FIRST DIVISION

PEOPLE OF THE PHILIPPINES,

Appellee,

G.R. No. 184058

Present:

- versus -

MELISSA CHUA,
Appellant.

PUNO, C.J., Chairperson,

CARPIO MORALES,
LEONARDO-DE CASTRO,
BERSAMIN, and
VILLARAMA, JR., JJ.
Promulgated:
March 10, 2010

x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
DECISION

CARPIO MORALES, J.:

Melissa Chua (appellant) was indicted for Illegal Recruitment (Large Scale)
and was convicted thereof by the Regional Trial Court (RTC) of Manila. She was
also indicted for five counts of Estafa but was convicted only for three. The Court
of Appeals, by Decision[1] dated February 27, 2008, affirmed appellants conviction.
The Information[2] charging appellant, together with one Josie Campos
(Josie), with Illegal Recruitment (Large Scale), docketed as Criminal Case No. 04222596, reads:
The undersigned accuses JOSIE CAMPOS and MELISSA CHUA of
violation of Article 38 (a) PD 1413, amending certain provisions of Book I, PD
442, otherwise known as the New Labor Code of the Philippines, in relation to
Art. 13 (b) and (c ) of said Code, as further amended by PD Nos. 1693, 1920 and
2019 and as further amended by Sec. 6 (a), (1) and (m) of RA 8042 committed in
a [sic] large scale as follows:

That sometime during the month of September, 2002, in the City of

Manila, Philippines, the said accused, conspiring and confederating together and
mutually helping each other, representing themselves to have the capacity to
contract, enlist and transport Filipino workers for employment abroad, did then
and there willfully, unlawfully and knowingly for a fee, recruit and promise
employment/job placement abroad to ERIK DE GUIA TAN, MARILYN O.
MACARANAS, NAPOLEON H. YU, JR., HARRY JAMES P. KING and
ROBERTO C. ANGELES for overseas employment abroad without first having
secured the required license from the Department of Labor and Employment as
required by law, and charge or accept directly from:
ERIK DE GUIA TAN - P73,000.00
MARILYN D. MACARANAS - 83,000.00
NAPOLEON H. YU, JR. - 23,000.00
HARRY JAMES P. KING - 23,000.00
ROBERTO C. ANGELES - 23,000.00
For purposes of their deployment, which amounts are in excess of or greater than
that specified in the schedule of allowable fees as prescribed by the POEA, and
without valid reasons and without the fault of said complainants, failed to actually
deploy them and failed to reimburse expenses incurred in connection with their
documentation and processing for purposes of their deployment.
xxxx

The five Informations[3] charging appellant and Josie with Estafa, docketed
as Criminal Case Nos. 04-222597-601, were similarly worded and varied only with
respect to the names of the five complainants and the amount that each purportedly
gave to the accused. Thus each of the Information reads:
xxxx
That on or about . . . in the City of Manila, Philippines, the said accused,
conspiring and confederating together and mutually helping each other, did then
and there willfully, unlawfully and feloniously defraud xxx in the following
manner, to wit: the said accused by means of false manifestations which they
made to the said . . . to the effect that they had the power and capacity to recruit
the latter as factory worker to work in Taiwan and could facilitate the processing
of the pertinent papers if given the necessary amount to meet the requirements
thereof, and by means of other similar deceits, induced and succeeded in inducing
said xxx to give and deliver, as in fact he gave and delivered to the said accused
the amount of . . . on the strength of said manifestations and representations, said
accused well knowing that the same were false and fraudulent and were made
solely to obtain, as in fact they did obtain the amount of . . . which amount once in

their possession, with intent to defraud, they willfully, unlawfully and feloniously
misappropriated, misapplied and converted to their own personal use and benefit,
to the damage of said . . . in the aforesaid amount of . . ., Philippine Currency.
xxxx

Appellant pleaded not guilty on arraignment. Her co-accused Josie remained at

large. The cases were consolidated, hence, trial proceeded only with respect to
appellant.
Of the five complainants, only three testified, namely, Marilyn D. Macaranas
(Marilyn), Erik de Guia Tan (Tan) and Harry James King (King). The substance of
their respective testimonies follows:
Marilyns testimony:
After she was introduced in June 2002 by Josie to appellant as capacitated to
deploy factory workers to Taiwan, she paid appellant P80,000 as placement fee
and P3,750 as medical expenses fee, a receipt[4] for the first amount of which was
issued by appellant.
Appellant had told her that she could leave for Taiwan in the last week of
September 2002 but she did not, and despite appellants assurance that she would
leave in the first or second week of October, just the same she did not.
She thus asked for the refund of the amount she paid but appellant claimed
that she was not in possession thereof but promised anyway to raise the amount to
pay her, but she never did.
She later learned in June 2003 that appellant was not a licensed recruiter,
prompting her to file the complaint against appellant and Josie.
Tans testimony:
After he was introduced by Josie to appellant at the Golden Gate, Inc.,
(Golden Gate) an agency situated in Paragon Tower Hotel in Ermita, Manila, he
underwent medical examination upon appellants assurance that he could work in

Taiwan as a factory worker with a guaranteed monthly salary of 15,800 in Taiwan

currency.
He thus paid appellant, on September 6, 2002, P70,000[5] representing
placement fees for which she issued a receipt.Appellant welched on her promise to
deploy him to Taiwan, however, hence, he demanded the refund of his money but
appellant failed to. He later learned that Golden Gate was not licensed to deploy
workers to Taiwan, hence, he filed the complaint against appellant and Josie.
Kings testimony:
His friend and a fellow complainant Napoleon Yu introduced him to Josie
who in turn introduced appellant as one who could deploy him to Taiwan.
On September 24, 2002,[6] he paid appellant P20,000 representing partial
payment for placement fees amounting to P80,000, but when he later inquired
when he would be deployed, Golden Gates office was already closed. He later
learned that Golden Gates license had already expired, prompting him to file the
complaint.
Appellant denied the charges. Claiming having worked as a temporary cashier
from January to October, 2002 at the office of Golden Gate, owned by one Marilyn
Calueng,[7] she maintained that Golden Gate was a licensed recruitment agency and
that Josie, who is her godmother, was an agent.
Admitting having received P80,000 each from Marilyn and Tan, receipt of
which she issued but denying receiving any amount from King, she claimed that
she turned over the money to the documentation officer, one Arlene Vega, who in
turn remitted the money to Marilyn Calueng whose present whereabouts she did
not know.
By Decision of April 5, 2006, Branch 36 of the Manila RTC convicted appellant of
Illegal Recruitment (Large Scale) and three counts of Estafa, disposing as follows:
WHEREFORE, the prosecution having established the guilt of accused Melissa
Chua beyond reasonable doubt, judgment is hereby rendered convicting the
accused as principal of a large scale illegal recruitment and estafa three (3) counts

and she is sentenced to life imprisonment and to pay a fine of Five Hundred
Thousand Pesos (P500,000.00) for illegal recruitment.
The accused is likewise convicted of estafa committed against Harry James P.
King and she is sentenced to suffer the indeterminate penalty of Four (4) years
and Two (2) months of prision correctional as minimum, to Six (6) years and One
(1) day of prision mayor as maximum; in Criminal Case No. 04-22598; in
Criminal Case No. 04-222600 committed against Marilyn Macaranas, accused is
sentence [sic] to suffer the indeterminate penalty of Four (4) years and Two (2)
months of prision correctional as minimum, to Twelve (12) years and one (1) day
of reclusion temporal as maximum; and in Criminal Case No. 04-222601
committed against Erik de Guia Tan, she is likewise sentence [sic] to suffer
an indeterminate penalty of Four (4) years and Two (2) months of prision
correctional as minimum, to Eleven (11) years and One (1) day of prision mayor
as maximum.
Accused Melissa Chua is also ordered to return the amounts of P20,000.00
to Harry James P. King, P83,750.00 to Marilyn D. Macaranas, and P70,000.00 to
Erik de Guia Tan.
As regards Criminal Cases Nos. 04-222597 and 04-222599, both are
dismissed for lack of interest of complainants Roberto Angeles and Napoleon Yu,
Jr.
In the service of her sentence, the accused is credited with the full period of
preventive imprisonment if she agrees in writing to abide by the disciplinary rules
imposed, otherwise only 4/5 shall be credited.
SO ORDERED.

The Court of Appeals, as stated early on, affirmed the trial courts decision by the
challenged Decision of February 27, 2008, it holding that appellants defense that,
as temporary cashier of Golden Gate, she received the money which was ultimately
remitted to Marilyn Calueng is immaterial, she having failed to prove the existence
of an employment relationship between her and Marilyn, as well as the legitimacy
of the operations of Golden Gate and the extent of her involvement therein.
Citing People v. Sagayaga,[8] the appellate court ruled that an employee of a
company engaged in illegal recruitment may be held liable as principal together
with his employer if it is shown that he, as in the case of appellant, actively and
consciously participated therein.

Respecting the cases for Estafa, the appellate court, noting that a person convicted
of illegal recruitment may, in addition, be convicted of Estafa as penalized under
Article 315, paragraph 2(a) of the Revised Penal Code, held that the elements
thereof were sufficiently established, viz: that appellant deceived the complainants
by assuring them of employment in Taiwan provided they pay the required
placement fee; that relying on such representation, the complainants paid appellant
the amount demanded; that her representation turned out to be false because she
failed to deploy them as promised; and that the complainants suffered damages
when they failed to be reimbursed the amounts they paid.
Hence, the present appeal, appellant reiterating the same arguments she
raised in the appellate court.
The appeal is bereft of merit.
The term recruitment and placement is defined under Article 13(b) of the
Labor Code of the Philippines as follows:
(b) Recruitment and placement refers to any act of canvassing, enlisting,
contracting, transporting, utilizing, hiring, or procuring workers, and
includes referrals, contract services, promising or advertising for
employment, locally or abroad, whether for profit or not. Provided, That any
person or entity which, in any manner, offers or promises for a fee employment to
two or more persons shall be deemed engaged in recruitment and placement.
(emphasis supplied)

On the other hand, Article 38, paragraph (a) of the Labor Code, as amended,
under which appellant was charged, provides:
Art. 38. Illegal Recruitment. (a) Any recruitment activities, including
the prohibited practices enumerated under Article 34 of this Code, to be
undertaken by non-licensees or non-holders of authority shall be deemed
illegal and punishable under Article 39 of this Code. The Ministry of Labor
and Employment or any law enforcement officer may initiate complaints under
this Article.
(b) Illegal recruitment when committed by a syndicate or in large scale
shall be considered an offense involving economic sabotage and shall be
penalized in accordance with Article 39 hereof.

Illegal recruitment is deemed committed by a syndicate if carried out by a

group of three (3) or more persons conspiring and/or confederating with one
another in carrying out any unlawful or illegal transaction, enterprise or scheme
defined under the first paragraph hereof. Illegal recruitment is deemed
committed in large scale if committed against three (3) or more persons
individually or as a group. (emphasis supplied)

From the foregoing provisions, it is clear that any recruitment activities to be

undertaken by non-licensee or non-holder of contracts, or as in the present case, an
agency with an expired license, shall be deemed illegal and punishable under
Article 39 of the Labor Code of the Philippines. And illegal recruitment is deemed
committed in large scale if committed against three or more persons individually or
as a group.
Thus for illegal recruitment in large scale to prosper, the prosecution has to prove
three essential elements, to wit: (1) the accused undertook a recruitment activity
under Article 13(b) or any prohibited practice under Article 34 of the Labor Code;
(2) the accused did not have the license or the authority to lawfully engage in
the recruitment and placement of workers; and (3) the accused committed such
illegal activity against three or more persons individually or as a group.[9]
In the present case, Golden Gate, of which appellant admitted being a
cashier from January to October 2002, was initially authorized to recruit workers
for deployment abroad. Per the certification from the POEA, Golden Gates license
only expired onFebruary 23, 2002 and it was delisted from the roster of licensed
agencies on April 2, 2002.
Appellant was positively pointed to as one of the persons who enticed the
complainants to part with their money upon the fraudulent representation that they
would be able to secure for them employment abroad. In the absence of any
evidence that the complainants were motivated by improper motives, the trial
courts assessment of their credibility shall not be interfered with by the Court.[10]

Even if appellant were a mere temporary cashier of Golden Gate, that did
not make her any less an employee to be held liable for illegal recruitment as
principal by direct participation, together with the employer, as it was shown that
she actively and consciously participated in the recruitment process. [11]
Assuming arguendo that appellant was unaware of the illegal nature of
the recruitment business of Golden Gate, that does not free her of liability
either. Illegal Recruitment in Large Scale penalized under Republic Act No. 8042,
or The Migrant Workers and Overseas Filipinos Act of 1995, is a special law, a
violation of which is malum prohibitum, not malum in se. Intent is thus
immaterial. And that explains why appellant was, aside from Estafa, convicted of
such offense.
[I]llegal recruitment is malum prohibitum, while estafa is malum in
se. In the first, the criminal intent of the accused is not necessary for
conviction. In the second, such an intent is imperative. Estafa under Article
315, paragraph 2, of the Revised Penal Code, is committed by any person
who defrauds another by using fictitious name, or falsely pretends to possess
power, influence, qualifications, property, credit, agency, business or
imaginary transactions, or by means of similar deceits executed prior to or
simultaneously with the commission of fraud.[12] (emphasis supplied)

WHEREFORE, the appeal is hereby DENIED.

SO ORDERED.
CONCHITA CARPIO MORALES
Associate Justice

WE CONCUR:

REYNATO S. PUNO

Chief Justice
Chairperson

TERESITA J. LEONARDO-DE CASTRO

Associate Justice

LUCAS P. BERSAMIN
Associate Justice

MARTIN S. VILLARAMA, JR.

Associate Justice

CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution, I certify that the
conclusions in the above decision had been reached in consultation before the case
was assigned to the writer of the opinion of the Courts Division.
REYNATO S. PUNO
Chief Justice

[1]

Penned by Associate Justice Remedios Salazar-Fernando and concurred in by Associate Justices Rosalinda
Asuncion-Vicente and Enrico A. Lanzanas; rollo, pp. 2-15.
[2]
Records, pp. 2-3.
[3]
Id. at 61-76.
[4]
Vide Cash Voucher dated September 6, 2002, id. at 13.
[5]
Vide Cash Voucher dated September 6, 2002, id. at 10.
[6]
Vide Cash Voucher receipt, id. at 19.
[7]
Spelled as GOLDEN GATE INTERNATIONAL CORPORATION and as MARILEN L. CALLUENG per
certification dated June 23, 2003 of Atty. Felicitas Q. Bay, Director II, Licensing Branch of the POEA, id. at 8.
[8]
G.R. No. 143726, February 23, 2004, 423 SCRA 468.
[9]
People v. Jamilosa, G.R. No. 169076, January 23, 2007, 512 SCRA 340, 352.
[10]
People v. Saulo, G.R. No. 125903, November 15, 2000, 344 SCRA 605, 614.

[11]
[12]

People v. Nogra, G.R. No. 170834, August 29, 2008, 563 SCRA 723, 724.
People v. Comila, G.R. No. 171448, February 28, 2007, 517 SCRA 153, 167.

Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
PEOPLE OF THE PHILIPPINES,
Petitioner,

G.R. No. 187730

Present:

- versus -

CORONA, C.J., Chairperson,

VELASCO, JR.,
LEONARDO-DE CASTRO,
DEL CASTILLO, and
PEREZ, JJ.

RODOLFO GALLO y GADOT,

Accused-Appellant,
FIDES PACARDO y JUNGCO and
PILAR MANTA y DUNGO,
Accused.

Promulgated:
June 29, 2010

x-----------------------------------------------------------------------------------------x
DECISION
VELASCO, JR., J.:

The Case
This is an appeal from the Decision[1] dated December 24, 2008 of the Court
of Appeals (CA) in CA-G.R. CR-H.C. No. 02764 entitled People of the
Philippines v. Rodolfo Gallo y Gadot (accused-appellant), Fides Pacardo y Jungco

and Pilar Manta y Dungo (accused), which affirmed the Decision[2] dated March
15, 2007 of the Regional Trial Court (RTC), Branch 30 in Manila which convicted
the accused-appellant Rodolfo Gallo y Gadot (accused-appellant) of syndicated
illegal recruitment in Criminal Case No. 02-206293 and estafa in Criminal Case
No. 02-206297.
The Facts
Originally, accused-appellant Gallo and accused Fides Pacardo (Pacardo)
and Pilar Manta (Manta), together with Mardeolyn Martir (Mardeolyn) and nine
(9) others, were charged with syndicated illegal recruitment and eighteen (18)
counts of estafacommitted against eighteen complainants, including Edgardo V.
Dela Caza (Dela Caza), Sandy Guantero (Guantero) and Danilo Sare (Sare). The
cases were respectively docketed as Criminal Case Nos. 02-2062936 to 02-206311.
However, records reveal that only Criminal Case No. 02-206293, which was filed
against accused-appellant Gallo, Pacardo and Manta for syndicated illegal
recruitment, and Criminal Case Nos. 02-206297, 02-206300 and 02-206308, which
were filed against accused-appellant Gallo, Pacardo and Manta for estafa,
proceeded to trial due to the fact that the rest of the accused remained at large.
Further, the other cases, Criminal Case Nos. 02-206294 to 02-206296, 02-206298
to 02-206299, 02-206301 to 02-206307 and 02-206309 to 02-206311 were
likewise provisionally dismissed upon motion of Pacardo, Manta and accusedappellant for failure of the respective complainants in said cases to appear and
testify during trial.
It should also be noted that after trial, Pacardo and Manta were acquitted in
Criminal Case Nos. 02-206293, 02-206297, 02-206300 and 02-206308 for
insufficiency of evidence. Likewise, accused-appellant Gallo was similarly
acquitted in Criminal Case Nos. 02-206300, the case filed by Guantero, and 02206308, the case filed by Sare. However, accused-appellant was found guilty
beyond reasonable doubt in Criminal Case Nos. 02-206293 and 02-206297, both
filed by Dela Caza, for syndicated illegal recruitment and estafa, respectively.

