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Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 78763 July 12,1989
MANILA ELECTRIC COMPANY, petitioner,
vs.
THE NATIONAL LABOR RELATIONS COMMISSION, and APOLINARIO
M. SIGNO, respondents.
Angara, Abello, Concepcion, Regala & Cruz for petitioner.
Dominador Maglalang for private respondent.
MEDIALDEA, J.:
This is a petition for certiorari under Rule 65 of the Rules of Court seeking
the annulment of the resolution of the respondent National Labor
Relations Commission dated March 12, 1987 (p. 28, Rollo) in NLRC Case
No. NCR-8-3808-83, entitled, "Apolinario M. Signo, Complainant, versus
Manila Electric Company, Respondents", affirming the decision of the
Labor Arbiter which ordered the reinstatement of private respondent
herein, Apolinario Signo, to his former position without backwages.
The antecedent facts are as follows:
Private respondent 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 Peafrancia
Subdivision, Marcos Highway, Antipolo, Rizal. Private respondent 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, private respondent 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.
On August 10 1983, respondent Signo filed a complaint for illegal
dismissal, unpaid wages, and separation pay.
After the parties had submitted their position papers, the Labor Arbiter
rendered a decision (p. 79, Rollo) on April 29, 1985, which stated, inter
alia:
Verily, complainant's act of inducing the Meralco
employees to effectuate the installation on Engr. de Lara's
residence prejudiced the respondent, and therefore,
complainant himself had indeed became a participant in
the transactions, although not directly, which turned out
to be illegal, not to mention that some of the materials
used therein belongs to Meralco, some of which were
inferior quality. . . .
While complainant may deny the violation, he cannot do
away with company's Code on Employee Discipline, more
particularly Section 7, par. 8 and Section 6, par. 24
thereof However, as admitted by the respondent, the
infraction of the above cited Code is punishable by
reprimand to dismissal."
... . And in this case, while considering that complainant
indeed committed the above-cited infractions of company
Code of Employee Discipline, We shall also consider his
records of uninterrupted twenty (20) years of service
coupled with two (2) commendations for honesty.
Likewise, We shall take note that subject offense is his
first, and therefore, to impose the extreme penalty of
dismissal is certainly too drastic. A penalty short of
dismissal is more in keeping with justice, and adherence
to compassionate society.
WHEREFORE, respondent Meralco is hereby directed to
reinstate complainant Apolinario M. Signo to his former
position as Supervisor Leadman without backwages,
considering that he is not at all faultless. He is however,
here warned, that commission of similar offense in the
future, shall be dealt with more severely.
SO ORDERED.
Both parties appealed from the decision to the respondent Commission.
On March 12, 1987, the respondent Commission dismissed both appeals
for lack of merit and affirmed in toto the decision of the Labor Arbiter.
On June 23, 1987, the instant petition was filed with the petitioner
contending that the respondent Commission committed grave abuse of
discretion in affirming the decision of the Labor Arbiter. A temporary
restraining order was issued by this Court on August 3, 1987, enjoining

the respondents from enforcing the questioned resolution of the


respondent Commission.
The issue to resolve in the instant case is whether or not respondent
Signo should be dismissed from petitioner company on grounds of serious
misconduct and loss of trust and confidence.
Petitioner contends that respondent Signo violated Sections 6 and 7 of
the company's Code on Employee Discipline, which provide:
Section 6, Par. 24Encouraging, inducing or threatening
another employee to perform an act constituting a
violation of this Code or of company work, rules or an
offense in connection with the official duties of the latter,
or allowing himself to be persuaded, induced or
influenced to commit such offense.
PenaltyReprimand to dismissal, depending upon the
gravity of the offense.
Section 7, Par. 8Soliciting or receiving money, gift,
share, percentage or benefits from any person, personally
or through the mediation of another, to perform an act
prejudicial to the Company.
PenaltyDismissal. (pp. 13-14, Rollo)
Petitioner further argues that the acts of private respondent constituted
breach of trust and caused the petitioner company economic losses
resulting from the unbilled electric consumption of de Lara; that in view
thereof, the dismissal of private respondent Signo is proper considering
the circumstances of the case.
The power to dismiss is the normal prerogative of the employer. An
employer, generally, can dismiss or lay-off an employee for just and
authorized causes enumerated under Articles 282 and 283 of the Labor
Code. However, the right of an employer to freely discharge his
employees is subject to regulation by the State, basically in the exercise
of its paramount police power. This is so because the preservation of the
lives of the citizens is a basic duty of the State, more vital than the
preservation of corporate profits (Euro-Linea, Phil. Inc. v. NLRC, G.R. No.
75782, December 1, 1987,156 SCRA 78).
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.
We find no reason to disturb these findings. Well-established is the
principle that findings of administrative agencies which have acquired

expertise because their jurisdiction is confined to specific matters are


generally accorded not only respect but even finality. Judicial review by
this Court on labor cases does not go so far as to evaluate the sufficiency
of the evidence upon which the proper labor officer or office based his or
its determination but is limited to issues of jurisdiction or grave abuse of
discretion (Special Events and Central Shipping Office Workers Union v.
San Miguel Corporation, G.R. Nos. L-51002-06, May 30,1983,122 SCRA
557).
This Court has held time and again, in a number of decisions, that
notwithstanding the existence of a valid cause for dismissal, such as
breach of trust by an employee, nevertheless, dismissal should not be
imposed, as it is too severe a penalty if the latter has been employed for
a considerable length of time in the service of his employer. (ItogonSuyoc Mines, Inc. v. NLRC, et al., G.R. No. L- 54280, September
30,1982,117 SCRA 523; Meracap v. International Ceramics Manufacturing
Co., Inc., et al., G.R. Nos. L-48235-36, July 30,1979, 92 SCRA 412;
Sampang v. Inciong, G.R. No. 50992, June 19,1985,137 SCRA 56; De Leon
v. NLRC, G.R. No. L-52056, October 30,1980, 100 SCRA 691; Philippine
Airlines, Inc. v. PALEA, G.R. No. L-24626, June 28, 1974, 57 SCRA 489).
In a similar case, this Court ruled:
As repeatedly been held by this Court, an employer
cannot legally be compelled to continue with the
employment of a person who admittedly was guilty of
breach of trust towards his employer and whose
continuance in the service of the latter is patently inimical
to its interest. The law in protecting the rights of the
laborers, authorized neither oppression nor selfdestruction of the employer.
However, taking into account private respondent's
'twenty-three (23) years of service which undisputedly is
unblemished by any previous derogatory record' as found
by the respondent Commission itself, and since he has
been under preventive suspension during the pendency
of this case, in the absence of a showing that the
continued employment of private respondent would result
in petitioner's oppression or self-destruction, We are of
the considered view that his dismissal is a drastic
punishment. ... .
xxx xxx xxx
The ends of social and compassionate justice would
therefore be served if private respondent is reinstated but
without backwages in view of petitioner's obvious good
faith. (Itogon- Suyoc Mines, Inc. v. NLRC, et al., 11 7 SCRA
528)
Further, in carrying out and interpreting the Labor Code's provisions and
its implementing regulations, the workingman's welfare should be the
primordial and paramount consideration. This kind of interpretation gives

meaning and substance to the liberal and compassionate spirit of the law
as provided for in Article 4 of the New Labor Code which states that "all
doubts in the implementation and interpretation of the provisions of the
Labor Code including its implementing rules and regulations shall be
resolved in favor of labor" (Abella v. NLRC, G.R. No. 71812, July
30,1987,152 SCRA 140).
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.
ACCORDINGLY, premises considered, the petition is hereby DISMISSED
and the assailed decision of the National Labor Relations Commission
dated March 12, 1987 is AFFIRMED. The temporary restraining order
issued on August 3, 1987 is lifted.
SO ORDERED.
Narvasa, Cruz, Gancayco and Grio-Aquino, JJ., concur.

Republic of the Philippines


SUPREME COURT
Manila
EN BANC
G.R. No. 120319 October 6, 1995
LUZON DEVELOPMENT BANK, petitioner,
vs.
ASSOCIATION OF LUZON DEVELOPMENT BANK EMPLOYEES and
ATTY. ESTER S. GARCIA in her capacity as VOLUNTARY
ARBITRATOR, respondents.
ROMERO, J.:
From a submission agreement of the Luzon Development Bank (LDB) and
the Association of Luzon Development Bank Employees (ALDBE) arose an
arbitration case to resolve the following issue:
Whether or not the company has violated the Collective
Bargaining Agreement provision and the Memorandum of
Agreement dated April 1994, on promotion.
At a conference, the parties agreed on the submission of their respective
Position Papers on December 1-15, 1994. Atty. Ester S. Garcia, in her
capacity as Voluntary Arbitrator, received ALDBE's Position Paper on
January 18, 1995. LDB, on the other hand, failed to submit its Position
Paper despite a letter from the Voluntary Arbitrator reminding them to do
so. As of May 23, 1995 no Position Paper had been filed by LDB.
On May 24, 1995, without LDB's Position Paper, the Voluntary Arbitrator
rendered a decision disposing as follows:
WHEREFORE, finding is hereby made that the Bank has
not adhered to the Collective Bargaining Agreement
provision nor the Memorandum of Agreement on
promotion.
Hence, this petition for certiorari and prohibition seeking to set aside the
decision of the Voluntary Arbitrator and to prohibit her from enforcing the
same.
In labor law context, arbitration is the reference of a labor dispute to an
impartial third person for determination on the basis of evidence and
arguments presented by such parties who have bound themselves to
accept the decision of the arbitrator as final and binding.
Arbitration may be classified, on the basis of the obligation on which it is
based, as either compulsory or voluntary.
Compulsory arbitration is a system whereby the parties to a dispute are
compelled by the government to forego their right to strike and are
compelled to accept the resolution of their dispute through arbitration by
a third party. 1 The essence of arbitration remains since a resolution of a
dispute is arrived at by resort to a disinterested third party whose
decision is final and binding on the parties, but in compulsory arbitration,
such a third party is normally appointed by the government.

Under voluntary arbitration, on the other hand, referral of a dispute by


the parties is made, pursuant to a voluntary arbitration clause in their
collective agreement, to an impartial third person for a final and binding
resolution. 2 Ideally, arbitration awards are supposed to be complied with
by both parties without delay, such that once an award has been
rendered by an arbitrator, nothing is left to be done by both parties but to
comply with the same. After all, they are presumed to have freely chosen
arbitration as the mode of settlement for that particular dispute. Pursuant
thereto, they have chosen a mutually acceptable arbitrator who shall
hear and decide their case. Above all, they have mutually agreed to de
bound by said arbitrator's decision.
In the Philippine context, the parties to a Collective Bargaining Agreement
(CBA) are required to include therein provisions for a machinery for the
resolution of grievances arising from the interpretation or implementation
of the CBA or company personnel policies. 3 For this purpose, parties to a
CBA shall name and designate therein a voluntary arbitrator or a panel of
arbitrators, or include a procedure for their selection, preferably from
those accredited by the National Conciliation and Mediation Board
(NCMB). Article 261 of the Labor Code accordingly provides for exclusive
original jurisdiction of such voluntary arbitrator or panel of arbitrators
over (1) the interpretation or implementation of the CBA and (2) the
interpretation or enforcement of company personnel policies. Article 262
authorizes them, but only upon agreement of the parties, to exercise
jurisdiction over other labor disputes.
On the other hand, a labor arbiter under Article 217 of the Labor Code
has jurisdiction over the following enumerated cases:
. . . (a) Except as otherwise provided under this Code the
Labor Arbiters shall have original and exclusive
jurisdiction to hear and decide, within thirty (30) calendar
days after the submission of the case by the parties for
decision without extension, even in the absence of
stenographic notes, the following cases involving all
workers, whether agricultural or non-agricultural:
1. Unfair labor practice cases;
2. Termination disputes;
3. If accompanied with a claim for reinstatement, those
cases that workers may file involving wages, rates of pay,
hours of work and other terms and conditions of
employment;
4. Claims for actual, moral, exemplary and other forms of
damages arising from the employer-employee relations;
5. Cases arising from any violation of Article 264 of this
Code, including questions involving the legality of strikes
and lockouts;
6. Except claims for Employees Compensation, Social
Security, Medicare and maternity benefits, all other
claims, arising from employer-employee relations,

including those of persons in domestic or household


service, involving an amount exceeding five thousand
pesos (P5,000.00) regardless of whether accompanied
with a claim for reinstatement.
xxx xxx xxx
It will thus be noted that the jurisdiction conferred by law on a voluntary
arbitrator or a panel of such arbitrators is quite limited compared to the
original jurisdiction of the labor arbiter and the appellate jurisdiction of
the National Labor Relations Commission (NLRC) for that matter. 4 The
state of our present law relating to voluntary arbitration provides that
"(t)he award or decision of the Voluntary Arbitrator . . . shall be final and
executory after ten (10) calendar days from receipt of the copy of the
award or decision by the parties," 5 while the "(d)ecision, awards, or
orders of the Labor Arbiter are final and executory unless appealed to the
Commission by any or both parties within ten (10) calendar days from
receipt of such decisions, awards, or orders." 6 Hence, while there is an
express mode of appeal from the decision of a labor arbiter, Republic Act
No. 6715 is silent with respect to an appeal from the decision of a
voluntary arbitrator.
Yet, past practice shows that a decision or award of a voluntary arbitrator
is, more often than not, elevated to the Supreme Court itself on a petition
for certiorari, 7 in effect equating the voluntary arbitrator with the NLRC or
the Court of Appeals. In the view of the Court, this is illogical and imposes
an unnecessary burden upon it.
In Volkschel Labor Union, et al. v. NLRC, et al., 8 on the settled premise
that the judgments of courts and awards of quasi-judicial agencies must
become final at some definite time, this Court ruled that the awards of
voluntary arbitrators determine the rights of parties; hence, their
decisions have the same legal effect as judgments of a court. In Oceanic
Bic Division (FFW), et al. v. Romero, et al., 9 this Court ruled that "a
voluntary arbitrator by the nature of her functions acts in a quasi-judicial
capacity." Under these rulings, it follows that the voluntary arbitrator,
whether acting solely or in a panel, enjoys in law the status of a quasijudicial agency but independent of, and apart from, the NLRC since his
decisions are not appealable to the latter. 10
Section 9 of B.P. Blg. 129, as amended by Republic Act No. 7902, provides
that the Court of Appeals shall exercise:
xxx xxx xxx
(B) Exclusive appellate jurisdiction over all final
judgments, decisions, resolutions, orders or awards of
Regional Trial Courts and quasi-judicial agencies,
instrumentalities, boards or commissions, including the
Securities and Exchange Commission, the Employees
Compensation Commission and the Civil Service
Commission, except those falling within the appellate
jurisdiction of the Supreme Court in accordance with the
Constitution, the Labor Code of the Philippines under

Presidential Decree No. 442, as amended, the provisions


of this Act, and of subparagraph (1) of the third paragraph
and subparagraph (4) of the fourth paragraph of Section
17 of the Judiciary Act of 1948.
xxx xxx xxx
Assuming arguendo that the voluntary arbitrator or the panel of voluntary
arbitrators may not strictly be considered as a quasi-judicial agency,
board or commission, still both he and the panel are comprehended
within the concept of a "quasi-judicial instrumentality." It may even be
stated that it was to meet the very situation presented by the quasijudicial functions of the voluntary arbitrators here, as well as the
subsequent arbitrator/arbitral tribunal operating under the Construction
Industry Arbitration Commission, 11 that the broader term
"instrumentalities" was purposely included in the above-quoted provision.
An "instrumentality" is anything used as a means or agency. 12 Thus, the
terms governmental "agency" or "instrumentality" are synonymous in the
sense that either of them is a means by which a government acts, or by
which a certain government act or function is performed. 13 The word
"instrumentality," with respect to a state, contemplates an authority to
which the state delegates governmental power for the performance of a
state function. 14 An individual person, like an administrator or executor, is
a judicial instrumentality in the settling of an estate, 15 in the same
manner that a sub-agent appointed by a bankruptcy court is an
instrumentality of the court, 16 and a trustee in bankruptcy of a defunct
corporation is an instrumentality of the state. 17
The voluntary arbitrator no less performs a state function pursuant to a
governmental power delegated to him under the provisions therefor in
the Labor Code and he falls, therefore, within the contemplation of the
term "instrumentality" in the aforequoted Sec. 9 of B.P. 129. The fact that
his functions and powers are provided for in the Labor Code does not
place him within the exceptions to said Sec. 9 since he is a quasi-judicial
instrumentality as contemplated therein. It will be noted that, although
the Employees Compensation Commission is also provided for in the
Labor Code, Circular No. 1-91, which is the forerunner of the present
Revised Administrative Circular No. 1-95, laid down the procedure for the
appealability of its decisions to the Court of Appeals under the foregoing
rationalization, and this was later adopted by Republic Act No. 7902 in
amending Sec. 9 of B.P. 129.
A fortiori, the decision or award of the voluntary arbitrator or panel of
arbitrators should likewise be appealable to the Court of Appeals, in line
with the procedure outlined in Revised Administrative Circular No. 1-95,
just like those of the quasi-judicial agencies, boards and commissions
enumerated therein.
This would be in furtherance of, and consistent with, the original purpose
of Circular No. 1-91 to provide a uniform procedure for the appellate
review of adjudications of all quasi-judicial entities 18 not expressly
excepted from the coverage of Sec. 9 of B.P. 129 by either the

Constitution or another statute. Nor will it run counter to the legislative


intendment that decisions of the NLRC be reviewable directly by the
Supreme Court since, precisely, the cases within the adjudicative
competence of the voluntary arbitrator are excluded from the jurisdiction
of the NLRC or the labor arbiter.
In the same vein, it is worth mentioning that under Section 22 of Republic
Act No. 876, also known as the Arbitration Law, arbitration is deemed a
special proceeding of which the court specified in the contract or
submission, or if none be specified, the Regional Trial Court for the
province or city in which one of the parties resides or is doing business, or
in which the arbitration is held, shall have jurisdiction. A party to the
controversy may, at any time within one (1) month after an award is
made, apply to the court having jurisdiction for an order confirming the
award and the court must grant such order unless the award is vacated,
modified or corrected. 19
In effect, this equates the award or decision of the voluntary arbitrator
with that of the regional trial court. Consequently, in a petition
for certiorari from that award or decision, the Court of Appeals must be
deemed to have concurrent jurisdiction with the Supreme Court. As a
matter of policy, this Court shall henceforth remand to the Court of
Appeals petitions of this nature for proper disposition.
ACCORDINGLY, the Court resolved to REFER this case to the Court of
Appeals.
SO ORDERED.
Padilla, Regalado, Davide, Jr., Bellosillo, Puno, Vitug, Kapunan, Mendoza,
Francisco and Hermosisima, Jr., JJ., concur.
Feliciano, J., concurs in the result.
Narvasa, C.J. and Melo, J. are on leave.
Footnotes
1 Seide, A Dictionary of Arbitration (1970).
2 Ibid.
3 Art. 260, Labor Code.
4 Art. 217, Labor Code.
5 Art. 262-A, par. 4, Labor Code.
6 Art. 223, Labor Code.
7 Oceanic Bic Division (FFW), et al. v. Romero, et
al., 130 SCRA 392 (1984); Sime Darby Pilipinas,
Inc. v. Magsalin, et al., 180 SCRA 177 (1989).
8 98 SCRA 314 (1980).
9 Supra.
10 Art. 262-A, in relation to Art. 217 (b) and (c),
Labor Code, as amended by Sec. 9, R.A. 6715.
11 Executive Order No. 1008.
12 Laurens Federal Sav. and Loan Ass'n v. South
Carolina Tax Commission, 112 S.E. 2d 716, 719,
236 S.C. 2.

