I. FUNDAMENTAL PRINCIPLES AND POLICIES

A. Consti.

ARTICLE IIDECLARATION OF PRINCIPLES AND STATE POLICIES PRINCIPLES

Section 9. The State shall promote a just and dynamic social order that will ensure the prosperity and independence of the nation and free the people from poverty through policies that provide adequate social services, promote full employment, a rising standard of living, and an improved quality of life for all.

Section 10. The State shall promote social justice in all phases of national development.

Section 11. The State values the dignity of every human person and guarantees full respect for human rights.

Section 13. The State recognizes the vital role of the youth in nation-building and shall promote and protect their physical, moral, spiritual, intellectual, and social well-being. It shall inculcate in the youth patriotism and nationalism, and encourage their involvement in public and civic affairs.

Section 14. The State recognizes the role of women in nation-building, and shall ensure the fundamental equality before the law of women and men.

Section 18. The State affirms labor as a primary social economic force. It shall protect the rights of workers and promote their welfare.

Section 20. The State recognizes the indispensable role of the private sector, encourages private enterprise, and provides incentives to needed investments

ARTICLE IIIBILL OF RIGHTS

Section 1. No person shall be deprived of life, liberty, or property without due process of law, nor shall any person be denied the equal protection of the laws.

Section 4. No law shall be passed abridging the freedom of speech, of expression, or of the press, or the right of the people peaceably to assemble and petition the government for redress of grievances.

Section 7. The right of the people to information on matters of public concern shall be recognized. Access to official records, and to documents and papers pertaining to

official acts, transactions, or decisions, as well as to government research data used as basis for policy development, shall be afforded the citizen, subject to such limitations as may be provided by law.

Section 8. The 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 be abridged

Section 10. No law impairing the obligation of contracts shall be passed.

Section 16. All persons shall have the right to a speedy disposition of their cases before all judicial, quasi-judicial, or administrative bodies.

Section 18. There shall be a Commission on Appointments consisting of the President of the Senate, as ex officio Chairman, twelve Senators, and twelve Members of the House of Representatives, elected by each House on the basis of proportional representation from the political parties and parties or organizations registered under the party-list system represented therein. The chairman of the Commission shall not vote, except in case of a tie. The Commission shall act on all appointments submitted to it within thirty session days of the Congress from their submission. The Commission shall rule by a majority vote of all the Members.

Section 18.

1. No person shall be detained solely by reason of his political beliefs and aspirations.

2. No involuntary servitude in any form shall exist except as a punishment for a crime whereof the party shall have been duly convicted.

ARTICLE XIIISOCIAL JUSTICE AND HUMAN RIGHTS

Section 1. The Congress shall give highest priority to the enactment of measures that protect and enhance the right of all the people to human dignity, reduce social, economic, and political inequalities, and remove cultural inequities by equitably diffusing wealth and political power for the common good.

To this end, the State shall regulate the acquisition, ownership, use, and disposition of property and its increments.

Section 2. The promotion of social justice shall include the commitment to create economic opportunities based on freedom of initiative and self-reliance.

LABOR

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Section 3. The State shall afford full protection to labor, local and overseas, organized and unorganized, and promote full employment and equality of employment opportunities for all.

It shall guarantee the rights of all workers to self-organization, collective bargaining and negotiations, and peaceful concerted activities, including the right to strike in accordance with law. They shall be entitled to security of tenure, humane conditions of work, and a living wage. They shall also participate in policy and decision-making processes affecting their rights and benefits as may be provided by law.

The State shall promote the principle of shared responsibility between workers and employers and the preferential use of voluntary modes in settling disputes, including conciliation, and shall enforce their mutual compliance therewith to foster industrial peace.

The State shall regulate the relations between workers and employers, recognizing the right of labor to its just share in the fruits of production and the right of enterprises to reasonable returns to investments, and to expansion and growth.

Section 13. The State shall establish a special agency for disabled person for their rehabilitation, self-development, and self-reliance, and their integration into the mainstream of society.

WOMEN

Section 14. The State shall protect working women by providing safe and healthful working conditions, taking into account their maternal functions, and such facilities and opportunities that will enhance their welfare and enable them to realize their full potential in the service of the nation.

B. Civ

Art. 19. Every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith.

Art. 1700. The relations between capital and labor are not merely contractual. They are so impressed with public interest that labor contracts must yield to the common good. Therefore, such contracts are subject to the special laws on labor unions, collective bargaining, strikes and lockouts, closed shop, wages, working conditions, hours of labor and similar subjects.

Art. 1702. In case of doubt, all labor legislation and all labor contracts shall be construed in favor of the safety and decent living for the laborer.

C. Labor

Art. 3. Declaration of basic policy. The State shall afford protection to labor, promote full employment, ensure equal work opportunities regardless of sex, race or creed and regulate the relations between workers and employers. The State shall assure the rights of workers to self-organization, collective bargaining, security of tenure, and just and humane conditions of work.

Art. 4. Construction in favor of labor. All doubts in the implementation and interpretation of the provisions of this Code, including its implementing rules and regulations, shall be resolved in favor of labor.

Title II

EMPLOYEES’ COMPENSATION AND STATE INSURANCE FUND

Chapter I

POLICY AND DEFINITIONS

Art. 166. Policy. The State shall promote and develop a tax-exempt employees’ compensation program whereby employees and their dependents, in the event of work-connected disability or death, may promptly secure adequate income benefit and medical related benefits.

BOOK FIVELABOR RELATIONS

Title IPOLICY AND DEFINITIONS

Chapter IPOLICY

Art. 211. Declaration of Policy.

1. It is the policy of the State:1.) To promote and emphasize the primacy of free collective

bargaining and negotiations, including voluntary arbitration, mediation and conciliation, as modes of settling labor or industrial disputes;

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2.) To promote free trade unionism as an instrument for the enhancement of democracy and the promotion of social justice and development;

3.) To foster the free and voluntary organization of a strong and united labor movement;

4.) To promote the enlightenment of workers concerning their rights and obligations as union members and as employees;

5.) To provide an adequate administrative machinery for the expeditious settlement of labor or industrial disputes;

6.) To ensure a stable but dynamic and just industrial peace; and7.) To ensure the participation of workers in decision and policy-

making processes affecting their rights, duties and welfare.

2. To encourage a truly democratic method of regulating the relations between the employers and employees by means of agreements freely entered into through collective bargaining, no court or administrative agency or official shall have the power to set or fix wages, rates of pay, hours of work or other terms and conditions of employment, except as otherwise provided under this Code. (As amended by Section 3, Republic Act No. 6715, March 21, 1989)

Chapter II

DEFINITIONS

Art. 212. Definitions.

"Commission" means the National Labor Relations Commission or any of its divisions, as the case may be, as provided under this Code.

"Bureau" means the Bureau of Labor Relations and/or the Labor Relations Divisions in the regional offices established under Presidential Decree No. 1, in the Department of Labor.

"Board" means the National Conciliation and Mediation Board established under Executive Order No. 126.

"Council" means the Tripartite Voluntary Arbitration Advisory Council established under Executive Order No. 126, as amended.

"Employer" includes any person acting in the interest of an employer, directly or indirectly. The term shall not include any labor organization or any of its officers or agents except when acting as employer.

"Employee" includes any person in the employ of an employer. The term shall not be limited to the employees of a particular employer, unless the Code so explicitly states. It shall include any individual whose work has ceased as a result of or in connection with any current labor dispute or because of any unfair labor practice if he has not obtained any other substantially equivalent and regular employment.

"Labor organization" means any union or association of employees which exists in whole or in part for the purpose of collective bargaining or of dealing with employers concerning terms and conditions of employment.

"Legitimate labor organization" means any labor organization duly registered with the Department of Labor and Employment, and includes any branch or local thereof.

"Company union" means any labor organization whose formation, function or administration has been assisted by any act defined as unfair labor practice by this Code.

"Bargaining representative" means a legitimate labor organization whether or not employed by the employer.

"Unfair labor practice" means any unfair labor practice as expressly defined by the Code.

"Labor dispute" includes any controversy or matter concerning terms and conditions of employment or the association or representation of persons in negotiating, fixing, maintaining, changing or arranging the terms and conditions of employment, regardless of whether the disputants stand in the proximate relation of employer and employee.

"Managerial employee" is one who is vested with the powers or prerogatives to lay down and execute management policies and/or to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees. Supervisory employees are those who, in the interest of the employer, effectively recommend such managerial actions if the exercise of such authority is not merely routinary or clerical in nature but requires the use of independent judgment. All employees not falling within any of the above definitions are considered rank-and-file employees for purposes of this Book.

"Voluntary Arbitrator" means any person accredited by the Board as such or any person named or designated in the Collective Bargaining Agreement by the parties to act as their Voluntary Arbitrator, or one chosen with or without the assistance of the National Conciliation and Mediation Board, pursuant to a selection procedure agreed upon in the Collective Bargaining Agreement, or any official that may be authorized by the Secretary of Labor and Employment to act as Voluntary Arbitrator upon the written request and agreement of the parties to a labor dispute.

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"Strike" means any temporary stoppage of work by the concerted action of employees as a result of an industrial or labor dispute.

"Lockout" means any temporary refusal of an employer to furnish work as a result of an industrial or labor dispute.

"Internal union dispute" includes all disputes or grievances arising from any violation of or disagreement over any provision of the constitution and by laws of a union, including any violation of the rights and conditions of union membership provided for in this Code.

"Strike-breaker" means any person who obstructs, impedes, or interferes with by force, violence, coercion, threats, or intimidation any peaceful picketing affecting wages, hours or conditions of work or in the exercise of the right of self-organization or collective bargaining.