Thus, the present appeal concerns solely accused-appellants conviction for

syndicated illegal recruitment in Criminal Case No. 02-206293 and for estafa in
Criminal Case No. 02-206297.
In Criminal Case No. 02-206293, the information charges the accusedappellant, together with the others, as follows:
The undersigned accuses MARDEOLYN MARTIR, ISMAEL
GALANZA, NELMAR MARTIR, MARCELINO MARTIR, NORMAN
MARTIR, NELSON MARTIR, MA. CECILIA M. RAMOS, LULU
MENDANES, FIDES PACARDO y JUNGCO,RODOLFO GALLO y GADOT,
PILAR MANTA y DUNGO, ELEONOR PANUNCIO and YEO SIN UNG of a
violation of Section 6(a), (l) and (m) of Republic Act 8042, otherwise known as
the Migrant Workers and Overseas Filipino Workers Act of 1995, committed by a
syndicate and in large scale, as follows:
That in or about and during the period comprised between November 2000
and December, 2001, inclusive, in the City of Manila, Philippines, the said
accused conspiring and confederating together and helping with one another,
representing themselves to have the capacity to contract, enlist and transport
Filipino workers for employment abroad, did then and there willfully and
unlawfully, for a fee, recruit and promise employment/job placement abroad to
FERDINAND ASISTIN, ENTICE BRENDO, REYMOND G. CENA,
EDGARDO V. DELA CAZA, RAYMUND EDAYA, SANDY O. GUANTENO,
RENATO V. HUFALAR, ELENA JUBICO, LUPO A. MANALO, ALMA V.
MENOR, ROGELIO S. MORON, FEDILA G. NAIPA, OSCAR RAMIREZ,
MARISOL L. SABALDAN, DANILO SARE, MARY BETH SARDON,
JOHNNY SOLATORIO and JOEL TINIO in Korea as factory workers and charge
or accept directly or indirectly from said FERDINAND ASISTIN the amount of
P45,000.00; ENTICE BRENDO P35,000.00; REYMOND G. CENA P30,000.00;
EDGARDO V. DELA CAZA P45,000.00; RAYMUND EDAYA P100,000.00;
SANDY O. GUANTENO P35,000.00; RENATO V. HUFALAR P70,000.00;
ELENA JUBICO P30,000.00; LUPO A. MANALO P75,000.00; ALMA V.
MENOR P45,000.00; ROGELIO S. MORON P70,000.00; FEDILA G. NAIPA
P45,000.00; OSCAR RAMIREZ P45,000.00; MARISOL L. SABALDAN
P75,000.00; DANILO SARE P100,000.00; MARY BETH SARDON P25,000.00;
JOHNNY SOLATORIO P35,000.00; and JOEL TINIO P120,000.00 as placement
fees in connection with their overseas employment, which amounts are in excess
of or greater than those specified in the schedule of allowable fees prescribed by
the POEA Board Resolution No. 02, Series 1998, and without valid reasons and
without the fault of the said complainants failed to actually deploy them and
failed to reimburse the expenses incurred by the said complainants in connection
with their documentation and processing for purposes of their deployment.
[3]
(Emphasis supplied)

In Criminal Case No. 02-206297, the information reads:

That on or about May 28, 2001, in the City of Manila, Philippines, the said
accused conspiring and confederating together and helping with [sic] one another,
did then and there willfully, unlawfully and feloniously defraud EDGARDO V.
DELA CAZA, in the following manner, to wit: the said accused by means of false
manifestations and fraudulent representations which they made to the latter, prior
to and even simultaneous with the commission of the fraud, to the effect that they
had the power and capacity to recruit and employ said EDGARDO V. DELA
CAZA in Korea as factory worker and could facilitate the processing of the
pertinent papers if given the necessary amount to meet the requirements thereof;
induced and succeeded in inducing said EDGARDO V. DELA CAZA to give and
deliver, as in fact, he gave and delivered to said accused the amount of
P45,000.00 on the strength of said manifestations and representations, said
accused well knowing that the same were false and untrue and were made [solely]
for the purpose of obtaining, as in fact they did obtain the said amount of
P45,000.00 which amount once in their possession, with intent to defraud said
[EDGARDO] V. DELA CAZA, they willfully, unlawfully and feloniously
misappropriated, misapplied and converted the said amount of P45,000.00 to their
own personal use and benefit, to the damage and prejudice of the said EDGARDO
V. DELA CAZA in the aforesaid amount of P45,000.00, Philippine currency.
CONTRARY TO LAW.[4]

When arraigned on January 19, 2004, accused-appellant Gallo entered a plea

of not guilty to all charges.
On March 3, 2004, the pre-trial was terminated and trial ensued, thereafter.
During the trial, the prosecution presented as their witnesses, Armando
Albines Roa, the Philippine Overseas Employment Administration (POEA)
representative and private complainants Dela Caza, Guanteno and Sare. On the
other hand, the defense presented as its witnesses, accused-appellant Gallo,
Pacardo and Manta.
Version of the Prosecution
On May 22, 2001, Dela Caza was introduced by Eleanor Panuncio to
accused-appellant Gallo, Pacardo, Manta, Mardeolyn, Lulu Mendanes, Yeo Sin

Ung and another Korean national at the office of MPM International Recruitment
and Promotion Agency (MPM Agency) located in Malate, Manila.
Dela Caza was told that Mardeolyn was the President of MPM Agency,
while Nelmar Martir was one of the incorporators. Also, that Marcelino Martir,
Norman Martir, Nelson Martir and Ma. Cecilia Ramos were its board members.
Lulu Mendanes acted as the cashier and accountant, while Pacardo acted as the
agencys employee who was in charge of the records of the applicants. Manta, on
the other hand, was also an employee who was tasked to deliver documents to the
Korean embassy.
Accused-appellant Gallo then introduced himself as a relative of Mardeolyn
and informed Dela Caza that the agency was able to send many workers abroad.
Together with Pacardo and Manta, he also told Dela Caza about the placement fee
of One Hundred Fifty Thousand Pesos (PhP 150,000) with a down payment of
Forty-Five Thousand Pesos (PhP 45,000) and the balance to be paid through salary
deduction.
Dela Caza, together with the other applicants, were briefed by Mardeolyn
about the processing of their application papers for job placement in Korea as a
factory worker and their possible salary. Accused Yeo Sin Ung also gave a briefing
about the business and what to expect from the company and the salary.
With accused-appellants assurance that many workers have been sent
abroad, as well as the presence of the two (2) Korean nationals and upon being
shown the visas procured for the deployed workers, Dela Caza was convinced to
part with his money. Thus, on May 29, 2001, he paid Forty-Five Thousand Pesos
(PhP 45,000) to MPM Agency through accused-appellant Gallo who, while in the
presence of Pacardo, Manta and Mardeolyn, issued and signed Official Receipt No.
401.
Two (2) weeks after paying MPM Agency, Dela Caza went back to the
agencys office in Malate, Manila only to discover that the office had moved to a
new location at Batangas Street, Brgy. San Isidro, Makati. He proceeded to the new

address and found out that the agency was renamed to New Filipino Manpower
Development & Services, Inc. (New Filipino). At the new office, he talked to
Pacardo, Manta, Mardeolyn, Lulu Mendanes and accused-appellant Gallo. He was
informed that the transfer was done for easy accessibility to clients and for the
purpose of changing the name of the agency.
Dela Caza decided to withdraw his application and recover the amount he
paid but Mardeolyn, Pacardo, Manta and Lulu Mendanes talked him out from
pursuing his decision. On the other hand, accused-appellant Gallo even denied any
knowledge about the money.
After two (2) more months of waiting in vain to be deployed, Dela Caza and
the other applicants decided to take action. The first attempt was unsuccessful
because the agency again moved to another place. However, with the help of the
Office of Ambassador Seeres and the Western Police District, they were able to
locate the new address at 500 Prudential Building, Carriedo,Manila. The agency
explained that it had to move in order to separate those who are applying as
entertainers from those applying as factory workers. Accused-appellant Gallo,
together with Pacardo and Manta, were then arrested.
The testimony of prosecution witness Armando Albines Roa, a POEA
employee, was dispensed with after the prosecution and defense stipulated and
admitted to the existence of the following documents:
1. Certification issued by Felicitas Q. Bay, Director II, Licensing Branch of the
POEA to the effect that New Filipino Manpower Development & Services,
Inc., with office address at 1256 Batangas St., Brgy. San Isidro, Makati City,
was a licensed landbased agency whose license expired on December 10,
2001 and was delisted from the roster of licensed agencies on December 14,
2001. It further certified that Fides J. Pacardo was the agencys Recruitment
Officer;
2. Certification issued by Felicitas Q. Bay of the POEA to the effect that MPM
International Recruitment and Promotion is not licensed by the POEA to
recruit workers for overseas employment;
3. Certified copy of POEA Memorandum Circular No. 14, Series of 1999
regarding placement fee ceiling for landbased workers.

4. Certified copy of POEA Memorandum Circular No. 09, Series of 1998 on the
placement fee ceiling for Taiwan and Korean markets, and
5. Certified copy of POEA Governing Board Resolution No. 02, series of 1998.

Version of the Defense

For his defense, accused-appellant denied having any part in the recruitment
of Dela Caza. In fact, he testified that he also applied with MPM Agency for
deployment to Korea as a factory worker. According to him, he gave his
application directly with Mardeolyn because she was his town mate and he was
allowed to pay only Ten Thousand Pesos (PhP 10,000) as processing fee. Further,
in order to facilitate the processing of his papers, he agreed to perform some tasks
for the agency, such as taking photographs of the visa and passport of applicants,
running errands and performing such other tasks assigned to him, without salary
except for some allowance. He said that he only saw Dela Caza one or twice at the
agencys office when he applied for work abroad. Lastly, that he was also promised
deployment abroad but it never materialized.
Ruling of the Trial Court
On March 15, 2007, the RTC rendered its Decision convicting the accused
of syndicated illegal recruitment and estafa. The dispositive portion reads:
WHEREFORE, judgment is hereby rendered as follows:
I.

Accused FIDES PACARDO y JUNGO and PILAR MANTA y

DUNGO are hereby ACQUITTED of the crimes charged in
Criminal Cases Nos. 02-206293, 02-206297, 02-206300 and 02206308;

II.

Accused RODOLFO GALLO y GADOT is found guilty beyond

reasonable doubt in Criminal Case No. 02-206293 of the crime of
Illegal Recruitment committed by a syndicate and is hereby
sentenced to suffer the penalty of life imprisonment and to pay a
fine of ONE MILLION (Php1,000,000.00) PESOS. He is also
ordered to indemnify EDGARDO DELA CAZA of the sum of
FORTY-FIVE THOUSAND (Php45,000.00) PESOS with legal

interest from the filing of the information on September 18, 2002

until fully paid.
III.

Accused RODOLFO GALLO y GADOT in Criminal Case No.

02-206297 is likewise found guilty and is hereby sentenced to
suffer the indeterminate penalty of FOUR (4) years of prision
correccional as minimum to NINE (9) years of prision mayor as
maximum.

IV.

Accused RODOLFO GALLO y GADOT is hereby ACQUITTED

of the crime charged in Criminal Cases Nos. 02-206300 and 02206308.

Let alias warrants for the arrest of the other accused be issued anew in all
the criminal cases. Pending their arrest, the cases are sent to the archives.
The immediate release of accused Fides Pacardo and Pilar Manta is hereby
ordered unless detained for other lawful cause or charge.
SO ORDERED.[5]

Ruling of the Appellate Court

On appeal, the CA, in its Decision dated December 24, 2008, disposed of the case
as follows:
WHEREFORE, the appealed Decision of the Regional Trial Court of Manila,
Branch 30, in Criminal Cases Nos. 02-206293 and 02-206297, dated March 15,
2007, is AFFIRMED with the MODIFICATION that in Criminal Case No. 02206297, for estafa, appellant is sentenced to four (4) years of prision
correccional to ten (10) years of prision mayor.
SO ORDERED.[6]

The CA held the totality of the prosecutions evidence showed that the accusedappellant, together with others, engaged in the recruitment of Dela Caza. His
actions and representations to Dela Caza can hardly be construed as the actions of
a mere errand boy.

As determined by the appellate court, the offense is considered economic sabotage

having been committed by more than three (3) persons, namely, accused-appellant
Gallo, Mardeolyn, Eleonor Panuncio and Yeo Sin Ung. More importantly, a
personal found guilty of illegal recruitment may also be convicted of estafa.[7] The
same evidence proving accused-appellants commission of the crime of illegal
recruitment in large scale also establishes his liability for estafa under paragragh
2(a) of Article 315 of the Revised Penal Code (RPC).
On January 15, 2009, the accused-appellant filed a timely appeal before this Court.
The Issues
Accused-appellant interposes in the present appeal the following assignment of
errors:
I
The court a quo gravely erred in finding the accused-appellant guilty of illegal
recruitment committed by a syndicate despite the failure of the prosecution to
prove the same beyond reasonable doubt.
II
The court a quo gravely erred in finding the accused-appellant guilty
of estafa despite the failure of the prosecution to prove the same beyond
reasonable doubt.

Our Ruling
The appeal has no merit.
Evidence supports conviction of the
crime
of
Syndicated
Illegal
Recruitment
Accused-appellant avers that he cannot be held criminally liable for illegal
recruitment because he was neither an officer nor an employee of the recruitment

agency. He alleges that the trial court erred in adopting the asseveration of the
private complainant that he was indeed an employee because such was not duly
supported by competent evidence. According to him, even assuming that he was an
employee, such cannot warrant his outright conviction sans evidence that he acted
in conspiracy with the officers of the agency.
We disagree.
To commit syndicated illegal recruitment, three elements must be
established: (1) the offender undertakes either any activity within the meaning of
recruitment and placement defined under Article 13(b), or any of the prohibited
practices enumerated under Art. 34 of the Labor Code; (2) he has no valid license
or authority required by law to enable one to lawfully engage in recruitment and
placement of workers;[8] and (3) the illegal recruitment is committed by a group of
three (3) or more persons conspiring or confederating with one another.[9] When
illegal recruitment is committed by a syndicate or in large scale, i.e., if it is
committed against three (3) or more persons individually or as a group, it is
considered an offense involving economic sabotage.[10]
Under Art. 13(b) of the Labor Code, recruitment and placement refers to any
act of canvassing, enlisting, contracting, transporting, utilizing, hiring or procuring
workers, and includes referrals, contract services, promising or advertising for
employment, locally or abroad, whether for profit or not.
After a thorough review of the records, we believe that the prosecution was
able to establish the elements of the offense sufficiently. The evidence readily
reveals that MPM Agency was never licensed by the POEA to recruit workers for
overseas employment.
Even with a license, however, illegal recruitment could still be committed
under Section 6 of Republic Act No. 8042 (R.A. 8042), otherwise known as
the Migrants and Overseas Filipinos Act of 1995, viz:

Sec. 6. Definition. For purposes of this Act, illegal recruitment shall mean
any act of canvassing, enlisting, contracting, transporting, utilizing, hiring, or
procuring workers and includes referring, contract services, promising or
advertising for employment abroad, whether for profit or not, when undertaken by
a non-licensee or non-holder of authority contemplated under Article 13(f) of
Presidential Decree No. 442, as amended, otherwise known as the Labor Code of
the Philippines: Provided, That any such non-licensee or non-holder who, in any
manner, offers or promises for a fee employment abroad to two or more persons
shall be deemed so engaged. It shall, likewise, include the following act, whether
committed by any person, whether a non-licensee, non-holder, licensee or holder
of authority:
(a) To charge or accept directly or indirectly any amount greater than that
specified in the schedule of allowable fees prescribed by the Secretary
of Labor and Employment, or to make a worker pay any amount
greater than that actually received by him as a loan or advance;
xxxx
(l) Failure to actually deploy without valid reason as determined by the
Department of Labor and Employment; and
(m) Failure to reimburse expenses incurred by the worker in connection
with his documentation and processing for purposes of deployment
and processing for purposes of deployment, in cases where the
deployment does not actually take place without the workers fault.
Illegal recruitment when committed by a syndicate or in large scale
shall be considered an offense involving economic sabotage.
Illegal recruitment is deemed committed by a syndicate if carried out by a
group of three (3) or more persons conspiring or confederating with one another.
It is deemed committed in large scale if committed against three (3) or more
persons individually or as a group.
The persons criminally liable for the above offenses are the principals,
accomplices and accessories. In case of juridical persons, the officers having
control, management or direction of their business shall be liable.

In the instant case, accused-appellant committed the acts enumerated in Sec.

6 of R.A. 8042. Testimonial evidence presented by the prosecution clearly shows
that, in consideration of a promise of foreign employment, accused-appellant
received the amount of Php 45,000.00 from Dela Caza. When accused-appellant
made misrepresentations concerning the agencys purported power and authority to
recruit for overseas employment, and in the process, collected money in the guise
of placement fees, the former clearly committed acts constitutive of illegal

recruitment.[11] Such acts were accurately described in the testimony of prosecution

witness, Dela Caza, to wit:
PROS. MAGABLIN
Q: How about this Rodolfo Gallo?
A: He was the one who received my money.
Q: Aside from receiving your money, was there any other representations
or acts made by Rodolfo Gallo?
A: He introduced himself to me as relative of Mardeolyn Martir and he
even intimated to me that their agency has sent so many workers
abroad.
xxxx
PROS. MAGABLIN
Q: Mr. Witness, as you claimed you tried to withdraw your application at
the agency. Was there any instance that you were able to talk to
Fides Pacardo, Rodolfo Gallo and Pilar Manta?
A: Yes, maam.
Q: What was the conversation that transpired among you before you
demanded the return of your money and documents?
A: When I tried to withdraw my application as well as my money, Mr.
Gallo told me I know nothing about your money while Pilar Manta
and Fides Pacardo told me, why should I withdraw my application
and my money when I was about to be [deployed] or I was about to
leave.
xxxx
Q: And what transpired at that office after this Panuncio introduced you to
those persons whom you just mentioned?
A: The three of them including Rodolfo Gallo told me that the placement
fee in that agency is Php 150,000.00 and then I should deposit the
amount of Php 45,000.00. After I have deposited said amount, I
would just wait for few days
xxxx
Q: They were the one (sic) who told you that you have to pay Php
45,000.00 for deposit only?
A: Yes, maam, I was told by them to deposit Php 45,000.00 and then I
would pay the remaining balance of Php105,000.00, payment of it
would be through salary deduction.
Q: That is for what Mr. Witness again?

