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Del Rosario vs National Labor Relations Commission

187 SCRA 777 [GR No. 85416 July 24, 1990]
Facts: In POEA case no. 85-06-0394, the Philippine Overseas Employment
Administration (POEA) promulgated a decision on February 4,1986 dismissing the
complaint for money claims for lack of merit. The decision was appealed to the
NLRC, which on April 30, 1987 reversed the POEA decision and ordered Philsa
Construction and Trading Co.Ind and Ariel Enterprises (the foreign employer) to
jointly and severally pay private respondent the peso equivalent of $16,039,000 salary
differentials and $2,420.03 as vacation leave benefits. A writ of execution was issued
by the POEA but it was returned unsatisfied incapable of satisfying the judgement.
Private respondent moved for the issuance of an alias writ against the officers of
Philsa. This motion was opposed by the officers led by petitioners, the president and
general manager of the corporation. However, POEA issued a resolution ordering the
sheriff to execute against the properties of the petitioner and if insufficient, against the
cash and/or surety bond of bonding company concerned for the full satisfaction of the
judgement awarded.
Issue: Whether or not the POEA resolution is proper.
Held: No. Under the law, a corporation is bestowed juridical personality, separate and
distinct from its stockholders. But when the juridical personality of the corporation is
used to defeat public convenience, justify wrong, protect or defend crime, the
corporation shall be considered as a mere association of persons and its responsible
officers and/or stockholders shall be individually liable. For the same reasons, a
corporation shall be liable for obligations of a stockholder or a corporation and its
successor-in-interest shall be considered as one and the liability of the former shall
attach to the latter.
But for the separate juridical personality of a corporation to be disregarded, the wrong
doing must be clearly and convincingly established. It cannot be presumed.
Thus, at the time Philsa allowed its license to lapse in 1985 and even at the time it was
delivered in 1986, there was yet no judgement in favor of private respondent. An
intent to evade payment of his claims cannot therefore be implied from the expiration
of Philas license and its delisting.
Neither will the organization of Philsa International Placement and Services Corp. and
its registration with the POEA as a private employment agency imply fraud since it
was organized and registered in 1981, several years before private respondent filed his
complaint with the POEA in 1985. The creation of the second anticipation of private
respondents money claims and the consequent adverse judgement against Philsa.
Likewise, substantially identity of the incorporators of the two corporations does not
necessarily imply fraud.
October 18, 1988

Vitaliano Saco was Chief Officer of the M/V Eastern Polaris when he was killed in an
accidentin Tokyo, Japan on March 15, 1985.His widow sued for damages under Executive
Order No. 797 and Memorandum Circular No. 2of the POEA.The petitioner, as owner of the
vessel, argued that the complaint was cognizable not by thePOEA but by the Social Security
System and should have been filed against the State FundInsurance.The POEA nevertheless
assumed jurisdiction and after considering the position papers of theparties ruled in favour of the
complainant.The petition is DISMISSED, with costs against the petitioner. The temporary
restraining orderdated December 10, 1986 is hereby LIFTED. It is so ordered.

1. Whether or not the POEA had jurisdiction over the case as the husband was not an
overseasworker.2. Whether or not the validity of Memorandum Circular No. 2 itself as
violative of the principleof non-delegation of legislative power.

1. Yes. The Philippine Overseas Employment Administration was created under Executive
OrderNo. 797, promulgated on May 1, 1982, to promote and monitor the overseas employment
of Filipinos and to protect their rights. It replaced the National Seamen Board created earlier
underArticle 20 of the Labor Code in 1974. Under Section 4(a) of the said executive order, the
POEAis vested with "original and exclusive jurisdiction over all cases, including money
claims,involving employee-employer relations arising out of or by virtue of any law or
contractinvolving Filipino contract workers, including seamen." These cases, according to the
1985Rules and Regulations on Overseas Employment issued by the POEA, include,
claims for death,disability and other benefits arising out of such employment.
The award of P180,000.00 for death benefits and P12,000.00 for burial expenses was made
bythe POEA pursuant to its Memorandum Circular No. 2, which became effective on February
1,1984. This circular prescribed a standard contract to be adopted by both foreign and
domesticshipping companies in the hiring of Filipino seamen for overseas employment.2. No.
Memorandum Circular No. 2 is an administrative regulation. The model contractprescribed
thereby has been applied in a significant number of the cases without challenge by theemployer.
The power of the POEA (and before it the National Seamen Board) in requiring themodel
contract is not unlimited as there is a sufficient standard guiding the delegate in theexercise of
the said authority. That standard is discoverable in the executive order itself which, increating
the Philippine Overseas Employment Administration, mandated it to protect the rightsof
overseas Filipino workers to "fair and equitable employment practices.
GENERAL RULE: Non-delegation of powers; exception;

It is true that legislative discretion as to the substantive contents of the law cannot be
delegated.What can be delegated is the discretion to determine how the law may be enforced,
not what thelaw shall be. The ascertainment of the latter subject is a prerogative of the
legislature. This prerogative cannot be abdicated or surrendered by the legislature to the

Two Tests of Valid Delegation of Legislative Power.

There are two accepted tests to determine whether or not there is a valid delegation of legislative
power, viz, the completeness test and the sufficient standard test. Under the first test, the
lawmust be complete in all its terms and conditions when it leaves the legislature such that
when itreaches the delegate the only thing he will have to do is to enforce it. Under the
sufficientstandard test, there must be adequate guidelines or stations in the law to map out the
boundaries of the delegates authority and prevent the delegation from running riot.
Both tests are intended to prevent a total transference of legislative authority to the delegate,
whois not allowed to step into the shoes of the legislature and exercise a power essentially
legislative. The delegation of legislative power has become the rule and its non-delegation the

Rationale for Delegation of Legislative Power.

The reason is the increasing complexity of the task of government and the growing inability
of the legislature to cope directly with the myriad problems demanding its attention. The growth
of society has ramified its activities and created peculiar and sophisticated problems that the
legislature cannot be expected to reasonably comprehend. Specialization even in legislation has
become necessary. Too many of the problems attendant upon present-day undertakings, the
legislature may not have the competence to provide the required direct and efficacious, not to
say, specific solutions. These solutions may, however, be expected from its delegates, who are
supposed to be experts in the particular fields.

Power of Subordinate Legislation.

The reasons given above for the delegation of legislative powers in general are particularly
applicable to administrative bodies. With the proliferation of specialized activities and their
attendant peculiar problems, the national legislature has found it more and more necessary to
entrust to administrative agencies the authority to issue rules to carry out the general provisions
of the statute. This is called the power of subordinate legislation.
With this power, administrative bodies may implement the broad policies laid down in statute
by filling in the details which the Congress may not have the opportunity or
competence to provide. Memorandum Circular No. 2 is one such administrative regulation.
Administrative agencies are vested with two basic powers, the quasi-legislative and quasi-
judicial. The first enables them to promulgate implementing rules and regulations, and the
second enables them to interpret and apply such regulations.