"Strike area" means the establishment, warehouses, depots, plants or offices, including the sites or premises used as runaway shops, of the employer struck against, as well as the immediate vicinity actually used by picketing strikers in moving to and fro before all points of entrance to and exit from said establishment. (As amended by Section 4, Republic Act No. 6715, March 21, 1989)

Art. 255. Exclusive bargaining representation and workers’ participation in policy and decision-making. The labor organization designated or selected by the majority of the employees in an appropriate collective bargaining unit shall be the exclusive representative of the employees in such unit for the purpose of collective bargaining. However, an individual employee or group of employees shall have the right at any time to present grievances to their employer.

Any provision of law to the contrary notwithstanding, workers shall have the right, subject to such rules and regulations as the Secretary of Labor and Employment may promulgate, to participate in policy and decision-making processes of the establishment where they are employed insofar as said processes will directly affect their rights, benefits and welfare. For this purpose, workers and employers may form labor-management councils: Provided, That the representatives of the workers in such labor-management councils shall be elected by at least the majority of all employees in said establishment. (As amended by Section 22, Republic Act No. 6715, March 21, 1989)

Art. 277. Miscellaneous provisions.

All unions are authorized to collect reasonable membership fees, union dues, assessments and fines and other contributions for labor education and research, mutual death and hospitalization benefits, welfare fund, strike fund and credit and cooperative undertakings. (As amended by Section 33, Republic Act No. 6715, March 21, 1989)

Subject to the constitutional right of workers to security of tenure and their right to be protected against dismissal except for a just and authorized cause and without prejudice to the requirement of notice under Article 283 of this Code, the employer shall furnish the worker whose employment is sought to be terminated a written notice containing a statement of the causes for termination and shall afford the latter ample opportunity to be heard and to defend himself with the assistance of his representative if he so desires in accordance with company rules and regulations promulgated pursuant to guidelines set by the Department of Labor and Employment. Any decision taken by the employer shall be without prejudice to the right of the worker to contest the validity or legality of his dismissal by filing a complaint with the regional branch of the National Labor Relations Commission. The burden of proving that the termination was for a valid or authorized cause shall rest on the employer. The Secretary of the Department of Labor and Employment may suspend the effects of the termination pending resolution of the dispute in the event of a prima facie finding by the appropriate official of the Department of Labor and Employment before whom such dispute is pending that the termination may cause a serious labor dispute or is in implementation of a mass lay-off. (As amended by Section 33, Republic Act No. 6715, March 21, 1989)

Any employee, whether employed for a definite period or not, shall, beginning on his first day of service, be considered as an employee for purposes of membership in any labor union. (As amended by Section 33, Republic Act No. 6715)

No docket fee shall be assessed in labor standards disputes. In all other disputes, docket fees may be assessed against the filing party, provided that in bargaining deadlock, such fees shall be shared equally by the negotiating parties.

The Minister of Labor and Employment and the Minister of the Budget shall cause to be created or reclassified in accordance with law such positions as may be necessary to carry out the objectives of this Code and cause the upgrading of the salaries of the personnel involved in the Labor Relations System of the Ministry. Funds needed for this purpose shall be provided out of the Special Activities Fund appropriated by Batas Pambansa Blg. 80 and from annual appropriations thereafter. (Incorporated by Batas Pambansa Bilang 130, August 21, 1981)

A special Voluntary Arbitration Fund is hereby established in the Board to subsidize the cost of voluntary arbitration in cases involving the interpretation and implementation of the Collective Bargaining Agreement, including the Arbitrator’s

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fees, and for such other related purposes to promote and develop voluntary arbitration. The Board shall administer the Special Voluntary Arbitration Fund in accordance with the guidelines it may adopt upon the recommendation of the Council, which guidelines shall be subject to the approval of the Secretary of Labor and Employment. Continuing funds needed for this purpose in the initial yearly amount of fifteen million pesos (P15,000,000.00) shall be provided in the 1989 annual general appropriations acts.

The amount of subsidy in appropriate cases shall be determined by the Board in accordance with established guidelines issued by it upon the recommendation of the Council.

The Fund shall also be utilized for the operation of the Council, the training and education of Voluntary Arbitrators, and the Voluntary Arbitration Program. (As amended by Section 33, Republic Act No. 6715, March 21, 1989)

The Ministry shall help promote and gradually develop, with the agreement of labor organizations and employers, labor-management cooperation programs at appropriate levels of the enterprise based on the shared responsibility and mutual respect in order to ensure industrial peace and improvement in productivity, working conditions and the quality of working life. (Incorporated by Batas Pambansa Bilang 130, August 21, 1981)

In establishments where no legitimate labor organization exists, labor-management committees may be formed voluntarily by workers and employers for the purpose of promoting industrial peace. The Department of Labor and Employment shall endeavor to enlighten and educate the workers and employers on their rights and responsibilities through labor education with emphasis on the policy thrusts of this Code. (As amended by Section 33, Republic Act No. 6715, March 21, 1989)

To ensure speedy labor justice, the periods provided in this Code within which decisions or resolutions of labor relations cases or matters should be rendered shall be mandatory. For this purpose, a case or matter shall be deemed submitted for decision or resolution upon the filing of the last pleading or memorandum required by the rules of the Commission or by the Commission itself, or the Labor Arbiter, or the Director of the Bureau of Labor Relations or Med-Arbiter, or the Regional Director.

Upon expiration of the corresponding period, a certification stating why a decision or resolution has not been rendered within the said period shall be issued forthwith by the Chairman of the Commission, the Executive Labor Arbiter, or the Director of the Bureau of Labor Relations or Med-Arbiter, or the Regional Director, as the case may be, and a copy thereof served upon the parties.

Despite the expiration of the applicable mandatory period, the aforesaid officials shall, without prejudice to any liability which may have been incurred as a consequence thereof, see to it that the case or matter shall be decided or resolved without any further delay. (Incorporated by Section 33, Republic Act No. 6715, March 21, 1989)

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II. Recruitment and Placement

SECOND DIVISION

G.R. No. 177498

STOLT-NIELSEN TRANSPORTATION GROUP, INC. AND CHUNG GAI SHIP MANAGEMENT,Petitioners,-versus-SULPECIO MEDEQUILLO, JR.,Respondent.

D E C I S I O N

PEREZ, J.:

Before the Court is a Petition for Review on Certiorari1 of the Decision2 of the First Division of the Court of Appeals in CA-G.R. SP No. 91632 dated 31 January 2007, denying the petition for certiorari filed by Stolt-Nielsen Transportation Group, Inc. and Chung Gai Ship Management (petitioners) and affirming the Resolution of the National Labor Relations Commission (NLRC). The dispositive portion of the assailed decision reads:

WHEREFORE, the petition is hereby DENIED. Accordingly, the assailed Decision promulgated on February 28, 2003 and the Resolution dated July 27, 2005 are AFFIRMED.3

The facts as gathered by this Court follow:

On 6 March 1995, Sulpecio Madequillo (respondent) filed a complaint before the Adjudication Office of the Philippine Overseas Employment Administration (POEA) against the petitioners for illegal dismissal under a first contract and for failure to deploy under a second contract. In his complaint-affidavit,4 respondent alleged that:

1. On 6 November 1991(First Contract), he was hired by Stolt-Nielsen Marine Services, Inc on behalf of its principal Chung-Gai Ship Management of Panama as Third Assistant Engineer on board the vessel “Stolt Aspiration” for a period of nine (9) months;

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

3. On 8 November 1991, he joined the vessel MV “Stolt Aspiration”;

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

5. Upon his return to Manila, he immediately proceeded to the petitioner’s office where he was transferred employment with another vessel named MV “Stolt Pride” under the same terms and conditions of the First Contract;

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

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

8. Despite the commencement of the Second Contract on 21 April 1992, petitioners failed to deploy him with the vessel MV “Stolt Pride”;

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

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

11. He was constrained to sign the document involuntarily because without these documents, he could not seek employment from other agencies.

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

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

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

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On 21 July 2000, Labor Arbiter Vicente R. Layawen rendered a judgment6 finding that the respondent was constructively dismissed by the petitioners. The dispositive portion reads:

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

1. $12,537.00 or its peso equivalent at the time of payment.7

The Labor Arbiter found the first contract entered into by and between the complainant and the respondents to have been novated by the execution of the second contract. In other words, respondents cannot be held liable for the first contract but are clearly and definitely liable for the breach of the second contract.8 However, he ruled that there was no substantial evidence to grant the prayer for moral and exemplary damages.9

The petitioners appealed the adverse decision before the National Labor Relations Commission assailing that they were denied due process, that the respondent cannot be considered as dismissed from employment because he was not even deployed yet and the monetary award in favor of the respondent was exorbitant and not in accordance with law.10

On 28 February 2003, the NLRC affirmed with modification the Decision of the Labor Arbiter. The dispositive portion reads:

WHEREFORE, premises considered, the decision under review is hereby, MODIFIED BY DELETING the award of overtime pay in the total amount of Three Thousand Six Hundred Thirty Six US Dollars (US $3,636.00).

In all other respects, the assailed decision so stands as, AFFIRMED.11

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

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

The NLRC upheld the finding of unjustified termination of contract for failure on the part of the petitioners to present evidence that would justify their non-deployment of the respondent.14 It denied the claim of the petitioners that the monetary award should be limited only to three (3) months for every year of the unexpired term of the contract. It ruled that the factual incidents material to the case transpired within 1991-1992 or before the effectivity of Republic Act No. 8042 or the Migrant Workers and Overseas Filipinos Act of 1995 which provides for such limitation.15

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

The Partial Motion for Reconsideration filed by the petitioners was denied by the NLRC in its Resolution dated 27 July 2005.17

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

Finding no grave abuse of discretion, the Court of Appeals AFFIRMED the Decision of the labor tribunal.

The Court’s Ruling

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

I.

THE COURT A QUO ERRED IN FINDING THAT THE SECOND CONTRACT NOVATED THE FIRST CONTRACT.

1. THERE WAS NO NOVATION OF THE FIRST CONTRACT BY THE SECOND CONTRACT; THE ALLEGATION OF ILLEGAL DISMISSAL UNDER THE FIRST CONTRACT MUST BE RESOLVED SEPARATELY FROM THE ALLEGATION OF FAILURE TO DEPLOY UNDER THE SECOND CONTRACT.

