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 from P1,000.00 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) [1] of the
Labor Code, as amended.
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
16. Veronica
Castigador P14,000.00
Bayogos 2,000.00
2. Josefina Mamon 3,000.00
17. Sony Jamuat 4,500.00
3. Jenelyn Casa 3,000.00
18. Irma Sobrequil 2,000.00
4. Peachy Laniog 13,500.00
19. Elsie Penarubia 2,000.00
5. Verdelina Belgira 2,000.00
20. Antonia Navarro 2,000.00
6. Elma Flores 2,500.00
21. Selfa Palma 3,000.00
7. Ramona Liturco 2,500.00
22. Lenirose
8. Grace Sabando 3,500.00
Abangan 13,300.00
9. Gloria Palma 1,500.00
23. Paulina Cordero 1,400.00
10. Avelyn Alvarez 1,500.00
24. Nora Maquiling 2,000.00
11. Candelaria Nono 1,000.00
25. Rosalie Sondia 2,000.00
12. Nita Bustamante 5,000.00
26. Ruby Sepulvida 3,500.00
13. Cynthia
27. Marjorie Macate 1,500.00
Arandillo 1,000.00
28. Estelita Biocos 3,000.00
14. Sandie Aguilar 3,000.00
29. Zita Galindo 3,500.00
15. Digna
30. Nimfa Bucol 1,000.00
Panaguiton 2,500.00
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.[2] (Underscoring supplied)
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[3] (E.O. No. 797) and Executive
Order No. 247 (E.O. No. 247),[4] 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.
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,[5] we held that:
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,[6] 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 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.[8] (Underscoring supplied)
This power conferred upon the Secretary of Labor and
Employment was echoed in People v. Diaz,[9] viz.:
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.

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.
[1]

Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION

G.R. No. L-79436-50 January 17, 1990

EASTERN ASSURANCE & SURETY CORPORATION, petitioner,
vs.
SECRETARY OF LABOR, PHILIPPINE OVERSEAS
EMPLOYMENT ADMINISTRATION, ELVIRA VENTURA, ESTER
TRANGUILLAN, et al., respondents.
Tanjuatco, Oreta, Tanjuatco, Berenguer & San Vicente for
petitioner.

NARVASA, J.:
In connection with the application with the Philippine Overseas
Employment Administration (POEA) of J & B Manpower Specialist,
Inc. for a license to engage in business as a recruitment agency,
a surety bond was filed on January 2, 1985 by the applicant and
the Eastern Assurance and Surety Corporation, herein petitioner,
in virtue of which they both held themselves
. . . firmly bound unto (said) Philippine Overseas
Employment Administration, Ministry of Labor in the
penal sum of PESOS ONE HUNDRED FIFTY THOUSAND
ONLY . . . (Pl50,000.00) for the payment of which will
and truly to be made, . . . (they bound themselves,

their) heirs, executors, administrators, successors and

assigns, jointly and severally . .
The bond stipulated that:
a) it was "conditioned upon the true and faithful performance and
observance of the . . . principal (J & B Manpower Specialist, Inc.)
of its duties and obligations in accordance with all the rules and
regulations promulgated by the Ministry of Labor Philippine
Overseas Employment Administration and with the terms and
conditions stipulated in the License;
b) the liability of the . . . Surety (petitioner) shall in no case
exceed the sum of PESOS ONE HUNDRED FIFTY THOUSAND
(P150,000.00) ONLY, PHILIPPINE CURRENCY; 1
c) notice to the Principal is also a notice to the Surety; and
d) LIABILITY of the surety . . . shall expire on JANUARY 02, 1986
and this bond shall be automatically cancelled ten (10) days after
its expiration and the surety shall not be liable for any claim not
discovered and presented to it in writing within said period of . . .
from expiration and the obligee hereby expressly waives the
rights to file any court action against the Surety after termination
of said period of . . . . above cited. 2
As narrated by respondent Secretary of Labor, the facts are as
follows: 3
From June 1983 to December 1985 . . . thirty three
(33) . . . (persons) applied for overseas employment
with . . . (J & B). In consideration of promised
deployment, complainants paid respondent various
amounts for various fees. Most of' the receipts issued

were sighed by Mrs. Baby Bundalian, Executive VicePresident of . . . (J & B).

Because of non-deployment . . . (the applicants) filed
separate complaints with the Licensing and Regulation
Office of POEA against . . . (J & B) for violation of
Articles 32 and 34 (a) of the Labor Code between the
months of April to October 1985.
Despite summons/notices of hearing,, . . . (J & B) failed
to file Answer nor appear in the hearings conducted.
In its separate Answer, . . . EASCO essentially
disclaimed liability on the ground that the claims were
not expressly covered by the bond, that POEA had no
jurisdiction to order forfeiture of the bond, that some of
the claims were paid beyond or prior to the period of
effectivity of the bond.
On September 8, 1986, the POEA Administrator issued
the Order in favor of complainants ruling thus:
After careful evaluation, we find that the
receipts and testimonies of complainants, in
the absence of controverting evidence
substantially establish that respondent
charged and collected fees from them in
amounts exceeding what is prescribed by this
Administration. Complainants' nondeployment strongly indicates that there was
no employment obtained for them. Hence,
violation of Articles 32 and 34 (a) of the
Labor Code, as amended, is established
against respondent. The claims of

complainants having arose (arisen) out of

acts of the principal covered under the surety
(bond), the respondent surety is equally
liable therefor.
Except for complainants Ramos, Samson, de Leon and
Rizada, whose claims were transacted prior to the
effectivity of the bond, . . . EASCO was declared jointly
and severally liable with . . . (J & B) to twenty-nine
(29) complainants.
(The dispositive portion of the POEA Administrator's
Order also contained the following statement and
direction, viz.:
Respondent was suspended on May 23, 1985,
June 26, 1985 and January 17, 1986 all for
illegal exaction. Considering its track record
of illegal exaction activities and considering
further the gross violation of recruitment
rules and regulations established against it in
the instant cases, and the expiration of its
license on February 15, 1985, it is hereby
forever banned from participation in the
overseas employment program. It is ordered
to cease and desist from further engaging in
recruitment activities otherwise it shall be
prosecuted for illegal recruitment.')
(J & B filed a motion for reconsideration). On December
19, 1986, the then deputy Minister of Labor and
Employment denied the . . . Motion for Reconsideration
for lack of merit and affirmed the findings in the Order

of the POEA Administrator finding no reversible error

therein.
On appeal by EASCO J & B having as aforestated taken no part
in the proceeding despite due service of summons the
judgment was modified by the Secretary of Labor, by Order dated
July 1, 1987, disposing as follows: 4
WHEREFORE, in view of the foregoing, the Resolution of
the then Deputy Minister of Labor dated December 19,
1986 affirming the Order of the POEA Administrator
dated September 8, 1986 is hereby MODIFIED.
Respondent J & B Manpower Specialist is directed to
refund all thirty-three (33) complainants as listed in the
Order of September 8, 1986 in the amounts listed
thereto with the modification that complainants Lucena
Cabasal and Felix Rivero are both entitled only to
P15,980 and not P15,980 each. Respondent Eastern
Assurance and Surety Corporation is hereby found
jointly and severally liable with respondent J & B
Manpower Specialist to refund nineteen (19)
complainants in the modified amounts . . . (particularly
specified).
The other findings in the Order of the POEA
Administrator dated September 8, 1986 affirmed in the
Resolution of the then Deputy Minister . . . are also
hereby AFFIRMED. This Order is FINAL. No further
Motion for Reconsideration hereof shall be entertained.
It is noteworthy that EASCO's liability for the refund, jointly and
severally with its principal, was limited to 19 named complainants
(in contrast to verdicts of the POEA and the Deputy Minister
which both ordered payment to no less than 33 complainants)

and was correspondingly reduced from P308,751.75 and US $

400.00 5 to the aggregate amount of P 140,817.75. 6
The special civil action of certiorari at bar was thereafter
instituted by EASCO 7 praying for the nullification of the POEA
Administrator's Order of September 8, 1986, the Resolution of the
Deputy Minister of Labor of' December 19, 1986, and the Order of
the Secretary of Labor of July 1, 1987, It theorizes that:
1) the POEA had no jurisdiction over the claims for
refund filed by non-employees;
2) neither did the Secretary of Labor have jurisdiction
of the claims;
3) assuming they had jurisdiction, both the POEA and
Secretary of Labor also committed legal errors and
acted with grave abuse of discretion when they ruled
that petitioner is liable on the claims.
EASCO contends that the POEA had no "adjudicatory jurisdiction"
over the monetary claims in question because the same "did not
arise from employer-employee relations." Invoked in support of
the argument is Section 4 (a) of EO 797 providing in part 8 that
the POEA has
. . . original and exclusive jurisdiction over all cases,
including money claims, involving employer-employee
relations arising out of or by virtue of any law or
contract involving Filipino workers for overseas
employment including seamen . . .
The complaints are however for violation of Articles 32 and
34 a) of the Labor Code. Article 32 and paragraph (a) of
Article 34 read as follows:

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 approved 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 actually
received by him as a loan or advance; . . .
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 9 "on its own initiative or
upon filing of a complaint or report or upon request for
investigation by any aggrieved person, . . . (authority to) conduct
the necessary proceedings for the suspension or cancellation of
the license or authority of any agency or entity" for certain
enumerated offenses including

1) the imposition or acceptance, directly or indirectly, of any

amount of money, goods or services, or any fee or bond in excess
of what is prescribed by the Administration, and
2) any other violation of pertinent provisions of the Labor Code
and other relevant laws, rules and regulations. 10
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." 11
Implicit in these powers is the award of appropriate relief to the
victims of the offenses committed by the respondent agency or
contractor, specially the refund or reimbursement of such fees as
may have been fraudulently or otherwise illegally collected, or
such money, goods or services imposed and accepted in excess of
what is licitly prescribed. It would be illogical and absurd to limit
the sanction on an offending recruitment agency or contractor to
suspension or cancellation of its license, without the concomitant
obligation to repair the injury caused to its victims. It would
result either in rewarding unlawful acts, as it would leave the
victims without recourse, or in compelling the latter to litigate in
another forum, giving rise to that multiplicity of actions or
proceedings which the law abhors.
Even more untenable is EASCO's next argument that the recruiter
and its victims are in pari delicto the former for having
required payment, and the latter for having voluntarily paid,
"prohibited recruitment fees" and therefore, said victims are
barred from obtaining relief. The sophistical, if not callous,
character of the argument is evident upon the most cursory
reading thereof; it merits no consideration whatever.

The Court is intrigued by EASCO's reiteration of its argument that

it should not be held liable for claims which accrued prior to or
after the effectivity of its bond, considering that the respondent
Secretary had conceded the validity of part of said argument, at
least. The Secretary ruled that EASCO's "contention that it should
not be held liable for claims/payments made to respondent
agency before the effectivity of the surety bond on January 2,
1985 is well taken." According to the Secretary: 12
. . . A close examination of the records reveal(s) that
respondent EASCO is not jointly and severally liable
with respondent agency to refund complainants Lucena
Cabasal, Felix Rivero, Romulo del Rosario, Rogelio
Banzuela, Josefina Ogatis, Francisco Sorato, Sonny
Quiazon, Josefina Dictado, Mario del Guzman and
Rogelio Mercado (10 in all). These complainants paid
respondent agency in 1984, or before the effectivity of
the bond on January 2, 1985 as evidence by the reciept
and their testimonies.
The related argument, that it is also not liable for claims filed
after the expiry (on January 2, 1986) of the period stipulated in
the surety bond for the filing of claims against the bond, must
however be rejected, as the Secretary did. The Court discerns no
grave abuse of discretion in the Secretary's statement of his
reasons for doing so, to wit:
. . . While it may be true that respondent EASCO
received notice of their claims after the ten (10) day
expiration period from cancellation or after January 12,
1986 as provided in the surety bond, records show that
. . . EASCO's principal, respondent agency, was
notified/ summoned prior to the expiration period or
before January 12, 1986. Respondent agency received

summons on July 24, 1985 with respect to claims of

complainants Penarroyo, dela Cruz and Canti. It also
received summons on November 26, 1985 with respect
to Giovanni Garbillons' claim. Respondent agency was
likewise considered constructively notified of the claims
of complainants Calayag, Danuco Domingo and
Campena on October 6, 1985. In this connection, it
may be stressed that the surety bond provides that
notice to the principal is notice to the surety. Besides, it
has been held that the contract of a compensated
surety like respondent EASCO is to be interpreted
liberally in the interest of the promises and
beneficiaries rather than strictly in favor of the surety
(Acoustics Inc. v. American Surety, 74 Nev-6, 320 P2d.
626, 74 Am. Jur. 2d).
So, too, EASCO's claim that it had not been properly served with
summons as regards a few of the complaints must be rejected,
the issue being factual, and the Court having been cited to no
grave error invalidating the respondent Secretary's conclusion
that summons had indeed been duly served.
Finally, EASCO's half-hearted argument that its liability should be
limited to the maximum amount set in its surety bond, i.e.,
P150,000.00, is palpably without merit, since the aggregate
liability imposed on it, P140,817.75, supra, does not in fact
exceed that limit.
WHEREFORE, the petition is DISMISSED for lack of merit, and this
decision is declared to be immediately executory. Costs against
petitioner.
SO ORDERED.

Cruz, Gancayco, Grio-Aquino and Medialdea, JJ., concur.

Footnotes
1 This limitation is stated no less than three (3) times
in the surety bond.
2 The blanks were not filed up by the parties.
3 Rollo, pp. 48-49; parenthetical statements supplied.
4 Emphasis supplied.
5 Rollo, pp. 41-42 being pp. 1 and 2 of the Resolution
of the Deputy Minister dated Dec. 19, 1986, in which
are enumerated the complainants entitled to refund the
amounts individually due to them.
6 The list of complainants entitled to refund and the
amounts respectively due them are set forth at pages
10 and 11 of the Order of the respondent
Secretary: Rollo, pp. 54-55.
7 Id., pp. 9-34. The petition is dated September 12,
1987.
8 Emphasis supplied.
9 Sec. 3 of Rule VI, Book II of the New Rules on
Overseas Employment
10 Sec. 2 (a) and (2), id.
11 Sec. 10, id.

12 Underscoring in quotation, in original.

Republic of the Philippines

SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 76595 May 6, 1988
PACIFIC ASIA OVERSEAS SHIPPING
CORPORATION, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and TEODORO
RANCES, respondents.
Acaban, Corvera, Valdez & Del Castillo Law Office for petitioner.
The Solicitor General for public respondent.
Valentin A Zozobrado for private respondent.

FELICIANO, J.:
The petitioner, Pacific Asia Overseas Shipping Corporation (Pascor,
in short), seeks the annulment and setting aside of the
Resolutions of the public respondent National Labor Relations
Commission (NLRC) dated 14 August 1986 and 19 November
1986, denying Pascor's appeal for having been filed out of time
and denying its Motion for Reconsideration, respectively.

Sometime in March 1984, private respondent Teodoro Rances was

engaged by petitioner Pascor as Radio Operator of a vessel
belonging to Pascor's foreign principal, the Gulf-East Ship
Management Limited. Four (4) months later, and after having
been transferred from one vessel to another four times for
misbehaviour and inability to get along with officers and crew
members of each of the vessels, the foreign principal terminated
the services of private respondent Rances citing the latter's poor
and incorrigible work attitude and incitement of others to
insubordination. 1
Petitioner Pascor filed a complaint against private respondent with
the Philippine Overseas Employment Administration tion (POEA)
for acts unbecoming a marine officer and for, character
assassination," which case was docketed as POEA Case No: M-8409-848. Private respondent denied the charges set out in the
complaint and by way of counterclaim demanded an amount of
US$ 1,500.00 which a court in Dubai had, he contended, awarded
in his favor against petitioner's foreign principal. In due course,
on 4 September 1985, the POEA found private respondent liable
for inciting another officer or seaman to insubordination and
challenging a superior officer to a fist fight and imposed six (6)
months suspension for each offense or a total of twelve (12)
months suspension, with a warning that commission of the same
or similar offense in the future would be met with a stiffer
disciplinary sanction. The POEA decision passed over sub
silentiothe counterclaim of private respondent. 2
On 10 October 1985, private respondent filed a complaint against
petitioner, docketed as POEA Case No: M-85-10-0814 and entitled
"Teodoro Rances v. Pacific Asia Overseas Shipping Corporation."
In this complaint, he sought to carry out and enforce the same
award obtained by him in Dubai allegedly against Pascor's foreign

principal which he had pleaded as a counterclaim in POEA Case

No: M-84-09-848. Private respondent claimed that be had filed an
action in the Dubai court for US$ 9,364.89, which claim was
compromised by the parties for US$ 5,500.00 plus "a return
ticket to (private respondent's) country," with the proviso that
"the opponent" would pay "to the claimant" US$ 1,500.00 'in case
the wife of the claimant Rantes doesn't agree with the amount
sent to [her] Private respondent further claimed that since his
wife did not "agree with" the amount given to her as 'an
allotment for the 3-month period (of April, May and June 1984),
he was entitled to recover the additional US$ 1,500.00 "as
mandated under the Compromise Agreement which was the basis
of the decision of the Dubai Civil Court. 3 As evidence of this
foreign award, private respondent submitted what purports to be
an "original copy (sic) of the decision" of the Dubai court written
in Arabic script and language, With a copy of an English
translation by an unidentified translator and a copy of a
transmittal letter dated 23 September 1984 signed by one Mohd
Bin Saleh "Honorary Consul for Philippines." The full texts of the
purported English translation of the Dubai award and of the
transmittal letter are set out in the margin. 4
In its answer filed on 11 December 1985, petitioner Pascor made
four principal arguments: that the copy of the Dubai decision
relied upon by private respondent could not be considered as
evidence, not having been properly authenticated; that Pascor
was not a party to the Dubai court proceedings; that the POEA
had no jurisdiction over cases for the enforcement of foreign
judgments; and that the claim had already been resolved in POEA
Case No: M-84-09-848, having been there dismissed as a
counterclaim.

In a decision dated 14 April 1986, the POEA held petitioner Pascor

liable to pay private respondent Rances the amount of US$
1,500.00 "at the prevailing rate of exchange at the time of
payment." This decision was served on petitioner's counsel on 18
April 1986, which counsel filed a 'Memorandum on Appeal and/or
Motion for Reconsideration" on 29 April 1986.
Private respondent moved the next day for dismissal of the
appeal and for issuance of a writ of execution, upon the ground
that petitioner's appeal had been filed one (1) day beyond the
reglementary period and that, consequently, the POEA decision
had become final and executory.
Petitioner opposed dismissal of its appeal and issuance of a writ
of execution, arguing that the one (1) day delay in filing its
Memorandum on Appeal had been occasioned by an excusable
mistake.
On 20 May 1986, the POEA issued an order denying petitioner's
appeal for having been filed out of time. Petitioner moved for
reconsideration, paid the docket fee and posted the required
supercedes bond in connection with its appeal.
On 29 May 1986, the POEA denied private respondent's Motion
for a Writ of Execution and elevated the case to the NLRC.
On 14 August 1986, public respondent NLRC denied petitioner's
appeal as flied out of time. Petitioner's Motion for Reconsideration
was similarly denied.
In the present Petition for certiorari and mandamus with prayer
for Preliminary Injunction and Temporary Restraint ' 9 Order,
Pascor urges that public respondent NLRC acted with grave abuse

of discretion or in excess of its jurisdiction in denying its appeal

and motion for reconsideration.
We think petitioner's contention has merit. The record shows, not
an intent to delay the proceedings but rather a genuine and
substantial effort on the part of petitioner Pascor to file, in a
timely manner, its Memorandum on Appeal which, in the
circumstances of this case, should not have been disregarded by
respondent NLRC. The circumstances surrounding the one (1) day
delay in the filing of petitioner's Memorandum on Appeal are
summed up by petitioner in the following terms:
30.1. Mr. Ruben de la Cruz, who was newly hired as
messenger in the law firm representing the petitioner
was tasked with the delivery of the memorandum on
appeal in the afternoon of April 28, 1986 (the last day
for filing the same).
30.2. When Mr. de la Cruz read the caption of the
memorandum, he noted that the same is addressed to
the respondent NLRC and he erroneously concluded
that it should be filed with the offices of the NLRC in
Intramuros, Manila.
30.3. Wen Mr. de la Cruz presented petitioner's Appeal
at the docket section of respondent NLRC, he was
advised that the same should be filed with the offices of
the POEA in Ortigas, San Juan, Metro Manila.
30.4. Mr. de la Cruz upon being apprised of his error
immediately proceeded to the offices of the POEA in
order to have petitioner's (PASCOR's) appeal received
but unfortunately, by the time he arrived thereat, the

POEA office had already closed for the day. Thus, the
appeal was filed the following day.
To Support the above explanation, in addition to an affidavit
executed by Mr. Ruben de la Cruz, petitioner submitted a
certification dated 2 May 1986 executed by Evelyn G. Sauza,
receive . receiving clerk of respondent NLRC stating that she had
read to receive the Memorandum on Appeal on or about 4:15
P.M., 28 April 1986, because the Memorandum was supposed to
be filed with the POEA office in Ortigas and not with the NLRC in
Intramuros.
The brevity of the delay in filing an appeal is not, of course, by
itself a sufficient basis for giving due course to the appeal. In the
present case, however, the factual circumstances combine with
the legal merits of the case urged by the petitioner to move us to
the conviction that respondent NLRC should have recognized and
heeded the requirements of orderly procedure and substantial
justice which are at stake in the present case by allowing the
appeal. In Siguenza v. Court of appeals, 5 the Court stressed that
the right to appeal should not be lightly disregarded by a
stringent application of rules of procedure especially where the
appeal is on its face meritorious and the interests of substantial
justice would be served by permitting the appeal:
In the case of Castro v. Court of Appeals (132 SCRA
782), we stressed the importance and real purpose of
the remedy of appeal and ruled:
An appeal is an essential part of our judicial
system. We have advised the courts to
proceed with caution so as not to deprive a
party of the right to appeal (National
Waterworks and Sewerage Authority v.