13 Govt. of P.I. v. Springer, et al., 50 Phil. 259, 334


(1927).
14 Ciulla v. State, 77 N.Y.S. 2d 545, 550, 191 Misc.
528.
15 In re Turncock's Estate, 300 N.W. 155, 156, 238
Wis. 438.
16 In re Brown Co., D.C. Me., 36 F. Supp. 275, 277.
17 Gagne v. Brush, D.C.N.H., 30 F. Supp. 714, 716.
18 First Lepanto Ceramics, Inc. v. CA, et al., 231
SCRA 30 (1994).
19 Section 23, R.A. No. 876.

Republic of the Philippines


SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 98107 August 18, 1997
BENJAMIN C. JUCO, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and NATIONAL
HOUSING CORPORATION, respondents.
HERMOSISIMA, JR., J.:
This is a petition for certiorari to set aside the Decision of the National
Labor Relations Commission (NLRC) dated March 14, 1991, which
reversed the Decision dated May 21, 1990 of Labor Arbiter Manuel R
Caday, on the ground of lack of jurisdiction.
Petitioner Benjamin C. Juco was hired as a project engineer of respondent
National Housing Corporation (NHC) from November 16, 1970 to May 14,
1975. On May 14, 1975, he was separated from the service for having
been implicated in a crime of theft and/or malversation of public funds.
On March 25, 1977, petitioner filed a complaint for illegal dismissal
against the NHC with the Department of Labor.
On September 17, 1977, the Labor Arbiter rendered a decision dismissing
the complaint on the ground that the NLRC had no jurisdiction over the
case. 1
Petitioner then elevated the case to the NLRC which rendered a decision
on December 28, 1982, reversing the decision of the Labor Arbiter. 2
Dissatisfied with the decision of the NLRC, respondent NHC appealed
before this Court and on January 17, 1985, we rendered a decision, the
dispositive portion thereof reads as follows:
WHEREFORE, the petition is hereby GRANTED. The
questioned decision of the respondent National Labor
Relations Commission is SET ASIDE. The decision of the
Labor Arbiter dismissing the case before it for lack of
jurisdiction is REINSTATED. 3
On January 6, 1989, petitioner filed with the Civil Service Commission a
complaint for illegal dismissal, with preliminary mandatory injunction. 4
On February 6, 1989, respondent NHC moved for the dismissal of the
complaint on the ground that the Civil Service Commission has no
jurisdiction over the case. 5
On April 11, 1989, the Civil Service Commission issued an order
dismissing the complaint for lack of jurisdiction. It ratiocinated that:
The Board finds the comment and/or motion to dismiss
meritorious. It was not disputed that NHC is a government
corporation without an original charter but
organized/created under the Corporation Code.
Article IX, Section 2 (1) of the 1987 Constitution provides:

The civil service embraces all branches,


subdivisions, instrumentalities and
agencies of the Government, including
government owned and controlled
corporations with original charters.
(emphasis supplied)
From the aforequoted constitutional provision, it is clear
that respondent NHC is not within the scope of the civil
service and is therefore beyond the jurisdiction of this
Board. Moreover, it is pertinent to state that the 1987
Constitution was ratified and became effective on
February 2, 1987.
WHEREFORE, for lack of jurisdiction, the instant complaint
is hereby dismissed. 6
On April 28, 1989, petitioner filed with respondent NLRC a complaint for
illegal dismissal with preliminary mandatory injunction against
respondent NHC. 7
On May 21, 1990, respondent NLRC thru Labor Arbiter Manuel R. Caday
ruled that petitioner was illegally dismissed from his employment by
respondent as there was evidence in the record that the criminal case
against him was purely fabricated, prompting the trial court to dismiss
the charges against him. Hence, he concluded that the dismissal was
illegal as it was devoid of basis, legal or factual.
He further ruled that the complaint is not barred by prescription
considering that the period from which to reckon the reglementary period
of four years should be from the date of the receipt of the decision of the
Civil Service Commission promulgated on April 11, 1989. He also
ratiocinated that:
It appears . . . complainant filed the complaint for illegal
dismissal with the Civil Service Commission on January 6,
1989 and the same was dismissed on April 11, 1989 after
which on April 28, 1989, this case was filed by the
complainant. Prior to that, this case was ruled upon by
the Supreme Court on January 17, 1985 which enjoined
the complainant to go to the Civil Service Commission
which in fact, complainant did. Under the circumstances,
there is merit on the contention that the running of the
reglementary period of four (4) years was suspended with
the filing of the complaint with the said Commission.
Verily, it was not the fault of the respondent for failing to
file the complaint as alleged by the respondent but due
to, in the words of the complainant, a "legal knot" that
has to be untangled. 8
Thereafter, the Labor Arbiter rendered a decision, the dispositive portion
of which reads:
Premises considered, judgment is hereby rendered
declaring the dismissal of the complainant as illegal and

ordering the respondent to immediately reinstate him to


his former position without loss of seniority rights with full
back wages inclusive of allowance and to his other
benefits or equivalent computed from the time it is
withheld from him when he was dismissed on March 27,
1977, until actually reinstated. 9
On June 1, 1990, respondent NHC filed its appeal before the NLRC and on
March 14, 1991, the NLRC promulgated a decision which reversed the
decision of Labor Arbiter Manuel R. Caday on the ground of lack of
jurisdiction. 10
The primordial issue that confronts us is whether or not public respondent
committed grave abuse of discretion in holding that petitioner is not
governed by the Labor Code.
Under the laws then in force, employees of government-owned and/or
controlled corporations were governed by the Civil Service Law and not
by the Labor Code. Hence,
Article 277 of the Labor Code (PD 442) then provided:
The terms and conditions of employment of all
government employees, including employees of
government-owned and controlled corporations shall be
governed by the Civil Service Law, rules and
regulations . . . .
The 1973 Constitution, Article II-B, Section 1(1), on the
other hand provided:
The Civil Service embraces every branch, agency,
subdivision and instrumentality of the government,
including government-owned or controlled corporations.
Although we had earlier ruled in National Housing Corporation v.
Juco, 11 that employees of government-owned and/or controlled
corporations, whether created by special law or formed as subsidiaries
under the general Corporation Law, are governed by the Civil Service Law
and not by the Labor Code, this ruling has been supplanted by the 1987
Constitution. Thus, the said Constitution now provides:
The civil service embraces all branches, subdivisions,
instrumentalities, and agencies of the Government,
including government owned or controlled corporations
with original charter. (Article IX-B, Section 2[1])
In National Service Corporation (NASECO) v. National Labor Relations
Commission, 12 we had the occasion to apply the present Constitution in
deciding whether or not the employees of NASECO are covered by the
Civil Service Law or the Labor Code notwithstanding that the case arose
at the time when the 1973 Constitution was still in effect. We ruled that
the NLRC has jurisdiction over the employees of NASECO on the ground
that it is the 1987 Constitution that governs because it is the Constitution
in place at the time of the decision. Furthermore, we ruled that the new
phrase "with original charter" means that government-owned and
controlled corporations refer to corporations chartered by special law as

distinguished from corporations organized under the Corporation Code.


Thus, NASECO which had been organized under the general incorporation
statute and a subsidiary of the National Investment Development
Corporation, which in turn was a subsidiary of the Philippine National
Bank, is exluded from the purview of the Civil Service Commission.
We see no cogent reason to depart from the ruling in the aforesaid case.
In the case at bench, the National Housing Corporation is a government
owned corporation organized in 1959 in accordance with Executive Order
No. 399, otherwise known as the Uniform Charter of Government
Corporation, dated January 1, 1959. Its shares of stock are and have been
one hundred percent (100%) owned by the Government from its
incorporation under Act 1459, the former corporation law. The
government entities that own its shares of stock are the Government
Service Insurance System, the Social Security System, the Development
Bank of the Philippines, the National Investment and Development
Corporation and the People's Homesite and Housing
Corporation. 13 Considering the fact that the NHA had been incorporated
under Act 1459, the former corporation law, it is but correct to say that it
is a government-owned or controlled corporation whose employees are
subject to the provisions of the Labor Code. This observation is reiterated
in the recent case of Trade Union of the Philippines and Allied Services
(TUPAS) v. National Housing
Corporation, 14 where we held that the NHA is now within the jurisdiction
of the Department of Labor and Employment, it being a governmentowned and/or controlled corporation without an original charter.
Furthermore, we also held that the workers or employees of the NHC (now
NHA) undoubtedly have the right to form unions or employee's
organization and that there is no impediment to the holding of a
certification election among them as they are covered by the Labor Code.
Thus, the NLRC erred in dismissing petitioner's complaint for lack of
jurisdiction because the rule now is that the Civil Service now covers only
government-owned or controlled corporations with original
charters. 15 Having been incorporated under the Corporation Law, its
relations with its personnel are governed by the Labor Code and come
under the jurisdiction of the National Labor Relations Commission.
One final point. Petitioners have been tossed from one forum to another
for a simple illegal dismissal case. It is but apt that we put an end to his
dilemna in the interest of justice.
WHEREFORE, the decision of the NLRC in NLRC NCR-04-02036089 dated
March 14, 1991 is hereby REVERSED and the Decision of the Labor Arbiter
dated May 21, 1990 is REINSTATED.
SO ORDERED.
Padilla, Bellosillo, Vitug and Kapunan, JJ., concur.
Footnotes
1 Rollo, pp. 20-21.
2 Id., pp. 22-26.
3 Id., pp. 27-37.

4 Id., pp. 38-42.


5 Id., pp. 43-47.
6 Id., p. 52.
7 Id., pp. 53-58.
8 Id., p. 68.
9 Id., p. 69.
10 Id., pp. 78-86.
11 134 SCRA 172 (1985).
12 168 SCRA 122 [1988].
13 National Housing Corporation vs. Juco, 134 SCRA 172
(1985).
14 173 SCRA 33 (1989).
15 PNOC-Energy Development Corporation v. NLRC, 201
SCRA 487 [1991] The NHC (now NHA).

Republic of the Philippines


SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 85279 July 28, 1989
SOCIAL SECURITY SYSTEM EMPLOYEES ASSOCIATION (SSSEA),
DIONISION T. BAYLON, RAMON MODESTO, JUANITO MADURA,
REUBEN ZAMORA, VIRGILIO DE ALDAY, SERGIO ARANETA,
PLACIDO AGUSTIN, VIRGILIO MAGPAYO, petitioner,
vs.
THE COURT OF APPEALS, SOCIAL SECURITY SYSTEM (SSS), HON.
CEZAR C. PERALEJO, RTC, BRANCH 98, QUEZON CITY, respondents.
Vicente T. Ocampo & Associates for petitioners.
CORTES, J:
Primarily, the issue raised in this petition is whether or not the Regional
Trial Court can enjoin the Social Security System Employees Association
(SSSEA) from striking and order the striking employees to return to work.
Collaterally, it is whether or not employees of the Social Security System
(SSS) have the right to strike.
The antecedents are as follows:
On June 11, 1987, the SSS filed with the Regional Trial Court of Quezon
City a complaint for damages with a prayer for a writ of preliminary
injunction against petitioners, alleging that on June 9, 1987, the officers
and members of SSSEA staged an illegal strike and baricaded the
entrances to the SSS Building, preventing non-striking employees from
reporting for work and SSS members from transacting business with the
SSS; that the strike was reported to the Public Sector Labor Management Council, which ordered the strikers to return to work; that
the strikers refused to return to work; and that the SSS suffered damages
as a result of the strike. The complaint prayed that a writ of preliminary
injunction be issued to enjoin the strike and that the strikers be ordered
to return to work; that the defendants (petitioners herein) be ordered to
pay damages; and that the strike be declared illegal.
It appears that the SSSEA went on strike after the SSS failed to act on the
union's demands, which included: implementation of the provisions of the
old SSS-SSSEA collective bargaining agreement (CBA) on check-off of
union dues; payment of accrued overtime pay, night differential pay and
holiday pay; conversion of temporary or contractual employees with six
(6) months or more of service into regular and permanent employees and
their entitlement to the same salaries, allowances and benefits given to
other regular employees of the SSS; and payment of the children's
allowance of P30.00, and after the SSS deducted certain amounts from
the salaries of the employees and allegedly committed acts of
discrimination and unfair labor practices [Rollo, pp. 21-241].
The court a quo, on June 11, 1987, issued a temporary restraining order
pending resolution of the application for a writ of preliminary injunction

[Rollo, p. 71.] In the meantime, petitioners filed a motion to dismiss


alleging the trial court's lack of jurisdiction over the subject matter [Rollo,
pp. 72-82.] To this motion, the SSS filed an opposition, reiterating its
prayer for the issuance of a writ of injunction [Rollo, pp. 209-222]. On July
22,1987, in a four-page order, the court a quo denied the motion to
dismiss and converted the restraining order into an injunction upon
posting of a bond, after finding that the strike was illegal [Rollo, pp. 8386]. As petitioners' motion for the reconsideration of the aforesaid order
was also denied on August 14, 1988 [Rollo, p. 94], petitioners filed a
petition for certiorari and prohibition with preliminary injunction before
this Court. Their petition was docketed as G.R. No. 79577. In a resolution
dated October 21, 1987, the Court, through the Third Division, resolved to
refer the case to the Court of Appeals. Petitioners filed a motion for
reconsideration thereof, but during its pendency the Court of Appeals on
March 9,1988 promulgated its decision on the referred case [Rollo, pp.
130-137]. Petitioners moved to recall the Court of Appeals' decision. In
the meantime, the Court on June 29,1988 denied the motion for
reconsideration in G.R. No. 97577 for being moot and academic.
Petitioners' motion to recall the decision of the Court of Appeals was also
denied in view of this Court's denial of the motion for reconsideration
[Rollo, pp. 141- 143]. Hence, the instant petition to review the decision of
the Court of Appeals [Rollo, pp. 12-37].
Upon motion of the SSS on February 6,1989, the Court issued a
temporary restraining order enjoining the petitioners from staging
another strike or from pursuing the notice of strike they filed with the
Department of Labor and Employment on January 25, 1989 and to
maintain the status quo [Rollo, pp. 151-152].
The Court, taking the comment as answer, and noting the reply and
supplemental reply filed by petitioners, considered the issues joined and
the case submitted for decision.
The position of the petitioners is that the Regional Trial Court had no
jurisdiction to hear the case initiated by the SSS and to issue the
restraining order and the writ of preliminary injunction, as jurisdiction lay
with the Department of Labor and Employment or the National Labor
Relations Commission, since the case involves a labor dispute.
On the other hand, the SSS advances the contrary view, on the ground
that the employees of the SSS are covered by civil service laws and rules
and regulations, not the Labor Code, therefore they do not have the right
to strike. Since neither the DOLE nor the NLRC has jurisdiction over the
dispute, the Regional Trial Court may enjoin the employees from striking.
In dismissing the petition for certiorari and prohibition with preliminary
injunction filed by petitioners, the Court of Appeals held that since the
employees of the SSS, are government employees, they are not allowed
to strike, and may be enjoined by the Regional Trial Court, which had
jurisdiction over the SSS' complaint for damages, from continuing with
their strike.

