucher marked as Exhibit D,
32
showing the
receipt of P10,000.00 for placement fee and duly signed by appellant, was presented by the
prosecution. Another receipt, identified as Exhibit E,
33
was issued and signed by appellant on February
5, 1987 to acknowledge receipt of P4,000.00 from Rogelio and Ramona Salado for "processing of
documents for Oman." Still another receipt dated March 10, 1987 and presented in evidence as Exhibit
F, shows that appellant received from Ernesto Alvarez P2,000.00 for "processing of documents for
Oman."
34

Apparently, the original copies of said receipts/vouchers were lost, hence only xerox copies
thereof were presented and which, under the circumstances, were admissible in evidence. When
the original writing has been lost or destroyed or cannot be produced in court, upon proof of its
execution and loss or destruction, or unavailability, its contents may be proved by a copy or a
recital of its contents in some authentic document, or by the recollection of witnesses.
35

Even assuming arguendo that the xerox copies presented by the prosecution as secondary
evidence are not allowable in court, still the absence thereof does not warrant the acquittal of
appellant. In People vs. Comia,
36
where this particular issue was involved, the Court held that the
complainants' failure to ask for receipts for the fees they paid to the accused therein, as well as their
consequent failure to present receipts before the trial court as proof of the said payments, is not fatal to
their case. The complainants duly proved by their respective testimonies that said accused was
involved in the entire recruitment process. Their testimonies in this regard, being clear and positive,
were declared sufficient to establish that factum probandum.
Indeed, the trial court was justified and correct in accepting the version of the prosecution
witnesses, their statements being positive and affirmative in nature. This is more worthy of credit
than the mere uncorroborated and self-serving denials of appellant. The lame defense consisting
of such bare denials by appellant cannot overcome the evidence presented by the prosecution
proving her guilt beyond reasonable doubt.
37

The presence of documentary evidence notwithstanding, this case essentially involves the
credibility of witnesses which is best left to the judgment of the trial court, in the absence of abuse
of discretion therein. The findings of fact of a trial court, arrived at only after a hearing and
evaluation of what can usually be expected to be conflicting testimonies of witnesses, certainly
deserve respect by an appellate court.
38
Generally, the findings of fact of the trial court on the matter
of credibility of witnesses will not be disturbed on appeal.
39

In a last-ditch effort to exculpate herself from conviction, appellant argues that there is no proof of
conspiracy between her and the Goce couple as to make her liable for illegal recruitment. We do
not agree. The evidence presented by the prosecution clearly establish that appellant
confabulated with the Goces in their plan to deceive the complainants. Although said accused
couple have not been tried and convicted, nonetheless there is sufficient basis for appellant's
conviction as discussed above.
In People vs. Sendon,
40
we held that the non-prosecution of another suspect therein provided no
ground for the appellant concerned to fault the decision of the trial court convicting her. The prosecution
of other persons, equally or more culpable than herein appellant, may come later after their true
identities and addresses shall have been ascertained and said malefactors duly taken into custody. We
see no reason why the same doctrinal rule and course of procedure should not apply in this case.
WHEREFORE, the appealed judgment of the court a quo is hereby AFFIRMED in toto, with costs
against accused-appellant Nelly D. Agustin.
SO ORDERED.


Page |
31
G.R. No. 125044 July 13, 1998
IMELDA DARVIN, petitioner,
vs.
HON. COURT OF APPEALS and PEOPLE OF THE PHILIPPINES, respondents.

ROMERO, J .:
Before us is a petition for review of the decision of the Court of Appeals in C.A.-G.R. No. 15624
dated January 31, 1996,
1
which affirmed in toto the judgment of the Regional Trial Court, Branch 19,
Bacoor, Cavite, convicting accused-appellant, Imelda Darvin for simple illegal recruitment under Article
38 and Article 39, in relation to Article 13 (b) and (c), of the Labor Code as amended.
Accused-appellant was charged under the following information:
That on our about the 13th day of April 1992, in the Municipality of Bacoor,
Province of Cavite, Philippines and within the jurisdiction of this Honorable Court,
the above-named accused, through fraudulent representation to one Macaria
Toledo to the effect that she has the authority to recruit workers and employees
for abroad and can facilitate the necessary papers in connection thereof, did,
then and there, wilfully, unlawfully and feloniously, hire, recruit and promise a job
abroad to one Macaria Toledo, without first securing the necessary license and
permit from the Philippine Overseas Employment Administration to do so,
thereby causing damage and prejudice to the aforesaid Macaria Toledo.
Contrary to law.
2

The evidence for the prosecution, based on the testimony of private respondent, Macaria Toledo,
shows that sometime in March, 1992, she met accused-appellant Darvin in the latter's residence
at Dimasalang, Imus, Cavite, through the introduction of their common friends, Florencio Jake
Rivera and Leonila Rivera. In said meeting, accused-appellant allegedly convinced Toledo that by
giving her P150,000.00, the latter can immediately leave for the United States without any
appearance before the U.S. embassy.
3
Thus, on April 13, 1992, Toledo gave Darvin the amount of
P150,000.00, as evidenced by a receipt stating that the "amount of P150,000.00 was for U.S. Visa and
Air fare."
4
After receiving the money, Darvin assured Toledo that she can leave within one week.
However, when after a week, there was no word from Darvin, Toledo went to her residence to inquire
about any development, but could not find Darvin. Thereafter, on May 7, 1992, Toledo filed a complaint
with the Bacoor Police Station against Imelda Darvin. Upon further investigation, a certification was
issued by the Philippine Overseas Employment Administration (POEA) stating that Imelda Darvin is
neither licensed nor authorized to recruit workers for overseas employment.
5
Accused-appellant was
then charged for estafa and illegal recruitment by the Office of the Provincial Prosecutor of Cavite.
Accused-appellant, on the other hand, testified that she used to be connected with Dale Travel
Agency and that in 1992, or thereabouts, she was assisting individuals in securing passports, visa,
and airline tickets. She came to know Toledo through Florencio Jake Rivera, Jr. and Leonila
Rivera, alleging that Toledo sought her help to secure a passport, US visa and airline tickets to the
States. She claims that she did not promise any employment in the U.S. to Toledo. She, however,
admits receiving the amount of P150,000.00 from the latter on April 13, 1992 but contends that it
was used for necessary expenses of an intended trip to the United States of Toledo and her
friend, Florencio Rivera
6
as follows. P45,000.00 for plane fare for one person; P1,500.00 for passport,
documentation and other incidental expenses for each person; P20,000.00 for visa application cost for
each person; and P17,000.00 for services.
7
After receiving the money, she allegedly told Toledo that the
papers will be released within 45 days. She likewise testified that she was able to secure Toledo's
passport on April 20, 1992 and even set up a date for an interview with the US embassy. Accused
alleged that she was not engaged in illegal recruitment but merely acted as a travel agent in assisting
individuals to secure passports and visa.
In its judgment rendered on June 17, 1993, the Bacoor, Cavite RTC found accused-appellant
guilty of the crime of simple illegal recruitment but acquitted her of the crime of estafa. The
dispositive portion of the judgment reads as follows:
WHEREFORE, premises considered, accused Imelda Darvin is hereby found
guilty beyond reasonable doubt of the crime of Simple Illegal Recruitment for
having committed the prohibited practice as defined by paragraph (b) of Article
34 and punished by paragraph (c) of Article 39 of the Labor Code, as amended
by PD 2018.
Accused Imelda Darvin is hereby ordered to suffer the prison term of Four (4)
years, as minimum, to Eight (8) years, as maximum; and to pay the fine of
P25,000.00.
Regarding her civil liability, she is hereby ordered to reimburse the private
complainant the sum of P150,000.00 and attorney's fees of P10,000.00.
She is hereby acquitted of the crime of Estafa.
SO ORDERED.
8

On appeal, the Court of Appeals affirmed the decision of the trial court in toto, hence this petition.
Before this Court, accused-appellant assails the decision of the trial and appellate courts in
convicting her of the crime of simple illegal recruitment. She contends that based on the evidence
presented by the prosecution, her guilt was not proven beyond reasonable doubt.
We find the appeal impressed with merit.
Art. 13 of the Labor Code, as amended, provides the definition of recruitment and placement as:

Page |
32
. . .; b) any act of canvassing, enlisting, contracting, transporting, utilizing, hiring,
or procuring workers, and includes referrals, contract services, promising or
advertising for employment locally or abroad, whether for profit or not: Provided,
that any person or entity which, in any manner, offers or promises for a fee
employment to two or more persons shall be deemed engaged in recruitment
and placement.
On the other hand, Article 38 of the Labor Code provides:
a) Any recruitment activities, including the prohibited practices enumerated under
Article 34 of this Code, to be undertaken by non-licensees or non-holders of
authority shall be deemed illegal and punishable under Article 39 of this Code.
The Ministry of Labor and Employment or any law enforcement officer may
initiate complaints under this Article.
xxx xxx xxx
Applied to the present case, to uphold the conviction of accused-appellant, two elements need to
be shown: (1) the person charged with the crime must have undertaken recruitment activities; and
(2) the said person does not have a license or authority to do so.
9