2. THE ALLEGED ILLEGAL DISMISSAL UNDER THE FIRST CONTRACT TRANSPIRED MORE THAN THREE (3) YEARS AFTER THE CASE WAS FILED AND THEREFORE HIS CASE SHOULD HAVE BEEN DISMISSED FOR BEING BARRED BY PRESCRIPTION.

II.

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THE COURT A QUO ERRED IN RULING THAT THERE WAS CONSTRUCTIVE DISMISSAL UNDER THE SECOND CONTRACT.

1. IT IS LEGALLY IMPOSSIBLE TO HAVE CONSTRUCTIVE DISMISSAL WHEN THE EMPLOYMENT HAS NOT YET COMMENCED.

2. ASSUMING THERE WAS OMISSION UNDER THE SECOND CONTRACT, PETITIONERS CAN ONLY BE FOUND AS HAVING FAILED IN DEPLOYING PRIVATE RESPONDENT BUT WITH VALID REASON.

III.

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

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

We do not agree.

Novation is the extinguishment of an obligation by the substitution or change of the obligation by a subsequent one which extinguishes or modifies the first, either by changing the object or principal conditions, or, by substituting another in place of the debtor, or by subrogating a third person in the rights of the creditor. In order for novation to take place, the concurrence of the following requisites is indispensable:

1. There must be a previous valid obligation,

2. There must be an agreement of the parties concerned to a new contract,

3. There must be the extinguishment of the old contract, and

4. There must be the validity of the new contract.19

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

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

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

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

We concur with the finding that there was a novation of the first employment contract.

We reiterate once more and emphasize the ruling in Reyes v. National Labor Relations Commission,22 to wit:

x x x [F]indings of quasi-judicial bodies like the NLRC, and affirmed by the Court of Appeals in due course, are conclusive on this Court, which is not a trier of facts.

x x x x

x x x Findings of fact of administrative agencies and quasi-judicial bodies, which have acquired expertise because their jurisdiction is confined to specific matters, are generally

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accorded not only respect, but finality when affirmed by the Court of Appeals. Such findings deserve full respect and, without justifiable reason, ought not to be altered, modified or reversed.(Emphasis supplied)23

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

Equally settled is the rule that factual findings of labor officials, who are deemed to have acquired expertise in matters within their jurisdiction, are generally accorded not only respect but even finality by the courts when supported by substantial evidence, i.e., the amount of relevant evidence which a reasonable mind might accept as adequate to justify a conclusion.25 But these findings are not infallible. When there is a showing that they were arrived at arbitrarily or in disregard of the evidence on record, they may be examined by the courts.26 In this case, there was no showing of any arbitrariness on the part of the lower courts in their findings of facts. Hence, we follow the settled rule.

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

Accordingly, the prescriptive period of three (3) years within which Medequillo Jr. may initiate money claims under the 1st contract commenced on the date of his repatriation. xxx The start of the three (3) year prescriptive period must therefore be reckoned on February 1992, which by Medequillo Jr.’s own admission was the date of his repatriation to Manila. It was at this point in time that Medequillo Jr.’s cause of action already accrued under the first contract. He had until February 1995 to pursue a case for illegal dismissal and damages arising from the 1stcontract. With the filing of his Complaint-Affidavit on March 6, 1995, which was clearly beyond the prescriptive period, the cause of action under the 1st contract was already time-barred.27

The issue that proceeds from the fact of novation is the consequence of the non-deployment of respondent.

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

A contract is a meeting of minds between two persons whereby one binds himself, with respect to the other, to give something or to render some service.29 The contracting parties may establish such stipulations, clauses, terms and conditions as they may deem convenient, provided they are not contrary to law, morals, good customs, public order, or public policy.30

The POEA Standard Employment Contract provides that employment shall commence “upon the actual departure of the seafarer from the airport or seaport in the port of hire.”31 We adhere to the terms and conditions of the contract so as to credit the valid prior stipulations of the parties before the controversy started. Else, the obligatory force of every contract will be useless. Parties are bound not only to the fulfillment of what has been expressly stipulated but also to all the consequences which, according to their nature, may be in keeping with good faith, usage and law.32

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

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

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

The POEA Rules and Regulations Governing Overseas Employment35 dated 31 May 1991 provides for the consequence and penalty against in case of non-deployment of the seafarer without any valid reason. It reads:

Section 4. Worker’s Deployment. — An agency shall deploy its recruits within the deployment period as indicated below:

xxx

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

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

The appellate court correctly ruled that the penalty of reprimand36 provided under Rule IV, Part VI of the POEA Rules and Regulations Governing the Recruitment and Employment of Land-based Overseas Workers is not applicable in this case. The breach of contract happened on February 1992 and the law applicable at that time was the 1991 POEA Rules and Regulations Governing Overseas Employment. The penalty for non-deployment as discussed is suspension or cancellation of license or fine.

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

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

We thus decree the application of Section 10 of Republic Act No. 8042 (Migrant Workers Act) which provides for money claims by reason of a contract involving Filipino workers for overseas deployment. The law provides:

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

for actual, moral, exemplary and other forms of damages. x x x (Underscoring supplied)

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

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

WHEREFORE, the appeal is DENIED. The 31 January 2007 Decision of the Court of Appeals in CA-G.R. SP. No. 91632 is hereby AFFIRMED. The Petitioners are hereby ordered to pay Sulpecio Medequillo, Jr., the award of actual damages equivalent to his salary for nine (9) months as provided by the Second Employment Contract.

SO ORDERED.

PERT/CPM MANPOWER EXPONENT CO., INC., Petitioner, versus ARMANDO A. VINUYA, LOUIE M. ORDOVEZ, ARSENIO S. LUMANTA,. JR., ROBELITO S. ANIPAN, VIRGILIO R. ALCANTARA, MARINO M. ERA, SANDY O. ENJAMBRE and NOEL T. LADEA, Respondents.

G.R. No. 197528 | 2012-09-05

SECOND DIVISION

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D E C I S I O N 

BRION, J.: 

          We resolve the present petition for review on certiorari1 assailing the decision2 dated May 9, 2011 and the resolution3dated June 23, 2011 of the Court of Appeals (CA) in CA-G.R. SP No. 114353.

The Antecedents

          On March 5, 2008, respondents Armando A. Vinuya, Louie M. Ordovez, Arsenio S. Lumanta, Jr., Robelito S. Anipan, Virgilio R. Alcantara, Marino M. Era, Sandy O. Enjambre and Noel T. Ladea (respondents) filed a complaint for illegal dismissal against the petitioner Pert/CPM Manpower Exponent Co., Inc. (agency), and its President Romeo P. Nacino.

          The respondents alleged that the agency deployed them between March 29, 2007 and May 12, 2007 to work as aluminum fabricator/installer for the agency's principal, Modern Metal Solution LLC/MMS Modern Metal Solution LLC (Modern Metal) in Dubai, United Arab Emirates.

          The respondents' employment contracts,4 which were approved by the Philippine Overseas Employment Administration (POEA), provided for a two-year employment, nine hours a day, salary of 1,350 AED with overtime pay, food allowance, free and suitable housing (four to a room), free transportation, free laundry, and free medical and dental services. They each paid a P15,000.00 processing fee.5

          On April 2, 2007, Modern Metal gave the respondents, except Era, appointment letters6 with terms different from those in the employment contracts which they signed at the agency's office in the Philippines. Under the letters of appointment, their employment was increased to three years at 1,000 to 1,200 AED and food allowance of 200 AED.

          The respondents claimed that they were shocked to find out what their working and living conditions were in Dubai. They were required to work from 6:30 a.m. to 6:30 p.m., with a break of only one hour to one and a half hours. When they rendered overtime work, they were most of the time either underpaid or not paid at all. Their housing accommodations were cramped and were shared with 27 other occupants. The lodging house was in Sharjah, which was far from their jobsite in Dubai, leaving them only three to four hours of sleep a day because of the long hours of travel to and from their place of work; there was no potable water and the air was polluted.

          When the respondents received their first salaries (at the rates provided in their appointment letters and with deductions for placement fees) and because of their difficult living and working conditions, they called up the agency and complained about their predicament. The agency assured them that their concerns would be promptly addressed, but nothing happened.

          On May 5, 2007, Modern Metal required the respondents to sign new employment contracts,7 except for Era who was made to sign later. The contracts reflected the terms of their appointment letters. Burdened by all the expenses and financial obligations they incurred for their deployment, they were left with no choice but to sign the contracts. They raised the matter with the agency, which again took no action.

          On August 5, 2007, despondent over their unbearable living and working conditions and by the agency's inaction, the respondents expressed to Modern Metal their desire to resign. Out of fear, as they put it, that Modern Metal would not give them their salaries and release papers, the respondents, except Era, cited personal/family problems for their resignation.8 Era mentioned the real reason - "because I dont (sic) want the company policy"9 - for his resignation.

          It took the agency several weeks to repatriate the respondents to the Philippines. They all returned to Manila in September 2007. Except for Ordovez and Enjambre, all the respondents shouldered their own airfare.

          For its part, the agency countered that the respondents were not illegally dismissed; they voluntarily resigned from their employment to seek a better paying job. It claimed that the respondents, while still working for Modern Metal, applied with another company which offered them a higher pay. Unfortunately, their supposed employment failed to materialize and they had to go home because they had already resigned from Modern Metal.

          The agency further alleged that the respondents even voluntarily signed affidavits of quitclaim and release after they resigned. It thus argued that their claim for benefits, under Section 10 of Republic Act No. (R.A.) 8042, damages and attorney's fees is unfounded.

The Compulsory Arbitration Rulings

          On April 30, 2008, Labor Arbiter Ligerio V. Ancheta rendered a decision10 dismissing the complaint, finding that the respondents voluntarily resigned from their jobs. He also found that four of them - Alcantara, Era, Anipan and Lumanta - even

11

executed a compromise agreement (with quitclaim and release) before the POEA. He considered the POEA recourse a case of forum shopping.