10

Thus, the sequential questions to be resolved by the Court in deciding


whether or not the Court of Appeals erred in finding that the Regional Trial
Court did not act without or in excess of jurisdiction when it took
cognizance of the case and enjoined the strike are as follows:
1. Do the employees of the SSS have the right to strike?
2. Does the Regional Trial Court have jurisdiction to hear the case
initiated by the SSS and to enjoin the strikers from continuing with the
strike and to order them to return to work?
These shall be discussed and resolved seriatim
I
The 1987 Constitution, in the Article on Social Justice and Human Rights,
provides that the State "shall guarantee the rights of all workers to selforganization, collective bargaining and negotiations, and peaceful
concerted activities, including the right to strike in accordance with law"
[Art. XIII, Sec. 31].
By itself, this provision would seem to recognize the right of all workers
and employees, including those in the public sector, to strike. But the
Constitution itself fails to expressly confirm this impression, for in the
Sub-Article on the Civil Service Commission, it provides, after defining the
scope of the civil service as "all branches, subdivisions, instrumentalities,
and agencies of the Government, including government-owned or
controlled corporations with original charters," that "[t]he right to selforganization shall not be denied to government employees" [Art. IX(B),
Sec. 2(l) and (50)]. Parenthetically, the Bill of Rights also provides that
"[tlhe right of the people, including those employed in the public and
private sectors, to form unions, associations, or societies for purposes not
contrary to law shall not abridged" [Art. III, Sec. 8]. Thus, while there is no
question that the Constitution recognizes the right of government
employees to organize, it is silent as to whether such recognition also
includes the right to strike.
Resort to the intent of the framers of the organic law becomes helpful in
understanding the meaning of these provisions. A reading of the
proceedings of the Constitutional Commission that drafted the 1987
Constitution would show that in recognizing the right of government
employees to organize, the commissioners intended to limit the right to
the formation of unions or associations only, without including the right to
strike.
Thus, Commissioner Eulogio R. Lerum, one of the sponsors of the
provision that "[tlhe right to self-organization shall not be denied to
government employees" [Art. IX(B), Sec. 2(5)], in answer to the
apprehensions expressed by Commissioner Ambrosio B. Padilla, VicePresident of the Commission, explained:
MR. LERUM. I think what I will try to say will not take that
long. When we proposed this amendment providing for
self-organization of government employees, it does not
mean that because they have the right to organize, they
also have the right to strike. That is a different matter. We

are only talking about organizing, uniting as a union. With


regard to the right to strike, everyone will remember that
in the Bill of Rights, there is a provision that the right to
form associations or societies whose purpose is not
contrary to law shall not be abridged. Now then, if the
purpose of the state is to prohibit the strikes coming from
employees exercising government functions, that could
be done because the moment that is prohibited, then the
union which will go on strike will be an illegal union. And
that provision is carried in Republic Act 875. In Republic
Act 875, workers, including those from the governmentowned and controlled, are allowed to organize but they
are prohibited from striking. So, the fear of our honorable
Vice- President is unfounded. It does not mean that
because we approve this resolution, it carries with it the
right to strike. That is a different matter. As a matter of
fact, that subject is now being discussed in the
Committee on Social Justice because we are trying to find
a solution to this problem. We know that this problem
exist; that the moment we allow anybody in the
government to strike, then what will happen if the
members of the Armed Forces will go on strike? What will
happen to those people trying to protect us? So that is a
matter of discussion in the Committee on Social Justice.
But, I repeat, the right to form an organization does not
carry with it the right to strike. [Record of the
Constitutional Commission, vol. 1, p. 569].
It will be recalled that the Industrial Peace Act (R.A. No. 875), which was
repealed by the Labor Code (P.D. 442) in 1974, expressly banned strikes
by employees in the Government, including instrumentalities exercising
governmental functions, but excluding entities entrusted with proprietary
functions:
.Sec. 11. Prohibition Against Strikes in the Government.
The terms and conditions of employment in the
Government, including any political subdivision or
instrumentality thereof, are governed by law and it is
declared to be the policy of this Act that employees
therein shall not strike for the purpose of securing
changes or modification in their terms and conditions of
employment. Such employees may belong to any labor
organization which does not impose the obligation to
strike or to join in strike:Provided, however, That this
section shall apply only to employees employed in
governmental functions and not those employed in
proprietary functions of the Government including but not
limited to governmental corporations.

11

No similar provision is found in the Labor Code, although at one time it


recognized the right of employees of government corporations
established under the Corporation Code to organize and bargain
collectively and those in the civil service to "form organizations for
purposes not contrary to law" [Art. 244, before its amendment by B.P. Blg.
70 in 1980], in the same breath it provided that "[t]he terms and
conditions of employment of all government employees, including
employees of government owned and controlled corporations, shall be
governed by the Civil Service Law, rules and regulations" [now Art. 276].
Understandably, the Labor Code is silent as to whether or not
government employees may strike, for such are excluded from its
coverage [Ibid]. But then the Civil Service Decree [P.D. No. 807], is
equally silent on the matter.
On June 1, 1987, to implement the constitutional guarantee of the right of
government employees to organize, the President issued E.O. No. 180
which provides guidelines for the exercise of the right to organize of
government employees. In Section 14 thereof, it is provided that "[t]he
Civil Service law and rules governing concerted activities and strikes in
the government service shall be observed, subject to any legislation that
may be enacted by Congress." The President was apparently referring to
Memorandum Circular No. 6, s. 1987 of the Civil Service Commission
under date April 21, 1987 which, "prior to the enactment by Congress of
applicable laws concerning strike by government employees ... enjoins
under pain of administrative sanctions, all government officers and
employees from staging strikes, demonstrations, mass leaves, walk-outs
and other forms of mass action which will result in temporary stoppage or
disruption of public service." The air was thus cleared of the confusion. At
present, in the absence of any legislation allowing government
employees to strike, recognizing their right to do so, or regulating the
exercise of the right, they are prohibited from striking, by express
provision of Memorandum Circular No. 6 and as implied in E.O. No. 180.
[At this juncture, it must be stated that the validity of Memorandum
Circular No. 6 is not at issue].
But are employees of the SSS covered by the prohibition against strikes?
The Court is of the considered view that they are. Considering that under
the 1987 Constitution "[t]he civil service embraces all branches,
subdivisions, instrumentalities, and agencies of the Government,
including government-owned or controlled corporations with original
charters" [Art. IX(B), Sec. .2(l) see also Sec. 1 of E.O. No. 180 where the
employees in the civil service are denominated as "government
employees"] and that the SSS is one such government-controlled
corporation with an original charter, having been created under R.A. No.
1161, its employees are part of the civil service [NASECO v. NLRC, G.R.
Nos. 69870 & 70295, November 24,1988] and are covered by the Civil
Service Commission's memorandum prohibiting strikes. This being the
case, the strike staged by the employees of the SSS was illegal.

The statement of the Court in Alliance of Government Workers v. Minister


of Labor and Employment [G.R. No. 60403, August 3, 1:983, 124 SCRA 11
is relevant as it furnishes the rationale for distinguishing between workers
in the private sector and government employees with regard to the right
to strike:
The general rule in the past and up to the present is that
'the terms and conditions of employment in the
Government, including any political subdivision or
instrumentality thereof are governed by law" (Section 11,
the Industrial Peace Act, R.A. No. 875, as amended and
Article 277, the Labor Code, P.D. No. 442, as
amended). Since the terms and conditions of government
employment are fixed by law, government workers
cannot use the same weapons employed by workers in
the private sector to secure concessions from their
employers. The principle behind labor unionism in private
industry is that industrial peace cannot be secured
through compulsion by law. Relations between private
employers and their employees rest on an essentially
voluntary basis. Subject to the minimum requirements of
wage laws and other labor and welfare legislation, the
terms and conditions of employment in the unionized
private sector are settled through the process of
collective bargaining. In government employment,
however, it is the legislature and, where properly given
delegated power, the administrative heads of government
which fix the terms and conditions of employment. And
this is effected through statutes or administrative
circulars, rules, and regulations, not through collective
bargaining agreements. [At p. 13; Emphasis supplied].
Apropos is the observation of the Acting Commissioner of Civil Service, in
his position paper submitted to the 1971 Constitutional Convention, and
quoted with approval by the Court in Alliance, to wit:
It is the stand, therefore, of this Commission that by
reason of the nature of the public employer and the
peculiar character of the public service, it must
necessarily regard the right to strike given to unions in
private industry as not applying to public employees and
civil service employees. It has been stated that the
Government, in contrast to the private employer, protects
the interest of all people in the public service, and that
accordingly, such conflicting interests as are present in
private labor relations could not exist in the relations
between government and those whom they employ. [At
pp. 16-17; also quoted in National Housing Corporation v.
Juco, G.R. No. 64313, January 17,1985,134 SCRA 172,178179].

12

E.O. No. 180, which provides guidelines for the exercise of the right to
organize of government employees, while clinging to the same
philosophy, has, however, relaxed the rule to allow negotiation where the
terms and conditions of employment involved are not among those fixed
by law. Thus:
.SECTION 13. Terms and conditions of employment or
improvements thereof, except those that are fixed by law,
may be the subject of negotiations between duly
recognized employees' organizations and appropriate
government authorities.
The same executive order has also provided for the general mechanism
for the settlement of labor disputes in the public sector to wit:
.SECTION 16. The Civil Service and labor laws and
procedures, whenever applicable, shall be followed in the
resolution of complaints, grievances and cases involving
government employees. In case any dispute remains
unresolved after exhausting all the available remedies
under existing laws and procedures, the parties may
jointly refer the dispute to the [Public Sector LaborManagement] Council for appropriate action.
Government employees may, therefore, through their unions or
associations, either petition the Congress for the betterment of the terms
and conditions of employment which are within the ambit of legislation or
negotiate with the appropriate government agencies for the improvement
of those which are not fixed by law. If there be any unresolved
grievances, the dispute may be referred to the Public Sector Labor Management Council for appropriate action. But employees in the civil
service may not resort to strikes, walk-outs and other temporary work
stoppages, like workers in the private sector, to pressure the Govemment
to accede to their demands. As now provided under Sec. 4, Rule III of the
Rules and Regulations to Govern the Exercise of the Right of GovernmentEmployees to Self- Organization, which took effect after the instant
dispute arose, "[t]he terms and conditions of employment in the
government, including any political subdivision or instrumentality thereof
and government- owned and controlled corporations with original
charters are governed by law and employees therein shall not strike for
the purpose of securing changes thereof."
II
The strike staged by the employees of the SSS belonging to petitioner
union being prohibited by law, an injunction may be issued to restrain it.
It is futile for the petitioners to assert that the subject labor dispute falls
within the exclusive jurisdiction of the NLRC and, hence, the Regional Trial
Court had no jurisdiction to issue a writ of injunction enjoining the
continuance of the strike. The Labor Code itself provides that terms and
conditions of employment of government employees shall be governed
by the Civil Service Law, rules and regulations [Art. 276]. More
importantly, E.O. No. 180 vests the Public Sector Labor - Management

Council with jurisdiction over unresolved labor disputes involving


government employees [Sec. 16]. Clearly, the NLRC has no jurisdiction
over the dispute.
This being the case, the Regional Trial Court was not precluded, in the
exercise of its general jurisdiction under B.P. Blg. 129, as amended, from
assuming jurisdiction over the SSS's complaint for damages and issuing
the injunctive writ prayed for therein. Unlike the NLRC, the Public Sector
Labor - Management Council has not been granted by law authority to
issue writs of injunction in labor disputes within its jurisdiction. Thus,
since it is the Council, and not the NLRC, that has jurisdiction over the
instant labor dispute, resort to the general courts of law for the issuance
of a writ of injunction to enjoin the strike is appropriate.
Neither could the court a quo be accused of imprudence or
overzealousness, for in fact it had proceeded with caution. Thus, after
issuing a writ of injunction enjoining the continuance of the strike to
prevent any further disruption of public service, the respondent judge, in
the same order, admonished the parties to refer the unresolved
controversies emanating from their employer- employee relationship to
the Public Sector Labor - Management Council for appropriate action
[Rollo, p. 86].
III
In their "Petition/Application for Preliminary and Mandatory Injunction,"
and reiterated in their reply and supplemental reply, petitioners allege
that the SSS unlawfully withheld bonuses and benefits due the individual
petitioners and they pray that the Court issue a writ of preliminary
prohibitive and mandatory injunction to restrain the SSS and its agents
from withholding payment thereof and to compel the SSS to pay them. In
their supplemental reply, petitioners annexed an order of the Civil Service
Commission, dated May 5, 1989, which ruled that the officers of the
SSSEA who are not preventively suspended and who are reporting for
work pending the resolution of the administrative cases against them are
entitled to their salaries, year-end bonuses and other fringe benefits and
affirmed the previous order of the Merit Systems Promotion Board.
The matter being extraneous to the issues elevated to this Court, it is Our
view that petitioners' remedy is not to petition this Court to issue an
injunction, but to cause the execution of the aforesaid order, if it has
already become final.
WHEREFORE, no reversible error having been committed by the Court of
Appeals, the instant petition for review is hereby DENIED and the decision
of the appellate court dated March 9, 1988 in CA-G.R. SP No. 13192 is
AFFIRMED. Petitioners' "Petition/Application for Preliminary and
Mandatory Injunction" dated December 13,1988 is DENIED.
SO ORDERED.
Fernan, C.J., Gutierrez, Jr., Feliciano and Bidin, JJ., concur.

13

Republic of the Philippines


SUPREME COURT
Manila

Denied at first, the motion was reconsidered and finally granted in the
Orders of the trial court dated June 24 and September 17, 1981. The
prosecution is now before us on certiorari. 3

EN BANC

The posture of the petitioner is that the private respondent is being


prosecuted under Article 39 in relation to Article 16 of the Labor Code;
hence, Article 13(b) is not applicable. However, as the first two cited
articles penalize acts of recruitment and placement without proper
authority, which is the charge embodied in the informations, application
of the definition of recruitment and placement in Article 13(b) is
unavoidable.

G.R. Nos. L-58674-77

July 11, 1990

PEOPLE OF THE PHILIPPINES, petitioner,


vs.
HON. DOMINGO PANIS, Presiding Judge of the Court of First Instance of
Zambales & Olongapo City, Branch III and SERAPIO ABUG, respondents.

CRUZ, J:
The basic issue in this case is the correct interpretation of Article 13(b) of
P.D. 442, otherwise known as the Labor Code, reading as follows:
(b) Recruitment and placement' refers to any act of canvassing, enlisting,
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.
Four informations were filed on January 9, 1981, in the Court of First
Instance of Zambales and Olongapo City alleging that Serapio Abug,
private respondent herein, "without first securing a license from the
Ministry of Labor as a holder of authority to operate a fee-charging
employment agency, did then and there wilfully, unlawfully and criminally
operate a private fee charging employment agency by charging fees and
expenses (from) and promising employment in Saudi Arabia" to four
separate individuals named therein, in violation of Article 16 in relation to
Article 39 of the Labor Code. 1
Abug filed a motion to quash on the ground that the informations did not
charge an offense because he was accused of illegally recruiting only one
person in each of the four informations. Under the proviso in Article 13(b),
he claimed, there would be illegal recruitment only "whenever two or
more persons are in any manner promised or offered any employment for
a fee. " 2

The view of the private respondents is that to constitute recruitment and


placement, all the acts mentioned in this article should involve dealings
with two or mre persons as an indispensable requirement. On the other
hand, the petitioner argues that the requirement of two or more persons
is imposed only where the recruitment and placement consists of an offer
or promise of employment to such persons and always in consideration of
a fee. The other acts mentioned in the body of the article may involve
even only one person and are not necessarily for profit.
Neither interpretation is acceptable. We fail to see why the proviso should
speak only of an offer or promise of employment if the purpose was to
apply the requirement of two or more persons to all the acts mentioned in
the basic rule. For its part, the petitioner does not explain why dealings
with two or more persons are needed where the recruitment and
placement consists of an offer or promise of employment but not when it
is done through "canvassing, enlisting, contracting, transporting, utilizing,
hiring or procuring (of) workers.
As we see it, the proviso was intended neither to impose a condition on
the basic rule nor to provide an exception thereto but merely to create a
presumption. The presumption is that the individual or entity is engaged
in recruitment and placement whenever he or it is dealing with two or
more persons to whom, in consideration of a fee, an offer or promise of
employment is made in the course of the "canvassing, enlisting,
contracting, transporting, utilizing, hiring or procuring (of) workers. "
The number of persons dealt with is not an essential ingredient of the act
of recruitment and placement of workers. Any of the acts mentioned in
the basic rule in Article 13(b) win constitute recruitment and placement
even if only one prospective worker is involved. The proviso merely lays
down a rule of evidence that where a fee is collected in consideration of a
promise or offer of employment to two or more prospective workers, the
individual or entity dealing with them shall be deemed to be engaged in
the act of recruitment and placement. The words "shall be deemed"
create that presumption.

14

This is not unlike the presumption in article 217 of the Revised Penal
Code, for example, regarding the failure of a public officer to produce
upon lawful demand funds or property entrusted to his custody. Such
failure shall be prima facie evidence that he has put them to personal
use; in other words, he shall be deemed to have malversed such funds or
property. In the instant case, the word "shall be deemed" should by the
same token be given the force of a disputable presumption or of prima
facie evidence of engaging in recruitment and placement. (Klepp vs. Odin
Tp., McHenry County 40 ND N.W. 313, 314.)
It is unfortunate that we can only speculate on the meaning of the
questioned provision for lack of records of debates and deliberations that
would otherwise have been available if the 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 public discussion or consultation, the promulgator
heeding only his own counsel or those of his close advisers in their lofty
pinnacle of power. The not infrequent results are rejection, intentional or
not, of the interest of the greater number and, as in the instant case,
certain esoteric provisions that one cannot read against the background
facts usually reported in the legislative journals.
At any rate, the interpretation here adopted should give more force to the
campaign against illegal recruitment and placement, which has
victimized many Filipino workers seeking a better life in a foreign land,
and investing hard- earned savings or even borrowed funds in pursuit of
their dream, only to be awakened to the reality of a cynical deception at
the hands of theirown countrymen.
WHEREFORE, the Orders of June 24, 1981, and September 17, 1981, are
set aside and the four informations against the private respondent
reinstated. No costs.
SO ORDERED.