In this case, private respondent, Macaria Toledo alleged that she was offered a job in the United
States as nursing aide
10
by accused-appellant. In her direct examination, she testified as follows:
Atty. Alejandro:
Q : How did you come to know the accused?
Witness : I was introduced by my two friends. One of whom is
my best friend. That according to them, this accused has
connections and authorizations, that she can make people
leave for abroad, sir.
Court : What connections?
Witness : That she has connections with the Embassy and with
people whom she can approach regarding work abroad, your
Honor.
xxx xxx xxx
Q : When you came to meet for the first time in Imus, Cavite,
what transpired in that meeting of yours?
A : When I came to her house, the accused convinced me that
by means of P150,000.00, I will be able to leave immediately
without any appearance to any embassy, non-appearance, Sir.
Q : When you mentioned non-appearance, as told to you by the
accused, precisely, what do you mean by that?
A : I was told by the accused that non-appearance, means
without working personally for my papers and through her
efforts considering that she is capacitated as according to her I
will be able to leave the country, Sir.
xxx xxx xxx
Atty. Alejandro : What transpired after the accused told you all
these things that you will be able to secure all the documents
without appearing to anybody or to any embassy and that you
will be able to work abroad?
Witness : She told me to get ready with my P150,000.00, that is
if I want to leave immediately, Sir.
Atty. Alejandro : When you mentioned kaagad, how many days
or week?
Witness : She said that if I will able to part with my P150,000.00.
I will be able to leave in just one week time, Sir.
xxx xxx xxx
11

The prosecution, as evidence, presented the certification issued by the POEA that accused-
appellant Imelda Darvin is not licensed to recruit workers abroad.
It is not disputed that accused-appellant does not have a license or authority to engage in
recruitment activities. The pivotal issue to be determined, therefore, is whether the accused-
appellant indeed engaged in recruitment activities, as defined under the Labor Code. Applying the
rule laid down in the case of People v. Goce,
12
to prove that accused-appellant was engaged in
recruitment activities as to commit the crime of illegal recruitment, it must be shown that the accused
appellant gave private respondent the distinct impression that she had the power or ability to send the
private respondent abroad for work such that the latter was convinced to part with her money in order to
be so employed.
In this case, we find no sufficient evidence to prove that accused-ppellant offered a job to private
respondent. It is not clear that accused gave the impression that she was capable of providing the
private respondent work abroad. What is established, however, is that the private respondent gave

Page |
33
accused-appellant P150,000.00. The claim of the accused that the P150,000.00 was for payment
of private respondent's air fare and US visa and other expenses cannot be ignored because the
receipt for the P150,000.00, which was presented by both parties during the trial of the case,
stated that it was "for Air Fare and Visa to USA."
13
Had the amount been for something else in
addition to air fare and visa expenses, such as work placement abroad, the receipt should have so
stated.
By themselves, procuring a passport, airline tickets and foreign visa for another individual, without
more, can hardly qualify as recruitment activities. Aside from the testimony of private respondent,
there is nothing to show that accused-appellant engaged in recruitment activities. We also note
that the prosecution did not present the testimonies of witnesses who could have corroborated the
charge of illegal recruitment, such as Florencio Rivera, and Leonila Rivera, when it had the
opportunity to do so. As it stands, the claim of private respondent that accused-appellant promised
her employment abroad is uncorroborated. All these, taken collectively, cast reasonable doubt on
the guilt of the accused.
This Court can hardly rely on the bare allegations of private respondent that she was offered by
accused-appellant employment abroad, nor on mere presumptions and conjectures, to convict the
latter. No sufficient evidence was shown to sustain the conviction, as the burden of proof lies with
the prosecution to establish that accused-appellant indeed engaged in recruitment activities, thus
committing the crime of illegal recruitment.
In criminal cases, the burden is on the prosecution to prove, beyond reasonable doubt, the
essential elements of the offense with which the accused is charged; and if the proof fails to
establish any of the essential elements necessary to constitute a crime, the defendant is entitled to
an acquittal. Proof beyond reasonable doubt does not mean such a degree of proof as, excluding
the possibility of error, produces absolute certainty. Moral certainty only is required, or that degree
of proof which produces conviction in an unprejudiced mind.
14

At best, the evidence proffered by the prosecution only goes so far as to create a suspicion that
accused-appellant probably perpetrated the crime charged. But suspicion alone is insufficient, the
required quantum of evidence being proof beyond reasonable doubt. When the People's evidence
fail to indubitably prove the accused' s authorship of the crime of which he stands accused, then it
is the Court's duty, and the accused's right, to proclaim his innocence. Acquittal, therefore, is in
order.
15

WHEREFORE, the appeal is hereby GRANTED and the decision of the Court of Appeals in CA-
G.R. CR No. 15624 dated January 31, 1996, is REVERSED and SET ASIDE. Accused-appellant
Imelda Darvin is hereby ACQUITTED on ground of reasonable doubt. Accordingly, let the accused
be immediately released from her place of confinement unless there is reason to detain her further
for any other legal or valid cause. No pronouncement as to costs.
SO ORDERED.


Page |
34
G.R. No. 109808 March 1, 1995
ESALYN CHAVEZ, petitioner,
vs.
HON. EDNA BONTO-PEREZ, HON. ROGELIO T. RAYALA, HON. DOMINGO H. ZAPANTA,
HON. JOSE N. SARMIENTO, CENTRUM PROMOTIONS PLACEMENT CORPORATION, JOSE
A. AZUCENA, JR., and TIMES SURETY & INSURANCE COMPANY, INC. respondents.

PUNO, J .:
One of the anguished cries in our society today is that while our laws appear to protect the poor,
their interpretation is sometimes anti-poor. In the case at bench, petitioner, a poor, uncounselled
entertainment dancer signed a contract with her Japanese employer calling for a monthly salary of
One Thousand Five Hundred U.S. Dollars (US$1,500) but later had to sign an immoral side
agreement reducing her salary below the minimum standard set by the POEA. Petitioner invoked
the law to collect her salary differentials, but incredibly found public respondent straining the
seams of our law to disfavor her. There is no greater disappointment to the poor like petitioner
than to discover the ugly reality behind the beautiful rhetoric of laws. We will not allow this
travesty.
This is a petition for certiorari to review the Decision of the National Labor Relations Commission
(NLRC),
1
dated December 29, 1992, which affirmed the Decision of public respondent Philippine
Overseas Employment Agency (POEA) Administrator Jose N. Sarmiento, dated February 17, 1992,
dismissing petitioner's complaint for unpaid salaries amounting to Six Thousand Dollars (US$6,000.00).
The facts are undisputed.
On December 1, 1988, petitioner, an entertainment dancer, entered into a standard employment
contract for overseas Filipino artists and entertainers with Planning Japan Co., Ltd.,
2
through its
Philippine representative, private respondent Centrum Placement & Promotions Corporation. The
contract had a duration of two (2) to six (6) months, and petitioner was to be paid a monthly
compensation of One Thousand Five Hundred Dollars (US$1,5000.00). On December 5, 1888, the
POEA approved the contract. Subsequently, petitioner executed the following side agreement with her
Japanese employer through her local manager, Jaz Talents Promotion:
Date: Dec. 10, 1988
SUBJECT: Salary Deduction
MANAGERIAL COMMISSION
DATE OF DEPARTURE: _________________
ATTENTION: MR. IWATA
I, ESALYN CHAVEZ, DANCER, do hereby with my own free will and voluntarily
have the honor to authorize your good office to please deduct the amount
of TWO HUNDRED FIFTY DOLLARS ($250) from my contracted monthly salary
of SEVEN HUNDRED FIFTY DOLLARS ($750) as monthly commission for my
Manager, Mr. Jose A. Azucena, Jr.
That, my monthly salary (net) is FIVE HUNDRED DOLLARS ($500).
(sgd. by
petitioner)
3

On December 16, 1988, petitioner left for Osaka, Japan, where she worked for six (6) months,
until June 10, 1989. She came back to the Philippines on June 14, 1989.
Petitioner instituted the case at bench for underpayment of wages with the POEA on February 21,
1991. She prayed for the payment of Six Thousand U.S. Dollars (US$6,000.00), representing the
unpaid portion of her basic salary for six months. Charged in the case were private respondent
Centrum Promotions and Placement Corporation, the Philippine representative of Planning Japan,
Co., Inc., its insurer, Times Surety and Insurance Co., Inc., and Jaz Talents Promotion.
The complaint was dismissed by public respondent POEA Administrator on February 17, 1992. He
ratiocinated,inter alia:
. . . Apparently and from all indications, complainant (referring to petitioner
herein) was satisfied and did not have any complaint (about) anything regarding
her employment in Japan until after almost two (2) years (when) she filed the
instant complaint on February 21, 1991. The records show that after signing the
Standard Employment Contract on December 1, 1988, she entered into a side
agreement with the Japanese employer thru her local manager, Jaz Talents
Promotion consenting to a monthly salary of US$750.00 which she affirmed
during the conference of May 21, 1991. Respondent agency had no knowledge
nor participation in the said agreement such that it could not be faulted for
violation of the Standard Employment Contract regarding the stipulated salary.
We cannot take cognizance of such violation when one of the principal party (sic)
thereto opted to receive a salary different from what has been stipulated in their
contract, especially so if the contracting party did not consent/participate in such
arrangement. Complainant (petitioner) cannot now demand from respondent
agency to pay her the salary based (on) the processed Employment Contract for
she is now considered in bad faith and hence, estopped from claiming thereto
thru her own act of consenting and agreeing to receive a salary not in
accordance with her contract of employment. Moreover, her self-imposed silence
for a long period of time worked to her own disadvantage as she allowed laches
to prevail which barred respondent from doing something at the outset. Normally,
if a person's right (is) violated, she/he would immediately react to protect her/his
rights which is not true in the case at bar.

