Century Textile Mills v. Escao (P) v. NLRC & Calangi | GR No.

77859 | 5.25.88 | Termination of Employment Procedure |

Feliciano, J p:
Since 12.74, R was employed by P as a Machine Operator. On 6.83,
he was placed under preventive suspension, and on 7.27.83,
terminated, having been accused of plotting criminal acts against 2
of his supervisors, by poisoning thru water, a criminal complaint was
also instituted against R.
Suing; alleging he was not furnished him copy of charges; nor
afforded him opportunity to answer.
LA Dismissed, holding that the evidence was overwhelming and
sufficient to justify Ps actions; R failing to controvert. NLRC Reversed,
hence this.
AFFIRMED. R was effectively denied his right to due process in that,
prior to his preventive suspension and the termination of his
services, he had not been given the opportunity either to affirm or
refute the charges proferred against him.
The (Twin) requirement of notice is intended to inform the employee
concerned of the employer's intent to dismiss and the reason for the
proposed dismissal; upon the other hand, the requirement of hearing
affords the employee an opportunity to answer his employer's
charges against him and accordingly to defend himself therefrom
before dismissal is effected.
Those rights were not satisfied by petitioner Corporation's obtaining
the consent of or consulting with the labor union; such consultation
or consent was not a substitute for actual observance of those rights
of private respondent Calangi.
The employee can waive those rights, if he so chooses, but the union
cannot waive them for him. That the private respondent simply "kept
silent" all the while, is not adequate to show an effective waiver of
his rights.
R is, as a matter of right, entitled to receive both types of relief
made available in Article 280 of the Labor Code, as amended. It
matters not that R had omitted in his complaint filed in Case No.
NLRC-NCR-10-4518-83 a claim for reinstatement without loss of
seniority rights for he is entitled to such relief as the facts alleged
and proved warrant.
But PCo should not be compelled to take back in its fold an
employee who, at least in the minds of his employers, poses a
significant threat to the lives and safety of company workers.

Consequently, we hold that private respondent should be given his

separation pay in lieu of such reinstatement.

Abiera (P) v. NLRC & Planters Bank | GR No. 102023 | 11.6.92 |

Termination of Employment Procedure | Cruz, J p:
As a Manager of RCo (Bank), was dismissed on 4.28.87 on the
ground of loss of confidence. The bank was being audited by the
Head Office, at the same time P filed for a vacation leave to take a
much needed rest. Upon his return, he received a memo requiring
him to answer the audit report, suggesting his participation in some
violations prohibited in the Banks Code of Discipline; & was not
allowed to return to work. He was advised to appear before the
investigating committee also, he waived the assistance of counsel
on said committee investigation.
P on the other hand denies the aforequoted. He was then
preventively suspended on 1.12.87. Formally protesting, averring
that the investigation was defective. A follow-up list of findings of
irregularities was found by the committee, he refuted, the
committee then submitted a recommendation for dismissal, w/c was
executed by RCo.
LA ruled for P; NLRC reversed; hence this.
DISMISSED. We do not agree. We hold that the first element was not
violated because the petitioner was duly notified of the Specification
of Charges and invited to appear at the hearing scheduled for their
investigation. He was even advised to bring a lawyer with him if he
so desired.
The requirement for hearing was also observed. The petitioner
cannot say he was deprived of this right because the record shows
he was duly afforded ample opportunity to defend himself and
introduce evidence on his behalf. "Ample opportunity" connotes
every kind of assistance that management must accord the
employee to enable him to prepare adequately for his defense,
including legal representation. Abiera says he believed that the
hearing to which he was invited was only preliminary and so would
not require the presence of his lawyer. Even so, he was not
precluded from asking for the suspension of that hearing after he
realized that he was already being "grilled," as he put it, in a formal
investigation.
It is also not true that the petitioner had not been given a chance to
defend himself. The established fact is that he did this verbally and
through written replies to the internal audit report and the additional
charge against him. The Court especially notes his point-by-point
refutation dated September 18, 1986, His explanation was quite

detailed and belies his claim that he was not given access to the
private respondent's records.
A formal trial-type hearing is not at all times and in all instances
essential to due process. It is enough that the parties are given a fair
and reasonable opportunity to explain their respective sides of the
controversy and to present supporting evidence on which a fair
decision can be based. (Caselaw) this type of hearing is not even
mandatory in cases of complaints lodged before the Labor Arbiter.
Although the aforesaid investigations were not conducted in the
manner of a regular trial in court, the elements of due process,
namely, the right to be informed of the charges, to be present and to
be heard, were accorded petitioners. In said investigations,
petitioners freely and voluntarily answered the questions and even
made further statements in their defense during the concluding
stages thereof. Due process as a constitutional precept does not,
always and in all situations, require trial-type proceedings. The
essence of due process is to be found in the reasonable opportunity
to be heard and to submit any evidence one may have in support of
one's defense. "To be heard" does not only mean verbal arguments
in court. One may be heard also through pleadings.
The parties could have held a trial-type hearing, but they decided
instead to submit the case for decision on the basis of the position
papers, documentary evidence and other pleadings already
submitted before the Labor Arbiter. This arrangement was mutually
agreed upon by them during the hearing held on July 27, 1989, and
is authorized under Article 221 of the Labor Code. It is true that the
right of confrontation is embraced in due process and that the
petitioner did demand the appearance of the internal auditors so he
could cross-examine them. It is also true that this demand was
rejected by the Investigating Committee. Nevertheless, the
petitioner saw fit not to insist on this right and in fact subsequently
waived it when he agreed at the said hearing on the abovediscussed procedure.
Regarding the ground for his dismissal, his conduct caused the
private respondent to lose confidence in his judgment and even his
integrity and provided the just cause for his dismissal as branch
manager. Article 282(c) of the Labor Code plainly states: Art. 282.
Termination by employer. An employer may terminate an
employment for any of the following causes: . . . (c) Fraud or willful
breach by the employee of the trust reposed in him by his employer
or duly authorized representative.

Del Monte Phils. & Balandra (P) v. Saldivar et al., (R) | GR No.
158620 | 10.11.06 | Termination of Employment Procedure |
Tinga, J, p:
Whether there was sufficient cause for the dismissal of a rank-andfile employee effectuated through the enforcement of a closed-shop
provision in a CBA.
The Associated Labor Union (ALU) is the exclusive bargaining agent
of plantation workers of PCo. R (Timbal) as a rank-and-file employee
of PCo. A CBA was entered into by ALU and PCo.
Rs were charged for disloyalty to the union, for supposedly
convincing others to join a contra Union, this allegation was
supported by the statement of a certain Artajo. R answered the
board (ALU) conducting the investigation, denying the allegations,
purportedly motivated by hate and revenge against her.
The board found R guilty of partisan activities, w/c is prohibited since
the freedom period has yet to commence then; likewise in
accordance with the Security clause in the CBA, PCo dismissed her.
LA favoured Rs, NLRC reversed. On review CA found that only R
Timbal was illegally dismissed, finding failure to observe procedural
due process. Hence this petition filed by the other Rs.
Denied. Affirmed. ALU's sole witness against her, should not be
given weight because Artajo had an ax[e] to grind at the
time when she made the adverse statements against her.
Timbal's dismissal is not predicated on any of the just or authorized
causes for dismissal under Book Six, Title I of the Labor Code, but on
the union security clause in the CBA between Del Monte and ALU.
Stipulations in the CBA authorizing the dismissal of employees are of
equal import as the statutory provisions on dismissal under the
Labor Code, since "[a] CBA is the law between the company and the
union and compliance therewith is mandated by the express policy
to give protection to labor."
A "closed-shop" may be defined as an enterprise in which, by
agreement between the employer and his employees or their
representatives, no person may be employed in any or certain
agreed departments of the enterprise unless he or she is, becomes,
and, for the duration of the agreement, remains a member in good
standing of a union entirely comprised of or of which the employees
in interest are a part. A CBA provision for a closed-shop is a valid
form of union security and it is not a restriction on the right or
freedom of association guaranteed by the Constitution.

 Timbal's expulsion from ALU was premised on the ground of

disloyalty to the union, which under Section 4(3), Article II of the
CBA, also stands as a ground for her dismissal from Del Monte.
Indeed, Section 5, Article II of the CBA enjoins Del Monte to dismiss
from employment those employees expelled from ALU for disloyalty,
albeit with the qualification "in accordance with law."
Del Monte had no choice but to implement the CBA provisions and
cause her dismissal. Similarly, it might be posited that any tribunal
reviewing such dismissal is precluded from looking beyond the
provisions of the CBA. What the Constitution does recognize is that
all workers, whether union members or not, are "entitled to security
of tenure."
Agabon v. NLRC did qualify that constitutional due process or
security of tenure did not shield from dismissal an employee found
guilty of a just cause for termination even if the employer failed to
render the statutory notice and hearing requirement. At the same
time, it should be understood that in the matter of determining
whether cause exists for termination, whether under Book Six, Title I
of the Labor Code or under a valid CBA, substantive due process
must be observed as a means of ensuring that security of
tenure is not infringed.
Agabon doctrine observed that due process under the Labor Code
comprised of two aspects: "substantive, i.e., the valid and
authorized causes of employment termination under the
Labor Code; and procedural, i.e., the manner of dismissal."
Agabon cannot be invoked to validate a dismissal wherein
substantive due process, or the proper determination of just cause,
was not observed.
Even if the dismissal of an employee is conditioned not on
the grounds for termination under the Labor Code, but
pursuant to the provisions of a CBA, it still is necessary to
observe substantive due process in order to validate the
dismissal. As applied to the Labor Code, adherence to substantive
due process is a requisite for a valid determination that just or
authorized causes existed to justify the dismissal.
As applied to the dismissals grounded on violations of the
CBA, observance of substantial due process is indispensable
in establishing the presence of the cause or causes for
dismissal as provided for in the CBA.
The fact that a CBA may provide for additional grounds for dismissal
other than those established under the Labor Code does not detract

from the necessity to duly establish the existence of such grounds

before the dismissal may be validated. And even if the employer or,
in this case, the collective bargaining agent, is satisfied that cause
has been established to warrant the dismissal, such satisfaction
will be of no consequence if, upon legal challenge, they are
unable to establish before the NLRC or the courts the
presence of such causes.
Considering that the civil complaint was filed just six (6) days prior
to the execution of Artajo's affidavit against Timbal, it would be
plainly injudicious to presume that Artajo possessed an unbiased
state of mind as she executed that affidavit. Such circumstance was
considered by the Labor Arbiter, and especially the Court of Appeals,
as they rendered a favorable ruling to Timbal. The NLRC may have
decided against Artajo, but in doing so, it failed to provide any basis
as to why Artajo's testimony should be believed, instead of
disbelieved.
Although Del Monte claims before this Court that Piquero had
corroborated Artajo's claims during such testimony, "positively
identified [Timbal's] presence in the NFL seminar on 14 July 1992,"
and "confirmed that Timbal gave Artajo P500.00 for recruiting
participants in the NFL seminar." These transcripts were not taken
during a hearing conducted by any public office in the Philippines,
but they were committed in the course of an internal disciplinary
mechanism devised by a privately organized labor union. Unless the
authenticity of these notes is duly proven before, and appreciated by
the triers of fact, we cannot accord them any presumptive or
conclusive value.

King of Kings Transport, Dela Fuente, & Lim (P) v. Mamac (R) |
GR No. 166208 | 6.29.07 | Termination of Employment Procedure
| Velasco, Jr., J p:
As a conductor (and Union Leader). One of his duties is to submit a
Trip Report (indicates ticket opening and closing for each trip
Accounting of earnings). On 10.8.01 a discrepancy (PhP.809.00) was
found, asked to explain, he held that they encountered an accident
and erroneously gave a wrong report, for they had to cut short their
trip for them to report to the police.
On 11.26.01, he received a termination letter effective 11.29.01,
alleging fraud on said report, citing other offenses allegedly
committed since 1999. Claiming that his dismissal was effected
without due process, he sued. LA dismissed his complaint. NLRC
Modified (to indemnify only) for failing to comply w/ due process
prior to termination. CA affirms, holding that there is just cause for
dismissal (Declaring sold tickets as returned tickets constituted
fraud). Hence this. Is a verbal appraisal of the charges a breach of
the procedural due process?
PARTLY GRANTED. Only Indemnity. Due process under the Labor
Code involves two aspects: first, substantive the valid and
authorized causes of termination of employment under the Labor
Code; and second, procedural the manner of dismissal. First,
respondent was not issued a written notice charging him of
committing an infraction. The law is clear on the matter. A verbal
appraisal of the charges against an employee does not comply with
the first notice requirement.
Consultations or conferences are not a substitute for the actual
observance of notice and hearing. The employee's written
explanation did not excuse the fact that there was a complete
absence of the first notice.
Second, even assuming that petitioner KKTI was able to furnish
respondent an Irregularity Report notifying him of his offense, such
would not comply with the requirements of the law. We observe from
the irregularity reports against respondent for his other offenses that
such contained merely a general description of the charges against
him. The reports did not even state a company rule or policy that the
employee had allegedly violated. Likewise, there is no mention of
any of the grounds for termination of employment under Art. 282 of
the Labor Code. Thus, KKTI's "standard" charge sheet is not sufficient
notice to the employee.