Municipality of Libmanan, 97 SCRA 138) and

instructed that every party-litigant should
be afforded the amplest opportunity for the
proper and just disposition of his cause,
freed from the constraints of
technicalities (A. One Feeds, Inc. v. Court of
Appeals, 100 SCRA 590).<re||an1w>
The rules of procedure are not to be applied
in a very rigid and technical sense. The rules
of procedure are used only to help secure not
override substantial justice. (Gregorio v.
Court of Appeals [72 SCRA 1201). Therefore,
we ruled in Republic v. Court of Appeals (83
SCRA 453) that a six-day delay in the
perfection of the appeal does not warrant its
dismissal. And again inRamos v. Bagasao, 96
SCRA 396, this Court held that the delay in
four (4) days in filing a notice of appeal and
a notion for extension of time to file a record
on appeal can be excused on the basis of
equity.
We should emphasize, however, that we have allowed
the of an appeal in some cases where a sent application
of the rules would have denied it only when to do so
would serve the demands of substantial justice and in
the exercise of our equity junction.
In the case at bar, the petitioner's delay in their record
on appeal should not be strictly construed as to deprive
them of the right to appeal especially since on its face
the appeal appears to be impressed appeal especially
with merit. 6

We turn to the merits of the Petition. An examination of the

complaint and of the Manifestation and Motion filed by respondent
Rances in POEA Case No: M-85-08-14, shows that the cause of
action pleaded by respondent Rances was enforcement of the
decision rendered by c. Dubai Court which purported to award
him, among other things, an additional amount of US$ 1,500.00
under certain circumstances. In the complaint dated 23 October
1985, respondent Rances stated:
Details of cause of action (Why are you complaining?)
(To include place and date of occurrence of case of
action and amount of claim, if any) P 2,295 US$ salary
for three (3) months stated in the compromise of 1,500
TJS$ total of 2,795.50 US$ [as] per decision from Civil
Court of Dubai U.A.E. 7
The Motion/Manifestation dated 3 December 1985 filed by
respondent Rances may be quoted in extension
1. Originally, complainant's claim was US$ 9,364.89
which he filed with the Dubai Court for adjudication.
xxx xxx xxx
2. The US$ 9,364.89 claim was compromised by the
court in a decision dated September 12, 1984. Xerox
copy of the decision is hereto attached as Annex "B"
and the authentication as Annex "B-l' and made an
integral part thereof.
3. Pertinent portion of the decision referred to above
reads as follows:
Both parties came to a decision that the
opponent would pay to the claimant the

amount of Five Thousand & Five Hundred

dollars for the withdrawal of the claimant and
providing him return ticket to his country.
The opponent declared that he would pay
One Thousand & Five Hundred Dollars to the
opponent in case the wife of the claimant
doesn't agree with the amount sent to.
4. During the hearing leading to the Compromise, I
emphasized that the allotment I was giving my wife
was US$ 765.00 per month and at the time the case
was filed the allotment was already 3 months in arrears
which already amounted to US$ 2,295.00.
5. The amount sent my wife which is only P 13,393.45
through PASCOR and confirmed by a Certification of the
Philippine National Bank, Dagupan City Branch, hereto
attached as Annex 'C' is definitely very meager
compared to the exchange value of US$ 2,295.00;
6. My wife certainly did not agree and cannot agree or
admit that only P 13,393.45 will be given her as an
allotment for the 3-month period; hence, urder the
Compromise Agreement, we are entitled to recover the
additional US$ 1,500.00;
7. The agreement insofar as the additional remittance
to my wife of US$1,500.00 is reasonable in that adding
the same to the P13,393.45 my wife received would
sum up to US$2,295.00 corresponding to the
accumulated 3 month allotment due my wife.
WHEREFORE, premises considered, it is respectfully
prayed of this Honorable Office to

Cause or require respondent to remit and/or pay the

undersigned or his wife of the amount of US$
1,500.00as mandated under the Compromise
Agreement which was the basis of the decision of the
Dubai Civil Court. 8
It should be noted that respondent Rances submitted to the POEA
only the Dubai Court decision; he did not submit any copy of the
'Compromise Agreement' (assuming that to have been reduced to
writing) which he presumably believed to have been absorbed
and superseded by the Dubai decision.
That the cause of action set out in respondent Rances' complaint
was enforcement of the Dubai decision is further, indicated in the
decision dated 14 April 1986 rendered by the POEA. This decision
provided in part as follows:
Complainant alleged that his original claim of US$
9,364.89 for unpaid salaries, termination pay and travel
expenses was filed in Dubai. In a decision rendered by
the Dubai Court, his claim was compromised in the
amount of US$ 5,500.00 plus return plane ticket. The
amount of US$ 1,500.00 will be paid to his wife if she
does not agree with the amount sent to her. The three
(3) months unremitted allotments refers to the months
of April, May and June 1984. As evidenced by the
Allotment Shp, respondent approved the authority
given by complainant stating that the amount of US$
765.00 be remitted to his wife belong with the month
of April 1984. The amount remitted to his wife for
allotment cover the three (3) month period was only P
13,393.45. The basis of complainant's claim is the
reservation in the decision of the Dubai Court which
states that in case the wife of the claimant does not

agree with the amount sent to her, the opponent shall

pay US$ l,500.00. 9
Clearly, therefore, respondent Rances' action was for enforcement
of the Dubai decision to the extent that such decision provided for
payment of an additional amount of US$1,500.00 and that
respondent relied upon such decision.
Petitioner argues vigorously that the POEA had no authority and
jurisdiction to enforce the judgment of a foreign court. Under
Section 1, Rule 1, Book VI of the POEA Rules and Regulations, it
will be seen that the POEA has jurisdiction to decide all cases
'involving employer employee relations arising out of or by virtue
of any law or contract involving Filipino workers for overseas
employment, including seamen." Respondent Rances, however,
relied not upon the employer - employee relationship between
himself and petitioner corporation and the latter's foreign
principal, but rather upon the judgment obtained by him from the
Dubai Court which had apparently already been partially satisfied
by payment to respondent Rances of US$ 5,500.00. The POEA
has no jurisdiction to hear and decide a claim for enforcement of
a foreign judgment. Such a claim must be brought before the
regular courts. The POEA is not a court; it is an administrative
agency exercising, inter alia, adjudicatory or quasi-judicial
functions. Neither the rules of procedure nor the rules of evidence
which are mandatorily applicable in proceedings before courts,
are observed in proceedings before the POEA. 10
Even assuming (arguendo, merely) that the POEA has jurisdiction
to recognize and enforce a foreign judgment, still respondent
Rances cannot rely upon the Dubai decision. The Dubai decision
was not properly proved before the POEA. The Dubai decision
purports to be the written act or record of an act of an official
body or tribunal of a foreign country, and therefore a public

writing under Section 20 (a) of Rule 132 of the Revised Rules of

Court. Sections 25 and 26 of Rules 132 prescribe the manner of
proving a public of official record of a foreign country in the
following terms:
Sec. 25. Proof of public or official record. An official
record or an entry therein, when admissible for any
purpose, may be evidenced by an official publication
thereof or by a copy attested by the officer having the
legal custody of the record, or by his deputy, and
accompanied. if the record is not kept in the
Philippines, with a certificate that such officer has the
custody. If the office in which the record is kept is in a
foreign country, the certificate maybe be made by a
secretary of embassy or litigation, consul general,
consul, vice consul, or consular agent or by any officer
in the foreign service of the Philippines stationed in the
foreign country in which the record is kept, and
authenticated by the seal of his office.
Sec. 26. What attestation of copy must state.
Whenever a copy of a writing is attend for the purpose
of evidence, the attestation must state, in substance,
that the copy is a correct copy of the original, or a
specific part thereof, as the case may be. The
attestation must be under the official seal of the
attesting officer, if there be any, or if he be the clerk of
a court having a seal, under the seal of such court.
(Emphasis supplied)
In the instant case, respondent Rances failed to submit any
attestation issued by the proper Dubai official having legal
custody of the original of the decision of the Dubai Court that the
copy presented by said respondent is a faithful copy of the

original decision, which attestation must furthermore be

authenticated by a Philippine Consular Officer having jurisdiction
in Dubai. The transmittal letter, dated 23 September 1984, signed
by Mohd Bin Saleh, Honorary Consul for Philippines' does not
comply with the requirements of either the attestation under
Section 26 nor the authentication envisaged by Section 25. 11
There is another problem in respect of the admissibility in
evidence of the Dubai decision. The Dubai decision is
accompanied by a document which purports to be an English
translation of that decision., but that translation is legally
defective. Section 34 of Rule 132 of the Revised Rules of Court
requires that documents written in a non-official language hke
Arabic) shall not be admitted as evidence unless accompanied by
a translation into English or Spanish or Filipino. 12 In Ahag v.
Cabiling, 13 Mr. Justice Moreland elaborated on the need for a
translation of a document written in a language other than an
official language:
... Moreover, when there is presented in evidence an
exhibit written in any language other than Spanish, if
there is an appeal, that exhibit should be translated
into Spanish by the official interpreter of the court, or a
translation should be agreed upon by the parties, and
both original and translation sent to this court. In the
case before us, there is an untranslated exhibit written
in the Visayan language. 14
In Teng Giok Yan v. Hon. Court of Appeals, et al., 15 the Court,
speaking through Mr. Justice Montemayor, had occasion to stress
the importance of having a translation made by the court
interpreter who must, of course, be of recognized competence
both in the language in which the document involved is written
and in English. The Court said:

[t]he trial court was certainly not bound by the

translation given by the Chinese Embassy, specially in
the absence of a delete assurance that said translation
was correct and that it was made by the Embassy
Adviser himself. On the other hand, the translation
made by the court interpreter is official and reliable not
only because of the recognized ability of said
interpreter to translate Chinese characters into English,
but also because said interpreter was under the direct
supervision and control of the court. .... 16
In the instant case, there is no showing of who effected the
English translation of the Dubai decision which respondent Rances
submitted to the POEA. The English translation does not purport
to have been made by an official court interpreter of the
Philippine Government nor of the Dubai Government. Neither the
Identity of the translator nor his competence in both the Arabic
and English languages has been shown. The English translation
submitted by the respondent is not sworn to as an accurate
translation of the original decision in Arabic. Neither has that
translation been agreed upon by the parties as a true and faithful
one.
The foregoing does not exhaust the difficulties presented by
reliance upon the Dubai decision. The Dubai Court decision, even
on the basis of the English translation submitted by respondent
Rances, does not purport on its face to have been rendered
against petitioner Pascor nor against the foreign principal of
petitioner. Respondent Rances simply assumed that the decision
was rendered against petitioner's foreign principal. The Dubai
decision does not Identify the parties to the litigation that was
resolved by said decision. Accordingly, the Dubai decision can
scarcely be enforced against petitioner Pascor. Further, even if the

Dubai decision had on its face purported to be rendered against

petitioner Pascor, we must note that petitioner Pascor has
expressly denied that jurisdiction had ever been acquired by the
Dubai court over the person of Pascor in accordance with the
Rules of Procedure applicable before the Dubai
Court. 17 Respondent Rances has not proved the contents of the
Dubai Rules of Procedure governing acquisition of jurisdiction
over the person of a non-resident defendant.
Finally, if it be assumed (arguendo, once more) that the Dubai
Court had indeed acquired jurisdiction over the person of Pascor's
foreign principal Gulf East Ship Management Ltd. it still
would not follow that Pascor would automatically be bound by the
Dubai decision. The statutory agency (or suretyship) of Pascor is
limited in its reach to the contracts of employment Pascor entered
into on behalf of its principal with persons like respondent
Rances. 18 Such statutory inability does not extend to liability for
judgments secured against Gulf East Ship Management Ltd., in
suits brought against Gulf East outside Philippine territorial
jurisdiction, even though such a suit may involve a contract of
employment with a Filipino seaman.
We conclude that the POEA acted without or in excess of
jurisdiction in rendering its Decision dated 14 April 1986 and its
Order dated 20 May 1986, and that public respondent NLRC
similarly acted without or in excess of jurisdiction in rendering its
Orders dated 14 August 1986 and 19 November 1986 denying
petitioner's appeal and Motion for Reconsideration. This, however,
is without prejudice to the right of respondent Rances to initiate
another proceeding before the POEA against petitioner Pascor,
this time on the basis alone of the contract of employment which
existed between said respondent and petitioner or petitioner's
foreign principal; there, respondent Rances may seek to show

that he is still entitled to the allotments which he claims were not

remitted by his employer to his wife.
ACCORDINGLY, the Petition for certiorari is GRANTED and the
Resolutions of public respondent NLRC dated 14 August 1986 and
19 November 1986 are hereby NULLIFIED and SET ASIDE. The
Temporary Restraining Order issued by this Court on 8 December
1986 is hereby made PERCENT. No pronouncement as to costs.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 85416 July 24, 1990
FRANCISCO V. DEL ROSARIO, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and
LEONARDO V. ATIENZA, respondents.
Jardeleza, Sobrevias, Diaz, Hayudini & Bodegon Law Offices for
petitioner.
Lourdes T. Pagayatan for private respondent.

CORTES, J.:
In POEA Case No. 85-06-0394, the Philippine Overseas
Employment Administration (POEA) promulgated a decision on
February 4, 1986 dismissing the complaint for money claims for

lack of merit. The decision was appealed to the National Labor

Relations Commission (NLRC), which on April 30, 1987 reversed
the POEA decision and ordered Philsa Construction and Trading
Co., Inc. (the recruiter) and Arieb Enterprises (the foreign
employer) to jointly and severally pay private respondent the
peso equivalent of $16,039.00, as salary differentials, and
$2,420.03, as vacation leave benefits. The case was elevated to
the Supreme Court, but the petition was dismissed on August 31,
1987 and entry of judgment was made on September 24, 1987.
A writ of execution was issued by the POEA but it was returned
unsatisfied as Philsa was no longer operating and was financially
incapable of satisfying the judgment. Private respondent moved
for the issuance of an alias writ against the officers of Philsa. This
motion was opposed by the officers, led by petitioner, the
president and general manager of the corporation.
On February 12, 1988, the POEA issued a resolution, the
dispositive portion of which read:
WHEREFORE, premises considered, let an alias writ of
Execution be issued and the handling sheriff is ordered
to execute against the properties of Mr. Francisco V. del
-Rosario and if insufficient, against the cash and/or
surety bond of Bonding Company concerned for the full
satisfaction of the judgment awarded.
Petitioner appealed to the NLRC. On September 23, 1988, the
NLRC dismissed the appeal. On October 21, 1988, petitioner's
motion for reconsideration was denied.
Thus, this petition was filed on October 28, 1988, alleging that
the NLRC gravely abused its discretion. On November 10, 1988
the Court issued a temporary restraining order enjoining the

enforcement of the NLRC's decision dated September 23, 1988

and resolution dated October 21, 1988. The petition was given
due course on June 14, 1989.
After considering the undisputed facts and the arguments raised
in the pleadings, the Court finds grave abuse of discretion on the
part of the NLRC.
The action of the NLRC affirming the issuance of an alias writ of
execution against petitioner, on the theory that the corporate
personality of Philsa should be disregarded, was founded
primarily on the following findings of the POEA
xxx xxx xxx
6. Per the certification issued by the Licensing Division
of this Office, it appears that Philsa Construction &
Trading Co., Inc., with office address at 126 Pioneer St.,
Mandaluyong, Metro Manila, represented by Mr.
Francisco V. del Rosario, President and General
Manager, was formerly a registered construction
contractor whose authority was originally issued on July
21, 1978 but was already delisted from the list of
agencies/entities on August 15, 1986 for inactivity;
7. Per another certification issued by the Licensing
Division of this Office, it also appears that another
corporation, Philsa International Placement & Services
Corp., composed of practically the same set of
incorporators/stockholders, was registered as a
licensed private employment agency whose license was
issued on November 5, 1981, represented by the same
Mr. Francisco V. del Rosario as its President/ General
Manager.

and an application of the ruling of the Court in A.C. Ransom

Labor Union-CCLU v. NLRC, G.R. No. 69494, June 10, 1986, 142
SCRA 269.
However, we find that the NLRC's reliance on the findings of the
POEA and the ruling in A. C. Ransom is totally misplaced.
1. Under the law a corporation is bestowed juridical personality,
separate and distinct from its stockholders [Civil Code, Art. 44;
Corporation Code, sec. 2]. But when the juridical personality of
the corporation is used to defeat public convenience, justify
wrong, protect fraud or defend crime, the corporation shall be
considered as a mere association of persons [Koppel (Phil.), Inc.
v. Yatco, 77 Phil. 496 (1946), citing 1 Fletcher, Cyclopedia of
Corporations, 135-136; see also Palay, Inc. v. Clave, G.R. No.
56076, September 21, 1983, 124 SCRA 638], and its responsible
officers and/or stockholders shall be held individually liable
[Namarco v. Associated Finance Co., Inc., G.R. No. L-20886, April
27, 1967, 19 SCRA 962]. For the same reasons, a corporation
shall be liable for the obligations of a stockholder [Palacio v. Fely
Transportation Company, G.R. No. L-15121, August 31, 1962, 5
SCRA 1011; Emilio Cano Enterprises, Inc. v. Court of Industrial
Relations, G.R. No. L-20502, February 26, 1965, 13 SCRA 290],
or a corporation and its successor-in-interest shall be considered
as one and the liability of the former shall attach to the latter
[Koppel v. Yatco, supra; Liddell & Co. v. Collector of Internal
Revenue, G.R. No. L-9687, June 30, 1961, 2 SCRA 632].
But for the separate juridical personality of a corporation to be
disregarded, the wrongdoing must be clearly and convincingly
established. It cannot be presumed.
In this regard we find the NLRC's decision wanting. The
conclusion that Philsa allowed its license to expire so as to evade

payment of private respondent's claim is not supported by the

facts. Philsa's corporate personality therefore remains inviolable.
Consider the following undisputed facts:
(1) Private respondent filed his complaint with the
POEA on June 4, 1985;
(2) The last renewal of Philsa's license expired on
October 12, 1985;
(3) The POEA dismissed private respondent's complaint
on February 4, 1986;
(4) Philsa was delisted for inactivity on August 15,
1986; *
(5) The dismissal of the complaint was appealed to the
NLRC and it was only on April 30, 1987 that the
judgment awarding differentials and benefits to private
respondent was rendered.
Thus, at the time Philsa allowed its license to lapse in 1985 and
even at the time it was delisted in 1986, there was yet no
judgment in favor of private respondent. An intent to evade
payment of his claims cannot therefore be implied from the
expiration of Philsa's license and its delisting.
Neither will the organization of Philsa International Placement and
Services Corp. and its registration with the POEA as a private
employment agency imply fraud since it was organized and
registered in 1981, several years before private respondent filed
his complaint with the POEA in 1985. The creation of the second
corporation could not therefore have been in anticipation of

private respondent's money claims and the consequent adverse

judgment against Philsa
Likewise, substantial identity of the incorporators of the two
corporations does not necessarily imply fraud.
The circumstances of this case distinguish it from those in earlier
decisions of the Court in labor cases where the veil of corporate
fiction was pierced.
In La Campana Coffee Factory, Inc. v. Kaisahan ng Manggagawa
sa La Campana (KKM) 93 Phil. 160 (1953), La Campana Coffee
Factory, Inc. and La Campana Gaugau Packing were substantially
owned by the same person. They had one office, one
management, and a single payroll for both businesses. The
laborers of the gaugaufactory and the coffee factory were also
interchangeable, i.e., the workers in one factory worked also in
the other factory.
In Claparols v. Court of Industrial Relations, G.R. No. L-30822,
July 31, 1975, 65 SCRA 613, the Claparols Steel and Nail Plant,
which was ordered to pay its workers backwages, ceased
operations on June 30, 1957 and was succeeded on the next day,
July 1, 1957 by the Claparols Steel Corporation. Both
corporations were substantially owned and controlled by the same
person and there was no break or cessation in operations.
Moreover, all the assets of the steel and nail plant were
transferred to the new corporation.
2. As earlier stated, we also find that, contrary to the NLRC'S
holding, the ruling in A. C. Ransom is inapplicable to this case.
In A. C. Ransom, the Court said:

... In the instant case, it would appear that RANSOM, in

1969, foreseeing the possibility or probability of
payment of back wages to the 22 strikers, organized
ROSARIO to replace RANSOM, with the latter to be
eventually phased out if the 22 strikers win their case.
RANSOM actually ceased operations on May 1, 1973,
after the December 19, 1972 Decision of the Court of
Industrial Relations was promulgated against RANSOM.
[At p. 274.]
The distinguishing marks of fraud were therefore clearly apparent
in A. C. Ransom. A new corporation was created, owned by the
same family, engaging in the same business and operating in the
same compound.
Thus, considering that the non-payment of the workers was a
continuing situation, the Court adjudged its President, the
"responsible officer" of the corporation, personally liable for the
backwages awarded, he being the chief operation officer or
"manager" who could be held criminally liable for violations of
Republic Act No. 602 (the old Minimum Wage Law.)
In the case now before us, not only has there been a failure to
establish fraud, but it has also not been shown that petitioner is
the corporate officer responsible for private respondent's
predicament. It must be emphasized that the claim for
differentials and benefits was actually directed against the foreign
employer. Philsa became liable only because of its undertaking to
be jointly and severally bound with the foreign employer, an
undertaking required by the rules of the POEA [Rule II, sec. 1(d)
(3)], together with the filing of cash and surety bonds [Rule 11,
sec. 4], in order to ensure that overseas workers shall find
satisfaction for awards in their favor.