15

Republic of the Philippines


SUPREME COURT
Manila
SECOND DIVISION

G.R. No. 113161

August 29, 1995

PEOPLE OF THE PHILIPPINES, plaintiff-appellee,


vs.
LOMA GOCE y OLALIA, DAN GOCE and NELLY D. AGUSTIN, accused. NELLY
D. AGUSTIN, accused-appellant.

REGALADO, J.:
On January 12, 1988, an information for illegal recruitment committed by
a syndicate and in large scale, punishable under Articles 38 and 39 of the
Labor Code (Presidential Decree No. 442) as amended by Section 1(b) of
Presidential Decree No. 2018, was filed against spouses Dan and Loma
Goce and herein accused-appellant Nelly Agustin in the Regional Trial
Court of Manila, Branch 5, alleging
That in or about and during the period comprised between May 1986 and
June 25, 1987, both dates inclusive, in the City of Manila, Philippines, the
said accused, conspiring and confederating together and helping one
another, representing themselves to have the capacity to contract, enlist
and transport Filipino workers for employment abroad, did then and there
willfully and unlawfully, for a fee, recruit and promise employment/job
placement abroad, to (1) Rolando Dalida y Piernas, (2) Ernesto Alvarez y
Lubangco, (3) Rogelio Salado y Savillo, (4) Ramona Salado y Alvarez, (5)
Dionisio Masaya y de Guzman, (6) Dave Rivera y de Leon, (7) Lorenzo
Alvarez y Velayo, and (8) Nelson Trinidad y Santos, without first having
secured the required license or authority from the Department of Labor. 1
On January 21, 1987, a warrant of arrest was issued against the three
accused but not one of them was arrested. 2 Hence, on February 2, 1989,
the trial court ordered the case archived but it issued a standing warrant
of arrest against the accused. 3
Thereafter, on learning of the whereabouts of the accused, one of the
offended parties, Rogelio Salado, requested on March 17, 1989 for a copy
of the warrant of arrest. 4 Eventually, at around midday of February 26,

1993, Nelly Agustin was apprehended by the Paraaque police. 5 On


March 8, 1993, her counsel filed a motion to revive the case and
requested that it be set for hearing "for purposes of due process and for
the accused to immediately have her day in court" 6 Thus, on April 15,
1993, the trial court reinstated the case and set the arraignment for May
3, 1993, 7 on which date of Agustin pleaded not guilty 8 and the case
subsequently went to trial.
Four of the complainants testified for the prosecution. Rogelio Salado was
the first to take the witness stand and he declared that sometime in
March or April, 1987, he was introduced by Lorenzo Alvarez, his brotherin-law and a co-applicant, to Nelly Agustin in the latter's residence at
Factor, Dongalo, Paraaque, Metro Manila. Representing herself as the
manager of the Clover Placement Agency, Agustin showed him a job
order as proof that he could readily be deployed for overseas
employment. Salado learned that he had to pay P5,000.00 as processing
fee, which amount he gave sometime in April or May of the same year. He
was issued the corresponding receipt. 9
Also in April or May, 1987, Salado, accompanied by five other applicants
who were his relatives, went to the office of the placement agency at
Nakpil Street, Ermita, Manila where he saw Agustin and met the spouses
Dan and Loma Goce, owners of the agency. He submitted his bio-data and
learned from Loma Goce that he had to give P12,000.00, instead of the
original amount of P5,000.00 for the placement fee. Although surprised at
the new and higher sum, they subsequently agreed as long as there was
an assurance that they could leave for abroad. 10
Thereafter, a receipt was issued in the name of the Clover Placement
Agency showing that Salado and his aforesaid co-applicants each paid
P2,000.00, instead of the P5,000.00 which each of them actually paid.
Several months passed but Salado failed to leave for the promised
overseas employment. Hence, in October, 1987, along with the other
recruits, he decided to go to the Philippine Overseas Employment
Administration (POEA) to verify the real status of Clover Placement
Agency. They discovered that said agency was not duly licensed to recruit
job applicants. Later, upon learning that Agustin had been arrested,
Salado decided to see her and to demand the return of the money he had
paid, but Agustin could only give him P500.00. 11
Ramona Salado, the wife of Rogelio Salado, came to know through her
brother, Lorenzo Alvarez, about Nelly Agustin. Accompanied by her
husband, Rogelio, Ramona went to see Agustin at the latter's residence.
Agustin persuaded her to apply as a cutter/sewer in Oman so that she
could join her husband. Encouraged by Agustin's promise that she and
her husband could live together while working in Oman, she instructed

16

her husband to give Agustin P2,000.00 for each of them as placement


fee, or the total sum of P4,000.00. 12
Much later, the Salado couple received a telegram from the placement
agency requiring them to report to its office because the "NOC" (visa) had
allegedly arrived. Again, around February, or March, 1987, Rogelio gave
P2,000.00 as payment for his and his wife's passports. Despite follow-up
of their papers twice a week from February to June, 1987, he and his wife
failed to leave for abroad. 13
Complainant Dionisio Masaya, accompanied by his brother-in-law, Aquiles
Ortega, applied for a job in Oman with the Clover Placement Agency at
Paraaque, the agency's former office address. There, Masaya met Nelly
Agustin, who introduced herself as the manager of the agency, and the
Goce spouses, Dan and Loma, as well as the latter's daughter. He
submitted several pertinent documents, such as his bio-data and school
credentials. 14
In May, 1986, Masaya gave Dan Goce P1,900.00 as an initial
downpayment for the placement fee, and in September of that same
year, he gave an additional P10,000.00. He was issued receipts for said
amounts and was advised to go to the placement office once in a while to
follow up his application, which he faithfully did. Much to his dismay and
chagrin, he failed to leave for abroad as promised. Accordingly, he was
forced to demand that his money be refunded but Loma Goce could give
him back only P4,000.00 in installments. 15
As the prosecution's fourth and last witness, Ernesto Alvarez took the
witness stand on June 7, 1993. He testified that in February, 1987, he met
appellant Agustin through his cousin, Larry Alvarez, at her residence in
Paraaque. She informed him that "madalas siyang nagpapalakad sa
Oman" and offered him a job as an ambulance driver at the Royal
Hospital in Oman with a monthly salary of about $600.00 to $700.00. 16
On March 10, 1987, Alvarez gave an initial amount of P3,000.00 as
processing fee to Agustin at the latter's residence. In the same month, he
gave another P3,000.00, this time in the office of the placement agency.
Agustin assured him that he could leave for abroad before the end of
1987. He returned several times to the placement agency's office to
follow up his application but to no avail. Frustrated, he demanded the
return of the money he had paid, but Agustin could only give back
P500.00. Thereafter, he looked for Agustin about eight times, but he
could no longer find her. 17
Only herein appellant Agustin testified for the defense. She asserted that
Dan and Loma Goce were her neighbors at Tambo, Paraaque and that
they were licensed recruiters and owners of the Clover Placement Agency.

Previously, the Goce couple was able to send her son, Reynaldo Agustin,
to Saudi Arabia. Agustin met the aforementioned complainants through
Lorenzo Alvarez who requested her to introduce them to the Goce couple,
to which request she acceded. 18
Denying any participation in the illegal recruitment and maintaining that
the recruitment was perpetrated only by the Goce couple, Agustin denied
any knowledge of the receipts presented by the prosecution. She insisted
that the complainants included her in the complaint thinking that this
would compel her to reveal the whereabouts of the Goce spouses. She
failed to do so because in truth, so she claims, she does not know the
present address of the couple. All she knew was that they had left their
residence in 1987. 19
Although she admitted having given P500.00 each to Rogelio Salado and
Alvarez, she explained that it was entirely for different reasons. Salado
had supposedly asked for a loan, while Alvarez needed money because
he was sick at that time. 20
On November 19, 1993, the trial court rendered judgment finding herein
appellant guilty as a principal in the crime of illegal recruitment in large
scale, and sentencing her to serve the penalty of life imprisonment, as
well as to pay a fine of P100,000.00. 21
In her present appeal, appellant Agustin raises the following arguments:
(1) her act of introducing complainants to the Goce couple does not fall
within the meaning of illegal recruitment and placement under Article
13(b) in relation to Article 34 of the Labor Code; (2) there is no proof of
conspiracy to commit illegal recruitment among appellant and the Goce
spouses; and (3) there is no proof that appellant offered or promised
overseas employment to the complainants. 22 These three arguments
being interrelated, they will be discussed together.
Herein appellant is accused of violating Articles 38 and 39 of the Labor
Code. Article 38 of the Labor Code, as amended by Presidential Decree
No. 2018, provides that any recruitment activity, including the prohibited
practices enumerated in Article 34 of said Code, undertaken by nonlicensees or non-holders of authority shall be deemed illegal and
punishable under Article 39 thereof. The same article further provides
that illegal recruitment shall be considered an offense involving economic
sabotage if any of these qualifying circumstances exist, namely, (a) when
illegal recruitment is committed by a syndicate, i.e., if it is carried out by
a group of three or more persons conspiring and/or confederating with
one another; or (b) when illegal recruitment is committed in large scale,
i.e., if it is committed against three or more persons individually or as a
group.

17

At the outset, it should be made clear that all the accused in this case
were not authorized to engage in any recruitment activity, as evidenced
by a certification issued by Cecilia E. Curso, Chief of the Licensing and
Regulation Office of the Philippine Overseas Employment Administration,
on November 10, 1987. Said certification states that Dan and Loma Goce
and Nelly Agustin are neither licensed nor authorized to recruit workers
for overseas
employment. 23 Appellant does not dispute this. As a matter of fact her
counsel agreed to stipulate that she was neither licensed nor authorized
to recruit applicants for overseas employment. Appellant, however,
denies that she was in any way guilty of illegal recruitment. 24
It is appellant's defensive theory that all she did was to introduce
complainants to the Goce spouses. Being a neighbor of said couple, and
owing to the fact that her son's overseas job application was processed
and facilitated by them, the complainants asked her to introduce them to
said spouses. Allegedly out of the goodness of her heart, she complied
with their request. Such an act, appellant argues, does not fall within the
meaning of "referral" under the Labor Code to make her liable for illegal
recruitment.
Under said Code, recruitment and placement refers to any act of
canvassing, enlisting, contracting, transporting, utilizing, hiring or
procuring workers, and includes referrals, contract services, promising or
advertising for employment, locally or abroad, whether for profit or not;
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. 25 On the other hand, referral is
the act of passing along or forwarding of an applicant for employment
after an initial interview of a selected applicant for employment to a
selected employer, placement officer or bureau. 26

Despite Agustin's pretensions that she was but a neighbor of the Goce
couple, the testimonies of the prosecution witnesses paint a different
picture. Rogelio Salado and Dionisio Masaya testified that appellant
represented herself as the manager of the Clover Placement Agency.
Ramona Salado was offered a job as a cutter/sewer by Agustin the first
time they met, while Ernesto Alvarez remembered that when he first met
Agustin, the latter represented herself as "nagpapaalis papunta sa
Oman." 28 Indeed, Agustin played a pivotal role in the operations of the
recruitment agency, working together with the Goce couple.
There is illegal recruitment when one gives the impression of having the
ability to send a worker abroad." 29 It is undisputed that appellant gave
complainants the distinct impression that she had the power or ability to
send people abroad for work such that the latter were convinced to give
her the money she demanded in order to be so employed. 30
It cannot be denied that Agustin received from complainants various
sums for purpose of their applications. Her act of collecting from each of
the complainants payment for their respective passports, training fees,
placement fees, medical tests and other sundry expenses unquestionably
constitutes an act of recruitment within the meaning of the law. In fact,
appellant demanded and received from complainants amounts beyond
the allowable limit of P5,000.00 under government regulations. It is true
that the mere act of a cashier in receiving money far exceeding the
amount allowed by law was not considered per se as "recruitment and
placement" in contemplation of law, but that was because the recipient
had no other participation in the transactions and did not conspire with
her co-accused in defrauding the victims. 31 That is not the case here.

Hence, the inevitable query is whether or not appellant Agustin merely


introduced complainants to the Goce couple or her actions went beyond
that. The testimonial evidence hereon show that she indeed further
committed acts constitutive of illegal recruitment. All four prosecution
witnesses testified that it was Agustin whom they initially approached
regarding their plans of working overseas. It was from her that they
learned about the fees they had to pay, as well as the papers that they
had to submit. It was after they had talked to her that they met the
accused spouses who owned the placement agency.

Appellant further argues that "there is no evidence of receipts of


collections/payments from complainants to appellant." On the contrary,
xerox copies of said receipts/vouchers were presented by the prosecution.
For instance, a cash voucher marked as Exhibit D, 32 showing the receipt
of P10,000.00 for placement fee and duly signed by appellant, was
presented by the prosecution. Another receipt, identified as Exhibit E, 33
was issued and signed by appellant on February 5, 1987 to acknowledge
receipt of P4,000.00 from Rogelio and Ramona Salado for "processing of
documents for Oman." Still another receipt dated March 10, 1987 and
presented in evidence as Exhibit F, shows that appellant received from
Ernesto Alvarez P2,000.00 for "processing of documents for Oman." 34

As correctly held by the trial court, being an employee of the Goces, it


was therefore logical for appellant to introduce the applicants to said
spouses, they being the owners of the agency. As such, appellant was
actually making referrals to the agency of which she was a part. She was
therefore engaging in recruitment activity. 27

Apparently, the original copies of said receipts/vouchers were lost, hence


only xerox copies thereof were presented and which, under the
circumstances, were admissible in evidence. When the original writing
has been lost or destroyed or cannot be produced in court, upon proof of
its execution and loss or destruction, or unavailability, its contents may

18

be proved by a copy or a recital of its contents in some authentic


document, or by the recollection of witnesses. 35

said malefactors duly taken into custody. We see no reason why the same
doctrinal rule and course of procedure should not apply in this case.

Even assuming arguendo that the xerox copies presented by the


prosecution as secondary evidence are not allowable in court, still the
absence thereof does not warrant the acquittal of appellant. In People vs.
Comia, 36 where this particular issue was involved, the Court held that
the complainants' failure to ask for receipts for the fees they paid to the
accused therein, as well as their consequent failure to present receipts
before the trial court as proof of the said payments, is not fatal to their
case. The complainants duly proved by their respective testimonies that
said accused was involved in the entire recruitment process. Their
testimonies in this regard, being clear and positive, were declared
sufficient to establish that factum probandum.

WHEREFORE, the appealed judgment of the court a quo is hereby


AFFIRMED in toto, with costs against accused-appellant Nelly D. Agustin.
SO ORDERED.

Indeed, the trial court was justified and correct in accepting the version of
the prosecution witnesses, their statements being positive and
affirmative in nature. This is more worthy of credit than the mere
uncorroborated and self-serving denials of appellant. The lame defense
consisting of such bare denials by appellant cannot overcome the
evidence presented by the prosecution proving her guilt beyond
reasonable doubt. 37
The presence of documentary evidence notwithstanding, this case
essentially involves the credibility of witnesses which is best left to the
judgment of the trial court, in the absence of abuse of discretion therein.
The findings of fact of a trial court, arrived at only after a hearing and
evaluation of what can usually be expected to be conflicting testimonies
of witnesses, certainly deserve respect by an appellate court. 38
Generally, the findings of fact of the trial court on the matter of credibility
of witnesses will not be disturbed on appeal. 39
In a last-ditch effort to exculpate herself from conviction, appellant argues
that there is no proof of conspiracy between her and the Goce couple as
to make her liable for illegal recruitment. We do not agree. The evidence
presented by the prosecution clearly establish that appellant
confabulated with the Goces in their plan to deceive the complainants.
Although said accused couple have not been tried and convicted,
nonetheless there is sufficient basis for appellant's conviction as
discussed above.
In People vs. Sendon, 40 we held that the non-prosecution of another
suspect therein provided no ground for the appellant concerned to fault
the decision of the trial court convicting her. The prosecution of other
persons, equally or more culpable than herein appellant, may come later
after their true identities and addresses shall have been ascertained and

19

Republic of the Philippines


SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 125044 July 13, 1998
IMELDA DARVIN, petitioner,
vs.
HON. COURT OF APPEALS and PEOPLE OF THE
PHILIPPINES, respondents.
ROMERO, J.:
Before us is a petition for review of the decision of the Court of Appeals in
C.A.-G.R. No. 15624 dated January 31, 1996, 1 which affirmed in toto the
judgment of the Regional Trial Court, Branch 19, Bacoor, Cavite,
convicting accused-appellant, Imelda Darvin for simple illegal recruitment
under Article 38 and Article 39, in relation to Article 13 (b) and (c), of the
Labor Code as amended.
Accused-appellant was charged under the following information:
That on our about the 13th day of April 1992, in the
Municipality of Bacoor, Province of Cavite, Philippines and
within the jurisdiction of this Honorable Court, the abovenamed accused, through fraudulent representation to one
Macaria Toledo to the effect that she has the authority to
recruit workers and employees for abroad and can
facilitate the necessary papers in connection thereof, did,
then and there, wilfully, unlawfully and feloniously, hire,
recruit and promise a job abroad to one Macaria Toledo,
without first securing the necessary license and permit
from the Philippine Overseas Employment Administration
to do so, thereby causing damage and prejudice to the
aforesaid Macaria Toledo.
Contrary to law. 2
The evidence for the prosecution, based on the testimony of private
respondent, Macaria Toledo, shows that sometime in March, 1992, she
met accused-appellant Darvin in the latter's residence at Dimasalang,
Imus, Cavite, through the introduction of their common friends, Florencio
Jake Rivera and Leonila Rivera. In said meeting, accused-appellant
allegedly convinced Toledo that by giving her P150,000.00, the latter can
immediately leave for the United States without any appearance before
the U.S. embassy. 3 Thus, on April 13, 1992, Toledo gave Darvin the
amount of P150,000.00, as evidenced by a receipt stating that the
"amount of P150,000.00 was for U.S. Visa and Air fare." 4After receiving
the money, Darvin assured Toledo that she can leave within one week.
However, when after a week, there was no word from Darvin, Toledo went
to her residence to inquire about any development, but could not find
Darvin. Thereafter, on May 7, 1992, Toledo filed a complaint with the