 Third, no hearing was conducted. Regardless of respondent's written

explanation, a hearing was still necessary in order for him to clarify
and present evidence in support of his defense. Moreover,
respondent made the letter merely to explain the circumstances
relating to the irregularity in his October 28, 2001 Conductor's Trip
Report. He was unaware that a dismissal proceeding was already
being effected. Thus, he was surprised to receive the November 26,
2001 termination letter indicating as grounds, not only his October
28, 2001 infraction, but also his previous infractions.
Wenphil (P) v. NLRC & Mallare (R) | GR No. 80587 | 2.8.89 |
Termination Agabon Doctrine | Gancayco, J p:
R was currently then a Backroom Department Assistant head of P in
Cubao (Restaurant). On 5.20.85, he and Barrameda had an
altercation, due to which they were suspended and R was
immediately (5.25.85) dismissed, in accordance w/ their Personnel
Manual. [Circumstance: A misunderstanding on tending the Salad
Bar, fight ensued; asked to report, refused, SG brought R to the
Manager, instead of explaining, shouted profane words; R wanted
the issue settled in between them only; Manager issued suspension
until further notice; Only R was dismissed.]
LA dismissed. NLRC reversed. Hence this (a restraining order was
granted by SC).
Granted. Reversed and Set Aside. The defiant attitude of private
respondent immediately after the incident amounted to
insubordination. Nevertheless his refusal to explain his side under
the circumstances cannot be considered as a waiver of his right to
an investigation.
Although in the Personnel Manual of the petitioner, it states that
an erring employee must request for an investigation it does not
thereby mean that petitioner is thereby relieved of the duty to
conduct an investigation before dismissing private respondent.
Indeed said provision of the Personnel Manual of petitioner which
may effectively deprive its employees of the right to due process is
clearly against the law and hence null and void.
Under Section 1, Rule XIV of the Implementing Regulations of the
Labor Code, it is provided that "No worker shall be dismissed except
for just or authorized cause provided by law and after due process"
Sections 2, 5, 6, and 7 of the same rules require that before an
employer may dismiss an employee the latter must be given a
written notice stating the particular act or omission constituting the

grounds thereof; that the employee may answer the allegations

within a reasonable period; that the employer shall afford him ample
opportunity to be heard and to defend himself with the assistance of
his representative, if he so desires; and that it is only then that the
employer may dismiss the employee by notifying him of the decision
in writing stating clearly the reasons therefor. Such dismissal is
without prejudice to the right of the employee to contest its validity
in the Regional Branch of the NLRC.
The claim of petitioner that a formal investigation was not necessary
because the incident which gave rise to the termination of private
respondent was witnessed by his co-employees and supervisors is
without merit. The basic requirement of due process is that which
hears before it condemns, which proceeds upon inquiry and renders
judgment only after trial.
However, it is a matter of fact that when the private respondent filed
a complaint against petitioner he was afforded the right to an
investigation by the labor arbiter. He presented his position paper as
did the petitioner. If no hearing was had, it was the fault of private
respondent as his counsel failed to appear at the scheduled
hearings. The labor arbiter concluded that the dismissal of private
respondent was for just cause. He was found guilty of grave
misconduct and insubordination. This is borne by the sworn
statements of witnesses. The Court is bound by this finding of the
labor arbiter.
Although belatedly, private respondent was afforded due process
before the labor arbiter wherein the just cause of his dismissal had
been established. With such finding, it would be arbitrary and unfair
to order his reinstatement with back wages.
Thus in the present case, where the private respondent, who
appears to be of violent temper, caused trouble during office hours
and even defied his superiors as they tried to pacify him, should not
be rewarded with re-employment and back wages. It may encourage
him to do even worse and will render a mockery of the rules of
discipline that employees are required to observe. Under the
circumstances the dismissal of the private respondent for just cause
should be maintained. He has no right to return to his former
employer.
However, the petitioner must nevertheless be held to account for
failure to extend to private respondent his right to an investigation
before causing his dismissal. The rule is explicit as above discussed.
The dismissal of an employee must be for just or authorized cause

and after due process. Petitioner committed an infraction of the

second requirement (DUE PROCESS). Thus, it must be imposed a
sanction for its failure to give a formal notice and conduct an
investigation as required by law before dismissing petitioner from
employment. Considering the circumstances of this case petitioner
must indemnify the private respondent the amount of P1,000.00.

Serrano (P) v. NLRC & ISETANN Department Store (RCo) | GR No.

117040 | 5.4.00 | Termination Agabon Doctrine | Mendoza, J p:
P was notified of his termination effective on the same date of
receipt on the ground of retrenchment. He contested the same and
filed a complaint for illegal dismissal.
The LA ruled in his favor for failure of respondent to prove that
termination was to prevent or minimize losses. Holding that
petitioner was not afforded due process. NLRC Reversed, finding that
the termination was legal but failed to address the issue of
compliance with the notice requirement.
SC affirmed the decision of the NLRC and ordered the payment of full
backwages for failure to comply with the 30-day prior notice
requirement.
RCo moving for reconsideration, contending, among others, that
payment of the 30 days pay is sufficient compliance with the
30 days prior notice and that the non-observance of the
notice requirement should not be visited with a severe
consequence. Insofar as it is ordered to pay petitioner full
backwages from the time the latter's employment was terminated
for failure to give petitioner a written notice of termination at least
thirty (30) days before the termination of his employment as
required by Art. 283 the Labor Code.
Denied. The requirement to give a written notice of termination at
least thirty (30) days in advance is a requirement of the Labor Code.
Nothing in the law gives private respondent the option to substitute
the required prior written notice with payment of thirty (30) days
salary. It is not for private respondent to make substitutions for a
right that a worker is legally entitled to.
The purpose of such previous notice is to give the employee some
time to prepare for the eventual loss of his job as well as the DOLE
the opportunity to ascertain the verity of the alleged authorized
cause of termination. Such purpose would not be served by the
simple expedient of paying thirty (30) days salary in lieu of notice of
an employee's impending dismissal, as by then the loss of
employment would have been a fait accompli.
In Associated Labor Unions-VIMCONTU v. NLRC, the employees and
the then Ministry of Labor and Employment (MOLE) were notified in
writing on August 5, 1983 that the employees' services would cease
on August 31, 1983 but that they would be paid their salaries and
other benefits until September 5, 1983. It was held that such written

notice was "more than substantial compliance" with the notice

requirement of the Labor Code. Had private respondent given a
written notice to petitioner on October 1, 1991, at the latest, that
effective October 31, 1991 his employment would cease although
from October 1 he would no longer be required to work, there would
be basis for private respondent's boast that "[payment] of this salary
even [if he is] no longer working is effective notice and is much
better than 30 days formal notice but working until the end of the 30
days period." What happened here was that on October 11, 1991,
petitioner was given a memorandum terminating his employment
effective on the same day on the ground of retrenchment (actually
redundancy).
It is contended that private respondent's non-observance of the
notice requirement should not be visited with a severe consequence
in accordance with Art. III, 19(1) of the Constitution. The contention
is without merit. Art. III, 19(1) of the Constitution, prohibiting the
imposition of excessive fines, applies only to criminal prosecutions.
The order to pay full backwages is a consequence of the employer's
action in dismissing an employee without notice which makes said
dismissal ineffectual. The employee is considered not to have been
terminated from his employment until it is finally determined that his
dismissal/termination of employment was for cause and, therefore,
he should be paid his salaries in the interim. This eliminates
guesswork in determining the degree of prejudice suffered by an
employee dismissed with cause but without notice since the penalty
is measured by the salary he failed to earn on account of his
dismissal/termination of employment.
The decision in Columbia Pictures does not mean that if a new rule is
laid down in a case, it should not be applied in that case but that
said rule should apply prospectively to cases arising afterwards.
Private respondent's view of the principle of prospective application
of new judicial doctrines would turn the judicial function into a mere
academic exercise with the result that the doctrine laid down would
be no more than a dictum and would deprive the holding in the case
of any force.

Agabon (P) v. NLRC & Riviera Home Improvements (R) | GR No.

158693 | 11.17.04 | Termination Agabon Doctrine | YnaresSantiago, J p:
Riviera Home Improvements, Inc. (Riviera) is engaged in the
business of selling and installing ornamental and construction
materials. It employed Ps as gypsum board and cornice installers in
1992 until 1999 when they were dismissed for abandonment of
work.
Twice in the duration of their employment, petitioners accepted work
for another company. Hence, there was abandonment of work. It
appears, however, that Riviera failed to send the required notices to
the petitioners to their last known address for the reason that it
would be useless since petitioners do not reside there anymore. This
is a procedural infirmity which, nonetheless, should not invalidate
the dismissal, contrary to the prevailing but herein abandoned case
of Serrano v. NLRC. The employer was liable but only for noncompliance with the procedural requirements of due process.
To dismiss an employee, the law requires not only the existence of a
just and valid cause but also enjoins the employer to give the
employee the opportunity to be heard and to defend himself.
Abandonment is the deliberate and unjustified refusal of an
employee to resume his employment. It is a form of neglect of duty,
hence, a just cause for termination of employment by the employer.
For a valid finding of abandonment, these two factors should be
present: (1) the failure to report for work or absence without valid or
justifiable reason; and (2) a clear intention to sever employeremployee relationship, with the second as the more determinative
factor which is manifested by overt acts from which it may be
deduced that the employees has no more intention to work.
The procedure for terminating an employee is found in Book VI, Rule
I, Section 2 (d) of the Omnibus Rules Implementing the Labor Code:
Standards of due process: requirements of notice. For termination of
employment based on just causes as defined in Article 282 of the
Code: (a) A written notice served on the employee specifying the
ground or grounds for termination, and giving to said employee
reasonable opportunity within which to explain his side; (b) A
hearing or conference during which the employee concerned, with
the assistance of counsel if the employee so desires, is given
opportunity to respond to the charge, present his evidence or rebut
the evidence presented against him; and (c) A written notice of

termination served on the employee indicating that upon due

consideration of all the circumstances, grounds have been
established to justify his termination. In case of termination, the
foregoing notices shall be served on the employee's last known
address.
Procedurally, (1) if the dismissal is based on a just cause under
Article 282, the employer must give the employee two written
notices and a hearing or opportunity to be heard if requested by the
employee before terminating the employment: a notice specifying
the grounds for which dismissal is sought a hearing or an
opportunity to be heard and after hearing or opportunity to be
heard, a notice of the decision to dismiss; and (2) if the dismissal is
based on authorized causes under Articles 283 and 284, the
employer must give the employee and the Department of Labor and
Employment written notices 30 days prior to the effectivity of his
separation. \
From the foregoing rules four possible situations may be derived: (1)
the dismissal is for a just cause under Article 282 of the Labor Code,
for an authorized cause under Article 283, or for health reasons
under Article 284, and due process was observed; (2) the dismissal
is without just or authorized cause but due process was observed;
(3) the dismissal is without just or authorized cause and there was
no due process; and (4) the dismissal is for just or authorized cause
but due process was not observed. In the first situation, the
dismissal is undoubtedly valid and the employer will not suffer any
liability. In the second and third situations where the dismissals are
illegal, Article 279 mandates that the employee is entitled to
reinstatement without loss of seniority rights and other privileges
and full backwages, inclusive of allowances, and other benefits or
their monetary equivalent computed from the time the
compensation was not paid up to the time of actual reinstatement.
In the fourth situation, the dismissal should be upheld. While the
procedural infirmity cannot be cured, it should not invalidate the
dismissal. However, the employer should be held liable for noncompliance with the procedural requirements of due process.
A review and re-examination of the relevant legal principles is
appropriate and timely to clarify the various rulings on employment
termination in the light of Serrano v. National Labor Relations
Commission. We held that the violation by the employer of the
notice requirement in termination for just or authorized causes was
not a denial of due process that will nullify the termination. However,

the dismissal is ineffectual and the employer must pay full

backwages from the time of termination until it is judicially declared
that the dismissal was for a just or authorized cause.
We believe, however, that the ruling in Serrano did not consider the
full meaning of Article 279 of the Labor Code Security of Tenure. In
cases of regular employment, the employer shall not terminate the
services of an employee except for a just cause or when authorized
by this Title. An employee who is unjustly dismissed from work shall
be entitled to reinstatement without loss of seniority rights and other
privileges and to his full backwages, inclusive of allowances, and to
his other benefits or their monetary equivalent computed from the
time his compensation was withheld from him up to the time of his
actual reinstatement. This means that the termination is illegal only
if it is not for any of the justified or authorized causes provided by
law. Payment of backwages and other benefits, including
reinstatement, is justified only if the employee was unjustly
dismissed. After carefully analyzing the consequences of the
divergent doctrines in the law on employment termination, we
believe that in cases involving dismissals for cause but without
observance of the twin requirements of notice and hearing, the
better rule is to abandon the Serrano doctrine and to follow Wenphil
case by holding that the dismissal was for just cause but imposing
sanctions on the employer. Such sanctions, however, must be stiffer
than that imposed in Wenphil to discourage the abhorrent practice of
"dismiss now, pay later," which we sought to deter. The sanction
should be in the nature of indemnification or penalty and should
depend on the facts of each case, taking into special consideration
the gravity of the due process violation of the employer. By doing so,
this Court would be able to achieve a fair result by dispensing justice
not just to employees, but to employers as well.
Due process under the Labor Code, like Constitutional due process,
has two aspects: substantive, i.e., the valid and authorized causes of
employment termination under the Labor Code; and procedural, i.e.,
the manner of dismissal. Procedural due process requirements
for dismissal are found in the Implementing Rules of P.D.
442, as amended, otherwise known as the Labor Code of the
Philippines in Book VI, Rule I, Sec. 2, as amended by
Department Order Nos. 9 and 10. Breaches of these due
process requirements violate the Labor Code. Therefore
statutory due process should be differentiated from failure
to comply with constitutional due process. Constitutional

due process protects the individual from the government

and assures him of his rights in criminal, civil or
administrative proceedings; while statutory due process
found in the Labor Code and Implementing Rules protects
employees from being unjustly terminated without just
cause after notice and hearing.
Under the Civil Code, nominal damages is adjudicated in order that
a right of the plaintiff, which has been violated or invaded by the
defendant, may be vindicated or recognized, and not for the purpose
of indemnifying the plaintiff for any loss suffered by him. The
violation of the petitioners' right to statutory due process by the
private respondent warrants the payment of indemnity in the form of
nominal damages. The amount of such damages is addressed to the
sound discretion of the court, taking into account the relevant
circumstances. At the very least, it provides a vindication or
recognition of this fundamental right granted to the latter under the
Labor Code and its Implementing Rules.
TINGA, J., separate opinion: I concur in the result, the final
disposition of the petition being correct. The Court emphatically
reaffirms the rule that dismissals for just cause are not invalidated
due to the failure of the employer to observe the proper notice and
hearing requirements under the Labor Code. At the same time, the
Decision likewise establishes that the Civil Code provisions
on damages serve as the proper framework for the
appropriate relief to the employee dismissed for just cause if
the notice-hearing requirement is not met. Serrano v. NLRC,
insofar as it is controlling in dismissals for unauthorized causes, is no
longer the controlling precedent. Any and all previous rulings and
statements of the Court inconsistent with these determinations are
now deemed inoperative.
Given the long controversy that has dogged this present issue
regarding dismissals for just cause, it is wise to lay down standards
that would guide the proper award of damages under the Civil Code
in cases wherein the employer failed to comply with statutory due
process in dismissals for just cause. I believe that it can be
maintained as a general rule, that failure to comply with the
statutory requirement of notice automatically gives rise to nominal
damages, at the very least, even if the dismissal was sustained for
just cause. Nominal damages are adjudicated in order that a right of
a plaintiff which has been violated or invaded by another may be
vindicated or recognized without having to indemnify the plaintiff for

any loss suffered by him. Nominal damages may likewise be

awarded in every obligation arising from law, contracts, quasicontracts, acts or omissions punished by law, and quasi-delicts, or
where any property right has been invaded.
It has also been held that one's employment, profession, trade, or
calling is a "property right" and the wrongful interference therewith
gives rise to an actionable wrong.
Considering that the affected right is a property right, there is
justification in basing the amount of nominal damages on the
particular characteristics attaching to the claimant's employment. At
the same time, it should be recognized that nominal damages are
not meant to be compensatory.
Actual or compensatory damages are not available as a
matter of right to an employee dismissed for just cause but
denied statutory due process. An award of backwages disguised
as actual damages would almost never be justified if the employee
was dismissed for just cause.
Temperate or nominal damages may yet prove to be a plausible
remedy, especially when common sense dictates that pecuniary loss
was suffered, but incapable of precise definition.