Page |
35
The term laches has been defined as one's negligence or failure to assert his
right in due time or within reasonable time from the accrual of his cause of action,
thus, leading another party to believe that there is nothing wrong with his own
claim. This resulted in placing the negligent party in estoppel to assert or enforce
his right. . . . Likewise, the Supreme Court in one case held that not only is
inaction within reasonable time to enforce a right the basic premise that underlies
a valid defense of laches but such inaction evinces implied consent or
acquiescence to the violation of the right . . .
Under the prevailing circumstances of this case, it is outside the regulatory
powers of the Administration to rule on the liability of respondent Jaz Talents
Promotions, if any, (it) not being a licensed private agency but a promotion which
trains entertainers for abroad.
xxx xxx xxx
(Citations omitted.)
On appeal, the NLRC upheld the Decision, thus:
We fail to see any conspiracy that the complainant (petitioner herein) imputes to
the respondents. She has, to put it bluntly, not established and/or laid the basis
for Us to arrive at a conclusion that the respondents have been and should be
held liable for her claims.
The way We see it, the records do not at all indicate any connection between
respondents Centrum Promotion & Placement Corporation and Jaz Talents
Promotion.
There is, therefore, no merit in the appeal. Hence, We affirmed.
4

Dissatisfied with the NLRC's Decision, petitioner instituted the present petition, alleging that public
respondents committed grave abuse of discretion in finding: that she is guilty of laches; that she
entered into a side contract on December 10, 1988 for the reduction of her basic salary to Seven
Hundred Fifty U.S. Dollars (US$750.00) which superseded, nullified and invalidated the standard
employment contract she entered into on December 1, 1988; and that Planning Japan Co., Ltd.
and private respondents are not solidarily liable to her for Six Thousand US Dollars (US$6,000.00)
in unpaid wages.
5

The petition is meritorious.
Firstly, we hold that the managerial commission agreement executed by petitioner to authorize her
Japanese Employer to deduct Two Hundred Fifty U.S. Dollars (US$250.00) from her monthly
basic salary is void because it is against our existing laws, morals and public policy. It cannot
supersede the standard employment contract of December 1, 1988 approved by the POEA with
the following stipulation appended thereto:
It is understood that the terms and conditions stated in this Employment Contract
are in conformance with the Standard Employment Contract for Entertainers
prescribed by the POEA under Memorandum Circular No. 2, Series of 1986. Any
alterations or changes made in any part of this contract without prior approval by
the POEA shall be null and void;
6
(Emphasis supplied.)
The stipulation is in line with the provisions of Rule II, Book V and Section 2(f), Rule I, Book VI of
the 1991 Rules and Regulations Governing Overseas Employment, thus:
Book V, Rule II
Sec. 1. Employment Standards. The Administration shall determine, formulate
and review employment standards in accordance with the market development
and welfare objectives of the overseas employment program and the prevailing
market conditions.
Sec. 2. Minimum Provisions for Contract. The following shall be considered the
minimum requirements for contracts of employment:
a. Guaranteed wages for regular working hours and overtime
pay for services rendered beyond regular working hours in
accordance with the standards established by the
Administration;
xxx xxx xxx
Sec. 3. Standard Employment Contract. The administration shall undertake
development and/or periodic review of region, country and skills specific
employment contracts for landbased workers and conduct regular review of
standard employment contracts (SEC) for seafarers. These contracts shall
provide for minimum employment standards herein enumerated under Section 2,
of this Rule and shall recognize the prevailing labor and social legislations at the
site of employment and international conventions. The SEC shall set the
minimum terms and conditions of employment. All employers and principals shall
adopt the SEC in connection with the hiring of workers without prejudice to their
adoption of other terms and conditions of employment over and above the
minimum standards of the Administration. (Emphasis supplied.)
and
BOOK VI, RULE I

Page |
36
Sec. 2. Grounds for suspension/cancellation of license.
xxx xxx xxx
f. Substituting or altering employment contracts and other documents approved
and verified by the Administration from the time of actual signing thereof by the
parties up to and including the period of expiration of the same without the
Administration's approval.
xxx xxx xxx
(Emphasis supplied.)
Clearly, the basic salary of One Thousand Five Hundred U.S. Dollars (US$1,500.00) guaranteed
to petitioner under the parties' standard employment contract is in accordance with
the minimum employment standards with respect to wages set by the POEA, Thus, the side
agreement which reduced petitioner's basic wage to Seven Hundred Fifty U.S. Dollars
(US$750.00) is null and void for violating the POEA's minimum employment standards, and for not
having been approved by the POEA. Indeed, this side agreement is a scheme all too frequently
resorted to by unscrupulous employers against our helpless overseas workers who are compelled
to agree to satisfy their basic economic needs.
Secondly. The doctrine of laches or "stale demands"' cannot be applied to petitioner. Laches has
been defined as the failure or neglect for an unreasonable and unexplained length time to do that
which, by exercising due diligence, could or should have been done earlier,
7
thus giving rise to a
presumption that the party entitled to assert it either has abandoned or declined to assert it.
8
It is not
concerned with mere lapse of time; the fact of delay, standing alone, is insufficient to constitute laches.
9

The doctrine of laches is based upon grounds of public policy which requires, for the peace of
society, the discouragement of stale claims, and is principally a question of the inequity or
unfairness of permitting a right or claim to be enforced or asserted.
10
There is no absolute rule as to
what constitutes laches; each case is to be determined according to its particular circumstances. The
question of laches is addressed to the sound discretion of the court, and since it is an equitable
doctrine, its application is controlled by equitable considerations. It cannot be worked to defeat justice or
to perpetrate fraud and injustice.
11

In the case at bench, petitioner filed her claim well within the three-year prescriptive period for the
filing of money claims set forth in Article 291 of the Labor Code.
12
For this reason, we hold the
doctrine of laches inapplicable to petitioner. As we ruled in Imperial Victory Shipping Agency v. NLRC,
200 SCRA 178 (1991):
. . . Laches is a doctrine in equity while prescription is based on law. Our courts
are basically courts of law not courts of equity. Thus, laches cannot be invoked to
resist the enforcement of an existing legal right. We have ruled in Arsenal
v. Intermediate Appellate Court . . . that it is a long standing principle that equity
follows the law. Courts exercising equity jurisdiction are bound by rules of law
and have no arbitrary discretion to disregard them. In Zabat, Jr. v. Court of
Appeals . . ., this Court was more emphatic upholding the rules of procedure. We
said therein:
As for equity, which has been aptly described as a "justice
outside legality," this applied only in the absence of, and never
against, statutory law or, as in this case, judicial rules of
procedure. Aequetas nunguam contravenit legis. The pertinent
positive rules being present here, they should pre-empt and
prevail over all abstract arguments based only on equity.
Thus, where the claim was filed within the three-year statutory period, recovery
therefore cannot be barred by laches. Courts should never apply the doctrine of
laches earlier than the expiration of time limited for the commencement of actions
at law.
xxx xxx xxx
(Emphasis supplied. Citations omitted.)
Thirdly, private respondents Centrum and Times as well as Planning Japan Co., Ltd. the
agency's foreign principal are solidarily liable to petitioner for her unpaid wages. This is in
accordance with stipulation 13.7 of the parties' standard employment contract which provides:
13.7. The Employer (in this case, Planning Japan Co., Ltd. ) and its locally (sic)
agent/promoter/representative (private respondent Centrum Promotions &
Placement Corporation) shall be jointly and severally responsible for the proper
implementation of the terms and conditions in this Contract.
13
(Emphasis
supplied.)
This solidary liability also arises from the provisions of Section 10(a)(2), Rule V, Book I of
the Omnibus Rules Implementing the Labor Code, as amended, thus:
Sec. 10. Requirement before recruitment. Before recruiting any worker, the
private employment agency shall submit to the Bureau the following documents:
a) A formal appointment or agency contract executed by a foreign-based
employer in favor of the license holder to recruit and hire personnel for the former
. . . . Such formal appointment or recruitment agreement shall contain the
following provisions, among others:
xxx xxx xxx

Page |
37
2. Power of the agency to sue and be sued jointly and solidarily with the principal
or foreign based employer for any of the violations of the recruitment agreement
and the contracts of employment.
xxx xxx xxx
(Emphasis supplied.)
Our overseas workers constitute an exploited class. Most of them come from the poorest sector of
our society. They are thoroughly disadvantaged. Their profile shows they live in suffocating slums,
trapped in an environment of crime. Hardly literate and in ill health, their only hope lies in jobs they
can hardly find in our country. Their unfortunate circumstance makes them easy prey to avaricious
employers. They will climb mountains, cross the seas, endure slave treatment in foreign lands just
to survive. Out of despondence, they will work under sub-human conditions and accept salaries
below the minimum. The least we can do is to protect them with our laws in our land. Regretfully,
respondent public officials who should sympathize with the working class appear to have a
different orientation.
IN VIEW WHEREOF, the petition is GRANTED. The Decisions of respondent POEA Administrator
and NLRC Commissioners in POEA Case No. Adj. 91-02-199 (ER), respectively dated February
17 and December 29, 1992, and the Resolution of the NLRC, dated March 23, 1993, are
REVERSED and SET ASIDE. Private respondents are held jointly and severally liable to petitioner
for the payment of SIX THOUSAND US DOLLARS (US$6,000.00) in unpaid wages. Costs against
private respondents.
SO ORDERED.


Page |
38
G.R. No. 109835 November 22, 1993
JMM PROMOTIONS & MANAGEMENT, INC., petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and ULPIANO L. DE LOS
SANTOS, respondent.
Don P. Porciuncula for petitioner.
Eulogio Nones, Jr. for private respondent.

