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JUSTA G. GUIDO v. RURAL PROGRESS ADMINISTRATION, c/o FAUSTINO AGUILAR, the destitute.

the destitute. As will presently be shown, condemnation of blighted urban areas bears direct
Manager, Rural Progress Administration relation to public safety health, and/or morals, and is legal.
G.R. No. L-2089, 31 October 1949.
In a broad sense, expropriation of large estates, trusts in perpetuity, and land that embraces a
FACTS: whole town, or a large section of a town or city, bears direct relation to the public welfare. The
size of the land expropriated, the large number of people benefited, and the extent of social
Justa Guido, owner of the land being expropriated by the Rural Progress Administration and economic reform secured by the condemnation, clothes the expropriation with public
(RPA), filed a petition for prohibition to prevent RPA and Judge Oscar Castelo from interest and public use. The expropriation in such cases tends to abolish economic slavery,
proceeding with the expropriation. Guido alleged, among others, that the land sought to be feudalistic practices, and other evils inimical to community prosperity and contentment and
expropriated is commercial and therefore excluded within the purview of the provisions of Act public peace and order.
539. Commonwealth Act No. 539 authorized the President of the Philippines to acquire
private lands or any interest therein through purchaser or expropriation, and to subdivide the The condemnation of a small property in behalf of 10, 20 or 50 persons and their families
same into home lots or small farms for resale at reasonable prices. The National Assembly does not inure to the benefit of the public to a degree sufficient to give the use public
approved this enactment on the authority of section 4 of Article XIII of the Constitution which character. The expropriation proceedings at bar have been instituted for the economic
provides that the Congress may authorize, upon payment of just compensation, the relief of a few families devoid of any consideration of public health, public peace and
expropriation of lands to be subdivided into small lots and conveyed at cost to individuals. order, or other public advantage. It suffices to say for the purpose of this decision that
the case under consideration is far wanting in those elements which make for public
ISSUE: Whether the expropriation of Guido’s land is in conformity to the principle of Social convenience or public use.
Justice.
Petition is granted.
RULING:

NO. Hand in hand with the principle that no one shall be deprived of his property without due
process of law, herein invoked, and that "the promotion of social justice to insure the well-
being and economic security of all the people should be the concern of the state," is a
declaration, with which the former should be reconciled, that "the Philippines is a Republican
state" created to secure to the Filipino people "the blessings of independence under a regime
of justice, liberty and democracy."

Democracy, as a way of life enshrined in the Constitution, embraces as its necessary


components freedom and along with these freedoms are included economic freedom and
freedom of enterprise within reasonable bounds and under proper control. In paving the way
for the breaking up of existing large estates, trust in perpetuity, feudalism, and their
concomitant evils, the Constitution did not propose to destroy or undermine the property right
or to advocate equal distribution of wealth or to authorize of what is in excess of one's
personal needs and the giving of it to another.

The promotion of social justice ordained by the Constitution does not supply paramount basis
for untrammeled expropriation of private land by the Rural Progress Administration or any
other government instrumentality. Social justice does not champion division of property
or equality of economic status; what it and the Constitution do guaranty are equality of
opportunity, equality of political rights, equality before the law, equality between values
given and received on the basis of efforts exerted in their production. As applied to
metropolitan centers, especially Manila, in relation to housing problems, it is a command to
devise, among other social measures, ways and means for the elimination of slums,
shambles, shacks, and house that are dilapidated, overcrowded, without ventilation. light and
sanitation facilities, and for the construction in their place of decent dwellings for the poor and
Jamer vs NLRC whether NLRC committed grave abuse of discretion in finding that petitioners were validly
dismissed on the ground of loss of trust and confidence.
DOCTRINE: THE CAUSE OF SOCIAL JUSTICE is not served by upholding the interest of
petitioners in disregard of the right of private respondents. Social justice ceases to be an RULING:
effective instrument for the equalization of the social and economic forces by the State when it
is used to shield wrongdoing.While it is true that compassion and human consideration should NO. The Supreme Court holds that substantial evidence exists to warrant the finding that
guide the disposition of cases involving termination of employment since it affects ones petitioners were validly dismissed for just cause and after observance of due process.
source or means of livelihood, it should not be overlooked that the benefits accorded to labor
do not include compelling an employer to retain the services of an employee who has been First, Amortizado and Jamer were cashiers and as such, a special and unique employment
shown to be a gross liability to the employer. It should be made clear that when the law tilts relationship exists between them and the respondent company. More than most key positions,
the scale of justice in favor of labor, it is but a recognition of the inherent economic inequality that of cashier calls for the utmost trust and confidence because their primary function
between labor and management. The intent is to balance the scale of justice; to put up the involves basically the handling of a highly essential property of the respondent employer ---
two parties on relatively equal positions. There may be cases where the circumstances the sales and revenues of the store.
warrant favoring labor over the interests of management but never should the scale be so
tilted if the result is an injustice to the employer, Justicia remini regarda est (Justice is to be Honesty and integrity are the primary considerations in petitioners position. The nature of his
denied to none). work requires that the actuations should be beyond suspicion, our empathy with the cause of
labor should not blind us to the rights of management.
FACTS:
Accordingly, it cannot be denied that herein petitioners were guilty of acts of dishonesty by
Complainants Jamer and Amortizado were employed as store cashiers in Isetann for 14 and incurring several occurrences of shortages in the amounts of P15,353.78, P1,000.00, P450.00
13 years, respectively. They receive a salary of P4,182.00 for eight (8) hours work till their and P70.00 which they failed to turnover and account for/and in behalf of respondent Isetann.
dismissal on August 31, 1990. The dismissal is grounded on dishonesty and loss of trust and Further, Amortizado and Jamer were accorded the chance to explain their side as to the
confidence. shortages and that they have utterly failed to do so providing basis for their valid dismissal. All
these shortages were not properly and timely accounted for.
Accordingly, On July 16, 1990, complainants discovered a shortage of P15,353.78. It was
complainant Corazon Jamer who first discovered the shortage. She informed her co-cashier Furthermore, the complainants herein tried to conceal the underpayment of P450.00, and its
Amortizado but they decided not to immediately report the matter with a hope to resolve the discovery is caused by some trusted employees. Stated otherwise, The shortages having
discrepancy but to no avail they failed to reconcile the same. Hence, they had no other been established and admitted has provided the employer sufficient basis for loss of
alternative but to report the same to the management on July 17, 1990. confidence and whether such occurrence is merely an isolated one or has been repeatedly
committed is no longer material.
Complainants, together with another Store Cashier, Lutgarda Inducta, were asked to explain
and they submitted their respective written explanations for the shortage of P15,353.78. and It is crystal clear that the failure of petitioners to report the aforequoted shortages and
the P450.00 under deposit last July 14, 1990. They were also suspended pending the overages to management as soon as they arose resulted in the breach of the fiduciary trust
administrative investigation. It was known that Complainants failed to turnover or account for: reposed in them by respondent company, thereby causing the latter to lose confidence in
them.
a) P1,000.00- amount borrowed by Lutgarda Inducta from Corazon Jamer;
On the argument of the Complainants whereby they particularly alleged that "that there was a
b) P 70.00- over replenishment of petty cash expenses incurred by Cristina Amortizado. serious flaw and laxity in the supervision and handling of company funds by respondent
Isetann." This does not excuse dishonesty of employees and should not in any case hamper
On August 31, they were dismissed. the right of the employer to terminate the employment of petitioners on the ground of loss of
confidence or breach of trust.
The parties, Jamer, Amortizado and a certain inducta, further explained their side that there
are several persons such as alex mejia who have access into the room and vault where the The Supreme Court also held that in this case, Amortizado and Jamer's years of service, 14
money were being kept. Further, the same has only transpired once which dismissal is not the and 13 years, respectively, may be used against them because if the petitioners length of
commensurate penalty. service is to be regarded as a justifying circumstance in moderating the dismissal, it will
actually become a prize for disloyalty, perverting the meaning of social justice and
ISSUE: undermining the efforts of labor to cleanse its ranks of all undesirables.
Philippine Airlines vs NLRC and OSCAR IRINEO The Labor Arbiter decided in favor of Ireneo and ordered his reinstatement to his position in
GR 87698, September 24, 1991 1967 without loss of seniority rights and the payment to him of back wages, as well as moral
J. NARVASA damages. The ruling was based on a PAL Circular (PAL IRD Circular No. 66-11) which
provides for the preventive suspension of an employee charged with an offense “inimical to
FACTS: the company’s interest”. Moreover, there was a standing order by the Court of Industrial
An employee of the Philippine Airlines was dismissed from his work on August 23, 1967 on Relations at that time forbidding the dismissal of any employee by PAL without court authority.
the basis of the findings and recommendations of a Fact-Finding Panel, after an investigation Thus, the Arbiter ruled that, the termination by PAL of Irineo's employment on August 23,
commenced in July 1967 in coordination with a well-known accounting firm. The Fact-Finding 1967 merely placed him under preventive suspension until his (criminal) case was finally
Panel recommended the criminal prosecution of the employee, Oscar Irineo, together with adjudicated. The LA also pointed out that the PAL Circular was not raised in issue in the case
four others, namely: Rogelio Damian, Antonio Rabasco, Jacinto Macatol and Jesus Saba, formerly instituted by Macatol, thus precluding a reaching a conclusion in the Irineo case
on account of complicity in irregular refunds of international plane tickets. similar to that in Macatol’s (i.e., that the claim was barred by prescription).