Jaka Foods (P) v. Pacot et al., (R) | GR No. 151378 | Termination

Agabon Doctrine | Garcia, J p:
Rs were hired by P, was later terminated, as alleged by P, were in a
Dire financial straits, uncontested is the fact that P did not serve
notices atleast 1 month before termination.
LA favoured Rs, ordering reinstatement and/or payment backwages
and separation if reinstatement is no longer possible. NLRC
ultimately modified by removing the award for backwages. CA
reversed applying Serrano doctrine. Hence this.
Granted. Rs are dismissed but granted with nominal damages (50K)
for violation of the due process.
A dismissal for just cause under Article 282 of the Labor Code
implies that the employee concerned has committed, or is guilty of,
some violation against the employer, i.e. the employee has
committed some serious misconduct, is guilty of some fraud against
the employer, or, as in Agabon, has neglected his duties. Thus, it can
be said that the employee himself initiated the dismissal process. On
another breath, a dismissal for an authorized cause under Article
283 of the same Code does not necessarily imply delinquency or
culpability on the part of the employee. Instead, the dismissal
process is initiated by the employer's exercise of his management
prerogative, i.e. when the employer opts to install labor saving
devices, when he decides to cease business operations or when, as
in this case, he undertakes to implement a retrenchment program.
The clear-cut distinction between a dismissal for just cause under
Article 282 and a dismissal for authorized cause under Article 283 is
further reinforced by the fact that in the first instance, payment of
separation pay, as a rule, is not required, while in the second, the
law requires payment of separation pay. For these reasons, there
ought to be a difference in treatment when the ground for dismissal
is one of the just causes under Article 282, and when based on one
of the authorized causes under Article 283. Accordingly, it is wise to
hold that: (1) if the dismissal is based on a just cause under Article
282 but the employer failed to comply with the notice requirement,
the sanction to be imposed upon him should be tempered, the
dismissal process being in effect, initiated by an act imputable to the
employee; and (2) if the dismissal is based on an authorized cause
under Article 283 but the employer failed to comply with the notice
requirement, the sanction should be stiffer because the dismissal

process was initiated by the employer's exercise of his management

prerogative.
The records before us reveal that JAKA was indeed suffering from
serious business losses at the time it terminated respondents'
employment. Thus, there was ground for respondents' dismissal, i.e.,
retrenchment, which is one of the authorized causes enumerated
under Article 283 of the Labor Code. Likewise, it is established that
JAKA failed to comply with the notice requirement under the same
Article. Considering the factual circumstances in the instant case,
we, therefore, deem it proper to fix the indemnity at P50,000.00.
We likewise find the Court of Appeals to have been in error when it
ordered JAKA to pay respondents separation pay equivalent to one
(1) month salary for every year of service. This is because in Reahs
Corporation vs. NLRC, we made the following declaration: "The rule,
therefore, is that in all cases of business closure or cessation of
operation or undertaking of the employer, the affected employee is
entitled to separation pay. This is consistent with the state policy of
treating labor as a primary social economic force, affording full
protection to its rights as well as its welfare. The exception is when
the closure of business or cessation of operations is due to serious
business losses or financial reverses; duly proved, in which
case, the right of affected employees to separation pay is lost for
obvious reasons. . . ."

Eastern Assurance & Surety (P) v. Sec. of Labor, etc. (R) | GR No.
79436-50 | 1.17.90 | Migrant Workers Generally - Recruitment &
Placement - | Narvasa, J p:
J&B Manpower applied for a license to engage in the business of
recruitment; P gave its bond. Unable to deliver on their promise to
33 persons for deployment, said persons sued for violations of Arts.
32 and 34 of LC. (J&B) failed to answer nor appear in the hearings
conducted.
P disclaimed liability, holding that such liability was not expressly
covered by the bond; POEA has no jurisdiction forfeiture of the bond
(150K).
POEA ruled in favour of complainants (mostly); P were held jointly
liable; later modified by the secretary, holding jointly liable to 19
only. Hence this, EASCO contends that the POEA had no
"adjudicatory jurisdiction" over the monetary claims in question
because the same "did not arise from employer-employee relations."
Dismissed. Secretary of Labor has the power under Section 35 of the
law to apply these sanctions, as well as the authority, conferred by
Section 36, not only to "restrict and regulate the recruitment and
placement activities of all agencies," but also to "promulgate rules
and regulations to carry out the objectives and implement the
provisions" governing said activities. Pursuant to this rule-making
power thus granted, the Secretary of Labor gave the POEA, "on its
own initiative or upon filing of a complaint or report or upon request
for investigation by any aggrieved person, . . . (authority to) conduct
the necessary proceedings for the suspension or cancellation of the
license or authority of any agency or entity" for certain enumerated
offenses including 1) the imposition or acceptance, directly or
indirectly, of any amount of money, goods or services, or any fee or
bond in excess of what is prescribed by the Administration, and 2)
any other violation of pertinent provisions of the Labor Code and
other relevant laws, rules and regulations.
Implicit in these powers is the award of appropriate relief to the
victims of the offenses committed by the respondent agency or
contractor, specially the refund or reimbursement of such fees as
may have been fraudulently or otherwise illegally collected, or such
money, goods or services imposed and accepted in excess of what is
licitly prescribed. It would be illogical and absurd to limit the
sanction on an offending recruitment agency or contractor to
suspension or cancellation of its license, without the concomitant

obligation to repair the injury caused to its victims. It would result

either in rewarding unlawful acts, as it would leave the victims
without recourse, or in compelling the latter to litigate in another
forum, giving rise to that multiplicity of actions or proceedings which
the law abhors.

Capricorn International Travel & Tours (P) v. CA & Sameer

Overseas Placement Agency (R) GR No. 91096 | 4.3.90 | Migrant
Workers Recruitment & Placement - Generally | Cortes, J p:
Is the cash bond posted by a recruitment agency in the Philippine
Overseas Employment Administration (POEA) may be garnished by a
judgment creditor of the agency.
In a civil case between PCo and RCo, RTC manila held for PCo and for
the latter to be indemnified (91.2K) by RCo. POEA eventually
complied w/ the RTCs order. The CA reversed, preventing PCo from
attaching, levying and garnishing RCos cash bond, and to return the
same to the POEA. Hence this.
Denied for Lack of Merit. Private respondent's liability to petitioner
relates to a purely contractual obligation arising from the purchase
and sale of airline tickets. While the liability may have been incurred
in connection with the business of recruiting or placing overseas
workers, it is definitely not one arising from violations of the
conditions for the grant and use of the license or authority and
contracts of employment. Nor is it one arising from the violation of
labor laws.
Explicit from the provisions of the Labor Code and Philippines
Overseas Employment Administration Rules and Regulation: (a) that
the cash bond is a requisite for the issuance and renewal of a license
or authority to engage in the business of recruitment and overseas
placement; (b) that the cash bond is to answer for the liabilities of
the agency arising from violations of the conditions for the grant or
use of the license or authority or the contracts of employment, the
Labor Code, the POEA rules and Labor Department issuances and all
liabilities that the POEA may impose; (c) that the amount of the cash
bond must be maintained during the lifetime of the license or
authority; and (d) that the amount of the cash bond shall be
returned to the agency only when it surrenders its license or
authority, and only upon posting of a surety bond of the same
amount valid for three (3) years.

 On a broader scale, the undertaking to assume joint and solidary

liability and to guarantee compliance with labor laws, and the
consequent posting of cash and surety bonds, may be traced all the
way back to the constitutional mandate for the State to "afford full
protection to labor, local and overseas" [Art. XIII, sec. 3].
The peculiar nature of overseas employment makes it very difficult
for the Filipino overseas worker to effectively go after his foreign
employer for employment-related claims and, hence, public policy
dictates that, to afford overseas workers protection from
unscrupulous employers, the recruitment or placement agency in
the Philippines be made to share in the employer's responsibility.
Considering the rationale for requiring the posting of a cash bond
and its nature, it cannot therefore be argued that the cash bond is
not exempt from execution by a judgment creditor simply because it
is not one of those enumerated in Rule 39, sec. 12 of the Rules of
Court. To accede to such an argument would be tantamount to
turning a blind eye to the clear intent of the law to reserve the cash
bond for the employment-related claims of overseas workers and for
violations of labor laws.

Stronghold Insurance v. CA | GR No. 88050 | 1.30.92 | Migrant

Workers Generally - Recruitment & Placement - | Cruz, J p:
The petitioner invokes due process to escape liability on a surety
bond executed for the protection of a Filipino seaman.
Acting in behalf of its foreign principal (Qatar National Fishing, Pan
Asian Logistics and Trading [recruitment & placement agency]. Hired
Adriano Urtesuela as a captain (50K bond by P). 3 months in the job,
Urtesuelas services was terminated, thereafter sued the Agency for
breach of contract and damages.
POEA ruled for Urtesuela, later sued in the Insurance Commission P
because the agency ceased operation. Asking for reversal at the
claiming violation of due process as it was not specifically directed to
pay. CA dismissed. Hence this.
Denied. Affirmed. In the surety bond, the petitioner unequivocally
bound itself: To answer for all liabilities which the Philippine
Overseas Employment Administration may adjudge/impose against
the Principal in connection with the recruitment of Filipino seamen.
Strictly interpreted, this would mean that the petitioner agreed to
answer for whatever decision might be rendered against the
principal, whether or not the surety was impleaded in the complaint
and had the opportunity to defend itself. There is nothing in the
stipulation calling for a direct judgment against the surety as a codefendant in an action against the principal. On the contrary, the
petitioner agreed "to answer for all liabilities" that "might be
adjudged or imposed by the POEA against the Principal. But even if
this interpretation were rejected, considering the well-known maxim
that "the surety is a favorite of the law," the petitioner would still
have to explain its other agreement that "notice to the Principal is
notice to the surety." This was in fact another special stipulation
typewritten on the printed form of the surety bond prepared by the
petitioner. Under this commitment, the petitioner is deemed, by the
implied notice, to have been given an opportunity to participate in
the litigation and to present its side, if it so chose, to avoid liability. If
it did not decide to intervene as a co-defendant (and perhaps also as
cross-claimant against Pan Asian), it cannot be heard now to
complain that it was denied due process.
The petitioner contends, however, that the said stipulation is
unconstitutional and contrary to public policy, because it is "a virtual
waiver". The Court cannot agree. The argument assumes that the
right to a hearing is absolute and may not be waived in any case

under the due process clause. This is not correct. As a matter of fact,
the right to be heard is as often waived as it is invoked, and validly
as long as the party is given an opportunity to be heard on his
behalf. The circumstance that the chance to be heard is not availed
of does not disparage that opportunity and deprive the person of the
right to due process.
In the proceedings before the Commission, the petitioner was given
full opportunity (which it took) to present its side, in its answer with
counterclaim to the complaint, in its testimony at the hearings, in its
motion to dismiss the complaint, and in its 10-page memorandum.
There is absolutely no question that in that proceeding, the
petitioner was actually and even extensively heard.

Phil Employ (Agency) (P) v. Paramio et al., (R) | GR No. 144786 |

4.15.04 | Migrant Workers Recruitment & Placement - Generally
| Callejo, Sr., J p:
Respondents herein were repatriated from their employment in
Taiwan on different dates, for different causes, but all prior to the
expiration of their respective contracts.
They filed separate complaints against their recruiter (petitioner
herein) before the NLRC for illegal dismissal, non-payment of
benefits and expenses. LA found for Rs. NLRC reversed the decision
of the labor arbiter and found the respondents were legally
dismissed. CA reinstated LAs decision with modification as to
damages. Hence this.
Denied. Preliminarily, it bears stressing that the respondents who
filed complaints for illegal dismissal against the petitioner were
overseas Filipino workers whose employment contracts were
approved by the Philippine Overseas Employment Administration
(POEA) and were entered into and perfected here in the Philippines.
As such, the rule lex loci contractus (the law of the place where the
contract is made) governs. Therefore, the Labor Code, its
implementing rules and regulations, and other laws affecting labor,
apply in this case.
Applying the law and the rule, the employer is burdened to prove
that the employee was suffering from a disease which prevented his
continued employment, or that the employee's wound prevented his
continued employment. Section 8, Rule 1, Book VI of the Omnibus
Rules Implementing the Labor Code requires a certification from
competent public authority that the employee was heavily wounded
and had lost the ability to work.
In Skippers Pacific, Inc. v. Mira, we ruled that an overseas Filipino
worker who is illegally terminated shall be entitled to his salary
equivalent to the unexpired portion of his employment contract if
such contract is less than one year. However, if his contract is for a
period of at least one year, he is entitled to receive his salaries
equivalent to the unexpired portion of his contract, or three months'
salary for every year of the unexpired term, whichever is lower.
According to Section 10, paragraph 2 of Rep. Act No. 8042, the
agency which deployed the employees whose employment contract
were adjudged illegally terminated, shall be jointly and solidarily
liable with the principal for the money claims awarded to the
aforesaid employees. Under Section 15 of the same Act, the

repatriation of the worker and the transport of his personal

belongings shall be the primary responsibility of the agency which
recruited or deployed the overseas contract worker. All the costs
attendant thereto shall be borne by the agency concerned and/or its
principal.