A: For placement fee.

Q: Now did you believe to (sic) them?
A: Yes, maam.
Q: Why, why did you believe?
A: Because of the presence of the two Korean nationals and they keep on
telling me that they have sent abroad several workers and they
even showed visas of the records that they have already deployed
abroad.
Q: Aside from that, was there any other representations which have been
made upon you or make you believe that they can deploy you?
A: At first I was adamant but they told me If you do not want to believe
us, then we could do nothing. But once they showed me the [visas]
of the people whom they have deployed abroad, that was the time I
believe them.
Q: So after believing on the representations, what did you do next Mr.
Witness?
A: That was the time that I decided to give the money.
xxxx
PROS. MAGABLIN
Q: Do you have proof that you gave the money?
A: Yes, maam.
Q: Where is your proof that you gave the money?
A: I have it here.
PROS. MAGABLIN:
Witness is producing to this court a Receipt dated May 28, 2001 in the
amount of Php45,000.00 which for purposes of record Your Honor, may I
request that the same be marked in the evidence as our Exhibit F.
xxxx
PROS. MAGABLIN
Q: There appears a signature appearing at the left bottom portion of this
receipt. Do you know whose signature is this?
A: Yes, maam, signature of Rodolfo Gallo.
PROS. MAGABLIN
Q: Why do you say that that is his signature?
A: Rodolfo Gallos signature Your Honor because he was the one who
received the money and he was the one who filled up this O.R. and

while he was doing it, he was flanked by Fides Pacardo, Pilar

Manta and Mardeolyn Martir.
xxxx
Q: So it was Gallo who received your money?
A: Yes, maam.

PROS. MAGABLIN
Q: And after that, what did this Gallo do after he received your money?
A: They told me maam just to call up and make a follow up with our
agency.
xxxx
Q: Now Mr. Witness, after you gave your money to the accused, what
happened with the application, with the promise of employment
that he promised?
A: Two (2) weeks after giving them the money, they moved to a new
office in Makati, Brgy. San Isidro.
xxxx
Q: And were they able to deploy you as promised by them?
A: No, maam, they were not able to send us abroad.[12]

Essentially, Dela Caza appeared very firm and consistent in positively

identifying accused-appellant as one of those who induced him and the other
applicants to part with their money. His testimony showed that accused-appellant
made false misrepresentations and promises in assuring them that after they paid
the placement fee, jobs in Korea as factory workers were waiting for them and that
they would be deployed soon. In fact, Dela Caza personally talked to accusedappellant and gave him the money and saw him sign and issue an official receipt as
proof of his payment. Without a doubt, accused-appellants actions constituted
illegal recruitment.
Additionally, accused-appellant cannot argue that the trial court erred in
finding that he was indeed an employee of the recruitment agency. On the contrary,
his active participation in the illegal recruitment is unmistakable. The fact that he

was the one who issued and signed the official receipt belies his profession of
innocence.
This Court likewise finds the existence of a conspiracy between the accusedappellant and the other persons in the agency who are currently at large, resulting
in the commission of the crime of syndicated illegal recruitment.
In this case, it cannot be denied that the accused-appellent together with
Mardeolyn and the rest of the officers and employees of MPM Agency participated
in a network of deception. Verily, the active involvement of each in the recruitment
scam was directed at one single purpose to divest complainants with their money
on the pretext of guaranteed employment abroad. The prosecution evidence shows
that complainants were briefed by Mardeolyn about the processing of their papers
for a possible job opportunity inKorea, as well as their possible salary. Likewise,
Yeo Sin Ung, a Korean national, gave a briefing about the business and what to
expect from the company. Then, here comes accused-appellant who introduced
himself as Mardeolyns relative and specifically told Dela Caza of the fact that the
agency was able to send many workers abroad. Dela Caza was even showed
several workers visas who were already allegedly deployed abroad. Later on,
accused-appellant signed and issued an official receipt acknowledging the down
payment of Dela Caza. Without a doubt, the nature and extent of the actions of
accused-appellant, as well as with the other persons in MPM Agency clearly show
unity of action towards a common undertaking. Hence, conspiracy is evidently
present.
In People v. Gamboa,[13] this Court discussed the nature of conspiracy in the
context of illegal recruitment, viz:
Conspiracy to defraud aspiring overseas contract workers was evident
from the acts of the malefactors whose conduct before, during and after the
commission of the crime clearly indicated that they were one in purpose and
united in its execution. Direct proof of previous agreement to commit a crime is
not necessary as it may be deduced from the mode and manner in which the
offense was perpetrated or inferred from the acts of the accused pointing to a joint
purpose and design, concerted action and community of interest. As such, all the

accused, including accused-appellant, are equally guilty of the crime of illegal

recruitment since in a conspiracy the act of one is the act of all.

To reiterate, in establishing conspiracy, it is not essential that there be actual

proof that all the conspirators took a direct part in every act. It is sufficient that
they acted in concert pursuant to the same objective.[14]
Estafa
The prosecution likewise established that accused-appellant is guilty of the
crime of estafa as defined under Article 315 paragraph 2(a) of the Revised Penal
Code, viz:
Art. 315. Swindling (estafa). Any person who shall defraud another by any
means mentioned hereinbelow
xxxx
2. By means of any of the following false pretenses or fraudulent acts
executed prior to or simultaneously with the commission of the fraud:
(a) By using fictitious name, or falsely pretending to possess power,
influence, qualifications, property, credit, agency, business or
imaginary transactions; or by means of other similar deceits.

The elements of estafa in general are: (1) that the accused defrauded another
(a) by abuse of confidence, or (b) by means of deceit; and (2) that damage or
prejudice capable of pecuniary estimation is caused to the offended party or third
person.[15] Deceit is the false representation of a matter of fact, whether by words or
conduct, by false or misleading allegations, or by concealment of that which
should have been disclosed; and which deceives or is intended to deceive another
so that he shall act upon it, to his legal injury.
All these elements are present in the instant case: the accused-appellant,
together with the other accused at large, deceived the complainants into believing
that the agency had the power and capability to send them abroad for employment;
that there were available jobs for them in Korea as factory workers; that by reason

or on the strength of such assurance, the complainants parted with their money in
payment of the placement fees; that after receiving the money, accused-appellant
and his co-accused went into hiding by changing their office locations without
informing complainants; and that complainants were never deployed abroad. As all
these representations of the accused-appellant proved false, paragraph 2(a), Article
315 of the Revised Penal Code is thus applicable.
Defense of Denial Cannot Prevail
over Positive Identification
Indubitably, accused-appellants denial of the crimes charged crumbles in the
face of the positive identification made by Dela Caza and his co-complainants as
one of the perpetrators of the crimes charged. As enunciated by this Court
in People v. Abolidor,[16] [p]ositive identification where categorical and consistent
and not attended by any showing of ill motive on the part of the eyewitnesses on
the matter prevails over alibi and denial.
The defense has miserably failed to show any evidence of ill motive on the
part of the prosecution witnesses as to falsely testify against him.
Therefore, between the categorical statements of the prosecution witnesses,
on the one hand, and bare denials of the accused, on the other hand, the former
must prevail.[17]
Moreover, this Court accords the trial courts findings with the probative
weight it deserves in the absence of any compelling reason to discredit the same. It
is a fundamental judicial dictum that the findings of fact of the trial court are not
disturbed on appeal except when it overlooked, misunderstood or misapplied some
facts or circumstances of weight and substance that would have materially affected
the outcome of the case. We find that the trial court did not err in convicting the
accused-appellant.

WHEREFORE, the appeal is DENIED for failure to sufficiently show

reversible error in the assailed decision. The Decision dated December 24, 2008 of
the CA in CA-G.R. CR-H.C. No. 02764 is AFFIRMED.
No costs.
SO ORDERED.
PRESBITERO J. VELASCO, JR.
Associate Justice
WE CONCUR:

RENATO C. CORONA
Chief Justice
Chairperson

TERESITA J. LEONARDO-DE CASTRO MARIANO C. DEL CASTILLO

Associate Justice Associate Justice

JOSE PORTUGAL PEREZ

Associate Justice

C E R T I F I C AT I O N
Pursuant to Section 13, Article VIII of the Constitution, I certify that the
conclusions in the above Decision had been reached in consultation before the case
was assigned to the writer of the opinion of the Courts Division.

RENATO C. CORONA
Chief Justice

[1]

Rollo, pp. 2-19. Penned by Associate Justice Ricardo R. Rosario and concurred in by Associate Justices Rebecca
De Guia-Salvador and Vicente S.E. Veloso.
[2]
Id. at 15-35. Penned by Judge Lucia Pea Purugganan.
[3]
CA rollo, p. 16.
[4]
Rollo, pp. 5-6.
[5]
CA rollo, pp. 34-35.
[6]
Rollo, pp. 18-19.
[7]
People v. Alona Buli-e, et al., G.R. No. 123146, June 17, 2003; People v. Spouses Ganaden, et al., G.R.
No. 125441, November 27, 1998.
[8]
People v. Soliven, G.R. No. 125081, October 3, 2001.
[9]
See Sec. 6, R.A. 8042; See also People v. Buli-e, et al., G.R. No. 123146, June 17, 2003.
[10]
Sec. 6 (m), R.A. 8042.
[11]
People v. Ong, G.R. No. 119594, January 18, 2000.
[12]
TSN, August 12, 2004, pp. 15-23.
[13]
G.R. No. 135382, September 29, 2000, 341 SCRA 451.
[14]
Fortuna v. People, G.R. No. 135784, December 15, 2000.
[15]
People v. Soliven, G.R. No. 125081, October 3, 2001.
[16]
G.R. No. 147231, February 18, 2004, 423 SCRA 260.
[17]
People v. Carizo, G.R. No. 96510, July 6, 1994, 233 SCRA 687; People v. Miranda, 235 SCRA 202; People v.
Bello, G.R. No. 92597, October 4, 1994, 237 SCRA 347.

Republic of the Philippines

Supreme Court
Manila

SECOND DIVISION
CLAUDIO S. YAP,
Petitioner,

G.R. No. 179532

Present:

- versus -

THENAMARIS SHIPS MANAGEMENT

and INTERMARE MARITIME AGENCIES,
INC.,
Respondents.

CARPIO, J.,
Chairperson,
NACHURA,
PERALTA,
ABAD, and
MENDOZA, JJ.
Promulgated:
May 30, 2011

x------------------------------------------------------------------------------------x
DECISION
NACHURA, J.:
Before this Court is a Petition for Review on Certiorari[1] under Rule 45 of
the Rules of Civil Procedure, seeking the reversal of the Court of Appeals (CA)
Decision[2] dated February 28, 2007, which affirmed with modification the
National Labor Relations Commission (NLRC) resolution[3] dated April 20, 2005.
The undisputed facts, as found by the CA, are as follows:
[Petitioner] Claudio S. Yap was employed as electrician of the vessel, M/T
SEASCOUT on 14 August 2001 by Intermare Maritime Agencies, Inc. in behalf
of its principal, Vulture Shipping Limited. The contract of employment entered
into by Yap and Capt. Francisco B. Adviento, the General Manager of Intermare,
was for a duration of 12 months. On 23 August 2001, Yap boarded M/T
SEASCOUT and commenced his job as electrician. However, on or about 08

November 2001, the vessel was sold. The Philippine Overseas Employment
Administration (POEA) was informed about the sale on 06 December 2001 in a
letter signed by Capt. Adviento. Yap, along with the other crewmembers, was
informed by the Master of their vessel that the same was sold and will be
scrapped. They were also informed about theAdvisory sent by Capt. Constatinou,
which states, among others:
PLEASE ASK YR OFFICERS AND RATINGS IF THEY WISH TO BE
TRANSFERRED TO OTHER VESSELS AFTER VESSEL S DELIVERY
(GREEK VIA ATHENS-PHILIPINOS VIA MANILA
FOR CREW NOT WISH TRANSFER TO DECLARE THEIR PROSPECTED
TIME FOR REEMBARKATION IN ORDER TO SCHEDULE THEM ACCLY
Yap received his seniority bonus, vacation bonus, extra bonus along with the
scrapping bonus. However, with respect to the payment of his wage, he refused to
accept the payment of one-month basic wage. He insisted that he was entitled to
the payment of the unexpired portion of his contract since he was illegally
dismissed from employment. He alleged that he opted for immediate transfer but
none was made.
[Respondents], for their part, contended that Yap was not illegally dismissed. They
alleged that following the sale of the M/T SEASCOUT, Yap signed off from the
vessel on 10 November 2001 and was paid his wages corresponding to the
months he worked or until 10 November 2001 plus his seniority bonus, vacation
bonus and extra bonus. They further alleged that Yaps employment contract was
validly terminated due to the sale of the vessel and no arrangement was made
for Yaps transfer to Thenamaris other vessels.[4]

Thus, Claudio S. Yap (petitioner) filed a complaint for Illegal Dismissal with
Damages and Attorneys Fees before the Labor Arbiter (LA). Petitioner claimed
that he was entitled to the salaries corresponding to the unexpired portion of his
contract. Subsequently, he filed an amended complaint, impleading Captain
Francisco Adviento of respondents Intermare Maritime Agencies, Inc. (Intermare)
and Thenamaris Ships Management (respondents), together with C.J. Martionos,
Interseas Trading and Financing Corporation, and Vulture Shipping Limited/Stejo
Shipping Limited.
On July 26, 2004, the LA rendered a decision[5] in favor of petitioner, finding the
latter to have been constructively and illegally dismissed by
respondents. Moreover, the LA found that respondents acted in bad faith when
they assured petitioner of re-embarkation and required him to produce an

electrician certificate during the period of his contract, but actually he was not able
to board one despite of respondents numerous vessels. Petitioner made several
follow-ups for his re-embarkation but respondents failed to heed his plea; thus,
petitioner was forced to litigate in order to vindicate his rights. Lastly, the LA
opined that since the unexpired portion of petitioners contract was less than one
year, petitioner was entitled to his salaries for the unexpired portion of his contract
for a period of nine months. The LA disposed, as follows:
WHEREFORE, in view of the foregoing, a decision is hereby rendered
declaring complainant to have been constructively dismissed. Accordingly,
respondents Intermare Maritime Agency Incorporated, Thenamaris Ships Mgt.,
and Vulture Shipping Limited are ordered to pay jointly and severally
complainant Claudio S. Yap the sum of $12,870.00 or its peso equivalent at the
time of payment. In addition, moral damages of ONE HUNDRED THOUSAND
PESOS (P100,000.00) and exemplary damages of FIFTY THOUSAND
PESOS (P50,000.00) are awarded plus ten percent (10%) of the total award as
attorneys fees.
Other money claims are DISMISSED for lack of merit.
SO ORDERED.[6]

Aggrieved, respondents sought recourse from the NLRC.

In its decision[7] dated January 14, 2005, the NLRC affirmed the LAs
findings that petitioner was indeed constructively and illegally dismissed; that
respondents bad faith was evident on their wilful failure to transfer petitioner to
another vessel; and that the award of attorneys fees was warranted. However, the
NLRC held that instead of an award of salaries corresponding to nine months,
petitioner was only entitled to salaries for three months as provided under Section
10[8] of Republic Act (R.A.) No. 8042,[9] as enunciated in our ruling in Marsaman
Manning Agency, Inc. v. National Labor Relations Commission.[10] Hence, the
NLRC ruled in this wise:
WHEREFORE, premises considered, the decision of the Labor Arbiter
finding the termination of complainant illegal is hereby AFFIRMED with a
MODIFICATION. Complainant[s] salary for the unexpired portion of his contract
should only be limited to three (3) months basic salary.

Respondents Intermare Maritime Agency, Inc.[,] Vulture Shipping Limited

and Thenamaris Ship Management are hereby ordered to jointly and severally pay
complainant, the following:
1. Three (3) months basic salary US$4,290.00 or its peso equivalent at
the time of actual payment.
2. Moral damages P100,000.00
3. Exemplary damages P50,000.00
4. Attorneys fees equivalent to 10% of the total monetary award.
SO ORDERED.[11]

Respondents filed a Motion for Partial Reconsideration,[12] praying for the reversal
and setting aside of the NLRC decision, and that a new one be rendered dismissing
the complaint. Petitioner, on the other hand, filed his own Motion for Partial
Reconsideration,[13] praying that he be paid the nine (9)-month basic salary, as
awarded by the LA.
On April 20, 2005, a resolution [14] was rendered by the NLRC, affirming the
findings of Illegal Dismissal and respondents failure to transfer petitioner to
another vessel. However, finding merit in petitioners arguments, the NLRC
reversed its earlier Decision, holding that there can be no choice to grant only
three (3) months salary for every year of the unexpired term because there is no
full year of unexpired term which this can be applied. Hence
WHEREFORE, premises considered, complainants Motion for Partial
Reconsideration is hereby granted. The award of three (3) months basic salary in
the sum of US$4,290.00 is hereby modified in that complainant is entitled to his
salary for the unexpired portion of employment contract in the sum of
US$12,870.00 or its peso equivalent at the time of actual payment.
All aspect of our January 14, 2005 Decision STANDS.
SO ORDERED.[15]

Respondents filed a Motion for Reconsideration, which the NLRC denied.