CRUZ, J .:
The sole issue submitted in this case is the validity of the order of respondent National Labor
Relations Commission dated October 30, 1992, dismissing the petitioner's appeal from a decision
of the Philippine Overseas Employment Administration on the ground of failure to post the
required appeal bond.
1

The respondent cited the second paragraph of Article 223 of the Labor Code as amended,
providing that:
In the case of a judgment involving a monetary award, an appeal by the
employer may be perfected only upon the posting of a cash or surety bond
issued by a reputable bonding company duly accredited by the Commission in an
amount equivalent to the monetary award in the judgment appealed from.
and Rule VI, Section 6 of the new Rules of Procedure of the NLRC, as amended, reading as
follows:
Sec. 6. Bond In case the decision of a Labor Arbiter involves a monetary
award, an appeal by the employer shall be perfected only upon the posting of a
cash or surety bond issued by a reputable bonding company duly accredited by
the Commission or the Supreme Court in an amount equivalent to the monetary
award.
The petitioner contends that the NLRC committed grave abuse of discretion in applying these
rules to decisions rendered by the POEA. It insists that the appeal bond is not necessary in the
case of licensed recruiters for overseas employment because they are already required under
Section 4, Rule II, Book II of the POEA Rules not only to pay a license fee of P30,000 but also to
post a cash bond of P100,000 and a surety bond of P50,000, thus:
Upon approval of the application, the applicant shall pay a license fee of
P30,000. It shall also post a cash bond of P100,000 and surety bond of P50,000
from a bonding company acceptable to the Administration and duly accredited by
the Insurance Commission. The 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 accreditation 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
Rules of the Administration and relevant issuances of the Department and all
liabilities which the Administration may impose. The surety bonds shall include
the condition that the notice to the principal is notice to the surety and that any
judgment against the principal in connection with matters falling under POEA's
jurisdiction shall be binding and conclusive on the surety. The surety bonds shall
be co-terminus with the validity period of license. (Emphasis supplied)
In addition, the petitioner claims it has placed in escrow the sum of P200,000 with the Philippine
National Bank in compliance with Section 17, Rule II, Book II of the same Rule, "to primarily
answer for valid and legal claims of recruited workers as a result of recruitment violations or
money claims."
Required to comment, the Solicitor General sustains the appeal bond requirement but suggest
that the rules cited by the NLRC are applicable only to decisions of the Labor Arbiters and not of
the POEA. Appeals from decisions of the POEA, he says, are governed by the following provisions
of Rule V, Book VII of the POEA Rules:
Sec. 5. Requisites for Perfection of Appeal. The appeal shall be filed within the
reglementary period as provided in Section 1 of this Rule; shall be under
oath with proof of payment of the required appeal fee and the posting of a cash
or surety bond as provided in Section 6 of this Rule; shall be accompanied by a
memorandum of appeal which shall state the grounds relied upon and the
arguments in support thereof; the relief prayed for; and a statement of the date
when the appellant received the appealed decision and/or award and proof of
service on the other party of such appeal.
A mere notice of appeal without complying with the other requisites aforestated
shall not stop the running of the period for perfecting an appeal.
Sec. 6. Bond. In case the decision of the Administration involves a monetary
award, an appeal by the employer shall be perfected only upon the posting of a
cash or surety bond issued by a reputable bonding company duly accredited by
the Commission in an amount equivalent to the monetary award. (Emphasis
supplied)
The question is, having posted the total bond of P150,000 and placed in escrow the amount of
P200,000 as required by the POEA Rules, was the petitioner still required to post an appeal bond
to perfect its appeal from a decision of the POEA to the NLRC?

Page |
39
It was.
The POEA Rules are clear. A reading thereof readily shows that in addition to the cash and surety
bonds and the escrow money, an appeal bond in an amount equivalent to the monetary award is
required to perfect an appeal from a decision of the POEA. Obviously, the appeal bond is intended
to further insure the payment of the monetary award in favor of the employee if it is eventually
affirmed on appeal to the NLRC.
It is true that the cash and surety bonds and the money placed in escrow are supposed to
guarantee the payment of all valid and legal claims against the employer, but these claims are not
limited to monetary awards to employees whose contracts of employment have been violated. The
POEA can go against these bonds also for violations by the recruiter of the conditions of its
license, the provisions of the Labor Code and its implementing rules, E.O. 247 (reorganizing
POEA) and the POEA Rules, as well as the settlement of other liabilities the recruiter may incur.
As for the escrow agreement, it was presumably intended to provide for a standing fund, as it
were, to be used only as a last resort and not to be reduced with the enforcement against it of
every claim of recruited workers that may be adjudged against the employer. This amount may not
even be enough to cover such claims and, even if it could initially, may eventually be exhausted
after satisfying other subsequent claims.
As it happens, the decision sought to be appealed grants a monetary award of about P170,000 to
the dismissed employee, the herein private respondent. The standby guarantees required by the
POEA Rules would be depleted if this award were to be enforced not against the appeal bond but
against the bonds and the escrow money, making them inadequate for the satisfaction of the other
obligations the recruiter may incur.
Indeed, it is possible for the monetary award in favor of the employee to exceed the amount of
P350,000, which is the sum of the bonds and escrow money required of the recruiter.
It is true that these standby guarantees are not imposed on local employers, as the petitioner
observes, but there is a simple explanation for this distinction. Overseas recruiters are subject to
more stringent requirement because of the special risks to which our workers abroad are
subjected by their foreign employers, against whom there is usually no direct or effective recourse.
The overseas recruiter is solidarily liable with a foreign employer. The bonds and the escrow
money are intended to insure more care on the part of the local agent in its choice of the foreign
principal to whom our overseas workers are to be sent.
It is a principle of legal hermeneutics that in interpreting a statute (or a set of rules as in this case),
care should be taken that every part thereof be given effect, on the theory that it was enacted as
an integrated measure and not as a hodge-podge of conflicting provisions. Ut res magis valeat
quam pereat.
2
Under the petitioner's interpretation, the appeal bond required by Section 6 of the
aforementioned POEA Rule should be disregarded because of the earlier bonds and escrow money it
has posted. The petitioner would in effect nullify Section 6 as a superfluity but we do not see any such
redundancy; on the contrary, we find that Section 6 complements Section 4 and Section 17. The rule is
that a construction that would render a provision inoperative should be avoided; instead, apparently
inconsistent provisions should be reconciled whenever possible as parts of a coordinated and
harmonious whole.
Accordingly, we hold that in addition to the monetary obligations of the overseas recruiter
prescribed in Section 4, Rule II, Book II of the POEA Rules and the escrow agreement under
Section 17 of the same Rule, it is necessary to post the appeal bond required under Section 6,
Rule V, Book VII of the POEA Rules, as a condition for perfecting an appeal from a decision of the
POEA.
Every intendment of the law must be interpreted in favor of the working class, conformably to the
mandate of the Constitution. By sustaining rather than annulling the appeal bond as a further
protection to the claimant employee, this Court affirms once again its commitment to the interest of
labor.
WHEREFORE, the petition is DISMISSED, with costs against the petitioner. It is so ordered.
Davide and Quiason, JJ., concur.
Bellosillo, J, is on leave.

G.R. No. 77279 April 15, 1988
MANUELA S. CATAN/M.S. CATAN PLACEMENT AGENCY, petitioners,
vs.
THE NATIONAL LABOR RELATIONS COMMISSION, PHILIPPINE OVERSEAS EMPLOYMENT
ADMINISTRATION and FRANCISCO D. REYES, respondents.
Demetria Reyes, Merris & Associates for petitioners.
The Solicitor General for public respondents.
Bayani G. Diwa for private respondent.

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

Page |
40
The facts of the case are quite simple.
Petitioner, a duly licensed recruitment agency, as agent of Ali and Fahd Shabokshi Group, a Saudi
Arabian firm, recruited private respondent to work in Saudi Arabia as a steelman.
The term of the contract was for one year, from May 15,1981 to May 14, 1982. However, the
contract provided for its automatic renewal:
FIFTH: The validity of this Contract is for ONE YEAR commencing from the date
the SECOND PARTY assumes hill port. This Contract is renewable automatically
if neither of the PARTIES notifies the other PARTY of his wishes to terminate the
Contract by at least ONE MONTH prior to the expiration of the contractual period.
[Petition, pp. 6-7; Rollo, pp. 7-8].
The contract was automatically renewed when private respondent was not repatriated by his
Saudi employer but instead was assigned to work as a crusher plant operator. On March 30,
1983, while he was working as a crusher plant operator, private respondent's right ankle was
crushed under the machine he was operating.
On May 15, 1983, after the expiration of the renewed term, private respondent returned to the
Philippines. His ankle was operated on at the Sta. Mesa Heights Medical Center for which he
incurred expenses.
On September 9, 1983, he returned to Saudi Arabia to resume his work. On May 15,1984, he was
repatriated.
Upon his return, he had his ankle treated for which he incurred further expenses.
On the basis of the provision in the employment contract that the employer shall compensate the
employee if he is injured or permanently disabled in the course of employment, private respondent
filed a claim, docketed as POEA Case No. 84-09847, against petitioner with respondent Philippine
Overseas Employment Administration. On April 10, 1986, the POEA rendered judgment in favor of
private respondent, the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered in favor of the complainant and
against the respondent, ordering the latter to pay to the complainant:
1. SEVEN THOUSAND NINE HUNDRED EIGHTY-FIVE PESOS and 60/100
(P7,985.60), Philippine currency, representing disability benefits;
2. TWENTY-FIVE THOUSAND NINETY-SIX Philippine pesos and 20/100
(29,096.20) representing reimbursement for medical expenses;
3. Ten percent (10%) of the abovementioned amounts as and for attorney's fees.
[NLRC Resolution, p. 1; Rollo, p. 16].
On appeal, respondent NLRC affirmed the decision of the POEA in a resolution dated December
12, 1986.
Not satisfied with the resolution of the POEA, petitioner instituted the instant special civil action for
certiorari, alleging grave abuse of discretion on the part of the NLRC.
1. Petitioner claims that the NLRC gravely abused its discretion when it ruled that petitioner was
liable to private respondent for disability benefits since at the time he was injured his original
employment contract, which petitioner facilitated, had already expired. Further, petitioner disclaims
liability on the ground that its agency agreement with the Saudi principal had already expired when
the injury was sustained.
There is no merit in petitioner's contention.
Private respondents contract of employment can not be said to have expired on May 14, 1982 as
it was automatically renewed since no notice of its termination was given by either or both of the
parties at least a month before its expiration, as so provided in the contract itself. Therefore,
private respondent's injury was sustained during the lifetime of the contract.
A private employment agency may be sued jointly and solidarily with its foreign principal for
violations of the recruitment agreement and the contracts of employment:
Sec. 10. Requirement before recruitment. Before recruiting any worker, the
private employment agency shall submit to the Bureau the following documents:
(a) A formal appointment or agency contract executed by a foreign-based
employer in favor of the license holder to recruit and hire personnel for the former
...
xxx xxx xxx
2. Power of the agency to sue and be sued jointly and solidarily
with the principal or foreign-based employer for any of the
violations of the recruitment agreement and the contracts of
employment. [Section 10(a) (2) Rule V, Book I, Rules to
Implement the Labor Code].
Thus, in the recent case of Ambraque International Placement & Services v. NLRC [G.R. No.
77970, January 28,1988], the Court ruled that a recruitment agency was solidarily liable for the
unpaid salaries of a worker it recruited for employment in Saudi Arabia.