People v. Judge Panis | GR No. L-58674-77 | 7.11.86 | Migrant

Workers Illegal Recruetment | Cruz J, p:
The basic issue in this case is the correct interpretation of Article
13(b) of P. D. 442, otherwise known as the Labor Code, Recruitment
and Placement.
A certain Abug was originally sued for operating w/o a license from
MOLE in the engagement of Recruitment and Placement charging
thereto and promising employment in Saudi; in violation of Art. 16
in relation to Art. 39 of the LC.
Abug motioned to quash w/c was eventually granted holding that
the information did not charge an offense because he was accuse of
Illegal Recruitment, citing Art. 13(b), that there is IR if, "whenever
two or more persons are in any manner promised or offered any
employment for a fee." The motion to quash was eventually granted,
hence this.
INFORMATIONS REINSTATED. 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) will 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 be given the force of a disputable presumption or
of prima facie evidence of engaging in recruitment and placement.
(Klepp v. Odin Tp., McHenry County 40 ND N.W. 313, 314.)
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 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 their own countrymen.

Aquino (P) v. CA & People (R) | GR No. 91896 | 11.21.91 | Migrant

Workers Illegal Recruetment | Guttierrez, J p:
P was sued for violation of Art. 25 of the LC; after operating to recruit
workers for employment abroad w/o license from MOLE. (4 victims,
all involved giving cash) to P.
Lower Court found P guilty beyond reasonable doubt. CA affirmed,
hence this.
Reversed. Acquitted. Does the receipt of payments, after the
expiration of the license, for services rendered before said expiration
constitute illegal recruitment? We believe that it does not, at least
not for purposes of criminal prosecutions. Recruitment refers to the
ordering of inducements to qualified personnel to enter a particular
job or employment. The advertising, the promise of future
employment and other come-ons took place while Ms. Aquino was
still licensed.
True, the payments for services rendered are necessary
consequences of the applications for overseas employment.
However, it is asking too much to expect a licensed agency to
absolutely at the stroke of midnight stop all transactions on the day
its license expires and refuse to accept carry-over payments after
the agency is closed. In any business, there has to be a winding-up
after it ceases operations. The collection of unpaid accounts should
not be the basis of a criminal prosecution. The Government did not
question the legality of the payments as such. The prosecution is
based on the date of the prohibited activity, not on the payments
being illegal exactions ever if effected during the correct period. The
payments are necessary in order to defray the expenses entailed in
any overseas contract of employment. They are intended for
administrative and for business of expenses and for the travelling
expenses of the applicants once cleared for overseas travel.
It has been the consistent ruling of this Court that the issuance of a
check is not payment until the check has been encashed. Although a
check, as a negotiable instrument, is regarded as a substitute for
money, it is not money. Hence, its mere delivery does not, by itself,
operate as payment. (PAL v. Court of Appeals, 181 SCRA 557
[1990]).

People (PA) v. Cabacang (AA) | GR No. 113917 | 7.17.95 | Migrant

Workers Illegal Recruetment | Puno, J p:
AA is charged for illegal recruitment; after conducting recruitment
and promising a job to 4 people (all related). Evidence shows that AA
is not licensed, instructed the victims to pay processing fees.
CFI found her guilty sentencing to life imprisonment. Hence this.
Affirmed w/ Modifications (more severe). It is incorrect to maintain
that to be liable for illegal recruitment, one must represent
himself/herself to the victims as a duly-licensed recruiter.. Illegal
recruitment is defined in Article 38 (a) of the Labor Code, as
amended, as "(a)ny recruitment activities, including the prohibited
practices enumerated under Article 34 of this Code, to be
undertaken by non-licenses or non-holders of authority." Article 13
(b) of the same Code defines "recruitment and placement" as
referring to: "(A)ny 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." Clearly, to prove illegal
recruitment, only two elements need to be shown, viz: (1) the person
charged with the crime must have undertaken recruitment activities
(or any of the activities enumerated in Article 34 of the Labor Code,
as amended); and (2) said person does not have a license or
authority to do so. It is not required that it be shown that such
person wrongfully represented himself as a licensed
recruiter.
The only time they talked to the manager of the Lakas Agency was
after their aborted flight to Abu Dhabi, when they were trying to
locate the whereabouts of appellant. Clearly, it was appellant who
directly recruited private complainants within the meaning of Article
38 (a) and (b) the Labor Code. Since it is undisputed that appellant is
not a holder of a license or authority to recruit from the Department
of Labor, through the POEA, her acts constitute illegal recruitment.
Appellant cannot successfully contend she merely performed her
duties as an employee of a licensed recruitment agency. Apart from
her uncorroborated testimony on the matter, she failed to present
credible evidence.

Vir-Jen Shipping (P) v. NLRC, et al. (R) | GR Nos. L-58011-12 |

11.18.83 | Migrant Workers Recruitment & Placement
Contractual Stipulations | Guttierrez, Jr., J p:
A complainant here, the captain (Bisula) received a cable on 1.10.79
from the Company informing them that they may be directed to call
at ITF-Controlled Ports (ITF-Militant Labor Org, capable of holding
ships); thereafter was advised of the procedure to be followed in
computing for special or additional compensation of crew members
while in said ports.
On 3.24.79 Bisula sent a cable to the company advising them that a
consensus was achieved by the crew; that they are not contented w/
their present salaries; based on their routes, hazardous cargo; that
they wanted to be paid w/ ITF rate (50% increase); both sides
eventually agreed to accept a 25% increase subject to conditions;
w/c was effected.
Subsequently the Company sought to cancel their contracts, citing
actuations of the seamen; NSB Granted; thereafter the Company
cabled the seamen informing that their contracts are terminated and
they are to be repatriated immediately.
Suing for illegal dismissal and non-payment of earned wages at the
NSB; Countering P sued for breach of contract. NSB ruled for P. NLRC
reversed, to pay for the unexpired contract term. Hence this (Petition
and Reconsideration)
Reconsideration Granted/Petition Dismissed.
If any minor advantages given to Filipino seamen may somehow cut
into the profits of local manning agencies and foreign shipowners,
that is not sufficient reason why the NSB or the NLRC should not
stand by the former instead of listening to unsubstantiated fears that
they would be killing the hen which lays the golden eggs.
Prescinding from the above, the Court now holds that neither the
National Seamen Board nor the National Labor Relations
Commissions should, as a matter of official policy, legitimize and
enforce dubious arrangements where shipowners and seamen enter
into fictitious contracts similar to the addendum agreements or side
contracts in this case whose purpose is to deceive.
The form contracts approved by the National Seamen Board are
designed to protect Filipino seamen not foreign shipowners who can
take care of themselves. The standard forms embody the basic
minimums which must be incorporated as parts of the employment

contract. (Section 15, Rule V, Rules and Regulations Implementing

the Labor Code.)
They are not collective bargaining agreements or immutable
contracts which the parties cannot improve upon or modify in the
course of the agreed period of time. To state, therefore, that the
affected seamen cannot petition their employer for higher salaries
during the 12 months duration of the contract runs counter to
established principles of labor legislation. The National Labor
Relations Commission, as the appellate tribunal from decisions of the
National Seamen Board, correctly ruled that the seamen did not
violate their contracts to warrant their dismissal.
The Court agrees with the movants that there is no showing of any
cause, which under the Labor Code or any current applicable law,
would warrant the termination of the respondents` services before
the expiration of their contracts. The Constitution guarantees State
assurance of the rights of workers to security of tenure. (Sec. 9,
Article II, Constitution) Presumptions and provisions of law, the
evidence on record, and fundamental State policy all dictate that the
motions for reconsideration should be granted.
Petitioner claims that the dismissal of private respondents was
justified because the latter threatened the ship authorities in
acceding to their demands, and this constitutes serious misconduct
as contemplated by the Labor Code. This contention is not welltaken. But even if there had been such a threat, respondents'
behavior should not be censured because it is but natural for them
to employ some means of pressing their demands on petitioner, who
refused to abide with the terms of the Special Agreement, to honor
and respect the same. They were only acting in the exercise of their
rights, and to deprive them of their freedom of expression is
contrary to law and public policy.

EN BANC
[G.R. Nos. 57999, 58143-53. August 15, 1989.]
RESURRECCION SUZARA, CESAR DIMAANDAL, ANGELITO MENDOZA,
ANTONIO TANEDO AMORSOLO CABRERA, DOMINADOR SANTOS , ISIDRO
BRACIA, RAMON DE BELEN, ERNESTO SABADO, MARTIN MALABANAN,
ROMEO HUERTO and VITALIANO PANGUE, petitioners, vs. THE HON. JUDGE
ALFREDO L. BENIPAYO and MAGSAYSAY LINES, INC., respondents.
[G.R. Nos. 64781-89. August 15, 1989.]
RESURRECCION SUZARA, CESAR DIMAANDAL, ANGELITO MENDOZA,
ANTONIO
TANEDO,
RAYMUNDO
PEREZ,
AMORSOLO
CABRERA,
DOMINADOR SANTOS, ISIDRO BRACIA, CATALINO CASICA, VITALIANO
PANGUE, RAMON DE BELEN, EDUARDO PAGTALUNAN, ANTONIO MIRANDA,
RAMON UNIANA, ERNESTO SARADO, MARTIN MALABANAN, ROMEO
HUERTO and WILFREDO CRISTOBAL, petitioners, vs. THE HONORABLE
NATIONAL LABOR RELATIONS COMMISSION, THE NATIONAL SEAMEN
BOARD (now the Philippine Overseas Employment Administration), and
MAGSAYSAY LINES, INC., respondents.
Quasha, Asperilla, Ancheta, Pea and Nolasco for petitioners.
Samson S. Alcantara for private respondent.
DECISION
GUTIERREZ, JR., J p:
These petitions ask for a re-examination of this Court's precedent
setting decision in Vir-Jen Shipping and Marine Services Inc. v. National
Labor Relations Commission, et al. (125 SCRA 577 [1983]). On
constitutional, statutory, and factual grounds, we find no reason to disturb
the doctrine in Vir-Jen Shipping and to turn back the clock of progress for
seabased overseas workers. The experience gained in the past few years
shows that, following said doctrine, we should neither deny nor diminish
the enjoyment by Filipino seamen of the same rights and freedoms taken
for granted by other workingmen here and abroad.
The cases at bar involve a group of Filipino seamen who were declared by
the defunct National Seamen Board (NSB) guilty of breaching their
employment contracts with the private respondent because they
demanded, upon the intervention and assistance of a third party, the
International Transport Worker's Federation (ITF), the payment of wages

over and above their contracted rates without the approval of the NSB.
The petitioners were ordered to reimburse the total amount of
US$91,348.44 or its equivalent in Philippine Currency representing the
said over-payments and to be suspended from the NSB registry for a
period of three years. The National Labor Relations Commission (NLRC)
affirmed the decision of the NSB.
In a corollary development, the private respondent, for failure of the
petitioners to return the overpayments made to them upon demand by
the former, filed estafa charges against some of the petitioners. The
criminal cases were eventually consolidated in the sala of then
respondent Judge Alfredo Benipayo. Hence, these consolidated petitions,
G.R. No. 64781-99 and G.R. Nos. 57999 and 58143-53, which respectively
pray for the nullification of the decisions of the NLRC and the NSB, and
the dismissal of the criminal cases against the petitioners.
The facts are found in the questioned decision of the NSB in G.R. No.
64781-99.
"From the records of this case it appears that the facts established and/or
admitted by the parties are the following; that on different dates in 1977
and 1978 respondents entered into separate contracts of employment
(Exhs. "B" to "B-17", inclusive) with complainant (private respondent) to
work aboard vessels owned/operated/manned by the latter for a period of
12 calendar months and with different rating /position, salary, overtime
pay and allowance, hereinbelow specified: . . . ; that aforesaid
employment contracts were verified and approved by this Board; that on
different dates in April 1978 respondents (petitioners) joined the M/V
'GRACE RIVER'; that on or about October 30, 1978 aforesaid vessel, with
the respondents on board, arrived at the port of Vancouver, Canada; that
at this port respondent received additional wages under rates prescribed
by the International Transport Worker's Federation (ITF) in the total
amount of US$98,261 .70; that the respondents received the amounts
appearing opposite their names, to wit: . . . ; that aforesaid amounts were
over and above the rates of pay of respondents us appearing in their
employment contracts approved by this Board; that on November 10,
1978, aforesaid vessel, with respondent on board, left Vancouver, Canada
for Yokohama, Japan; that on December 14, 1978, while aforesaid vessel,
was at Yara, Japan, they were made to disembark. (pp. 6466, Rollo)
Furthermore, according to the petitioners, while the vessel was docked at
Nagoya, Japan, a certain Atty. Oscar Torres of the NSB Legal Department
bounded the vessel and called a meeting of the seamen including the