Undaunted, respondents filed a petition for certiorari[16] under Rule 65 of the
Rules of Civil Procedure before the CA. On February 28, 2007, the CA affirmed
the findings and ruling of the LA and the NLRC that petitioner was constructively
and illegally dismissed. The CA held that respondents failed to show that the
NLRC acted without statutory authority and that its findings were not supported by
law, jurisprudence, and evidence on record. Likewise, the CA affirmed the lower
agencies findings that the advisory of Captain Constantinou, taken together with
the other documents and additional requirements imposed on petitioner, only
meant that the latter should have been re-embarked. In the same token, the CA
upheld the lower agencies unanimous finding of bad faith, warranting the
imposition of moral and exemplary damages and attorneys fees. However, the CA
ruled that the NLRC erred in sustaining the LAs interpretation of Section 10 of

R.A. No. 8042. In this regard, the CA relied on the clause or for three months for
every year of the unexpired term, whichever is less provided in the 5th paragraph of
Section 10 of R.A. No. 8042 and held:
In the present case, the employment contract concerned has a term of one
year or 12 months which commenced on August 14, 2001. However, it was
preterminated without a valid cause. [Petitioner] was paid his wages for the
corresponding months he worked until the 10th of November. Pursuant to the
provisions of Sec. 10, [R.A. No.] 8042, therefore, the option of three months for
every year of the unexpired term is applicable.[17]

Thus, the CA provided, to wit:

WHEREFORE, premises considered, this Petition for Certiorari
is DENIED. The Decision dated January 14, 2005, andResolutions, dated April
20, 2005 and July 29, 2005, respectively, of public respondent National Labor
Relations Commission-Fourth Division, Cebu City, in NLRC No. V-000038-04
(RAB VIII (OFW)-04-01-0006) are hereby AFFIRMED with the
MODIFICATIONthat private respondent is entitled to three (3) months of basic
salary computed at US$4,290.00 or its peso equivalent at the time of actual
payment.
Costs against Petitioners.[18]

Both parties filed their respective motions for reconsideration, which the
CA, however, denied in its Resolution[19] dated August 30, 2007.
Unyielding, petitioner filed this petition, raising the following issues:
1)

Whether or not Section 10 of R.A. [No.] 8042, to the extent that it affords
an illegally dismissed migrant worker the lesser benefit of salaries for [the]
unexpired portion of his employment contract or for three (3) months for
every year of the unexpired term,whichever is less is constitutional; and

2)

Assuming that it is, whether or not the Court of Appeals gravely erred in
granting petitioner only three (3) months backwages when his unexpired
term of 9 months is far short of the every year of the unexpired term
threshold.[20]

In the meantime, while this case was pending before this Court, we declared
as unconstitutional the clause or for three months for every year of the unexpired
term, whichever is less provided in the 5th paragraph of Section 10 of R.A. No.
8042 in the case ofSerrano v. Gallant Maritime Services, Inc.[21] on March 24,
2009.
Apparently, unaware of our ruling in Serrano, petitioner claims that the
5 paragraph of Section 10, R.A. No. 8042, is violative of Section 1, [22] Article III
and Section 3,[23] Article XIII of the Constitution to the extent that it gives an erring
employer the option to pay an illegally dismissed migrant worker only three
months for every year of the unexpired term of his contract; that said provision of
law has long been a source of abuse by callous employers against migrant workers;
and that said provision violates the equal protection clause under the Constitution
because, while illegally dismissed local workers are guaranteed under the Labor
Code of reinstatement with full backwages computed from the time compensation
was withheld from them up to their actual reinstatement, migrant workers, by
virtue of Section 10 of R.A. No. 8042, have to waive nine months of their
collectible backwages every time they have a year of unexpired term of contract to
reckon with. Finally, petitioner posits that, assuming said provision of law is
constitutional, the CA gravely abused its discretion when it reduced petitioners
backwages from nine months to three months as his nine-month unexpired term
th

cannot accommodate the lesser relief of three months for every year of the
unexpired term.[24]
On the other hand, respondents, aware of our ruling in Serrano, aver that our
pronouncement of unconstitutionality of the clause or for three months for every
year of the unexpired term, whichever is less provided in the 5th paragraph of
Section 10 of R.A. No. 8042 in Serrano should not apply in this case because
Section 10 of R.A. No. 8042 is a substantive law that deals with the rights and
obligations of the parties in case of Illegal Dismissal of a migrant worker and is not
merely procedural in character. Thus, pursuant to the Civil Code, there should be
no retroactive application of the law in this case. Moreover, respondents asseverate
that petitioners tanker allowance of US$130.00 should not be included in the
computation of the award as petitioners basic salary, as provided under his
contract, was only US$1,300.00. Respondents submit that the CA erred in its
computation since it included the said tanker allowance. Respondents opine that
petitioner should be entitled only to US$3,900.00 and not to US$4,290.00, as
granted by the CA. Invoking Serrano, respondents claim that the tanker allowance
should be excluded from the definition of the term salary. Also, respondents
manifest that the full sum of P878,914.47 in Intermares bank account was
garnished and subsequently withdrawn and deposited with the NLRC Cashier of
Tacloban City on February 14, 2007. On February 16, 2007, while this case was
pending before the CA, the LA issued an Order releasing the amount
of P781,870.03 to petitioner as his award, together with the sum ofP86,744.44 to
petitioners former lawyer as attorneys fees, and the amount of P3,570.00 as
execution and deposit fees. Thus, respondents pray that the instant petition be
denied and that petitioner be directed to return to Intermare the sum of
US$8,970.00 or its peso equivalent.[25]
On this note, petitioner counters that this new issue as to the inclusion of the
tanker allowance in the computation of the award was not raised by respondents
before the LA, the NLRC and the CA, nor was it raised in respondents pleadings
other than in their Memorandum before this Court, which should not be allowed
under the circumstances.[26]
The petition is impressed with merit.

Prefatorily, it bears emphasis that the unanimous finding of the LA, the
NLRC and the CA that the dismissal of petitioner was illegal is not disputed.
Likewise not disputed is the tribunals unanimous finding of bad faith on the part of
respondents, thus, warranting the award of moral and exemplary damages and
attorneys fees. What remains in issue, therefore, is the constitutionality of the
5th paragraph of Section 10 of R.A. No. 8042 and, necessarily, the proper
computation of the lump-sum salary to be awarded to petitioner by reason of his
illegal dismissal.
Verily, we have already declared in Serrano that the clause or for three
months for every year of the unexpired term, whichever is less provided in the
5th paragraph of Section 10 of R.A. No. 8042 is unconstitutional for being violative
of the rights of Overseas Filipino Workers (OFWs) to equal protection of the laws.
In an exhaustive discussion of the intricacies and ramifications of the said clause,
this Court, in Serrano, pertinently held:
The Court concludes that the subject clause contains a suspect
classification in that, in the computation of the monetary benefits of fixed-term
employees who are illegally discharged, it imposes a 3-month cap on the claim
of OFWs with an unexpired portion of one year or more in their contracts, but
none on the claims of other OFWs or local workers with fixed-term
employment. The subject clause singles out one classification of OFWs and
burdens it with a peculiar disadvantage.[27]

Moreover, this Court held therein that the subject clause does not state or
imply any definitive governmental purpose; hence, the same violates not just
therein petitioners right to equal protection, but also his right to substantive due
process under Section 1, Article III of the Constitution.[28] Consequently, petitioner
therein was accorded his salaries for the entire unexpired period of nine months
and 23 days of his employment contract, pursuant to law and jurisprudence prior to
the enactment of R.A. No. 8042.
We have already spoken. Thus, this case should not be different
from Serrano.
As a general rule, an unconstitutional act is not a law; it confers no rights; it
imposes no duties; it affords no protection; it creates no office; it is inoperative as

if it has not been passed at all. The general rule is supported by Article 7 of the
Civil Code, which provides:
Art. 7. Laws are repealed only by subsequent ones, and their violation or
non-observance shall not be excused by disuse or custom or practice to the
contrary.

The doctrine of operative fact serves as an exception to the aforementioned

general rule. In Planters Products, Inc. v. Fertiphil Corporation,[29] we held:
The doctrine of operative fact, as an exception to the general rule, only
applies as a matter of equity and fair play. It nullifies the effects of an
unconstitutional law by recognizing that the existence of a statute prior to a
determination of unconstitutionality is an operative fact and may have
consequences which cannot always be ignored. The past cannot always be erased
by a new judicial declaration.
The doctrine is applicable when a declaration of unconstitutionality will
impose an undue burden on those who have relied on the invalid law. Thus, it was
applied to a criminal case when a declaration of unconstitutionality would put the
accused in double jeopardy or would put in limbo the acts done by a municipality
in reliance upon a law creating it.[30]

Following Serrano, we hold that this case should not be included in the
aforementioned exception. After all, it was not the fault of petitioner that he lost
his job due to an act of illegal dismissal committed by respondents. To rule
otherwise would be iniquitous to petitioner and other OFWs, and would, in effect,
send a wrong signal that principals/employers and recruitment/manning agencies
may violate an OFWs security of tenure which an employment contract embodies
and actually profit from such violation based on an unconstitutional provision of
law.
In the same vein, we cannot subscribe to respondents postulation that the
tanker allowance of US$130.00 should not be included in the computation of the
lump-sum salary to be awarded to petitioner.
First. It is only at this late stage, more particularly in their Memorandum,
that respondents are raising this issue. It was not raised before the LA, the NLRC,
and the CA. They did not even assail the award accorded by the CA, which

computed the lump-sum salary of petitioner at the basic salary of US$1,430.00,

and which clearly included the US$130.00 tanker allowance. Hence, fair play,
justice, and due process dictate that this Court cannot now, for the first time on
appeal, pass upon this question. Matters not taken up below cannot be raised for
the first time on appeal. They must be raised seasonably in the proceedings before
the lower tribunals. Questions raised on appeal must be within the issues framed by
the parties; consequently, issues not raised before the lower tribunals cannot be
raised for the first time on appeal.[31]
Second. Respondents invocation of Serrano is unavailing. Indeed, we made
the following pronouncements in Serrano, to wit:
The word salaries in Section 10(5) does not include overtime and leave
pay. For seafarers like petitioner, DOLE Department Order No. 33, series 1996,
provides a Standard Employment Contract of Seafarers, in which salary is
understood as the basic wage, exclusive of overtime, leave pay and other
bonuses; whereas overtime pay is compensation for all work performed in excess
of the regular eight hours, and holiday pay is compensation for any work
performed on designated rest days and holidays.[32]

A close perusal of the contract reveals that the tanker allowance of

US$130.00 was not categorized as a bonus but was rather encapsulated in the basic
salary clause, hence, forming part of the basic salary of petitioner. Respondents
themselves in their petition for certiorari before the CA averred that petitioners
basic salary, pursuant to the contract, was US$1,300.00 + US$130.00 tanker
allowance.[33] If respondents intended it differently, the contract per se should have
indicated that said allowance does not form part of the basic salary or, simply, the
contract should have separated it from the basic salary clause.
A final note.
We ought to be reminded of the plight and sacrifices of our OFWs. In Olarte
v. Nayona,[34] this Court held that:
Our overseas workers belong to a disadvantaged class. Most of them come
from the poorest sector of our society. Their profile shows they live in suffocating
slums, trapped in an environment of crimes. Hardly literate and in ill health, their

only hope lies in jobs they find with difficulty in our country. Their unfortunate
circumstance makes them easy prey to avaricious employers. They will climb
mountains, cross the seas, endure slave treatment in foreign lands just to survive.
Out of despondence, they will work under sub-human conditions and accept
salaries below the minimum. The least we can do is to protect them with our laws.

WHEREFORE, the Petition is GRANTED. The Court of Appeals Decision

dated February 28, 2007 and Resolution dated August 30, 2007 are
hereby MODIFIED to the effect that petitioner is AWARDED his salaries for the
entire unexpired portion of his employment contract consisting of nine months
computed at the rate of US$1,430.00 per month. All other awards are
herebyAFFIRMED. No costs.
SO ORDERED.

ANTONIO EDUARDO B. NACHURA

Associate Justice
WE CONCUR:

ANTONIO T. CARPIO
Associate Justice
Chairperson

DIOSDADO M. PERALTA
Associate Justice

ROBERTO A. ABAD
Associate Justice

JOSE CATRAL MENDOZA

Associate Justice

AT T E S TAT I O N
I attest that the conclusions in the above Decision had been reached in consultation
before the case was assigned to the writer of the opinion of the Courts Division.

ANTONIO T. CARPIO
Associate Justice
Chairperson, Second Division

C E R T I F I C AT I O N
Pursuant to Section 13, Article VIII of the Constitution and the Division
Chairperson's Attestation, I certify that the conclusions in the above Decision had
been reached in consultation before the case was assigned to the writer of the
opinion of the Courts Division.

RENATO C. CORONA
Chief Justice

[1]

Rollo, pp. 33-56.

Penned by Associate Justice Antonio L. Villamor, with Associate Justices Pampio A. Abarintos and Stephen C.
Cruz, concurring; id. at 60-73.
[3]
Id. at 166-170.
[4]
Supra note 2, at 63-65.
[5]
Rollo, pp. 121-129.
[6]
Id. at 129.
[7]
Id. at 130-149.
[8]
The last clause in the 5th paragraph of Section 10, R.A. No. 8042, provides to wit:
Sec. 10. MONEY CLAIMS. x x x.
In case of termination of overseas employment without just, valid or authorized cause as defined by law or
contract, the workers shall be entitled to the full reimbursement of his placement fee with interest of twelve percent
(12%) per annum, plus his salaries for the unexpired portion of his employment contract or for three (3) months
for every year of the unexpired term, whichever is less. (Emphasis and underscoring supplied.)
[9]
The Migrant Workers and Overseas Filipinos Act of 1995, effective July 15, 1995.
[10]
371 Phil. 827 (1999).
[11]
Supra note 7, at 148-149.
[2]

[12]

Rollo, pp. 157-163.

Id. at 150-156.
[14]
Id. at 166-170.
[15]
Id. at 170.
[16]
Id. at 171-196.
[17]
Supra note 2, at 70.
[18]
Id. at 72-73.
[19]
Rollo, pp. 96-99.
[20]
Supra note 1, at 44-45.
[21]
G.R. No. 167614, March 24, 2009, 582 SCRA 254.
[22]
Section 1, Article III of the Constitution provides:
Section 1. No person shall be deprived of life, liberty, or property without due process of law, nor shall any
person be denied the equal protection of the laws.
[23]
Section 3, Article XIII of the Constitution pertinently provides:
Sec. 3. The State shall afford full protection to labor, local and overseas, organized and unorganized, and
promote full employment and equality of employment opportunities for all.
[24]
Rollo, pp. 312-331.
[25]
Id. at 290-303.
[26]
Supra note 24.
[27]
Supra note 21, at 295.
[28]
Id. at 303.
[29]
G.R. No. 166006, March 14, 2008, 548 SCRA 485.
[30]
Id. at 516-517. (Citations omitted.)
[31]
Ayson v. Vda. De Carpio, 476 Phil. 525, 535 (2004).
[32]
Supra note 21, at 303. (Emphasis supplied.)
[33]
Supra note 16, at 173.
[34]
461 Phil. 429, 431 (2003).
[13]

SECOND DIVISION

[G.R. No. 109583. September 5, 1997]

TRANS ACTION OVERSEAS CORPORATION, petitioner, vs. THE

HONORABLE SECRETARY OF LABOR, ROSELLE CASTIGADOR,
JOSEFINA MAMON, JENELYN CASA, PEACHY LANIOG,
VERDELINA BELGIRA, ELMA FLORES, RAMONA LITURCO,
GRACE SABANDO, GLORIA PALMA, AVELYN ALVAREZ,
CANDELARIA
NONO,NITA
BUSTAMANTE,
CYNTHIA
ARANDILLO,
SANDIE AGUILAR,
DIGNA PANAGUITON,
VERONICA BAYOGOS, JULIANITA ARANADOR, LEONORA
CABALLERO, NANCY BOLIVAR, NIMFA BUCOL, ZITA GALINDO,
ESTELITA BIOCOS, MARJORIE MACATE, RUBY SEPULVIDA,
ROSALIE SONDIA, NORA MAQUILING, PAULINA CORDERO,
LENIROSE ABANGAN, SELFA PALMA, ANTONIA NAVARRO,

ELSIE PENARUBIA, IRMA SOBREQUIL, SONY JAMUAT, CLETA

MAYO,respondents.
DECISION
ROMERO, J.:

The issue presented in the case at bar is whether or not the Secretary of Labor and
Employment has jurisdiction to cancel or revoke the license of a private fee-charging
employment agency.
From July 24 to September 9, 1987, petitioner Trans Action Overseas Corporation,
a private fee-charging employment agency, scoured Iloilo City for possible recruits for
alleged job vacancies in Hongkong. Private respondents sought employment as
domestic helpers through petitioners employees, Luzviminda Aragon, Ben Hur Domincil
and his wife Cecille. The applicants paid placement fees ranging fromP1,000.00
to P14,000.00, but petitioner failed to deploy them. Their demands for refund proved
unavailing; thus, they were constrained to institute complaints against petitioner for
violation of Articles 32 and 34(a) of the Labor Code, as amended.
[1]

Petitioner denied having received the amounts allegedly collected from

respondents, and averred that Aragon, whose only duty was to pre-screen and interview
applicants, and the spouses Domincil were not authorized to collect fees from the
applicants. Accordingly, it cannot be held liable for the money claimed by
respondents. Petitioner maintains that it even warned respondents not to give any
money to unauthorized individuals.
POEA Regional Extension Unit Coordinator Edgar Somes testified that although he
was aware that petitioner collected fees from respondents, the latter insisted that they
be allowed to make the payments on the assumption that it could hasten their
deployment abroad.He added that Mrs. Honorata Manliclic, a representative of
petitioner tasked to oversee the conduct of the interviews, told him that she was leaving
behind presigned receipts to Aragon as she cannot stay in Iloilo City for the screening of
the applicants. Manliclic, however, denied this version and argued that it was Somes
who instructed her to leave the receipts behind as it was perfectly alright to collect fees.
On April 5, 1991, then Labor Undersecretary Nieves R. Confesor rendered the
assailed order, the dispositive portion of which reads:

WHEREFORE, respondents are hereby ordered to pay, jointly and severally, the
following claims:
1. Rosele Castigador P14,000.00
2. Josefina Mamon 3,000.00
3. Jenelyn Casa 3,000.00

4. Peachy Laniog 13,500.00

5. Verdelina Belgira 2,000.00
6. Elma Flores 2,500.00
7. Ramona Liturco 2,500.00
8. Grace Sabando 3,500.00
9. Gloria Palma 1,500.00
10. Avelyn Alvarez 1,500.00
11. Candelaria Nono 1,000.00
12. Nita Bustamante 5,000.00
13. Cynthia Arandillo 1,000.00
14. Sandie Aguilar 3,000.00
15. Digna Panaguiton 2,500.00
16. Veronica Bayogos 2,000.00
17. Sony Jamuat 4,500.00
18. Irma Sobrequil 2,000.00
19. Elsie Penarubia 2,000.00
20. Antonia Navarro 2,000.00
21. Selfa Palma 3,000.00
22. Lenirose Abangan 13,300.00
23. Paulina Cordero 1,400.00
24. Nora Maquiling 2,000.00
25. Rosalie Sondia 2,000.00

26. Ruby Sepulvida 3,500.00

27. Marjorie Macate 1,500.00
28. Estelita Biocos 3,000.00
29. Zita Galindo 3,500.00
30. Nimfa Bucol 1,000.00
31. Nancy Bolivar 2,000.00
32. Leonora Caballero 13,900.00
33. Julianita Aranador 14,000.00
The complaints of Ma. Luz Alingasa, Nimfa Perez, and Cleta Mayo are hereby
dismissed in view of their desistance.
The following complaints are hereby dismissed for failure to appear/prosecute:

1. Jiyasmin Bantillo 6. Edna Salvante

2. Rosa de Luna Senail 7. Thelma Beltiar
3. Elnor Bandojo 8. Cynthia Cepe
4. Teresa Caldeo 9. Rosie Pavillon
5. Virginia Castroverde
The complaints filed by the following are hereby dismissed for lack of evidence:

1. Aleth Palomaria 5. Mary Ann Beboso

2. Emely Padrones 6. Josefina Tejero
3. Marybeth Aparri 7. Bernadita Aprong
4. Lenia Biona 8. Joji Lull
Respondent agency is liable for twenty eight (28) counts of violation of Article 32 and
five (5) counts of Article 34 (a) with a corresponding suspension in the aggregate
period of sixty six (66) months. Considering however, that under the schedule of

penalties, any suspension amounting to a period of 12 months merits the imposition of

the penalty of cancellation, the license of respondent TRANS ACTION OVERSEAS
CORPORATION to participate in the overseas placement and recruitment of workers
is hereby ordered CANCELLED, effective immediately.
SO ORDERED. (Underscoring supplied)
[2]

On April 29, 1991, petitioner filed its Motion for Temporary Lifting of Order of
Cancellation alleging, among other things, that to deny it the authority to engage in
placement and recruitment activities would jeopardize not only its contractual relations
with its foreign principals, but also the welfare, interests, and livelihood of recruited
workers scheduled to leave for their respective assignments. Finally, it manifested its
willingness to post a bond to insure payment of the claims to be awarded, should its
appeal or motion be denied.
Finding the motion to be well taken, Undersecretary Confesor provisionally lifted the
cancellation of petitioners license pending resolution of its Motion for Reconsideration
filed on May 6, 1991. On January 30, 1992, however, petitioners motion for
reconsideration was eventually denied for lack of merit, and the April 5, 1991, order
revoking its license was reinstated.
Petitioner contends that Secretary Confesor acted with grave abuse of discretion in
rendering the assailed orders on alternative grounds, viz.: (1) it is the Philippine
Overseas Employment Administration (POEA) which has the exclusive and original
jurisdiction to hear and decide illegal recruitment cases, including the authority to cancel
recruitment licenses, or (2) the cancellation order based on the 1987 POEA Schedule of
Penalties is not valid for non-compliance with the Revised Administrative Code of 1987
regarding its registration with the U.P. Law Center.
Under Executive Order No. 797 (E.O. No. 797) and Executive Order No. 247 (E.O.
No. 247), the POEA was established and mandated to assume the functions of the
Overseas Employment Development Board (OEDB), the National Seamen Board
(NSB), and the overseas employment function of the Bureau of Employment Services
(BES). Petitioner theorizes that when POEA absorbed the powers of these
agencies, Article 35 of the Labor Code, as amended, was rendered ineffective.
[3]

[4]

The power to suspend or cancel any license or authority to recruit employees for
overseas employment is vested upon the Secretary of Labor and Employment. Article
35 of the Labor Code, as amended, which provides:

ART. 35. Suspension and/or Cancellation of License or Authority. - The Minister of

Labor shall have the power to suspend or cancel any license or authority to recruit
employees for overseas employment for violation of rules and regulations issued by
the Ministry of Labor, the Overseas Employment Development Board, and the
National Seamen Board, or for violation of the provisions of this and other applicable
laws, General Orders and Letters of Instructions.

In the case of Eastern Assurance and Surety Corp. v. Secretary of Labor, we held
that:
[5]

The penalties of suspension and cancellation of license or authority are prescribed for
violations of the above quoted provisions, among others. And the 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, x x (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 [6]

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.
[7]

The Administrator was also given the power to order the dismissal of the case or the
suspension of the license or authority of the respondent agency or contractor or
recommend to the Minister the cancellation thereof. (Underscoring supplied)
[8]

This power conferred upon the Secretary of Labor and Employment was echoed
in People v. Diaz, viz.:
[9]

A non-licensee or non-holder of authority means any person, corporation or entity

which has not been issued a valid license or authority to engage in recruitment and
placement by the Secretary of Labor, or whose license or authority has been
suspended, revoked or cancelled by the POEA or the Secretary. (Underscoring
supplied)
In view of the Courts disposition on the matter, we rule that the power to suspend or
cancel any license or authority to recruit employees for overseas employment is
concurrently vested with the POEA and the Secretary of Labor.
As regards petitioners alternative argument that the non-filing of the 1987 POEA
Schedule of Penalties with the UP Law Center rendered it ineffective and, hence,
cannot be utilized as basis for penalizing them, we agree with Secretary Confesors
explanation, to wit:

On the other hand, the POEA Revised Rules on the Schedule of Penalties was issued
pursuant to Article 34 of the Labor Code, as amended. The same merely amplified and
particularized the various violations of the rules and regulations of the POEA and
clarified and specified the penalties therefore (sic). Indeed, the questioned schedule of
penalties contains only a listing of offenses. It does not prescribe additional rules and
regulations governing overseas employment but only detailed the administrative
sanctions imposable by this Office for some enumerated prohibited acts.
Under the circumstances, the license of the respondent agency was cancelled on
the authority of Article 35 of the Labor Code, as amended, and not pursuant to the 1987
POEA Revised Rules on Schedule of Penalties.
[10]

WHEREFORE, in view of the foregoing, the instant petition is hereby

DISMISSED. Accordingly, the decision of the Secretary of Labor dated April 5, 1991, is
AFFIRMED. No costs.
SO ORDERED.
Regalado, (Chairman), Puno Mendoza, and Torres, Jr., JJ., concur.

[1]

ART. 32. Fees to be paid by workers. - Any person applying with a private fee-charging employment
agency for employment assistance shall not be charged any fee until he has obtained
employment through its efforts or has actually commenced employment. Such fee shall be always
covered with the appropriate receipt clearly showing the amount paid. The Secretary of Labor
shall promulgate a schedule of allowable fees.

ART. 34. Prohibited practices. - It shall be unlawful for any individual, entity, licensee, or holder of
authority:
(a) To charge or accept, directly or indirectly, any amount greater than that specified in the schedule of
allowable fees prescribed by the Secretary of Labor, or to make a worker pay any amount greater
than that actually received by him as a loan or advance; x x x.
[2]

Rollo, pp. 43-44.

[3]

Creating the POEA.

[4]

Reorganizing the POEA and for other purposes.

[5]

181 SCRA 110 (1990).

[6]

Sec. 1, Rule II, Book VI of the New Rules on Overseas Employment.

[7]

Ibid., Sec. 2 (t).

[8]

Id., Sec. 12.

[9]

259 SCRA 441 (1996).

[10]

Rollo, pp. 27-28.

FIRST DIVISION
REPUBLIC OF THE PHILIPPINES, G.R. No. 167639
represented by the ADMINISTRATOR
OF THE PHILIPPINE OVERSEAS
EMPLOYMENT ADMINISTRATION
(POEA),
Petitioner, Present:
Panganiban, C.J. (Chairperson),
- versus - Ynares-Santiago,
Austria-Martinez,
Callejo, Sr., and
Chico-Nazario, JJ.
PRINCIPALIA MANAGEMENT AND
PERSONNEL CONSULTANTS, Promulgated:
INCORPORATED,
Respondent. April 19, 2006
x ---------------------------------------------------------------------------------------- x

DECISION
YNARES-SANTIAGO, J.:
Petitioner assails the September 20, 2004 Resolution [1] of the Court of Appeals in
CA-G.R. SP No. 86170, dismissing outright the petition for certiorari for failure to
attach copies of all relevant pleadings and transcripts of the hearings, as well as the
March 29, 2005 Resolution[2] denying the motion for reconsideration.
This case stemmed from two separate complaints filed before the Philippine
Overseas Employment Administration (POEA) against Principalia Management
and Personnel Consultants, Incorporated (Principalia) for violation of the 2002
POEA Rules and Regulations. The first complaint dated July 16, 2003 filed by
Ruth Yasmin Concha (Concha) was docketed as POEA Case No. RV 03-07-

1497. The second complaint dated October 14, 2003 filed by Rafael E. Baldoza
(Baldoza) was docketed as POEA Case No. RV 03-07-1453.
In the first complaint, Concha alleged that in August 2002, she applied with
Principalia for placement and employment as caregiver or physical therapist in the
USA or Canada. Despite paying P20,000.00 out of the P150,000.00 fee required by
Principalia which was not properly receipted, Principalia failed to deploy Concha
for employment abroad.[3]
In its March 15, 2004 Order,[4] the Adjudication Office of the POEA found
Principalia liable for violations of the 2002 POEA Rules and Regulations,
particularly for collecting a fee from the applicant before employment was
obtained; for non-issuance of official receipt; and for misrepresenting that it was
able to secure employment for Concha. For these infractions, Principalias license
was ordered suspended for 12 months or in lieu thereof, Pricipalia is ordered to pay
a fine of P120,000.00 and to refund Conchas placement fee of P20,000.00.
Baldoza initiated the second complaint on October 14, 2003[5] alleging that
Principalia assured him of employment in Doha, Qatar as a machine operator with
a monthly salary of $450.00. After paying P20,000.00 as placement fee, he
departed for Doha, Qatar on May 31, 2003 but when he arrived at the jobsite, he
was made to work as welder, a job which he had no skills. He insisted that he was
hired as machine operator but the alternative position offered to him was that of
helper, which he refused. Thus, he was repatriated on July 5, 2003.
On November 12, 2003, Baldoza and Principalia entered into a compromise
agreement with quitclaim and release whereby the latter agreed to redeploy
Baldoza for employment abroad. Principalia, however, failed to deploy Baldoza as
agreed hence, in an Order dated April 29, 2004, [6] the POEA suspended Principalias
documentary processing.
Principalia moved for reconsideration which the POEA granted on June 25,
2004. The latter lifted its order suspending the documentary processing by
Principalia after noting that it exerted efforts to obtain overseas employment for
Baldoza within the period stipulated in the settlement agreement but due to
Baldozas lack of qualification, his application was declined by its foreign principal.
[7]

Meanwhile, on June 14, 2004, or before the promulgation of POEAs order lifting
the suspension, Principalia filed a Complaint [8](Complaint) against Rosalinda D.
Baldoz in her capacity as Administrator of POEA and Atty. Jovencio R. Abara in
his capacity as POEA Conciliator, before the Regional Trial Court (RTC) of
Mandaluyong City for Annulment of Order for Suspension of Documentation
Processing with Damages and Application for Issuance of a Temporary
Restraining Order and/or Writ of Preliminary Injunction, and a Writ of
Preliminary Mandatory Injunction. Principalia claimed that the suspension of its
documentary processing would ruin its reputation and goodwill and would cause
the loss of its applicants, employers and principals. Thus, a writ of preliminary
injunction and a writ of mandatory injunction must be issued to prevent serious and
irreparable damage to it.
On June 14, 2004,[9] Judge Paulita B. Acosta-Villarante of the RTC of
Mandaluyong City, Branch 211, granted a 72-hour restraining order enjoining
Administrator Baldoz and Atty. Abara to refrain from imposing the suspension
orders before the matter can be heard in full. On June 17, 2004,[10] Judge Rizalina
T. Capco-Umali, RTC of Mandaluyong City, Branch 212, held thus:
WHEREFORE, in order to preserve status quo ANTE, the prayer for a Temporary
Restraining Order is hereby GRANTED enjoining the defendant[s] ROSALINDA
D. BALDOZ and ATTY. JOVENCIO ABARA, other officers of Philippine
Overseas Employment Administration, their subordinates, agents, representatives
and all other persons acting for and in their behalf, for (sic) implementing the
Orders of Suspension under VC No. LRD 03-100-95 and POEA Case No. RV-0307-1497.
Let the hearing on Preliminary Injunction and Preliminary Mandatory Injunction
be set on June 22, 2004 at 1:30 oclock in the afternoon.
SO ORDERED.[11]

After the hearing on the preliminary injunction, Administrator Baldoz and Atty.
Abara submitted their Memorandum (Memorandum).[12] In an Order dated July 2,
2004,[13] the trial court held that the issue on the application for preliminary
mandatory injunction has become moot because POEA had already released the

renewal of license of Principalia. However, on the issue against the implementation

of the order of suspension, the trial court resolved, to wit:
Accordingly, the only issue left for the resolution of this Court is whether or not a
Writ of Preliminary Prohibitory Injunction will lie against the immediate
implementation of the Order of Suspension of License of the Plaintiff dated
March 15, 2004 under POEA case No. RV-03-07-1497, issued by the POEA
Administrator Rosalinda D. Baldoz.
In support of its Application for a Writ of Preliminary Prohibitory Injunction,
Plaintiff presented evidence to prove the following:
(1) that it has a license,
(2) that the said license was renewed,
(3) the existence of the two (2) suspension orders subject of this case;
(4) the irreparable damages to the Plaintiff.
The defendants on the other hand did not present evidence to
controvert the evidence of the plaintiff. Instead, defendants submitted a
Memorandum.
Upon a careful evaluation and assessment of the evidence by the plaintiff
and their respective memoranda of the parties, this Court finds the need to issue
the Writ of Preliminary Prohibitory Injunction prayed for by the plaintiff.
It bears stressing that the Order of Suspension dated March 15,
2004 is still pending appeal before the Office of the Secretary of Labor and
Employment.
It is likewise significant to point out that the said Order dated March 15,
2004 does not categorically state that the suspension of Plaintiffs License is
immediately executory contrary to the contention of the defendants.
Counsel for POEA argued that the basis for the immediate implementation
thereof is Section 5, Rule V, Part VI of the 2002 POEA Rules and Regulation,
which is quoted hereunder, as follows:
Section 5. Stay of Execution. The decision of the Administration
shall be stayed during the pendency of the appeal; Provided that
where the penalty imposed carried the maximum penalty of twelve
(12) months suspension o[r] cancellation of license, the decision
shall be immediately executory despite pendency of the appeal.
The Order dated March 15, 2004 decreed Plaintiff as having violated Section 2 (a)
(d) and (e) of Rule I, Part VI of the POEA Rules and Regulations and the

Plaintiffs was imposed the penalty of twelve (12) months suspension of license
(or in lieu, to pay fine of P120,000, it being it[s] first offense).
Violation of Section 2 (a) (d) and (e) Rule I, Part VI of POEA Rules and
Regulations imposes a penalty of two (2) months to six (6) months suspension of
license for the FIRST offender (sic). And in the absence of mitigating or
aggravating circumstance, the medium range of the imposable penalty which is
four (4) months shall be meted out. Being a first offender, the plaintiff was
imposed suspension of license for four (4) months for each violation or an
aggregate period of suspension for twelve (12) months for the three (3) violations.
It was not however made clear in the Order of Suspension dated March 15,
2004 that the Plaintiffs case falls under the EXCEPTION under Section 5
Rule V, Part VI of the 2002 POEA Rules and Regulation, warranting the
immediate implementationthereof even if an appeal is pending with the POEA.
The Plaintiff had established that even if it has been granted a renewal license, but
if the same is suspended under the March 15, 2004 Order in POEA case No. RV03-07-1497, it could not use the license to do business. As earlier mentioned, the
said Order is still pending appeal.
In the meantime that the appeal has not been resolved, Plaintiffs
clients/principals will have to look for other agencies here and abroad, to
supply their needs for employees and workers. The end result would be a
tremendous loss and even closure of its business. More importantly, Plaintiffs
reputation would be tarnished and it would be difficult, if not impossible for
it to regain its existing clientele if the immediate implementation of the
suspension of its license continues.
The defendants and even the POEA, upon the other hand, will not suffer any
damage, if the immediate implementation of the suspension of plaintiffs license as
decreed in the March 15, 2004 Order, is enjoined.
WHEREFORE, as prayed for by the Plaintiff, the application for the issuance of
the Writ of Preliminary Prohibitory Injunction is hereby GRANTED, upon
posting of a bond in the amount of FIVE HUNDRED THOUSAND PESOS (Php
500,000.00), enjoining and restraining the Defendants ROSALINDA D.
BALDOZ and Atty. Jovencio Abarra (sic), other officers of the POEA, their
subordinates, agents, representative, and all other persons acting for and in their
behalf, from immediately implementing the Order of Suspension dated March 15,
2004 under POEA Case No. RV-03-07-1497.
The Writ of Preliminary Prohibitory Injunction shall be in full force and effect
immediately upon receipt thereof and to be carried out on subsequent days
thereafter pending the termination of this case and/or unless a contrary Order is
issued by this court.[14] (Emphasis supplied)