On the basis of the panel's report, and the testimony of witnesses, criminal proceedings for NLRC:
estafa thru falsification of commercial documents were also initiated against four of the PAL PAL was unable to obtain a reversal of the judgment of the Labor Arbiter.
employees above named (Oscar Irineo, Rogelio Damian, Antonio Rabasco, and Jacinto
Macatol) in the Court of First Instance of Rizal. The NLRC agreed with the Arbiter that "applying the mandate of IRD Circular No. 66-11 which
respondent PAL itself solely promulgated," Irineo was never dismissed from employment but
The case resulted in the conviction of all the accused in March 1976. "was merely under preventive suspension", and that PAL's termination of Irineo's work was
violative of the "Injunction Order (forbidding, during the pendency of said case, the dismissal
All four (4) defendants filed motions for reconsideration and/or new trial. All the motions were of any employee by PAL without court authority), even though that order "lost its efficacy
denied except Macatol's. After due hearing on said motions, the Trial Court rendered an when the parties concerned entered into a valid Certified Bargaining Agreement" (on
amended decision absolving Macatol of any liability for the offense charged, "for lack of December 7, 1965, according to petitioner PAL). It also affirmed the award of moral damages.
sufficient evidence." The other three appealed.
OSG COMMENT:
In July 1978, about twelve (12) years after his dismissal from employment, Macatol filed a It is not possible to defend the position taken by the LA and NLRC.
complaint for illegal dismissal against PAL in the Department of Labor. His complaint was
however dismissed by the Labor Arbiter on the ground that his right of action had prescribed. While care and solicitude must be exercised in the protection and vindication of the rights of
That dismissal was affirmed by the National Labor Relations Commission in May 1980. The workingmen, the same cannot be an excuse for disregarding the relevant facts and
Commission ruled that "the running of the prescriptive period ... commenced on the date eschewing rationality in the construction of the text of applicable rules in order to arrive at a
Macatol's cause of action accrued, and that such cause of action did not accrue "upon the disposition in favor of an employee.
termination of the criminal case," but upon "his dismissal, the legality or illegality of which
could be determined soon after it was effected. A suit to contest its legality could proceed ISSUE: Did the termination of Irineo constitute a preventive suspension? NO.
independently of any criminal proceedings”; that "if no criminal case was instituted, following
the logic of the complainant's argument, the cause of action would not and could not have RULING:
accrued at all; ... (and) the institution of the criminal action did not bar the complainant from On the argument that Irineo was merely placed under preventive suspension
filing a complaint for illegal dismissal." The letter to Oscar Irineo of then PAL President Benigno P. Toda reads as follows:

On the other hand, the appeal taken by Oscar Irineo, Rogelio Damian, Antonio Rabasco, For being involved in the irregular refund of tickets in the international service to the
resulted in a decision promulgated in September 1983 by the Intermediate Appellate damage and prejudice of the company, you are dismissed from the service effective
Court, affirming the judgment of conviction only as regards Rogelio Damian, but acquitting immediately.”
Irineo and Rabasco "on grounds of reasonable doubt."
To say, that that declaration, "you are dismissed from the service effective immediately,"
Seventeen (17) years after the termination of his employment on August 23, 1967, Irineo filed
should be construed merely as a suspension, not a dismissal, from employment, is illogical if
a complaint against PAL for reinstatement and back wages on the claim that that termination
not downright ludicrous. The LA and the NLRC attempted to justify this interpretation by
was illegal. PAL interposed the defense of prescription.
adhering to the PAL circular which provides that an employee will be placed under preventive
suspension until the final adjudication of his case. Thus, the LA and the NLRC interpreted this
to mean that an employer is precluded from taking any alternative or concurrent action, such
as administrative sanctions or penalties. In other words, any disciplinary action against an
erring employee was absolutely dependent on the outcome of the criminal action against the
latter, no disciplinary measure of any nature being permissible against the employee "until the
final adjudication" of his criminal case.

To the Court, such construction has nothing to support it, is contrary to common sense, and
one certainly not justified by the recorded facts.

On the standing Order by the Court of Industrial Relations (dismissal-qua-suspension)


The Order which forbid the dismissal of any employee by PAL without court authority, is
equally indefensible. That prohibition was imposed only in relation to a labor dispute then
pending before the Court of Industrial Relations. That dispute however ended when the
parties entered into a collective bargaining agreement two (2) years or so before Irineo was
fired on August 23, 1967. In other words, when Irineo's employment was terminated, the CIR
injunction adverted to was already functions officio and could no longer have any relevance to
that event.

On Irineo’s omission to impugn his termination of employment by PAL


The Court said that there was no reason to excuse Ireneo’s omission to impugn his
termination of employment by PAL.

His theory was that, under existing PAL rules and the CIR injunction, he could only be placed
under preventive suspension and therefore his dismissal was illegal. That he only questioned
his termination after seventeen (17) years from his discharge from employment can only
mean that he slept on his rights or that his counsel did not share the respondent
Commission's belief in the soundness of the theory. His claim must thus be rejected as time-
barred, as being unpardonably tardy.

The Court found that respondent Commission's conclusions are flawed by errors so serious
as to constitute grave abuse of discretion and should on this account be struck down. It
NULLIFIED and SET ASIDE the respondent Commission's Resolutions and DISMISSED
private respondent's complaint.
Manning International Corp. vs. NLRC a nunc pro tunc entry. Nor may the latter judgment be considered as void in any aspect. It is
in truth the "new judgment" of the NLRC that is void ab initio insofar as it attempts to vary the
Facts: disposition of the final and executory decision of the POE Administrator. Said new judgment is
utterly inefficacious to work any change in the Administrator's decision.
Francisco Benedicto a.k.a Lazaro Benedicto was hired by a foreign firm, Abdulasis &
Mohamed A. Aljomaih Co., thru its Philippine representative, Manning international corp., as a
truck driver for its establishment in Riyadh, Saudi Arabia. Benedicto was engaged for a term
of 2 years. He left for Saudi Arabia on Dec. 1, 1980 to fulfill his employment contract. Some
months before the expiration of his contract, Benedicto was involved in a vehicular accident
and in consequence he lost his both legs. From the date of accident, Feb. 2, 1982, he was
confined in a hospital in Saudi Arabia until sometime in May 1982, when his employment was
terminated. He was repatriated to the Philippines in August 1982. In October 18, 1982
Benedicto filed a complaint with the Philippine Overseas Employment Administration for the
recovery of his salary for the unexpired portion of his contract, insurance benefits and
projected cost of medical expenses amounting to P25,000.00.

POEA rendered a decision ordering Petitioner to pay Respondent the the actual medical
expenses incurred by him in the treatment of his disability for at least one hundred twenty
(120) days. The NLRC affirmed the decision of the POEA, thus, the decision become
executory.