petitioners, telling them that for their own good and safety they should
sign an agreement prepared by him on board the vessel and that if they
do, the cases filed against them with NSB on November 17, 1978 would
be dismissed. Thus, the petitioners signed the "Agreement" dated
December 5, 1978. (Annex C of Petition) However, when they were later
finished xerox copies of what they had signed, they noticed that the line
"which amount(s) was/were received and held by CREWMEMBERS in trust
for SHIPOWNERS" was inserted therein, thereby making it appear that the
amounts given to the petitioners representing the increase in their wages
based on ITF rates were only received by them in trust for the private
respondent.
When the vessel reached Manila, the private respondent demanded from
the petitioners the "overpayments" made to them in Canada. As the
petitioners refused to give back the said amounts, charges were filed
against some of them with the NSB and the Professional Regulations
Commission. Estafa charges were also filed before different branches of
the then Court of First Instance of Manila which, as earlier stated, were
subsequently consolidated in the sala of the respondent Judge Alfredo
Benipayo and which eventually led to G.R. Nos. 57999 and 58143-53.
In G.R. Nos. 64781-99, the petitioners claimed before the NSB that
contrary to the private respondent's allegations, they did not commit any
illegal act nor stage a strike while they were on board the vessel; that the
"Special Agreement" entered into in Vancouver to pay their salary
differentials is valid, having been executed after peaceful negotiations.
Petitioners further argued that the amounts they received were in
accordance with the provision of law, citing among others, Section 18,
Rule VI, Book I of the Rules and Regulations Implementing the Labor Code
which provides that "the basic minimum salary of seamen shall not be
less than the prevailing minimum rates established by the International
Labor Organization (ILO) or those prevailing in the country whose flag the
employing vessel carries, which ever in higher . . . "; and that the
"Agreement" executed in Nagoya, Japan had been forced upon them and
that intercalation's were made to make it appear that they were merely
trustees of the amounts they received in Vancouver.
On the other hand, the private respondent alleged that the petitioners
breached their employment contracts when they, acting in concert and
with the active participation's of the ITF while the vessel was in
Vancouver, staged an illegal strike and by means of threats, coercion and
intimidation compelled the owners of the vessel to pay to them various

sums totalling US$104,244.35; that the respondent entered into the

"Special Agreement" to pay the petitioners' wage differentials because it
was under duress as the vessel would not be allowed to leave Vancouver
unless the said agreement was signed, and to prevent the shipowner from
incurring further delay in the shipment of goods; and that in view of
petitioners' breach of contract, the latter's names must be removed from
the NSB's Registry and that they should be ordered to return the amounts
they received over and above their contracted rates.
The respondent NSB ruled that the petitioners were guilty of breach of
contract because despite subsisting and valid NSB approved employment
contracts, the petitioners sought the assistance of a third party (ITF) to
demand from the private respondent wages in accordance with the ITF
rates, which rates are over and above their rates of pay as appearing in
their NSB approved contracts. As bases for this conclusion, the NSB
stated:
"1) The fact that respondents sought the aid of a third party (ITF) and
demanded for wages and overtime pay based on ITF rates is shown in the
entries of their respective Pay-Off Clearance Slips which were marked as
their Exhs. "1" to "18", and we quote 'DEMANDED ITF WAGES, OVERTIME,
DIFFERENTIALS APRIL TO OCTOBER 1978'. Respondent Suzara admitted
that the entries in his Pay-Off Clearance Slip (Exh. "1") are correct (TSN.,
p. 16, Dec. 6, 1979). Moreover, it is the policy (reiterated very often) by
the ITF that it does not interfere in the affairs of the crewmembers and
masters and/or owners of a vessel unless its assistance is sought by the
crewmembers themselves. Under this pronounced policy of the ITF, it is
reasonable to assume that the representatives of the ITF in Vancouver,
Canada assisted and intervened by reason of the assistance sought by
the latter.
"2) The fact that the ITF assisted and intervened for and in behalf of the
respondents in the latter's demand for higher wages could be gleaned
from the answer of the respondents when they admitted that the ITF
acted in their behalf in the negotiations for increase of wages. Moreover,
respondent Cesar Dimaandal admitted that the ITF differential pay was
computed by the ITF representative (TSN, p.7, Dec, 12, 1979)
"3) The fact that complainant and the owner/operator of the vessel were
compelled to sign the Special Agreement (Exh. "20") and to pay ITF
differentials to respondents in order not to delay the departure of the
vessel and to prevent further losses is shown in the Agreement' (Exist. "R21") . . ." (pp. 69-70, Rollo")

The NSB further said:

"While the Board recognizes the rights of the respondents to demand for
higher wages, provided the means are peaceful and legal, it could not,
however, sanction the same if the means employed are violent and
illegal. In the case at bar, the means employed are violent and illegal for
in demanding higher wages the respondents sought the aid of a third
party and in turn the latter intervened in their behalf and prohibited the
vessel from sailing unless the owner and/or operator of the vessel
acceded to respondents' demand for higher wages. To avoid suffering
further incalculable losses, the owner and/or operator of the vessel had
no alternative but to pay respondents' wages in accordance with the ITF
scale. The Board condemns the act of a party who enters into a contract
and with the use of force/or intimidation causes the other party to modify
said contract. If the respondents believe that they have a avoid ground to
demand from the complainant a revision of the terms of their contracts,
the same should have been done in accordance with law and not thru
illegal means. (at p. 72, Rollo).
Although the respondent NSB found that the petitioners were entitled to
the payment of earned wages and overtime pay/allowance from
November 1, 1978 to December 14, 1978, it nevertheless ruled that the
computation should be based on the rates of pay as appearing in the
petitioners' NSB approved contracts. It ordered that the amounts to which
the petitioners are entitled under the said computation should be
deducted from the amounts that the petitioners must return to the private
respondent.
On appeal, the NLRC affirmed the NSB's findings. Hence, the petition in
G.R. Nos. 64781-99.
Meanwhile, the petitioners in G.R. Nos. 57999 and 58143-53 moved to
quash the criminal cases of estafa filed against the on the ground that the
alleged crimes were committed, if at all, in Vancouver, Canada and,
therefore, Philippine courts have no jurisdiction. The respondent judge
denied the motion. Hence, the second petition.
The principal issue in these consolidated petitions is whether or not the
petitioners are entitled to the amounts they received from the private
respondent representing additional wages as determined in the special
agreement. If they are, then the decision of the NLRC and NSB must be
reversed. Similarly, the criminal cases of estafa must be dismissed

because it follows as a consequence that the amounts received by the

petitioners belong to them and not to the private respondent.
In arriving at the questioned decision, the NSB ruled that the petitioners
are not entitled to the wage differentials as determined by the ITF
because the means employed by them in obtaining the same were violent
and illegal and because in demanding higher wages the petitioners
sought the aid of a third party, which, in turn, intervened in their behalf
and prohibited the vessel from sailing unless the owner and/or operator of
the vessel acceded to respondents' demand for higher wages. And as
proof of this conclusion, the NSB cited the following: (a) the entries in the
petitioners Pay-Off clearances lip which contained the phrase
"DEMANDED ITF WAGES. . . ."; (b) the alleged policy of the ITF' in not
interfering with crewmembers of a vessel unless its intervention is sought
by the crewmembers themselves; (c), the petitioners' admission that ITF
acted in their behalf; and (d) the fact that the private respondent was
compelled to sign the special agreement at Vancouver, Canada.
There is nothing in the public and private respondents' pleadings, to
support the allegations that the petitioners used force and violence to
secure the special agreement signed in Vancouver, British Columbia.
There was no need for any form of intimidation coming from the Filipino
seamen because the Canadian Brotherhood of Railways and Transport
Workers (CBRT), a strong Canadian labor union, backed by an
international labor federation was actually doing all the influencing not
only on the ship-owners and employers but also against third world
seamen themselves who, by receiving lower wages and cheaper
accommodations, were threatening the employment and livelihood of
seamen from developed nations.
The bases used by the respondent NSB to support its decision do not
prove that the petitioners initiated a conspiracy with the ITF or
deliberately sought its assistance in order to receive higher wages. They
only prove that when ITF acted in petitioners' behalf for an increase in
wages, the latter manifested their support. This would be a logical and
natural reaction for any worker in whose benefit the ITF or any other labor
group had intervened. The petitioners admit that while they expressed
their conformity to and their sentiments for higher wages by means of
placards, they, nevertheless, continued working and going about their
usual chores. In other words, all they did was to exercise their freedom of
speech in a most peaceful way. The ITF people, in turn, did not employ
any violent means to force the private respondent to accede to their

demands. Instead, they simply applied effective pressure when they

intimated the possibility of interdiction should the shipowner fail to heed
the call for an upward adjustment of the rates of the Filipino seamen.
Interdiction is nothing more than a refusal of ITF members to render
service for the ship, such as to load or unload its cargo, to prevision it or
to perform such other chores ordinarily incident to the docking of the ship
at a certain port. It was the fear of ITF interdiction, not any action taken
by the seamen on board the vessel which led the shipowners to yield.
The NSB's conclusion that it is ITF's policy not to intervene with the plight
of crewmembers of a vessel unless its intervention was sought is without
basis. This Court is cognizant of the fact that during the period covered by
the labor controversies in Wallem Philippines Shipping, Inc. v. Minister of
Labor (102 SCRA 835[1981]; Vir-len Shipping and Marine Services, Inc. v.
NLRC (supra) and these consolidated petitions, the ITF was militant
worldwide especially in Canada, Australia, Scandinavia, and various
European countries, interdicting foreign vessels and demanding wage
increases for third world seamen. There was no need for Filipino or other
seamen to seek ITF intervention. The ITF was waiting on its own volition in
all Canadian ports, not particularly for the petitioners' vessel but for all
ships similarly situated. As earlier stated, the ITF was not really acting for
the petitioners out of pure altruism. The ITF was merely protecting the
interests of its own members. The petitioners happened to be pawns in a
higher and broader struggle between the ITF on one hand and shipowners
and third world seamen, on the other. To subject our seamen to criminal
prosecution and punishment for having been caught in such a struggle is
out of the question.
As stated in Vir-Jen Shipping (supra):
"The seamen had done no act which under Philippine law or any other
civilized law would be termed illegal, oppressive, or malicious. Whatever
pressure existed, it was mild compared to accepted and valid modes of
labor activity." (at page 591)
Given these factual situations, therefore, we cannot affirm the NSB and
NLRC's finding that there was violence, physical or otherwise employed
by the petitioners in demanding for additional wages. The fact that the
petitioners placed placards on the gangway of their ship to show support
for ITF's demands for wage differentials for their own benefit and the
resulting ITF's threatened interdiction do not constitute violence. The
petitioners were exercising their freedom of speech and expressing
sentiments in their hearts when they placed the placard "We Want ITF

Rates." Under the facts and circumstances of these petitions, we see no

reason to deprive the seamen of their right to freedom of expression
guaranteed by the Philippine Constitution and the fundamental law of
Canada where they happened to exercise it.
As we have ruled in Wallem Phil. Shipping Inc. v. Minister of Labor, et al
supra:
"'Petitioner claims that the dismissal of private respondents was justified
because the latter threatened the ship authorities in acceding to their
demands, and this constitutes serious misconduct as contemplated by the
Labor Code. This contention is now well-taken. The records fail to
establish clearly the commission of any threat. But even if there had been
such a threat, respondents' behavior should not be censured because it is
but natural for them to employ some means of pressing their demands for
petitioner, who refused to abide with the terms of the Special Agreement,
to honor and respect the same. They were only acting in the exercise of
their rights, and to deprive them of their freedom of expression is
contrary to law and public policy. . . . " (at page 843)
We likewise, find the public respondents' conclusions that the acts of the
petitioners in demanding and receiving wages over and above the rates
appearing in their NSB-approved contracts is in effect an alteration of
their valid and subsisting contracts because the same were not obtained
through mutual consent and without the prior approval of the NSB to be
without basis, not only because the private respondent's consent to pay
additional wages was not vitiated by any violence or intimidation on the
part of the petitioners but because the said NSB-approved form contracts
are not unalterable contracts that can have no room for improvement
during their effectivity or which ban any amendments during their term.
For one thing, the employer can always improve the working conditions
without violating any law or stipulation.
We stated in the Vir-Jen case (supra) that:
"The form contracts approved by the National Seamen Board are
designed to protect Filipino seamen not foreign shipowners who can take
care of themselves. The standard forms embody the basic minimums
which must be incorporated us parts of the employment contract.
(Section 15, Rule V, Rules and Regulations Implementing the Labor Code).
They are not collective bargaining agreements or illimitable contracts
which the parties cannot improve upon or modify in the course of the
agreed period of time. To state, therefore, that the affected seamen

cannot petition their employer for higher salaries during the 12 months
duration of the contract runs counter to established principles of labor
legislation. The National Labor Relations Commission, as the appellate
tribunal from the decisions of the National Seamen Board, correctly ruled
that the seamen did not violate their contracts to warrant their dismissal."
(at page 589)
It is impractical for the NSB to require the petitioners, caught in the
middle of a labor struggle between the ITF and owners of ocean going
vessels halfway around the world in Vancouver, British Columbia to first
secure the approval of the NSB in Manila before signing an agreement
which the employer was willing to sign. It is also totally unrealistic to
expect the petitioners while in Canada to exhibit the will and strength to
oppose the ITF's demand for an increase in their wages, assuming they
were so minded.
An examination of Annex C of the petition, the agreement signed in Japan
by the crewmembers of the M/V Grace River and a certain M. Tabei,
representative of the Japanese shipowner lends credence to the
petitioners' claim that the clause "which amount(s) was received and held
by CREWMEMBERS in trust for SHIPOWNER" was an intercalation added
after the execution of the agreement. The clause appears too closely
typed below the names of the 19 crewmen and their wages with no
similar intervening space as that which appears between all the
paragraphs and the triple space which appears between the list of
crewmembers and their wages on one hand and the paragraph above
which introduces the list, on the other. The verb "were" was also inserted
above the verb "was" to make the clause grammatically correct but the
insertion of "were" is already on the same line as "Antonio Miranda and
5,221.06" where it clearly does not belong. There is no other space where
the word "were" could be intercalated. (See Rollo, page 80).
At any rate, the proposition that the petitioners should have pretended to
accept the increased wages while in Vancouver but returned them to the
shipowner when they reached its country, Japan, has already been
answered earlier by the Court:
"Filipino seamen are admittedly as competent and reliable as seamen
from any other country in the world. Otherwise, there would not be so
many of them in the vessels sailing in every ocean and sea on this globe.
It is competence and reliability, not cheap labor that makes our seamen
so greatly in demand. Filipino seamen have never demanded the same
high salaries as seamen from the United States, the United Kingdom,