At this juncture, the Court finds it appropriate to point out that a

judgment against a recruiter should initially be enforced against
the cash and surety bonds filed with the POEA. As provided in the
POEA Rules and Regulations
... The bonds shall answer for all valid and legal claims
arising from violations of the conditions for the grant
and use of the license or authority and contracts of
employment. The bonds shall likewise guarantee
compliance with the provisions of the Labor Code and
its implementing rules and regulations relating to
recruitment and placement, the rules of the
Administration and relevant issuances of the Ministry
and all liabilities which the Administration may
impose. ... [Rule II, see. 4.]
Quite evidently, these bonds do not answer for a single specific
liability, but for all sorts of liabilities of the recruiter to the worker
and to the POEA. Moreover, the obligations guaranteed by the
bonds are continuing. Thus, the bonds are subject to
replenishment when they are garnished, and failure to replenish
shall cause the suspension or cancellation of the recruiter's
license [Rule II, sec. 19]. Furthermore, a cash bond shall be
refunded to a recruiter who surrenders his license only upon
posting of a surety bond of similar amount valid for three (3)
years [Rule II, sec. 20]. All these, to ensure recovery from the
recruiter.
It is therefore surprising why the POEA ordered execution
"against the properties of Mr. Francisco V. del Rosarioand if
insufficient, against the cash and/or surety bond of Bonding
Company concerned for the till satisfaction of the judgment
awarded" in complete disregard of the scheme outlined in the

POEA Rules and Regulations. On this score alone, the NLRC

should not have affirmed the POEA.
WHEREFORE, the petition is GRANTED and the decision and
resolution of the NLRC, dated September 23, 1988 and October
21, 1988, respectively, in POEA Case No. 85-06-0394 are SET
ASIDE. The temporary restraining order issued by the Court on
November 10, 1988 is MADE PERMANENT.
SO ORDERED.
Fernan, C.J., Gutierrez, Jr., Feliciano and Bidin, JJ., concur.

Footnotes
* Under the POEA Rules and Regulations, "[a]ny
agency or entity which fails to renew its license or
authority shall, upon expiration thereof, be immediately
delisted and disallowed from conducting recruitment
and placement." [Rule II, see. 17.]

Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION

G.R. No. 109835 November 22, 1993

JMM PROMOTIONS & MANAGEMENT, INC., petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and ULPIANO
L. DE LOS SANTOS, respondent.
Don P. Porciuncula for petitioner.
Eulogio Nones, Jr. for private respondent.

CRUZ, J.:
The sole issue submitted in this case is the validity of the order of
respondent National Labor Relations Commission dated October
30, 1992, dismissing the petitioner's appeal from a decision of
the Philippine Overseas Employment Administration on the
ground of failure to post the required appeal bond. 1
The respondent cited the second paragraph of Article 223 of the
Labor Code as amended, providing that:
In the case of a judgment involving a monetary award,
an appeal by the employer may be perfected only upon
the posting of a cash or surety bond issued by a

reputable bonding company duly accredited by the

Commission in an amount equivalent to the monetary
award in the judgment appealed from.
and Rule VI, Section 6 of the new Rules of Procedure of the NLRC,
as amended, reading as follows:
Sec. 6. Bond In case the decision of a Labor Arbiter
involves a monetary award, an appeal by the employer
shall be perfected only upon the posting of a cash or
surety bond issued by a reputable bonding company
duly accredited by the Commission or the Supreme
Court in an amount equivalent to the monetary award.
The petitioner contends that the NLRC committed grave abuse of
discretion in applying these rules to decisions rendered by the
POEA. It insists that the appeal bond is not necessary in the case
of licensed recruiters for overseas employment because they are
already required under Section 4, Rule II, Book II of the POEA
Rules not only to pay a license fee of P30,000 but also to post a
cash bond of P100,000 and a surety bond of P50,000, thus:
Upon approval of the application, the applicant shall
pay a license fee of P30,000. It shall also post a cash
bond of P100,000 and surety bond of P50,000 from a
bonding company acceptable to the Administration and
duly accredited by the Insurance Commission. The
bonds shall answer for all valid and legal claims arising
from violations of the conditions for the grant and use
of the license, and/or accreditation and contracts of
employment. The bonds shall likewise guarantee
compliance with the provisions of the Code and its
implementing rules and regulations relating to
recruitment and placement, the Rules of the

Administration and relevant issuances of the

Department and all liabilities which the Administration
may impose. The surety bonds shall include the
condition that the notice to the principal is notice to the
surety and that any judgment against the principal in
connection with matters falling under POEA's
jurisdiction shall be binding and conclusive on the
surety. The surety bonds shall be co-terminus with the
validity period of license. (Emphasis supplied)
In addition, the petitioner claims it has placed in escrow the sum
of P200,000 with the Philippine National Bank in compliance with
Section 17, Rule II, Book II of the same Rule, "to primarily
answer for valid and legal claims of recruited workers as a result
of recruitment violations or money claims."
Required to comment, the Solicitor General sustains the appeal
bond requirement but suggest that the rules cited by the NLRC
are applicable only to decisions of the Labor Arbiters and not of
the POEA. Appeals from decisions of the POEA, he says, are
governed by the following provisions of Rule V, Book VII of the
POEA Rules:
Sec. 5. Requisites for Perfection of Appeal. The appeal
shall be filed within the reglementary period as
provided in Section 1 of this Rule; shall be under
oath with proof of payment of the required appeal fee
and the posting of a cash or surety bond as provided in
Section 6 of this Rule; shall be accompanied by a
memorandum of appeal which shall state the grounds
relied upon and the arguments in support thereof; the
relief prayed for; and a statement of the date when the
appellant received the appealed decision and/or award
and proof of service on the other party of such appeal.

A mere notice of appeal without complying with the

other requisites aforestated shall not stop the running
of the period for perfecting an appeal.
Sec. 6. Bond. In case the decision of the Administration
involves a monetary award, an appeal by the employer
shall be perfected only upon the posting of a cash or
surety bond issued by a reputable bonding company
duly accredited by the Commission in an amount
equivalent to the monetary award. (Emphasis supplied)
The question is, having posted the total bond of P150,000 and
placed in escrow the amount of P200,000 as required by the
POEA Rules, was the petitioner still required to post an appeal
bond to perfect its appeal from a decision of the POEA to the
NLRC?
It was.
The POEA Rules are clear. A reading thereof readily shows that in
addition to the cash and surety bonds and the escrow money, an
appeal bond in an amount equivalent to the monetary award is
required to perfect an appeal from a decision of the POEA.
Obviously, the appeal bond is intended to further insure the
payment of the monetary award in favor of the employee if it is
eventually affirmed on appeal to the NLRC.
It is true that the cash and surety bonds and the money placed in
escrow are supposed to guarantee the payment of all valid and
legal claims against the employer, but these claims are not limited
to monetary awards to employees whose contracts of
employment have been violated. The POEA can go against these
bonds also for violations by the recruiter of the conditions of its
license, the provisions of the Labor Code and its implementing

rules, E.O. 247 (reorganizing POEA) and the POEA Rules, as well
as the settlement of other liabilities the recruiter may incur.
As for the escrow agreement, it was presumably intended to
provide for a standing fund, as it were, to be used only as a last
resort and not to be reduced with the enforcement against it of
every claim of recruited workers that may be adjudged against
the employer. This amount may not even be enough to cover
such claims and, even if it could initially, may eventually be
exhausted after satisfying other subsequent claims.
As it happens, the decision sought to be appealed grants a
monetary award of about P170,000 to the dismissed employee,
the herein private respondent. The standby guarantees required
by the POEA Rules would be depleted if this award were to be
enforced not against the appeal bond but against the bonds and
the escrow money, making them inadequate for the satisfaction
of the other obligations the recruiter may incur.
Indeed, it is possible for the monetary award in favor of the
employee to exceed the amount of P350,000, which is the sum of
the bonds and escrow money required of the recruiter.
It is true that these standby guarantees are not imposed on local
employers, as the petitioner observes, but there is a simple
explanation for this distinction. Overseas recruiters are subject to
more stringent requirement because of the special risks to which
our workers abroad are subjected by their foreign employers,
against whom there is usually no direct or effective recourse. The
overseas recruiter is solidarily liable with a foreign employer. The
bonds and the escrow money are intended to insure more care on
the part of the local agent in its choice of the foreign principal to
whom our overseas workers are to be sent.

It is a principle of legal hermeneutics that in interpreting a statute

(or a set of rules as in this case), care should be taken that every
part thereof be given effect, on the theory that it was enacted as
an integrated measure and not as a hodge-podge of conflicting
provisions. Ut res magis valeat quam pereat. 2 Under the
petitioner's interpretation, the appeal bond required by Section 6
of the aforementioned POEA Rule should be disregarded because
of the earlier bonds and escrow money it has posted. The
petitioner would in effect nullify Section 6 as a superfluity but we
do not see any such redundancy; on the contrary, we find that
Section 6 complements Section 4 and Section 17. The rule is that
a construction that would render a provision inoperative should
be avoided; instead, apparently inconsistent provisions should be
reconciled whenever possible as parts of a coordinated and
harmonious whole.
Accordingly, we hold that in addition to the monetary obligations
of the overseas recruiter prescribed in Section 4, Rule II, Book II
of the POEA Rules and the escrow agreement under Section 17 of
the same Rule, it is necessary to post the appeal bond required
under Section 6, Rule V, Book VII of the POEA Rules, as a
condition for perfecting an appeal from a decision of the POEA.
Every intendment of the law must be interpreted in favor of the
working class, conformably to the mandate of the Constitution.
By sustaining rather than annulling the appeal bond as a further
protection to the claimant employee, this Court affirms once
again its commitment to the interest of labor.
WHEREFORE, the petition is DISMISSED, with costs against the
petitioner. It is so ordered.
Davide and Quiason, JJ., concur.

Bellosillo, J, is on leave.

G.R. No. 178551

ATCI OVERSEAS CORPORATION VS. MA JOSEFA ECHIN
DECISION
CARPIO MORALES, J.:
Josefina Echin (respondent) was hired by petitioner ATCI
Overseas Corporation in behalf of its principal-co-petitioner, the
Ministry of Public Health of Kuwait (the Ministry), for the position
of medical technologist under a two-year contract, denominated
as a Memorandum of Agreement (MOA), with a monthly salary of
US$1,200.00.
Under the MOA,[1] all newly-hired employees undergo a
probationary period of one (1) year and are covered by Kuwaits
Civil Service Board Employment Contract No. 2.
Respondent was deployed on February 17, 2000 but was
terminated from employment on February 11, 2001, she not
having allegedly passed the probationary period.
As
the
Ministry
denied
respondents
request
for
reconsideration, she returned to the Philippines on March 17,
2001, shouldering her own air fare.
On July 27, 2001, respondent filed with the National Labor
Relations Commission (NLRC) a complaint[2] for illegal dismissal
against petitioner ATCI as the local recruitment agency,

represented by petitioner, Amalia Ikdal (Ikdal), and the Ministry,

as the foreign principal.
By Decision[3] of November 29, 2002, the Labor Arbiter,
finding that petitioners neither showed that there was just cause
to warrant respondents dismissal nor that she failed to qualify as
a regular employee, held that respondent was illegally dismissed
and accordingly ordered petitioners to pay her US$3,600.00,
representing her salary for the three months unexpired portion of
her contract.
On
appeal
of
petitioners
ATCI
and
Ikdal,
the
[4]
NLRC affirmed the Labor Arbiters decision by Resolution of
January 26, 2004. Petitioners motion for reconsideration having
been denied by Resolution[5] of April 22, 2004, they appealed to
the Court of Appeals, contending that their principal, the Ministry,
being a foreign government agency, is immune from suit and, as
such, the immunity extended to them; and that respondent was
validly dismissed for her failure to meet the performance rating
within the one-year period as required under Kuwaits Civil Service
Laws. Petitioners further contended that Ikdal should not be liable
as an officer of petitioner ATCI.
By
Decision[6] of
March
30,
court affirmed the NLRC Resolution.

2007,

the

appellate

In brushing aside petitioners contention that they only acted

as agent of the Ministry and that they cannot be held jointly and
solidarily liable with it, the appellate court noted that under the
law,
a
private employment
agency
shall
assume
all
responsibilities for the implementation of the contract of
employment of an overseas worker, hence, it can be sued jointly
and severally with the foreign principal for any violation of the
recruitment agreement or contract of employment.

As to Ikdals liability, the appellate court held that under Sec.

10 of Republic Act No. 8042, the Migrant and Overseas Filipinos
Act of 1995, corporate officers, directors and partners of a
recruitment agency may themselves be jointly and solidarily liable
with the recruitment agency for money claims and damages
awarded to overseas workers.
Petitioners motion for reconsideration having been denied by
the appellate court by Resolution[7] of June 27, 2007, the present
petition for review on certiorari was filed.
Petitioners maintain that they should not be held liable
because respondents employment contract specifically stipulates
that her employment shall be governed by the Civil Service Law
and Regulations of Kuwait. They thus conclude that it was patent
error for the labor tribunals and the appellate court to apply the
Labor Code provisions governing probationary employment in
deciding the present case.
Further, petitioners argue that even the Philippine Overseas
Employment Act (POEA) Rules relative to master employment
contracts (Part III, Sec. 2 of the POEA Rules and Regulations)
accord respect to the customs, practices, company policies and
labor laws and legislation of the host country.
Finally, petitioners posit that assuming arguendo that
Philippine labor laws are applicable, given that the foreign
principal is a government agency which is immune from suit, as
in fact it did not sign any document agreeing to be held jointly
and solidarily liable, petitioner ATCI cannot likewise be held liable,
more so since the Ministrys liability had not been judicially
determined as jurisdiction was not acquired over it.
The petition fails.

Petitioner ATCI, as a private recruitment agency, cannot

evade responsibility for the money claims of Overseas Filipino
workers (OFWs) which it deploys abroad by the mere expediency
of claiming that its foreign principal is a government agency
clothed with immunity from suit, or that such foreign principals
liability must first be established before it, as agent, can be held
jointly and solidarily liable.
In providing for the joint and solidary liability of private
recruitment agencies with their foreign principals, Republic Act
No. 8042 precisely affords the OFWs with a recourse and assures
them of immediate and sufficient payment of what is due
them. Skippers United Pacific v. Maguad[8] explains:
. . . [T]he obligations covenanted in the
recruitment agreement entered into by and
between the local agent and its foreign principal
are not coterminous with the term of such
agreement so that if either or both of the parties
decide to end the agreement, the responsibilities of
such parties towards the contracted employees under
the agreement do not at all end, but the same extends
up to and until the expiration of the employment
contracts of the employees recruited and employed
pursuant
to
the
said
recruitment
agreement. Otherwise, this will render nugatory
the very purpose for which the law governing the
employment of workers for foreign jobs abroad
was enacted. (emphasis supplied)
The imposition of joint and solidary liability is in line with the
policy of the state to protect and alleviate the plight of the
working class.[9] Verily, to allow petitioners to simply invoke the
immunity from suit of its foreign principal or to wait for the
judicial determination of the foreign principals liability before

petitioner can be held liable renders the law on joint and solidary
liability inutile.
As to petitioners contentions that Philippine labor laws
on probationary employment are not applicable since it was
expressly provided in respondents employment contract, which
she voluntarily entered into, that the terms of her engagement
shall be governed by prevailing Kuwaiti Civil Service Laws and
Regulations as in fact POEA Rules accord respect to such rules,
customs and practices of the host country, the same was not
substantiated.
Indeed, a contract freely entered into is considered the law
between the parties who can establish stipulations, clauses, terms
and conditions as they may deem convenient, including the laws
which they wish to govern their respective obligations, as long as
they are not contrary to law, morals, good customs, public order
or public policy.
It is hornbook principle, however, that the party invoking the
application of a foreign law has the burden of proving the law,
under the doctrine of processual presumptionwhich, in this case,
petitioners failed to discharge. The Courts ruling in EDIStaffbuilders Intl., v. NLRC[10] illuminates:
In the present case, the employment contract
signed by Gran specifically states that Saudi
Labor Laws will govern matters not provided for
in the contract (e.g. specific causes for termination,
termination procedures, etc.). Being the law intended
by the parties (lex loci intentiones) to apply to the
contract, Saudi Labor Laws should govern all matters
relating to the termination of the employment of Gran.
In international law, the party who wants to have

a foreign law applied to a dispute or case has the

burden of proving the foreign law. The foreign
law is treated as a question of fact to be properly
pleaded and proved as the judge or labor arbiter
cannot take judicial notice of a foreign law. He is
presumed to know only domestic or forum law.
Unfortunately for petitioner, it did not prove the
pertinent Saudi laws on the matter; thus, the
International Law doctrine of presumed-identity
approach or processual presumptioncomes into
play. Where a foreign law is not pleaded or, even
if pleaded, is not proved, the presumption is that
foreign law is the same as ours. Thus, we apply
Philippine labor laws in determining the issues
presented before us. (emphasis and underscoring
supplied)

The Philippines does not take judicial notice of foreign laws,

hence, they must not only be alleged; they must be proven. To
prove a foreign law, the party invoking it must present a copy
thereof and comply with Sections 24 and 25 of Rule 132 of the
Revised Rules of Court which reads:
SEC. 24. Proof of official record. The record of
public documents referred to in paragraph (a) of
Section 19, when admissible for any purpose, may be
evidenced by an official publication thereof or by a copy
attested by the officer having the legal custody of the
record, or by his deputy, and accompanied, if the
record is not kept in the Philippines, with a certificate
that such officer has the custody. If the office in
which the record is kept is in a foreign country,
the certificate may be made by a secretary of the
embassy or legation, consul general, consul, vice
consul, or consular agent or by any officer in the

foreign service of the Philippines stationed in the

foreign country in which the record is kept, and
authenticated by the seal of his office. (emphasis
supplied)

SEC. 25. What attestation of copy must

state. Whenever a copy of a document or record is
attested for the purpose of the evidence, the
attestation must state, in substance, that the copy is a
correct copy of the original, or a specific part thereof,
as the case may be. The attestation must be under the
official seal of the attesting officer, if there be any, or if
he be the clerk of a court having a seal, under the seal
of such court.
To prove the Kuwaiti law, petitioners submitted the
following: MOA between respondent and the Ministry, as
represented by ATCI, which provides that the employee is subject
to a probationary period of one (1) year and that the host
countrys Civil Service Laws and Regulations apply; a translated
copy[11] (Arabic to English) of the termination letter to respondent
stating that she did not pass the probation terms, without
specifying the grounds therefor, and a translated copy of the
certificate of termination,[12] both of which documents were
certified by Mr. Mustapha Alawi, Head of the Department of
Foreign Affairs-Office of Consular Affairs Inslamic Certification and
Translation Unit; and respondents letter[13] of reconsideration to
the Ministry, wherein she noted that in her first eight (8) months
of employment, she was given a rating of Excellent albeit it
changed due to changes in her shift of work schedule.
These documents, whether taken singly or as a whole, do
not sufficiently prove that respondent was validly terminated as a
probationary employee under Kuwaiti civil service laws. Instead

of submitting a copy of the pertinent Kuwaiti labor laws

duly authenticated and translated by Embassy officials
thereat, as required under the Rules, what petitioners
submitted were mere certifications attesting only to the
correctness of the translations of the MOA and the
termination letter which does not prove at all that Kuwaiti
civil service laws differ from Philippine laws and that
under such Kuwaiti laws, respondent was validly
terminated. Thus the subject certifications read:
xxxx
This is to certify that the herein attached translation/s
from Arabic to English/Tagalog and or vice versa
was/were presented to this Office for review and
certification and the same was/were found to be in
order. This
Office,
however,
assumes
no
responsibility as to the contents of the
document/s.
This certification is being issued upon request of the
interested party for whatever legal purpose it may
serve. (emphasis supplied)

Respecting Ikdals joint and solidary liability as a corporate

officer, the same is in order too following the express provision of
R.A. 8042 on money claims, viz:
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 employeremployee relationship or by virtue of any law or

contract involving Filipino workers for overseas

deployment including claims for actual moral,
exemplary and other forms of damages.
The liability of the principal/employer and the
recruitment/placement agency for any and all claims
under this section shall be joint and several. This
provision shall be incorporated in the contract for
overseas employment and shall be a condition
precedent for its approval. The performance bond to be
filed by the recruitment/placement agency, as provided
by law, shall be answerable for all money claims or
damages that may be awarded to the workers. If the
recruitment/placement agency is a juridical
being, the corporate officers and directors and
partners as the case may be, shall themselves be
jointly and solidarily liable with the corporation
or partnership for the aforesaid claims and
damages. (emphasis and underscoring supplied)
WHEREFORE, the petition is DENIED.
SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION

G.R. No. 109808 March 1, 1995

ESALYN CHAVEZ, petitioner,
vs.
HON. EDNA BONTO-PEREZ, HON. ROGELIO T. RAYALA,
HON. DOMINGO H. ZAPANTA, HON. JOSE N. SARMIENTO,
CENTRUM PROMOTIONS PLACEMENT CORPORATION, JOSE
A. AZUCENA, JR., and TIMES SURETY & INSURANCE
COMPANY, INC. respondents.