          The respondents appealed to the National Labor Relations Commission (NLRC). They argued that the labor arbiter committed serious errors in (1) admitting in evidence the quitclaims and releases they executed in Dubai, which were mere photocopies of the originals and which failed to explain the circumstances behind their execution; (2) failing to consider that the compromise agreements they signed before the POEA covered only the refund of their airfare and not all their money claims; and (3) ruling that they violated the rule on non-forum shopping.

          On May 12, 2009, the NLRC granted the appeal.11 It ruled that the respondents had been illegally dismissed. It anchored its ruling on the new employment contracts they were made to sign in Dubai. It stressed that it is illegal for an employer to require its employees to execute new employment papers, especially those which provide benefits that are inferior to the POEA-approved contracts.

          The NLRC rejected the quitclaim and release executed by the respondents in Dubai. It believed that the respondents executed the quitclaim documents under duress as they were afraid that they would not be allowed to return to the Philippines if they did not sign the documents. Further, the labor tribunal disagreed with the labor arbiter's opinion that the compromise agreement they executed before the POEA had effectively foreclosed the illegal dismissal complaint before the NLRC and that the respondents had been guilty of forum shopping. It pointed out that the POEA case involved pre-deployment issues; whereas, the complaint before the NLRC is one for illegal dismissal and money claims arising from employment.

          Consequently, the NLRC ordered the agency, Nacino and Modern Metal to pay, jointly and severally, the respondents, as follows:

          WHEREFORE, the Decision dated 30 April 2008 is hereby REVERSED and SET ASIDE, a new Decision is hereby issued ordering the respondents PERT/CPM MANPOWER EXPONENTS CO., INC., ROMEO NACINO, and MODERN METAL SOLUTIONS, INC. to jointly and severally, pay the complainants the following:

              TOTAL           6,850 AED   US$3,200   64,800 AED   P400,000.00  

or their peso equivalent at the time of actual payment plus attorney[']s fees equivalent to 10% of the judgment award.12

          The agency moved for reconsideration, contending that the appeal was never perfected and that the NLRC gravely abused its discretion in reversing the labor arbiter's decision.

          The respondents, on the other hand, moved for partial reconsideration, maintaining that their salaries should have covered the unexpired portion of their employment contracts, pursuant to the Court's ruling in Serrano v. Gallant Maritime Services, Inc.13

          The NLRC denied the agency's motion for reconsideration, but granted the respondents' motion.14 It sustained the respondents' argument that the award needed to be adjusted, particularly in relation to the payment of their salaries, consistent with the Court's ruling in Serrano. The ruling declared unconstitutional the clause, "or for three (3) months for every year of the unexpired term, whichever is less," in Section 10, paragraph 5, of R.A. 8042, limiting the entitlement of illegally

12

dismissed overseas Filipino workers to their salaries for the unexpired term of their contract or three months, whichever is less. Accordingly, it modified its earlier decision and adjusted the respondents' salary entitlement based on the following matrix:

          Again, the agency moved for reconsideration, reiterating its earlier arguments and, additionally, questioning the application of the Serranoruling in the case because it was not yet final and executory. The NLRC denied the motion, prompting the agency to seek recourse from the CA through a petition for certiorari.

The CA Decision

          The CA dismissed the petition for lack of merit.16 It upheld the NLRC ruling that the respondents were illegally dismissed. It found no grave abuse of discretion in the NLRC's rejection of the respondents' resignation letters, and the accompanying quitclaim and release affidavits, as proof of their voluntary termination of employment.

          The CA stressed that the filing of a complaint for illegal dismissal is inconsistent with resignation. Moreover, it found nothing in the records to substantiate the agency's contention that the respondents' resignation was of their own accord; on the contrary, it considered the resignation letters "dubious for having been lopsidedly-worded to ensure that the petitioners (employer[s]) are free from any liability."17

         The appellate court likewise refused to give credit to the compromise agreements that the respondents executed before the POEA. It agreed with the NLRC's conclusion that the agreements pertain to the respondents' charge of recruitment violations against the agency distinct from their illegal dismissal complaint, thus negating forum shopping by the respondents.

          Lastly, the CA found nothing legally wrong in the NLRC correcting itself (upon being reminded by the respondents), by adjusting the respondents' salary award on the basis of the unexpired portion of their contracts, as enunciated in the Serrano case.

          The agency moved for, but failed to secure, a reconsideration of the CA decision.18

The Petition

          The agency is now before the Court seeking a reversal of the CA dispositions, contending that the CA erred in:

1. affirming the NLRC's finding that the respondents were illegally dismissed;

2. holding that the compromise agreements before the POEA pertain only to the respondents' charge of recruitment violations against the agency; and

3. affirming the NLRC's award to the respondents of their salaries for  the unexpired portion of their employment contracts, pursuant to the Serrano ruling.

           The agency insists that it is not liable for illegal dismissal, actual or constructive. It submits that as correctly found by the labor arbiter, the respondents voluntarily resigned from their jobs, and even executed affidavits of quitclaim and release; the respondents stated family concerns for their resignation. The agency posits that the letters were duly proven as they were written unconditionally by the respondents. It, therefore, assails the conclusion that the respondents resigned under duress or that the resignation letters were dubious.

13

          The agency raises the same argument with respect to the compromise agreements, with quitclaim and release, it entered into with Vinuya, Era, Ladea, Enjambre, Ordovez, Alcantara, Anipan and Lumanta before the POEA, although it submitted evidence only for six of them. Anipan, Lumanta, Vinuya and Ladea signing one document;19 Era20 and Alcantara21signing a document each. It points out that the agreement was prepared with the assistance of POEA Conciliator Judy Santillan, and was duly and freely  signed by the respondents; moreover, the agreement is not conditional as it pertains to all issues involved in the dispute between the parties.

            On the third issue, the agency posits that the Serrano ruling has no application in the present case for three reasons. First, the respondents were not illegally dismissed and, therefore, were not entitled to their money claims. Second, the respondents filed the complaint in 2007, while the Serrano ruling came out on March 24, 2009. The ruling cannot be given retroactive application. Third, R.A. 10022, which was enacted on March 8, 2010 and which amended R.A. 8042, restored the subject clause in Section 10 of R.A. 8042, declared unconstitutional by the Court.

The Respondents' Position

           In their Comment (to the Petition) dated September 28, 2011,22 the respondents ask the Court to deny the petition for lack of merit. They dispute the agency's insistence that they resigned voluntarily. They stand firm on their submission that because of their unbearable living and working conditions in Dubai, they were left with no choice but to resign. Also, the agency never refuted their detailed narration of the reasons for giving up their employment.

           The respondents maintain that the quitclaim and release affidavits,23which the agency presented, betray its desperate attempt to escape its liability to them. They point out that, as found by the NLRC, the affidavits are ready-made documents; for instance, in Lumanta's24 and Era's25affidavits, they mentioned a certain G & A International Manpower as the agency which recruited them - a fact totally inapplicable to all the respondents. They contend that they had no choice but to sign the documents; otherwise, their release papers and remaining salaries would not be given to them, a submission which the agency never refuted.

           On the agency's second line of defense, the compromise agreement (with quitclaim and release) between the respondents and the agency before the POEA, the respondents argue that the agreements pertain only to their charge of recruitment violations against the agency. They add that based on the agreements, read and considered entirely, the agency was discharged only with respect to the recruitment and pre-deployment issues such as excessive placement fees, non-issuance of receipts and placement misrepresentation, but not with respect to post-deployment issues such as illegal dismissal, breach of contract, underpayment of salaries and underpayment and nonpayment of overtime pay. The respondents stress that the

agency failed to controvert their contention that the agreements came about only to settle their claim for refund of their airfare which they paid for when they were repatriated.

         Lastly, the respondents maintain that since they were illegally dismissed, the CA was correct in upholding the NLRC's award of their salaries for the unexpired portion of their employment contracts, as enunciated in Serrano. They point out that the Serrano ruling is curative and remedial in nature and, as such, should be given retroactive application as the Court declared in Yap v. Thenamaris Ship's Management.26Further, the respondents take exception to the agency's contention that the Serrano ruling cannot, in any event, be applied in the present case in view of the enactment of R.A. 10022 on March 8, 2010, amending Section 10 of R.A. 8042. The amendment restored the subject clause in paragraph 5, Section 10 of R.A. 8042 which was struck down as unconstitutional in Serrano.

          The respondents maintain that the agency cannot raise the issue for the first time before this Court when it could have raised it before the CA with its petition for certiorari which it filed on June 8, 2010;27 otherwise,their right to due process will be violated. The agency, on the other hand, would later claim that it is not barred by estoppel with respect to its reliance on R.A. 10022 as it raised it before the CA in CA-G.R. SP No. 114353.28They further argue that RA 10022 cannot be applied in their case, as the law is an amendatory statute which is, as a rule, prospective in application, unless the contrary is provided.29 To put the issue to rest, the respondents ask the Court to also declare unconstitutional Section 7 of R.A. 10022.

          Finally, the respondents submit that the petition should be dismissed outright for raising only questions of fact, rather than of law.

The Court's Ruling

The procedural question

          We deem it proper to examine the facts of the case on account of the divergence in the factual conclusions of the labor arbiter on the one hand, and, of the NLRC and the CA, on the other.30 The arbiter found no illegal dismissal in the respondents' loss of employment in Dubai because they voluntarily resigned; whereas, the NLRC and the CA adjudged them to have been illegally dismissed because they were virtually forced to resign.

The merits of the case

          We find no merit in the petition. The CA committed no reversible error and neither did it commit grave abuse of discretion in affirming the NLRC's illegal dismissal ruling. 

14

          The agency and its principal, Modern Metal, committed flagrant violations of the law on overseas employment, as well as basic norms of decency and fair play in an employment relationship, pushing the respondents to look for a better employment and, ultimately, to resign from their jobs.