Benedicto protested the limitation of the award to him of medical expenses to the period
corresponding to only 120 days and filed a motion for partial reconsideration to correct this
claimed error. The NLRC adjudged his motion to be possessed of sufficient merit. The NLRC
set aside the POEA Order of July 8, 1986 and, on considerations of equity and social
justice as well as the theory that medical treatment should not be stopped until Benedicto's
injury or disability is completely healed.

Petitioner contended that the Decision should be nullified and set aside because Benedicto is
estopped from further claims for medical expenses, having been fully compensated for his
injury.

Issue: Whether the decision of the NLRC is correct.

Held:

No. Under the law when a final judgment becomes executory, it thereby becomes immutable
and unalterable. The judgment may no longer be modified in any respect, even if the
modification is meant to correct what is perceived to be an erroneous conclusion of fact or
law, and regardless of whether the modification is attempted to be made by the Court
rendering it or by the highest Court of the land. The only recognized exceptions are the
correction of clerical errors or the making of so-called nunc pro tunc entries which cause no
prejudice to any party, and, of course, where the judgment is void.

The alteration made by the NLRC judgment on the final and executory judgment of the POE
Administrator cannot in any sense be characterized as the correction of a clerical mistake, or
Pacific Mills, Inc v. Zenaida Alonzo

Facts:
In this case, Respondent Zenaida Alonzo was a ring framed operator at the
Petitioner Pacific Mills. Unfortunately, she was dismissed on the grounds of poor work,
habitual absences and tardiness, wasting time, insubordination, and disrespect. One
afternoon on September 22, 1982, Respondent Zenaida challenged Ernesto Tamondong, the
company inspector, to a fight. Respondent punched Tomondong in the stomach. The motive
for the punching of Tamondong by Zenaida is cause by the latter’s having been reprimanded
by Tamondong 2 days earlier for wasting time in engaging with idle chatters.

The service of that memorandum of dismissal on her was not preceded by any
complaint, hearing or other formality. This is so as it was considered by management in view
of the provision on Company’s Rules and Regulations. It was only at the hearing of the
complaint for illegal dismissal instituted by Zenaida in the NCR Arbitration Branch, that
evidence was presented by the company not only of the assault by Zenaida on her superior
but also of many other violations by her of company rules and regulations, in an attempt to
substantiate the validity of her dismissal from work. However, Labor Arbiter and NLRC found
that Alonzo is entitled to relief, reinstatement, and payment of her backwages from Jan 1,
1983 until fully reinstated.

Issue:
Is Zenaida entitled for relief and reinstatement?

Held:
No.

Zenaida appears to be of violent temper, causing troubles during office hours and
even defied his superiors as they tried to pacify him and, hence, should not be rewarded with
reemployment and back wages. It will just encourage him to even do worse and will render
mockery of the Rules of Discipline that employees are required to observe. The dismissal of
Zenaida for just cause should be maintained.

However, employer Pacific Mills must nevertheless be held to a account for failure
to extend to private respondent his right to an investigation before causing his dismissal.
Thus, it must be imposed a sanction for its failure to give a formal notice and conduct an
investigation as required by law before dismissing (respondent) from employment.
Considering the circumstance of this petitioner must indemnify the private respondent the
amount of P1000. The measure of this award depends on the fact of each case and the
gravity of the omission committed by the employees.

Although Employer Pacific Mills was not able to comply the requirements of due
process prior to the removing of Zenaida from employment, the proceedings before the Labor
Arbiter had successfully proved the commission by Zenaida of many violations of the
company rules and regulations justifying termination of her employment.
Meralco vs. NLRC

Signo was employed in petitioner company as supervisor-leadman since January 1963 up to


the time when his services were terminated on May 18, 1983.

In 1981, a certain Fernando de Lara filed an application with the petitioner company for
electrical services at his residence at Peñafrancia Subdivision, Marcos Highway, Antipolo,
Rizal. Signo facilitated the processing of the said application as well as the required
documentation for said application at the Municipality of Antipolo, Rizal. In consideration
thereof, Signo received from Fernando de Lara the amount of P7,000.00. Signo thereafter
filed the application for electric services with the Power Sales Division of the company.

It was established that the area where the residence of de Lara was located is not yet within
the serviceable point of Meralco, because the place was beyond the 30-meter distance from
the nearest existing Meralco facilities. In order to expedite the electrical connections at de
Lara's residence, certain employees of the company, including respondent Signo, made it
appear in the application that the sari-sari store at the corner of Marcos Highway, an entrance
to the subdivision, is applicant de Lara's establishment, which, in reality is not owned by the
latter.

As a result of this scheme, the electrical connections to de Lara's residence were installed
and made possible. However, due to the fault of the Power Sales Division of petitioner
company, Fernando de Lara was not billed for more than a year.

Petitioner company conducted an investigation of the matter and found respondent Signo
responsible for the said irregularities in the installation. Thus, the services of the latter were
terminated on May 18, 1983.

Issue: Whether or not, the dismissal of Signo was a proper penalty for his acts.

Held: No. There is no question that herein respondent Signo is guilty of breach of trust and
violation of company rules, the penalty for which ranges from reprimand to dismissal
depending on the gravity of the offense. However, as earlier stated, the respondent
Commission and the Labor Arbiter found that dismissal should not be meted to respondent
Signo considering his twenty (20) years of service in the employ of petitioner, without any
previous derogatory record, in addition to the fact that petitioner company had awarded him in
the past, two (2) commendations for honesty. If ever the petitioner suffered losses resulting
from the unlisted electric consumption of de Lara, this was found to be the fault of petitioner's
Power Sales Division.

In view of the foregoing, reinstatement of respondent Signo is proper in the instant case, but
without the award of backwages, considering the good faith of the employer in dismissing the
respondent.
Eastern Shipping Lines vs POEA,G.R. No. 76633, October 18, 1988. shipping articles to the POEA for processing, formalization and approval in the exercise of its
regulatory power over overseas employment under Executive Order NO. 797. The second is
DOCTRINE: Labor is not a mere employee of capital but its active and equal partner. its payment of the contributions mandated by law and regulations to the Welfare Fund for
Overseas Workers, which was created by P.D. No. 1694 "for the purpose of providing social
FACTS: and welfare services to Filipino overseas workers."
Vitaliano Saco was Chief Officer of the M/V Eastern Polaris when he was killed in an accident More importantly, the receipt it prepared for the private respondent's signature, described the
in Tokyo, Japan, March 15, 1985. His widow sued for damages under Executive Order No. subject of the burial benefits as "overseas contract worker Vitaliano Saco." While this receipt
797 and Memorandum Circular No. 2 of the POEA. The petitioner, as owner of the vessel, is certainly not controlling, it does indicate, in the light of the petitioner's own previous acts,
argued that the complaint was cognizable not by the POEA but by the Social Security System that the petitioner and the Fund to which it had made contributions considered Saco to be an
and should have been filed against the State Insurance Fund. The POEA nevertheless overseas employee.
assumed jurisdiction and after considering the position papers of the parties ruled in favor of
the complainant. The award consisted of P180,000.00 as death benefits and P12,000.00 for 2. YES. The tests according to the Supreme Court in this case for delegation of power to be
burial expenses. valid are the following:

On the other hand, Eastern Shipping argues that he was not an overseas worker but a The completeness test and the sufficient standard test. Under the first test, the law must be
'domestic employee and consequently his widow's claim should have been filed with Social complete in all its terms and conditions when it leaves the legislature such that when it
Security System, subject to appeal to the Employees Compensation Commission. reaches the delegate the only thing he will have to do is enforce it. Under the sufficient
standard test, there must be adequate guidelines or stations in the law to map out the
Further, the petitioner argues that the deceased employee should be likened to the boundaries of the delegate's authority and prevent the delegation from running riot.
employees of the Philippine Air Lines who, although working abroad in its international flights,
are not considered overseas workers. And that they did not enter into a contract with Saco Memorandum Circular No. 2 is an administrative regulation, which is a fruit of subordinate
designating him as such. Thus, it questioned the Constitutionality of Memorandum Circular legislation. The model contract prescribed thereby has been applied in a significant number
No. 2 itself as violative of the principle of non-delegation of legislative power. It contends that of the cases without challenge by the employer. The power of the POEA (and before it the
no authority had been given the POEA to promulgate the said regulation; and even with such National Seamen Board) in requiring the model contract is not unlimited as there is a sufficient
authorization, the regulation represents an exercise of legislative discretion which, under the standard guiding the delegate in the exercise of the said authority. That standard is
principle, is not subject to delegation. discoverable in the executive order itself which, in creating the Philippine Overseas
Employment Administration, mandated it to protect the rights of overseas Filipino workers to
ISSUE: "fair and equitable employment practices."
1. Whether Saco is an overseas contract worker The Contract under the Memorandum is a standard contract protecting overseas contract
work even outside the Philippines. It is designed to prohibit abuses of Filipinos. It manifests
2. Whether Memorandum Circular No. 2 is valid manifestations of the concern of the State for the working class, consistently with the social
justice policy and the specific provisions in the Constitution for the protection of the working
RULING:
class and the promotion of its interest.
1. YES. The employer registered itself in the POEA. This very registration gives a
presumption that Saco is not a domestic worker. Under1985 Rules and Regulations on
Overseas Employment, overseas employment is defined as "employment of a worker outside
the Philippines, including employment on board vessels plying international waters, covered
by a valid contract. A contract worker is described as "any person working or who has worked
overseas under a valid employment contract and shall include seamen" or "any person
working overseas or who has been employed by another which may be a local employer,
foreign employer, principal or partner under a valid employment contract and shall include
seamen."

The petitioner performed at least two acts which constitute implied or tacit recognition of the
nature of Saco's employment at the time of his death in 1985. The first is its submission of its
ROSA C. RODOLFO, Petitioner, Labor Code defines "recruitment and placement" as any act of canvassing, enlisting,
vs. contracting, transporting, utilizing, hiring or procuring workers, and includes referrals, contract
PEOPLE OF THE PHILIPPINES services, promising or advertising for employment, locally or abroad, whether for profit or not."
Facts: In this case, first element is present in the case at bar, there is no doubt. Jose Valeriano,
Accused-appellant approached private complainants Necitas Ferre and Narciso Corpus Senior Overseas Employment Officer of the Philippine Overseas Employment Administration
individually and invited them to apply for overseas employment in Dubai. The accused- (POEA), testified that the records of the POEA do not show that petitioner is authorized to
appellant being their neighbor, private complainants agreed and went to the former’s office. recruit workers for overseas employment. The second element is also present. The act of
This office which bore the business name "Bayside Manpower Export Specialist" in Buendia, referral, which is included in recruitment, is the act of passing along or forwarding of an
Makati. In that office, private complainants gave certain amounts to appellant for processing applicant for employment after an initial interview of a selected applicant for employment to a
and other fees. selected employer, placement officer or bureau. Petitioner’s admission that she brought
private complainants to the agency whose owner she knows and her acceptance of fees
Appellant then told private complainants that they were scheduled to leave for Dubai on including those for processing showed her guilt.
September 8, 1984. However, private complainants and all the other applicants were not able Therefore, accused Rodolfo committed the crime illegal recruitment.
to depart on the said date as their employer allegedly did not arrive. Thus, their departure was
rescheduled to September 23, but the result was the same. Suspecting that they were being
hoodwinked, private complainants demanded of appellant to return their money. Appellant
was not able to return private complainants’ money. Tired of excuses, private complainants
filed the present case for illegal recruitment against the accused-appellant.

Complainants presented Jose Valeriano, a Senior Overseas Employment Officer of the


Philippine Overseas Employment Agency (POEA), who testified that accused-appellant was
neither licensed nor authorized by the then Ministry of Labor and Employment to recruit
workers for overseas employment.
For her defense, appellant denied ever approaching private complainants to recruit them for
employment in Dubai. It was the private complainants who asked her help in securing jobs
abroad. As a good neighbor and friend, she brought the private complainants to the Bayside
Manpower Export Specialist agency because she knew the owner Florante Hinahon. While
accused-appellant admitted that she received money from the private complainants, she was
quick to point out that she received the same only in trust for delivery to the agency. She
denied being part of the agency either as an owner or employee thereof. To corroborate
appellant’s testimony, Milagros Cuadra, who was also an applicant and a companion of
private complainants, testified that appellant did not recruit them. On the contrary, they were
the ones who asked help from appellant. To further bolster the defense, Eriberto C. Tabing,
the accountant and cashier of the agency, testified that appellant is not connected with the
agency and that he saw appellant received money from the applicants but she turned them
over to the agency through either Florantino Hinahon or Luzviminda Marcos.

The Trial Court and the Court of Appeals convicted Rodolfo for illegal recruitment.

Issue: Whether Rodolfo committed the crime of illegal recruitment.

Held: Yes. The elements of the offense of illegal recruitment, which must concur, are: (1) that
the offender has no valid license or authority required by law to lawfully engage in recruitment
and placement of workers; and (2) that the offender undertakes any activity within the
meaning of recruitment and placement under Article 13(b), or any prohibited practices
enumerated under Article 34 of the Labor Code.
People vs HON. DOMINGO PANIS, Presiding Judge of the Court of First Instance of Neither interpretation of the parties is acceptable.
Zambales & Olongapo City, Branch III and SERAPIO ABUG
GR 58674-77, July 11, 1990 The proviso was intended neither to impose a condition on the basic rule nor to provide an
J. CRUZ exception thereto but merely to create a presumption. The presumption is that the individual
or entity is engaged in recruitment and placement whenever he or it is dealing with two or
FACTS: more persons to whom, in consideration of a fee, an offer or promise of employment is made
Four informations were filed on January 9, 1981, in the Court of First Instance of Zambales in the course of the "canvassing, enlisting, contracting, transporting, utilizing, hiring or
and Olongapo City alleging that Serapio Abug (private respondent), without first securing a procuring (of) workers. "
license from the Ministry of Labor as a holder of authority to operate a fee-charging
employment agency, operated a private fee charging employment agency by charging fees The number of persons dealt with is not an essential ingredient of the act of recruitment and
and expenses (from) and promising employment in Saudi Arabia to four separate individuals, placement of workers. Any of the acts mentioned in the basic rule in Article 13(b) win
in violation of Article 16 in relation to Article 39 of the Labor Code. constitute recruitment and placement even if only one prospective worker is involved. The
proviso merely lays down a rule of evidence that where a fee is collected in consideration of a
Abug filed a motion to quash on the ground that the informations did not charge an offense promise or offer of employment to two or more prospective workers, the individual or entity
because he was accused of illegally recruiting only one person in each of the four dealing with them shall be deemed to be engaged in the act of recruitment and placement.
informations. Under the proviso in Article 13(b), he claimed, there would be illegal recruitment The words "shall be deemed" create that presumption.
only "whenever two or more persons are in any manner promised or offered any employment
for a fee. " The word "shall be deemed" should be given the force of a disputable presumption or of prima
facie evidence of engaging in recruitment and placement.
The motion was initially denied, but was reconsidered and finally granted in an Orders of the
trial court in June and September 1981. The Orders were set aside and the four informations against the private respondent
reinstated.
Before the Court (on certiorari), the prosecution argued that the private respondent is being
prosecuted under Article 39 in relation to Article 16 of the Labor Code; hence, Article 13(b) is Note from J. Cruz:
not applicable. However, as the first two cited articles penalize acts of recruitment and “It is unfortunate that we can only speculate on the meaning of the questioned provision for
placement without proper authority, which is the charge embodied in the informations, lack of records of debates and deliberations that would otherwise have been available if the
application of the definition of recruitment and placement in Article 13(b) is unavoidable. Labor Code had been enacted as a statute rather than a presidential decree. The trouble with
presidential decrees is that they could be, and sometimes were, issued without previous
The view of the private respondents is that to constitute recruitment and placement, all the public discussion or consultation, the promulgator heeding only his own counsel or those of
acts mentioned in article 13b should involve dealings with two or more persons as an his close advisers in their lofty pinnacle of power. The not infrequent results are rejection,
indispensable requirement. Petitioner countered that the requirement of two or more persons intentional or not, of the interest of the greater number and, as in the instant case, certain
is imposed only where the recruitment and placement consists of an offer or promise of esoteric provisions that one cannot read against the background facts usually reported in the
employmsent to such persons and always in consideration of a fee. The other acts mentioned legislative journals.
in the body of the article may involve even only one person and are not necessarily for profit.
The interpretation here adopted should give more force to the campaign against illegal
ISSUE: recruitment and placement, which has victimized many Filipino workers seeking a better life in
The correct interpretation of Article 13(b) of P.D. 442 (Labor Code), reading as follows: a foreign land, and investing hard- earned savings or even borrowed funds in pursuit of their
dream, only to be awakened to the reality of a cynical deception at the hands of their own
b) Recruitment and placement' refers to any act of canvassing, enlisting, countrymen.”
contracting, transporting, hiring, or procuring workers, and includes referrals,
contract services, promising or advertising for employment, locally or abroad,
whether for profit or not: Provided, That any person or entity which, in any manner,
offers or promises for a fee employment to two or more persons shall be deemed
engaged in recruitment and placement.