PUNO, J.:
One of the anguished cries in our society today is that while our
laws appear to protect the poor, their interpretation is sometimes
anti-poor. In the case at bench, petitioner, a poor, uncounselled
entertainment dancer signed a contract with her Japanese
employer calling for a monthly salary of One Thousand Five
Hundred U.S. Dollars (US$1,500) but later had to sign an
immoral side agreement reducing her salary below the minimum
standard set by the POEA. Petitioner invoked the law to collect
her salary differentials, but incredibly found public respondent
straining the seams of our law to disfavor her. There is no greater
disappointment to the poor like petitioner than to discover the

ugly reality behind the beautiful rhetoric of laws. We will not allow
this travesty.
This is a petition for certiorari to review the Decision of the
National Labor Relations Commission (NLRC), 1 dated December
29, 1992, which affirmed the Decision of public respondent
Philippine Overseas Employment Agency (POEA) Administrator
Jose N. Sarmiento, dated February 17, 1992, dismissing
petitioner's complaint for unpaid salaries amounting to Six
Thousand Dollars (US$6,000.00).
The facts are undisputed.
On December 1, 1988, petitioner, an entertainment dancer,
entered into a standard employment contract for overseas Filipino
artists and entertainers with Planning Japan Co., Ltd., 2 through
its Philippine representative, private respondent Centrum
Placement & Promotions Corporation. The contract had a duration
of two (2) to six (6) months, and petitioner was to be paid a
monthly compensation of One Thousand Five Hundred Dollars
(US$1,5000.00). On December 5, 1888, the POEA approved the
contract. Subsequently, petitioner executed the following side
agreement with her Japanese employer through her local
manager, Jaz Talents Promotion:
Date: Dec. 10, 1988
SUBJECT: Salary Deduction
MANAGERIAL COMMISSION
DATE OF DEPARTURE: _________________
ATTENTION: MR. IWATA

I, ESALYN CHAVEZ, DANCER, do hereby with my own

free will and voluntarily have the honor to authorize
your good office to please deduct the amount of TWO
HUNDRED FIFTY DOLLARS ($250) from my contracted
monthly salary of SEVEN HUNDRED FIFTY DOLLARS
($750) as monthly commission for my Manager, Mr.
Jose A. Azucena, Jr.
That, my monthly salary (net) is FIVE HUNDRED
DOLLARS ($500).
(sgd. by
petitioner) 3
On December 16, 1988, petitioner left for Osaka, Japan, where
she worked for six (6) months, until June 10, 1989. She came
back to the Philippines on June 14, 1989.
Petitioner instituted the case at bench for underpayment of wages
with the POEA on February 21, 1991. She prayed for the payment
of Six Thousand U.S. Dollars (US$6,000.00), representing the
unpaid portion of her basic salary for six months. Charged in the
case were private respondent Centrum Promotions and Placement
Corporation, the Philippine representative of Planning Japan, Co.,
Inc., its insurer, Times Surety and Insurance Co., Inc., and Jaz
Talents Promotion.
The complaint was dismissed by public respondent POEA
Administrator on February 17, 1992. He ratiocinated,inter alia:
. . . Apparently and from all indications, complainant
(referring to petitioner herein) was satisfied and did not
have any complaint (about) anything regarding her
employment in Japan until after almost two (2) years

(when) she filed the instant complaint on February 21,

1991. The records show that after signing the Standard
Employment Contract on December 1, 1988, she
entered into a side agreement with the Japanese
employer thru her local manager, Jaz Talents Promotion
consenting to a monthly salary of US$750.00 which she
affirmed during the conference of May 21, 1991.
Respondent agency had no knowledge nor participation
in the said agreement such that it could not be faulted
for violation of the Standard Employment Contract
regarding the stipulated salary. We cannot take
cognizance of such violation when one of the principal
party (sic) thereto opted to receive a salary different
from what has been stipulated in their contract,
especially so if the contracting party did not
consent/participate in such arrangement. Complainant
(petitioner) cannot now demand from respondent
agency to pay her the salary based (on) the processed
Employment Contract for she is now considered in bad
faith and hence, estopped from claiming thereto thru
her own act of consenting and agreeing to receive a
salary not in accordance with her contract of
employment. Moreover, her self-imposed silence for a
long period of time worked to her own disadvantage as
she allowed laches to prevail which barred respondent
from doing something at the outset. Normally, if a
person's right (is) violated, she/he would immediately
react to protect her/his rights which is not true in the
case at bar.
The term laches has been defined as one's negligence
or failure to assert his right in due time or within
reasonable time from the accrual of his cause of action,

thus, leading another party to believe that there is

nothing wrong with his own claim. This resulted in
placing the negligent party in estoppel to assert or
enforce his right. . . . Likewise, the Supreme Court in
one case held that not only is inaction within
reasonable time to enforce a right the basic premise
that underlies a valid defense of laches but such
inaction evinces implied consent or acquiescence to the
violation of the right . . .
Under the prevailing circumstances of this case, it is
outside the regulatory powers of the Administration to
rule on the liability of respondent Jaz Talents
Promotions, if any, (it) not being a licensed private
agency but a promotion which trains entertainers for
abroad.
xxx xxx xxx
(Citations omitted.)
On appeal, the NLRC upheld the Decision, thus:
We fail to see any conspiracy that the complainant
(petitioner herein) imputes to the respondents. She
has, to put it bluntly, not established and/or laid the
basis for Us to arrive at a conclusion that the
respondents have been and should be held liable for
her claims.
The way We see it, the records do not at all indicate
any connection between respondents Centrum
Promotion & Placement Corporation and Jaz Talents
Promotion.

There is, therefore, no merit in the appeal. Hence, We

affirmed. 4
Dissatisfied with the NLRC's Decision, petitioner instituted the
present petition, alleging that public respondents committed
grave abuse of discretion in finding: that she is guilty of laches;
that she entered into a side contract on December 10, 1988 for
the reduction of her basic salary to Seven Hundred Fifty U.S.
Dollars (US$750.00) which superseded, nullified and invalidated
the standard employment contract she entered into on December
1, 1988; and that Planning Japan Co., Ltd. and private
respondents are not solidarily liable to her for Six Thousand US
Dollars (US$6,000.00) in unpaid wages. 5
The petition is meritorious.
Firstly, we hold that the managerial commission agreement
executed by petitioner to authorize her Japanese Employer to
deduct Two Hundred Fifty U.S. Dollars (US$250.00) from her
monthly basic salary is void because it is against our existing
laws, morals and public policy. It cannot supersede the standard
employment contract of December 1, 1988 approved by the POEA
with the following stipulation appended thereto:
It is understood that the terms and conditions stated in
this Employment Contract are in conformance with the
Standard Employment Contract for Entertainers
prescribed by the POEA under Memorandum Circular
No. 2, Series of 1986. Any alterations or changes made
in any part of this contract without prior approval by
the POEA shall be null and void; 6 (Emphasis supplied.)

The stipulation is in line with the provisions of Rule II, Book V and
Section 2(f), Rule I, Book VI of the 1991 Rules and Regulations
Governing Overseas Employment, thus:
Book V, Rule II
Sec. 1. Employment Standards. The Administration
shall determine, formulate and review employment
standards in accordance with the market development
and welfare objectives of the overseas employment
program and the prevailing market conditions.
Sec. 2. Minimum Provisions for Contract. The following
shall be considered the minimum requirements for
contracts of employment:
a. Guaranteed wages for regular working
hours and overtime pay for services rendered
beyond regular working hours in accordance
with the standards established by the
Administration;
xxx xxx xxx
Sec. 3. Standard Employment Contract. The
administration shall undertake development and/or
periodic review of region, country and skills specific
employment contracts for landbased workers and
conduct regular review of standard employment
contracts (SEC) for seafarers. These contracts shall
provide for minimum employment standards herein
enumerated under Section 2, of this Rule and shall
recognize the prevailing labor and social legislations at
the site of employment and international conventions.

The SEC shall set the minimum terms and conditions of

employment. All employers and principals shall adopt
the SEC in connection with the hiring of workers
without prejudice to their adoption of other terms and
conditions of employment over and above the minimum
standards of the Administration. (Emphasis supplied.)
and
BOOK VI, RULE I
Sec. 2. Grounds for suspension/cancellation of license.
xxx xxx xxx
f. Substituting or altering employment contracts and
other documents approved and verified by the
Administration from the time of actual signing thereof
by the parties up to and including the period of
expiration of the same without the Administration's
approval.
xxx xxx xxx
(Emphasis supplied.)
Clearly, the basic salary of One Thousand Five Hundred U.S.
Dollars (US$1,500.00) guaranteed to petitioner under the parties'
standard employment contract is in accordance with
the minimum employment standards with respect to wages set by
the POEA, Thus, the side agreement which reduced petitioner's
basic wage to Seven Hundred Fifty U.S. Dollars (US$750.00) is
null and void for violating the POEA's minimum employment
standards, and for not having been approved by the POEA.
Indeed, this side agreement is a scheme all too frequently

resorted to by unscrupulous employers against our helpless

overseas workers who are compelled to agree to satisfy their
basic economic needs.
Secondly. The doctrine of laches or "stale demands"' cannot be
applied to petitioner. Laches has been defined as the failure or
neglect for an unreasonable and unexplained length time to do
that which, by exercising due diligence, could or should have
been done earlier, 7 thus giving rise to a presumption that the
party entitled to assert it either has abandoned or declined to
assert it. 8 It is not concerned with mere lapse of time; the fact of
delay, standing alone, is insufficient to constitute laches. 9
The doctrine of laches is based upon grounds of public policy
which requires, for the peace of society, the discouragement of
stale claims, and is principally a question of the inequity or
unfairness of permitting a right or claim to be enforced or
asserted. 10 There is no absolute rule as to what constitutes
laches; each case is to be determined according to its particular
circumstances. The question of laches is addressed to the sound
discretion of the court, and since it is an equitable doctrine, its
application is controlled by equitable considerations. It cannot be
worked to defeat justice or to perpetrate fraud and injustice. 11
In the case at bench, petitioner filed her claim well within the
three-year prescriptive period for the filing of money claims set
forth in Article 291 of the Labor Code. 12 For this reason, we hold
the doctrine of laches inapplicable to petitioner. As we ruled
in Imperial Victory Shipping Agency v. NLRC, 200 SCRA 178
(1991):
. . . Laches is a doctrine in equity while prescription is
based on law. Our courts are basically courts of law not
courts of equity. Thus, laches cannot be invoked to

resist the enforcement of an existing legal right. We

have ruled in Arsenal v. Intermediate Appellate
Court . . . that it is a long standing principle that equity
follows the law. Courts exercising equity jurisdiction are
bound by rules of law and have no arbitrary discretion
to disregard them. In Zabat, Jr. v. Court of
Appeals . . ., this Court was more emphatic upholding
the rules of procedure. We said therein:
As for equity, which has been aptly described
as a "justice outside legality," this applied
only in the absence of, and never against,
statutory law or, as in this case, judicial rules
of procedure. Aequetas nunguam contravenit
legis. The pertinent positive rules being
present here, they should pre-empt and
prevail over all abstract arguments based
only on equity.
Thus, where the claim was filed within the three-year
statutory period, recovery therefore cannot be barred
by laches. Courts should never apply the doctrine of
laches earlier than the expiration of time limited for the
commencement of actions at law.
xxx xxx xxx
(Emphasis supplied. Citations omitted.)
Thirdly, private respondents Centrum and Times as well as
Planning Japan Co., Ltd. the agency's foreign principal are
solidarily liable to petitioner for her unpaid wages. This is in
accordance with stipulation 13.7 of the parties' standard
employment contract which provides:

13.7. The Employer (in this case, Planning Japan Co.,

Ltd. ) and its locally (sic)
agent/promoter/representative (private respondent
Centrum Promotions & Placement Corporation) shall
be jointly and severally responsible for the proper
implementation of the terms and conditions in this
Contract. 13 (Emphasis supplied.)
This solidary liability also arises from the provisions of
Section 10(a)(2), Rule V, Book I of the Omnibus Rules
Implementing the Labor Code, as amended, thus:
Sec. 10. Requirement before recruitment. Before
recruiting any worker, the private employment agency
shall submit to the Bureau the following documents:
a) A formal appointment or agency contract executed
by a foreign-based employer in favor of the license
holder to recruit and hire personnel for the former . . . .
Such formal appointment or recruitment agreement
shall contain the following provisions, among others:
xxx xxx xxx
2. Power of the agency to sue and be sued jointly and
solidarily with the principal or foreign based employer
for any of the violations of the recruitment agreement
and the contracts of employment.
xxx xxx xxx
(Emphasis supplied.)
Our overseas workers constitute an exploited class. Most of them
come from the poorest sector of our society. They are thoroughly

disadvantaged. Their profile shows they live in suffocating slums,

trapped in an environment of crime. Hardly literate and in ill
health, their only hope lies in jobs they can hardly find in our
country. Their unfortunate circumstance makes them easy prey to
avaricious employers. They will climb mountains, cross the seas,
endure slave treatment in foreign lands just to survive. Out of
despondence, they will work under sub-human conditions and
accept salaries below the minimum. The least we can do is to
protect them with our laws in our land. Regretfully, respondent
public officials who should sympathize with the working class
appear to have a different orientation.
IN VIEW WHEREOF, the petition is GRANTED. The Decisions of
respondent POEA Administrator and NLRC Commissioners in POEA
Case No. Adj. 91-02-199 (ER), respectively dated February 17
and December 29, 1992, and the Resolution of the NLRC, dated
March 23, 1993, are REVERSED and SET ASIDE. Private
respondents are held jointly and severally liable to petitioner for
the payment of SIX THOUSAND US DOLLARS (US$6,000.00) in
unpaid wages. Costs against private respondents.
SO ORDERED.
Narvasa, C.J., Bidin, Regalado and Mendoza, JJ., concur.

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. Nos. L-57999, 58143-53 August 15, 1989

RESURRECCION SUZARA, CESAR DIMAANDAL, ANGELITO

MENDOZA, ANTONIO TANEDO, AMORSOLO CABRERA,
DOMINADOR SANTOS, ISIDRO BRACIA, RAMON DE BELEN,
ERNESTO SABADO, MARTIN MALABANAN, ROMEO HUERTO
and VITALIANO PANGUE, petitioners,
vs.
THE HON. JUDGE ALFREDO L. BENIPAYO and MAGSAYSAY
LINES, INC., respondents.
G.R. Nos. L-64781-99 August 15, 1989
RESURRECCION SUZARA, CESAR DIMAANDAL, ANGELITO
MENDOZA, ANTONIO TANEDO, RAYMUNDO PEREZ,
AMORSOLO CABRERA, DOMINADOR SANTOS, ISIDRO
BRACIA, CATALINO CASICA, VITALIANO PANGUE, RAMON
DE BELEN, EDUARDO PAGTALUNAN, ANTONIO MIRANDA,
RAMON UNIANA, ERNESTO SABADO, MARTIN MALABANAN,
ROMEO HUERTO and WILFREDO CRISTOBAL, petitioners,
vs.
THE HONORABLE NATIONAL LABOR RELATIONS
COMMISSION, THE NATIONAL SEAMEN BOARD (now the
Philippine Overseas Employment Administration), and
MAGSAYSAY LINES, INC., respondents.
Quasha, Asperilla, Ancheta, Pe;a and Nolasco for petitioners.
Samson S. Alcantara for private respondent.

GUTIERREZ, JR., J.:

These petitions ask for a re-examination of this Court's precedent
setting decision in Vir-Jen Shipping and Marine Services Inc. v.
National Labor Relations Commission, et al. (125 SCRA 577

[1983]). On constitutional, statutory, and factual grounds, we find

no reason to disturb the doctrine in Vir-Jen Shipping and to turn
back the clock of progress for sea-based overseas workers. The
experience gained in the past few years shows that, following
said doctrine, we should neither deny nor diminish the enjoyment
by Filipino seamen of the same rights and freedoms taken for
granted by other working-men here and abroad.
The cases at bar involve a group of Filipino seamen who were
declared by the defunct National Seamen Board (NSB) guilty of
breaching their employment contracts with the private
respondent because they demanded, upon the intervention and
assistance of a third party, the International Transport Worker's
Federation (ITF), the payment of wages over and above their
contracted rates without the approval of the NSB. The petitioners
were ordered to reimburse the total amount of US$91,348.44 or
its equivalent in Philippine Currency representing the said overpayments and to be suspended from the NSB registry for a period
of three years. The National Labor Relations Commission (NLRC)
affirmed the decision of the NSB.
In a corollary development, the private respondent, for failure of
the petitioners to return the overpayments made to them upon
demand by the former, filed estafa charges against some of the
petitioners. The criminal cases were eventually consolidated in
the sala of then respondent Judge Alfredo Benipayo. Hence, these
consolidated petitions, G.R. No. 64781-99 and G.R. Nos. 57999
and 58143-53, which respectively pray for the nullification of the
decisions of the NLRC and the NSB, and the dismissal of the
criminal cases against the petitioners.
The facts are found in the questioned decision of the NSB in G.R.
No. 64781-99.

From the records of this case it appears that the facts

established and/or admitted by the parties are the
following: that on different dates in 1977 and 1978
respondents entered into separate contracts of
employment (Exhs. "B" to "B-17", inclusive) with
complainant (private respondent) to work aboard
vessels owned/operated/manned by the latter for a
period of 12 calendar months and with different
rating/position, salary, overtime pay and allowance,
hereinbelow specified: ...; that aforesaid employment
contracts were verified and approved by this Board;
that on different dates in April 1978 respondents
(petitioners) joined the M/V "GRACE RIVER"; that on or
about October 30, 1978 aforesaid vessel, with the
respondents on board, arrived at the port of Vancouver,
Canada; that at this port respondent received
additional wages under rates prescribed by the
Intemational Transport Worker's Federation (ITF) in the
total amount of US$98,261.70; that the respondents
received the amounts appearing opposite their names,
to wit: ...; that aforesaid amounts were over and above
the rates of pay of respondents as appearing in their
employment contracts approved by this Board; that on
November 10, 1978, aforesaid vessel, with respondent
on board, left Vancouver, Canada for Yokohama, Japan;
that on December 14, 1978, while aforesaid vessel,
was at Yura, Japan, they were made to disembark. (pp.
64-66, Rollo)
Furthermore, according to the petitioners, while the vessel was
docked at Nagoya, Japan, a certain Atty. Oscar Torres of the NSB
Legal Department boarded the vessel and called a meeting of the
seamen including the petitioners, telling them that for their own

good and safety they should sign an agreement prepared by him

on board the vessel and that if they do, the cases filed against
them with NSB on November 17, 1978 would be dismissed. Thus,
the petitioners signed the. "Agreement" dated December 5, 1978.
(Annex C of Petition) However, when they were later furnished
xerox copies of what they had signed, they noticed that the line
"which amount(s) was/were received and held by CREWMEMBERS
in trust for SHIPOWNERS" was inserted therein, thereby making it
appear that the amounts given to the petitioners representing the
increase in their wages based on ITF rates were only received by
them in trust for the private respondent.
When the vessel reached Manila, the private respondent
demanded from the petitioners the "overpayments" made to
them in Canada. As the petitioners refused to give back the said
amounts, charges were filed against some of them with the NSB
and the Professional Regulations Commission. Estafa charges
were also filed before different branches of the then Court of First
Instance of Manila which, as earlier stated, were subsequently
consolidated in the sala of the respondent Judge Alfredo Benipayo
and which eventually led to G.R. Nos. 57999 and 58143-53.
In G.R. Nos. 64781-99, the petitioners claimed before the NSB
that contrary to the private respondent's allegations, they did not
commit any illegal act nor stage a strike while they were on board
the vessel; that the "Special Agreement" entered into in
Vancouver to pay their salary differentials is valid, having been
executed after peaceful negotiations. Petitioners further argued
that the amounts they received were in accordance with the
provision of law, citing among others, Section 18, Rule VI, Book I
of the Rules and Regulations Implementing the Labor Code which
provides that "the basic minimum salary of seamen shall not be
less than the prevailing minimum rates established by the

International Labor Organization (ILO) or those prevailing in the

country whose flag the employing vessel carries, whichever is
higher ..."; and that the "Agreement" executed in Nagoya, Japan
had been forced upon them and that intercalations were made to
make it appear that they were merely trustees of the amounts
they received in Vancouver.
On the other hand, the private respondent alleged that the
petitioners breached their employment contracts when they,
acting in concert and with the active participations of the ITF
while the vessel was in Vancouver, staged an illegal strike and by
means of threats, coercion and intimidation compelled the owners
of the vessel to pay to them various sums totalling
US$104,244.35; that the respondent entered into the "Special
Agreement" to pay the petitioners' wage differentials because it
was under duress as the vessel would not be allowed to leave
Vancouver unless the said agreement was signed, and to prevent
the shipowner from incurring further delay in the shipment of
goods; and that in view of petitioners' breach of contract, the
latter's names must be removed from the NSB's Registry and that
they should be ordered to return the amounts they received over
and above their contracted rates.
The respondent NSB ruled that the petitioners were guilty of
breach of contract because despite subsisting and valid NSBapproved employment contracts, the petitioners sought the
assistance of a third party (ITF) to demand from the private
respondent wages in accordance with the ITF rates, which rates
are over and above their rates of pay as appearing in their NSBapproved contracts. As bases for this conclusion, the NSB stated:
1) The fact that respondents sought the aid of a third
party (ITF) and demanded for wages and overtime pay
based on ITF rates is shown in the entries of their

respective Pay-Off Clearance Slips which were marked

as their Exhs. "1" to "18", and we quote "DEMANDED
ITF WAGES, OVERTIME, DIFFERENTIALS APRIL TO
OCTOBER 1978". Respondent Suzara admitted that the
entries in his Pay-Off Clearance Slip (Exh. "1") are
correct (TSN., p. 16, Dec. 6,
1979).lwph1.t Moreover, it is the policy (reiterated
very often) by the ITF that it does not interfere in the
affairs of the crewmembers and masters and/or owners
of a vessel unless its assistance is sought by the
crewmembers themselves. Under this pronounced
policy of the ITF, it is reasonable to assume that the
representatives of the ITF in Vancouver, Canada
assisted and intervened by reason of the assistance
sought by the latter.
2) The fact that the ITF assisted and intervened for and
in behalf of the respondents in the latter's demand for
higher wages could be gleaned from the answer of the
respondents when they admitted that the ITF acted in
their behalf in the negotiations for increase of wages.
Moreover, respondent Cesar Dimaandal admitted that
the ITF differential pay was computed by the ITF
representative (TSN, p. 7, Dec. 12, 1979)
3) The fact that complainant and the owner/operator of
the vessel were compelled to sign the Special
Agreement (Exh. "20") and to pay ITF differentials to
respondents in order not to delay the departure of the
vessel and to prevent further losses is shown in the
"Agreement" (Exhs. "R-21") ... (pp. 69-70, Rollo)
The NSB further said:

While the Board recognizes the rights of the

respondents to demand for higher wages, provided the
means are peaceful and legal, it could not, however,
sanction the same if the means employed are violent
and illegal. In the case at bar, the means employed are
violent and illegal for in demanding higher wages the
respondents sought the aid of a third party and in turn
the latter intervened in their behalf and prohibited the
vessel from sailing unless the owner and/or operator of
the vessel acceded to respondents' demand for higher
wages. To avoid suffering further incalculable losses,
the owner and/or operator of the vessel had no
altemative but to pay respondents' wages in
accordance with the ITF scale. The Board condemns the
act of a party who enters into a contract and with the
use of force/or intimidation causes the other party to
modify said contract. If the respondents believe that
they have a valid ground to demand from the
complainant a revision of the terms of their contracts,
the same should have been done in accordance with
law and not thru illegal means. (at p. 72, Rollo).
Although the respondent NSB found that the petitioners were
entitled to the payment of earned wages and overtime
pay/allowance from November 1, 1978 to December 14, 1978, it
nevertheless ruled that the computation should be based on the
rates of pay as appearing in the petitioners' NSB-approved
contracts. It ordered that the amounts to which the petitioners
are entitled under the said computation should be deducted from
the amounts that the petitioners must return to the private
respondent.