          First. The agency and Modern Metal are guilty of contract substitution. The respondents entered into a POEA-approved two-year employment contract,31with Modern Metal providing among others, as earlier discussed, for a monthly salary of 1350 AED. On April 2, 2007, Modern Metal issued to them appointment letters32 whereby the respondents were hired for a longer three-year period and a reduced salary, from 1,100 AED to 1,200 AED, among other provisions. Then, on May 5, 2007, they were required to sign new employment contracts33 reflecting the same terms contained in their appointment letters, except that this time, they were hired as "ordinary laborer," no longer aluminum fabricator/installer. The respondents complained with the agency about the contract substitution, but the agency refused or failed to act on the matter.

          The fact that the respondents' contracts were altered or substituted at the workplace had never been denied by the agency. On the contrary, it admitted that the contract substitution did happen when it argued, "[a]s to their claim for [underpayment] of salary, their original contract mentioned 1350 AED monthly salary, which includes allowance while in their Appointment Letters, they were supposed to receive 1,300 AED. While there was [a] difference of 50 AED monthly, the same could no longer be claimed by virtue of their Affidavits of Quitclaims and Desistance[.]"34

          Clearly, the agency and Modern Metal committed a prohibited practice and engaged in illegal recruitment under the law. Article 34 of the Labor Code provides:

          Art. 34. Prohibited Practices. It shall be unlawful for any individual, entity, licensee, or holder of authority:

x x x x

          (i) To substitute or alter employment contracts approved andverified by the Department of Labor from the time of actual signing thereof by the parties up to and including the periods of expiration of the same without the approval of the Secretary of Labor[.] 

Further, Article 38 of the Labor Code, as amended by R.A. 8042,35defined "illegal recruitment" to include the following act:

          (i) To substitute or alter to the prejudice of the worker,employment contracts approved and verified by the Department of Labor and Employment from the time of

actual signing thereof by the parties up to and including the period of the expiration of the same without the approval of the Department of Labor and Employment[.]

          Second. The agency and Modern Metal committed breach of contract. Aggravating the contract substitution imposed upon them by their employer, the respondents were made to suffer substandard (shocking, as they put it) working and living arrangements. Both the original contracts the respondents signed in the Philippines and the appointment letters issued to them by Modern Metal in Dubai provided for free housing and transportation to and from the jobsite. The original contract mentioned free and suitable housing.36 Although no description of the housing was made in the letters of appointment except: "Accommodation: Provided by the company," it is but reasonable to think that the housing or accommodation would be "suitable."

          As earlier pointed out, the respondents were made to work from 6:30 a.m. to 6:30 p.m., with a meal break of one to one and a half hours, and their overtime work was mostly not paid or underpaid. Their living quarters were cramped as they shared them with 27 other workers. The lodging house was in Sharjah, far from the jobsite in Dubai, leaving them only three to four hours of sleep every workday because of the long hours of travel to and from their place of work, not to mention that there was no potable water in the lodging house which was located in an area where the air was polluted. The respondents complained with the agency about the hardships that they were suffering, but the agency failed to act on their reports. Significantly, the agency failed to refute their claim, anchored on the ordeal that they went through while in Modern Metal's employ.

          Third. With their original contracts substituted and their oppressive working and living conditions unmitigated or unresolved, the respondents' decision to resign is not surprising. They were compelled by the dismal state of their employment to give up their jobs; effectively, they were constructively dismissed. A constructive dismissal or discharge is "a quitting because continued employment is rendered impossible, unreasonable or unlikely, as, an offer involving a demotion in rank and a diminution in pay."37

          Without doubt, the respondents' continued employment with Modern Metal had become unreasonable. A reasonable mind would not approve of a substituted contract that pays a diminished salary - from 1350 AED a month in the original contract to 1,000 AED to 1,200 AED in the appointment letters, a difference of 150 AED to 250 AED (not just 50 AED as the agency claimed) or an extended employment (from 2 to 3 years) at such inferior terms, or a "free and suitable" housing which is hours away from the job site, cramped and crowded, without potable water and exposed to air pollution.

15

          We thus cannot accept the agency's insistence that the respondents voluntarily resigned since they personally prepared their resignationletters38in their own handwriting, citing family problems as their common ground for resigning. As the CA did, we find the resignation letters "dubious,"39not only for having been lopsidedly worded to ensure that the employer is rendered free from any liability, but also for the odd coincidence that all the respondents had, at the same time, been confronted with urgent family problems so that they had to give up their employment and go home. The truth, as the respondents maintain, is that they cited family problems as reason out of fear that Modern Metal would not give them their salaries and their release papers. Only Era was bold enough to say the real reason for his resignation - to protest company policy.

          We likewise find the affidavits40 of quitclaim and release which the respondents executed suspect. Obviously, the affidavits were prepared as a follow through of the respondents' supposed voluntary resignation. Unlike the resignation letters, the respondents had no hand in the preparation of the affidavits. They must have been prepared by a representative of Modern Metal as they appear to come from a standard form and were apparently introduced for only one purpose - to lend credence to the resignation letters. In Modern Metal's haste, however, to secure the respondents' affidavits, they did not check on the model they used. Thus, Lumanta's affidavit41 mentioned a G & A International Manpower as his recruiting agency, an entity totally unknown to the respondents; the same thing is true for Era's affidavit.42 This confusion is an indication of the employer's hurried attempt to avoid liability to the respondents.

          The respondents' position is well-founded. The NLRC itself had the same impression, which we find in order and hereunder quote:

The acts of respondents of requiring the signing of new contracts upon reaching the place of work and requiring employees to sign quitclaims before they are paid and repatriated to the Philippines are all too familiar stories of despicable labor practices which our employees are subjected to abroad. While it is true that quitclaims are generally given weight,however, given the facts of the case, We are of the opinion that the complainants-appellants executed the same under duress and fear that they will not be allowed to return to the Philippines.43

          Fourth. The compromise agreements (with quitclaim and release)44between the respondents and the agency before the POEA did not foreclose their employer-employee relationship claims before the NLRC. The respondents, except Ordovez and Enjambre, aver in this respect that they all paid for their own airfare when they returned home45 and that the compromise

agreements settled only their claim for refund of their airfare, but not their other claims.46 Again, this submission has not been refuted or denied by the agency.

          On the surface, the compromise agreements appear to confirm the agency's position, yet a closer examination of the documents would reveal their true nature. Copy of the compromise agreement is a standard POEA document, prepared in advance and readily made available to parties who are involved in disputes before the agency, such as what the respondents filed with the POEA ahead (filed in 2007) of the illegal dismissal complaint before the NLRC (filed on March 5, 2008).

          Under the heading "Post-Deployment," the agency agreed to pay Era47 and Alcantara48 P12,000.00 each, purportedly in satisfaction of the respondents' claims arising from overseas employment, consisting of unpaid salaries, salary differentials and other benefits, including money claims with the NLRC. The last document was signed by (1) Anipan, (2) Lumanta, (3) Ladea, (4) Vinuya, (5) Jonathan Nangolinola, and (6) Zosimo Gatchalian (the last four signing on the left hand side of the document; the last two were not among those who filed the illegal dismissal complaint).49The agency agreed to pay them a total of P72,000.00. Although there was no breakdown of the entitlement for each of the six, but guided by the compromise agreement signed by Era and Alcantara, we believe that the agency paid them P12,000.00 each, just like Era and Alcantara.

           The uniform insubstantial amount for each of the signatories to the agreement lends credence to their contention that the settlement pertained only to their claim for refund of the airfare which they shouldered when they returned to the Philippines. The compromise agreement, apparently, was intended by the agency as a settlement with the respondents and others with similar claims, which explains the inclusion of the two (Nangolinola and Gatchalian) who were not involved in the case with the NLRC. Under the circumstances, we cannot see how the compromise agreements can be considered to have fully settled the respondents' claims before the NLRC - illegal dismissal and monetary benefits arising from employment. We thus find no reversible error nor grave abuse of discretion in the rejection by the NLRC and the CA of said

agreements.

          Fifth. The agency's objection to the application of the Serrano ruling in the present case is of no moment. Its argument that the ruling cannot be given retroactive effect, because it is curative and remedial, is untenable. It points out, in this respect, that the respondents filed the complaint in 2007, while the Serrano ruling was handed down in March 2009. The issue, as the respondents correctly argue, has been resolved in Yap v. Thenamaris Ship's Management,50where the Court sustained the retroactive application of the Serrano ruling which declared unconstitutional the subject clause in Section 10, paragraph 5 of R.A. 8042, limiting to three months the payment of salaries to illegally dismissed Overseas Filipino Workers.

16

          Undaunted, the agency posits that in any event, the Serrano ruling has been nullified by R.A. No. 10022, entitled "An Act Amending Republic Act No. 8042, Otherwise Known as the Migrant Workers and Overseas Filipinos Act of 1995, As Amended, Further Improving the Standard of Protection and Promotion of the Welfare of Migrant Workers, Their Families and Overseas Filipinos in Distress, and For Other Purposes."51It argues that R.A. 10022, which lapsed into law (without the Signature of the President) on March 8, 2010, restored the subject clause in the 5thparagraph, Section 10 of R.A. 8042. The amendment, contained in Section 7 of R.A. 10022, reads as follows:

          In case of termination of overseas employment without just, valid or authorized cause as defined by law or contract, or any unauthorized deductions from the migrant worker's salary, the worker shall be entitled to the full reimbursement "of" his placement fee and the deductions made with interest at twelve percent (12%) per annum, plus his salaries for the unexpired portion of his employment contract or for three (3) months for every year of the unexpired term, whichever is less.52(emphasis ours)

          This argument fails to persuade us. Laws shall have no retroactive effect, unless the contrary is provided.53 By its very nature, the amendment introduced by R.A. 10022 - restoring a provision of R.A. 8042 declared unconstitutional - cannot be given retroactive effect, not only because there is no express declaration of retroactivity in the law, but because retroactive application will result in an impairment of a right that had accrued to the respondents by virtue of the Serrano ruling - entitlement to their salaries for the unexpired portion of their employment contracts.