Page |
41
Even if indeed petitioner and the Saudi principal had already severed their agency agreement at
the time private respondent was injured, petitioner may still be sued for a violation of the
employment contract because no notice of the agency agreement's termination was given to the
private respondent:
Art 1921. If the agency has been entrusted for the purpose of contra with
specified persons, its revocation shall not prejudice the latter if they were not
given notice thereof. [Civil Code].
In this connection the NLRC elaborated:
Suffice it to state that albeit local respondent M. S. Catan Agency was at the time
of complainant's accident resulting in his permanent partial disability was (sic) no
longer the accredited agent of its foreign principal, foreign respondent herein, yet
its responsibility over the proper implementation of complainant's
employment/service contract and the welfare of complainant himself in the
foreign job site, still existed, the contract of employment in question not having
expired yet. This must be so, because the obligations covenanted in the
recruitment agreement entered into by and between the local agent and its
foreign principal are not coterminus with the term of such agreement so that if
either or both of the parties decide to end the agreement, the responsibilities of
such parties towards the contracted employees under the agreement do not at all
end, but the same extends up to and until the expiration of the employment
contracts of the employees recruited and employed pursuant to the said
recruitment agreement. Otherwise, this will render nugatory the very purpose for
which the law governing the employment of workers for foreign jobs abroad was
enacted. [NLRC Resolution, p. 4; Rollo, p. 18]. (Emphasis supplied).
2. Petitioner contends that even if it is liable for disability benefits, the NLRC gravely abused its
discretion when it affirmed the award of medical expenses when the said expenses were the
consequence of private respondent's negligence in returning to work in Saudi Arabia when he
knew that he was not yet medically fit to do so.
Again, there is no merit in this contention.
No evidence was introduced to prove that private respondent was not medically fit to work when
he returned to Saudi Arabia. Exhibit "B", a certificate issued by Dr. Shafquat Niazi, the camp
doctor, on November 1, 1983, merely stated that private respondent was "unable to walk properly,
moreover he is still complaining [of] pain during walking and different lower limbs movement"
[Annex "B", Reply; Rollo, p. 51]. Nowhere does it say that he was not medically fit to work.
Further, since petitioner even assisted private respondent in returning to work in Saudi Arabia by
purchasing his ticket for him [Exhibit "E"; Annex "A", Reply to Respondents' Comments], it is as if
petitioner had certified his fitness to work. Thus, the NLRC found:
Furthermore, it has remained unrefuted by respondent that complainant's
subsequent departure or return to Saudi Arabia on September 9, 1983 was with
the full knowledge, consent and assistance of the former. As shown in Exhibit "E"
of the record, it was respondent who facilitated the travel papers of complainant.
[NLRC Resolution, p. 5; Rollo, p. 19].
WHEREFORE, in view of the foregoing, the petition is DISMISSED for lack of merit, with costs
against petitioner.
SO ORDERED


Page |
42
G.R. No. 78085 October 16, 1989
ROYAL CROWN INTERNATIONALE, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSI0N and VIRGILIO P. NACIONALES, respondents.
Ceferino Padua Law Office for petitioner.
Acosta & Rico Law Offices for private respondent.

CORTES, J .:
Petitioner Royal Crown Internationale seeks the nullification of a resolution of the National Labor
Relations Commission (NLRC) which affirmed a decision of the Philippine Overseas Employment
Administration (POEA) holding it liable to pay, jointly and severally with Zamel-Turbag Engineering
and Architectural Consultant (ZAMEL), private respondent Virgilio P. Nacionales' salary and
vacation pay corresponding to the unexpired portion of his employment contract with ZAMEL.
In 1983, petitioner, a duly licensed private employment agency, recruited and deployed private
respondent for employment with ZAMEL as an architectural draftsman in Saudi Arabia. On May
25, 1983, a service agreement was executed by private respondent and ZAMEL whereby the
former was to receive per month a salary of US$500.00 plus US$100.00 as allowance for a period
of one (1) year commencing from the date of his arrival in Saudi Arabia. Private respondent
departed for Saudi Arabia on June 28,1983.
On February 13, 1984, ZAMEL terminated the employment of private respondent on the ground
that his performance was below par. For three (3) successive days thereafter, he was detained at
his quarters and was not allowed to report to work until his exit papers were ready. On February
16, 1984, he was made to board a plane bound for the Philippines.
Private respondent then filed on April 23, 1984 a complaint for illegal termination against petitioner
and ZAMEL with the POEA, docketed as POEA Case No. (L) 84-04-401.
Based on a finding that petitioner and ZAMEL failed to establish that private respondent was
terminated for just and valid cause, the Workers' Assistance and Adjudication Office of the POEA
issued a decision dated June 23, 1986 signed by Deputy Administrator and Officer-in-Charge
Crescencio M. Siddayao, the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered in favor of the complainant and
against respondents, ordering the latter to pay, jointly and severally, to
complainant the following amounts:
1. TWO THOUSAND SIX HUNDRED FORTY US DOLLARS (US$2,640.00) or
its equivalent in Philippine currency at the time of payment, representing the
salaries corresponding to the unexpired portion of complainant's contract;
2. SIX HUNDRED US DOLLARS (US$ 600.00) less partial payment of FIVE
HUNDRED FIFTY-EIGHT SAUDI RIYALS (SR558), or its equivalent in Philippine
currency at the time of actual payment, representing the unpaid balance of
complainant's vacation pay;
3. THREE HUNDRED FIFTY US DOLLARS (US$350.00) or its equivalent in
Philippine currency at the time of actual payment representing reimbursement of
salary deductions for return travel fund;
4. Ten percent (10%) of the above-stated amounts, as and for attorney's fees.
Complainant's claim for legal and transportation expenses are hereby
DISMISSED for lack of merit.
SO ORDERED.
[POEA Decision, p. 5; Rollo, p. 34.]
On July 18, 1986, petitioner filed thru its new counsel a motion for reconsideration which was
treated as an appeal to the NLRC by the POEA. Petitioner alleged that the POEA erred in holding
it solidarity liable for ZAMEL's violation of private respondent's service agreement even if it was
not a party to the agreement.
In a resolution promulgated on December 11, 1986, the NLRC affirmed the POEA decision,
holding that, as a duly licensed private employment agency, petitioner is jointly and severally liable
with its foreign principal ZAMEL for all claims and liabilities which may arise in connection with the
implementation of the employment contract or service agreement [NLRC Decision, pp. 3-4; Rollo,
pp. 26-27].
On March 30, 1987, the NLRC denied for lack of merit petitioner's motion for reconsideration.
Hence, petitioner filed the present petition captioned as "Petition for Review".
At this point, it is not amiss to note that the filing of a "Petition for Review" under Rule 45 of the
Rules of Court is not the proper means by which NLRC decisions are appealed to the Supreme
Court. It is only through a petition for certiorari under Rule 65 that NLRC decisions may be
reviewed and nullified on the grounds of lack of jurisdiction or grave abuse of discretion amounting
to lack or excess of jurisdiction. Nevertheless, in the interest of justice, this Court opted to treat the
instant petition as if it were a petition for certiorari. Thus, after the filing of respondents' comments,
petitioner's joint reply thereto, and respondents' rejoinders, the Court resolved to consider the
issues joined and the case submitted for decision.