On appeal, the NLRC affirmed the NSB's findings. Hence, the

petition in G.R. Nos. 64781-99.
Meanwhile, the petitioners in G.R. Nos. 57999 and 58143-53
moved to quash the criminal cases of estafa filed against them on
the ground that the alleged crimes were committed, if at all, in
Vancouver, Canada and, therefore, Philippine courts have no
jurisdiction. The respondent judge denied the motion. Hence, the
second petition.
The principal issue in these consolidated petitions is whether or
not the petitioners are entitled to the amounts they received from
the private respondent representing additional wages as
determined in the special agreement. If they are, then the
decision of the NLRC and NSB must be reversed. Similarly, the
criminal cases of estafa must be dismissed because it follows as a
consequence that the amounts received by the petitioners belong
to them and not to the private respondent.
In arriving at the questioned decision, the NSB ruled that the
petitioners are not entitled to the wage differentials as
determined by the ITF because the means employed by them in
obtaining the same were violent and illegal and because in
demanding higher wages the petitioners sought the aid of a third
party, which, in turn, intervened in their behalf and prohibited the
vessel from sailing unless the owner and/or operator of the vessel
acceded to respondents' demand for higher wages. And as proof
of this conclusion, the NSB cited the following: (a) the entries in
the petitioners Pay-Off Clearance Slip which contained the phrase
"DEMANDED ITF WAGES ..."; (b) the alleged policy of the ITF in
not interfering with crewmembers of a vessel unless its
intervention is sought by the crewmembers themselves; (c), the
petitioners' admission that ITF acted in their behalf; and (d) the

fact that the private respondent was compelled to sign the special
agreement at Vancouver, Canada.
There is nothing in the public and private respondents' pleadings,
to support the allegations that the petitioners used force and
violence to secure the special agreement signed in Vancouver.
British Columbia. There was no need for any form of intimidation
coming from the Filipino seamen because the Canadian
Brotherhood of Railways and Transport Workers (CBRT), a strong
Canadian labor union, backed by an international labor federation
was actually doing all the influencing not only on the ship-owners
and employers but also against third world seamen themselves
who, by receiving lower wages and cheaper accommodations,
were threatening the employment and livelihood of seamen from
developed nations.
The bases used by the respondent NSB to support its decision do
not prove that the petitioners initiated a conspiracy with the ITF
or deliberately sought its assistance in order to receive higher
wages. They only prove that when ITF acted in petitioners' behalf
for an increase in wages, the latter manifested their support. This
would be a logical and natural reaction for any worker in whose
benefit the ITF or any other labor group had intervened. The
petitioners admit that while they expressed their conformity to
and their sentiments for higher wages by means of placards,
they, nevertheless, continued working and going about their usual
chores. In other words, all they did was to exercise their freedom
of speech in a most peaceful way. The ITF people, in turn, did not
employ any violent means to force the private respondent to
accede to their demands. Instead, they simply applied effective
pressure when they intimated the possibility of interdiction should
the shipowner fail to heed the call for an upward adjustment of
the rates of the Filipino seamen. Interdiction is nothing more than

a refusal of ITF members to render service for the ship, such as

to load or unload its cargo, to provision it or to perform such
other chores ordinarily incident to the docking of the ship at a
certain port. It was the fear of ITF interdiction, not any action
taken by the seamen on board the vessel which led the
shipowners to yield.
The NSB's contusion that it is ITF's policy not to intervene with
the plight of crewmembers of a vessel unless its intervention was
sought is without basis. This Court is cognizant of the fact that
during the period covered by the labor controversies in Wallem
Philippines Shipping, Inc. v. Minister of Labor (102 SCRA 835
[1981]; Vir-Jen Shipping and Marine Services, Inc. v.
NLRC (supra) and these consolidated petitions, the ITF was
militant worldwide especially in Canada, Australia, Scandinavia,
and various European countries, interdicting foreign vessels and
demanding wage increases for third world seamen. There was no
need for Filipino or other seamen to seek ITF intervention. The
ITF was waiting on its own volition in all Canadian ports, not
particularly for the petitioners' vessel but for all ships similarly
situated. As earlier stated, the ITF was not really acting for the
petitioners out of pure altruism. The ITF was merely protecting
the interests of its own members. The petitioners happened to be
pawns in a higher and broader struggle between the ITF on one
hand and shipowners and third world seamen, on the other. To
subject our seamen to criminal prosecution and punishment for
having been caught in such a struggle is out of the question.
As stated in Vir-Jen Shipping (supra):
The seamen had done no act which under Philippine law
or any other civilized law would be termed illegal,
oppressive, or malicious. Whatever pressure existed, it

was mild compared to accepted and valid modes of

labor activity. (at page 591)
Given these factual situations, therefore, we cannot affirm the
NSB and NLRC's finding that there was violence, physical or
otherwise employed by the petitioners in demanding for
additional wages. The fact that the petitioners placed placards on
the gangway of their ship to show support for ITF's demands for
wage differentials for their own benefit and the resulting ITF's
threatened interdiction do not constitute violence. The petitioners
were exercising their freedom of speech and expressing
sentiments in their hearts when they placed the placard We Want
ITF Rates." Under the facts and circumstances of these petitions,
we see no reason to deprive the seamen of their right to freedom
of expression guaranteed by the Philippine Constitution and the
fundamental law of Canada where they happened to exercise it.
As we have ruled in Wallem Phil. Shipping Inc. v. Minister of
Labor, et al. supra:
Petitioner claims that the dismissal of private
respondents was justified because the latter threatened
the ship authorities in acceding to their demands, and
this constitutes serious misconduct as contemplated by
the Labor Code. This contention is now well-taken. The
records fail to establish clearly the commission of any
threat. But even if there had been such a threat,
respondents' behavior should not be censured because
it is but natural for them to employ some means of
pressing their demands for petitioner, who refused to
abide with the terms of the Special Agreement, to
honor and respect the same. They were only acting in
the exercise of their rights, and to deprive them of their

freedom of expression is contrary to law and public

policy. ... (at page 843)
We likewise, find the public respondents' conclusions that the acts
of the petitioners in demanding and receiving wages over and
above the rates appearing in their NSB-approved contracts is in
effect an alteration of their valid and subsisting contracts because
the same were not obtained through. mutual consent and without
the prior approval of the NSB to be without basis, not only
because the private respondent's consent to pay additional wages
was not vitiated by any violence or intimidation on the part of the
petitioners but because the said NSB-approved form contracts are
not unalterable contracts that can have no room for improvement
during their effectivity or which ban any amendments during their
term.
For one thing, the employer can always improve the working
conditions without violating any law or stipulation.
We stated in the Vir-Jen case (supra) that:
The form contracts approved by the National Seamen
Board are designed to protect Filipino seamen not
foreign shipowners who can take care of themselves.
The standard forms embody the basic minimums which
must be incorporated as parts of the employment
contract. (Section 15, Rule V, Rules and Regulations
Implementing the Labor Code).lwph1.t They are
not collective bargaining agreements or immutable
contracts which the parties cannot improve upon or
modify in the course of the agreed period of time. To
state, therefore, that the affected seamen cannot
petition their employer for higher salaries during the 12
months duration of the contract runs counter to

estabhshed principles of labor legislation. The National

Labor Relations Commission, as the appellate tribunal
from the decisions of the National Seamen Board,
correctly ruled that the seamen did not violate their
contracts to warrant their dismissal. (at page 589)
It is impractical for the NSB to require the petitioners, caught in
the middle of a labor struggle between the ITF and owners of
ocean going vessels halfway around the world in Vancouver,
British Columbia to first secure the approval of the NSB in Manila
before signing an agreement which the employer was willing to
sign. It is also totally unrealistic to expect the petitioners while in
Canada to exhibit the will and strength to oppose the ITF's
demand for an increase in their wages, assuming they were so
minded.
An examination of Annex C of the petition, the agreement signed
in Japan by the crewmembers of the M/V Grace River and a
certain M. Tabei, representative of the Japanese shipowner lends
credence to the petitioners' claim that the clause "which
amount(s) was received and held by CREWMEMBERS in trust for
SHIPOWNER" was an intercalation added after the execution of
the agreement. The clause appears too closely typed below the
names of the 19 crewmen and their wages with no similar
intervening space as that which appears between all the
paragraphs and the triple space which appears between the list of
crewmembers and their wages on one hand and the paragraph
above which introduces the list, on the other. The verb "were"
was also inserted above the verb "was" to make the clause
grammatically correct but the insertion of "were" is already on
the same line as "Antonio Miranda and 5,221.06" where it clearly
does not belong. There is no other space where the word "were"
could be intercalated. (See Rollo, page 80).

At any rate, the proposition that the petitioners should have

pretended to accept the increased wages while in Vancouver but
returned them to the shipowner when they reached its country,
Japan, has already been answered earlier by the Court:
Filipino seamen are admittedly as competent and
reliable as seamen from any other country in the world.
Otherwise, there would not be so many of them in the
vessels sailing in every ocean and sea on this globe. It
is competence and reliability, not cheap labor that
makes our seamen so greatly in demand. Filipino
seamen have never demanded the same high salaries
as seamen from the United States, the United
Kingdom, Japan and other developed nations. But
certainly they are entitled to government protection
when they ask for fair and decent treatment by their
employer and when they exercise the right to petition
for improved terms of employment, especially when
they feel that these are sub-standard or are capable of
improvement according to internationally accepted
rules. In the domestic scene, there are marginal
employers who prepare two sets of payrolls for their
employees one in keeping with minimum wages and
the other recording the sub-standard wages that the
employees really receive. The reliable employers,
however, not only meet the minimums required by fair
labor standards legislation but even go away above the
minimums while earning reasonable profits and
prospering. The same is true of international
employment. There is no reason why this court and the
Ministry of Labor and Employment or its agencies and
commissions should come out with pronouncements
based on the standards and practices of unscrupulous

or inefficient shipowners, who claim they cannot

survive without resorting to tricky and deceptive
schemes, instead of Government maintaining labor law
and jurisprudence according to the practices of
honorable, competent, and law-abiding employers,
domestic or foreign. (Vir-Jen Shipping, supra, pp. 587588)
It is noteworthy to emphasize that while the Intemational Labor
Organization (ILO) set the minimum basic wage of able seamen
at US$187.00 as early as October 1976, it was only in 1979 that
the respondent NSB issued Memo Circular No. 45, enjoining all
shipping companies to adopt the said minimum basic wage. It
was correct for the respondent NSB to state in its decision that
when the petitioners entered into separate contracts between
1977-1978, the monthly minimum basic wage for able seamen
ordered by NSB was still fixed at US$130.00. However, it is not
the fault of the petitioners that the NSB not only violated the
Labor Code which created it and the Rules and Regulations
Implementing the Labor Code but also seeks to punish the
seamen for a shortcoming of NSB itself.
Article 21(c) of the Labor Code, when it created the NSB,
mandated the Board to "(O)btain the best possible terms and
conditions of employment for seamen."
Section 15, Rule V of Book I of the Rules and Regulations
Implementing the Labor Code provides:
Sec. 15. Model contract of employment. The NSB
shall devise a model contract of employment which
shall embody all the requirements of pertinent labor
and social legislations and the prevailing standards set
by applicable International Labor Organization

Conventions. The model contract shall set the minimum

standards of the terms and conditions to govern the
employment of Filipinos on board vessels engaged in
overseas trade. All employers of Filipinos shall adopt
the model contract in connection with the hiring and
engagement of the services of Filipino seafarers, and in
no case shall a shipboard employment contract be
allowed where the same provides for benefits less than
those enumerated in the model employment contract,
or in any way conflicts with any other provisions
embodied in the model contract.
Section 18 of Rule VI of the same Rules and Regulations
provides:
Sec. 18. Basic minimum salary of able-seamen. The
basic minimum salary of seamen shall be not less than
the prevailing minimxun rates established by the
International Labor Organization or those prevailing in
the country whose flag the employing vessel carries,
whichever is higher. However, this provision shall not
apply if any shipping company pays its crew members
salaries above the minimum herein provided.
Section 8, Rule X, Book I of the Omnibus Rules provides:
Section 8. Use of standard format of service
agreement. The Board shall adopt a standard format
of service agreement in accordance with pertinent labor
and social legislation and prevailing standards set by
applicable International Labor Organization
Conventions. The standard format shall set the
minimum standard of the terms and conditions to
govern the employment of Filipino seafarers but in no

case shall a shipboard employment contract (sic), or in

any way conflict with any other provision embodied in
the standard format.
It took three years for the NSB to implement requirements which,
under the law, they were obliged to follow and execute
immediately. During those three years, the incident in Vancouver
happened. The terms and conditions agreed upon in Vancouver
were well within ILO rates even if they were above NSB standards
at the time.
The sanctions applied by NSB and affirmed by NLRC are moreover
not in keeping with the basic premise that this Court stressed in
the Vir-Jen Shipping case (supra) that the Ministry now the
Department of Labor and Employment and all its agencies exist
primarily for the workingman's interest and the nation's as a
whole.
Implicit in these petitions and the only reason for the NSB to take
the side of foreign shipowners against Filipino seamen is the
"killing the goose which lays the golden eggs" argument. We
reiterate the ruling of the Court in Vir-Jen Shipping (supra)
There are various arguments raised by the petitioners
but the common thread running through all of them is
the contention, if not the dismal prophecy, that if the
respondent seamen are sustained by this Court, we
would in effect "kill the hen that lays the golden egg."
In other words, Filipino seamen, admittedly among the
best in the world, should remain satisfied with relatively
lower if not the lowest, international rates of
compensation, should not agitate for higher wages
while their contracts of employment are subsisting,
should accept as sacred, iron clad, and immutable the

side contracts which require: them to falsely pretend to

be members of international labor federations, pretend
to receive higher salaries at certain foreign ports only
to return the increased pay once the ship leaves that
port, should stifle not only their right to ask for
improved terms of employment but their freedom of
speech and expression, and should suffer instant
termination of employment at the slightest sign of
dissatisfaction with no protection from their
Government and their courts. Otherwise, the
petitioners contend that Filipinos would no longer be
accepted as seamen, those employed would lose their
jobs, and the still unemployed would be left hopeless.
This is not the first time and it will not be the last where the
threat of unemployment and loss of jobs would be used to argue
against the interests of labor; where efforts by workingmen to
better their terms of employment would be characterized as
prejudicing the interests of labor as a whole.
xxx xxx xxx
Unionism, employers' liability acts, minimum wages,
workmen's compensation, social security and collective
bargaining to name a few were all initially opposed by
employers and even well meaning leaders of
government and society as "killing the hen or goose
which lays the golden eggs." The claims of workingmen
were described as outrageously injurious not only to
the employer but more so to the employees themselves
before these claims or demands were established by
law and jurisprudence as "rights" and before these
were proved beneficial to management, labor, and the
national as a whole beyond reasonable doubt.

The case before us does not represent any major

advance in the rights of labor and the workingmen. The
private respondents merely sought rights already
established. No matter how much the petitioneremployer tries to present itself as speaking for the
entire industry, there is no evidence that it is typical of
employers hiring Filipino seamen or that it can speak
for them.
The contention that manning industries in the
Philippines would not survive if the instant case is not
decided in favor of the petitioner is not supported by
evidence. The Wallem case was decided on February
20, 1981. There have been no severe repercussions, no
drying up of employment opportunities for seamen, and
none of the dire consequences repeatedly emphasized
by the petitioner. Why should Vir-Jen be an exception?
The wages of seamen engaged in international shipping
are shouldered by the foreign principal. The local
manning office is an agent whose primary function is
recruitment and who usually gets a lump sum from the
shipowner to defray the salaries of the crew. The hiring
of seamen and the determination of their compensation
is subject to the interplay of various market factors and
one key factor is how much in terms of profits the local
manning office and the foreign shipowner may realize
after the costs of the voyage are met. And costs include
salaries of officers and crew members. (at pp. 585586)
The Wallem Shipping case, was decided in 1981. Vir-Jen
Shipping was decided in 1983. It is now 1989. There has'been no
drying up of employment opportunities for Filipino seamen. Not

only have their wages improved thus leading ITF to be placid and
quiet all these years insofar as Filipinos are concerned but the
hiring of Philippine seamen is at its highest level ever.
Reporting its activities for the year 1988, the Philippine Overseas
Employment Administration (POEA) stated that there will be an
increase in demand for seamen based overseas in 1989 boosting
the number to as high as 105,000. This will represent a 9.5
percent increase from the 1988 aggregate. (Business
World, News Briefs,January 11, 1989 at page 2) According to the
POEA, seabased workers numbering 95,913 in 1988 exceeded by
a wide margin of 28.15 percent the year end total in 1987. The
report shows that sea-based workers posted bigger monthly
increments compared to those of landbased workers. (The
Business Star, Indicators, January 11, 1988 at page 2)
Augmenting this optimistic report of POEA Administrator Tomas
Achacoso is the statement of Secretary of Labor Franklin M.
Drilon that the Philippines has a big jump over other crewing
nations because of the Filipinos' abilities compared with any
European or westem crewing country. Drilon added that cruise
shipping is also a growing market for Filipino seafarers because of
their flexibility in handling odd jobs and their expertise in
handling almost all types of ships, including luxury liners. (Manila
Bulletin, More Filipino Seamen Expected Development,December
27, 1988 at page 29).lwph1.t Parenthetically, the minimum
monthly salary of able bodied seamen set by the ILO and adhered
to by the Philippines is now $276.00 (id.) more than double the
$130.00 sought to be enforced by the public respondents in these
petitions.
The experience from 1981 to the present vindicates the finding
in Vir-Jen Shipping that a decision in favor of the seamen would
not necessarily mean severe repercussions, drying up of

employment opportunities for seamen, and other dire

consequences predicted by manning agencies and recruiters in
the Philippines.
From the foregoing, we find that the NSB and NLRC committed
grave abuse of discretion in finding the petitioners guilty of using
intimidation and illegal means in breaching their contracts of
employment and punishing them for these alleged offenses.
Consequently, the criminal prosecutions for estafa in G.R. Nos.
57999 and 58143-53 should be dismissed.
WHEREFORE, the petitions are hereby GRANTED. The decisions of
the National Seamen Board and National Labor Relations
Commission in G. R. Nos. 64781-99 are REVERSED and SET
ASIDE and a new one is entered holding the petitioners not guilty
of the offenses for which they were charged. The petitioners'
suspension from the National Seamen Board's Registry for three
(3) years is LIFTED. The private respondent is ordered to pay the
petitioners their earned but unpaid wages and overtime
pay/allowance from November 1, 1978 to December 14, 1978
according to the rates in the Special Agreement that the parties
entered into in Vancouver, Canada.
The criminal cases for estafa, subject matter of G. R. Nos. 57999
and 58143-53, are ordered DISMISSED.
SO ORDERED.
Narvasa, Melencio-Herrera, Cruz, Paras, Gancayco, Padilla, Bidin,
Sarmiento, Cortes, Gri;o-Aquino, Medialdea and Regalado, JJ.,
concur.

Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 82252 February 28, 1989
SEAGULL MARITIME CORP. AND PHILIMARE SHIPPING &
EQUIPMENT SUPPLY, petitioners
vs.
NERRY D. BALATONGAN, NATIONAL LABOR RELATIONS
COMMISSION AND PHILIPPINE OVERSEAS EMPLOYMENT
ADMINISTRATION, respondents.
Tanjuatco, Oreta, Tanjuatco, Berenguer & San Vicente for
petitioners.
The Solicitor General for public respondent.
Benjamin B. Vergara for private respondent

GANCAYCO, J.:
On November 2, 1982, a "crew Agreement" was entered into by
private respondent Nerry D. Balatongan and Philimare Shipping
and Equipment Supply (hereinafter called Philimare) whereby the
latter employed the former as able seaman on board its vessel
"Santa Cruz" (renamed "Turtle Bay") with a monthly salary of US
$ 300.00. Said agreement was processed and approved by the
National Seaman's Board (NSB) on November 3, 1982. 1

While on board said vessel the said parties entered into a

supplementary contract of employment on December 6,
1982 2 which provides among others:
1. The employer shall be obliged to insure the
employee during his engagement against death or
permanent invalidity caused by accident on board up
to:
US $ 40,000 - for death caused by accident
US $ 50,000 - for permanent total disability
caused by accident. 3
On October 6, 1983 Balatongan met an accident in the Suez
Canal, Egypt as a result of which he was hospitalized at the Suez
Canal Authority Hospital. Later, he was repatriated to the
Philippines and was hospitalized at the Makati Medical Center
from October 23, 1983 to March 27, 1984. On August 19, 1985
the medical certificate was issued describing his disability as
"permanent in nature."
Balatongan demanded payment for his claim for total disability
insurance in the amount of US $ 50,000.00 as provided for in the
contract of employment but his claim was denied for having been
submitted to the insurers beyond the designated period for doing
so.
Thus, Balatongan filed on June 21, 1985 a complaint against
Philimare and Seagull Maritime Corporation (hereinafter called
Seagull) in the Philippine Overseas Employment Administration
(POEA) for non-payment of his claim for permanent total
disability with damages and attorney's fees.

After the parties submitted their respective position papers with

the corresponding documentary evidence, the officer-in-charge of
the Workers Assistance and Adjudication Office of the POEA
rendered a decision on May 2, 1986, the dispositive part of which
reads as follows:
WHEREFORE, premises considered, respondents are
hereby ordered to pay complainant the amount of US $
50,000.00 representing permanent total disability
insurance and attorney's fees at 10% of the award.
Payment should be made in this Office within ten (10)
days from receipt hereof at the prevailing rate of
exchange. This Office cannot however rule on damages,
having no jurisdiction on the matter.
SO ORDERED.

Seagull and Philimare appealed said decision to the National

Labor Relations Commission (NLRC) on June 4, 1986. Pending
resolution of their appeal because of the alleged transfer of the
agency of Seagull to Southeast Asia Shipping Corporation,
Seagull filed on April 28, 1987 a Motion For Substitution/Inclusion
of Party Respondent which was opposed by Balatongan. 5 This
was followed by an ex-parte motion for leave to file third party
complaint on June 4, 1987 by Seagull. A decision was
promulgated on December 7, 1987 denying both motions and
dismissing the appeal for lack of merit. 6 A motion for
reconsideration of said decision was denied for lack of merit in a
resolution dated February 26, 1988. 7
Hence, Seagull and Philimare filed this petition for certiorari with
a prayer for the issuance of a temporary restraining order based
on the following grounds:

1. Respondent POEA erred in applying the

Supplemental Contract;
2. Respondents POEA and NLRC acted with grave abuse
of discretion in holding that the Supplemental Contract
was signed on board MV Santa Cruz by and between
private respondent and your petitioner; and
3. Respondent NLRC acted with grave abuse of
discretion in not giving due course to your petitioners'
Motion for Leave to File Third Party Complaint as well
as their Motion for Inclusion/Substitution of
respondents. 8
On March 21, 1988, the Court issued a temporary restraining
order enjoining respondents from enforcing the questioned
decision and resolution of public respondents.
Petitioners argue that prior to private respondent's departure he
executed a crew agreement on November 2, 1982 which was duly
approved by the POEA; that the supplementary contract of
employment that was entered into on board the vessel "Turtle
Bay" which provides for a US $ 50,000.00 insurance benefit in
case of permanent disability was neither approved nor verified by
respondent POEA; and that the same violates Article 34(i) of the
Labor Code, as amended, which provides as follows:
Art. 34. Prohibited Practices. - It shall be unlawful for
any individual, entity, licensee, or holder of authority:
xxx xxx xxx
xxx xxx xxx

(i) to substitute or alter employment contracts

approved and verified by the Department of Labor from
the time of actual signing thereof by the parties up to
and including the period of expiration of the same
without the approval of the Department of Labor.
Petitioners also call attention to Article VIII, paragraph 2 of the
Supplementary Contract which provides as follows:
2. Notwithstanding his claim against the insurers the
employee hereby expressly waives all claims of his own
or his heirs for compensation of damages due to death
or permanent invalidity which he suffered during his
engagement against the employers ... unless his death
or permanent invalidity has been caused by willful act
of any of the above-named persons. 9
Petitioners stress that while public respondents upheld the
applicability of said supplementary contract insofar as it increased
the benefits to private respondent, public respondents considered
the provision on the waiver against all claims by private
respondent to be contrary to public policy.
In its questioned decision dated December 7, 1987, the
respondent NLRC made the following disquisition:
The focal issue for determination is the validity and
enforceability of the second contract of employment
entered into by and between complainant and
respondents on board the vessel where the former had
served as a member of its complement despite the
absence of NSB verification or approval. With respect to
the findings of facts in the appealed decision, We
consider the same as duly supported by substantial

evidence and the admissions of the parties in their

pleadings.
Much stress and emphasis are made by the
respondents in their appeal that this claim has no legal
basis or footing inasmuch as the second contract of
employment containing a total disability insurance
benefit of US $ 50,000.00, much more than that
embodied in the first contract of employment which
was approved by the defunct NSB, was not verified or
approved by the latter. Accordingly, the respondents
posit the argument that subject claim may not prosper
pursuant to the provisions of Art. 34(i) of the Labor
Code, as amended, which provides that it shall be
unlawful for any individual, entity, licensee, or holder of
authority '(T)o substitute or alter employment contracts
approved and verified by the Department of Labor from
the time of actual signing thereof by the parties up to
and including the period of expiration of the same
without the approval of the Department of Labor.
Did the POEA commit a reversible error when it
considered the second contract of employment as
valid sans any verification or approval thereof by the
NSB? Our answer to this query is in the negative.
Apparently, the intention of the law when Art. 34 of the
Labor Code was enacted is to provide for the prohibited
and unlawful practices relative to recruitment and
placement. As shown in the 'Explanatory Note' of
Parliamentary Bill No. 4531, pertaining to Art. 34
(supra), thus:
Many of the provisions are already existing and were
simply restated. Some however were restated with

modifications and new ones were introduced to reflect

what in the past have been noted to be pernicious
practices which tend to place workers at a
disadvantage.'
it is indubitably clear that the purpose of having
overseas contracts of employment approved by the
NSB(POEA) is whether or not such contracts conform to
the minimum terms and conditions prescribed by the
NSB (POEA). In other words, the law did not at all
prohibit any alteration which provided for increases in
wages or other benefits voluntarily granted by the
employer. Precisely, under Section 2, Rule 1, Book V of
the Rules and Regulations of the POEA, '(t)he standard
format of employment contracts shall set the minimum
standards of the terms and conditions of employment.
All employers and principals shall adopt the model
contract in connection with the hiring of workers
without prejudice to their adopting other terms and
conditions of employment over and above the
minimum standards of the Administration.' Where, as
here, it is admitted that the second contract although
not verified or approved by the NSB (POEA) granted
more benefits by way of total disability insurance to the
complainant, the respondents may not be allowed to
disvow their own voluntary acts by insisting that such
beneficial contract in favor of the seaman is null and
void. (Emphasis supplied.)10
We agree.
The supplementary contract of employment was entered into
between petitioner and private respondent to modify the original
contract of employment The reason why the law requires that the

POEA should approve and verify a contract under Article 34(i) of

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

supplementary contract was entered into by private respondent

with their principal, Navales Shipping Management and Marine
Consultant (Pte) Ltd. on board the vessel Turtle Bay so petitioners
cannot be held responsible thereunder.
This Court is not a trier of facts and the findings of the public
respondents are conclusive in this proceeding. Public respondents
found that petitioner Philimare and private respondent entered
into said supplementary contract of employment on December 6,
1982. Assuming for the sake of argument that it was petitioners'
principal which entered into said contract with private
respondent, nevertheless petitioner, as its manning agent in the
Philippines, is jointly responsible with its principal thereunder. 13
There is no question that under the said supplementary contract
of employment, it is the duty of the employer, petitioners herein,
to insure the employee, during his engagement, against death
and permanent invalidity caused by accident on board up to $
50,000.00. Consequently, it is also its concomitant obligation to
see to it that the claim against the insurance company is duly
filed by private respondent or in his behalf, and within the time
provided for by the terms of the insurance contract.
In this case, the private respondent met the accident on October
6, 1983. Since then, he was hospitalized at the Suez Canal
Authority Hospital and thereafter be was repatriated to the
Philippines wherein he was also hospitalized from October 22,
1983 to March 27, 1984. It was only on August 19, 1985 that he
was issued a medical certificate describing his disability to be
permanent in nature. It was not possible for private respondent
to file a claim for permanent disability with the insurance
company within the one-year period from the time of the injury,
as his disability was ascertained to be permanent only thereafter.
Petitioners did not exert any effort to assist private respondent to

recover payment of his claim from the insurance company. They

did not even care to dispute the finding of the insurer that the
claim was not flied on time. 14 Petitioners must, therefore, be held
responsible for its omission, if not negligence, by requiring them
to pay the claim of private respondent.
The Court finds that the respondent NLRC did not commit a grave
abuse of discretion in denying petitioners, motion for leave to file
third-party complaint and substitution inclusion of party
respondent. Such motion is largely addressed to the discretion of
the said Commission. Inasmuch as the alleged transfer of interest
took place only after the POEA had rendered its decision, the
denial of the motion so as to avoid further delay in the settlement
of the claim of private respondent was well-taken. At any rate,
petitioners may pursue their claim against their alleged
successor-in-interest in a separate suit.
WHEREFORE, the petition is hereby DISMISSED for lack of merit
and the temporary restraining order issued by this Court on
March 21, 1988 is hereby LIFTED. No costs. This decision is
immediately executory.
SO ORDERED.
Narvasa, Cruz, Grio-Aquino and Medialdea, JJ., concur.

SECOND DIVISION
EDGARDO M.
PANGANIBAN ,

G.R. No. 187032

Petitioner,
Present:

- versus -

CARPIO, J., Chairperson,

NACHURA,
LEONARDO-DE CASTRO,*
PERALTA, and
MENDOZA, JJ.

TARA TRADING
Promulgated:
SHIPMANAGEMENT INC.
AND SHINLINE SDN BHD,
October 18, 2010
Respondents.
x
-------------------------------------------------------------------------------------------------------x
DECISION
MENDOZA, J.:
While it is true that labor contracts are
impressed with public interest and the
provisions of the POEA Standard Employment
Contract must be construed logically and
liberally in favor of Filipino seamen in the
pursuit of their employment on board oceangoing vessels, absent substantial evidence
from which reasonable basis for the grant of
benefits prayed for can be drawn, We are left

with no choice but to deny the claims of the

employee, lest We cause injustice to the
employer. We must always remember that
justice is in every case for the deserving, to
be dispensed with in the light of established
facts, the applicable law, and existing
jurisprudence.[1]

This is a petition for review under Rule 45 of the Rules of

Court challenging the October 29, 2008 Decision [2] of the Court of
Appeals (CA), and its March 4, 2009 Resolution,[3] in CA-G.R. SP
No. 104343, reversing the March 25, 2008 Decision [4] and April
30, 2008 Resolution[5] of the National Labor Relations
Commission (NLRC)which affirmed the decision of the Labor
Arbiter (LA) favoring the petitioner.
THE FACTS:
In November 2005, petitioner was hired by respondent Tara
Trading Shipmanagement, Inc. (Tara), in behalf of its foreign
principal, respondent Shinline SDN BHD(Shinline) to work as an
Oiler on board MV Thailine 5 [6] with a monthly salary of
US$409.00.
Sometime in April 2006, petitioner began exhibiting signs of
mental instability. He was repatriated on May 24, 2006 for further
medical evaluation and management.[7]
Petitioner
was
referred
by
respondents
to
the Metropolitan Medical Center where he was diagnosed to be
suffering from brief psychotic disorder.[8]
Despite his supposed total and permanent disability and
despite
repeated
demands
for
payment
of
disability

compensation, respondents allegedly failed and refused to comply

with their contractual obligations.[9]
Hence, petitioner filed a Complaint against respondents
praying for the payment of US$60,000.00 as total and permanent
disability benefits, reimbursement of medical and hospital
expenses, moral and exemplary damages, and attorneys fees
equivalent to 10% of total claims.[10]
Respondents, on the other hand, maintained that petitioner
requested for an early repatriation and arrived at the point of hire
on May 24, 2006; that while on board the vessel, he confided to a
co-worker, Henry Santos, that his eating and sleeping disorders
were due to some family problems; that Capt. Zhao, the master
of the vessel, even asked him if he wanted to see a doctor; that
he initially declined; that on May 22, 2006, petitioner approached
Capt. Zhao and requested for a vacation and early repatriation;
that the said request was granted; that upon arrival, petitioner
was subjected to a thorough psychiatric evaluation; and that after
a series of check-ups, it was concluded that his illness did not
appear to be work-related. Respondents argued that petitioner
was not entitled to full and permanent disability benefits under
the Philippine Overseas Employment Administration Standard
Employment Contract (POEA SEC) because there was no
declaration from the company-designated physician that he was
permanently and totally disabled and that the claim for damages
was without basis as no bad faith can be attributed to them. [11]
On September 17, 2007, the LA ruled in favor of the
petitioner.[12] Specifically, the LA held that:

The claim for total and permanent disability

benefits is resolved in favor of complainant.
Respondents have stated that the cause of
complainants illness, brief psychotic disorder, is largely
unknown. This being the case, it is not therefore right
to bluntly claim that the same is not work-related
because it is also possible that the illness may be
caused by or aggravated by his employment. As alleged
by respondents, there are certain factors which may
bring about brief psychotic disorder such as biological
or psychological vulnerability toward the development
of psychotic symptoms. Complainant, and all seamen
for that matter, are subjected to stress because of the
rigorous and strenuous demands of being at sea for
prolonged periods of time, causing sensory deprivation
and continuous isolation, to borrow the words of
complainants attending psychiatrist. As correctly
argued by complainant, while all seamen may be
subjected to the same or greater degree of stress, their
respective abilities to cope with these factors are
different. There is therefore the risk that seamen, not
only complainant, are prone to contract brief psychotic
disorder since they are most of the time at sea and
away from their loved ones.
As early as 27 June 2006, respondents designated
physicians have declared that complainants condition
does not appear to be work-related. With this
declaration,
respondents
are
bound
to
deny
complainants claim for disability benefits. He cannot
therefore be faulted for filing the instant case in

October 2006 without waiting for the evaluation of his

disability impediment by the company designated
doctors. Moreover, the 120 days period lapsed without
the latter having declared the degree of complainants
disability, if any.
Complainant is thus considered to be totally and
permanently disabled as he is no longer capable of
earning wages in the same kind of work, or work of
similar nature that he was trained for or accustomed to
perform. He is now incapacitated to work, hence, his
earning capacity is impaired. Jurisprudence has
declared that disability should not be understood more
on its medical significance but on loss of earning
capacity.
With the foregoing, complainant is awarded total
and permanent disability benefits in the amount of US$
60,000.00 or its equivalent in Philippine Currency at the
time of payment.
Complainant cannot however be awarded his claim
for medical and hospitalization expenses. He did not
anymore pursue this charge in his pleadings, hence,
the same remained unsubstantiated. The same holds
true with his claim for moral and exemplary damages.
Complainant failed to prove bad faith or malice on
respondents part in denying his claims.
Complainant is entitled to attorneys fees as he
sought the assistance of his counsel in pursuing his
claims against respondents for his total and permanent
disability benefits. He is thus awarded an equivalent of
ten percent (10%) of his total claims as and by way of
attorneys fees.
WHEREFORE,
in
view
of
the
foregoing,
respondents Tara Trading Shipmanagement, Inc. and/or

Shinline SDN. BHD, are hereby ordered to pay

complainant Edgardo M. Panganiban his total and
permanent disability benefit in the amount of
US$60,000.00 plus US$6,000.00 attorneys fees, in
Philippine Currency, at the prevailing rate of exchange
at the time of payment.
All other claims are denied.
SO ORDERED.[13]
Respondents appealed to the NLRC. On March 25, 2008,
the NLRC affirmed the decision of the LA.[14] The appeal of
respondents was dismissed for lack of merit.[15]The NLRC
reasoned out that All material averments on appeal are mere
rehash or amplification of the substantive allegations propounded
in the proceedings below which were already discerned and
judiciously passed upon by the Labor Arbiter. [16]
Respondents filed a motion for reconsideration but it was
denied in a resolution dated April 30, 2008.
Aggrieved, respondents filed a Petition for Certiorari with
prayer for the issuance of a writ of preliminary injunction and/or
temporary restraining order[17] with the CA. In their petition,
respondents presented the following grounds:
A. Public respondent gravely abused its discretion
and committed serious error in ruling that the
petitioners are liable to private respondent for
the payment of disability compensation in the
amount of US$ 60,000.00 considering the facts as
borne out by the evidence on record and the
applicable laws.

1.

Public respondent committed grave

abuse of discretion in arriving at the findings
of fact which are not substantiated by the
evidence on record.

2.

Public respondent committed grave

abuse of discretion when it failed to consider
the evidence which proves the illness is not
work related, thereby violating petitioners
right to procedural due process.

3.

Public respondent erred in not

finding in favor of the expert opinion of the
company-designated doctor on the nature of
the illness as against that of complainants
doctor in utter disregard of rules on
evidence.

Without concrete proof that his assessment

is biased and self-serving, the medical
opinion of the company-designate physician
should be accorded probative value and not
discarded merely on the basis of unfounded
allegation.
4. Public respondent committed grave abuse of
discretion when it affirmed the award of
attorneys fees.
B. Public respondent committed grave abuse of
discretion when it affirmed the award of
attorneys fees.[18]

On October 29, 2008, the CA reversed the decision of the

NLRC.[19] Pertinently, the CA held that:

We find that the NLRC (Sixth Division) committed

grave abuse of discretion in affirming the Decision of
Labor Arbiter Cellan which awarded US$60,000.00 total
and permanent disability benefits and US$6,000.00
attorneys fees in favor of private respondent, as the
findings of both the Labor Arbiter and the NLRC (Sixth
Division) are not anchored on substantial evidence.
It is basic that a contract is the law between the
parties. Obligations arising from contracts have the
force of law between the contracting parties and should
be complied with in good faith. Unless the stipulations
in a contract are contrary to law, morals, good
customs, public order or public policy, the same are
binding as between the parties.
A seafarer is a contractual, not a regular
employee, and his employment is contractually fixed for
a certain period of time. His employment, including
claims for death or illness compensations, is governed
by the contract he signs every time he is hired, and is
not rooted from the provisions of the Labor Code.
The Contract of Employment entered into by
petitioners and private respondent, and approved by
the POEA on 25 October 2005, provides:
The herein terms and conditions in
accordance with Department Order No. 4 and
Memorandum Circular No. 09, both Series of
2000, shall be strictly and faithfully observed.
x x x Upon approval, the same shall be
deemed an integral part of the: Standard
Terms and Conditions Governing the
Employment of Filipino Seafarers On
Board Ocean-Going Vessels.