          All statutes are to be construed as having only a prospective application, unless the purpose and intention of the legislature to give them a retrospective effect are expressly declared or are necessarily implied from the language used. 54 We thus see no reason to nullity the application of the Serrano ruling in the present case. Whether or not R.A. 1 0022 is constitutional is not for us to rule upon in the present case as this is?? an issue that is not squarely before us. In other words, this is an issue that awaits its proper day in court; in the meanwhile, we make no pronouncement on it.

WHEREFORE, premises considered, the petition is DENIED. The assailed Decision dated May 9, 2011 and the Resolution dated June 23, 2011 of the Court of Appeals in CA-G.R. SP No. 114353 are AFFIRMED. Let this Decision be brought to the attention of the Honorable Secretary of Labor and Employment and the Administrator of the Philippine Overseas Employment Administration as a black mark in the deployment record of petitioner Pert/CPM Manpower Exponent Co., Inc., and as a record that should be considered in?? any similar future violations.

Costs against the petitioner.

SO ORDERED.

17

A. Recruitment of Local and Migrant workers

1. Illegal Recruitment (Sec 5, RA 10022)

illegal recruitment shall mean any act of canvassing, enlisting, contracting, transporting, utilizing, hiring, or procuring workers and includes referring, contract services, promising or advertising for employment abroad, whether for profit or not, when undertaken by non-licensee or non-holder of authority contemplated under Article 13(f) of Presidential Decree No. 442, as amended, otherwise known as the Labor Code of the Philippines: Provided, That any such non-licensee or non-holder who, in any manner, offers or promises for a fee employment abroad to two or more persons shall be deemed so engaged. It shall likewise include the following acts, whether committed by any person, whether a non-licensee, non-holder, licensee or holder of authority:

"(a) To charge or accept directly or indirectly any amount greater than that specified in the schedule of allowable fees prescribed by the Secretary of Labor and Employment, or to make a worker pay or acknowledge any amount greater than that actually received by him as a loan or advance;

"(b) To furnish or publish any false notice or information or document in relation to recruitment or employment;

"(c) To give any false notice, testimony, information or document or commit any act of misrepresentation for the purpose of securing a license or authority under the Labor Code, or for the purpose of documenting hired workers with the POEA, which include the act of reprocessing workers through a job order that pertains to nonexistent work, work different from the actual overseas work, or work with a different employer whether registered or not with the POEA;

"(d) To include or attempt to induce a worker already employed to quit his employment in order to offer him another unless the transfer is designed to liberate a worker from oppressive terms and conditions of employment;

"(e) To influence or attempt to influence any person or entity not to employ any worker who has not applied for employment through his agency or who has formed, joined or supported, or has contacted or is supported by any union or workers' organization;

"(f) To engage in the recruitment or placement of workers in jobs harmful to public health or morality or to the dignity of the Republic of the Philippines;

"(h) To fail to submit reports on the status of employment, placement vacancies, remittance of foreign exchange earnings, separation from jobs, departures and such other matters or information as may be required by the Secretary of Labor and Employment;

"(i) To substitute or alter to the prejudice of the worker, employment contracts approved and verified by the Department of Labor and Employment from the time of actual signing thereof by the parties up to and including the period of the expiration of the same without the approval of the Department of Labor and Employment;

"(j) For an officer or agent of a recruitment or placement agency to become an officer or member of the Board of any corporation engaged in travel agency or to be engaged directly or indirectly in the management of travel agency;

"(k) To withhold or deny travel documents from applicant workers before departure for monetary or financial considerations, or for any other reasons, other than those authorized under the Labor Code and its implementing rules and regulations;

"(l) Failure to actually deploy a contracted worker without valid reason as determined by the Department of Labor and Employment;

"(m) Failure to reimburse expenses incurred by the worker in connection with his documentation and processing for purposes of deployment, in cases where the deployment does not actually take place without the worker's fault. Illegal recruitment when committed by a syndicate or in large scale shall be considered an offense involving economic sabotage; and

"(n) To allow a non-Filipino citizen to head or manage a licensed recruitment/manning agency.

"Illegal recruitment is deemed committed by a syndicate if carried out by a group of three (3) or more persons conspiring or confederating with one another. It is deemed committed in large scale if committed against three (3) or more persons individually or as a group.

"In addition to the acts enumerated above, it shall also be unlawful for any person or entity to commit the following prohibited acts:

"(1) Grant a loan to an overseas Filipino worker with interest exceeding eight percent (8%) per annum, which will be used for payment of legal and allowable placement fees and make the migrant worker issue, either personally or through a guarantor or accommodation party, postdated checks in relation to the said loan;

18

"(2) Impose a compulsory and exclusive arrangement whereby an overseas Filipino worker is required to avail of a loan only from specifically designated institutions, entities or persons;

"(3) Refuse to condone or renegotiate a loan incurred by an overseas Filipino worker after the latter's employment contract has been prematurely terminated through no fault of his or her own;

"(4) Impose a compulsory and exclusive arrangement whereby an overseas Filipino worker is required to undergo health examinations only from specifically designated medical clinics, institutions, entities or persons, except in the case of a seafarer whose medical examination cost is shouldered by the principal/shipowner;

"(5) Impose a compulsory and exclusive arrangement whereby an overseas Filipino worker is required to undergo training, seminar, instruction or schooling of any kind only from specifically designated institutions, entities or persons, except fpr recommendatory trainings mandated by principals/shipowners where the latter shoulder the cost of such trainings;

"(6) For a suspended recruitment/manning agency to engage in any kind of recruitment activity including the processing of pending workers' applications; and

"(7) For a recruitment/manning agency or a foreign principal/employer to pass on the overseas Filipino worker or deduct from his or her salary the payment of the cost of insurance fees, premium or other insurance related charges, as provided under the compulsory worker's insurance coverage.

"The persons criminally liable for the above offenses are the principals, accomplices and accessories. In case of juridical persons, the officers having ownership, control, management or direction of their business who are responsible for the commission of the offense and the responsible employees/agents thereof shall be liable.

"In the filing of cases for illegal recruitment or any of the prohibited acts under this section, the Secretary of Labor and Employment, the POEA Administrator or their duly authorized representatives, or any aggrieved person may initiate the corresponding criminal action with the appropriate office. For this purpose, the affidavits and testimonies of operatives or personnel from the Department of Labor and Employment, POEA and other law enforcement agencies who witnessed the acts constituting the offense shall be sufficient to prosecute the accused.

"In the prosecution of offenses punishable under this section, the public prosecutors of the Department of Justice shall collaborate with the anti-illegal recruitment branch of the POEA and, in certain cases, allow the POEA lawyers to take the lead in the prosecution. The POEA lawyers who act as prosecutors in such cases shall be

entitled to receive additional allowances as may be determined by the POEA Administrator.

"The filing of an offense punishable under this Act shall be without prejudice to the filing of cases punishable under other existing laws, rules or regulations."1avvphi1

a) License v authority

b) Elements of illegal recruitment

c) Simple illegal recruitment

d) Illegal recruitment in large scale

e) Illegal recruitment as economic sabotage

f) Illegal recruitment v estafa

g) Liabilities

1) Local Recruitment agency

2) Foreign employer

Theory of imputed knowledge

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SUNACE   INTERNATIONAL MANAGEMENT SERVICES, INC.                                      Petitioner,  

- versus -

G.R. No. 161757 Present: QUISUMBING, J., Chairperson,CARPIO,CARPIO MORALES, and

 NATIONAL LABOR RELATIONS COMMISSION, Second Division;HON. ERNESTO S. DINOPOL, in his capacity as Labor Arbiter, NLRC; NCR, Arbitration Branch, Quezon City and DIVINA A. MONTEHERMOZO,                                           Respondents. 

TINGA,  JJ.      Promulgated: January 25, 2006 

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

D E C I S I O N  

CARPIO MORALES, J.:  

Petitioner, Sunace International Management Services (Sunace),  a corporation duly organized and existing under the laws of the Philippines, deployed to Taiwan Divina A. Montehermozo (Divina) as a domestic helper under a 12-month contract effectiveFebruary  1, 1997.[1]  The deployment was with the assistance of a Taiwanese broker, Edmund Wang, President of Jet Crown International Co., Ltd.

 After her 12-month contract expired on February 1, 1998, Divina continued

working for her Taiwanese employer, Hang Rui Xiong, for two more years, after which she returned to the Philippines on February 4, 2000. 

 Shortly after her return or on February 14, 2000, Divina filed a

complaint[2] before the National Labor Relations Commission (NLRC) against Sunace, one Adelaide Perez, the Taiwanese broker, and the employer-foreign principal alleging that she was jailed for three months and that she was underpaid. 

 The following day or on February 15, 2000, Labor Arbitration Associate

Regina T. Gavin issued Summons[3] to the Manager of Sunace, furnishing it with a copy of Divina’s complaint and directing it to appear for mandatory conference on February 28, 2000.

 The scheduled mandatory conference was reset.  It appears to have been

concluded, however.