RULING:
Sameer Overseas Placement Agency v. Joy C. Cabiles In the hierarchy of laws, the Constitution is supreme. No branch or office of the
government may exercise its powers in any manner inconsistent with the Constitution,
Facts: In this case, the petitioner is Sameer Overseas Placement Agency, Inc., which regardless of the existence of any law that supports such exercise. The Constitution cannot
is engaged in recruitment and placement. Respondent (Joy Cabiles) was hired thus signed a be trumped by any other law. All laws must be read in light of the Constitution. Any law that is
one-year employment contract for a monthly salary of NT$15,360.00. She was deployed to inconsistent with it is a nullity. Hence, when a law or a provision of law is null because it is
work for Taiwan Wacoal, Co. Ltd. (Wacoal) on June 26, 1997. She alleged that in her inconsistent with the Constitution, the nullity cannot be cured by reincorporation or
employment contract, she agreed to work as quality control for one year. She work as reenactment of the same or a similar law or provision. A law or provision of law that was
a cutter in Taiwan. already declared unconstitutional remains as such unless circumstances have so changed as
to warrant a reverse conclusion.
Petitioner Sameer claims that on July 14, 1997, a certain Mr. Huwang from Wacoal
informed Joy, without prior notice, that she was terminated and that “she should immediately The Court observed that the reinstated clause, this time as provided in Republic
report to their office to get her salary and passport.” She was asked to “prepare for immediate Act. No. 10022, violates the constitutional rights to equal protection and due process.
repatriation.” Joy claims that she was told that from June 26 to July 14, 1997, she only earned Petitioner as well as the Solicitor General have failed to show any compelling change in the
a total of NT$9,000.15 According to her, Wacoal deducted NT$3,000 to cover her circumstances that would warrant us to revisit the precedent.
plane ticket to Manila.
The Court declared, once again, the clause, “or for three (3) months for every year
On October 15, 1997, Joy filed a complaint for illegal dismissal with the NLRC of the unexpired term, whichever is less” in Section 7 of Republic Act No. 10022 amending
against petitioner and Wacoal. Section 10 of Republic Act No. 8042 is declared unconstitutional and, therefore, null and void

LA dismissed the complaint. NLRC reversed LA’s decision. CA affirmed the ruling of
the National Labor Relations Commission finding respondent illegally dismissed and awarding
her three months’ worth of salary, the reimbursement of the cost of her repatriation, and
attorney’s fees

Issue: (1) Is Cabiles entitled to the unexpired portion of her salary due to illegal
dismissal?

Held:

Yes. Note that the court held that the respondent was entitled to the award of the
three-month equivalent of respondent’s salary should be increased to the amount equivalent
to the unexpired term of the employment contract. In Serrano v. Gallant Maritime Services,
Inc. and Marlow Navigation Co., Inc., the court ruled that the clause “or for three (3) months
for every year of the unexpired term, whichever is less” is unconstitutional for violating the
equal protection clause and substantive due process.

A statute or provision which was declared unconstitutional is not a law. It “confers


no rights; it imposes no duties; it affords no protection; it creates no office; it is inoperative as
if it has not been passed at all.” (Orthodox view)

The Court said that they are aware that the clause “or for three (3) months for every
year of the unexpired term, whichever is less” was reinstated in Republic Act No. 8042 upon
promulgation of Republic Act No. 10022 in 2010.
Finman v Inocencio There appears nothing so special or unique about the determination of a surety’s liability
under its bond as to restrict that determination to the Office of the Insurance Commissioner
Pan Pacific is a private, fee-charging, recruitment and employment agency. In accordance and to the regular courts of justice exclusively. The exact opposite is strongly stressed by the
with the requirements of Section 4, Rule II, Book II of the Rules and Regulations of the POEA, second paragraph of Article 31 of the Labor Code:
Pan Pacific posted a surety bond issued by petitioner Finman and was granted a license to
operate by the POEA. Art. 31. Bonds. — … …

Private respondents William Inocencio, Perfecto Palero, Jr., Edwin Cardones and one Edwin The secretary of Labor shall have the exclusive power to determine, decide, order or direct
Hernandez filed with the POEA separate complaints against Pan Pacific for violation of payment from, or application of, the cash or surety bond for any claim or injury covered and
Articles 32 and 34 (a) of the Labor Code, as amended and for refund of placement fees paid guaranteed by the bonds.
to Pan Pacific. The complainants alleged that Pan Pacific charged and collected such fees
from them but did not secure employment for them. Cash and surety bonds are required by the POEA and its predecessor agencies from
recruitment and employment companies precisely as a means of ensuring prompt and
The POEA Administrator motu proprio impleaded petitioner Finman as party respondent in its effective recourse against such companies when held liable for applicants or workers’ claims.
capacity as surety for Pan Pacific. Separate summons were served upon Finman and Pan Clearly that public policy will be effectively negated if POEA and the Department of Labor and
Pacific. The return of the summons served on Pan Pacific at its official address registered in Employment were held powerless to compel a surety company to make good on its solidary
the POEA records, showed that Pan Pacific had moved out therefrom; no prior notice of undertaking in the same quasi-judicial proceeding where the liability of the principal obligor,
transfer or change of address was furnished by Pan Pacific to the POEA as required under the recruitment or employment agency, is determined and fixed and where the surety is given
POEA rules. The POEA considered that constructive service of the complaints had been reasonable opportunity to present any defenses it or the principal obligor may be entitled to
effected upon Pan Pacific and proceeded accordingly. set up. Petitioner surety whose liability to private respondents and the POEA is neither more
nor less than that of Pan Pacific, is not entitled to another or different procedure for
FInman filed an answer denying liability and pleading, by way of special and affirmative determination or fixing of that liability than that which Pan Pacific is entitled and subject to.
defenses, that: (1) the POEA had no “jurisdiction over surety bonds,” that jurisdiction being
vested in the Insurance Commission or the regular courts; (2) it (Finman) had not violated
Articles 32 and 34 (a) of the Labor Code and complainants’ claims had accrued during the
suspension of the principal obligor, Pan Pacific; (3) complainants had no cause of action
against Finman, since it was not privy to the transactions between them and Pan Pacific and
had not received any moneys from them; and (4) the amounts claimed by complainants had
been paid by them as deposits and not as placement fees.

Issue: Whether or not Finman General is solidarily liable in the case at bar.

Held: YES. Petitioner Finman is a party-in-interest in the proceedings private respondents had
initiated against Pan Pacific the principal obligor. Since Pan Pacific had thoughtfully refrained
from notifying the POEA of its new address and from responding to the complaints, petitioner
Finman may well be regarded as an indispensable party to the proceedings before the POEA.
Whether Finman was an indepensable or merely a proper party to the proceedings, we
believe and so hold that the POEA could properly implead it as party respondent either upon
the request of the private respondents or, as it happened, motu propio.