Section 20-B of the POEA Amended Standard

Terms and Conditions Governing the Employment of
Filipino Seafarers on Board Ocean Going Vessels (POEASEC for brevity) provides that COMPENSATION AND
BENEFITS FOR INJURY OR ILLNESS. The liabilities of
the employer when the seafarer suffers work-related
injury or illness during the term of his contract: x x x
Under the Definition of Terms found in the
Standard Contract, a work related illness is defined as
any sickness resulting to disability or death as a result
of an occupational disease listed under Section 32-A of
this contract with the conditions set therein satisfied. In
the instant case, the illness brief psychotic disorder is
not listed as an occupational disease.
In the instant case, it is an undisputed fact that
private respondents illness occurred during the term of
his contract. The remaining issue to be determined is
whether or not private respondents illness of brief
psychotic disorder is work-related.
We find that private respondents brief psychotic
disorder was not contracted as a result of or caused by
the seafarers work as an Oiler on board the vessel M.V.
Thailine 5.
A review of the evidence shows that the companydesignated physician Dr. Mylene Cruz-Balbon (Dr.
Balbon, for brevity) issued a certification dated 26 June
2006 certifying that private respondent has undergone
medical evaluation treatment at Robert D. Lim, M.D.
Marine Medical Services, Metropolitan Medical Center
from 26 May 2006 up to the date of the certification,
due to Brief Psychotic Disorder. x x x.
xxxxxxxxx

On the psychological test done on 30 May 2006 on

private respondent, Dr. Raymond L. Rosales (Dr.
Rosales, for brevity) Diplomate in Neurology and
Psychiatry and Associate Professor of the University of
Santo Tomas Hospital, who is the specialist to whom
private respondent was referred by the companydesignated
physician,
commented
that
private
respondent suffered from hallucinations, persecutory
delusions and paranoia; at present, he does not exhibit
these symptoms; no definite mood disturbance; no
suicidal intent; fair judgment and insight; the working
diagnosis is brief psychotic disorder; at this point, his
condition does not appear to be work-related since he
claims to have no significant stressor at work and his
symptoms were most likely triggered by personal
family problems; and he needs to be followed up for
atleast 3 months with regular intake of medications.
As to the question of which findings should prevail,
that of the company-designated physician or the
private respondents personal physician, Section 20-B of
the POEA-SEC provides:
2. x x x x x x
However, if after repatriation, the seafarer
still requires medical attention arising from
said injury or illness, he shall be so
provided at cost to the employer until such
time he is declared fit or the degree of his
disability
has
been
established
by
the company-designated physician.
3. Upon sign-off from the vessel for medical
treatment, the seafarer is entitled to
sickness allowance equivalent to his basic
wage until he is declared fit to work or the
degree of permanent disability has been

assessed by the company-designated

physician but in no case shall this period
exceed one hundred twenty (120) days.
For this purpose, the seafarer shall
submit himself to a post-employment
medical examination by a companydesignated
physician within
three
working days upon his return except when
he is physically incapacitated to do so, in
which case, a written notice to the agency
within the same period is deemed as
compliance. Failure of the seafarer to
comply with the mandatory reporting
requirement shall result in his forfeiture of
the right to claim the above benefits.
If a doctor appointed by the seafarer
disagrees with the assessment, a
third doctor may be agreed jointly
between the Employer and the
seafarer. The third doctors decision
shall be final and binding on both
parties. (Emphasis supplied)
In order to claim disability benefits under the
Standard Employment Contract, it is the companydesignated physician who must proclaim that the
seaman suffered a permanent disability, whether total
or partial, due to either injury or illness, during the
term of the latters employment. It is a cardinal rule in
the interpretation of contracts that if the terms of a
contract are clear and leave no doubt upon the
intention of the contracting parties, the literal meaning
of its stipulation shall control. There is no ambiguity in
the wording of the Standard Employment Contract the
only qualification prescribed for the physician entrusted

with the task of assessing the seamans disability is that

he be company-designated.
xxxxxxxxx
[E]ven private respondents co-employee Oiler
Henry Santos stated in his letter to the Master of the
vessel that private respondent could not eat and sleep
because of a family problem. X x x.
xxxxxxxxx
From
the
foregoing
disquisitions,
private
respondent is neither entitled to a total and permanent
disability of US$60,000.00 nor to attorneys fees of
US$6,000.00. Petitioners did not act with gross or
evident bad faith in denying the claim of private
respondent. Thus, We find that the NLRC (Sixth
Division) acted with grave abuse of discretion in
dismissing petitioners appeal, affirming the Decision of
Labor Arbiter Cellan, and denying petitioners Motion for
Reconsideration.
While it is true that labor contracts are impressed
with public interest and the provisions of the POEA
Standard Employment Contract must be construed
fairly, reasonably and liberally in favor of Filipino
seamen in the pursuit of their employment on board
ocean-going vessels, we should always be mindful that
justice is in every case for the deserving, to be
dispensed with in the light of established facts, the
applicable law, and existing jurisprudence. x x x.
xxxxxxxxx
WHEREFORE, premises considered, the Petition
is GRANTED. The Decision dated 25 March 2008 and
Resolution dated 30 April 2008 of the National Labor

Relations Commission (Sixth Division) in NLRC LAC NO.

11-000311-07; NLRC NCR OFW (M) CASE NO. 06-1003278-00 are REVERSED and SET ASIDE and private
respondents complaint is hereby DISMISSED.
However, solely for humanitarian considerations,
petitioners are hereby ORDERED to grant private
respondent the amount of Php50,000.00 by way of
financial assistance, and to continue, at their expense,
the medical treatment of private respondent until the
final evaluation or assessment could be made, with
regard to private respondents medical condition.
SO ORDERED.[20]

Petitioners Motion for Reconsideration was denied by the CA

in its Resolution dated March 4, 2009.[21]
Hence, this Petition anchored on the following grounds--I
THE COURT OF APPEALS COMMITTED
SERIOUS ERROR OF LAW IN IGNORING THE
OVERWHELMING EVIDENCE THAT SUPPORTS
PETITIONERS ENTITLEMENT TO MAXIMUM
DISABILITY BENEFITS IN THE AMOUNT OF
USD60,000.00
II
THE HONORABLE COURT OF APPEALS
COMMITTED GRAVE ABUSE OF DISCRETION

IN DENYING THE COMPLAINANTS

DISABILITY BENEFITS SOLELY BECAUSE THE
COMPANY-DESIGNATED PHYSICIAN HAS
DECLARED PETITIONERS ILLNESS AS NOT
WORK-RELATED
III
THE HONORABLE COURT OF APPEALS
COMMITTED GRAVE ABUSE OF DISCRETION
IN NOT CONSIDERING THAT COMPLAINANT
COULD NO LONGER RETURN TO ACTIVE SEA
DUTIES, A JOB HE WAS TRAINED AND
ACCUSTOMED TO PERFORM WITHOUT
ENDANGERING HIS HEALTH AND LIFE
IV
THE HONORABLE COURT OF APPEALS
COMMITTED GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OR EXCESS OF
JURISDICTION IN DISMISSING PETITONERS
SEPARATE CLAIMS FOR DAMAGES AND
ATTORNEYS FEES.[22]

The Court denies the petition.

Preliminarily, considering the grounds raised by petitioner, it

appears that he denominated this petition as one under Rule 45,
but he filed it as both a petition for review under Rule 45 and a
petition for certiorari under Rule 65 of the Rules of Court. The
applicable rule is Rule 45, which clearly provides that decisions,
final orders or resolutions of the CA in any case, regardless of the
nature of the action or proceeding involved, may be appealed to

this Court through a petition for review. This remedy is a

continuation of the appellate process over the original case.
Recourse under Rule 65 cannot be allowed either as an add-on or
as a substitute for appeal.[23]
The procedural infirmity notwithstanding, the Court shall
treat this petition as one filed under Rule 45 only and shall
consider the alleged grave abuse of discretion on the part of the
CA as an allegation of reversible error.
The pivotal issue to be resolved is whether or not the CA is
correct in denying petitioners entitlement to full and total
disability benefits amounting to US$60,000.00 and attorneys fees
in the amount of US$6,000.00.
The Court resolves the issue in the affirmative.
It need not be overemphasized that in the absence of
substantial evidence, working conditions cannot be accepted to
have caused or at least increased the risk of contracting the
disease, in this case, brief psychotic disorder. Substantial
evidence is more than a mere scintilla. The evidence must be
real and substantial, and not merely apparent; for the duty to
prove work-causation or work-aggravation imposed by law is real
and not merely apparent.[24]
Even in case of death of a seafarer, the grant of benefits in
favor of the heirs of the deceased is not automatic. As in the case
of Rivera v. Wallem Maritime Services, Inc.,[25] without a postmedical examination or its equivalent to show that the disease for
which the seaman died was contracted during his employment or
that his working conditions increased the risk of contracting the
ailment, the employer/s cannot be made liable for death
compensation.

In fact, in Mabuhay Shipping Services, Inc. v. NLRC,[26] the

Court held that the death of a seaman even during the term of
employment does not automatically give rise to compensation.
Several factors must be taken into account such as the
circumstances
which
led
to
the
death, the provisions of the contract, and the right and obligation
of the employer and the seaman with due regard to the
provisions of the Constitution on the due process and equal
protection clauses.
Petitioner points out that his illness is work-related simply
because had it been a land-based employment, petitioner would
have easily gone home and attended to the needs of his family.[27]
The Court cannot submit to this argument. This is not the
work-related instance contemplated by the provisions of the
employment contract in order to be entitled to the benefits.
Otherwise, every seaman would automatically be entitled to
compensation because the nature of his work is not land-based
and the submission of the seaman to the company-designated
physician as to the nature of the illness suffered by him would
just be an exercise of futility.
The fact is that the petitioner failed to establish, by substantial
evidence, that his brief psychotic disorder was caused by the
nature of his work as oiler of the company-owned vessel. In fact,
he failed to elaborate on the nature of his job or to specify his
functions as oiler of respondent company. The Court, therefore,
has difficulty in finding any link between his position as oiler and
his illness.
The Court cannot give less importance either to the fact that
petitioner was a seaman for 10 years serving 10 to 18-month
contracts and never did he have any problems with his earlier
contracts.[28] The Court can only surmise that the brief psychotic
disorder suffered by him was brought about by a family problem.

His daughter was sick and, as a seafarer, he could not just decide
to go home and be with his family.[29] Even the psychiatric
report[30] prepared by the evaluating private psychiatrist of
petitioner shows that the hospitalization of petitioners youngest
daughter caused him poor sleep and appetite. Later, he started
hearing voices and developed fearfulness.
Although strict rules of evidence are not applicable in claims
for compensation and disability benefits, the Court cannot just
disregard the provisions of the POEA SEC. Significantly, a seaman
is a contractual and not a regular employee. His employment is
contractually fixed for a certain period of time. Petitioner and
respondents entered into a contract of employment. It was
approved by the POEA on October 25, 2005 and, thus, served as
the law between the parties. Undisputedly, Section 20-B of the
POEA Amended Standard Terms and Conditions Governing the
Employment of Filipino Seafarers on Board Ocean-Going Vessels
(POEA-SEC) provides for compensation and benefits for injury or
illness suffered by a seafarer. It says that, in order to claim
disability benefits under the Standard Employment Contract, it is
the company-designated physician who must proclaim that the
seaman suffered a permanent disability, whether total or partial,
due to either injury or illness, during the term of the latters
employment. In German Marine Agencies, Inc. v. NLRC,[31] the
Courts discussion on the seafarers claim for disability benefits is
enlightening. Thus:
[In] order to claim disability benefits under the
Standard Employment Contract, it is the companydesignated physician who must proclaim that the
seaman suffered a permanent disability, whether total
or partial, due to either injury or illness, during the
term of the latters employment. There is no provision
requiring accreditation by the POEA of such physician.
In fact, aside from their own gratuitous allegations,
petitioners are unable to cite a single provision in the
said contract in support of their assertions or to offer

any credible evidence to substantiate their claim. If

accreditation of the company-designated physician was
contemplated by the POEA, it would have expressly
provided for such a qualification, by specifically using
the term accreditation in the Standard Employment
Contract, to denote its intention. For instance, under
the Labor Code, it is expressly provided that physicians
and hospitals providing medical care to an injured or
sick employee covered by the Social Security System or
the Government Service Insurance System must be
accredited
by
the
Employees
Compensation
Commission. It is a cardinal rule in the interpretation of
contracts that if the terms of a contract are clear and
leave no doubt upon the intention of the contracting
parties, the literal meaning of its stipulation shall
control. There is no ambiguity in the wording of
the Standard Employment Contract the only
qualification
prescribed
for
the
physician
entrusted with the task of assessing the seamans
disability is that he be company-designated.
When the language of the contract is explicit, as
in the case at bar, leaving no doubt as to the
intention of the drafters thereof, the courts may
not read into it any other intention that would
contradict its plain import. [Emphasis supplied]
In this case, the findings of respondents designated physician
that petitioner has been suffering from brief psychotic disorder
and that it is not work-related must be respected.
The Court commiserates with the petitioner, but absent
substantial evidence from which reasonable basis for the grant of
benefits prayed for can be drawn, the Court is left with no choice
but to deny his petition, lest an injustice be caused to the
employer. Otherwise stated, while it is true that labor contracts

are impressed with public interest and the provisions of the POEA
SEC must be construed logically and liberally in favor of Filipino
seamen in the pursuit of their employment on board ocean-going
vessels, still the rule is that justice is in every case for the
deserving, to be dispensed with in the light of established facts,
the applicable law, and existing jurisprudence.[32]
Lastly, it appears premature at this time to consider
petitioners disability as permanent and total because the severity
of his ailment has not been established with finality to render him
already incapable of performing the work of a seafarer. In fact,
the medical expert termed his condition as brief psychotic
disorder. The Court also takes note, as the CA correctly did, that
petitioner did not finish his treatment with the companydesignated physician, hence, there is no final evaluation yet on
petitioner.
All told, no reversible error was committed by the CA in
rendering the assailed Decision and issuing the questioned
Resolution.
WHEREFORE, the October 29, 2008 Decision of the Court
of Appeals and its March 4, 2009 Resolution in CA-G.R. SP No.
104343, are AFFIRMED.
SO ORDERED.

SPECIAL FIRST DIVISION

[G.R. No. 110524. July 29, 2002]
DOUGLAS MILLARES and ROGELIO LAGDA, petitioners,
vs. NATIONAL
LABOR
RELATIONS
COMMISSION,
TRANS-GLOBAL MARITIME AGENCY, INC. and ESSO
INTERNATIONAL SHIPPING CO., LTD. respondents.
RESOLUTION
KAPUNAN, J.:
On March 14, 2000, the Court promulgated its decision in the
above-entitled case, ruling in favor of the petitioners. The
dispositive portion reads, as follows:
WHEREFORE, premises considered, the assailed Decision, dated
June 1, 1993, of the National Labor Relations Commission is
hereby REVERSED and SET ASIDE and a new judgment is
hereby rendered ordering the private respondents to:
(1) Reinstate petitioners Millares and Lagda to their former
positions without loss of seniority rights, and to pay full
backwages computed from the time of illegal dismissal to the
time of actual reinstatement;
(2) Alternatively, if reinstatement is not possible, pay petitioners
Millares and Lagda separation pay equivalent to one months
salary for every year of service; and,
(3) Jointly and severally pay petitioners One Hundred Percent
(100%) of their total credited contributions as provided under the
Consecutive Enlistment Incentive Plan.

SO ORDERED.[1]
A motion for reconsideration was consequently filed [2] by the
private respondents to which petitioners filed an Opposition
thereto.[3]
In a Minute Resolution dated June 28, 2000, the Court
resolved to deny the motion for reconsideration with finality.[4]
Subsequently,
the
Filipino
Association
for
Mariners
Employment, Inc. (FAME) filed a Motion for Leave to Intervene
and to Admit a Motion for Reconsideration in Intervention.
Private respondents, meanwhile, also filed a Motion for Leave
to File a Second Motion for Reconsideration of our decision.
In both motions, the private respondents and FAME
respectively pray in the main that the Court reconsider its ruling
that Filipino seafarers are considered regular employees within
the context of Article 280 of the Labor Code. They claim that the
decision may establish a precedent that will adversely affect the
maritime industry.
The Court resolved to set the case for oral arguments to
enable the parties to present their sides.
To recall, the facts of the case are, as follows:
Petitioner Douglas Millares was employed by private respondent
ESSO International Shipping Company LTD. (Esso International,
for brevity) through its local manning agency, private respondent
Trans-Global Maritime Agency, Inc. (Trans-Global, for brevity) on
November 16, 1968 as a machinist. In 1975, he was promoted as
Chief Engineer which position he occupied until he opted to retire
in 1989. He was then receiving a monthly salary of US $1,939.00.

On June 13, 1989, petitioner Millares applied for a leave of

absence for the period July 9 to August 7, 1989. In a letter dated
June 14, 1989, Michael J. Estaniel, President of private
respondent Trans-Global, approved the request for leave of
absence. On June 21, 1989, petitioner Millares wrote G.S. Hanly,
Operations Manager of Exxon International Co., (now Esso
International) through Michael J. Estaniel, informing him of his
intention to avail of the optional retirement plan under the
Consecutive Enlistment Incentive Plan (CEIP) considering that he
had already rendered more than twenty (20) years of continuous
service. On July 13, 1989 respondent Esso International, through
W.J. Vrints, Employee Relations Manager, denied petitioner
Millares request for optional retirement on the following grounds,
to wit: (1) he was employed on a contractual basis; (2) his
contract of enlistment (COE) did not provide for retirement before
the age of sixty (60) years; and (3) he did not comply with the
requirement for claiming benefits under the CEIP, i.e., to submit a
written advice to the company of his intention to terminate his
employment within thirty (30) days from his last disembarkation
date.
On August 9, 1989, petitioner Millares requested for an extension
of his leave of absence from August 9 to 24, 1989. On August 19,
1989, Roy C. Palomar, Crewing Manager, Ship Group A, Transglobal, wrote petitioner Millares advising him that respondent
Esso International has corrected the deficiency in its manpower
requirement specifically in the Chief Engineer rank by promoting
a First Assistant Engineer to this position as a result of (his)
previous leave of absence which expired last August 8, 1989. The
adjustment in said rank was required in order to meet manpower
schedules as a result of (his) inability.

On September 26, 1989, respondent Esso International, through

H. Regenboog, Personnel Administrator, advised petitioner
Millares that in view of his absence without leave, which is
equivalent to abandonment of his position, he had been dropped
from the roster of crew members effective September 1, 1989.
On the other hand, petitioner Lagda was employed by private
respondent Esso International as wiper/oiler in June 1969. He
was promoted as Chief Engineer in 1980, a position he continued
to occupy until his last COE expired on April 10, 1989. He was
then receiving a monthly salary of US$1,939.00.
On May 16, 1989, petitioner Lagda applied for a leave of absence
from June 19, 1989 up to the whole month of August 1989. On
June 14, 1989, respondent Trans-Globals President, Michael J.
Estaniel, approved petitioner Lagdas leave of absence from June
22, 1989 to July 20, 1989 and advised him to report for reassignment on July 21, 1989.
On June 26, 1989, petitioner Lagda wrote a letter to G.S. Stanley,
Operations Manager of respondent Esso International, through
respondent Trans-Globals President Michael J. Estaniel, informing
him of his intention to avail of the optional early retirement plan
in view of his twenty (20) years continuous service in the
complaint.
On July 13, 1989, respondent Trans-global denied petitioner
Lagdas request for availment of the optional early retirement
scheme on the same grounds upon which petitioner Millares
request was denied.
On August 3, 1989, he requested for an extension of his leave of
absence up to August 26, 1989 and the same was
approved. However, on September 27, 1989, respondent Esso

International, through H. Regenboog, Personnel Administrator,

advised petitioner Lagda that in view of his unavailability for
contractual sea service, he had been dropped from the roster of
crew members effective September 1, 1989.
On October 5, 1989, petitioners Millares and Lagda filed a
complaint-affidavit, docketed as POEA (M) 89-10-9671, for illegal
dismissal and non-payment of employee benefits against private
respondents Esso International and Trans-Global, before the
POEA.[5]
On July 17, 1991, the POEA rendered a decision dismissing the
complaint for lack of merit.
On appeal to the NLRC, the decision of the POEA was affirmed
on June 1, 1993 with the following disquisition:
The first issue must be decided in the negative. Complainantsappellants, as seamen and overseas contract workers are not
covered by the term regular employment as defined under Article
280 of the Labor Code. The POEA, which is tasked with protecting
the rights of the Filipino workers for overseas employment to fair
and equitable recruitment and employment practices and to
ensure their welfare, prescribes a standard employment contract
for seamen on board ocean-going vessels for a fixed period but in
no case to exceed twelve (12) months (Part 1, Sec. C). This POEA
policy appears to be in consonance with the international
maritime practice. Moreover, the Supreme Court in Brent School,
Inc. vs. Zamora, 181 SCRA 702, had held that a fixed term is
essential and natural appurtenance of overseas employment
contracts to which the concept of regular employment with all
that it implies is not applicable, Article 280 of the Labor Code
notwithstanding. There is, therefore, no reason to disturb the
POEA Administrators finding that complainants-appellants were

hired on a contractual basis and for a definite period. Their

employment is thus governed by the contracts they sign each
time they are re-hired and is terminated at the expiration of the
contract period.[6]
Undaunted, the petitioners elevated their case to this
Court[7] and successfully obtained the favorable action, which is
now vehemently being assailed.
At the hearing on November 15, 2000, the Court defined the
issues for resolution in this case, namely:
I. ARE PETITIONERS REGULAR OR CONTRACTUAL EMPLOYEES
WHOSE EMPLOYMENTS ARE TERMINATED EVERYTIME THEIR
CONTRACTS OF EMPLOYMENT EXPIRE?
II. ASSUMING THAT PETITIONERS ARE REGULAR EMPLOYEES,
WERE THEY DISMISSED WITHOUT JUST CAUSE SO AS TO BE
ENTITLED TO REINSTATEMENT AND BACKWAGES, INCLUDING
PAYMENT OF 100% OF THEIR TOTAL CREDITED CONTRIBUTIONS
TO THE CONSECUTIVE ENLISTMENT INCENTIVE PLAN (CEIP)?
III. DOES THE PROVISION OF THE POEA STANDARD CONTRACT
FOR SEAFARERS ON BOARD FOREIGN VESSELS (SEC. C.,
DURATION OF CONTRACT) PRECLUDE THE ATTAINMENT BY
SEAMEN OF THE STATUS OF REGULAR EMPLOYEES?
IV. DOES THE DECISION OF THE COURT IN G.R. NO. 110524
CONTRAVENE INTERNATIONAL MARITIME LAW, ALLEGEDLY PART
OF THE LAW OF THE LAND UNDER SECTION 2, ARTICLE II OF
THE CONSTITUTION?
V. DOES THE SAME DECISION OF THE COURT CONSTITUTE A
DEPARTURE FROM ITS RULING IN COYOCA VS. NLRC (G.R. NO.
113658, March 31, 1995)?[8]