 On April 6, 2000, Divina filed her Position Paper[4] claiming that under her

original one-year contract and the 2-year extended contract which was with the knowledge and consent of Sunace, the following amounts representing income tax and savings were deducted: 

  

Year Deduction forIncome Tax 

Deduction for Savings 

1997 NT10,450.00 NT23,100.001998 NT9,500.00 NT36,000.001999 NT13,300.00 NT36,000.00;[5]

   

and while the amounts deducted in 1997 were refunded to her, those deducted in 1998 and 1999 were not.     On even date, Sunace, by its Proprietor/General Manager Maria Luisa Olarte, filed its Verified Answer and Position Paper, [6] claiming as follows,  quoted verbatim:                        COMPLAINANT IS NOT ENTITLED                       FOR THE REFUND OF HER 24 MONTHS                       SAVINGS                          3.  Complainant could not anymore claim nor entitled for the

refund of her 24 months savings as she already took back her saving already last year and the employer did not deduct any money from her salary, in accordance with a Fascimile Message from the respondent SUNACE’s employer, Jet Crown International Co. Ltd., a xerographic copy of which is herewith attached as ANNEX “2” hereof;

                       COMPLAINANT IS NOT ENTITLED                       TO REFUND OF HER 14 MONTHS TAX                       AND PAYMENT OF ATTORNEY’S FEES                          4.  There is no basis for the grant of tax refund to the

complainant as the she finished her   one year contract   and hence, was not illegally dismissed by her employer.  She could only lay claim over the tax refund or much more be awarded of damages such as attorney’s fees as said reliefs are available only when the dismissal of a migrant worker is without just valid or lawful cause as defined by law or contract.

                         The rationales behind the award of tax refund and payment

of attorney’s fees is not to enrich the complainant but to compensate him for actual injury suffered.  Complainant did not

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suffer injury, hence, does not deserve to be compensated for whatever kind of damages.

                         Hence, the complainant has NO cause of action against

respondent SUNACE for monetary claims, considering that she has been totally paid of all the monetary benefits due her under her Employment Contract   to her full satisfaction.

 6.      Furthermore, the tax deducted from her salary is in

compliance with the Taiwanese law, which respondent SUNACE has no control and complainant has to obey and this Honorable Office has no authority/jurisdiction to intervene because the power to tax is a sovereign power which the Taiwanese Government is supreme in its own territory.  The sovereign power of taxation of a state is recognized under international law and among sovereign states.

                            7.  That respondent SUNACE respectfully reserves the right

to file supplemental Verified Answer and/or Position Paper to substantiate its prayer for the dismissal of the above case against the herein respondent.  AND BY WAY OF -

                         x x x x  (Emphasis and underscoring supplied) 

           Reacting to Divina’s Position Paper, Sunace filed on April 25, 2000 an  “. . . ANSWER TO COMPLAINANT’S POSITION PAPER”[7] alleging that Divina’s 2-year extension of her contract was without its knowledge and consent, hence, it had no liability attaching to any claim arising therefrom, and Divina in fact executed a Waiver/Quitclaim and Release of Responsibility and an Affidavit of Desistance, copy of each document was annexed to said “. . . ANSWER TO COMPLAINANT’S POSITION PAPER.”           To Sunace’s “. . . ANSWER TO COMPLAINANT’S POSITION PAPER,” Divina filed a 2-page reply,[8] without, however, refuting Sunace’s disclaimer of knowledge of the extension of her contract and without saying anything about the Release, Waiver and Quitclaim and Affidavit of Desistance.           The Labor Arbiter, rejected Sunace’s claim that the extension of Divina’s contract for two more years was without its knowledge and consent in this wise: 

 We reject Sunace’s submission that it should not

be held responsible for the amount withheld because her contract was extended for 2 more years without its knowledge and consent because as Annex “B” [9]   shows, Sunace and Edmund Wang have not stopped

communicating with each other   and yet the matter of the contract’s extension and Sunace’s alleged non-consent thereto has not been categorically established.

 What Sunace should have done was to write to

POEA about the extension and its objection thereto, copy furnished the complainant herself, her foreign employer, Hang Rui Xiong and the Taiwanese broker, Edmund Wang.

 And because it did not, it is presumed to have

consented to the extension and should be liable for anything that resulted thereform (sic).[10]  (Underscoring supplied)

           The Labor Arbiter rejected too Sunace’s argument that it is not liable on account of Divina’s execution of a Waiver and Quitclaim and an Affidavit of Desistance.  Observed the Labor Arbiter: 

Should the parties arrive at any agreement as to the whole or any part of the dispute, the same shall be reduced to writing and signed by the parties and their respective counsel (sic), if any, before the Labor Arbiter.

 The settlement shall be approved by the Labor Arbiter

after being satisfied that it was voluntarily entered into by the parties and after having explained to them the terms and consequences thereof.

 A compromise agreement entered into by the parties not in

the presence of the Labor Arbiter before whom the case is pending shall be approved by him, if after confronting the parties, particularly the complainants, he is satisfied that they understand the terms and conditions of the settlement and that it was entered into freely voluntarily (sic) by them and the agreement is not contrary to law, morals, and public policy.

             And because no consideration is indicated in the

documents, we strike them down as contrary to law, morals, and public policy.[11]  

  

 He accordingly decided in favor of Divina, by decision of October 9, 2000, [12] the dispositive portion of which reads:

  

Wherefore, judgment is hereby rendered ordering respondents SUNACE INTERNATIONAL SERVICES and its owner

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ADELAIDA PERGE, both in their personal capacities and as agent of Hang Rui Xiong/Edmund Wang   to jointly and severally pay complainant DIVINA A. MONTEHERMOZO the sum of NT91,950.00 in its peso equivalent at the date of payment, as refund for the amounts which she is hereby adjudged entitled to as earlier discussed plus 10% thereof as attorney’s fees since compelled to litigate, complainant had to engage the services of counsel.

 SO ORDERED.[13]  (Underescoring

supplied) 

 On appeal of Sunace, the NLRC, by Resolution of April 30, 2002, [14] affirmed

the Labor Arbiter’s decision. Via petition for certiorari,[15] Sunace elevated the case to the Court of

Appeals which dismissed it outright by Resolution of November 12, 2002, [16] the full text of which reads:

           The petition for certiorari faces outright dismissal.

The petition failed to allege facts constitutive of grave abuse of discretion on the part of the public respondent amounting to lack of jurisdiction when the NLRC affirmed the Labor Arbiter’s finding that petitioner Sunace International Management Services impliedly consented to the extension of the contract of private respondent Divina A. Montehermozo.  It is undisputed that petitioner was continually communicating with private respondent’s foreign employer (sic).  As agent of the foreign principal, “petitioner cannot profess ignorance of such extension as obviously, the act of the principal extending complainant   (sic) employment contract necessarily bound it.”  Grave abuse of discretion is not present in the case at bar.

 ACCORDINGLY, the petition is hereby DENIED DUE

COURSE and DISMISSED.[17]  SO ORDERED.

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3) Solidary liability

h) Pre-termination of contract of migrant worker

2. Direct hiring

B. Regulation and enforcement

1. Suspension an cancellation of license (Art35)

2. Regulatory and visitorial powers of the DOLE Sec

3. Remittance of foreign exchange earnings

4. Prohibited activities

23

EASTERN MEDITERRANEAN MARITIME LTD. AND AGEMAR MANNING AGENCY, INC., Petitioners, vs. ESTANISLAO SURIO, FREDDIE PALGUIRAN, GRACIANO MORALES, HENRY CASTILLO, ARISTOTLE ARREOLA, ALEXANDER YGOT, ANRIQUE BA TTUNG, GREGORIO ALDOVINO, NARCISO FRIAS, VICTOR FLORES, SAMUEL MARCIAL, CARLITO PALGUIRAN, DUQUE VINLUAN, .JESUS MENDEGORIN, NEIL FLORES, ROMEO MANGALIAG, JOE GARFIN and SALESTINO SUSA, Respondents.G.R. No. 154213 | 2012-08-22

FIRST DIVISION

D E C I S I O N 

BERSAMIN, J.: 

On appeal is the decision the Court of Appeals (CA) promulgated on December 21, 2001 affirming the resolution of the National Labor Relations Commission (NLRC) declaring itself to be without appellate jurisdiction to review the decision of the Philippine Overseas Employment Administration (POEA) involving petitioners' complaint for disciplinary action against respondents.1 

Respondents were former crewmembers of MT Seadance, a vessel owned by petitioner Eastern Mediterranean Maritime Ltd. and manned and operated by petitioner Agemar Manning Agency, Inc. While respondents were still on board the vessel, they experienced delays in the payment of their wages and in the remittance of allotments, and were not paid for extra work and extra overtime work. They complained about the vessel's inadequate equipment, and about the failure of the petitioners to heed their repeated requests for the improvement of their working conditions. On December 19, 1993, when MT Seadance docked at the port of Brofjorden, Sweden to discharge oil, representatives of the International Transport Federation (ITF) boarded the vessel and found the wages of the respondents to be below the prevailing rates. The ensuing negotiations between the ITF and the vessel owner on the increase in respondents' wages resulted in the payment by the vessel owner of wage differentials and the immediate repatriation of respondents to the Philippines. 

Subsequently, on December 23, 1993, the petitioners filed against the newly-repatriated respondents a complaint for disciplinary action based on breach of discipline and for the reimbursement of the wage increases in the Workers Assistance and Adjudication Office of the POEA. 

During the pendency of the administrative complaint in the POEA, Republic Act No. 8042 (Migrant Workers and Overseas Filipinos Act of 1995) took effect on July 15, 1995. Section 10 of Republic Act No. 8042 vested original and exclusive jurisdiction over all money claims arising out of employer-employee relationships involving overseas Filipino workers in the Labor Arbiters, to wit: 

Section 10. Money Claims. - Notwithstanding any provision of law to the contrary, the Labor Arbiters of the National Labor Relations Commission (NLRC) shall have the original and exclusive jurisdiction to hear and decide, within ninety (90) calendar days

after the filing of the complaint, the claims arising out of an employer-employee relationship or by virtue of any law or contract involving Filipino workers for overseas deployment including claims for actual, moral, exemplary and other forms of damages. 

The jurisdiction over such claims was previously exercised by the POEA under the POEA Rules and Regulations of 1991 (1991 POEA Rules). 

On May 23, 1996, the POEA dismissed the complaint for disciplinary action. Petitioners received the order of dismissal on July 24, 1996.2 

Relying on Section 1, Rule V, Book VII of the 1991 POEA Rules, petitioners filed a partial appeal on August 2, 1996 in the NLRC, still maintaining that respondents should be administratively sanctioned for their conduct while they were on board MT Seadance. 