Japan and other developed nations. But certainly they are entitled to
government protection when they ask for fair and decent treatment by
their employer and when they exercise the right to petition for improved
terms of employment, especially when they feel that these are substandard or are capable of improvement according to internationally
accepted rules. In the domestic scene, there are marginal employers who
prepare two sets of payrolls for their employees one in keeping with
minimum wages and the other recording the sub-standard wages that the
employees really receive. The reliable employers, however, not only meet
the minimums required by fair labor standards legislation but even so
away above the minimums while earning reasonable profits and
prospering. The same is true of international employment. There is no
reason why this court and the Ministry of Labor and Employment or its
agencies and commissions should come out with pronouncements based
on the standards and practices of unscrupulous or inefficient shipowners,
who claim they cannot survive without resorting to tricky and deceptive
schemes, instead of Government maintaining labor law and jurisprudence
according to the practices of honorable, competent, and law-abiding
employers, domestic or foreign." (Vir-Jen Shipping, supra, pp. 587-588)
It is noteworthy to emphasize that while the International Labor
Organization (ILO) set the minimum basic wage of able seamen at
US$187.00 as early as October 1976, it was only in 1979 that the
respondent NSB issued Memo Circular No. 45, enjoining all shipping
companies to adopt the said minimum basic wage. It was correct for the
respondent NSB to state in its decision that when the petitioners entered
into separate contracts between 1977-1978, the monthly minimum basic
wage for able seamen ordered by NSB was still fixed at US$130.00.
However, it is not the fault of the petitioners that the NSB not only
violated the Labor Code which created it and the Rules and Regulations
Implementing the Labor Code but also seeks to punish the seamen for a
shortcoming of NSB itself.
Article 21(c) of the Labor Code, when it created the NSB, mandated the
Board to "(O)btain the best possible terms and conditions of employment
for seamen.
Section 15, Rule V of Book I of the Rules and Regulations Implementing
the Labor Code provides:
"Sec. 15. Model contract of employment. The NSB shall devise a model
contract of employment which shall embody all the requirements of
pertinent labor and social legislation's and the prevailing standards set by

applicable International Labor Organization Conventions. The model

contract shall set the minimum standards of the terms and conditions to
govern the employment of Filipinos on board vessels engaged in overseas
trade. All employers of Filipinos shall adopt the model contract in
connection with the hiring and engagement of the services of Filipino
seafarers, and in no case shall a shipboard employment contract be
allowed where the same provides for benefits less than those enumerated
in the model employment contract, or in any way conflicts with any other
provisions embodied in the model contract."
Section 18 of Rule VI of the same Rules and Regulations provides:
"Sec. 18. Basic minimum salary of able-seamen. The basic minimum
salary of seamen shall be not less than the prevailing minimum rates
established by the International Labor Organization or those prevailing in
the country whose flag the employing vessel carries, whichever is higher.
However, this provision shall not apply if any shipping company pays its
crew members salaries above the minimum herein provided.
Section 8, Rule X, Book I of the Omnibus Rules provides:
"Section 8.
Use of standard format of service agreement. The Board
shall adopt a standard format of service agreement in accordance's with
pertinent labor and social legislation and prevailing standards set by
applicable International Labor Organization Conventions. The standard
format shall set the minimum standard of the terms and conditions to
govern the employment of Filipino seafarers but in no case shall a
shipboard employment contract (sic), or in any way conflict with any
other provision embodied in the standard format."
It took three years for the NSB to implement requirements which, under
the law, they were obliged to follow and execute immediately. During
those three years, the incident in Vancouver happened. The terms and
conditions agreed upon in Vancouver were well within ILO rates even if
they were above NSB standards at the time.
The sanctions applied by NSB and affirmed by NLRC are moreover not in
keeping with the basic premise that this Courts stressed in the Vir-Jen
Shipping case (supra) that the Ministry new the Department of Labor and
Employment and all its agencies exist primarily for the workingman's
interest and the nation's as a whole.
Implicit in these petitions and the only reason for the NSB to take the side
of foreign shipowners against Filipino seamen is the "killing the goose

which lays the golden eggs" argument. We reiterate the ruling of the
Court in Vir-Jen Shipping (supra)
"There are various arguments raised by the petitioners but the common
thread running through all of them is the contention, if not the dismal
prophecy, that if the respondent seaman are sustained by this Court, we
would in effect 'kill the hen that lays the golden egg.' In other words,
Filipino seamen, admittedly among the best in the world, should remain
satisfied with relatively lower if not the lowest, international rates of
compensation, should not agitate for higher wages while their contracts
of employment are subsisting, should accept as sacred, iron clad, and
immutable the side contracts which require them to falsely pretend to be
members of international labor federations, pretend to receive higher
salaries at certain foreign ports only to return the increased pay once the
ship leaves that port, should stifle not only their right to ask for improved
terms of employment but their freedom of speech and expression, and
should suffer instant termination of employment at the slightest sign of
dissatisfaction with no protection from their Government and their courts.
Otherwise, the petitioners contend that Filipinos would no longer be
accepted as seamen, those employed would lose their jobs, and the still
unemployed would be left hopeless.
"This is not the first time and it will not be the last where the threat of
unemployment and loss of jobs would be used to argue against the
interests of labor; where efforts by workingmen to better their terms of
employment would be characterized as prejudicing the interests of labor
as a whole."
xxx

xxx

xxx

"Unionism, employers' liability acts, minimum wages, workmen's

compensation, social security and collective bargaining to name a few
were all initially opposed by employer' and even well meaning leaders of
government and society as 'killing the hen or goose which lays the golden
eggs.' The claims of workingmen were described as outrageously
injurious not only to the employer but more so to the employees
themselves before these claims or demands were established by law and
jurisprudence as 'rights' and before these were proved beneficial to
management, labor, and the national as a whole beyond reasonable
doubt.
"The case before us does not represent any major advance in the rights of
labor and the workingmen. The private respondents merely sought rights

already established. No matter how much the petitioner-employer tries to

present itself as speaking for the entire industry, there is no evidence that
it is typical of employers hiring Filipino seamen or that it can speak for
them.
"The contention that manning industries in the Philippines would not
survive if the instant case is not decided in favor of the petitioner is not
supported by evidence. The Wallem case was decided on February 20,
1981. There have been no severe repercussions, no diving up of
employment opportunities for seamen, and none of the dire
consequences repeatedly emphasized by the petitioner. Why should VirJen be an exception?
"The wages of seamen engaged in international shipping are shouldered
by the foreign principal. The local manning office is an agent whose
primary function is recruitment end who usually gets a lump sum from
the shipowner to defray the salaries of the crew. The hiring of seamen
and the determination of their compensation is subject to the interplay of
various market factors and one key factor is how much in terms of profits
the local meaning office and the foreign shipowner may realize after the
costs of the voyage are met. And costs include salaries of officers and
crew members." (at pp. 585-586)
The Wallem Shipping case, was decided in 1981. Vir-Jen Shipping was
decided in 1983. It is now 1989. There has been no drying up of
employment opportunities for Filipino seamen. Not only have their wages
improved thus lending ITF to be placid and quiet all these years insofar as
Filipinos are concerned but the hiring of Philippine seamen is at its highest
level ever.
Reporting its activities for the year 1988, the Philippine Overseas
Employment Administration (POEA) stated that there will be en increase
in demand for seamen based overseas in 1989 boosting the number to as
high as 105,000. This will represent a 9.5 percent increase from the 1988
aggregate. (Business World, News Briefs, January 11, 1989 at page 2)
According to the POEA, seabased workers numbering 95,913 in 1988
exceeded by a wide margin of 28.15 percent the year end total in 1987.
The report shows that seabased workers posted bigger monthly
increments compared to those of landbesed workers. (The Business Star,
Indicators, January 11, 1988 at page 2)
Augmenting this optimistic report of POEA Administrator Tomas Achacoso
is the statement of Secretary of Labor Franklin M. Drilon that the

Philippines has a big jump over other crewing nations because of the
Filipinos' abilities compared with any European or western crewing
country. Drilon added that cruise shipping is also a growing market for
Filipino seafarers because of their flexibility in handling odd jobs and their
expertise in handling almost all types of ships, including luxury liners.
(Manila Bulletin, More Filipino Seamen Expected Deployment December
27, 1988 at page 29). Parenthetically, the minimum monthly salary of
able bodied seamen set by the ILO and adhered to by the Philippines is
now $276.00 (id.) more than double the $130.00 sought to be enforced
by the public respondents in these petitions.
The experience from 1981 to the present vindicates the finding in Vir-Jen
Shipping that a decision in favor of the seamen would not necessarily
mean severe repercussions, drying up of employment opportunities for
seamen, and other dire consequences predicted by manning agencies
and recruiters in the Philippines.
From the foregoing, we find that the NSB and NLRC committed grave
abuse of discretion in finding the petitioners guilty of using intimidation
and illegal means in breaching their contracts of employment and
punishing them for these alleged offenses. Consequently, the criminal
prosecutions for estafa in G.R. Nos. 57999 and 58143-53 should be
dismissed.
WHEREFORE, the petitions are hereby GRANTED. The decisions of the
National Seamen Board and National Labor Relations Commission in G. R.
Nos. 64781-99 are REVERSED and SET ASIDE and a new one is entered
holding the petitioners not guilty of the offenses for which they were
charged. The petitioners' suspension from the National Seamen Board's
Registry for three (3) years is LIFTED. The private respondent is ordered
to pay the petitioners their earned but unpaid wages and overtime
pay/allowance from November 1, 1978 to December 14, 1978 according
to the rates in the Special Agreement that the parties entered into in
Vancouver, Canada.
The criminal cases for estafa, subject matter of G. R. Nos. 57999 and
58143-53, are ordered DISMISSED.
SO ORDERED.
Narvasa, Melencio-Herrera, Cruz, Paras, Gancayco, Padilla, Bidin,
Sarmiento, Cortes, Grio-Aquino, Medialdea and Regalado, JJ., concur.
Fernan, (C.J.) on official leave.

Feliciano, J., took no part. I was a director of private respondent corp.

FIRST DIVISION
[G.R. No. 82252. February 28, 1989.]
SEAGULL MARITIME CORP. AND PHILIMARE SHIPPING & EQUIPMENT
SUPPLY, petitioners, vs. NERRY D. BALATONGAN, NATIONAL LABOR
RELATIONS COMMISSION AND PHILIPPINE OVERSEAS EMPLOYMENT
ADMINISTRATION, respondents.
Tanjuatco, Oreta, Tanjuatco, Berenguer & San Vicente for petitioners.
The Solicitor General for public respondent.
Benjamin B. Vergara for private respondent.
SYLLABUS
1.
LABOR LAW; EMPLOYMENT CONTRACT; MUST BE SUBMITTED TO THE
POEA FOR APPROVAL; REASON; "SUPPLEMENTARY CONTRACT" PROVIDING
FOR MORE BENEFITS TO THE WORKERS, DECLARED VALID AND
ENFORCEABLE EVEN WITHOUT APPROVAL OF THE POEA. The
supplementary contract of employment was entered into between
petitioner and private respondent to modify the original contract of
employment. The reason why the law requires that the POEA should
approve and verify a contract under Article 34(i) of the Labor Code is to
insure that the employee shall not thereby be placed in a
disadvantageous position and that the same are within the minimum
standards of the terms and conditions of such employment contract set
by the POEA. This is why a standard format for employment contracts has
been adopted by the Department of Labor. However, there is no
prohibition against stipulating in a contract more benefits to the
employee than those required by law. Thus, in this case wherein a
"supplementary contract" was entered into affording greater benefits to
the employee than the previous one, and although the same was not
submitted for the approval of the POEA, the public respondents properly
considered said contract to be valid and enforceable. Indeed, said
pronouncements of public respondents have the effect of an approval of
said contract. Moreover, as said contract was voluntarily entered into by
the parties the same is binding between them. Not being contrary to law,
morals, good customs, public policy or public order, its validity must be
sustained.
2.
ID.; ID.; PROVISION ON WAIVER AGAINST ALL CLAIMS AGAINST THE
EMPLOYER, HELD CONTRARY TO PUBLIC POLICY. The court sustains the
ruling of public respondents that the provision in the supplementary

contract whereby private respondent waives any claim against petitioners

for damages arising from death or permanent disability is against public
policy, oppressive and inimical to the rights of private respondent. The
said provision defeats and is inconsistent with the duty of petitioners to
insure private respondent against said contingencies as clearly stipulated
in the said contract.
3.
ID.; ID.; FINDINGS OF FACT OF LABOR TRIBUNALS, CONCLUSIVE;
EMPLOYER LIABLE TO PAY CLAIM OF EMPLOYEE IN CASE OF DEATH OR
ACCIDENT WHICH OCCURRED DURING HIS EMPLOYMENT. This Court is
not a trier of facts and the findings of the public respondents are
conclusive in this proceeding. Public respondents found that petitioner
Philimare and private respondent, entered into said supplementary
contract of employment on December 6, 1982. Assuming for the sake of
argument that it was petitioners' principal which entered into said
contract with private respondent, nevertheless petitioner, as its manning
agent in the Philippines, is jointly responsible with its principal thereunder.
There is no question that under the said supplementary contract of
employment, it is the duty of the employer, petitioners herein, to insure
the employee, during his engagement, against death and permanent
invalidity caused by accident on board up to $50,000.00. Consequently, it
is also its concomitant obligation to see to it that the claim against the
insurance company is duly filed by private respondent or in his behalf,
and within the time provided for by the terms of the insurance contract. In
this case, the private respondent met the accident on October 6, 1983.
Since then, he was hospitalized at the Suez Canal Authority Hospital and
thereafter he was repatriated to the Philippines wherein he was also
hospitalized from October 22, 1983 to March 27, 1984. It was only on
August 19, 1985 that he was issued a medical certificate describing his
disability to be permanent in nature. It was not possible for private
respondent to file a claim for permanent disability with the insurance
company within the one-year period from the time of the injury, as his
disability was ascertained to be permanent only thereafter. Petitioners did
not exert any effort to assist private respondent to recover payment of his
claim from the insurance company. They did not even care to dispute the
finding of the insurer that the claim was not filed on time. Petitioners
must, therefore, be held responsible for its omission, if not negligence, by
requiring them to pay the claim of private respondent.
DECISION
GANCAYCO, J p:

On November 2, 1982, a "Crew Agreement" was entered into by private

respondent Nerry D. Balatongan and Philimare Shipping and Equipment
Supply (hereinafter called Philimare whereby the latter employed the
former as able seaman on board its vessel "Santa Cruz" (renamed "Turtle
Bay") with a monthly salary of US$300.00. Said agreement was processed
and approved by the National Seaman's Board (NSB) on November 3,
1982. 1
While on board said vessel the said parties entered into a supplementary
contract of employment on December 6, 1982 2 which provides among
others:
"1. The employer shall be obliged to insure the employee during his
engagement against death or permanent invalidity caused by accident on
board up to:
US $40,000 for death caused by accident
US $50,000 for permanent total disability caused by accident." 3
On October 6, 1983 Balatongan met an accident in the Suez Canal, Egypt
as a result of which he was hospitalized at Suez Canal Authority Hospital.
Later, he was repatriated to the Philippines and was hospitalized at the
Makati Medical Center from October 23, 1983 to March 27, 1984. On
August 19, 1985 the medical certificate was issued describing his
disability as "permanent in nature."
Balatongan demanded payment for his claim for total disability insurance
in the amount of US $50,000.00 as provided for in the contract of
employment but his claim was denied having been submitted to the
insurers beyond the designated period for doing so.