The fundamental argument of Finman is that its liability under its own bond must be
determined and enforced, not by the POEA or the Secretary of Labor, but rather by the
Insurance Commission or by the regular courts. Once more, we are not moved by petitioner’s
argument.
PEOPLE V. HERNANDEZ Philippines that they would not be able to send them abroad and that they would refund their
payment instead.
G.R. No. 141221-36 March 7, 2002

[PEOPLE OF THE PHILIPPINES, plaintiff-appellee,


The defense interposed denial and alibi. Karl Reichl denied any knowledge about Francisco
vs. Hernandez's recruitment activities. He further denied that he promised private complainants
that he would give them overseas employment. He claimed that he signed the documents
FRANCISCO HERNANDEZ (at large), KARL REICHL, and YOLANDA GUTIERREZ DE promising to pay P1,388,924.00 to private complainants under duress. Francisco Hernandez
REICHL, accused, allegedly told him that private complainants would harm him and his family if he refused to
sign it. He signed the document as he felt he had no other option. Yolanda Gutierrez de
KARL REICHL and YOLANDA GUTIERREZ DE REICHL, accused-appellants] Reichl corroborated the testimony of her husband and denied the charges against her.
FACTS:

Eight (8) informations for syndicated and large scale illegal recruitment and eight (8) RTC convicted accused-appellants of one (1) count of illegal recruitment in large scale and six
informations for estafa were filed against accused-appellants, spouses Karl and Yolanda (6) counts of estafa.
Reichl, together with Francisco Hernandez. Only the Reichl spouses were tried and convicted
by the trial court as Francisco Hernandez remained at large.

(NOT GUILTY of the crime of syndicated and large-scale illegal recruitment as charged in the
Criminal Cases Nos. 6435, 6437 and 6529)
The evidence for the prosecution consisted of the testimonies of private complainants; a
certification from the Philippine Overseas Employment Administration (POEA) that Francisco ISSUES:
Hernandez, Karl Reichl and Yolanda Gutierrez Reichl in their personal capacities were neither
licensed nor authorized by the POEA to recruit workers for overseas employment;2 the (1) WON the trial court erred in convicting the accused-appellant of the crime of illegal
receipts for the payment made by private complainants; and two documents signed by the recruitment on a large scale by cumulating five separate cases of illegal recruitment each filed
Reichl spouses where they admitted that they promised to secure Austrian tourist visas for by a single private complainant;
private complainants and that they would return all the expenses incurred by them if they are
not able to leave by March 24, 1993, and where Karl Reichl pledged to refund to private
complainants the total sum of P1,388,924.00 representing the amounts they paid for the
processing of their papers. (2) WON the trial court erred in rendering an automatic guilty for estafa after a guilty
verdict in a separate crime for illegal recruitment.

The testimonies of private complainants consisted of the following:


HELD:
That he Reichls promised to take care of all the papers and to secure a job as
adomestic helper in Italy for each of them abroad if they can pay of P150,000.00 for the (1) NO. In the case at bar, the prosecution was able to prove beyond reasonable doubt that
processing of her papers and travel documents; accused-appellants engaged in activities that fall within the definition of recruitment and
placement under the Labor Code. The evidence on record shows that they promised
That each of the private respondents gave money in various installment plans but overseas employment to private complainants and required them to prepare the necessary
the departure was again and again rescheduled on multiple dates and still did not push documents and to pay the placement fee, although they did not have any license to do so.
through; There is illegal recruitment when one who does not possess the necessary authority or
license gives the impression of having the ability to send a worker abroad.
That the spouses gave various excuses for their failure to depart, until finally the
Reichls told the applicants that Karl Reichl had so many business transactions in the We note that each information was filed by only one complainant. We agree with accused-
appellants that they could not be convicted for illegal recruitment committed in large scale
based on several informations filed by only one complainant. When the Labor Code speaks of The law imposes a higher penalty when the illegal recruitment is committed by a syndicate or
illegal recruitment 'committed against three (3) or more persons individually or as a group,' it in large scale as they are considered an offense involving economic sabotage.
must be understood as referring to the number of complainants in each case who are
complainants therein, otherwise, prosecutions for single crimes of illegal recruitment can be ILLEGAL RECRUITMENT IS DEEMED COMMITTED BY A SYNDICATE – if carried out by a
cumulated to make out a case of large scale illegal recruitment. In other words, a conviction group of three (3) or more persons conspiring and/or confederating with one another in
for large scale illegal recruitment must be based on a finding in each case of illegal carrying out any unlawful or illegal transaction, enterprise or scheme.
recruitment of three or more persons whether individually or as a group.
ILLEGAL RECRUITMENT IS DEEMED COMMITTED IN LARGE SCALE – if committed
This, however, does not serve to lower the penalty imposed upon accused-appellants. The against three (3) or more persons individually or as a group.
charge was not only for illegal recruitment committed in large scale but also for illegal
recruitment committed by a syndicate. Illegal recruitment is deemed committed by a syndicate
- if carried out by a group of three (3) or more persons conspiring and/or confederating with
one another in carrying out any unlawful or illegal transaction, enterprise or scheme( par. 1,
Article 38, Labor Code).

It has been shown that Karl Reichl, Yolanda Reichl and Francisco Hernandez conspired with
each other in convincing private complainants to apply for an overseas job and giving them
the guaranty that they would be hired as domestic helpers in Italy although they were not
licensed to do so. Thus, we hold that accused-appellants should be held liable for illegal
recruitment committed by a syndicate which is also punishable by life imprisonment and a fine
of one hundred thousand pesos (P100,000.00) under Article 39 of the Labor Code.

(2) NO. The prosecution also proved the guilt of accused-appellants for the crime of estafa. A
person who is convicted of illegal recruitment may, in addition, be convicted of estafa under
Art. 315 (2) of the Revised Penal Code provided the elements of estafa are present. The
offended party must have relied on the false pretense, fraudulent act or fraudulent means of
the accused-appellant and as a result thereof, the offended party suffered damages. It has
been proved in this case that accused-appellants represented themselves to private
complainants to have the capacity to send domestic helpers to Italy, although they did not
have any authority or license. It is by this representation that they induced private
complainants to pay a placement fee of P150,000.00. Such act clearly constitutes estafa
under Article 315 (2) of the Revised Penal Code.

IN VIEW WHEREOF, the appeal is DISMISSED. The Decision appealed from is hereby
AFFIRMED.

Article 38 of the Labor Code:

ILLEGAL RECRUITMENT - "any recruitment activities, including the prohibited practices


enumerated under Article 34 of (the Labor Code), to be undertaken by non-licensees or non-
holders of authority.”

"RECRUITMENT AND PLACEMENT" - refers to any act of canvassing, enlisting, contracting,


transporting, utilizing, hiring or procuring workers, including referrals, contract services,
promising or advertising for employment, locally or abroad, whether for profit or not, provided
that any person or entity which, in any manner, offers or promises for a fee employment to two
or more persons shall be deemed engaged in recruitment and placement.
ATCHI Overseas Corp vs Echin, G.R. No. 178551, October 11, 2010 Further, the party invoking the foreign law has the burden of proving it. In the case at bar,
ATCHI failed to prove the law of Kuwait as regards probation. What it merely provided is the
FACTS: copy of the MOA, Termatination letter which is general for it did not specify the basis thereof.
It fell short to the requirements in order to prove a foreign law. Hence, the Court applied
Josefina Echin (respondent) was hired by petitioner ATCI Overseas Corporation in behalf of processual presumption.
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. Provided in the MOA that there will
be a one (1) year probationary period. Respondent was deployed on February 17, 2000 but
was terminated from employment on February 11, 2001, she not having allegedly passed the
probationary period.

The motion for reconsideration she files has been denied by the Ministry. Thus, she
shouldered her own fare upon returning to the Philippines. Thereafter, she filed a complaint
before the NLRC for illegal dismissal against petitioner ATCI as the local recruitment agency,
represented by petitioner, Amalia Ikdal (Ikdal), and the Ministry, as the foreign principal.