Bacoor Police Station against Imelda Darvin. Upon further investigation, a


certification was issued by the Philippine Overseas Employment
Administration (POEA) stating that Imelda Darvin is neither licensed nor
authorized to recruit workers for overseas employment. 5 Accusedappellant was then charged for estafa and illegal recruitment by the
Office of the Provincial Prosecutor of Cavite.
Accused-appellant, on the other hand, testified that she used to be
connected with Dale Travel Agency and that in 1992, or thereabouts, she
was assisting individuals in securing passports, visa, and airline tickets.
She came to know Toledo through Florencio Jake Rivera, Jr. and Leonila
Rivera, alleging that Toledo sought her help to secure a passport, US visa
and airline tickets to the States. She claims that she did not promise any
employment in the U.S. to Toledo. She, however, admits receiving the
amount of P150,000.00 from the latter on April 13, 1992 but contends
that it was used for necessary expenses of an intended trip to the United
States of Toledo and her friend, Florencio Rivera 6 as follows. P45,000.00
for plane fare for one person; P1,500.00 for passport, documentation and
other incidental expenses for each person; P20,000.00 for visa application
cost for each person; and P17,000.00 for services. 7 After receiving the
money, she allegedly told Toledo that the papers will be released within
45 days. She likewise testified that she was able to secure Toledo's
passport on April 20, 1992 and even set up a date for an interview with
the US embassy. Accused alleged that she was not engaged in illegal
recruitment but merely acted as a travel agent in assisting individuals to
secure passports and visa.
In its judgment rendered on June 17, 1993, the Bacoor, Cavite RTC found
accused-appellant guilty of the crime of simple illegal recruitment but
acquitted her of the crime of estafa. The dispositive portion of the
judgment reads as follows:
WHEREFORE, premises considered, accused Imelda
Darvin is hereby found guilty beyond reasonable doubt of
the crime of Simple Illegal Recruitment for having
committed the prohibited practice as defined by
paragraph (b) of Article 34 and punished by paragraph (c)
of Article 39 of the Labor Code, as amended by PD 2018.
Accused Imelda Darvin is hereby ordered to suffer the
prison term of Four (4) years, as minimum, to Eight (8)
years, as maximum; and to pay the fine of P25,000.00.
Regarding her civil liability, she is hereby ordered to
reimburse the private complainant the sum of
P150,000.00 and attorney's fees of P10,000.00.
She is hereby acquitted of the crime of Estafa.
SO ORDERED. 8
On appeal, the Court of Appeals affirmed the decision of the trial court in
toto, hence this petition.
Before this Court, accused-appellant assails the decision of the trial and
appellate courts in convicting her of the crime of simple illegal

20

recruitment. She contends that based on the evidence presented by the


prosecution, her guilt was not proven beyond reasonable doubt.
We find the appeal impressed with merit.
Art. 13 of the Labor Code, as amended, provides the definition of
recruitment and placement as:
. . .; b) any act of canvassing, enlisting, contracting,
transporting, utilizing, hiring, or procuring workers, and
includes referrals, contract services, promising or
advertising for employment locally or abroad, whether for
profit or not: Provided, that any person or entity which, in
any manner, offers or promises for a fee employment to
two or more persons shall be deemed engaged in
recruitment and placement.
On the other hand, Article 38 of the Labor Code provides:
a) Any recruitment activities, including the prohibited
practices enumerated under Article 34 of this Code, to be
undertaken by non-licensees or non-holders of authority
shall be deemed illegal and punishable under Article 39 of
this Code. The Ministry of Labor and Employment or any
law enforcement officer may initiate complaints under
this Article.
xxx xxx xxx
Applied to the present case, to uphold the conviction of accusedappellant, two elements need to be shown: (1) the person charged with
the crime must have undertaken recruitment activities; and (2) the said
person does not have a license or authority to do so. 9
In this case, private respondent, Macaria Toledo alleged that she was
offered a job in the United States as nursing aide 10 by accused-appellant.
In her direct examination, she testified as follows:
Atty. Alejandro:
Q : How did you come to know the
accused?
Witness : I was introduced by my two
friends. One of whom is my best friend.
That according to them, this accused has
connections and authorizations, that she
can make people leave for abroad, sir.
Court : What connections?
Witness : That she has connections with
the Embassy and with people whom she
can approach regarding work abroad,
your Honor.
xxx xxx xxx
Q : When you came to meet for the first
time in Imus, Cavite, what transpired in
that meeting of yours?

A : When I came to her house, the


accused convinced me that by means of
P150,000.00, I will be able to leave
immediately without any appearance to
any embassy, non-appearance, Sir.
Q : When you mentioned non-appearance,
as told to you by the accused, precisely,
what do you mean by that?
A : I was told by the accused that nonappearance, means without working
personally for my papers and through her
efforts considering that she is capacitated
as according to her I will be able to leave
the country, Sir.
xxx xxx xxx
Atty. Alejandro : What transpired after the
accused told you all these things that you
will be able to secure all the documents
without appearing to anybody or to any
embassy and that you will be able to work
abroad?
Witness : She told me to get ready with
my P150,000.00, that is if I want to leave
immediately, Sir.
Atty. Alejandro : When you mentioned
kaagad, how many days or week?
Witness : She said that if I will able to part
with my P150,000.00. I will be able to
leave in just one week time, Sir.
xxx xxx xxx 11
The prosecution, as evidence, presented the certification issued by the
POEA that accused-appellant Imelda Darvin is not licensed to recruit
workers abroad.
It is not disputed that accused-appellant does not have a license or
authority to engage in recruitment activities. The pivotal issue to be
determined, therefore, is whether the accused-appellant indeed engaged
in recruitment activities, as defined under the Labor Code. Applying the
rule laid down in the case of People v. Goce, 12 to prove that accusedappellant was engaged in recruitment activities as to commit the crime of
illegal recruitment, it must be shown that the accused appellant gave
private respondent the distinct impression that she had the power or
ability to send the private respondent abroad for work such that the latter
was convinced to part with her money in order to be so employed.
In this case, we find no sufficient evidence to prove that accused-ppellant
offered a job to private respondent. It is not clear that accused gave the
impression that she was capable of providing the private respondent work
abroad. What is established, however, is that the private respondent gave

21

accused-appellant P150,000.00. The claim of the accused that the


P150,000.00 was for payment of private respondent's air fare and US visa
and other expenses cannot be ignored because the receipt for the
P150,000.00, which was presented by both parties during the trial of the
case, stated that it was "for Air Fare and Visa to USA." 13 Had the amount
been for something else in addition to air fare and visa expenses, such as
work placement abroad, the receipt should have so stated.
By themselves, procuring a passport, airline tickets and foreign visa for
another individual, without more, can hardly qualify as recruitment
activities. Aside from the testimony of private respondent, there is
nothing to show that accused-appellant engaged in recruitment activities.
We also note that the prosecution did not present the testimonies of
witnesses who could have corroborated the charge of illegal recruitment,
such as Florencio Rivera, and Leonila Rivera, when it had the opportunity
to do so. As it stands, the claim of private respondent that accusedappellant promised her employment abroad is uncorroborated. All these,
taken collectively, cast reasonable doubt on the guilt of the accused.
This Court can hardly rely on the bare allegations of private respondent
that she was offered by accused-appellant employment abroad, nor on
mere presumptions and conjectures, to convict the latter. No sufficient
evidence was shown to sustain the conviction, as the burden of proof lies
with the prosecution to establish that accused-appellant indeed engaged
in recruitment activities, thus committing the crime of illegal recruitment.
In criminal cases, the burden is on the prosecution to prove, beyond
reasonable doubt, the essential elements of the offense with which the
accused is charged; and if the proof fails to establish any of the essential
elements necessary to constitute a crime, the defendant is entitled to an
acquittal. Proof beyond reasonable doubt does not mean such a degree of
proof as, excluding the possibility of error, produces absolute certainty.
Moral certainty only is required, or that degree of proof which produces
conviction in an unprejudiced mind. 14
At best, the evidence proffered by the prosecution only goes so far as to
create a suspicion that accused-appellant probably perpetrated the crime
charged. But suspicion alone is insufficient, the required quantum of
evidence being proof beyond reasonable doubt. When the People's
evidence fail to indubitably prove the accused' s authorship of the crime
of which he stands accused, then it is the Court's duty, and the accused's
right, to proclaim his innocence. Acquittal, therefore, is in order. 15
WHEREFORE, the appeal is hereby GRANTED and the decision of the
Court of Appeals in CA-G.R. CR No. 15624 dated January 31, 1996, is
REVERSED and SET ASIDE. Accused-appellant Imelda Darvin is hereby
ACQUITTED on ground of reasonable doubt. Accordingly, let the accused
be immediately released from her place of confinement unless there is
reason to detain her further for any other legal or valid cause. No
pronouncement as to costs.
SO ORDERED.
Narvasa, C.J., Kapunan and Purisima, JJ., concur.

# Footnotes
1 Penned by Associate Justice Angelina Sandoval
Gutierrez; Paras and Vasquez, Jr., concurring.
2 Records, p. 6.
3 TSN, December 22, 1992, p. 15.
4 Exhibits, p. 1.
5 Exhibits, p. 2.
6 TSN, January 28, 1993, p. 17.
7 Rollo, p. 29.
8 Records, pp. 78-85.
9 People v. Pantaleon, G.R. No. 108107, June 19, 1997.
10 TSN, December 22, 1992, pp. 29-30.
11 TSN, December 22, 1992, pp. 14-16
12 247 SCRA 780 (1995).
13 Exhibit A for the prosecution, Exhibit 5 for the defense,
Folder of Exhibits, p. 1.
14 Rule 133, Section 2, Rules of Court.
15 People v. Geron, G.R. No. 113788, October 17, 1997.

22

Republic of the Philippines


SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-58011-12 July 20, 1982
VIR-JEN SHIPPING AND MARINE SERVICES, INC., petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, ROGELIO BISULA,
RUBEN ARROZA, JUAN GACUTNO, LEONILO ATOK, NILO CRUZ,
ALVARO ANDRADA, NEMESIO ADUG, SIMPLICIO BAUTISTA, ROMEO
ACOSTA, and JOSE ENCABO, respondents.
Maximo A. Savellano, Jr., for petitioner.
Solicitor General and Romeo M. Devera for respondents.
BARREDO, J.:
Petition for certiorari seeking the annulment or setting aside, on the
grounds of excess of jurisdiction and grave abuse of discretion, of the
decision of the National Labor Relations Commission in consolidated NSB
Cases Nos. 2250-79 and 2252-79 thereof, 1 the dispositive portion of
which reads thus:
WHEREFORE, the Decision appealed from should be, as it
is hereby modified in this wise:
Respondent Vir-jen Shipping and Marine Services, Inc., is
hereby ordered to pay the following to the complainant
Seamen who have not withdrawn from the case, namely:
Capt. Rogelio H. Bisula, Ruben Arroza, Juan Gacutno,
Leonilo Atok, Nilo Cruz, Alvaro Andrada, Nemesio Adug,
Simplicio Bautista, Romeo Acosta and Jose Encabo:
1. their earned wages corresponding to
the period from 16 to 19 April 1979;
2. the wages corresponding to the
unexpired portion of their contracts, as
adjusted by the respondent Company
effective 1 March 1979;
3. the adjusted representation allowances
of the complainant Seamen who served
as officers and who have not withdrawn
from the case, namely: Capt. Rogelio
Bisula, Ruben Arroza, Juan Gacutno,
Leonilo Atok and Nilo Cruz;
4. their vacation pay equivalent to onehalf () month's pay after six (6) months
of service and another one-half ()
month's pay after the completion of the
one-year contract;
5. their tanker service bonus equivalent to
one-half () month's pay; and

6. their earned overtime pay from l to l9


April 1979.
The Secretariat of the National Seamen Board is also
hereby directed to issue within five (5) days from receipt
of this Decision the necessary clearances to the
suspended Seamen. (pp. 86-87, Record.)
The factual and legal background of these cases is related most
comprehensively in the "Manifestation and Comment" filed by the
Solicitor General. It is as follows:
The records show that private respondents have a
manning contract for a period of one (1) year with
petitioner in representation of its principal Kyoei Tanker
Co. Ltd. The terms and conditions of said contract were
based on the standard contract of the NSB. The manning
contract was approved by the NSB. Aware of the problem
that vessels not paying rates imposed by the
International Transport Workers Federation (ITF) would be
detained or interdicted in foreign ports controlled by the
ITF, petitioner and private respondents executed a side
contract to the effect that should the vessel M/T Jannu be
required to pay ITF rates when it calls on any ITF
controlled foreign port, private respondents would return
to petitioner the amounts so paid to them.
On March 23, 1979, the master of the vessel who is one
of the private respondents sent a cable to petitioner,
while said vessel was en route to Australia which is an ITF
controlled port, stating that private respondents were not
contented with the salary and benefits stipulated in the
manning contract, and demanded that they be given 50%
increase thereof, as the "best and only solution to solve
ITF problem." Apparently, reference to "ITF" in private
respondents' cable made petitioner apprehensive since
the vessel at that time was en route to Australia, an ITF
port, and would be interdicted and detained thereat,
should private respondents denounce the existing
manning contract to the ITF and should petitioner refuse
or be unable to pay the ITF rates, which represent more
than 100% of what is stipulated in the manning contract.
Placed under such situation, petitioner replied by cable
dated March 24, 1979 to private respondents, as follows:
... WE ARE SURPRISED WITH THIS
SUDDEN CHANGE OF ATTITUDE AND
DEMANDS FOR WE HAVE THOROUGHLY
EXPLAINED AND DISCUSSED ALL
MATTERS PERTAINING TO YOUR PRESENT
EMPLOYMENT AND BELIEVED THAT WE
FULLY UNDERSTOOD EACH OTHER ... WE

23

SHALL SUFFER AND ABSORB


CONSIDERABLE AMOUNT OF LOSSES
WITH YOUR DEMAND OF FIFTY PERCENT
AS WE ARE ALREADY COMMITTED TO
PRINCIPALS THEREFORE TO MINIMIZE
OUR LOSSES WE PROPOSE AN INCREASE
OF TWENTY FIVE PERCENT ON YOUR
BASIC PAYS PLUS THE SPECIAL
COMPENSATION FOR THIS PARTICULAR
VOYAGE ... (p. 7 Comment)
On March 26, 1979, petitioner wrote a letter to the NSB
denouncing the conduct of private respondents as
follows:
This is to inform you that on March 24, 1979, we received
a cable from Capt. Rogelio Bisula, Master of the abovereference vessel reading as follows:
URINFO ENTIRE JANNU OFFICERS AND
CREW NOT CONTENTED WITH PRESENT
SALARY BASED ON VOLUME OF WORK
TYPE OF SHIP WITH HAZARDOUS CARGO
AND REGISTERED IN A WORLDWIDE
TRADE STOP WHAT WE DEMAND IS ONLY
FIFTY PERCENT INCREASE BASED ON
PRESENT BASIC SALARY STOP THIS
DEMAND THE BEST AND ONLY SOLUTION
TO SOLVE PROBLEM DUE YOUR PRESENT
RATES ESPECIALLY TANKERS VERY FAR IN
COMPARISON WITH OTHER SHIPPING
AGENCIES IN MANILA.
to which we replied on March 24, 1979, as follows:
WE ARE SURPRISED WITH SUDDEN
CHANGE, OF ATTITUDE AND DEMANDS
FOR WE HAVE THOROUGHLY EXPLAINED
AND DISCUSSED ALL MATTERS
PERTAINING TO YOUR PRESENT
EMPLOYMENT AND BELIEVED THAT WE
FULLY UNDERSTOOD EACH OTHER STOP
FRANKLY SPEAKING WE SHALL SUFFER
AND ABSORB CONSIDERABLE AMOUNT OF
LOSSES WITH YOUR DEMAND OF FIFTY
PERCENT AS WE ARE COMMITTED TO
PRINCIPALS THEREFORE TO MINIMIZE
OUR LOSSES WE PROPOSE AN INCREASE
OF TWENTY FIVE PERCENT ON YOUR
BASIC PAY STOP YOUR UNDERSTANDING
AND FULL COOPERATION WILL BE VERY