The trial court stressed that it issued the injunctive writ because the order of
suspension dated March 15, 2004 is still pending appeal before the Office of the
Secretary of Labor and Employment; that there is a possibility that Principalia will
suffer tremendous losses and even closure of business pending appeal; that POEA
will not suffer any damage if the immediate implementation of the suspension of
Principalia is enjoined; that the order does not categorically state that the
suspension of the license is immediately executory.
POEA appealed to the Court of Appeals which was dismissed [15] outright for failure
of POEA to attach copies of its Memorandum dated June 30, 2004, as well as the
transcripts of the hearings conducted on June 22, 2004 and June 29, 2004 as
required under Section 3 of Rule 46 of the Rules of Court. POEAs motion for
reconsideration was denied[16] hence, this petition on the following grounds:
I
SECTION 1, RULE 65 OF THE REVISED RULES OF COURT REQUIRES
ONLY THAT THE PETITION SHOULD BE ACCOMPANIED BY CERTIFIED
TRUE COPIES OF THE JUDGMENT, ORDER OR RESOLUTION SUBJECT
THEREOF AND OTHER DOCUMENTS RELEVANT AND PERTINENT
THERETO. PETITIONER ATTACHED ALL THE DOCUMENTS PERTINENT
TO THE PETITION FILED WITH THE COURT OF APPEALS.
II
THE REGIONAL TRIAL COURT GRAVELY ABUSED ITS DISCRETION
WHEN IT GRANTED RESPONDENT PRICIPALIAS APPLICATION FOR A
WRIT OF PRELIMINARY INJUNCTION DESPITE THE ABSENCE OF A
CLEAR AND CONVINCING RIGHT TO THE RELIEF DEMANDED.
III
THE REGIONAL TRIAL COURT COMMITTED GRAVE ABUSE OF
DISCRETION WHEN IT GRANTED RESPONDENT PRINCIPALIAS
APPLICATION
DESPITE
THE
ABSENCE
OF
PROOF
OF
IRREPARABLE DAMAGE AS REQUIRED UNDER THE RULES OF COURT.
IV
THE INJUNCTIVE WRIT ISSUED BY THE REGIONAL TRIAL COURT
DOES NOT LIE TO ENJOIN AN ACCOMPLISHED ACT.
V

THE ISSUANCE OF AN INJUNCTIVE WRIT BY THE REGIONAL TRIAL

COURT IS TANTAMOUNT TO THE REVERSAL OF THE PRESUMPTION
OF REGULARITY OF AN OFFICIAL ACT.[17]

The core issues for resolution are as follows: (1) whether the Court of Appeals
erred in dismissing the Petition for Certiorari based on purely technical grounds;
and (2) whether the trial court erred in issuing the writ of preliminary injunction.
POEA avers that the Court of Appeals Resolution dismissing outright the
petition for certiorari is not valid because the documents attached to the petition
substantially informed the Court of Appeals that the trial court gravely abused its
discretion in granting the preliminary injunction. Thus, the attached documents
were sufficient to render an independent assessment of its improvident issuance.
We disagree.
The Court of Appeals dismissed the petition for certiorari due to POEAs
failure to comply with Section 3, Rule 46 and Section 1, Rule 65 of the Rules of
Court which read as follows:
RULE 46
SEC. 3. Contents and filing of petition; effect of non-compliance with
requirements. - The petition shall contain the full names and actual addresses of
all the petitioners and respondents, a concise statement of the matters involved,
the factual background of the case, and the grounds relied upon for the relief
prayed for.
In actions filed under Rule 65, the petition shall further indicate the
material dates showing when notice of the judgment or final order or resolution
subject thereof was received, when a motion for new trial or reconsideration, if
any, was filed and when notice of the denial thereof was received.
It shall be filed in seven (7) clearly legible copies together with proof of
service thereof on the respondent with the original copy intended for the court
indicated as such by the petitioner, and shall be accompanied by a clearly
legible duplicate original or certified true copy of the judgment, order,
resolution, or ruling subject thereof, such material portions of the record as
are referred to therein, and other documents relevant or pertinent thereto.
The certification shall be accomplished by the proper clerk of court or by his duly
authorized representative, or by the proper officer of the court, tribunal, agency or

office involved or by his duly authorized representative. The other requisite

number of copies of the petition shall be accompanied by clearly legible plain
copies of all documents attached to the original.
xxxx
The failure of the petitioner to comply with any of the foregoing
requirements shall be sufficient ground for the dismissal of the
petition. (Emphasis supplied)
RULE 65
SECTION. 1. Petition for certiorari. When any tribunal, board or officer
exercising judicial or quasi-judicial functions has acted without or in excess of its
or his jurisdiction, or with grave abuse of discretion amounting to lack or excess
of jurisdiction, and there is no appeal, nor any plain, speedy, and adequate remedy
in the ordinary course of law, a person aggrieved thereby may file a verified
petition in the proper court, alleging the facts with certainty and praying that
judgment be rendered annulling or modifying the proceedings of such tribunal,
board or officer, and granting such incidental reliefs as law and justice may
require.
The petition shall be accompanied by a certified true copy of the judgment,
order or resolution subject thereof, copies of all pleadings and documents
relevant and pertinent thereto, and a sworn certification of non-forum shopping
as provided in the third paragraph of Section 3, Rule 46.

In the case at bar, the Court of Appeals dismissed the petition for certiorari due to
POEAs failure to attach the following relevant documents: (1) the Memorandum
filed by POEA in the trial court to oppose the Complaint; and (2) the transcripts of
stenographic notes (TSN) of the hearings conducted by the trial court on June 22,
2004 and June 29, 2004. In its motion for reconsideration datedOctober 13, 2004,
[18]
POEA only attached the TSN dated June 30, 2004,[19] with the explanation that
the trial court did not furnish it with copies of the other hearings. However, we note
that POEA still failed to attach a copy of the Memorandum which the Court of
Appeals deemed essential in its determination of the propriety of the trial courts
issuance of the writ of preliminary prohibitory injunction.
The allowance of the petition on the ground of substantial compliance with the
Rules is not a novel occurrence in our jurisdiction. [20] Indeed, if we apply the Rules
strictly, we cannot fault the Court of Appeals for dismissing the petition [21] because

the POEA did not demonstrate willingness to comply with the requirements set by
the rules and to submit the necessary documents which the Court of Appeals need
to have a proper perspective of the case.
POEA avers that the trial court gravely abused its discretion in granting the writ of
preliminary prohibitory injunction when the requirements to issue the same have
not been met. It asserts that Principalia had no clear and convincing right to the
relief demanded as it had no proof of irreparable damage as required under the
Rules of Court.
We do not agree.
The trial court did not decree that the POEA, as the granting authority of
Principalias license to recruit, is not allowed to determine Principalias compliance
with the conditions for the grant, as POEA would have us believe. For all intents
and purposes, POEA can determine whether the licensee has complied with the
requirements. In this instance, the trial court observed that the Order of Suspension
dated March 15, 2004 was pending appeal with the Secretary of the Department of
Labor and Employment (DOLE).Thus, until such time that the appeal is resolved
with finality by the DOLE, Principalia has a clear and convincing right to operate
as a recruitment agency.
Furthermore, irreparable damage was duly proven by Principalia. Suspension of its
license is not easily quantifiable nor is it susceptible to simple mathematical
computation, as alleged by POEA. The trial court in its Order stated, thus:
In the meantime that the appeal has not been resolved, Plaintiffs clients/principals
will have to look for other agencies here and abroad, to supply their needs for
employees and workers. The end result would be a tremendous loss and even
closure of its business. More importantly, Plaintiffs reputation would be tarnished
and it would be difficult, if not impossible for it to regain its existing clientele if
the immediate implementation of the suspension of its license continues.[22]

If the injunctive writ was not granted, Principalia would have been labeled
as an untrustworthy recruitment agency before there could be any final
adjudication of its case by the DOLE. It would have lost both its employer-clients

and its prospective Filipino-applicants. Loss of the former due to a tarnished

reputation is not quantifiable.
Moreover, POEA would have no authority to exercise its regulatory functions over
Principalia because the matter had already been brought to the jurisdiction of the
DOLE. Principalia has been granted the license to recruit and process documents
for Filipinos interested to work abroad. Thus, POEAs action of suspending
Principalias license before final adjudication by the DOLE would be premature and
would amount to a violation of the latters right to recruit and deploy workers.
Finally, the presumption of regular performance of duty by the POEA under
Section 3 (m), Rule 131 of the Rules of Court, finds no application in the case at
bar, as it applies only where a duty is imposed on an official to act in a certain way,
and assumes that the law tells him what his duties are. Therefore the presumption
that an officer will discharge his duties according to law does not apply where his
duties are not specified by law and he is given unlimited discretion. [23] The issue
threshed out before the trial court was whether the order of suspension should be
implemented pending appeal. It did not correct a ministerial duty of the POEA.As
such, the presumption on the regularity of performance of duty does not apply.
WHEREFORE, in light of the foregoing, the petition is DENIED for lack of
merit.
SO ORDERED.
CONSUELO YNARES-SANTIAGO
Associate Justice

WE CONCUR:

ARTEMIO V. PANGANIBAN
Chief Justice
Chairperson
MA. ALICIA AUSTRIA-MARTINEZ ROMEO J. CALLEJO, SR.
Associate Justice Associate Justice

MINITA V. CHICO-NAZARIO
Associate Justice

CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified that
the conclusions in the above Decision were reached in consultation before the case
was assigned to the writer of the opinion of the Courts Division.

ARTEMIO V. PANGANIBAN
Chief Justice

[1]

Rollo, pp. 43-44. Penned by Associate Justice Hakim S. Abdulwahid and concurred in by Associate Justices
Cancio C. Garcia (now a Supreme Court Justice) and Remedios A. Salazar-Fernando.
[2]
Id. at 45-46. Penned by Associate Justice Hakim S. Abdulwahid and concurred in by Associate Justices Remedios
A. Salazar-Fernando and Rosalinda Asuncion-Vicente.
[3]
Id. at 105-106.
[4]
Id. at 110-113.
[5]
Id. at 107-108.
[6]
Id. at 131.
[7]
Id. at 132.
[8]
Id. at 133-154.
[9]
Id. at 155.
[10]
Id. at 156-160.
[11]
Id. at 159.
[12]
Id. at 161-177.
[13]
Id. at 185-188.
[14]
Id. at 185-187.
[15]
Id. at 43-44.
[16]
Id. at 45-46.
[17]
Id. at 24-25.
[18]
Id. at 69-73.
[19]
Id. at 74-104.
[20]
Reyes v. Court of Appeals, 456 Phil. 520, 532 (2003).
[21]
Security Bank Corporation v. Indiana Aerospace University, G.R. No. 146197, June 27, 2005, 461 SCRA 260,
268.
[22]
Rollo, p. 187.
[23]
R. Francisco, Basic Evidence, 39 (2nd ed., 1999).

FIRST DIVISION
SANTOSA B. DATUMAN,

G.R. No. 156029

Petitioner,

Present:

PUNO, C.J.,*
versus

CARPIO,**
AUSTRIA-MARTINEZ,***

CORONA,
CARPIO MORALES,*** and
LEONARDO-DE CASTRO, JJ.
FIRST
COSMOPOLITAN
MANPOWER
AND
PROMOTION
SERVICES,
INC.,

Promulgated:

Respondent.
November 14, 2008

x-----------------------------------------------------------------------------------------x

DECISION
LEONARDO-DE CASTRO, J.:

Before us is a petition for review on certiorari under Rule 45

of the 1997 Rules of Civil Procedure, as amended, assailing the
Court of Appeals (CA) Decision[1] dated August 7, 2002, in CA-G.R.
SP No. 59825, setting aside the Decision of the National Labor
Relations Commission (NLRC).

The facts are as follows:

Sometime in 1989, respondent First Cosmopolitan Manpower

& Promotion Services, Inc. recruited petitioner Santosa B.
Datuman to work abroad under the following terms and
conditions:

Site of employment - Bahrain

Employees Classification/Position/Grade - Saleslady
Basic Monthly Salary - US$370.00
Duration of Contract - One (1) year
Foreign Employer - Mohammed Sharif Abbas Ghulam Hussain[2]

On April 17, 1989, petitioner was deployed to Bahrain after

paying the required placement fee. However, her employer
Mohammed Hussain took her passport when she arrived there;
and instead of working as a saleslady, she was forced to work as a
domestic helper with a salary of Forty Bahrain Dinar (BD40.00),
equivalent only to One Hundred US Dollars (US$100.00). This was
contrary to the agreed salary of US$370.00 indicated in her
Contract of Employment signed in the Philippines and approved
by the Philippine Overseas Employment Administration (POEA). [3]

On September 1, 1989, her employer compelled her to sign

another contract, transferring her to another employer as
housemaid with a salary of BD40.00 for the duration of two (2)
years.[4] She pleaded with him to give her a release paper and to
return her passport but her pleas were unheeded. Left with no

choice, she continued working against her will. Worse, she even
worked without compensation from September 1991 to April 1993
because of her employers continued failure and refusal to pay her
salary despite demand. In May 1993, she was able to finally
return to the Philippines through the help of the Bahrain Passport
and Immigration Department.[5]

In May 1995, petitioner filed a complaint before the POEA

Adjudication Office against respondent for underpayment and
nonpayment of salary, vacation leave pay and refund of her plane
fare, docketed as Case No. POEA ADJ. (L) 95-05-1586. [6] While the
case was pending, she filed the instant case before the NLRC for
underpayment of salary for a period of one year and six months,
nonpayment of vacation pay and reimbursement of return airfare.

When the parties failed to arrive at an amicable settlement

before the Labor Arbiter, they were required to file their
respective
position
papers,
subsequent
pleadings
and
documentary exhibits.

In its Position Paper,[7] respondent countered that petitioner

actually agreed to work in Bahrain as a housemaid for one (1)
year because it was the only position available then. However,
since such position was not yet allowed by the POEA at that time,
they mutually agreed to submit the contract to the POEA
indicating petitioners position as saleslady. Respondent added
that it was actually petitioner herself who violated the terms of
their contract when she allegedly transferred to another employer

without respondents knowledge and approval. Lastly, respondent

raised the defense of prescription of cause of action since the
claim was filed beyond the three (3)-year period from the time the
right accrued, reckoned from either 1990 or 1991. [8]

On April 29, 1998, Labor Arbiter Jovencio Mayor, Jr. rendered

a Decision finding respondent liable for violating the terms of the
Employment Contract and ordering it to pay petitioner: (a) the
amount of US$4,050.00, or its equivalent rate prevailing at the
time of payment, representing her salary differentials for fifteen
(15) months; and, (b) the amount of BD 180.00 or its equivalent
rate prevailing at the time of payment, representing the refund of
plane ticket, thus:
From the foregoing factual backdrop, the only crucial issue for us
to resolve in this case is whether or not complainant is entitled to her
monetary claims.
xxx
In the instant case, from the facts and circumstances laid down,
it is thus self-evident that the relationship of the complainant and
respondent agency is governed by the Contract of Employment, the
basic terms a covenants of which provided for the position of saleslady,
monthly compensation of US$370.00 and duration of contract for one
(1) year. As it is, when the parties complainant and respondent Agency
signed and executed the POEA approved Contract of Employment, this
agreement is the law that governs them. Thus, when respondent
agency deviated from the terms of the contract by assigning the
position of a housemaid to complainant instead of a saleslady as
agreed upon in the POEA-approved Contract of Employment,
respondent Agency committed a breach of said Employment
Contract.Worthy of mention is the fact that respondent agency
in their Position Paper paragraph 2, Brief Statement of the
Facts and of the Case admitted that it had entered into an
illegal contract with complainant by proposing the position of a

housemaid which said position was then not allowed by the

POEA, by making it appear in the Employment Contract that
the position being applied for is the position of a saleslady. As
it is, we find indubitably clear that the foreign employer had
took advantage to the herein hopeless complainant and
because of this ordeal, the same obviously rendered
complainants continuous employment unreasonable if not
downright impossible. The facts and surrounding circumstances of
her ordeal was convincingly laid down by the complainant in her
Position Paper, from which we find no flaws material enough to
disregard the same. Complainant had clearly made out her case and
no amount of persuasion can convince us to tilt the scales of justice in
favor of respondents whose defense was anchored solely on the flimsy
allegations that for a period of more than five (5) years from 1989 until
1995 nothing was heard from her or from her relatives, presuming then
that complainant had no problem with her employment abroad. We
also find that the pleadings and the annexes filed by the parties reveal
a total lapse on the part of respondent First Cosmopolitan Manpower
and Promotions their failure to support with substantial evidence their
contention that complainant transferred from one employer to another
without knowledge and approval of respondent agency in
contravention of the terms of the POEA approved Employment
Contract. Obviously, respondent Agency anchored its disquisition on
the alleged contracts signed by the complainant that she agreed with
the terms of said contracts one (1) year duration only and as a
housemaid to support its contention that complainant violated the
contract agreement by transferring from one employer to another on
her own volition without the knowledge and consent of respondent
agency. To us, this posture of respondent agency is unavailing.These
documents are self-serving. We could not but rule that the same were
fabricated to tailor-fit their defense that complainant was guilty of
violating the terms of the Employment Contract. Consequently, we
could not avoid the inference of a more logical conclusion
thatcomplainant was forced against her will to continue with
her employment notwithstanding the fact that it was in
violation of the original Employment Contract including the
illegal withholding of her passport.