Page |
43
The case at bar involves two principal issues, to wit:
I. Whether or not petitioner as a private employment agency may be held jointly
and severally liable with the foreign-based employer for any claim which may
arise in connection with the implementation of the employment contracts of the
employees recruited and deployed abroad;
II. Whether or not sufficient evidence was presented by petitioner to establish the
termination of private respondent's employment for just and valid cause.
I.
Petitioner contends that there is no provision in the Labor Code, or the omnibus rules
implementing the same, which either provides for the "third-party liability" of an employment
agency or recruiting entity for violations of an employment agreement performed abroad, or
designates it as the agent of the foreign-based employer for purposes of enforcing against the
latter claims arising out of an employment agreement. Therefore, petitioner concludes, it cannot be
held jointly and severally liable with ZAMEL for violations, if any, of private respondent's service
agreement.
Petitioner's conclusion is erroneous. Petitioner conveniently overlooks the fact that it had
voluntarily assumed solidary liability under the various contractual undertakings it submitted to the
Bureau of Employment Services. In applying for its license to operate a private employment
agency for overseas recruitment and placement, petitioner was required to submit, among others,
a document or verified undertaking whereby it assumed all responsibilities for the proper use of its
license and the implementation of the contracts of employment with the workers it recruited and
deployed for overseas employment [Section 2(e), Rule V, Book 1, Rules to Implement the Labor
Code (1976)]. It was also required to file with the Bureau a formal appointment or agency contract
executed by the foreign-based employer in its favor to recruit and hire personnel for the former,
which contained a provision empowering it to sue and be sued jointly and solidarily with the
foreign principal for any of the violations of the recruitment agreement and the contracts of
employment [Section 10 (a) (2), Rule V, Book I of the Rules to Implement the Labor Code (1976)].
Petitioner was required as well to post such cash and surety bonds as determined by the
Secretary of Labor to guarantee compliance with prescribed recruitment procedures, rules and
regulations, and terms and conditions of employment as appropriate [Section 1 of Pres. Dec. 1412
(1978) amending Article 31 of the Labor Code].
These contractual undertakings constitute the legal basis for holding petitioner, and other private
employment or recruitment agencies, liable jointly and severally with its principal, the foreign-
based employer, for all claims filed by recruited workers which may arise in connection with the
implementation of the service agreements or employment contracts [See Ambraque International
Placement and Services v. NLRC, G.R. No. 77970, January 28, 1988, 157 SCRA 431; Catan v.
NLRC, G.R. No. 77279, April 15, 1988, 160 SCRA 691; Alga Moher International Placement
Services v. Atienza, G.R. No. 74610, September 30, 1988].
In a belated attempt to bolster its position, petitioner contends in its joint reply that the omnibus
rules implementing the Labor Code are invalid for not having been published in the Official
Gazette pursuant to the Court's pronouncements in the cases of Tanada v. Tuvera [G.R. No.
63915, April 25, 1985, 136 SCRA 27; December 29, 1986, 146 SCRA 446]. Petitioner further
contends that the 1985 POEA Rules and Regulations, in particular Section 1, Rule I of Book
VII** quoted in the NLRC decision, should not have been retroactively applied to the case at bar.
But these contentions are irrelevant to the issues at bar. They proceed from a misapprehension of
the legal basis of petitioner's liabilities as a duly licensed private employment agency. It bears
repeating that the basis for holding petitioner jointly and severally liable with the foreign-based
employer ZAMEL is the contractual undertakings described above which it had submitted to the
Bureau of Employment Services. The sections of the omnibus rules implementing the Labor Code
cited by this Court merely enumerate the various documents or undertakings which were
submitted by petitioner as applicant for the license to operate a private employment agency for
overseas recruitment and placement. These sections do not create the obligations and liabilities of
a private employment agency to an employee it had recruited and deployed for work overseas. It
must be emphasized again that petitioner assumed the obligations and liabilities of a private
employment agency by contract. Thus, whether or not the omnibus rules are effective in
accordance with Tanada v. Tuvera is an issue the resolution of which does not at all render
nugatory the binding effect upon petitioner of its own contractual undertakings.
The Court, consequently, finds it unnecessary to pass upon both the implications of Tanada v.
Tuvera on the omnibus rules implementing the Labor Code as well as the applicability of the 1985
POEA Rules and Regulations.
Petitioner further argues that it cannot be held solidarily liable with ZAMEL since public respondent
had not acquired jurisdiction over ZAMEL through extra-territorial service of summons as
mandated by Section 17, Rule 14 of the Rules of Court.
This argument is untenable. It is well-settled that service upon any agent of a foreign corporation,
whether or not engaged in business in the Philippines, constitutes personal service upon that
corporation, and accordingly, judgment may be rendered against said foreign corporation
[Facilities Management Corporation v. De la Osa, G.R. No. L-38649, March 26, 1979, 89 SCRA
131]. In the case at bar, it cannot be denied that petitioner is an agent of ZAMEL. The service
agreement was executed in the Philippines between private respondent and Milagros G. Fausto,
the General Manager of petitioner, for and in behalf of ZAMEL [Annex "D" of Petition, p. 3; Rollo,
p. 37]. Moreover, one of the documents presented by petitioner as evidence, i.e., the counter-
affidavit of its General Manager Ms. Fausto, contains an admission that it is the representative and
agent of ZAMEL [See Paragraph No. 1 of Annex "H" of Petition; Rollo. p. 43].
Considering the foregoing, the Court holds that the NLRC committed no grave abuse of discretion
amounting to lack or excess of jurisdiction in declaring petitioner jointly and severally liable with its
foreign principal ZAMEL for all claims which have arisen in connection with the implementation of
private respondent's employment contract.
II.

Page |
44
Petitioner asserts that the NLRC failed to consider the overwhelming evidence it had presented
before the POEA which establishes the fact that private respondent was terminated for just and
valid cause in accordance with his service agreement with ZAMEL.
This assertion is without merit. The NLRC upheld the POEA finding that petitioner's evidence was
insufficient to prove termination from employment for just and valid cause. And a careful study of
the evidence thus far presented by petitioner reveals to this Court that there is legal basis for
public respondent's conclusion.
It must be borne in mind that the basic principle in termination cases is that the burden of proof
rests upon the employer to show that the dismissal is for just and valid cause, and failure to do so
would necessarily mean that the dismissal was not justified and, therefore, was illegal [Polymedic
General Hospital v. NLRC, G.R. No. 64190, January 31, 1985,134 SCRA 420; and also Article
277 of the Labor Code]. And where the termination cases involve a Filipino worker recruited and
deployed for overseas employment, the burden naturally devolves upon both the foreign-based
employer and the employment agency or recruitment entity which recruited the worker, for the
latter is not only the agent of the former, but is also solidarily liable with its foreign principal for any
claims or liabilities arising from the dismissal of the worker.
In the case at bar, petitioner had indeed failed to discharge the burden of proving that private
respondent was terminated from employment for just and valid cause. Petitioner's evidence
consisted only of the following documents:
(1) A letter dated May l5, 1984 allegedly written by an official of ZAMEL, stating
that a periodic evaluation of the entire staff was conducted; that the personnel
concerned were given a chance to improve; that complainant's performance was
found below par; and that on February 13,1984, at about 8:30 AM, complainant
was caught on the way out of the office to look for another job during office hours
without the permission of his supervisor;
(2) A telex message allegedly sent by employees of ZAMEL, stating that they
have not experienced maltreatment, and that the working conditions (in ZAMEL)
are good;
(3) The signatures of fifteen (15) persons who allegedly sent the telex message;
(4) A receipt dated February 16, 1984 signed by complainant, stating that he was
paid SR915 representing his salary and SR558, representing vacation pay for the
month of February 1984;
(5) The counter-affidavit of Milagros G. Fausto, the General Manager of Royal
Crown, stating that complainant was dismissed because of poor performance,
acts of dishonesty and misconduct, and denying complainant's claim that his
salary and leave pay were not paid, and that he was maltreated [See POEA
Decision, p. 3; Rollo, p. 32, See also Annexes "E", "F", "F-1 ", "G" and "H" of
Petition; Rollo, pp. 38-43].
Certainly, the telex message supposedly sent by the employees of ZAMEL is not relevant in the
determination of the legality of private respondent's dismissal. On the other hand, the receipt
signed by private respondent does not prove payment to him of the salary and vacation pay
corresponding to the unexpired portion of his contract.
More importantly, except for its allegation that private respondent was caught on February
13,1984 on his way out of the office compound without permission, petitioner had failed to allege
and to prove with particularity its charges against private respondent. The letter dated May 15,
1984 allegedly written by the Actg. Project Architect and the counter-affidavit of petitoner's
General Manager merely stated that the grounds for the employee's dismissal were his
unsatisfactory performance and various acts of dishonesty, insubordination and misconduct. But
the particular acts which would indicate private respondent's incompetence or constitute the above
infractions were neither specified nor described therein. In the absence of any other evidence to
substantiate the general charges hurled against private respondent, these documents, which
comprise petitioner's evidence in chief, contain empty and self-serving statements insufficient to
establish just and valid cause for the dismissal of private respondent [See Euro-Lines, Phils., Inc.
v. NLRC, G.R. No. 75782, December 1, 1987,156 SCRA 78; Ambraque International Placement
and Services v. NLRC, supra].
The Court is aware of the document attached in petitioner's manifestation and joint reply which is
purportedly a xerox copy of a statement executed on December 13, 1987 in Saudi Arabia by
private respondent claiming that the latter had settled the case with ZAMEL and had "received all
[his] benefits that is salary, vacation pay, severance pay and all other bonuses before [he] left the
kingdom of Saudi Arabia on 13 Feb. 1984 and hereby indemnify [ZAMEL] from any claims or
liabilities, [he] raised in the Philippine Courts" [Annex "A" of petitioner's Manifestation with Motion
to hold in Abeyance; Rollo, p. 82. And also Annex "A" of petitioner's Joint Reply; Rollo, p. 111].
But the veracity of the contents of the document is precisely disputed by private respondent. He
claims that he was made to sign the above statement against his will and under threat of
deportation [See Telex of private respondent received by the Supreme Court of the Philippines on
January 14,1988; Rollo, p. 83. And also private respondent's Rejoinder, pp. 1-3; Rollo, pp. 139-
141].
Petitioner finally contends that inasmuch as clause no. 13 of the service agreement provided that
the law under which the agreement shall be regulated was the laws of Saudi Arabia [Annex "D" of
Petition, p. 2; Rollo, p. 36], public respondent should have taken into account the laws of Saudi
Arabia and the stricter concept of morality availing in that jurisdiction for the determination of the
legality of private respondent's dismissal.
This contention is patently erroneous. The provisions of the Labor Code of the Philippines, its
implementing rules and regulations, and doctrines laid down in jurisprudence dealing with the
principle of due process and the basic right of all Filipino workers to security of tenure, provide the
standard by which the legality of the exercise by management of its prerogative to dismiss