MUCH APPRECIATED STOP PLS CONFIRM


SOONEST.
On March 25, 1979 we received the following
communication from the Master of said vessel:
OFFICERS AND CREW HESITATING TO
GIVE UP DEMAND OF FIFTY PERCENT
INCREASE BUT FOR THE GOOD AND
HARMONIOUS RELATIONSHIP ON BOARD
AND RECONSIDERING YOUR SUPPOSED
TO BE LOSSES IN CASE WE
CONDITIONALLY COOPERATE WITH YOUR
PROPOSED INCREASE AND TWENTY FIVE
PERCENT BASED ON INDIVIDUAL BASIC
PAY WITH THE FOLLOWING TERMS AND
CONDITION STOP EFFECTIVITY OF
TWENTY FIVE PERCENT INCREASE MUST
BE MARCH/79 STOP INCREASE MUST BE
COLLECTIBLE ON BOARD EFFECTIVE
ABOVE DATE UNTIL DISEMBARKATION
STOP ALLOTMENT TO ALLOTEES REMAIN
AS IS STOP REASONABLE REPALLOWS
FOR ALL OFFICERS BE GIVEN EFFECTIVE
MARCH/79 STOP BONUS FOR 6 MONTHS
SERVICES RENDERED BE COLLECTIBLE ON
BOARD STOP OFFICERS/CREW 30PCT O/T
SHUD BE BASED NEW UPGRADED SALARY
SCALE STOP MASTER/CHENGR/CHMATE
SPECIAL COMPENSATION GIVE BY YOUR
COMPANY PRIOR DEPARTURE MANILA
REMAIN AS IS.
to which we replied on March 25, 1979, as follows:
WE AGREE ALL CONDITIONS AND
CONFIRM IT SHALL BE PROPERLY
ENFORCED STOP WILL PREPARE ALL
REQUIRED DOCUMENTS AND WILL BE
DELIVERED ON BOARD.
For your further information and guidance, the
abovementioned demands of the officers and crew (25%
increase in basic pay, increase in overtime pay and
increase in representation allowance) involve an
additional amount of US$3,096.50 per month, which our
company is not in a position to shoulder.
We are, therefore, negotiating with our Principals, Messrs.
Kyoei Tanker Company, Limited, for the amendment of
our agency agreement in the sense that our monthly fee
be increased correspondingly. We have sent our Executive
Vice-President, Mr. Ericson M. Marquez, to Japan to

24

represent us in said negotiation and we will inform you of


the results thereof. (Annex "E" of Petition)
In view of private respondents' conduct and breach of
contract, petitioner's principal, Kyoei Tanker Co., Ltd.
terminated the manning contract in a letter dated April 4,
1979, which reads in part;
This is with reference to your letter of
March 26, 1979 and our conference with
Mr. Ericson Marquez in Tokyo on March 29,
1979, regarding the unexpected and
unreasonable demand for salary increase
of your officers and crew on the above
vessel.
Frankly speaking, we fully agree with you
that this action taken by your officers and
crew in demanding increase in their
salaries and overtime after being on
board for only three months was very
unreasonable. Considering the
circumstances when the demand was
made, we believe that their action was
definitely abusive and plain blackmail.
We regret to advise you that since this
vessel is only under our management, we
also cannot afford to grant your request
for an increase of US$3,096.50 effective
March 1, 1979, as demanded by your
crew. Your crew should respect their
employment contracts which was
approved by your government and your
National Seamen Board should make sure
that all seamen should follow their
contracts.
For your information, we have discussed
this matter with the owners of the vessel,
particularly the attitude and mentality of
your crew on board. Our common and
final decision is not to grant your request
but also to terminate our Manning
Agreement effective upon crew's change
when the vessel arrives at Japan or at any
possible port about end April, 1979.
We regret that we have to take this
drastic step in order to protect ourselves
from further problem if we continue with
your present officers and crew because if
their demand is granted, there is no

guarantee that they will not demand


further increase in salaries in the future
when they have chance. Also, as you
know the present freight market is very
bad and we cannot afford an unexpected
increase in cost of operations and more
so with a troublesome and unreliable crew
that you have on board.
In view of the circumstances mentioned
above, please consider this letter as our
official notice of cancellation of our
Manning Agreement effective upon the
date of crew's change. (Annex "F" of
Petition).
On April 6, 1979, petitioner wrote the NSB asking
permission to cancel the manning contract with
petitioner, said letter reading as follows:
This is with reference to our letter of
March 26, 1979, informing you of the
sudden and unexpected demands of the
officers and crew of the above vessel for a
twenty five percent (25%) increase in
their basic salaries and overtime, plus an
increase of the officers' representation
allowances, involving a total of
US$3,096.50 per month.
As we have advised in our aforementioned letter, we have negotiated
with our Principals, Messrs. Kyoei Tanker
Co., Ltd., to amend our Agency
Agreement by increasing our monthly fee
by US$3,096.50, and attached herewith is
copy of our letter dated March 26, 1979
duly received by our Principals on March
31, 1979.
In this connection, we wish to inform your
good office that our Principals have
refused to consider our request for an
increase and have also advised us of their
final decision to terminate our Manning
Agreement effective upon vessel's arrival
in Japan on or about April 17, 1979.
For your further information, we enclose
herewith xerox copy of the Kyoei Tanker
Co., Ltd. letter dated April 4, 1979, which
we just received today via airfreight.

25

This is the first time that a cancellation of


this nature has been made upon us, and
needless to say, we feel very
embarrassed and disappointed but we
have no other alternative but to accept
the said cancellation.
In view of the foregoing, we respectfully
request your authority to cancel our
Contracts of Employment and to
disembark the entire officers and crew
upon vessel's arrival in Japan on or about
17th April, 1979. (Annex "G", of Petition).
On April 10, 1979, the NSB through its Executive Director
Cresencio C. Dayao wrote petitioner authorizing it to
cancel the manning contract. The NSB letter to petitioner
reads:
We have for acknowledgment your letter
of 6 April 1979 in connection with the
above-captioned subject.
Considering the circumstances
enumerated in your letter under reply
(and also in your letter of March 1979),
we authorize you to cancel your contracts
of employment with the crew/members of
the M/T "Jannu" and you may now
disembark the whole compliment upon
the vessel's arrival in Japan on or about
April 17, 1979.
We trust that you will not encounter any
difficulty in connection with the
disembarkation of the crew/members.
(Annex "H" of Petition).
The seamen were accordingly disembarked in Japan and
repatriated to Manila. They then filed a complaint with the
NSB for illegal dismissal and non-payment of wages. After
trial, the NSB found that the termination of the services of
the seamen before the expiration of their employment
contract was justified "when they demanded and in fact
received from the company wages over and above the
contracted rates which in effect was an alteration and
modification of a valid and existing contract ..." (Annex
"D", Petition). The seamen appealed the decision to the
NLRC which reversed the decision of the NSB and
required the petitioner to pay the wages and other
monetary benefits corresponding to the unexpired portion
of the manning contract on the ground that the
termination of the said contract by petitioner was without

valid cause. Hence, the present petition. (Pp. 2-9,


Manifestation & Comment)
In its petition which contains practically the same facts and
circumstances above-quoted, petitioner submits for Our resolution the
following issues:
I. That the respondent NLRC acted without or in excess of
its jurisdiction, or with grave abuse of discretion in said
NSB Cases Nos. 2250-79 and 2252-79 when it adjudged
the petitioner Vir-jen liable to the respondents-seamen for
terminating its employment contracts with them despite
the fact that prior authorization to terminate or cancel
said employment contracts and to disembark the said
respondents was first secured from and was granted by,
the National Seamen Board, the government agency
primarily charged with the supervision and discipline of
seamen and the approval and enforcement of
employment contracts;
II. That the respondent NLRC acted with grave abuse of
discretion, or without or in excess of its jurisdiction, or
contrary to law and the evidence when it concluded that
"there is nothing on record to show that respondentsseamen made any threat that they would complain or
report to the ITF their low wage rates if their demand or
proposal for a wage increase was not met", despite the
fact that in their cable of March 23, 1979 to the
petitioner, the said respondents made the following
threats and impositions: "WHAT WE DEMAND IS ONLY 50
PERCENT INCREASE BASED ON PRESENT BASIC SALARY
STOP THIS DEMAND THE BEST AND ONLY SOLUTION TO
SOLVE ITF PROBLEMS", that there are other substantial
and conclusive evidence to support the existence of such
threats and intimidation which the respondent NLRC
failed and refused to consider; and that the evidence
substantially and conclusively shows that the petitioner
Vir-jen was, in fact, threatened and intimidated into giving
such salary increases due to such cabled threats and
intimidation of the private respondents;
III. That the respondent NLRC acted with grave abuse of
discretion or without or in excess of jurisdiction when it
concluded, in effect, that the respondents-seamen acted
within their rights when they imposed upon their
employer, the herein petitioner, their demands for salary
and wages increases, in disregard of their existing NSBapproved contracts of employment, notwithstanding the
substantial and conclusive findings of the NSB, the trier of
facts which is in the best position to assess the special
circumstances of the case, that the said respondents

26

breached their respective contracts of employment with


the petitioner, without securing the prior approval of the
NSB as required by the New Labor Code, as amended,
and with the use of threats, intimidation and coercion,
when they demanded and, in fact, received from the
petitioner salaries or wages over and above their
contracted rates which the petitioner was "constrained to
make" in order "to prevent the vessel from being
interdicted and/or detained by the ITF because at the
time the demand for salary increase was made the vessel
was en route to Kwinana, Australia (via Senipah,
Indonesia), a port were the ITF is strong and militant," "for
in the event the vessel would be detained and/or
interdicted the company (petitioner) would suffer more
losses than paying the seamen 25 % increase of their
salary";
IV. That respondent NLRC committed a grave abuse of
discretion or exceeded its jurisdiction or acted contrary to
law when it failed and refused to admit and take into
account the ADDENDUM AGREEMENT, dated December
27, 1978, entered into between the petitioner and the
private respondents, which would have further
enlightened the respondent NLRC on the "ITF PROBLEMS"
insinuated by the private respondents in their cable of
March 23, 1979 to threaten and intimidate the petitioner
into granting the salary increases in question;
V. That respondent NLRC committed a grave abuse of
discretion or acted without or in excess of its jurisdiction
or contrary to law when it ordered the petitioner Vir-jen to
pay, among others, to the private respondents their
"wages corresponding to the unexpired portion of their
contracts" the said petitioner having already lost its trust
and confidence on the private respondents; that the
employer cannot be legally compelled to continue with
the employment of persons in whom it has already lost its
trust and confidence; that payment to the private
respondents of their wages corresponding to the
unexpired portion of their contract would be tantamount
to retaining their services after their employer, petitioner
herein, had already lost its faith and trust in them;
VI. That the respondent NLRC committed a grave abuse of
discretion or exceeded its jurisdiction in still including and
considering ROMEO ACOSTA as one of the appellants in
the two (2) aforementioned NSB cases and making him a
beneficiary of its decision, dated July 8, 1981, modifying
the NSB decision, dated July 2, 1980, despite the fact that
way back on October 23, 1980, Acosta had already filed

in said NSB cases a pleading, entitled "SATISFACTION OF


JUDGMENT" in which he manifested that he was not
appealing the NSB decision anymore as the judgment in
his favor was already fully satisfied by the petitioner Virjen;
VII. That the respondent NLRC had no more jurisdiction to
entertain private respondents' appeal because the NSB
decision became final and executory for failure of said
respondents to serve on he petitioner a copy of their
"APPEAL AND MEMORANDUM OF APPEAL" within the ten
(10) day reglementary period for appeal and even after
the expiration of said period;
VIII. That the respondent NLRC had no jurisdiction to
entertain the appeal by the private respondents based on
the supposedly verified "APPEAL AND MEMORANDUM OF
APPEAL" because the supposed signature of the person
purportedly verifying the same is forged; and that the
new counsel appearing for the private respondents on
appeal was not even authorized by some of the private
respondents to appear for them;
IX. That the respondent NLRC committed a grave abuse of
discretion or acted without or in excess of jurisdiction or
contrary to law when it misconstrued, misinterpreted and
misapplied to the instant case the ruling of this Honorable
Supreme Court in Wallem Philippines Shipping, Inc. vs.
The Hon. Minister of Labor, et al., G.R No. 50734, prom.
February 20, 1981, despite distinct and fundamental
differences in facts between the Wallem Case and the
instant case;
X. That the respondent NLRC committed a grave abuse of
discretion or acted without or in excess of its jurisdiction
or acted contrary to law when it failed and refused to
consider and pass upon the substantial issues of
jurisdiction, law and facts and matters of public interests
raised by the petitioner in its URGENT
MOTION/APPELLEE'S MEMORANDUM ON APPEAL, dated
April 24, 1981, and in its MOTION FOR RECONSIDERATION
AND/OR NEW TRIAL, dated July 20, 1981, filed in the two
(2) cases;
XI. That the respondent NLRC committed a grave abuse of
discretion or acted without or in excess of jurisdiction or
contrary to law when it failed and refused to reconsider
and set aside its decision subject-matter of this petition
for certiorari, considering Chat if allowed to stand, the
said decision will open the floodgates for Filipino seamen
to disregard NSB-approved contracts of employment with
impunity, leading to the destruction of the Philippine

27

manning industry, which is a substantial source of


revenue for the Philippine government, as well as the
image of the Filipino seamen who will undoubtedly
become known far and wide as one prone to violate the
solemnity of employment contracts, compounded with
the use of threats, intimidation and blackmail, thereby
necessitating a policy decision by this Honorable Supreme
Court on the matter for the survival of the manning
industry. (Pp. 5-9, Record.)
We shall deal first with the jurisdictional issue (No. VII above) to the effect
that the appeal of private respondents from the decision of the National
Seamen's Board against them was filed out of time, considering that copy
of said decision was received by them on July 9, 1980 and they filed their
memorandum of appeal only on July 23, 1980 or fourteen (14) days later,
whereas under article 223 of the Labor Code which governs appeals from
the National Seamen's Board to the National Labor Relations Commission
per Article 20(b) of the Code provides that such appeals must be made
within ten (10) days.
In this connection, it is contended in the comment of private respondents
that petitioner has overlooked that under Section 7, Rule XIII,, Book V of
the Implementing Rules of the Labor Code, the ten-day period specified in
Article 223 refers to working days and that this Court has already upheld
such construction and manner of computation in Fabula vs. NLRC, G.R.
No. 54247, December 19, 1980. Now, computing the number of working
days from July 9 to July 23, 1980 We find that there were exactly ten (10)
days, hence, if We adhere to Fabula, the appeal in question must be held
to have been made on time.
But petitioner herein maintains that the Minister of Labor may not, under
the guise of issuing implementing rules of a law as authorized by the law
itself, go beyond the clear and unmistakable language of the law and
expand it at his discretion. In other words, since Article 223 of the Labor
Code literally provides thus:
Appeal. Decisions, awards, or orders of the Labor
Arbiters or compulsory arbitrators are final and executory
unless appealed to the Commission by any or both of the
parties within ten (10) days from receipt of such awards,
orders, or decisions. Such appeal may be entertained only
on any of the following grounds:
(a) If there is a prima facie evidence of abuse of discretion
on the part of the labor Arbiter or compulsory arbitrator;
(b) If the decision, order, or award was secured through
fraud or coercion, including graft and corruption;
(c) If made purely on questions of law; and
(d) If serious errors in the findings of facts are raised
which would cause grave or irreparable damage or injury
to the appellant.

To discourage frivolous or dilatory appeals, the


Commission or the Labor Arbiter shall impose reasonable
penalty, including fines or censures, upon the erring
parties.
the implementing rules may not provide that the said period should be
computed on the basis of working days. This, indeed, is a legal issue not
brought up nor passed upon squarely in Fabula, and petitioner prays that
this Court rule on the point once and for all.
After mature and careful deliberation, We have arrived at the conclusion
that the shortened period of ten (10) days fixed by Article 223
contemplates calendar days and not working days. We are persuaded to
this conclusion, if only because We believe that it is precisely in the
interest of labor that the law has commanded that labor cases be
promptly, if not peremptorily, dispose of. Long periods for any acts to be
done by the contending parties can be taken advantage of more by
management than by labor. Most labor claims are decided in their favor
and management is generally the appellant. Delay, in most instances,
gives the employers more opportunity not only to prepare even ingenious
defenses, what with well-paid talented lawyers they can afford, but even
to wear out the efforts and meager resources of the workers, to the point
that not infrequently the latter either give up or compromise for less than
what is due them.
All the foregoing notwithstanding, and bearing in mind the peculiar
circumstances of this case, particularly, the fact that private respondents
must have been misled by the implementing rules aforementioned. We
have opted to just the same pass on the merits of the substantial issues
herein, even as We admonish all concerned to henceforth act in
accordance with our foregoing view. Verily, the Minister of Labor has no
legal power to amend or alter in any material sense whatever the law
itself unequivocally specifies or fixes.
We need not ponder long on the contention of petitioner regarding the
alleged forgery of the signature of respondent Rogelio Bisula and the
alleged lack of authority of the new counsel of respondents, Atty. B. C.
Gonzales, to appear for them. Resolution of these minor points,
considering their highly controversial nature, so much so that they could
rationally to our mind, be decided either way, may be dispensed with in
order that We may go to the more transcendentally important main
issues before Us.
As far as issue No. VI above regarding the inclusion of Romeo Acosta
among the beneficiaries of the decision herein in question, there can be
no reason why petitioner should not be sustained. It is undenied that
Acosta has filed a formal satisfaction of judgment. Indeed, it is quite
relevant to mention at this point that originally, there were twenty-eight
(28) claimants against petitioner, This number was first reduced to fifteen
(15) then to ten (10) and finally to nine (9) now, by withdrawal of the
claimants themselves. These series of withdrawals lend no little degree to
added enlightenment of the discussion hereunder of the adverse