The Labor Arbiter ruled in her favor, the decision provides that there was no just or valid
cause for the dismissal. On appeal of petitioners ATCI and Ikdal, the NLRC affirmed the Labor
Arbiter’s decision. ATCHI appealed invoking the immunity of the foreign principal. Accordingly,
the immunity from suit being enjoyed by the foreign principal shall also be enjoyed by them,
that the Contract provides that Echib must comply with the Civil Service Law and the condition
during his probationary status. More so, petitioners’ contention that they only acted as agent
of the Ministry and that they cannot be held jointly and solidarily liable with it. However, the
appellate court affirmed the decision of NLRC.

ISSUE:

Whether ATCHI is liable as an agent of the ministry

RULING:

YES. 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 principal’s 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.

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. 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
principal’s liability before petitioner can be held liable renders the law on joint and solidary
liability inutile.
ANTONIO M. SERRANO VS. GALLANT MARITIME SERVICES, INC. AND Serrano filed a Motion for Partial Reconsideration, but this time he
MARLOW NAVIGATION CO., INC. questioned the constitutionality of the last clause in the 5th paragraph of
Section 10 of RA 8042, which reads:

Sec. 10. Money Claims. - x x x In case of termination of overseas


FACTS: employment without just, valid or authorized cause as defined by law or
contract, the workers shall be entitled to the full reimbursement of his
Petitioner Antonio Serrano was hired by respondents Gallant Maritime
placement fee with interest of twelve percent (12%) per annum, plus his
Services, Inc. and Marlow Navigation Co., Inc., under a POEA-approved
salaries for the unexpired portion of his employment contract or for three (3)
contract of employment for 12 months, as Chief Officer, with the basic
months for every year of the unexpired term, whichever is less.
monthly salary of US$1,400, plus $700/month overtime pay, and 7 days paid
vacation leave per month. The NLRC denied the Motion; hence, Serrano filed a Petition for Certiorari
with the Court of Appeals (CA), reiterating the constitutional challenge
On March 19, 1998, the date of his departure, Serrano was constrained to
against the subject clause. The CA affirmed the NLRC ruling on the
accept a downgraded employment contract for the position of Second Officer
reduction of the applicable salary rate, but skirted the constitutional issue
with a monthly salary of US$1,000 upon the assurance and representation of
raised by herein petitioner Serrano.
respondents that he would be Chief Officer by the end of April 1998.

Respondents did not deliver on their promise to make Serrano Chief Officer.
Hence, Serrano refused to stay on as second Officer and was repatriated to ISSUES:
the Philippines on May 26, 1998, serving only two (2) months and seven (7)
days of his contract, leaving an unexpired portion of nine (9) months and
twenty-three (23) days.
1. Whether or not the subject clause violates Section 10, Article III of the
Serrano filed with the Labor Arbiter (LA) a Complaint against respondents for Constitution on non-impairment of contracts?
constructive dismissal and for payment of his money claims in the total
amount of US$26,442.73 (based on the computation of $2590/month from 2. Whether or not the subject clause violate Section 1, Article III of the
June 1998 to February 199, $413.90 for March 1998, and $1640 for March Constitution, and Section 18, Article II and Section 3, Article XIII on labor as
1999) as well as moral and exemplary damages. a protected sector?

The LA declared the petitioner's dismissal illegal and awarded him HELD:
US$8,770, representing his salaray for three (3) months of the unexpired
On the first issue.
portion of the aforesaid contract of employment, plus $45 for salary
differential and for attorney's fees equivalent to 10% of the total amount; The answer is in the negative. Petitioner's claim that the subject clause
however, no compensation for damages as prayed was awarded. unduly interferes with the stipulations in his contract on the term of his
employment and the fixed salary package he will receive is not tenable.
On appeal, the NLRC modified the LA decision and awarded Serrano
$4669.50, representing three (3) months salary at $1400/month, plus 445 Section 10, Article III of the Constitution provides: No law impairing the
salary differential and 10% for attorney's fees. This decision was based on obligation of contracts shall be passed.
the provision of RA 8042, which was made into law on July 15, 1995.
The prohibition is aligned with the general principle that laws newly enacted
have only a prospective operation, and cannot affect acts or contracts
already perfected; however, as to laws already in existence, their provisions To Filipino workers, the rights guaranteed under the foregoing constitutional
are read into contracts and deemed a part thereof. Thus, the non-impairment provisions translate to economic security and parity: all monetary benefits
clause under Section 10, Article II is limited in application to laws about to be should be equally enjoyed by workers of similar category, while all monetary
enacted that would in any way derogate from existing acts or contracts by obligations should be borne by them in equal degree; none should be denied
enlarging, abridging or in any manner changing the intention of the parties the protection of the laws which is enjoyed by, or spared the burden imposed
thereto. on, others in like circumstances.

As aptly observed by the OSG, the enactment of R.A. No. 8042 in 1995
preceded the execution of the employment contract between petitioner and
respondents in 1998.Hence, it cannot be argued that R.A. No. 8042, Such rights are not absolute but subject to the inherent power of Congress to
particularly the subject clause, impaired the employment contract of the incorporate, when it sees fit, a system of classification into its legislation;
parties. Rather, when the parties executed their 1998 employment contract, however, to be valid, the classification must comply with these requirements:
they were deemed to have incorporated into it all the provisions of R.A. No. 1) it is based on substantial distinctions; 2) it is germane to the purposes of
8042. the law; 3) it is not limited to existing conditions only; and 4) it applies equally
to all members of the class.
But even if the Court were to disregard the timeline, the subject clause may
not be declared unconstitutional on the ground that it impinges on the
impairment clause, for the law was enacted in the exercise of the police
There are three levels of scrutiny at which the Court reviews the
power of the State to regulate a business, profession or calling, particularly
constitutionality of a classification embodied in a law: a) the deferential or
the recruitment and deployment of OFWs, with the noble end in view of
rational basis scrutiny in which the challenged classification needs only be
ensuring respect for the dignity and well-being of OFWs wherever they may
shown to be rationally related to serving a legitimate state interest; b) the
be employed. Police power legislations adopted by the State to promote the
middle-tier or intermediate scrutiny in which the government must show that
health, morals, peace, education, good order, safety, and general welfare of
the challenged classification serves an important state interest and that the
the people are generally applicable not only to future contracts but even to
classification is at least substantially related to serving that interest; and c)
those already in existence, for all private contracts must yield to the superior
strict judicial scrutiny in which a legislative classification which impermissibly
and legitimate measures taken by the State to promote public welfare.
interferes with the exercise of a fundamental right or operates to the peculiar
On the second issue. disadvantage of a suspect class is presumed unconstitutional, and the
burden is upon the government to prove that the classification is necessary
The answer is in the affirmative. to achieve a compelling state interest and that it is the least restrictive means
to protect such interest.
Section 1, Article III of the Constitution guarantees: No person shall be
deprived of life, liberty, or property without due process of law nor shall any
person be denied the equal protection of the law.
Upon cursory reading, the subject clause appears facially neutral, for it
applies to all OFWs. However, a closer examination reveals that the subject
clause has a discriminatory intent against, and an invidious impact on, OFWs
Section 18, Article II and Section 3, Article XIII accord all members of the at two levels:
labor sector, without distinction as to place of deployment, full protection of
their rights and welfare. First, OFWs with employment contracts of less than one year vis-à-vis OFWs
with employment contracts of one year or more;
Second, among OFWs with employment contracts of more than one year; In the present case, the Court dug deep into the records but found no
and compelling state interest that the subject clause may possibly serve.