Page |
45
incompetent, dishonest or recalcitrant employees, is to be determined. Whether employed locally
or overseas, all Filipino workers enjoy the protective mantle of Philippine labor and social
legislation, contract stipulations to the contrary notwithstanding. This pronouncement is in keeping
with the basic public policy of the State to afford protection to labor, promote full employment,
ensure equal work opportunities regardless of sex, race or creed, and regulate the relations
between workers and employers. For the State assures the basic rights of all workers to self-
organization, collective bargaining, security of tenure, and just and humane conditions of work
[Article 3 of the Labor Code of the Philippines; See also Section 18, Article II and Section 3, Article
XIII, 1987 Constitution]. This ruling is likewise rendered imperative by Article 17 of the Civil Code
which states that laws "which have for their object public order, public policy and good customs
shall not be rendered ineffective by laws or judgments promulgated, or by determination or
conventions agreed upon in a foreign country."
Needless to say, the laws of Saudi Arabia which were, incidentally, neither pleaded nor proved by
petitioner, have absolutely no bearing whatsoever to the case at bar.
The Court holds, therefore, that the NLRC committed no grave abuse of discretion amounting to
lack or excess of jurisdiction in upholding the POEA's finding of insufficiency of evidence to prove
termination for just and valid cause.
WHEREFORE, the Court Resolved to DISMISS the instant petition.
SO ORDERED


Page |
46
G.R. No. L-38649 March 26, 1979
FACILITIES MANAGEMENT CORPORATION, J. S. DREYER, and J. V. CATUIRA, petitioners,
vs.
LEONARDO DE LA ROSA AND THE HONORABLE COURT OF INDUSTRIAL
RELATIONS, respondents.
Sycip, Salazar, Feliciano & Associates for petitioners.
Benjamin M. Mendoza for respondent Court.

MAKASIAR, J :
Petition for review on certiorari of the decision of the Court of Industrial Relations, dated February
14, 1972, ordering petitioners herein to pay private respondent Leonardo de la Osa his overtime
compensation, as wen as his swing shift and graveyard shift premiums at the rate of fifty (50%)
per cent of his basic sa (Annex E, p. 31, rollo).
The aforesaid decision was based on a report submitted by the Hearing Examiner, CIR (Dagupan
City Branch), the pertinent portions of which are quoted hereinbelow:::
In a petition filed on July 1, 1967, Leonardo dela Osa sought his reinstatement.
with full backwages, as well as the recovery of his overtime compensation, swing
shift and graveyard shift differentials. Petitioner alleged that he was employed by
respondents as follows: (1) painter with an hourly rate of $1.25 from March, 1964
to November, 1964, inclusive; (2) houseboy with an hourly rate of $1.26 from
December, 1964 to November, 1965, inclusive; (3) houseboy with an hourly rate
of $1.33 from December, 1965 to August, 1966, inclusive; and (4) cashier with an
hourly rate of $1.40 from August, 1966 to March 27, 1967, inclusive. He further
averred that from December, 1965 to August, 1966, inclusive, he rendered
overtime services daily and that this entire period was divided into swing and
graveyard shifts to which he was assigned, but he was not paid both overtime
and night shift premiums despite his repeated demands from respondents.
Respondents filed on August 7, 1967 their letter- answer without substantially
denying the material allegations of the basic petition but interposed the following
special defenses, namely: That respondents Facilities Management Corporation
and J. S. Dreyer are domiciled in Wake Island which is beyond the territorial
jurisdiction of the Philippine Government; that respondent J. V. Catuira, though
an employee of respondent corporation presently stationed in Manila, is without
power and authority of legal representation; and that the employment contract
between petitioner and respondent corporation carries -the approval of the
Department of Labor of the Philippines.
Subsequently on May 3, 1968. respondents filed a motion to dismiss the subject
petition on the ground that this Court has no Jurisdiction over the instant case,
and on May 24, 1968, petitioner interposed an opposition thereto. Said motion
was denied by this Court in its Order issued on July 12, 1968 sustaining
jurisdiction in accordance with the prevailing doctrine of the Supreme Court in
similar cases.
xxx xxx xxx
But before we consider and discuss the foregoing issues, let us first ascertain if
this Court could acquire jurisdiction over the case at bar, it having been
contended by respondents that they are domiciled in Wake Island which is
beyond the territorial jurisdiction of the Philippine Government. To this incidental
question, it may be stated that while it is true the site of work is Identified as
Wake Island, it is equally true the place of hire is established in Manila (See
Section B, Filipino Employment Contract, Exhibit '1'). Moreover, what is important
is the fact that the contract of employment between the parties litigant was shown
to have been originally executed and subsequently renewed in Manila, as
asserted by petitioner and not denied by respondents. Hence, any dispute arising
therefrom should necessarily be determined in the place or venue where it was
contracted.
xxx xxx xxx
From the evidence on hand, it has been proven beyond doubt that petitioner
canvas assigned to and performed work in respondent company at slight time
which consisted of two different schedules, namely, swing shift and graveyard
shifts, particularly during his tenure as houseboy for the second period and as
cashier. Petitioner's testimony to this effect was not contradicted, much less
rebutted, by respondents, as revealed by the records. Since petitioner actually
rendered night time services as required by respondents, and considering the
physical, moral and sociological effects arising from the performance of such
nocturnal duties, we think and honestly believe that petitioner should be
compensated at least fifty percent (50%) more than his basic wage rate. This
night shift premium pay would indeed be at par with the overtime compensation
stipulated at one and one-half (1 ) times of the straight time rate.
xxx xxx xxx (pp. 31-36, rollo).
Apropos before this Court were filed three (3) other cases involving the same petitioner, all of
which had been finally dispoded of, as follows:
G.R. No Date of Filing Disposition

Page |
47
1. L-37117 July 30, 1973 Petition denied for
lack of merit on Sept.
13, 1973. Motion for
Reconsideration
denied lack of
merit, Nov. 20,1973.
2. L-38781 June 17,1974 Petition denied for
lack of merit on June
21,1974.
3. L-39111-12 Sept. 2,1974 Case dismissed on Feb.
6, 1976, pursuant to
voluntary manifesta
tion of private respon
dent Inocente R. Riel
that his claims had all
been settled to his entire
satisfaction.
Incidentally, in connection with G.R. No. L-39111-12 (No. 3 above), WE found strong evidence
that petitioner therein, which is also the petitioner in the case at bar, "twisted the arm" of private
respondent, when the latter in his Manifestation dated July 3, 1975, stated:
3. ... Furthermore, since petitioner FMC is a foreign corporation domiciled in
California, U.S.A. and has never been engaged in business in the Philippines,
nor does it have an agent or an office in this country, there exists no valid reason
for me to participate in the continuation and/or prosecution of this case (p. 194,
rollo).
as if jurisdiction depends on the will of the parties to a case. At any rate, considering that
petitioner paid the claims of private respondent, the case had become moot and academic.
Besides, the fact of such payment amounts to an acknowledgment on the part of petitioner of the
jurisdiction of the court over it.
WE have also noted that the principal question involved in each of the above-numbered three (3)
cases is more or less Identical, to wit: Is the mere act by a non-resident foreign corporation of
recruiting Filipino workers for its own use abroad, in law doing business in the Philippines?
In the case at bar, which was filed with this Court on June 3, 1974, petitioners presented, inter
alia, the following issue: ... can the CIR validly affirm a judgment against persons domiciled
outside and not doing business in the Philippines, and over whom it did not acquire jurisdiction')
While it is true that the issues presented in the decided cases are worded differently from the
principal issue raised in the case at bar, the fact remains that they all boil down to one and the
same issue, which was aptly formulated and ably resolved by Mr. Justice Ramon C. Fernandez,
then with the Court of Appeals and now a member of this Court, in CA-G.R. No. SP-01485-R, later
elevated to this Court on appeal by certiorari in Case G.R. No. L-37117 this case, the majority
opinion of the Court of Appeals, which was penned by Justice Fernandez and which WE hereby
adopt, runs as follows:
The principal issue presented in this special civil action is whether petitioner has
been 'doing business in the Philippines' so that the service of summons upon its
agent in the Philippines vested the Court of First Instance of Manila with
jurisdiction.
From the facts of record, the petitioner may be considered as doing busuness un
the Philippines within the the scope of Section 14, Rule 14 of the Rules of the
Court which provide:
SEC 14. Service upon private foreign corporations. If the
defendant is a foreign corporation or a non-resident joint stock
company or association: doing business in the Philippines,
service may be made on its resident agent designated in
accordance with law for that purpose or, if there be no such
agent, on the government official designated by law to that
effect, or on any of its officers or agents within the Philippines.
Indeed, the petitioner, in compliance with Act 2486 as implemented by
Department of Labor Order No. IV dated May 20, 1968 had to appoint Jaime V.
Catuira, 1322 A. Mabini, Ermita, Manila as agent for FMC with authority to
execute Employment Contracts and receive, in behalf of that corporation, legal
services from and be bound by processes of the Philippine Courts of Justice, for
as long as he remains an employee of FMC (Annex 'I', rollo, p. 56). It is a fact
that when the summons for the petitioner was served on Jaime V. Catuira he was
still in the employ of the FMC.
In his motion to dismiss Annex B', p. 19, Rollo), petitioner admits that Mr. Catuira
represented it in this country 'for the purpose of making arrangements for the
approval by the Department of Labor of the employment of Filipinos who are
recruited by the Company as its own employees for assignment abroad.' In
effect, Mr. Catuira was a on officer representing petitioner in the Philippines.
Under the rules and regulations promulgated by the Board of Investments which
took effect Feb. 3, 1969, implementing Rep. Act No. 5455, which took effect
Sept. 30, 1968, the phrase 'doing business' has been exemption with
illustrations, among them being as follows:
xxx xxx xxx