28

positions of the remaining claimants, on the one hand, and the petitioner,
on the other.
To begin with, let it be borne in mind that seamen's contracts of the
nature We have before Us now are not ordinary ones. There are specie,
laws and rules governing them precisely due to the peculiar
circumstances that surround them. Relatedly, We quote from the
Manifestation and Comment of the Solicitor General:
The employment contract in question is unlike any
ordinary contract of employment, for the reason that a
manning contract involves the interests not only of the
signatories thereto, such as the local Filipino recruiting
agent (herein petitioner), the foreign owner of the vessel,
and the Filipino crew members (private respondents), but
also those of other Filipino seamen in general as well as
the country itself. Accordingly, Article 12 of the Labor
Code provides that it is the policy of the State not only "to
insure and regulate the movement of workers in
conformity with the national interest" but also "to insure
careful selection of Filipino workers for overseas
employment in order to protect the good name of the
Philippines abroad". The National Seamen Board (NSB),
which is the agency created to implement said state
policies, is thus empowered pursuant to Article 20 of the
Labor Code "to secure the best possible terms and
conditions of employment for seamen, and to insure
compliance thereof" not only on the part of the owners of
the vessel but also on the part of the crew members
themselves.
Conformably to the power vested in the NSB, the law
requires that all manning contracts shall be approved by
said agency. It likewise provides that "it shall be unlawful
to substitute or alter any previously approved and
certified employment contract without the approval of
NSB" (Section 35, Rules and Regulations in the
recruitment and placement of Filipino seamen aboard
foreign going ships) and authorizes the employer or
owner of the vessel to terminate such contract for just
causes (Section 32, Ibid). Among such just causes for
termination are "bad conduct and unwanted presence
prejudicial to the safety of the ship" (Guidebook for
shipping employers, page 8) and material breach of said
contract.
The stringent rules governing Filipino seamen aboard
foreign, going ships are dictated by national interest.
There are about 120,000 registered seamen with the NSB.
Only about 50,000 of them are employed and 70,000 or
so are still hoping to be employed. Those Filipino seamen

already employed on board foreign-going ships should


accordingly conduct themselves with utmost propriety
and abide strictly with the terms and conditions of their
employment contract, and the NSB should see to that, in
order that owners of foreignowned vessels will not only be
encouraged to renew their employment contract but will
moreover be induced to hire other Filipino seamen as
against other competing foreign sailors. (Pp. 15-17,
Manifestation & Comment of the Solicitor General)
Pertinently, the Labor Code of the Philippines provides for the creation of
a National Seamen Board (NSB) thus:
ART. 20. National Seamen Board.(a) A National Seamen
Board is hereby created which shall developed and
maintain a comprehensive program for Filipino seamen
employed overseas. It shall have the power and duty:
(1) To provide free placement services for
seamen;
(2) To regulate and supervise the
activities of agents or representatives of
shipping companies in the hiring of
seamen for overseas employment; and
secure the best possible terms of
employment for contract seamen workers
and secure compliance therewith; and
(3) To maintain a complete registry of all
Filipino seamen.
(b) The Board shall have original and exclusive jurisdiction
over all matters or cases including money claims,
involving employer-employee relations, arising out of or
by virtue of any law or contracts involving Filipino seamen
for overseas employment. The decision of the Board shall
be appealable to the National Labor Relations
Commission upon the same grounds provided in Article
223 hereof. The decisions of the National Labor Relations
Commission shall be final and inappealable.
The finality and unappealability of the decisions of the National Labor
Relations Commission conferred by the above provisions in cases of the
nature now before Us necessarily limits Our power in the premises to the
exercise of Our plenary certiorari jurisdiction. And under the scheme of
said Article 20, in relation to Article 223 of the same Code, the reviewing
authority of the Commission is limited only to the following instances:
Appeal.Decisions, awards, or orders of the Labor
Arbiters or compulsory arbitrators are final and executory
unless appealed to the Commission by any or both of the
parties within ten (10) days from receipt of such awards,
orders, or decisions. Such appeal may be entertained only
on any of the following grounds:

29

(a) If there is prima facie evidence of abuse of discretion


on the part of the Labor Arbiter or compulsory arbitrator;
(b) If the decision, order or award was secured through
fraud or coercion, including graft and corruption;
(c) If made purely on questions of law;and
(d) If serious errors in the findings of facts are raised
which would cause grave or irreparable damage or injury
to the appellant.
To discourage frivolous or dilatory appeals, the
Commission or the Labor Arbiter shall impose reasonable
penalty, including fines or censures, upon the erring
parties.
In all cases, the appellant shall furnish a copy of the
memorandum of appeals to the other party who shall file
an answer not later than ten (10) days from receipt
thereof.
xxx xxx xxx
In the light of the foregoing perspective of law and policy, all the other
issues raised by petitioner may be disposed of together. Anyway they
revolve basically around the following questions:
1. In the event of conflict in the conclusions of the National Seamen
Board, on the one hand, and the National Labor Relations Commission on
the other, on a matter that is fundamentally an issue of fact, which one
should prevail?
2. Under the facts of this case, was it legally proper for the Commission to
disregard the permission granted by the NSB to the petitioner to
disembark and discontinue the employment of herein respondents?
3. As a matter of fact, did respondent breach their contract with
petitioner, so as to entitle the latter to take the punitive action herein
complained of?
4. Was the conformity of petitioner to pay respondents additional
compensation of 25% secured by said respondents thru threats of grave
injury to petitioner who, therefore, acceded to such increase
involuntarily?
We feel that the resolution of the instant controversy hinges on whether
or not it was violative of law and policy in the light of the peculiar nature
of the contracts in question as already explained at the outset of this
opinion, for the respondents to make the demand for an increase of 50%
of their respective wages stipulated in their NSB approved contracts while
they were already in the midst of the voyage to Kwinana, Australia (an ITF
controlled post), pointedly mentioning in their cablegram that such
"demand (was) the best and only solution to solve ITF problem"?
On these questions, the NSB found and held:
1. Whether or not the Seamen breached their respective
employment contracts;
2. Whether or not the Seamen were illegally dismissed by
the Company;

3. Whether or not the monetary claims of the seamen are


valid and meritorious;
4. Whether or not the monetary claims of the Company
are valid and meritorious;
5. Whether or not disciplinary action should be taken
against the Seamen.
With respect to the first issue, the Board believes that the
answer should be in the affirmative. This is so for the
Seamen demanded and in fact received from the
Company wages over and above their contracted rates,
which in effect is an alteration or modification of a valid
and subsisting contract; and the same not having been
done thru mutual consent and without the prior approval
of the Board the alteration or modification is contrary to
the provisions of the New Labor Code, as amended, more
particularly Art. 34 (i) thereof which states that:
Art. 34. Prohibited practices.It shall be unlawful for any
individual, entity, licensee or holder of authority:
xxx xxx xxx
(i) To substitute or alter employment contracts approved
and verified by the Department of Labor from the time of
actual signing thereof by the parties up to and including
the period of expiration of the same without the approval
of the Department of Labor;
xxx xxx xxx
The revision of the contract was not done thru mutual
consent for the Company did not voluntarily agree to an
increase of wage, but was only constrained to make a
counter-proposal of 25% increase to prevent the vessel
from being interdicted and/or detained by the ITF because
at the time the demand for salary increase was made the
vessel was enroute to Kwinana, Australia (via Senipah,
Indonesia), a port where the ITF is strong and militant.
However, a perusal of the Cables (Exhs. "D" & "F", "3" &
"5") coming from the Seamen addressed to the Company
would show the threatening manner by which the desire
for a salary increase was manifested, contrary to their
claim that it was merely a request. Aforesaid cables are
hereby quoted for ready reference:
RYCV-11-12-13-14 RECEIVED URINFO ENTIRE JANNU
OFFICERS AND CREW NOT AGREEABLE WITH YOUR
SUGGESTIONS THEY ARE NOT CONTENTED WITH
PRESENT SALARY BASED IN VOLUME OF WORKS TYPE OF
SHIP WITH HAZARDOUS CARGO AND REGISTERED IN A
WORLD WIDE TRADE STOP REGARDING URCABV-14
OFFICERS AND CREW NOT INTERESTED IN ITF
MEMBERSHIP IF NOT ACTUALLY PAID WITH ITF RATE STOP

30

WHAT WE DEMAND IS ONLY 50 PERCENT INCREASE


BASED ON PRESENT BASIC SALARY STOP THIS DEMAND
THE BEST AND ONLY SOLUTION TO SOLVE ITF PROBLEM
DUE YOUR PRESENT RATE ESPECIALLY IN TANKERS VERY
FAR IN COMPARISON WITH OTHER SHIPPING AGENCIES IN
MANILA STOP LET US SHARE EQUALLY THE FRUITS OF
LONELINESS SACRIFICES AND HARDSHIP WE ARE
ENCOUNTERING ON BOARD WE REMAIN ...
REURVIR-JEN-15 OFFICERS AND CREW
HESITATING TO GIVE UP DEMAND OF 50
PERCENT INCREASE BUT FOR GOOD AND
HARMONIOUS RELATIONSHIP ONBOARD
AND RECONSIDERING YOUR SUPPOSE TO
BE LOSSES IN CASE WE CONDITIONALLY
COOPERATE WITH YOUR PROPOSE
INCREASE OF 25 PERCENT BASED ON
INDIVIDUAL MONTHLY BASIC PAY WITH
FOLLOWING TERMS AND CONDITIONS AA
EFFECTIVITY OF 25 PERCENT INCREASE
MUST BE MARCH/79 PLUS SPECIAL
COMPENSATION MENTIONED URCAB
VIRJEN-14 BB NEW COMPANY CIRCULAR
ON UPGRADED NEW SALARY SCALE DULY
SIGNED AND APPROVED BE FORWARDED
KWINANA AUSTRALIA OR HANDCARRIED
BY YOUR REPRESENTATIVE TO DISCUSS
MATTERS OFFICIALLY CC 25 PERCENT
INCREASE MUST BE COLLECTABLE
ONBOARD EFFECTIVE ABOVE DATE UNTIL
DISEMBARKATION STOP ALLOTMENT TO
ALLOTTEES REMAIN AS IS DD
REASONABLE REPALLOWS FOR ALL
OFFICERS BE GIVEN EFFECTIVE MARCH/79
EE BONUS FOR 6 MONTHS SERVICE
RENDERED BE COLLECTIBLE ONBOARD FF
OFFICERS/CREW 30 PERCENT' OT SHOULD
BE BASED NEW UPGRADED SALARY
SCALE GG MASTER/CHENGR/CHMATE
SPECIAL COMPENSATION GIVE BY YOUR
COMPANY PRIOR DEPARTURE MANILA BE
REMAIN AS IS STOP THE ABOVE TERMS
AND CONDITIONS SHOULD BE PROPERLY
ENFORCE AND DOCUMENTED ALSO
COPIES AND FORWARDED ONBOARD ON
ARRIVAL KWINANA AUSTRALIA
CONFIRM ...

While the Board recognizes the rights of the Seamen to


seek higher wages provided the increase is arrived at thru
mutual consent, it could not however, sanction the same
if the consent of the employer is secured thru threats,
intimidation or force. In the case at bar, the Company was
compelled to accede to the demand of the Seamen for a
salary increase to forestall the possibility of the vessel
being interdicted by the ITF at Kwinana, Australia, for in
the event the vessel would be detained and/or interdicted
the Company would suffer more losses than paying the
Seamen 25% increase of their
With respect to the second issue, the Board believes that
the termination of the services of the Seamen was legal
and in accordance with the provisions of their respective
employment contracts. Considering the findings of the
Board that the Seamen breached their contracts, their
subsequent repatriation was justified. While it may be
true that the Seamen were hired for a definite period their
services could be terminated prior to the completion of
the fun term thereof for a just and valid cause.
It may be stated in passing that Vir-jen Shipping & Marine
Services, Inc., despite the fact that it was compelled to
accede to a 25% salary increase for the Seamen, tried to
convince its principal Kyoei Tanker, Ltd. to an adjustment
in their agency fee to answer for the 25% increase, but
the latter not only denied the request but likewise
terminated their Manning, Agreement. The Seamen's
breach of their employment contracts and the
subsequent termination of the Manning Agreement of Virjen Shipping & Marine Services, Inc. with the Kyoei Tanker,
Ltd., justified the termination of the Seamen's services.
With respect to the third issue the following are the
findings of the Board:
As regards the claim of the Seamen for the payment of
their salaries for the unexpired portion of their
employment contracts the same should be denied. This is
so because of the findings of the Board that their
dismissal was legal and for a just cause. Awards of this
nature is proper only in cases where a seafarer is illegally
dismissed. (Pp. 148-151, Record)
Disagreeing with the foregoing findings of the NSB, the NLRC held:
The more important issue to be resolved in this case,
however, is the question of whether the Seamen violated
their employment contracts when they demanded or
proposed and in fact accepted wages over and above
their contracted rates. Stated otherwise, could the
Seamen rightfully demand or propose the revision of their

31

employment contracts? While they concede that they are


bound by their contracts, the Seamen claim that their
cable asking for the revision of their contract rates was a
valid exercise of their right to grievance.
The right to grievance is recognized in this jurisdiction
even if there is a valid and subsisting contract, especially
where there are supervening facts or events of which a
party to the contract was not apprised at the time of its
conclusion. As pointed out by the Supreme Court in the
Wallem case, supra, it "is a basic right of all working men
to seek greater benefits not only for themselves but for
their families as well ..." and the "Constitution itself
guarantees the promotion of social welfare and protection
to labor." In this care, records show that it was impressed
on the Seamen that their vessel would be trading only in
Caribbean ports. This was admitted by the Company in its
cable to the Seamen on 10 January 1979. After the
conclusion of their contracts, however, and after they had
boarded the vessel, the principals of the Company
directed the vessel to can at different ports or to engage
in "worldwide trade" which is admittedly more difficult
and hazardous than trading in only one maritime area.
This is a substantial change in the original understanding
of the parties. Thus, in their cable asking for a wage
increase, the Seamen expressed their dissatisfaction by
informing the Company that they were "not contented
with (their) present salary based on volume of work, type
of ship with hazardous cargo and registered in world wide
trade."(emphasis supplied.) With such change in the
original agreement of the parties, we find that the
Seamen were well within their rights in demanding for the
revision of their contract rates.
We also note that the Company was not exactly in good
faith in contracting the service of the Seamen. During his
briefing in Manila, the Company instructed the master of
the vessel, complainant Bisula, to prepare two (2) sets of
payrolls, one set reflecting the actual salary rates of the
Seamen and the other showing higher rates based on
Panamanian Shipping articles which approximate those
prescribed by ITF for its member seafarers. In compliance
with this instruction, Bisula prepared the latter payrolls.
These payrolls were intended for the consumption of ITF if
and when the vessel called on ports where ITF rates were
operational, the evident purpose being to show ITF that
the Company was paying the same rates prescribed by
said labor federation and thereby prevent the interdiction
of the vessel. And when the vessel was en route to

Australia, an ITF-controlled port, the Company arranged


for the Seamen's membership with ITF and actually paid
their membership fees without their knowledge and
consent, thereby exposing them to the danger of being
disciplined by the NSB Secretariat for having affiliated
with ITF. All these have to be mentioned here to better
understand the feelings of the Seamen when they asked
for the revision of their wage rates. 2 (Pp. 83-85, Record)
Comparing these two decisions, We do not hesitate to hold that the NLRC
overstepped the boundaries of its reviewing authority and was
overlenient. Whether or not respondents had breached their contract wit
petitioner is a factual issue, the peculiar nuances of which were better
known to the NSB, the fact-finding authority. Indeed, even if it was
nothing more than the interpretation of the cablegram sent by
respondents to petitioner on March 23, 1979 that were the only question
to be resolved, that is, whether or not it carried with it or connoted a
threat which naturally panicked petitioner, which, to be sure, could be a
question of law, still, as We see it, the conclusion of the NLRC cannot be
justified.
The NLRC ruled that in the exercise of their right to present any
grievances they had and in their desire to alleviate their condition, it was
but well and proper for respondents to make a proposal for increase of
their wages, which petitioner could accept or reject. We do not see it that
way.
Definitely, the reference in the cablegram to the conformity of petitioner
to respondents' demand was "the best and only solution to ITF problem"
had an undertone which naturally placed petitioner hardly in a position to
answer them with a flat denial. It would be the acme of naivete for Us to
go along with the contention that the cablegram of March 23, 1979 was a
mere proposal and had no trace nor tint of threat at all. Indeed, it is
alleged in the petition and there is no denial thereof that on April 23,
1979, Chief Mate Jacobo Catabay of the M/T Jannu, who was among the
claimants at first, revealed that:
On April 23, 1979, Chief Mate Jacobo H. Catabay of the
M/T Jannu, in a signed statement-report to the petitioner,
marked and admitted in evidence as Exh. "10-A" during
the trial stated, as follows:
On our departure at Keelung, we did not
have destination until three (3) days later
that Harman cabled us to proceed to
Senipah, Indonesia to load fun cargo to be
discharged at Kwinana ,
Australia. Captain told everyone that if
only we stayed so long with the ship, he
will report to ITF personally in order to get
back wages. In view that we only worked
for three months so the back wages is so

32

small and does not worth. From that time


on, Chief Engr. and Captain have a nightly
closed door conference they arrived at
the conclusion to ask for 50% salary
increase and they have modified a certain
platforms. They certainly believe that Virjen have no choice because the vessel is
going to ITF port so they called a general
meeting conducted at the bridge during
my duty hours in the afternoon. All engine
and deck personnel were present in that
meeting. (Pp. 19-20, Record.)
Well taken, indeed, is the Solicitor General's observation that:
Private respondents'conduct is uncalled for. While
employees may be free to request their employers to
increase their wages, they should not use threat of such a
nature and in such a situation as to put the employer at
their complete mercy and with no choice but to accede to
their demands or to face bankruptcy. This is what private
respondents did, which is an act of bad conduct
prejudicial to the vessel, and a material breach of the
existing manning contract. It has adverse consequences
that led not only to the termination of the existing
manning contract but to the rejection by Kyoei Tanker Co.
Ltd. of petitioner's offer to supply crew members to three
other vessels, thereby depriving unemployed Filipino
seamen of the opportunity to work on said vessels. Thus,
in a letter dated May 17, 1979, Kyoei Tanker Co. Ltd.
wrote petitioner as follows:
This is with reference to your letter of Feb. 23, 1979,
submitting your manning offers on our three (3) managed
vessels for delivery as follows:
1. M/V "Maya" crew,delivery end May, 1979,
2. M/T "Cedar" 28 crew, delivery end June, 1979,
3. M/T "Global Oath" 30 crew, delivery end, June 1979.
In this connection, we wish to advise you that, as a result
of our unpleasant experience with your crew on the M/T
"Jannu", owners have decided to give the manning
contracts on the above three vessels to other foreign
crew instead of your company.
We deeply regret that although your crew performance on
our other four (4) vessels have been satisfactory, we were
unable to persuade owners to consider your Philippine
crew because of the bad attitude and actuation of your
crew manned on board M/T "Jannu".
As we have already advised you, owners have spent more
than US$30,000.00 to replace the crew of M/T "Jannu" in