In answer to the private respondents Second Motion for

Reconsideration and to FAMEs Motion for Reconsideration in
Intervention, petitioners maintain that they are regular
employees as found by the Court in the March 14, 2000
Decision. Considering that petitioners performed activities which
are usually necessary or desirable in the usual business or trade
of private respondents, they should be considered as regular
employees pursuant to Article 280, Par. 1 of the Labor Code.
[9]
Other justifications for this ruling include the fact that
petitioners have rendered over twenty (20) years of service, as
admitted by the private respondents;[10] that they were recipients
of Merit Pay which is an express acknowledgment by the private
respondents that petitioners are regular and not just contractual
employees;[11] that petitioners were registered under the Social
Security System (SSS).
The petitioners further state that the case of Coyoca v.
NLRC[12] which the private respondents invoke is not applicable to
the case at bar as the factual milieu in that case is not the
same. Furthermore, private respondents fear that our judicial
pronouncement will spell the death of the manning industry is far
from real. Instead, with the valuable contribution of the manning
industry to our economy, these seafarers are supposed to be
considered as Heroes of the Republic whose rights must be
protected.[13] Finally, the first motion for reconsideration has
already been denied with finality by this Court and it is about
time that the Court should write finis to this case.
The private respondents, on the other hand, contend that: (a)
the ruling holding petitioners as regular employees was not in
accord with the decision in Coyoca v. NLRC, 243 SCRA 190; (b)
Art. 280 is not applicable as what applies is the POEA Rules and
Regulations Governing Overseas Employment; (c) seafarers are

not regular employees based on international maritime practice;

(d) grave consequences would result on the future of seafarers
and manning agencies if the ruling is not reconsidered; (e) there
was no dismissal committed; (f) a dismissed seafarer is not
entitled to back wages and reinstatement, that being not allowed
under the POEA rules and the Migrant Workers Act; and, (g)
petitioners are not entitled to claim the total amount credited to
their account under the CEIP.[14]
Meanwhile, Intervenor Filipino Association of Mariners
Employment (FAME) avers that our decision, if not reconsidered,
will have negative consequences in the employment of Filipino
Seafarers overseas which, in turn, might lead to the demise of
the manning industry in the Philippines. As intervenor FAME puts
it:
xxx
7.1 Foreign principals will start looking for alternative sources for
seafarers to man their ships. AS reported by the BIMCO/ISF
study, there is an expectancy that there will be an increasing
demand for (and supply of) Chinese seafarers, with some
commentators suggesting that this may be a long-term
alternative to the Philippines. Moreover, the political changes
within the former Eastern Bloc have made new sources of supply
available to the international market. Intervenors recent survey
among its members shows that 50 Philippine manning companies
had already lost some 6,300 slots to other Asian, East Europe and
Chinese competition for the last two years;
7.2 The Philippine stands to lose an annual foreign income
estimated at U.S. DOLLARS TWO HUNDRED SEVENTY FOUR
MILLION FIVE HUNDRED FORTY NINE THOUSAND (US$
274,549,000.00) from the manning industry and another US

DOLLARS FOUR BILLION SIX HUNDRED FIFTY MILLION SEVEN

HUNDRED SIX THOUSAND (US$ 4,650,760,000.00) from the
land-based sector if seafarers and equally situated land-based
contract workers will be declared regular employees;
7.3 Some 195,917 (as of 1998) deployed overseas Filipino
seafarers will be rendered jobless should we lose the market;
7.4 Some 360 manning agencies (as of 30 June 2000) whose
principals may no longer be doing business with them will close
their shops;
7.5 The contribution to the Overseas Workers Welfare
Administration by the sector, which is USD 25.00 per contract and
translates to US DOLLARS FOUR MILLION (US$
4,000,000.00)annually, will be drastically reduced. This is not to
mention the processing fees paid to POEA, Philippine Regulatory
Commission (PRC), Department of Foreign Affairs (DFA) and
Maritime Industry Authority (MARINA) for the documentation of
these seafarers;
7.6 Worst, some 195,917 (as of 1998) families will suffer socially
and economically, as their breadwinners will be rendered jobless;
and
7.7 It will considerably slow down the governments program of
employment generation, considering that, as expected foreign
employers will now avoid hiring Filipino overseas contract workers
as they will become regular employees with all its concomitant
effects.[15]
Significantly, the Office of the Solicitor General, in a departure
from its original position in this case, has now taken the opposite

view. It has expressed its apprehension in sustaining our decision

and has called for a re-examination of our ruling.[16]
Considering all the arguments presented by the private
respondents, the Intervenor FAME and the OSG, we agree that
there is a need to reconsider our position with respect to the
status of seafarers which we considered as regular employees
under Article 280 of the Labor Code. We, therefore, partially grant
the second motion for reconsideration.
In Brent School Inc. v. Zamora,[17] the Supreme Court stated
that Article 280 of the Labor Code does not apply to overseas
employment.
In the light of the foregoing description of the development of the
provisions of the Labor Code bearing on term or fixed-period
employment that the question posed in the opening paragraph of
this opinion should now be addressed. Is it then the legislative
intention to outlaw stipulations in employment contracts laying
down a definite period therefor? Are such stipulations in essence
contrary to public policy and should not on this account be
accorded legitimacy?
On the other hand, there is the gradual and progressive
elimination of references to term or fixed-period employment in
the Labor Code, and the specific statement of the rule that:
Regular and Casual Employment The provisions of written
agreement to the contrary notwithstanding and regardless of the
oral agreement of the parties, an employment shall be deemed to
be regular where the employee has been engaged to perform
activities which are usually necessary or desirable in the usual
business or trade of the employer except where the employment
has been fixed for a specific project or undertaking the

completion or termination of which has been determined at the

time of the engagement of the employee or where the work or
service to be employee is seasonal in nature and the employment
is for the duration of the season.
An employment shall be deemed to be casual if it is not covered
by the preceding paragraph; provided that, any employee who
has rendered at least one year of service, whether such service is
continuous or broken, shall be considered a regular employee
with respect to the activity in which he is employed and his
employment shall continue while such actually exists.
There is, on the other hand, the Civil Code, which has always
recognized, and continues to recognize, the validity and propriety
of contracts and obligations with a fixed or definite period, and
imposes no restraints on the freedom of the parties to fix the
duration of a contract, whatever its object, be it specific, goods or
services, except the general admonition against stipulations
contrary to law, morals, good customs, public order or public
policy. Under the Civil code, therefore, and as a general
proposition, fixed-term employment contracts are not limited, as
they are under the present Labor Code, to those by natural
seasonal or for specific projects with predetermined dates of
completion; they also include those to which the parties by free
choice have assigned a specific date of termination.
Some familiar examples may be cited of employment
contract which may be neither for seasonal work nor for
specific projects, but to which a fixed term is an essential
and natural appurtenance: overseas employment
contracts, for one, to which, whatever the nature of the
engagement, the concept of regular employment with all
that it implies does not appear ever to have been
applied. Article 280 of the Labor Code notwithstanding also

appointments to the positions of dean, assistant dean, college

secretary, principal, and other administrative offices in
educational institutions, which are by practice or tradition rotated
among the faculty members, and where fixed terms are a
necessity without which no reasonable rotation would be
possible. Similarly, despite the provisions of Article 280, Policy
Instructions. No. 8 of the Minister of Labor implicitly recognize
that certain company officials may be elected for what would
amount to fix periods, at the expiration of which they would have
to stand down, in providing that these officials, xxx may lose their
jobs as president, executive vice-president or vice-president,
etc. because the stockholders or the board of directors for one
reason or another did not reelect them.
There can of course be no quarrel with the proposition that where
from the circumstances it is apparent that periods have been
imposed to preclude acquisition of tenurial security by the
employee, they should be struck down or disregard as contrary to
public policy, morals, etc. But where no such intent to circumvent
the law is shown, or stated otherwise, where the reason for the
law does not exists, e.g., where it is indeed the employee himself
who insists upon a period or where the nature of the engagement
is such that, without being seasonal or for a specific project, a
definite date of termination is a sine qua non, would an
agreement fixing a period be essentially evil or illicit, therefore
anathema? Would such an agreement come within the scope of
Article 280 which admittedly was enacted to prevent the
circumvention of the right of the employee to be secured in xxx
his employment
As it is evident from even only the three examples already given
that Article 280 of the Labor Code, under a narrow and literal
interpretation, not only fails to exhaust the gamut of employment

contracts to which the lack of a fixed period would be an anomaly,

but would also appear to restrict, without reasonable distinctions,
the right of an employee to freely stipulate within his employer
the duration of his engagement, it logically follows that such a
literal interpretation should be eschewed or avoided. The law
must be given a reasonable interpretation, to preclude absurdity
in its application. Outlawing the whole concept of term
employment and subverting to boot the principle of freedom of
contract to remedy the evil of employers using it as a means to
prevent their employees from obtaining security of tenure is like
cutting off the nose to spite the face or, more relevantly, curing a
headache by lopping of the head.
It is a salutary principle in statutory construction that there exists
a valid presumption that undesirable consequences were never
intended by a legislative measure, and that a construction of
which the statute is fairly susceptible is favored, which will avoid
all objectionable, mischievous, indefensible, wrongful, evil, and
injurious consequences.
Nothing is better settled than that courts are not to give words a
meaning which would lead to absurd or unreasonable
consequences. That is a principle that goes back to In re Allen
decided on October 27, 1902, where it was held that a literal
interpretation is to be rejected if it would be unjust or lead to
absurd results. That is a strong argument against its
adoption. The words of Justice Laurel are particularly
apt. Thus: the appellants would lead to an absurdity is another
argument for rejecting it.
Xxx We have, here, then a case where the true intent of the law
is clear that calls for the application of the cardinal rule of
statutory construction that such intent of spirit must prevail over
the letter thereof, for whatever is within the spirit of a statute is

within the statute, since adherence to the letter would result in

absurdity, injustice and contradictions and would defeat the plain
and vital purpose of the statute.
Accordingly, and since the entire purpose behind the
development of legislation culminating in the present
Article 280 of the Labor code clearly appears to have been,
as already observed, to prevent circumvention of the
employees right to be secure in his tenure, the clause in
said article indiscriminately and completely ruling out all
written or oral agreements conflicting with the concept of
regular employment as defined therein should be
construed to refer to the substantive evil that the Code
itself has singled out; agreements entered into precisely to
circumvent security of tenure. It should have no
application to instances where a fixed period of
employment was agreed upon knowingly and voluntarily
by the parties, without any force, duress or improper
pressure being brought to bear upon the employee and
absent any other circumstances vitiating his consent, or
where it satisfactorily appears that the employer and
employee dealt with each other on more or less equal
terms with no moral dominance whatever being exercised
by the former over the latter. Unless thus limited in its
purview, the law would be made to apply to purposes other than
those explicitly stated by its framers; it thus becomes pointless
and arbitrary, unjust in its effects and apt to lead to absurd and
unintended consequences.
Again, in Pablo Coyoca v. NLRC,[18] the Court also held that a
seafarer is not a regular employee and is not entitled to
separation pay. His employment is governed by the POEA
Standard Employment Contract for Filipino Seamen.

XXX. In this connection, it is important to note that neither does

the POEA standard employment contract for Filipino seamen
provide for such benefits.
As a Filipino seaman, petitioner is governed by the Rules
and Regulations Governing Overseas Employment and the
said Rules do not provide for separation or termination
pay. What is embodied in petitioners contract is the payment of
compensation arising from permanent partial disability during the
period of employment. We find that private respondent complied
with the terms of contract when it paid petitioner P42,315.00
which, in our opinion, is a reasonable amount, as compensation
for his illness.
Lastly, petitioner claims that he eventually became a regular
employee of private respondent and thus falls within the purview
of Articles 284 and 95 of the Labor Code. In support of this
contention, petitioner cites the case of Worth Shipping Service,
Inc., et al. v. NLRC, et al., wherein we held that the crew
members of the shipping company had attained regular status
and thus, were entitled to separation pay. However, the facts of
said case differ from the present. In Worth, we held that the
principal and agent had operational control and management over
the MV Orient Carrier and thus, were the actual employers of
their crew members.
From the foregoing cases, it is clear that seafarers are
considered contractual employees. They can not be considered as
regular employees under Article 280 of the Labor Code. Their
employment is governed by the contracts they sign everytime
they are rehired and their employment is terminated when the
contract expires. Their employment is contractually fixed for a
certain period of time. They fall under the exception of Article 280
whose employment has been fixed for a specific project or

undertaking the completion or termination of which has been

determined at the time of engagement of the employee or where
the work or services to be performed is seasonal in nature and
the employment is for the duration of the season. [19] We need not
depart from the rulings of the Court in the two aforementioned
cases which indeed constitute stare decisis with respect to the
employment status of seafarers.
Petitioners insist that they should be considered regular
employees, since they have rendered services which are usually
necessary and desirable to the business of their employer, and
that they have rendered more than twenty(20) years of
service. While this may be true, the Brent case has, however,
held that there are certain forms of employment which also
require the performance of usual and desirable functions and
which exceed one year but do not necessarily attain regular
employment status under Article 280.[20] Overseas workers
including seafarers fall under this type of employment which are
governed by the mutual agreements of the parties.
In
this
jurisdiction
and
as
clearly
stated
in
the Coyoca case, Filipino seamen are governed by the Rules and
Regulations of the POEA. The Standard Employment Contract
governing the employment of All Filipino seamen on Board
Ocean-Going Vessels of the POEA, particularly in Part I, Sec. C
specifically provides that the contract of seamen shall be for a
fixed period. And in no case should the contract of seamen be
longer than 12 months. It reads:
Section C. Duration of Contract
The period of employment shall be for a fixed period but in no
case to exceed 12 months and shall be stated in the Crew

Contract. Any extension of the Contract period shall be subject to

the mutual consent of the parties.
Moreover, it is an accepted maritime industry practice that
employment of seafarers are for a fixed period only. Constrained
by the nature of their employment which is quite peculiar and
unique in itself, it is for the mutual interest of both the seafarer
and the employer why the employment status must be
contractual only or for a certain period of time. Seafarers spend
most of their time at sea and understandably, they can not stay
for a long and an indefinite period of time at sea. [21] Limited
access to shore society during the employment will have an
adverse impact on the seafarer. The national, cultural and lingual
diversity among the crew during the COE is a reality that
necessitates the limitation of its period.[22]
Petitioners make much of the fact that they have been
continually re-hired or their contracts renewed before the
contracts expired (which has admittedly been going on for twenty
(20) years). By such circumstance they claim to have acquired
regular status with all the rights and benefits appurtenant to it.
Such contention is untenable. Undeniably, this circumstance of
continuous re-hiring was dictated by practical considerations that
experienced crew members are more preferred.Petitioners were
only given priority or preference because of their experience and
qualifications but this does not detract the fact that herein
petitioners are contractual employees. They can not be
considered regular employees. We quote with favor the
explanation of the NLRC in this wise:
Xxx The reference to permanent and probationary masters and
employees in these papers is a misnomer and does not alter the
fact that the contracts for enlistment between complainants-

appellants and respondent-appellee Esso International were for a

definite periods of time, ranging from 8 to 12 months. Although
the use of the terms permanent and probationary is unfortunate,
what is really meant is eligible for-re-hire. This is the only logical
conclusion possible because the parties cannot and should not
violate POEAs requirement that a contract of enlistment shall be
for a limited period only; not exceeding twelve (12)months.[23]
From all the foregoing, we hereby state that petitioners are
not considered regular or permanent employees under Article 280
of the Labor Code. Petitioners employment have automatically
ceased upon the expiration of their contracts of enlistment
(COE). Since there was no dismissal to speak of, it follows that
petitioners are not entitled to reinstatement or payment of
separation pay or backwages, as provided by law.
With respect to the benefits under the Consecutive Enlistment
Incentive Plan (CEIP), we hold that the petitioners are still
entitled to receive 100% of the total amount credited to him
under the CEIP. Considering that we have declared that
petitioners are contractual employees, their compensation and
benefits are covered by the contracts they signed and the CEIP is
part and parcel of the contract.
The CEIP was formulated to entice seamen to stay long in the
company. As the name implies, the program serves as an
incentive for the employees to renew their contracts with the
same company for as long as their services were needed. For
those who remained loyal to them, they were duly rewarded with
this additional remuneration under the CEIP, if eligible.While this
is an act of benevolence on the part of the employer, it can not,
however, be denied that this is part of the benefits accorded to
the employees for services rendered. Such right to the benefits is
vested upon them upon their eligibility to the program.

The CEIP provides that an employee becomes covered under

the Plan when he completes thirty-six (36) months or an
equivalent of three (3) years of credited service with respect to
employment after June 30, 1973. [24] Upon eligibility, an amount
shall be credited to his account as it provides, among others:
III. Distribution of Benefits
A. Retirement, Death and Disability
When the employment of an employee terminates
because of his retirement, death or permanent and total
disability, a percentage of the total amount credited to
his account will be distributed to him (or his eligible
survivor(s) in accordance with the following:
Reason for Termination Percentage
a) Attainment of mandatory retire- 100%
ment age of 60.
b) Permanent and total disability, 100%
while under contract, that is
not due to accident or misconduct.
c) Permanent and total disability, 100%
while under contract, that is
due to accident, and not due to
misconduct.
xxx

B. Voluntary Termination
When an employee voluntary terminates his employment with at
least 36 months of credited service without any misconduct on his
part, 18 percent of the total amount credited to his account, plus
an additional of one percent for each month (up to a maximum of
164 months of credited service in excess of 36, will be distributed
to him provided (1) the employee has completed his last Contract
of Enlistment and (2) employee advises the company in writing,
within 30 days, from his last disembarkation date, of his intention
to terminate his employment. (To advise the Company in writing
means that the original letter must be sent to the Companys
agent in the Philippines, a copy sent to the Company in New
York).
xxx
C. Other Terminations
When the employment of an employee is terminated by
the Company for a reason other than one in A and B
above, without any misconduct on his part, a
percentage of the total amount credited to his account
will be distributed to him in accordance with the
following.
Credited Service Percentage
36 months 50%
48 75%
60 100%

When the employment of an employee is terminated due

to his poor-performance, misconduct, unavailability, etc.,
or if employee is not offered re-engagement for similar
reasons, no distribution of any portion of employees
account will ever be made to him (or his eligible
survivor[s]).
It must be recalled that on June 21, 1989, Millares wrote a
letter to his employer informing his intention to avail of the
optional retirement plan under the CEIP considering that he has
rendered more than twenty (20) years of continuous
service. Lagda, likewise, manifested the same intention in a letter
dated June 26, 1989. Private respondent, however, denied their
requests for benefits under the CEIP since: (1) the contract of
enlistment (COE) did not provide for retirement before 60 years
of age; and that (2) petitioners failed to submit a written notice
of their intention to terminate their employment within thirty (30)
days from the last disembarkation date pursuant to the provision
on Voluntary Termination of the CEIP. Petitioners were eventually
dropped from the roster of crew members and on grounds of
abandonment and unavailability for contractual sea service,
respectively, they were disqualified from receiving any benefits
under the CEIP.[25]
In our March 14, 2000 Decision, we, however, found that
petitioners Millares and Lagda were not guilty of abandonment or
unavailability for contractual sea service, as we have stated:
The absence of petitioners was justified by the fact that they
secured the approval of private respondents to take a leave of
absence after the termination of their last contracts of
enlistment. Subsequently, petitioners sought for extensions of
their respective leaves of absence. Granting arguendo that their
subsequent requests for extensions were not approved, it cannot

be said that petitioners were unavailable or had abandoned their

work when they failed to report back for assignment as they were
still questioning the denial of private respondents of their desire
to avail of the optional early retirement policy, which they
believed in good faith to exist.[26]
Neither can we consider petitioners guilty of poor performance
or misconduct since they were recipients of Merit Pay Awards for
their exemplary performances in the company.
Anent the letters dated June 21, 1989 (for Millares) and June
26, 1989 (for Lagda) which private respondent considered as
belated written notices of termination, we find such assertion
specious. Notwithstanding, we could conveniently consider the
petitioners eligible under Section III-B of the CEIP (Voluntary
Termination), but this would, however, award them only a measly
amount of benefits which to our mind, the petitioners do not
rightfully deserve under the facts and circumstances of the
case. As the CEIP provides:
III. Distribution of Benefits
xxx
E. Distribution of Accounts
When an employee terminates under conditions that would
qualify for a distribution of more than one specified in A, B or C
above, the largest single amount, only, will be distributed.
Since petitioners termination of employment under the CEIP
do not fall under Section III-A (Retirement, Death and Disability)
or Section III-B (Voluntary Termination), nor could they be
considered under the second paragraph of Section III-C, as
earlier discussed; it follows that their termination falls under the

first paragraph of Section III-C for which they are entitled to

100% of the total amount credited to their accounts. The private
respondents can not now renege on their commitment under the
CEIP to reward deserving and loyal employees as the petitioners
in this case.
In taking cognizance of private respondents Second Motion for
Reconsideration, the Court hereby suspends the rules to make
them conformable to law and justice and to subserve an
overriding public interest.
IN VIEW OF THE FOREGOING, THE COURT Resolved
to Partially GRANT Private Respondents Second Motion for
Reconsideration and Intervenor FAMES Motion for Reconsideration
in Intervention. The Decision of the National Labor Relations
Commission dated June 1, 1993 is hereby REINSTATED with
MODIFICATION. The Private Respondents, Trans-Global Maritime
Agency, Inc. and Esso International Shipping Co.,Ltd. are hereby
jointly and severally ORDERED to pay petitioners One Hundred
Percent (100%) of their total credited contributions as provided
under the Consecutive Enlistment Incentive Plan(CEIP).
SO ORDERED.
Davide, Jr., C.J., (Chairman), Puno, and Ynares-Santiago,
JJ., concur.
Austria-Martinez, J., no part. Did not participate in the
Decision.