With the foregoing, we find and so rule that respondent Agency

failed to discharge the burden of proving with substantial evidence that
complainant violated the terms of the Employment Contract, thus
negating respondent Agencys liability for complainants money

claims. All the more, the record is bereft of any evidence to show that
complainant Datuman is either not entitled to her wage differentials or
have already received the same from respondent. As such, we are
perforce constrained to grant complainants prayer for payment of
salary differentials computed as follows:

January 1992 April 1993 (15 months)

US$370.00 agreed salary
US$100.00 actual paid salary
US$270.00 balance
US$270.00 x 15 months = US$4050.00
We are also inclined to grant complainants entitlement to a refund of
her plane ticket in the amount of BD 180 Bahrain Dinar or the
equivalent in Philippine Currency at the rate of exchange prevailing at
the time of payment.

Anent complainants claim for vacation leave pay and overtime pay, we
cannot, however, grant the same for failure on the part of complainant
to prove with particularity the months that she was not granted
vacation leave and the day wherein she did render overtime work.

Also, we could not grant complainants prayer for award of damages

and attorneys fees for lack of factual and legal basis.

WHEREFORE, premises considered, judgment is hereby rendered,

finding respondent Agency liable for violating the term of Employment
Contract and respondent First Cosmopolitan Manpower and Promotions
is hereby ordered:

To pay complainant the amount of US$ FOUR THOUSAND AND FIFTY

(US$4,050.00), or its equivalent rate prevailing at the time of payment,
representing her salary differentials for fifteen (15) months;

To pay complainant the amount of BD 180.00 or its equivalent rate

prevailing at the time of payment, representing the refund of plane
ticket;

All other claims are hereby dismissed for lack of merit.

SO ORDERED.[9] (emphasis supplied)

On appeal, the NLRC, Second Division, issued a

Decision[10] affirming with modification the Decision of Labor
Arbiter Mayor, Jr., by reducing the award of salary differentials
from US$4,050.00 to US$2,970.00 ratiocinating as follows:

Accordingly, we find that the claims for salary differentials

accruing earlier than April of 1993 had indeed prescribed. This is so as
complainant had filed her complaint on May 31, 1995 when she arrived
from the jobsite in April 1993. Since the cause of action for salary
differential accrues at the time when it falls due, it is clear that only
the claims for the months of May 1993 to April 1994 have not yet
prescribed. With an approved salary rate of US$370.00 vis--vis the
amount of salary received which was $100.00, complainant is entitled
to the salary differential for the said period in the amount of $2,970.00.
xxx
WHEREFORE, premises considered, judgment is hereby rendered
MODIFYING the assailed Decision by reducing the award of salary
differentials to $2,970.00 to the complainant.

The rest of the disposition is AFFIRMED.

SO ORDERED.[11]

On July 21, 2000, respondent elevated the matter to the CA

through a petition for certiorari under Rule 65.

On August 2, 2000,[12] the CA dismissed the petition for being

insufficient in form pursuant to the last paragraph of Section 3,
Rule 42 of the 1997 Rules of Civil Procedure, as amended.

On October 20, 2000,[13] however, the CA reinstated the petition

upon respondents motion for reconsideration. [14]

On August 7, 2002, the CA issued the assailed

Decision[15] granting the petition and reversing the NLRC and the
Labor Arbiter, thus:

Under Section 1 (f), Rule II, Book II of the 1991 POEA Rules and
Regulations, the local agency shall assume joint and solidary liability
with the employer for all claims and liabilities which may arise in
connection with the implementation of the contract, including but not
limited to payment of wages, health and disability compensation and
repatriation.

Respondent Commission was correct in declaring that claims of

private respondent for salary differentials accruing earlier than April of
1993 had indeed prescribed. It must be noted that petitioner company
is privy only to the first contract. Granting arguendo that its liability
extends to the acts of its foreign principal, the Towering Recruiting
Services, which appears to have a hand in the execution of the second
contract, it is Our considered opinion that the same would, at the most,

extend only up to the expiration of the second contract or until 01

September 1991. Clearly, the money claims subject of the complaint
filed in 1995 had prescribed.

However, this Court declares respondent Commission as not only

having abused its discretion, but as being without jurisdiction at all, in
declaring private respondent entitled to salary differentials. After
decreeing the money claims accruing before April 1993 as having
prescribed, it has no more jurisdiction to hold petitioner company for
salary differentials after that period. To reiterate, the local agency shall
assume joint and solidary liability with the employer for all claims and
liabilities which may arise in connection with the implementation of the
contract. Which contract? Upon a judicious consideration, we so hold
that it is only in connection with the firstcontract. The provisions in
number 2, Section 10 (a), Rule V, Book I of the Omnibus Rules
Implementing the Labor Code Section 1 (f), Rule II, Book II of the 1991
POEA Rules and Regulations were not made to make the local agency a
perpetual insurer against all untoward acts that may be done by the
foreign principal or the direct employer abroad. It is only as regards the
principal contract to which it is privy shall its liability extend. In Catan
v. National Labor Relations Commission, 160 SCRA 691 (1988), it was
held that the responsibilities of the local agent and the foreign principal
towards the contracted employees under the recruitment agreement
extends up to and until the expiration of the employment contracts of
the employees recruited and employed pursuant to the said
recruitment agreement.

xxx

Foregoing considered, the assailed Decision dated 24 February 2000

and the Resolution dated 23 June 2000 of respondent Commission in
NLRC NCR CA 016354-98 are hereby SET ASIDE.

SO ORDERED.[16]

Petitioners Motion for Reconsideration [17] thereon was denied

in the assailed Resolution[18] dated November 14, 2002.

Hence, the present petition based on the following grounds:

I.
THE HONORABLE COURT OF APPEALS COMMITTED A REVERSIBLE
ERROR WHEN IT ABANDONED THE FACTUAL FINDINGS OF THE LABOR
ARBITER AS AFFIRMED BY THE NATIONAL LABOR RELATIONS
COMMISSION.
II.
THE HONORABLE COURT OF APPEALS PATENTLY ERRED IN HOLDING
THAT THE RESPONDENT AGENCY IS ONLY A [sic] PRIVY AND LIABLE TO
THE PRINCIPAL CONTRACT.

III.
THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN HOLDING
THAT THE CAUSE OF ACTION OF THE PETITIONER ALREADY
PRESCRIBED.

The respondent counters in its Comment that the CA is

correct in ruling that it is not liable for the monetary claims of
petitioner as the claim had already prescribed and had no factual
basis.

Simply put, the issues boil down to whether the CA erred in

not holding respondent liable for petitioners money claims
pursuant to their Contract of Employment.

We grant the petition.

On whether respondent is solidarily

liable for petitioners monetary
claims

Section 1 of Rule II of the POEA Rules and Regulations states

that:
Section 1. Requirements for Issuance of License. Every applicant for
license to operate a private employment agency or manning agency
shall submit a written application together with the following
requirements:
xxx
f. A verified undertaking stating that the applicant:
xxx
(3) Shall assume joint and solidary liability with the employer for
all claims and liabilities which may arise in connection with the
implementation of the contract; including but not limited to
payment of wages, death and disability compensation and repatriation.
(emphasis supplied)

The above provisions are clear that the private employment agency shall
assume joint and solidary liability with the employer.[19] This Court has, time and
again, ruled that private employment agencies are held jointly and severally liable
with the foreign-based employer for any violation of the recruitment agreement or
contract of employment.[20] This joint and solidary liability imposed by law against
recruitment agencies and foreign employers is meant to assure the aggrieved
worker of immediate and sufficient payment of what is due him.[21] This is in line
with the policy of the state to protect and alleviate the plight of the working class.

In the assailed Decision, the CA disregarded the aforecited

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

We cannot agree with the view of the CA that the solidary

liability of respondent extends only to the first contract (i.e. the
original, POEA-approved contract which had a term of until April
1990). The signing of the substitute contracts with the foreign
employer/principal before the expiration of the POEA-approved
contract and any continuation of petitioners employment beyond
the original one-year term, against the will of petitioner, are
continuing breaches of the original POEA-approved contract. To
accept the CAs reasoning will open the floodgates to even more
abuse of our overseas workers at the hands of their foreign
employers and local recruiters, since the recruitment agency
could easily escape its mandated solidary liability for breaches of
the POEA-approved contract by colluding with their foreign
principals in substituting the approved contract with another upon
the workers arrival in the country of employment. Such outcome
is certainly contrary to the States policy of extending protection
and support to our overseas workers. To be sure, Republic Act No.
8042 explicitly prohibits the substitution or alteration to the
prejudice of the worker of employment contracts already

approved and verified by the Department of Labor and

Employment (DOLE) from the time of actual signing thereof by the
parties up to and including the period of the expiration of the
same without the approval of the DOLE. [22]

Respondents contention that it was petitioner herself who

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

In Placewell International Services Corporation v. Camote,

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

Hence, in the present case, the diminution in the salary of

petitioner from US$370.00 to US$100 (BD 40.00) per month is
void for violating the POEA-approved contract which set the
minimum
standards,
terms,
and
conditions
of
her
employment.Consequently, the solidary liability of respondent
with petitioners foreign employer for petitioners money claims
continues although she was forced to sign another contract

in Bahrain. It is the terms of the original POEA-approved

employment contract that shall govern the relationship of
petitioner with the respondent recruitment agency and the foreign
employer. We agree with the Labor Arbiter and the NLRC that the
precepts of justice and fairness dictate that petitioner must be
compensated for all months worked regardless of the supposed
termination of the original contract in April 1990. It is undisputed
that petitioner was compelled to render service until April 1993
and for the entire period that she worked for the foreign employer
or his unilaterally appointed successor, she should have been
paid US$370/month for every month worked in accordance with
her original contract.

Respondent cannot disclaim liability for the acts of the

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

advantage of overseas, as what indeed happened to her in this

case.

We look upon with great disfavor the unsubstantiated

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

On whether petitioners claims for

underpaid salaries have prescribed

It should be recalled that the Labor Arbiter and the NLRC

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

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

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

Both the Labor Arbiter and the NLRC found that petitioner was
forced to work until April 1993. Interestingly, the CA did not
disturb this finding but held only that the extent of respondents
liability was limited to the term under the original contract or, at
most, to the term of the subsequent contract entered into with
the participation of respondents foreign principal, i.e. 1991. We
have discussed previously the reasons why (a) the CAs theory of
limited liability on the part of respondent is untenable and (b) the
petitioner has a right to be compensated for all months she, in
fact, was forced to work. To determine for which months
petitioners right to claim salary differentials has not prescribed,

we must count three years prior to the filing of the complaint

on May 31, 1995.Thus, only claims accruing prior to May 31,
1992 have prescribed when the complaint was filed on May 31,
1995. Petitioner is entitled to her claims for salary differentials for
the period May 31, 1992 to April 1993, or approximately eleven
(11) months.[25]

We find that the NLRC correctly computed the salary differential

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

A final note

This Court reminds local recruitment agencies that it is their

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

WHEREFORE, the petition is GRANTED. The assailed

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

SO ORDERED.

TERESITA J. LEONARDO-DE CASTRO

Associate Justice

WE CONCUR:

ANTONIO T. CARPIO
Acting Chairperson

MA. ALICIA AUSTRIAMARTINEZ

RENATO C. CORONA
Associate Justice

Associate Justice

CONCHITA CARPIO MORALES

Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision were reached

in consultation before the case was assigned to the writer of the
opinion of the Courts Division

ANTONIO T. CARPIO
Associate Justice
Acting Chairperson, First Division

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution and the

Acting Division Chairpersons Attestation, I certify that the
conclusions in the above decision had been reached in
consultation before the case was assigned to the writer of the
opinion of the Courts Division.

LEONARDO A. QUISUMBING

Acting Chief Justice

On Official Leave.

**

Acting Chairperson of the First Division as per Special Order No. 534.

***

Additional Member as per Special Order No. 535.

[1]

Penned by then Associate Justice Romeo A. Brawner and concurred in by Associate Justices Jose L. Sabio, Jr. and
Mario L. Guarina III.

[2]

Annexes B B-2, Court of Appeals (CA) Rollo at 79-81.

[3]

Id.

[4]

Annex A, CA Rollo at 77.

[5]

Petition for Review in the CA, CA Rollo.

[6]

Rollo at 86.

[7]

CA Petition-Annex H, CA Rollo.

[8]

Id., at 97-98.

[9]

Rollo at 108-113.

[10]

Promulgated on February 24, 2000, penned by Commissioner Victoriano R. Calaycay and concurred in by
Presiding Commissioner Raul Aquino and Commissioner Angelita Gacutan.

[11]

Rollo at 161.

[12]

CA Rollo at 45.

[13]

Id., at 91.

[14]

Id., at 91-92.

[15]

Id., at 37-43.

[16]

Rollo at 41-42.

[17]

CA Rollo at 121-133.

[18]

Id., at 46-47.

[19]

Skippers United Pacific, Inc. and J.P. Samartzsis Maritime Enterprises Co., S.A. v. Jerry
Maguad and Porferio Ceudadano, G.R. No. 166363, August 15, 2006, 498 SCRA 639, 668.
[20]

Hellenic Philippine Shipping, Inc. v. Siete, G.R. No. 84082, March 13, 1991, 195 SCRA 179,
186; Empire Insurance Company v. NLRC, G.R. 121879, August 14, 1998, 294 SCRA 263,
271-272.
[21]

P.I. Manpower Placements, Inc. v. NLRC (Second Division), G.R. No. 97369, July 31, 1997,
276 SCRA 451, 461.

[22]

Placewell International Services Corporation v. Camote, G.R. No. 169973, June 26, 2006, 492 SCRA 761.

[23]

Id., citing Chavez v. Bonto-Perez, G.R. No. 109808, March 1, 1995, 242 SCRA 73.

[24]

NLRC Decision, Rollo at 160.

[25]

As an aside, this Court notes that in petitioners complaint filed with the Labor Arbiter, she only claims
underpayment of salaries and did not include nonpayment of salaries as one of her causes of action. Subsequently, in
her position paper and other pleadings, petitioner asserts that she was not paid any salary at all from September 1991
to April 1993. However, under the NLRC Rules of Procedure, parties are barred from alleging or proving causes of
action in the position paper that are not found/alleged in the complaint. Thus, the Labor Arbiter and the NLRC only
granted petitioner salary differentials as she herself prayed for in her complaint.

SECOND DIVISION

STOLT-NIELSEN
TRANSPORTATION GROUP,
INC. AND CHUNG GAI SHIP
MANAGEMENT,

G.R. No. 177498

Present:

Petitioners,
CARPIO, J.,
Chairperson,
PEREZ,
SERENO,
-versus-

REYES, and
PERLAS-BERNABE, JJ.*

SULPECIO MEDEQUILLO,
JR.,

Promulgated:

Respondent.
January 18, 2012
x------------------------------------------------x

DECISION

PEREZ, J.:

Before the Court is a Petition for Review on Certiorari of the Decision of the
First Division of the Court of Appeals in CA-G.R. SP No. 91632 dated 31 January
2007, denying the petition for certiorari filed by Stolt-Nielsen Transportation Group,
Inc. and Chung Gai Ship Management (petitioners) and affirming the Resolution of
the National Labor Relations Commission (NLRC). The dispositive portion of the
assailed decision reads:
1

WHEREFORE, the petition is hereby DENIED. Accordingly, the

assailed Decision promulgated on February 28, 2003 and the Resolution dated
July 27, 2005 are AFFIRMED.
3

The facts as gathered by this Court follow:

On 6 March 1995, Sulpecio Madequillo (respondent) filed a complaint before

the Adjudication Office of the Philippine Overseas Employment Administration
(POEA) against the petitioners for illegal dismissal under a first contract and for
failure to deploy under a second contract. In his complaint-affidavit, respondent
alleged that:
4

1.

On 6 November 1991(First Contract), he was hired by Stolt-Nielsen Marine

Services, Inc on behalf of its principal Chung-Gai Ship Management of Panama
as Third Assistant Engineer on board the vessel Stolt Aspiration for a period of
nine (9) months;

2.

He would be paid with a monthly basic salary of $808.00 and a fixed overtime
pay of $404.00 or a total of $1,212.00 per month during the employment period
commencing on 6 November 1991;

3.

On 8 November 1991, he joined the vessel MV Stolt Aspiration;

4.

On February 1992 or for nearly three (3) months of rendering service and while
the vessel was at Batangas, he was ordered by the ships master to disembark the
vessel and repatriated back to Manila for no reason or explanation;

5.

Upon his return to Manila, he immediately proceeded to the petitioners office

where he was transferred employment with another vessel named MV Stolt
Pride under the same terms and conditions of the First Contract;

6.

On 23 April 1992, the Second Contract was noted and approved by the POEA;

7.

The POEA, without knowledge that he was not deployed with the vessel, certified
the Second Employment Contract on 18 September 1992.

8.

Despite the commencement of the Second Contract on 21 April 1992, petitioners

failed to deploy him with the vessel MV Stolt Pride;

9.

He made a follow-up with the petitioner but the same refused to comply with the
Second Employment Contract.

10.

On 22 December 1994, he demanded for his passport, seamans book and other
employment documents. However, he was only allowed to claim the said
documents in exchange of his signing a document;

11.

He was constrained to sign the document involuntarily because without these

documents, he could not seek employment from other agencies.

He prayed for actual, moral and exemplary damages as well as attorneys fees
for his illegal dismissal and in view of the Petitioners bad faith in not complying with
the Second Contract.

The case was transferred to the Labor Arbiter of the DOLE upon the effectivity
of the Migrant Workers and Overseas Filipinos Act of 1995.