Japan last April 19, 1979 which would have been saved if
your crew did not violate their employment contracts.
(Annex "K"of Petition),
In the light of all the foregoing and the law and policy on
the matter, it is submitted that there was valid
justification on the part of petitioner and/or its principal to
terminate the manning contract. (Pp. 12-14, Manifestation
and Comment of the Solicitor General.)
At first glance it might seem that the judgment of the NLRC should have
more weight than that of NSB. Having in view, however, the set up and
relationship of these two entities framed by the Labor Code, the NSB is
not only charged directly with the administration of shipping companies
in the hiring of seamen for overseas employment by seeing to it that our
seamen "secure the best possible terms of employment for contract
seamen workers and secure compliance therewith." Its composition as of
the time this controversy arose is worth notingfor it is made up of the
Minister of Labor as Chairman, the Deputy Minister as Vice Chairman, and
a representative each of the Ministries of Foreign Affairs, National
Defense, Education and Culture, the Central Bank, the Bureau of
Employment Service, a worker's organization and an employee's
organization and the Executive Director of the Overseas Employment
Development Board. (Article 23, Labor Code) It is such a board that has to
approve all contracts of Filipino seamen (Article 18, Labor Code). And
after such approval, the contract becomes unalterable, it being "unlawful"
under Article 34 of the Code "for any individual, entity, licensee or holder
of authority: (i) to substitute or alter employment contracts approved and
verified by 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." In other words, it is not
only that contracts may not be altered or modified or amended without
mutual consent of the parties thereto; it is further necessary to have the
change approved by the Department, otherwise, the guilty parties would
be penalized.
The power of the NLRC in relation to the works and actuations of the NSB
is only appellate, according to Article 20 (b), read in relation to Article
223, principally, over questions of law, since as to factual matters, it may
exercise such appellate jurisdiction only "if errors in the findings of fact
are raised which would cause grave or irreparable damage or injury to the
appellant." (par. d)
The NLRC has noted in its decision that respondents were originally made
to believe that their ship would go only to the Caribbean ports and yet
after completing trips to Inchon, Korea and Kuwait and Keelung, Taiwan, it
was suddenly directed to call at Kwinana, Australia, an ITF controlled port.
The record shows that this imputation is more apparent than real, for
respondents knew from the very moment they were hired that world-wide
voyages or destinations were contemplated in their agreement. So much
so that corresponding steps had to be taken to avoid interference of or

33

trouble about the ITF upon the ship's arrival at ITF controlled ports. As
already stated earlier, the ITF requires the seamen working on any vessel
calling at ports controlled by them to be paid the rates fixed by the ITF
which are much higher than those provided in the contract's signed here,
to the extent of causing tremendous loss if not bankruptcy of the
employer.
And so, as revealed to the NLRC later, in anticipation precisely of such
peril to the employer and ultimate unemployment of the seamen, in the
instant case, the usual procedure undeniably known to respondents of
having two payroll's, one containing the actually agreed rates and the
other ITF rates, the latter to be shown to the ITF in order that the ship
may not be detained or interdicted in Kwinana, was followed. But
according to the NLRC, this practice constitutes deception and bad faith,
and worse, it is an effect within the prohibition against alteration of
contracts approved by the NSB, considering there is nothing to show that
NSB was made aware of the so-called addendum or side agreement to
the effect that should the ship manned by respondents be made to call an
any ITF controlled port, the contract with ITF rates would be shown and, if
for any reason, the respondents are required to be actually paid higher
rates and they are so paid, the excess over the rates agreed in the NSB
contract shall be returned to petitioner later.
It is of insubstantial moment that the side agreement or addendum was
not made known to or presented as evidence before the NSB. We are
persuaded that more or less the NSB knows that the general practice is to
have such side contracts. More importantly, the said side contracts are
not meant at all to alter or modify the contracts approved by the NSB.
Rather, they are precisely purported to enforce them to the letter, making
it clearer that even if the ships have to call at ITF controlled ports, the
same shall remain to be the real and binding agreement between the
parties, in intentional disregard of whatever the ITF may exact.
We hold that there was no bad faith in having said side contracts, the
intent thereof being to put into effect the NSB directed arrangements that
would protect the ship manning industry from unjust and ruinning effects
of ITF intervention. Indeed, examining the said side agreements, it is not
correct to say that the respondents were caught unaware, or by surprise
when they were advised that the ship would proceed to Kwinana,
Australia, even assuming they had been somehow informed that they
would sail to the Caribbean. Said side agreements textually provide:
KNOW ALL MEN BY THESE PRESENTS:
This Addendum Agreement entered into by and between
KYOEI TANKER CO., LTD., Principals, of the vessel M.T.
"JANNU", represented herein by VIR-JEN SHIPPING &
MARINE SERVICES, INC., Manila, Philippines, as Manning
Agents (hereinafter referred to as the Company),

and

The herein-mentioned officers and crew, and engaged by


the Company as crewmembers of the vessel M/T "JANNU"
with their positions, seaman certificate numbers and
signatures (hereinafter referred to as the Crewmember),
hereunder shown:
W I T N E S S E T H that:
1. WHEREAS, the Crewmember is hired and recruited as a
member of the crew on board the vessel M/T "JANNU"
with the corresponding Contracts of Employment
submitted to, verified and duly approved by the National
Seamen Board; that the employment contract referred to,
has clearly defined the rate of salary, wages, and/or
employment benefits for a period of one (1) year (or
twelve (12) months), and any extension thereof.
2. WHEREAS, the parties hereby further agree and
covenant that should the above-mentioned vessel enter,
dock or drop anchor in ports of other countries, the
Crewmember shall not demand, ask or receive, and the
Company shall have no obligation to pay the
Crewmember, salaries,, wages and/or benefits over and
above those provided for in the employment contract
submitted to, verified and approved by the National
Seamen Board, which shall remain in full force and effect
between the parties. The Company as well as the
Owners,, Charterers, Agents shall neither be held
accountable nor liable for any amount other than what is
agreed upon and stipulated in the aforesaid NSBapproved Contracts of Employment.
3. WHEREAS, the parties likewise agree that should the
vessel enter, dock or drop anchor in any foreign port, and
in the event that the Company (and/or its Owners,
Charterers, Agents), are forced, pressured, coerced or
compelled, in any way and for whatever cause or reason,
to pay the Crewmember either directly or thru their
respective allottees or other persons, salaries and
benefits higher than those rates imposed in the NSBapproved contract, the Crewmember hereby agrees and
binds himself to receive the said payment in behalf of,
and in trust for, the Company (and/or its Owners,
Charterers, Agents), and to return the said amount in full
to the Company or to its agent/s in Manila, Philippines
immediately upon his and/or his allottees receipt thereof;
the Crewmember hereby waives formal written demand
by the Company or its agent/s for the return thereof. The
Crewmember hereby fully understands that failure or
refusal by him to return to the Company the said amount,
will render him criminally liable for Estafa, as provided for

34

in the Revised Penal Code of the Philippines, and in such


case, the parties hereby agree that any criminal and/or
civil action in connection therewith shall be within the
exclusive jurisdiction of Philippine Courts.
4. WHEREAS, if, in order to avoid delays to the vessels,
the Company is forced, pressured, coerced or compelled
to sign a Collective Bargaining Agreement or any other
Agreement with any foreign union, particularly ITF or ITF
affiliated unions, and to sign new crews' contract of
employment stipulating higher wages, salaries or benefits
than the NSB-approved contract, the said agreements
and contracts shall be void from the beginning and the
Crewmember shall be deemed to have automatically
waived the increased salaries and benefits stipulated in
the said agreements and employment contracts unto and
in favor of the Company, and shall remain unalterably
bound by the rates, terms, and conditions of the NSBapproved contract.
5. WHEREAS, the parties also agree that should the
Company, as a precautionary or anticipatory measure for
the purpose of avoiding costly delays to the vessel
prejudicial to its own interest, decide to negotiate and/or
enter into any agreement in advance with any foreign
based union, particularly ITF or ITF affiliated unions, in
any foreign port where the vessel involved herein may
enter, dock or drop anchor, whatever increases in salaries
or benefits to the Crewmember that the Company may be
compelled to give, over and above those stipulated in the
NSB-approved employment contracts of the
Crewmember, shag, likewise, be deemed ineffective or
void from the beginning as far as the Crewmember is
concerned, and any such increases in salaries or benefits
which the Crewmember shall receive pursuant thereto
shall be held by the Crewmembers in trust for the
Company with the obligation to return the same
immediately upon receipt thereof, at the Company's or its
agent's office at Manila, Philippines. It is fully understood
that the rates of pay and all other terms and conditions
embodied in the NSB-approved employment contracts
shall be of continuing validity and effectivity between the
parties, irrespective of the countries or ports where the
said vessel shall enter, dock or drop anchor, and
irrespective of any agreement which the Company may
enter or may have entered into with any union,
particularly ITF or ITF affiliated unions.
6. WHEREAS, it is likewise agreed that any undertaking
made by the Company and/or the National Seamen Board

upon the request of the Company, imposed by any


foreign union, particularly ITF or ITF affiliated unions,
which will negate or render in effective any provisions of
this agreement, shall also be considered null and void
from the beginning.
7. WHEREAS, lastly, this Addendum Agreement is entered
into for the mutual interest of both parties in line with the
Company's desire to continue the service of the Filipino
crewmembers on board their vessel and the
Crewmembers'desire to keep their employment on board
the subject vessel, thus maintaining the good image of
the Filipino seamen and contributing to the development
of the Philippine manning industry.
8. That both the Company and the Crewmember agree
and bind themselves that this Agreement shall be
considered an addendum to, or as part of, the NSBapproved employment contract entered into by the
Company and the Crewmember.
IN WITNESS WHEREOF, we have hereunto affixed our
signatures this December 28, 1978 at Manila, Philippines.
THE COMPANY
VIR-JEN SHIPPING & MARINE SERVICES, INC.
By:
(SGD.) CAPT. RUBEN R.
BALTAZAR
Operations Dept.

35

THE CREWMEMBERS

N
a
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36

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84
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37

C
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5.

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A
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13
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45

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96
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38

C
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o
8.

R
o
d
o
l
f
o

O
/
S

16
21
21

S
G
D
.

O
/
S

13
71
32

S
G
D
.

14

C
r
i
s
o
s
t
o
m
o
9.

R
e
n
a
t
o
O
l
i
v
e
r
o
s

10.

39

o
g
e
l
i
o

/
S

96
35

G
D
.

P
u
m
p
m
a
n

15
72
15

S
G
D
.

O
i
l
e
r

89
46
7

S
G
D
.

S
a
r
a
z
a
11.

N
e
m
e
s
i
o
A
d
u
g

12.

F
r
a
n
c
i
s
c
o
B
e
n
e
m
e
r

40

i
t
o
13.

R
u
f
i
n
o

O
i
l
e
r

17
36
63

S
G
D
.

O
i
l
e
r

84
93
4

S
G
D
.

W
i
p
e
r

14
60
96

S
G
D
.

G
u
t
i
e
r
r
e
z
14.

J
u
o
l
R
a
m
M
a
u
l

15.

S
t
e
v
e
M
a
r
i

41


o
16.

S
i
m
p
l
i
c
i
o

C
h
i
e
f
C
o
o
k

16
91
42

S
G
D
.

S
e
c
o
n
d

15
99
60

S
G
D
.

14
40
96

S
G
D
.

B
a
u
t
i
s
t
a
17.

R
o
m
e
o
A
c
o
s
t
a

18.

D
e
l
f
i
n

C
o
o
k

M
e
s
s
m
a
n

D
a

42

g
o
h
o
y
19.

J
o
s
e
E
n
c
a
b
o

M
e
s
s
m
a
n

17
95
51

S
G
D
.

(Pp. 99-103, Annex D-1 of Petition)

43

The NLRC has cited Wallem Philippine Shipping Inc. vs. The Minister of
Labor, G. R. No. 50734-37, February 20, 1981 (102 SCRA 835). No less
than the Solicitor General maintains that said cited case is not controlling:
A careful examination of Wallem Philippine Shipping Inc.
vs. The Minister of Labor, G. R. No. 50734-37, February,
20, 1981 shows that the same is dissimilar to the case at
bar. In the Wallem case, there was an express agreement
between the employer and the ITF representative, under
which said employer bound itself to pay the crew
members salary rates similar to those of ITF. When the
crew members in the Wallem case demanded that they
be paid ITF rates, they were merely asking their employer
to comply with what had been agreed upon with the ITF
representative, which conduct on their part cannot be
said to be a violation of contract but an effort to urge
performance thereof. Such is not the situation in the case
at bar. In the case at bar, petitioner and private
respondents had a side agreement, whereby private
respondents agreed to return to petitioner whatever
amounts petitioner would be required to pay under ITF
rates. In other words, petitioner and private respondents
agreed that petitioner would not pay the ITF rate. When
private respondents used ITF as threat to secure increase
in salary, they violated the manning contract. Moreover,
in the case at bar, petitioner terminated the manning
contract only after the NSB authorized it to do so, after it
found the grounds therefor to be valid. On the other hand,
the termination of the manning contract in the Wallem
case was without prior authorization from the NSB.
It will be noted that private respondents sent a cable to
petitioner demanding an increase of 50% of their basic
salary as the only solution to the ITF problem at a time
when the vessel M/T JANNU was enroute to Australia, an
ITF port. The fact that private respondents mentioned ITF
in their cable clearly shows that if petitioner would not
accede to their demands, they would denounce petitioner
to ITF. Thus, Chief Mate Jacobo Catabay in his report
dated April 23, 1979 (Exh. 10-A) stated:
On our departure at Keelung, we did not
have destination until three days later
that Harman cabled us to proceed to
Senipah, Indonesia to load fun cargo to be
discharged at Kwinana, Australia. Captain
told everyone that if only we stayed so
long with the ship, he will report to ITF
personally in order to get back wages. In
view that we only worked for three

months so the back wages is so small and


does not worth. From that time on, Chief
Engr. and Captain have a nightly closed
door conference until they arrived at the
conclusion to ask for 50% salary increase
and they have modified a certain
platforms. They certainly believe that Virjen have no choice because the vessel is
going to ITF port so they called a general
meeting conducted at the bridge during
my duty hours in the afternoon. All
engines and deck personnel were present
in that meeting. (Emphasis supplied)
Reporting the wage scheme to the ITF would mean that
the vessel would be interdicted and detained in Australia
unless petitioner pay the ITF rates, which represent more
than 100% of what is stipulated in the manning contract.
Petitioner was thus forced to grant private respondents an
increase of 25% in their basic salary. That such grant of a
25% increase was not voluntary is shown by the fact that
petitioner immediately denounced the seamen's conduct
to NSB and subsequently asked said agency authority to
terminate the manning contract. (Pp. 10-12, Manifestation
& Comment of Solicitor General)
Summarizing, We are convinced that since the NSB, considering its official
role in matters like those now before Us, is the fact-finding body, and
there is no sufficient cogency in the NLRC's finding that there was no
threat employed by respondents on petitioner, and, it appearing further
that the well prepared Manifestation and Comment of the Solicitor
General supports the decision of the NSB, which body, to Our mind, was
in a better position than the NLRC to appraise the relevant nuances of the
actuations of both parties, We are of the considered view that the
decision of the NLRC under question constitutes grave abuse of discretion
and should be set aside in favor of the NSB's decision.
In El Hogar Filipino Mutual Building and Loan Association vs. Building
Employees Inc., 107 Phil. 473, citing San Miguel Brewery vs. National
Labor Union, 97 Phil. 378, We emphasized:
Much as we should expand beyond economic orthodoxy,
we hold that an employer cannot be legally compelled to
continue with the employment of a person who
admittedly was guilty of misfeasance or malfeasance
towards his employer, and whose continuance in the
service of the latter is patently inimical to his interest.
The law in protecting the rights of the laborer, authorizes
neither the oppression nor self-destruction of the
employer. (Page 3, Record) (Emphasis supplied)

44

It is timely to add here in closing that situations wherein employers are


practically laid in ambush or placed in a position not unlike those in a
highjack whether in the air, land or midsea must be considered to be
what they really are: acts of coercion, threat and intimidation against
which the victim has generally no recourse but to yield at the peril of
irreparable loss. And when such happenings affect the national economy,
as pointed out by the Solicitor General, they must be treated to be in the
nature of economic sabotage. They should not be tolerated. This Court
has to be careful not to sanction them.
WHEREFORE, the petition herein is granted and the decision of the NLRC
complained of hereby set aside; the decision of the NSB should stand.
No costs.
Concepcion, Jr., Guerrero, Abad Santos, De Castro and Escolin, JJ., concur.
Aquino, J., concur in the result.

Footnotes
1 NSB Case No. 2250-79 is a complaint for illegal
dismissal and non-payment of earned wages filed by 27
officers and crew/members of the vessel M/T "Jannu"
against herein petitioner while NSB2252-79 is a complaint
for breach of contract and recovery of excess salaries,
overtime pay filed by petitioner against the complainants
in the other case.
2 Please see clarification of the point that respondents
were misled as to whether they were hired for worldwide
voyages or not in the latter part of this opinion.

45