On March 21, 1997, the NLRC dismissed petitioners' appeal for lack of jurisdiction,3 thus: 

We dismiss the partial appeal. 

The Commission has no jurisdiction to review cases decided by the POEA Administrator involving disciplinary actions. Under the Migrant Workers and Overseas Filipinos Act of 1995, the Labor Arbiter shall have jurisdiction over money claims involving employer-employee relationship (sec. 10, R.A. 8042). Said law does not provide that appeals from decisions arising from complaint for disciplinary action rest in the Commission. 

PREMISES CONSIDERED, instant appeal from the Order of May 23, 1996 is hereby DISMISSED for lack of jurisdiction. 

SO ORDERED. 

Not satisfied, petitioners moved for reconsideration, but the NLRC denied their motion. They received the denial on July 8, 1997.4 

Petitioners then commenced in this Court a special civil action for certiorari and mandamus. Citing St. Martin Funeral Homes v. National Labor Relations Commission,5 however, the Court referred the petition to the CA on November 25, 1998. 

Petitioners contended in their petition that: 

THE NLRC GRAVELY ABUSED ITS DISCRETION AND/OR GRAVELY ERRED IN DISMISSING PETITIONERS' APPEAL AND MOTION FOR RECONSIDERATION WHEN IT REFUSED TO TAKE COGNIZANCE OF PETITIONERS' APPEAL DESPITE BEING EMPOWERED TO DO SO UNDER THE LAW.6 

24

On December 21, 2001, the CA dismissed the petition for certiorari and mandamus, holding that the inclusion and deletion of overseas contract workers from the POEA blacklist/watchlist were within the exclusive jurisdiction of the POEA to the exclusion of the NLRC, and that the NLRC had no appellate jurisdiction to review the matter, viz: 

Section 10 of RA 8042, otherwise known as the Migrant Workers and Overseas Filipinos Act of 1995, provides that: 

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

xxxx 

Likewise, the Rules and Regulations implementing RA 8042 reiterate the jurisdiction of POEA, thus: 

"Section 28. Jurisdiction of the POEA. - The POEA shall exercise original and exclusive jurisdiction to hear and decide: 

a) All cases, which are administrative in character, involving or arising out of violations of rules and regulations relating to licensing and registration of recruitment and employment agencies or entities; and 

b) Disciplinary action cases and other special cases, which are administrative in character, involving employers, principals, contracting partners and Filipino migrant workers." 

Further, Sections 6 and 7 Rule VII, Book VII of the POEA Rules & Regulations (1991) provide: 

"Sec. 6. Disqualification of Contract Workers. Contract workers, including seamen, against whom have been imposed or with pending obligations imposed upon them through an order, decision or resolution shall be included in the POEA Blacklist Workers shall be disqualified from overseas employment unless properly cleared by the Administration or until their suspension is served or lifted. 

Sec. 7. Delisting of the Contract Worker's Name from the POEA Watchlist. The name of an overseas worker may be excluded, deleted and removed from the POEA Watchlist only after disposition of the case by the Administration." 

Thus, it can be concluded from the afore-quoted law and rules that, public respondent has no jurisdiction to review disciplinary cases decided by the POEA involving contract workers. Clearly, the matter of inclusion and deletion of overseas contract workers in the POEA Blacklist/Watchlist is within the exclusive jurisdiction of the

POEA to the exclusion of the public respondent. Nor has the latter appellate jurisdiction to review the findings of the POEA involving such cases. 

xxx 

In fine, we find and so hold, that, no grave abuse of discretion can be imputed to the public respondent when it issued the assailed Decision and Order, dated March 21, 1997 and June 13, 1997, respectively, dismissing petitioners' appeal from the decision of the POEA. 

WHEREFORE, finding the instant petition not impressed with merit, the same is hereby DENIED DUE COURSE. Costs against petitioners. 

SO ORDERED.7 

Issue 

Petitioners still appeal, submitting to the Court the sole issue of: 

WHETHER OR NOT THE NLRC HAS JURISDICTION TO REVIEW ON APPEAL CASES DECIDED BY THE POEA ON MATTERS PERTAINING TO DISCIPLINARY ACTIONS AGAINST PRIVATE RESPONDENTS. 

They contend that both the CA and the NLRC had no basis to rule that the NLRC had no jurisdiction to entertain the appeal only because Republic Act No. 8042 had not provided for its retroactive application. 

Respondents counter that the appeal should have been filed with the Secretary of Labor who had exclusive jurisdiction to review cases involving administrative matters decided by the POEA. 

Ruling 

The petition for review lacks merit. 

Petitioners' adamant insistence that the NLRC should have appellate authority over the POEA's decision in the disciplinary action because their complaint against respondents was filed in 1993 was unwarranted. Although Republic Act No. 8042, through its Section 10, transferred the original and exclusive jurisdiction to hear and decide money claims involving overseas Filipino workers from the POEA to the Labor Arbiters, the law did not remove from the POEA the original and exclusive jurisdiction to hear and decide all disciplinary action cases and other special cases administrative in character involving such workers. The obvious intent of Republic Act No. 8042 was to have the POEA focus its efforts in resolving all administrative matters affecting and involving such workers. This intent was even expressly recognized in the Omnibus Rules and Regulations Implementing the Migrant Workers and Overseas Filipinos Act of 1995 promulgated on February 29, 1996, viz: 

Section 28. Jurisdiction of the POEA. - The POEA shall exercise original and exclusive jurisdiction to hear and decide: 

25

(a) all cases, which are administrative in character, involving or arising out of violations or rules and regulations relating to licensing and registration of recruitment and employment agencies or entities; and 

(b) disciplinary action cases and other special cases, which are administrative in character, involving employers, principals, contracting partners and Filipino migrant workers. 

Section 29. Venue - The cases mentioned in Section 28(a) of this Rule, may be filed with the POEA Adjudication Office or the DOLE/POEA regional office of the place where the complainant applied or was recruited, at the option of the complainant. The office with which the complaint was first filed shall take cognizance of the case. 

Disciplinary action cases and other special cases, as mentioned in the preceding Section, shall be filed with the POEA Adjudication Office. 

It is clear to us, therefore, that the NLRC had no appellate jurisdiction to review the decision of the POEA in disciplinary cases involving overseas contract workers. 

Petitioners' position that Republic Act No. 8042 should not be applied retroactively to the review of the POEA's decision dismissing their complaint against respondents has no support in jurisprudence. Although, as a rule, all laws are prospective in application unless the contrary is expressly provided,8 or unless the law is procedural or curative in nature,9 there is no serious question about the retroactive applicability of Republic Act No. 8042 to the appeal of the POEA's decision on petitioners' disciplinary action against respondents. In a way, Republic Act No. 8042 was a procedural law due to its providing or omitting guidelines on appeal. A law is procedural, according to De Los Santos v. Vda. De Mangubat,10 when it - 

Refers to the adjective law which prescribes rules and forms of procedure in order that courts may be able to administer justice. Procedural laws do not come within the legal conception of a retroactive law, or the general rule against the retroactive operation of statues - they may be given retroactive effect on actions pending and undetermined at the time of their passage and this will not violate any right of a person who may feel that he is adversely affected, insomuch as there are no vested rights in rules of procedure. 

Republic Act No. 8042 applies to petitioners' complaint by virtue of the case being then still pending or undetermined at the time of the law's passage, there being no vested rights in rules of procedure.11 They could not validly insist that the reckoning period to ascertain which law or rule should apply was the time when the disciplinary complaint was originally filed in the POEA in 1993. Moreover, Republic Act No. 8042 and its implementing rules and regulations were already in effect when petitioners took their appeal. A statute that eliminates the right to appeal and considers the judgment rendered final and unappealable only destroys the right to appeal, but not the right to prosecute an appeal that has been perfected prior to its passage, for, at that stage, the right to appeal has already vested and cannot be impaired.12

Conversely and by analogy, an appeal that is perfected when a new statute affecting appellate jurisdiction comes into effect should comply with the provisions of the new law, unless otherwise provided by the new law. Relevantly, petitioners need to be reminded that the right to appeal from a decision is a privilege established by positive laws, which, upon authorizing the taking of the appeal, point out the cases in which it is proper to present the appeal, the procedure to be observed, and the courts by which the appeal is to be proceeded with and resolved.13 This is why we consistently hold that the right to appeal is statutory in character, and is available only if granted by law or statute.14

When Republic Act No. 8042 withheld the appellate jurisdiction of the NLRC in respect of cases decided by the POEA, the appellate jurisdiction was vested in the Secretary of Labor in accordance with his power of supervision and control under Section 38(1), Chapter 7, Title II, Book III of the Revised Administrative Code of 1987, to wit: 

Section 38. Definition of Administrative Relationship. - Unless otherwise expressly stated in the Code or in other laws defining the special relationships of particular agencies, administrative relationships shall be categorized and defined as follows: 

Supervision and Control. - Supervision and control shall include authority to act directly whenever a specific function is entrusted by law or regulation to a subordinate; direct the performance of duty; restrain the commission of acts; review, approve, reverse or modify acts and decisions of subordinate officials or units; determine priorities in the execution of plans and programs. Unless a different meaning is explicitly provided in the specific law governing the relationship of particular agencies, the word "control" shall encompass supervision and control as defined in this paragraph. xxx. 

Thus, Section 1, Part VII, Rule V of the 2003 POEA Rules and Regulations specifically provides, as follows: 

Section 1. Jurisdiction. - The Secretary shall have the exclusive and original jurisdiction to act on appeals or petition for review of disciplinary action cases decided by the Administration. 

In conclusion, we hold that petitioners should have appealed the adverse decision of the POEA to the Secretary of Labor instead of to the NLRC. Consequently, the CA, being correct on its conclusions, committed no error in upholding the NLRC. 

WHEREFORE, we AFFIRM the decision promulgated on December 21, 2001 by the Court of Appeals; and ORDER the petitioners to pay the costs of suit. 

SO ORDERED. 

26

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