The parties were required to submit their respective position papers before the
Labor Arbiter. However, petitioners failed to submit their respective pleadings despite
the opportunity given to them.
5

On 21 July 2000, Labor Arbiter Vicente R. Layawen rendered a

judgment finding that the respondent was constructively dismissed by the petitioners.
The dispositive portion reads:
6

WHEREFORE, premises considered, judgment is hereby rendered,

declaring the respondents guilty of constructively dismissing the complainant by
not honoring the employment contract. Accordingly, respondents are hereby
ordered jointly and solidarily to pay complainant the following:

1.

$12,537.00 or its peso equivalent at the time of payment.

The Labor Arbiter found the first contract entered into by and between the
complainant and the respondents to have been novated by the execution of the second
contract. In other words, respondents cannot be held liable for the first contract but are
clearly and definitely liable for the breach of the second contract. However, he ruled
that there was no substantial evidence to grant the prayer for moral and exemplary
damages.
8

The petitioners appealed the adverse decision before the National Labor Relations
Commission assailing that they were denied due process, that the respondent cannot
be considered as dismissed from employment because he was not even deployed yet

and the monetary award in favor of the respondent was exorbitant and not in
accordance with law.
10

On 28 February 2003, the NLRC affirmed with modification the Decision of

the Labor Arbiter. The dispositive portion reads:

WHEREFORE, premises considered, the decision under review is hereby,

MODIFIED BY DELETING the award of overtime pay in the total amount of
Three Thousand Six Hundred Thirty Six US Dollars (US $3,636.00).

In all other respects, the assailed decision so stands as, AFFIRMED.

11

Before the NLRC, the petitioners assailed that they were not properly notified of the
hearings that were conducted before the Labor Arbiter. They further alleged that after
the suspension of proceedings before the POEA, the only notice they received was a
copy of the decision of the Labor Arbiter.
12

The NLRC ruled that records showed that attempts to serve the various notices of
hearing were made on petitioners counsel on record but these failed on account of
their failure to furnish the Office of the Labor Arbiter a copy of any notice of change
of address. There was also no evidence that a service of notice of change of address
was served on the POEA.
13

The NLRC upheld the finding of unjustified termination of contract for failure on the
part of the petitioners to present evidence that would justify their non-deployment of
the respondent. It denied the claim of the petitioners that the monetary award should
be limited only to three (3) months for every year of the unexpired term of the
contract. It ruled that the factual incidents material to the case transpired within 199114

1992 or before the effectivity of Republic Act No. 8042 or the Migrant Workers and
Overseas Filipinos Act of 1995 which provides for such limitation.
15

However, the NLRC upheld the reduction of the monetary award with respect to the
deletion of the overtime pay due to the non-deployment of the respondent.
16

The Partial Motion for Reconsideration filed by the petitioners was denied by
the NLRC in its Resolution dated 27 July 2005.
17

The petitioners filed a Petition for Certiorari before the Court of Appeals
alleging grave abuse of discretion on the part of NLRC when it affirmed with
modification the ruling of the Labor Arbiter. They prayed that the Decision and
Resolution promulgated by the NLRC be vacated and another one be issued
dismissing the complaint of the respondent.

Finding no grave abuse of discretion, the Court of Appeals AFFIRMED the

Decision of the labor tribunal.

The Courts Ruling

The following are the assignment of errors presented before this Court:

I.

THE COURT A QUO ERRED IN FINDING THAT THE SECOND CONTRACT

NOVATED THE FIRST CONTRACT.

1.

THERE WAS NO NOVATION OF THE FIRST CONTRACT BY THE

SECOND CONTRACT; THE ALLEGATION OF ILLEGAL DISMISSAL
UNDER THE FIRST CONTRACT MUST BE RESOLVED SEPARATELY
FROM THE ALLEGATION OF FAILURE TO DEPLOY UNDER THE
SECOND CONTRACT.

2.

THE ALLEGED ILLEGAL DISMISSAL UNDER THE FIRST CONTRACT

TRANSPIRED MORE THAN THREE (3) YEARS AFTER THE CASE WAS
FILED AND THEREFORE HIS CASE SHOULD HAVE BEEN DISMISSED
FOR BEING BARRED BY PRESCRIPTION.

II.

THE COURT A QUO ERRED IN RULING THAT THERE WAS

CONSTRUCTIVE DISMISSAL UNDER THE SECOND CONTRACT.

1.

IT IS LEGALLY IMPOSSIBLE TO HAVE CONSTRUCTIVE DISMISSAL

WHEN THE EMPLOYMENT HAS NOT YET COMMENCED.

2.

ASSUMING THERE WAS OMISSION UNDER THE SECOND

CONTRACT, PETITIONERS CAN ONLY BE FOUND AS HAVING
FAILED IN DEPLOYING PRIVATE RESPONDENT BUT WITH VALID
REASON.

III.
THE COURT A QUO ERRED IN FAILING TO FIND THAT EVEN
ASSUMING THERE WAS BASIS FOR HOLDING PETITIONER LIABLE
FOR FAILURE TO DEPLOY RESPONDENT, THE POEA RULES
PENALIZES SUCH OMISSION WITH A MERE REPRIMAND.
18

The petitioners contend that the first employment contract between them and
the private respondent is different from and independent of the second contract
subsequently executed upon repatriation of respondent to Manila.

We do not agree.

Novation is the extinguishment of an obligation by the substitution or change of

the obligation by a subsequent one which extinguishes or modifies the first, either by
changing the object or principal conditions, or, by substituting another in place of the
debtor, or by subrogating a third person in the rights of the creditor. In order for
novation to take place, the concurrence of the following requisites is indispensable:
1. There must be a previous valid obligation,
2. There must be an agreement of the parties concerned to a new contract,
3. There must be the extinguishment of the old contract, and
4. There must be the validity of the new contract.

19

In its ruling, the Labor Arbiter clarified that novation had set in between the first and
second contract. To quote:

xxx [T]his office would like to make it clear that the first contract entered into by
and between the complainant and the respondents is deemed to have been novated
by the execution of the second contract. In other words, respondents cannot be
held liable for the first contract but are clearly and definitely liable for the breach
of the second contract.
20

This ruling was later affirmed by the Court of Appeals in its decision ruling
that:

Guided by the foregoing legal precepts, it is evident that novation took

place in this particular case. The parties impliedly extinguished the first contract
by agreeing to enter into the second contract to placate Medequillo, Jr. who was
unexpectedly dismissed and repatriated to Manila. The second contract would not
have been necessary if the petitioners abided by the terms and conditions of
Madequillo, Jr.s employment under the first contract. The records also reveal that
the 2nd contract extinguished the first contract by changing its object or principal.
These contracts were for overseas employment aboard different vessels. The first
contract was for employment aboard the MV Stolt Aspiration while the second
contract involved working in another vessel, the MV Stolt Pride. Petitioners and
Madequillo, Jr. accepted the terms and conditions of the second contract. Contrary
to petitioners assertion, the first contract was a previous valid contract since it
had not yet been terminated at the time of Medequillo, Jr.s repatriation to Manila.
The legality of his dismissal had not yet been resolved with finality. Undoubtedly,
he was still employed under the first contract when he negotiated with petitioners
on the second contract. As such, the NLRC correctly ruled that petitioners could
only be held liable under the second contract.
21

We concur with the finding that there was a novation of the first employment
contract.
We reiterate once more and emphasize the ruling in Reyes v. National Labor
Relations Commission, to wit:
22

x x x [F]indings of quasi-judicial bodies like the NLRC, and affirmed by the

Court of Appeals in due course, are conclusive on this Court, which is not a trier
of facts.

xxxx

x x x Findings of fact of administrative agencies and quasi-judicial bodies,

which have acquired expertise because their jurisdiction is confined to
specific matters, are generally accorded not only respect, but finality when
affirmed by the Court of Appeals. Such findings deserve full respect and,
without justifiable reason, ought not to be altered, modified or reversed.(Emphasis
supplied)
23

With the finding that respondent was still employed under the first contract
when he negotiated with petitioners on the second contract, novation became an
unavoidable conclusion.
24

Equally settled is the rule that factual findings of labor officials, who are
deemed to have acquired expertise in matters within their jurisdiction, are generally
accorded not only respect but even finality by the courts when supported by
substantial evidence, i.e., the amount of relevant evidence which a reasonable mind
might accept as adequate to justify a conclusion. But these findings are not infallible.
When there is a showing that they were arrived at arbitrarily or in disregard of the
evidence on record, they may be examined by the courts. In this case, there was no
showing of any arbitrariness on the part of the lower courts in their findings of facts.
Hence, we follow the settled rule.
25

26

We need not dwell on the issue of prescription. It was settled by the Court of
Appeals with its ruling that recovery of damages under the first contract was already
time-barred. Thus:

Accordingly, the prescriptive period of three (3) years within which

Medequillo Jr. may initiate money claims under the 1st contract commenced on the
date of his repatriation. xxx The start of the three (3) year prescriptive period must
therefore be reckoned on February 1992, which by Medequillo Jr.s own
admission was the date of his repatriation to Manila. It was at this point in time
that Medequillo Jr.s cause of action already accrued under the first contract. He
had until February 1995 to pursue a case for illegal dismissal and damages arising

from the 1st contract. With the filing of his Complaint-Affidavit on March 6, 1995,
which was clearly beyond the prescriptive period, the cause of action under the
1st contract was already time-barred.
27

The issue that proceeds from the fact of novation is the consequence of the nondeployment of respondent.

The petitioners argue that under the POEA Contract, actual deployment of the
seafarer is a suspensive condition for the commencement of the employment. We
agree with petitioners on such point. However, even without actual deployment, the
perfected contract gives rise to obligations on the part of petitioners.
28

A contract is a meeting of minds between two persons whereby one binds

himself, with respect to the other, to give something or to render some service. The
contracting parties may establish such stipulations, clauses, terms and conditions as
they may deem convenient, provided they are not contrary to law, morals, good
customs, public order, or public policy.
29

30

The POEA Standard Employment Contract provides that employment shall

commence upon the actual departure of the seafarer from the airport or seaport in the
port of hire. We adhere to the terms and conditions of the contract so as to credit the
valid prior stipulations of the parties before the controversy started. Else, the
obligatory force of every contract will be useless. Parties are bound not only to the
fulfillment of what has been expressly stipulated but also to all the consequences
which, according to their nature, may be in keeping with good faith, usage and law.
31

32

Thus, even if by the standard contract employment commences only upon

actual departure of the seafarer, this does not mean that the seafarer has no remedy in
case of non-deployment without any valid reason. Parenthetically, the contention of
the petitioners of the alleged poor performance of respondent while on board the first
ship MV Stolt Aspiration cannot be sustained to justify the non-deployment, for no
evidence to prove the same was presented.
33

We rule that distinction must be made between the perfection of the

employment contract and the commencement of the employer-employee relationship.
The perfection of the contract, which in this case coincided with the date of execution
thereof, occurred when petitioner and respondent agreed on the object and the cause,
as well as the rest of the terms and conditions therein. The commencement of the
employer-employee relationship, as earlier discussed, would have taken place had
petitioner been actually deployed from the point of hire. Thus, even before the start of
any employer-employee relationship, contemporaneous with the perfection of the
employment contract was the birth of certain rights and obligations, the breach of
which may give rise to a cause of action against the erring party. Thus, if the reverse
had happened, that is the seafarer failed or refused to be deployed as agreed upon, he
would be liable for damages.
34

Further, we do not agree with the contention of the petitioners that the penalty
is a mere reprimand.

The POEA Rules and Regulations Governing Overseas Employment dated 31

May 1991 provides for the consequence and penalty against in case of nondeployment of the seafarer without any valid reason. It reads:
35

Section 4. Workers Deployment. An agency shall deploy its recruits within the
deployment period as indicated below:

xxx

b. Thirty (30) calendar days from the date of processing by the administration of
the employment contracts of seafarers.

Failure of the agency to deploy a worker within the prescribed period

without valid reasons shall be a cause for suspension or cancellation of
license or fine. In addition, the agency shall return all documents at no cost to
the worker.(Emphasis and underscoring supplied)

The appellate court correctly ruled that the penalty of reprimand provided
under Rule IV, Part VI of the POEA Rules and Regulations Governing the
Recruitment and Employment of Land-based Overseas Workers is not applicable in
this case. The breach of contract happened on February 1992 and the law applicable at
that time was the 1991 POEA Rules and Regulations Governing Overseas
Employment. The penalty for non-deployment as discussed is suspension or
cancellation of license or fine.
36

Now, the question to be dealt with is how will the seafarer be compensated by
reason of the unreasonable non-deployment of the petitioners?

The POEA Rules Governing the Recruitment and Employment of Seafarers do

not provide for the award of damages to be given in favor of the employees. The claim
provided by the same law refers to a valid contractual claim for compensation or
benefits arising from employer-employee relationship or for any personal injury,
illness or death at levels provided for within the terms and conditions of employment
of seafarers. However, the absence of the POEA Rules with regard to the payment of
damages to the affected seafarer does not mean that the seafarer is precluded from
claiming the same. The sanctions provided for non-deployment do not end with the
suspension or cancellation of license or fine and the return of all documents at no cost
to the worker. As earlier discussed, they do not forfend a seafarer from instituting an
action for damages against the employer or agency which has failed to deploy him.
37

We thus decree the application of Section 10 of Republic Act No. 8042

(Migrant Workers Act) which provides for money claims by reason of a contract
involving Filipino workers for overseas deployment. The law provides:

Sec. 10. Money Claims. Notwithstanding any provision of law to the contrary,
the Labor Arbiters of the National Labor Relations Commission (NLRC) shall
have the original and exclusive jurisdiction to hear and decide, within ninety (90)
calendar days after the filing of the complaint, the claims arising out of an
employer-employee relationship or by virtue of any law or contract involving
Filipino workers for overseas deployment including claims for actual, moral,
exemplary and other forms of damages. x x x (Underscoring supplied)

Following the law, the claim is still cognizable by the labor arbiters of the
NLRC under the second phrase of the provision.

Applying the rules on actual damages, Article 2199 of the New Civil Code
provides that one is entitled to an adequate compensation only for such pecuniary loss
suffered by him as he has duly proved. Respondent is thus liable to pay petitioner
actual damages in the form of the loss of nine (9) months worth of salary as provided
in the contract. This is but proper because of the non-deployment of respondent
without just cause.
38

WHEREFORE, the appeal is DENIED. The 31 January 2007 Decision of the

Court of Appeals in CA-G.R. SP. No. 91632 is hereby AFFIRMED. The Petitioners
are hereby ordered to pay Sulpecio Medequillo, Jr., the award of actual damages
equivalent to his salary for nine (9) months as provided by the Second Employment
Contract.

SO ORDERED.

JOSE PORTUGAL PEREZ

Associate Justice

WE CONCUR:

ANTONIO T. CARPIO
Associate Justice
Chairperson

MARIA LOURDES P. A. SERENO

Associate Justice

BIENVENIDO L. REYES
Associate Justice

ESTELA M. PERLAS-BERNABE

Associate Justice
AT T E S TAT I O N

I attest that the conclusions in the above Decision had been reached in consultation
before the case was assigned to the writer of the opinion of the Courts Division.

ANTONIO T. CARPIO
Associate Justice
Chairperson

C E R T I F I C AT I O N

Pursuant to Section 13, Article VIII of the Constitution and the Division Chairpersons
Attestation, I certify that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the opinion of the Courts
Division.

RENATO C. CORONA
Chief Justice

1* Designated as additional member per Special Order No. 1174 dated 9 January 2012.
Rule 45, Rule on Civil Procedure.
2Penned by Associate Justice Mariano C. Del Castillo (now a Member of this Court) with Presiding Justice
Ruben T. Reyes (former Member of this Court) and Associate Justice Arcangelita Romilla Lontok,
concurring. Rollo, pp. 38-54.
3Id. at 53.
4Id. at 134-139.
5Id. at 61.
6Id. at 59-62.
7Id. at 62.
8Id.
9Id.
10Id. at 64.
11Id. at 68.
12Id. at 64-65.
13Id. at 65.
14Id. at 66.
15Id. at 67.
16Id.
17Id. at 72.
18Id. at 20-21.

19Philippine Savings Bank v. Sps. Maalac, Jr., 496 Phil, 671, 686-687 (2005); Azolla Farms v. Court of
Appeals, 484 Phil. 745, 754-755.
20Rollo, p. 61.
21Id. at 45-46.
22G.R. No. 160233, 8 August 2007, 529 SCRA 487.
23Id. at 494 and 499.
24Rollo, p. 46.
25Prince Transport, Inc. v. Garcia, G.R. No. 167291, 12 January 2011, 639 SCRA 312, 324 citing Philippine
Veterans Bank v. National Labor Relations Commission, G.R. No. 188882, 30 March 2010, 617 SCRA 204.
26Id. at 324-325 citing Faeldonia v. Tong Yak Groceries, G.R. No. 182499, 2 October 2009, 602 SCRA 677, 684.
27Rollo, pp. 47-48.
28Id. at 48.
29Article 1305, New Civil Code.
30Article 1306, New Civil Code.
31Rollo, p. 48.
32Article 1315, New Civil Code.
33Rollo, p. 50.
34Santiago v. CF Sharp Crew Management, Inc., G.R. No. 162419, 10 July 2007, 527 SCRA 165, 176.
35Section 4, par. (b), Rule II, Book III.
36Section 1 (C) 4. Failure to deploy a worker within the prescribed period without valid reason:
1st Offense Reprimand.
37Santiago v. CF Sharp Crew Management, Inc., Supra note 33 at 176-177.
38In Legahi v. National Labor Relations Commission, 376 Phil. 557, 566 (1999), we held: Petitioner's dismissal
without a valid cause constitute a breach of contract. Consequently, he should only be paid the unexpired portion of
his employment contract.