Thus, Balatongan filed on June 21, 1985 a complaint against Philimare

and Seagull Maritime Corporation (hereinafter called Seagull) in the
Philippine Overseas Employment Administration (POEA) for non-payment
of his claim for permanent total disability with damages and attorney's
fees.
After the parties submitted their respective position papers with the
corresponding documentary evidence, the office charge of the Workers
Assistance and Adjudication Office of the POEA rendered a decision on
May 2, 1986, the dispositive part of which reads as follows:

"WHEREFORE, premises considered, respondents are hereby ordered to

pay complainant the amount of US$50,000.00 representing permanent
total disability insurance and attorney's fees at 10% of the award.
Payment should be made in this Office within ten (10) days from receipt
hereof at the prevailing rate of exchange. This Office cannot however rule
on damages, having no jurisdiction on the matter.
SO ORDERED." 4
Seagull and Philimare appealed said decision to the National Labor
Relations Commission (NLRC) on June 4, 1986. Pending resolution of their
appeal because of the alleged transfer of the agency of Seagull to
Southeast Asia Shipping Corporation, Seagull filed on April 28, 1987 a
Motion For Substitution/Inclusion of Party Respondent which was opposed
by Balatongan. 5 This was followed by an ex-parte motion for leave to file
third party complaint on June 4, 1987 by Seagull. A decision was
promulgated on December 7, 1987 denying both motions and dismissing
the appeal for lack of merit. 6 A motion for reconsideration of said
decision was denied for lack of merit in a resolution dated February 26,
1988. 7
Hence, Seagull and Philimare filed this petition for certiorari with a prayer
for the issuance of a temporary restraining order based on the following
grounds:
1.

Respondent POEA erred in applying the Supplemental Contract;

2.
Respondents POEA and NLRC acted with grave abuse of discretion in
holding that the Supplemental Contract was signed on board MV Santa
Cruz by and between private respondent and from petitioner; and
3.
Respondent NLRC acted with grave abuse of discretion in not giving
due course to your petitioners' Motion for Leave to File Third Party
Complaint as well as their Motion for Inclusion/Substitution of
respondents. 8
On March 21, 1988, the Court issued a temporary restraining order
enjoining respondents from enforcing the questioned decision and
resolution of public respondents.
Petitioners argue that prior to private respondent's departure he executed
a crew agreement on November 2, 1982 which was duly approved by the
POEA; that the supplementary contract of employment that was entered
into on board the vessel "Turtle Bay" which provides for a US $50,000.00
insurance benefit in case of permanent disability was neither approved

nor verified by respondent POEA; and that the same violates Article 34(i)
of the Labor Code, as amended, which provides as follows:
"Art. 34. Prohibited Practices. It shall be unlawful for any individual,
entity, licensee, or holder of authority:
xxx

xxx

xxx

(i)
to substitute or alter employment contracts approved and verified
by the Department of Labor from the time of actual signing thereof by the
parties up to and including the period of expiration of the same without
the approval of the Department of Labor."
Petitioners also call attention to Article VIII, paragraph 2 of the
Supplementary Contract which provides as follows:
"2. Notwithstanding his claim against the insurers the employee hereby
expressly waives all claims of his own or his heirs for compensation of
damages due to death or permanent invalidity which he suffered during
his engagement against the employers . . . unless his death or permanent
invalidity has been caused by willful act of any of the above-named
persons. 9
Petitioners stress that while public respondents upheld the applicability of
said supplementary contract insofar as it increased the benefits to private
respondent, public respondents considered the provision on the waiver
against all claims by private respondent to be contrary to public policy.
In its questioned decision dated December 7, 1987, the respondent NLRC
made the following disquisition:
"The focal issue for determination is the validity and enforceability of the
second contract of employment entered into by and between complainant
and respondents on board the vessel where the former had served as a
member of its complement despite the absence of NSB verification or
approval. With respect to the findings of facts in the appealed decision,
We consider the same as duly supported by substantial evidence and the
admissions of the parties in pleadings. LLphil
Much stress and emphasis are made by the respondents in their appeal
that this claim has no legal basis or footing inasmuch as the second
contract of employment containing a total disability insurance benefit of
US$50,000.00, much more than that embodied in the first contract of
employment which was approved by the defunct NSB, was not verified or
approved by the latter. Accordingly, the respondents posit the argument

that subject claim may not prosper pursuant to the provisions of Art. 34(i)
of the Labor Code, as amended, which provides that it shall be unlawful
for any individual, entity, licensee, or holder of authority '(T)o substitute
or alter employment contracts approved and verified by the Department
of Labor from the time of actual signing thereof by the parties up to and
including the period of expiration of the same without the approval of the
Department of Labor.
Did the POEA commit a reversible error when it considered the second
contract of employment as valid sans any verification or approval thereof
by the NSB? Our answer to this query is in the negative. Apparently, the
intention of the law when Art. 34 of the Labor Code was enacted is to
provide for the prohibited and unlawful practices relative to recruitment
and placement. As shown in the 'Explanatory Note' of Parliamentary Bill
No. 4531, pertaining to Art. 34 (supra), thus:
Many of the provisions are already existing and were simply restated.
Some however were restated with modifications and new ones were
introduced to reflect what in the past have been noted to be pernicious
practices which tend to place workers at a disadvantage.
it is indubitably clear that the purpose of having overseas contracts of
employment approved by the NSB(POEA) is whether or not such contracts
conform to the minimum terms and conditions prescribed by the NSB
(POEA). In other words, the law did not at all prohibit any alteration which
provided for increases in wages or other benefits voluntarily granted by
the employer. Precisely, under Section 2, Rule 1, Book V of the Rules and
Regulations of the POEA '(t)he standard format of employment contracts
shall set the minimum standards of the terms and conditions of
employment. All employers and principals shall adopt the model contract
in connection with the hiring of workers without prejudice to their
adopting other terms and conditions of employment over and above the
minimum standards of the Administration.' Where, as here, it is admitted
that the second contract although not verified or approved by the NSB
(POEA) granted more benefits by way of total disability insurance to the
complainant, the respondents may not be allowed to disavow their own
voluntary acts by insisting that such beneficial contract in favor of the
seaman is null and void." (Emphasis supplied.) 10
We agree.
The supplementary contract of employment was entered into between
petitioner and private respondent to modify the original contract of

employment. The reason why the law requires that the POEA should
approve and verify a contract under Article 34(i) of the Labor Code is to
insure that the employee shall not thereby be placed in a
disadvantageous position and that the same are within the minimum
standards of the terms and conditions of such employment contract set
by the POEA. This is why a standard format for employment contracts has
been adopted by the Department of Labor. However, there is no
prohibition against stipulating in a contract more benefits to the
employee than those required by law. Thus, in this case wherein a
"supplementary contract" was entered into affording greater benefits to
the employee than the previous one, and although the same was not
submitted for the approval of the POEA, the public respondents properly
considered said contract to be valid and enforceable. Indeed, said
pronouncements of public respondents have the effect of an approval of
said contract. Moreover, as said contract was voluntarily entered into by
the parties the same is binding between them. 11 Not being contrary to
law, morals, good customs, public policy or public order, its validity must
be sustained. 12 By the same token, the court sustains the ruling of
public respondents that the provision in the supplementary contract
whereby private respondent waives any claim against petitioners for
damages arising from death or permanent disability is against public
policy, oppressive and inimical to the rights of private respondent. The
said provision defeats and is inconsistent with the duty of petitioners to
insure private respondent against said contingencies as clearly stipulated
in the said contract. LLpr
Petitioners however argue that they could not have entered into said
supplementary contract of employment as Philimare was a mere manning
agent in the Philippines of the shipping company managed by Navales
Shipping Management and Marine Consultant (Pte) Ltd., its principal.
Petitioners assert that the said supplementary contract was entered into
by private respondent with their principal, Navales Shipping Management
and Marine Consultant (Pte) Ltd. on board the vessel Turtle Bay so
petitioners cannot be held responsible thereunder.
This Court is not a trier of facts and the findings of the public respondents
are conclusive in this proceeding. Public respondents found that petitioner
Philimare and private respondent, entered into said supplementary
contract of employment on December 6, 1982. Assuming for the sake of
argument that it was petitioners' principal which entered into said
contract with private respondent, nevertheless petitioner, as its manning

agent in the Philippines, is jointly responsible with its principal thereunder.

13
There is no question that under the said supplementary contract of
employment, it is the duty of the employer, petitioners herein, to insure
the employee, during his engagement, against death and permanent
invalidity caused by accident on board up to $50,000.00. Consequently, it
is also its concomitant obligation to see to it that the claim against the
insurance company is duly filed by private respondent or in his behalf,
and within the time provided for by the terms of the insurance contract.
In this case, the private respondent met the accident on October 6, 1983.
Since then, he was hospitalized at the Suez Canal Authority Hospital and
thereafter he was repatriated to the Philippines wherein he was also
hospitalized from October 22, 1983 to March 27, 1984. It was only on
August 19, 1985 that he was issued a medical certificate describing his
disability to be permanent in nature. It was not possible for private
respondent to file a claim for permanent disability with the insurance
company within the one-year period from the time of the injury, as his
disability was ascertained to be permanent only thereafter. Petitioners did
not exert any effort to assist private respondent to recover payment of his
claim from the insurance company. They did not even care to dispute the
finding of the insurer that the claim was not filed on time. 14 Petitioners
must, therefore, be held responsible for its omission, if not negligence, by
requiring them to pay the claim of private respondent. LexLib
The Court finds that the respondent NLRC did not commit a grave abuse
of discretion in denying petitioners' motion for leave to file third-party
complaint and substitution or inclusion of party respondent. Such motion
is largely addressed to the discretion of the said Commission. Inasmuch
as the alleged transfer of interest took place only after the POEA had
rendered its decision, the denial of the motion so as to avoid further delay
in the settlement of the claim of private respondent was well-taken. At
any rate, petitioners may pursue their claim against their alleged
successor-in-interest in a separate suit.
WHEREFORE, the petition is hereby DISMISSED for lack of merit and the
temporary restraining order issued by this Court on March 21, 1988 is
hereby LIFTED. No costs. This decision is immediately executory.
SO ORDERED.
Narvasa, Cruz, Grio-Aquino and Medialdea, JJ., concur.

THIRD DIVISION
[G.R. No. 119320. March 13, 1998.]
OCEAN EAST AGENCY CORP., EUROPEAN NAVIGATION, INC. & STANDARD
INSURANCE CO., INC., petitioners, vs. THE NATIONAL LABOR RELATIONS
COMMISSION (NLRC-FIRST DIVISION), and CAPT. PEPITO M. GUCOR,
respondents.
Potenciano R. Napenas for petitioners.
Roger S. Bonifacio for private respondent.
SYNOPSIS
Respondent Capt. Gucor was hired by petitioner Ocean East as master of
M/V "Alpine" for one year. While the M/V "Alpine" was anchored at the
Port of Havana, Cuba, respondent was informed of his repatriation for his
subsequent transfer to another vessel.
Capt. Gucor refused to leave the vessel, believing the cause for his
repatriation to be unreasonable. Ocean East and petitioner European
Navigation advised him that his services were not terminated, the
repatriation being solely for documentation purposes.
On the ground of serious misconduct or willful disobedience, petitioners
terminated the services of Capt. Gucor. Respondent filed a complaint for
illegal dismissal, but the POEA dismissed the complaint for lack of merit
finding respondent's apprehension as premature and that petitioners
were merely acting in the exercise of their management prerogative.
DCcTHa
On appeal, the decision of the POEA was reversed by the NLRC. The
principal issue is whether or not the transfer clause of the Standard
Employment Contract (SEC) is violative of Article 34(i) of the Labor Code.
The NLRC ruled that the intended transfer of Capt. Gucor to another
vessel was an alteration of his original contract which could not be done
without the approval of the Secretary of Labor.
The NLRC's ruling does not persuade. The Standard Employment Contract
was adopted and approved conformably with Section 3, Rule II, Book V of
the POEA Rules and Regulations. The transfer clause under the SEC is not
inconsistent with Article 34(i) of the Labor Code. On the contrary, the
transfer clause under the SEC even complements the Labor Code by way
of resolving the complex demands of seafarers whose services may entail