Third, OFWs vis-à-vis local workers with fixed-period employment; In fine, the Government has failed to discharge its burden of proving the
existence of a compelling state interest that would justify the perpetuation of
In sum, prior to R.A. No. 8042, OFWs and local workers with fixed-term the discrimination against OFWs under the subject clause.
employment who were illegally discharged were treated alike in terms of the
computation of their money claims: they were uniformly entitled to their Assuming that, as advanced by the OSG, the purpose of the subject clause
salaries for the entire unexpired portions of their contracts. But with the is to protect the employment of OFWs by mitigating the solidary liability of
enactment of R.A. No. 8042, specifically the adoption of the subject clause, placement agencies, such callous and cavalier rationale will have to be
illegally dismissed OFWs with an unexpired portion of one year or more in rejected. There can never be a justification for any form of government action
their employment contract have since been differently treated in that their that alleviates the burden of one sector, but imposes the same burden on
money claims are subject to a 3-month cap, whereas no such limitation is another sector, especially when the favored sector is composed of private
imposed on local workers with fixed-term employment. businesses such as placement agencies, while the disadvantaged sector is
composed of OFWs whose protection no less than the Constitution
commands. The idea that private business interest can be elevated to the
level of a compelling state interest is odious.
The Court concludes that the subject clause contains a suspect classification
in that, in the computation of the monetary benefits of fixed-term employees Moreover, even if the purpose of the subject clause is to lessen the solidary
who are illegally discharged, it imposes a 3-month cap on the claim of OFWs liability of placement agencies vis-a-vis their foreign principals, there are
with an unexpired portion of one year or more in their contracts, but none on mechanisms already in place that can be
the claims of other OFWs or local workers with fixed-term employment. The
subject clause singles out one classification of OFWs and burdens it with a employed to achieve that purpose without infringing on the constitutional
peculiar disadvantage. rights of OFWs.

There being a suspect classification involving a vulnerable sector protected The POEA Rules and Regulations Governing the Recruitment and
by the Constitution, the Court now subjects the classification to a strict Employment of Land-Based Overseas Workers, dated February 4, 2002,
judicial scrutiny, and determines whether it serves a compelling state interest imposes administrative disciplinary measures on erring foreign employers
through the least restrictive means. who default on their contractual obligations to migrant workers and/or their
Philippine agents. These disciplinary measures range from temporary
disqualification to preventive suspension. The POEA Rules and Regulations
Governing the Recruitment and Employment of Seafarers, dated May 23,
What constitutes compelling state interest is measured by the scale of rights
2003, contains similar administrative disciplinary measures against erring
and powers arrayed in the Constitution and calibrated by history. It is akin to
foreign employers.
the paramount interest of the state for which some individual liberties must
give way, such as the public interest in safeguarding health or maintaining
medical standards, or in maintaining access to information on matters of
public concern. Resort to these administrative measures is undoubtedly the less restrictive
means of aiding local placement agencies in enforcing the solidary liability of
their foreign principals.
Thus, the subject clause in the 5th paragraph of Section 10 of R.A. No. 8042
is violative of the right of petitioner and other OFWs to equal protection.

The subject clause “or for three months for every year of the unexpired term,
whichever is less” in the 5th paragraph of Section 10 of Republic Act No.
8042 is DECLARED UNCONSTITUTIONAL.
PAMBUSCO vs CIR Director of Labor expressing their satisfaction with the hours they work and
the pay they receive for their labor including the special bonuses and
overtime pay they receive for extra work, and asking, in view thereof, that the
law be not applied to them (Exhibits 6, 6-a to 6-g).
FACTS:

The following are the pertinent facts which have given occasion to this
industrial dispute: On March 26, 1938, the Pambusco Employees' Union, After the enactment of Act No. 4242 several transportation companies
Inc., addressed a thirteen- point petition to the management of the operating motor buses filed with Commissioner of Labor petitions for a
Pampanga Bus Co. Upon the failure of the company officials to act upon the readjustment of the hours of labor specified in section 1 of the Act on the
petition, a strike was declared by the workers on April 14, 1938. However, basis of maintaining the status quo as to the hours the drivers were required
through the timely mediation of the Department of Labor, a provisional to be actually on duty in order to enable them to make the prescribed hours
agreement was reached, by virtue of which the strike was called off, eight daily that the exigencies of the service required. The petitions were based on
demands were granted, and the remaining five were submitted to the Court the impracticability of applying the provisions of the law to drivers of public
of Industrial Relations for settlement. One of these demands, in the language service vehicles without disrupting the public service and causing pecuniary
of the petitioner, is that the respondent Pampanga Bus Co. "pay to all loss to both employers and employees alike, and the resulting difficulties on
Company drivers affiliated with the Pambusco Employees' Union, Inc., all the the part of the drivers. The testimony of Atty. Carlos Alvear on this point in
back overtime pay due them under the law." After trial on the disputed uncontradicted. He testified that in 1935, he was president of the Philippine
demands, the Court of Industrial Relations decided inter alia that the claim Motor Association composed of bus operators operating in the Philippines, of
for back overtime pay could not be allowed. which the respondent is a member. Major Olson, who was at the time the
executive secretary of the association, and himself took up the matter with
the Secretary of the Interior and the Secretary of Labor after the passage of
The pertinent portion of the decision of the respondent Court of Industrial the Act extending the operation of the Eight Labor Law to drivers. In their
Relations is as follows: conference with the Commissioner of Labor, they were told to take
advantage of the provisions of the law in which they may apply for the
readjustment of the working hours, and in conformity with that suggestion,
the executive secretary of the association filed a formal petition, Exhibit 10,
The evidence is clear that even before the final approval of Act No. 4242 on September 5, 1935. When this was filed the Department of Labor further
amending Act No. 4123, the Eight Hour Labor Law, by extending the suggested that the drivers of each company file and address a petition of
provisions of the latter to other class of laborers including drivers of public similar nature designating their representatives who will represent them in a
service vehicles, a petition was addressed by 44 drivers of the company to conference that the Commissioner of Labor may call for the purpose. With
the Governor-General asking him to veto the bill amending the law extending the filing of the petition, the conferees were assured by the Under-Secretary
it to drivers for the reason stated in their petition (Exhibit 5 and 5-a). About of Labor that the enforcement of the Eight Hour Labor Law in so far as the
the 6th day of September, 1935, a petition was again addressed by 97 drivers were concerned, will be held in abeyance until such time as the
drivers of the company to the Commissioner of Labor requesting adjustment meeting or investigations are held. It is not clear as to whether investigations
of working hours to permit them to retain their present status with the and hearings were finally made but the evidence indicates that the petition
company as nearly as possible under the law (Exhibits 4, 4-a, 4-b, 4-c, 4-d was never decided and the companies continued its schedule of hours.
and 4-e). This petition was prepared after a meeting of the employees was
held and was drawn with the help of the manager of the respondent about
the last days of August, 1935. In September, 1937, about 347 employees of
the different departments of the company again addresses a petition to the ISSUE:
whether petitioners were entitled to the benefits of back overtime pay granted
by law when in fact they specifically asked to be exempted from it ?

RULING:

No. The Court of Industrial Relations ruled that, The evidence permits no
other conclusion than that the employees were not coerced not intimidated
by the respondent on the repeated occasions they signed and presented to
the Department of Labor their petitions for non-enforcement of the Eight Hour
Labor Law. The employees were indubitably aware of certain hardships the
enforcement of the law at that time would bring to them and these prompted
their attitude of preferring the continuation of the schedule of hours observed
prior to the enactment of the legislation extending the benefits of the Eight
Hour Labor Law to drivers of motor vehicles in public utility enterprises.
Whatever pecuniary advantage they would have gained by the strict
observance of the law by the company should they be made to work more
than eight hours a day was apparently waived or given up by them in
exchange of their personal convenience and of the additional monthly pay
the respondent gave to those employees who were assigned to routes where
the daily working hours exceeded the maximum fixed by law. The evidence
that the company paid additional salaries not only to drivers but also to its
conductors who were assigned to such routes stands uncontradicted and no
attempt even was made by the petitioner to deny it. Without need of passing
on the question as to whether the provisions of the law are mandatory or not,
in the light of the above facts and applying the rules of equity invoked by the
union, we are constrained to hold that the petitioners are not rightly entitled
to the payment sought. We are not, to be sure insensible to the argument
that industrial disputes should be decided with an eye on the welfare of the
working class, who, in the inter-play of economic forces, is said to find itself
in the "end of the stick." In the case at bar, however, we find no reason for
disturbing the action taken by the respondent Court of Industrial Relations,
which is a special court enjoined to "act according to justice and equity and
substantial merits of the case, without regard to technicalities or legal forms
and shall not be bound by any technical rules of legal evidence but may
inform its mind in such manner as it may deem just and equitable.

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