Page |
48
(f) the performance within the Philippines of any act or
combination of acts enumerated in section l(l) of the Act shall
constitute 'doing business' therein. in particular, 'doing business
includes:
(1) Soliciting orders, purchases (sales) or service contracts.
Concrete and specific solicitations by a foreign firm, not acting
independently of the foreign firm amounting to negotiation or
fixing of the terms and conditions of sales or service contracts,
regardless of whether the contracts are actually reduced to
writing, shall constitute doing business even if the enterprise
has no office or fixed place of business in the Philippines. xxx
(2) Appointing a representative or distributor who is dociled in
the Philippines, unless said representative or distributor has an
independent status, i.e., it transacts business in its name and
for its own account, and not in the name or for the account of
the principal.
xxx xxx xxx
(4) Opening offices, whether called 'liaison'offices, agencies or
branches, unless proved otherwise.
xxx xxx xxx
(10) Any other act or acts that imply a continuity of commercial
dealings or arrangements, and contemplate to that extent the
performance of acts or works, or the exercise of some of the
functions normally incident to, or in the progressive prosecution
of, commercial gain or of the purpose and objective of the
business organization (54 O.G. 53).
Recently decided by this Court again thru Mr. Justice Ramon C. Fernandez which is similar
to the case at bar, is G.R. No. L-26809, entitled Aetna Casualty & Curety Company, plaintiff-
appellant versus Pacific Star Line, the Bradman Co., Inc., Manila Port Service and/or Manila
Railroad Company, Inc., defendants-appellees." The case is an appeal from the decision of the
Court of First Instance of Manila, Branch XVI, in its Civil Case No. 53074, entitled Aetna Casualty
& Surety Company vs. Pacific Star Lines, The Bradman Co., Inc., Manila Port Service and/or
Manila Railroad Company, Inc." dismissing the complaint on the ground that the plaintiff has no
legal capacity to bring the suit.
It appears that on February 11, 1963, Smith Bell & Co. (Philippines), Inc. and Aetna Casualty &
Surety Co., Inc., as subrogee instituted Civil Case No. 53074 in the Court of First Instance of
Manila against Pacific Star Line, The Bradman Co., Inc., Manila Port Service and/or Manila
Railroad Company, Inc. to recover the amount of US$2,300.00 representing the value of stolen
and damaged cargo plus litigation expenses and exemplary damages in the amounts of P1,000.00
and P2,000.00, respectively, with legal interest thereon from the filing of the suit and costs.
After all the defendants had filed their answer, the defendants Manila Port Service and Manila
Railroad Company, Inc. amended their answer to allege that the plaintiff, Aetna Casualty & Surety
Company, is a foreign corporation not duly licensed to do business in the Philippines and,
therefore, without capacity to sue and be sued.
After the parties submitted a partial stipulation of facts and additional documentary evidence, the
case was submitted for decision of the trial court, which dismissed the complaint on the ground
that the plaintiff insurance company is subject to the requirements of Sections 68 and 69 of Act
1459, as amended, and for its failure to comply therewith, it has no legal capacity to bring suit in
this jurisdiction. Plaintiff appealed to this Court.
The main issue involved in the appeal is whether or not the plaintiff appellant has been doing
business in the Philippines, considering the fact that it has no license to transact business in the
Philippines as a foreign corporation. WE ruled:
The object of Sections 68 and 69 of the Corporation Law was not to prevent the
foreign corporation from performing single acts, but to prevent it from acquiring a
domicile for the purpose of business without taking the steps necessary to render
it amenable to suit in the local courts. It was never the purpose of the Legislature
to exclude a foreign corporation which happens to obtain an isolated order for
business from the Philippines, from securing redress in the Philippine courts
(Marshall Co. vs. Elser & Co., 46 Phil 70,75).
In Mentholatum Co., Inc., et al vs- M Court rules that-
No general rule or governing principle can be laid down as to
what constitutes 'doing' or 'engaging in' or 'transacting'
business. Indeed, each case must be judged in the light of its
peculiar environmental circumstances. The true test, however,
seems to be whether the foreign corporation is continuing the
body or substance of the business or enterprise for which it was
organized or whether it has substantially retired from it and
turned it over to another. (Traction Cos. v. Collectors of Int
Revenue [C.C.A Ohio], 223 F. 984, 987). The term implies a
continuity of commercial dealings and arrangements, and
contemplates, to that extent, the performance of acts or works
or the exercise of some of the functions normally incident to,
and in progressive prosecution of, the purpose and object of its
organization (Griffin v. Implement Dealers' Mut. Fire Ins. Co.,
241 N.W. 75, 77; Pauline Oil & Gas Co. v. Mutual Tank Line
Co., 246 P. 851, 852, 118 Okl. III; Automotive Material Co. vs.

Page |
49
American Standard Metal Products Corp., 158 N.E. 698, 703,
327 III. 367)'. 72 Phil. 524, 528-529.
And in Eastboard Navigation, Ltd., et al. vs. Juan Ysmael & Co., Inc., this Court
held:
(d) While plaintiff is a foreign corporation without license to
transact business in the Philippines, it does not follow that it has
no capacity to bring the present action. Such license is not
necessary because it is not engaged in business in the
Philippines. In fact, the transaction herein involved is the first
business undertaken by plaintiff in the Philippines, although on
a previous occasion plaintiff's vessel was chartered by the
National Rice and Corn Corporation to carry rice cargo from
abroad to the Philippines. These two isolated transactions do
not constitute engaging in business in the Philippines within the
purview of Sections 68 and 69 of the Corporation Law so as to
bar plaintiff from seeking redress in our courts. (Marshall Wens
Co. vs. Henry W. Elser & Co. 49 Phil., 70; Pacific Vegetable Oil
Corporation vs. Angel O. Singson, G.R. No. L-7917, April 29,
1955)'. 102 Phil., pp. 1, 18.
Based on the rulings laid down in the foregoing cases, it cannot be said that the
Aetna Casualty & Surety Company is transacting business of insurance in the
Philippines for which it must have a license. The Contract of insurance was
entered into in New York, U.S.A., and payment was made to the consignee in its
New York branch. It appears from the list of cases issued by the Clerk of Court of
the Court of First Instance of Manila that all the actions, except two (2) cases
filed by Smith, Beer & Co., Inc. against the Aetna Casualty & Surety Company,
are claims against the shipper and the arrastre operators just like the case at bar.
Consequently, since the appellant Aetna Casualty & Surety Company is not
engaged in the business of insurance in the Philippines but is merely collecting a
claim assigned to it by the consignee, it is not barred from filing the instant case
although it has not secured a license to transact insurance business in the
Philippines.
Indeed, if a foreign corporation, not engaged in business in the Philippines, is not banned from
seeking redress from courts in the Philippines, a fortiori, that same corporation cannot claim
exemption from being sued in Philippine courts for acts done against a person or persons in the
Philippines.
WHEREFORE, THE PETITION IS HEREBY DENIED WITH COSTS AGAINST THE
PETITIONERS.
SO ORDERED.


Page |
50
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.
D E C I S I O N
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 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.
G.R. 152642 and G.R. 152710
(Constitutionality of Sections 29 and 30, R.A. 8042)
Sections 29 and 30 of the Act
1
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

Page |
51
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 Court
5
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 Director-General,
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.
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. 9422
8
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:
x x x x
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:
(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.
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.
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.
x x x x
On August 20, 2009 respondents Salac, et al. told the Court in G.R. 152642 that they agree
9
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

Page |
52
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:
x x x x
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 non-licensee or non-holder of authority.
10

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.
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.
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. 10022
12
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

Page |
53
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)
x x x x
Section 9 of R.A. 8042, as an exception to the rule on venue of criminal actions is, consistent with
that laws declared policy
15
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. 184298-99
17

(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 work-connected 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

Page |
54
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.


Page |
55
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.
05. T: Kailan at saan naganap and ginawang
panloloko sa
iyo ng tao/mga taong inireklamo mo?
S. Sa bahay ni Horty Salazar.
06. T: Paano naman naganap ang
pangyayari?
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
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.

Page |
56
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.
6. On January 28, 1988, petitioner filed with POEA the following letter:
Gentlemen:
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:
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.
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

Page |
57
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 non-licensee 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
non-holder 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 job-seekers. 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 well-taken. 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

Page |
58
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
(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:
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
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;
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.
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

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:

Page |
59
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.
SO ORDERED.