occasional transfer from one vessel to another. A transfer is sanctioned

only if it is to any vessel owned or managed by the same employer
provided it is accredited to the same manning agent and that the rating
of the crewmember, his wages and terms of service are in no way inferior
and the total period of employment shall not exceed that originally
agreed upon. The transfer clause is deemed incorporated into the original
contract; hence, the approval of the Secretary of Labor is no longer
necessary.
Petitioners merely availed of what the employment contract allows.
SYLLABUS
1.
LABOR AND SOCIAL LEGISLATION; LABOR CODE; EMPLOYMENT;
EMPLOYER-EMPLOYEE RELATIONSHIP; EXISTENCE THEREOF NOT NEGATED
BY EXPRESSLY REPUDIATING IT IN CONTRACT. It is axiomatic that the
existence of an employer-employee relationship cannot be negated by
expressly repudiating it in the management contract and providing
therein that the "employee" is an independent contractor when the terms
of the agreement clearly show otherwise. For, the employment status of a
person is defined and prescribed by law and not by what the parties say it
should be. In determined the status of the management contract, the
"four-fold test" on employment has to be applied. CAaSED
2.
ID.; ID.; ID.; FOUR-FOLD TEST; SELECTION AND ENGAGEMENT OF
EMPLOYEE. Petitioner contends that De los Reyes was never required to
go through the pre-employment procedures and that the probationary
employment status was reserved only to employees of petitioner. On this
score, it insists that the first requirement of selection and engagement of
the employee was not met. A look at the provisions of the contract shows
that private respondent was appointed as Acting Unit Manager only upon
recommendation of the District Manager. This indicates that private
respondent was hired by petitioner because of the favorable endorsement
of its duly authorized officer. But, this approbation could only have been
based on the performance of De los Reyes as agent under the agency
contract so that there can be no other conclusion arrived under this
premise than the fact that the agency or underwriter phase of the
relationship of De los Reyes with petitioner was nothing more than a trial
or probationary period for his eventual appointment as Acting Unit
Manager of petitioner. Then, again, the very designation of the
appointment of private respondent as "acting" unit manager obviously
implies a temporary employment status which may be made permanent

only upon compliance with company standard such as those enumerated

under Sec. 6 of the management contract.
3.
ID.; ID.; ID.; ID.; PAYMENT OF WAGES; CASE AT BAR. On the matter
of payment of wages, petitioner points out that respondent was
compensated strictly on commission basis, the amount of which was
totally dependent on his total output. But, the manager's contract speaks
differently. The above provisions unquestionably demonstrate that the
performance requirement imposed on De los Reyes was applicable
quarterly while his entitlement to the free portion (P300) and the
validated portion (P1,200) was monthly starting on the first month of
twelve (12) months of the appointment. Thus, it has to be admitted that
even before the end of the first quarter and prior to the so-called
quarterly performance evaluation, private respondent was already
entitled to be paid both the free and validated portions of the UDF every
month because his production performance could not be determined until
after the lapse of the quarter involved. This indicates quite clearly that
the unit manager's quarterly performance had no bearing at all on his
entitlement at least to the free portion of the UDF which for all intents and
purposes comprised the salary regularly paid to him by petitioner. Thus it
cannot be validly claimed that the financial assistance consisting of the
free portion of the UDF was purely dependent on the premium production
of the agent. Be that as it may, it is worth considering that the payment
of compensation by way of commission does not militate against the
conclusion that private respondent was an employee of petitioner. Under
Art. 97 of the Labor Code, "wage" shall mean "however designated,
capable of being expressed in terms of money, whether fixed or
ascertained on a time, task, price or commission basis . . . ."
4.
ID.; ID.; ID.; ID.; POWER OF DISMISSAL AND CONTROL; CASE AT BAR.
A perusal of the appointment of complainant as Acting Unit Manager
reveals that: 1. Complainant was to "exclusively" serve respondent
company. Thus it is provided: . . .7..7 Other causes of Termination: This
appointment may likewise be terminated for any of the following
causes : . . 7..7..2. Your entering the service of the government or another
life insurance company; 7..7..3. Your accepting a managerial or
supervisory position in any firm doing business in the Philippines without
the written consent of the Company; . . . It would not be amiss to state
that respondent's duty to collect the company's premium using company
receipts under Sec. 7.4 of the management contract is further evidence of
petitioner's control over respondent. Exclusivity of service, control of
assignments and removal of agents under private respondent's unit,

collection of premiums, furnishing of company facilities and materials as

well as capital described as Unit Development Fund are but hallmarks of
the management system in which herein private respondent worked. This
obtaining, there is no escaping the conclusion that private respondent
Pantaleon de los Reyes was an employee of herein petitioner. aATEDS
DECISION
ROMERO, J p:
On September 28, 1991, respondent Capt. Pepito M. Gucor was hired by
petitioner Ocean East Agency Corp. (Ocean East), the manning agent of
herein co-petitioner European Navigation, Inc. (ENI), as master of M/V
"Alpine" for a period of one (1) year with a monthly salary of US$840.00.
Sometime in February 1992, while the M/V "Alpine" was anchored at the
Port of Havana, Cuba, respondent was informed of his repatriation for his
subsequent transfer to another vessel. cdtai
Perceiving the transfer as an insult to his professional competence, Capt.
Gucor signified that, unless his full benefits are accorded him, he shall
refuse to leave the vessel knowing the cause for his repatriation to be
unreasonable. In an effort to assuage his fears, petitioners Ocean East
and ENI advised him that his services were not terminated at all, the
repatriation being solely for documentation purposes. On February 29,
1992, after his demands were fully settled, respondent agreed to be
repatriated. Petitioner alleged that in view of respondent's earlier refusal
to be repatriated and to man the newly-acquired MV "Havre de Grace," it
was compelled to assign another master to the said vessel. Thereafter,
the company decided to assign him to MV "Eleptheria-K," whose master
was going on leave on February 27, which, however, respondent likewise
missed for failure to disembark when ordered to do so.
On the ground of serious misconduct or willful disobedience, petitioner
terminated the services of respondent. In a complaint for illegal dismissal,
on December 1, 1993, Philippine Overseas Employment Administration
(POEA), through Administrator Felicisimo O. Joson, dismissed the said
complaint for lack of merit finding respondent's apprehension as
premature and that petitioners were merely acting in the exercise of their
management prerogative.
On appeal, this decision was reversed by the National Labor Relations
Commission (NLRC) in its decision dated November 29, 1994, the
dispositive portion of which reads:

"WHEREFORE, the appealed decision is hereby set aside. The respondents

are hereby directed to jointly and severally pay complainant his salary,
overtime pay, vacation leave and other benefits corresponding to the
unexpired portion of his contract.
SO ORDERED." 1
Its motion for reconsideration having been denied, petitioners filed the
instant petition.
The principal issue in this case is whether or not the transfer clause of the
Standard Employment Contract (SEC) 2 is violative of Article 34(i) of the
Labor Code.
Said clause provides that:
"The CREWMEMBER agrees to be transferred at any port to any vessel
owned or operated, manned or managed by the same employer provided
it is accredited to the same manning agent and provided further that the
rating of the crewmember and the rate of his wages and terms of service
are in no way inferior and the total period of employment shall not exceed
that originally agreed upon."
Article 34(i) of the Labor Code, on the other hand, reads:
"(i) It shall be unlawful for 'any individual, entity, licensee or holder of
authority to substitute or alter employment contract approved and
verified by the Department of Labor from the time of actual signing
thereof by the parties up to and including the periods of expiration of the
same without the approval of the Secretary of Labor."
The NLRC, in setting aside the decision of the POEA, ruled that the
intended transfer of Capt. Gucor to another vessel was in effect an
alteration of his original contract which could not be done without the
approval of the Secretary of Labor.
The NLRC's ruling does not persuade.
It must be noted that the standard employment contract was adopted
and approved conformably with Section 3, Rule II, Book V of the POEA
Rules and Regulations which reads as follows:
"Section 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 3 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."
On the other hand, elucidating the rationale behind Article 34 (i), this
Court held in Seagull Maritime Corp., et al. v. Balatongan, et al., 4 thus:
"The reason why the law requires that the POEA should approve and
verify a contract under Article 34(i) of the Labor Code is to insure that the
employee shall not thereby be placed in a disadvantageous position and
that the same are within the minimum standards of the terms and
conditions of such employment contract set by the POEA. This is why a
standard format for employment contracts has been adopted by the
Department of Labor." (Emphasis supplied)
Apparently, there is no inconsistency between Article 34(i) of the Labor
Code and the transfer clause under the SEC. On the contrary, the latter
even complements the other by way of resolving the complex demands of
seafarers whose services may entail occasional transfer from one vessel
to another. Obviously, the transfer clause is not without limitations. Thus,
a transfer is sanctioned only if it is to any vessel owned or operated,
manned or managed by the same employer provided it is accredited to
the same manning agent and that the rating of the crewmember, his
wages and terms of service are in no way inferior and the total period of
employment shall not exceed that originally agreed upon. In the instant
case, respondent's assignment to another vessel owned by European
Navigation and accredited to the same manning agent, therefore, under
no circumstance, violated Article 34(i) of the Labor Code. The transfer
clause is deemed incorporated into the original contract; hence, the
approval of the Secretary of Labor is no longer necessary.
Accordingly, we conclude that petitioners merely availed of what the
employment contract allows. Indeed, it was nothing more than an
application of the subject provision.
With regard to the finding of illegal dismissal, the pertinent provision of
the Labor Code states:

"Art. 282. Termination by employer.

dctai

An employer may terminate an employment for any of the following

causes:
a.
Serious misconduct or wilful disobedience by the employer of the
lawful orders of his employer or representative in connection with his
work;
xxx

xxx

xxx."

In AHS Philippines, Inc. v. Court of Appeals, 5 we held that in order that an

employer may terminate an employee on the ground of willful
disobedience to the former's order, regulations or instructions, it must be
established that the said orders, regulation or instructions are (a)
reasonable and lawful, (b) sufficiently known to the employee, and (c) in
connection with the duties which the employee has been engaged to
discharge.
In the instant case, petitioners have conscientiously apprised respondent
that his repatriation was solely for documentation purposes preliminary to
his transfer to another vessel which the management believes him to be
more familiar with. Respondent's defiance of a lawful order posed serious
and considerable prejudice to the business of the employer. This Court
finds that petitioner's order was made within the sphere of its
management prerogative. "The exercise of an employer to regulate all
aspects of employment must be in keeping with good faith and not be
used as a pretext for defeating the rights of employees under the laws
and applicable contracts." 6 A perusal of the records shows a clear, valid
and legal cause for the termination of respondent's employment. As
correctly viewed by the Solicitor General:
"Capt. Gucor's refusal to disembark and turn over command of his vessel
to its new master when instructed to do so caused great pecuniary
damage to his employer. The vessel was at anchorage for a long time
disrupting its schedule. Not only that. He was not able to take command
of the M/V Havre de Grace, forcing European Navigation to make the
arrangements and assign a new master to it. European Navigation,
exercising maximum tolerance in spite of Capt. Gucor's insubordination,
even went as far as assigning him to the M/V Eleptheria-K after he missed
the M/V Havre de Grace. He likewise missed this assignment. All this
because he believed that his transfer was an insult to his personal and
professional capacity.

Capt. Gucor willfully disobeyed a lawful order of his employer. This act of
insubordination is a valid ground for dismissal." 7
WHEREFORE, the instant petition is hereby GRANTED. The decision of the
National Labor Relations Commission dated November 29, 1994 is
vacated and the resolution of the POEA Administrator is REINSTATED. No
costs.
SO ORDERED. dctai
Narvasa, C .J ., Kapunan and Purisima, JJ ., concur.

SECOND DIVISION
[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.
Felix C . Chavez for petitioner.
The Solicitor General for respondents.
SYLLABUS
1.
LABOR AND SOCIAL LEGISLATION; WAGES; SIDE AGREEMENT TO
REDUCE WAGES; NULLIFIED IN CASE AT BAR.
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. 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 (U.S.$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.
2.
ID.; ID.; AGENCY AND FOREIGN PRINCIPAL; SOLIDARILY LIABLE FOR
UNPAID WAGES. 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. 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.
3.
ID.; DOCTRINE OF LACHES; DEFINED; WHEN NOT APPLICABLE; CASE
AT BAR. 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 of time to do that which, by

exercising due diligence, could or should have been done earlier, (La
Campana Food Products, Inc. v. Court of Appeals, 223 SCRA 151 [1993],
Radio Communications of the Philippines, Inc. v. National Labor Relations
Commission, 223 SCRA 656 [1993]; Marcelino v. Court of Appeals, 210
SCRA 444 [1992]) thus giving rise to a presumption that the party entitled
to assert it either has abandoned or declined to assert it. (Bergado v.
Court of Appeals, 173 SCRA 497 [1989]). It is not concerned with mere
lapse of time; the fact of delay, standing alone, is insufficient to constitute
laches. (Donato v. Court of Appeals, 217 SCRA 196 [1993]). 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 permitting a right or claim to be
enforced or asserted. (Bergado v. Court of Appeals, op. cit.) 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.
(Jimenez v. Fernandez, 184 SCRA 190 [1990]).
DECISION
PUNO, J p:
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 respondents 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 U.S. Dollars (US$6,000.00). LibLex

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 U.S. Dollars (US$1,500.00). On December 5, 1988, 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. prcd
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. Cdpr

The complaint was dismissed by public respondent POEA Administrator on

February 17, 1992. He ratiocinated, inter alia:
". . . Apparently and form 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 other 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.
"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. cdphil

"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. Cdpr
"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
"Section 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.
"Section 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

"Section 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.) LexLib
and
"BOOK VI, RULE I
"Section 2.
"xxx

Grounds for suspension/cancellation of license.

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

(Emphasis supplied)

xxx"

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. cdll
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 of 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 in upholding the rules of procedure. We said therein:
"As for equity, which has been aptly described as a 'justice outside
legality,' this is applied only in the absence of, and never against,
statutory law or, as in this case, judicial rules of procedure. Aequetas
nunquam contravenit legis. The pertinent positive rules being present
here, they should preempt 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. LexLib
"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:
"Section 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 foreignbased 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 other:
"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." LexLib
"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 a varicious 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. 9102-199 (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. LibLex
SO ORDERED.
Narvasa, C.J., Bidin, Regalado and Mendoza, JJ., concur.